Document and Entity Information
Document and Entity Information Document - shares | 6 Months Ended | |
Jun. 30, 2017 | Jul. 31, 2017 | |
Entity Information | ||
Entity Registrant Name | Tennant Company | |
Entity Central Index Key | 97,134 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2017 | |
Current Fiscal Year End Date | --12-31 | |
Entity Well-known Seasoned Issuer | Yes | |
Entity Voluntary Filers | No | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 17,824,192 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Net Sales | $ 270,791 | $ 216,828 | $ 461,850 | $ 396,692 |
Cost of Sales | 166,237 | 121,539 | 277,560 | 223,901 |
Gross Profit | 104,554 | 95,289 | 184,290 | 172,791 |
Operating Expense: | ||||
Research and Development Expense | 7,886 | 8,390 | 16,332 | 16,294 |
Selling and Administrative Expense | 87,513 | 64,253 | 161,416 | 126,692 |
Loss on Sale of Business | 0 | 87 | 0 | 149 |
Total Operating Expense | 95,399 | 72,730 | 177,748 | 143,135 |
Profit from Operations | 9,155 | 22,559 | 6,542 | 29,656 |
Other Income (Expense): | ||||
Interest Income | 793 | 40 | 877 | 81 |
Interest Expense | (11,833) | (288) | (12,627) | (590) |
Net Foreign Currency Transaction (Losses) Gains | (336) | 597 | (1,533) | 324 |
Other Expense, Net | (197) | (314) | (218) | (350) |
Total Other (Expense) Income, Net | (11,573) | 35 | (13,501) | (535) |
(Loss) Profit Before Income Taxes | (2,418) | 22,594 | (6,959) | 29,121 |
Income Tax Expense (Benefit) | 238 | 7,266 | (346) | 9,354 |
Net (Loss) Earnings Including Noncontrolling Interest | (2,656) | 15,328 | (6,613) | 19,767 |
Net Loss Attributable to Noncontrolling Interest | (65) | 0 | (65) | 0 |
Net (Loss) Earnings Attributable to Tennant Company | $ (2,591) | $ 15,328 | $ (6,548) | $ 19,767 |
Net (Loss) Earnings Attributable to Tennant Company per Share: | ||||
Basic | $ (0.15) | $ 0.88 | $ (0.37) | $ 1.13 |
Diluted | $ (0.15) | $ 0.85 | $ (0.37) | $ 1.10 |
Weighted Average Shares Outstanding: | ||||
Basic | 17,693,102 | 17,508,022 | 17,645,090 | 17,526,107 |
Diluted | 17,693,102 | 17,933,243 | 17,645,090 | 17,954,167 |
Cash Dividend Declared per Common Share | $ 0.21 | $ 0.20 | $ 0.42 | $ 0.40 |
Condensed Consolidated Stateme3
Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Net (Loss) Earnings Including Noncontrolling Interest | $ (2,656) | $ 15,328 | $ (6,613) | $ 19,767 |
Other Comprehensive Income: | ||||
Foreign currency translation adjustments | 13,640 | 403 | 16,040 | 3,999 |
Pension and retiree medical benefits | 152 | 19 | 162 | 38 |
Cash flow hedge | (4,506) | 18 | (4,579) | (429) |
Income Taxes: | ||||
Foreign currency translation adjustments | 0 | (1) | 0 | 5 |
Pension and retiree medical benefits | (4) | (7) | (22) | (14) |
Cash flow hedge | 1,681 | (7) | 1,708 | 160 |
Total Other Comprehensive Income, Net of Tax | 10,963 | 425 | 13,309 | 3,759 |
Total Comprehensive Income Including Noncontrolling Interest | 8,307 | 15,753 | 6,696 | 23,526 |
Comprehensive Loss Attributable to Noncontrolling Interest | (65) | 0 | (65) | 0 |
Comprehensive Income Attributable to Tennant Company | $ 8,372 | $ 15,753 | $ 6,761 | $ 23,526 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 |
Current Assets: | ||
Cash and Cash Equivalents | $ 53,305 | $ 58,033 |
Restricted Cash | 1,243 | 517 |
Accounts Receivable, less Allowances of $2,992 and $3,108, respectively | 199,861 | 149,134 |
Inventories | 141,579 | 78,622 |
Prepaid Expenses | 25,198 | 9,204 |
Other Current Assets | 5,461 | 2,412 |
Total Current Assets | 426,647 | 297,922 |
Property, Plant and Equipment | 373,254 | 298,500 |
Accumulated Depreciation | (195,248) | (186,403) |
Property, Plant and Equipment, Net | 178,006 | 112,097 |
Deferred Income Taxes | 20,157 | 13,439 |
Goodwill | 183,250 | 21,065 |
Intangible Assets, Net | 166,198 | 6,460 |
Other Assets | 22,953 | 19,054 |
Total Assets | 997,211 | 470,037 |
Current Liabilities: | ||
Short-Term Borrowings and Current Portion of Long-Term Debt | 5,307 | 3,459 |
Accounts Payable | 88,572 | 47,408 |
Employee Compensation and Benefits | 35,789 | 35,997 |
Income Taxes Payable | 6,753 | 2,348 |
Other Current Liabilities | 58,189 | 43,617 |
Total Current Liabilities | 194,610 | 132,829 |
Long-Term Liabilities: | ||
Long-Term Debt | 405,716 | 32,735 |
Employee-Related Benefits | 25,581 | 21,134 |
Deferred Income Taxes | 59,002 | 171 |
Other Liabilities | 24,937 | 4,625 |
Total Long-Term Liabilities | 515,236 | 58,665 |
Total Liabilities | 709,846 | 191,494 |
Commitments and Contingencies (Note 14) | ||
Equity: | ||
Preferred Stock, $0.02 par value; 1,000,000 shares authorized; no shares issued or outstanding | 0 | 0 |
Common Stock, $0.375 par value; 60,000,000 shares authorized; 17,823,292 and 17,688,350 shares issued and outstanding, respectively | 6,684 | 6,633 |
Additional Paid-In Capital | 9,915 | 3,653 |
Retained Earnings | 304,170 | 318,180 |
Accumulated Other Comprehensive Loss | (36,614) | (49,923) |
Total Tennant Company Shareholders' Equity | 284,155 | 278,543 |
Noncontrolling Interest | 3,210 | 0 |
Total Equity | 287,365 | 278,543 |
Total Liabilities and Total Equity | $ 997,211 | $ 470,037 |
Condensed Consolidated Balance5
Condensed Consolidated Balance Sheets (Parentheticals) - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 |
Current Assets: | ||
Allowance For Doubtful Receivables And Sales Returns | $ 2,992 | $ 3,108 |
Equity: | ||
Preferred Stock, par value per share | $ 0.02 | $ 0.02 |
Preferred Stock, shares authorized | 1,000,000 | 1,000,000 |
Preferred Stock, shares issued | 0 | 0 |
Preferred Stock, shares outstanding | 0 | 0 |
Common Stock, par value per share | $ 0.375 | $ 0.375 |
Common Stock, shares authorized | 60,000,000 | 60,000,000 |
Common Stock, shares issued | 17,823,292 | 17,688,350 |
Common Stock, shares outstanding | 17,823,292 | 17,688,350 |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
OPERATING ACTIVITIES | ||
Net (Loss) Earnings Including Noncontrolling Interest | $ (6,613) | $ 19,767 |
Adjustments to reconcile Net (Loss) Earnings to Net Cash (Used in) Provided by Operating Activities: | ||
Depreciation | 11,043 | 8,655 |
Amortization of Intangible Assets | 3,780 | 224 |
Amortization of Debt Issuance Costs | 466 | 77 |
Debt Issuance Cost Charges Related to Financing | 6,200 | 0 |
Fair Value Step-Up Adjustment to Acquired Inventory | 6,199 | 0 |
Deferred Income Taxes | (6,032) | (1,633) |
Share-Based Compensation Expense | 3,622 | 4,426 |
Allowance for Doubtful Accounts and Returns | 697 | 606 |
Loss on Sale of Business | 0 | 149 |
Other, Net | 64 | (63) |
Changes in Operating Assets and Liabilities: | ||
Receivables | (6,016) | (12,314) |
Inventories | (9,854) | (3,941) |
Accounts Payable | 6,190 | (389) |
Employee Compensation and Benefits | (8,262) | (5,788) |
Other Current Liabilities | 5,252 | (3,936) |
Income Taxes | (1,617) | 6,743 |
Other Assets and Liabilities | (7,614) | (142) |
Net Cash (Used in) Provided by Operating Activities | (2,495) | 12,441 |
INVESTING ACTIVITIES | ||
Purchases of Property, Plant and Equipment | (9,145) | (14,769) |
Proceeds from Disposals of Property, Plant and Equipment | 2,428 | 427 |
Issuance of Long-Term Note Receivable | (1,500) | 0 |
Acquisition of Businesses, Net of Cash Acquired | (354,073) | 0 |
Purchase of Intangible Assets | (2,500) | 0 |
Proceeds from Sale of Business | 0 | 285 |
(Increase) Decrease in Restricted Cash | (118) | 120 |
Net Cash Used in Investing Activities | (364,908) | (13,937) |
FINANCING ACTIVITIES | ||
Proceeds from Short-term Debt | 300,000 | 0 |
Repayments of Short-term Debt | (300,000) | 0 |
Proceeds from Issuance of Long-term Debt | 440,000 | 0 |
Payments of Long-Term Debt | (58,471) | (3,444) |
Payments of Debt Issuance Costs | (16,039) | 0 |
Purchases of Common Stock | 0 | (12,762) |
Proceeds from Issuance of Common Stock | 3,843 | 1,196 |
Excess Tax Benefit on Stock Plans | 0 | 246 |
Dividends Paid | (7,463) | (7,058) |
Net Cash Provided by (Used in) Financing Activities | 361,870 | (21,822) |
Effect of Exchange Rate Changes on Cash and Cash Equivalents | 805 | (37) |
Net Decrease in Cash and Cash Equivalents | (4,728) | (23,355) |
Cash and Cash Equivalents at Beginning of Period | 58,033 | 51,300 |
Cash and Cash Equivalents at End of Period | 53,305 | 27,945 |
Supplemental Disclosure of Cash Flow Information: | ||
Cash Paid for Income Taxes | 4,851 | 3,174 |
Cash Paid for Interest | 2,463 | 505 |
Supplemental Non-cash Investing and Financing Activities: | ||
Long-Term Note Receivable from Sale of Business | 0 | 5,489 |
Capital Expenditures in Accounts Payable | 1,440 | 1,538 |
Debt Issuance Costs Incurred but not yet Paid | $ 417 | $ 0 |
Summary of Significant Accounti
Summary of Significant Accounting Policies (Notes) | 6 Months Ended |
Jun. 30, 2017 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | 1. Summary of Significant Accounting Policies Basis of Presentation – The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with the Securities and Exchange Commission (“SEC”) requirements for interim reporting, which allows certain footnotes and other financial information normally required by accounting principles generally accepted in the United States of America to be condensed or omitted. In our opinion, the Condensed Consolidated Financial Statements contain all adjustments (consisting of only normal recurring adjustments) necessary for the fair presentation of our financial position and results of operations. These statements should be read in conjunction with the Consolidated Financial Statements and Notes included in our annual report on Form 10-K for the year ended December 31, 2016 . The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Equity Method Investment – Investments in which we have the ability to exercise significant influence, but do not control, are accounted for under the equity method of accounting and are included in Other Assets on the Condensed Consolidated Balance Sheets. Under this method of accounting, our share of the net earnings or losses of the investee are presented as a component of Other Expense, Net on the Condensed Consolidated Statements of Operations. The details regarding our equity method investment in i-team North America B.V., a joint venture that operates as the distributor of the i-mop in North America, are further described in Note 3. New Accounting Pronouncements – In accordance with Accounting Standards Update ("ASU") No. 2016-09, C ompensation–Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting , all excess tax benefits and tax deficiencies are recorded as a component of the provision for income taxes in the reporting period in which they occur. Additionally, we present excess tax benefits along with other income tax cash flows on the Condensed Consolidated Statements of Cash Flows as an operating activity rather than, as previously required, a financing activity. For further details regarding the implementation of this ASU and the impact on our financial statements, see Note 2. We documented the summary of significant accounting policies in the Notes to the Consolidated Financial Statements of our annual report on Form 10-K for the fiscal year ended December 31, 2016 . Other than the accounting policies noted above, there have been no material changes to our accounting policies since the filing of that report. |
Newly Adopted Accounting Pronou
Newly Adopted Accounting Pronouncements (Notes) | 6 Months Ended |
Jun. 30, 2017 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
Newly Adopted Accounting Pronouncements | 2. Newly Adopted Accounting Pronouncements On March 30, 2016, the Financial Accounting Standards Board ("FASB") issued ASU 2016-09, C ompensation–Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting , which amends Accounting Standards Codification ("ASC") Topic 718, Compensation – Stock Compensation. ASU 2016-09 simplifies several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities and classification on the Condensed Consolidated Statements of Cash Flows. Under the new standard, all excess tax benefits and tax deficiencies are recorded as a component of the provision for income taxes in the reporting period in which they occur. Additionally, ASU 2016-09 requires that the Company present excess tax benefits along with other income tax cash flows on the Condensed Consolidated Statements of Cash Flows as an operating activity rather than, as previously required, a financing activity. ASU 2016-09 is effective for fiscal years beginning after December 15, 2016. We have adopted ASU 2016-09 effective January 1, 2017 on a prospective basis where permitted by the new standard. As a result of this adoption: • For the three and six months ended June 30, 2017 , we recognized discrete tax benefits of $742 and $1,144 , respectively, in the Income Tax Expense (Benefit) line item of our Condensed Consolidated Statements of Operations related to excess tax benefits upon vesting or settlement in that period. • We elected to adopt the cash flow presentation of the excess tax benefits prospectively where the tax benefits are classified along with other income tax cash flows as operating cash flows in 2017. Our prior year's excess tax benefits are recognized as financing cash flows. However, other income tax cash flows are classified as operating cash flows. • We have elected to account for forfeitures as they occur, rather than electing to estimate the number of share-based awards expected to vest to determine the amount of compensation cost to be recognized in each period. The difference of such change is immaterial. • We excluded the excess tax benefits from the assumed proceeds available to repurchase shares in the computation of our diluted earnings per share for the three and six months ended June 30, 2017 . |
Investment in Joint Venture (No
Investment in Joint Venture (Notes) | 6 Months Ended |
Jun. 30, 2017 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Equity Method Investments and Joint Ventures Disclosure [Text Block] | 3. Investment in Joint Venture On February 13, 2017, the Company, through a Dutch subsidiary, and i-team Global, a Future Cleaning Technologies, B.V. company headquartered in The Netherlands, announced the January 1, 2017 formation of i-team North America B.V., a joint venture that will operate as the distributor of the i-mop in North America. The Company began selling and servicing the i-mop in the second quarter of 2017 . The Company owns a 50% ownership interest in the joint venture and is accounted for under the equity method of accounting, with our proportionate share of income or loss presented as a component of Other Expense, Net on the Condensed Consolidated Statements of Operations. As of June 30, 2017 , the carrying value of the Company's investment in the joint venture was $57 . In March 2017, the Company issued a $1,500 loan to the joint venture and, as a result, recorded a long-term note receivable in Other Assets on the Condensed Consolidated Balance Sheets. |
Management Action
Management Action | 6 Months Ended |
Jun. 30, 2017 | |
Restructuring and Related Activities [Abstract] | |
Management Actions | 4. Management Action During the first quarter of 2017, we implemented a restructuring action to better align our global resources and expense structure with a lower growth global economic environment. The pre-tax charge of $8,018 , including other associated costs of $961 , consisted primarily of severance and was included within Selling and Administrative Expense in the Condensed Consolidated Statements of Operations. The charge impacted our Americas, Europe, Middle East and Africa ("EMEA") and Asia Pacific ("APAC") operating segments. We believe the anticipated savings will offset the pre-tax charge in approximately one year from the date of the action. We do not expect additional costs will be incurred related to this restructuring action. A reconciliation to the ending liability balance of severance and related costs as of June 30, 2017 is as follows: Severance and Related Costs Q1 2017 restructuring action $ 7,057 Cash payments (5,297 ) Foreign currency adjustments 110 June 30, 2017 balance $ 1,870 |
Acquisitions (Notes)
Acquisitions (Notes) | 6 Months Ended |
Jun. 30, 2017 | |
Business Combinations [Abstract] | |
Acquisitions | 5. Acquisitions IP Cleaning S.p.A. On April 6, 2017 , we acquired 100 percent of the outstanding capital stock of IP Cleaning S.p.A. and its subsidiaries ("IPC Group") for a purchase price of $353,769 , net of cash acquired of $10,652 . The primary seller was Ambienta SGR S.p.A., a European private equity fund. IPC Group, based in Italy, is a designer and manufacturer of innovative professional cleaning equipment, cleaning tools and supplies. The acquisition strengthens our presence and market share in Europe and will allow us to better leverage our EMEA cost structure. We funded the acquisition of IPC Group, along with related fees, including refinancing of existing debt, with funds raised through borrowings under a senior secured credit facility in an aggregate principal amount of $420,000 . Further details regarding our acquisition financing arrangements are discussed in Note 9. The following table summarizes the preliminary fair value measurement of the assets acquired and liabilities assumed as of the date of acquisition: ASSETS Restricted Cash 538 Receivables 40,067 Inventories 54,222 Other Current Assets 4,362 Assets Held for Sale 2,247 Property, Plant and Equipment 62,845 Intangible Assets Subject to Amortization: Trade Name 29,963 Customer Lists 115,571 Noncompete Agreements 3,210 Other Assets 4,168 Total Identifiable Assets Acquired 317,193 LIABILITIES Accounts Payable 31,529 Accrued Expenses 15,756 Deferred Income Taxes 58,573 Other Liabilities 6,967 Total Identifiable Liabilities Assumed 112,825 Net Identifiable Assets Acquired 204,368 Noncontrolling Interest (3,312 ) Goodwill 152,713 Total Estimated Purchase Price, net of Cash Acquired $ 353,769 The acquired assets, liabilities and operating results have been included in our Condensed Consolidated Financial Statements from the date of acquisition. During the three and six months ended June 30, 2017 , we included Net Sales of $59,074 and a net loss of $5,187 from IPC Group in our Condensed Consolidated Statements of Operations. The net loss includes a $4,470 fair value adjustment, net of tax, to the acquired inventory of IPC Group. In addition, costs of $4,684 , net of tax, associated with the acquisition of the IPC Group were expensed as incurred in the Condensed Consolidated Statements of Operations. The preliminary gross amount of the accounts receivable acquired is $43,785 , of which $3,718 is expected to be uncollectible. The fair value measurement was preliminary at June 30, 2017 . During the measurement period, the Company expects to record adjustments relating to the finalization of Intangible Assets, Inventories, Restricted Cash and Property, Plant and Equipment valuations, and various income tax matters, amongst others. We expect the fair value measurement process to be completed as soon as possible, but no later than one year from the acquisition date. Goodwill was calculated as the difference between the acquisition date fair value of the total purchase price consideration and the fair value of the net identifiable assets acquired, and represents the future economic benefits that we expect to achieve as a result of the acquisition. This resulted in an estimated purchase price in excess of the fair value of identifiable net assets acquired. The estimated purchase price also included the fair value of other assets that were not identifiable and not separately recognizable under accounting rules (i.e. assembled workforce) or these assets were of immaterial value. In addition, there is a going concern element that represents our ability to earn a higher rate of return on the group of assets than would be expected on the separate assets as determined during the valuation process. Based on preliminary fair value measurement of the assets acquired and liabilities assumed, we allocated $152,713 to goodwill for the expected synergies from combining IPC Group with our existing business. None of the goodwill is expected to be deductible for income tax purposes. The assignment of Goodwill to reporting units is not complete, pending finalization of the valuation measurements. The fair value of acquired identifiable intangible assets was primarily determined using discounted expected cash flows. The fair value of acquired identifiable tangible assets was primarily determined using the cost or market approach. The valuations were based on the information that was available as of the acquisition date and the expectations and assumptions that have been deemed reasonable by us. There are inherent uncertainties and management judgment required in these determinations. The fair value measurements of the assets acquired and liabilities assumed were based on valuations involving significant unobservable inputs, or Level 3 in the fair value hierarchy. The preliminary fair value of the acquired intangible assets is $148,744 . The expected lives of the acquired amortizable intangible assets are approximately 15 years for Customer Lists, 11 years for Trade Names and two years for Non-Compete Agreements and all are being amortized on a straight-line basis, pending finalization of fair value. The following unaudited pro forma financial information presents the combined results of operations of Tennant Company as if the acquisition of IPC Group had occurred as of January 1, 2017 and 2016. The unaudited pro forma financial information is presented for informational purposes only. It is not necessarily indicative of what our consolidated results of operations actually would have been had the acquisition occurred at the beginning of each year, nor does it attempt to project the future results of operations of the combined company. Pro Forma Financial Information (Unaudited) Three Months Ended Six Months Ended (In thousands, except per share data) June 30 June 30 2017 2016 2017 2016 Net Sales Pro forma $ 270,791 $ 269,689 $ 517,163 $ 497,896 As reported 270,791 216,828 461,850 396,692 Net Earnings (Loss) Attributable to Tennant Company Pro forma $ 10,308 $ 13,577 $ 10,260 $ 15,889 As reported (2,591 ) 15,328 (6,548 ) 19,767 Net Earnings (Loss) Attributable to Tennant Company per Share Pro forma $ 0.58 $ 0.76 $ 0.58 $ 0.88 As reported (0.15 ) 0.85 (0.37 ) 1.10 The unaudited pro forma financial information is based on certain assumptions which we believe are reasonable, directly attributable to the transaction, factually supportable and do not reflect any cost savings, operating synergies or revenue enhancements that we may achieve, nor the costs necessary to achieve those cost savings, operating synergies, revenue enhancements or integration efforts. The unaudited pro forma financial information above gives effect to the following: • Incremental amortization and depreciation expense related to the estimated fair value of the identifiable intangible assets and property, plant and equipment from the preliminary purchase price allocation . • Exclusion of the purchase accounting impact of the inventory step up reported in cost of sales for the sale of acquired inventory of $6,199 . • Incremental interest expense related to additional debt used to finance the acquisition. • Exclusion of non-recurring acquisition-related transaction and financing costs. • Pro forma adjustments tax affected based on the jurisdiction where the costs were incurred. Other Acquisitions On July 28, 2016 , pursuant to an asset purchase agreement and real estate purchase agreement with Crawford Laboratories, Inc. and affiliates thereof ("Sellers") , we acquired selected assets and liabilities of the Seller's commercial floor coatings business, including the Florock ® Polymer Flooring brand ("Florock"). Florock manufactures commercial floor coatings systems in Chicago, IL. The purchase price was $11,843 , including working capital and other adjustments, and is comprised of $10,965 paid at closing, with the remaining $878 paid in two installments. We paid the first installment of $575 on October 14, 2016. The remaining amount was paid during the 2017 first quarter. On September 1, 2016 , we acquired selected assets and liabilities of Dofesa Barrido Mecanizado ("Dofesa") which was our largest distributor in Mexico over many decades. The operations are based in Aguascalientes, Mexico, and their addition allows us to expand our sales and service network in an important market. The purchase price was $5,000 less assumed liabilities of $3,448 , subject to customary working capital adjustments. The net purchase price of $1,552 is comprised of $1,202 paid at closing, and a value added tax of $191 , with the remaining $350 subject to working capital adjustments. The working capital adjustment is not yet finalized, but we do not expect to pay additional cash beyond the cash already paid. The acquisitions have been accounted for as business combinations and the results of their operations have been included in the Condensed Consolidated Financial Statements since their respective dates of acquisition. The impact of the incremental revenue and earnings recorded as a result of the acquisitions are not material to our Condensed Consolidated Financial Statements. The purchase price allocation for the Florock acquisition is complete. The purchase price allocation for the Dofesa acquisition is complete except for a preliminary valuation of Intangible Assets and finalization of the working capital adjustment. We expect our valuation will be complete in the third quarter of 2017. The preliminary components of the purchase price of the business combinations described above have been allocated as follows: Current Assets $ 5,949 Property, Plant and Equipment, net 4,112 Identified Intangible Assets 6,055 Goodwill 1,739 Other Assets 7 Total Assets Acquired 17,862 Current Liabilities 4,764 Other Liabilities 53 Total Liabilities Assumed 4,817 Net Assets Acquired $ 13,045 |
Divestiture
Divestiture | 6 Months Ended |
Jun. 30, 2017 | |
Disposal Group, Not Discontinued Operation, Disposal Disclosures [Abstract] | |
Divestiture | 6. Divestiture On January 19, 2016 , we signed a Business Purchase Agreement (“BPA”) with Green Machines International GmbH and Green Machine Sweepers UK Limited ("the Buyers"), subsidiaries of M&F Management and Financing GmbH, which is also the parent company of the master distributor of our products in Central Eastern Europe, Middle East and Africa, TCS EMEA GmbH, for the sale of our Green Machines outdoor city cleaning line. The sale closed on January 31, 2016 . Including working capital adjustments, the aggregate consideration for the Green Machines business was $5,774 . For additional information regarding the sale of our Green Machines outdoor city cleaning line, the distributor agreement with the Buyers and the subsequent amendments to the distributor agreement and BPA, refer to Note 4 of our Consolidated Financial Statements as disclosed in our 2016 annual report on Form 10-K for the year ended December 31, 2016 . In the first six months of 2016 , as a result of this divestiture, we recorded a pre-tax loss of $149 in our Profit from Operations in the Condensed Consolidated Statements of Operations. The impact of the recorded loss and the sale of Green Machines was not material to our earnings as Green Machines only accounted for approximately two percent of our total sales. We have identified Green Machines International GmbH as a variable interest entity (“VIE”) and have performed a qualitative assessment to determine if Tennant is the primary beneficiary of the VIE. We have determined that we are not the primary beneficiary of the VIE and consolidation of the VIE is not considered necessary. |
Inventories
Inventories | 6 Months Ended |
Jun. 30, 2017 | |
Inventory Disclosure [Abstract] | |
Inventories | 7. Inventories Inventories are valued at the lower of cost or market. Inventories at June 30, 2017 and December 31, 2016 consisted of the following: June 30, December 31, Inventories carried at LIFO: Finished goods $ 45,562 $ 39,142 Raw materials, production parts and work-in-process 25,107 23,980 LIFO reserve (28,190 ) (28,190 ) Total LIFO inventories 42,479 34,932 Inventories carried at FIFO: Finished goods 57,771 31,044 Raw materials, production parts and work-in-process 41,329 12,646 Total FIFO inventories 99,100 43,690 Total inventories $ 141,579 $ 78,622 The LIFO reserve approximates the difference between LIFO carrying cost and FIFO. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 6 Months Ended |
Jun. 30, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets | 8. Goodwill and Intangible Assets The changes in the carrying value of Goodwill for the six months ended June 30, 2017 were as follows: Goodwill Accumulated Impairment Losses Total Balance as of December 31, 2016 $ 58,397 $ (37,332 ) $ 21,065 Additions 152,713 — 152,713 Purchase accounting adjustments (2,048 ) — (2,048 ) Foreign currency fluctuations 13,736 (2,216 ) 11,520 Balance as of June 30, 2017 $ 222,798 $ (39,548 ) $ 183,250 The balances of acquired Intangible Assets, excluding Goodwill, as of June 30, 2017 and December 31, 2016 , were as follows: Customer Lists Trade Name Technology Noncompete Agreement Total Balance as of June 30, 2017 Original cost $ 136,503 $ 33,954 $ 5,247 $ 3,424 $ 179,128 Accumulated amortization (8,697 ) (823 ) (2,982 ) (428 ) (12,930 ) Carrying value $ 127,806 $ 33,131 $ 2,265 $ 2,996 $ 166,198 Weighted average original life (in years) 15 11 14 2 Balance as of December 31, 2016 Original cost $ 8,016 $ 2,000 $ 5,136 $ — $ 15,152 Accumulated amortization (5,948 ) — (2,744 ) — (8,692 ) Carrying value $ 2,068 $ 2,000 $ 2,392 $ — $ 6,460 Weighted average original life (in years) 15 15 13 0 The additions to Goodwill during the first six months of 2017 were based on the preliminary purchase price allocation of our acquisition of the IPC Group and adjustments to the preliminary purchase price allocation related to our acquisition of the Florock brand and the assets of Dofesa Barrido Mecanizado, as described further in Note 5. As part of our acquisition of the IPC Group, we acquired a Trade Name, Customer Lists and a Noncompete Agreement for a preliminary fair value measurement of $148,744 . Further details regarding the preliminary purchase price allocation of our acquisition of the IPC Group described is described further in Note 5. As part of the formation of the i-team North America B.V. joint venture, we purchased the distribution rights to sell the i-mop in North America for $2,500 . The distribution rights were recorded in Intangible Assets, Net as a customer list on the Condensed Consolidated Balance Sheets as of June 30, 2017 . The i-mop distribution rights have a useful life of five years . Further details regarding the joint venture are discussed in Note 3. Amortization expense on Intangible Assets for the three and six months ended June 30, 2017 was $3,536 and $3,780 , respectively. Amortization expense on Intangible Assets for the three and six months ended June 30, 2016 was $112 and $224 , respectively. Estimated aggregate amortization expense based on the current carrying value of amortizable Intangible Assets for each of the five succeeding years and thereafter is as follows: Remaining 2017 $ 7,043 2018 14,085 2019 12,801 2020 12,374 2021 12,374 Thereafter 107,521 Total $ 166,198 |
Debt
Debt | 6 Months Ended |
Jun. 30, 2017 | |
Debt Disclosure [Abstract] | |
Debt | 9. Debt JPMorgan Credit Facility In order to finance the acquisition of the IPC Group, the Company and certain of our foreign subsidiaries entered into a Credit Agreement (the “2017 Credit Agreement”) with JPMorgan, as administrative agent, Goldman Sachs Bank USA, as syndication agent, Wells Fargo, National Association, U.S. Bank National Association, and HSBC Bank USA, National Association, as co-documentation agents, and the lenders (including JPMorgan) from time to time party thereto on April 4, 2017 . The 2017 Credit Agreement provides the Company and certain of our foreign subsidiaries access to a senior secured credit facility until April 4, 2022 , consisting of a multi-tranche term loan facility in an amount up to $400,000 and a revolving facility in an amount up to $200,000 with an option to expand the revolving facility by $150,000 , with the consent of the lenders willing to provide additional borrowings in the form of increases to their revolving facility commitment or funding of incremental term loans. Borrowings may be denominated in U.S. dollars or certain other currencies. The fee for committed funds under the revolving facility of the 2017 Credit Agreement ranges from an annual rate of 0.175% to 0.35% , depending on the Company’s leverage ratio. Borrowings denominated in U.S. dollars under the 2017 Credit Agreement bear interest at a rate per annum equal to (a) the greatest of (i) the prime rate, (ii) the federal funds rate plus 0.50% and (iii) the adjusted LIBOR rate for a one month period, but in any case, not less than 0% , plus, in any such case, 1.00% , plus an additional spread of 0.075% to 0.90% for revolving loans and 0.25% to 1.25% for term loans, depending on the Company’s leverage ratio, or (b) the LIBOR Rate, as adjusted for statutory reserve requirements for eurocurrency liabilities, but in any case, not less than 0% , plus an additional spread of 1.075% to 1.90% for revolving loans and 1.25% to 2.25% for term loans, depending on the Company’s leverage ratio. Upon entry into the 2017 Credit Agreement, the Company repaid $45,000 in outstanding borrowings under our Amended and Restated Credit Agreement, as described in Note 9 of our annual report on Form 10-K for the year ended December 31, 2016 , and terminated the Amended and Restated Credit Agreement. The 2017 Credit Agreement contains customary representations, warranties and covenants, including but not limited to covenants restricting the Company’s ability to incur indebtedness and liens and merge or consolidate with another entity. The Credit Agreement also contains financial covenants, including the ratio of consolidated total indebtedness to consolidated earnings before income, taxes, depreciation and amortization ("EBITDA"), as well as the ratio of consolidated EBITDA to consolidated interest expense. These financial covenants may restrict our ability to pay dividends and purchase outstanding shares of our common stock. At June 30, 2017 , we were in compliance with these financial covenants. The full terms and conditions of the senior secured credit facility, including our financial covenants, are set forth in the 2017 Credit Agreement. A copy of the 2017 Credit Agreement was filed as Exhibit 10.1 to the Company's Current Report on Form 8-K filed April 5, 2017 and is incorporated by reference herein. Issuance of 5.625% Senior Notes due 2025 On April 18, 2017 , we issued and sold $300,000 in aggregate principal amount of our 5.625% Senior Notes due 2025 (the “Notes”), pursuant to an Indenture, dated as of April 18, 2017, among the Company, the Guarantors (as defined therein), and Wells Fargo Bank, National Association, a national banking association, as trustee. The Notes are guaranteed by Tennant Coatings, Inc. and Tennant Sales and Service Company (collectively, the “Guarantors”), which are wholly owned subsidiaries of the Company. The Notes will mature on May 1, 2025 . Interest on the Notes will accrue at the rate of 5.625% per annum and will be payable semiannually in cash on each May 1 and November 1, commencing on November 1, 2017. The Notes and the guarantees will constitute senior unsecured obligations of the Company and the Guarantors, respectively. The Notes and the guarantees, respectively, will be: (a) equal in right of payment with all of the Company’s and the Guarantors’ senior debt, without giving effect to collateral arrangements; (b) senior in right of payment to all of the Company’s and the Guarantors’ future subordinated debt, if any; (c) effectively subordinated in right of payment to all of the Company’s and the Guarantors’ debt and obligations that are secured, including borrowings under the Company’s senior secured credit facilities for so long as the senior secured credit facilities are secured, to the extent of the value of the assets securing such liens; and (d) structurally subordinated in right of payment to all liabilities (including trade payables) of the Company’s and the Guarantors’ subsidiaries that do not guarantee the Notes. We used the net proceeds from this offering to refinance a $300,000 term loan under our 2017 Credit Agreement that we borrowed as part of the financing for the acquisition of the IPC Group and to pay related fees and expenses. The full terms and conditions of the Indenture are set forth in Exhibit 4.1 to the Company's Current Report on Form 8-K filed April 24, 2017 and is incorporated by reference herein. Registration Rights Agreement In connection with the issuance and sale of the Notes, the Company entered into a Registration Rights Agreement, dated April 18, 2017 , among the Company, the Guarantors and Goldman, Sachs & Co. and J.P. Morgan Securities LLC (the “Registration Rights Agreement”). Pursuant to the Registration Rights Agreement, the Company agreed (1) to use its commercially reasonable efforts to consummate an exchange offer to exchange the Notes for new registered notes (the “Exchange Notes”), with terms substantially identical in all material respects with the Notes (except that the Exchange Notes will not contain terms with respect to additional interest, registration rights or transfer restrictions) and (2) if required, to have a shelf registration statement declared effective with respect to resales of the Notes. If the Company fails to satisfy its obligations under the Registration Rights Agreement within 360 days , it will be required to pay additional interest to the holders of the Notes under certain circumstances. The Registration Rights Agreement is incorporated by reference to Exhibit 4.2 to the Company's Current Report on Form 8-K filed April 24, 2017. Debt outstanding at June 30, 2017 is summarized as follows: June 30, December 31, Long-Term Debt: Senior Unsecured Notes $ 300,000 $ — Credit Facility Borrowings 117,750 36,143 Capital Lease Obligations 688 51 Total Long-Term Debt 418,438 36,194 Less: Unamortized Debt Issuance Costs (7,415 ) — Less: Current Maturities of Credit Facility Borrowings, Net of Debt Issuance Costs (1) (4,905 ) (3,459 ) Less: Current Maturities of Capital Lease Obligations (1) (402 ) — Long-Term Portion, Net $ 405,716 $ 32,735 (1) Current maturities of long-term debt includes $5,000 of current maturities, less $95 of unamortized debt issuance costs, under our 2017 Credit Agreement and $402 of current maturities of capital lease obligations. As of June 30, 2017 , we had outstanding borrowings under our 2017 Credit Agreement, totaling $97,750 under our term loan facility and $20,000 under our revolving facility. There were $300,000 in outstanding borrowings under the Notes as of June 30, 2017 . In addition, we had stand alone letters of credit and bank guarantees outstanding in the amount of $4,645 . Commitment fees on unused lines of credit for the six months ended June 30, 2017 were $200 . The overall weighted average cost of debt is approximately 4.9% and, net of a related cross-currency swap instrument, is approximately 4.2% . Further details regarding the cross-currency swap instrument are discussed in Note 11. Prudential Investment Management, Inc. In March 2017, we repaid $11,143 of debt evidenced by the notes issued under our Private Shelf Agreement, as described in Note 9 of our annual report on Form 10-K for the year ended December 31, 2016 , and terminated the Private Shelf Agreement. HSBC Bank (China) Company Limited, Shanghai Branch On June 20, 2012, we entered into a banking facility with the HSBC Bank (China) Company Limited, Shanghai Branch in the amount of $5,000 . As of June 30, 2017 , there were no outstanding borrowings on this facility. |
Warranty
Warranty | 6 Months Ended |
Jun. 30, 2017 | |
Product Warranties Disclosures [Abstract] | |
Warranty | 10. Warranty We record a liability for warranty claims at the time of sale. The amount of the liability is based on the trend in the historical ratio of claims to sales, the historical length of time between the sale and resulting warranty claim, new product introductions and other factors. Warranty terms on machines generally range from one to four years. However, the majority of our claims are paid out within the first six to nine months following a sale. The majority of the liability for estimated warranty claims represents amounts to be paid out in the near term for qualified warranty issues, with immaterial amounts reserved to be paid for older equipment warranty issues. The changes in warranty reserves for the six months ended June 30, 2017 and 2016 were as follows: Six Months Ended June 30 2017 2016 Beginning balance $ 10,960 $ 10,093 Additions charged to expense 5,815 5,946 Acquired warranty obligations 384 — Foreign currency fluctuations 154 48 Claims paid (5,872 ) (5,766 ) Ending balance $ 11,441 $ 10,321 |
Derivatives (Notes)
Derivatives (Notes) | 6 Months Ended |
Jun. 30, 2017 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Instruments and Hedging Activities Disclosure [Text Block] | 11. Derivatives Hedge Accounting and Hedging Programs We recognize all derivative instruments as either assets or liabilities in our Condensed Consolidated Balance Sheets and measure them at fair value. Gains and losses resulting from changes in fair value are accounted for depending on the use of the derivative and whether it is designated and qualifies for hedge accounting. We evaluate hedge effectiveness on our hedges that are designated and qualify for hedge accounting at the inception of the hedge prospectively, as well as retrospectively, and record any ineffective portion of the hedging instruments in Net Foreign Currency Transaction (Losses) Gains in our Condensed Consolidated Statements of Operations. The time value of purchased contracts is recorded in Net Foreign Currency Transaction (Losses) Gains in our Condensed Consolidated Statements of Operations. Balance Sheet Hedging Hedges of Foreign Currency Assets and Liabilities We hedge portions of our net recognized foreign currency denominated assets and liabilities with foreign exchange forward contracts to reduce the risk that the value of these assets and liabilities will be adversely affected by changes in exchange rates. These contracts hedge assets and liabilities that are denominated in foreign currencies and are carried at fair value as either assets or liabilities on the Condensed Consolidated Balance Sheets with changes in the fair value recorded to Net Foreign Currency Transaction (Losses) Gains in our Condensed Consolidated Statements of Operations. These contracts do not subject us to material balance sheet risk due to exchange rate movements because gains and losses on these derivatives are intended to offset gains and losses on the assets and liabilities being hedged. At June 30, 2017 and December 31, 2016 , the notional amounts of foreign currency forward exchange contracts outstanding not designated as hedging instruments were $71,415 and $42,866 , respectively. During the first quarter of 2017, in connection with our acquisition of IPC Group, we entered into a foreign currency option contract not designated as a hedging instrument for a notional amount of €180,000 . The option contract has since expired and there were no outstanding foreign currency option contracts not designated as hedging instruments as of June 30, 2017 and December 31, 2016 . Cash Flow Hedging Hedges of Forecasted Foreign Currency Transactions In countries outside the U.S., we transact business in U.S. dollars and in various other currencies. We may use foreign exchange option contracts or forward contracts to hedge certain cash flow exposures resulting from changes in these foreign currency exchange rates. These foreign exchange contracts, carried at fair value, have maturities of up to one year . We enter into these foreign exchange contracts to hedge a portion of our forecasted foreign currency denominated revenue in the normal course of business, and accordingly, they are not speculative in nature. The notional amounts of outstanding foreign currency forward contracts designated as cash flow hedges were $2,781 and $2,127 as of June 30, 2017 and December 31, 2016 , respectively. The notional amounts of outstanding foreign currency option contracts designated as cash flow hedges were $8,989 and $8,522 as of June 30, 2017 and December 31, 2016 , respectively. To receive hedge accounting treatment, all hedging relationships are formally documented at the inception of the hedge, and the hedges must be highly effective in offsetting changes to future cash flows on hedged transactions. We record changes in the fair value of these cash flow hedges in Accumulated Other Comprehensive Loss in our Condensed Consolidated Balance Sheets, until the forecasted transaction occurs. When the forecasted transaction occurs, we reclassify the related gain or loss on the cash flow hedge to Net Sales in our Condensed Consolidated Statements of Operations. In the event the hedge becomes ineffective, the underlying forecasted transaction does not occur, or it becomes probable that it will not occur, we reclassify the gain or loss on the related cash flow hedge from Accumulated Other Comprehensive Loss to Net Foreign Currency Transaction (Losses) Gains in our Condensed Consolidated Statements of Operations at that time. If we do not elect hedge accounting, or the contract does not qualify for hedge accounting treatment, the changes in fair value from period to period are recorded in Net Foreign Currency Transaction (Losses) Gains in our Condensed Consolidated Statements of Operations. Foreign Currency Derivatives We use foreign currency exchange rate derivatives to hedge our exposure to fluctuations in exchange rates for anticipated intercompany cash transactions between Tennant Company and its subsidiaries. During the second quarter of 2017 we entered into Euro to US Dollar foreign exchange cross currency swaps for all of the anticipated cash flows associated with an intercompany loan from a wholly-owned European subsidiary. We entered into these foreign exchange cross currency swaps to hedge the foreign currency denominated cash flows associated with this intercompany loan, and accordingly, they are not speculative in nature. We designated these cross currency swaps as cash flow hedges. The hedged cash flows as of June 30, 2017 included €184,800 of total notional value. As of June 30, 2017 , the aggregate scheduled interest payments over the course of the loan and related swaps amounted to €34,800 . The scheduled maturity and principal payment of the loan and related swaps of €150,000 are due in April 2022 . There were no cross currency swaps designated as cash flow hedges as of December 31, 2016 . The fair value of derivative instruments on our Condensed Consolidated Balance Sheets as of June 30, 2017 and December 31, 2016 were as follows: June 30, 2017 December 31, 2016 Fair Value Asset Derivatives Fair Value Liability Derivatives Fair Value Asset Derivatives Fair Value Liability Derivatives Derivatives designated as hedging instruments: Foreign currency option contracts (1) $ 78 $ — $ 184 $ — Foreign currency forward contracts (1) 10,154 26,090 — 13 Derivatives not designated as hedging instruments: Foreign currency option contracts — — — — Foreign currency forward contracts (1) $ 713 $ 1,324 $ 12 $ 162 (1) Contracts that mature within the next 12 months are included in Other Current Assets and Other Current Liabilities for asset derivatives and liability derivatives, respectively, on our Condensed Consolidated Balance Sheets. Contracts with maturities greater than 12 months are included in Other Assets and Other Liabilities for asset derivatives and liability derivatives, respectively, on our Condensed Consolidated Balance Sheets. Amounts included in our Condensed Consolidated Balance Sheets are recorded net where a right of offset exists with the same derivative counterparty. As of June 30, 2017 , we anticipate reclassifying approximately $2,252 of losses from Accumulated Other Comprehensive Loss to net earnings during the next 12 months. The effect of foreign currency derivative instruments designated as cash flow hedges and of foreign currency derivative instruments not designated as hedges in our Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2017 was as follows: Three Months Ended Six Months Ended June 30, 2017 June 30, 2017 Foreign Currency Option Contracts Foreign Currency Forward Contracts Foreign Currency Option Contracts Foreign Currency Forward Contracts Derivatives in cash flow hedging relationships: Net loss recognized in Other Comprehensive Income, net of tax (1) $ (47 ) $ (9,517 ) $ (137 ) $ (9,534 ) Net gain (loss) reclassified from Accumulated Other Comprehensive Loss into earnings, net of tax, effective portion to Net Sales 43 (83 ) 1 (102 ) Net gain reclassified from Accumulated Other Comprehensive Loss into earnings, net of tax, effective portion to Interest Income — 449 — 449 Net loss reclassified from Accumulated Other Comprehensive Loss into earnings, net of tax, effective portion to Net Foreign Currency Transaction (Losses) Gains — (7,148 ) — (7,148 ) Net (loss) gain recognized in earnings (2) (4 ) 3 (5 ) 5 Derivatives not designated as hedging instruments: Net loss recognized in earnings (3) $ — $ (3,939 ) $ (1,132 ) $ (5,307 ) The effect of foreign currency derivative instruments designated as cash flow hedges and of foreign currency derivative instruments not designated as hedges in our Condensed Consolidated Statements Operations for the three and six months ended June 30, 2016 was as follows: Three Months Ended Six Months Ended June 30, 2016 June 30, 2016 Foreign Currency Option Contracts Foreign Currency Forward Contracts Foreign Currency Option Contracts Foreign Currency Forward Contracts Derivatives in cash flow hedging relationships: Net loss recognized in Other Comprehensive Income, net of tax (1) $ (44 ) $ (29 ) $ (230 ) $ (65 ) Net loss reclassified from Accumulated Other Comprehensive Loss into earnings, net of tax, effective portion to Net Sales — (84 ) — (26 ) Net loss recognized in earnings (2) — — (6 ) — Derivatives not designated as hedging instruments: Net loss recognized in earnings (3) $ — $ (371 ) $ — $ (2,062 ) (1) Net change in the fair value of the effective portion classified in Other Comprehensive Income. (2) Ineffective portion and amount excluded from effectiveness testing classified in Net Foreign Currency Transaction (Losses) Gains. (3) Classified in Net Foreign Currency Transaction (Losses) Gains. |
Fair Value Measurements
Fair Value Measurements | 6 Months Ended |
Jun. 30, 2017 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | 12. Fair Value Measurements Estimates of fair value for financial assets and financial liabilities are based on the framework established in the accounting guidance for fair value measurements. The framework defines fair value, provides guidance for measuring fair value and requires certain disclosures. The framework discusses valuation techniques, such as the market approach (comparable market prices), the income approach (present value of future income or cash flow) and the cost approach (cost to replace the service capacity of an asset or replacement cost). The framework utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three levels: • Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities. • Level 2: Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active. • Level 3: Unobservable inputs that reflect the reporting entity’s own assumptions. Our population of assets and liabilities subject to fair value measurements on a recurring basis at June 30, 2017 is as follows: Fair Value Level 1 Level 2 Level 3 Assets: Foreign currency forward exchange contracts $ 10,867 $ — $ 10,867 $ — Foreign currency option contracts 78 — 78 — Total Assets $ 10,945 $ — $ 10,945 $ — Liabilities: Foreign currency forward exchange contracts $ 27,414 $ — $ 27,414 $ — Foreign currency option contracts $ — — — — Total Liabilities $ 27,414 $ — $ 27,414 $ — Our foreign currency forward and option exchange contracts are valued using observable Level 2 market expectations at the measurement date and standard valuation techniques to convert future amounts to a single present value amount. Further details regarding our foreign currency forward exchange and option contracts are discussed in Note 11. The carrying amounts reported in the Condensed Consolidated Balance Sheets for Cash and Cash Equivalents, Restricted Cash, Accounts Receivable, Other Current Assets, Accounts Payable and Other Current Liabilities approximate fair value due to their short-term nature. The fair value of our Long-Term Debt approximates cost based on the borrowing rates currently available to us for bank loans with similar terms and remaining maturities. From time to time, we measure certain assets at fair value on a non-recurring basis, including evaluation of long-lived assets, goodwill and other intangible assets, as part of a business acquisition. These assets are measured and recognized at amounts equal to the fair value determined as of the date of acquisition. Fair value valuations are based on the information available as of the acquisition date and the expectations and assumptions that have been deemed reasonable by us. There are inherent uncertainties and management judgment required in these determinations. The fair value measurements of assets acquired and liabilities assumed as part of a business acquisition are based on valuations involving significant unobservable inputs, or Level 3, in the fair value hierarchy. These assets are also subject to periodic impairment testing by comparing the respective carrying value of each asset to the estimated fair value of the reporting unit or asset group in which they reside. In the event we determine these assets to be impaired, we would recognize an impairment loss equal to the amount by which the carrying value of the reporting unit, impaired asset or asset group exceeds its estimated fair value. These periodic impairment tests utilize company-specific assumptions involving significant unobservable inputs, or Level 3, in the fair value hierarchy. |
Retirement Benefit Plans
Retirement Benefit Plans | 6 Months Ended |
Jun. 30, 2017 | |
Defined Benefit Plans and Other Postretirement Benefit Plans Disclosures [Abstract] | |
Retirement Benefit Plans | 13. Retirement Benefit Plans Our defined benefit pension plans and postretirement medical plan are described in Note 13 of our annual report on Form 10-K for the year ended December 31, 2016 . We have contributed $186 and $86 during the second quarter of 2017 and $265 and $295 during the first six months of 2017 to our pension plans and postretirement medical plan, respectively. The components of the net periodic cost (benefit) for the three and six months ended June 30, 2017 and 2016 were as follows: Three Months Ended June 30 Pension Benefits Postretirement U.S. Plans Non-U.S. Plans Medical Benefits 2017 2016 2017 2016 2017 2016 Service cost $ — $ 97 $ 24 $ 36 $ 20 $ 24 Interest cost 390 415 129 103 90 100 Expected return on plan assets (586 ) (603 ) (101 ) (97 ) — — Amortization of net actuarial loss 11 8 — — — — Amortization of prior service cost — 10 49 32 — — Settlement charge 205 — — — — — Foreign currency — — 234 (16 ) — — Net periodic cost (benefit) $ 20 $ (73 ) $ 335 $ 58 $ 110 $ 124 Six Months Ended June 30 Pension Benefits Postretirement U.S. Plans Non-U.S. Plans Medical Benefits 2017 2016 2017 2016 2017 2016 Service cost $ — $ 177 $ 48 $ 72 $ 40 $ 48 Interest cost 780 830 219 208 181 199 Expected return on plan assets (1,171 ) (1,200 ) (197 ) (194 ) — — Amortization of net actuarial loss 21 17 — — — — Amortization of prior service cost — 21 96 64 — — Settlement charge 205 — — — — — Foreign currency — — 229 24 — — Net periodic (benefit) cost $ (165 ) $ (155 ) $ 395 $ 174 $ 221 $ 247 |
Commitments and Contingencies (
Commitments and Contingencies (Notes) | 6 Months Ended |
Jun. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments Contingencies and Guarantees [Text Block] | 14. Commitments and Contingencies Certain operating leases for vehicles contain residual value guarantee provisions, which would become due at the expiration of the operating lease agreement if the fair value of the leased vehicles is less than the guaranteed residual value. As of June 30, 2017 , of those leases that contain residual value guarantees, the aggregate residual value at lease expiration was $14,700 , of which we have guaranteed $13,319 . As of June 30, 2017 , we have recorded a liability for the estimated end of term loss related to this residual value guarantee of $374 for certain vehicles within our fleet. Our fleet also contains vehicles we estimate will settle at a gain. Gains on these vehicles will be recognized at the end of the lease term. The minimum rentals for aggregate lease commitments as of June 30, 2017 were as follows: Remaining 2017 $ 7,702 2018 10,540 2019 7,074 2020 4,380 2021 2,488 Thereafter 4,183 Total $ 36,367 |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Loss (Notes) | 6 Months Ended |
Jun. 30, 2017 | |
Equity [Abstract] | |
Accumulated Other Comprehensive Loss | 15. Accumulated Other Comprehensive Loss Components of Accumulated Other Comprehensive Loss, net of tax, within the Condensed Consolidated Balance Sheets, are as follows: June 30, 2017 December 31, 2016 Foreign currency translation adjustments $ (28,404 ) $ (44,444 ) Pension and retiree medical benefits (5,251 ) (5,391 ) Cash flow hedge (2,959 ) (88 ) Total Accumulated Other Comprehensive Loss $ (36,614 ) $ (49,923 ) The changes in components of Accumulated Other Comprehensive Loss, net of tax, are as follows: Foreign Currency Translation Adjustments Pension and Post Retirement Benefits Cash Flow Hedge Total December 31, 2016 $ (44,444 ) $ (5,391 ) $ (88 ) $ (49,923 ) Other comprehensive income (loss) before reclassifications 16,040 127 (9,671 ) 6,496 Amounts reclassified from Accumulated Other Comprehensive Loss — 13 6,800 6,813 Net current period other comprehensive income (loss) $ 16,040 $ 140 $ (2,871 ) $ 13,309 June 30, 2017 $ (28,404 ) $ (5,251 ) $ (2,959 ) $ (36,614 ) |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 16. Income Taxes We and our subsidiaries are subject to U.S. federal income tax as well as income tax of numerous state and foreign jurisdictions. We are generally no longer subject to U.S. federal tax examinations for taxable years before 2013 and, with limited exceptions, state and foreign income tax examinations for taxable years before 2012 . We recognize potential accrued interest and penalties related to unrecognized tax benefits in Income Tax Expense. In addition to the liability of $2,790 for unrecognized tax benefits as of June 30, 2017 , there was approximately $536 for accrued interest and penalties. The total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate as of June 30, 2017 was $2,433 . To the extent interest and penalties are not assessed with respect to uncertain tax positions, amounts accrued will be revised and reflected as an adjustment of the Income Tax Expense. Unrecognized tax benefits were reduced by $138 during the first six months of 2017 as a result of the expiration of the statute of limitations in various jurisdictions and settlement with tax authorities. We are currently undergoing income tax examinations in various state and foreign jurisdictions covering 2014 to 2016 . Although the final outcome of these examinations cannot be currently determined, we believe that we have adequate reserves with respect to these examinations. |
Share-Based Compensation
Share-Based Compensation | 6 Months Ended |
Jun. 30, 2017 | |
Share-based Compensation [Abstract] | |
Share-Based Compensation | 17. Share-Based Compensation Our share-based compensation plans are described in Note 17 of our annual report on Form 10-K for the year ended December 31, 2016 . During the three months ended June 30, 2017 and 2016 , we recognized total Share-Based Compensation Expense of $1,049 and $1,789 , respectively. During the six months ended June 30, 2017 and 2016 , we recognized total Share-Based Compensation Expense of $3,622 and $4,426 , respectively. The total excess tax benefit recognized for share-based compensation arrangements during the six months ended June 30, 2017 and 2016 was $1,144 and $246 , respectively. During the first six months of 2017 , we granted 19,971 restricted shares. The weighted average grant date fair value of each share awarded was $73.16 . Restricted share awards generally have a three year vesting period from the effective date of the grant. The total fair value of shares vested during the six months ended June 30, 2017 and 2016 was $1,250 and $1,724 , respectively. |
(Loss) Earnings Attributable to
(Loss) Earnings Attributable to Tennant Company Per Share | 6 Months Ended |
Jun. 30, 2017 | |
Earnings Per Share [Abstract] | |
(Loss) Earnings Attributable to Tennant Company Per Share | 18. (Loss) Earnings Attributable to Tennant Company Per Share The computations of Basic and Diluted (Loss) Earnings Attributable to Tennant Company per Share were as follows: Three Months Ended Six Months Ended June 30 June 30 2017 2016 2017 2016 Numerator: Net (Loss) Earnings Attributable to Tennant Company $ (2,591 ) $ 15,328 $ (6,548 ) $ 19,767 Denominator: Basic - Weighted Average Shares Outstanding 17,693,102 17,508,022 17,645,090 17,526,107 Effect of Dilutive Securities: Share-Based Compensation Plans — 425,221 — 428,060 Diluted - Weighted Average Shares Outstanding 17,693,102 17,933,243 17,645,090 17,954,167 Basic (Loss) Earnings per Share $ (0.15 ) $ 0.88 $ (0.37 ) $ 1.13 Diluted (Loss) Earnings per Share $ (0.15 ) $ 0.85 $ (0.37 ) $ 1.10 Excluded from the dilutive securities shown above were options to purchase 735,377 and 408,979 shares of Common Stock during the three months ended June 30, 2017 and 2016 , respectively. Excluded from the dilutive securities shown above were options to purchase 716,401 and 405,123 shares of Common Stock during the six months ended June 30, 2017 and 2016 , respectively. These exclusions were made if the exercise prices of the options are greater than the average market price of our Common Stock for the period, if the number of shares we can repurchase under the treasury stock method exceeds the weighted average shares outstanding in the options or if we have a net loss, as these effects are anti-dilutive. |
Segment Reporting
Segment Reporting | 6 Months Ended |
Jun. 30, 2017 | |
Segment Reporting [Abstract] | |
Segment Reporting | 19. Segment Reporting We are organized into four operating segments: North America; Latin America; EMEA; and APAC. We combine our North America and Latin America operating segments into the “Americas” for reporting Net Sales by geographic area. In accordance with the objective and basic principles of the applicable accounting guidance, we aggregate our operating segments into one reportable segment that consists of the design, manufacture and sale of products used primarily in the maintenance of nonresidential surfaces. Net Sales attributed to each geographic area for the three and six months ended June 30, 2017 and 2016 were as follows: Three Months Ended Six Months Ended June 30 June 30 2017 2016 2017 2016 Americas $ 169,146 $ 163,857 $ 311,916 $ 297,410 EMEA 77,356 34,391 110,632 65,124 APAC 24,289 18,580 39,302 34,158 Total $ 270,791 $ 216,828 $ 461,850 $ 396,692 Net Sales are attributed to each geographic area based on the end user country and are net of intercompany sales. |
Related Party Transactions
Related Party Transactions | 6 Months Ended |
Jun. 30, 2017 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | 20. Related Party Transactions During the first quarter of 2008 , we acquired Sociedade Alfa Ltda. and entered into lease agreements for certain properties owned by or partially owned by the former owners of this entity. Some of these individuals are current employees of Tennant. Lease payments made under these lease agreements are not material to our financial position or results of operations. |
Summary of Significant Accoun27
Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2017 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation – The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with the Securities and Exchange Commission (“SEC”) requirements for interim reporting, which allows certain footnotes and other financial information normally required by accounting principles generally accepted in the United States of America to be condensed or omitted. In our opinion, the Condensed Consolidated Financial Statements contain all adjustments (consisting of only normal recurring adjustments) necessary for the fair presentation of our financial position and results of operations. These statements should be read in conjunction with the Consolidated Financial Statements and Notes included in our annual report on Form 10-K for the year ended December 31, 2016 . The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. |
Equity Method Investment | Equity Method Investment – Investments in which we have the ability to exercise significant influence, but do not control, are accounted for under the equity method of accounting and are included in Other Assets on the Condensed Consolidated Balance Sheets. Under this method of accounting, our share of the net earnings or losses of the investee are presented as a component of Other Expense, Net on the Condensed Consolidated Statements of Operations. The details regarding our equity method investment in i-team North America B.V., a joint venture that operates as the distributor of the i-mop in North America, are further described in Note 3. |
New Accounting Pronouncements | New Accounting Pronouncements – In accordance with Accounting Standards Update ("ASU") No. 2016-09, C ompensation–Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting , all excess tax benefits and tax deficiencies are recorded as a component of the provision for income taxes in the reporting period in which they occur. Additionally, we present excess tax benefits along with other income tax cash flows on the Condensed Consolidated Statements of Cash Flows as an operating activity rather than, as previously required, a financing activity. For further details regarding the implementation of this ASU and the impact on our financial statements, see Note 2. |
Management Action (Tables)
Management Action (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Restructuring and Related Activities [Abstract] | |
Reconciliation of beginning and ending liability balances | A reconciliation to the ending liability balance of severance and related costs as of June 30, 2017 is as follows: Severance and Related Costs Q1 2017 restructuring action $ 7,057 Cash payments (5,297 ) Foreign currency adjustments 110 June 30, 2017 balance $ 1,870 |
Acquisitions (Tables)
Acquisitions (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Business Acquisition [Line Items] | |
Business Acquisition, Pro Forma Information | The following unaudited pro forma financial information presents the combined results of operations of Tennant Company as if the acquisition of IPC Group had occurred as of January 1, 2017 and 2016. The unaudited pro forma financial information is presented for informational purposes only. It is not necessarily indicative of what our consolidated results of operations actually would have been had the acquisition occurred at the beginning of each year, nor does it attempt to project the future results of operations of the combined company. Pro Forma Financial Information (Unaudited) Three Months Ended Six Months Ended (In thousands, except per share data) June 30 June 30 2017 2016 2017 2016 Net Sales Pro forma $ 270,791 $ 269,689 $ 517,163 $ 497,896 As reported 270,791 216,828 461,850 396,692 Net Earnings (Loss) Attributable to Tennant Company Pro forma $ 10,308 $ 13,577 $ 10,260 $ 15,889 As reported (2,591 ) 15,328 (6,548 ) 19,767 Net Earnings (Loss) Attributable to Tennant Company per Share Pro forma $ 0.58 $ 0.76 $ 0.58 $ 0.88 As reported (0.15 ) 0.85 (0.37 ) 1.10 |
IPC Group | |
Business Acquisition [Line Items] | |
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | The following table summarizes the preliminary fair value measurement of the assets acquired and liabilities assumed as of the date of acquisition: ASSETS Restricted Cash 538 Receivables 40,067 Inventories 54,222 Other Current Assets 4,362 Assets Held for Sale 2,247 Property, Plant and Equipment 62,845 Intangible Assets Subject to Amortization: Trade Name 29,963 Customer Lists 115,571 Noncompete Agreements 3,210 Other Assets 4,168 Total Identifiable Assets Acquired 317,193 LIABILITIES Accounts Payable 31,529 Accrued Expenses 15,756 Deferred Income Taxes 58,573 Other Liabilities 6,967 Total Identifiable Liabilities Assumed 112,825 Net Identifiable Assets Acquired 204,368 Noncontrolling Interest (3,312 ) Goodwill 152,713 Total Estimated Purchase Price, net of Cash Acquired $ 353,769 |
Florock and Dofesa | |
Business Acquisition [Line Items] | |
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | The preliminary components of the purchase price of the business combinations described above have been allocated as follows: Current Assets $ 5,949 Property, Plant and Equipment, net 4,112 Identified Intangible Assets 6,055 Goodwill 1,739 Other Assets 7 Total Assets Acquired 17,862 Current Liabilities 4,764 Other Liabilities 53 Total Liabilities Assumed 4,817 Net Assets Acquired $ 13,045 |
Inventories (Tables)
Inventories (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Inventory Disclosure [Abstract] | |
Inventories | Inventories are valued at the lower of cost or market. Inventories at June 30, 2017 and December 31, 2016 consisted of the following: June 30, December 31, Inventories carried at LIFO: Finished goods $ 45,562 $ 39,142 Raw materials, production parts and work-in-process 25,107 23,980 LIFO reserve (28,190 ) (28,190 ) Total LIFO inventories 42,479 34,932 Inventories carried at FIFO: Finished goods 57,771 31,044 Raw materials, production parts and work-in-process 41,329 12,646 Total FIFO inventories 99,100 43,690 Total inventories $ 141,579 $ 78,622 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Changes in the carrying amount of Goodwill | The changes in the carrying value of Goodwill for the six months ended June 30, 2017 were as follows: Goodwill Accumulated Impairment Losses Total Balance as of December 31, 2016 $ 58,397 $ (37,332 ) $ 21,065 Additions 152,713 — 152,713 Purchase accounting adjustments (2,048 ) — (2,048 ) Foreign currency fluctuations 13,736 (2,216 ) 11,520 Balance as of June 30, 2017 $ 222,798 $ (39,548 ) $ 183,250 |
Acquired Intangible Assets excluding Goodwill | The balances of acquired Intangible Assets, excluding Goodwill, as of June 30, 2017 and December 31, 2016 , were as follows: Customer Lists Trade Name Technology Noncompete Agreement Total Balance as of June 30, 2017 Original cost $ 136,503 $ 33,954 $ 5,247 $ 3,424 $ 179,128 Accumulated amortization (8,697 ) (823 ) (2,982 ) (428 ) (12,930 ) Carrying value $ 127,806 $ 33,131 $ 2,265 $ 2,996 $ 166,198 Weighted average original life (in years) 15 11 14 2 Balance as of December 31, 2016 Original cost $ 8,016 $ 2,000 $ 5,136 $ — $ 15,152 Accumulated amortization (5,948 ) — (2,744 ) — (8,692 ) Carrying value $ 2,068 $ 2,000 $ 2,392 $ — $ 6,460 Weighted average original life (in years) 15 15 13 0 |
Estimated aggregate amortization expense of Intangible Assets | Estimated aggregate amortization expense based on the current carrying value of amortizable Intangible Assets for each of the five succeeding years and thereafter is as follows: Remaining 2017 $ 7,043 2018 14,085 2019 12,801 2020 12,374 2021 12,374 Thereafter 107,521 Total $ 166,198 |
Debt (Tables)
Debt (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Debt Disclosure [Abstract] | |
Summary of outstanding Long-Term Debt | Debt outstanding at June 30, 2017 is summarized as follows: June 30, December 31, Long-Term Debt: Senior Unsecured Notes $ 300,000 $ — Credit Facility Borrowings 117,750 36,143 Capital Lease Obligations 688 51 Total Long-Term Debt 418,438 36,194 Less: Unamortized Debt Issuance Costs (7,415 ) — Less: Current Maturities of Credit Facility Borrowings, Net of Debt Issuance Costs (1) (4,905 ) (3,459 ) Less: Current Maturities of Capital Lease Obligations (1) (402 ) — Long-Term Portion, Net $ 405,716 $ 32,735 (1) Current maturities of long-term debt includes $5,000 of current maturities, less $95 of unamortized debt issuance costs, under our 2017 Credit Agreement and $402 of current maturities of capital lease obligations. |
Warranty (Tables)
Warranty (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Product Warranties Disclosures [Abstract] | |
Changes in warranty reserve | The changes in warranty reserves for the six months ended June 30, 2017 and 2016 were as follows: Six Months Ended June 30 2017 2016 Beginning balance $ 10,960 $ 10,093 Additions charged to expense 5,815 5,946 Acquired warranty obligations 384 — Foreign currency fluctuations 154 48 Claims paid (5,872 ) (5,766 ) Ending balance $ 11,441 $ 10,321 |
Derivatives (Tables)
Derivatives (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of derivative instruments on our Condensed Consolidated Balance Sheets | The fair value of derivative instruments on our Condensed Consolidated Balance Sheets as of June 30, 2017 and December 31, 2016 were as follows: June 30, 2017 December 31, 2016 Fair Value Asset Derivatives Fair Value Liability Derivatives Fair Value Asset Derivatives Fair Value Liability Derivatives Derivatives designated as hedging instruments: Foreign currency option contracts (1) $ 78 $ — $ 184 $ — Foreign currency forward contracts (1) 10,154 26,090 — 13 Derivatives not designated as hedging instruments: Foreign currency option contracts — — — — Foreign currency forward contracts (1) $ 713 $ 1,324 $ 12 $ 162 (1) Contracts that mature within the next 12 months are included in Other Current Assets and Other Current Liabilities for asset derivatives and liability derivatives, respectively, on our Condensed Consolidated Balance Sheets. Contracts with maturities greater than 12 months are included in Other Assets and Other Liabilities for asset derivatives and liability derivatives, respectively, on our Condensed Consolidated Balance Sheets. Amounts included in our Condensed Consolidated Balance Sheets are recorded net where a right of offset exists with the same derivative counterparty. |
Derivative Instruments, Gain (Loss) [Table Text Block] | The effect of foreign currency derivative instruments designated as cash flow hedges and of foreign currency derivative instruments not designated as hedges in our Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2017 was as follows: Three Months Ended Six Months Ended June 30, 2017 June 30, 2017 Foreign Currency Option Contracts Foreign Currency Forward Contracts Foreign Currency Option Contracts Foreign Currency Forward Contracts Derivatives in cash flow hedging relationships: Net loss recognized in Other Comprehensive Income, net of tax (1) $ (47 ) $ (9,517 ) $ (137 ) $ (9,534 ) Net gain (loss) reclassified from Accumulated Other Comprehensive Loss into earnings, net of tax, effective portion to Net Sales 43 (83 ) 1 (102 ) Net gain reclassified from Accumulated Other Comprehensive Loss into earnings, net of tax, effective portion to Interest Income — 449 — 449 Net loss reclassified from Accumulated Other Comprehensive Loss into earnings, net of tax, effective portion to Net Foreign Currency Transaction (Losses) Gains — (7,148 ) — (7,148 ) Net (loss) gain recognized in earnings (2) (4 ) 3 (5 ) 5 Derivatives not designated as hedging instruments: Net loss recognized in earnings (3) $ — $ (3,939 ) $ (1,132 ) $ (5,307 ) The effect of foreign currency derivative instruments designated as cash flow hedges and of foreign currency derivative instruments not designated as hedges in our Condensed Consolidated Statements Operations for the three and six months ended June 30, 2016 was as follows: Three Months Ended Six Months Ended June 30, 2016 June 30, 2016 Foreign Currency Option Contracts Foreign Currency Forward Contracts Foreign Currency Option Contracts Foreign Currency Forward Contracts Derivatives in cash flow hedging relationships: Net loss recognized in Other Comprehensive Income, net of tax (1) $ (44 ) $ (29 ) $ (230 ) $ (65 ) Net loss reclassified from Accumulated Other Comprehensive Loss into earnings, net of tax, effective portion to Net Sales — (84 ) — (26 ) Net loss recognized in earnings (2) — — (6 ) — Derivatives not designated as hedging instruments: Net loss recognized in earnings (3) $ — $ (371 ) $ — $ (2,062 ) (1) Net change in the fair value of the effective portion classified in Other Comprehensive Income. (2) Ineffective portion and amount excluded from effectiveness testing classified in Net Foreign Currency Transaction (Losses) Gains. (3) Classified in Net Foreign Currency Transaction (Losses) Gains. |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Fair Value Disclosures [Abstract] | |
Fair value measurements of assets and liabilities | Our population of assets and liabilities subject to fair value measurements on a recurring basis at June 30, 2017 is as follows: Fair Value Level 1 Level 2 Level 3 Assets: Foreign currency forward exchange contracts $ 10,867 $ — $ 10,867 $ — Foreign currency option contracts 78 — 78 — Total Assets $ 10,945 $ — $ 10,945 $ — Liabilities: Foreign currency forward exchange contracts $ 27,414 $ — $ 27,414 $ — Foreign currency option contracts $ — — — — Total Liabilities $ 27,414 $ — $ 27,414 $ — |
Retirement Benefit Plans (Table
Retirement Benefit Plans (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Defined Benefit Plans and Other Postretirement Benefit Plans Disclosures [Abstract] | |
Components of the net periodic cost (benefit) | The components of the net periodic cost (benefit) for the three and six months ended June 30, 2017 and 2016 were as follows: Three Months Ended June 30 Pension Benefits Postretirement U.S. Plans Non-U.S. Plans Medical Benefits 2017 2016 2017 2016 2017 2016 Service cost $ — $ 97 $ 24 $ 36 $ 20 $ 24 Interest cost 390 415 129 103 90 100 Expected return on plan assets (586 ) (603 ) (101 ) (97 ) — — Amortization of net actuarial loss 11 8 — — — — Amortization of prior service cost — 10 49 32 — — Settlement charge 205 — — — — — Foreign currency — — 234 (16 ) — — Net periodic cost (benefit) $ 20 $ (73 ) $ 335 $ 58 $ 110 $ 124 Six Months Ended June 30 Pension Benefits Postretirement U.S. Plans Non-U.S. Plans Medical Benefits 2017 2016 2017 2016 2017 2016 Service cost $ — $ 177 $ 48 $ 72 $ 40 $ 48 Interest cost 780 830 219 208 181 199 Expected return on plan assets (1,171 ) (1,200 ) (197 ) (194 ) — — Amortization of net actuarial loss 21 17 — — — — Amortization of prior service cost — 21 96 64 — — Settlement charge 205 — — — — — Foreign currency — — 229 24 — — Net periodic (benefit) cost $ (165 ) $ (155 ) $ 395 $ 174 $ 221 $ 247 |
Commitments and Contingencies37
Commitments and Contingencies (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Minimum Rentals for Aggregate Lease Commitments | The minimum rentals for aggregate lease commitments as of June 30, 2017 were as follows: Remaining 2017 $ 7,702 2018 10,540 2019 7,074 2020 4,380 2021 2,488 Thereafter 4,183 Total $ 36,367 |
Accumulated Other Comprehensi38
Accumulated Other Comprehensive Loss (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Equity [Abstract] | |
Components of Accumulated Other Comprehensive Loss, net of tax | Components of Accumulated Other Comprehensive Loss, net of tax, within the Condensed Consolidated Balance Sheets, are as follows: June 30, 2017 December 31, 2016 Foreign currency translation adjustments $ (28,404 ) $ (44,444 ) Pension and retiree medical benefits (5,251 ) (5,391 ) Cash flow hedge (2,959 ) (88 ) Total Accumulated Other Comprehensive Loss $ (36,614 ) $ (49,923 ) |
Changes in components of Accumulated Other Comprehensive Loss, net of tax | The changes in components of Accumulated Other Comprehensive Loss, net of tax, are as follows: Foreign Currency Translation Adjustments Pension and Post Retirement Benefits Cash Flow Hedge Total December 31, 2016 $ (44,444 ) $ (5,391 ) $ (88 ) $ (49,923 ) Other comprehensive income (loss) before reclassifications 16,040 127 (9,671 ) 6,496 Amounts reclassified from Accumulated Other Comprehensive Loss — 13 6,800 6,813 Net current period other comprehensive income (loss) $ 16,040 $ 140 $ (2,871 ) $ 13,309 June 30, 2017 $ (28,404 ) $ (5,251 ) $ (2,959 ) $ (36,614 ) |
(Loss) Earnings Attributable 39
(Loss) Earnings Attributable to Tennant Company Per Share (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Earnings Per Share [Abstract] | |
Computation of Basic and Diluted (Loss) Earnings per Share | The computations of Basic and Diluted (Loss) Earnings Attributable to Tennant Company per Share were as follows: Three Months Ended Six Months Ended June 30 June 30 2017 2016 2017 2016 Numerator: Net (Loss) Earnings Attributable to Tennant Company $ (2,591 ) $ 15,328 $ (6,548 ) $ 19,767 Denominator: Basic - Weighted Average Shares Outstanding 17,693,102 17,508,022 17,645,090 17,526,107 Effect of Dilutive Securities: Share-Based Compensation Plans — 425,221 — 428,060 Diluted - Weighted Average Shares Outstanding 17,693,102 17,933,243 17,645,090 17,954,167 Basic (Loss) Earnings per Share $ (0.15 ) $ 0.88 $ (0.37 ) $ 1.13 Diluted (Loss) Earnings per Share $ (0.15 ) $ 0.85 $ (0.37 ) $ 1.10 |
Segment Reporting (Tables)
Segment Reporting (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Segment Reporting [Abstract] | |
Net Sales by geographic area | Net Sales attributed to each geographic area for the three and six months ended June 30, 2017 and 2016 were as follows: Three Months Ended Six Months Ended June 30 June 30 2017 2016 2017 2016 Americas $ 169,146 $ 163,857 $ 311,916 $ 297,410 EMEA 77,356 34,391 110,632 65,124 APAC 24,289 18,580 39,302 34,158 Total $ 270,791 $ 216,828 $ 461,850 $ 396,692 |
Newly Adopted Accounting Pron41
Newly Adopted Accounting Pronouncements (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended |
Jun. 30, 2017 | Jun. 30, 2017 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Discrete tax benefits recognized related to excess tax benefits, Amount | $ 742 | $ 1,144 |
Investment in Joint Venture (De
Investment in Joint Venture (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
Equity Method Investments and Joint Ventures [Abstract] | ||
Equity Method Investment, Ownership Percentage | 50.00% | |
Carrying value of Investment in Joint Venture | $ 57 | |
Loan to joint venture, Amount | $ 1,500 | $ 0 |
Management Action (Details)
Management Action (Details) $ in Thousands | 6 Months Ended |
Jun. 30, 2017USD ($) | |
Restructuring Cost and Reserve [Line Items] | |
Restructuring Charges | $ 8,018 |
Other associated restructuring charges | $ 961 |
Approximate time anticipated savings will offset the restructuring charge | 1 year |
Restructuring Reserve [Roll Forward] | |
Q1 2017 restructuring action | $ 7,057 |
Cash Payments | (5,297) |
Foreign currency adjustments | 110 |
June 30, 2017 balance | $ 1,870 |
Acquisitions (Details 1)
Acquisitions (Details 1) $ in Thousands | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2017USD ($) | Dec. 31, 2016USD ($) | Apr. 06, 2017USD ($) | |
Business Acquisition [Line Items] | |||
Business Acquisition, Percentage of Voting Interests Acquired | 100.00% | ||
IPC Group | |||
Business Acquisition [Line Items] | |||
Business Acquisition, Effective Date of Acquisition | Apr. 6, 2017 | ||
Business Acquisition, Name of Acquired Entity | IP Cleaning S.p.A. and its subsidiaries ("IPC Group") | ||
Business Combination, Consideration Transferred | $ 353,769 | ||
Cash Acquired from Acquisition | $ 10,652 | ||
Debt Instrument, Face Amount | $ 420,000 | ||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Liabilities | 112,825 | ||
Business Acquisition, Transaction Costs | $ 4,684 | ||
Crawford Laboratories, Inc. | |||
Business Acquisition [Line Items] | |||
Business Acquisition, Effective Date of Acquisition | Jul. 28, 2016 | ||
Business Acquisition, Name of Acquired Entity | Crawford Laboratories, Inc. and affiliates thereof ("Sellers") | ||
Business Combination, Consideration Transferred | $ 11,843 | ||
Payments to Acquire Businesses, Gross | $ 10,965 | ||
Payment to Acquire Businesses, Deferred | $ 878 | ||
Business Acquisition, Number of Deferred Payments | 2 | ||
Business Acquisition, Amount of first deferred payment | 575 | ||
Dofesa Barrido Mecanizado | |||
Business Acquisition [Line Items] | |||
Business Acquisition, Effective Date of Acquisition | Sep. 1, 2016 | ||
Business Acquisition, Name of Acquired Entity | Dofesa Barrido Mecanizado ("Dofesa") | ||
Business Combination, Consideration Transferred | $ 5,000 | ||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Liabilities | 3,448 | ||
Business Combination, Consideration Transferred, Net | 1,552 | ||
Payments to Acquire Businesses, Gross | 1,202 | ||
Payment to Acquire Businesses, Deferred | $ 350 | ||
Business Acquisition, Transaction Costs | $ 191 |
Acquisitions (Details 2)
Acquisitions (Details 2) - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 |
Business Acquisition [Line Items] | ||
Identified Intangible Assets | $ 148,744 | |
Goodwill | 183,250 | $ 21,065 |
Florock and Dofesa | ||
Business Acquisition [Line Items] | ||
Current Assets | 5,949 | |
Property, Plant and Equipment, net | 4,112 | |
Identified Intangible Assets | 6,055 | |
Goodwill | 1,739 | |
Other Assets | 7 | |
Total Assets Acquired | 17,862 | |
Current Liabilities | 4,764 | |
Other Liabilities | 53 | |
Total Identifiable Liabilities Assumed | 4,817 | |
Total Estimated Purchase Price, net of Cash Acquired | $ 13,045 |
Acquisitions (Details 3)
Acquisitions (Details 3) - USD ($) $ in Thousands | 6 Months Ended | ||
Jun. 30, 2017 | Apr. 06, 2017 | Dec. 31, 2016 | |
Business Acquisition [Line Items] | |||
Finite-Lived Intangible Asset, Useful Life | 5 years | ||
Business Combination, Acquired Receivables, Gross Contractual Amount | $ 43,785 | ||
Business Combination, Acquired Receivables, Estimated Uncollectible | 3,718 | ||
ASSETS | |||
Identified Intangible Assets | $ 148,744 | ||
LIABILITIES | |||
Goodwill | 183,250 | $ 21,065 | |
IPC Group | |||
Business Acquisition [Line Items] | |||
Revenue of Acquiree since Acquisition Date | 59,074 | ||
Loss of Acquiree since Acquisition Date | (5,187) | ||
Fair Value Step-Up Adjustment to Acquired Inventory, Net Of Tax | $ 4,470 | ||
Business Acquisition, Transaction Costs | 4,684 | ||
Preliminary Fair Value of Intangible Assets | 148,744 | ||
ASSETS | |||
Restricted Cash | 538 | ||
Receivables | 40,067 | ||
Inventories | 54,222 | ||
Other Current Assets | 4,362 | ||
Assets Held for Sale | 2,247 | ||
Property, Plant and Equipment | 62,845 | ||
Other Assets | 4,168 | ||
Total Identifiable Assets Acquired | 317,193 | ||
LIABILITIES | |||
Accounts Payable | 31,529 | ||
Accrued Expenses | 15,756 | ||
Deferred Income Taxes | 58,573 | ||
Other Liabilities | 6,967 | ||
Total Identifiable Liabilities Assumed | 112,825 | ||
Net Identifiable Assets Acquired | 204,368 | ||
Noncontrolling Interest | (3,312) | ||
Goodwill | 152,713 | ||
Total Estimated Purchase Price, net of Cash Acquired | 353,769 | ||
Customer Lists | IPC Group | |||
Business Acquisition [Line Items] | |||
Finite-Lived Intangible Asset, Useful Life | 15 years | ||
ASSETS | |||
Identified Intangible Assets | 115,571 | ||
Trade Name | IPC Group | |||
Business Acquisition [Line Items] | |||
Finite-Lived Intangible Asset, Useful Life | 11 years | ||
ASSETS | |||
Identified Intangible Assets | 29,963 | ||
Noncompete Agreement | IPC Group | |||
Business Acquisition [Line Items] | |||
Finite-Lived Intangible Asset, Useful Life | 2 years | ||
ASSETS | |||
Identified Intangible Assets | $ 3,210 |
Acquisitions (Details 4)
Acquisitions (Details 4) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Net Sales | ||||
Pro forma | $ 270,791 | $ 269,689 | $ 517,163 | $ 497,896 |
As reported | 270,791 | 216,828 | 461,850 | 396,692 |
Net Earnings (Loss) Attributable to Tennant Company | ||||
Pro forma | 10,308 | 13,577 | 10,260 | 15,889 |
As reported | $ (2,591) | $ 15,328 | $ (6,548) | $ 19,767 |
Net Earnings (Loss) Attributable to Tennant Company per Share | ||||
Pro forma | $ 0.58 | $ 0.76 | $ 0.58 | $ 0.88 |
Diluted (Loss) Earnings per Share | $ (0.15) | $ 0.85 | $ (0.37) | $ 1.10 |
Fair Value Step-Up Adjustment To Acquired Inventory, Pro Forma Adjustment | $ 6,199 | $ 6,199 |
Divestiture (Details)
Divestiture (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | Jan. 31, 2016 | |
Disposal Group, Not Discontinued Operation, Disposal Disclosures [Abstract] | |||||
Date of divestiture | Jan. 31, 2016 | ||||
Total selling price | $ 5,774 | ||||
Loss on Sale of Business | $ 0 | $ 87 | $ 0 | $ 149 | |
Relative size of the disposal group compared to the total company, in terms of revenue | 2.00% |
Inventories (Details)
Inventories (Details) - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 |
Inventories carried at LIFO: | ||
Finished goods | $ 45,562 | $ 39,142 |
Raw materials, production parts and work-in-process | 25,107 | 23,980 |
LIFO reserve | (28,190) | (28,190) |
Total LIFO inventories | 42,479 | 34,932 |
Inventories carried at FIFO: | ||
Finished goods | 57,771 | 31,044 |
Raw materials, production parts and work-in-process | 41,329 | 12,646 |
Total FIFO inventories | 99,100 | 43,690 |
Total inventories | $ 141,579 | $ 78,622 |
Goodwill and Intangible Asset50
Goodwill and Intangible Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | Dec. 31, 2016 | |
Goodwill, Gross | |||||
Balance, beginning of period | $ 58,397 | ||||
Additions | 152,713 | ||||
Purchase accounting adjustments | (2,048) | ||||
Foreign currency fluctuations | 13,736 | ||||
Balance, end of period | $ 222,798 | 222,798 | $ 58,397 | ||
Accumulated Impairment Losses | |||||
Balance, beginning of period | (37,332) | ||||
Foreign currency fluctuations | (2,216) | ||||
Balance, end of period | (39,548) | (39,548) | (37,332) | ||
Goodwill, Net | |||||
Balance, beginning of period | 21,065 | ||||
Additions | 152,713 | ||||
Purchase accounting adjustments | (2,048) | ||||
Foreign currency fluctuations | 11,520 | ||||
Balance, end of period | 183,250 | 183,250 | 21,065 | ||
Acquired Finite-lived Intangible Assets | |||||
Original cost | 179,128 | 179,128 | 15,152 | ||
Accumulated amortization | (12,930) | (12,930) | (8,692) | ||
Intangible Assets, Net | 166,198 | 166,198 | 6,460 | ||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Finite-Lived Intangibles | 148,744 | 148,744 | |||
Purchase of Intangible Assets | $ 2,500 | $ 0 | |||
Finite-Lived Intangible Asset, Useful Life | 5 years | ||||
Amortization expense | 3,536 | $ 112 | $ 3,780 | $ 224 | |
Estimated aggregate amortization expense of Intangible Assets | |||||
Remaining 2,017 | 7,043 | 7,043 | |||
2,018 | 14,085 | 14,085 | |||
2,019 | 12,801 | 12,801 | |||
2,020 | 12,374 | 12,374 | |||
2,021 | 12,374 | 12,374 | |||
Thereafter | 107,521 | 107,521 | |||
Total | 166,198 | 166,198 | |||
Customer Lists | |||||
Acquired Finite-lived Intangible Assets | |||||
Original cost | 136,503 | 136,503 | 8,016 | ||
Accumulated amortization | (8,697) | (8,697) | (5,948) | ||
Intangible Assets, Net | 127,806 | $ 127,806 | $ 2,068 | ||
Weighted-average original life | 15 years | 15 years | |||
Trade Name | |||||
Acquired Finite-lived Intangible Assets | |||||
Original cost | 33,954 | $ 33,954 | $ 2,000 | ||
Accumulated amortization | (823) | (823) | 0 | ||
Intangible Assets, Net | 33,131 | $ 33,131 | $ 2,000 | ||
Weighted-average original life | 11 years | 15 years | |||
Technology | |||||
Acquired Finite-lived Intangible Assets | |||||
Original cost | 5,247 | $ 5,247 | $ 5,136 | ||
Accumulated amortization | (2,982) | (2,982) | (2,744) | ||
Intangible Assets, Net | 2,265 | $ 2,265 | $ 2,392 | ||
Weighted-average original life | 14 years | 13 years | |||
Noncompete Agreement | |||||
Acquired Finite-lived Intangible Assets | |||||
Original cost | 3,424 | $ 3,424 | $ 0 | ||
Accumulated amortization | (428) | (428) | 0 | ||
Intangible Assets, Net | $ 2,996 | $ 2,996 | $ 0 | ||
Weighted-average original life | 2 years | 0 years |
Debt (Details 1)
Debt (Details 1) - USD ($) $ in Thousands | 6 Months Ended | |||
Jun. 30, 2017 | Apr. 18, 2017 | Apr. 04, 2017 | Dec. 31, 2016 | |
Debt Instrument | ||||
Registration Rights Agreement, Effective Date | Apr. 18, 2017 | |||
Registration Rights Agreement Term | 360 days | |||
Long-term Debt | ||||
Total Debt | $ 418,438 | $ 36,194 | ||
Less: Unamortized Debt Issuance Costs | (7,415) | 0 | ||
Less: Current Maturities of Capital Lease Obligations | (402) | 0 | ||
Long-Term Portion | 405,716 | 32,735 | ||
Current Maturities of Long-Term Debt | 5,307 | 3,459 | ||
Letters of Credit Outstanding | 4,645 | |||
Commitment fees on unused line of credit | $ 200 | |||
Weighted average interest rate | 4.87% | |||
Debt, Weighted Average Interest Rate, net of Currency Swap Contract | 4.20% | |||
Senior Notes due 2025 | ||||
Debt Instrument | ||||
Debt Instrument, Interest Rate, Stated Percentage | 5.625% | |||
Bonds, Initiation Date | Apr. 18, 2017 | |||
Debt Instrument, Face Amount | $ 300,000 | |||
Debt Instrument, Maturity Date | May 1, 2025 | |||
Long-term Debt | ||||
Total Debt | $ 300,000 | 0 | ||
Term Loan Facility | ||||
Debt Instrument | ||||
Outstanding Borrowings | 97,750 | |||
Long-term Debt | ||||
Less: Current Maturities of Credit Facility Borrowings, Net of Debt Issuance Costs | (4,905) | (3,459) | ||
Current Maturities of Long-Term Debt | 5,000 | |||
Unamortized Debt Issuance Costs, Current Portion | 95 | |||
Revolving Facility | ||||
Debt Instrument | ||||
Outstanding Borrowings | 20,000 | |||
Capital lease obligations | ||||
Long-term Debt | ||||
Total Debt | $ 688 | 51 | ||
JPMorgan, 2017 Credit Agreement | ||||
Debt Instrument | ||||
Line of Credit Facility, Initiation Date | Apr. 4, 2017 | |||
Line of Credit Facility, Expiration Date | Apr. 4, 2022 | |||
Line Of Credit Facility, Interest rate margin spread added to Federal Funds Rate on US Dollar borrowings | 0.50% | |||
Line Of Credit Facility, Minimum LIBOR one month interest rate on borrowings denominated in US dollars | 0.00% | |||
Line Of Credit Facility, Interest rate margin spread added to LIBOR rate on US Dollar borrowings | 1.00% | |||
Line Of Credit Facility, Minimum LIBOR one month interest rate on eurocurrency borrowings | 0.00% | |||
Long-term Debt | ||||
Total Debt | $ 117,750 | |||
JPMorgan, 2017 Credit Agreement | Term Loan Facility | ||||
Debt Instrument | ||||
Line of Credit Facility, Current Borrowing Capacity | $ 400,000 | |||
Line Of Credit Facility, Minimum interest rate margin spread added to LIBOR rate on US Dollar borrowings | 0.25% | |||
Line Of Credit Facility, Maximum interest rate margin spread added to LIBOR rate on US Dollar borrowings | 1.25% | |||
Minimum interest rate spread added to adjusted LIBOR rate based on leverage ratio on Eurocurrency borrowings (in hundreths) | 1.25% | |||
Maximum interest rate spread added to adjusted LIBOR rate based on leverage ratio on Eurocurrency borrowings (in hundreths) | 2.25% | |||
Debt Instrument, Face Amount | $ 300,000 | |||
JPMorgan, 2017 Credit Agreement | Revolving Facility | ||||
Debt Instrument | ||||
Line of Credit Facility, Current Borrowing Capacity | $ 200,000 | |||
Line Of Credit Facility, Additional Borrowing Capacity Available | $ 150,000 | |||
Line Of Credit Facility, Minimum commitment fee percentage | 0.175% | |||
Line Of Credit Facility, Maximum commitment fee percentage | 0.35% | |||
Line Of Credit Facility, Minimum interest rate margin spread added to LIBOR rate on US Dollar borrowings | 0.075% | |||
Line Of Credit Facility, Maximum interest rate margin spread added to LIBOR rate on US Dollar borrowings | 0.90% | |||
Minimum interest rate spread added to adjusted LIBOR rate based on leverage ratio on Eurocurrency borrowings (in hundreths) | 1.075% | |||
Maximum interest rate spread added to adjusted LIBOR rate based on leverage ratio on Eurocurrency borrowings (in hundreths) | 1.90% | |||
JPMorgan, Previous Credit Agreement | ||||
Debt Instrument | ||||
Outstanding Borrowings | $ 45,000 | |||
Long-term Debt | ||||
Total Debt | $ 36,143 | |||
Prudential Investment Management, Inc. | ||||
Long-term Debt | ||||
Repayments of Long-term Debt | $ 11,143 | |||
HSBC Bank (China) Company Limited, Shanghai Branch | ||||
Debt Instrument | ||||
Outstanding Borrowings | 0 | |||
Long-term Debt | ||||
Maximum borrowing capacity | $ 5,000 |
Warranty (Details)
Warranty (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
Product Warranties Disclosures [Abstract] | ||
Warranty terms, minimum | 1 year | |
Warranty terms, maximum | 4 years | |
Period of time following a sale the majority of claims are paid, min | 6 months | |
Period of time following a sale the majority of claims are paid, max | 9 months | |
Changes in warranty reserves | ||
Beginning balance | $ 10,960 | $ 10,093 |
Additions charged to expense | 5,815 | 5,946 |
Acquired warranty obligations | 384 | 0 |
Foreign currency fluctuations | 154 | 48 |
Claims paid | (5,872) | (5,766) |
Ending balance | $ 11,441 | $ 10,321 |
Derivatives (Details 1)
Derivatives (Details 1) € in Thousands, $ in Thousands | 6 Months Ended | ||||
Jun. 30, 2017EUR (€) | Jun. 30, 2017USD ($) | Jun. 30, 2017USD ($) | Dec. 31, 2016USD ($) | ||
Derivatives not designated as hedging instruments | Foreign currency forward contracts | |||||
Derivatives, Fair Value [Line Items] | |||||
Notional Amount | $ 71,415 | $ 42,866 | |||
Fair Value Asset Derivatives | [1] | 713 | 12 | ||
Fair Value Liability Derivatives | [1] | 1,324 | 162 | ||
Derivatives not designated as hedging instruments | Foreign currency option contracts | |||||
Derivatives, Fair Value [Line Items] | |||||
Notional Amount | € 180,000 | 0 | |||
Fair Value Asset Derivatives | 0 | 0 | |||
Fair Value Liability Derivatives | 0 | 0 | |||
Derivatives designated as hedging instruments | |||||
Derivatives, Fair Value [Line Items] | |||||
Derivative, Term of Contract | 1 year | 1 year | |||
Cash Flow Hedge Loss to be Reclassified within Twelve Months | $ 2,252 | ||||
Derivatives designated as hedging instruments | Foreign currency forward contracts | |||||
Derivatives, Fair Value [Line Items] | |||||
Notional Amount | 2,781 | 2,127 | |||
Fair Value Asset Derivatives | [1] | 10,154 | 0 | ||
Fair Value Liability Derivatives | [1] | 26,090 | 13 | ||
Derivatives designated as hedging instruments | Foreign currency option contracts | |||||
Derivatives, Fair Value [Line Items] | |||||
Notional Amount | 8,989 | 8,522 | |||
Fair Value Asset Derivatives | [1] | 78 | 184 | ||
Fair Value Liability Derivatives | [1] | $ 0 | 0 | ||
Derivatives designated as hedging instruments | Cross currency swap contracts | |||||
Derivatives, Fair Value [Line Items] | |||||
Notional Amount | € 184,800 | $ 0 | |||
Aggregate interest paid over the course of the loan | € | 34,800 | ||||
Debt Instrument, Face Amount | € | € 150,000 | ||||
Derivative, Maturity Date | Apr. 4, 2022 | Apr. 4, 2022 | |||
[1] | Contracts that mature within the next 12 months are included in Other Current Assets and Other Current Liabilities for asset derivatives and liability derivatives, respectively, on our Condensed Consolidated Balance Sheets. Contracts with maturities greater than 12 months are included in Other Assets and Other Liabilities for asset derivatives and liability derivatives, respectively, on our Condensed Consolidated Balance Sheets. Amounts included in our Condensed Consolidated Balance Sheets are recorded net where a right of offset exists with the same derivative counterparty. |
Derivatives (Details 2)
Derivatives (Details 2) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | ||
Foreign currency option contracts | Derivatives not designated as hedging instruments | |||||
Derivative Instruments, Gain (Loss) [Line Items] | |||||
Net loss recognized in earnings | [1] | $ 0 | $ 0 | $ (1,132) | $ 0 |
Foreign currency option contracts | Cash Flow Hedge | |||||
Derivative Instruments, Gain (Loss) [Line Items] | |||||
Net loss recognized in Other Comprehensive Income, net of tax | [2] | (47) | (44) | (137) | (230) |
Net gain (loss) reclassified from Accumulated Other Comprehensive Loss into earnings, net of tax, effective portion to Net Sales | 43 | 0 | 1 | 0 | |
Net gain reclassified from Accumulated Other Comprehensive Loss into earnings, net of tax, effective portion to Interest Income | 0 | 0 | |||
Net loss reclassified from Accumulated Other Comprehensive Loss into earnings, net of tax, effective portion to Net Foreign Currency Transaction (Losses) Gains | 0 | 0 | |||
Net (loss) gain recognized in earnings | [3] | (4) | 0 | (5) | (6) |
Foreign currency forward contracts | Derivatives not designated as hedging instruments | |||||
Derivative Instruments, Gain (Loss) [Line Items] | |||||
Net loss recognized in earnings | [1] | (3,939) | (371) | (5,307) | (2,062) |
Foreign currency forward contracts | Cash Flow Hedge | |||||
Derivative Instruments, Gain (Loss) [Line Items] | |||||
Net loss recognized in Other Comprehensive Income, net of tax | [2] | (9,517) | (29) | (9,534) | (65) |
Net gain (loss) reclassified from Accumulated Other Comprehensive Loss into earnings, net of tax, effective portion to Net Sales | (83) | (84) | (102) | (26) | |
Net gain reclassified from Accumulated Other Comprehensive Loss into earnings, net of tax, effective portion to Interest Income | 449 | 449 | |||
Net loss reclassified from Accumulated Other Comprehensive Loss into earnings, net of tax, effective portion to Net Foreign Currency Transaction (Losses) Gains | (7,148) | (7,148) | |||
Net (loss) gain recognized in earnings | [3] | $ 3 | $ 0 | $ 5 | $ 0 |
[1] | Classified in Net Foreign Currency Transaction (Losses) Gains. | ||||
[2] | Net change in the fair value of the effective portion classified in Other Comprehensive Income | ||||
[3] | Ineffective portion and amount excluded from effectiveness testing classified in Net Foreign Currency Transaction (Losses) Gains. |
Fair Value Measurements (Detail
Fair Value Measurements (Details) $ in Thousands | Jun. 30, 2017USD ($) |
Level 1 | |
Assets: | |
Total Assets | $ 0 |
Liabilities: | |
Total Liabilities | 0 |
Level 1 | Foreign currency forward exchange contracts | |
Assets: | |
Foreign currency contract, asset fair value | 0 |
Liabilities: | |
Foreign currency contract, liability fair value | 0 |
Level 1 | Foreign currency option contracts | |
Assets: | |
Foreign currency contract, asset fair value | 0 |
Liabilities: | |
Foreign currency contract, liability fair value | 0 |
Level 2 | |
Assets: | |
Total Assets | 10,945 |
Liabilities: | |
Total Liabilities | 27,414 |
Level 2 | Foreign currency forward exchange contracts | |
Assets: | |
Foreign currency contract, asset fair value | 10,867 |
Liabilities: | |
Foreign currency contract, liability fair value | 27,414 |
Level 2 | Foreign currency option contracts | |
Assets: | |
Foreign currency contract, asset fair value | 78 |
Liabilities: | |
Foreign currency contract, liability fair value | 0 |
Level 3 | |
Assets: | |
Total Assets | 0 |
Liabilities: | |
Total Liabilities | 0 |
Level 3 | Foreign currency forward exchange contracts | |
Assets: | |
Foreign currency contract, asset fair value | 0 |
Liabilities: | |
Foreign currency contract, liability fair value | 0 |
Level 3 | Foreign currency option contracts | |
Assets: | |
Foreign currency contract, asset fair value | 0 |
Liabilities: | |
Foreign currency contract, liability fair value | 0 |
Fair Value | |
Assets: | |
Total Assets | 10,945 |
Liabilities: | |
Total Liabilities | 27,414 |
Fair Value | Foreign currency forward exchange contracts | |
Assets: | |
Foreign currency contract, asset fair value | 10,867 |
Liabilities: | |
Foreign currency contract, liability fair value | 27,414 |
Fair Value | Foreign currency option contracts | |
Assets: | |
Foreign currency contract, asset fair value | 78 |
Liabilities: | |
Foreign currency contract, liability fair value | $ 0 |
Retirement Benefit Plans (Detai
Retirement Benefit Plans (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Pension Plans | ||||
Defined Benefit Plans and Other Postretirement Benefit Plans | ||||
Plan contributions | $ 186 | $ 265 | ||
U.S. Plans | ||||
Defined Benefit Plans and Other Postretirement Benefit Plans | ||||
Service cost | 0 | $ 97 | 0 | $ 177 |
Interest cost | 390 | 415 | 780 | 830 |
Expected return on plan assets | (586) | (603) | (1,171) | (1,200) |
Amortization of net actuarial loss | 11 | 8 | 21 | 17 |
Amortization of prior service cost | 0 | 10 | 0 | 21 |
Settlement charge | 205 | 0 | 205 | 0 |
Foreign currency | 0 | 0 | 0 | 0 |
Net periodic cost (benefit) | 20 | (73) | (165) | (155) |
Non-U.S. Plans | ||||
Defined Benefit Plans and Other Postretirement Benefit Plans | ||||
Service cost | 24 | 36 | 48 | 72 |
Interest cost | 129 | 103 | 219 | 208 |
Expected return on plan assets | (101) | (97) | (197) | (194) |
Amortization of net actuarial loss | 0 | 0 | 0 | 0 |
Amortization of prior service cost | 49 | 32 | 96 | 64 |
Settlement charge | 0 | 0 | 0 | 0 |
Foreign currency | 234 | (16) | 229 | 24 |
Net periodic cost (benefit) | 335 | 58 | 395 | 174 |
Postretirement Medical Benefits | ||||
Defined Benefit Plans and Other Postretirement Benefit Plans | ||||
Plan contributions | 86 | 295 | ||
Service cost | 20 | 24 | 40 | 48 |
Interest cost | 90 | 100 | 181 | 199 |
Expected return on plan assets | 0 | 0 | 0 | 0 |
Amortization of net actuarial loss | 0 | 0 | 0 | 0 |
Amortization of prior service cost | 0 | 0 | 0 | 0 |
Settlement charge | 0 | 0 | 0 | 0 |
Foreign currency | 0 | 0 | 0 | 0 |
Net periodic cost (benefit) | $ 110 | $ 124 | $ 221 | $ 247 |
Commitments and Contingencies57
Commitments and Contingencies (Details) $ in Thousands | Jun. 30, 2017USD ($) |
Long-term Purchase Commitment [Line Items] | |
Aggregate residual value at lease expiration for vehicle leases | $ 14,700 |
Guaranteed aggregate residual value at lease expiration for vehicle leases | 13,319 |
Liability for the estimated end of term loss related to residual value guarantee | 374 |
Minimum Rentals for Aggregate Lease Commitments | |
Remaining 2,017 | 7,702 |
2,018 | 10,540 |
2,019 | 7,074 |
2,020 | 4,380 |
2,021 | 2,488 |
Thereafter | 4,183 |
Total | $ 36,367 |
Accumulated Other Comprehensi58
Accumulated Other Comprehensive Loss (Details 1) - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 |
Equity [Abstract] | ||
Foreign currency translation adjustments | $ (28,404) | $ (44,444) |
Pension and retiree medical benefits | (5,251) | (5,391) |
Cash flow hedge | (2,959) | (88) |
Total Accumulated Other Comprehensive Loss | $ (36,614) | $ (49,923) |
Accumulated Other Comprehensi59
Accumulated Other Comprehensive Loss (Details 2) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Components of Other Comprehensive Loss | ||||
Balance at the beginning of the year | $ (49,923) | |||
Other comprehensive income (loss) before reclassifications | 6,496 | |||
Amounts reclassified from Accumulated Other Comprehensive Loss | 6,813 | |||
Total Other Comprehensive Income, Net of Tax | $ 10,963 | $ 425 | 13,309 | $ 3,759 |
Balance at the end of the period | (36,614) | (36,614) | ||
Foreign Currency Translation Adjustments | ||||
Components of Other Comprehensive Loss | ||||
Balance at the beginning of the year | (44,444) | |||
Other comprehensive income (loss) before reclassifications | 16,040 | |||
Amounts reclassified from Accumulated Other Comprehensive Loss | 0 | |||
Total Other Comprehensive Income, Net of Tax | 16,040 | |||
Balance at the end of the period | (28,404) | (28,404) | ||
Pension and Post Retirement Benefits | ||||
Components of Other Comprehensive Loss | ||||
Balance at the beginning of the year | (5,391) | |||
Other comprehensive income (loss) before reclassifications | 127 | |||
Amounts reclassified from Accumulated Other Comprehensive Loss | 13 | |||
Total Other Comprehensive Income, Net of Tax | 140 | |||
Balance at the end of the period | (5,251) | (5,251) | ||
Cash Flow Hedge | ||||
Components of Other Comprehensive Loss | ||||
Balance at the beginning of the year | (88) | |||
Other comprehensive income (loss) before reclassifications | (9,671) | |||
Amounts reclassified from Accumulated Other Comprehensive Loss | 6,800 | |||
Total Other Comprehensive Income, Net of Tax | (2,871) | |||
Balance at the end of the period | $ (2,959) | $ (2,959) |
Income Taxes (Details)
Income Taxes (Details) $ in Thousands | 6 Months Ended |
Jun. 30, 2017USD ($) | |
Income Tax Disclosure [Abstract] | |
Liability for unrecognized tax benefits | $ 2,790 |
Unrecognized tax benefits, income tax penalties and interest accrued | 536 |
Unrecognized tax benefits that would impact the effective tax rate | 2,433 |
Unrecognized tax benefits, reduction resulting from lapse of applicable statute of limitations | $ 138 |
Minimum | |
Income Tax Examination [Line Items] | |
Income Tax Examination, Year under Examination | 2,014 |
Maximum | |
Income Tax Examination [Line Items] | |
Income Tax Examination, Year under Examination | 2,016 |
Share-Based Compensation (Detai
Share-Based Compensation (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Share-based Compensation Arrangement by Share-based Payment Award | ||||
Share-based Compensation Expense | $ 1,049 | $ 1,789 | $ 3,622 | $ 4,426 |
Excess Tax Benefit on Stock Plans, 2017 | 1,144 | |||
Excess Tax Benefit on Stock Plans, 2016 | $ 0 | 246 | ||
Restricted shares | ||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||
Shares granted | 19,971 | |||
Weighted average grant date fair value, in dollars per share | $ 73.16 | |||
Vesting period of new awards granted | 3 years | |||
Fair value of shares vested | $ 1,250 | $ 1,724 |
(Loss) Earnings Attributable 62
(Loss) Earnings Attributable to Tennant Company Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Numerator: | ||||
Net (Loss) Earnings Attributable to Tennant Company | $ (2,591) | $ 15,328 | $ (6,548) | $ 19,767 |
Denominator: | ||||
Basic - Weighted Average Shares Outstanding | 17,693,102 | 17,508,022 | 17,645,090 | 17,526,107 |
Effect of dilutive securities: | ||||
Share-based compensation plans | 0 | 425,221 | 0 | 428,060 |
Diluted - Weighted Average Shares Outstanding | 17,693,102 | 17,933,243 | 17,645,090 | 17,954,167 |
Basic (Loss) Earnings per Share | $ (0.15) | $ 0.88 | $ (0.37) | $ 1.13 |
Diluted (Loss) Earnings per Share | $ (0.15) | $ 0.85 | $ (0.37) | $ 1.10 |
Anti-dilutive securities excluded from earnings per share calculation | 735,377 | 408,979 | 716,401 | 405,123 |
Segment Reporting (Details)
Segment Reporting (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017USD ($) | Jun. 30, 2016USD ($) | Jun. 30, 2017USD ($) | Jun. 30, 2016USD ($) | |
Segment Reporting [Abstract] | ||||
Number of operating segments | 4 | |||
Number of reportable segments | 1 | |||
Revenues from External Customers | ||||
Net Sales | $ 270,791 | $ 216,828 | $ 461,850 | $ 396,692 |
Americas | ||||
Revenues from External Customers | ||||
Net Sales | 169,146 | 163,857 | 311,916 | 297,410 |
EMEA | ||||
Revenues from External Customers | ||||
Net Sales | 77,356 | 34,391 | 110,632 | 65,124 |
APAC | ||||
Revenues from External Customers | ||||
Net Sales | $ 24,289 | $ 18,580 | $ 39,302 | $ 34,158 |