FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Quarterly Report Under Section 13 or 15 (d)
of the Securities Exchange Act of 1934
For Quarter Ended September 30, 1999
Commission File No. 04804
TENNANT COMPANY
Incorporated in Minnesota IRS Emp Id No. 410572550
701 North Lilac Drive
P.O. Box 1452
Minneapolis, Minnesota 55440
Telephone No. 612-540-1200
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
The number of shares outstanding of Registrant's common stock, par value
$.375 on September 30, 1999, was 9,042,437.
Page 2 of 15
TENNANT COMPANY
Quarterly Report - Form 10-Q
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
TENNANT COMPANY AND SUBSIDIARIES - CONSOLIDATED STATEMENTS OF EARNINGS
AND COMPREHENSIVE EARNINGS (UNAUDITED)
(Dollars in thousands, except per share amounts)
Three Months Nine Months
Ended September 30 Ended September 30
---------------------- -----------------------
1999 1998 1999 1998
---- ---- ---- ----
Net sales $ 104,286 $ 96,116 $ 310,412 $ 284,057
Less:
Cost of sales 62,984 56,157 185,600 165,915
Selling and administrative 33,439 30,479 99,778 91,311
Restructuring charges 3,078 0 3,078 0
--------- --------- --------- ---------
Profit from operations 4,785 9,480 21,956 26,831
Other income (expense)
Net foreign currency gain (loss) 240 93 183 (79)
Interest income 626 1,036 2,053 3,345
Interest expense (486) (573) (1,826) (1,878)
Miscellaneous income (expense), net (226) (214) (574) 165
--------- --------- --------- ---------
Total other income (expense) 154 342 (164) 1,553
--------- --------- --------- ---------
Earnings before income taxes 4,939 9,822 21,792 28,384
Taxes on income 1,784 3,514 7,767 10,115
--------- --------- --------- ---------
Net earnings $ 3,155 $ 6,308 $ 14,025 $ 18,269
========= ========= ========= =========
Comprehensive earnings adjustment
for foreign currency translation,
net of tax 414 417 (2,421) 84
--------- --------- --------- ---------
Comprehensive earnings $ 3,569 $ 6,725 $ 11,604 $ 18,353
========= ========= ========= =========
PER SHARE:
Basic net earnings $ .35 $ .67 $ 1.54 $ 1.91
Diluted net earnings $ .35 $ .67 $ 1.53 $ 1.91
Dividends $ .19 $ .19 $ .57 $ .55
Weighted average number of shares 9,079,900 9,383,900 9,110,400 9,550,800
(basic)
Weighted average number of shares 9,111,800 9,411,800 9,146,800 9,580,100
(diluted)
Page 3 of 15
TENNANT COMPANY
Quarterly Report - Form 10-Q
ITEM 1 - FINANCIAL STATEMENTS (continued)
TENNANT COMPANY AND SUBSIDIARIES - CONSOLIDATED STATEMENTS
(Dollars in thousands)
BALANCE SHEET
(Condensed from Audited
(Unaudited) Financial Statements)
ASSETS September 30, 1999 December 31, 1998
------------------ -----------------
Cash and cash equivalents $ 12,705 $ 17,693
Receivables 81,867 81,145
Less deferred income from sales finance charges (137) (954)
Less allowance for doubtful accounts (3,732) (2,956)
--------- ---------
Net receivables 77,998 77,235
Inventories 49,654 46,162
Prepaid expenses 1,880 878
Deferred income taxes, current portion 8,921 8,900
--------- ---------
Total current assets 151,158 150,868
Property, plant, and equipment 178,755 169,515
Less allowance for depreciation (111,875) (102,875)
--------- ---------
Net property, plant, and equipment 66,880 66,640
Net noncurrent installment accounts receivable 2,048 2,843
Deferred income taxes, long-term portion 2,836 2,657
Intangible assets, net 18,452 15,631
Other assets 811 459
--------- ---------
Total assets $ 242,185 $ 239,098
========= =========
LIABILITIES & SHAREHOLDERS' EQUITY
(Condensed from Audited
(Unaudited) Financial Statements)
LIABILITIES September 30, 1999 December 31, 1998
------------------ -----------------
Current debt $ 6,448 $ 7,302
Accounts payable 13,264 19,042
Accrued expenses 32,669 30,647
--------- ---------
Total current liabilities 52,381 56,991
Long-term debt 24,415 23,038
Long-term employee retirement-related benefits 31,635 27,802
--------- ---------
Total liabilities 108,431 107,831
SHAREHOLDERS' EQUITY
Common stock 3,392 3,421
Common stock subscribed 153 425
Unearned restricted shares (1,090) (307)
Retained earnings 141,934 136,730
Receivable from ESOP (9,801) (10,589)
Accumulated other comprehensive income (equity
adjustment from foreign currency translation) (834) 1,587
--------- ---------
Total shareholders' equity 133,754 131,267
Total liabilities and shareholders' equity $ 242,185 $ 239,098
========= =========
Page 4 of 15
TENNANT COMPANY
Quarterly Report - Form 10-Q
ITEM 1 - FINANCIAL STATEMENTS (continued)
TENNANT COMPANY AND SUBSIDIARIES - CONSOLIDATED STATEMENTS (UNAUDITED)
(Dollars in thousands)
CONDENSED STATEMENTS OF CASH FLOWS Nine Months Ended September 30
------------------------------
1999 1998
---- ----
Net cash flow provided by operating activities $ 26,136 $ 28,682
Cash flow used in investing activities:
Acquisition of property, plant, and equipment (13,793) (14,597)
Acquisition of Paul Andra KG, less cash acquired (note 7) (6,944) 0
Proceeds from disposals of property, plant, and equipment 1,907 4,178
Proceeds from maturing long-term securities 1 0
-------- --------
Net cash flow used in investing activities (18,829) (10,419)
Cash flow related to financing activities:
Net changes in current debt (805) 4,541
Issuance (payments) of long-term debt (1,188) 4,163
Payments to settle long-term debt 0 (27)
Principal payment from ESOP 660 600
Proceeds from employee stock issues 1,727 1,521
Repurchase of common stock (7,500) (22,259)
Dividends paid (5,155) (5,201)
-------- --------
Net cash flow used in financing activities (12,261) (16,662)
Effect of exchange rate changes on cash (34) 21
-------- --------
Net increase (decrease) in cash and cash equivalents (4,988) 1,622
Cash and cash equivalents at beginning of period 17,693 16,279
-------- --------
Cash and cash equivalents at end of period $ 12,705 $ 17,901
======== ========
Page 5 of 15
TENNANT COMPANY
Quarterly Report - Form 10-Q
ITEM 1 - FINANCIAL STATEMENTS (continued)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In the opinion of management, the accompanying financial statements include
all adjustments, consisting of normal recurring accruals, necessary for a
fair presentation of the interim periods presented.
The results of operations for interim periods are not necessarily indicative
of results which will be realized for the full fiscal year.
(1) Information Incorporated by Reference from Form 10-K
The Company's Summary of Significant Accounting Policies and other
Related Data and Summary of Stock Plans, Bonuses, and Profit Sharing are
included in the Company's 1998 Annual Report filed as Exhibit 13.1 to the
Company's annual filing on Form 10-K and are incorporated in this Form
10-Q by reference.
(2) Expenses
Engineering, research and development, maintenance and repairs, warranty,
and bad debt expenses were charged to operations for the three and nine
months ended September 30, 1999 and 1998, as follows:
Three Months Nine Months
Ended September 30 Ended September 30
------------------ ------------------
1999 1998 1999 1998
------ ------ ------- -------
(In Thousands)
Engineering, research and development $3,575 $4,091 $11,102 $12,555
====== ====== ======= =======
Maintenance and repairs $1,356 $1,155 $ 4,155 $ 4,174
====== ====== ======= =======
Warranty $1,591 $1,612 $ 4,769 $ 3,936
====== ====== ======= =======
Bad debts $ 78 $ 364 $ 632 $ 862
====== ====== ======= =======
The Company also makes accrual adjustments on a regular monthly basis for
bonus and profit sharing expenses which are settled at year-end. This
allows for a fair statement of the results for the interim periods
presented.
(3) Inventories
Inventories are valued at the lower of cost (principally on a last-in,
first-out basis) or market. The composition of inventories at September
30, 1999, and December 31, 1998, is as follows:
September 30 December 31
1999 1998
------------ -----------
(In Thousands)
FIFO Inventories:
Finished goods $ 31,131 $ 32,895
All other 37,091 32,162
LIFO Adjustment (18,568) (18,895)
-------- --------
LIFO Inventories $ 49,654 $ 46,162
======== ========
The increase in all other inventory is due largely to the acquisition of
Paul Andra KG.
Page 6 of 15
TENNANT COMPANY
Quarterly Report - Form 10-Q
ITEM 1 - FINANCIAL STATEMENTS (continued)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(4) Cash Flow
Income taxes paid during the nine months ended September 30, 1999 and
1998, were $11,938,000 and $14,405,000, respectively. Interest costs
paid during the nine months ended September 30, 1999 and 1998, were
$1,688,000 and $1,866,000 respectively.
(5) Earnings Per Share
(In thousands, except per share amounts)
For the Quarter Ended September 30, 1999
----------------------------------------
Per Share
Income Shares Amount
------ ------ ---------
Basic EPS
Income available to common
shareholders $3,155 9,080 $.35
Dilutive effect of stock options 32
Diluted EPS
Income available to common
shareholders plus
assumed conversions $3,155 9,112 $.35
For the Quarter Ended September 30, 1998
----------------------------------------
Per Share
Income Shares Amount
------ ------ ---------
Basic EPS
Income available to common
shareholders $6,308 9,383 $.67
Dilutive effect of stock options 29
Diluted EPS
Income available to common
shareholders plus
assumed conversions $6,308 9,412 $.67
Page 7 of 15
TENNANT COMPANY
Quarterly Report - Form 10-Q
ITEM 1 - FINANCIAL STATEMENTS (continued)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(6) Segment Reporting
The Company operates in one industry segment which consists of the
design, manufacture, and sale of products and services used in the
maintenance of nonresidential floors.
Financial data by geographic area is before interest expense and
elimination of intercompany transactions. North America sales include
sales in the United States, Canada, and Mexico. Sales in Canada and
Mexico comprise less than 10% of consolidated sales and are interrelated
with the Company's U.S. operations. Product transfers from North America
are generally made at prices that recognize return on investment
objectives for both the manufacturing and selling units. Corporate items
include general corporate expense and miscellaneous items such as net
ESOP interest income and Foundation contribution expense.
Three Months Nine Months
Ended September 30 Ended September 30
-------------------- -------------------
1999 1998 1999 1998
---- ---- ---- ----
(In Thousands)
Net sales
North America
Customer sales $ 74,651 $ 73,543 $225,264 $215,392
Transfers to Europe and other
International areas 14,138 13,011 40,855 38,897
-------- -------- -------- --------
Total North America 88,789 86,554 266,119 254,289
Europe customer sales 20,912 14,866 60,088 44,669
Other international customer sales 8,723 7,707 25,060 23,995
Eliminations (14,138) (13,011) (40,855) (38,896)
-------- -------- -------- --------
Total $104,286 $ 96,116 $310,412 $284,057
======== ======== ======== ========
Earnings before income taxes
North America 2,350 7,500 17,771 22,631
Europe 1,457 1,503 3,096 4,147
Other international 1,633 1,620 3,124 3,709
Corporate items, interest income,
interest expense, and eliminations (501) (801) (2,199) (2,103)
-------- -------- -------- --------
Total earnings before income taxes $ 4,939 $ 9,822 $ 21,792 $ 28,384
======== ======== ======== ========
Page 8 of 15
TENNANT COMPANY
Quarterly Report - Form 10-Q
ITEM 1 - FINANCIAL STATEMENTS (continued)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(7) Acquisition of Paul Andra KG
On January 4, 1999, the Company acquired the shares and holdings in
associated businesses of Paul Andra KG, a privately owned manufacturer
of commercial floor maintenance equipment in Germany. Paul Andra KG
sells products principally under the Sorma brand name, including single
disk machines, wet/dry vacuum cleaners and vacuumized scrubbers. Sales
of $15.5 million in the first nine months of 1999 generated a $.5
million operating loss. The acquisition is not expected to have a
material impact on net income.
Acquisition of Paul Andra KG:
Assets acquired $ 12,763
Liabilities assumed (10,371)
Goodwill 4,551
--------
Total cash paid, less cash acquired $ 6,943
========
(8) Reclassification
The Company reports revenue and costs from providing repair service in
its sales and cost of sales figures. Through 1998, in its European
operations, the related costs were included in selling and
administrative expense. Third quarter and first nine months 1998
figures were restated to reflect $693,000 and $1,840,000, respectively,
reclassification from selling and administrative expense to cost of
sales to reflect the related allocable portion of service labor costs
for those periods. This makes European reporting consistent with
Company reporting.
(9) Restructuring Charges
The company recorded a pre-tax restructuring charge of $3.1 million in
the most recent quarter, primarily related to severance and early
retirement costs as part of Tennant's shareholder value enhancement
plan. The company expects to record additional pre-tax restructuring
and other charges in the fourth quarter, which are estimated to be $3-5
million. Charges are expected to include severance costs, asset
write-offs and other costs related to closing facilities.
Page 9 of 15
TENNANT COMPANY
Quarterly Report - Form 10-Q
(10) New Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board issued Statement
No. 133, "Accounting for Derivative Instruments and Hedging Activities"
(SFAS No. 133), which is required to be adopted for fiscal years
beginning after June 15, 1999, although earlier application is
permitted as of the beginning of any fiscal quarter. In June 1999, the
Financial Accounting Standards Board issued Statement No. 137, which
defers the effective date of SFAS No. 133 to quarters of all fiscal
years beginning after June 15, 2000. SFAS No. 133 will require the
Company to recognize all derivatives on the balance sheet at fair
value. Derivatives that are not hedges must be adjusted to fair value
through the statement of earnings. If the derivative is a hedge,
depending on the nature of the hedge, changes in the fair value of the
hedged assets, liabilities, or firm commitments are recognized through
earnings or recognized in other comprehensive income until the hedged
item is recognized in earnings. The ineffective portion of a
derivative's change in fair value will be immediately recognized in
earnings. The Company is in the process of determining what effect the
adoption of SFAS No. 133 will have on the Company's results of
operations, cash flows or financial position
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
Net Earnings
Excluding a restructuring charge, net earnings for the quarter ended
September 30, 1999 were $5.2 million, or 57 cents per share diluted, down 15
percent from $6.3 million, or 67 cents per share diluted for the same period
in 1998. Excluding the restructuring charge, net earnings were $16.0 million
or $1.75 per share diluted for the nine month period ended September 30,
1999, compared to $18.3 million or $1.91 per share diluted for the comparable
period last year.
Net Sales
Net sales of $104.3 million for the third quarter ended and $310.4 million
for the nine months ended September 30, 1999 increased 9 percent compared to the
same periods last year, positively impacted by the acquisition of Paul Andra
KG in January, 1999. Excluding the impact of that acquisition, sales grew
$2.4 million or 2.5 percent over the prior year third quarter ($10.8 million
or 3.8 percent over the prior year first nine months). A temporary decrease
in manufacturing efficiency reduced shipments approximately $4-$5 million
below what they otherwise would have been. North American sales for the
quarter were $74.7 million which was 1.5 percent or $1.1 million greater than
third quarter 1998. This was largely due to continued growth in commercial
sales. Sales outside North America, excluding Paul Andra KG, increased 5
percent or $1.2 million due to improved export sales and a stronger European
economy.
Page 10 of 15
TENNANT COMPANY
Quarterly Report - Form 10-Q
Orders for the third quarter ended September 30, 1999 were $108.9 million.
Order growth in the third quarter, excluding the Paul Andra KG acquisition,
was $8.5 million or 9 percent over the comparable period in 1998. North
American orders grew $7.2 or 9 percent over 1998 due to continued strong
commercial business and the improving industrial economy and new outdoor
machines. Orders outside of North America, excluding Paul Andra KG
acquisition, grew $2.0 million or 9 percent due to growth in Europe base
business of 11 percent and strong Australian growth. The disparity between
order growth and sales growth in the third quarter is reflected in the
difference in backlog. Third quarter 1998 backlog declined $1.3 million while
backlog increased $4.9 million in third quarter 1999.
Gross Profit
For the first nine months, gross profit was 40.2 percent in 1999 versus 41.6
percent in 1998. Gross profit for the third quarter as a percentage of sales
was 39.6 percent compared to 41.6 percent last year. The decline was due
primarily to manufacturing variances related to implementing a flexible,
build-to order manufacturing system, a mix shift to lower margin products,
and an increased rate of discounting on North American industrial machines.
In addition, the acquisition of Paul Andra KG increased the proportion of
sales with low gross margin in the company's sales mix.
Selling, General, and Administrative Expense (SG&A)
SG&A expense for the quarter ended September 30, 1999 was $33.4 million
compared to $30.5 million for the comparable period last year largely due to
expenses of newly acquired Paul Andra KG. SG&A as a percent of sales
increased slightly from 31.7 percent a year ago to 32.1 for the current
quarter. This percentage decreased slightly year-to-date from 32.2 percent a
year ago to 32.1 for the nine months ended September 30, 1999 as other cost
savings efforts offset Paul Andra KG costs.
Restructuring Charges
The company recorded a pre-tax restructuring charge of $3.1 million in the
most recent quarter, primarily related to severance and early retirement
costs as part of Tennant's shareholder value enhancement plan. The company
expects to record additional pre-tax restructuring and other charges in the
fourth quarter, which are estimated to be $3-5 million. Charges are expected
to include severance costs, asset write-offs and other costs related to
closing facilities.
Other Income and Expense
Other income and expense for the quarter ended September 30, 1999 was a net
income of $.2 million compared to $.3 million last year. Foreign currency
gains were more than offset by a reduction of interest income from equipment
financing provided by the Company to its customers. In 1998 the Company
outsourced its product financing business. The Company transferred its
portfolio to the outsourced vendor, and continues to report interest income
and interest expense on the portfolio. The principal balance of the portfolio
is declining over time as customer balances decrease thereby reducing the
Company's interest income.
Page 11 of 15
TENNANT COMPANY
Quarterly Report - Form 10-Q
Income Taxes
The estimated effective tax rate for the Company's current fiscal year is 36
percent consistent with the prior year rate.
LIQUIDITY AND CAPITAL RESOURCES
Operating activities provided $26.1 million of cash and cash equivalents for
the nine-month period ended September 30, 1999 compared to $28.7 million for
the same period a year ago. Significant uses of cash during the nine month
period ended September 30, 1999 included the cash purchase price paid for the
acquisition of Paul Andra KG, purchases of property, plant, and equipment,
repurchases of common stock under the Company's stock purchase plan, and
dividends paid to shareholders.
MARKET RISK
The Company's market risk includes the potential loss arising from adverse
changes in foreign currency exchange rates. The Company uses forward exchange
contracts and other hedging activities to hedge the U.S. dollar value
resulting from anticipated foreign currency transactions. There have been no
material changes in the Company's market risks since December 31, 1998.
YEAR 2000 PROJECT OVERVIEW
Tennant's company-wide Year 2000 Project (Project) is proceeding on schedule.
Tennant's Project is divided into four major sections: Applications Systems,
Systems Infrastructure, External Agents
(suppliers/partners/distributors/customers) and Embedded Systems
(manufacturing and facilities). General Project phases common to all sections
are:1) inventorying Year 2000 items; 2) assigning priorities to identified
items; 3) assessing the Year 2000 compliance of items determined to be
material to the Company; 4) repairing or replacing material items that are
determined not to be Year 2000 compliant; 5) testing material items; and 6)
designing and implementing contingency and business continuation plans.
Material items are those believed by the Company to have risk involving the
safety of individuals that may cause damage to either property or the
environment, or affect revenues.
Progress status is as follows:
% Complete
as of 9/30/99 Completion
------------- ----------------
Applications Systems 100% 2nd Quarter 1999
Systems Infrastructure 100% 2nd Quarter 1999
External Agents 100% 2nd Quarter 1999
Embedded Systems 100% 1st Quarter 1999
Page 12 of 15
TENNANT COMPANY
Quarterly Report - Form 10-Q
A more detailed description of activities is as follows:
Applications Systems - In 1994, in order to improve access to business
information through common integrated computing systems across the Company,
Tennant began a worldwide business systems replacement project with systems
that use programs from SAP America, Inc. (SAP). The new systems are expected
to make approximately 80% of the Company's business systems Year 2000
compliant. The European and North American SAP application systems are now
completely installed. The remaining 20% of non-SAP business software is now
compliant. The North American Commercial systems remediation was completed in
September of 1998. Our activity also includes assessment and remediation of
non-mission critical personal systems. Initial survey and assessment work is
complete with repair and remediation now completed.
Systems Infrastructure - The Infrastructure section consists of hardware and
system software other than Applications Software. Activity in this area has
been continuous with the majority having been addressed and tested in
conjunction with project and regular replacement programs.
External Agents (Suppliers/Partners/Distributors/Customers) - The primary
activity in this section involves the process of identifying and prioritizing
critical suppliers, customers, distributors, and other partners at the direct
interface level and communicating with them about their plans and progress in
addressing the Year 2000 problem. The initial survey activity has been
completed and detailed evaluations of the most critical third parties have
been completed. These evaluations have been followed by selective follow-up
contact and audit.
Embedded Systems (Manufacturing and Facilities) - This section focuses on the
hardware and software associated with embedded computer chips that are used
in the operation of all facilities operated by the Company. Survey and
prioritization activities were completed and are now compliant. In addition,
our activities have included the evaluation of Year 2000 dependencies in
embedded chips produced in our own products all of which have been certified
to be compliant.
With the technical remediation and conversions now complete, our efforts for
the remainder of the year will focus on refining our business contingency
plan. This plan will identify actions to be implemented to reasonably sustain
business in the event of Y2K impacts out of our direct control.
Costs
The total cost associated with the required modifications to become Year 2000
compliant is not material to the Company's financial position. The core of
the Company's IT investments have been focused on building new capability
while satisfying Year 2000 requirements. The estimated total cost of the
planned SAP activities through 1999 is approximately $20 million, which has
been expended. Funding for Year 2000 specific activities are estimated at
$950,000, which has been expended. Funding for both SAP and Y2K activities is
integrated with operational budgets, with IT funding for fiscal year 1999
estimated to be at the same levels as fiscal year 1998.
In January 1999 Tennant Company completed the purchase of Paul Andra KG.
Activities for Year 2000 compliance have been completed using the same
process as outlined for Tennant Company. An action plan has been completed
and integrated into the corporate plan. The majority of Y2K issues were
addressed by conversion of systems to SAP in June 1999. All other activities
have been incorporated into the existing plan and are complete. Funding for
the SAP integration was approximately $650,000. Funding for the Y2K specific
activities was less than $50,000.
Page 13 of 15
TENNANT COMPANY
Quarterly Report - Form 10-Q
Cautionary Statement Concerning Forward-Looking Statements
Some statements in this report are forward-looking statements and are not
meant as historical facts. As discussed above, many factors are involved in
this project which contain risk and uncertainty and are beyond the control of
the Company. Included in this are the actions of suppliers, distributors,
customers, and other partners.
EURO CONVERSION
On January 1, 1999, eleven of the fifteen member countries of the European
Union established fixed conversion rates between their existing currencies
and the euro, a new European currency, and adopted the euro as their common
legal currency (the "Euro Conversion"). Either the euro or a participating
country's present currency will be accepted as legal tender from January 1,
1999, to January 1, 2002, from which date forward only the euro will be
accepted.
The Company has a significant number of customers located in European Union
countries participating in the Euro Conversion. Such customers will likely
have to upgrade or modify their computer systems and software to comply with
euro requirements. The amount of money the Company anticipates spending in
connection with product development related to the Euro Conversion is not
expected to have a material adverse effect on the Company's results of
operations or financial condition. The Euro Conversion may also have
competitive implications for the Company's pricing and marketing strategies,
which could be material in nature; however, any such impact is not known at
this time.
The Company has begun to analyze which of its internal systems will need to
be modified to deal with the Euro Conversion. The Company does not currently
expect the cost of such modifications to have a material effect on the
Company's results of operations or financial condition. There is no
assurance, however, that all problems related to the Euro Conversion will be
foreseen and corrected, or that no material disruptions of the Company's
business will occur.
Additional management's discussion and analysis of financial condition and
results of operations is included in Exhibit 13.1, attached, text portion of
Report to Shareholders for the Nine Months Ended September 30, 1999, and is
incorporated in this Form 10-Q by reference.
Page 14 of 15
TENNANT COMPANY
Quarterly Report - Form 10-Q
PART II - OTHER INFORMATION
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
ITEM # DESCRIPTION METHOD OF FILING
------ ----------- ----------------
3i Articles of Incorporation Incorporated by reference to
Exhibit 4.1 to the Company's
Registration Statement No.
33-62003, Form S-8,
dated August 22, 1995.
3ii By-Laws Incorporated by reference to
Exhibit 4.2 to the Company's
Registration Statement
No. 33-59054, Form S-8,
dated March 2, 1993.
13.1 Text Portion of Report to Shareholders for Filed herewith electronically.
the Nine Months Ended September 30, 1999
10iii.1 Management Agreement with John T. Pain Filed herewith electronically.
dated October 1, 1998.
10iii.2 Employment Agreement with Janet Dolan Filed herewith electronically.
dated April 5, 1999.
10iii.3 Management Agreement with James J. Seifert Filed herewith electronically.
dated July 12, 1999.
27.1 Financial Data Schedule Filed herewith electronically.
(b) Reports on Form 8-K
There were no reports filed on Form 8-K for the quarter ended
September 30, 1999.
Page 15 of 15
TENNANT COMPANY
Quarterly Report - Form 10-Q
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
TENNANT COMPANY
Date: November 12, 1999 /s/ Janet Dolan
---------------------------- --------------------------------------
November 12, 1999 Janet Dolan
President and Chief Executive Officer
Date: November 12, 1999 /s/ John T. Pain
---------------------------- --------------------------------------
November 12, 1999 John T. Pain
Vice President, Treasurer and
Chief Financial Officer
Date: November 12, 1999 /s/ Dean A. Niehus
---------------------------- --------------------------------------
November 12, 1999 Dean A. Niehus
Corporate Controller and
Principal Accounting Officer