Separate Financial Information of Guarantor Subsidiaries (Notes)

3 Months Ended

Mar. 31, 2020

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Separate Financial Information of Guarantor Subsidiaries

The following condensed consolidated guarantor financial information is presented to comply with the requirements of Rule 3-10 of Regulation S-X.

In 2017, we issued and sold $300.0 million 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 below), and Wells Fargo Bank, National Association, a national banking association, as trustee. The Notes are unconditionally and jointly and severally guaranteed by Tennant Coatings, Inc. and Tennant Sales and Service Company (collectively, the "Guarantors" or "Guarantor Subsidiaries"), which are wholly owned subsidiaries of the Company.

The Notes and the guarantees constitute senior unsecured obligations of the Company and the Guarantors, respectively. The Notes and the guarantees, respectively, are: (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.

The following condensed consolidated financial information presents the Condensed Consolidated Statements of Earnings and the Condensed Consolidated Statements of Comprehensive Income (Loss) for each of the three and three months ended March 31, 2020 and March 31, 2019, the related Condensed Consolidated Balance Sheets as of March 31, 2020 and December 31, 2019, and the related Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2020 and March 31, 2019, of Tennant Company ("Parent"), the Guarantor Subsidiaries on a combined basis, the wholly owned subsidiaries of Parent that are not Guarantor Subsidiaries (the "Non-Guarantor Subsidiaries") on a combined basis and elimination entries necessary to consolidate the Parent with the Guarantor and Non-Guarantor Subsidiaries. The following condensed consolidated financial statements should be read in conjunction with the consolidated financial statements of the Company and notes thereto of which this note is an integral part.



Condensed Consolidated Statement of Earnings
For the three months ended March 31, 2020
(in millions)	Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Total Tennant Company
Net Sales	$	116.9		$	150.5		$	121.3		$	(136.6	)	$	252.1
Cost of Sales	76.4			125.5			82.5			(136.4		)	148.0
Gross Profit	40.5			25.0			38.8			(0.2		)	104.1

Operating Expense:
Research and Development Expense	5.9			0.3			1.2			—			7.4
Selling and Administrative Expense	27.4			18.6			36.3			—			82.3
Total Operating Expense	33.3			18.9			37.5			—			89.7
Profit from Operations	7.2			6.1			1.3			(0.2		)	14.4

Other Income (Expense):
Equity in Earnings of Affiliates	—			0.5			0.4			(0.9		)	—
Interest (Expense) Income, Net	(4.2		)	—			—			—			(4.2		)
Intercompany Interest Income (Expense)	3.4			(1.4		)	(2.0		)	—			—
Net Foreign Currency Transaction Loss (Gain)	—			(0.1		)	(4.0		)	—			(4.1		)
Other (Expense) Income, Net	(0.1		)	(0.3		)	0.6			—			0.2
Total Other Expense, Net	(0.9		)	(1.3		)	(5.0		)	(0.9		)	(8.1		)

Profit Before Income Taxes	6.3			4.8			(3.7		)	(1.1		)	6.3
Income Tax Expense (Benefit)	1.1			1.1			(0.1		)	(1.0		)	1.1
Net Earnings Including Noncontrolling Interest	5.2			3.7			(3.6		)	(0.1		)	5.2
Net Earnings Attributable to Tennant Company	$	5.2		$	3.7		$	(3.6	)	$	(0.1	)	$	5.2



Condensed Consolidated Statement of Earnings
For the three months ended March 31, 2019
(in millions)	Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Total Tennant Company
Net Sales	$	116.5		$	148.4		$	133.3		$	(135.7	)	$	262.5
Cost of Sales	76.5			123.0			88.8			(134.0		)	154.3
Gross Profit	40.0			25.4			44.5			(1.7		)	108.2

Operating Expense:
Research and Development Expense	5.6			0.2			1.4			—			7.2
Selling and Administrative Expense	27.2			19.0			44.0			—			90.2
Total Operating Expense	32.8			19.2			45.4			—			97.4
Profit from Operations	7.2			6.2			(0.9		)	(1.7		)	10.8

Other Income (Expense):
Equity in Earnings of Affiliates	0.3			0.8			1.4			(2.5		)	—
Interest (Expense) Income, Net	(4.2		)	—			—			—			(4.2		)
Intercompany Interest Income (Expense)	3.5			(1.4		)	(2.1		)	—			—
Net Foreign Currency Transaction Loss (Gain)	—			—			0.2			—			0.2
Other (Expense) Income, Net	(0.2		)	(0.4		)	0.4			—			(0.2		)
Total Other Income (Expense), Net	(0.6		)	(1.0		)	(0.1		)	(2.5		)	(4.2		)

Profit Before Income Taxes	6.6			5.2			(1.0		)	(4.2		)	6.6
Income Tax Expense (Benefit)	1.2			1.1			1.0			(2.1		)	1.2
Net Earnings Including Noncontrolling Interest	5.4			4.1			(2.0		)	(2.1		)	5.4
Net Earnings Attributable to Tennant Company	$	5.4		$	4.1		$	(2.0	)	$	(2.1	)	$	5.4



Condensed Consolidated Statement of Comprehensive Income (Loss)
For the three months ended March 31, 2020
(in millions)	Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Total Tennant Company
Net Earnings Including Noncontrolling Interest	$	5.2		$	3.7		$	(3.6	)	$	(0.1	)	$	5.2
Other Comprehensive Loss:
Foreign currency translation adjustments	(11.3		)	(0.3		)	(20.0		)	20.3			(11.3		)
Cash flow hedge	4.8			—			—			—			4.8
Income Taxes:
Foreign currency translation adjustments	—			—			—			—			—
Cash flow hedge	(1.1		)	—			—			—			(1.1		)
Total Other Comprehensive Loss, net of tax	(7.6		)	(0.3		)	(20.0		)	20.3			(7.6		)

Total Comprehensive (Loss) Income Including Noncontrolling Interest	(2.4		)	3.4			(23.6		)	20.2			(2.4		)
Comprehensive (Loss) Income Attributable to Tennant Company	$	(2.4	)	$	3.4		$	(23.6	)	$	20.2		$	(2.4	)



Condensed Consolidated Statement of Comprehensive Income (Loss)
For the three months ended March 31, 2019
(in millions)	Parent			Guarantor Subsidiaries		Non-Guarantor Subsidiaries			Eliminations			Total Tennant Company
Net Earnings Including Noncontrolling Interest	$	5.4		$	4.1	$	(2.0	)	$	(2.1	)	$	5.4
Other Comprehensive Loss:
Foreign currency translation adjustments	(2.3		)	—		(22.6		)	22.6			(2.3		)
Pension and retiree medical benefits	—			—		1.2			(1.2		)	—
Cash flow hedge	1.4			—		—			—			1.4
Income Taxes:
Foreign currency translation adjustments	(0.1		)	—		0.1			(0.1		)	(0.1		)
Pension and retiree medical benefits	—			—		(0.3		)	0.3			—
Cash flow hedge	(0.3		)	—		—			—			(0.3		)
Total Other Comprehensive (Loss) Income, net of tax	(1.3		)	—		(21.6		)	21.6			(1.3		)

Total Comprehensive (Loss) Income Including Noncontrolling Interest	4.1			4.1		(23.6		)	19.5			4.1
Comprehensive (Loss) Income Attributable to Tennant Company	$	4.1		$	4.1	$	(23.6	)	$	19.5		$	4.1



Condensed Consolidated Balance Sheet
As of March 31, 2020
(in millions)	Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Total Tennant Company
ASSETS
Current Assets:
Cash, Cash Equivalents, and Restricted Cash	$	150.3		$	1.0		$	40.8		$	—		$	192.1
Net Receivables	1.4			95.5			110.2			—			207.1
Intercompany Receivables	36.1			117.4			—			(153.5		)	—
Inventories	38.5			18.0			111.4			(12.7		)	155.2
Prepaid and Other Current Assets	14.7			0.9			15.0			0.2			30.8
Total Current Assets	241.0			232.8			277.4			(166.0		)	585.2
Property, Plant and Equipment	252.1			10.1			153.8			—			416.0
Accumulated Depreciation	(167.3		)	(4.4		)	(70.4		)	—			(242.1		)
Property, Plant and Equipment, Net	84.8			5.7			83.4			—			173.9
Operating Lease Assets	4.9			10.2			27.7			—			42.8
Investment in Affiliates	393.3			14.3			31.1			(438.7		)	—
Intercompany Loans	295.5			—			—			(295.5		)	—
Goodwill	12.9			1.7			176.6			—			191.2
Intangible Assets, Net	3.0			2.4			124.2			—			129.6
Other Assets	4.9			5.0			17.6			—			27.5
Total Assets	$	1,040.3		$	272.1		$	738.0		$	(900.2	)	$	1,150.2
LIABILITIES AND TOTAL EQUITY
Current Liabilities:
Current Portion of Long-Term Debt	$	—		$	—		$	1.1		$	—		$	1.1
Accounts Payable	40.0			5.8			50.0			—			95.8
Intercompany Payables	115.5			—			38.0			(153.5		)	—
Employee Compensation and Benefits	9.6			7.9			22.7			—			40.2
Other Current Liabilities	29.4			17.7			40.7			0.2			88.0
Total Current Liabilities	194.5			31.4			152.5			(153.3		)	225.1
Long-Term Liabilities:
Long-Term Debt	461.4			—			1.1			—			462.5
Intercompany Loans	2.9			128.0			164.5			(295.4		)	—
Long-Term Operating Lease Liabilities	3.6			5.2			18.5			—			27.3
Employee-Related Benefits	10.1			1.5			7.0			—			18.6
Deferred Income Taxes	—			—			39.8			—			39.8
Other Liabilities	9.1			2.9			6.2			—			18.2
Total Long-Term Liabilities	487.1			137.6			237.1			(295.4		)	566.4
Total Liabilities	681.6			169.0			389.6			(448.7		)	791.5
Equity:
Common Stock	6.9			—			11.1			(11.1		)	6.9
Additional Paid-In Capital	49.4			77.6			417.4			(495.0		)	49.4
Retained Earnings	347.1			26.9			2.4			(29.3		)	347.1
Accumulated Other Comprehensive Loss	(46.1		)	(1.4		)	(83.9		)	85.3			(46.1		)
Total Tennant Company Shareholders' Equity	357.3			103.1			347.0			(450.1		)	357.3
Noncontrolling Interest	1.4			—			1.4			(1.4		)	1.4
Total Equity	358.7			103.1			348.4			(451.5		)	358.7
Total Liabilities and Total Equity	$	1,040.3		$	272.1		$	738.0		$	(900.2	)	$	1,150.2



Condensed Consolidated Balance Sheet
As of December 31, 2019
(in millions)	Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Total Tennant Company
ASSETS
Current Assets:
Cash, Cash Equivalents, and Restricted Cash	$	27.7		$	1.3		$	45.6		$	—		$	74.6
Net Receivables	3.3			99.7			120.3			—			223.3
Intercompany Receivables	35.7			137.7			—			(173.4		)	—
Inventories	39.1			16.9			106.9			(12.8		)	150.1
Prepaid and Other Current Assets	17.8			1.2			14.0			—			33.0
Total Current Assets	123.6			256.8			286.8			(186.2		)	481.0
Property, Plant and Equipment	246.7			10.0			155.8			—			412.5
Accumulated Depreciation	(164.3		)	(4.2		)	(70.7		)	—			(239.2		)
Property, Plant and Equipment, Net	82.4			5.8			85.1			—			173.3
Operating Lease Assets	5.2			10.3			31.1			—			46.6
Investment in Affiliates	420.7			14.1			39.2			(474.0		)	—
Intercompany Loans	298.2			—			—			(298.2		)	—
Goodwill	12.9			1.7			180.5			—			195.1
Intangible Assets, Net	3.2			2.5			132.0			—			137.7
Other Assets	4.9			4.4			19.9			—			29.2
Total Assets	$	951.1		$	295.6		$	774.6		$	(958.4	)	$	1,062.9
LIABILITIES AND TOTAL EQUITY
Current Liabilities:
Current Portion of Long-Term Debt	$	30.0		$	—		$	1.3		$	—		$	31.3
Accounts Payable	39.4			5.1			49.6			—			94.1
Intercompany Payables	137.5			—			35.9			(173.4		)	—
Employee Compensation and Benefits	19.3			17.5			26.7			—			63.5
Other Current Liabilities	24.9			20.5			40.6			—			86.0
Total Current Liabilities	251.1			43.1			154.1			(173.4		)	274.9
Long-Term Liabilities:
Long-Term Debt	306.2			—			1.3			—			307.5
Intercompany Loans	2.1			128.0			168.1			(298.2		)	—
Long-Term Operating Lease Liabilities	4.0			5.3			21.0			—			30.3
Employee-Related Benefits	10.4			1.4			7.6			—			19.4
Deferred Income Taxes	—			—			41.7			—			41.7
Other Liabilities	16.0			3.0			8.8			—			27.8
Total Long-Term Liabilities	338.7			137.7			248.5			(298.2		)	426.7
Total Liabilities	589.8			180.8			402.6			(471.6		)	701.6
Equity:
Common Stock	6.9			—			11.1			(11.1		)	6.9
Additional Paid-In Capital	45.5			77.6			417.4			(495.0		)	45.5
Retained Earnings	346.0			38.4			6.0			(44.4		)	346.0
Accumulated Other Comprehensive Loss	(38.5		)	(1.2		)	(63.9		)	65.1			(38.5		)
Total Tennant Company Shareholders' Equity	359.9			114.8			370.6			(485.4		)	359.9
Noncontrolling Interest	1.4			—			1.4			(1.4		)	1.4
Total Equity	361.3			114.8			372.0			(486.8		)	361.3
Total Liabilities and Total Equity	$	951.1		$	295.6		$	774.6		$	(958.4	)	$	1,062.9



Condensed Consolidated Statement of Cash Flows
For the three months ended March 31, 2020
(in millions)	Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Total Tennant Company
OPERATING ACTIVITIES
Net Cash Provided by (Used in) Operating Activities	$	4.0		$	(0.2	)	$	4.9		$	—		$	8.7
INVESTING ACTIVITIES
Purchases of Property, Plant and Equipment	(6.2		)	(0.1		)	(6.1		)	—			(12.4		)
Proceeds from Disposals of Property, Plant, and Equipment	0.1			—			—			—			0.1
Purchase of Intangible Assets	—			—			(0.1		)	—			(0.1		)
Loan Payments to Parent	—			—			(0.9		)	0.9			—
Net Cash Used in Investing Activities	(6.1		)	(0.1		)	(7.1		)	0.9			(12.4		)
FINANCING ACTIVITIES
Proceeds from Credit Facility Borrowings	125.0			—			—			—			125.0
Loan Payments from Subsidiaries	0.9			—			—			(0.9		)	—
Repayments of Debt	—			—			(0.3		)	—			(0.3		)
Change in Finance Lease Obligations	—			—			(0.1		)	—			(0.1		)
Proceeds from Issuances of Common Stock	2.4			—			—			—			2.4
Dividends Paid	(4.0		)	—			—			—			(4.0		)
Net Cash Provided by (Used in) Financing Activities	124.3			—			(0.4		)	(0.9		)	123.0
Effect of Exchange Rate Changes on Cash, Cash Equivalents and Restricted Cash	0.4			—			(2.2		)	—			(1.8		)
Net Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash	122.6			(0.3		)	(4.8		)	—			117.5
Cash, Cash Equivalents and Restricted Cash at Beginning of Period	27.7			1.3			45.6			—			74.6
Cash, Cash Equivalents and Restricted Cash at End of Period	$	150.3		$	1.0		$	40.8		$	—		$	192.1



Condensed Consolidated Statement of Cash Flows
For the three months ended March 31, 2019
(in millions)	Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Total Tennant Company
OPERATING ACTIVITIES
Net Cash Provided by (Used in) Operating Activities	$	(4.2	)	$	(0.4	)	$	(7.0	)	$	—		$	(11.6	)
INVESTING ACTIVITIES
Purchases of Property, Plant and Equipment	(16.6		)	(0.1		)	(3.8		)	—			(20.5		)
Proceeds from Principal Payments Received on Long-Term Note Receivable	—			—			0.1			—			0.1
Acquisition of Business, Net of Cash, Cash Equivalents and Restricted Cash Acquired	—			—			(9.0		)	—			(9.0		)
Purchase of Intangible Asset	—			—			(0.2		)	—			(0.2		)
Loan Payments to Parent	—			—			(0.2		)	0.2			—
Net Cash Used in Investing Activities	(16.6		)	(0.1		)	(13.1		)	0.2			(29.6		)
FINANCING ACTIVITIES
Proceeds from Credit Facility Borrowings	13.0			—			—			—			13.0
Repayment of Debt	(4.0		)	—			(4.0		)	—			(8.0		)
Change in Finance Lease Obligations	—			—			(0.1		)	—			(0.1		)
Loan Payments from Subsidiaries	0.2			—			—			(0.2		)	—
Proceeds from Issuance of Common Stock	0.6			—			—			—			0.6
Dividends Paid	(4.0		)	—			—			—			(4.0		)
Net Cash Provided by (Used in) Financing Activities	5.8			—			(4.1		)	(0.2		)	1.5
Effect of Exchange Rate Changes on Cash, Cash Equivalents and Restricted Cash	—			—			0.5			—			0.5
Net Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash	(15.0		)	(0.5		)	(23.7		)	—			(39.2		)
Cash, Cash Equivalents and Restricted Cash at Beginning of Period	24.8			1.6			59.7			—			86.1
Cash, Cash Equivalents and Restricted Cash at End of Period	$	9.8		$	1.1		$	36.0		$	—		$	46.9