What changed in this filing

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Item 1. Financial Statements

2021-05-05 compared with 2020-11-03 · 133 added, 306 removed, 349 unchanged (56% of the section changed)

3 unchanged sentences

Consolidated Statements of Operations

Three Months Ended September 30, Nine Months Ended September 30,

Three Months Ended

(in thousands, except per share data) 2021 2020

4 unchanged sentences

Acquisition-related and exit and realignment charges 5,963 6,064

Other operating (income) expense, net ( 134 ) 1,329 ( 3,020 ) 2,385

Other operating income, net ( 2,605 ) ( 2,309 )

Operating income 146,692 10,756

Interest expense, net 13,672 23,342

Loss on extinguishment of debt

Other expense, net 569 719

14 unchanged sentences

Consolidated Statements of Comprehensive Income (Loss)

Three Months Ended September 30, Nine Months Ended September 30,

Three Months Ended

(in thousands) 2021 2020

1 unchanged sentence

Other comprehensive income (loss), net of tax:

Currency translation adjustments (net of income tax of $ 0 in 2020 and 2019)

5,173 ( 9,038 ) 7,003 ( 5,793 )

Change in unrecognized net periodic pension costs (net of income tax of $ 47 and $ 135 in 2020, and $ 61 and $ 187 in 2019)

167 199 932 593

Net unrealized gain (loss) on derivative instruments (net of income tax of $ 831 and income tax benefit of $ 3,232 in 2020, and $ 1,225 and $ 4,866 in 2019)

1,681 ( 1,789 ) ( 9,792 ) ( 9,464 )

Currency translation adjustments ( 12,262 ) ( 28,178 )

Change in unrecognized net periodic pension costs 121 170

Net gain (loss) on derivative instruments 20,044 ( 11,397 )

Total other comprehensive income (loss), net of tax 7,903 ( 39,405 )

4 unchanged sentences

Consolidated Balance Sheets

September 30, December 31,

March 31, December 31,

(in thousands, except per share data) 2021 2020

5 unchanged sentences

Other current assets 93,208 118,264

Current assets of discontinued operations — 439,983

Total current assets 2,206,736 2,135,865

11 unchanged sentences

Other current liabilities 250,875 236,094

Current liabilities of discontinued operations — 323,511

Total current liabilities 1,337,297 1,345,727

18 unchanged sentences

Consolidated Statements of Cash Flows

Nine Months Ended September 30,

Three Months Ended March 31,

(in thousands) 2021 2020

Operating activities:

Net loss $ ( 20,871 ) $ ( 23,348 )

Adjustments to reconcile net loss to cash provided by operating activities:

Net income (loss) $ 69,589 $ ( 11,324 )

Adjustments to reconcile net income (loss) to cash provided by operating activities:

Depreciation and amortization 22,900 23,913

Share-based compensation expense 5,182 3,941

Loss on divestiture 65,472 —

Impairment charges — 9,080

Loss on extinguishment of debt

Provision for losses on accounts receivable 8,462 5,213

Deferred income tax expense (benefit) 25,017 ( 11,989 )

Deferred income tax (benefit) expense ( 5,865 ) 6,348

Changes in operating lease right-of-use assets and lease liabilities 448 ( 714 )

7 unchanged sentences

Investing activities:

Proceeds from divestiture 133,000 —

Additions to property and equipment ( 5,048 ) ( 4,771 )

1 unchanged sentence

Proceeds from sale of property and equipment 4 33

Proceeds from cash surrender value of life insurance policies 6,032 —

Cash provided by (used for) investing activities 112,830 ( 37,932 )

Cash used for investing activities ( 6,619 ) ( 5,680 )

Financing activities:

4 unchanged sentences

Cash dividends paid ( 181 ) ( 155 )

Payment for termination of interest rate swaps

Other, net ( 8,339 ) ( 2,468 )

1 unchanged sentence

Effect of exchange rate changes on cash and cash equivalents ( 2,139 ) ( 62 )

Net increase in cash, cash equivalents and restricted cash 142,792 9,636

Net (decrease) increase in cash, cash equivalents and restricted cash ( 63,729 ) 56,306

Cash, cash equivalents and restricted cash at beginning of period 134,506 84,687

1 unchanged sentence

Supplemental disclosure of cash flow information:

Income taxes received, net of payments $ ( 1,892 ) $ ( 12,085 )

Income taxes paid, net of refunds $ 898 $ 2,695

Interest paid $ 10,255 $ 21,431

5 unchanged sentences

Outstanding Common

($2 par value ) Paid-In

($ 2 par value )

Capital Retained

8 unchanged sentences

Balance, March 31, 2020 62,885 $ 125,770 $ 256,357 $ 126,323 $ ( 92,112 ) $ 416,338

Net loss ( 55,627 ) ( 55,627 )

Other comprehensive income 30,527 30,527

Dividends declared ($ 0.0025 per share)

( 156 ) ( 156 )

Share-based compensation expense, exercises and other 852 1,704 2,376 4,080

Balance, June 30, 2020 63,737 127,474 258,733 70,540 ( 61,585 ) 395,162

Balance, December 31, 2020 73,472 $ 146,944 $ 436,597 $ 167,022 $ ( 38,509 ) $ 712,054

Net income 69,589 69,589

3 unchanged sentences

Share-based compensation expense, exercises and other 1,628 3,256 ( 6,107 ) ( 2,851 )

Balance, September 30, 2020 63,716 $ 127,432 $ 262,002 $ 116,465 $ ( 54,564 ) $ 451,335

Balance, December 31, 2018 62,294 $ 124,588 $ 238,773 $ 200,670 $ ( 45,612 ) $ 518,419

Net loss ( 14,096 ) ( 14,096 )

Other comprehensive loss ( 6,423 ) ( 6,423 )

Dividends declared ($ 0.0025 per share)

( 119 ) ( 119 )

Share-based compensation expense, exercises and other 642 1,284 2,774 4,058

Balance, March 31, 2021 75,100 $ 150,200 $ 430,490 $ 236,177 $ ( 30,606 ) $ 786,261

Net loss ( 10,476 ) ( 10,476 )

Other comprehensive income 2,387 2,387

Dividends declared ($ 0.0025 per share)

( 114 ) ( 114 )

Share-based compensation expense, exercises and other 28 56 3,209 3,265

Balance, June 30, 2019 62,964 125,928 244,756 175,865 ( 49,648 ) 496,901

Net income 1,224 1,224

Other comprehensive loss ( 10,628 ) ( 10,628 )

Dividends declared ($ 0.0025 per share)

( 175 ) ( 175 )

Share-based compensation expense, exercises and other ( 102 ) ( 204 ) 4,160 3,956

Balance, September 30, 2019 62,862 $ 125,724 $ 248,916 $ 176,914 $ ( 60,276 ) $ 491,278

See accompanying notes to consolidated financial statements.

9 unchanged sentences

All significant intercompany accounts and transactions have been eliminated.

The Movianto business represents a component that met accounting requirements to be classified as discontinued operations and held-for-sale beginning December 31, 2019.

In accordance with GAAP, the results of operations and financial position of the Movianto business are presented as discontinued operations through June 18, 2020 (the Divestiture Date) and, as such, have been excluded from continuing operations for all periods presented.

The Movianto business represented a component that met accounting requirements to be classified as discontinued operations for the three months ended March 31, 2020.

In accordance with GAAP, the results of operations of the Movianto business are presented as discontinued operations through June 18, 2020 (the Divestiture Date) and, as such, have been excluded from continuing operations for the three months ended March 31, 2020.

With the exception of Note 3, the Notes to Consolidated Financial Statements reflect the continuing operations of Owens & Minor, Inc.

12 unchanged sentences

Cash that is held by a major bank and has restrictions on its availability to us is classified as restricted cash.

Restricted cash included in other current assets represents cash held in a designated account as of September 30, 2020 as required by the Fifth Amendment to the Credit Agreement, which stipulates that the cash held within this account is to be used to repay the 2021 Notes or the Term Loans.

Restricted cash included in Other assets, net as of September 30, 2020 represents cash held in an escrow account as required by the Centers for Medicare & Medicaid Services (CMS) in conjunction with the Bundled Payments for Care Improvement (BPCI) Advanced Program.

Restricted cash included in Other assets, net as of March 31, 2021 represents cash held in an escrow account as required by the Centers for Medicare & Medicaid Services (CMS) in conjunction with the Bundled Payments for Care Improvement (BPCI) Advanced Program.

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the accompanying consolidated balance sheets that sum to the total of those same amounts presented in the accompanying consolidated statements of cash flows.

September 30, 2020 December 31, 2019

March 31, 2021 December 31, 2020

Cash and cash equivalents $ 54,455 $ 83,058

1 unchanged sentence

Restricted cash included in Other assets, net 16,322 16,322

Cash of discontinued operations — 1,396

Total cash, cash equivalents, and restricted cash $ 70,777 $ 134,506

4 unchanged sentences

See Note 6 for the fair value of debt.

The fair value of interest rate swaps and foreign currency contracts is determined based on the present value of expected future cash flows considering the risks involved,

including non-performance risk, and using discount rates appropriate for the respective maturities.

The fair value of foreign currency contracts is determined based on the present value of expected future cash flows considering the risks involved, including non-performance risk, and using discount rates appropriate for the respective maturities.

Observable Level 2 inputs are used to determine the present value of expected future cash flows.

1 unchanged sentence

Note 3— Discontinued Operations

On June 18, 2020, we completed the previously announced divestiture of our European logistics business, Movianto (the Divestiture), as well as certain support functions in our Dublin office, to Walden Group SAS (the Buyer) and EHDH (as Buyer’s guarantor) for cash consideration of $ 133 million.

We concluded that the Movianto business met the criteria for discontinued operations as of December 31, 2019 and through the Divestiture Date, as the intention to sell represented a strategic shift and the criteria for held-for-sale were met.

On June 18, 2020, we completed the divestiture of our European logistics business, Movianto (the Divestiture), as well as certain support functions in our Dublin office, to Walden Group SAS (the Buyer) and EHDH (as Buyer’s guarantor) for cash consideration of $ 133 million.

We concluded that the Movianto business met the criteria for discontinued operations through the Divestiture Date, as the intention to sell represented a strategic shift and the criteria for held-for-sale were met.

Movianto was previously reported in the Global Solutions segment.

Accordingly, the results of operations from the Movianto business are reported in the accompanying consolidated statements of operations as Loss from discontinued operations, net of tax for the three and nine months ended September 30, 2020 and 2019, and the related assets and liabilities are classified as held-for-sale as of December 31, 2019 in the accompanying balance sheet.

We are working with the Buyer on a final working capital adjustment that could result in a benefit in an amount up to $ 42 million.

There is no benefit of any such adjustment reflected in our consolidated financial statements as of September 30, 2020.

The following table summarizes the financial results of our discontinued operations for the three and nine months ended September 30, 2020 and 2019:

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

The following table summarizes the financial results of our discontinued operations for the three months ended March 31, 2020:

Three Months Ended March 31, 2020

Net revenue $ 122,342

2 unchanged sentences

Distribution, selling, and administrative expenses 80,953

Loss on divestiture — — 65,472 —

Asset impairment charges 9,080

Acquisition-related and exit and realignment charges 271

Other operating income, net ( 461 )

Operating loss — ( 62 ) ( 54,585 ) ( 265 )

Operating income 393

Interest expense, net 1,720

3 unchanged sentences

We suspended depreciation and amortization on assets that are held-for-sale, including right-of-use assets recorded in accordance with ASU No.

2016-02, for the nine months ended September 30, 2020.

All revenue and expense included in discontinued operations during the nine months ended September 30, 2020 relates to activity through the Divestiture Date.

2016-02, for three months ended March 31, 2020.

No revenue or expense have been recorded in discontinued operations related to the disposal group subsequent to the Divestiture Date.

We have entered into transition services agreements with a subsidiary of the Buyer, pursuant to which we and a subsidiary of the Buyer will provide to each other various transitional services.

Certain transition service arrangement costs and reimbursements were recorded during the three and nine months ended September 30, 2020.

These amounts were immaterial for the three and nine months ended September 30, 2020.

The assets and liabilities of the discontinued Movianto business reflected on the consolidated balance sheet at December 31, 2019 were as follows:

December 31, 2019

Assets of discontinued operations

Cash and cash equivalents $ 1,396

Accounts receivable, net 78,643

Merchandise inventories 16,058

Other current assets 188,853

Current assets of discontinued operations 284,950

Property and equipment, net 65,710

Intangible assets, net 6,579

Other assets, net 27,431

Operating lease assets 87,425

Valuation allowance on disposal group classified as held-for-sale ( 32,112 )

Total assets of discontinued operations $ 439,983

Liabilities of discontinued operations

Accounts payable $ 53,981

Other current liabilities 182,980

Current liabilities of discontinued operations 236,961

Long-term debt, excluding current portion 5,523

Operating lease liabilities, excluding current portion 76,270

Other liabilities 4,757

Total liabilities of discontinued operations $ 323,511

Assets and liabilities held-for-sale as of December 31, 2019 were classified as current since we expected the Divestiture to be completed within one year of the balance sheet date.

Certain transition service arrangement costs and reimbursements were recorded during the three months ended March 31, 2021 and were immaterial for the period presented.

We had no assets and liabilities of the discontinued Movianto business reflected on the consolidated balance sheets at March 31, 2021 and December 31, 2020.

The following table provides operating and investing cash flow information for our discontinued operations:

September 30, 2020 September 30, 2019

Three Months Ended March 31, 2020

Operating Activities:

Depreciation and amortization $ —

Loss on divestiture 65,472 —

Impairment charges 9,080

Investing Activities:

1 unchanged sentence

Note 4— Goodwill and Intangible Assets

The following table summarizes the goodwill balances by segment and the changes in the carrying amount of goodwill through September 30, 2020:

The following table summarizes the goodwill balances by segment and the changes in the carrying amount of goodwill through March 31, 2021:

Global Solutions Global Products Consolidated

1 unchanged sentence

Currency translation adjustments — ( 2,737 ) ( 2,737 )

Carrying amount of goodwill, September 30, 2020 $ 283,905 $ 106,490 $ 390,395

Intangible assets at September 30, 2020 and December 31, 2019 were as follows:

September 30, 2020 December 31, 2019

Carrying amount of goodwill, March 31, 2021 $ 283,905 $ 107,444 $ 391,349

Intangible assets at March 31, 2021 and December 31, 2020 were as follows:

March 31, 2021 December 31, 2020

Relationships Tradenames Other

5 unchanged sentences

Weighted average useful life 10 years 11 years 8 years 10 years 11 years 8 years

At September 30, 2020, $ 67.2 million in net intangible assets were held in the Global Solutions segment and $ 184.4 million were held in the Global Products segment.

Amortization expense for intangible assets was $ 10.2 million and $ 10.6 million for the three months ended September 30, 2020 and 2019, respectively, and $ 31.5 million and $ 33.4 million for the nine months ended September 30, 2020 and 2019, respectively.

At March 31, 2021, $ 59.1 million in net intangible assets were held in the Global Solutions segment and $ 173 million were held in the Global Products segment.

Amortization expense for intangible assets was $ 10.0 million and $ 10.6 million for the three months ended March 31, 2021 and 2020.

Based on the current carrying value of intangible assets subject to amortization, estimated amortization expense is $ 29.9 million for the remainder of 2021, $ 38.9 million for 2022, $ 38.7 million for 2023, $ 33.9 million for 2024, $ 28.2 million for 2025 and $ 26.8 million for 2026.

1 unchanged sentence

We periodically incur exit and realignment and other charges associated with optimizing our operations which includes the consolidation of certain distribution and outsourced logistics centers, administrative offices and warehouses, our client engagement center and IT restructuring charges.

These charges also include costs associated with our strategic organizational realignment which include management changes, certain professional fees, and costs to streamline administrative functions and processes.

Exit and realignment charges by segment for the three and nine months ended September 30, 2020 and 2019 were as follows:

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

Exit and realignment charges by segment for the three months ended March 31, 2021 and 2020 were as follows:

Three Months Ended

Global Solutions segment $ 4,663 $ 1,829

1 unchanged sentence

Total exit and realignment charges $ 5,963 $ 1,829

The following table summarizes the activity related to exit and realignment cost accruals through September 30, 2020 and 2019:

The following table summarizes the activity related to exit and realignment cost accruals through March 31, 2021 and 2020:

Accrued exit and realignment costs, December 31, 2020 $ 3,146

Provision for exit and realignment activities:

Severance 1,391

Information system restructuring costs 1,029

Lease obligations 347

Cash payments ( 2,915 )

Accrued exit and realignment costs, March 31, 2021 $ 2,388

Provision for exit and realignment activities:

Severance 809

Information system restructuring costs 671

Cash payments ( 2,072 )

Accrued exit and realignment costs, June 30, 2020 4,320

Provision for exit and realignment activities:

Severance 1,950

Information system restructuring costs 77

Cash payments ( 7,083 )

Accrued exit and realignment costs, September 30, 2020 $ 2,828

Accrued exit and realignment costs, December 31, 2019 $ 8,162

2 unchanged sentences

Information system restructuring costs 183

Lease obligations 202

Cash payments ( 5,799 )

Accrued exit and realignment costs, March 31, 2020 $ 4,192

Provision for exit and realignment activities:

Severance 1,008

Information system restructuring costs 705

Cash payments ( 2,301 )

Accrued exit and realignment costs, June 30, 2019 5,391

Provision for exit and realignment activities:

Severance 305

Information system restructuring costs 664

Cash payments ( 2,586 )

Accrued exit and realignment costs, September 30, 2019 $ 3,785

Acquisition-related and exit and realignment charges presented in our consolidated statements of operations includes acquisition-related charges of $ 0.8 million and $ 8.9 million for the three and nine months ended September 30, 2020 and $ 3.5 million and $ 11.4 million for the three and nine months ended September 30, 2019, respectively, and consisted primarily of transition costs for the Halyard acquisition.

In addition to the exit and realignment accruals in the preceding table, we also incurred $ 3.8 million of costs that were expensed as incurred for the three months ended March 31, 2021, including $ 3.2 million related to an increase in reserves associated with certain retained assets of Fusion5, $ 0.5 million in impairment charges related to our client engagement center, and $ 0.1 million in other asset charges.

There were no acquisition-related charges included within acquisition-related and exit and realignment charges presented in our consolidated statements of operations for the three months ended March 31, 2021.

Acquisition-related charges included within acquisition-related and exit and realignment charges presented in our consolidated statements of operations were $ 4.2 million for the three months ended March 31, 2020 and consisted primarily of transition costs for the Halyard acquisition.

We may incur additional costs in 2021 related to certain retained assets of Fusion5.

Debt consists of the following:

September 30, 2020 December 31, 2019

Carrying Amount Estimated Fair Value Carrying Amount Estimated Fair Value

3.875 % Senior Notes, due September 2021

$ 178,485 $ 180,307 $ 236,234 $ 229,356

March 31, 2021 December 31, 2020

Amount Estimated

Fair Value Carrying

Amount Estimated

4.375 % Senior Notes, due December 2024

$ 244,862 $ 254,183 $ 244,780 $ 253,241

Term A Loans, due July 2022 196,489 199,619 377,420 383,050

Term B Loan, due April 2025 478,127 475,913 480,337 442,217

4.500 % Senior Notes, due March 2029

491,299 503,475 — —

Term Loan A-2 — — 33,865 34,390

Term Loan B — — 477,525 486,614

Revolver 6,700 6,700 103,200 103,200

4 unchanged sentences

Long-term debt $ 981,342 $ 1,006,835 $ 986,018 $ 1,005,760

We have $ 178 million of 3.875 % senior notes due in 2021 (the 2021 Notes) and $ 245 million of 4.375 % senior notes due in 2024 (the 2024 Notes), with interest payable semi-annually.

The 2021 Notes were sold at 99.5 % of the principal amount with an effective yield of 3.951 %.

We have $ 246 million, excluding debt issuance costs and deferred fees, of 4.375 % senior notes due in 2024 (the 2024 Notes), with interest payable semi-annually.

The 2024 Notes were sold at 99.6 % of the principal amount with an effective yield of 4.422 %.

We have the option to redeem the 2021 Notes and 2024 Notes in part or in whole prior to maturity at a redemption price equal to the greater of 100 % of the principal amount or the present value of the remaining scheduled payments discounted at the applicable Benchmark Treasury Rate plus 25 basis points for the 2021 Notes and the applicable Benchmark Treasury Rate plus 30 basis points for the 2024 Notes.

In June 2020, we announced cash tender offers for up to $ 240 million aggregate principal amount of our outstanding 2021 Notes and 2024 Notes.

As of the Early Settlement Date of June 22, 2020, $ 54.1 million of the 2021 Notes and $ 29.0 million of the 2024 Notes were repaid.

On the Early Settlement Date, the 2021 Notes were redeemed at 100 % of par, and the 2024 Notes were redeemed at 90 % of par, resulting in a net gain on extinguishment of debt of $ 2.9 million.

The tender offers remained open through July 2, 2020, and an additional $ 0.1 million of the 2021 Notes were redeemed at the Base Consideration price of 95 % of par by the time the offers closed.

Including the tender offer, we used $ 83.3 million of cash to repurchase $ 87.9 million aggregate principal amount of the 2021 Notes and 2024 Notes during the first nine months of 2020.

Consistent with the terms of the Fifth Amendment to the Credit Agreement, we used $ 54.1 million of the proceeds from the sale of Movianto to fund the repayment of the 2021 Notes, which were retired in the second quarter as part of the tender offer.

As required by the Fifth Amendment to the Credit Agreement, the remaining $ 78.9 million of proceeds from the sale of Movianto were placed in a designated account and will be used to repurchase a portion of the outstanding 2021 Notes within 210 days of the Divestiture Date or repay a portion of our Term Loans.

We have a Credit Agreement (last amended February 13, 2020) with a $ 400 million revolving credit facility and $ 675 million in outstanding term loans.

The interest rate on our revolving credit facility and Term A Loans is based on 1) either the Eurocurrency Rate or the Base Rate plus 2) an Applicable Percentage which varies depending on Consolidated Total Leverage Ratio (each as defined in the Credit Agreement).

Our credit spread on the revolving credit facility and Term A Loans at September 30, 2020 was Eurocurrency Rate plus 4.25 %.

Our Term B Loan accrues interest based on 1) either the Eurocurrency Rate or the Base Rate plus 2) an Applicable Percentage of 3.50 % per annum for Base Rate Loans and 4.50 % per annum for Eurocurrency Rate Loans (each as defined in the Credit Agreement).

Our credit spread on the Term B Loan at September 30, 2020 was Eurocurrency Rate plus 4.50 %.

We are charged a commitment fee of between 12.5 and 25.0 basis points on the unused portion of the revolving credit facility.

Our Credit Agreement has a “springing maturity date” with respect to the revolving credit facility, the Term A Loans, and the Term B Loan.

If the outstanding balance of the 2021 Notes has not been paid in full as of the date 91 days prior to the maturity date of the 2021 Notes, then the Termination Date (as defined in the Credit Agreement) of the revolving credit facility, the Term A Loans, and the Term B Loan shall be the date that is 91 days prior to the maturity date of the 2021 Notes.

Likewise, if the outstanding balance of the 2024 Notes has not been paid in full as of the date 91 days prior to the maturity date of the 2024 Notes, the Termination Date of the Term B Loan shall be the date that is 91 days prior to the maturity date of the 2024 Notes.

At September 30, 2020 and December 31, 2019, we had borrowings of $ 70.0 million and $ 177.9 million, respectively, under the revolver and letters of credit of $ 13.9 million and $ 11.7 million, respectively, outstanding under the Credit Agreement.

At September 30, 2020 and December 31, 2019, we had $ 316.1 million and $ 209.3 million, respectively, available for borrowing.

The December 31, 2019 availability reflected letters of credit associated with discontinued operations of $ 1.1 million.

There were no letters of credit associated with discontinued operations as of September 30, 2020.

We also had letters of credit and bank guarantees outstanding for $ 2.4 million, of which $ 0.8 million are in process of being transferred to

the buyer of Movianto, and $ 1.6 million and $ 1.5 million as of September 30, 2020 and December 31, 2019, respectively, which supports certain leased facilities as well as other normal business activities in the United States and Europe.

We have the option to redeem the 2024 Notes in part or in whole prior to maturity at a redemption price equal to the greater of 100 % of the principal amount or the present value of the remaining scheduled payments discounted at the applicable Benchmark Treasury Rate plus 30 basis points.

In March 2021, we issued $ 500 million, excluding debt issuance costs and deferred fees, of 4.500 % senior unsecured notes due in 2029 (the 2029 Unsecured Notes), with interest payable semi-annually (the Notes Offering).

The 2029 Unsecured Notes were sold at 100 % of the principal amount with an effective yield of 4.500 % .

We used a portion of the net proceeds from the Notes Offering to repay our Term B Loan and borrowings under our revolving credit facility.

In connection with these repayments, we recorded $ 15.3 million in write-offs of deferred financing costs and third party fees within l oss on extinguishment of debt for the three months ended March 31, 2021 .

We may redeem all or part of the 2029 Unsecured Notes prior to March 31, 2024, at a price equal to 100 % of the principal amount of the 2029 Unsecured Notes redeemed, plus accrued and unpaid interest, if any, to, but not including, the redemption date, plus a “make-whole” premium, as described in the Indenture dated March 10, 2021 (the Indenture).

On or after March 31, 2024, we may redeem all or part of the 2029 Unsecured Notes at the applicable redemption prices described in the Indenture, plus accrued and unpaid interest, if any, to, but not including, the redemption date.

We may also redeem up to 40 % of the aggregate principal amount of the 2029 Unsecured Notes at any time prior to March 31, 2024, at a redemption price equal to 104.5 % with an amount equal to or less than the net cash proceeds from certain equity offerings, plus accrued and unpaid interest, if any, to, but excluding, the redemption date.

On March 10, 2021, we terminated our then existing credit agreement and all obligations thereunder were repaid.

On that same date, we entered into a new credit agreement with Bank of America, N.A.

and a syndicate of lenders (the Credit Agreement) with a $ 300 million revolving credit facility.

The interest rate on our revolving credit facility is based on a spread over either the Eurocurrency Rate or the Base Rate (each as defined in the Credit Agreement).

The Credit Agreement matures in March 2026.

At March 31, 2021 and December 31, 2020, we had borrowings of $ 6.7 million and $ 103 million and letters of credit of $ 11.4 million and $ 13.9 million outstanding under our revolving credit facilities.

At March 31, 2021 and December 31, 2020, we had $ 282 million and $ 283 million available for borrowing.

We also had letters of credit and bank guarantees outstanding for $ 1.9 million and $ 1.6 million as of March 31, 2021 and December 31, 2020, which supports certain leased facilities as well as other normal business activities in the United States and Europe.

These letters of credit and guarantees were issued independent of the Credit Agreement.

We also have a Security and Pledge Agreement (the Security Agreement) pursuant to which we granted collateral on behalf of the holders of the 2021 Notes, the holders of the 2024 Notes, and the parties secured under the Credit Agreement (the Secured Parties) including first priority liens and security interests in (a) all present and future shares of capital stock owned by the Credit Parties (as defined) in the Credit Parties’ present and future subsidiaries of each Credit Party and (b) all present and future personal property and assets of the Credit Parties, subject to certain exceptions.

The Fifth Amendment to the Credit Agreement included additional collateral requirements if the Credit Parties, including an obligation to pledge our owned U.S.

We entered into a Security and Pledge Agreement (the Security Agreement), dated March 10, 2021, pursuant to which we granted collateral on behalf of the holders of the 2024 Notes, and the parties secured under the Credit Agreement (the Secured Parties) including first priority liens and security interests in (a) all present and future shares of capital stock owned by the Credit Parties (as defined) in the Credit Parties’ present and future subsidiaries and (b) all present and future personal property and assets of the Credit Parties, subject to certain exceptions.

The Credit Agreement included additional collateral requirements of the Credit Parties, including an obligation to pledge our owned U.S.

real estate and the remaining equity interests in foreign subsidiaries.

On February 19, 2020, we entered into an accounts receivable securitization program (the Receivables Securitization Program).

Pursuant to the Receivables Securitization Program the aggregate principal amount of the loans made by the Lenders (as defined) will not exceed $ 325 million outstanding at any time.

The interest rate under the Receivables Securitization Program is based on a spread over the London Interbank Offered Rate (LIBOR) dependent on the tranche period thereto and any breakage fees accrued.

On March 10, 2021, we entered into an amendment to our accounts receivable securitization program (the Receivables Securitization Program).

Pursuant to the amended Receivables Securitization Program, the aggregate principal amount of the loans made by the Lenders (as defined) will not exceed $ 450 million outstanding at any time.

The interest rate under the Receivables Securitization Program is based on a spread over the London Interbank Offered Rate (LIBOR) or successor rate.

Under the Receivables Securitization Program, certain of our subsidiaries sell substantially all of their accounts receivable balances to our wholly owned special purpose entity, O&M Funding LLC.

The Receivables Securitization Program matures on February 17, 2023.

Our Receivables Securitization Program has a “springing maturity date” with respect to the Term A Loans.

If the outstanding balance of the Term A loans have not been paid in full as of the date 91 days prior to the maturity date of the Term A Loans, then the Scheduled Termination Date (as defined in the Receivables Financing Agreement) of the Receivables Securitization Program shall be the date that is 91 days prior to the maturity date of the Term A Loans.

In February 2020, we drew $ 150 million from the Receivables Securitization Program to repay portions of the Term A Loans, consistent with the terms of the Fifth Amendment to the Credit Agreement.

The Fifth Amendment to the Credit Agreement requires that any additional draws on the Receivables Securitization Program are restricted for use to repay the 2021 Notes or Term A loans to the extent those instruments are outstanding.

The Credit Agreement, Receivables Securitization Program, and Senior Notes contain cross-default provisions which could result in the acceleration of payments due in the event of default of either agreement.

The terms of the Credit Agreement also require the company to maintain ratios for leverage and interest coverage, including on a pro forma basis in the event of an acquisition or divestiture.

We were in compliance with our debt covenants at September 30, 2020.

As of September 30, 2020, scheduled future principal payments of debt were $ 12.4 million in 2020, $ 228.5 million in 2021, $ 218.8 million in 2022, $ 155.0 million in 2023, $ 251.0 million in 2024, and $ 468.8 million thereafter.

Current maturities include scheduled principal payments within the next 12 months of $ 44.6 million and $ 5.0 million for our Term A and Term B Loans, respectively, $ 1.0 million in short-term finance leases, and $ 178.5 million related to our 2021 Notes.

The Receivables Securitization Program matures in March 2024.

The Credit Agreement, Receivables Securitization Program, 2024 Notes and 2029 Unsecured Notes contain cross-default provisions which could result in the acceleration of payments due in the event of default of either agreement.

The terms of the Credit Agreement also require us to maintain ratios for leverage and interest coverage, including on a pro forma basis in the event of an acquisition or divestiture.

We were in compliance with our debt covenants at March 31, 2021.

As of March 31, 2021, scheduled future principal payments of debt, excluding finance leases and other, were $ 476 million in 2024, $ 6.7 million in 2026, and $ 500 million in 2029.

Current maturities include $ 1.1 million in current portion of finance leases.

Note 7— Retirement Plans

We have a noncontributory, unfunded retirement plan for certain retirees in the United States.

Certain of our foreign subsidiaries also have defined benefit pension plans covering substantially all of their respective employees.

The components of net periodic benefit cost for the three and nine months ended September 30, 2020 and 2019, respectively, were as follows:

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

Certain of our foreign subsidiaries also have defined benefit pension plans covering substantially all of their respective teammates.

The components of net periodic benefit cost for the three months ended March 31, 2021 and 2020 were as follows:

Three Months Ended

Service cost $ 704 $ 351

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The gain or loss recorded on these instruments is substantially offset by the remeasurement adjustment on the foreign currency denominated asset or liability.

We pay interest under our Credit Agreement and Receivables Securitization Program, which fluctuate based on changes in our benchmark interest rates.

In order to mitigate the risk of increases in benchmark rates, we enter into interest rate swaps whereby we agree to exchange with the counterparty, at specified intervals, the difference between fixed and variable amounts calculated by reference to the notional amount.

The interest rate swaps were designated as cash flow hedges.

Cash flows related to the interest rate swap agreements are included in interest expense.

We determine the fair value of our foreign currency derivatives and our interest rate swaps based on observable market-based inputs or unobservable inputs that are corroborated by market data.

We determine the fair value of our foreign currency derivatives based on observable market-based inputs or unobservable inputs that are corroborated by market data.

We do not view the fair value of our derivatives in isolation, but rather in relation to the fair values or cash flows of the underlying exposure.

All derivatives are carried at fair value in our consolidated balance sheets in other assets, net and other liabilities.

All derivatives are carried at fair value in our consolidated balance sheets in other current assets and other current liabilities.

We consider the risk of counterparty default to be minimal.

We report cash flows from our hedging instruments in the same cash flow statement category as the hedged items.

The following table summarizes the terms and fair value of our outstanding derivative financial instruments as of September 30, 2020:

The following table summarizes the terms and fair value of our outstanding derivative financial instruments as of March 31, 2021:

Derivative Assets Derivative Liabilities

Notional Amount Maturity Date Classification Fair Value Classification Fair Value

Cash flow hedges

Interest rate swaps $ 300,000 May 2022 and May 2025 Other assets, net $ — Other liabilities $ 19,807

Economic (non-designated) hedges

Foreign currency contracts $ 28,900 October 2020 Other assets, net $ 149 Other liabilities $ —

We terminated $ 150 million in notional value of interest rate swaps on September 30, 2020.

The remaining balance of the fair value adjustments of $ 10.7 million, which related to these terminated interest rate swaps within accumulated other comprehensive loss, will be recognized in interest expense ratably over the remaining life of the Term B Loan.

Foreign currency contracts $ 18,700 April 2021 Other current assets $ — Other current liabilities $ 110

In March 2021, we terminated the remaining $ 300 million in notional value of interest rate swaps.

In September 2020, we had previously terminated $ 150 million in notional value of interest rate swaps.

The remaining balance of the fair value adjustments of $ 25.1 million, which related to these terminated interest rate swaps, within Accumulated other comprehensive loss was reclassified to Loss on extinguishment of debt within our Consolidated Statements of Operations for the three months ended March 31, 2021.

The following table summarizes the terms and fair value of our outstanding derivative financial instruments as of December 31, 2020:

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Interest rate swaps $ 300,000 May 2022 and May 2025 Other assets, net $ — Other liabilities $ 17,872

The following table summarizes the effect of cash flow hedge accounting on our consolidated statements of operations for the three and nine months ended September 30, 2020:

Amount of Gain/(Loss) Recognized in Other Comprehensive Income (Loss) Location of Gain/(Loss) Reclassified from Accumulated Other Comprehensive Loss into Income Total Amount of Income/(Expense) Line Items Presented in the Consolidated Statement of Operations in Which the Effects are Recorded Amount of Gain/(Loss) Reclassified from Accumulated Other Comprehensive Loss into Income

Three Months Ended September 30, 2020 Nine Months Ended September 30, 2020 Three Months Ended September 30, 2020 Nine Months Ended September 30, 2020 Three Months Ended September 30, 2020 Nine Months Ended September 30, 2020

Interest rate swaps $ ( 515 ) $ ( 19,913 ) Interest expense, net $ ( 20,975 ) $ ( 65,923 ) $ ( 3,028 ) $ ( 6,889 )

The amount of ineffectiveness associated with these contracts was immaterial for the periods presented.

The following table summarizes the effect of cash flow hedge accounting on our consolidated statements of operations for the three and nine months ended September 30, 2019:

Amount of Gain/(Loss) Recognized in Other Comprehensive Loss Location of Gain/(Loss) Reclassified from Accumulated Other Comprehensive Loss into Income Total Amount of Income/(Expense) Line Items Presented in the Consolidated Statement of Operations in Which the Effects are Recorded Amount of Gain/(Loss) Reclassified from Accumulated Other Comprehensive Loss into Income

Three Months Ended September 30, 2019 Nine Months Ended September 30, 2019 Three Months Ended September 30, 2019 Nine Months Ended September 30, 2019 Three Months Ended September 30, 2019 Nine Months Ended September 30, 2019

Economic (non-designated) hedges

Foreign currency contracts $ 30,300 January 2021 Other current assets $ 151 Other current liabilities $ —

The following table summarizes the effect of cash flow hedge accounting on our consolidated statements of operations for the three months ended March 31, 2021:

Amount of Gain Recognized in Other Comprehensive Income Location of Loss Reclassified from Accumulated Other Comprehensive Loss into Income Total Amount of Expense Line Items Presented in the Consolidated Statement of Operations in Which the Effects are Recorded Amount of Loss Reclassified from Accumulated Other Comprehensive Loss into Income

Interest rate swaps $ 2,426 Loss on extinguishment of debt $ ( 40,433 ) $ ( 25,518 )

The following table summarizes the effect of cash flow hedge accounting on our consolidated statements of operations for the three months ended March 31, 2020:

Amount of Loss Recognized in Other Comprehensive Loss Location of Loss Reclassified from Accumulated Other Comprehensive Loss into Income Total Amount of Expense Line Items Presented in the Consolidated Statement of Operations in Which the Effects are Recorded Amount of Loss Reclassified from Accumulated Other Comprehensive Loss into Income

Interest rate swaps $ ( 16,958 ) Interest expense, net $ ( 23,342 ) $ ( 1,259 )

Foreign currency contracts $ ( 28 ) $ 608 Cost of goods sold $ ( 2,012,130 ) $ ( 6,176,537 ) $ 262 $ 319

The amount of ineffectiveness associated with these contracts was immaterial for the periods presented.

For the three and nine months ended September 30, 2020, we recognized losses of $ 0.9 million and $ 2.3 million, respectively, associated with our economic (non-designated) foreign currency contracts.

For the three and nine months ended September 30, 2019, we recognized gains of $ 0.1 million and $ 1.1 million, respectively, associated with our economic (non-designated) foreign currency contracts.

We recorded the change in fair value of derivative instruments and the remeasurement adjustment of the foreign currency denominated asset or liability in other operating (income) expense, net for our foreign exchange contracts.

For the three months ended March 31, 2021 and 2020, we recognized losses of $ 1.0 million and $ 2.7 million associated with our economic (non-designated) foreign currency contracts.

We recorded the change in fair value of derivative instruments and the remeasurement adjustment of the foreign currency denominated asset or liability in other operating income, net for our foreign exchange contracts.

Note 9— Income Taxes

The effective tax rate was 13.8 % and 9.4 % for the three and nine months ended September 30, 2020, compared to ( 126.5 )% and 17.8 % in the same periods of 2019.

The change in these rates resulted primarily from an income tax benefit recorded in the first and third quarters of 2020 associated with the Coronavirus Aid, Relief, and Economic Security (CARES) Act, the mixture of income and losses in jurisdictions in which we operate, and the incremental income tax expense associated with the vesting of restricted stock.

In addition, the provision for income taxes reflects an increase in our reserve for uncertain tax positions for the three and nine months ended September 30, 2020 in connection with the IRS’ audit of our 2015 and 2016 consolidated income tax returns described in the subsequent paragraph.

The liability for unrecognized tax benefits was $ 22.5 million at September 30, 2020 and $ 11.5 million at December 31, 2019.

Included in the liability at September 30, 2020 and December 31, 2019 were $ 1.9 million and $ 3.1 million, respectively, of tax positions for which ultimate deductibility is highly certain but for which there is uncertainty about the timing of such deductibility.

The effective tax rate was 24.4 % for the three months ended March 31, 2021, compared to a tax benefit of 48.9 % in the same quarter of 2020.

The change in these rates resulted primarily from an income tax benefit recorded in the first quarter of 2020 associated with the Coronavirus Aid, Relief, and Economic Security (CARES) Act, the mixture of income and losses in jurisdictions in which we operate, and the incremental income tax benefit associated with the vesting of restricted stock recorded in the first quarter of 2021.

The liability for unrecognized tax benefits was $ 21.0 million at March 31, 2021 and $ 20.8 million at December 31, 2020.

Included in the liability at March 31, 2021 and December 31, 2020 were $ 2.7 million of tax positions for which ultimate deductibility is highly certain but for which there is uncertainty about the timing of such deductibility.

On August 26, 2020, we received a Notice of Proposed Adjustment (NOPA) from the Internal Revenue Services (IRS) regarding our 2015 and 2016 consolidated income tax returns.

Within the NOPA, the IRS has asserted that our taxable income for 2015 and 2016 should be higher based on their assessment of the appropriate amount of taxable income that we should report in the United States in connection with our sourcing of products by our foreign subsidiaries for sale in the United

States by our domestic subsidiaries.

Within the NOPA, the IRS has asserted that our taxable income for 2015 and 2016 should be higher based on their assessment of the appropriate amount of taxable income that we should

report in the United States in connection with our sourcing of products by our foreign subsidiaries for sale in the United States by our domestic subsidiaries.

Our amount of taxable income in the United States is based on our transfer pricing methodology, which has been consistently applied through the current date.

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Note 10— Net Income (Loss) per Common Share

The following summarizes the calculation of net income (loss) per common share attributable to common shareholders for the three and nine months ended September 30, 2020 and 2019:

Three Months Ended September 30, Nine Months Ended

September 30,

The following summarizes the calculation of net income (loss) per common share attributable to common shareholders for the three months ended March 31, 2021 and 2020:

Three Months Ended

(in thousands, except per share data) 2021 2020

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We intend to use the net proceeds from the sale of our securities offered by this program for the repayment of indebtedness and/or for general corporate and working capital purposes.

As of September 30, 2020, no shares were issued and $ 50 million of common stock remained available under the at-the-market equity financing program.

On October 6, 2020, we completed a follow-on equity offering as further described in Note 15 - Subsequent Events .

As of March 31, 2021, no shares were issued and $ 50.0 million of common stock remained available under the at-the-market equity financing program.

Note 12— Accumulated Other Comprehensive Loss

The following table shows the changes in accumulated other comprehensive loss by component for the three and nine months ended September 30, 2020 and 2019:

The following table shows the changes in accumulated other comprehensive loss by component for the three months ended March 31, 2021 and 2020:

Retirement Plans Currency

Adjustments Derivatives Total

Accumulated other comprehensive loss, June 30, 2020 $ ( 13,926 ) $ ( 23,471 ) $ ( 24,188 ) $ ( 61,585 )

Accumulated other comprehensive loss, December 31, 2020 $ ( 18,447 ) $ ( 18 ) $ ( 20,044 ) $ ( 38,509 )

Other comprehensive income (loss) before reclassifications — ( 12,262 ) 2,426 ( 9,836 )

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Amounts reclassified from accumulated other comprehensive loss, net of tax 121 — 18,229 18,350

Other comprehensive income 167 5,173 1,681 7,021

Accumulated other comprehensive loss, September 30, 2020 $ ( 13,759 ) $ ( 18,298 ) $ ( 22,507 ) $ ( 54,564 )

Retirement Plans Currency Translation Adjustments Derivatives Total

Accumulated other comprehensive loss, June 30, 2019 $ ( 7,752 ) $ ( 29,306 ) $ ( 12,590 ) $ ( 49,648 )

Other comprehensive loss before reclassifications — ( 9,038 ) ( 3,384 ) ( 12,422 )

Income tax — — 1,314 1,314

Other comprehensive loss before reclassifications, net of tax — ( 9,038 ) ( 2,070 ) ( 11,108 )

Amounts reclassified from accumulated other comprehensive loss 260 — 370 630

Income tax ( 61 ) — ( 89 ) ( 150 )

Amounts reclassified from accumulated other comprehensive loss, net of tax 199 — 281 480

Other comprehensive income (loss) 121 ( 12,262 ) 20,044 7,903

Accumulated other comprehensive loss, September 30, 2019 $ ( 7,553 ) $ ( 38,344 ) $ ( 14,379 ) $ ( 60,276 )

Accumulated other comprehensive loss, March 31, 2021 $ ( 18,326 ) $ ( 12,280 ) $ — $ ( 30,606 )

Retirement Plans Currency Translation Adjustments Derivatives Total

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Other comprehensive income (loss) 170 ( 28,178 ) ( 11,397 ) ( 39,405 )

Accumulated other comprehensive loss, September 30, 2020 $ ( 13,759 ) $ ( 18,298 ) $ ( 22,507 ) $ ( 54,564 )

Retirement Plans Currency

Adjustments Derivatives Total

Accumulated other comprehensive loss, December 31, 2018 $ ( 8,146 ) $ ( 32,551 ) $ ( 4,915 ) $ ( 45,612 )

Other comprehensive loss before reclassifications — ( 5,793 ) ( 15,325 ) ( 21,118 )

Income tax — — 5,204 5,204

Other comprehensive loss before reclassifications, net of tax — ( 5,793 ) ( 10,121 ) ( 15,914 )

Amounts reclassified from accumulated other comprehensive loss 780 — 995 1,775

Income tax ( 187 ) — ( 338 ) ( 525 )

Amounts reclassified from accumulated other comprehensive loss, net of tax 593 — 657 1,250

Other comprehensive income (loss) 593 ( 5,793 ) ( 9,464 ) ( 14,664 )

Accumulated other comprehensive loss, September 30, 2019 $ ( 7,553 ) $ ( 38,344 ) $ ( 14,379 ) $ ( 60,276 )

Accumulated other comprehensive loss, March 31, 2020 $ ( 14,521 ) $ ( 53,479 ) $ ( 24,112 ) $ ( 92,112 )

We include amounts reclassified out of accumulated other comprehensive loss related to defined benefit pension plans as a component of net periodic pension cost recorded in Other expense, net.

For the three and nine months ended September 30, 2020, we reclassified $ 0.2 million and $ 1.1 million, which included $ 0.4 million as a result of the Divestiture, respectively, of actuarial net losses.

Amounts reclassified from accumulated other comprehensive loss for the nine months ended September 30, 2020 include currency translation adjustments released as a result of the Divestiture.

For the three and nine months ended September 30, 2019, we reclassified $ 0.3 million and $ 0.8 million, respectively, of actuarial net losses.

Note 13— Segment Information

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Global Products manufactures and sources medical surgical products through our production and kitting operations.

We evaluate the performance of our segments based on their operating income excluding intangible amortization, acquisition-related and exit and realignment charges, certain purchase price fair value adjustments, and other substantive items that, either as a result of their nature or size, would not be expected to occur as part of our normal business operations on a regular basis.

We evaluate the performance of our segments based on their operating income excluding intangible amortization and acquisition-related and exit and realignment charges that, either as a result of their nature or size, would not be expected to occur as part of our normal business operations on a regular basis.

Segment assets exclude inter-segment account balances as we believe their inclusion would be misleading and not meaningful.

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Three Months Ended

September 30, Nine Months Ended

September 30,

2020 2019 2020 2019

Global Solutions $ 1,849,509 $ 1,847,593

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Acquisition-related and exit and realignment charges ( 5,963 ) ( 6,064 )

— ( 324 ) — ( 853 )

Consolidated operating income $ 146,692 $ 10,756

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Global Products 13,061 13,277

Discontinued operations — 4,697 — 15,466

Consolidated depreciation and amortization $ 22,900 $ 23,913

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Consolidated capital expenditures $ 6,623 $ 5,713

(1) 2019 included interest cost and net actuarial losses related to the U.S.

Retirement Plan as well as Software as a Service (SaaS) implementation costs associated with the upgrading of our global IT platforms in connection with the redesign of our global information system strategy.

September 30, 2020 December 31, 2019

March 31, 2021 December 31, 2020

Total assets:

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Segment assets 3,336,366 3,252,581

Discontinued operations — 439,983

Cash and cash equivalents 54,455 83,058

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The following table presents net revenue by geographic area, which were attributed based on the location from which we ship products or provide services.

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

Three Months Ended March 31,

United States $ 2,182,755 $ 2,033,454

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Note 14— Recent Accounting Pronouncements

In August 2018, the FASB issued ASU No.

2018-13, Fair Value Measurement (Topic 820):

Disclosure Framework— Changes to the Disclosure Requirements for Fair Value Measurement.

This ASU modifies the disclosure requirements for fair value measurements by removing the requirement to disclose the amount and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy and the policy for timing of such transfers.

This ASU expands the disclosure requirements for Level 3 fair value measurements, primarily focused on changes in unrealized gains and losses included in other comprehensive income (loss).

We adopted ASU No.

2018-13 effective beginning January 1, 2020.

Its adoption did not have a material impact on our consolidated financial statements.

In August 2018, the FASB issued ASU No.

2018-14, Compensation—Retirement Benefits—Defined Benefit Plans—General (Subtopic 715-20):

Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans.

ASU 2018-14 removes disclosures that no longer are considered cost beneficial, clarifies the specific requirements of disclosures and adds disclosure requirements identified as relevant for companies with defined benefit retirement plans.

The amendments in ASU No.

2018-14 are effective for fiscal years ending after December 15, 2020 and we do not expect this to have a material impact on our consolidated financial statements.

In August 2018, the FASB issued ASU No.

2018-15, Intangibles—Goodwill and Other (Topic 350):

Internal-Use Software.

This standard aligns the requirements for capitalizing implementation costs incurred in a cloud computing arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software.

We adopted ASU No.

2018-15 effective beginning January 1, 2020.

Its adoption did not have a material impact on our consolidated financial statements.

In December 2019, the FASB issued ASU No.

2019-12, Simplifying the Accounting for Income Taxes, which simplifies the accounting for income taxes, eliminates certain exceptions within ASC 740, Income Taxes, and clarifies certain aspects of the current guidance to promote consistency among reporting entities.

2019-12 is effective for fiscal years beginning after December 15, 2020.

Most amendments within the standard are required to be applied on a prospective basis, while certain amendments must be applied on a retrospective or modified retrospective basis.

We do not expect this to have a material impact on our consolidated financial statements.

In March 2020, the FASB issued ASU No.

2020-03, Codification Improvements to Financial Instruments.

The Standard is part of FASB’s ongoing project to improve and clarify its Accounting Standards Codification and avoid unintended application.

The items addressed are not expected to significantly affect current practice or create a significant administrative cost for most entities.

The amendment is divided into issues 1 to 7 with different effective dates as follows:

The amendments related to Issue 1, Issue 2, Issue 4, and Issue 5 are conforming amendments.

The amendments are effective upon issuance of this update.

The amendment related to Issue 3 is a conforming amendment that affects the guidance related to the amendments in ASU No.

2016-01, Financial Instruments-Overall (Subtopic 825-10):

Recognition and Measurement of Financial Assets and

Financial Liabilities.

The effective date of this update for the amendments to ASU No.

2016-01 is for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years.

The amendments related to Issue 6 and Issue 7 affect the guidance in the amendments in ASU No.

2016-13, Financial 5 Instruments-Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments.

For entities that have not yet adopted the amendments related to ASU No.

2016-13, the effective dates and the transition requirements for these amendments are the same as the effective date and transition requirements in ASU No.

2016-13, which will be effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years.

We adopted ASU No.

2020-03 effective beginning January 1, 2020 for Issues 1 through 5.

2019-12 effective beginning January 1, 2021.

Its adoption did not have a material impact on our consolidated financial statements.

We are currently evaluating the potential impact of adopting this guidance for Issues 6 and 7 on our consolidated financial statements and disclosures.

In March 2020, the FASB issued ASU No.

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The amendments are effective for all entities as of March 12, 2020 through December 31, 2022.

We do not expect this to have a material impact on our consolidated financial statements.

At the present time, none of our lenders have requested that we transition away from LIBOR for our borrowings that bear interest based on LIBOR and we will continue to evaluate the impact through transition.

In October 2020, the FASB issued ASU No.

2020-10, Codification Improvements, to improve consistency by amending the FASB Accounting Standards Codification (the Codification) to include all disclosure guidance in the appropriate disclosure sections.

This ASU also clarifies application of various provisions in the Codification by amending and adding new headings, cross referencing to other guidance, and refining or correcting terminology.

The amendments in this ASU do not change GAAP and, therefore, are not expected to result in a significant change in practice.

We adopted ASU No.

2020-10 effective beginning January 1, 2021.

Its adoption did not have a material impact on our consolidated financial statements.

There have been no further changes in our significant accounting policies from those contained in our Annual Report on Form 10-K for the year ended December 31, 2020.

Note 15— Subsequent Events

On October 6, 2020, we completed a follow-on equity offering wherein we sold an aggregate of 8,475,000 shares of our common stock at an offering price of $ 20.50 , resulting in net proceeds to us of approximately $ 165 million, after deducting expenses relating to the follow-on equity offering, including the underwriters’ discounts and commissions.

Pursuant to the underwriting agreement, we granted the underwriters an option to purchase up to an additional 1,271,250 shares of our common stock, which the underwriters exercised in full.

Inclusive of this exercised option, net proceeds to us were approximately $ 190 million, after deducting expenses relating to the follow-on equity offering, including the underwriters’ discounts and commissions.

We used the proceeds from the follow-on equity offering to repay the remaining $ 109 million outstanding balance of Term Loan A-1 at par on October 8, 2020, to repay $ 52 million of our Term Loan A-2 at par on October 15, 2020, and to repay $ 30 million of borrowings under the revolving credit facility.

On October 30, 2020, we issued a notice of redemption to redeem all of our outstanding 2021 Notes on November 30, 2020 (the “Redemption Date”).

The redemption price will include accrued and unpaid interest to, but not including, the Redemption Date, and a redemption premium, equal to the greater of (i) 100 % of the principal amount of the 2021 Notes to be redeemed or (ii) the sum of the present values of the remaining scheduled payments of principal and interest thereon (exclusive of interest accrued to the Redemption Date) discounted to the Redemption Date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate plus 25 basis points.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements