What changed in this filing

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Item 1. Financial Statements

2022-10-27 compared with 2022-08-09 · 251 added, 480 removed, 363 unchanged (67% of the section changed)

2 unchanged sentences

CONSOLIDATED STATEMENTS OF INCOME

Three Months Ended

Six Months Ended

(In millions, except shares and per share data)

$ 280.2  

$ 279.1  

$ 538.3  

$ 542.4  

(In millions, except shares and per share data) Three Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

Net sales $ 262.9 $ 272.0 $ 801.2 $ 814.4

Cost of sales 162.2 162.8 495.5 477.0

Gross profit 100.7 109.2 305.7 337.4

Selling and administrative expense 71.4 76.9 227.1 242.5

1 unchanged sentence

Gain on sale of assets — — ( 3.7 ) ( 9.8 )

( 3.7 )  

Operating income 21.4 23.9 58.8 80.6

Interest expense, net ( 2.2 ) ( 0.6 ) ( 3.7 ) ( 6.6 )

( 1.2 )  

( 2.1 )  

( 1.5 )  

Net foreign currency transaction (loss) gain

( 1.0 )  

( 0.4 )  

Net foreign currency transaction loss — ( 0.7 ) ( 0.4 ) ( 0.2 )

Loss on extinguishment of debt — — — ( 11.3 )

( 11.3 )  

Other (expense) income, net

( 0.3 )  

( 0.5 )  

Other income (expense), net 0.6 ( 0.3 ) 0.1 —

Income before income taxes 19.8 22.3 54.8 62.5

Income tax expense (benefit)

( 2.6 )  

$ 16.6  

$ 26.9  

$ 35.5  

Income tax expense 4.2 0.8 12.3 5.5

Net income $ 15.6 $ 21.5 $ 42.5 $ 57.0

Net income per share

$ 0.90  

$ 0.53  

$ 1.46  

$ 1.92  

$ 0.89  

$ 0.51  

$ 1.44  

$ 1.88  

Basic $ 0.84 $ 1.16 $ 2.30 $ 3.08

Diluted $ 0.83 $ 1.14 $ 2.27 $ 3.02

Weighted average shares outstanding

18,507,073  

18,547,276  

18,485,367  

18,501,930  

18,683,798  

18,931,703  

18,735,913  

18,879,616  

Basic 18,515,851 18,554,136 18,495,640 18,519,523

Diluted 18,691,916 18,871,217 18,713,337 18,869,898

TENNANT COMPANY

CONSOLIDATED  

STATEMENTS OF COMPREHENSIVE INCOME

Three Months Ended

Six Months Ended

(In millions)

$ 16.6  

$ 26.9  

$ 35.5  

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

(In millions) Three Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

Net income $ 15.6 $ 21.5 $ 42.5 $ 57.0

Other comprehensive (loss) income:

Foreign currency translation adjustments (net of related tax expense of $ 1.0 , $ 0.3 , $ 1.4 , and $ 0.2 , respectively)

( 16.9 )  

( 20.7 )  

Foreign currency translation adjustments (net of related tax (expense) benefit of $( 1.2 ), $ 0.6 , $( 2.6 ), and $ 0.4 , respectively)

( 20.1 ) ( 7.3 ) ( 40.8 ) ( 13.1 )

Pension and postretirement medical benefits (net of related tax benefit of $ — , $ — , $ — , and $ 0.1 , respectively)

Cash flow hedge (net of related tax expense of $ — , $ 0.1 , $ 0.2 , and $ 0.1 , respectively)

( 0.1 )  

Total other comprehensive (loss) income, net of tax

( 16.1 )  

( 20.1 )  

Comprehensive income

$ 14.7  

$ 29.7  

( 0.1 ) ( 0.2 ) 0.5 ( 0.3 )

Total other comprehensive loss, net of tax ( 20.2 ) ( 7.5 ) ( 40.3 ) ( 13.3 )

Comprehensive (loss) income $ ( 4.6 ) $ 14.0 $ 2.2 $ 43.7

See accompanying notes to consolidated financial statements.

1 unchanged sentence

CONSOLIDATED BALANCE SHEETS

(Unaudited)  

(In millions, except shares and per share data)

(In millions, except shares and per share data) September 30,

2022 December 31,

Cash, cash equivalents, and restricted cash $ 59.2 $ 123.6

$ 73.8  

$ 123.6  

Receivables, less allowances of $ 5.2 and $ 5.3 , respectively

Inventories 199.6 160.6

Prepaid and other current assets 43.9 31.2

2 unchanged sentences

Operating lease assets 31.4 41.3

Goodwill 168.6 193.1

Intangible assets, net 74.0 98.0

$ 1,025.2  

$ 1,061.7  

Other assets 43.0 29.7

Total assets $ 1,005.1 $ 1,061.7

LIABILITIES AND EQUITY

11 unchanged sentences

Total liabilities $ 578.6 $ 626.6

$ 591.2  

$ 626.6  

Commitments and contingencies (Note 12)

5 unchanged sentences

Accumulated other comprehensive loss ( 78.2 ) ( 37.9 )

( 58.0 )  

Total Tennant Company shareholders' equity 425.2 433.8

Noncontrolling interest 1.3 1.3

Total equity 426.5 435.1

Total liabilities and total equity $ 1,005.1 $ 1,061.7

$ 1,025.2  

$ 1,061.7  

See accompanying notes to consolidated financial statements.

1 unchanged sentence

CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended

(In millions)

(In millions) Nine Months Ended

September 30,

OPERATING ACTIVITIES

$ 26.9  

$ 35.5  

Net income $ 42.5 $ 57.0

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

2 unchanged sentences

Deferred income tax benefit ( 6.3 ) ( 13.1 )

( 4.4 )  

Share-based compensation expense 4.4 9.5

2 unchanged sentences

Gain on sale of assets ( 3.7 ) ( 9.8 )

( 3.7 )  

Debt extinguishment cost — 11.3

Other, net 0.7 1.6

Changes in operating assets and liabilities:

( 9.5 )  

( 44.7 )  

Receivables ( 17.3 ) ( 5.5 )

Inventories ( 65.5 ) ( 48.9 )

Accounts payable ( 1.2 ) 16.4

Employee compensation and benefits ( 10.4 ) 7.2

( 8.7 )  

Other assets and liabilities ( 18.6 ) ( 3.9 )

( 14.7 )  

Net cash (used in) provided by operating activities ( 38.8 ) 62.9

( 23.6 )  

INVESTING ACTIVITIES

Purchases of property, plant and equipment ( 19.4 ) ( 12.0 )

( 10.5 )  

Proceeds from sale of assets, net of cash divested 4.1 24.7

Purchase of intangible assets — ( 0.1 )

Investment in leased assets ( 4.1 ) —

( 4.0 )  

Cash received from leased assets 0.4 —

Net cash (used in) provided by investing activities ( 19.0 ) 12.6

( 10.1 )  

FINANCING ACTIVITIES

1 unchanged sentence

Repayments of borrowings ( 18.0 ) ( 361.2 )

( 16.6 )  

Debt extinguishment payment — ( 8.4 )

2 unchanged sentences

(Repurchases) proceeds from exercise of stock options, net of employee tax withholdings obligations ( 1.2 ) 4.2

( 1.4 )  

Repurchases of common stock — ( 7.5 )

Dividends paid ( 14.0 ) ( 12.9 )

( 9.2 )  

Net cash used in financing activities ( 1.2 ) ( 72.3 )

( 12.2 )  

Effect of exchange rate changes on cash, cash equivalents and restricted cash ( 5.4 ) ( 3.6 )

( 3.9 )  

Net (decrease) in cash, cash equivalents and restricted cash ( 64.4 ) ( 0.4 )

( 49.8 )  

Cash, cash equivalents and restricted cash at beginning of period 123.6 141.0

Cash, cash equivalents and restricted cash at end of period $ 59.2 $ 140.6

$ 73.8  

$ 135.1  

SUPPLEMENTAL CASH FLOW INFORMATION

Six Months Ended

SUPPLEMENTAL CASH FLOW INFORMATION Nine Months Ended

September 30,

Cash paid for income taxes $ 21.9 $ 13.1

$ 10.7  

Cash paid for interest 5.4 10.3

1 unchanged sentence

Operating cash flows from operating leases 13.8 15.4

Financing cash flows from financing leases — 0.1

Lease assets obtained in exchange for new operating lease liabilities 8.4 12.9

6 unchanged sentences

Tennant Company Shareholders

Common Shares

Additional Paid-in Capital

Retained Earnings

Accumulated Other Comprehensive Loss

Tennant Company Shareholders' Equity

Noncontrolling Interest

Shares Common

Stock Additional

Capital Retained

Earnings Accumulated

Comprehensive

Shareholders'

Equity Noncontrolling

Interest Total Equity

Balance, December 31, 2021

18,535,116  

$ 54.1  

$ 410.6  

$ ( 37.9 )  

$ 433.8  

$ 435.1  

18,535,116 $ 7.0 $ 54.1 $ 410.6 $ ( 37.9 ) $ 433.8 $ 1.3 $ 435.1

Net income — — 10.3 — 10.3 — 10.3

Other comprehensive loss — — — ( 4.0 ) ( 4.0 ) — ( 4.0 )

( 4.0 )  

Issue stock for directors, employee benefit and stock plans, net of related tax withholdings and repurchases of 24,025 shares

44,700  

( 1.3 )  

44,700 — ( 1.3 ) — — ( 1.3 ) — ( 1.3 )

Share-based compensation — 1.8 — — 1.8 — 1.8

Dividends paid $ 0.25 per common share

( 4.6 )  

— — ( 4.6 ) — ( 4.6 ) — ( 4.6 )

Balance, March 31, 2022 18,579,816 $ 7.0 $ 54.6 $ 416.3 $ ( 41.9 ) $ 436.0 $ 1.3 $ 437.3

18,579,816  

$ 54.6  

$ 416.3  

$ ( 41.9 )  

$ 436.0  

$ 437.3  

Net income — — 16.6 — 16.6 — 16.6

Other comprehensive income — — — ( 16.1 ) ( 16.1 ) — ( 16.1 )

( 16.1 )  

Issue stock for directors, employee benefit and stock plans, net of related tax withholdings of 2,071 shares

( 0.1 )  

9,859 — ( 0.1 ) — — ( 0.1 ) — ( 0.1 )

Share-based compensation — 0.9 — — 0.9 — 0.9

Dividends paid $ 0.25 per common share

( 4.6 )  

— — ( 4.6 ) — ( 4.6 ) — ( 4.6 )

Balance, June 30, 2022 18,589,675 $ 7.0 $ 55.4 $ 428.3 $ ( 58.0 ) $ 432.7 $ 1.3 $ 434.0

18,589,675  

$ 55.4  

$ 428.3  

$ ( 58.0 )  

$ 432.7  

$ 434.0  

Net income — — 15.6 — 15.6 — 15.6

Other comprehensive income — — — ( 20.2 ) ( 20.2 ) — ( 20.2 )

Issue stock for directors, employee benefit and stock plans, net of related tax withholdings of 54 shares

6,714 — 0.2 — — 0.2 — 0.2

Share-based compensation — 1.7 — — 1.7 — 1.7

Dividends paid $ 0.25 per common share

— — ( 4.8 ) — ( 4.8 ) — ( 4.8 )

Balance, September 30, 2022 18,596,389 $ 7.0 $ 57.3 $ 439.1 $ ( 78.2 ) $ 425.2 $ 1.3 $ 426.5

Tennant Company Shareholders

Common Shares

Additional Paid-in Capital

Retained Earnings

Accumulated Other Comprehensive Loss

Tennant Company Shareholders' Equity

Noncontrolling Interest

Shares Common

Stock Additional

Capital Retained

Earnings Accumulated

Comprehensive

Shareholders'

Equity Noncontrolling

Interest Total Equity

Balance, December 31, 2020 18,503,805 $ 6.9 $ 54.7 $ 363.3 $ ( 20.1 ) $ 404.8 $ 1.3 $ 406.1

18,503,805  

$ 54.7  

$ 363.3  

$ ( 20.1 )  

$ 404.8  

$ 406.1  

Net income — — 25.7 — 25.7 — 25.7

Other comprehensive loss — — — ( 10.7 ) ( 10.7 ) — ( 10.7 )

( 10.7 )  

Issue stock for directors, employee benefit and stock plans, net of related tax withholdings of 22,724 shares

102,681  

102,681 0.1 1.3 — — 1.4 — 1.4

Share-based compensation — 3.1 — — 3.1 — 3.1

Dividends paid $ 0.23 per common share

( 4.2 )  

— — ( 4.2 ) — ( 4.2 ) — ( 4.2 )

Balance, March 31, 2021 18,606,486 $ 7.0 $ 59.1 $ 384.8 $ ( 30.8 ) $ 420.1 $ 1.3 $ 421.4

18,606,486  

$ 59.1  

$ 384.8  

$ ( 30.8 )  

$ 420.1  

$ 421.4  

Other comprehensive income

Net income — — 9.8 — 9.8 — 9.8

Other comprehensive loss — — — 4.9 4.9 — 4.9

Issue stock for directors, employee benefit and stock plans, net of related tax withholdings of 3,305 shares

58,579  

58,579 — 1.9 — — 1.9 — 1.9

Share-based compensation — 3.9 — — 3.9 — 3.9

Dividends paid $ 0.23 per common share

( 4.4 )  

— — ( 4.4 ) — ( 4.4 ) — ( 4.4 )

Balance, June 30, 2021 18,665,065 $ 7.0 $ 64.9 $ 390.2 $ ( 25.9 ) $ 436.2 $ 1.3 $ 437.5

18,665,065  

$ 64.9  

$ 390.2  

$ ( 25.9 )  

$ 436.2  

$ 437.5  

Net income — — 21.5 — 21.5 — 21.5

Other comprehensive loss — — — ( 7.5 ) ( 7.5 ) — ( 7.5 )

Issue stock for directors, employee benefit and stock plans, net of related tax withholdings of 18 shares

20,401 — 0.9 — — 0.9 — 0.9

Share-based compensation — 2.5 2.5 2.5

Dividends paid $ 0.23 per common share

— — ( 4.3 ) — ( 4.3 ) — ( 4.3 )

Repurchases of common stock ( 102,229 ) — ( 7.5 ) ( 7.5 ) — ( 7.5 )

Balance, September 30, 2021 18,583,237 $ 7.0 $ 60.8 $ 407.4 $ ( 33.4 ) $ 441.8 $ 1.3 $ 443.1

See accompanying notes to consolidated financial statements.

TENNANT COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In millions, except shares and per share data)

3 unchanged sentences

Our products are used in many types of environments, including retail establishments, distribution centers, factories and warehouses, public venues such as arenas and stadiums, office buildings, schools and universities, hospitals and clinics, and more.

Customers include contract cleaners to whom organizations outsource facilities maintenance as well as businesses that perform facilities maintenance themselves.

Customers include contract cleaners to whom organizations outsource facilities maintenance as well as businesses that perform facilities maintenance themselves.

The Company reaches these customers through the industry's largest direct sales and service organization and through a strong and well-supported network of authorized distributors worldwide.

Basis of Presentation –

The accompanying unaudited consolidated financial statements have been prepared in accordance with the U.S.

Securities and Exchange Commission (“SEC”) requirements for interim reporting.

Basis of Presentation – The accompanying unaudited consolidated financial statements have been prepared in accordance with the U.S.

Securities and Exchange Commission (“SEC”) requirements for interim reporting.

In our opinion, the consolidated financial statements contain all adjustments (consisting of only normal recurring adjustments) necessary for the fair presentation of our financial position and results of operations.

3 unchanged sentences

Reference Rate Reform

March 2020, 

the Financial Accounting Standards Board ("FASB") issued Accounting Standard Update (“ASU”) 

2020 - 04,  

Reference Rate Reform (Topic  

 This ASU provides optional expedients to applying generally accepted accounting principles to certain contract modifications, hedging relationships, and other transactions affected by the reference rate reform, which affects the London Interbank Offered ("LIBO") Rate, if certain criteria are met.

The amendments are effective 

March 12, 2020 

through 

December 31, 2022.

In March 2020, the Financial Accounting Standards Board ("FASB") issued Accounting Standard Update (“ASU”) No.

2020-04, Reference Rate Reform (Topic 848) .

The amendments are effective March 12, 2020 through December 31, 2022.

We continue to monitor our contracts and transactions for potential application of this ASU.

3 unchanged sentences

Three Months Ended

Six Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

Americas $ 174.0 $ 166.7 $ 512.7 $ 491.7

Europe, Middle East and Africa 69.0 80.7 225.0 246.8

Asia Pacific 19.9 24.6 63.5 75.9

Total $ 262.9 $ 272.0 $ 801.2 $ 814.4

Net sales are attributed to each geographic area based on the end-user country and are net of intercompany sales.

1 unchanged sentence

Three Months Ended

Six Months Ended

$ 172.1  

$ 177.1  

$ 330.2  

$ 338.0  

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

Equipment $ 153.8 $ 168.6 $ 484.0 $ 506.6

Parts and consumables 67.4 62.8 194.1 187.4

Specialty surface coatings (a)

Service and other 41.7 40.6 123.1 118.9

$ 280.2  

$ 279.1  

$ 538.3  

$ 542.4  

On February 1, 2021, we sold our Coatings business.

Specialty surface coatings (a)

Total $ 262.9 $ 272.0 $ 801.2 $ 814.4

(a) On February 1, 2021, we sold our Coatings business.

Further details regarding the sale are discussed in Note 5.

1 unchanged sentence

Three Months Ended

Six Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

Sales direct to consumer $ 174.9 $ 175.4 $ 518.4 $ 517.3

$ 179.7  

$ 172.9  

$ 343.5  

$ 341.9  

Sales to distributors 88.0 96.6 282.8 297.1

$ 280.2  

$ 279.1  

$ 538.3  

$ 542.4  

Total $ 262.9 $ 272.0 $ 801.2 $ 814.4

Contract Liabilities

11 unchanged sentences

The change in our sales incentive accrual balance was as follows:

Six Months Ended

Nine Months Ended

September 30,

Beginning balance $ 19.9 $ 12.1

$ 19.9  

$ 12.1  

Additions to sales incentive accrual 16.1 29.9

Contract payments ( 19.5 ) ( 26.1 )

( 16.4 )  

Foreign currency fluctuations ( 0.9 ) 0.1

( 0.5 )  

Ending balance $ 15.6 $ 16.0

$ 13.3  

$ 14.6  

Deferred Revenue

3 unchanged sentences

The change in the deferred revenue balance was as follows:

Six Months Ended

Nine Months Ended

September 30,

Beginning balance $ 11.2 $ 9.3

$ 11.2  

Increase in deferred revenue representing our obligation to satisfy future performance obligations 19.4 25.9

Decrease in deferred revenue for amounts recognized in net sales for satisfied performance obligations ( 19.9 ) ( 25.2 )

( 14.8 )  

Foreign currency fluctuations ( 0.7 ) —

( 0.3 )  

Ending balance $ 10.0 $ 10.0

$ 11.7  

$ 10.1  

At June 30, 2022 , $ 8.4 million and $ 3.3 million of deferred revenue was reported in other current liabilities and other liabilities, respectively, on our consolidated balance sheets.

At September 30, 2022, $ 6.9 million and $ 3.1 million of deferred revenue was reported in other current liabilities and other liabilities, respectively, on our consolidated balance sheets.

Of these amounts, we expect to recognize the following approximate amounts in net sales in the following periods:

Remaining 2022

$ 11.7  

At December 31, 2021 , $ 7.7 million and $ 3.5 million of deferred revenue was reported in other current liabilities and other liabilities, respectively, on our consolidated balance sheets.

Thereafter 0.1

At December 31, 2021, $ 7.7 million and $ 3.5 million of deferred revenue was reported in other current liabilities and other liabilities, respectively, on our consolidated balance sheets.

Management Actions

Restructuring Actions

During the three and six months ended June 30, 2022 and June 30, 2021, we incurred restructuring expenses as part of our ongoing global reorganization efforts.

During the three and nine months ended September 30, 2022 and September 30, 2021, we incurred restructuring expenses as part of our ongoing global reorganization efforts.

The following pre-tax restructuring charges were included in selling and administrative expense in the consolidated statements of income:

Three Months Ended

Six Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

Severance-related costs $ — $ — $ 0.3 $ 0.9

Other costs 0.5 — 0.8 —

Total pre-tax restructuring costs $ 0.5 $ — $ 1.1 $ 0.9

1 unchanged sentence

The charges in 2021 primarily impacted the EMEA and APAC operating segments.

Our restructuring actions represent the continued execution of a multi-year enterprise strategy to drive increased productivity throughout our operations.

Our restructuring actions represent the continued execution of a multi-year enterprise strategy to drive increased productivity throughout our operations.

A reconciliation of the beginning and ending liability balances for severance-related costs is as follows:

Six Months Ended

Nine Months Ended

September 30,

Beginning balance $ 4.9 $ 4.5

New charges 0.9 0.9

Cash payments ( 2.3 ) ( 2.3 )

( 1.9 )  

Foreign currency fluctuations ( 0.7 ) ( 0.2 )

( 0.5 )  

Adjustments to accrual ( 0.6 ) —

( 0.6 )  

Ending balance $ 2.2 $ 2.9

5 unchanged sentences

Sale of Coatings business

During the first quarter of 2021, we sold the Coatings business. The resulting pre-tax gain was $ 9.8 million and is reflected within gain on sale of assets in the consolidated statements of income.

During the first quarter of 2021, we sold the Coatings business.

The resulting pre-tax gain was $ 9.8 million and is reflected within gain on sale of assets in the consolidated statements of income.

Proceeds from sale of assets, net of cash divested, was $ 24.7 million.

Acquisition of Gaomei

On January 4, 2019, we completed the acquisition of Hefei Gaomei Cleaning Machines Co., Ltd.

On January 4, 2019, we completed the acquisition of Hefei Gaomei Cleaning Machines Co., Ltd.

and Anhui Rongen Environmental Protection Technology Co., Ltd.

3 unchanged sentences

Inventories are valued at the lower of cost or net realizable value and consisted of the following:

September 30,

2022 December 31,

Inventories carried at LIFO:

Finished goods (a)

$ 68.2  

$ 54.0  

$ 78.8 $ 54.0

Raw materials and work-in-process 51.2 42.4

Excess of FIFO over LIFO cost (b)

(49.0 )  

( 51.2 ) ( 43.0 )

Total LIFO inventories $ 78.8 $ 53.4

$ 69.7  

$ 53.4  

Inventories carried at FIFO:

Finished goods (a)

$ 58.8  

$ 53.8  

$ 62.8 $ 53.8

Raw materials and work-in-process 58.0 53.4

Total FIFO inventories $ 120.8 $ 107.2

$ 118.9  

$ 107.2  

Total inventories $ 199.6 $ 160.6

$ 188.6  

$ 160.6  

Finished goods include machines, parts and consumables and component parts that are used in our products.

The difference between replacement cost and the stated LIFO inventory value is not materially different from the reserve for the LIFO valuation method.

We are currently operating in a more volatile inflationary environment and we experienced higher product cost inflation in most categories during the second quarter of 2022.

Our LIFO charge for the three and six months ended June 30, 2022 was $ 4.9 million and $ 6.0 million, respectively, compared to $ 2.4 million and $ 2.2 million in the three and six months ended June 30, 2021, respectively.

The increase in each period was attributable to the broad effects of inflation on materials.

(a) Finished goods include machines, parts and consumables and component parts that are used in our products.

(b) The difference between replacement cost and the stated LIFO inventory value is not materially different from the reserve for the LIFO valuation method.

We are currently operating in a more volatile inflationary environment and we experienced higher product cost inflation in most categories during 2022.

Our LIFO charge for the three and nine months ended September 30, 2022 was $ 2.1 million and $ 8.1 million, respectively, compared to $ 3.7 million and $ 5.9 million in the three and nine months ended September 30, 2021, respectively.

The increase in each period was attributable to the broad effects of inflation.

Goodwill and Intangible Assets

The changes in the carrying amount of goodwill for the six months ended June 30, 2022 were as follows:

The changes in the carrying amount of goodwill for the nine months ended September 30, 2022 were as follows:

Goodwill Accumulated

Balance as of December 31, 2021

$ 233.9  

$ ( 40.8 )  

$ 193.1  

$ 233.9 $ ( 40.8 ) $ 193.1

Foreign currency fluctuations ( 32.0 ) 7.5 ( 24.5 )

( 16.7 )  

Balance as of June 30, 2022

$ 217.2  

$ ( 36.9 )  

$ 180.3  

Balance as of September 30, 2022

$ 201.9 $ ( 33.3 ) $ 168.6

The balances of acquired intangible assets, excluding goodwill, were as follows:

Customer Lists

Balance as of June 30, 2022

Customer Lists Trade Names Technology Total

Balance as of September 30, 2022

Original cost $ 134.5 $ 26.1 $ 15.3 $ 175.9

$ 144.4  

$ 28.0  

$ 16.0  

$ 188.4  

Accumulated amortization ( 77.6 ) ( 13.8 ) ( 10.5 ) ( 101.9 )

( 80.4 )  

( 14.2 )  

( 10.7 )  

Carrying value $ 56.9 $ 12.3 $ 4.8 $ 74.0

$ 64.0  

$ 13.8  

$ 83.1  

Weighted average original life (in years) 15 10 11

1 unchanged sentence

Original cost $ 155.4 $ 30.3 $ 17.0 $ 202.7

$ 155.4  

$ 30.3  

$ 17.0  

$ 202.7  

Accumulated amortization ( 80.0 ) ( 13.9 ) ( 10.8 ) ( 104.7 )

( 80.0 )  

( 13.9 )  

( 10.8 )  

Carrying value $ 75.4 $ 16.4 $ 6.2 $ 98.0

$ 75.4  

$ 16.4  

$ 98.0  

Weighted average original life (in years) 15 11 11

Amortization expense on intangible assets for the three and six months ended June 30, 2022 was $ 3.9 million and $ 8.4 million, respectively.

Amortization expense on intangible assets for the three and six months ended June 30, 2021 was $ 5.0 million and $ 10.3 million, respectively.

Amortization expense on intangible assets for the three and nine months ended September 30, 2022 was $ 3.7 million and $ 12.1 million, respectively.

Amortization expense on intangible assets for the three and nine months ended September 30, 2021 was $ 4.8 million and $ 15.1 million, respectively.

Estimated aggregate amortization expense based on the current carrying value of amortizable intangible assets for each of the five succeeding years and thereafter is as follows:

Remaining 2022

$ 83.1  

Thereafter 24.6

2021 Credit Agreement

April 5, 2021, 

we and certain of our foreign subsidiaries entered into an Amended and Restated Credit Agreement (the 

“2021  Credit Agreement”) with JPMorgan Chase Bank, N.A.

On April 5, 2021, we and certain of our foreign subsidiaries entered into an Amended and Restated Credit Agreement (the “2021 Credit Agreement”) with JPMorgan Chase Bank, N.A.

as administrative agent.

2021  Credit Agreement provides us and certain of our foreign subsidiaries access to a senior secured credit facility until 

April 3, 2026, 

consisting of a term loan facility in an amount up to $ 100.0  million and a revolving facility in an amount up to $ 450.0  million with an option to expand the credit facility by up to $ 275.0  million, with the consent of the lenders willing to provide additional borrowings in the form of increases to their revolving facility commitment or funding of incremental term loans.

Borrowings 

be denominated in U.S.

The 2021 Credit Agreement provides us and certain of our foreign subsidiaries access to a senior secured credit facility until April 3, 2026, consisting of a term loan facility in an amount up to $ 100.0 million and a revolving facility in an amount up to $ 450.0 million with an option to expand the credit facility by up to $ 275.0 million, with the consent of the lenders willing to provide additional borrowings in the form of increases to their revolving facility commitment or funding of incremental term loans.

Borrowings may be denominated in U.S.

dollars or certain other currencies.

The fee for committed funds under the revolving facility of the 

2021  Credit Agreement ranges from an annual rate of 

0.15 % to 

0.30 %, depending on our leverage ratio.

The fee for committed funds under the revolving facility of the 2021 Credit Agreement ranges from an annual rate of 0.15 % to 0.30 %, depending on our leverage ratio.

Borrowings denominated in U.S.

dollars under the 

2021  Credit Agreement bear interest at a rate per annum equal to (a) the Adjusted LIBO Rate, as adjusted for statutory reserve requirements for eurocurrency liabilities, but in any case, not less than 0 %, plus an additional spread of 1.10 % to 1.70%, depending on our leverage ratio or (b) the Alternate Base Rate which is the greatest of (i) the prime rate, (ii) the federal funds rate plus 0.50 % and (iii) the adjusted LIBO rate for a one -month period, but in any case, not less than 1.0 %, plus, in any such case, 1.0 %, plus an additional spread of 0.10 % to 0.70 %, depending on our leverage ratio.

In connection with the 

2021  Credit Agreement, we reaffirmed our security interest in favor of the lenders in substantially all our personal property and pledged the stock of our domestic subsidiaries and 

65 % of the stock of our 

first -tier foreign subsidiaries.

The obligations under the 

2021  Credit Agreement are also guaranteed by certain of our 

first -tier domestic subsidiaries, and those subsidiaries also provided a security interest in their similar personal property.

dollars under the 2021 Credit Agreement bear interest at a rate per annum equal to (a) the Adjusted LIBO Rate, as adjusted for statutory reserve requirements for eurocurrency liabilities, but in any case, not less than 0 %, plus an additional spread of 1.10 % to 1.70 %, depending on our leverage ratio or (b) the Alternate Base Rate which is the greatest of (i) the prime rate, (ii) the federal funds rate plus 0.50 % and (iii) the adjusted LIBO rate for a one-month period, but in any case, not less than 1.0 %, plus, in any such case, 1.0 %, plus an additional spread of 0.10 % to 0.70 %, depending on our leverage ratio.

In connection with the 2021 Credit Agreement, we reaffirmed our security interest in favor of the lenders in substantially all our personal property and pledged the stock of our domestic subsidiaries and 65 % of the stock of our first-tier foreign subsidiaries.

The obligations under the 2021 Credit Agreement are also guaranteed by certain of our first-tier domestic subsidiaries, and those subsidiaries also provided a security interest in their similar personal property.

Our 2021 Credit Agreement restricts the payment of dividends or repurchasing of stock requiring that, after giving effect to such payments, no default exists or would result from such payment.

Additionally, cash dividends are restricted to $ 7.5 million per quarter and approved levels of other restricted payments range from $ 60.0 million to unlimited based on our net leverage ratio (not taking into account any acquisition holiday) after giving effect to such payment.

2021  Credit Agreement contains customary representations, warranties and covenants, including but 

not  limited to covenants restricting our ability to incur indebtedness and liens and to merge or consolidate with another entity.

Further, the 

2021  Credit Agreement contains the following covenants:

• 

A covenant requiring us to maintain an indebtedness to EBITDA ratio, determined as of the end of each of our fiscal quarters, of 

no  greater than 

3.50  to 

1.00,  with certain alternative requirements for permitted acquisitions greater than $ 50.0  million;

• 

A covenant requiring us to maintain an EBITDA to interest expense ratio for a period of 

four  consecutive fiscal quarters as of the end of each quarter of 

no  less than 

3.00  to 

• 

A covenant restricting us from paying dividends or repurchasing stock if, after giving effect to such payments and assuming 

no  default exists or would result from such payment, our leverage ratio is greater than 

2.50  to 

1.00,  in such case limiting such payments to $ 60.0  million during any fiscal year.

The 2021 Credit Agreement contains customary representations, warranties and covenants, including but not limited to covenants restricting our ability to incur indebtedness and liens and to merge or consolidate with another entity.

Further, the 2021 Credit Agreement contains the following covenants:

• A covenant requiring us to maintain an indebtedness to EBITDA ratio, determined as of the end of each of our fiscal quarters, of no greater than 3.50 to 1.00, with certain alternative requirements for permitted acquisitions greater than $ 50.0 million;

• A covenant requiring us to maintain an EBITDA to interest expense ratio for a period of four consecutive fiscal quarters as of the end of each quarter of no less than 3.00 to 1.00;

• A covenant restricting us from paying dividends or repurchasing stock if, after giving effect to such payments and assuming no default exists or would result from such payment, our leverage ratio is greater than 2.50 to 1.00, in such case limiting such payments to $ 60.0 million during any fiscal year.

Redemption of Senior Notes

In the second quarter of 2021, the Company redeemed $ 300.0 million principal amount outstanding of its 5.625 % Senior Notes due 2025 ("Senior Notes"). We used the proceeds from the borrowings under the 2021 Credit Agreement to retire our Senior Notes and pay the $ 8.4 million call premium due upon redemption in the second quarter of 2021.

In the second quarter of 2021, the Company redeemed $ 300.0 million principal amount outstanding of its 5.625 % Senior Notes due 2025 ("Senior Notes").

We used the proceeds from the borrowings under the 2021 Credit Agreement to retire our Senior Notes and pay the $ 8.4 million call premium due upon redemption in the second quarter of 2021.

In addition, we wrote off $ 2.9 million of unamortized debt issuance costs in the second quarter of 2021.

1 unchanged sentence

Debt outstanding consisted of the following:

September 30, 2022 December 31, 2021

Credit facility borrowings:

Revolving credit facility borrowings $ 185.0 $ 168.0

$ 168.0  

Term loan facility borrowings 96.3 98.8

1 unchanged sentence

Finance lease liabilities 0.1 0.1

Total debt 281.6 267.6

current portion of long-term debt (a)

( 5.2 )  

( 5.3 ) ( 4.2 )

Long-term debt $ 276.3 $ 263.4

$ 260.6  

$ 263.4  

As of June 30, 2022 , the Company is required to repay $ 5.0 million in outstanding credit facility borrowings and $ 0.2 million of current maturities of secured borrowings over the next 12 months.

As of June 30, 2022 , we had outstanding borrowings of $ 168.0 million and $ 97.5 million under our revolving facility and term loan facility, respectively.

We had letters of credit and bank guarantees outstanding in the amount of $ 2.9 million, leaving approximately $ 279.1 million of unused borrowing capacity on our revolving facility.

Commitment fees on unused lines of credit for the six months ended June 30, 2022 were $ 0.4 million.

The overall weighted average cost of debt is approximately 

2.0 % and net of related cross-currency swap instruments is approximately 0.9 %.

(a) As of September 30, 2022, the Company is required to repay $ 5.0 million in outstanding credit facility borrowings, $ 0.2 million of current maturities of secured borrowings and $ 0.1 million of finance lease liabilities over the next 12 months.

As of September 30, 2022, we had outstanding borrowings of $ 185.0 and $ 96.3 under our revolving facility and term loan facility, respectively.

We had letters of credit and bank guarantees outstanding in the amount of $ 3.1 million, leaving approximately $ 261.9 of unused borrowing capacity on our revolving facility.

Commitment fees on unused lines of credit for the nine months ended September 30, 2022 were $ 0.6 million.

The overall weighted average cost of debt was approximately 3.5 % and net of related cross-currency swap instruments was approximately 2.5 %.

Further details regarding the cross-currency swap instrument are discussed in Note 10.

5 unchanged sentences

The changes in warranty reserves were as follows:

Six Months Ended

Nine Months Ended

September 30,

Beginning balance $ 10.4 $ 11.1

$ 10.4  

$ 11.1  

Additions charged to expense 6.7 6.7

Foreign currency fluctuations ( 0.3 ) ( 0.2 )

( 0.1 )  

( 4.1 )  

Claims paid ( 6.2 ) ( 7.1 )

Ending balance $ 10.6 $ 10.5

$ 10.6  

Hedge Accounting and Hedging Programs

7 unchanged sentences

These contracts do not subject us to material balance sheet risk due to exchange rate movements because gains and losses on these derivatives are intended to offset gains and losses on the assets and liabilities being hedged.

At June 30, 2022 and December 31, 2021 , the notional amounts of foreign currency forward exchange contracts outstanding not designated as hedging instruments were $ 145.8 million and $ 45.0 million, respectively.

At September 30, 2022 and December 31, 2021, the notional amounts of foreign currency forward exchange contracts outstanding not designated as hedging instruments were $ 80.0 million and $ 45.0 million, respectively.

Cash Flow Hedges

2 unchanged sentences

These cross-currency swaps are designated as cash flow hedges.

The hedged cash flows as of December 31, 2021 included 

€152.4 million of total notional values.

The hedged cash flows as of December 31, 2021 included € 152.4 million of total notional values.

The loan and related swaps matured in April 2022.

4 unchanged sentences

These cross-currency swaps are designated as fair value hedges.

As of June 30, 2022 these cross-currency swaps included 

€85.9 million of total notional value.

As of June 30, 2022, the aggregated scheduled interest payments over the course of the loan and related swaps amounted to €10.9 million.

The scheduled maturity and principal payment of the loan and related swaps of 

€75.0 million are due in April 2027.

As of September 30, 2022 these cross-currency swaps included € 85.3 million of total notional value.

As of September 30, 2022, the aggregated scheduled interest payments over the course of the loan and related swaps amounted to € 10.3 million.

The scheduled maturity and principal payment of the loan and related swaps of € 75.0 million are due in April 2027.

Net Investment Hedges

1 unchanged sentence

dollar foreign exchange cross-currency swaps to hedge our exposure to adverse foreign currency exchange rate movements between Tennant Company and a wholly owned European subsidiary.

We enter into these fixed-to-fixed cross-currency swap agreements to protect a designated monetary amount of the Company’s net investment in its Euro functional currency subsidiary against the risk of changes in the Euro to U.S.

We enter into these fixed-to-fixed cross-currency swap agreements to protect a designated monetary amount of the Company’s net investment in its Euro functional currency subsidiary against the risk of changes in the Euro to U.S.

dollar foreign exchange rate.

These cross-currency swaps are designated as net investment hedges.

As of June 30, 2022, the cross-currency swaps included €75.0 million of total notional values.

As of September 30, 2022, the cross-currency swaps included € 75.0 million of total notional values.

These swaps are scheduled to mature in April 2027.

The fair value of derivative instruments on our consolidated balance sheets was as follows:

Derivative Assets

Derivative Liabilities

Balance Sheet Location

June 30, 2022  

December 31, 2021

Balance Sheet Location

June 30, 2022  

December 31, 2021

Derivative Assets Derivative Liabilities

Balance Sheet Location September 30, 2022 December 31, 2021 Balance Sheet Location September 30, 2022 December 31, 2021

Derivatives designated as cash flow hedges:

Foreign currency forward contracts

Other current assets

Other current liabilities

$ 10.4  

Foreign currency forward contracts Other current assets $ — $ — Other current liabilities $ — $ 10.4

Derivatives designated as fair value hedges:

Cross-currency swaps

Other current assets

Other current liabilities

Cross-currency swaps

Other liabilities

Cross-currency swaps Other current assets 1.6 — Other current liabilities — —

Cross-currency swaps Other assets 6.5 — Other liabilities — —

Derivatives designated as net investment hedges:

Cross-currency swaps

Other current assets

Other current liabilities

Cross-currency swaps

Other liabilities

Cross-currency swaps Other current assets 1.2 — Other current liabilities — —

Cross-currency swaps Other assets 5.4 — Other liabilities — —

Derivatives not designated as hedging instruments:

Foreign currency forward contracts

Other current assets

Other current liabilities

As of June 30, 2022 , we anticipate reclassifying $ 1.2 million of gains from accumulated other comprehensive loss to net income during the next 12 months.

Foreign currency forward contracts Other current assets $ 2.7 $ 0.3 Other current liabilities $ — $ 0.4

As of September 30, 2022, we anticipate reclassifying $ 2.6 million of gains from accumulated other comprehensive loss to net income during the next 12 months.

The following tables include the amounts in the consolidated statements of income in which the effects of derivatives designated as hedging instruments are recorded:

Three Months Ended

Six Months Ended

Amount of Gain (Loss) on Hedging Activity

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

Total Amount of Gain

(Loss) on Hedging

Activity Total Amount of Gain

(Loss) on Hedging

Activity Total Amount of Gain

(Loss) on Hedging

Activity Total Amount of Gain

(Loss) on Hedging

Derivatives designated as cash flow hedges:

$ 280.2  

$ 279.1  

$ ( 0.2 )  

$ 538.3  

$ 542.4  

Net sales $ 262.9 $ — $ 272.0 $ — $ 801.2 $ — $ 814.4 $ ( 0.3 )

Interest expense, net ( 2.2 ) — ( 0.6 ) 0.6 ( 3.7 ) 0.7 ( 6.6 ) 1.7

( 1.2 )  

( 2.1 )  

( 1.5 )  

( 6.0 )  

Net foreign currency transaction (loss) gain — — ( 0.7 ) 4.1 ( 0.4 ) 4.7 ( 0.2 ) 9.5

( 1.0 )  

( 1.9 )  

( 0.4 )  

Derivatives designated as fair value hedges:

Interest expense, net ( 2.2 ) 0.4 ( 0.6 ) — ( 3.7 ) 0.8 ( 6.6 ) —

( 1.2 )  

( 2.1 )  

( 1.5 )  

( 6.0 )  

Net foreign currency transaction (loss) gain — 5.6 ( 0.7 ) — ( 0.4 ) 9.9 ( 0.2 ) —

( 1.0 )  

( 0.4 )  

Derivatives designated as net investment hedges:

Interest expense, net $ ( 2.2 ) $ 0.3 $ ( 0.6 ) $ — $ ( 3.7 ) $ 0.6 $ ( 6.6 ) $ —

( 1.2 )  

( 2.1 )  

( 1.5 )  

( 6.0 )  

The effect of derivative instruments designated as hedges and derivative instruments not designated as hedges in our consolidated statements of income was as follows:

Three Months Ended

Six Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

Derivatives designated as cash flow hedges:

Net (loss) gain recognized in other comprehensive loss, net of tax (a)

$ ( 1.3 )  

Net gain recognized in other comprehensive loss, net of tax (a)

$ — $ 3.4 $ 3.8 $ 8.1

Net loss reclassified from accumulated other comprehensive loss into income, net of tax, effective portion to net sales — — — ( 0.2 )

( 0.2 )  

Net gain reclassified from accumulated other comprehensive loss into income, net of tax, effective portion to interest expense, net — 0.4 0.5 1.3

Net (loss) gain reclassified from accumulated other comprehensive loss into income, net of tax, effective portion to net foreign currency transaction gain

( 1.5 )  

Net gain reclassified from accumulated other comprehensive loss into income, net of tax, effective portion to net foreign currency transaction gain — 3.2 3.6 7.3

Derivatives designated as fair value hedges:

1 unchanged sentence

Net gain reclassified from accumulated other comprehensive loss into income, net of tax, effective portion to interest expense, net 0.3 — 0.6 —

Net gain reclassified from accumulated other comprehensive loss into income, net of tax, effective portion to net foreign currency transaction gain

Derivatives designated as net investment hedges:

Net gain recognized in other comprehensive loss, net of tax (a)

Net gain reclassified from accumulated other comprehensive loss into income, net of tax, effective portion to interest expense, net 0.3 — 0.5 —

Derivatives not designated as hedging instruments:

Net gain (loss) recognized in income (b)

( 0.7 )  

Net change in the fair value of the effective portion classified in other comprehensive loss.

Classified in net foreign currency transaction (loss) gain.

Net gain recognized in income (b)

$ 4.0 $ 0.8 $ 6.6 $ 2.2

(a) Net change in the fair value of the effective portion classified in other comprehensive loss.

(b) Classified in net foreign currency transaction loss.

Fair Value Measurements

4 unchanged sentences

The following is a brief description of those three levels:

• 

Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities.

• 

Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly.

These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.

• 

Unobservable inputs that reflect the reporting entity’s own assumptions.

Our population of assets and liabilities subject to fair value measurements at June 30, 2022 was as follows:

Unobservable inputs that reflect the reporting entity’s own assumptions.

Our population of assets and liabilities subject to fair value measurements at September 30, 2022 was as follows:

Value Level 1 Level 2 Level 3

Foreign currency forward exchange contracts $ 2.7 $ — $ 2.7 $ —

Cross-currency swaps 14.7 — 14.7 —

Total assets 17.4 — 17.4 —

Foreign currency forward exchange contracts — — — —

Total liabilities $ — $ — $ — $ —

Our population of assets and liabilities subject to fair value measurements at 

December 31, 2021 was as follows:

Our population of assets and liabilities subject to fair value measurements at December 31, 2021 was as follows:

Value Level 1 Level 2 Level 3

Foreign currency forward exchange contracts $ 0.9 $ — $ 0.9 $ —

Total assets 0.9 — 0.9 —

Foreign currency forward exchange contracts 11.4 — 11.4 —

Total liabilities $ 11.4 $ — $ 11.4 $ —

$ 11.4  

Our foreign currency forward exchange contracts and cross-currency swaps are valued using observable Level 2 market expectations at the measurement date and standard valuation techniques to convert future amounts to a single present value amount.

1 unchanged sentence

The carrying amounts reported in the consolidated balance sheets for cash and cash equivalents, restricted cash, accounts receivable, other current assets, accounts payable and other current liabilities approximate fair value due to their short-term nature.

The fair value and carrying value of total debt, including current portion, was $ 266.8 million and $ 265.8 million, respectively, as of June 30, 2022 .

The fair value and carrying value of total debt, including current portion, was $ 271.2 million and $ 267.6 million, respectively, as of December 31, 2021 .

The fair value and carrying value of total debt, including current portion, was $ 282.4 million and $ 281.6 million, respectively, as of September 30, 2022.

The fair value and carrying value of total debt, including current portion, was $ 271.2 million and $ 267.6 million, respectively, as of December 31, 2021.

The fair value was calculated based on the borrowing rates currently available to us for bank loans with similar terms and remaining maturities, which is a Level 2 in the fair value hierarchy.

6 unchanged sentences

The changes in components of accumulated other comprehensive loss, net of tax, are as follows:

Six Months Ended June 30, 2022

Six Months Ended June 30, 2021

Foreign Currency Translation Adjustments

Pension and Post-Retirement Medical Benefits

Derivative Financial Instruments

Foreign Currency Translation Adjustments

Pension and Post-Retirement Medical Benefits

Derivative Financial Instruments

Nine Months Ended September 30, 2022 Nine Months Ended September 30, 2021

Foreign Currency

Adjustments Pension and Post-

Retirement Medical

Benefits Cash Flow Hedge Total Foreign Currency

Adjustments Pension and Post-

Retirement Medical

Benefits Cash Flow Hedge Total

Beginning balance $ ( 36.0 ) $ ( 2.1 ) $ 0.2 $ ( 37.9 ) $ ( 19.1 ) $ ( 1.7 ) $ 0.7 $ ( 20.1 )

$ ( 36.0 )  

$ ( 2.1 )  

$ ( 37.9 )  

$ ( 19.1 )  

$ ( 1.7 )  

Other comprehensive (loss) income before reclassifications ( 40.3 ) — 5.2 ( 35.1 ) ( 13.1 ) 0.1 8.1 ( 4.9 )

( 20.7 )  

( 12.2 )  

( 5.8 )  

Amounts reclassified from accumulated other comprehensive loss ( 0.5 ) — ( 4.7 ) ( 5.2 ) — — ( 8.4 ) ( 8.4 )

( 7.9 )  

( 4.8 )  

Net current period other comprehensive loss

( 20.7 )  

( 20.1 )  

( 5.8 )  

( 0.1 )  

Net current period other comprehensive (loss) income ( 40.8 ) — 0.5 ( 40.3 ) ( 13.1 ) 0.1 ( 0.3 ) ( 13.3 )

Ending balance $ ( 76.8 ) $ ( 2.1 ) $ 0.7 $ ( 78.2 ) $ ( 32.2 ) $ ( 1.6 ) $ 0.4 $ ( 33.4 )

$ ( 56.7 )  

$ ( 2.1 )  

$ ( 58.0 )  

$ ( 24.9 )  

$ ( 1.6 )  

We and our subsidiaries are subject to U.S.

7 unchanged sentences

We recognize potential accrued interest and penalties related to unrecognized tax benefits in income tax expense.

In addition to the liability of $ 4.1 million for unrecognized tax benefits as of June 30, 2022 , there was approximately $ 0.6 million for accrued interest and penalties.

The total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate as of June 30, 2022 was $ 3.9 million.

In addition to the liability of $ 4.0 million for unrecognized tax benefits as of September 30, 2022, there was approximately $ 0.6 million for accrued interest and penalties.

The total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate as of September 30, 2022 was $ 3.7 million.

To the extent interest and penalties are not assessed with respect to uncertain tax positions, amounts accrued will be revised and reflected as an adjustment of the income tax expense.

On August 16, 2022, the Inflation Reduction Act of 2022 was signed into U.S.

Under this law, there is a new 15% corporate minimum tax, which we do not believe will have an impact on the Company.

In addition, beginning after December 31, 2022, there will be a 1% excise tax on certain share repurchases, which is not expected to have a material impact on the Company's consolidated financial statements.

Share-Based Compensation

Our share-based compensation plans are described in Note 18 of our annual report on Form 10-K for the year ended December 31, 2021.

During the three months ended June 30, 2022 and 2021 , we recognized total share-based compensation expense of $ 0.9 million and $ 3.9 million, respectively.

During the six months ended June 30, 2022 and 2021, we recognized total share-based compensation expense of $ 2.7 million and $ 7.0 million, respectively.

The total excess tax benefit recognized for share-based compensation arrangements during the six months ended June 30, 2022 and 2021 was $ 0.3 million and $ 0.4 million, respectively.

During the three months ended September 30, 2022 and 2021, we recognized total share-based compensation expense of $ 1.7 million and $ 2.5 million, respectively.

During the nine months ended September 30, 2022 and 2021, we recognized total share-based compensation expense of $ 4.4 million and $ 9.5 million, respectively.

The total excess tax benefit recognized for share-based compensation arrangements during the nine months ended September 30, 2022 and 2021 was $ 0.3 million and $ 0.4 million, respectively.

Earnings Per Share

1 unchanged sentence

Three Months Ended

Six Months Ended

$ 16.6  

$ 26.9  

$ 35.5  

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

Net income $ 15.6 $ 21.5 $ 42.5 $ 57.0

Basic - weighted average shares outstanding 18,515,851 18,554,136 18,495,640 18,519,523

18,507,073  

18,547,276  

18,485,367  

18,501,930  

Effect of dilutive securities:

176,725  

384,427  

250,546  

377,686  

176,065 317,081 217,697 350,375

Diluted - weighted average shares outstanding 18,691,916 18,871,217 18,713,337 18,869,898

18,683,798  

18,931,703  

18,735,913  

18,879,616  

Basic earnings per share $ 0.84 $ 1.16 $ 2.30 $ 3.08

$ 0.90  

$ 0.53  

$ 1.46  

$ 1.92  

Diluted earnings per share $ 0.83 $ 1.14 $ 2.27 $ 3.02

$ 0.89  

$ 0.51  

$ 1.44  

$ 1.88  

Excluded from the dilutive securities shown above were options to purchase and shares to be paid out under share-based compensation plans of 

698,378 and 

143,505 shares of common stock during the three months ended June 30, 2022 and 2021 , respectively.

Excluded from the dilutive securities shown above were options to purchase and shares to be paid out under share-based compensation plans of 402,696 and 146,191 shares of common stock during the six months ended June 30, 2022 and 2021 , respectively.

Excluded from the dilutive securities shown above were options to purchase and shares to be paid out under share-based compensation plans of 766,235 and 148,747 shares of common stock during the three months ended September 30, 2022 and 2021, respectively.

Excluded from the dilutive securities shown above were options to purchase and shares to be paid out under share-based compensation plans of 425,920 and 198,853 shares of common stock during the nine months ended September 30, 2022 and 2021, respectively.

These exclusions were made if the exercise prices of the options are greater than the average market price of our common stock for the period, if the number of shares we can repurchase under the treasury stock method exceeds the weighted average shares outstanding in the options or if we have a net loss, as these effects would be anti-dilutive.

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