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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM10-Q
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended September 30, 2021
or
Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from ______ to ______
Commission File Number 1-34036
John Bean Technologies Corporation
(Exact name of registrant as specified in its charter)
Delaware91-1650317
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization)
Identification No.)
70 West Madison Street,Suite 4400
Chicago,Illinois60602
(Address of principal executive offices)(Zip code)
(312) 861-5900
(Registrant’s telephone number, including area code)
Securities registered pursuant to section 12(b) of the Act:
Title of each classTrading symbol(s)Name of each exchange on which registered
Common Stock, par value $0.01 per shareJBTNew York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).     Yes     No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “non-accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
ClassOutstanding at October 22, 2021
Common Stock, par value $0.01 per share31,768,127
1


PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

JOHN BEAN TECHNOLOGIES CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)

Three Months Ended September 30,Nine Months Ended September 30,
(In millions, except per share data)2021202020212020
Revenue:
Product revenue$411.7 $358.2 $1,184.5 $1,120.5 
Service revenue65.7 61.0 186.2 167.9 
Total revenue477.4 419.2 1,370.7 1,288.4 
Operating expenses:
Cost of products289.4 248.9 816.1 767.3 
Cost of services45.5 43.1 129.0 120.7 
Selling, general and administrative expense100.9 91.8 296.9 269.6 
Restructuring expense1.1 7.1 3.1 11.2 
Operating income 40.5 28.3 125.6 119.6 
Pension expense, other than service cost0.1 1.1 0.1 3.1 
Interest expense, net2.1 2.9 6.3 11.2 
Income from continuing operations before income taxes38.3 24.3 119.2 105.3 
Income tax provision9.0 7.1 32.4 26.6 
Income from continuing operations29.3 17.2 86.8 78.7 
Net income $29.3 $17.2 $86.8 $78.7 
Basic earnings per share:
Income from continuing operations$0.91 $0.54 $2.71 $2.46 
Net income $0.91 $0.54 $2.71 $2.46 
Diluted earnings per share:
Income from continuing operations$0.91 $0.54 $2.71 $2.45 
Net income $0.91 $0.54 $2.71 $2.45 

The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.  
2


JOHN BEAN TECHNOLOGIES CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
Three Months Ended September 30,Nine Months Ended September 30,
(In millions)2021202020212020
Net income$29.3 $17.2 $86.8 $78.7 
Other comprehensive (loss) income, net of income taxes
Foreign currency translation adjustments(8.7)0.3 (0.6)(25.0)
Pension and other postretirement benefits adjustments1.7 1.8 5.1 4.6 
Derivatives designated as hedges0.2 (0.1)3.1 (4.5)
Other comprehensive (loss) income (6.8)2.0 7.6 (24.9)
Comprehensive income$22.5 $19.2 $94.4 $53.8 

The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.  
3


JOHN BEAN TECHNOLOGIES CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In millions, except per share data and number of shares)September 30, 2021December 31, 2020
Assets:
Current Assets:
Cash and cash equivalents$58.2 $47.5 
Trade receivables, net of allowances227.6 236.1 
Contract assets92.1 68.3 
Inventories217.9 197.3 
Other current assets68.6 66.9 
Total current assets664.4 616.1 
Property, plant and equipment, net of accumulated depreciation of $343.3 and $334.8 respectively
268.3 268.0 
Goodwill664.8 543.9 
Intangible assets, net334.6 299.1 
Other assets106.4 78.8 
Total Assets$2,038.5 $1,805.9 
Liabilities and Stockholders' Equity:
Current Liabilities:
Short-term debt$0.3 $2.4 
Accounts payable, trade and other183.4 140.7 
Advance and progress payments157.1 137.5 
Accrued payroll55.2 42.9 
Other current liabilities106.8 134.0 
Total current liabilities502.8 457.5 
Long-term debt652.9 522.5 
Accrued pension and other postretirement benefits, less current portion74.1 94.1 
Other liabilities101.4 94.7 
Commitments and contingencies (Note 13)
Stockholders' Equity:
Preferred stock, $0.01 par value; 20,000,000 shares authorized; no shares issued in 2021 or 2020
  
Common stock, $0.01 par value; 120,000,000 shares authorized; September 30, 2021:31,768,127 issued and 31,768,127 outstanding; December 31, 2020: 31,741,607 issued and 31,729,736 outstanding
0.3 0.3 
Common stock held in treasury, at cost September 30, 2021: 0 shares and December 31, 2020: 11,871 shares
 (1.0)
Additional paid-in capital214.3 229.9 
Retained earnings705.0 627.8 
Accumulated other comprehensive loss(212.3)(219.9)
Total stockholders' equity707.3 637.1 
Total Liabilities and Stockholders' Equity$2,038.5 $1,805.9 

The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.
4


JOHN BEAN TECHNOLOGIES CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended September 30,
(In millions)20212020
Cash flows from operating activities:
Net income $86.8 $78.7 
Adjustments to reconcile income from continuing operations to cash provided by continuing operating activities:
Depreciation and amortization56.6 53.2 
Stock-based compensation6.5 0.9 
Other3.0 8.2 
Changes in operating assets and liabilities:
Trade receivables, net and contract assets(16.1)54.5 
Inventories(26.6)14.4 
Accounts payable, trade and other40.0 (46.6)
Advance and progress payments22.7 4.2 
Accrued pension and other postretirement benefits, net(12.3)(0.6)
Other assets and liabilities, net2.7 (5.8)
Cash provided by continuing operating activities163.3 161.1 
Cash provided by operating activities163.3 161.1 
Cash flows from investing activities:
Acquisitions, net of cash acquired(185.3)(4.5)
Capital expenditures(33.9)(22.7)
Proceeds from disposal of assets2.0 1.2 
Cash required by investing activities(217.2)(26.0)
Cash flows from financing activities:
Net payments on short-term debt(2.1)(0.7)
Net payments from domestic credit facilities(258.7)(108.9)
Proceeds from issuance of 2026 convertible senior notes, net of issuance costs391.5  
Purchase of convertible bond hedge(65.6) 
Proceeds from sale of warrants29.5  
Settlement of taxes withheld on stock-based compensation awards(2.1)(2.2)
Payment of acquisition date earnout liability(16.1) 
Dividends(9.5)(9.5)
Cash provided (required) by financing activities66.9 (121.3)
Effect of foreign exchange rate changes on cash and cash equivalents(2.3)(2.7)
Increase in cash and cash equivalents10.7 11.1 
Cash and cash equivalents, beginning of period47.5 39.5 
Cash and cash equivalents, end of period$58.2 $50.6 

The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.
5



JOHN BEAN TECHNOLOGIES CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(Unaudited)
Three Months Ended September 30, 2021
(In millions)Common StockCommon Stock Held in TreasuryAdditional Paid-In CapitalRetained EarningsAccumulated Other Comprehensive Income (Loss)Total Equity
Balance at June 30, 2021$0.3 $ $212.0 $678.9 $(205.5)$685.7 
Net income— — — 29.3 — 29.3 
Common stock cash dividends, $0.10 per share
— — — (3.2)— (3.2)
Foreign currency translation adjustments, net of income taxes of $0.6
— — — — (8.7)(8.7)
Derivatives designated as hedges, net of income taxes of $0.1
— — — — 0.2 0.2 
Pension and other postretirement liability adjustments, net of income taxes of $0.5
— — — — 1.7 1.7 
Stock-based compensation expense— — 2.4 — — 2.4 
Taxes withheld on issuance of stock-based awards— — (0.1)— — (0.1)
Balance at September 30, 2021$0.3 $ $214.3 $705.0 $(212.3)$707.3 
Nine Months Ended September 30, 2021
(In millions)Common StockCommon Stock Held in TreasuryAdditional Paid-In CapitalRetained EarningsAccumulated Other Comprehensive Income (Loss)Total Equity
Balance at December 31, 2020$0.3 $(1.0)$229.9 $627.8 $(219.9)$637.1 
Net income— — — 86.8 — 86.8 
Issuance of treasury stock— 1.0 (1.0)— —  
Common stock cash dividends, $0.30 per share
— — — (9.6)— (9.6)
Foreign currency translation adjustments, net of income taxes of $1.3
— — — — (0.6)(0.6)
Derivatives designated as hedges, net of income taxes of $1.1
— — — — 3.1 3.1 
Proceeds from sale of warrants— — 29.5 — — 29.5 
Purchase of convertible bond hedge, net of income tax of $(17.1)
— — (48.5)— — (48.5)
Pension and other postretirement liability adjustments, net of income taxes of $1.7
— — — — 5.1 5.1 
Stock-based compensation expense— — 6.5 — — 6.5 
Taxes withheld on issuance of stock-based awards— — (2.1)— — (2.1)
Balance at September 30, 2021$0.3 $ $214.3 $705.0 $(212.3)$707.3 
6


Three Months Ended September 30, 2020
(In millions)Common StockCommon Stock Held in TreasuryAdditional Paid-In CapitalRetained EarningsAccumulated Other Comprehensive Income (Loss)Total Equity
Balance at June 30, 2020$0.3 $(7.0)$236.1 $586.9 $(219.7)$596.6 
Net income— — — 17.2 — 17.2 
Issuance of treasury stock— 6.0 (6.0)— —  
Common stock cash dividends, $0.10 per share
— — — (3.2)— (3.2)
Foreign currency translation adjustments, net of income taxes of $1.5
— — — — 0.3 0.3 
Derivatives designated as hedges, net of income taxes of $(0.1)
— — — — (0.1)(0.1)
Pension and other postretirement liability adjustments, net of income taxes of $0.6
— — — — 1.8 1.8 
Stock-based compensation expense— — (1.2)— — (1.2)
Balance at September 30, 2020$0.3 $(1.0)$228.9 $600.9 $(217.7)$611.4 
Nine Months Ended September 30, 2020
(In millions)Common StockCommon Stock Held in TreasuryAdditional Paid-In CapitalRetained EarningsAccumulated Other Comprehensive Income (Loss)Total Equity
Balance at December 31, 2019$0.3 $(12.6)$241.8 $532.8 $(192.8)$569.5 
Net income— — — 78.7 — 78.7 
Issuance of treasury stock— 11.6 (11.6)— —  
Common stock cash dividends, $0.30 per share
— — — (9.6)— (9.6)
Foreign currency translation adjustments, net of income taxes of $0.5
— — — — (25.0)(25.0)
Derivatives designated as hedges, net of income taxes of $(1.2)
— — — — (4.5)(4.5)
Pension and other postretirement liability adjustments, net of income taxes of $1.5
— — — — 4.6 4.6 
Stock-based compensation expense— — 0.9 — — 0.9 
Taxes withheld on issuance of stock-based awards— — (2.2)— — (2.2)
Adoption of ASC 326
— — — (1.0)— (1.0)
Balance at September 30, 2020$0.3 $(1.0)$228.9 $600.9 $(217.7)$611.4 

The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.
7


JOHN BEAN TECHNOLOGIES CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)



NOTE 1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

Description of Business
John Bean Technologies Corporation and its majority-owned consolidated subsidiaries (the “Company,” “JBT,” “our,” “us,” or “we”) provide global technology solutions to high-value segments of the food and beverage and air transportation industries. The Company designs, produces and services sophisticated products and systems for multi-national and regional customers through JBT FoodTech and JBT AeroTech segments. The Company has manufacturing operations worldwide that are strategically located to facilitate delivery of its products and services to its customers.

Basis of Presentation
In accordance with Securities and Exchange Commission (“SEC”) rules for interim periods, the accompanying unaudited condensed consolidated financial statements (the “interim financial statements”) do not include all of the information and notes for complete financial statements as required by accounting principles generally accepted in the United States of America (“U.S. GAAP”). As such, the accompanying interim financial statements should be read in conjunction with the Annual Report on Form 10-K for the year ended December 31, 2020, which provides a more complete description of the Company’s accounting policies, financial position, operating results, business, properties, and other matters. The year-end condensed consolidated Balance Sheet was derived from audited financial statements, but does not include all annual disclosures required by accounting principles generally accepted in the United States of America.

In the opinion of management, the interim financial statements reflect all normal recurring adjustments necessary for a fair statement of the Company's financial condition and operating results as of and for the periods presented. Revenue, expenses, assets and liabilities can vary during each quarter of the year. Therefore, the interim results and trends in the interim financial statements may not be representative of those for the full year or any future period.

Use of estimates
Preparation of financial statements that follow U.S. GAAP requires management to make estimates and judgments that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from these estimates.

Recently adopted accounting pronouncements
In August 2020, the FASB issued ASU 2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40). The amendments in this update simplifies accounting for certain convertible debt instruments by removing the separation models for convertible debt with a cash conversion feature or convertible instruments with a beneficial conversion feature. As a result, convertible debt instruments will be reported as a single liability instrument with no separate accounting for embedded conversion features. Additionally, ASU 2020-06 requires the application of the if-converted method for calculating diluted earnings per share and the treasury stock method will be no longer be available for convertible debt instruments. The provisions of ASU 2020-06 are applicable for fiscal years beginning after December 15, 2021, with early adoption permitted no earlier than fiscal years beginning after December 15, 2020. The Company early adopted the new standard effective January 1, 2021 using the modified retrospective method. There was no impact on the Company's financial statements as of the adoption date. As further discussed in Note 6, "Debt," the Company issued $402.5 million principal amount of convertible senior notes on May 28, 2021, which have been accounted for in accordance with the provisions of ASU 2020-06.

In July 2021, the FASB issued ASU 2021-05, Leases (Topic 842): Lessors—Certain Leases with Variable Lease Payments. ASU 2021-05 requires accounting for leases by lessors with variable lease payments that do not depend on a reference index or a rate as operating leases if any other lease classification would require the lessor to recognize a day-one loss. The provisions of ASU 2021-05 are applicable for fiscal years beginning after December 15, 2021, with early adoption permitted. The Company early adopted the new standard effective September 30, 2021 using retrospective method of adoption with an immaterial adoption impact to the Company's current year financial statements and no impact to the Company's financial statement for comparative prior year periods.
8



NOTE 2. ACQUISITIONS

During the nine months ended September 30, 2021 and fiscal year 2020 the Company acquired 100% of voting equity of two businesses, and the assets and liabilities of another business. A summary of the acquisitions made during the periods is as follows:
DateType Company/Product LineLocation (Near)Segment
July 2, 2021StockCMS Technology, Inc ("Prevenio")Bridgewater, New JerseyJBT FoodTech
A provider of innovative food safety solutions primarily for the poultry industry as well as produce applications. Prevenio provides a pathogen protection solution through its anti-microbial delivery equipment that enhances food safety and integrity, and creates a safer work environment for its customers and their employees. This acquisition enhances the Company’s recurring revenue portfolio and furthers its investment in solutions that support its customers’ daily operations.
February 28, 2021StockAutoCoding Systems Ltd. ("ACS")Cheshire, U.K.JBT FoodTech
A provider of a central command solution for the integration of packaging process devices. The ACS acquisition extends the Company's capabilities in packaging line equipment and associated devices, including coding and label inspection and verification.
May 29, 2020AssetMARS Food Processing Solutions, LLC ("MARS")Denver, North CarolinaJBT FoodTech
A provider of solutions for monitoring and managing the efficiency of poultry processing plants. The MARS acquisition allows the Company to offer its Protein customers proprietary solutions for monitoring and managing the efficiency of poultry processing plants.
Each acquisition has been accounted for as a business combination. Tangible and identifiable intangible assets acquired and liabilities assumed were recorded at their respective estimated fair values. The excess of the consideration transferred over the estimated fair value of the net assets received has been recorded as goodwill. The factors that contributed to the recognition of goodwill primarily relate to acquisition-driven anticipated cost savings and revenue enhancement synergies coupled with the assembled workforce acquired.
9


Prevenio(1)
ACS(2)
Total
(In millions)
Financial assets$8.1 $2.9 $11.0 
Inventories0.2 0.7 0.9 
Property, plant and equipment4.2  4.2 
Customer relationship (3)
41.0 3.7 44.7 
Patents and acquired technology (3)
17.5 3.4 20.9 
Trademarks (3)
0.7 0.8 1.5 
Deferred taxes(15.0)(0.9)(15.9)
Financial liabilities(3.1)(2.9)(6.0)
Total identifiable net assets$53.6 $7.7 $61.3 
Cash consideration paid$173.1 $16.8 $189.9 
Cash acquired3.5 1.1 4.6 
Net consideration$169.6 $15.7 $185.3 
Goodwill (4)
$119.5 $9.1 $128.6 

(1)The purchase accounting for Prevenio is provisional. The valuation of certain working capital balances, property, plant and equipment, intangibles, income tax balances and residual goodwill is not complete. These amounts are subject to adjustment as additional information is obtained within the measurement period (not to exceed 12 months from the acquisition date).
(2)The purchase accounting for ACS is provisional. The valuation of intangibles, income tax balances and residual goodwill is not complete. These amounts are subject to adjustment as additional information is obtained within the measurement period (not to exceed 12 months from the acquisition date). During the quarter ended June 30, 2021, the Company refined its estimates for other intangibles by ($2.0) million and deferred taxes by $0.5 million. During the quarter ended September 30, 2021, the Company made no significant measurement period adjustments for ACS. The impact of these adjustments was reflected as a net increase in goodwill of $1.3 million. These adjustments resulted in an immaterial impact to the consolidated statement of income.
(3)The acquired intangible assets are amortized on a straight-line basis over their estimated useful lives, which range from four to nineteen years. The intangible assets acquired in 2021 have weighted average useful lives of 15 years for customer relationship, 8 years for patents and acquired technology, and 12 years for trademarks.
(4)The Company expects goodwill of $0.7 million from these acquisitions to be deductible for income tax purposes.
During the second quarter of 2020, the Company acquired certain assets and liabilities of MARS Food Processing Solutions, LLC ("MARS") for a purchase price of $5 million. The Company expects goodwill of $3.1 million from this acquisition to be deductible for income tax purposes.
10


NOTE 3. GOODWILL AND INTANGIBLE ASSETS

The changes in the carrying amount of goodwill by business segment were as follows:
(In millions)JBT FoodTechJBT AeroTechTotal
Balance as of December 31, 2020$505.7 $38.2 $543.9 
Acquisitions128.6  128.6 
Currency translation(7.6)(0.1)(7.7)
Balance as of September 30, 2021$626.7 $38.1 $664.8 

Intangible assets consisted of the following:
September 30, 2021December 31, 2020
(In millions)Gross carrying amountAccumulated amortizationGross carrying amountAccumulated amortization
Customer relationship$298.7 $96.7 $256.9 $82.8 
Patents and acquired technology169.6 78.4 151.3 65.2 
Trademarks45.5 14.8 44.8 16.8 
Non-amortizing intangible assets10.6 — 10.8 — 
Other8.8 8.7 9.4 9.3 
Total intangible assets$533.2 $198.6 $473.2 $174.1 


NOTE 4. INVENTORIES

Inventories consisted of the following:
(In millions)September 30, 2021December 31, 2020
Raw materials $96.7 $87.3 
Work in process 59.4 51.4 
Finished goods 143.7 136.4 
Gross inventories before LIFO reserves and valuation adjustments 299.8 275.1 
LIFO reserves(51.4)(49.2)
Valuation adjustments(30.5)(28.6)
Net inventories $217.9 $197.3 


NOTE 5. PENSION

Components of net periodic benefit cost were as follows:
Three Months Ended September 30,Nine Months Ended September 30,
(In millions)2021202020212020
Service cost$0.5 $0.7 $1.7 $1.8 
Interest cost1.7 2.3 5.0 6.9 
Expected return on plan assets(4.0)(3.3)(11.8)(9.9)
Amortization of net actuarial losses2.3 2.1 6.9 6.1 
Net periodic cost$0.5 $1.8 $1.8 $4.9 

11


The Company expects to contribute $13.7 million to its pension and other post-retirement benefit plans in 2021. The pension contributions will be primarily for the U.S. qualified pension plan. All of the contributions are expected to be in the form of cash. The Company made a $10.5 million contribution to its U.S. qualified pension plan during the three and nine months ended September 30, 2021.

NOTE 6. DEBT

Five-year Revolving Credit Facility

On June 19, 2018, the Company entered into a Credit Agreement (the “Credit Agreement”) with Wells Fargo Bank, National Association, as administrative agent, and the other lenders party thereto. The Credit Agreement provides for a $1 billion revolving credit facility that matures in June 2023. On May 25, 2021, the Company entered into the first amendment to the Credit Agreement with Wells Fargo Bank, National Association, as administrative agent, and the other lenders party thereto (the “Credit Agreement Amendment”). The purpose of the Credit Agreement Amendment was to permit the issuance of the Convertible Senior Notes described below.

Convertible Senior Notes

On May 28, 2021, the Company closed a private offering of $402.5 million aggregate principal amount of the Company's 0.25% Convertible Senior Notes due 2026 (the "Notes") to qualified institutional buyers, resulting in net proceeds of approximately $392.2 million after deducting initial purchasers’ discounts of the Notes. Interest on the Notes will accrue from May 28, 2021 and is payable semi-annually in arrears on May 15 and November 15 of each year, beginning on November 15, 2021, at a rate of 0.25% per year. The Notes will mature on May 15, 2026 unless earlier converted, redeemed or repurchased. No sinking fund is provided for the Notes.

The initial conversion rate of the Notes is 5.8958 shares of the Company's common stock per $1,000 principal amount of notes, which is equivalent to an initial conversion price of approximately $169.61 per share. The conversion rate of the Notes is subject to adjustment upon the occurrence of certain specified events. In addition, upon the occurrence of a make-whole fundamental change (as defined in the indenture governing the Notes (the "Indenture")) or upon a notice of redemption, the Company will, in certain circumstances, increase the conversion rate for a holder that elects to convert its Notes in connection with such make-whole fundamental change or notice of redemption, as the case may be.

On or after March 20, 2024, the Company has the option to redeem for cash all or part of the Notes, if the last reported sales price of the Company's common stock (the "common stock") has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive), including the trading day immediately preceding the date on which the Company provides redemption notice, during any 30 consecutive trading days ending on, and including, the last trading day immediately before the date the Company sends the related redemption notice. The redemption price of each Note to be redeemed will be the principal amount of such note, plus accrued and unpaid interest to, but excluding, the redemption date. If the Company redeems less than all the outstanding Notes, at least $100 million aggregate principal amount of Notes must be outstanding and not subject to redemption as of the relevant redemption notice date.

Prior to the close of business on the business day immediately preceding February 15, 2026, the Notes are convertible at the option of the holders only under the following circumstances:

during any calendar quarter commencing after the calendar quarter ending on September 30, 2021 (and only during such calendar quarter), if the last reported sale price of the common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day;
during the five business day period after any ten consecutive trading day period (the “measurement period”) in which the trading price per $1,000 principal amount of Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of the common stock and the conversion rate on each such trading day;
if the Company calls such Notes for redemption, at any time prior to the close of business on the scheduled trading day immediately preceding the redemption date, but only with respect to the Notes called (or deemed called) for redemption; or
upon the occurrence of certain corporate events, as specified in the Indenture governing the Notes.

12


At any time on or after February 15, 2026, holders may convert their Notes at their option, and in multiples of $1,000 principle amount, without regard to the foregoing circumstances. Upon conversion, the Company will pay cash up to the aggregate principal amount of the Notes and for the remainder of our conversion obligation in excess of the aggregate principal amount will pay or deliver cash, shares of common stock, or a combination of cash and shares of common stock at the Company’s election.

The Notes were not convertible during the quarter ended September 30, 2021 and none have been converted to date. Also given the average market price of the common stock has not exceeded the exercise price since inception, there is no impact to the diluted earnings per share.

Upon the occurrence of a fundamental change (as defined in the Indenture), subject to certain conditions, holders may require the Company to repurchase for cash all or any portion of their Notes in multiples of $1,000 principal amounts, at its repurchase price, plus accrued and unpaid interest to, but excluding, the repurchase date.

The Notes are senior unsecured obligations and rank equally in right of payment with all of the Company's existing unsubordinated debt and senior in right of payment to any future debt that is expressly subordinated in right of payment to the Notes. The Notes will be effectively subordinated to any of the Company's existing and future secured debt to the extent of the assets securing such indebtedness.

The Indenture includes customary terms and covenants, including certain events of default after which the Notes may become due and payable immediately.

Convertible Note Hedge Transactions

The Company paid an aggregate amount of $65.6 million for the Convertible Note Hedge Transactions (the "Hedge Transactions"). The Hedge Transactions cover, subject to anti-dilution adjustments substantially similar to those in the Notes, approximately 2.4 million shares of the Company's common stock. These are the same number of shares initially underlying the Notes, at a strike price of $169.61, subject to customary adjustments. The Hedge Transactions will expire upon the maturity of the Notes, subject to earlier exercise or termination.

The Hedge Transactions are expected generally to reduce the potential dilutive effect of the conversion of the Notes and/or offset any cash payments the Company is required to make in excess of the principal amount of the converted Notes, in the event that the market price per share of the Company's common stock, as measured under the terms of the Hedge Transactions, is greater than the Hedge Transactions strike price of $169.61. The Hedge Transactions meet the criteria in ASC 815-40 to be classified within Stockholders' Equity, and therefore these transactions are not revalued after their issuance.

The Company made a tax election to integrate the Notes and the Hedge Transactions. The accounting impact of this tax election makes the Hedge Transactions deductible as original issue discount interest for tax purposes over the term of the note, and results in a $17.1 million deferred tax asset recorded as an adjustment to Additional paid-in capital on our Balance Sheet as of September 30, 2021.

Warrant Transactions

In addition, concurrently with entering into the Hedge Transactions, the Company separately entered into privately-negotiated Warrant Transactions (the "Warrant Transactions"), whereby the Company sold to the counterparties warrants to acquire, collectively, subject to anti-dilution adjustments, 2.4 million shares of its common stock at an initial strike price of $240.02 per share. The Company received aggregate proceeds of $29.5 million from the Warrant Transactions with the counterparties, with such proceeds partially offsetting the costs of entering into the Hedge Transactions. The warrants expire in August 2026. If the market value per share of the common stock, exceeds the strike price of the warrants, the warrants will have a dilutive effect on our earnings per share, unless the Company elects, subject to certain conditions, to settle the warrants in cash. The warrants meet the criteria in ASC 815-40 to be classified within Stockholders' Equity, and therefore the warrants are not revalued after issuance.

13


The components of the Company's borrowings were as follows:
(In millions)Maturity DateSeptember 30, 2021December 31, 2020
Revolving credit facility (1)
June 19, 2023$261.2 $523.9 
Less: unamortized debt issuance costs$(0.5)$(1.4)
Revolving credit facility, net$260.7 $522.5 
Convertible senior notes (2)
May 15, 2026$402.5 $ 
Less: unamortized debt issuance costs$(10.3)$ 
Convertible senior notes, net$392.2 $ 
Long-term debt, net$652.9 $522.5 
(1) Weighted-average interest rate at September 30, 2021 was 1.31%
(2) Effective interest rate for the Notes for the quarter ended September 30, 2021 was 0.82%

Interest expense of $0.8 million recognized for the Notes included contractual interest expense of $0.3 million and the amortization of debt issuance cost of $0.5 million for the three months ended September 30, 2021.

Interest expense of $1.1 million recognized for the Notes included contractual interest expense of $0.4 million and the amortization of debt issuance cost of $0.7 million for the nine months ended September 30, 2021.


NOTE 7. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

Accumulated other comprehensive income or loss (“AOCI”) represents the cumulative balance of other comprehensive income, net of tax, as of the Balance Sheet date. For the Company, AOCI is composed of adjustments related to pension and other postretirement benefit plans, derivatives designated as hedges, and foreign currency translation adjustments. Changes in the AOCI balances for the three months ended September 30, 2021 and 2020 by component are shown in the following tables:
Pension and Other Postretirement Benefits (1)
Derivatives Designated as Hedges (1)
Foreign Currency Translation (1)
Total (1)
(In millions)
Beginning balance, June 30, 2021$(158.0)$(0.9)$(46.6)$(205.5)
Other comprehensive loss before reclassification (0.1)(8.1)(8.2)
Amounts reclassified from accumulated other comprehensive income1.7 0.3 (0.6)1.4 
Ending balance, September 30, 2021$(156.3)$(0.7)$(55.3)$(212.3)
(1) All amounts are net of income taxes.

Reclassification adjustments from AOCI into earnings for pension and other postretirement benefit plans for the three months ended September 30, 2021 were $2.3 million of charges to pension expense, other than service cost, net of $0.6 million income tax benefit. Reclassification adjustments for derivatives designated as hedges for the same period were $0.5 million of interest expense, net of $0.2 million income tax benefit. Reclassification adjustments for foreign currency translation related to net investment hedges for the three months ended September 30, 2021 were $0.8 million of benefit in interest expense, net of $0.2 million income tax provision.



14


Pension and Other Postretirement Benefits (1)
Derivatives Designated as Hedges (1)
Foreign Currency Translation(1)
Total (1)
(In millions)
Beginning balance, June 30, 2020$(144.2)$(4.3)$(71.2)$(219.7)
Other comprehensive income (loss) before reclassification (0.5)0.8 0.3 
Amounts reclassified from accumulated other comprehensive income1.8 0.4 (0.5)1.7 
Ending balance, September 30, 2020$(142.4)$(4.4)$(70.9)$(217.7)
(1) All amounts are net of income taxes.

Reclassification adjustments from AOCI into earnings for pension and other postretirement benefit plans for the three months ended September 30, 2020 were $2.4 million of charges to pension expense, other than service cost, net of $0.6 million income tax benefit. Reclassification adjustments for derivatives designated as hedges for the same period were $0.6 million of interest expense, net of $0.2 million income tax benefit. Reclassification adjustments for foreign currency translation related to net investment hedges for the three months ended September 30, 2020 were $0.8 million of benefit in interest expense, net of $0.3 million income tax provision.
Pension and Other Postretirement Benefits (1)
Derivatives Designated as Hedges (1)
Foreign Currency Translation (1)
Total (1)
(In millions)
Beginning balance, December 31, 2020$(161.4)$(3.8)$(54.7)$(219.9)
Other comprehensive income before reclassification 2.1 1.0 3.1 
Amounts reclassified from accumulated other comprehensive income5.1 1.0 (1.6)4.5 
Ending balance, September 30, 2021$(156.3)$(0.7)$(55.3)$(212.3)
(1) All amounts are net of income taxes.

Reclassification adjustments from AOCI into earnings for pension and other postretirement benefit plans for the nine months ended September 30, 2021 were $