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 ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ 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,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

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 ☒

As of ~~October 20, 2017, 29,275,362~~April 29, 2019, there were 64,494,632 million outstanding shares of ~~Common Stock,~~the registrant’s common stock, $0.001 par value per ~~share, were outstanding.~~

	September 30, 2017			December 31, 2016			March 31, 2019			December 31, 2018
	(Unaudited)						(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	53,151		$	69,118		$	152.4		$	169.0
Trade receivables, less allowance for doubtful accounts of $5,479 and $3,114 at September 30, 2017 and December 31, 2016, respectively		136,511			120,319
Trade receivables, less allowance for doubtful accounts of $5.2 and $5.6 million at March 31, 2019 and December 31, 2018, respectively								281.8			259.8
Inventories		153,014			139,840			241.0			231.2
Income tax receivable		7,822			607			8.5			10.2
Prepaid expenses and other current assets		16,671			10,429			32.8			33.1
Assets held for sale		364			3,874			—			0.7
Total current assets		367,533			344,187			716.5			704.0
Property, plant and equipment, net		190,455			177,043			360.5			364.4
Intangible assets, net		160,939			154,683			1,559.9			1,585.7
Goodwill		203,574			188,841			1,683.5			1,662.3
Deferred income taxes		1,383			2,510			3.3			4.9
Other non-current assets, net		2,147			2,560
Other non-current assets								13.3			15.9
Operating lease right of use assets								43.3			—
Total assets	$	926,031		$	869,824		$	4,380.3		$	4,337.2
LIABILITIES, AND STOCKHOLDERS’ EQUITY
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	59,624		$	60,845		$	172.3		$	175.8
Accrued payroll		29,761			31,302			53.6			57.0
Accruals and other current liabilities		38,137			35,080			78.7			79.6
Income tax payable		8,887			706			9.3			7.5
Current portion of long-term debt		380			43,690			18.2			17.2
Operating lease liabilities								14.9			—
Total current liabilities		136,789			171,623			347.0			337.1
Long-term debt - less current portion and net of unaccreted discount		295,223			325,969
Long-term debt - less current portion								1,676.6			1,690.9
Deferred income taxes		57,471			61,084			399.1			393.2
Pension liabilities		27,269			23,691			32.1			32.0
Long-term taxes payable								4.5			5.4
Other long-term liabilities		25,714			4,109			18.5			30.4
Operating lease liabilities, net of current portion								30.1			—
Commitments and Contingencies (Note 18)
Stockholders’ equity:
Common stock ($0.001 par value, 90,000,000 shares authorized, 29,054,378 and 27,206,162 issued and outstanding at September 30, 2017 and December 31, 2016, respectively)		29			27
Common stock ($0.001 par value per share, 120.0 million shares authorized, 64.3 and 64.2 million shares issued and outstanding at March 31, 2019 and December 31, 2018, respectively)								0.1			0.1
Additional paid-in capital		222,605			168,299			1,688.5			1,687.1
Retained earnings		215,766			191,108			256.7			232.6
Accumulated other comprehensive loss		(54,835	)		(76,086	)		(72.9	)		(71.6	)
Total stockholders’ equity		383,565			283,348			1,872.4			1,848.2
Total liabilities, and stockholders’ equity	$	926,031		$	869,824		$	4,380.3		$	4,337.2

The accompanying notes are an integral part of these unaudited condensed consolidated interim financial statements.

	Quarter Ended				Year to Date Ended					Quarter Ended
	September 30, 2017		September 30, 2016		September 30, 2017		September 30, 2016			March 31, 2019		March 31, 2018
	(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)			(Unaudited)		(Unaudited)
Net sales	$	214,623	$	173,132	$	653,415	$	536,259		$	482.8	$	240.4
Cost of sales		145,610		118,957		446,109		369,254			307.9		166.2
Gross profit		69,013		54,175		207,306		167,005			174.9		74.2
Operating expenses:
Selling, general and administrative expenses		41,009		36,142		123,012		105,548			90.9		47.1
Research and development expenses		6,051		4,267		18,434		13,345			15.3		6.5
Restructuring costs		680		3,397		3,776		6,591			2.3		0.9
		47,740		43,806		145,222		125,484			108.5		54.5
Income from operations		21,273		10,369		62,084		41,521			66.4		19.7
Other non-operating income and expense:
Loss on settlement of pension plan											—		5.1
Interest expense, net		1,811		2,815		5,547		8,615			19.8		1.8
Other non-operating expense (income), net		696		45		30		(438	)
Loss on extinguishment of convertible debt		—		—		1,797		—
Other non-operating expense/(income), net											1.1		(0.1	)
		2,507		2,860		7,374		8,177			20.9		6.8
Income before income taxes		18,766		7,509		54,710		33,344			45.5		12.9
Provision for income taxes		5,489		2,196		15,723		9,872			10.3		3.9
Net income	$	13,277	$	5,313	$	38,987	$	23,472		$	35.2	$	9.0
Weighted average shares, basic		29,008		25,726		28,912		25,684			64.2		29.1
Weighted average shares, diluted		29,074		26,021		29,001		25,813			64.4		29.2
Net income per share:
Basic net income	$	0.46	$	0.21	$	1.35	$	0.91
Diluted net income	$	0.46	$	0.20	$	1.34	$	0.91
Cash dividend declared	$	0.17	$	0.15	$	0.49	$	0.45
Basic											0.55		0.31
Diluted											0.55		0.31
Cash dividend declared per share											0.17		0.17

The accompanying notes are an integral part of these unaudited condensed consolidated interim financial statements.

Quarter Ended

Year to Date Ended

September 30, 2017

September 30, 2016

September 30, 2017

September 30, 2016

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

Net Income

$
13,277

$
5,313

$
38,987

$
23,472

Other Comprehensive income (loss):

Foreign currency translation adjustment

6,673

90

21,157

(1,000
)
Change in defined benefit pension plans

65

14

(232
)

134

Change in fair value of derivative financial instruments, net of tax

(331
)

—

326

—

Other comprehensive income (loss):

6,407

104

21,251

(866
)
Comprehensive income

$
19,684

$
5,417

$
60,238

$
22,606

	Quarter Ended
	March 31, 2019			March 31, 2018
	(Unaudited)			(Unaudited)
Net Income	$	35.2		$	9.0
Other Comprehensive income:
Foreign currency translation adjustment, net of tax		(12.5	)		7.8
Reclassification adjustment from loss on partial settlement of pension plan, net of tax		—			3.8
Change in pension liability adjustment, net of tax		(0.3	)		0.6
Change in fair value of derivative financial instruments, net of tax		11.5			0.3
Total other comprehensive (loss) income:		(1.3	)		12.5
Comprehensive income	$	33.9		$	21.5

The accompanying notes are an integral part of these unaudited condensed consolidated interim financial statements.

	Year to Date Ended						Quarter Ended
	September 30, 2017			September 30, 2016			March 31, 2019			March 31, 2018
	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
Cash flows from operating activities
Net income	$	38,987		$	23,472		$	35.2		$	9.0
Adjustments to reconcile net income to net operating cash flows:
Depreciation		19,764			16,235			14.3			6.9
Amortization of intangible assets		7,139			6,384			17.8			2.5
Amortization of deferred financing costs		449			590			1.1			0.2
Loss/(Gain) on foreign currency, net		241			(130	)
Accretion of debt discount, net		—			2,970
(Gain)/Loss on disposal / impairment of fixed assets		(36	)		582
Loss on extinguishment of debt		1,797			—
Loss(gain) on foreign currency, net								1.0			(0.1	)
Loss on partial settlement of pension plan								—			5.1
Loss on disposal, impairment and other								0.3			0.1
Stock based compensation		4,543			3,370			3.5			1.3
Amortization of inventory fair value adjustment		2,347			—
Changes in assets and liabilities:
Changes in assets and liabilities, net of assets acquired:
Trade receivables		(9,701	)		(10,461	)		(22.5	)		(12.9	)
Inventories		(9,478	)		(837	)		(10.6	)		(0.5	)
Accounts payable and accrued liabilities		(8,799	)		3,226			(4.9	)		(5.9	)
Other current assets and liabilities		(2,392	)		728			18.5			0.0
Other operating assets and liabilities		(1,572	)		765			(14.4	)		(2.0	)
Net cash provided by operating activities		43,289			46,894			39.3			3.7
Cash flows from investing activities
Purchase of property, plant and equipment		(23,261	)		(15,684	)		(14.0	)		(7.0	)
Proceeds from sale of Altra Industrial Motion Changzhou		3,221			—
Working capital settlement from prior year acquisitions		2,883			—
A&S acquisition purchase price adjustment								(13.5	)		—
Proceeds from sale of building								0.3			—
Net cash used in investing activities		(17,157	)		(15,684	)		(27.2	)		(7.0	)
Cash flows from financing activities
Payments on 2015 Revolving Credit Facility		(39,036	)		(30,870	)		—			(4.9	)
Payments on Term Loan Facility								(15.0	)		—
Dividend payments		(13,256	)		(7,784	)		(11.1	)		(5.0	)
Borrowing under 2015 Revolving Credit Facility		7,000			3,000			—			8.0
Payments of equipment and working capital notes		(913	)		(3,181	)
Cash paid to redeem Convertible Notes		(954	)		—
Proceeds from mortgages and other debt		—			2,893
Payments of equipment, working capital notes, mortgages and other debts								(0.2	)		(0.3	)
Proceeds from issuance of China debt								1.2			—
Shares surrendered for tax withholding		(2,089	)		(1,288	)		(2.1	)		(1.5	)
Purchases of common stock under share repurchase program		—			(4,713	)
Net cash used in financing activities		(49,248	)		(41,943	)		(27.2	)		(3.7	)
Effect of exchange rate changes on cash and cash equivalents		7,149			178			(1.5	)		1.4
Net change in cash and cash equivalents		(15,967	)		(10,555	)		(16.6	)		(5.6	)
Cash and cash equivalents at beginning of year		69,118			50,320
Cash and cash equivalents at beginning of period								169.0			52.0
Cash and cash equivalents at end of period	$	53,151		$	39,765		$	152.4		$	46.4
Cash paid during the period for:
Interest	$	5,413		$	5,856
Income taxes		18,505			7,665
Non-cash Financing and Investing
Conversion of Convertible Notes to common stock	$	51,851		$	—
Interest paid on borrowings							$	11.4		$	1.8
Income taxes paid							$	7.9		$	2.6

The accompanying notes are an integral part of these unaudited condensed consolidated interim financial statements.

Common
Stock

Shares

Additional
Paid
in Capital

Retained
Earnings

Accumulated
Other
Comprehensive Income
(Loss)

Total

Balance at January 1, 2016

$
26

25,773

$
124,834

$
181,539

$
(63,832
)

$
242,567

Stock-based compensation and vesting
   of restricted stock

—

89

2,082

—

—

2,082

Net income

—

—

—

23,472

—

23,472

Dividends declared

—

—

—

(11,667
)

—

(11,667
)
Changes in Accumulated Other Comprehensive Loss

—

—

—

—

(866
)

(866
)
Repurchases of common
   stock - 177,053 shares

—

(177
)

(4,713
)

—

—

(4,713
)
Balance at September 30, 2016

$
26

25,685

$
122,203

$
193,344

$
(64,698
)

$
250,875

Balance at January 1, 2017

$
27

27,206

$
168,299

$
191,108

$
(76,086
)

$
283,348

Stock-based compensation and vesting
   of restricted stock

—

100

2,457

—

—

2,457

Net income

—

—

—

38,987

—

38,987

Conversion of convertible debt

2

1,748

51,849

—

—

51,851

Dividends declared

—

—

—

(14,329
)

—

(14,329
)
Changes in Accumulated Other Comprehensive Income

—

—

—

—

21,251

21,251

Balance at September 30, 2017

$
29

29,054

$
222,605

$
215,766

$
(54,835
)

$
383,565

	Common Stock		Shares		Additional Paid in Capital			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Total
Balance at January 1, 2018	$	0.0		29.1	$	223.3		$	223.2		$	(49.8	)	$	396.7
Stock-based compensation and vesting of restricted stock, net of withholdings		—		0.0		(0.2	)		—			—			(0.2	)
Net income		—		—		—			9.0			—			9.0
Dividends declared, $0.17 per share		—		—		—			(5.0	)		—			(5.0	)
Change in fair value of derivative financial instruments, net of tax		—		—		—			—			0.3			0.3
Minimum pension adjustment, net of tax		—		—		—			—			4.4			4.4
Cumulative foreign currency translation adjustment		—		—		—			—			7.8			7.8
Balance at March 31, 2018	$	0.0		29.1	$	223.1		$	227.2		$	(37.3	)	$	413.0

Balance at January 1, 2019	$	0.1	64.2	$	1,687.1	$	232.6		$	(71.6	)	$	1,848.2
Stock-based compensation and vesting of restricted stock, net of withholdings		—	0.1		1.4		—			—			1.4
Net income		—	—		—		35.2			—			35.2
Dividends declared, $0.17 per share		—	—		—		(11.1	)		—			(11.1	)
Change in fair value of derivative financial instruments, net of tax		—	—		—		—			11.5			11.5
Minimum pension adjustment, net of tax		—	—		—		—			(0.3	)		(0.3	)
Cumulative foreign currency translation adjustment		—	—		—		—			(12.5	)		(12.5	)
Balance at March 31, 2019	$	0.1	64.3	$	1,688.5	$	256.7		$	(72.9	)	$	1,872.4

The accompanying notes are an integral part of these unaudited condensed consolidated interim financial statements.

Headquartered in Braintree, Massachusetts, Altra Industrial Motion Corp. (the ~~“Company”, “we”,~~“Company,” “Altra,” “We,” or ~~“our”~~“Our”) is a leading ~~multi-national~~global designer, producer and marketer of a wide range of electro-mechanical power transmission and motion control (“PTMC”) products. The Company brings together strong brands ~~covering over 42 product lines~~ with production facilities in ~~twelve~~seventeen countries. Altra’s leading brands include Ameridrives Couplings, Bauer Gear Motor, Bibby Turboflex, Boston Gear, Delroyd Worm Gear, Formsprag Clutch, Guardian Couplings, Huco, Industrial Clutch, Inertia Dynamics, Jacobs Vehicle Systems, Kilian Manufacturing, Kollmorgen, Lamiflex Couplings, Marland Clutch, Matrix, Nuttall Gear, Portescap, Stieber Clutch, Stromag, Svendborg Brakes, TB Wood’s, Thomson, Twiflex, Warner Electric, Warner Linear, and Wichita Clutch.

The Company’s unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and do not include all of the information and note disclosures required by generally accepted accounting principles ~~generally accepted~~ in the United States, ~~of America.~~or GAAP. These statements should be read in conjunction with the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2018, filed with the U.S. Securities and Exchange Commission (the “SEC”) on March 1, 2019. In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments, consisting of normal recurring adjustments, necessary to present fairly the Company’s financial position ~~for the interim periods presented,~~ and cash flows for the interim periods presented. The results are not necessarily indicative of future results. The Company considers events or transactions that occur after the balance sheet date but before the financial statements are issued to provide additional evidence relative to certain estimates or to identify matters that require additional disclosure. Certain prior year numbers have been adjusted to conform to the current year rounding convention of reporting financial data in millions of dollars, except as otherwise noted.

~~In August 2017, the~~ ~~Financial Accounting Standards Board ("FASB")~~ issued Accounting Standards Update ("ASU") 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities. This ASU provides new guidance about income statement classification and eliminates the requirement to separately measure and report hedge ineffectiveness. The entire change in fair value for qualifying hedge instruments included in the effectiveness will be recorded in other comprehensive income (OCI) and amounts deferred in OCI will be reclassified to earnings in the same income statement line item in which the earnings effect of the hedged item is reported. The guidance is effective for interim and annual periods for the Company on

On January 1, 2019 ~~with early adoption permitted. The Company does not expect the adoption of this ASU to have a material impact on its Consolidated Financial Statements.~~

~~In October 2016, the FASB issued Accounting Standards Update ("ASU") 2016-16,~~ ~~Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory~~ (“ASU 2016-16”). This ASU requires entities to recognize the income tax consequences of many intercompany asset transfers at the transaction date. The seller and buyer will immediately recognize the current and deferred income tax consequences of an intercompany transfer of an asset other than inventory. The tax consequences were previously deferred until the asset is sold to a third party or recovered through use. This guidance will be effective for the Company ~~on January 1, 2018. We are currently evaluating this guidance and the impact it will have on our consolidated financial statements.~~

~~In August 2016, the FASB issued Accounting Standards Update ("ASU") 2016-15,~~ ~~Statement of Cash Flows (Topic 230): Classification of certain cash receipts and cash payments (a consensus of the emerging issues task force)~~ (“ASU 2016-15”). This ASU addresses the following eight specific cash flow issues: debt prepayment or debt extinguishment costs; settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing; contingent consideration payments made after a business combination; proceeds from the settlement of insurance claims; proceeds from the settlement of corporate-owned life insurance policies (including bank-owned life insurance policies); distributions received from equity method investees; beneficial interests in securitization transactions; and separately identifiable cash flows and application of the predominance principle. This guidance will be effective for the Company on January 1, 2018. We are currently evaluating the impact this guidance will have on our consolidated financial statements.

~~In February 2015, the FASB issued~~adopted ASU 2016-02, Leases (Topic 842) (“ASU 2016-02”)~~. The~~ using the modified retrospective approach for all lease arrangements at the beginning period of adoption. Results for the reporting period beginning January 1, 2019 are presented under ASU ~~requires management~~2016-02, which required, among other items, lessees to recognize a right-of-use asset (“ROU assets”) and lease liability for most leases. As permitted by the new lease standard, the Company elected (i) not to reevaluate land easements if they were not previously accounted for as leases, (ii) not to reassess prior conclusions about lease identification, lease classification and initial direct costs (iii) not to apply the recognition requirements to short-term leases, and (iv) not to separate non-lease components from associated lease components, for all classes of underlying assets. Upon adoption of the new lease standard, the Company recorded right of use assets of approximately $46.7 million and lease liabilities ~~by lessees for all~~of approximately $48.2 million in connection with its operating leases. See Note 5 for additional information regarding our commitments under various lease obligations.

Arrangements that are determined to be leases at inception are recognized in long-term ROU assets, current lease liabilities, and long-term lease liabilities in the condensed consolidated balance sheet at lease commencement. Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future fixed lease payments over the lease term at commencement date. As most of the Company’s leases do not provide an implicit rate, the Company applies its incremental borrowing rate based on the economic environment at commencement date in determining the present value of future payments. The ~~ASU~~operating lease ROU asset also includes any lease prepayments made and initial direct costs incurred and is ~~effective~~reduced by lease incentives. Lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense for ~~periods beginning after December 15, 2018 and interim periods therein~~operating leases or payments are recognized on a ~~modified retrospective basis. We are currently evaluating~~straight-line basis over the ~~impact this guidance will have on our~~lease term.

On October 1, 2018, the Company and Fortive Corporation (“Fortive”) consummated the previously announced combination (the “Fortive Transaction”) of Altra with four operating companies from Fortive’s Automation & Specialty platform (the “A&S Business”), and as a result, the consolidated financial statements ~~and expect to recognize a significant lease obligation upon adoption.~~reflect the A&S Business’s results of operations from October 1, 2018 onward.

~~In May 2014,~~The A&S Business, consisting of four key brands, Kollmorgen, Portescap, Thomson and Jacobs Vehicle Systems, designs, manufactures, markets and sells electromechanical and electronic motion control products, including standard and custom motors, drives and controls; linear motion systems, ball screws, linear bearings, clutches/brakes, linear actuators and mechanical components; and through Jacobs Vehicle Systems, supplemental braking systems for commercial vehicles.

As of March 31, 2019, the ~~FASB issued ASU No. 2014-09~~allocation of the purchase price of the A&S Business is provisional. The fair value of all ~~Revenue~~the acquired identifiable assets and liabilities is provisional pending finalization of the Company’s acquisition accounting, including the finalization of the valuation of the intangible assets acquired, identification and measurement of the inventory and property, plant and equipment, the measurement of tax basis in certain jurisdictions and the resulting deferred taxes that might arise from ~~Contracts with Customers~~ ~~(“ASU 2014-09”). ASU 2014-09 provides~~book and tax basis differences, as well as identification and measurement of uncertain tax positions, if any. The Company believes that such preliminary allocations provide a ~~single principles-based, five-step model~~reasonable basis for estimating the fair values of assets acquired and liabilities assumed, but the Company is waiting for additional information necessary to ~~be applied to all contracts with customers.~~finalize fair value. The ~~five steps are to (i) identify~~Company recorded certain measurement period adjustments during the ~~contracts with the customer, (ii) identify the performance obligations~~quarter ended March 31, 2019 in the ~~contract, (iii) determine~~amount of $26.2 million. The preliminary purchase price allocation below includes such adjustments.

Preliminary purchase price allocation:	At Acquisition Date			Measurement Period Adjustments			At Acquisition Date (As Adjusted)
Consideration transferred:
Total cash consideration	$	1,003.4		$	—		$	1,003.4
Total equity consideration		1,458.7			—			1,458.7
A&S acquisition purchase price adjustment		—			13.5			13.5
Fair value of consideration transferred	$	2,462.1		$	13.5		$	2,475.6

Recognized identifiable assets acquired and liabilities assumed:
Less: cash on A&S balance sheet at 10/1/2018		54.1			(0.5	)		53.6
Receivables		129.7			(0.8	)		128.9
Inventory		89.1			(2.3	)		86.8
Prepaids and other current assets		6.9			(0.2	)		6.7
Property, plant and equipment		178.3			(1.0	)		177.3
Intangibles		1,454.0			—			1,454.0
Other non-current assets		7.9			(0.4	)		7.5
Accounts payable		(98.9	)		0.8			(98.1	)
Accrued payroll		(15.2	)		0.5			(14.7	)
Accrued expenses and other current liabilities		(33.7	)		—			(33.7	)
Pension liability and other post employment benefits		(12.0	)		—			(12.0	)
Deferred tax liability		(355.7	)		(8.5	)		(364.2	)
Other long term liability		(2.6	)		(0.3	)		(2.9	)
Senior unsecured notes assumed		(400.0	)		—			(400.0	)
Total identifiable net assets assumed		1,001.9			(12.7	)		989.2
Goodwill	$	1,460.2		$	26.2		$	1,486.4

The excess of the ~~transaction~~purchase price ~~(iv) allocate~~over the ~~transaction price~~fair value of the net assets acquired was recorded as goodwill, which is not deductible for income tax purposes. The goodwill in this acquisition is attributable to the ~~performance obligations~~Company’s expectation to achieve synergies, such as facility consolidations, global procurement efficiencies, the ability to cross-sell product, and the ability to penetrate certain geographic areas.

Customer relationships and ~~(v) recognize revenue when each performance obligation is satisfied. Revenue~~technology are subject to amortization, and will be recognized ~~when promised goods or services~~on a straight-line basis over the estimated useful lives of 20 years and 7-10 years, respectively, which represents the anticipated period over which the Company estimates it will benefit from the acquired assets. The tradenames and trademarks are ~~transferred~~considered to have an indefinite life and will not be amortized.

The major acquired technology IPR&D relates to the ~~customer in an amount that reflects the consideration expected in exchange for those goods or services. ASU 2014-09~~next generation of valvetrain technologies, which focus on improving engine brake performance, improving fuel efficiency and meeting future worldwide emissions regulations. The IPR&D projects are not currently amortized and will be ~~effective~~reviewed for impairment at least annually and amortization will commence when the assets are placed into service. There was no evidence of impairment to IPR&D as of March 31, 2019.

The Company recorded net sales from the A&S Business of $249.1 million for the three months ended March 31, 2019. The Company ~~beginning~~recorded net income from the A&S Business of $32.1 million for the three months ended March 31, 2019. Net income includes amortization expense from the A&S Business of $15.5 million for the three months ended March 31, 2019.

The following table sets forth the unaudited pro forma results of operations of the Company for the quarter ended March 31, 2018, as if the Company had acquired the A&S Business on January 1, 2018. The pro forma information contains the actual operating results of the Company ~~commenced its assessment~~and the A&S Business, adjusted to include the pro forma impact of ~~ASU 2014-09 during the second half~~(i) additional depreciation expense as a result of ~~2015 and developed a project plan to guide the implementation. The project plan includes analyzing the ASU’s impact~~estimated depreciation based on the Company’s contract portfolio, surveying the Company’s business units and discussing the various revenue streams, completing contract reviews, comparing historical accounting policies and practices to the requirementsfair value of fixed assets; (ii) additional expense as a result of the ~~new guidance, identifying potential differences from applying~~estimated amortization of identifiable intangible assets and (iii) additional interest expense for borrowings associated with the ~~requirements~~A&S Acquisition. These pro forma amounts do not purport to be indicative of the ~~new guidance to its contracts and updating and providing training on its accounting policy.~~ results that would have actually been obtained if the acquisition occurred at the beginning of the period or that may be obtained in the future.As

On January 1, 2019 the Company continues its evaluation, it is also identifying and preparing to implement changes to accounting policies, business processes and internal controls to support the new accounting and disclosure requirements. adopted ASU 2016-02, Leases~~The Company expects to adopt this new guidance~~ (Topic 842) (“ASU 2016-02”) using the modified retrospective ~~method~~approach for all lease arrangements at the beginning period of adoption. Leases existing for the reporting period beginning January 1, 2019 are presented under ASU 2016-02. We lease property and equipment under finance and operating leases. At March 31, 2019, the Company’s ROU assets and lease liabilities for operating and finance leases totaled approximately $43.8 million and $45.5 million, respectively. Finance lease ROU assets are included in non-current other assets and finance lease liabilities are included in current and non-current other liabilities on the Company’s condensed consolidated balance sheets. The impact of adopting the new lease standard was not material to the Company’s condensed consolidated statement of operations for the periods presented.

As previously disclosed in our 2018 Annual Report on Form 10-K and under Topic 840, future minimum lease payments for operating leases having initial or remaining noncancelable lease terms in excess of one year would have been as follows:

We sell our products through three primary commercial channels: original equipment manufacturers (OEMs), industrial distributors and direct to end users. Each of our segments sells similar products, which are balanced across end-user industries including, without limitation, energy, food processing, general industrial, material handling, mining, transportation, industrial automation, robotics, medical devices, and turf & garden.

The following table disaggregates our revenue for each reportable segment. The Company believes that disaggregating revenue into these categories achieves the disclosure objective to depict how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors.

Net sales by geographic region based on point of shipment origin are as follows:

The payment terms and conditions in our customer contracts vary. In some cases, customers will ~~result~~partially prepay for their goods; in other cases, after appropriate credit evaluations, payment will be due in arrears. In addition, there are constraints that cause variability in the ultimate consideration to be recognized. These constraints typically include early payment discounts, volume rebates, rights of return, surcharges, and other customer consolidation.

A contract asset is created when the Company satisfies a ~~cumulative effect adjustment~~performance obligation by transferring a promised good to the customer. Contract assets may represent conditional or unconditional rights to consideration. The right is conditional, and recorded as a contract asset, if the Company must first satisfy another performance obligation in the contract before it is entitled to payment from the customer. Contract assets are transferred to billed receivables once the right becomes unconditional. If the Company has the unconditional right to receive consideration from the customer, the contract asset is accounted for as a billed receivable and presented separately from other contract assets. A right is unconditional if nothing other than the passage of time is required before payment of that consideration is due. If the Company receives a customer payment prior to satisfying a performance obligation or in excess of estimates of what the Company expects to be entitled to, the payment is recorded as a contract liability.Contracts with payment in arrears are recognized as receivables.

The opening and closing balances of the Company’s contract liability and receivables as of the ~~date of adoption.~~ quarter ended March 31, 2019 are as follows:

The ~~company does not expect~~revenue recognized during the ~~adoption of this ASU to have a material impact on its Consolidated Financial Statements.~~

Inthree months ended March ~~2016, the FASB issued ASU 2016-09,~~ ~~Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting~~ ~~(“ASU 2016-09”). The updated guidance revises aspects of stock-based compensation guidance which include income tax consequences, classification of awards as equity or liabilities,~~31, 2019 and ~~classification on the statement of cash flows. The Company adopted this guidance on January 1, 2017 which resulted~~2018 that was included in the ~~recognition~~contract liabilities at the beginning of ~~excess tax benefits in our provision for income taxes with~~ the period amounted to $2.1 and $0.8, respectively.

Notes to Unaudited Condensed Consolidated Statements of Operations rather than paid-in capital and was not material for the quarter ended September 30, 2017. Additionally, our Unaudited Condensed Consolidated Statements of Cash Flows now present excess tax benefits as an operating activity, effective January 1, 2017. Finally, the Company elected to continue to estimate forfeitures based on historical data and recognizes forfeiture compensation expense over the vesting period of the award. The adoption of this ASU did not have a material impact to our Unaudited Condensed ConsolidatedInterim Financial ~~Statements.~~Statements

~~In July 2015, the FASB issued ASU 2015-11,~~ ~~Simplifying the Measurement of Inventory~~ ~~(“ASU 2015-11”).~~ Under this guidance, entities utilizing the first-in-first-out (“FIFO”) or average cost method should measure inventory at the lower of cost or net realizable value, whereas net realizable value is defined as the estimated selling priceAmounts in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. The Company adopted this guidance on January 1, 2017. The adoption of this ASU did not have a material impact to our Unaudited Condensed Consolidated Financial Statements.millions, unless otherwise noted

Fair value is determined based upon the exit price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants, as determined by either the principal market or the most advantageous market. Inputs used in the valuation techniques to derive fair values are classified based on a three-level hierarchy, as follows:

The Company considers all highly liquid investments purchased with a remaining maturity of three months or less to be cash ~~equivalents.~~

~~The carrying values of financial instruments, including accounts receivable, cash~~ equivalents ~~accounts payable,~~ and other accrued liabilities approximate fair value. Debt under the Company’s 2015 Credit Agreement approximates the fair value due to the variable rate and the fact that the agreement was renegotiated in December 2016 and there have been no significant changes in our credit rating or pricing of similar debt.

The Company determines the fair value of financial instruments using quoted market prices whenever available. When quoted market prices are not available for various types of financial instruments (such as forwards, options and swaps), the Company uses standard models with market-based inputs, which take into account the present value of estimated future cash flows and the ability of the Company or the financial counterparty to perform. For interest rate and cross currency swaps, the significant inputs to these models are interest rate curves for discounting future cash flows and are adjusted for credit risk. For forward foreign currency contracts, the significant inputs are interest rate curves for discounting future cash flows and exchange rate curves of the foreign currency for translating future cash flows. See additional discussion of the Company’s use of financial instruments including a cross-currency ~~swap~~swaps and interest rate swaps included in Note ~~15.~~17.

The carrying values of financial instruments, including accounts receivable, cash equivalents, accounts payable, and other accrued liabilities are carried at cost, which approximates fair value. Debt under the Altra Credit Agreement (as defined herein) of $1,305.0 million approximates the fair value due to the variable interest rate. Further, the agreement was negotiated in October 2018 and there have not been any significant changes in our credit rating. The carrying amount of the Notes (as defined herein) was $400 million and the estimated fair value of the Notes was $412.0 million at March 31, 2019.

The following is a reconciliation of changes in accumulated other comprehensive loss by component for the periods presented:

On December 30, 2016, we acquired the shares and certain assets and liabilities of the Stromag business from GKN plc., and as a result, the Company’s unaudited condensed consolidated financial statements reflect Stromag’s results of operations from the beginning of business on December 30, 2016 forward. Stromag is a leading global manufacturer of highly engineered clutches and brakes, couplings, and limit switches for use in a variety of end markets including renewable energy, crane & hoist, and marine. We refer to this transaction as the Stromag Acquisition.

As of September 30, 2017, the allocation of the purchase price for the Stromag Acquisition remains preliminary as the company continues to evaluate the fair value of certain inventories located in foreign jurisdictions. The fair value of all the acquired identifiable assets and liabilities is provisional pending finalization of the Company’s acquisition accounting. The Company believes that such preliminary allocations provide a reasonable basis for estimating the fair values of assets acquired and liabilities assumed, but the Company is waiting for additional information necessary to finalize fair value. The Company recorded certain immaterial measurement period adjustments during the quarter ended September 30, 2017. The preliminary purchase price allocations below include such adjustments.

The excess of the purchase price over the fair value of the net assets acquired was recorded as goodwill. This goodwill is not deductible for income tax purposes. The Company expects to develop synergies, such as lower cost country sourcing, global procurement, the ability to cross-sell product, and the ability to penetrate certain geographic areas, as a result of the acquisition of Stromag.

~~During the second quarter, the Company and the seller completed the working capital adjustment under the sale and purchase agreement which reduced the purchase price by $2.9 million.~~

Customer relationships are subject to amortization which will be amortized on a straight-line basis over their estimated useful lives of 15 years, which represents the anticipated period over which the Company estimates it will benefit from the acquired assets.

The following table sets forth the unaudited pro forma results of operations of the Company for the quarter and year to date periods ended September 30, 2016, as if the Company had acquired Stromag at the beginning of the period. The pro forma information contains the actual operating results of the Company, including Stromag, adjusted to include the pro forma impact of (i) additional depreciation expense as a result of estimated depreciation based on the fair value of fixed assets and; (ii) additional expense as a result of the estimated amortization of identifiable intangible assets; (iii) additional interest expense for borrowings under the Credit Agreement associated with the Stromag Acquisition and (iv) inventory fair value adjustment. These pro forma amounts do not purport to be indicative of the results that would have actually been obtained if the acquisition occurred at the beginning of the period or that may be obtained in the future.

Basic earnings per share is based on the weighted average number of shares of common stock outstanding, and diluted earnings per share is based on the weighted average number of shares of common stock outstanding and all potentially dilutive common stock equivalents outstanding. Common stock equivalents are included in the per share calculations when the effect of their inclusion is dilutive.

On October 1, 2018, upon consummation of the Fortive Transaction, the Company issued 35.0 million shares of Altra common stock pursuant to that certain Agreement and Plan of Merger and Reorganization (The “Merger Agreement”), dated March 7 2018, among Altra, Fortive, McHale Acquisition Corp, and Stevens Holding Company, Inc. (“Stevens Holding”), and that certain Separation and Distribution Agreement, dated March 7, 2018, among Altra, Fortive and Stevens Holding (the “Distribution Agreement”). As a result, following the consummation of the Fortive Transaction, the total amount of issued and outstanding common stock was approximately 64.2 million.

Inventories at ~~September 30, 2017~~March 31, 2019 and December 31, ~~2016~~2018 consisted of the following:

~~Changes in goodwill from January 1, 2017 through September 30, 2017 were as follows:~~

Changes in goodwill from January 1, 2019 through March 31, 2019 were as follows:

Other intangible assets as of ~~September 30, 2017~~March 31, 2019 and December 31, ~~2016~~2018 consisted of the following:

	September 30, 2017						December 31, 2016						March 31, 2019						December 31, 2018
	Cost		Accumulated Amortization		Net		Cost		Accumulated Amortization		Net		Cost		Accumulated Amortization		Net		Cost		Accumulated Amortization		Net
Other intangible assets
Intangible assets not subject to amortization:
Tradenames and trademarks	$	54,408	$	—	$	54,408	$	50,416	$	—	$	50,416	$	260.7	$	—	$	260.7	$	262.0	$	—	$	262.0
In-process research and development														16.0		—		16.0		16.0		—		16.0
Intangible assets subject to amortization:
Customer relationships		175,842		70,277	$	105,565		164,406		60,761		103,645		1,191.9		101.0		1,090.9		1,196.4		91.0		1,105.4
Product technology and patents		6,779		5,813	$	966		6,090		5,468		622		210.0		17.7		192.3		212.9		10.6		202.3
Total intangible assets	$	237,029	$	76,090	$	160,939	$	220,912	$	66,229	$	154,683	$	1,678.6	$	118.7	$	1,559.9	$	1,687.3	$	101.6	$	1,585.7

The Company recorded ~~$2.4~~$17.8 million and ~~$2.1~~$2.5 million of amortization expense in the quarters ended ~~September 30, 2017~~March 31, 2019 and ~~2016 respectively, and recorded $7.1 million and $6.4 million of amortization expense in the year to date periods ended September 30, 2017 and September 30, 2016,~~2018, respectively.

The estimated amortization expense for intangible assets is approximately ~~$2.3~~$52.9 million for the remainder of ~~2017, $9.4~~2019, $70.7 million in each of the next four years and then ~~$66.6~~$947.5 million thereafter.

The contractual warranty period of the Company's products generally ranges from three months to two years with certain warranties extending for longer periods. Estimated expenses related to product warranties are accrued at the time products are sold to customers and are recorded in accruals and other current liabilities on the unaudited condensed consolidated balance ~~sheet.~~sheets. Estimates are established using historical information as to the nature, frequency and average costs of warranty claims. Changes in the carrying amount of accrued product warranty costs for each of the quarters ended ~~September 30, 2017~~March 31, 2019 and ~~September 30, 2016~~2018 are as follows:

~~Outstanding debt obligations at September 30, 2017 and December 31, 2016 were as follows.~~

~~Second Amended~~Outstanding debt obligations at March 31, 2019 and ~~Restated~~December 31, 2018 were as follows.

On October ~~22, 2015,~~1, 2018 (the “A&S Closing Date”), upon the closing of the Fortive Transaction the Company assumed $400 million aggregate principal amount of 6.125% senior notes due 2026 (the “Notes”). The Notes will mature on October 1, 2026. Interest on the Notes accrues from October 1, 2018, and the first interest payment date on the Notes will be due April 1, 2019. The Notes may be redeemed at the option of the issuer on or after October 1, 2023. The Notes are guaranteed on a senior unsecured basis by the Company and certain of its domestic subsidiaries.

On the A&S Closing Date, the Company entered into a ~~Second Amended and Restated~~new Credit Agreement ~~which may be amended from time to time~~ (the ~~“2015~~“Altra Credit Agreement”). ~~Under the 2015~~The Altra Credit Agreement ~~the~~provides for a seven-year senior secured term loan in an aggregate principal amount of ~~the Company’s prior~~$1,340.0 million (the “Altra Term Loan Facility”) and a five-year senior secured revolving credit facility ~~was increased to $350~~in an aggregate committed principal amount of $300.0 million (the ~~“2015~~“Altra Revolving Credit Facility” and together with the Altra Term Loan Facility, the “Altra Credit Facilities”). The ~~amounts available under the 2015 Revolving Credit Facility can be used for general corporate purposes, including acquisitions, and to repay existing indebtedness. The stated maturity~~proceeds of the ~~2015 Revolving Credit~~Altra Term Loan Facility ~~is October 22, 2020.~~

~~The amounts available under the 2015 Revolving Credit Facility may be drawn upon in accordance with the terms~~were used to (i) consummate Fortive’s transfer of the 2015 Credit Agreement. All amounts outstanding under the 2015 Revolving Credit Facility are due on the stated maturity or such earlier time, if any, required under the 2015 Credit Agreement. The amounts owed under the 2015 Revolving Credit Facility may be prepaid at any time, subject to usual notificationcertain non-U.S assets, liabilities and breakage payment provisions. Interest on the amounts outstanding under the 2015 Revolving Credit Facility is calculated using either an ABR Rate or Eurodollar Rate, plus the applicable margin. The applicable margins for Eurodollar Loans are between 1.25% to 2.00%, and for ABR Loans are between 0.25% and 1.00%. The amounts of the margins are calculated based on either a consolidated total net leverage ratio (as defined in the 2015 Credit Agreement), or the then applicable rating(s) of the Company’s debt and then to the extent as provided in the 2015 Credit Agreement. The rate at December 31, 2015 was 1.5%. A portion of the 2015 Revolving Credit Facility may also be used for the issuance of letters of credit, andentities constituting a portion of the ~~amount~~A&s Business to certain subsidiaries of Altra, and the Altra subsidiaries’ assumption of substantially all of the ~~2015 Revolving Credit Facility is available~~liabilities associated with the transferred assets (the “Direct Sales”), (ii) repay in full and extinguish all outstanding indebtedness for borrowings in certain agreed upon foreign currencies. The 2015 Credit Agreement contains various affirmative and negative covenants and restrictions, which among other things, will require the Borrowers (as defined in the 2015 Credit Agreement) to provide certain financial reports to the Lenders (as defined in the 2015 Credit Agreement), require the Company to maintain certain financial covenants relating to consolidated leverage and interest coverage, limit maximum annual capital expenditures, and limit the ability of the Company and its subsidiaries to incur or guarantee additional indebtedness, pay dividends or make other equity distributions, purchase or redeem capital stock or debt, make certain investments, sell assets, engage in certain transactions, and effect a consolidation or merger. The 2015 Credit Agreement also contains customary events of default.

On October 21, 2016, the Company entered into an agreement to amend the 2015 Credit Agreement. This amendment, which became effective upon closing of the purchase of Stromag on December 30, 2016, increased the 2015 Revolving Credit Facility by $75 million to $425 million. The Company used additional borrowings under the increased facility to finance its purchase of Stromag. In addition, the amendment increased the multicurrency sublimit to $250 million and adjusted certain financial covenants. The pricing terms and maturity dateborrowed money under the 2015 Credit Agreement ~~remain unchanged. The Company paid $0.6 million in~~and (iii) pay certain fees, costs, and expenses in connection with the ~~October 2016 amendment, which is recorded in other non-current assets.~~

Asconsummation of ~~September 30, 2017 we had $282.4 million outstanding on~~ the ~~USD tranche~~Fortive Transaction. The proceeds of ~~our 2015~~the Altra Revolving Credit Facility will be used for working capital and general corporate purposes.

The Altra Credit Facilities are guaranteed on a senior secured basis by the Company and certain of its domestic subsidiaries, subject to certain customary exceptions.

Borrowings under the Altra Term Loan Facility will bear interest at a per annum rate equal to a “Eurocurrency Rate” plus 2.00%, in the case of Eurocurrency Rate borrowings, or equal to a “Base Rate” plus 1.00%, in the case of Base Rate borrowings. Borrowings under the Altra Revolving Credit Facility will initially bear interest at a per annum rate equal to a Eurocurrency Rate plus 2.00%, in the case of Eurocurrency Rate borrowings, or equal to a Base Rate plus 1.00%, in the case of Base Rate borrowings, and thereafter will bear interest at a per annum rate equal to a Eurocurrency Rate or Base Rate, as applicable, plus an interest rate spread determined by reference to a pricing grid based on the Company’s senior secured net leverage ratio. In addition, the Company will be required to pay fees that will fluctuate between 0.250% per annum to 0.375% per annum on the unused amount of ~~2.99%. As of September 30, 2017 and December 31, 2016, we had $3.7 million and $4.1 million in letters of credit outstanding, respectively. We had $138.9 million available to borrow under~~ the ~~2015~~Altra Revolving Credit Facility, ~~at September 30, 2017 and may borrow an additional $150 million under certain circumstances.~~

~~In March 2011, the Company issued Convertible Senior Notes (the “Convertible Notes”) due March 1, 2031. The Convertible Notes were guaranteed by~~based upon the Company’s ~~U.S. domestic subsidiaries. Interest~~senior secured net leverage ratio. The interest rate on the ~~Convertible Notes~~Term Loan Facility and the Revolving Credit Facility was ~~payable semi-annually in arrears,~~4.49% at March 31, 2019.

The Altra Credit Agreement contains usual and customary representations and warranties, and usual and customary affirmative and negative covenants, including limitations on ~~March 1~~liens, investments, restricted payments, additional indebtedness and ~~September 1~~asset sales and mergers. In addition, the Altra Credit Agreement requires that Altra maintain a specified maximum senior secured leverage ratio and a specified minimum interest coverage ratio. The obligations of ~~each year, commencing on September 1, 2011 at an annual rate~~the borrowers of ~~2.75%. Proceeds from~~ the ~~offering were $81.3 million, net~~Altra Credit Facilities under the Altra Credit Agreement may be accelerated upon customary events of default, including non-payment of principal, interest, fees and ~~expenses that were capitalized.~~other amounts,

~~Company’s common stock. As a result~~inaccuracy of ~~the conversion, the Company incurred a loss on extinguishment~~representation and warranties, violation of ~~debt~~covenants, cross default and cross acceleration, voluntary and involuntary bankruptcy or insolvency proceedings, inability to pay debts as they become due, material judgements, ERISA events, actual or asserted invalidity of ~~approximately $1.9 million~~security documents or guarantees and the carrying value of the Convertible Notes was $42.9 million as of December 31, 2016. In January 2017, additional Convertible Notes with an outstanding principal of approximately $44.7 million were converted resultingchange in ~~the issuance of 1.7 million shares of the Company’s common stock, and $0.9 million of Convertible Notes were redeemed for cash.~~ control.

The Company incurred $29.9 million in issuance costs, which will be amortized over the term of the debt as an ~~additional loss~~adjustment to the effective interest rate on ~~extinguishment~~the outstanding borrowings.

As of ~~debt of approximately $1.8 million during the quarter ended~~ March 31, ~~2017. All Convertible Notes were converted or redeemed as~~2019, the Company had $1,305.0 million outstanding on the Altra Credit Agreement. As of ~~January 12, 2017.~~March 31, 2019 and 2018, the Company had $3.8 million and $4.3 million in letters of credit outstanding, respectively. The Company had $296.2 million available to borrow under the Altra Credit Facilities at March 31, 2019.

Prior to the Altra Credit Facilities, the Company maintained the 2015 Revolving Credit Facility, in the amount of $425 million.

On October 1, 2018, in connection with the Fortive Transaction and the entering into Altra Credit Agreement, the 2015 Credit Agreement, was terminated and all outstanding indebtedness for borrowed money thereunder was repaid in full.

~~During 2015, a foreign subsidiary of the Company~~The Company’s subsidiaries in Europe have entered into ~~a mortgage with a bank for €1.5 million, or $1.7 million,~~certain long-term fixed rate term loans that are generally secured by ~~its facility in Heidelberg, Germany~~the local property, plant and equipment. The debt has interest rates that range from 1.79% to ~~replace its previously existing mortgage. The mortgage has an interest rate of 1.79%~~2.5%, ~~which is payable in~~with various quarterly and monthly installments through ~~August 2023. The mortgage had a remaining principal balance of € 1.1 million, or $1.3 million, at September 30, 2017.~~

During 2015, a foreign subsidiary of the Company entered into a mortgage with a bank for €6.0 million, or $6.7 million, secured by its facility in Esslingen, Germany. The mortgage has an interest rate of 2.5% per year, which is payable in annual interest payments of €0.1 million, or $0.1 million, to be paid in monthly installments. The mortgage had a remaining principal balance of €6.0 million, or $7.1 million, at September 30, 2017. The principal portion of the mortgage will be due in a lump-sum payment in May 2019.

2028. During the quarter ended March 31, ~~2016,~~2019, one of our subsidiaries in China opened a ~~foreign subsidiary~~new line of credit for approximately $7.5 million with a term life of one year. As of March 31, 2019 the Company ~~entered in to a loan with a bank to equip its facility in Zlate Moravce, Slovakia. As~~had approximately $1.2 million outstanding on the line of September 30, 2017, the total principal outstanding was €2.1 million, or $2.5 million, and is guaranteed by land security at its parent company facility in Esslingen, Germany. The loan is due in installments from 2016 through 2020, with an interest rate of 1.95%.credit.

During 2015, a foreign subsidiary of the Company entered into a mortgage with a bank for €2.1 million, or $2.3 million, secured by its facility in in Angers, France. The mortgage has an interest rate of 1.85% per year which is payable in monthly installments from June 2016 until May 2025. The mortgage had a balance of €1.7 million, or $2.0 million, at September 30, 2017.

The Company leases certain equipment under ~~capital~~finance lease arrangements, whose obligations are included in both short-term and long-term debt. ~~Capital~~Finance lease obligations amounted to approximately $0.5 million and $0.3 million at ~~September 30, 2017~~March 31, 2019 and ~~approximately $0.4 million at December 31, 2016. Assets subject to capital leases~~2018, respectively. ROU assets are included in property, plant and equipment with the related amortization recorded as depreciation expense.

Certain of our foreign subsidiaries maintain overdraft agreements with financial institutions. There were no borrowings as of September 30, 2017 or December 31, 2016 under any of the overdraft agreements.

~~The Company’s 2004 Equity Incentive Plan (the “2004 Plan”) permitted~~Effective October 1, 2018, the ~~grant~~Company amended its Articles of ~~various forms~~Incorporation to increase the number of authorized shares of Altra common stock ~~based compensation~~from 90.0 million shares to ~~our officers~~120.0 million shares. As of March 31, 2019 and ~~senior level employees. The 2004 Plan expired in 2014 and, upon expiration,~~2018, there were ~~750,576~~64.3 million shares ~~subject~~and 29.1 million of common stock issued and outstanding, respectively.

On December 20, 2006, the Company amended and restated its certificate of incorporation authorizing 10.0 million shares of undesignated Preferred Stock (“Preferred Stock”). The Preferred Stock may be issued from time to ~~outstanding awards under~~time in one or more classes or series, the ~~2004 Plan. The 2014 Omnibus Incentive Plan (the “2014 Plan”) was approved~~shares of each class or series to have such designations and powers, preferences, and rights, and qualifications, limitations and restrictions as determined by the Company’s ~~shareholders~~Board of Directors. There was no Preferred Stock issued or outstanding at ~~its 2014 annual meeting.~~ March 31, 2019 and December 31, 2018.

The 2014 Plan provides for various forms of stock based compensation to our directors, executive personnel and other key employees and consultants. Under the 2014 Plan, the remaining total number of shares of common stock available for delivery pursuant to the grant of awards (“Awards”) was ~~originally 750,000. At the Company’s 2017 Annual Meeting, its shareholders approved amendments to the 2014 Plan which, among other things, made an additional 750,000 shares~~1.7 million as of ~~common stock~~March 31, 2019.

available for grant under the 2014 Plan. Shares of our common stock subject to Awards awarded under the 2004 Plan and outstanding as of the effective date of the 2014 Plan (except for substitute awards) that terminate without being exercised, expire, are forfeited or canceled, are exchanged for Awards that did not involve shares of common stock, are not issued on the stock settlement of a stock appreciation right, are withheld by the Company or tendered by a participant (either actually or by attestation) to pay an option exercise price or to pay the withholding tax on any Award, or are settled in cash in lieu of shares will again be available for Awards under the 2014 Plan.

The restricted shares and restricted stock units issued pursuant to the 2014 Plan generally vest ratably over a period ranging from immediately to five years from the date of grant, provided, that the vesting of the restricted shares or restricted stock units may accelerate upon the occurrence of certain events. Common stock awarded under the 2014 Plan is generally subject to restrictions on transfer, repurchase rights, and other limitations and rights as set forth in the applicable award agreements. The fair value of the shares repurchased are measured based on the share price on the date of grant.

The 2014 Plan permits the Company to grant, among other things, restricted stock, restricted stock units, and performance share awards to key ~~employees and other persons who make significant contributions to the success~~employees. Certain awards include vesting based upon achievement of ~~the Company. The restrictions and vesting schedule for restricted stock granted under the 2014 Plan are determined by the Personnel and~~specified market conditions. Compensation ~~Committee of the Board of Directors.~~

~~Stock-based compensation~~ expense recorded (in selling, general and administrative expense) during the ~~year to date periods~~quarter ended ~~September 30, 2017~~March 31, 2019 and ~~September 30, 2016,~~2018 was ~~$4.5~~$3.5 million and ~~$3.4~~$1.3 million, respectively. The Company recognizes stock-based compensation expense on a straight-line basis for the shares vesting ratably under the plan and uses the graded-vesting method of recognizing stock-based compensation expense for the performance share awards based on the probability of the specific performance metrics being achieved over the requisite service period.

The following ~~table~~tables sets forth the activity of the Company’s restricted stock grants and ~~performance share grants in the year~~stock options to ~~date period ended September 30, 2017:~~date:

Total remaining unrecognized compensation cost ~~was $6.3~~is approximately $30.8 million as of ~~September 30, 2017, which~~March 31, 2019, and will be recognized over a weighted average remaining period of 3three years. The ~~fair market~~intrinsic value of ~~the shares for which the restrictions have lapsed during the year to~~these awards, as of March 31, 2019, was $31.9 million. Grant date ~~period ended September 30, 2017 was $5.6 million. Restricted shares granted are valued~~fair value is based on the ~~fair market value~~quoted price of the stock on the date of grant.

In ~~May 2014, our board~~October 2018, the Company issued 536,030 shares of ~~directors approved~~restricted stock to certain Automation and Specialty employees as a ~~share repurchase program (the “2014 Program”) authorizing~~result of the ~~buyback~~acquisition and in accordance with the terms of ~~up to $50.0~~the Employee Matters Agreement, dated March 7, 2018, among Altra, Fortive and Stevens Holding. The aggregate fair value of these awards totaled $21 million. Based upon the vesting provisions of these awards, $3.1 million of the ~~Company’s common stock. Under the 2014 program, the Company~~fair value was ~~authorized~~attributed to purchase shares on the open market, through block trades, in privately negotiated transactions, in compliance with SEC Rule 10b-18 (including through Rule 10b5-1 plans), or in any other appropriate manner. The timingpreacquisition services of the ~~shares repurchased~~A&S employees and was atrecognized as purchase price consideration. The remaining compensation will be recognized over the ~~discretion of management and depended on a number of factors, including price, market conditions and regulatory requirements. Shares acquired through the repurchase program were retired.~~remaining service period.

On October 19, 2016, our board of directors approved a ~~new~~ share repurchase program authorizing the buyback of up to $30.0 million of the Company's common stock through December 31, 2019. ~~This plan replaces the 2014 Program which was terminated.~~ The Company expects to purchase shares on the open market, through block trades, in privately negotiated transactions, in compliance with SEC Rule 10b-18 (including through Rule 10b5-1 plans), or in any other appropriate manner. The timing of the shares repurchased will be at the discretion of management and will depend on a number of factors, including price, market conditions and regulatory requirements. Shares acquired through the repurchase program will be retired. The Company retains the right to limit, terminate or extend the share repurchase program at any ~~time without prior notice.~~ ~~The Company expects to fund any further~~

time without prior notice. The Company expects to fund any further repurchases of its common stock through a combination of cash on hand and cash generated by operations. ~~During the year to date period ended September 30, 2017, the~~

The Company did not repurchase any ~~of its common stock under~~shares during the ~~share repurchase program.~~

~~The Company declared a dividend of $0.17 per share of common stock related to the quarter~~quarters ended ~~September 30, 2017 which was accrued in the balance sheet at September 30, 2017.~~

~~Future declarations of quarterly cash dividends are subject to approval by the Board of Directors~~March 31, 2019 and to the Board’s continuing determination that the declaration of dividends are in the best interest of the Company’s stockholders and are in compliance with all laws and agreements of the Company applicable to the declaration and payment of cash dividends.2018.

From time to time, the Company has initiated various restructuring programs and incurred severance and other restructuring costs.

During 2015, the Company commenced a restructuring plan (“2015 Altra Plan”) as a result of weak demand in Europe and to make certain adjustments to improve business effectiveness, reduce the number of facilities and streamline the Company's cost structure. The actions taken pursuant to the 2015 Altra Plan included reducing headcount, facility consolidations, and ~~related asset impairments, and~~ limiting discretionary spending to improve profitability.

For the quarter ended March 31, 2019, the Company didn’t record any expense related to the 2015 Altra Plan. The ~~following table details~~Company does not expect to incur any additional material restructuring ~~charges incurred by segment for the periods presented under~~expenses related to the 2015 Altra Plan.

The amounts for the quarter ended September 30, 2017 were comprised of approximately $0.1 million in consolidation costs. The amounts for the year to date period ended September 30, 2017 were comprised of approximately $0.9 million in severance, $1.2 million in consolidation costs, and $1.1 million in other restructuring, and are classified in the accompanying unaudited condensed consolidated statement of income as restructuring costs.

During ~~the quarter ended September 30,~~ 2017, the Company commenced a new restructuring plan (“2017 Altra Plan”) as a result of the Stromag acquisition and to rationalize its global renewable energy business. The actions taken pursuant to the 2017 Altra Plan included reducing headcount, facility consolidations and the elimination of certain costs.

~~The following table details restructuring charges incurred by segment for the periods presented under the 2017 Altra Plan.~~

The amounts for the quarter ended ~~September 30, 2017~~March 31, 2019 were comprised of approximately ~~$0.4~~$0.5 million in severance, $0.3 million in consolidation costs, and $0.2 million in ~~consolidation~~other restructuring costs, and are classified in the accompanying unaudited condensed consolidated statement of income as restructuring costs. The Company expects to incur an additional amount of approximately $1.0 to $3.0 million in expense under the 2017 Altra Plan through 2019.

During 2019, the Company commenced a restructuring plan (“2019 Altra Plan”) to drive efficiencies, reduce the number of facilities and optimize its operating margin. The Company expects expenses related to workforce reductions, lease termination costs and other facility rationalization costs. The Company expects to incur $15 - $25 million in restructuring expenses under the 2019 Altra Plan over the next four years, primarily related to plant consolidation and headcount reductions. For the quarter ended March 31, 2019, the Company recorded approximately $1.1 million in severance, $0.1 million in relocation costs and $0.1 million in other restructuring costs, respectively, under the 2019 Altra Plan, which are classified in the accompanying unaudited condensed consolidated statement of income as restructuring costs.

The following is a reconciliation of the accrued restructuring costs between January 1, ~~2017~~2019 and ~~September 30, 2017.~~March 31, 2019.

The ~~total~~following is a reconcilation of the accrued restructuring ~~reserve as of September 30, 2017 relates to severance~~ costs ~~to be paid to former employees which are expected to be paid during 2017~~between January 1, 2018 and are recorded in accruals and other current liabilities on the accompanying unaudited condensed consolidated balance sheet. The Company does not expect to incur any additional material restructuring expenses related to the 2015 Altra Plan. The company expects to incur approximately $2.0 to $4.0 million in expense under the 2017 Plan through 2019.March 31, 2018.

The ~~Company sold its entity in Changzhou China and obtained proceeds~~following is a reconciliation of ~~approximately $3.2 million at~~restructuring expense by segment for the ~~close of the transaction. There was no additional gain or loss recorded on the sale of the building associated with this entity which was classified as assets held for sale.~~quarter ended March 31, 2019.

~~The Company currently operates through three business segments that are aligned with key product types and end markets served:~~

Couplings are the interface between two shafts, which enable power to be transmitted from one shaft to the other. Clutches in this segment are devices which use mechanical, hydraulic, pneumatic, or friction type connections to facilitate engaging or disengaging two rotating members. Brakes are combinations of interacting parts that work to slow or stop machinery. Products in this segment are generally used in heavy industrial applications and energy markets.

Products in this segment include brakes and clutches that are used to electronically slow, stop, engage or disengage equipment utilizing electromagnetic friction type connections. Products in this segment are used in industrial and commercial markets including agricultural machinery, material handling, motion control, and turf & garden.

Gears are utilized to reduce the speed and increase the torque of an electric motor or engine to the level required to drive a particular piece of equipment. Gears produced by the Company are primarily utilized in industrial applications.

The total accrued restructuring reserve as of March 31, 2019 relates to severance costs to be paid to former employees under the 2017 Altra Plan and is recorded in accruals and other liabilities on the accompanying consolidated balance sheet.

The internal reporting structure used by our Chief Operating Decision Maker (“CODM”) to assess performance and allocate resources determines the basis for our reportable operating segments. Our CODM is our Chief Executive Officer, and he evaluates operations and allocates resources based on a measure of income from operations. Our operations are organized in two reporting segments that are aligned with key product types and end markets served, Power Transmission Technologies (“PTT”) and Automation & Specialty (“A&S”):

The segment information presented below for the prior periods has been reclassified to conform to the new presentation of our two reporting segments. The prior year reporting segments consisted of Couplings, Clutches & Brakes; Electromagnetic, Clutches, & Brakes; and Gearing and were aggregated into the PTT segment.

Segment financial information and a reconciliation of segment results to unaudited condensed consolidated results follows:

	Quarters Ended September 30,						Year to Date Period Ended September 30,						Quarters Ended
	2017			2016			2017			2016			March 31, 2019			March 31, 2018
Net Sales:
Couplings, Clutches & Brakes	$	110,109		$	77,446		$	327,310		$	231,225
Electromagnetic Clutches & Brakes		58,304			50,680			187,463			165,083
Gearing		48,368			47,023			144,545			145,038
Power Transmission Technologies													$	234.9		$	240.4
Automation & Specialty														249.1			—
Inter-segment eliminations		(2,158	)		(2,017	)		(5,903	)		(5,087	)		(1.2	)		—
Net sales	$	214,623		$	173,132		$	653,415		$	536,259		$	482.8		$	240.4
Income from operations:
Segment earnings:
Couplings, Clutches & Brakes	$	12,679		$	6,596		$	33,031		$	20,441
Electromagnetic Clutches & Brakes		6,138			6,589			21,894			20,120
Gearing		5,689			5,650			17,804			17,280
Restructuring		(680	)		(3,397	)		(3,776	)		(6,591	)
Power Transmission Technologies													$	28.9		$	28.2
Automation & Specialty														40.6			—
Corporate expenses (1)		(2,553	)		(5,069	)		(6,869	)		(9,729	)		(0.8	)		(7.6	)
Restructuring costs														(2.3	)		(0.9	)
Income from operations	$	21,273		$	10,369		$	62,084		$	41,521		$	66.4		$	19.7
Other non-operating (income) expense:
Loss on settlement of pension plan														—			5.1
Net interest expense	$	1,811		$	2,815		$	5,547		$	8,615			19.8			1.8
Other non-operating expense (income), net		696			45			30			(438	)
Loss on extinguishment of convertible debt		—			—			1,797			—
		2,507			2,860			7,374			8,177
Other non-operating (income), net														1.1			(0.1	)
Total non-operating (income) expense													$	20.9		$	6.8
Income before income taxes		18,766			7,509			54,710			33,344			45.5			12.9
Provision for income taxes		5,489			2,196			15,723			9,872			10.3			3.9
Net income	$	13,277		$	5,313		$	38,987		$	23,472		$	35.2		$	9.0

Quarter Ended

Year to Date Period Ended

September 30, 2017

September 30, 2016

September 30, 2017

September 30, 2016

Depreciation and amortization:

Couplings, Clutches & Brakes

$
5,387

$
4,028

$
15,658

$
11,485

Electromagnetic Clutches & Brakes

1,274

1,176

3,690

3,501

Gearing

1,776

1,862

5,077

5,261

Corporate

851

791

2,478

2,372

Total depreciation and amortization

$
9,288

$
7,857

$
26,903

$
22,619

September 30, 2017

December 31, 2016

Total assets:

Couplings, Clutches & Brakes

$
570,266

$
511,934

Electromagnetic Clutches & Brakes

181,766

169,507

Gearing

139,039

147,829

Corporate (2)

34,960

40,554

Total assets

$
926,031

$
869,824

	Quarter Ended
	March 31, 2019		March 31, 2018
Depreciation and amortization:
Power Transmission Technologies	$	8.4	$	8.5
Automation & Specialty		23.0		—
Corporate		0.7		0.9
Total depreciation and amortization	$	32.1	$	9.4

Net sales to third parties are attributed to the geographic regions based on the country in which the shipment originates. Amounts attributed to the geographic regions for property, plant and equipment are based on the location of the entity, which holds such assets.

Financial instruments, which are potentially subject to counter party performance and concentrations of credit risk, consist primarily of trade accounts receivable. The Company manages these risks by conducting credit evaluations of customers prior to delivery or commencement of services. When the Company enters into a sales contract, collateral is normally not required from the customer. Payments are typically due within 30 days of billing. An allowance for potential credit losses is maintained, and losses have historically been within management’s expectations. While the Company did not have any customers that represented total sales greater than 10% for each of the quarters ended September 30, 2017 and 2016, the Gearing business had one customer that approximated 10% of total sales for that segment during the quarter ended September 30, 2017.

The Company is also subject to counter party performance risk of loss in the event of non-performance by counterparties to financial instruments, such as cash and investments. Cash and cash equivalents are held by well-established financial institutions and invested in AAA rated mutual funds. The Company is exposed to swap counterparty credit risk with well-established financial institutions.

The Company enters into ~~contractual~~ derivative arrangements to manage changes in market conditions related to interest on debt obligations, ~~and~~ foreign currency ~~exposures.~~exposures and occasionally on commodity prices. Derivative instruments utilized during the period include interest rate ~~swap agreements~~ and foreign currency ~~contracts.~~swap agreements. All derivative instruments are recognized as either assets or liabilities on the balance sheet at fair value at the end of each period. The counterparties to the Company's contractual derivative agreements are all major ~~international~~global financial institutions. The Company is exposed to credit loss in the event of nonperformance by these counterparties. The Company continually monitors its positions and the credit ratings of its counterparties, and does not anticipate nonperformance by the counterparties. For designated hedging relationships, the Company formally documents the hedging relationship and its risk management objective and strategy for undertaking the hedge, the hedging instrument, the hedged item, the nature of the risk being hedged, how the hedging instrument's effectiveness in offsetting the hedged risk will be assessed prospectively and ~~retrospectively, and a description of the method of measuring ineffectiveness.~~retrospectively. The Company also formally assesses, both at the hedge's inception and on an ongoing basis, whether the derivatives that are used in hedging transactions are highly effective in offsetting cash flows of hedged items.

In December 2018, the Company entered into cross-currency swap agreements to hedge its net investment in Euro-denominated assets against future volatility in the exchange rate between the U.S. dollar and the Euro. By doing so, the Company synthetically converted a portion of its U.S. dollar-based long-term debt into Euro-denominated long-term debt. The agreements have a five-year maturity at notional amounts declining from $600.0 million to $360.0 million over the contract period. Under the terms of the swap agreements, the Company is to receive net interest payments at a fixed rate of 4.8255% and pay Euros at rates ranging from 2.19% to 2.315%. At inception, the cross-currency swaps were designated as net investment hedges.

For a fixed-fixed cross currency swap at final maturity, (i) the total change in fair value of the swap will be the realized accruals of the pay and receive legs of the swap recorded in earnings and (ii) the final cash settlement of the principal at maturity recorded in cumulative translation adjustments (“CTA”). The accruals of the pay and receive legs of the swap represent the forward points or “carry” on the swap and the final cash settlement of the principal at maturity will be equal to the spot-to-spot change over its life. On a mark-to-market basis during its life, there will be three components to the change in fair value of the swap. The spot-to-spot change in fair value of the swap, non-discounted, based on the swap’s principal amount, will be recorded in CTA each period. The accrual of the pay and receive legs of the swap each period, representing the amortization in systematic fashion of the impact of changes in fair value of the swap from all other factors, will be recorded in earnings. The difference between the change in fair value of the excluded component of the cross currency swap and the amount recognized in earnings represented by accrual of the pay and receive legs of the swap will be recorded in CTA each period. This amount includes the change in fair value of the future interest payments and the impact of changes in discount factors as it impacts the value of the final principal exchange. As of March 31, 2019, the Company recorded $15.8 million to CTA and recognized approximately $3.8 interest income, net of the pay and receive legs of the swap.

The Company ~~is exposed~~has historically utilized its cross currency interest rate swaps to mitigate foreign currency and interest rate cash flow exposure related to its non-functional currency long-term debt ofheld at the Company’s wholly owned Dutch subsidiary. ~~To manage~~The currency adjustments related to this ~~foreign currency~~loan were recorded in Other non-operating (income) expense, net. The offsetting gains and ~~interest rate cash flow exposure,~~losses

on the related derivative contracts were recorded in other non-operating (income) expense, net. In December of 2016 the Company entered into a cross-currency interest rate swap that ~~converts~~converted $100.0 million of U.S. dollar denominated floating interest payments to functional currency (euro) fixed interest payments during the life of the hedging instrument. In addition, the Company has two cross-currency interest rate swaps that convert an additional $70.0 million of the U.S. dollar denominated floating interest payments to functional currency (euro) floating interest payments during the life of the hedging instruments. The effective period of one of the cross-currency interest rate swaps in the amount of $30 million (the “Initial Swap”) that the Company entered in to as of December 21, 2016 expired as of June 30, 2017. The Company net settled the Initial Swap and a new $30 million cross-currency swap transaction was entered into which will amortize down to $20 million after six-months. The effective period of the second of these two cross-currency interest rate swaps in the amount of $40 million expires on December 31, 2018. As changes in foreign exchange and interest rates impact the future cash flow of interest payments, the hedges are intended to offset changes in cash flows attributable to interest rate and foreign exchange movements.

The Company designated the $100.0 million swap as a cash flow hedge, with the effective portion of the gain or loss on the derivative reported as a component of other comprehensive income (loss) and reclassified into earnings in the same period or periods during which the hedged transaction impacts earnings. ~~There were no amounts recorded for ineffectiveness for~~In addition, the ~~periods reported herein related to the~~Company entered into two cross-currency interest rate ~~swaps. Changes in the fair value~~swaps that converted an additional $70.0 million of the ~~derivatives that are not designated as a cash flow hedge are recorded in~~U.S. dollar denominated floating interest payments (one for $40 million and the other ~~operating (income) expense, net.~~

~~Changes in~~for $30 million) to functional currency (euro) floating interest payments during the ~~fair value~~life of ~~a derivative that is designated as and meets all~~ the ~~required criteria for a cash flow hedge are recorded in accumulated other comprehensive income and reclassified into earnings as the underlying hedged item affects earnings. As~~hedging instruments. The effective period of ~~September 30, 2017, approximately $0.3 million~~one of ~~net unrealized gains related to~~ the cross-currency interest rate swaps, ~~were included~~ in ~~accumulated other comprehensive income.~~

the amount of $30 million, expired as of December 31, 2017. On October 2, 2018, the Company terminated both the $100 million and the $40 million cross-currency interest rate swap agreements and paid approximately $14.0 million to settle the swap agreements.

In December 2018, the Company entered into an interest rate swap agreement designed to eliminate the cash flow risk caused by interest rate changes on the forecasted interest payments expected to occur related to a portion of its outstanding borrowings under the Altra Credit Agreement for a notional value of $600 million at 4.8255%. The Company recognized $0.5 million in interest expense as of March 31, 2019. The effective period of the swap was December 4, 2018, and the maturity date is September 29, 2023.

In January 2017, the Company entered into an interest rate swap agreement designed to fix the variable interest rate payable on a portion of its outstanding borrowings ~~under the 2015 Credit Agreement,~~ for a notional value of $50.0 million, at 1.625%. The effective date was January 31, 2017 and the maturity date is January 31, 2020.

These interest rate swap ~~agreement was~~agreements are designed to manage exposure to interest rates on the Company’s variable rate indebtedness. The Company recognizes all derivatives on its balance sheet at fair value. The Company has designated ~~this~~these interest rate swap ~~agreement~~agreements as a cash flow ~~hedge.~~hedges. Changes in the fair value of the swap will be recognized in other comprehensive income until the hedged items are recognized in earnings. Hedge ineffectiveness, if any, associated with the swap will be reported by the Company in interest expense. As of September 30, 2017, approximately $35 thousand of unrealized gain related to the interest rate swap was included in accumulated other comprehensive income.

~~The following table summarizes outstanding swaps which the Company has recorded at September 30, 2017.~~

The following table summarizes outstanding swaps that the Company has recorded at March 31, 2019.

Initial US$

Date

Derivative

Notional

Entered

Financial

Amount

Fixed Rate

Floating Leg

Fixed Rate

Floating Leg

Settlement

Effective

into

Instrument

(millions)

(swap

counterparty)

(swap

counterparty)

(Company)

Dates

Period of Swap

12/10/2018

Cross currency

interest rate

swap

240.0

4.8255%

N/A

2.315%

N/A

Quarterly on the last

day of each

December,

March,

June, and

September

12/10/2018 - 9/29/2023

12/10/2018

Cross currency

interest rate

swap

192.0

4.8255%

N/A

2.235%

N/A

Quarterly on the last

day of each

December,

March,

June, and

September

12/10/2018 - 9/29/2023

12/10/2018

Cross currency

interest rate

swap

108.0

4.8255%

N/A

2.190%

N/A

Quarterly on the last

day of each

December,

March,

June, and

September

12/10/2018 - 9/29/2023

12/10/2018

Cross currency

interest rate

swap

60.0

4.8255%

N/A

2.290%

N/A

Quarterly on the last

day of each

December,

March,

June, and

September

12/10/2018 - 9/29/2023

12/4/2018

Interest rate swap

600.0

4.8255%

Variable rate 1-

month USD

LIBOR plus 2%

N/A

1 Month USD-

LIBOR-BBA

plus 2%

Monthly on the last

business day

of each month

commencing with

December 31,

2018 in

accordance with

Modified

Following

Business Day

Convention

12/4/2018 - 9/29/2023

1/31/2017

Interest rate swap

50.0

N/A

Variable rate 1-

month USD

LIBOR

1.625% USD

N/A

Monthly on the last

banking day of

each month

commencing

February 28, 2017

1/31/2017 - 1/31/2020

The following table summarizes the location and fair value, using Level 2 inputs (see Note 46 for a description of the fair value levels), of the Company's derivatives designated and not designated as hedging instruments in the ~~Unaudited Condensed Consolidated Balance Sheets~~unaudited condensed consolidated balance sheets (in ~~thousands)~~millions).

The following table summarizes the location of (gain) loss reclassified from Accumulated other comprehensive loss into earnings for derivatives designated as hedging instruments and the location of (gain) loss for our derivatives not designated as hedging instruments in the Consolidated Statements of Income (in thousands).

~~16. Commitments~~Notes to Unaudited Condensed Consolidated Interim Financial Statements

The Company is involved in various pending legal proceedings arising out of the ordinary course of business. These proceedings primarily involve commercial claims, product liability claims, personal injury claims, and workers’ compensation claims. ~~None of these legal proceedings are expected to have a material adverse effect on the results of operations, cash flows, or financial condition of the Company. Wi~~thWith respect to these proceedings, management believes that the Company will prevail, has adequate insurance coverage or has established appropriate reserves to cover potential liabilities. Any costs that management estimates may be paid related to these proceedings or claims are accrued when the liability is considered probable and the amount can be reasonably estimated. There can be no assurance, however, as to the ultimate outcome of any of these matters, and if all or substantially all of these legal proceedings were to be determined adversely to the Company, there could be a material adverse effect on the results of operations, cash flows, or financial condition of the Company. We have established loss provisions for matters in which losses are probable and can be reasonably estimated. ~~There were no material amounts accrued in the accompanying unaudited condensed consolidated balance sheet for potential litigation as of September 30, 2017 or December 31, 2016.~~ For matters where a reserve has not been established and for which we believe a loss is reasonably possible, as well as for matters where a reserve has been recorded but for which an exposure to loss in excess of the amount accrued is reasonably possible, we believe that such losses, individually and in the aggregate, will not have a material effect on our unaudited condensed consolidated financial statements.

Our estimates regarding potential losses and materiality are based on our judgment and assessment of the claims utilizing currently available information. Although we will continue to reassess our reserves and estimates based on future developments, our objective assessment of the legal merits of such claims may not always be predictive of the outcome and actual results may vary from our current estimates. We will continue to consider the applicable guidance in ASC 450-20, based on the facts known at the time of our future filings, as it relates to legal contingencies, and will adjust our disclosures as may be required under the guidance.

There were no material amounts accrued in the accompanying unaudited condensed consolidated balance sheets for potential litigation as of March 31, 2019 and December 31, 2018.

The Company also risks exposure to product liability claims in connection with products it has sold and those sold by businesses that the Company acquired. Although in some cases third parties have retained responsibility for product liability claims relating to products manufactured or sold prior to the acquisition of the relevant business and in other cases the persons from whom the Company has acquired a business may be required to indemnify the Company for certain product liability claims subject to certain caps or limitations on indemnification, the Company cannot assure that those third parties will in fact satisfy their obligations with respect to liabilities retained by them or their indemnification obligations. If those third parties become unable to or otherwise do not comply with their respective obligations including indemnity obligations, or if certain product liability claims for which the Company is obligated were not retained by third parties or are not subject to these indemnities, the Company could become subject to significant liabilities or other adverse consequences. Moreover, even in cases where third parties retain

responsibility for product liability claims or are required to indemnify the Company, significant claims arising from products that have been acquired could have a material adverse effect on the Company’s ability to realize the benefits from an acquisition, could result in the reduction of the value of goodwill that the Company recorded in connection with an acquisition, or could otherwise have a material adverse effect on the Company’s business, financial condition, or operations.

There is contamination at some of ~~an Amendment~~the Company’s current facilities, primarily related to historical operations at those sites, for which the Company could be liable for the investigation and remediation under certain environmental laws. The potential for contamination also exists at other of the Company’s current or former sites, based on historical uses of those sites. The Company currently is not undertaking any remediation or investigations and the costs or liability in connection with potential contamination conditions at these facilities cannot be predicted at this time because the potential existence of contamination has not been investigated or not enough is known about the environmental conditions or likely remedial requirements. Currently, other parties with contractual liability are addressing or have plans or obligations to address those contamination conditions that may pose a material risk to human health, safety or the environment. In addition, while the Company attempts to evaluate the risk of liability associated with these facilities at the time the Company acquired them, there may be environmental conditions currently unknown to the Company relating to prior, existing or future sites or operations or those of predecessor companies whose liabilities the Company may have assumed or acquired which could have a material adverse effect on the Company’s business.

The Company is being indemnified, or expects to be indemnified by third parties subject to certain caps or limitations on the indemnification, for certain environmental costs and liabilities associated with certain owned or operated sites. Accordingly, based on

the indemnification and the experience with similar sites of the environmental consultants who the Company has hired, the Company does not expect such costs and liabilities to have a material adverse effect on its business, operations or earnings. The Company cannot assure you, however, that those third parties will in fact satisfy their indemnification obligations. If those third parties become unable to, or otherwise do not, comply with their respective indemnity obligations, or if certain contamination or other liability for which the Company is obligated is not subject to these indemnities, the Company could become subject to significant liabilities.

From time to time, the Company is notified that it is a potentially responsible party and may have liability in connection with off-site disposal facilities. To date, the Company has generally resolved matters involving off-site disposal facilities for a nominal sum but there can be no assurance that the Company will be able to resolve pending or future matters in a similar fashion.

The Company commenced its plan to terminate the Altra Industrial Motion, Inc. Retirement Plan (the ~~“Pension Plan”)~~

~~Effective June 30, 2017, the Company amended the Altra Industrial Motion, Inc. Retirement Plan (the “Pension Plan”~~“Plan”), its frozen U.S. defined benefit pension plan ~~to terminate the Pension Plan effective as of~~in June ~~30, 2017. The Company has commenced the plan termination process~~2017 and ~~expects to distribute~~distributed a portion of the ~~Pension~~ Plan assets by the end of 2017 and the remainder in the first quarter of 2018. Upon regulatory approval and the distribution of plan assets, the Company expects to recognize a loss up to a total of approximately $8.0 million during the fourth quarter of 2017 as a partial plan settlement. See Note 8, Pension and Other Employee Benefits, to the consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2017. During the first quarter of 2018, ~~associated with~~ the ~~plan termination. The loss will include up to~~Company completed the Plan termination and made a final contribution of $1.1 million to fully fund the benefit obligation prior to settlement. The Company settled the remaining benefit obligation of approximately $18.7 million by transferring the remaining Plan assets and liability obligations to a third party. The Company recorded an additional settlement loss of $5.1 million related to the Plan in ~~cash required to terminate~~ the ~~pension plan and the remainder will be non-cash in nature. The unrecognized loss will be triggered upon the distribution of Pension Plan assets.~~quarter ended March 31, 2018.

On ~~October 17, 2017~~April 24 2019, the Company declared a dividend of $0.17 per share for the quarter ended ~~December 31, 2017,~~June 30, 2019, payable on ~~January 3, 2017~~July 2, 2019 to ~~shareholders~~stockholders of record as of ~~December~~June 18, ~~2017.~~

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

This Quarterly Report on Form 10-Q contains forward-looking statements, within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which reflect ~~the Company’s~~our current estimates, expectations and projections about ~~the Company’s~~our future results, performance, prospects and opportunities. Forward-looking statements include, among other things, the information concerning ~~the Company’s~~our possible future results of operations including revenue, costs of goods sold, gross margin, future profitability, future economic improvement, business and growth strategies, financing plans, ~~the Company’s~~our competitive position and the effects of competition, the projected growth of the industries in which we operate, and ~~the Company’s~~our ability to consummate strategic acquisitions and other transactions. Forward-looking statements include statements that are not historical facts and can often be identified by forward-looking words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “forecast,” “intend,” “may,” “plan,” ~~“may,~~“project,” “should,” “will,” “would,” ~~“project,” “forecast”~~ and similar ~~expressions.~~expressions or variations. These forward-looking statements are based upon information currently available to the Company and are subject to a number of risks, uncertainties, and other factors that could cause ~~the Company’s~~our actual results, performance, prospects, or opportunities to differ materially from those expressed in, or implied by, these forward-looking statements.

Important factors that could cause ~~the Company’s~~our actual results to differ materially from the results referred to in the forward-looking statements ~~the Company makes~~we make in this ~~report~~Quarterly Report on Form 10-Q include:

changes in market conditions that would result in the impairment of our goodwill or other assets;

•

~~changes in market conditions that would result in the impairment of goodwill or other assets of the Company;~~

changes in accounting rules and standards, audits, compliance with the Sarbanes-Oxley Act, and regulatory investigations;

the effects of changes to critical accounting estimates;

changes in volatility of the ~~Company’s~~price of our common stock ~~price~~ and the risk of litigation following a decline in the price of ~~the Company’s~~our common stock;

failure of ~~the Company’s~~our operating equipment or information technology infrastructure;

~~the Company’s~~our ability to implement and maintain our Enterprise Resource Planning (ERP) system;

~~the Company’s~~our access to capital, credit ratings, indebtedness, and our ability to raise additional capital and operate under the terms of ~~the Company’s~~our debt obligations;

the risks associated with our debt;

the risks associated with ~~the Company’s~~our exposure to variable interest rates and foreign currency exchange rates;

the risks associated with interest rate swap contracts;

the risks associated with ~~the Company’s~~our being subject to tax laws and regulations in various jurisdictions;

the risks associated with ~~the Company’s~~our exposure to renewable energy markets;

the risks related to regulations regarding conflict minerals;

the risks associated with the volatility and disruption in the global financial markets;

~~the Company’s~~our ability to successfully execute, manage and integrate key acquisitions and mergers, including ~~but not limited to~~ the ~~Svendborg Acquisition, the Guardian~~Stromag Acquisition, and the ~~Stromag Acquisition;~~Fortive Transaction;

~~the~~other risks associated with the ~~Company’s closure of its manufacturing facility in Changzhou, China;~~ Fortive Transaction, including:

lost sales and customers as a result of customers of Altra or the A&S Business deciding not do so business with us;

risks associated with managing a larger and more complex business;

integrating personnel of Altra and the A&S Business while maintaining focus on providing consistent, high-quality products and service to customers;

the loss of key employees;

unanticipated issues in integrating manufacturing, logistics, information, communications and other systems;

possible inconsistencies in standards, controls, procedures, policies and compensation structures;

the impact on our internal controls and compliance with the regulatory requirements under the Sarbanes-Oxley Act of 2002;

potential unknown liabilities and unforeseen expenses associated with the Fortive Transaction;

~~the Company’s~~our ability to achieve the efficiencies, savings and other benefits anticipated from our cost reduction, margin improvement, restructuring, plant consolidation and other business optimization initiatives;

the risk associated with the UKUK’s vote to leave the European Union; and

other factors, risks, and uncertainties referenced in ~~the Company’s~~our filings with the Securities and Exchange Commission (“SEC”), including the “Risk Factors” set forth in this document.

YOU SHOULD NOT RELY UPON FORWARD-LOOKING STATEMENTS AS PREDICTIONS OF FUTURE EVENTS. ALL FORWARD-LOOKING STATEMENTS SPEAK ONLY AS OF THE DATE OF THIS REPORT. EXCEPT AS REQUIRED BY LAW, WE UNDERTAKE NO OBLIGATION TO PUBLICLY UPDATE OR RELEASE ANY REVISIONS TO THESE FORWARD-LOOKING STATEMENTS TO REFLECT ANY EVENTS OR CIRCUMSTANCES AFTER THE DATE OF THIS REPORT OR TO REFLECT THE OCCURRENCE OF UNANTICIPATED EVENTS. ALL SUBSEQUENT WRITTEN AND ORAL FORWARD-LOOKING STATEMENTS ATTRIBUTABLE TO US OR ANY PERSON ACTING ON THE COMPANY’S BEHALF ARE EXPRESSLY QUALIFIED IN THEIR ENTIRETY BY THE CAUTIONARY STATEMENTS CONTAINED OR REFERRED TO IN THIS SECTION AND IN OUR RISK FACTORS SET FORTH (1) IN THE SECTION TITLED “RISK FACTORS,” SET FORTH IN PART II, ITEM 1A OF THIS QUARTERLY REPORT ON FORM 10-Q; (2) IN PART I, ITEM 1A OF THE COMPANY’S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, ~~2016, AND IN OTHER REPORTS~~2018, FILED WITH THE ~~SECURITIES~~SEC ON MARCH 1, 2019; AND ~~EXCHANGE COMMISSION BY~~(3) IN THE ~~COMPANY.~~COMPANY’S OTHER SEC FILINGS.

The following discussion and analysis of the financial condition and results of operations of Altra Industrial Motion Corp. and its subsidiaries should be read together with (1) the ~~audited~~unaudited condensed consolidated financial statements of Altra Industrial Motion Corp. and its subsidiaries and the related notes and other financial information included elsewhere in this Quarterly Report on Form 10-Q and (2) the audited consolidated financial statements of Altra Industrial Motion Corp. and its subsidiaries and the related notes and management’s discussion and analysis of financial conditions and results of operations included in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2018. Unless the context requires otherwise, the terms “Altra,” “Altra Industrial Motion Corp.,” “the Company,” “we,” “us,” and “our” refer to Altra Industrial Motion Corp. and its subsidiaries.

General

We are a leading global designer, producer and marketer of a wide range of electromechanical power transmission ~~and~~ motion control products with a presence in over 70 countries. Our global sales and marketing network includes over 1,000 direct OEM customers and over 3,000 distributor outlets. Our product portfolio includes industrial clutches and brakes, enclosed gear drives, open gearing, couplings, engineered bearing assemblies, linear components, gear motors, and other related(“PTMC”) products. Our ~~products serve~~technologies are used in various motion related applications and across a wide variety of ~~end markets including energy, general industrial, material handling, mining, transportation~~high-volume manufacturing and ~~turf~~non-manufacturing processes in which reliability and ~~garden.~~ precision are critical to avoid costly down time and enhance the overall efficiency of operations.

We ~~primarily sell~~market our products tounder well recognized and established brands, which have been in existence for an average of over 85 years. We serve a ~~wide range~~diversified group of ~~OEMs~~customers comprised of over 1,000 direct original equipment manufacturers (“OEMs”) including GE, Honeywell and ~~through long-standing~~Siemens, and also benefit from established, long-term relationships with leading industrial distributors, ~~such as Motion Industries,~~including Applied Industrial Technologies, Grainger, Kaman ~~Industrial Technologies~~Corporation and ~~W.W. Grainger.~~

~~Business Segments~~

~~The Company currently operates through three business segments that are aligned~~Motion Industries. Many of our customers operate globally across a large number of industries, ranging from transportation, turf and agriculture, energy and mining to factory automation, medical and robotics. Our relationships with ~~key product types~~these customers often span multiple decades, which we believe reflects the high level of performance, quality and ~~end markets served:~~

~~Couplings, Clutches & Brakes.~~

~~Electromagnetic Clutches & Brakes.~~

~~Gearing.~~

~~Gears are utilized to reduce the speed and increase the torque of an electric motor or engine to the level required to drive a particular piece of equipment. Gears produced~~service we deliver, supplemented by the ~~Company are primarily utilized in industrial applications.~~

~~The following tables show the percentage of net sales and operating income generated by each~~breadth of our ~~three segments~~offering, vast geographic footprint and our ability to rapidly develop custom solutions for complex customer requirements.

On October 1, 2018, Altra consummated the Fortive Transaction and acquired the A&S Business for an aggregate purchase price of approximately $2,855.7 million, subject to certain post-closing adjustments, which consisted of $1,400.0 million of cash and debt instruments transferred to Fortive and shares of Altra common stock received by Fortive shareholders valued at approximately $1,455.7 million. As of March 31, 2019, the initial accounting for the ~~quarters~~Fortive Transaction (including the allocation of the purchase price to acquired assets and ~~year to date periods ended September 30, 2017 and 2016:~~

Net Sales

Quarter Ended

Year to Date Period Ended

September 30, 2017

September 30, 2016

September 30, 2017

September 30, 2016

Couplings, Clutches & Brakes

52%

45%

51%

43%

Electromagnetic Clutches & Brakes

27%

29%

29%

31%

Gearing

21%

26%

20%

26%

Operating Income

Quarter Ended

Year to Date Period Ended

September 30, 2017

September 30, 2016

September 30, 2017

September 30, 2016

Couplings, Clutches & Brakes

52%

35%

45%

35%

Electromagnetic Clutches & Brakes

25%

35%

30%

35%

Gearing

23%

30%

25%

30%

liabilities) is provisional.

Our ~~Internet address~~website is www.altramotion.com. By following the link “Investor Relations” and then “SEC ~~filings”~~Filings” on our ~~Internet~~ website, ~~we make available, free of charge,~~you can access our Annual ~~Report~~Reports on Form 10-K, our Quarterly Reports on Form 10-Q, ~~our~~ Current Reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which we make available free of charge, as soon as reasonably practicable after such forms are filed with or furnished to the ~~Securities and Exchange Commission.~~SEC. We are not including the information contained on or available through our website as a part of, or incorporating such information by reference into, this Quarterly Report on Form 10-Q.

Business Outlook

Our future financial performance depends, in large part, on conditions in the markets that we serve and on the U.S., European, and global economies in general. Since completing the Fortive Transaction on October 1, 2018, our focus has been on the integration of the A&S Business ~~Outlook~~

~~During~~and we have substantially completed the tactical components of that integration. In the quarter ended ~~September 30, 2017, we saw continued improvement in certain~~March 31, 2019, the addition of ~~our end markets that previously had been challenged. As our markets strengthen, we expect~~the A&S Business continues to ~~benefit increasingly from our work during the past few years~~have a favorable impact on our ~~facility consolidation, supply chain~~financial performance. Looking forward, our strategic priorities are to continue to execute on the integration of the A&S Business and ~~operational excellence initiatives. Moreover, we believe we are now in a position~~achieve our synergy target, to continue to capitalize on our strong cash generation to de-lever our balance sheet and to implement best practices from the ~~positive momentum in the industrial economy by driving~~Altra Business System to optimize sales growth ~~initiatives. To this end, our sales~~ and ~~engineering teams are targeting specific strategic end markets with focused activities~~accelerate profitability, primarily through supply chain management, leveraging technology to ~~generate new opportunities. We continue to be encouraged by the progress of the integration of our Stromag acquisition~~drive innovation, and ~~we have already experienced an increase in~~executing on organic growth and cross-selling opportunities. ~~We continue to seek further acquisitions, but remain highly disciplined in that pursuit.~~

Critical Accounting Policies

The preparation of our unaudited condensed consolidated financial statements and related disclosures in conformity with generally accepted accounting principles ~~generally accepted~~ in the United States (“GAAP”) requires management to make judgments, assumptions and estimates that affect our reported amounts of assets, revenues and expenses, as well as related disclosures of contingent assets and liabilities. We base our estimates on past experiences and other assumptions we believe to be appropriate, and we evaluate these estimates on an on-going basis. See the discussion of critical accounting policies in our Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2018. There have been no changes in the identification or application of the Company’s critical accounting policies during the quarter ended ~~September 30, 2017.~~

March 31, 2019, except for the adoption of ASC 842.

Recent Accounting Standards

See Part 1, Notes to Unaudited Condensed Consolidated Interim Financial Statements, Note 3 – Recent Accounting Standards.

Results of Operations

(Amounts in ~~thousands,~~millions, unless otherwise noted)

	Quarter Ended						Year to Date Period Ended						Quarter Ended
	September 30, 2017			September 30, 2016			September 30, 2017			September 30, 2016			March 31, 2019			March 31, 2018
Net sales	$	214,623		$	173,132		$	653,415		$	536,259		$	482.8		$	240.4
Cost of sales		145,610			118,957			446,109			369,254			307.9			166.2
Gross profit		69,013			54,175			207,306			167,005			174.9			74.2
Gross profit percentage		32.2	%		31.3	%		31.7	%		31.1	%		36.2	%		30.9	%
Selling, general and administrative expenses		41,009			36,142			123,012			105,548			90.9			47.1
Research and development expenses		6,051			4,267			18,434			13,345			15.3			6.5
Restructuring costs		680			3,397			3,776			6,591			2.3			0.9
Income from operations		21,273			10,369			62,084			41,521			66.4			19.7
Loss on settlement of pension plan														—			5.1
Interest expense, net		1,811			2,815			5,547			8,615			19.8			1.8
Other non-operating income (loss), net		696			45			30			(438	)
Loss on extinguishment of debt		—			—			1,797			—
Other non-operating expense (income), net														1.1			(0.1	)
Income before income taxes		18,766			7,509			54,710			33,344			45.5			12.9
Provision for income taxes		5,489			2,196			15,723			9,872			10.3			3.9
Net income	$	13,277		$	5,313			38,987			23,472		$	35.2		$	9.0

Quarter Ended ~~September 30, 2017~~March 31, 2019 compared with Quarter Ended ~~September 30, 2016~~March 31, 2018

The increase in net sales during the quarter ended March 31, 2019 is primarily due to increased sales resulting from the addition of the A&S Business in the amount of $249.1 million. Excluding the impact of net sales from the A&S Business, net sales decreased $6.7 million compared to the prior year period. Changes in foreign exchange had an unfavorable impact on net sales of $8.6 million, primarily driven by the Euro. This was offset by price which had a favorable increase of $4.5 million for the quarter ended March 31, 2019.

The increase in sales during the quarter ended September 30, 2017 was due to the acquisition of Stromag, price increases, higher sales levels in several end markets and the favorable effect of changes in foreign exchange rates of $2.5 million. Of the increase in sales, approximately $34.9 million relates to the inclusion of additional sales as a result of the acquisition of Stromag for the quarter. In addition, price increases contributed $1.7 million to the increase during the quarter. The rest of the increase related to a recovery in sales levels in various end markets in the Couplings, Clutches, and Brakes business segment.

Gross profit as a percentage of sales increased during the quarter ended ~~September 30, 2017~~March 31, 2019, primarily due to the acquisition of the A&S Business as well as improvements realized from ~~our consolidation and cost saving efforts as well~~price increases.

For the quarter ended March 31, 2019, SG&A as a ~~modest improvement~~percentage of net sales decreased primarily due to a decrease in ~~some~~acquisition expense of ~~our more profitable end markets.~~$4.9 million compared to the prior year quarter.

~~The increase in SG&A is primarily~~Research and development expenses increased due to the inclusion of ~~SG&A related to~~R&D expenses from the ~~Stromag business. This amount is partially offset by a decrease in year over year US healthcare costs and certain reductions as a result of our plant consolidations.~~

~~The increase in R&D is due to the inclusion of Stromag~~A&S Business for the quarter ended ~~September 30, 2017.~~March 31, 2019 in the amount of approximately $9.2 million. We expect R&D costs to be approximately 2.0% - 3.0% of sales in future periods.

Restructuring costs. During 2015 we adopted the ~~Company adopted a restructuring plan (“~~2015 Altra ~~Plan”)~~Plan in response to weak demand in Europe and to make certain adjustments to improve business effectiveness, reduce the number of facilities and streamline ~~the Company’s~~our cost structure. The actions taken pursuant to the 2015 Altra Plan included reducing headcount, facility consolidations and related asset impairments and limiting discretionary spending to improve profitability. ~~Approximately $1.9 million of the decrease is related to activity in the Couplings, Clutches and Brakes segment not present in the current quarter under the 2015 Altra Plan. The Company does~~We do not expect to incur any additional material costs as a result of the 2015 Altra Plan. We estimate future annual savings for 2019 to be approximately $0.1 million. The estimated future savings through 2019 are expected to improve SG&A by $0.1 million. The total 2015 Plan savings are in line with our expectations.

During the quarter ended September 30, 2017, ~~the Company~~we commenced a new restructuring plan (“2017 Altra Plan”) as a result of the Stromag acquisition and to rationalize ~~its~~our global renewable energy business. The actions taken pursuant to the 2017 Altra Plan include reducing headcount, facility consolidations and the elimination of certain costs. ~~Approximately $0.6 million of the expense in the current quarter is related to activity in the Couplings, Clutches and Brakes segment under the 2017 Altra Plan. The company expects~~We expect to incur approximately ~~$2.0~~$1.0 to ~~$4.0~~$3.0 million in additional expense through 2019 related to the 2017 Altra Plan. We have achieved savings of $0.7 million during the quarter ended March 31, 2019 under the 2017 Altra Plan and estimate additional future savings during 2019 to be approximately $2.2 million. The cost savings for the quarter ended March 31, 2018 were recognized as improvements in SG&A and Cost of Sales of approximately $0.2 million and $0.5 million, respectively. The estimated future savings through 2019 are expected to improve SG&A and Cost of Sales by $0.6 million and $1.7 million, respectively. The total 2017 Altra Plan savings are in line with our expectations.

During 2019, we commenced a restructuring plan (“2019 Plan”) to drive efficiencies, reduce the number of facilities and optimize our operating margin. We expect expenses related to workforce reductions, lease termination costs and other facility rationalization costs. We expect to incur $15 - $25 million in restructuring expenses under the 2019 Plan over the next four years, primarily related to plant consolidation and headcount reductions.

Interest expense ~~decreased significantly during~~increased for the quarter ~~as a result of~~ended March 31, 2019 compared to the ~~conversion~~prior year period due to the debt incurred and ~~redemption of our convertible notes and~~assumed in connection with the ~~favorable impact of the cross currency interest rate swaps despite the higher borrowing under our Credit Facility for the Stromag Acquisition.~~ Fortive Transaction in October 2018.

Other non-operating ~~expense increased~~income in each period in the chart above primarily ~~due~~relates to ~~foreign currency~~ transaction gains and losses arising from the changes in foreign currency exchange rates related primarily to the Euro, British Pound, and Chinese Renminbi.

The provision for income tax, as a percentage of income before income taxes, ~~was flat~~decreased for the quarter ended ~~September 30, 2017~~March 31, 2019 as compared to the quarter ended ~~September 30, 2016.~~

~~Year to Date Ended September 30, 2017 compared with Year to Date Ended September 30, 2016~~

March 31, 2018. The increase in sales during the year to date period ended September 30, 2017 was due to the acquisition of Stromag, price increases, and higher sales levels in several end markets partially offset by the effect of changes in foreign exchange rates of $5.4 million. Of the increase in sales, approximately $103.0 million relates to the inclusion of additional sales as a result of the acquisition of Stromag. In addition, price increases contributed $4.9 million to the increase. The rest of the increase related to a recovery in sales levels in various end marketsdecrease in the ~~Couplings, Clutches, and Brakes business segment~~

Gross profit as a percentage of sales increased slightly during the year to date period ended September 30, 2017 primarily as a result of our plant consolidations, price increases, and improving end markets. The increase in gross profit was partially offset by the impact of acquired inventory related to the Stromag acquisition in the amount of $2.3 million which was recorded at fair value rather than cost.

~~The increase in SG&A is primarily due to the inclusion of SG&A related to the Stromag business.~~

During 2015, the Company adopted a restructuring plan (“2015 Altra Plan”) in response to weak demand and to make certain adjustments to improve business effectiveness, reduce the number of facilities and streamline the Company’s cost structure. The actions taken pursuant to the 2015 Altra Plan included reducing headcount and limiting discretionary spending to improve

profitability. Approximately $1.8 million, $0.8 million, and $0.5 million of the restructuring costs, associated with the 2015 Altra Plan, were related to the Couplings, Clutches and Brakes, Gearing, and Corporate, respectively. The Company does not expect to incur any additional material costs as a result of the 2015 Plan. During the quarter ended September 30, 2017, the Company commenced a new restructuring plan (“2017 Altra Plan”) as a result of the Stromag acquisition and to rationalize its global renewable energy business. The actions taken pursuant to the 2017 Altra Plan include reducing headcount, facility consolidations and the elimination of certain costs. Approximately $0.6 million of the expense in the current quarter is related to activity in the Couplings, Clutches and Brakes segment under the 2017 Altra Plan. The company expects to incur approximately $2.0 to $4.0 million in additional expense through 2019 ~~related to the 2017 Altra Plan.~~

Interest expense decreased significantly during the period as a result of the conversion and redemption of our convertible notes and the favorable impact of the cross currency interest rate swaps despite the higher borrowing under our 2015 Revolving Credit Facility for the Stromag Acquisition.

Other non-operating expense increased primarily due to foreign currency transaction gains and losses arising from changes in exchange rates related primarily to the Euro, British Pound, and Chinese Renminbi.

~~The~~ provision for income tax as a ~~percentage~~percent of income before income taxes ~~decreased for~~is due to an increased R&D tax credit in the ~~year to date period ended September 30, 2017~~U.S. as ~~compared to the year to date period ended September 30, 2016. This decrease is~~ a ~~combined~~ result of the A&S Business acquisition. Additionally, the 2018 provision for income ~~in China associated with~~tax as a percent of income before income taxes was impacted by certain non-deductible acquisition expenses related to the closure of the Company’s Changzhou facility which was offset by previously recognized net operating losses, and the adoption of FASB Accounting Standards Update 2016-09, Compensation - Stock Compensation: Improvements to Employee Share-Based Payment Accounting ("ASU 2016-09") on January 1, 2017. Income tax expense included a benefit of $0.6 million arising from a cash tax deduction on restricted stock awards that vested in 2017.Fortive Transaction.

Quarters Ended September 30,

Year to date periods Ended
September 30,

2017

2016

2017

2016

Net Sales:

Couplings, Clutches & Brakes

$
110,109

$
77,446

$
327,310

$
231,225

Electromagnetic Clutches & Brakes

58,304

50,680

187,463

165,083

Gearing

48,368

47,023

144,545

145,038

Intra-segment eliminations

(2,158
)

(2,017
)

(5,903
)

(5,087
)
Net sales

$
214,623

$
173,132

$
653,415

$
536,259

Income from operations:

Segment earnings:

Couplings, Clutches & Brakes

$
12,679

$
6,596

$
33,032

$
20,441

Electromagnetic Clutches & Brakes

6,138

6,589

21,894

20,120

Gearing

5,689

5,650

17,804

17,280

Restructuring

(680
)

(3,397
)

(3,776
)

(6,591
)
Corporate expenses (1)

(2,553
)

(5,069
)

(6,870
)

(9,729
)
Income from operations

$
21,273

$
10,369

$
62,084

$
41,521

Net sales in the ~~Couplings, Clutches & Brakes~~Power Transmission Technologies segment were ~~$110.1~~$234.9 million in the quarter ended ~~September 30, 2017, an increase~~March 31, 2019, a decrease of approximately ~~$32.7~~$5.5 million or ~~42.2%~~2.3%, from the quarter ended ~~September 30, 2016. Approximately $28.8~~March 31, 2018. The decrease is due to unfavorable impact of foreign exchange rates at $8.6 million offset by the recovery of certain end markets. Segment operating income increased $0.6 million compared to the ~~increase was~~prior year quarter.

Net sales in the Automation and Specialty segment were $249.1 million in the quarter ended March 31, 2019, a decrease of approximately $1.5 million, or 0.6%, from the quarter ended March 31, 2018. The decrease is due to the ~~inclusion~~unfavorable impact of ~~sales from the newly acquired Stromag business for the quarter. The remainder of the increase was due to a modest~~foreign exchange rates offset by continued recovery in certain of our more profitable end markets. Segment operating income ~~increased~~decreased by approximately ~~$6.1~~$17.0 million compared to the prior ~~period~~year quarter, primarily as a result of increased amortization expense. Note that the ~~addition of Stromag~~Automation and ~~plant consolidations.~~

~~Net sales in~~Specialty segment financial information for the ~~Electromagnetic Clutches & Brakes segment were $58.3 million in the~~prior year quarter ~~ended September 30, 2017, an increase of approximately $7.6 million, or 15.0%,~~has been derived from the ~~quarter ended September 30, 2016. Approximately $6.0 million~~interim unaudited combined condensed financial statements of the ~~increase was due~~A&S Business, which are included in Amendment No. 1 to the inclusion of sales from the newly acquired Stromag business in the quarter. Segment operating income decreased $0.5 million compared to the prior period primarily as a result of the impact of foreign exchange.Company’s Registration Statement on Form S-4 filed on June 21, 2018.

Net sales in the Gearing segment were $48.4 million in the quarter ended September 30, 2017, which were similar to the prior year. Segment operating income was consistent compared to the prior period.

We finance our capital and working capital requirements through a combination of cash flows from operating activities and borrowings under ~~our 2015~~the Altra Revolving Credit Facility ~~(defined below)~~(as defined herein). At March 31, 2019, we have the ability under the Altra Revolving Credit Facility (as defined herein) to borrow an additional $296.2 million subject to satisfying customary conditions. We expect that our primary ongoing requirements for cash will be for working capital, debt service, capital expenditures, acquisitions, pensions, dividends and share repurchases.

On October 1, 2018, we consummated the Fortive Transaction. The aggregate purchase price for the A&S Business was approximately $2,855.7 million, subject to certain post-closing adjustments, and consisted of (i) $1,400.0 million of cash transferred to Fortive and (ii) shares of Altra common stock received by Fortive shareholders valued at approximately $1,455.7 million. The value of the common stock was based on the closing stock price on the A&S Closing Date of $41.59. We financed the cash portion of the Fortive Transaction with the Altra Credit Facilities (as defined herein).

We believe, based on current and projected levels of cash flows from operating activities, together with our ability to borrow under the Altra Revolving Credit Facility (as defined herein), we have sufficient liquidity to meet our short-term and long-term needs to make required payments of interest on our debt, make amortization payments under the Altra Credit Facilities (as defined herein), fund our operating needs, fund working capital and capital expenditure requirements and comply with the financial ratios in our debt agreements. In the event additional funds are needed for operations, we could ~~borrow additional funds available under our existing 2015 Revolving Credit Facility, request an expansion by up to $150 million of the amount available to be borrowed under the 2015 Credit Agreement,~~ attempt to ~~secure~~obtain new debt ~~attempt to~~and/or refinance ~~our loans under the 2015 Credit Agreement,~~existing debt, or attempt to raise capital in the equity markets. ~~As of September 30, 2017, we have the ability under our 2015 Revolving Credit Facility to borrow an additional $138.9 million based on current availability calculations.~~ There can be no assurance however that additional debt ~~financing will be available on commercially acceptable terms, if at all. Similarly, there can be no assurance that~~or equity financing will be available on commercially acceptable terms, if at all.

On September 26, 2018, Stevens Holding Company, Inc., a wholly owned subsidiary of the Company (“Stevens Holding”), announced the pricing of $400.0 million aggregate principal amount of Stevens Holding’s 6.125% senior notes due 2026 (the “Notes”) in a private debt offering pursuant to Rule 144A and ~~Restated~~Regulation S under the Securities Act of 1933 (the “Private Placement”). On October 1, 2018, the Private Placement closed, and Stevens Holding sold $150.0 million aggregate principal amount of the Notes (the “Primary Notes”) and an unaffiliated selling securityholder sold $250.0 million aggregate principal amount of the Notes (the “Selling Securityholder Notes”). The Notes will mature on October 1, 2026. Interest on the Notes accrues from October 1, 2018, and the first interest payment date on the Notes will be April 1, 2019. The Notes may be redeemed at the option of Stevens Holding on or after October 1, 2023, in the manner and at the redemption prices specified in the indenture governing the Notes, plus accrued and unpaid interest thereon, if any, to, but excluding, the date of redemption. The Notes are guaranteed on a senior unsecured basis by Altra and certain of its domestic subsidiaries.

The unaffiliated selling securityholder received the Selling Securityholder Notes from Fortive prior to the closing of the Private Placement in exchange for certain outstanding Fortive debt held or acquired by the unaffiliated selling securityholder. Stevens Holding used the net proceeds of the Primary Notes to fund a dividend payment to Fortive prior to the consummation of the Merger, and Stevens Holding did not receive any proceeds from the sale of the Selling Securityholder Notes.

On the A&S Closing Date, Altra entered into a new Credit Agreement (the “Altra Credit Agreement”) with certain subsidiaries of Altra, JPMorgan Chase Bank, N.A., as administrative agent and collateral agent, and a syndicate of lenders. The Altra Credit Agreement provides for a seven-year senior secured term loan to Altra in an aggregate principal amount of $1,340.0 million (the “Altra Term Loan Facility”) and a five-year senior secured revolving credit facility provided to Altra and certain of its subsidiaries in an aggregate committed principal amount of $300.0 million (the “Altra Revolving Credit Facility” and together with the Altra Term Loan Facility, the “Altra Credit Facilities”). The proceeds of the Altra Term Loan Facility were used to (i) consummate the Direct Sales, (ii) repay in full and extinguish all outstanding indebtedness for borrowed money under the 2015 Credit Agreement and (iii) pay certain fees, costs, and expenses in connection with the consummation of the Fortive Transaction. Any proceeds of the Altra Term Loan Facility not so used may be used for general corporate purposes. The proceeds of the Altra Revolving Credit Facility will be used for working capital and general corporate purposes.

The Altra Credit Facilities are guaranteed on a senior secured basis by Altra and by each direct or indirect wholly owned domestic subsidiary of Altra, subject to certain customary exceptions.

Borrowings under the Altra Term Loan Facility will bear interest at a per annum rate equal to a “Eurocurrency Rate” plus 2.00%, in the case of Eurocurrency Rate borrowings, or equal to a “Base Rate” plus 1.00%, in the case of Base Rate borrowings. Borrowings under the Altra Revolving Credit Facility will initially bear interest at a per annum rate equal to a Eurocurrency Rate plus 2.00%, in the case of Eurocurrency Rate borrowings, or equal to a Base Rate plus 1.00%, in the case of Base Rate borrowings, and thereafter will bear interest at a per annum rate equal to a Eurocurrency Rate or Base Rate, as applicable, plus an interest rate spread determined by reference to a pricing grid based on Altra’s senior secured net leverage ratio. In addition, Altra will be required to pay fees that will fluctuate between 0.250% per annum to 0.375% per annum on the unused amount of the Altra Revolving Credit Facility, based upon Altra’s senior secured net leverage ratio. The interest rate on the Term Loan Facility and the Revolving Credit Facility was 4.49% at March 31, 2019.

Revolving borrowings and issuances of letters of credit under the Altra Revolving Credit Facility are subject to the satisfaction of customary conditions, including the accuracy of representations and warranties and the absence of defaults.

The Altra Credit Agreement contains usual and customary representations and warranties, and usual and customary affirmative and negative covenants, including limitations on liens, investments, restricted payments, additional indebtedness and asset sales and mergers. In addition, the Altra Credit Agreement requires that Altra maintain a specified maximum senior secured leverage ratio and a specified minimum interest coverage ratio. The obligations of the borrowers of the Altra Credit Facilities under the Altra Credit Agreement may be accelerated upon customary events of default, including non-payment of principal, interest, fees and other amounts, inaccuracy of representation and warranties, violation of covenants, cross default and cross acceleration, voluntary and involuntary bankruptcy or insolvency proceedings, inability to pay debts as they become due, material judgements, ERISA events, actual or asserted invalidity of security documents or guarantees and change in control.

On October 22, 2015, the Company entered into a Second Amended and Restated Credit Agreement by and among the Company, Altra Industrial Motion Netherlands, B.V. ~~(“Altra Netherlands”)~~, one of the Company’s foreign subsidiaries (collectively with the Company, the “Borrowers”), the lenders party to the Second Amended and Restated Credit Agreement from time to time (collectively, the “Lenders”), ~~J.P.~~J.P, Morgan Securities LLC, Wells Fargo Securities, LLC, and KeyBanc Capital Markets, Inc., as joint lead arrangers and joint bookrunners, and JPMorgan Chase Bank, N.A., as administrative agent (the “Administrative Agent”), to be guaranteed ~~through a Guarantee Agreement~~and secured by certain domestic subsidiaries of the Company, ~~(each a “Guarantor” and collectively the “Guarantors”; the Guarantors collectively with the Borrowers, the “Loan Parties”),~~ and which may be amended from time to time (the “2015 Credit Agreement”).

Under the 2015 Credit Agreement, the amount of ~~our Revolving Credit Facility~~the Company’s revolving credit facility was ~~increased to $350~~$350.0 million (the “2015 Revolving Credit Facility”). ~~The~~Prior to October 2018, the amounts available under the 2015 Revolving Credit Facility ~~can be~~were used for general corporate purposes, including acquisitions, and to repay existing indebtedness.

Prior to October 2018, the ~~2015 Revolving Credit Facility is October 22, 2020.~~

~~The~~ amounts available under the 2015 Revolving Credit Facility ~~may~~could be drawn upon in accordance with the terms of the 2015 Credit Agreement. All amounts outstanding under the 2015 Revolving Credit Facility ~~are~~were due on the stated maturity or such earlier time, if any, required under the 2015 Credit Agreement. The amounts owed under the 2015 Revolving Credit Facility ~~may~~could be prepaid

at any time, subject to usual notification and breakage payment provisions. Interest on the amounts outstanding under the ~~credit facilities is~~2015 Revolving Credit Facility was calculated using either an ABR Rate or Eurodollar Rate, plus the applicable margin. The applicable margins for Eurodollar Loans are between 1.25% to 2.00%, and for ABR Loans are between 0.25% and 1.00%. The amounts of the margins are calculated based on either a consolidated total net leverage ratio (as defined in the 2015 Credit Agreement), or the then applicable rating(s) of the Company’s debt if and then to the extent as provided in the 2015 Credit Agreement. A portion of the 2015 Revolving Credit Facility ~~may~~could also be used for the issuance of letters of credit, and a portion of the amount of the 2015 Revolving Credit Facility iswas available for borrowings in certain agreed upon foreign currencies.

The 2015 Credit Agreement ~~contains~~contained various affirmative and negative covenants and restrictions, which among other things, ~~will require~~required the Borrowers to provide certain financial reports to the Lenders, ~~require~~required the Company to maintain certain financial covenants relating to consolidated leverage and interest coverage, ~~limit~~limited maximum annual capital expenditures, and ~~limit~~limited the ability of the Company and its subsidiaries to incur or guarantee additional indebtedness, pay dividends or make other equity distributions, purchase or redeem capital stock or debt, make certain investments, sell assets, engage in certain transactions, and effect a consolidation or merger. The 2015 Credit Agreement also ~~contains~~contained customary events of default.

On October 21, 2016, the Company entered into an agreement to amend ~~its~~the 2015 Credit ~~Agreement. This amendment,~~Agreement (the “October 2016 Amendment”). The October 2016 Amendment, which became effective upon the December 30, 2016 closing of Altra’s purchase of Stromag ~~which was December 30, 2016,~~(the “Stromag Acquisition”), increased the ~~Company’s~~ 2015 Revolving Credit Facility by ~~$75~~$75.0 million to ~~$425~~$425.0 million. The Company borrowed additional funds under the increased ~~facility~~2015 Revolving Credit Facility to finance ~~its purchase of Stromag.~~the Stromag Acquisition. The ~~amendment~~October 2016 Amendment also reset the possible expansion of up to ~~$150~~$150.0 million of additional future loan commitments. In addition, the ~~amendment~~October 2016 Amendment increased the multicurrency sublimit to ~~$250~~$250.0 million and adjusted certain financial covenants.

~~Pursuant to an Omnibus Reaffirmation and Ratification and Amendment of Collateral Documents entered into on~~On October ~~22, 2015~~1, 2018, in connection with the ~~2015~~Fortive Transaction and the entering into the Altra Credit Agreement, by and among the Company, the Loan Parties and the Administrative Agent (the “Ratification Agreement”), the Loan Parties (exclusive of the foreign subsidiary Borrower) have reaffirmed their obligations to the Lenders under the Pledge and Security Agreement dated November 20, 2012 (the “Pledge and Security Agreement”), pursuant to which each Loan Party pledges, assigns and grants to the Administrative Agent, on behalf of and for the ratable benefit of the Lenders, a security interest in all of its right, title and interest in, to and under all personal property, whether now owned by or owing to, or after acquired by or arising in favor of such Loan Party (including under any trade name or derivations), and whether owned or consigned by or to, or leased from or to, such Loan Party, and regardless of where located, except for specific excluded personal property identified in the Pledge and Security Agreement (collectively, the “Collateral”). Notwithstanding the foregoing, the Collateral does not include, among other items, more than 65% of the capital stock of the first tier foreign subsidiaries of the Company. The Pledge and Security Agreement contains other customary representations, warranties and covenants of the parties. The 2015 Credit Agreement provides that the obligation to grant the security interest can cease upon the obtaining of certain corporate family credit ratings for the Company, but the obligation to grant a security interest is subject to subsequent reinstatement if the ratings are not maintained as provided in the 2015 Credit Agreement.

Pursuant to the Ratification Agreement, the Loan Parties (other than the foregoing subsidiary Borrower) have also reaffirmed their obligations under each of the Patent Security Agreement and a Trademark Security Agreement in favor of the Administrative Agent dated November 20, 2012 (the “2012 Security Agreements”) pursuant to which each of the Loan Parties signatory thereto pledges, assigns and grants to the Administrative Agent, on behalf of and for the ratable benefit of the Lenders, a security interest in all of its right, title and interest in, to and under all registered patents, patent applications, registered trademarks and trademark applications owned by such Loan Parties.

In connection with the reaffirmation of the Pledge and Security Agreement, certain of the Loan Parties delivered a new Patent Security Agreement and a new Trademark Security Agreement in favor of the Administrative Agent pursuant to which each of the Loan Parties signatory thereto pledges, assigns and grants to the Administrative Agent, on behalf of and for the ratable benefit of the Lenders, a security interest in all of its right, title and interest in, to and under all registered patents, patent applications, registered trademarks and trademark applications owned by such Loan Parties and not covered by the 2012 Security Agreements.

As of September 30, 2017 and December 31,2016 we had $282.4 million and $313.6 million outstanding on our 2015 Revolving Credit Facility, respectively. As of September 30, 2017 and December 31, 2016, we had $3.7 million, and $4.1 million in letters of credit outstanding, respectively. We had $138.9 million available to borrow under the 2015 Revolving Credit Facility at September 30, 2017. On October 21, 2016, the Company entered into a First Amendment to the Second Amended and Restated Credit Agreement.

~~We were in compliance in all material respects with all covenants of the indenture governing~~ the 2015 Credit Agreement ~~at September 30, 2017.~~

In March 2011, the Company issued Convertible Senior Notes (the “Convertible Notes”) due March 1, 2031. The Convertible Notes were guaranteed by the Company’s U.S. domestic subsidiaries. Interest on the Convertible Notes was ~~payable semi-annually~~terminated and all outstanding indebtedness for borrowed money thereunder was repaid in arrears, on March 1 and September 1 of each year, commencing on September 1, 2011 at an annual rate of 2.75%. Proceeds from the offering were $81.3 million, net of fees and expenses that were capitalized.

On December 12, 2016 the Company gave notice to the holders of the Convertible Notes of its intention to redeem all of the Convertible Notes outstanding on January 12, 2017 (the “Redemption Date”), pursuant to the optional redemption provisions in the Indenture. The redemption price for the Convertible Notes was 100% of the principal amount thereof, plus accrued and unpaid interest, if any, to, but not including, the Redemption Date plus a Make-Whole Premium equal to the present values of the remaining scheduled payments of interest on any Convertible Notes through March 1, 2018 (excluding interest accrued to, but excluding, the Redemption Date). In lieu of receiving the redemption price, holders of the Notes could surrender their Convertible Notes for conversion at any time before January 9, 2017. The conversion rate of the Convertible Notes was 39.0809 shares of the Company’s common stock, for each $1,000 of outstanding principal of the Convertible Notes. As of December 31, 2016 approximately $39.3 million notes were converted resulting in the issuance of 1.5 million shares of the Company’s common stock. As a result of the conversion, the Company incurred a loss on extinguishment of debt of approximately $1.9 million and the carrying value of the Convertible Notes was $42.9 million as of December 31, 2016. In January 2017, the remaining principal was converted to common stock, with the exception of $0.9 million that was redeemed for cash. The Company incurred an additional loss on extinguishment of debt of approximately $1.8 million duringfull. During the quarter ended March 31, ~~2017.~~2019, one of our subsidiaries in China opened a new line of credit for approximately $1.2 million with a term of 1 year.

The following is a summary of our borrowings as of March 31, 2019 and December 31, 2018, respectively:

The following is a summary of our cash balances and cash flows (in ~~thousands)~~millions) as of and for the year to date periods ended ~~September 30, 2017~~March 31, 2019 and ~~September 30, 2016,~~March 31, 2018, respectively:

Net cash provided from operating activities was approximately ~~$43.3~~$39.3 million for the ~~year to date~~ period ended ~~September 30, 2017.~~March 31, 2019. This was generated by net income of ~~$39.0~~$35.2 million and the net impact of the add-back of certain items including non-cash depreciation, amortization of intangible assets, stock-based compensation, ~~accretion of debt discount,~~ amortization of deferred financing costs, loss on ~~extinguishment~~settlement of ~~debt,~~pension plan, loss on disposal of fixed assets, ~~amortization of inventory fair value adjustment~~ and

non-cash loss on foreign currency which ~~was~~totaled approximately ~~$36.2~~$38.0 million. This was ~~partially~~mostly offset by a net ~~increase~~decrease in ~~current~~ assets and liabilities of approximately ~~$31.9~~$(33.9) million.

Net cash used in investing activities for the ~~year to date~~ period ended ~~September 30, 2017~~March 31, 2019 increased approximately ~~$1.5~~$20.2 million compared to the ~~year to date~~ period ended September 30, 2016. The increase is attributed to higher purchases of manufacturing equipment and plant construction projects at certain facilities. This increase is partially offset by proceeds from the sale of Changzhou equity and the completionMarch 31, 2018, primarily as a result of the ~~working capital adjustment under~~impact of the ~~Stromag sale and purchase agreement.~~ Fortive Transaction.

Net cash used in financing activities in the ~~year to date~~ period ended ~~September 30, 2017~~March 31, 2019 as compared to the ~~year to date~~ period ended ~~September 30, 2016~~March 31, 2018 increased by ~~$7.3 million. This increase relates~~$23.5 million, primarily ~~to increased net debt payments on the Revolving Credit Facility~~ as a result of the ~~year to date period ended September 30, 2017.~~impact of the Fortive Transaction.

We intend to use our remaining cash and cash equivalents and cash flow from operations to provide for our working capital needs, to fund potential future acquisitions, to service our debt, including principal payments, for capital expenditures, for pension funding, for share repurchases, and to pay dividends to our stockholders. As of ~~September 30, 2017~~March 31, 2019 we have approximately ~~$49.9~~$76.9 million of cash and cash equivalents held by foreign ~~subsidiaries that are generally subject to U.S. income taxation on repatriation to the U.S.~~subsidiaries. We believe, ~~our future operating~~based on current and projected levels of cash flows ~~will be~~from operating activities, together with our ability to borrow under the Altra Revolving Credit Facility, we have sufficient liquidity to meet our ~~future~~short-term and long-term needs to make required payments of interest on our debt, make amortization payments under the Altra Credit Facilities, fund our operating needs, fund working capital and ~~investing cash needs. Furthermore,~~capital expenditure requirements and comply with the ~~existing cash balances and the availability of additional borrowings under~~financial ratios in our ~~2015 Revolving Credit Facility provide additional potential sources of liquidity should they be required.~~debt agreements.

There were no material changes in our contractual obligations during the period ended ~~September 30, 2017.~~March 31, 2019.

We are exposed to various market risk factors such as fluctuating interest rates, changes in foreign currency rates, and changes in commodity prices. During the reporting period, there have been no material changes to the quantitative and qualitative disclosures regarding our market risk set forth in our Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2018.

As of ~~September 30, 2017,~~March 31, 2019, our management, under the supervision and with the participation of our chief executive officer and chief financial officer, carried out an evaluation of the effectiveness of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act. Our disclosure controls and procedures are designed to provide reasonable assurance that information required to be disclosed in the reports ~~filed~~that we file or submit under the Exchange Act, such as this Quarterly Report on Form 10-Q, is (i) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and (ii) accumulated and communicated to our management, including ~~the~~our principal executive officer and principal financial officers, as appropriate, to allow timely decisions regarding required disclosures. Based upon that evaluation, our chief executive officer and chief financial officer have concluded that, as of ~~September 30, 2017,~~March 31, 2019, our disclosure controls and procedures ~~are~~were effective at a reasonable assurance level.

There has been no change in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that occurred during our fiscal quarter ended ~~September 30, 2017,~~March 31, 2019, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

We are, from time to time, party to various legal proceedings arising out of our business. During the reporting period, there have been no material changes to the description of legal proceedings set forth in our Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2018.

The reader should carefully consider the Risk Factors described in our Annual Report on Form 10-K for the year ended December 31, ~~2016~~2018 filed with the Securities and Exchange Commission. Those risk factors described elsewhere in this report on Form 10-Q and in our Annual Report on Form 10-K for the year ended December 31, ~~2016~~2018 are not the only ones we face, but are considered to be the most material. These risk factors could cause our actual results to differ materially from those stated in forward looking statements contained in this Form 10-Q and elsewhere. All risk factors stated in our Annual Report on Form 10-K for the year ended December 31, ~~2016~~2018 are incorporated herein by reference.

During the reporting period there were no material changes to the risk factors previously disclosed in our Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2018.

The following table summarizes our share repurchase activity by month for the quarter ended ~~September 30, 2017.~~March 31, 2019.

~~Disclosure of Activities Under Section 13(r) of the Securities Exchange Act of 1934~~

Under Section 219 of the Iran Threat Reduction and Syria Human Rights Act of 2012, which added Section 13(r) to the Securities Exchange Act of 1934, as amended, we are required to disclose whether Altra or any of its affiliates knowingly engaged inNone.

certain activities, transactions or dealings relating to Iran or certain designated individuals or entities. Disclosure is required even when the activities were conducted outside the United States by non-U.S. entities and even when such activities were conducted in compliance with applicable law. The following information is disclosed pursuant to Section 13(r). None of the following activities involved U.S. affiliates of Altra.

During the reporting period, Bibby Transmissions Limited, a subsidiary of Altra organized and existing under the laws of England (“Bibby”), sold couplings to a customer in the United Kingdom, for ultimate re-sale to an Iranian end user for use in a gas treating plant. Gross revenues received by Bibby in connection with this transaction were approximately GBP 12.3 thousand and net profits were approximately GBP 5.9 thousand. Bibby intends to continue pursuing opportunities with this direct customer and end user, to the extent compliant with applicable law.

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Delaware		61-1478870
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

300 Granite Street, Suite 201, Braintree, MA		02184
(Address of principal executive offices)		(Zip Code)


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.001 par value	AIMC	NASDAQ Global Market

		Page #
PART I - FINANCIAL INFORMATION
Item 1.	Financial Statements (unaudited)	1
	Condensed Consolidated Balance Sheets	1
	Condensed Consolidated Statement of Operations	2
	Condensed Consolidated Statements of Comprehensive Income	3
	Condensed Consolidated Statements of Cash Flows	4
	Condensed Consolidated Statements of Stockholders’ Equity	5
	Notes to Unaudited Condensed Consolidated Interim Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2225
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3234
Item 4.	Controls and Procedures	3234

PART II - OTHER INFORMATION
Item 1.	Legal Proceedings	3335
Item 1A.	Risk Factors	3335
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3335
Item 3.	Defaults Upon Senior Securities	3335
Item 4.	Mine Safety Disclosures	3336
Item 5.	Other Information	3336
Item 6.	Exhibits	3436

SIGNATURES		35







		38

Intangible assets acquired consist of:
Customer relationships	$	1,025.0
Trade names and trademarks		209.0
Technology		204.0
In-process research and development ("IPR&D")		16.0
Total intangible assets	$	1,454.0

	Pro forma (unaudited)
	Quarter Ended March 31,
	2018
Total revenues	$	491.0
Net income		26.2
Basic earnings per share		0.41
Diluted earnings per share		0.41

	March 31, 2019
Lease cost⁽¹⁾:
Operating lease cost		4.3
Short-term lease cost		0.1
Total lease cost	$	4.4

Maturities of Lease Liabilities	Operating Leases		Finance Leases
2019	$	12.5	$	0.1
2020		13.1		0.2
2021		8.0		0.2
2022		6.1		0.1
2023		4.3		—
After 2023		4.8		—
Total lease payments		48.8		0.6
Less interest		3.8		0.1
Present value of lease liabilities	$	45.0	$	0.5

Other Information
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from finance leases	$	0.0
Operating cash flows from operating leases	$	4.3
Financing cash flows from finance leases	$	0.0
Weighted average remaining lease term - finance leases	3.5
Weighted average remaining lease term - operating leases	4.4
Average discount rate - finance leases		5.50	%
Average discount rate - operating leases		3.43	%

Year ending December 31:	Operating Leases		Capital Leases
2019	$	15.3	$	0.2
2020		11.2		0.2
2021		7.8		0.2
2022		6.1		0.1
2023		4.4		—
Thereafter		5.1		—
Total lease obligations		49.9		0.7
Less amounts representing interest		—		(0.1	)
Present value of minimum capital lease obligations	$	49.9	$	0.6

	Deferred Revenue (Current)		Accounts Receivable
Beginning - January 1, 2019	$	7.4	$	259.8
Closing - March 31, 2019		7.8		281.8
Increase/(Decrease)	$	0.4	$	22.0

	Gains and Losses on Cash Flow Hedges			Defined Benefit Pension Plans			Cumulative Foreign Currency Translation Adjustment			Total
Accumulated Other Comprehensive Loss by Component, January 1, 2017	$	(646	)	$	(5,668	)	$	(69,772	)	$	(76,086	)
Net current-period Other Comprehensive Income (Loss)		326			(232	)		21,157			21,251
Accumulated Other Comprehensive Loss by Component, September 30, 2017	$	(320	)	$	(5,900	)	$	(48,615	)	$	(54,835	)

	Preliminary Purchase Price Allocation
Total purchase price, excluding acquisition costs of approximately $2.9 million	$	191,852
Cash and cash equivalents		8,758
Trade receivables		24,087
Inventories		22,935
Property, plant and equipment		40,343
Intangible assets		74,795
Prepaid expenses and other current assets		778
Total assets acquired	$	171,696
Accounts payable		(15,370	)
Accrued payroll		(7,171	)
Accrued expenses and other current liabilities		(4,357	)
Income tax payable		(2,525	)
Deferred tax liability		(27,859	)
Other long-term liabilities		(1,255	)
Pension liability		(15,283	)
Total liabilities assumed	$	(73,820	)
Net assets acquired		97,876
Excess purchase price over fair value of net assets acquired	$	93,976

Intangible assets acquired consist of:
Customer relationships	$	56,019
Trade names and trademarks		18,776
Total intangible assets	$	74,795

	Proforma (unaudited)
	Quarter Ended		Year to date Period Ended
	September 30, 2016		September 30, 2016
Total revenues	$	206,424	$	644,361
Net income	$	7,057	$	29,250
Basic earnings per share	$	0.27	$	1.13
Diluted earnings per share	$	0.27	$	1.13

	September 30, 2017		December 31, 2016		March 31, 2019		December 31, 2018
Raw materials	$	50,976	$	45,507	$	112.8	$	103.0
Work in process		24,359		20,128		27.5		23.5
Finished goods		77,679		74,205		100.7		104.7
	$	153,014	$	139,840	$	241.0	$	231.2

	Couplings, Clutches & Brakes		Electromagnetic Clutches & Brakes		Gearing		Total
Net goodwill balance January 1, 2017	$	104,465	$	37,161	$	47,215	$	188,841
Measurement period adjustment related to acquisition of Stromag, including working capital settlement (See Note 6)	$	738	$	113	$	-	$	851
Impact of changes in foreign currency and other		12,378		623		881		13,882
Net goodwill balance September 30, 2017	$	117,581	$	37,897	$	48,096	$	203,574

	September 30, 2017			December 31, 2016
Debt:
Revolving Credit Facility	$	282,440		$	313,620
Convertible Notes		—			45,656
Mortgages		12,904			12,755
Capital leases		259			363
Total debt		295,603			372,394
Less: debt discount, net of accretion		—			(2,735	)
Total debt, net of unaccreted discount	$	295,603		$	369,659
Less current portion of long-term debt		(380	)		(43,690	)
Total long-term debt, net of unaccreted discount	$	295,223		$	325,969

	Shares			Weighted-average grant date fair value		Shares			Weighted- average fair value
Shares unvested January 1, 2017		199,712		$	24.68
Shares unvested January 1, 2019							823.6		$	36.69
Shares granted		150,643			39.43		394.9			31.12
Shares for which restrictions lapsed		(128,265	)		43.76		(195.0	)		30.32
Shares unvested September 30, 2017		222,090		$	31.92
Shares unvested March 31, 2019							1,023.5		$	35.69

	Shares		Weighted- average fair value
Options unvested January 1, 2019		—	$	—
Options granted		271.7		30.65
Options exercised		—		—
Options outstanding March 31, 2019		271.7	$	30.65

	Quarter Ended				Year to Date Period Ended
	September 30, 2017		September 30, 2016		September 30, 2017		September 30, 2016
Couplings, Clutches & Brakes	$	—	$	3,022	$	1,849	$	4,425
Electromagnetic Clutches & Brakes		—		169		—		1,276
Gearing		25		68		809		84
Corporate (1)		24		138		487		806
Total	$	49	$	3,397	$	3,145	$	6,591

	2015 Plan			2017 Plan			Total All Plans			2015 Altra Plan		2017 Altra Plan			2019 Altra Plan			Total All Plans
Balance at January 1, 2017	$	1,971		$	—		$	1,971
Balance at January 1, 2019										$	0.4	$	1.6		$	—		$	2.0
Restructuring expense incurred		3,145		631				3,776			—		1.0			1.3			2.3
Cash payments		(4,441	)		(88	)		(4,529	)		—		(1.5	)		(0.5	)		(2.0	)
Balance at September 30, 2017	$	675		$	543		$	1,218
Balance at March 31, 2019										$	0.4	$	1.1		$	0.8		$	2.3

	March 31, 2019		March 31, 2018
Total assets:
Power Transmission Technologies	$	1,091.4	$	908.9
Automation & Specialty		3,191.2		—
Corporate(2)		97.7		29.6
Total assets	$	4,380.3	$	938.5


		September 30,		December, 31
	Balance Sheet Location	2017		2016
Designated as hedging instruments:
Cross currency swap agreements	Other long-term liabilities	$	13,699	$	1,642
Interest rate swap agreement	Other long-term assets		(35)		-
Not designated as hedging instruments:
Cross currency swap agreements	Other long-term liabilities		8,714		889
		$	22,378	$	2,531

		September 30,
	Income Statement Location	2017		Balance Sheet Location	March 31, 2019			December 31, 2018
Designated as hedging instruments:
Cross currency swap agreements	Other non-operating (income) expense, net	$	11,867	Other long-term (assets)/liabilities	$	(7.4	)	$	8.4
Not designated as hedging instruments:
Cross currency swap agreements	Other non-operating (income) expense, net		7,825
Interest rate swap agreement				Other long-term (assets)		(0.3	)		(0.5	)
Interest rate swap agreement				Other long-term liabilities		12.4			7.9
		$	19,692		$	4.7		$	15.8

	Operating Income
	Quarter Ended				Year to Date Period Ended
	September 30, 2017		September 30, 2016		September 30, 2017		September 30, 2016
Couplings, Clutches & Brakes		52%		35%		45%		35%
Electromagnetic Clutches & Brakes		25%		35%		30%		35%
Gearing		23%		30%		25%		30%

Amounts in thousands, except percentage data	Quarter-Ended
Amounts in millions, except percentage data										Quarter Ended
	September 30, 2017		September 30, 2016		Change		%			March 31, 2019		March 31, 2018		Change		%
Net sales	$	214,623	$	173,132	$	41,491		24.0	%	$	482.8	$	240.4	$	242.4		100.8	%

	Quarters Ended September 30,						Year to date periods Ended September 30,
	2017			2016			2017			2016
Net Sales:
Couplings, Clutches & Brakes	$	110,109		$	77,446		$	327,310		$	231,225
Electromagnetic Clutches & Brakes		58,304			50,680			187,463			165,083
Gearing		48,368			47,023			144,545			145,038
Intra-segment eliminations		(2,158	)		(2,017	)		(5,903	)		(5,087	)
Net sales	$	214,623		$	173,132		$	653,415		$	536,259
Income from operations:
Segment earnings:
Couplings, Clutches & Brakes	$	12,679		$	6,596		$	33,032		$	20,441
Electromagnetic Clutches & Brakes		6,138			6,589			21,894			20,120
Gearing		5,689			5,650			17,804			17,280
Restructuring		(680	)		(3,397	)		(3,776	)		(6,591	)
Corporate expenses (1)		(2,553	)		(5,069	)		(6,870	)		(9,729	)
Income from operations	$	21,273		$	10,369		$	62,084		$	41,521

	Amounts in millions
	September 30, 2017		December 31, 2016
Debt:
Revolving Credit Facility	$	282.4	$	313.6
Convertible Notes		-		45.7
Mortgages		12.9		12.7
Capital leases		0.3		0.4
Total debt	$	295.6	$	372.4

Period	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1)		Approximate Dollar Value of Shares That May Yet be Purchased Under The Plans or Programs
July 1, 2017 to July 31, 2017		—	$	—		—	$	30,000,000
August 1, 2017 to August 30, 2017		—	$	—		—	$	—
September 1, 2017 to September 30, 2017		—	$	—		—	$	—


Exhibit Number		Description

~~3.1(1)~~ 2.1(1)		Agreement and Plan of Merger and Reorganization, dated as of March 7, 2018, among Fortive Corporation, Stevens Holding Company, Inc., Altra Industrial Motion Corp. and McHale Acquisition Corp.

3.1(2)		Certificate of Amendment to the Second Amended and Restated Articles of Incorporation of Altra industrial Motion Corp., as filed with the Secretary of State of the State of Delaware.

3.2(3)		Second Amended and Restated Certificate of Incorporation of the Registrant

~~3.2(2)~~ 3.3(4)		Second Amended and Restated Bylaws of the Registrant

4.1(2)		Indenture, dated as of October 1, 2018, among Stevens Holding Company, Inc., the guarantors party thereto and The Bank of New York Mellon Trust Company, N.A.

4.2(2)		Supplemental Indenture, dated as of October 1, 2018, among Stevens Holding Company, Inc., Altra Industrial Motion Corp., the other guarantors party thereto and The Bank of New York Mellon Trust Company, N.A.

10.1*		Form of Altra industrial Motion Corp.’s Restricted Stock Award Agreement under Altra Industrial Motion Corp.’s 2014 Omnibus Inventive Plan.

10.2*		Form of Altra industrial Motion Corp.’s Restricted Stock Unit Award Agreement under Altra Industrial Motion Corp.’s 2014 Omnibus Inventive Plan.

10.3*		Form of Altra industrial Motion Corp.’s Performance Share Award Agreement under Altra Industrial Motion Corp.’s 2014 Omnibus Inventive Plan.

10.4*		Form of Altra industrial Motion Corp.’s Nonqualified Stock Option Award Agreement under Altra Industrial Motion Corp.’s 2014 Omnibus Inventive Plan.

31.1*		Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2*		Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1**		Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2**		Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101*		The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended ~~September 30, 2017,~~March 31, 2019, formatted in XBRL (Extensible Business Reporting Language): (i) the Unaudited Condensed Consolidated Statement of Operations, (ii) the Unaudited Condensed Consolidated Statement of Comprehensive Income (Loss), (iii) the Unaudited Condensed Consolidated Balance Sheet, (iv) the Unaudited Condensed Consolidated Statement of Cash Flows, (v) the Unaudited Consolidated Statement of Stockholders’ Equity and (vi) Notes to Unaudited Condensed Consolidated Interim Financial Statements.

			ALTRA INDUSTRIAL MOTION CORP.

~~October 25, 2017~~May 3, 2019	By:		/s/ Carl R. Christenson
	Name:		Carl R. Christenson
	Title		Chairman and Chief Executive Officer
		(Principal Executive Officer)
~~October 25, 2017~~May 3, 2019	By:		/s/ Christian Storch
	Name:		Christian Storch
	Title:		Vice President and Chief Financial Officer
		(Principal Financial Officer)
~~October 25, 2017~~May 3, 2019	By:		/s/ Todd B. Patriacca
	Name:		Todd B. Patriacca
	Title:		Vice President of Finance, Corporate Controller and Treasurer
		(Principal Accounting Officer)

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