UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q
FORM 10-Q
☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended March 31,September 30, 2020
or
☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from               to             



Commission File Number: 1-37548
wbt-20200930_g1.jpg 
Welbilt, Inc.
(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction
of incorporation or organization)

2227 Welbilt Boulevard
New Port Richey,, FL
(Address of principal executive offices)

47-4625716
(I.R.S. Employer
Identification No.)



34655
(Zip Code)

(727) (727) 375-7010
(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading symbol(s)Name of each exchange on which registered
Common stock, $0.01 par valueWBTNew York Stock Exchange
Indicate by check mark whether the registrant:registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒  No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer," "accelerated filer," "smaller reporting company"company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer☒Accelerated filer☐
Non-accelerated filer☐Smaller reporting company☐
Emerging growth company☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐  No ☒
The number of shares outstanding of Welbilt, Inc.'s common stock as of May 4,November 2, 2020, the latest practicable date, was 141,498,896.141,515,876.



WELBILT, INC.
Index to Quarterly Report on Form 10-Q
For the Quarterly Period Ended March 31,September 30, 2020
Page
Page
PART I. FINANCIAL INFORMATION3
Item 1.
3
Consolidated Statements of Operations
3
4
5
6
8
910
3844
5162
5162

5263
5264
5264
5264
5264
5265
5365
5466

-2-

PART I. FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

WELBILT, INC.
Consolidated Statements of Operations
(In millions, except share and per share data, unaudited)


Three Months Ended March 31,Three Months Ended September 30,Nine Months Ended September 30,

2020 20192020201920202019
Net sales
$328.9
 $375.3
Net sales$298.5 $410.5 $833.4 $1,212.1 
Cost of sales
214.1
 248.8
Cost of sales193.2 259.6 544.9 778.4 
Gross profit
114.8
 126.5
Gross profit105.3 150.9 288.5 433.7 
Selling, general and administrative expenses
86.5
 88.3
Selling, general and administrative expenses72.3 86.7 215.6 262.8 
Amortization expense
9.7
 9.5
Amortization expense9.9 9.4 29.2 28.8 
Restructuring and other expenses
6.8
 4.2
Restructuring and other expense (recovery)Restructuring and other expense (recovery)1.5 (0.2)9.5 5.4 
Loss from impairment and disposal of assets — net
11.2
 —
Loss from impairment and disposal of assets — net0.4 0.2 11.7 0.2 
Earnings from operations
0.6
 24.5
Earnings from operations21.2 54.8 22.5 136.5 
Interest expense
21.3
 24.0
Interest expense18.1 22.4 58.5 70.9 
Other (income) expense — net
(5.4) 3.0
Other (income) expense — net(0.6)2.9 0.8 11.5 
Loss before income taxes
(15.3) (2.5)
Earnings (loss) before income taxesEarnings (loss) before income taxes3.7 29.5 (36.8)54.1 
Income taxes
(0.2) 0.1
Income taxes(1.2)9.4 (9.2)16.6 
Net loss
$(15.1) $(2.6)
Net earnings (loss)Net earnings (loss)$4.9 $20.1 $(27.6)$37.5 
Per share data:
   Per share data:
Loss per share — Basic
$(0.11) $(0.02)
Loss per share — Diluted
$(0.11) $(0.02)
Earnings (loss) per share — BasicEarnings (loss) per share — Basic$0.03 $0.14 $(0.20)$0.27 
Earnings (loss) per share — DilutedEarnings (loss) per share — Diluted$0.03 $0.14 $(0.20)$0.27 
Weighted average shares outstanding — Basic
141,430,614
 140,612,213
Weighted average shares outstanding — Basic141,512,207 141,072,179 141,481,963 140,893,966 
Weighted average shares outstanding — Diluted
141,430,614
 140,612,213
Weighted average shares outstanding — Diluted141,560,747 141,532,790 141,481,963 141,455,493 

The accompanying notes are an integral part of these unaudited consolidated financial statements.
-3-

WELBILT, INC.
Consolidated Statements of Comprehensive LossIncome (Loss)
(In millions, unaudited)

  Three Months Ended March 31,
 2020 2019
Net loss $(15.1) $(2.6)
Other comprehensive (loss) income, net of tax:    
Foreign currency translation adjustments (28.2) —
Unrealized loss on derivatives (0.4) (1.0)
Employee pension and postretirement benefits 2.0
 (1.2)
Total other comprehensive loss, net of tax (26.6) (2.2)
Comprehensive loss $(41.7) $(4.8)
Three Months Ended September 30,Nine Months Ended September 30,
2020201920202019
Net earnings (loss)$4.9 $20.1 $(27.6)$37.5 
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments11.8 (8.8)1.7 (1.3)
Unrealized gain (loss) on derivatives0.5 (0.7)0.7 (3.0)
Employee pension and postretirement benefits(0.6)1.6 2.2 1.8 
Total other comprehensive income (loss), net of tax11.7 (7.9)4.6 (2.5)
Comprehensive income (loss)$16.6 $12.2 $(23.0)$35.0 

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

-4-

WELBILT, INC.
Consolidated Balance Sheets
(In millions, except share and per share data, unaudited)

September 30,December 31,
 March 31, December 31,20202019
2020 2019
Assets  
  
Assets  
Current assets:  
  
Current assets:  
Cash and cash equivalents $148.5
 $130.7
Cash and cash equivalents$122.9 $130.7 
Accounts receivable, less allowance of $4.7 and $4.0, respectively 190.0
 183.6
Restricted cashRestricted cash0.2 0 
Accounts receivable, less allowance of $4.9 and $4.0, respectivelyAccounts receivable, less allowance of $4.9 and $4.0, respectively161.8 183.6 
Inventories — net 200.9
 186.4
Inventories — net192.4 186.4 
Prepaids and other current assets 46.5
 28.2
Prepaids and other current assets67.9 28.2 
Total current assets 585.9
 528.9
Total current assets545.2 528.9 
Property, plant and equipment — net 124.6
 127.5
Property, plant and equipment — net126.7 127.5 
Operating lease right-of-use assets 38.3
 39.9
Operating lease right-of-use assets42.5 39.9 
Goodwill 929.7
 933.1
Goodwill936.8 933.1 
Other intangible assets — net 481.9
 507.7
Other intangible assets — net471.8 507.7 
Other non-current assets 24.6
 28.2
Other non-current assets27.8 28.2 
Total assets $2,185.0
 $2,165.3
Total assets$2,150.8 $2,165.3 
Liabilities and equity    Liabilities and equity
Current liabilities:    Current liabilities:
Trade accounts payable $113.8
 $104.4
Trade accounts payable$102.4 $104.4 
Accrued expenses and other liabilities 141.3
 192.4
Accrued expenses and other liabilities151.5 192.4 
Current portion of long-term debt and finance leases 1.9
 1.2
Current portion of long-term debt and finance leases3.4 1.2 
Product warranties 31.9
 33.3
Product warranties31.3 33.3 
Total current liabilities 288.9
 331.3
Total current liabilities288.6 331.3 
Long-term debt and finance leases 1,506.1
 1,403.1
Long-term debt and finance leases1,444.2 1,403.1 
Deferred income taxes 87.1
 81.9
Deferred income taxes89.7 81.9 
Pension and postretirement health liabilities 30.4
 32.8
Pension and postretirement health liabilities27.2 32.8 
Operating lease liabilities 27.5
 29.1
Operating lease liabilities32.4 29.1 
Other long-term liabilities 32.0
 34.1
Other long-term liabilities35.7 34.1 
Total non-current liabilities 1,683.1
 1,581.0
Total non-current liabilities1,629.2 1,581.0 
Commitments and contingencies (Note 12) 


 


Commitments and contingencies (Note 12)
Total equity:  
  
Total equity:  
Common stock ($0.01 par value, 300,000,000 shares authorized, 141,487,527 shares and 141,213,995 shares issued and outstanding as of March 31, 2020 and December 31, 2019, respectively) 1.4
 1.4
Common stock ($0.01 par value, 300,000,000 shares authorized, 141,513,415 shares and 141,213,995 shares issued and outstanding as of September 30, 2020 and December 31, 2019, respectively)Common stock ($0.01 par value, 300,000,000 shares authorized, 141,513,415 shares and 141,213,995 shares issued and outstanding as of September 30, 2020 and December 31, 2019, respectively)1.4 1.4 
Additional paid-in capital (deficit) (28.9) (31.0)Additional paid-in capital (deficit)(27.6)(31.0)
Retained earnings 309.0
 324.5
Retained earnings296.5 324.5 
Accumulated other comprehensive loss (68.1) (41.5)Accumulated other comprehensive loss(36.9)(41.5)
Treasury stock, at cost, 61,712 shares and 58,935 shares, as of March 31, 2020 and December 31, 2019, respectively (0.4) (0.4)
Treasury stock, at cost, 61,556 shares and 58,935 shares, as of September 30, 2020 and December 31, 2019, respectivelyTreasury stock, at cost, 61,556 shares and 58,935 shares, as of September 30, 2020 and December 31, 2019, respectively(0.4)(0.4)
Total equity 213.0
 253.0
Total equity233.0 253.0 
Total liabilities and equity $2,185.0
 $2,165.3
Total liabilities and equity$2,150.8 $2,165.3 

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

-5-

WELBILT, INC.
Consolidated Statements of Cash Flows
(In millions, unaudited)

 Three Months Ended March 31,Nine Months Ended September 30,
2020 201920202019
Cash flows from operating activities  
  
Cash flows from operating activities  
Net loss $(15.1) $(2.6)
Adjustments to reconcile net loss to cash used in operating activities:    
Net (loss) earningsNet (loss) earnings$(27.6)$37.5 
Adjustments to reconcile net (loss) earnings to cash used in operating activities:Adjustments to reconcile net (loss) earnings to cash used in operating activities:
Depreciation expense 5.2
 4.9
Depreciation expense16.1 16.4 
Amortization of intangible assets 10.0
 9.5
Amortization of intangible assets30.2 28.8 
Amortization of debt issuance costs 1.1
 1.2
Amortization of debt issuance costs3.9 3.6 
Deferred income taxes 7.0
 —
Deferred income taxes10.0 0.5 
Stock-based compensation expense 1.0
 2.9
Stock-based compensation expense2.3 6.2 
Loss from impairment and disposal of assets 11.2
 —
Loss from impairment and disposal of assets11.7 0.2 
Pension settlement —
 1.2
Pension settlement0 1.2 
Gain on remeasurement of debt and other realized foreign currency derivative —
 (0.8)
Loss on remeasurement of debt and other realized foreign currency derivativeLoss on remeasurement of debt and other realized foreign currency derivative0 0.3 
Changes in operating assets and liabilities:    Changes in operating assets and liabilities:
Accounts receivable (11.2) (296.2)Accounts receivable21.9 (371.1)
Inventories (19.1) (14.5)Inventories(5.5)(9.3)
Other assets (16.4) (2.0)Other assets(32.4)(2.1)
Trade accounts payable 11.7
 (26.7)Trade accounts payable(1.8)(37.9)
Other current and long-term liabilities (57.9) (33.9)Other current and long-term liabilities(55.7)5.2 
Net cash used in operating activities (72.5) (357.0)Net cash used in operating activities(26.9)(320.5)
Cash flows from investing activities  
  
Cash flows from investing activities  
Cash receipts on beneficial interest in sold receivables —
 196.0
Cash receipts on beneficial interest in sold receivables0 280.7 
Capital expenditures (5.6) (4.8)Capital expenditures(15.9)(17.4)
Acquisition of intangible assetsAcquisition of intangible assets(0.2)0 
Proceeds from maturity of short-term investmentProceeds from maturity of short-term investment0 32.0 
Other (3.9) 0.2
Other(3.9)0.9 
Net cash (used in) provided by investing activities (9.5) 191.4
Net cash (used in) provided by investing activities(20.0)296.2 
Cash flows from financing activities  
  
Cash flows from financing activities  
Proceeds from long-term debt 128.0
 196.5
Proceeds from long-term debt172.5 355.0 
Repayments on long-term debt and finance leases (23.3) (32.8)Repayments on long-term debt and finance leases(131.2)(267.2)
Debt issuance costsDebt issuance costs(2.1)0 
Repayment of short-term borrowings —
 (15.0)Repayment of short-term borrowings0 (15.0)
Payment of contingent consideration —
 (0.8)Payment of contingent consideration0 (0.8)
Exercises of stock options 1.1
 0.6
Exercises of stock options1.1 3.0 
Payments on tax withholdings for equity awards (0.7) (1.8)Payments on tax withholdings for equity awards(0.7)(2.2)
Net cash provided by financing activities 105.1
 146.7
Net cash provided by financing activities39.6 72.8 
Effect of exchange rate changes on cash (5.3) 1.0
Effect of exchange rate changes on cash(0.3)(3.9)
Net increase (decrease) in cash and cash equivalents and restricted cash 17.8
 (17.9)
Net (decrease) increase in cash and cash equivalents and restricted cashNet (decrease) increase in cash and cash equivalents and restricted cash(7.6)44.6 
Balance at beginning of period 130.7
 73.2
Balance at beginning of period130.7 73.2 
Balance at end of period $148.5
 $55.3
Balance at end of period$123.1 $117.8 

(Continued)

-6-

WELBILT, INC.
Consolidated Statements of Cash Flows (Continued)
(In millions, unaudited)

 Three Months Ended March 31,Nine Months Ended September 30,
 2020
201920202019
Supplemental disclosures of cash flow information:    Supplemental disclosures of cash flow information:
Cash paid for income taxes, net of refunds $11.6
 $11.0
Cash paid for income taxes, net of refunds$21.1 $27.3 
Cash paid for interest, net of related hedge settlements $31.4
 $23.3
Cash paid for interest, net of related hedge settlements$68.4 $67.4 
    
Supplemental disclosures of non-cash activities:    Supplemental disclosures of non-cash activities:
Non-cash investing activity: Beneficial interest obtained in exchange for securitized receivables $—
 $238.6
Non-cash investing activity: Beneficial interest obtained in exchange for securitized receivables$0 $238.6 
Non-cash financing activity: Reassessments and modifications of right-of-use assets and lease liabilities and assets obtained through leasing arrangements $5.5
 $0.8
Non-cash financing activity: Reassessments and modifications of right-of-use assets and lease liabilities and assets obtained through leasing arrangements$14.9 $12.2 

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

-7-

WELBILT, INC.
Consolidated Statements of Equity
(In millions, except share data, unaudited)
  Shares Common Stock Additional Paid-In Capital (Deficit) Retained Earnings Accumulated Other Comprehensive Loss Treasury Stock Total Equity
Balance as of December 31, 2019 141,213,995
 $1.4
 $(31.0) $324.5
 $(41.5) $(0.4) $253.0
Cumulative effect of accounting standards adoption (Note 2) —
 —
 —
 (0.4) —
 —
 (0.4)
Net loss —
 —
 —
 (15.1) —
 —
 (15.1)
Issuance of common stock, stock-based compensation plans 273,532
 —
 1.1
 —
 —
 —
 1.1
Stock-based compensation expense —
 —
 1.0
 —
 —
 —
 1.0
Other comprehensive loss —
 —
 —
 —
 (26.6) —
 (26.6)
Balance as of March 31, 2020 141,487,527
 $1.4
 $(28.9) $309.0
 $(68.1) $(0.4) $213.0

SharesCommon StockAdditional Paid-In Capital (Deficit)Retained EarningsAccumulated Other Comprehensive LossTreasury StockTotal Equity
Balance as of December 31, 2019141,213,995 $1.4 $(31.0)$324.5 $(41.5)$(0.4)$253.0 
Cumulative effect of accounting standards adoption (Note 2)— — — (0.4)— — (0.4)
Net loss— — — (15.1)— — (15.1)
Issuance of common stock, stock-based compensation plans273,532 — 1.1 — — — 1.1 
Stock-based compensation expense— — 1.0 — — — 1.0 
Other comprehensive loss— — — — (26.6)— (26.6)
Balance as of March 31, 2020141,487,527 $1.4 $(28.9)$309.0 $(68.1)$(0.4)$213.0 
Net loss— — — (17.4)— — (17.4)
Issuance of common stock, stock-based compensation plans23,704 — — — — — — 
Other comprehensive income— — — — 19.5 — 19.5 
Balance as of June 30, 2020141,511,231 $1.4 $(28.9)$291.6 $(48.6)$(0.4)$215.1 
Net earnings— — — 4.9 — — 4.9 
Issuance of common stock, stock-based compensation plans2,184 — — — — — — 
Stock-based compensation expense— — 1.3 — — — 1.3 
Other comprehensive income— — — — 11.7 — 11.7 
Balance as of September 30, 2020141,513,415 $1.4 $(27.6)$296.5 $(36.9)$(0.4)$233.0 

The accompanying notes are an integral part of these unaudited consolidated financial statements.
(Continued)

-8-

  Shares Common Stock Additional Paid-In Capital (Deficit) Retained Earnings Accumulated Other Comprehensive Loss Treasury Stock Total Equity
Balance as of December 31, 2018 140,252,693
 $1.4
 $(41.5) $268.4
 $(41.6) $(0.3) $186.4
Cumulative effect of accounting standards adoption (1)
 —
 —
 —
 0.2
 —
 —
 0.2
Net loss —
 —
 —
 (2.6) —
 —
 (2.6)
Issuance of common stock, stock-based compensation plans 604,511
 —
 0.6
 —
 —
 —
 0.6
Stock-based compensation expense —
 —
 2.9
 —
 —
 —
 2.9
Other comprehensive loss —
 —
 —
 —
 (2.2) —
 (2.2)
Balance as of March 31, 2019 140,857,204
 $1.4
 $(38.0) $266.0
 $(43.8) $(0.3) $185.3
WELBILT, INC.
Consolidated Statements of Equity (Continued)
(In millions, except share data, unaudited)

SharesCommon StockAdditional Paid-In Capital (Deficit)Retained EarningsAccumulated Other Comprehensive LossTreasury StockTotal Equity
Balance as of December 31, 2018140,252,693 $1.4 $(41.5)$268.4 $(41.6)$(0.3)$186.4 
Cumulative effect of accounting standards adoption (1)
— — — 0.2 — — 0.2 
Net loss— — — (2.6)— — (2.6)
Issuance of common stock, stock-based compensation plans604,511 — 0.6 — — — 0.6 
Stock-based compensation expense— — 2.9 — — — 2.9 
Other comprehensive loss— — — — (2.2)— (2.2)
Balance as of March 31, 2019140,857,204 $1.4 $(38.0)$266.0 $(43.8)$(0.3)$185.3 
Net earnings— — — 20.0 — — 20.0 
Issuance of common stock, stock-based compensation plans190,583 — 2.0 — — — 2.0 
Stock-based compensation expense— — 1.8 — — — 1.8 
Other comprehensive income— — — — 7.6 — 7.6 
Balance as of June 30, 2019141,047,787 $1.4 $(34.2)$286.0 $(36.2)$(0.3)$216.7 
Net earnings— — — 20.1 — — 20.1 
Issuance of common stock, stock-based compensation plans64,799 — 0.4 — — — 0.4 
Stock-based compensation expense— — 1.5 — — — 1.5 
Other comprehensive income— — — — (7.9)— (7.9)
Value of shares in deferred compensation plan— — — — — (0.1)(0.1)
Balance at September 30, 2019141,112,586 $1.4 $(32.3)$306.1 $(44.1)$(0.4)$230.7 
(1) Effective January 1, 2019, the Company adopted Accounting Standards Update ("ASU") 2016-02, "Leases (Topic 842)" with additional updates subsequently issued (collectively, "ASU 2016-02"). The cumulative effect of the change made to the Consolidated Statement of Equity as of January 1, 2019 for the adoption of ASU 2016-02 is the result of recognizing the remaining deferred gain associated with a previous sale-leaseback transaction.

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

-9-

WELBILT, INC.
Notes to Unaudited Consolidated Financial Statements


1. Business and Organization

Welbilt, Inc. ("Welbilt" or the "Company") is one of the world’s leading commercial foodservice equipment companies leveraging a full suite of equipment capable of storing, cooking, holding, displaying, dispensing and serving in both hot and cold foodservice categories. Headquartered in New Port Richey, Florida, the Company was incorporated in Delaware in 2015 and became publicly traded in March 2016 after a spin-off from its former parent. The Company operates 2019 manufacturing facilities globally at which it designs, manufactures and supplies best-in-class equipment for the global commercial foodservice market, consisting of commercial and institutional foodservice operators includingrepresented by full-service restaurants, quick-service restaurant chains, hotels, resorts, cruise ships, caterers, supermarkets, convenience stores, hospitals, schools and other institutions. The Company sells its products through a global network of over 5,000 distributors, dealers, buying groups and manufacturers' representatives.

The Company manages its business in 3 geographic business segments: Americas, EMEA and APAC. The Americas segment includes the United States ("U.S."), Canada and Latin America. The EMEA segment consists of markets in Europe, including the Middle East, Africa, Russia and the Commonwealth of Independent States. The APAC segment consists primarily of markets in China, India, Australia, South Korea, Singapore, Philippines, Japan, Indonesia, Malaysia, Thailand, Hong Kong, Taiwan, New Zealand and Vietnam.

2. Basis of Presentation and Summary of Significant Accounting Policies

Principles of Consolidation and Basis of Presentation

The accompanying unaudited consolidated financial statements include the accounts of Welbilt and its subsidiaries and have been prepared by the Company, pursuant to the rules and regulations of the U.S. Securities and Exchange Commission ("SEC"). The Company prepares its financial statements in accordance with accounting principles generally accepted in the U.S. ("U.S. GAAP"). All intercompany balances and transactions between the Company and its affiliates have been eliminated in consolidation.

Use of Estimates

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Significant items subject to such estimates and assumptions include inventory obsolescence costs, asset impairments, warranty costs, product liability costs, employee benefit programs, sales rebates, loss contingencies and the measurement of income tax assets and liabilities. The Company bases its estimates on historical experience and on various other assumptions that the Company believes to be reasonable under the circumstances. On an ongoing basis, the Company evaluates these assumptions, judgments and estimates. Actual results may differ from these estimates.

In the opinion of management, the consolidated financial statements contain all adjustments necessary for a fair statement of the results of operations and comprehensive lossincome (loss) for the three and nine months ended March 31,September 30, 2020 and 2019, the financial position as of March 31,September 30, 2020 and December 31, 2019 and the cash flows for the threenine months ended March 31,September 30, 2020 and 2019, and except as otherwise discussed herein, such adjustments consist only of those of a normal recurring nature. The interim results are not necessarily indicative of results that may be achieved in a full reporting year. Certain information and footnote disclosures normally included in annual consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to the SEC rules and regulations governing interim financial statements. However, the Company believes that the disclosures made in the unaudited consolidated financial statements and related notes are adequate to make the information presented not misleading. These consolidated financial statements should be read in conjunction with the Company's audited consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2019.

All dollar amounts, except share and per share amounts, are in millions of dollars unless otherwise indicated.

Government Assistance

The Company's policy for government assistance is to recognize the assistance when there is reasonable assurance that the Company has met the substantive conditions of and requirements for receiving the assistance. The government assistance is recorded as a reduction to the related expense for which the assistance relates. As a result of the COVID-19 pandemic, governments in various jurisdictions in which the Company operates have provided financial assistance designed to offset salary expenditures associated with companies maintaining their pre-COVID-19 employee headcount levels. The Company has applied and will continue to apply for such assistance programs where relevant requirements and conditions have been met. For the three and nine months ended September 30, 2020, the Company met the requirements to receive $6.0 million and $11.8 million, respectively, of government assistance in the form of cash, cost abatements and retention credits. As of September 30, 2020, the Company has a receivable for $2.5 million related to government assistance.

-10-

Government assistance has been reflected as a reduction to the related expense for which the assistance relates as follows:

(in millions)Three Months EndedNine Months Ended
September 30, 2020September 30, 2020
Reduction to related expense(1):
Cost of sales$1.9 $3.1 
Selling, general and administrative expenses3.2 5.4 
Total$5.1 $8.5 

(1) As of September 30, 2020, $3.3 million of government assistance was included as a reduction in capitalized labor, which is a component of "Inventories — net". This portion of government assistance will be recognized as a reduction to "Cost of sales" when the associated inventory is sold.

Recently Adopted Accounting Pronouncements

In August 2018, the Financial Accounting Standards Board ("FASB") issued Accounting Standard Update ("ASU") 2018-15, "Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract," which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software, with amortization expense being recorded in the same income statement expense line as the hosted service costs and over the expected term of the hosting arrangement. This standard was effective for the Company on January 1, 2020 and has been adopted prospectively for applicable implementation costs incurred subsequent to the effective date.

In June 2016, the FASB issued ASU 2016-13, "Financial Instruments - Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments," including subsequent amendments issued thereafter which clarify the standard (collectively, "Topic 326"), which significantly changes the impairment model for most financial instruments. Current guidance requires the recognition of credit losses based on an incurred loss impairment methodology that reflects losses once the losses are probable. In accordance with Topic 326, the Company

will be is required to use a current expected credit loss model (“CECL”) that will immediately recognize an estimate of credit losses that are expected to occur over the life of the financial instruments that are within the scope of this update, including trade receivables. The CECL model uses a broader range of reasonable and supportable information in the development of credit loss estimates. This standard was effective for the Company on January 1, 2020 and, upon adoption, the Company recorded an additional expected credit loss allowance with an offsetting adjustment to retained earnings of $0.4 million.

In August 2018, the FASB issued ASU 2018-13, "Fair Value Measurement (Topic 820): Disclosure Framework- Changes to the Disclosure Requirements for Fair Value Measurement". The amendments in this update modify the disclosure requirements for fair value measurements in Topic 820, Fair Value Measurement and were adopted by the Company as of January 1, 2020. As this amendment contemplates changes in disclosures only there was no impact on the Company's consolidated financial condition or results of operations. Refer to Note 11, "Fair Value of Financial Instruments," for the additional required disclosures. 

In March 2020, the FASB issued ASU 2020-04, "Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting" ("ASU 2020-04") to provide temporary optional expedients and exceptions to U.S. GAAP guidance on contract modifications, hedge accounting and other transactions affected by the expected market transition from the London Interbank Offered Rate ("LIBOR") and other interbank offered rates to alternative reference rates. ASU 2020-04 is effective upon issuance and the Company may elect to apply the standard through December 31, 2022. This guidance primarily impacts the interest expense under the Company's 2016 Credit Facility which utilizes LIBOR as a basis. As the Company has not completedexecuted a modification of the interest component of this financial instrument and does not have related outstanding hedges in place as of March 31,September 30, 2020, the guidance has not impacted the Company's consolidated financial statements to date. The Company will evaluate the impact of adopting this guidance at the time such transition to an alternative reference rate occurs.

Recently Issued Accounting Pronouncements Not Yet Adopted

In December 2019, the FASB issued ASU 2019-12, "Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes" ("ASU 2019-12"), which amends, and is intended to simplify, existing guidance related to the accounting for income taxes. ASU 2019-12 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. Early adoption is permitted. This guidance is effective for the Company beginning January 1, 2021. The Company is currently evaluating the impact this new standard will have on the Company's consolidated financial statements.statements subsequent to January 1, 2021.

Recent accounting guidance not discussed is not applicable, did not have, or is not expected to have a material impact on the Company.

-11-

3. Accounts Receivable Securitization

Prior to its termination on March 13, 2019, the Company participated in a $110.0 million accounts receivable securitization program whereby the Company sold certain of its domestic trade accounts receivable and certain of its non-U.S. trade accounts receivable to a wholly-owned, bankruptcy-remote, foreign special purpose entity, which would in turn, sell, convey, transfer and assign to a third-party financial institution (the “Purchaser”), all the rights, title and interest in and to its pool of receivables. Upon termination of the program, the Purchaser had no recourse for uncollectible receivables. During the period of this program, cash receipts from the Purchaser at the time of the sale were classified as operating activities while cash receipts from the beneficial interest on sold receivables were classified as investing activities on the Consolidated Statements of Cash Flows.

In connection with the termination of the accounts receivable securitization program during the first quarter of 2019, $156.9 million of accounts receivable sold under the program were reacquired in exchange for the outstanding deferred purchase price receivable and cash, which was provided by receipts of previously sold trade receivables. Cash receipts on the reacquired receivables were $65.0$149.7 million for the threenine months ended March 31,September 30, 2019 and have been classified as an investing activity in the Company's Consolidated Statements of Cash Flows. As of June 30, 2019, the reacquired trade receivables had either been collected or reserved.

4. Inventories — Net

The components of "Inventories — net" are as follows:

(in millions) March 31, December 31,
 2020 2019
Inventories — net:  
  
Raw materials $84.0
 $81.4
Work-in-process 14.8
 14.2
Finished goods 106.3
 95.0
Total inventories at FIFO cost 205.1
 190.6
Excess of FIFO costs over LIFO value (4.2) (4.2)
Total inventories — net $200.9
 $186.4


(in millions)September 30,December 31,
20202019
Inventories — net:  
Raw materials$90.9 $81.4 
Work-in-process14.3 14.2 
Finished goods91.4 95.0 
Total inventories at FIFO cost196.6 190.6 
Excess of FIFO costs over LIFO value(4.2)(4.2)
Total inventories — net$192.4 $186.4 


5. Property, Plant and Equipment — Net

The components of "Property, plant and equipment — net" are as follows:

(in millions) March 31, December 31,
 2020 2019
Property, plant and equipment — net:    
Land $9.6
 $9.7
Building and improvements 92.7
 93.2
Machinery, equipment and tooling 220.9
 223.3
Furniture and fixtures 7.4
 7.6
Computer hardware and software for internal use 65.4
 66.1
Construction in progress 21.5
 22.0
Total cost 417.5
 421.9
Less accumulated depreciation (292.9) (294.4)
Total property, plant and equipment — net $124.6
 $127.5


(in millions)September 30,December 31,
20202019
Property, plant and equipment — net:
Land$9.6 $9.7 
Building and improvements99.2 93.2 
Machinery, equipment and tooling229.9 223.3 
Furniture and fixtures8.0 7.6 
Computer hardware and software for internal use67.7 66.1 
Construction in progress14.6 22.0 
Total cost429.0 421.9 
Less accumulated depreciation(302.3)(294.4)
Total property, plant and equipment — net$126.7 $127.5 

6. Goodwill and Other Intangible Assets — Net

The Company's annual impairment tests of goodwill and intangible assets with indefinite lives are performed as of June 30 of each fiscal year and whenever a triggering event occurs between annual impairment tests. The Company's trademarks and tradenames are classified as indefinite-lived intangible assets as there are no regulatory, contractual, competitive, economic or other factors which limit the useful lives of these intangible assets. 

The indefinite-lived intangible asset impairment test is performed at the Company's unit of account level, which is the Americas, EMEA and APAC. The goodwill impairment test is performed for the Company's reporting units, which are the Americas, EMEA and APAC. The long-lived asset impairment testing is performed at

-12-

During the Company's unitfirst quarter of account level, which is the Americas, EMEA and APAC. As2020, as a result of the decrease in demand for commercial foodservice equipment and aftermarket parts resulting from the COVID-19 pandemic and impacts on the Company's current and estimated future operating cash flows, management reviewedperformed a review of the Company's goodwill and indefinite-lived intangible assets to determine whether it was more-likely-than-not that the fair value of such assets was less than their carrying amount as of March 31, 2020.

TheThis review included the Company's evaluation of relevant events and circumstances in totality that affect the fair value of the reporting units or indefinite-lived intangible assets. These events and circumstances include, but are not limited to, macroeconomic conditions (including the impact of COVID-19), industry and competitive environment conditions, overall financial performance, business specific events and market considerations. The majority of the Company's goodwill and indefinite-lived intangible assets were generated on a legacy basis and as a result have fair values that sufficiently exceed their underlying carrying values. However, additional goodwill and indefinite-lived intangible assets attributable to the EMEA and APAC regions were generated as a result of a recent acquisition in April 2018.

Management's review concluded for each of its reporting units and for the Americas indefinite-lived intangible assets that it is not more-likely-than-not that the fair value is less than the carrying amount based on the preponderance of evidence. Therefore, no impairment iswas indicated and no impairment test was required to be performed as of March 31, 2020. However, for both the EMEA and APAC indefinite-lived intangible assets, the review indicated, based on limited fair value cushion and overall financial performance expectations, that it is more-likely-than-not that the fair value of the indefinite-lived intangible assets is less than the carrying amount and, therefore, a quantitative impairment test was performed as of March 31, 2020.

The Company estimated the fair value of the EMEA and APAC indefinite-lived intangible assets based on an income approach using the relief-from-royalty method. This approach iswas dependent upon several factors, including estimates of future growth and trends, royalty rates, discount rates and other variables. Management based its fair value estimates on assumptions believed to be reasonable, but which are inherently uncertain and could materially affect the valuations. These estimated fair values were then compared to the carrying values of the relevant indefinite-lived intangible asset and to the extent the carrying value exceeded the estimated fair value, an impairment loss was recognized in the amount by which the carrying amount of the asset exceeded the estimated fair value of the asset.

As of March 31, 2020, the Company determined that the carrying value of the indefinite-lived intangible assets in the EMEA region exceeded their estimated fair value. Asvalue and as a result, an impairment charge was recognized in the amount of $11.1 million which was recorded for the first quarter of 2020. This impairment charge has been reflected as a component of "Loss from impairment and disposal of assets — net" for the threenine months ended March 31,September 30, 2020. Management determined that the fair value of the indefinite-lived intangible assets in the APAC region exceeded the carrying value of these assets and, therefore, concluded there was 0 impairment of these assets as of March 31, 2020.

As of June 30, 2020, the Company performed its annual impairment testing for its goodwill reporting units, as well as its indefinite-lived intangible assets, and based on those results, 0 impairment was indicated. The Company estimated the fair value of the indefinite-lived intangible assets based on an income approach using the relief-from-royalty method. This approach was dependent upon several factors, including estimates of future growth and trends, royalty rates, discount rates and other variables. Management based its fair value estimates on assumptions believed to be reasonable, but which are inherently uncertain and could materially affect the valuations. For each of the Company's regions, the estimated fair values of the relevant indefinite-lived intangible assets was greater than or approximated the carrying values, resulting in no impairment of the relevant assets. Although no reporting units failed the annual impairment testing, in management’s opinion, the indefinite-lived intangible assets in the EMEA region are at risk of impairment in the near term if there is a negative change in the future financial performance of the EMEA region. As of both September 30, 2020 and June 30, 2020, the carrying value of the indefinite-lived intangible assets approximate fair value as a result of an impairment charge recorded during the first quarter of 2020, as discussed above.

The duration and severity of the COVID-19 pandemic or other industry or competitive changes could result in additional future impairment charges to the Company's goodwill and remaining indefinite-lived intangible assets. Despite management's implemented strategies to address these events, a prolonged or more pronounced effect of the COVID-19 pandemic could negatively impact the results of operations and future financial performance expectations, resulting in changes in operating plans, or cause other adverse changes in the business, the foodservice industry or the macroeconomic environment, such as interest rate changes, that could trigger an impairment in the future.

-13-

The changes in the carrying amount of goodwill by geographic business segment are as follows:

(in millions) Americas EMEA APAC Total
Gross balance as of December 31, 2019 $1,144.8
 $284.1
 $19.9
 $1,448.8
Accumulated asset impairments (312.2) (203.5) —
 (515.7)
Net balance as of December 31, 2019 $832.6
 $80.6
 $19.9
 $933.1
         
Foreign currency impact $—
 $(2.8) $(0.6) $(3.4)
Gross balance as of March 31, 2020 1,144.8
 281.3
 19.3
 1,445.4
Accumulated asset impairments (312.2) (203.5) —
 (515.7)
Net balance as of March 31, 2020 $832.6
 $77.8
 $19.3
 $929.7

(in millions)AmericasEMEAAPACTotal
Gross balance as of December 31, 2019$1,144.8 $284.1 $19.9 $1,448.8 
Accumulated asset impairments(312.2)(203.5)0 (515.7)
Net balance as of December 31, 2019$832.6 $80.6 $19.9 $933.1 
Foreign currency impact$0 $3.4 $0.3 $3.7 
Gross balance as of September 30, 20201,144.8 287.5 20.2 1,452.5 
Accumulated asset impairments(312.2)(203.5)0 (515.7)
Net balance as of September 30, 2020$832.6 $84.0 $20.2 $936.8 

The gross carrying amounts, impairment charges and accumulated amortization of the Company's intangible assets, other than goodwill, are as follows:

(in millions) March 31, 2020 December 31, 2019
 Gross
Carrying
Amount		 Impairment Charges Accumulated
Amortization
Amount		 Net
Book
Value		 Gross
Carrying
Amount		 Accumulated
Amortization
Amount		 Net
Book
Value
Customer relationships $470.7
 $—
 $(249.8) $220.9
 $472.8
 $(243.6) $229.2
Trademarks and trade names 214.8
 (11.1) —
 203.7
 217.6
 —
 217.6
Other intangibles 165.7
 —
 (112.2) 53.5
 166.9
 (109.8) 57.1
Patents 5.8
 —
 (2.0) 3.8
 5.8
 (2.0) 3.8
Total $857.0
 $(11.1) $(364.0) $481.9
 $863.1
 $(355.4) $507.7


(in millions)September 30, 2020December 31, 2019
Gross
Carrying
Amount		Impairment ChargesAccumulated
Amortization
Amount		Net
Book
Value		Gross
Carrying
Amount		Accumulated
Amortization
Amount		Net
Book
Value
Customer relationships$475.1 $0 $(263.9)$211.2 $472.8 $(243.6)$229.2 
Trademarks and trade names219.7 (11.1)— 208.6 217.6 — 217.6 
Other intangibles169.6 0 (121.2)48.4 166.9 (109.8)57.1 
Patents5.8 0 (2.2)3.6 5.8 (2.0)3.8 
Total$870.2 $(11.1)$(387.3)$471.8 $863.1 $(355.4)$507.7 

7. Accrued Expenses and Other Liabilities

The components of "Accrued expenses and other liabilities" are as follows:

(in millions) March 31, December 31,
 2020 2019
Accrued expenses and other liabilities:    
Accrued rebates and commissions $32.6
 $56.2
Miscellaneous accrued expenses 34.9
 37.8
Employee related expenses 27.9
 34.7
Interest payable 5.7
 15.8
Operating lease liabilities 10.1
 10.0
Restructuring liabilities 7.4
 6.3
Business Transformation Program related expenses 4.1
 5.8
Derivative liabilities 1.8
 5.0
Income and other taxes payable 7.7
 11.2
Deferred revenues 2.7
 3.1
Customer deposits 2.9
 3.1
Pension and postretirement health liabilities 2.1
 2.1
Product liabilities 1.4
 1.3
Total accrued expenses and other liabilities $141.3
 $192.4


(in millions)September 30,December 31,
20202019
Accrued expenses and other liabilities:
Accrued rebates and commissions$36.1 $56.2 
Miscellaneous accrued expenses37.1 37.8 
Employee related expenses38.8 34.7 
Interest payable5.9 15.8 
Operating lease liabilities9.6 10.0 
Restructuring liabilities3.7 6.3 
Business Transformation Program related expenses2.2 5.8 
Derivative liabilities0.3 5.0 
Income and other taxes payable7.7 11.2 
Deferred revenues2.7 3.1 
Customer deposits3.7 3.1 
Pension and postretirement health liabilities2.1 2.1 
Product liabilities1.6 1.3 
Total accrued expenses and other liabilities$151.5 $192.4 


8. Income Taxes

The Coronavirus Aid, Relief, and Economic Security Act ("CARES Act") was enacted on March 27, 2020 and includes many measures intended to assist companies during the COVID-19 pandemic including temporary changes to income and non-income-based tax laws, some of which were enacted under the Tax Cuts and Jobs Act ("Tax Act") in 2017. As a result of the Tax Act and the CARES Act, additional legislative and regulatory guidance has been and may continue to be issued, including final regulations that could impact ourthe Company's effective tax rate in future periods.

-14-

For the three months ended March 31,September 30, 2020, the Company recorded a $0.2$1.2 million income tax benefit, reflecting a 1.3%(32.4)% effective tax rate, compared to a $0.1$9.4 million income tax provision reflecting a (4.0)% effective tax rate, recorded for the three months ended March 31, 2019.September 30, 2019, reflecting a 31.9% effective tax rate. The increasechange in the effective tax rate for the three months ended March 31,September 30, 2020 compared to the same period of the prior year is primarily due tothe result of the Company's decrease in earnings before income taxes and changes in discrete tax items as a result of the change in uncertain tax positions, CARES Act net operating loss carryback provisions and the relative weighting of jurisdictional income and loss. For the three months ended March 31,September 30, 2020, the income tax benefit includesis primarily comprised of a net discrete expenses benefit of $4.6$1.2 million,primarily related to the provisionsuncertain tax position for net interest deduction limitations, and changes in discrete tax items related to the CARES Act net operating loss carryback provisions.

For the nine months ended September 30, 2020, the Company recorded a $9.2 million income tax benefit, reflecting a 25.0% effective tax rate, compared to a $16.6 million income tax provision, reflecting a 30.7% effective tax rate, for the nine months ended September 30, 2019. The change in the effective tax rate for the nine months ended September 30, 2020 compared to the same period of the prior year is primarily the result of the Company's decrease in earnings before income taxes, changes in discrete tax items associated with the CARES Act including changes allowing for net operating loss carryback provisions and an increase in the allowable deduction limitationrelative weighting of interest expense (from 30%jurisdictional income and loss. For the nine months ended September 30, 2020, the income tax benefit includes net discrete expenses of $5.0 million primarily related to 50%),provisions of the CARES Act discussed above compared to $0.8$0.7 million discrete expenses related to stock-based compensation and foreign tax adjustments for the threenine months ended March 31,September 30, 2019.

The Company’s effective tax rate for the three months ended March 31,September 30, 2020 varies from the 21.0% U.S. federal statutory rate primarily due to discrete tax items generated from the provisions of the CARES Act for net operating loss carryback and interest limitations, changes in uncertain tax positions for foreign income subject to U.S. tax, foreign income or loss before income taxes and relative weighting of foreign earnings before income taxes, includingtaxes. The Company's effective tax rate for the nine months ended September 30, 2020 varies from the 21.0% U.S. federal statutory rate for the items discussed for the three months ended September 30, 2020 as well as the impact of the indefinite-lived intangible asset impairment in the Company's EMEA region. The Company'sCompany’s effective tax raterates for the three and nine months ended March 31,September 30, 2019 variesvary from the 21.0% U.S. federal statutory rate primarily due to the relative weighting of foreign earnings before income taxes, discrete tax items and taxes on foreign income. Foreign earnings are generated from operations in all of the Company’s 3 geographic segments, Americas, EMEA and APAC.

As of each reporting date, the Company’s management considers new evidence, both positive and negative, that could impact management’s view regarding the future realization of deferred tax assets. The Company will continue to evaluate its valuation allowance requirements, including the U.S. interest expense limitation of the Tax Act, as temporarily modified under the CARES Act. Due to the revised interest deduction limitations of the CARES Act, the Company has determined that a valuation allowance is not required for the deferred tax asset associated with the U.S. interest expense as of March 31,September 30, 2020. The Company may adjust its deferred tax asset valuation allowances based on possible sources of taxable income that may be available to realize a tax benefit for deferred tax assets. As facts and circumstances change, the Company may adjust its deferred tax asset valuation allowances accordingly. Such changes in the deferred tax asset valuation allowances will be reflected in current operations through the Company’s income tax provision and could have a material effect on the Company’s operating results.

The Company's unrecognized tax benefits, including interest and penalties, were $4.1$7.1 million and $4.2 million as of March 31,September 30, 2020, and December 31, 2019, respectively. During the next twelve months, it is reasonably possible that unrecognized tax benefits could change in the range of $0.1$0.6 million to $0.5$1.0 million due to the expiration of relevant statutes of limitations and federal, state and foreign tax audit resolutions. As of September 30, 2020 and December 31, 2019 the Company's Consolidated Balance Sheets includes $49.1 million and $11.3 million, respectively, of income tax receivables, classified within "Prepaids and other current assets."

The Company regularly assesses the likelihood of an adverse outcome resulting from examinations to determine the adequacy of its tax reserves. The Company is currently under audit by the tax authorities in Germany for the years 2015-2018 and in the U.S. for the 20172017-2018 federal income tax returnreturns as well as various other state income tax and jurisdictional audits. As of March 31,September 30, 2020, the Company believes that it is more-likely-than-not that the tax positions it has taken will be sustained upon the resolution of its audits resulting in no material impact on its consolidated financial position, results of operations and cash flows. However, the final determination with respect to any tax audits, and any related litigation, could be materially different from the Company's estimates and/or from its historical income tax provisions and accruals and could have a material effect on operating results and/or cash flows in the periods for which that determination is made. In addition, future period earnings may be adversely impacted by litigation costs, settlements, penalties and/or interest assessments.

As of March 31,September 30, 2020, the Company intends to continue reinvesting foreign earnings indefinitely outside of the U.S. with certain limited exceptions, and has not recorded a deferred tax liability for U.S. state income taxes, foreign withholding or other foreign income taxes that would be due if cash is repatriated to the U.S. because those foreign earnings are considered permanently reinvested or may be remitted substantially free of any additional income or withholding taxes. While the Company does not anticipate a need to repatriate funds to the U.S. to satisfy domestic liquidity needs, management reviews cash positions regularly and, to the extent it is determined that all or a portion of foreign earnings will not remain indefinitely reinvested, the Company will record a liability for the additional taxes, if applicable, including foreign withholding taxes and U.S. state income taxes. Further, the determination of the amount of the unrecognized deferred tax liability related to the undistributed earnings is not practicable.


-15-

9. Debt
9. Debt

The carrying value of the Company's outstanding debt consists of the following:

(in millions, except percentage data) March 31, 2020 December 31, 2019(in millions, except percentage data)September 30, 2020December 31, 2019
Carrying Value Weighted Average Interest Rate Carrying Value Weighted Average Interest RateCarrying ValueWeighted Average Interest RateCarrying ValueWeighted Average Interest Rate
Long-term debt and finance leases:        Long-term debt and finance leases:
Revolving Credit Facility $244.9
 4.37% $141.8
 5.00%Revolving Credit Facility$182.9 4.16 %$141.8 5.00 %
Term Loan B Facility 855.0
 4.50% 855.0
 5.11%Term Loan B Facility855.0 3.61 %855.0 5.11 %
9.50% Senior Notes due 2024 425.0
 9.72% 425.0
 9.72%9.50% Senior Notes due 2024425.0 9.73 %425.0 9.72 %
Finance leases 2.2
 4.83% 2.5
 4.83%Finance leases1.9 4.76 %2.5 4.83 %
Total debt and finance leases, including current portion 1,527.1
   1,424.3
  Total debt and finance leases, including current portion1,464.8 1,424.3 
Less current portion:        Less current portion:
Term Loan B Facility (0.8)   —
  Term Loan B Facility(2.5)0 
Finance leases (1.1)   (1.2)  Finance leases(0.9)(1.2)
Unamortized debt issuance costs (1)
 (19.5)   (20.5)  
Unamortized debt issuance costs (1)
(17.6)(20.5)
Hedge accounting fair value adjustment (2)
 0.4
   0.5
  
Hedge accounting fair value adjustment (2)
0.4 0.5 
Total long-term debt and finance leases $1,506.1
   $1,403.1
  Total long-term debt and finance leases$1,444.2 $1,403.1 
(1) Total debt issuance costs, net of amortization as of March 31,September 30, 2020 and December 31, 2019, were $21.9$21.5 million and $23.0 million, respectively, of which $2.4$3.9 million and $2.5 million, respectively, are related to the Revolving Credit Facility (as defined below) and recorded in "Other non-current assets" in the Consolidated Balance Sheets.
(2) Balance represents deferred gains from the terminations of interest rate swaps designated as fair value hedges.

In March 2016, the Company entered into a credit agreement, as amended, restated, supplemented or otherwise modified from time to time (the "2016 Credit Agreement") for a $1,300.0 million Senior Secured Credit Facility consisting of (i) a senior secured Term Loan B facility in an aggregate principal amount of $900.0 million (the "Term Loan B Facility") and (ii) a senior secured revolving credit facility in an aggregate principal amount of $400.0 million (the "Revolving Credit Facility"). The 2016 Credit Agreement also provides for (i) a sublimit for the issuance of letters of credit under the revolving commitments up to $30.0 million and (ii) an aggregate principal amount of allowed incremental revolving or term loan facilities thereunder in an amount not to exceed the sum of (a) $275.0 million plus (b) an additional amount, as long as after giving effect to the incurrence of such additional amount, the proformapro forma secured leverage ratio does not exceed 3.75:1.00. The maturities of the Term Loan B Facility and Revolving Credit Facility are October 2025 and October 2023, respectively.

Through the first half of 2019, borrowings under the 2016 Credit Agreement bore interest at a rate per annum equal to, at the Company's option, either (i) LIBOR plus an applicable margin of 2.50% for the Term Loan B Facility and 1.50% to 2.50% for the Revolving Credit Facility (depending on the Company's Consolidated Total Leverage Ratio) or (ii) an alternate base rate plus an applicable margin that is 1.00% less than the LIBOR-based applicable margin. Beginning in the third quarter of 2019, the spreads for LIBOR and alternate base rate borrowings for the revolving credit facilityRevolving Credit Facility were 2.25% and 1.25%, respectively.

Due to Beginning in the impactsecond quarter of the COVID-19 pandemic on the commercial foodservice industry and the resulting decrease in demand for the Company's products, on April 17, 2020, the Company further amended the 2016 Credit Agreement to amend the financial covenants ofspreads for LIBOR and alternate base rate borrowings for the Revolving Credit Facility to prevent non-compliance with financial covenantswere 2.50% and 1.50%, respectively, as a result of the Revolving Credit Facility for the quarter ending June 30, 2020. In addition, the Company executed contingency plans for its operations and took steps to reduce operating expenses and capital spendingCompany's Consolidated Total Leverage Ratio as necessary, including reductions in the size of our workforce and temporary employee furloughs. The Company has estimated the negative impact of COVID-19 on its financial position, results of operations and cash flows, however, due to the inherent uncertainty of the COVID-19 pandemic on the Company's business, management's estimates of the achievement of its financial covenants may change in the future. See Note 20, "Subsequent Event," for additional information related to this amendment.

As of March 31, 2020, the Company had $4.1 million in outstanding stand-by letters of credit and $151.0 million available for additional borrowings under the Revolving Credit Facility, to the extent the Company's compliance with financial covenants permits such borrowings. As of March 31, 2020, the Company also had $1.3 million in other outstanding letters of credit or guarantees of payment to certain third-parties in accordance with commercial terms and conditions which did not reduce the amount available for additional borrowing under the Revolving Credit Facility.2020.

The 2016 Credit Agreement contains financial covenants including, but not limited to (a) a Consolidated Interest Coverage Ratio, which measures the ratio of (i) Consolidated EBITDA to (ii) Consolidated Interest Expense, and (b) a Consolidated Total Leverage Ratio, which measures the ratio of (i) Consolidated Indebtedness to (ii) Consolidated EBITDA for the most recent four fiscal quarters, in each case, as defined in the 2016 Credit Agreement.



InOn April 2018,17, 2020, the Company through a wholly-owned subsidiary, entered into Amendment No. 7 (the “Amendment”) to the 2016 Credit Agreement, to amend the financial covenants of the Revolving Credit Facility to prevent non-compliance with these financial covenants for the quarter ended June 30, 2020 resulting from the impact of the COVID-19 pandemic on the commercial foodservice industry and the resulting decrease in demand for the Company's products. The terms of the Amendment, among other items, (i) suspend the Consolidated Total Leverage Ratio and Consolidated Interest Coverage Ratio covenants, in each case, as defined in the 2016 Credit Agreement, for four fiscal quarters through March 31, 2021 ("Suspension Period") and (ii) temporarily replace the suspended covenants with a short-term secured $30.0Minimum Consolidated EBITDA covenant and a Maximum Capital Expenditure covenant, each computed on a trailing four quarters basis and measured quarterly and a Minimum Liquidity covenant that is measured monthly, each as defined in the Amendment, throughout the Suspension Period, with the Minimum Liquidity covenant extending through June 30, 2021.

Beginning in the second quarter of 2021, the Consolidated Total Leverage Ratio and Consolidated Interest Coverage Ratio covenants will be reinstated at modified levels as compared to the covenants in effect beginning June 30, 2020 and will phase-in to the pre-Amendment covenant levels by the fourth quarter of 2021.

-16-

The Amendment prohibits draws under the Revolving Credit Facility (i) if the Company has not evidenced compliance with the financial covenants for the year ended December 31, 2021 by delivery of a compliance certificate within 90 days, and (ii) to the extent the draw would result in a consolidated cash balance of $100.0 million revolving loan facilityor greater (excluding cash held in China) through December 31, 2021, with the exception of draws to meet cash uses anticipated in the ordinary course of business that are expected to be paid within 10 days of the draw. The Amendment also includes additional limitations on restricted payments, investments and other actions that are otherwise allowed under the 2016 Credit Agreement, with a $25.0 million carve-out for working capital requirements. This revolving loan facility bore interest at LIBOR plusgeneral investments. These limitations expire on December 31, 2021.

The Amendment also includes a quarterly fee applicable through the fourth quarter of 2021 in an applicable marginamount equal to a per annum rate of 1.90% and matured0.50% on April 18, 2019. The Company repaid the average outstanding balance of the facility duringRevolving Credit Facility payable on a quarterly basis. The Company incurred total debt issuance costs in connection with this Amendment of $2.1 million, which were capitalized and included as a component of "Other non-current assets" on the first quarterCompany's Consolidated Balance Sheets and will be amortized through the maturity of 2019.the Revolving Credit Facility.

As of March 31,September 30, 2020, the Company had $7.1 million in outstanding stand-by letters of credit and $210.0 million available for additional borrowings under the Revolving Credit Facility, to the extent the Company's compliance with financial covenants permits such borrowings. As of September 30, 2020, the Company also had $1.7 million in other outstanding letters of credit or guarantees of payment to certain third-parties in accordance with commercial terms and conditions which did not reduce the amount available for additional borrowing under the Revolving Credit Facility.

The Company has estimated the negative impact of COVID-19 on its financial position, results of operations and cash flows; however, due to the inherent uncertainty of the severity and duration of the COVID-19 pandemic on the Company's business, management's estimates of the achievement of its financial covenants may change in the future. In the second and third quarters of 2020, the Company executed contingency plans for its operations and reduced operating expenses and capital spending as necessary, including reductions in the size of the Company's workforce and temporary employee furloughs. As of September 30, 2020, the Company was in compliance with all affirmative and negative covenants pertaining to its financing arrangements.

10. Derivative Financial Instruments

The Company's risk management objective is to ensure that business exposures to risks that have been identified and measured and are capable of being controlled are minimized or managed using what the Company believes to be the most effective and efficient methods to eliminate, reduce or transfer such exposures. Operating decisions consider these associated risks and the Company structures transactions to minimize or manage these risks whenever possible.

The primary risks the Company manages using derivative instruments are interest rate risk, commodity price risk and foreign currency exchange risk. The Company enters into interest rate swap agreements to manage interest rate risk associated with the Company’s fixed and floating-rate borrowings. Cross-currency interest rate swaps are entered into to protect the value of the Company’s investments in its foreign subsidiaries. Swap contracts on various commodities are used to manage the price risk associated with forecasted purchases of materials used in the Company's manufacturing process. The Company also enters into various foreign currency derivative instruments to manage foreign currency risk associated with its projected purchases and sales and foreign currency denominated receivable and payable balances.

The Company recognizes all derivative instruments as either assets or liabilities at fair value in the Consolidated Balance Sheets. Commodity swaps and foreign currency exchange contracts are designated as cash flow hedges of forecasted purchases of commodities and currencies, certain interest rate swaps are designated as cash flow hedges of floating-rate borrowings, and the remainder of the instruments are designated as fair value hedges of fixed-rate borrowings and a cross-currency interest rate swap as a hedge of net investments in its foreign subsidiaries.

Discontinuance of Cash Flow Hedge Accounting for Commodity Contracts

Through September 30, 2019 the Company designated all of its commodity derivative contracts as cash flow hedges, for which unrealized changes in fair value were recorded to "Accumulated other comprehensive loss" ("AOCI") in the Company's Consolidated Balance Sheets, to the extent the commodity hedges were effective. As of October 1, 2019, the Company elected to de-designate all of its commodity derivative contracts and as a result, the Company now recognizes all future gains and losses from changes in the fair value of the commodity derivative immediately in earnings. As a result of discontinuing hedge accounting effective October 1, 2019, the associated amounts in AOCI as of September 30, 2019 remained in AOCI and will behave been reclassified into earnings when the original hedged transaction affects earnings or it becomes probable that the forecasted transactions will not occur.

Cash flow hedging strategy

For derivative instruments that are designated and qualify as cash flow hedges, the gain or loss on the derivative is recorded in AOCI in the Company's Consolidated Balance Sheets and is subsequently reclassified into earnings in the periods in which the hedged transaction affects earnings. During the next twelve months, the Company estimates $1.1$0.1 million of unrealized losses,gains, net of tax, related to currency rate and commodity price hedging will be reclassified from AOCI into earnings. Foreign currency and commodity hedging, prior to de-designation, is generally completed prospectively on a rolling basis for 15 and 36 months, respectively, depending on the type of risk being hedged.

-17-

In March 2017, the Company entered into 2 interest rate swap agreements with a total notional amount of $600.0 million, to manage interest rate risk exposure by converting the Company’s floating-rate debt to a fixed-rate basis, thus reducing the impact from fluctuations in interest rates on future interest expense. These interest rate swap agreements involved the receipt of floating rate amounts in exchange for fixed rate interest payments over the life of the agreements without an exchange of the underlying principal. These interest rate swap agreements with notional amounts of $425.0 million and $175.0 million matured in the first quarter of 2020 and 2019, respectively.

The Company's outstanding currency forward contracts entered into as hedges of forecasted transactions are as follows:

Currency Units Hedged
 March 31, December 31,
 2020 2019
Canadian Dollar 4,608,000
 8,014,000
Euro 4,073,000
 7,593,000
British Pound 4,342,932
 8,046,471
Mexican Peso 65,150,000
 111,250,000
Singapore Dollar 1,210,000
 2,019,000


Currency (in millions)Units Hedged
September 30,December 31,
20202019
Canadian Dollar6.6 8.0 
Euro4.1 7.6 
British Pound7.4 8.0 
Mexican Peso91.4 111.3 
Singapore Dollar2.0 2.0 

The effects of the Company's derivative instruments on the Consolidated Statements of Comprehensive Income (Loss) and Consolidated Statements of Operations for gains or losses initially recognized in AOCI in the Consolidated Balance Sheets wereare as follows:

Derivatives in cash flow hedging relationships Pretax gain/(loss) recognized in AOCI Pretax gain/(loss) reclassified from AOCI into income
(in millions) Three Months Ended March 31, Location Three Months Ended March 31,
 2020
2019  2020 2019
Foreign currency exchange contracts $(1.1) $(0.1) Cost of sales $(0.1) $(0.3)
Commodity contracts —
 0.2
 Cost of sales (0.5) (0.1)
Interest rate swap contracts —
 (0.6) Interest expense —
 1.1
Total $(1.1) $(0.5)   $(0.6) $0.7

Derivatives in cash flow hedging relationshipsPretax gain/(loss) recognized in AOCIPretax gain/(loss) reclassified from AOCI into income
(in millions)Three Months Ended September 30,LocationThree Months Ended September 30,
2020201920202019
Foreign currency exchange contracts$0.4 $(0.5)Cost of sales$(0.1)$(0.1)
Commodity contracts0 (0.5)Cost of sales(0.1)(0.4)
Interest rate swap contracts0 0.1 Interest expense0 0.6 
Total$0.4 $(0.9)$(0.2)$0.1 

Derivatives in cash flow hedging relationshipsPretax gain/(loss) recognized in AOCIPretax gain/(loss) reclassified from AOCI into income
(in millions)Nine Months Ended September 30,LocationNine Months Ended September 30,
2020201920202019
Foreign currency exchange contracts$(0.5)$0 Cost of sales$(0.5)$(0.7)
Commodity contracts0 (1.3)Cost of sales(0.9)(0.7)
Interest rate swap contracts0 (1.6)Interest expense0 2.5 
Total$(0.5)$(2.9)$(1.4)$1.1 

Fair value hedging strategy

For derivative instruments that qualify and are designated as a fair value hedge (i.e. hedging the exposure to changes in the fair value of an asset or a liability or an identified portion thereof that is attributable to a particular risk), the gain or loss on the derivative instrument as well as the offsetting loss or gain on the hedged item attributable to the hedged risk are recognized in the same line item associated with the hedged item in the Company's Consolidated Statements of Operations.

In October 2017, the Company entered into an interest rate swap agreement with a total notional amount of $425.0 million to manage interest rate risk exposure by converting the Company’s fixed-rate debt to a floating-rate basis. This agreement involved the receipt of fixed rate amounts in exchange for floating rate interest payments over the life of the agreement without an exchange of the underlying principal and had a scheduled maturity of February 2024. In June 2019, this interest rate swap agreement was terminated, and the Company received cash in the amount of $14.0 million, representing the fair value of the swap and interest accrued through the date of termination.

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Effect of Fair Value and Cash Flow Derivative Instruments on Consolidated Statements of Operations

The table below presents the effect of the Company’s derivative financial instruments on the Consolidated Statements of Operations:

(in millions) Location and amount of gain/(loss) recognized on effect of fair value and cash flow derivative instruments(in millions)Location and amount of gain/(loss) recognized on effect of fair value and cash flow derivative instruments
Three Months Ended Three Months EndedThree Months EndedThree Months Ended
March 31, 2020 March 31, 2019September 30, 2020September 30, 2019
Cost of Sales Interest Expense Cost of Sales Interest ExpenseCost of SalesInterest ExpenseCost of SalesInterest Expense
Total amounts of expense line items presented in the Consolidated Statements of Operations in which effects of fair value and cash flow hedges are recorded $214.1
 $21.3
 $248.8
 $24.0
Total amounts of expense line items presented in the Consolidated Statements of Operations in which effects of fair value and cash flow hedges are recorded$193.2 $18.1 $259.6 $22.4 
The effects of fair value and cash flow hedging:        The effects of fair value and cash flow hedging:
Gain/(loss) on fair value hedging relationship:        Gain/(loss) on fair value hedging relationship:
Interest rate contract:        Interest rate contract:
Hedged item $—
 $0.1
 $—
 $(7.0)Hedged item$0 $0 $0 $0.1 
Derivative designated as hedging instrument $—
 $—
 $—
 $6.6

        
Gain/(loss) on cash flow hedging relationships:        Gain/(loss) on cash flow hedging relationships:
Foreign currency exchange contracts:        Foreign currency exchange contracts:
Amount of gain/(loss) reclassified from AOCI into income $(0.1) $—
 $(0.3) $—
Amount of gain/(loss) reclassified from AOCI into income$(0.1)$0 $(0.1)$0 
Commodity contracts:        Commodity contracts:
Amount of gain/(loss) reclassified from AOCI into income $(0.5) $—
 $(0.1) $—
Amount of gain/(loss) reclassified from AOCI into income$(0.1)$0 $(0.4)$0 
Interest rate contracts:        Interest rate contracts:
Amount of gain/(loss) reclassified from AOCI into income $—
 $—
 $—
 $1.1
Amount of gain/(loss) reclassified from AOCI into income$0 $0 $0 $0.6 


(in millions)Location and amount of gain/(loss) recognized on effect of fair value and cash flow derivative instruments
Nine Months EndedNine Months Ended
September 30, 2020September 30, 2019
Cost of SalesInterest ExpenseCost of SalesInterest Expense
Total amounts of expense line items presented in the Consolidated Statements of Operations in which effects of fair value and cash flow hedges are recorded$544.9 $58.5 $778.4 $70.9 
The effects of fair value and cash flow hedging:
Gain/(loss) on fair value hedging relationship:
Interest rate contract:
Hedged Item$0 $0.1 $0 $(14.2)
Derivative designated as hedging instrument$0 $0 $0 $13.3 
Gain/(loss) on cash flow hedging relationships:
Foreign currency exchange contracts:
Amount of gain/(loss) reclassified from AOCI into income$(0.5)$0 $(0.7)$0 
Commodity contracts:
Amount of gain/(loss) reclassified from AOCI into income$(0.9)$0 $(0.7)$0 
Interest rate contracts:
Amount of gain/(loss) reclassified from AOCI into income$0 $0 $0 $2.5 
-19-


Hedge of net investment in foreign operations strategy

For derivative instruments that qualify and are designated as a hedge of a net investment in a foreign currency, the gain or loss is reported in AOCI as a component of the cumulative translation adjustment. Amounts are reclassified out of AOCI into earnings when the hedged net investment is either sold or substantially liquidated.

In March 2017, the Company entered into a three-year cross-currency interest rate swap contract ("CCS") for a notional value of €50.0 million to protect the value of its net investment in Euros. Prior to its expiration in March 2020, the carrying value of the net investment in Euros was designated as a hedging instrument and remeasured at each reporting date to reflect the changes in the foreign currency exchange spot rate, with changes since the last remeasurement date recorded in AOCI. Upon expiration of the CCS in March 2020, the Company paid $4.1 million representing the final notional exchange at the expiration date spot exchange rate, which has been classified as an investing activity in the Company's Consolidated Statements of Cash Flows.

The location and effects of the net investment hedge on the Consolidated Statements of Comprehensive Income (Loss) and Consolidated Statements of Operations wereare as follows: 

Derivative in net investment hedging relationship Pretax gain/(loss) recognized in AOCI Gain/(loss) reclassified from AOCI into income Gain/(loss) recognized in income (amount excluded from effectiveness testing)
(in millions) Three Months Ended Location Three Months Ended Location Three Months Ended
 March 31,  March 31,  March 31,
 2020
2019  2020 2019  2020 2019
Interest rate swap contract $(0.8) $1.6
 N/A $—
 $—
 Other (income) expense — net $0.3
 $0.4

Derivative in net investment hedging relationshipPretax gain/(loss) recognized in AOCIGain/(loss) reclassified from AOCI into incomeGain/(loss) recognized in income (amount excluded from effectiveness testing)
(in millions)Three Months EndedLocationThree Months EndedLocationThree Months Ended
September 30,September 30,September 30,
202020192020201920202019
Interest rate swap contract$0 $2.7 N/A$0 $0 Other (income) expense — net$0 $0.4 
N/A = Not applicable
Derivatives in net investments hedging relationshipsPretax gain/(loss) recognized in AOCIGain/(loss) reclassified from AOCI into incomeGain/(loss) recognized in income (amount excluded from effectiveness testing)
(in millions)Nine Months EndedLocationNine Months EndedLocationNine Months Ended
September 30,September 30,September 30,
202020192020201920202019
Interest rate swap contract$(0.8)$4.0 N/A$0 $0 Other (income) expense — net$0.3 $1.2 
N/A = Not applicable

Derivatives Not Designated as Hedging Instruments


The Company enters into commodity and foreign currency exchange contracts that are not designated as hedge relationships to offset, in part, the impact of certain intercompany transactions and to further mitigate certain other short-term commodity and currency impacts, as identified. For derivative instruments that are not designated as hedging instruments, the gains or losses on the derivatives are recognized in current earnings within "Other (income) expense — net" in the Consolidated Statements of Operations.

The Company had the following outstanding commodity and currency forward contracts that were not designated as hedging instruments:

Commodity Contracted Units Unit
 March 31, December 31, 
 2020 2019 
Aluminum 392
 524
 MT
Copper 189
 269
 MT
Steel 908
 1,778
 Short tons

Currency Contracted Units
 March 31, December 31,
 2020 2019
Singapore Dollar 28,367,000
 28,427,000
Euro 81,085,000
 75,557,000
British Pound 26,488,585
 20,323,932
Mexican Peso 13,500,000
 11,805,000
Swiss Franc 6,400,000
 7,000,000
Canadian Dollar 997,000
 1,330,000


CommodityContracted UnitsUnit
September 30,December 31,
20202019
Aluminum133 524 MT
Copper51 269 MT
Steel0 1,778 Short tons
-20-

Currency (in millions)Contracted Units
September 30,December 31,
20202019
Singapore Dollar28.4 28.4 
Euro84.1 75.6 
British Pound6.5 20.3 
Mexican Peso13.2 11.8 
Swiss Franc7.0 7.0 
Canadian Dollar1.2 1.3 

The location and impact on the Consolidated Statements of Operations for gains or losses related to derivative instruments not designated as hedging instruments are as follows:

Derivatives NOT designated as hedging instrumentsAmount of gain/(loss) recognized in income on derivativeLocation of gain/(loss) recognized in income on derivative
(in millions)Three Months Ended September 30,
20202019
Foreign currency exchange contracts$(2.1)$3.6 Other (income) expense — net
Commodity contracts0.1 0 Other (income) expense — net
Total$(2.0)$3.6 
Derivatives NOT designated as hedging instruments Amount of gain/(loss) recognized in income on derivative Location of gain/(loss) recognized in income on derivative
(in millions) Three Months Ended March 31, 
 2020 2019 
Foreign currency exchange contracts $(2.0) $2.8
 Other (income) expense — net
Commodity contracts (0.5) —
 Other (income) expense — net
Total $(2.5) $2.8
  

Derivatives NOT designated as hedging instrumentsAmount of gain/(loss) recognized in income on derivativeLocation of gain/(loss) recognized in income on derivative
(in millions)Nine Months Ended September 30,
20202019
Foreign currency exchange contracts$(2.1)$9.3 Other (income) expense — net
Commodity contracts(0.3)0 Other (income) expense — net
Total$(2.4)$9.3 

The fair value of outstanding derivative contracts recorded as assets in the Consolidated Balance Sheets are as follows:

(in millions) Balance Sheet Location 
Asset Derivatives
Fair Value
  
  March 31, December 31,
  2020 2019
Derivatives designated as hedging instruments:      
Foreign currency exchange contracts Prepaids and other current assets $—
 $0.8
Total derivatives designated as hedging instruments   $—
 $0.8
       
Derivatives NOT designated as hedging instruments:      
Foreign currency exchange contracts Prepaids and other current assets $0.6
 $0.4
Total derivatives NOT designated as hedging instruments   $0.6
 $0.4
       
Total asset derivatives   $0.6
 $1.2

(in millions)Balance Sheet LocationAsset Derivatives
Fair Value
September 30,December 31,
20202019
Derivatives designated as hedging instruments:
Foreign currency exchange contractsPrepaids and other current assets$0.2 $0.8 
Total derivatives designated as hedging instruments$0.2 $0.8 
Derivatives NOT designated as hedging instruments:
Foreign currency exchange contractsPrepaids and other current assets$0.2 $0.4 
Total derivatives NOT designated as hedging instruments$0.2 $0.4 
Total asset derivatives$0.4 $1.2 

-21-

The fair value of outstanding derivative contracts recorded as liabilities in the Consolidated Balance Sheets are as follows:

(in millions) Balance Sheet Location 
Liability Derivatives
Fair Value
  
  March 31, December 31,
  2020 2019
Derivatives designated as hedging instruments:      
Foreign currency exchange contracts Accrued expenses and other liabilities $0.8
 $0.6
Interest rate swap contracts Accrued expenses and other liabilities —
 3.2
Total derivatives designated as hedging instruments   $0.8
 $3.8
       
Derivatives NOT designated as hedging instruments:      
Foreign currency exchange contracts Accrued expenses and other liabilities $0.3
 $0.6
Commodity contracts Accrued expenses and other liabilities 0.7
 0.6
Total derivatives NOT designated as hedging instruments   $1.0
 $1.2
       
Total liability derivatives   $1.8
 $5.0



(in millions)Balance Sheet LocationLiability Derivatives
Fair Value
September 30,December 31,
20202019
Derivatives designated as hedging instruments:
Foreign currency exchange contractsAccrued expenses and other liabilities$0.1 $0.6 
Interest rate swap contractsAccrued expenses and other liabilities0 3.2 
Total derivatives designated as hedging instruments$0.1 $3.8 
Derivatives NOT designated as hedging instruments:
Foreign currency exchange contractsAccrued expenses and other liabilities$0.1 $0.6 
Commodity contractsAccrued expenses and other liabilities0.1 0.6 
Total derivatives NOT designated as hedging instruments$0.2 $1.2 
Total liability derivatives$0.3 $5.0 

11. Fair Value of Financial Instruments

In accordance with the Company's policy, fair value is defined as the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The policy classifies the inputs used to measure fair value into the following hierarchy:

Level 1Unadjusted quoted prices in active markets for identical assets or liabilities
Level 1    Unadjusted quoted prices in active markets for identical assets or liabilities

Level 2Unadjusted quoted prices in active markets for similar assets or liabilities, or
Level 2    Unadjusted quoted prices in active markets for similar assets or liabilities, or

Unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or

Inputs other than quoted prices that are observable for the asset or liability

Level 3Unobservable inputs for the asset or liability
Level 3    Unobservable inputs for the asset or liability

Interim Disclosures About Fair Value of Financial Instruments

The Company utilizes the best available information in measuring fair value. The carrying values of cash and cash equivalents, accounts receivable and trade accounts payable approximate fair value, without being discounted, as of March 31,September 30, 2020 and December 31, 2019, as applicable, due to the short-term nature of these instruments.

The Company'sCompany records its Revolving Credit Facility, Term Loan B Facility and Senior Notes are recorded at their carrying values on the Company's Consolidated Balance Sheets, as disclosed in Note 9, "Debt." The carrying value of the Revolving Credit Facility approximates its fair value due to the short-term variable interest rates of the borrowings. The Company estimates the fair value of the Term Loan B Facility and the Senior Notes based on quoted market prices of the instruments. Because these instruments are typically thinly traded, the assets and liabilities are classified as Level 2 ofwithin the fair value hierarchy. The fair value of the Company's Term Loan B Facility was approximately $671.7$780.2 million and $860.9 million as of March 31,September 30, 2020 and December 31, 2019, respectively. The fair value of the Company's Senior Notes was approximately $359.7$435.8 million and $450.9 million as of March 31,September 30, 2020 and December 31, 2019, respectively.

-22-

Fair Value Measurements on a Recurring Basis

The following tables set forth financial assets and liabilities that were accounted for at fair value on a recurring basis by level within the fair value hierarchy. Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement:

(in millions) Fair Value
 March 31, 2020
 Level 1 Level 2 Level 3 Total
Current assets:        
Foreign currency exchange contracts $—
 $0.6
 $—
 $0.6
Total current assets at fair value —
 0.6
 —
 0.6
Total assets at fair value $—
 $0.6
 $—
 $0.6
         
Current liabilities:        
Foreign currency exchange contracts $—
 $1.1
 $—
 $1.1
Commodity contracts —
 0.7
 —
 0.7
Total current liabilities at fair value —
 1.8
 —
 1.8
Total liabilities at fair value $—
 $1.8
 $—
 $1.8

(in millions) Fair Value
 December 31, 2019
 Level 1 Level 2 Level 3 Total
Current assets:        
Foreign currency exchange contracts $—
 $1.2
 $—
 $1.2
Total current assets at fair value —
 1.2
 —
 1.2
Total assets at fair value $—
 $1.2
 $—
 $1.2
         
Current liabilities:        
Foreign currency exchange contracts $—
 $1.2
 $—
 $1.2
Commodity contracts —
 0.6
 —
 0.6
Interest rate swap contracts —
 3.2
 —
 3.2
Total current liabilities at fair value —
 5.0
 —
 5.0
Total liabilities at fair value $—
 $5.0
 $—
 $5.0


(in millions)Fair Value
September 30, 2020
Level 1Level 2Level 3Total
Current assets:
Foreign currency exchange contracts$0 $0.4 $0 $0.4 
Total current assets at fair value0 0.4 0 0.4 
Total assets at fair value$0 $0.4 $0 $0.4 
Current liabilities:
Foreign currency exchange contracts$0 $0.2 $0 $0.2 
Commodity contracts0 0.1 0 0.1 
Total current liabilities at fair value0 0.3 0 0.3 
Total liabilities at fair value$0 $0.3 $0 $0.3 

(in millions)Fair Value
December 31, 2019
Level 1Level 2Level 3Total
Current assets:
Foreign currency exchange contracts$0 $1.2 $0 $1.2 
Total current assets at fair value0 1.2 0 1.2 
Total assets at fair value$0 $1.2 $0 $1.2 
Current liabilities:
Foreign currency exchange contracts$0 $1.2 $0 $1.2 
Commodity contracts0 0.6 0 0.6 
Interest rate swap contracts0 3.2 0 3.2 
Total current liabilities at fair value0 5.0 0 5.0 
Total liabilities at fair value$0 $5.0 $0 $5.0 

Fair Value Measurements on a Nonrecurring Basis

The Company's assets and liabilities that are measured at fair value on a nonrecurring basis are primarily property, plant and equipment, operating lease right-of-use assets, goodwill and other intangible assets. These fair value measurements are generally determined when there is a transaction involving those assets and liabilities, such as a purchase transaction, a business combination or an adjustment for impairment.

See Note 6, "Goodwill and Other Intangible Assets — Net," for information regarding the impairment charge resulting from the fair value measurement of the Company's indefinite-lived intangible assets in the EMEA region performed on a nonrecurring basis during the nine months ended September 30, 2020. The Company has determined that the majority of the inputs used to value its EMEA region indefinite-lived intangible assets are unobservable inputs that fall within Level 3 of the fair value hierarchy and include the following for the impairment charge recorded during the nine months ended September 30, 2020:

Long Term Growth Rate2.0%
Weighted Average Cost of Capital12.0%
Pre-Tax Royalty Rate1.50% - 2.25%

-23-

12. Contingencies and Significant Estimates

Product-Related and Environmental Matters

As of March 31,September 30, 2020 and December 31, 2019, the Company had reserved $42.0$40.8 million and $43.9 million, respectively, for product-related warranty claims expected to be paid. Certain of these warranty and other related claims involve matters in dispute that will ultimately be resolved by negotiations, arbitration or litigation. See Note 13, "Product Warranties," for further information.

As of March 31,September 30, 2020, the Company has various product liability lawsuits pending. For products sold outside of the U.S. and Canada, the Company is insured by third-party insurance companies. For products sold in the U.S. and Canada, the Company is insured, to the extent permitted under applicable law, with self-insurance retention levels. The Company's self-insurance retention levels vary by business and fluctuate with the Company's risk management practices. In the U.S., the Company's current self-insured retention level is $0.3 million per occurrence and $1.0 million in the aggregate for product liability claims. In Canada, the Company's current self-insured retention level is $0.1 million per occurrence and $2.0 million in the aggregate for product liability claims. In addition, the Company's current self-insured retention level for commercial general liability is $2.0 million in the aggregate.

Product liability reserves are included in "Accrued expenses and other liabilities" in the Consolidated Balance Sheets and totaled $1.4$1.6 million and $1.3 million as of March 31,September 30, 2020 and December 31, 2019, respectively, consisted of which $0.8$1.0 million and $0.7 million, respectively, was reserved for specific cases and of which $0.6 million was reserved for each periodas of both September 30, 2020 and December 31, 2019 for claims, calculated using actuarial methods, anticipated to have occurred but are not yet reported. Based on the Company's experience in defending product liability claims, management believes the reserves are adequate for estimated case resolutions on aggregate self-insured claims and third-party insured claims. Any recoveries from insurance carriers are dependent upon the legal sufficiency of claims and solvency of insurance carriers. Such recoveries are not recorded until the associated contingencies are resolved and the recoveries are realizable.

As of both March 31,September 30, 2020 and December 31, 2019, the Company held reserves for environmental matters related to certain of its current and former facilities of approximately $0.8 million and $0.7 million, respectively, which are included in "Accrued expenses and other liabilities" in the Company's Consolidated Balance Sheets. At certain of the Company's other facilities, potential contaminants in the soil and groundwater have been identified. The ultimate cost of any required remediation will depend upon the results of future investigation and is not reasonably estimable. Based upon available information, the Company does not expect the ultimate costs of any required remediation at any of these facilities will have a material adverse effect on its financial condition, results of operations or cash flows individually or in the aggregate.

It is reasonably possible that the estimates for product warranty, product liability and environmental remediation costs may change based upon new information that may arise or matters that are beyond the scope of the Company's historical experience. Presently, there are no reliable methods to estimate the amount of any such potential changes.

Other Contingencies

The Company is subject to litigation, government inquiries, audits, commercial disputes, claims and other legal proceedings arising in the ordinary course of business. From time to time, the Company may be subject to audits by tax, export, customs and other governmental authorities or incur routine and non-routine fees, expenses or penalties relating to compliance with complex laws and regulations impacting the Company's business. The Company records accruals for anticipated losses related to legal and other matters, which are both probable and reasonably estimable, as well as for related legal costs as incurred. The Company believes that it has adequately accrued for such matters as of March 31,September 30, 2020 based on the best available information. In the opinion of management, the ultimate resolution of such legal and other matters is not expected to have, individually or in the aggregate, a material adverse effect on the Company's financial condition, results of operations or cash flows.


On December 13, 2018, a purported securities class action lawsuit was filed in the U.S. District Court for the Middle District of Florida against the Company and certain of its former executive officers. The lawsuit was captioned Schlimm v. Welbilt, Inc., et al.,("Schlimm lawsuit") and alleged that the defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, and Rule 10b-5 promulgated thereunder, by making material misstatements or omissions in certain of its periodic reports filed with the SEC relating to, among other things, the Company's business operations and the effectiveness of its internal control over financial reporting. The lawsuit sought an unspecified amount of damages and an award of attorney’s fees, in addition to other relief. On October 17, 2019, the defendants filed a motion to dismiss the lawsuit. On February 6, 2020, the Court issued an order granting defendants’ motion and dismissed the Schlimm lawsuit without prejudice. On March 30, 2020, the Court issued an amended order of dismissal with prejudice. On April 2, 2020, the plaintiffs filed a notice of appeal regarding the Court’s order granting the defendants’ motion to dismiss. The appeal is pending.

On March 15, 2019, a purported stockholder derivative action was filed in the U.S. District Court for the District of Delaware against certain of the Company's current and former executive officers and directors, and the Company was named as a nominal defendant. The lawsuit is captioned Quinney v. Muehlhaeuser, et al.,("Quinney lawsuit") and alleges violation of Section 14(a) of the Securities Exchange Act of 1934 and breach of fiduciary duty, among other claims, based upon similar underlying allegations as those in the Schlimm lawsuit. The Quinney lawsuit seeks an unspecified amount of damages and an award of attorney’s fees, in addition to other relief. On June 5, 2019, the Delaware court stayed the Quinney lawsuit, pending further developments in the Schlimm lawsuit. On April 1, 2020, the parties filed a stipulation of dismissal, and the Delaware court dismissed the Quinney lawsuit without prejudice.

On September 4, 2019, a purported stockholder derivative action was filed in the U.S. District Court for the Middle District of Florida against certain of the Company's current and former executive officers and directors, and the Company was named as a nominal defendant. The lawsuit was captioned The Lee S. Kosby Trust v. Muehlhaeuser, et al., ("Kosby lawsuit") and alleged violation of Section 14(a) of the Securities Exchange Act of 1934 and breach of fiduciary duty, among other claims, based upon similar underlying allegations as those in the Quinney and Schlimm lawsuits. The Kosby lawsuit sought an unspecified amount of damages and an award of attorney’s fees, in addition to other relief. On March 18, 2020, the plaintiff filed a notice of voluntary dismissal, and on March 19, 2020, the Florida court dismissed the Kosby lawsuit without prejudice.

The Company intends to defend vigorously against all lawsuits, as they may arise in the ordinary course of business. However, litigation is inherently uncertain, and the Company is unable to predict the outcome of these lawsuits and is unable to estimate the range of loss, if any, that could result from an unfavorable outcome. The Company also cannot provide any assurance that the ultimate resolution of each of these lawsuits will not have a material adverse effect on the Company's future results of operations or financial condition.

The Companyhas voluntarily disclosed to U.S. Customs and Border Protection ("CBP") certain errors in the declaration of imported products relating to quantity, value, classification, North American Free Trade Agreement eligibility and other matters as well as potential violations of antidumping and countervailing duties. Following such disclosures, the Company began a comprehensive review of its import practices in order to quantify the loss of revenue to CBP. In April 2020, the Company determined based on its analysis of relevant records of import activity an estimated range of potential loss for customs duties, fees and interest owed for previously imported products through March 31, 2020 to be $3.1 million to $9.0 million. Additional losses will continue to be generated for future period activity and interest until the disclosure is perfected with CBP. No amount within the range of loss iswas more likely than any other and therefore, the Company recorded a charge of $3.1 million, representing the low end of the range of potential loss. This charge

Through September 30, 2020, based on ongoing analyses, the Company has beendetermined the estimated range of potential loss for customs duties, fees and interest owed for previously imported products to be $3.6 million to $6.2 million. No amount within the range of loss is more likely than any other and, therefore, the Company recorded an additional expense of $0.3 million for the three months ended June 30, 2020 and $0.2 million for the three months ended, September 30, 2020, resulting in a total expense of $3.6 million recorded for the nine months ended September 30, 2020. The charges recorded for the potential loss for customs duties, fees and interest owed on previously imported products are included as a component of "Restructuring and other expenses"expense (recovery) " in the Consolidated Statements of Operations for the three and nine months ended March 31, 2020 andSeptember 30, 2020. The associated liability of $3.6 million, representing the low end of the range of potential loss, is included in "Accrued expenses and other liabilities" in the Consolidated Balance Sheets as of March 31,September 30, 2020. Additional interest will continue to be generated until the disclosure is perfected with CBP and estimated amounts due to CBP have been remitted. The Company's analysis is ongoing and it expects to settle the final determination of the obligation in cash at such time that its disclosure is perfected with CBP. The Company cannot predict with any certainty the outcome or timing of CBP's review of the Company's analysis.


-24-


13. Product Warranties

In the normal course of business, the Company provides its customers with product warranties covering workmanship, and in some cases materials, on products manufactured by the Company. Such product warranties generally provide that products will be free from defects for periods ranging from 12 to 60 months, with certain equipment having longer-term warranties. If a product fails to comply with the Company's warranty, the Company may be obligated, at its expense, to correct any defect by repairing or replacing such defective products. The Company accrues an estimate of costs that may be incurred under the product warranty at the time the product revenue is recognized. These costs include estimates of labor and materials, as necessary, associated with repair or replacement of the products. The primary factors which affectimpact the warranty liability include the number of units shipped and historical and anticipated warranty claims. As these factors are impacted by actual experience and future expectations, the Company assesses the adequacy of its recorded warranty liability on an ongoing basis and adjusts the liability as determined necessary.

The total product warranty liability activity for the threenine months ended March 31,September 30, 2020 is as follows:

(in millions)  
Balance as of December 31, 2019(1)
 $43.9
Additions for issuance of warranties 8.4
Settlements (in cash or in kind) (9.5)
Currency translation impact (0.8)
Balance as of March 31, 2020(1)
 $42.0

(in millions)
Balance as of December 31, 2019(1)
$43.9 
Additions for issuance of warranties21.3 
Settlements (in cash or in kind)(24.3)
Currency translation impact(0.1)
Balance as of September 30, 2020(1)
$40.8 
(1) Long-term product warranty liabilities are included in "Other long-term liabilities" and totaled $10.1$9.5 million and $10.6 million as of March 31,September 30, 2020 and December 31, 2019, respectively.

The Company also sells extended warranties, which are recorded as deferred revenue and are amortized to "Net sales" on a straight-line basis over the warranty period. The short-term portion of deferred revenue on extended warranties, included in "Accrued expenses and other liabilities" in the Consolidated Balance Sheets as of both March 31,September 30, 2020 and December 31, 2019, was $1.8 million. The long-term portion of deferred revenue on extended warranties, included in "Other long-term liabilities" in the Consolidated Balance Sheets as of March 31,September 30, 2020 and December 31, 2019, was $3.7$3.6 million and $3.8 million, respectively.

-25-

14. Employee Benefit Plans

The Company sponsors and maintains defined benefit retirement plans ("Pension Plans") and postretirement health and other plans ("Postretirement Health and Other Plans") (collectively "Defined Benefit Plans") for certain retired and resigned employees. Benefits under the employee retirement plans are primarily based on years of service and compensation during the years immediately preceding retirement. The current plans are based largely upon benefit plans maintained prior to the spin-off from the Company's former parent and are generally closed to new participants.

The components of the periodic benefit costs for the defined benefit plansDefined Benefit Plans are as follows:

(in millions)Three Months Ended September 30,
20202019
Pension PlansPostretirement
Health and Other Plans		Pension PlansPostretirement
Health and Other Plans
Service cost - benefits earned during the period$0.1 $0 $0.1 $0 
Interest cost of projected benefit obligations1.0 0 1.3 0.1 
Expected return on assets(1.1)0 (1.2)0 
Amortization of actuarial net loss0.6 0.1 0.6 0 
Net periodic benefit cost$0.6 $0.1 $0.8 $0.1 
(in millions) Three Months Ended March 31,
 2020 2019
 Pension Plans Postretirement
Health Plans		 Pension Plans Postretirement
Health Plans
Interest cost of projected benefit obligations $1.0
 $—
 $1.3
 $0.1
Expected return on assets (1.0) —
 (1.2) —
Amortization of prior service cost —
 (0.1) —
 —
Amortization of actuarial net loss 0.6
 0.2
 0.5
 0.1
Settlement loss recognized —
 —
 1.2
 —
Net periodic benefit cost $0.6
 $0.1
 $1.8
 $0.2

(in millions)Nine Months Ended September 30,
20202019
Pension PlansPostretirement
Health and Other Plans		Pension PlansPostretirement
Health and Other Plans
Service cost - benefits earned during the period$0.1 $0 $0.1 $0 
Interest cost of projected benefit obligations2.9 0.1 3.9 0.2 
Expected return on assets(3.1)0 (3.6)(0.1)
Amortization of prior service cost0 (0.1)0 0 
Amortization of actuarial net loss1.8 0.5 1.9 0.2 
Settlement loss recognized0 0 1.2 0 
Net periodic benefit cost$1.7 $0.5 $3.5 $0.3 

The components of periodic benefit costs are included in "Other (income) expense — net" in the Consolidated Statements of Operations.

During the first quarter of 2019, the Company took various actions to settle a portion of its United Kingdom pension obligations. These actions resulted in a reduction in accrued pension obligations of approximately $5.5 million and a non-cash settlement loss of approximately $1.2 million, related to the accelerated recognition of unamortized losses forincurred during the threenine months ended March 31,September 30, 2019, which are included in "Other (income) expense — net" in the Consolidated Statements of Operations.

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15. Business Transformation Program and Restructuring

Business Transformation Program

During the first quarter of 2019, the Company initiated a comprehensive operational review to validate the Company'sits long-term growth and margin targets and to refine the Company'sits execution plans, which culminated in launching the Business Transformation Program ("Transformation Program") in May 2019. The Transformation Program is structured in multiple phases and is focused on specific areas of opportunity including strategic sourcing, manufacturing facility workflow redesign, distribution and administrative process efficiencies and optimizing the Company's global brand platforms. The Company currently expects the Transformation Program to extend through 2021, however, the business disruption resulting from the global COVID-19 pandemic and the uncertainty around the timing and extent of its impacts may extend the timing and alter the execution costs and related savings the Company expects from this program. For the three and nine months ended March 31,September 30, 2020 and 2019, the Transformation Program costs consistedconsist primarily of fees for consulting services.

The componentsclassification of the Company's Transformation Program expense incurredexpenses are as follows:

(in millions) Three Months Ended March 31,
 2020 2019
Transformation Program expense:    
Cost of sales $0.8
 $—
Selling, general and administrative expenses 10.8
 5.8
Total $11.6
 $5.8

(in millions)Three Months Ended September 30,Nine Months Ended September 30,
2020201920202019
Transformation Program expense:
Cost of sales$0.4 $1.1 $1.5 $1.3 
Selling, general and administrative expenses6.3 11.2 19.4 24.5 
Total$6.7 $12.3 $20.9 $25.8 

Restructuring

The Company periodically takes actionwill take actions to improve operating efficiencies, typically in connection with recognizing cost synergies and rationalizing the cost structure of the Company, including actions associated with the Transformation Program. These actions generally include facility rationalization, headcount reductions and organizational integration activities resulting from discrete restructuring events, which are supported by approved plans for workforce reductions.

The Company's restructuring activity and balance of the restructuring liability is as follows:

(in millions) 2020 Plans 2019 and Previous Plans Total
 Workforce reductions Workforce reductions Other Pension withdrawal obligation 
Restructuring liability as of December 31, 2019 $—
 $5.0
 $—
 $9.9
 $14.9
Restructuring activities 2.8
 0.8
 0.1
 —
 3.7
Cash payments (0.4) (2.0) —
 (0.3) (2.7)
Non-cash adjustments (1)
 (0.1) —
 (0.1) —
 (0.2)
Restructuring liability as of March 31, 2020 $2.3
 $3.8
 $—
 $9.6
 $15.7

(in millions)2020 Plans2019 and Previous PlansTotal
Workforce reductionsWorkforce reductionsOtherPension withdrawal obligation
Restructuring liability as of December 31, 2019$0 $5.0 $0 $9.9 $14.9 
Restructuring activities3.9 1.4 1.0 0 6.3 
Cash payments(3.5)(4.4)0 (0.9)(8.8)
Non-cash adjustments (1)
(0.1)0 (1.0)0 (1.1)
Restructuring liability as of September 30, 2020$0.3 $2.0 $0 $9.0 $11.3 
(1) (1) Non-cash adjustments represent stock-based compensation resulting from the accelerated vesting of certain stock awards and accelerated depreciation recorded during the period.

As of March 31,September 30, 2020 and December 31, 2019, the current portion of the restructuring liability was $7.4$3.7 million and $6.3 million, respectively, and was included in "Accrued expenses and other liabilities" in the Consolidated Balance Sheets. As of March 31,September 30, 2020 and December 31, 2019, the long-term portion of the restructuring liability was $8.3$7.6 million and $8.6 million, respectively, and was included in "Other long-term liabilities" in the Consolidated Balance Sheets. The long-term portion of the restructuring liability consists of theis a pension withdrawal obligation incurred in connection with the reorganization and plant restructuring of one of the Company's former operating entities and is expected to be satisfied in April of 2026.2026 when the pension obligation is scheduled to have been satisfied.

-27-


The Company's restructuring expense (recovery) by segment is as follows:

(in millions)Three Months Ended September 30,Nine Months Ended September 30,
2020201920202019
Americas$0.7 $0 $2.5 $2.4 
EMEA(0.2)(0.1)0.3 0.2 
APAC1.1 0 2.1 0.1 
Corporate0.1 (0.1)1.4 3.1 
Total restructuring activities$1.7 $(0.2)$6.3 $5.8 
(in millions) Three Months Ended March 31,
 2020 2019
Americas $2.2
 $1.7
EMEA 0.3
 0.4
APAC 0.5
 0.1
Corporate 0.7
 2.0
Total restructuring activities $3.7
 $4.2

The Company's restructuring expense (recovery) is reported as follows in the Consolidated Statements of Operations:Operations as follows:

(in millions) Three Months Ended March 31,
 2020 2019
Cost of sales $0.1
 $—
Restructuring and other expenses 3.6
 4.2
Total restructuring activities $3.7
 $4.2


(in millions)Three Months Ended September 30,Nine Months Ended September 30,
2020201920202019
Cost of sales$0.4 $0 $0.4 $0.4 
Restructuring and other expense (recovery)1.3 (0.2)5.9 5.4 
Total restructuring activities$1.7 $(0.2)$6.3 $5.8 
During
Beginning in the first quarter of 2020, the Company executedcontinued taking restructuring actions intended to reduce operating expenses as a result of the improved efficiencies gained from the execution of the Transformation Program. During the three and nine months ended September 30, 2020, the Company recognized $0.8 million and $3.9 million, respectively, of severance and related costs resulting from workforce reductionreductions in the Americas region and Corporate as well as a limited management restructuring to reduce operating expenses primarily in response torestructurings. For the negative impact of the global COVID-19 pandemic on the Company's operations. As a result of these actions, the Company expects to incur severance and related costs of approximately $4.0 million, consisting of $2.2 million in the Americas region and $1.8 million in the Corporate division. During the first quarter ofnine months ended September 30, 2020, the Company recognized $2.8 million of these severance and related costs, consisting of $2.2$2.5 million in the Americas region and $0.6$1.4 million in the Corporate division, which are included in "Restructuring and other expenses"expense (recovery) " in the Company's Consolidated Statements of Operations. The remaining $1.2 millionCompany may take future restructuring actions as the efficiencies from the Transformation Program are realized, as part of restructuringits continued effort to review operating costs are expected to be recognized through the second quarter of 2020.and streamline future staffing requirements.

During the first quarter of 2020, theThe Company also recognized $0.8 million of severance and related costs included in "Restructuring and other expenses" and $0.1 million of accelerated depreciation included in "Cost of sales" in connection with restructuring actions initiated during the fourth quarter of 2019 in the EMEA and APAC regions. These costs include $1.4 million of severance and related costs included in "Restructuring and other expense (recovery) " for the nine months ended September 30, 2020. The Company also recognized $0.4 million of inventory write-down included in "Cost of sales" for both the three and nine months ended September 30, 2020 and $0.5 million and $0.6 million of accelerated depreciation included in "Restructuring and other expense (recovery) " for the three and nine months ended September 30, 2020, respectively. The estimated remaining $1.3$0.3 million of restructuring costs related to these actions are expected to be recognized throughout the remainder of the year ending December 31, 2020 as the details of the restructuring actions are communicated to the remaining impacted employees and continuing service requirements are met.met and final determinations are made for future usage of impacted inventory and equipment.

During the nine months ended September 30, 2019, the Company recognized $5.4 million of severance and related costs resulting from a global workforce reduction and limited executive management and restructuring actions initiated during the first quarter of 2019. The severance and related costs are included in "Restructuring and other expense (recovery) " in the Company's Consolidated Statements of Operations during the respective periods incurred.

During the second quarter of 2019, the Company completed the closure and plant consolidation of a small manufacturing facility in Baltimore, Maryland and recognized total costs of $0.6 million, consisting of $0.2 million of inventory write-down and $0.2 million of accelerated depreciation included in "Cost of sales" and $0.2 million of severance and related costs, included in "Restructuring and other expense (recovery) " in the Company's Consolidated Statements of Operations for the year ended December 31, 2019.

As the Company completes payments on each of its approved plans, the remaining restructuring liability is adjusted for the actual amounts incurred. No material adjustments for prior period restructuring liabilities were incurred induring either of the three or nine months ended March 31,September 30, 2020 and 2019, respectively.

During the first quarter of 2019, the Company recognized $4.2 million of severance and related costs resulting from a global workforce reduction and limited executive management and restructuring actions during the first quarter of 2019. The remaining $1.2 million of severance and related costs was recognized during the second quarter of 2019 related to continuing service requirements associated with these actions. These severance and related costs are included in "Restructuring and other expenses" in the Company's Consolidated Statements of Operations during the respective periods incurred.
-28-


16. Accumulated Other Comprehensive Loss

Comprehensive incomeloss includes foreign currency translation adjustments, changes in the fair value of certain financial derivative instruments that quality for hedge accounting and actuarial gains and losses arising from the Company's employee pension and postretirement benefit obligations.

The components of the Company's AOCI are as follows:
(in millions)September 30,December 31,
20202019
Accumulated other comprehensive loss:
Foreign currency translation, net of income tax benefit of $1.4 million and $1.6 million, respectively$(2.6)$(4.3)
Derivative instrument fair market value, net of income tax expense of $1.0 million and $0.8 million, respectively(0.9)(1.6)
Employee pension and postretirement benefit adjustments, net of income tax benefit of $6.0 million and $6.5 million, respectively(33.4)(35.6)
Total accumulated other comprehensive loss$(36.9)$(41.5)
(in millions) March 31, December 31,
 2020 2019
Accumulated other comprehensive loss:    
Foreign currency translation, net of income tax benefit of $0.9 million and $1.6 million, respectively $(32.5) $(4.3)
Derivative instrument fair market value, net of income tax expense of $0.7 million and $0.8 million, respectively (2.0) (1.6)
Employee pension and postretirement benefit adjustments, net of income tax benefit of $6.4 million and $6.5 million, respectively (33.6) (35.6)
Total accumulated other comprehensive loss $(68.1) $(41.5)


The summary of changes in AOCI for the three and nine months ended March 31,September 30, 2020 and 2019 are as follows:

(in millions) 
Foreign Currency Translation(1)
 Gains and Losses on Cash Flow Hedges Pension & Postretirement Total
Balance as of December 31, 2019 $(4.3) $(1.6) $(35.6) $(41.5)
Other comprehensive (loss) income before reclassifications (27.5) (1.1) 1.4
 (27.2)
Reclassifications —
 0.6
 0.7
 1.3
Tax effect (0.7) 0.1
 (0.1) (0.7)
Net current period other comprehensive (loss) income (28.2) (0.4) 2.0
 (26.6)
Balance as of March 31, 2020 $(32.5) $(2.0) $(33.6) $(68.1)

(in millions) 
Foreign Currency Translation(1)
 Gains and Losses on Cash Flow Hedges Pension & Postretirement Total
Balance as of December 31, 2018 $(6.5) $0.8
 $(35.9) $(41.6)
Other comprehensive income (loss) before reclassifications 0.3
 (0.5) (2.9) (3.1)
Reclassifications —
 (0.7) 1.8
 1.1
Tax effect (0.3) 0.2
 (0.1) (0.2)
Net current period other comprehensive loss —
 (1.0) (1.2) (2.2)
Balance as of March 31, 2019 $(6.5) $(0.2) $(37.1) $(43.8)

(in millions)
Foreign Currency Translation(1)
Gains and Losses on Cash Flow HedgesPension & PostretirementTotal
Balance as of December 31, 2019$(4.3)$(1.6)$(35.6)$(41.5)
Other comprehensive (loss) income before reclassifications(27.5)(1.1)1.4 (27.2)
Reclassifications0 0.6 0.7 1.3 
Tax effect(0.7)0.1 (0.1)(0.7)
Net current period other comprehensive (loss) income(28.2)(0.4)2.0 (26.6)
Balance as of March 31, 2020$(32.5)$(2.0)$(33.6)$(68.1)
Other comprehensive income before reclassifications17.6 0.2 0.2 18.0 
Reclassifications0 0.6 0.8 1.4 
Tax effect0.5 (0.2)(0.2)0.1 
Net current period other comprehensive income18.1 0.6 0.8 19.5 
Balance as of June 30, 2020$(14.4)$(1.4)$(32.8)$(48.6)
Other comprehensive income (loss) before reclassifications11.8 0.4 (1.1)11.1 
Reclassifications0 0.2 0.7 0.9 
Tax effect0 (0.1)(0.2)(0.3)
Net current period other comprehensive income (loss)11.8 0.5 (0.6)11.7 
Balance as of September 30, 2020$(2.6)$(0.9)$(33.4)$(36.9)

-29-

(in millions)
Foreign Currency Translation(1)
Gains and Losses on Cash Flow HedgesPension & PostretirementTotal
Balance as of December 31, 2018$(6.5)$0.8 $(35.9)$(41.6)
Other comprehensive income (loss) before reclassifications0.3 (0.5)(2.9)(3.1)
Reclassifications0 (0.7)1.8 1.1 
Tax effect(0.3)0.2 (0.1)(0.2)
Net current period other comprehensive loss0 (1.0)(1.2)(2.2)
Balance as of March 31, 2019$(6.5)$(0.2)$(37.1)$(43.8)
Other comprehensive income (loss) before reclassifications7.4 (1.5)0.4 6.3 
Reclassifications0 (0.3)0.9 0.6 
Tax effect0.1 0.5 0.1 0.7 
Net current period other comprehensive income (loss)7.5 (1.3)1.4 7.6 
Balance as of June 30, 2019$1.0 $(1.5)$(35.7)$(36.2)
Other comprehensive (loss) income before reclassifications(8.2)(0.9)0.9 (8.2)
Reclassifications0 (0.1)0.6 0.5 
Tax effect(0.6)0.3 0.1 (0.2)
Net current period other comprehensive (loss) income(8.8)(0.7)1.6 (7.9)
Balance as of September 30, 2019$(7.8)$(2.2)$(34.1)$(44.1)
(1) Income taxes are not provided for foreign currency translation relating to indefinite investments in foreign subsidiaries, although the income tax effects within cumulative translation does include the impact of the net investment hedge transaction through its expiration in March 2020.transaction. Reclassification adjustments are made to avoid including items in both comprehensive income (loss) and net earnings.earnings (loss).


Reclassifications from AOCI, net of tax, to income were as follows:

(in millions) Three Months Ended March 31, Recognized Location
 2020 2019 
(Losses) gains on cash flow hedges:      
Foreign currency exchange contracts $(0.1) $(0.3) Cost of sales
Commodity contracts (0.5) (0.1) Cost of sales
Interest expense —
 1.1
 Interest expense
(Losses) gains on cash flow hedges, before tax (0.6) 0.7
  
Tax effect 0.1
 0.1
 Income taxes
(Losses) gains on cash flow hedges, net of tax $(0.5) $0.8
  
       
Amortization of pension and postretirement items:      
Amortization of prior service cost $0.1
 $—
 Other (income) expense — net
Actuarial losses (0.8) (0.6) Other (income) expense — net
Pension settlement —
 (1.2) Other (income) expense — net
Amortization of pension and postretirement items, before tax (0.7) (1.8)  
Tax effect 0.1
 0.1
 Income taxes
Amortization of pension and postretirement items, net of tax $(0.6) $(1.7)  
       
Total reclassifications, net of tax $(1.1) $(0.9)  

(in millions)Three Months Ended September 30,Location
20202019
(Losses) gains on cash flow hedges:
Foreign currency exchange contracts$(0.1)$(0.1)Cost of sales
Commodity contracts(0.1)(0.4)Cost of sales
Interest expense0 0.6 Interest expense
(Losses) gains on cash flow hedges, before tax(0.2)0.1 
Tax effect0 0.2 Income taxes
(Losses) gains on cash flow hedges, net of tax$(0.2)$0.3 
Amortization of pension and postretirement items:
Actuarial losses$(0.7)$(0.6)Other (income) expense — net
Amortization of pension and postretirement items, before tax(0.7)(0.6)
Tax effect0.2 (0.2)Income taxes
Amortization of pension and postretirement items, net of tax$(0.5)$(0.8)
Total reclassifications, net of tax$(0.7)$(0.5)
-30-

(in millions)Nine Months Ended September 30,Recognized Location
20202019
(Losses) gains on cash flow hedges:
Foreign currency exchange contracts$(0.5)$(0.7)Cost of sales
Commodity contracts(0.9)(0.7)Cost of sales
Interest expense0 2.5 Interest expense
(Losses) gains on cash flow hedges, before tax(1.4)1.1 
Tax effect0.3 0.5 Income taxes
(Losses) gains on cash flow hedges, net of tax$(1.1)$1.6 
Amortization of pension and postretirement items:
Prior service cost$0.1 $0 Other (income) expense — net
Actuarial losses(2.3)(2.1)Other (income) expense — net
Pension settlement0 (1.2)Other (income) expense — net
Amortization of pension and postretirement items, before tax(2.2)(3.3)
Tax effect0.5 (0.1)Income taxes
Amortization of pension and postretirement items, net of tax$(1.7)$(3.4)
Total reclassifications, net of tax$(2.8)$(1.8)

17. Earnings (Loss) Per Share
17. Loss Per Share

The Company presents lossearnings or (loss) per share on a basic and diluted basis. Basic lossearnings or (loss) per share is computed by dividing net lossearnings or (loss) by the weighted average number of common shares outstanding during the reported period. SinceDiluted earnings per share includes the dilutive effect of common stock equivalents, consisting of stock options, restricted stock units and performance share units, using the treasury stock method. Performance share units, which are considered contingently issuable, are considered dilutive when the related performance criteria has been met.

As the Company reported a net loss for each of the periods presented,nine months ended September 30, 2020, basic loss per share is the same as diluted loss per share as the inclusion of all potential shares of common stock would be antidilutive. As the Company reported net earnings for the three months ended September 30, 2020 and for both the three and nine months ended September 30, 2019, basic and diluted earnings per share are calculated as outlined above.

The following table summarizes the total number of shares of common stock issuable pursuant to the Company's outstanding stock-based compensation awards that wereawards. As a result of the Company's net loss for the nine months ended September 30, 2020, all of the potentially issuable common stock was excluded from the diluted per share calculation because the effect of including these potential shares was antidilutive, even though the exercise price could be less than the average market price of the common shares:

  March 31, March 31,
 2020 2019
Potential shares of common stock:    
Stock options 2,372,495
 2,232,634
Unvested restricted stock units 575,758
 438,978
Unvested performance share units(1)
 691,494
 617,068
Total potential shares of common stock 3,639,747
 3,288,680
shares.

As of September 30, 2020, potentially issuable shares of common stock consisted of the following:

Potential shares of common stock:
Stock options2,148,864
Unvested restricted stock units788,584
Unvested performance share units(1)
648,590
Total potential shares of common stock3,586,038 
(1) The number of performance share units that vest is determined for each grant based on the achievement of certain Company performance criteria over the 3-year period, as set forth in each respective award agreement, and may range from 0 to 200% of the target shares granted. The unvested performance share units are presented at 100% achievement of the performance target for determination of potential shares of common stock. 

-31-

The components of weighted average basic and diluted shares outstanding are as follows:

Three Months Ended September 30,Nine Months Ended September 30,
2020201920202019
Weighted average shares outstanding — Basic141,512,207141,072,179141,481,963140,893,966
Effect of dilutive securities:
Stock options0 152,4190 209,264
Unvested restricted stock units48,540 195,8130 255,646
Unvested performance share units0 112,3790 96,617
Effect of dilutive securities48,540 460,6110 561,527
Weighted average shares outstanding — Diluted141,560,747141,532,790141,481,963141,455,493

For the three months ended September 30, 2020, there were 2.5 million securities excluded from the computation of earnings per share because the effect of including such securities would have been antidilutive. For the three and nine months ended September 30, 2019, there were 1.2 million and 1.4 million securities, respectively, excluded from the computation of earnings per share because the effect of including such securities would have been antidilutive. In addition, certain performance share units whose conditions were not met at the end of the respective reporting periods have also been excluded from the computation of earnings per share.

18. Business Segments

The Company identifies its geographic business segments using the "management approach," which designates the internal organization used by management for making operating decisions and assessing performance as the source for determining the Company's geographic business segments. Management organizes and manages the business based on 3 geographic business segments: the Americas, EMEA and APAC. The accounting policies of the Company's geographic business segments are the same as those described in Note 2, "Basis of Presentation and Summary of Significant Accounting Policies."


The Company evaluates segment performance based on an "Adjusted Operating EBITDA" result.metric. Adjusted Operating EBITDA, a non-GAAP financial measure, is defined as net earnings before interest expense, income taxes, other income or expense, depreciation and amortization expense plus certain other items such as loss from impairment of assets, gain or loss from disposal of assets, restructuring activities, loss on modification or extinguishment of debt, acquisition-related transaction and integration costs, Transformation Program expense and certain other items.items. In addition, certain corporate-level expenses and eliminations are not allocated to the segments. These unallocated expenses include corporate overhead, stock-based compensation expense and certain other non-operating expenses. The Company's presentation of Adjusted Operating EBITDA may not be comparable to similar measures used by other companies.

During the first quarter of 2020, the Company revised the allocation of certain of its functional expenses between the corporate-level and the geographic business segments. Management believes the revised allocation methodology better aligns the operating results of the geographic business segments with how management assesses performance and makes operating decisions. The prior periodperiods segment results and related disclosures have been recast to conform to the current period presentation. These changes did not impact the Company's previously reported consolidated financial results.

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FinancialThe following table presents financial information relating to the Company's geographic business segments, isreconciled to "Net sales" and "Earnings (loss) before income taxes" included in the Company's Consolidated Statements of Operations presented in accordance with U.S. GAAP as follows:

(in millions, except percentage data) Three Months Ended March 31,
 2020 2019
Net sales:    
Americas $250.5
 $275.1
EMEA 90.0
 106.7
APAC 51.3
 54.8
Elimination of intersegment sales (62.9) (61.3)
Total net sales $328.9
 $375.3
     
Segment Adjusted Operating EBITDA:    
Americas $52.3
 $44.5
EMEA 13.6
 18.2
APAC 8.2
 7.9
Total Segment Adjusted Operating EBITDA 74.1
 70.6
Corporate and unallocated expenses (28.6) (20.5)
Amortization expense (10.0) (9.5)
Depreciation expense (5.2) (4.9)
Transaction costs (1)
 (0.1) (0.4)
Other items (2)
 (3.1) (0.8)
Transformation Program expense (3)
 (11.6) (5.8)
Restructuring activities (4)
 (3.7) (4.2)
Loss from impairment and disposal of assets — net (11.2) —
Earnings from operations 0.6
 24.5
Interest expense (21.3) (24.0)
Other income (expense) — net 5.4
 (3.0)
Loss before income taxes $(15.3) $(2.5)
(1) Transaction costs are associated with acquisition-related transaction and integration activities. Transaction costs recorded in "Cost of Sales" include $0.2 million related to inventory fair value purchase accounting adjustments for the three months ended March 31, 2019. Professional services and other direct acquisition and integration costs recorded in "Selling, general and administrative expenses" were $0.1 million and $0.2 million for the three months ended March 31, 2020 and 2019, respectively.
(2) Other items are costs which are not representative of the Company's operational performance. For the three months ended March 31, 2020, other items represent the loss contingency estimate of amounts due for custom duties, fees and interest on previously imported products, which are included in "Restructuring and other expenses." Refer to Note 12, "Contingencies and Significant Estimates" for discussion of the impact to the Consolidated Statements of Operations. For the three months ended March 31, 2019, the amount represents other professional fees which are included in "Selling, general and administrative expenses."
(3) Transformation Program expense includes consulting and other costs associated with executing the Company's Transformation Program initiatives. Refer to Note 15, "Business Transformation Program and Restructuring" for discussion of the impact to the Consolidated Statements of Operations.
(4) Restructuring activities includes costs associated with actions to improve operating efficiencies and rationalization of the Company's cost structure. Refer to Note 15, "Business Transformation Program and Restructuring" for discussion of the impact to the Consolidated Statements of Operations.
     
Adjusted Operating EBITDA % by segment (5):
    
Americas 20.9% 16.2%
EMEA 15.1% 17.1%
APAC 16.0% 14.4%
(5) Adjusted Operating EBITDA % is calculated by dividing Adjusted Operating EBITDA by net sales for each respective segment.

(in millions, except percentage data)Three Months Ended September 30,Nine Months Ended September 30,
2020201920202019
Net sales:
Americas$221.8 $318.2 $630.9 $929.2 
EMEA73.9 95.8 209.5 301.3 
APAC48.0 64.4 141.5 179.3 
Elimination of intersegment sales(45.2)(67.9)(148.5)(197.7)
Total net sales$298.5 $410.5 $833.4 $1,212.1 
Segment Adjusted Operating EBITDA:
Americas$34.8 $67.0 $105.8 $184.2 
EMEA10.5 18.6 29.6 55.1 
APAC8.4 11.3 22.3 26.5 
Total Segment Adjusted Operating EBITDA53.7 96.9 157.7 265.8 
Corporate and unallocated expenses(8.1)(14.8)(46.8)(50.8)
Amortization expense(10.2)(9.4)(30.2)(28.8)
Depreciation expense(5.1)(5.3)(15.5)(16.2)
Transaction costs (1)
(0.1)(0.3)(0.2)(0.9)
Other items (2)
(0.2)0 (3.6)(0.8)
Transformation Program expense (3)
(6.7)(12.3)(20.9)(25.8)
Restructuring activities (4)
(1.7)0.2 (6.3)(5.8)
Loss from impairment and disposal of assets — net(0.4)(0.2)(11.7)(0.2)
Earnings from operations21.2 54.8 22.5 136.5 
Interest expense(18.1)(22.4)(58.5)(70.9)
Other income (expense) — net0.6 (2.9)(0.8)(11.5)
Earnings (loss) before income taxes$3.7 $29.5 $(36.8)$54.1 
(1) Transaction costs are associated with acquisition and integrated-related activities. Transaction costs recorded in "Cost of Sales" include $0.2 million related to inventory fair value purchase accounting adjustments for the nine months ended September 30, 2019. Professional services and other direct acquisition and integration costs recorded in "Selling, general and administrative expenses" were $0.1 million and $0.2 million for the three and nine months ended September 30, 2020, respectively, and $0.3 million and $0.7 million for the three and nine months ended September 30, 2019, respectively.
(2) Other items are costs which are not representative of the Company's operational performance. For the three and nine months ended September 30, 2020, other items represent the changes in the loss contingency estimate of amounts due for customs duties, fees and interest on previously imported products, which are included in "Restructuring and other expenses." Refer to Note 12, "Contingencies and Significant Estimates" for discussion of the impact to the Consolidated Statements of Operations. For the nine months ended September 30, 2019, the amount represents other professional fees which are included in "Selling, general and administrative expenses."
(3) Transformation Program expense includes consulting and other costs associated with executing the Company's Transformation Program initiatives. Refer to Note 15, "Business Transformation Program and Restructuring" for discussion of the impact to the Consolidated Statements of Operations.
(4) Restructuring activities includes costs associated with actions to improve operating efficiencies and rationalization of the Company's cost structure. Refer to Note 15, "Business Transformation Program and Restructuring" for discussion of the impact to the Consolidated Statements of Operations.
Adjusted Operating EBITDA % by segment (5):
Americas15.7 %21.1 %16.8 %19.8 %
EMEA14.2 %19.4 %14.1 %18.3 %
APAC17.5 %17.5 %15.8 %14.8 %
(5) Adjusted Operating EBITDA % is calculated by dividing Adjusted Operating EBITDA by net sales for each respective segment.

-33-

(in millions) Three Months Ended March 31,(in millions)Three Months Ended September 30,Nine Months Ended September 30,
2020 20192020201920202019
Third-party net sales by geographic area (6):
    
Third-party net sales by geographic area (6):
United States $204.4
 $225.0
United States$190.0 $263.0 $530.0 $767.1 
Other Americas 18.5
 20.3
Other Americas14.6 25.7 44.1 72.4 
EMEA 69.2
 88.6
EMEA55.8 73.2 159.7 238.1 
APAC 36.8
 41.4
APAC38.1 48.6 99.6 134.5 
Total net sales by geographic area $328.9
 $375.3
Total net sales by geographic area$298.5 $410.5 $833.4 $1,212.1 
(6) Net sales in the section above are attributed to geographic regions based on location of customer.
(6) Third-party net sales in the section above are attributed to geographic regions based on location of customer.
(6) Third-party net sales in the section above are attributed to geographic regions based on location of customer.

Net sales by product class and geographic business segment are as follows:

(in millions)Three Months Ended September 30, 2020
Commercial Foodservice EquipmentAftermarket Parts and SupportTotal
Americas$171.2 $31.5 $202.7 
EMEA47.1 10.9 58.0 
APAC31.5 6.3 37.8 
Total net sales$249.8 $48.7 $298.5 
(in millions) Three Months Ended March 31, 2020
 Commercial Foodservice Equipment Aftermarket Parts and Support Total
Americas $182.0
 $36.1
 $218.1
EMEA 56.0
 15.6
 71.6
APAC 32.0
 7.2
 39.2
Total net sales $270.0
 $58.9
 $328.9


(in millions)Three Months Ended September 30, 2019
Commercial Foodservice EquipmentAftermarket Parts and SupportTotal
Americas$237.4 $47.4 $284.8 
EMEA62.9 11.1 74.0 
APAC41.5 10.2 51.7 
Total net sales$341.8 $68.7 $410.5 

(in millions) Three months ended March 31, 2019(in millions)Nine Months Ended September 30, 2020
Commercial Foodservice Equipment Aftermarket Parts and Support TotalCommercial Foodservice EquipmentAftermarket Parts and SupportTotal
Americas $202.6
 $38.2
 $240.8
Americas$480.8 $84.0 $564.8 
EMEA 77.5
 13.4
 90.9
EMEA131.4 32.2 163.6 
APAC 36.0
 7.6
 43.6
APAC86.9 18.1 105.0 
Total net sales $316.1
 $59.2
 $375.3
Total net sales$699.1 $134.3 $833.4 

(in millions)Nine Months Ended September 30, 2019
Commercial Foodservice EquipmentAftermarket Parts and SupportTotal
Americas$699.2 $129.0 $828.2 
EMEA205.9 36.3 242.2 
APAC118.0 23.7 141.7 
Total net sales$1,023.1 $189.0 $1,212.1 

Total assets by geographic segment are as follows:

(in millions) March 31, December 31,
 2020 2019
Americas $1,529.1
 $1,528.0
EMEA 336.0
 349.8
APAC 202.3
 211.8
Corporate 117.6
 75.7
Total assets $2,185.0
 $2,165.3



(in millions)September 30,December 31,
20202019
Americas$1,498.5 $1,528.0 
EMEA336.0 349.8 
APAC202.0 211.8 
Corporate114.3 75.7 
Total assets$2,150.8 $2,165.3 

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19. Subsidiary Guarantors and Senior Notes

The following tables present consolidating financial information for (a) Welbilt ("Parent"); (b) the guarantors of the Senior Notes, which include substantially all of the domestic, 100% owned subsidiaries of Welbilt ("Guarantor Subsidiaries"); and (c) the wholly-owned foreign subsidiaries of Welbilt, which do not guarantee the Senior Notes ("Non-Guarantor Subsidiaries"). The information includes elimination entries necessary to consolidate the Guarantor Subsidiaries and the Non-Guarantor Subsidiaries. Investments in subsidiaries are accounted for using the equity method of accounting. The principal elimination entries eliminate investments in subsidiaries, equity and intercompany balances and transactions. Separate financial statements of the Guarantor Subsidiaries are not presented because as guarantors, these subsidiaries are fully and unconditionally, jointly and severally liable under the guarantees, except for normal and customary release provisions.

As disclosed in Note 18, "Business Segments," the Company revised the allocation of certain of its functional expenses between the corporate-level and the geographic business segments during the first quarter of 2020. The impacts of the revised allocation predominantly impact the Parent and Guarantor Subsidiaries financial information reflected in the tables below. The prior period has been recast to conform to the current period presentation. These changes did not impact the Company's previously reported consolidated financial results.

-35-

WELBILT, INC.
Consolidating Statement of Operations
(Unaudited)

(in millions)Three Months Ended September 30, 2020
ParentGuarantor
Subsidiaries		Non-
Guarantor
Subsidiaries		Consolidating AdjustmentsConsolidated
Net sales$0 $201.2 $169.1 $(71.8)$298.5 
Cost of sales0.2 155.9 108.9 (71.8)193.2 
Gross profit(0.2)45.3 60.2 0 105.3 
Selling, general and administrative expenses15.5 28.9 27.9 0 72.3 
Amortization expense0 7.2 2.7 0 9.9 
Restructuring and other expenses0.1 0.7 0.7 0 1.5 
Loss (gain) from impairment and disposal of assets — net0.1 0.5 (0.2)0 0.4 
(Loss) earnings from operations(15.9)8.0 29.1 0 21.2 
Interest expense17.7 0.2 0.2 0 18.1 
Other (income) expense — net(1.8)(5.9)7.1 0 (0.6)
Equity in earnings of subsidiaries19.6 11.5 0 (31.1)0 
(Loss) earnings before income taxes(12.2)25.2 21.8 (31.1)3.7 
Income taxes(17.1)5.6 10.3 0 (1.2)
Net earnings$4.9 $19.6 $11.5 $(31.1)$4.9 
Total other comprehensive income, net of tax11.8 11.6 11.0 (22.7)11.7 
Comprehensive income$16.7 $31.2 $22.5 $(53.8)$16.6 
-36-
(in millions) Three Months Ended March 31, 2020
 Parent Guarantor
Subsidiaries		 Non-
Guarantor
Subsidiaries		 Consolidating Adjustments Consolidated
Net sales $—
 $233.1
 $210.9
 $(115.1) $328.9
Cost of sales —
 170.0
 159.2
 (115.1) 214.1
Gross profit —
 63.1
 51.7
 —
 114.8
Selling, general and administrative expenses 18.1
 32.8
 35.6
 —
 86.5
Amortization expense —
 7.1
 2.6
 —
 9.7
Restructuring and other expenses 0.7
 4.8
 1.3
 —
 6.8
Loss from impairment and disposal of assets — net —
 —
 11.2
 —
 11.2
(Loss) earnings from operations (18.8) 18.4
 1.0
 —
 0.6
Interest expense 20.8
 0.2
 0.3
 —
 21.3
Other (income) expense — net (4.1) (6.3) 5.0
 —
 (5.4)
Equity in earnings (loss) of subsidiaries 5.0
 (4.4) —
 (0.6) —
(Loss) earnings before income taxes (30.5) 20.1
 (4.3) (0.6) (15.3)
Income taxes (15.4) 15.1
 0.1
 —
 (0.2)
Net (loss) earnings $(15.1) $5.0
 $(4.4) $(0.6) $(15.1)
Total other comprehensive loss, net of tax (26.6) (25.0) (24.6) 49.6
 (26.6)
Comprehensive loss $(41.7) $(20.0) $(29.0) $49.0
 $(41.7)






























WELBILT, INC.
Consolidating Statement of Operations
(Unaudited)
(in millions) Three months ended March 31, 2019
 Parent Guarantor
Subsidiaries		 Non-
Guarantor
Subsidiaries		 Consolidating Adjustments Consolidated
Net sales $—
 $247.2
 $231.0
 $(102.9) $375.3
Cost of sales 1.0
 188.6
 162.1
 (102.9) 248.8
Gross profit (1.0) 58.6
 68.9
 —
 126.5
Selling, general and administrative expenses 20.6
 35.3
 32.4
 —
 88.3
Amortization expense —
 7.1
 2.4
 —
 9.5
Restructuring and other expenses 1.5
 1.3
 1.4
 —
 4.2
(Loss) earnings from operations (23.1) 14.9
 32.7
 —
 24.5
Interest expense 21.8
 0.2
 2.0
 —
 24.0
Other (income) expense — net (6.4) (0.7) 10.1
 —
 3.0
Equity in earnings of subsidiaries 27.1
 14.8
 —
 (41.9) —
(Loss) earnings before income taxes (11.4) 30.2
 20.6
 (41.9) (2.5)
Income taxes (8.8) 3.1
 5.8
 —
 0.1
Net (loss) earnings $(2.6) $27.1
 $14.8
 $(41.9) $(2.6)
Total other comprehensive loss, net of tax (2.2) (30.5) (28.5) 59.0
 (2.2)
Comprehensive loss $(4.8) $(3.4) $(13.7) $17.1
 $(4.8)


Three Months Ended September 30, 2019
(in millions)ParentGuarantor
Subsidiaries		Non-
Guarantor
Subsidiaries		Consolidating AdjustmentsConsolidated
Net sales$0 $297.2 $243.8 $(130.5)$410.5 
Cost of sales0.9 221.6 167.6 (130.5)259.6 
Gross profit(0.9)75.6 76.2 0 150.9 
Selling, general and administrative expenses24.5 33.8 28.4 0 86.7 
Amortization expense0 7.2 2.2 0 9.4 
Restructuring recovery0 (0.1)(0.1)0 (0.2)
(Gain) loss from disposal of assets — net0 (0.1)0.3 0 0.2 
(Loss) earnings from operations(25.4)34.8 45.4 0 54.8 
Interest expense21.7 0.2 0.5 0 22.4 
Other (income) expense — net(3.1)(8.7)14.7 0 2.9 
Equity in earnings of subsidiaries49.3 19.4 0 (68.7)0 
Earnings before income taxes5.3 62.7 30.2 (68.7)29.5 
Income taxes(14.8)13.4 10.8 0 9.4 
Net earnings$20.1 $49.3 $19.4 $(68.7)$20.1 
Total other comprehensive loss, net of tax(7.9)(9.8)(9.7)19.5 (7.9)
Comprehensive income$12.2 $39.5 $9.7 $(49.2)$12.2 

-37-

WELBILT, INC.
Consolidating Statement of Operations
(Unaudited)

(in millions)Nine Months Ended September 30, 2020
ParentGuarantor
Subsidiaries		Non-
Guarantor
Subsidiaries		Consolidating AdjustmentsConsolidated
Net sales$0 $581.8 $506.9 $(255.3)$833.4 
Cost of sales0 448.7 351.5 (255.3)544.9 
Gross profit0 133.1 155.4 0 288.5 
Selling, general and administrative expenses45.1 84.0 86.5 0 215.6 
Amortization expense0 21.3 7.9 0 29.2 
Restructuring and other expenses1.4 5.5 2.6 0 9.5 
Loss from impairment and disposal of assets — net0.1 0.5 11.1 0 11.7 
(Loss) earnings from operations(46.6)21.8 47.3 0 22.5 
Interest expense57.2 0.6 0.7 0 58.5 
Other (income) expense — net(10.0)(17.4)28.2 0 0.8 
Equity in earnings of subsidiaries26.5 8.2 0 (34.7)0 
(Loss) earnings before income taxes(67.3)46.8 18.4 (34.7)(36.8)
Income taxes(39.7)20.3 10.2 0 (9.2)
Net (loss) earnings$(27.6)$26.5 $8.2 $(34.7)$(27.6)
Total other comprehensive income, net of tax4.6 5.5 4.6 (10.1)4.6 
Comprehensive (loss) income$(23.0)$32.0 $12.8 $(44.8)$(23.0)

-38-

WELBILT, INC.
Consolidating Statement of Operations
(Unaudited)

(in millions)Nine Months Ended September 30, 2019
ParentGuarantor
Subsidiaries		Non-
Guarantor
Subsidiaries		Consolidating AdjustmentsConsolidated
Net sales$— $850.4 $714.8 $(353.1)$1,212.1 
Cost of sales2.7 639.1 489.7 (353.1)778.4 
Gross profit(2.7)211.3 225.1 0 433.7 
Selling, general and administrative expenses67.7 103.4 91.7 0 262.8 
Amortization expense0 21.4 7.4 0 28.8 
Restructuring and other expenses2.8 1.6 1.0 0 5.4 
(Gain) loss from disposal of assets — net0 (0.1)0.3 0 0.2 
(Loss) earnings from operations(73.2)85.0 124.7 0 136.5 
Interest expense67.0 0.7 3.2 0 70.9 
Other (income) expense — net(13.5)(15.5)40.5 0 11.5 
Equity in earnings of subsidiaries130.7 57.0 0 (187.7)0 
Earnings before income taxes4.0 156.8 81.0 (187.7)54.1 
Income taxes(33.5)26.1 24.0 0 16.6 
Net earnings$37.5 $130.7 $57.0 $(187.7)$37.5 
Total other comprehensive loss, net of tax(2.5)(31.2)(28.9)60.1 (2.5)
Comprehensive income$35.0 $99.5 $28.1 $(127.6)$35.0 

-39-

WELBILT, INC.
Consolidating Balance Sheet
(Unaudited)

(in millions)September 30, 2020
ParentGuarantor
Subsidiaries		Non-
Guarantor
Subsidiaries		Consolidating AdjustmentsConsolidated
Assets 
Current assets: 
Cash and cash equivalents$17.8 $0 $106.0 $(0.9)$122.9 
Restricted cash0 0 0.2 0 0.2 
Accounts receivable — net1.8 72.4 87.6 0 161.8 
Inventories — net0 97.8 94.6 0 192.4 
Prepaids and other current assets45.4 1.4 21.1 0 67.9 
Total current assets65.0 171.6 309.5 (0.9)545.2 
Property, plant and equipment — net14.1 71.2 41.4 0 126.7 
Operating lease right-of-use assets2.3 4.4 35.8 0 42.5 
Goodwill0 832.4 104.4 0 936.8 
Other intangible assets — net0.2 322.5 149.1 0 471.8 
Intercompany long-term notes receivable0 10.1 9.9 (20.0)0 
Due from affiliates0 3,478.2 0 (3,478.2)0 
Investment in subsidiaries4,427.4 0 0 (4,427.4)0 
Other non-current assets6.4 4.6 16.8 0 27.8 
Total assets$4,515.4 $4,895.0 $666.9 $(7,926.5)$2,150.8 
Liabilities and equity
Current liabilities:
Trade accounts payable$0.2 $55.8 $47.3 $(0.9)$102.4 
Accrued expenses and other liabilities23.0 67.9 60.6 0 151.5 
Current portion of long-term debt and finance leases2.5 0.3 0.6 0 3.4 
Product warranties0 20.3 11.0 0 31.3 
Total current liabilities25.7 144.3 119.5 (0.9)288.6 
Long-term debt and finance leases1,430.4 0.4 13.4 0 1,444.2 
Deferred income taxes51.2 0 38.5 0 89.7 
Pension and postretirement health liabilities14.7 9.5 3.0 0 27.2 
Intercompany long-term notes payable15.7 0 4.3 (20.0)0 
Due to affiliates2,730.5 0 747.6 (3,478.1)0 
Investment in subsidiaries0 292.7 0 (292.7)0 
Operating lease liabilities2.1 2.6 27.7 0 32.4 
Other long-term liabilities12.2 18.1 5.6 (0.2)35.7 
Total non-current liabilities4,256.8 323.3 840.1 (3,791.0)1,629.2 
Total equity (deficit):
Total equity (deficit)232.9 4,427.4 (292.7)(4,134.6)233.0 
Total liabilities and equity$4,515.4 $4,895.0 $666.9 $(7,926.5)$2,150.8 
-40-
(in millions) March 31, 2020
 Parent Guarantor
Subsidiaries		 Non-
Guarantor
Subsidiaries		 Consolidating Adjustments Consolidated
Assets  
        
Current assets:  
        
Cash and cash equivalents $42.0
 $(0.9) $107.4
 $—
 $148.5
Accounts receivable — net —
 81.8
 108.2
 —
 190.0
Inventories — net —
 108.8
 92.1
 —
 200.9
Prepaids and other current assets 24.5
 3.7
 18.3
 —
 46.5
Total current assets 66.5
 193.4
 326.0
 —
 585.9
Property, plant and equipment — net 14.3
 70.0
 40.3
 —
 124.6
Operating lease right-of-use assets 0.1
 4.7
 33.5
 —
 38.3
Goodwill —
 832.4
 97.3
 —
 929.7
Other intangible assets — net 0.2
 337.0
 144.7
 —
 481.9
Intercompany long-term notes receivable —
 10.1
 9.9
 (20.0) —
Due from affiliates —
 3,429.7
 —
 (3,429.7) —
Investment in subsidiaries 4,406.0
 —
 —
 (4,406.0) —
Other non-current assets 4.9
 3.8
 15.9
 —
 24.6
Total assets $4,492.0
 $4,881.1
 $667.6
 $(7,855.7) $2,185.0
Liabilities and equity          
Current liabilities:          
Trade accounts payable $0.3
 $52.8
 $60.7
 $—
 $113.8
Accrued expenses and other liabilities 20.2
 63.1
 58.0
 —
 141.3
Current portion of long-term debt and finance leases 0.9
 0.6
 0.4
 —
 1.9
Product warranties —
 20.7
 11.2
 —
 31.9
Total current liabilities 21.4
 137.2
 130.3
 —
 288.9
Long-term debt and finance leases 1,475.2
 0.6
 30.3
 —
 1,506.1
Deferred income taxes 51.1
 —
 36.0
 —
 87.1
Pension and postretirement health liabilities 14.9
 10.1
 5.4
 —
 30.4
Intercompany long-term notes payable 15.6
 —
 4.6
 (20.2) —
Due to affiliates 2,694.6
 —
 735.0
 (3,429.6) —
Investment in subsidiaries —
 305.2
 —
 (305.2) —
Operating lease liabilities —
 2.3
 25.2
 —
 27.5
Other long-term liabilities 6.3
 19.7
 6.0
 —
 32.0
Total non-current liabilities 4,257.7
 337.9
 842.5
 (3,755.0) 1,683.1
Total equity (deficit) 212.9
 4,406.0
 (305.2) (4,100.7) 213.0
Total liabilities and equity $4,492.0
 $4,881.1
 $667.6
 $(7,855.7) $2,185.0


WELBILT, INC.
Consolidating Balance Sheet
(Audited)
(in millions) December 31, 2019
 Parent Guarantor
Subsidiaries		 Non-
Guarantor
Subsidiaries		 Consolidating Adjustments Consolidated
Assets  
        
Current assets:  
        
Cash and cash equivalents $10.7
 $0.7
 $119.3
 $—
 $130.7
Accounts receivable — net 0.1
 82.5
 101.0
 —
 183.6
Intercompany trade receivable —
 5.9
 —
 (5.9) —
Inventories — net —
 100.2
 86.2
 —
 186.4
Prepaids and other current assets 6.7
 6.8
 14.7
 —
 28.2
Total current assets 17.5
 196.1
 321.2
 (5.9) 528.9
Property, plant and equipment — net 17.0
 66.4
 44.1
 —
 127.5
Operating lease right-of-use assets —
 3.6
 36.3
 —
 39.9
Goodwill —
 832.4
 100.7
 —
 933.1
Other intangible assets — net —
 344.2
 163.5
 —
 507.7
Intercompany long-term notes receivable —
 10.1
 9.9
 (20.0) —
Due from affiliates —
 3,437.2
 —
 (3,437.2) —
Investment in subsidiaries 4,400.9
 —
 —
 (4,400.9) —
Other non-current assets 7.6
 4.2
 16.4
 —
 28.2
Total assets $4,443.0
 $4,894.2
 $692.1
 $(7,864.0) $2,165.3
Liabilities and equity          
Current liabilities:          
Trade accounts payable $0.2
 $49.0
 $55.2
 $—
 $104.4
Accrued expenses and other liabilities 35.3
 87.7
 69.4
 —
 192.4
Current portion of long-term debt and finance leases —
 0.7
 0.5
 —
 1.2
Intercompany trade payable 5.9
 —
 —
 (5.9) —
Product warranties —
 21.9
 11.4
 —
 33.3
Total current liabilities 41.4
 159.3
 136.5
 (5.9) 331.3
Long-term debt and finance leases 1,370.0
 0.6
 32.5
 —
 1,403.1
Deferred income taxes 45.0
 —
 36.9
 —
 81.9
Pension and postretirement health liabilities 15.5
 10.2
 7.1
 —
 32.8
Intercompany long-term notes payable 15.7
 —
 4.3
 (20.0) —
Due to affiliates 2,695.1
 —
 742.1
 (3,437.2) —
Investment in subsidiaries —
 300.9
 —
 (300.9) —
Operating lease liabilities —
 1.8
 27.3
 —
 29.1
Other long-term liabilities 7.4
 20.5
 6.3
 (0.1) 34.1
Total non-current liabilities 4,148.7
 334.0
 856.5
 (3,758.2) 1,581.0
Total equity (deficit) 252.9
 4,400.9
 (300.9) (4,099.9) 253.0
Total liabilities and equity $4,443.0
 $4,894.2
 $692.1
 $(7,864.0) $2,165.3


(in millions)December 31, 2019
ParentGuarantor
Subsidiaries		Non-
Guarantor
Subsidiaries		Consolidating AdjustmentsConsolidated
Assets 
Current assets: 
Cash and cash equivalents$10.7 $0.7 $119.3 $0 $130.7 
Accounts receivable — net0.1 82.5 101.0 0 183.6 
Intercompany trade receivable0 5.9 0 (5.9)0 
Inventories — net0 100.2 86.2 0 186.4 
Prepaids and other current assets6.7 6.8 14.7 0 28.2 
Total current assets17.5 196.1 321.2 (5.9)528.9 
Property, plant and equipment — net17.0 66.4 44.1 0 127.5 
Operating lease right-of-use assets0 3.6 36.3 0 39.9 
Goodwill0 832.4 100.7 0 933.1 
Other intangible assets — net0 344.2 163.5 0 507.7 
Intercompany long-term notes receivable0 10.1 9.9 (20.0)0 
Due from affiliates0 3,437.2 0 (3,437.2)0 
Investment in subsidiaries4,400.9 0 0 (4,400.9)0 
Other non-current assets7.6 4.2 16.4 0 28.2 
Total assets$4,443.0 $4,894.2 $692.1 $(7,864.0)$2,165.3 
Liabilities and equity
Current liabilities:
Trade accounts payable$0.2 $49.0 $55.2 $0 $104.4 
Accrued expenses and other liabilities35.3 87.7 69.4 0 192.4 
Current portion of long-term debt and finance leases0 0.7 0.5 0 1.2 
Intercompany trade payable5.9 0 0 (5.9)0 
Product warranties0 21.9 11.4 0 33.3 
Total current liabilities41.4 159.3 136.5 (5.9)331.3 
Long-term debt and finance leases1,370.0 0.6 32.5 0 1,403.1 
Deferred income taxes45.0 0 36.9 0 81.9 
Pension and postretirement health liabilities15.5 10.2 7.1 0 32.8 
Intercompany long-term notes payable15.7 0 4.3 (20.0)0 
Due to affiliates2,695.1 0 742.1 (3,437.2)0 
Investment in subsidiaries0 300.9 0 (300.9)0 
Operating lease liabilities0 1.8 27.3 0 29.1 
Other long-term liabilities7.4 20.5 6.3 (0.1)34.1 
Total non-current liabilities4,148.7 334.0 856.5 (3,758.2)1,581.0 
Total equity (deficit):
Total equity (deficit)252.9 4,400.9 (300.9)(4,099.9)253.0 
Total liabilities and equity$4,443.0 $4,894.2 $692.1 $(7,864.0)$2,165.3 

-41-

WELBILT, INC.
Consolidating Statement of Cash Flows
(Unaudited)

(in millions)Nine Months Ended September 30, 2020
ParentGuarantor
Subsidiaries		Non-
Guarantor
Subsidiaries		Consolidating AdjustmentsConsolidated
Cash flows from operating activities
Net cash (used in) provided by operating activities$(81.0)$50.4 $4.6 $(0.9)$(26.9)
Cash flows from investing activities
Capital expenditures(1.7)(9.3)(4.9)0 (15.9)
Acquisition of intangible assets0 (0.2)0 0 (0.2)
Intercompany investment0 (41.0)5.6 35.4 0 
Other(3.9)0 0 0 (3.9)
Net cash (used in) provided by investing activities(5.6)(50.5)0.7 35.4 (20.0)
Cash flows from financing activities
Proceeds from long-term debt172.5 0 0 0 172.5 
Repayments on long-term debt and finance leases(112.5)(0.6)(18.1)0 (131.2)
Debt issuance costs(2.1)0 0 0 (2.1)
Exercises of stock options1.1 0 0 0 1.1 
Payments on tax withholdings for equity awards(0.7)0 0 0 (0.7)
Intercompany financing35.4 0 0 (35.4)0 
Net cash provided by (used in) financing activities93.7 (0.6)(18.1)(35.4)39.6 
Effect of exchange rate changes on cash0 0 (0.3)0 (0.3)
Net increase (decrease) in cash and cash equivalents and restricted cash7.1 (0.7)(13.1)(0.9)(7.6)
Balance at beginning of period10.7 0.7 119.3 0 130.7 
Balance at end of period$17.8 $0 $106.2 $(0.9)$123.1 
-42-
(in millions) Three Months Ended March 31, 2020
 Parent Guarantor
Subsidiaries		 Non-
Guarantor
Subsidiaries		 Consolidating Adjustments Consolidated
Cash flows from operating activities          
Net cash (used in) provided by operating activities $(69.7) $(4.5) $1.7
 $—
 $(72.5)
Cash flows from investing activities          
Capital expenditures —
 (4.5) (1.1) —
 (5.6)
Intercompany investment —
 7.6
 (7.1) (0.5) —
Other (3.9) —
 —
 —
 (3.9)
Net cash (used in) provided by investing activities (3.9) 3.1
 (8.2) (0.5) (9.5)
Cash flows from financing activities          
Proceeds from long-term debt 128.0
 —
 —
 —
 128.0
Repayments on long-term debt and finance leases (23.0) (0.2) (0.1) —
 (23.3)
Exercises of stock options 1.1
 —
 —
 —
 1.1
Payments on tax withholdings for equity awards (0.7) —
 —
 —
 (0.7)
Intercompany financing (0.5) —
 —
 0.5
 —
Net cash provided by (used in) financing activities 104.9
 (0.2) (0.1) 0.5
 105.1
Effect of exchange rate changes on cash —
 —
 (5.3) —
 (5.3)
Net increase (decrease) in cash and cash equivalents and restricted cash 31.3
 (1.6) (11.9) —
 17.8
Balance at beginning of period 10.7
 0.7
 119.3
 —
 130.7
Balance at end of period $42.0
 $(0.9) $107.4
 $—
 $148.5


WELBILT, INC.
Consolidating Statement of Cash Flows
(Unaudited)
(in millions) Three Months Ended March 31, 2019
 Parent Guarantor
Subsidiaries		 Non-
Guarantor
Subsidiaries		 Consolidating Adjustments Consolidated
Cash flows from operating activities          
Net cash used in operating activities $(62.5) $(138.2) $(154.0) $(2.3) $(357.0)
Cash flows from investing activities          
Cash receipts on beneficial interest in sold receivables —
 35.6
 160.4
 —
 196.0
Capital expenditures (1.7) (2.4) (0.7) —
 (4.8)
Intercompany investment —
 105.6
 (8.9) (96.7) —
Other 0.2
 —
 —
 —
 0.2
Net cash (used in) provided by investing activities (1.5) 138.8
 150.8
 (96.7) 191.4
Cash flows from financing activities          
Proceeds from long-term debt 196.5
 —
 —
 —
 196.5
Repayments on long-term debt and finance leases (32.5) (0.3) —
 —
 (32.8)
Repayment of short-term borrowings —
 —
 (15.0) —
 (15.0)
Payment of contingent consideration —
 (0.8) —
 —
 (0.8)
Exercises of stock options 0.6
 —
 —
 —
 0.6
Payments on tax withholdings for equity awards (1.8) —
 —
 —
 (1.8)
Intercompany financing (96.8) —
 —
 96.8
 —
Net cash provided by (used in) financing activities 66.0
 (1.1) (15.0) 96.8
 146.7
Effect of exchange rate changes on cash —
 —
 1.0
 —
 1.0
Net increase (decrease) in cash and cash equivalents and restricted cash 2.0
 (0.5) (17.2) (2.2) (17.9)
Balance at beginning of period 0.2
 0.5
 72.5
 —
 73.2
Balance at end of period $2.2
 $—
 $55.3
 $(2.2) $55.3



(in millions)Nine Months Ended September 30, 2019
ParentGuarantor
Subsidiaries		Non-
Guarantor
Subsidiaries		Consolidating AdjustmentsConsolidated
Cash flows from operating activities
Net cash used in operating activities$(112.9)$(84.1)$(122.1)$(1.4)$(320.5)
Cash flows from investing activities
Cash receipts on beneficial interest in sold receivables0 75.8 204.9 0 280.7 
Capital expenditures(3.5)(10.2)(3.7)0 (17.4)
Proceeds from maturity of short-term investment0 0 32.0 0 32.0 
Intercompany investment0 19.5 (5.7)(13.8)0 
Other0.9 0 0 0 0.9 
Net cash (used in) provided by investing activities(2.6)85.1 227.5 (13.8)296.2 
Cash flows from financing activities
Proceeds from long-term debt355.0 0 0 0 355.0 
Repayments on long-term debt and finance leases(223.5)(0.7)(43.0)0 (267.2)
Repayment of short-term borrowings0 0 (15.0)0 (15.0)
Payment of contingent consideration0 (0.8)0 0 (0.8)
Exercises of stock options3.0 0 0 0 3.0 
Payments on tax withholdings for equity awards(2.2)0 0 0 (2.2)
Intercompany financing(13.8)0 0 13.8 0 
Net cash provided by (used in) financing activities118.5 (1.5)(58.0)13.8 72.8 
Effect of exchange rate changes on cash0 0 (3.9)0 (3.9)
Net increase (decrease) in cash and cash equivalents and restricted cash3.0 (0.5)43.5 (1.4)44.6 
Balance at beginning of period0.2 0.5 72.5 0 73.2 
Balance at end of period$3.2 $0 $116.0 $(1.4)$117.8 
20.Subsequent Event

-43-
Amendment to 2016 Credit Facility

On April 17, 2020, the Company entered into Amendment No. 7 (the “Amendment”) to the 2016 Credit Agreement, to amend the financial covenants of the Revolving Credit Facility. The terms of the Amendment, among other items, (i) suspend the Consolidated Total Leverage Ratio and Consolidated Interest Coverage Ratio covenants, in each case, as defined in the 2016 Credit Agreement, for four fiscal quarters until March 31, 2021 ("Suspension Period") and (ii) temporarily replace the suspended covenants with a Minimum Consolidated EBITDA covenant and a Maximum Capital Expenditure covenant, each computed on a trailing four quarters basis and measured quarterly and a Minimum Liquidity covenant that is measured monthly, each as defined in the Amendment, throughout the Suspension Period, with the Minimum Liquidity covenant extending through June 30, 2021.

Beginning in the second quarter of 2021, the Consolidated Total Leverage Ratio and Consolidated Interest Coverage Ratio covenants will be reinstated at modified levels as compared to the covenants in effect as of March 31, 2020 and will return to the March 31, 2020 covenant levels by the fourth quarter of 2021.

The Amendment prohibits draws under the Revolving Credit Facility (i) if the Company has not evidenced compliance with the financial covenants for the year ended December 31, 2021 by delivery of a compliance certificate within 90 days, and ii) to the extent the draw would result in a consolidated cash balance of $100 million or greater (excluding cash held in China) through December 31, 2021, with the exception of draws to meet cash uses anticipated in the ordinary course of business that are expected to be paid within 10 days of the draw. The Amendment also includes additional limitations on restricted payments, investments and other actions that are otherwise allowed under the 2016 Credit Agreement, with a $25.0 million carve-out for a general investments basket. These limitations expire on December 31, 2021.

The Amendment includes a quarterly fee applicable through the fourth quarter of 2021 in an amount equal to a per annum rate of 0.50% on the average outstanding balance of the Revolving Credit Facility payable on a quarterly basis. The Company estimates total debt issuance costs in connection with this Amendment to be approximately $2.3 million, which will be capitalized and included as a component of "Other non-current assets" on the Company's Consolidated Balance Sheets and amortized using the effective interest method through the maturity of the Revolving Credit Facility in October 2023.


ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited consolidated financial statements and related notes included in Item 1 of Part I of this Quarterly Report on Form 10-Q and with our audited consolidated financial statements and related notes included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019. The financial position, results of operations, cash flows and other information included herein are not necessarily indicative of the financial position, results of operations and cash flows that may be expected in future periods. See "Cautionary Statements Regarding Forward-Looking Information" below for a discussion of the uncertainties and assumptions that may cause actual results to differ materially from those expressed or implied in the forward-looking statements. Additionally, we use certain non-GAAP financial measures to evaluate our results of operations, financial condition and liquidity. For important information regarding the use of such non-GAAP measures, including reconciliations to the most comparable GAAP measure, see the section titled “Non-GAAP Financial Measures” below. The financial condition, results of operations and cash flows discussed in this Management's Discussion and Analysis of Financial Condition and Results of Operations are those of Welbilt, Inc. and its consolidated subsidiaries, collectively, the "Company," "Welbilt," "we," "our" or "us."

Overview

Business Overview

We design, manufacture and supply best-in-class equipment for the global commercial foodservice market which is used by commercial and institutional foodservice operators including full-service restaurants, quick-service restaurant chains, hotels, resorts, cruise ships, caterers, supermarkets, convenience stores, hospitals, schools and other institutions. Our products, product-based services and aftermarket parts and service support are recognized by our customers and channel partners for their quality, reliability and durability and support our end customers by improving menus, enhancing operations and reducing costs. We sell our products through a global network of over 5,000 distributors, dealers, buying groups and manufacturers' representatives.

We manage our business in three geographic business segments: Americas, EMEA and APAC. The Americas segment includes the United States ("U.S."), Canada and Latin America. The EMEA segment consists of markets in Europe, including the Middle East, Africa, Russia and the Commonwealth of Independent States. The APAC segment consists primarily of markets in China, India, Australia, South Korea, Singapore, Philippines, Japan, Indonesia, Malaysia, Thailand, Hong Kong, Taiwan, New Zealand and Vietnam. These geographic business segments represent the level at which separate financial information is available and which is used by management to assess operating performance and allocate resources. We evaluate our segment performance based upon Adjusted Operating EBITDA (a non-GAAP measure). See the definition of Adjusted Operating EBITDA and other non-GAAP measures used by management within the section titled "Non-GAAP Financial Measures" of this Management's Discussion and Analysis of Financial Condition and Results of Operations. In addition, see
Note 18, "Business Segments," of the Notes to the Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for further discussion of our geographic business segments.

Executive Summary

Financial Results Highlights

Highlights of our financial results as of and for the three months ended March 31,September 30, 2020, and for select line items, as compared to the same period of the prior year, are as applicable, include the following:follows:

•
•Net sales were$298.5 million, a decrease of 27.3%.

•$328.9 million, a decrease of 12.4%.

Organic net sales (a non-GAAP measure) decreased 11.6%28.0%.

•Earnings from operations were $0.6$21.2 million, which included an impairment chargea decrease of $11.161.3%

•Adjusted Operating EBITDA (a non-GAAP measure) was $45.6 million, on trademark and trade names in our EMEA segment.a decrease of 44.5% while Adjusted Operating EBITDA margin (a non-GAAP measure) was 15.3%.

•
Adjusted Operating EBITDA (a non-GAAP measure) was $45.5 million, a decrease of 9.2% while Adjusted Operating EBITDA margin (a non-GAAP measure) was 13.8%, an increase of 50 basis points.

•Net lossearnings was $15.1$4.9 million, while our Adjusted Net Earnings (a non-GAAP measure) was $1.4$9.9 million.

•Diluted net lossearnings per share was $0.11,$0.03, Adjusted Diluted Net Earnings Per Share (a non-GAAP measure) was $0.01.$0.07.

•As of March 31,September 30, 2020, our total liquidity was $299.5$332.9 million, consisting of $148.5$122.9 million of cash and cash equivalents and $151.0$210.0 million available for additional borrowings under theour senior secured revolving credit facility, comparedto the extent the Company's compliance with financial covenants permits such borrowings. This compares to liquidity of $298.3 million as of June 30, 2020, $299.5 million as of March 31, 2020 and $384.8 million as of December 31, 2019.

•Our total outstanding long-term debt, excluding finance leases, as of March 31,September 30, 2020 was $1,524.1$1,460.4 million.
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COVID-19 Impact on Our Business

In March 2020, the World Health Organization ("WHO") declared the outbreak of COVID-19 as a pandemic, which continues to spread throughout the United States and the world. The pandemic, along with the measures implemented by governmental authorities and other third-parties in response, has caused disruption in commercial foodservice equipment end markets across the geographies in which we operate. While many professional kitchens remain open for takeout, drive-thru and delivery, many have closed to dine-in customers while others have closed completely. Beginning in March 2020, we experienced lower

The COVID-19 pandemic has decreased demand for commercial foodservice equipment and aftermarket parts and the related economic disruption has continued to negatively impact our results of operations, financial position and cash flows during the third quarter of fiscal 2020 compared to the same period of the prior year. We continue to proactively monitor the impacts of the COVID-19 pandemic, and while we are encouraged by recent developments surrounding a phased reopening of the economy in North America and Asia, we remain cautious due to a "potential resurgence" of the virus, as it has recently been reported in Europe. We believe our go-to-market approach has and will continue to enable us to serve our customers and our long-standing relationships have positioned us to capitalize on emerging opportunities.

Because the COVID-19 pandemic is unprecedented, its severity, duration and future economic consequences are difficult to forecast. Although we cannot predict its future impact on our Company with any certainty, we anticipate that demand will continue to be negatively impacted through the second quarter of 2020well into 2021 and beyond.

In response to the decreased customer demand for our products and services, as a result of COVID-19, we have executed contingency plans fortaken numerous actions in order to protect our operationsemployees, customers, suppliers and have taken steps to reduce operating expensesshareholders throughout the second and capital spending as necessary, including reductions in the sizethird quarters of our workforce2020, including:

•implementing health and temporary employee furloughs. We have also implemented health safety measures to protect our employees in our manufacturing plants, distribution centers and offices. We haveoffices,

•reviewing operating costs, adjusting budgets and will continuereducing discretionary spending,

•working with our customers to adjustbalance requests for extended payment terms and deferral of payments to vendors,

•reducing hiring activities and adjusting compensation programs,

•streamlining staffing requirements and furloughing employees consistent with reductions in product demand and manufacturing levels,

•adjusting the operating schedules of our manufacturing plants based on governmental requirements, health, safety and demand factors, as we proceed through

•cancellation of non-essential travel plans to promote the safety and security of our employees while complying with various government mandates,

•engaging in work-from-home arrangements and social-distancing initiatives to reduce the risk of transmission of COVID-19, pandemic and related market impacts. Ourbased on the multiple standards published to date,

•the evaluation of our supply chain, continuesdetermining critical raw material requirements and identifying additional suppliers beyond our first-tier suppliers,

•reviewing and updating cybersecurity protocols to see minimal disruptionprotect and has not caused significant production delaysmaintain our operations, and

•obtaining government assistance, where applicable. During the nine months ended September 30, 2020, we met the requirements to date.receive a total of $11.8 million of government assistance in the form of cash, cost abatements and retention credits, with $2.5 million of the government assistance yet to be received and recorded as a receivable at September 30, 2020.

The Company's third quarter 2020 net sales, gross margins and cash flows all improved sequentially from the second quarter as the commercial foodservice industry continued to gradually recover from the negative impacts of COVID-19. The extent of the effect of the COVID-19 pandemic on our operational and financial performance will depend significantly on future developments, including the duration, scope and severity of the pandemic, the actions taken to contain or mitigate its impact in each of the countries thatwhere we operate globally, the development of treatments orand vaccines, and the timelinesstiming of the resumption of widespread economic activity. While we expectactivity to pre-pandemic levels. We are currently unable to quantify with certainty the pandemic to continue to negatively impact our results of operations, financial position and cash flows, due to the inherent uncertainty of such factors, our estimatesultimate severity or duration of the impact of COVID-19 on our business may change based on future developments.business.

As of March 31, 2020, we determined that it was more-likely-than-not that the indefinite-lived intangible assets of our EMEA and APAC regions carrying values exceeded their fair values due to the expected operational performance of these regions. As a result, we performed quantitative impairment assessments and determined that the carrying value of the indefinite-lived intangible assets in the EMEA region exceeded their estimated fair value. An impairment charge was recognized in the amount of $11.1 million, which was recorded as a component of "Loss from impairment and disposal of assets — net" for the three months ended March 31, 2020. Management determined that the fair value of the indefinite-lived intangible assets in the APAC region exceeded the carrying value of these assets and, therefore, concluded there was no impairment of these assets as of March 31, 2020. The duration and severity of the COVID-19 pandemic or other     industry or competitive changes could result in additional future impairment charges to the Company's goodwill and remaining indefinite-lived intangible assets.

The Coronavirus Aid, Relief, and Economic Security Act ("CARES Act") was enacted on March 27, 2020 and includes many measures intended to assist companies during the COVID-19 pandemic including temporary changes to income and non-income-based tax laws, some of which were enacted under the Tax Cuts and Jobs Act ("Tax Act") in 2017. As a result of the Tax Act and the CARES Act, additional legislative and regulatory guidance has been and may continue to be issued, including final regulations that could impact our effective tax rate in future periods. Certain provisions of the CARES Act provide benefits in our 2020 effective income tax rates as it relates to our net operating loss carryback and the increase in the allowable deductions for interest expense. WeAs discussed above, we have also intend to applyapplied additional provisions of the CARES Act in payroll-related payment deferrals and credits and other benefits, as applicable.

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On April 17, 2020, we entered into Amendment No. 7 (the “Amendment”) to the 2016 Credit Agreement, to amend the financial covenants of the Revolving Credit Facility to prevent non-compliance with these financial covenants of the Revolving Credit Facility for the quarter endingended June 30, 2020 due toresulting from the impact of the COVID-19 pandemic on the commercial foodservice industry and the resulting decrease in demand for our products. The termsSee further details regarding the Amendment included in the following Liquidity and Capital Resources section of Management's Discussion and Analysis.

As of March 31, 2020, an impairment charge was recognized in the amount of $11.1 million, resulting from an interim impairment assessment in the EMEA region which determined that the carrying value of the Amendment (i) suspendindefinite-lived intangible assets exceeded their estimated fair value. The impairment charge was recorded as a component of "Loss from impairment and disposal of assets — net" in our Consolidated Statements of Operations for the nine months ended September 30, 2020.

As of June 30, 2020, we performed the annual impairment testing for our reporting units, as well as its indefinite-lived intangible assets, and based on those results, no impairment was indicated. Although no reporting units failed the annual impairment testing, in our opinion, the indefinite-lived intangible assets in the EMEA region are at risk of impairment in the near term if there is a negative change in the long-term outlook for the EMEA region. The duration and severity of the COVID-19 pandemic or other industry or competitive changes could also result in future impairment charges to our goodwill and remaining indefinite-lived intangible assets. See further discussion included in Note 6. "Goodwill and Other Intangible Assets - Net" of the Notes to the Consolidated Total Leverage Ratio and Consolidated Interest Coverage Ratio covenants,Financial Statements included in each case, as defined in the 2016 Credit Agreement, for four fiscal quarters until March 31, 2021 ("Suspension Period") and (ii) temporarily replace the suspended covenants with a Minimum Consolidated EBITDA covenant and a Maximum Capital Expenditure covenant, each computedPart I, Item 1 of this Quarterly Report on a trailing four quarters basis and measured quarterly, and a Minimum Liquidity covenant that is measured monthly, each as defined in the Amendment, throughout the Suspension Period, with the Minimum Liquidity covenant extending through June 30, 2021.Form 10-Q.

Strategic Objectives

While our strategic objectives are long-term and remain intact, the uncertainty surrounding the COVID-19 pandemic will impact the extent and timing of our execution of these objectives. As such, our strategic objectives continue to include achieving sustainable growth globally and increased profitability by leveraging our position as a leading commercial foodservice equipment provider, while selectively pursuing longer-term strategic acquisitions and partnerships, growing our customer base and expanding the frontiers of foodservice innovation, as well as attracting and developing industry-leading talent.

Our specific strategic objectives include:

•
Achieve profitable growth. We intend to grow sales organically with our best-in-class foodservice equipment product portfolio and kitchen systems approach. While organic growth across all three of our regions is our first priority, we will selectively pursue strategic acquisitions and partnerships. Our industry is fragmented, and we believe there is significant opportunity for consolidation through acquisitions, partnerships and other strategic relationships to drive growth.

•Achieve profitable growth: We intend to grow sales organically with our best-in-class foodservice equipment product portfolio and kitchen systems approach. While organic growth across all three of our regions is our first priority, we will selectively pursue strategic acquisitions and partnerships as our capital structure allows in the future. Our industry is fragmented, and we believe there is significant opportunity for consolidation through acquisitions, partnerships and other strategic relationships to drive growth.

Business Transformation Program Update.Update: We are currently incontinuing the midstexecution of ourthe Business Transformation Program ("Transformation Program") whichto maintain and increase productivity gains and material cost reductions. Our Transformation Program is structured in multiple phases extending through 2021 and is focused on specific areas of opportunity including strategic sourcing, manufacturing facility workflow redesign, distribution and administrative process efficiencies and optimizing our global brand platforms. We anticipate incurring consulting costs, restructuring charges, and other related transformation expenses of $75 to $85 million through 2021. The business disruption resulting from the global COVID-19 pandemic and the uncertainty around the timing and extent of its impacts may extend the execution costsperiod for this program and related savings we expect from this program.will continue to update our cost estimates as the Transformation Program evolves.

In connection with the ongoing execution of the Transformation Program, we incurred $11.6$6.7 million and $20.9 million of consulting and other related Transformation Program costs for the three and nine months ended March 31, 2020,September 30, 2020. We also incurred $1.8 million and $6.6 million of restructuring charges intended to reduce operating expenses as a result of the improved efficiencies gained from the execution of the Transformation Program, resulting in total costs of $46.9$65.2 million from the inception of the operational reviewTransformation Program through March 31,September 30, 2020. We expect to incur the remaining costs associated with the Transformation Program in 2020 with a lesser portion expected to extend into 2021. We expect to settle these costs primarily in cash. We intend to continuously evaluate the total investment in, and financial benefits of, the various initiatives associated with the Transformation Program. SinceWe remain encouraged by our progress to date and are committed to completing the activities included within the scope of the Transformation Program's inception we have targetedProgram by the end of 2021 as originally planned. We remain confident in our ability to achieve the $75 million of annualized savings when our sales and volume levels return to pre-COVID levels.

•Create innovative products and solutions: To remain an industry leader and grow our reputation as an innovative company, we continuously develop dynamic product and system solutions for the entire kitchen. We leverage our suppliers and customers to actively address product competitiveness and life cycle extensions. We co-create innovation and refresh existing products with new, locally relevant food-inspiring technologies, while simultaneously finding new ways to integrate those technologies into global platforms in a cost-effective manner and create cohesive kitchen systems for our customers.

•Enhance customer satisfaction: We believe our broad product portfolio and the positioning of our industry-leading brands enables us to further grow the number of customers we serve and improve overall customer satisfaction as a trusted provider to the largest companies in the foodservice industry.

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•Drive operational excellence: We are focused on productivity gains and cost reductions across our business and plan to continue to leverage our global footprint to drive greater efficiencies across our operations. We are executing these cost reduction initiatives through our Transformation Program, focused on specific areas of opportunity including the realizationstrategic sourcing, manufacturing facility workflow redesign, distribution and administrative process efficiencies and optimizing our global brand platforms.

•Develop great people: We strive to make Welbilt an employer of benefits from pricing optimization developedchoice in conjunction with this program, in excess of $75 millionour industry. We believe that we demonstrate a strong commitment to our people by the second half of 2021. The actual timing of future costsproviding a diverse and realized savings of the program may differ materially from our current expectationsinclusive culture and estimates.environment where employee input, efforts and achievements are recognized and valued.

•
Create innovative products and solutions: To remain an industry leader and grow our reputation as an innovative company, we continuously develop dynamic product and system solutions for the entire kitchen. We leverage our suppliers and customers to actively address product competitiveness and life cycle extensions. We co-create innovation and refresh existing products with new, locally relevant food-inspiring technologies, while simultaneously finding new ways to integrate those technologies into global platforms in a cost-effective manner and create cohesive kitchen systems for our customers.

•
Enhance customer satisfaction: We believe our broad product portfolio and the positioning of our industry-leading brands enables us to further grow the number of customers we serve and improve overall customer satisfaction as a trusted provider to the largest companies in the foodservice industry.

•
Drive operational excellence: We are focused on productivity gains and cost reductions across our business and plan to continue to leverage our global footprint to drive greater efficiencies across our operations. We are executing these cost reduction initiatives through our Transformation Program, focused on specific areas of opportunity including strategic sourcing, manufacturing facility workflow redesign, distribution and administrative process efficiencies and optimizing our global brand platforms.

•
Develop great people: We strive to make Welbilt an employer of choice in our industry. We believe that we demonstrate a strong commitment to our people by providing a diverse and inclusive culture and environment where employee input, efforts and achievements are recognized and valued.

Results of Operations for the Three Months Ended March 31,September 30, 2020 and 2019

The following table sets forth our consolidated results for the periods presented:

(in millions, except percentage data)Three Months Ended September 30,Change
20202019$%
Net sales$298.5 $410.5 $(112.0)(27.3)%
Cost of sales193.2 259.6 (66.4)(25.6)%
Gross profit105.3 150.9 (45.6)(30.2)%
Gross margin (% of Net sales)35.3 %36.8 %(1.5)%
Selling, general and administrative expenses72.3 86.7 (14.4)(16.6)%
Amortization expense9.9 9.4 0.5 5.3 %
Restructuring and other expense (recovery)1.5 (0.2)1.7 N/M
Loss from impairment and disposal of assets — net0.4 0.2 0.2 100.0 %
Earnings from operations21.2 54.8 (33.6)(61.3)%
Interest expense18.1 22.4 (4.3)(19.2)%
Other (income) expense — net(0.6)2.9 3.5 120.7 %
Earnings before income taxes3.7 29.5 (25.8)(87.5)%
Income taxes(1.2)9.4 (10.6)(112.8)%
Net earnings$4.9 $20.1 $(15.2)(75.6)%
(in millions, except percentage data) Three Months Ended March 31, Change
 2020 2019 $ %
Net sales $328.9
 $375.3
 $(46.4) (12.4)%
Cost of sales 214.1
 248.8
 (34.7) (13.9)%
Gross profit 114.8
 126.5
 (11.7) (9.2)%
Gross margin (% of Net sales) 34.9% 33.7%   1.2 %
Selling, general and administrative expenses 86.5
 88.3
 (1.8) (2.0)%
Amortization expense 9.7
 9.5
 0.2
 2.1 %
Restructuring and other expenses 6.8
 4.2
 2.6
 61.9 %
Loss from impairment and disposal of assets — net 11.2
 —
 11.2
 100.0 %
Earnings from operations 0.6
 24.5
 (23.9) (97.6)%
Interest expense 21.3
 24.0
 (2.7) (11.3)%
Other (income) expense — net (5.4) 3.0
 8.4
 280.0 %
Loss before income taxes (15.3) (2.5) (12.8) 512.0 %
Income taxes (0.2) 0.1
 (0.3) (300.0)%
Net loss $(15.1) $(2.6) $(12.5) 480.8 %
N/M - Not Meaningful


Analysis of Net Sales

"Net sales" for our geographic business segments consisted ofcomprised the following for the periods presented:

(in millions)Three Months Ended September 30,Change
20202019$%
Americas$221.8 $318.2 $(96.4)(30.3)%
EMEA73.9 95.8 (21.9)(22.9)%
APAC48.0 64.4 (16.4)(25.5)%
Elimination of intersegment sales(45.2)(67.9)22.7 33.4 %
Total net sales$298.5 $410.5 $(112.0)(27.3)%
(in millions, except percentage data) Three Months Ended March 31, Change
 2020 2019 $ %
Americas $250.5
 $275.1
 $(24.6) (8.9)%
EMEA 90.0
 106.7
 (16.7) (15.7)%
APAC 51.3
 54.8
 (3.5) (6.4)%
Elimination of intersegment sales (62.9) (61.3) (1.6) (2.6)%
Total net sales $328.9
 $375.3
 $(46.4) (12.4)%

Net sales totaled $328.9$298.5 million for the three months ended March 31,September 30, 2020 representing a decrease of $46.4$112.0 million, or 12.4%27.3%, compared to the same period of the prior year. The decrease in net sales was primarily the result of decreased volumes largely due to rollouts with large chain customers in the prior year which did not recur and a decrease in general market demand, primarily due to the impactdecreased KitchenCare aftermarket sales, both of which were significantly impacted by the COVID-19 pandemic on foodservice providers globally and the resulting decrease in demand for our products.products, and rollouts with large chain customers in the prior year which did not recur in 2020. This decrease was partially offset by increased net pricing.pricing and a reduction in costs associated with volume driven rebate programs. Foreign currency translation negativelypositively impacted net sales for the three months ended March 31,September 30, 2020 by $2.9$3.0 million, or 0.8%0.7%. Organic net sales (a non-GAAP measure) decreased 11.6% for the three months ended March 31, 2020 compared to the same period of the prior year.

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Net sales in the Americas segment for the three months ended March 31,September 30, 2020 decreased $24.6$96.4 million, or 8.9%30.3%, as a result of lower third-party net sales of $22.7$82.1 million and a decrease in intersegment sales of $1.9$14.3 million. The decrease in third-party net sales was primarily driven by decreased volumes largely due to rollouts with certain large chain customersa decrease in the prior yeargeneral market demand, decreased KitchenCare aftermarket sales, both of which did not recur as well as the impact ofwere significantly impacted by the COVID-19 pandemic on foodservice providers and the resulting decrease in demand for our products. Thisproducts, and rollouts with large chain customers in the prior year which did not recur in 2020. The decrease was partially offset by increased net pricing.pricing and a reduction in costs associated with volume driven rebate programs. Foreign currency translation also negatively impacted third-party net sales for the three months ended March 31,September 30, 2020 by $0.4$0.3 million. Organic net sales (a non-GAAP measure) decreased 9.3% for the three months ended March 31, 2020 compared to the same period of the prior year.

Net sales in the EMEA segment for the three months ended March 31,September 30, 2020 decreased $16.7$21.9 million, or 15.7% driven by lower22.9%, consisting of a $16.0 million decrease in third-party net sales of $19.3and a $5.9 million partially offset by a $2.6 million increasedecrease in intersegment sales. The decrease in third-party net sales was primarily driven by decreased volumes largely due to a rolloutrollouts with a large chain customercustomers in the prior year which did not recur in 2020 along with decreased volumes largely due to the impact of the COVID-19 pandemic on foodservice providers and the resulting decrease in demand for our products. This decrease was slightly offset by increased net pricing. Foreign currency translation also negatively impacted third-party net sales for the three months ended March 31, 2020 by $2.0 million. Organic net sales (a non-GAAP measure) decreased 19.0% for the three months ended March 31, 2020 compared to the same period of the prior year.

Net sales in the APAC segment for the three months ended March 31, 2020general market and decreased $3.5 million, or 6.4% consistingKitchenCare aftermarket sales, both of lower third-party net sales of $4.4 million partially offsetwhich were significantly impacted by a $0.9 million increase in intersegment sales. The decrease in third-party net sales was primarily driven by decreased volumes largely due to the impact of the COVID-19 pandemic on foodservice providers and the resulting decrease in demand for our products. Foreign currency translation also negativelypositively impacted third-party net sales for the three months ended March 31,September 30, 2020 by $0.5$3.1 million. Organic net

Net sales (a non-GAAP measure) decreased 8.9%in the APAC segment for the three months ended March 31,September 30, 2020 compared todecreased $16.4 million, or 25.5%, primarily as a result of decreased third-party net sales of $13.9 million and a decrease in intersegment sales of $2.5 million. The decrease in third-party net sales was primarily driven by decreased volumes in the same period ofgeneral market and decreased KitchenCare aftermarket sales, which were significantly impacted by the prior year.COVID-19 pandemic on foodservice providers and the resulting decrease in demand for our products. Foreign currency translation positively impacted third-party net sales for the three months ended September 30, 2020 by $0.2 million.

Analysis of Earnings from Operations

Gross profit

"Gross profit" for the three months ended March 31,September 30, 2020 totaled $114.8$105.3 million, a decrease of $11.7$45.6 million, or 9.2%30.2%, compared to the same period of the prior year. This decrease was primarily driven by: (i) a $22.4$39.6 million unfavorable impact from product volumes, (ii) $14.5 million of unfavorable material and mix, (ii) $5.4other manufacturing costs, primarily driven by a reduction in fixed overheard absorption due to lower production volumes and (iii) $0.9 million of higher other manufacturing and warranty costs, (iii) a $1.6 million negative foreign currency translation impact and (iv) $0.8 million of increased costs incurred in connection with the Transformation Program.depreciation costs. These unfavorable impacts were largelypartially offset by (i) a $12.1$7.6 million favorable impact from increased net pricing, (ii) a $1.1 million positive foreign currency translation impact and $6.6(iii) a $0.7 million of lower material costs.decrease in third-party consulting costs incurred in connection with our Transformation Program.

Selling, general and administrative expenses

"Selling, general and administrative expenses" for the three months ended March 31,September 30, 2020 totaled $86.5$72.3 million, representing a decrease of $1.8$14.4 million, or 2.0%16.6%, compared to the same period of the prior year. TheThis decrease in selling, general and administrative expenses is primarily the result of:due to: (i) $2.9$6.5 million of lower net professional fees (inclusive of $4.9 million of lower third-party consulting incurred in connection with our Transformation Program), (ii) $4.5 million of lower marketing and sales commission costs, (ii) $1.6expenses, (iii) $3.1 million of lower net employee-related and controllable travel costs (iii) $0.9and (iv) $0.5 million of lower professional fees, (iv) $0.9 milliondepreciation expense. The majority of lower other expenses primarilythese expense reductions were associated with information technology spendingour response to the COVID-19 pandemic, including reductions in force and (v)temporary furloughs and a $0.5 million positive foreign currency translation impact. These decreases were partially offset by $5.0 millionsignificant curtailment of higher third-party consultingtravel and marketing spend, and other costs incurred in connection with our Transformation Program.discretionary spending.


Restructuring and other expenses

"Restructuring and other expenses"expense (recovery) " for the three months ended March 31,September 30, 2020 were $6.8$1.5 million, consisting of $3.7$1.3 million of severance and related costs and a $3.1$0.2 million loss contingency charge. The severance and related costs were associated with continued workforce reductions in the Americas and Corporate andreduction efforts as a limited management restructuring to reduce operating expenses in response to the negative impactresult of the global COVID-19 pandemic on our operationsimproved efficiencies gained from the execution of the Transformation Program as well as actions initiated during the fourth quarter of 2019 in the EMEA and APAC regions. The loss contingency charge was associated with our voluntary review of certain errors in declarations to the U.S. Customs and Border Protection for customs duties, fees and interest owed for previously imported products.products. See Note 12, "Contingencies and Significant Estimates," for further information.
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Analysis of Adjusted Operating EBITDA

Adjusted Operating EBITDA for our geographic segments consisted of the following for the periods presented:

(in millions, except percentage data)Three Months Ended September 30,Change
20202019$%
Americas$34.8 $67.0 $(32.2)(48.1)%
EMEA10.5 18.6 (8.1)(43.5)%
APAC8.4 11.3 (2.9)(25.7)%
Total Segment Adjusted Operating EBITDA53.7 96.9 (43.2)(44.6)%
Less: Corporate and unallocated expenses(8.1)(14.8)6.7 45.3 %
Total Adjusted Operating EBITDA$45.6 $82.1 $(36.5)(44.5)%
Adjusted Operating EBITDA margin (1)
15.3 %20.0 %(4.7)%

(1) Adjusted Operating EBITDA margin is calculated by dividing the dollar amount of Adjusted Operating EBITDA by net sales.

Adjusted Operating EBITDA in the Americas segment for the three months ended September 30, 2020 decreased by $32.2 million, or 48.1%. This decrease was primarily the result of: (i) $30.5 million of lower product volumes and (ii) $12.6 million of unfavorable material and other manufacturing costs primarily driven by reduced production volumes. The impact of these decreases was partially offset by (i) a $5.3 million favorable impact from net pricing, (ii) $3.8 million of lower marketing and commissions costs and (iii) $1.6 million of lower employee-related and travel costs.

Adjusted Operating EBITDA in the EMEA segment for the three months ended September 30, 2020 decreased by $8.1 million, or 43.5%, primarily the result of $12.8 million of lower margin principally driven by lower product volumes. The impact of these decreases were partially offset by (i) $2.9 million of favorable material and other manufacturing costs, (ii) $0.8 million of lower employee-related, travel and other controllable costs, (iii) $0.6 million of favorable foreign currency translation impact and (iv) $0.4 million of lower marketing expenses.

Adjusted Operating EBITDA in the APAC segment for the three months ended September 30, 2020 decreased by $2.9 million, or 25.7%, primarily driven by $4.4 million of decreased product volumes partially offset by $0.4 million of lower employee-related and controllable travel expenses, $0.3 million of favorable impact from net pricing and $0.3 million of favorable material and other manufacturing costs.

Corporate and unallocated expenses reflect certain corporate-level expenses which are not allocated to the geographic business segments and eliminations. For the three months ended September 30, 2020, corporate and unallocated expenses decreased by $6.7 million, or 45.3%, primarily driven by $4.7 million in intercompany inventory related eliminations, $0.9 million of other related costs and $0.7 million of lower employee-related, travel and other controllable costs.

Analysis of Non-Operating Income Statement Items

For the three months ended September 30, 2020, "Interest expense" was $18.1 million, a $4.3 million decrease as compared to the same period of the prior year, primarily driven by a decrease in weighted average interest rates as a result of the decrease in LIBOR during the period.

For the three months ended September 30, 2020, "Other (income) expense — net" was income of $0.6 million, compared to an expense of $2.9 million for the same period of the prior year. The increase of $3.5 million is primarily the result of an increase in net foreign currency gains compared to the same period of prior year.

Analysis of Income Taxes

For the three months ended September 30, 2020, we recorded a $1.2 million income tax benefit, reflecting a (32.4)% effective tax rate, compared to a $9.4 million income tax provision for the three months ended September 30, 2019, reflecting a 31.9% effective tax rate. The change in the effective tax rate for the three months ended September 30, 2020 compared to the same period of the prior year is primarily the result of our decrease in earnings, changes in discrete tax items as a result of the change in uncertain tax positions related to interest limitation, CARES Act net operating loss carryback provisions and relative weighting of jurisdictional income and loss. For the three months ended September 30, 2020, the income tax benefit includes net discrete benefits of $1.2 million primarily related to the uncertain tax position related to interest limitation, and CARES Act net operating loss carryback provisions.
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Results of Operations for the Nine Months Ended September 30, 2020 and 2019

The following table sets forth our consolidated results for the periods presented:

(in millions, except percentage data)Nine Months Ended September 30,Change
20202019$%
Net sales$833.4 $1,212.1 $(378.7)(31.2)%
Cost of sales544.9 778.4 (233.5)(30.0)%
Gross profit288.5 433.7 (145.2)(33.5)%
Gross margin (% of Net sales)34.6 %35.8 %(1.1)%
Selling, general and administrative expenses215.6 262.8 (47.2)(18.0)%
Amortization expense29.2 28.8 0.4 1.4 %
Restructuring and other expense9.5 5.4 4.1 75.9 %
Loss from impairment and disposal of assets — net11.7 0.2 11.5 N/M
Earnings from operations22.5 136.5 (114.0)(83.5)%
Interest expense58.5 70.9 (12.4)(17.5)%
Other expense — net0.8 11.5 10.7 93.0 %
(Loss) earnings before income taxes(36.8)54.1 (90.9)(168.0)%
Income taxes(9.2)16.6 (25.8)(155.4)%
Net (loss) earnings$(27.6)$37.5 $(65.1)(173.6)%
N/M - Not Meaningful

Analysis of Net Sales

"Net sales" for our geographic business segments consisted of the following for the periods presented:

(in millions, except percentage data)Nine Months Ended September 30,Change
20202019$%
Americas$630.9 $929.2 $(298.3)(32.1)%
EMEA209.5 301.3 (91.8)(30.5)%
APAC141.5 179.3 (37.8)(21.1)%
Elimination of intersegment sales(148.5)(197.7)49.2 24.9 %
Total net sales$833.4 $1,212.1 $(378.7)(31.2)%

Net sales totaled $833.4 million for the nine months ended September 30, 2020, representing a decrease of $378.7 million, or 31.2%, compared to the same period of the prior year. The decrease in net sales was primarily the result of decreased volumes largely due to a decrease in general market demand, decreased KitchenCare aftermarket sales, both of which were significantly impacted by the COVID-19 pandemic on foodservice providers globally and the resulting decrease in demand for our products, and rollouts with large chain customers in the prior year which did not recur in 2020. This decrease was partially offset by increased net pricing and a reduction in costs associated with volume driven rebate programs. Foreign currency translation negatively impacted net sales for the nine months ended September 30, 2020 by $2.1 million, or 0.2%.

Net sales in the Americas segment for the nine months ended September 30, 2020 decreased $298.3 million, or 32.1%, as a result of lower third-party net sales of $263.4 million and a decrease in intersegment sales of $34.9 million. The decrease in third-party net sales was primarily driven by decreased volumes largely due to a decrease in general market demand, decreased KitchenCare aftermarket sales, both of which were significantly impacted by the COVID-19 pandemic on foodservice providers and the resulting decrease in demand for our products, and rollouts with certain large chain customers in the prior year which did not recur in 2020. This decrease was partially offset by increased net pricing and a reduction in costs associated with volume driven rebate programs. Foreign currency translation negatively impacted third-party net sales for the nine months ended September 30, 2020 by $1.5 million.

Net sales in the EMEA segment for the nine months ended September 30, 2020 decreased $91.8 million, or 30.5%, driven by lower third-party net sales of $78.6 million and a $13.2 million decrease in intersegment sales. The decrease in third-party net sales was primarily driven by rollouts with large chain customers in the prior year which did not recur in 2020 along with decreased volumes in the general market and decreased KitchenCare aftermarket sales, both of which were significantly impacted by the COVID-19 pandemic on foodservice providers and the resulting decrease in demand for our products. Foreign currency translation positively impacted third-party net sales for the nine months ended September 30, 2020 by $0.4 million.

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Net sales in the APAC segment for the nine months ended September 30, 2020 decreased $37.8 million, or 21.1%, consisting of lower third-party net sales of $36.7 million partially offset by a $1.1 million decrease in intersegment sales. The decrease in third-party net sales was primarily driven by decreased volumes in the general market and KitchenCare aftermarket sales, both of which were significantly impacted by the COVID-19 pandemic on foodservice providers and the resulting decrease in demand for our products. Foreign currency translation negatively impacted third-party net sales for the nine months ended September 30, 2020 by $1.0 million.

Analysis of Earnings from Operations

Gross profit

"Gross profit" for the nine months ended September 30, 2020 totaled $288.5 million, a decrease of $145.2 million, or 33.5%, compared to the same period of the prior year. This decrease was primarily driven by: (i) a $136.9 million unfavorable impact from a decline in product volumes, (ii) $25.8 million of unfavorable material and other manufacturing costs primarily driven by a reduction in fixed overhead absorption due to lower production volumes and temporary shutdowns of certain manufacturing plants during the current year, (iii) a $2.0 million negative foreign currency translation impact, and (iv) $1.6 million of higher depreciation costs. These unfavorable impacts were partially offset by a $21.3 million favorable impact from increased net pricing.

Selling, general and administrative expenses

"Selling, general and administrative expenses" for the nine months ended September 30, 2020 totaled $215.6 million, representing a decrease of $47.2 million, or 18.0%, compared to the same period of the prior year. The decrease is primarily the result of: (i) $21.0 million lower employee-related and controllable travel costs inclusive of favorable adjustments of $5.4 million for governmental wage subsidies, (ii) $14.3 million of lower marketing and commission costs, (iii) $6.8 million of lower professional fees (inclusive of $5.1 million of lower third-party consulting costs incurred in connection with our Transformation Program), (iv) $2.6 million of lower expenses primarily associated with information technology spending, (v) $1.2 million of lower depreciation expense and (vi) $0.8 million positive foreign currency translation impact. A significant portion of the expense reductions was associated with our response to the COVID-19 pandemic, including employee furlough activities and reduction in headcount, reduced travel and marketing spend and other related operational actions.

Restructuring and other expense (recovery)

"Restructuring and other expense (recovery) " for the nine months ended September 30, 2020 were $9.5 million, consisting of $5.9 million of severance and related costs and a $3.6 million loss contingency charge. The severance and related costs were associated with workforce reductions executed throughout 2020 in the Americas and Corporate regions and a limited management restructuring to reduce operating expenses as a result of the improved efficiencies gained from the execution of the Transformation Program, as well as actions initiated during the fourth quarter of 2019 in the EMEA and APAC regions. The loss contingency charge was associated with our voluntary review of certain errors in declarations to the U.S. Customs and Border Protection for customs duties, fees and interest owed for previously imported products. See Note 12, "Contingencies and Significant Estimates," for further information.

Restructuring and other expenses for the threenine months ended March 31,September 30, 2019 were $4.2$5.4 million as a result of a global and limited executive managementbroad-based restructuring actionactions which included personnel across all levels of our organization as well as executive management changes.

Loss from impairment and disposal of assets — net

"Loss from impairment and disposal of assets — net" for the threenine months ended March 31,September 30, 2020 was $11.2$11.7 million and consisted primarily of an impairment charge of $11.1 million on trademark and trade names in our EMEA segment.segment recorded during the quarter ended March 31, 2020. See Note 6, "Goodwill and Other Intangibles"Intangible Assets — Net," of the Notes to the Consolidated Financial Statements for additional details.

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Analysis of Adjusted Operating EBITDA

As described in Note 18, "Business Segments," in the Notes to the Consolidated Financial Statements, during the first quarter of 2020, the Companywe revised the allocation of certain of its functional expenses between the corporate-level and the geographic business segments. Management believes the revised allocation methodology better aligns the operating results of the geographic business segments with how management assesses performance and makes operating decisions. The prior period segment results and related disclosures have been recast to conform to the current period presentation. These changes did not impact the Company'sour previously reported consolidated financial results.

Adjusted Operating EBITDA for geographic segments consisted of the following for the periods presented:

(in millions, except percentage data) Three Months Ended March 31, Change(in millions, except percentage data)Nine Months Ended September 30,Change
2020 2019 $ %20202019$%
Americas $52.3
 $44.5
 $7.8
 17.5 %Americas$105.8 $184.2 $(78.4)(42.6)%
EMEA 13.6
 18.2
 (4.6) (25.3)%EMEA29.6 55.1 (25.5)(46.3)%
APAC 8.2
 7.9
 0.3
 3.8 %APAC22.3 26.5 (4.2)(15.8)%
Total Segment Adjusted Operating EBITDA 74.1
 70.6
 3.5
 5.0 %Total Segment Adjusted Operating EBITDA157.7 265.8 (108.1)(40.7)%
Less: Corporate and unallocated expenses (28.6) (20.5) (8.1) (39.5)%Less: Corporate and unallocated expenses(46.8)(50.8)4.0 7.9 %
Total Adjusted Operating EBITDA $45.5
 $50.1
 $(4.6) (9.2)%Total Adjusted Operating EBITDA$110.9 $215.0 $(104.1)(48.4)%
        
Adjusted Operating EBITDA margin(1)
 13.8% 13.3%   0.5 %
Adjusted Operating EBITDA margin(1)
13.3 %17.7 %(4.4)%

(1) Adjusted Operating EBITDA margin is calculated by dividing the dollar amount of Adjusted Operating EBITDA by net sales.

Adjusted Operating EBITDA in the Americas segment for the threenine months ended March 31,September 30, 2020 increaseddecreased by $7.8$78.4 million, or 17.5%42.6%. This increasedecrease was primarily driven by: (i) an $11.2$94.6 million of lower product volumes, (ii) $19.7 million of unfavorable material and other manufacturing costs primarily driven by a reduction in fixed overhead absorption due to reduced production volumes and temporary shutdowns of certain manufacturing plants and (iii) a $1.0 million unfavorable foreign currency translation impact. The impact of these decreases were partially offset by (i) a $15.5 million favorable impact from net pricing, , (ii) $6.0 million improvement of material costs, (iii) $2.1$11.9 million of lower marketing and commissions costs and (iii) $1.8$8.8 million of lower product warranty costsemployee-related and (iv) $0.6 million of lower employee related and controllable travel costs. These increases were partially offset by $7.1 million of lower product volumes and mix and $5.7 million of increases in other manufacturing costs.

Adjusted Operating EBITDA in the EMEA segment for the threenine months ended March 31,September 30, 2020 decreased by $4.6$25.5 million, or 25.3%46.3%, which was primarily driven by: (i) $3.3$37.2 million of lower margin principally driven by lower product volumes and mix, (ii) $1.9 million higher other manufacturing costs , (iii) $1.3 million higher professional services and research and development costs , (iv) $0.6 millionvolumes. The impact of higher product warranty costs and (v) a $0.5 million unfavorable foreign currency translation impact. Thesethese decreases were partially offset by: (i) a $1.3 million favorable impact from net pricing, (ii) $0.7$5.9 million of lower marketing expensesfavorable material and (iii) $0.5other manufacturing costs, (ii) $4.9 million of lower employee-related, travel and other controllable costs.costs and (iii) $1.9 million of lower marketing and commission expenses.

Adjusted Operating EBITDA in the APAC segment for the threenine months ended March 31,September 30, 2020 increaseddecreased by $4.2 million, or 15.8%, primarily driven by a $8.7 million of decreased product volumes and a $0.3 million or 3.8%. This increase was primarily driven by: (i) $0.6unfavorable impact of foreign currency translation. These decreases were partially offset by $3.2 million of lower employee-related and travel costs, $0.9 million of favorable material and other controllablemanufacturing costs (ii) $0.4and $0.7 million of lower research and development costs and (iii) a $0.2 million favorable impact from net pricing. These increases were partially offset by $0.8 million of decreased product volumes and mix and a $0.2 million unfavorable impact of foreign currency translation.


costs.

Corporate and unallocated expenses reflect certain corporate-level expenses and eliminations, which are not allocated to the geographic business segments.segments and eliminations. For the threenine months ended March 31,September 30, 2020, corporate and unallocated costs increasedexpenses decreased by $8.1$4.0 million,, or 39.5%,7.9%. This increasedecrease was primarily driven by an increase in the eliminationa decrease of profit in inventory attributable to higher intercompany inventory on hand partially offset by $2.2$4.4 million of lower professional servicesemployee-related, travel and information technology costs and $1.2 million of lower stock-based compensation expenses.other controllable costs.

Analysis of Non-Operating Income Statement Items

For the threenine months ended March 31,September 30, 2020, "Interest expense" was $21.3$58.5 million, a $2.7$12.4 million decrease as compared to the same period of the prior year, primarily driven by a decrease in weighted average interest rates.rates as a result of the decrease in LIBOR during the period.

For the threenine months ended March 31,September 30, 2020, "Other (income) expense — net" was an incomeexpense of $5.4$0.8 million, compared to an expense of $3.0$11.5 million for the same period of the prior year. The $8.4$10.7 million changedecrease is primarily the result of lower net foreign currency transaction gains andlosses combined with a decrease in expenses associated with the$1.2 million pension settlement loss of $1.2 million recognized in 2019 which did not recur in 2020.
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Analysis of Income Taxes

For the threenine months ended March 31,September 30, 2020, we recorded a $0.2$9.2 million income tax benefit, reflecting a 1.3%25.0% effective tax rate, compared to a $0.1$16.6 million income tax provision, reflecting a (4.0)% effective tax rate, recorded for the three months ended March 31, 2019. The increase in30.7% effective tax rate for the threenine months ended March 31,September 30, 2019. The change in the effective tax rate for the nine months ended September 30, 2020 compared to the same period of the prior year is primarily due tothe result of changes in discrete tax items as a result of the CARES Act and theour decrease in earnings and relative weighting of jurisdictional income and loss. For the threenine months ended March 31,September 30, 2020, the income tax benefit includes $4.6 million of net discrete expenses of $5.0 million primarily related to the provisions of the CARES Act, including changes allowing for net operating loss carryback and an increase in the allowable deduction limitation of interest expense, (from 30% to 50%),along with the changes in uncertain tax positions, compared to $0.8$0.7 million of discrete expenses related to stock-based compensation and foreign tax adjustments for the threenine months ended March 31,September 30, 2019.

Liquidity and Capital Resources

Overview of Factors Affecting our Liquidity

We manage cash centrally, generally reinvest net earnings locally and meet working capital requirements from cash and cash equivalents, cash flows from operations and capacity under our existing credit facilities. As of March 31,September 30, 2020, our total liquidity was $299.5$332.9 million, consisting of $148.5$122.9 million of cash and cash equivalents and $151.0$210.0 million available for additional borrowings under our senior secured revolving credit facility ("Revolving Credit Facility"), to the extent the Company'sour compliance with financial covenants permits such borrowings, comparedborrowings. This compares to totalour liquidity of $298.3 million as of June 30, 2020, $299.5 million as of March 31, 2020 and $384.8 million as of December 31, 2019. Our annual liquidity trend generally decreases in the first quarter and increases in the remaining quarters of the year driven by our earnings cycle as well as the timing of large cash payments in the first quarter such as annual rebates, incentive compensation and others.the build-up of inventory in advance of the historically higher sales period in the spring and early summer months. This general trend has been disrupted during the second and third quarters of the current year as a result of the effects of the COVID-19 pandemic.

As of March 31,September 30, 2020, 72.4%approximately 86% of our cash and cash equivalents were held outside of the U.S. The majority of the cash generated in the U.S. is used to fund current and expected future working capital requirements and to fund debt service obligations. We maintain significant operations outside of the U.S., and as a result, a significant portion of our cash is denominated in foreign currencies. We manage our worldwide cash requirements by reviewing available funds among our subsidiaries through which we conduct our business and the cost effectiveness with which those funds can be accessed. Where local restrictions prevent an efficient intercompany transfer of funds, our intent is to keep cash balances outside of the U.S. and to meet our liquidity needs through ongoing cash flows, external borrowings, or both. We plan to continue reinvesting foreign earnings indefinitely outside of the U.S. with certain limited exceptions.

Our future cash needs are currently expected to be primarily related to operating activities, inclusive of ongoing Transformation Program costs, working capital, debt service and capital investments. We estimate that our capital expenditures will be between $24$22 and $28$26 million for the year ending December 31, 2020, which may be impacted by general economic, financial or operational changes, including the impact of COVID-19 on our operating results, competitive, legislative and regulatory factors, among other things.considerations. Our ability to satisfy our cash requirements depends on our ongoing ability to generate and raise cash. In response to the global COVID-19 pandemic, we have actioned contingency plans for our operations and taken what we believe to be appropriate steps to reduce operating expenses and capital spending as necessary, including reductions in the size of our workforce and temporary employee furloughs. Additionally, in April 2020, due to the impact of the COVID-19 pandemic on the commercial foodservice industry and the resulting decrease in demand for our products, we executed an amendment on our 2016 Credit FacilityAgreement to prevent non-compliance withamend the financial covenants of our senior secured revolving credit facility for the quarter ending June 30, 2020.Revolving Credit Facility. We continue to expect that our future cash generated from operations, together with our capacity under our existing senior secured revolving credit facility and our access to capital markets, will provide adequate resources to meet our working capital needs and cash requirements for at least the next 12 months.

Our access to, and the availability of, financing on acceptable terms in the future will be affected by many factors including overall liquidity in the capital markets, the state of the economy and our credit rating. The ongoing COVID-19 pandemic, which has causedcontinued to cause disruption in the capital markets, could also make financing more difficult and at increased expense.costly. Moreover, we are unable to quantify the extentseverity or duration of the effectimpact of the COVID-19 pandemic on our operational and financial performance, will depend significantly on future developments for which our estimates may change; however, it could have a materialan adverse impact on our results of operations, cash flows and financial position, compared to our current expectations, potentially resulting in a default or an acceleration of indebtedness, and could otherwise negatively impact our liquidity and ability to make additional borrowings under our revolving credit facility.Revolving Credit Facility.
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Sources and Uses of Cash

Cash and cash equivalents and restricted cash as of March 31,September 30, 2020 totaled $148.5$123.1 million, an increasea decrease of $17.8$7.6 million from the December 31, 2019 balance of $130.7 million.

The table below summarizes our cash flows:

(in millions)Nine Months Ended September 30,Change
20202019
Cash (used in) provided by:
Operating activities$(26.9)$(320.5)$293.6 
Investing activities(20.0)296.2 (316.2)
Financing activities39.6 72.8 (33.2)
Effect of exchange rate changes on cash(0.3)(3.9)3.6 
Net (decrease) increase in cash and cash equivalents and restricted cash$(7.6)$44.6 $(52.2)
(in millions) Three Months Ended March 31, Change
 2020 2019 
Cash (used in) provided by:      
Operating activities $(72.5) $(357.0) $284.5
Investing activities (9.5) 191.4
 (200.9)
Financing activities 105.1
 146.7
 (41.6)
Effect of exchange rate changes on cash (5.3) 1.0
 (6.3)
Net increase (decrease) in cash and cash equivalents and restricted cash $17.8
 $(17.9) $35.7

Operating Activities

Cash used in operating activities for the threenine months ended March 31,September 30, 2020 was $72.5$26.9 million comparedand consisted primarily of a net loss of $27.6 million, a use of $37.9 million related to $357.0a current income tax receivable primarily associated with CARES Act net operating loss carryback provisions, $19.2 million and $9.9 million of cash used for rebate payments and interest expense, respectively, and $8.8 million of cash used in connection with settlement of previously actioned restructuring activities. We also had cash outflows of $13.6 million associated with the three months ended March 31, 2019. Thetiming of other current and long-term liabilities, assets and trade accounts payable and $5.5 million due to higher inventory. These outflows were partially offset by a cash inflow of $21.9 million from a net decrease in cashaccounts receivable and $52.5 million in non-cash charges for depreciation and amortization expense, stock-based compensation and amortization of debt issuance costs, an $11.1 million non-cash impairment charge on trademarks in the EMEA segment and a change in deferred income taxes of $10.0 million.

Cash used in operating activities for the nine months ended September 30, 2019 was primarily$320.5 million. The use of cash in operating activities was driven by a decreaseusage of $285.0$371.1 million resulting from the timing of collections on accounts receivable combined with the termination of our accounts receivable securitization program during the first quarter of 2019 and a net impact$37.9 million use of $14.4 million for the changecash due to a reduction in timingtrade accounts payable. This combined use of payables and other current and long-term liabilities. Also contributing to the decrease in cash usage was a $4.1 million decrease in the net loss adjusted for non-cash items, including impairment charges of $11.1 million on trademarks and trade names in the EMEA segment. These decreases in usage were partially offset by an increasenet earnings of $37.5 million, $28.8 million in cash use driven by timingnon-cash amortization of activity for otherintangible assets and $16.4 million of $14.4 million and inventory build of $4.6 million.non-cash depreciation expense.

Investing Activities

Cash used in investing activities of $9.5$20.0 million for the threenine months ended March 31,September 30, 2020 consisted of capital expenditures of $5.6$15.9 million and $3.9 million of payments, net of interest received, made in connection with the maturity of our cross-currency swap in March 2020.

Cash provided by investing activities of $191.4$296.2 million for the threenine months ended March 31,September 30, 2019 consisted primarily of $196.0$280.7 million of cash receipts on beneficial interests in sold receivables.receivables and $32.0 million of proceeds received from the maturity of a short-term investment. These cash inflows were partially offset by capital expenditures of $4.8$17.4 million.

Financing Activities

Cash provided by financing activities for the threenine months ended March 31,September 30, 2020 of $105.1$39.6 million consisted primarily of net borrowings on long-term debt and finance leases of $104.7 million.$41.3 million partially offset by $2.1 million of capitalized costs incurred in connection with the April 2020 amendment of our 2016 Credit Facility.

Cash provided by financing activities for the threenine months ended March 31,September 30, 2019 of $146.7$72.8 million consisted primarily of net borrowings on long-term debt and finance leases of $163.7$87.8 million, partially offset by repayments on short-term borrowings of $15.0 million.

Financing Resources

Our primary financing resources have historically consisted of our 2016 Credit Agreement and our 9.50% Senior Notes due 2024. Collectively, these arrangements represent the majority of our financing resources, which combined with cash generated by our business operations, are used to meet our financial obligations and liquidity requirements. The general terms of our financing arrangements as of March 31,September 30, 2020 are set forth below.

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2016 Credit Agreement

Our 2016 Credit Agreement provides for a $1,300.0 million Senior Secured Credit Facility consisting of (i) a senior secured Term Loan B Facility for $900.0 million and (ii) a Senior Securedthe Revolving Credit Facility ("Revolving Credit Facility") with aggregate commitments of $400.0 million. On April 17, 2020, we entered into Amendment No. 7 (the “Amendment”) to the 2016 Credit Agreement, to amend the financial covenants of the Revolving Credit Facility. The terms of the Amendment, among others as set forth in the Amendment, (i) suspend the Consolidated Total Leverage Ratio and Consolidated Interest Coverage Ratio covenants, in each case, as defined in the 2016 Credit Agreement, for four fiscal quarters until March 31, 2021 ("Suspension Period") and (ii) temporarily replace the suspended covenants with a Minimum Consolidated EBITDA covenant and a Maximum Capital Expenditure covenant, each computed on a trailing four quarters basis and measured quarterly, and a Minimum Liquidity covenant that is measured monthly, each as defined in the Amendment, throughout the Suspension Period, with the Minimum Liquidity covenant extending through June 30, 2021.


Beginning in the second quarter of 2021, the Consolidated Total Leverage Ratio and Consolidated Interest Coverage Ratio covenants will be reinstated at modified levels as compared to the covenants in effect as of March 31,beginning June 30, 2020 and will returnphase-in to the March 31, 2020pre-Amendment covenant levels by the fourth quarter of 2021.

As of March 31,September 30, 2020, borrowings under the 2016 Credit Agreement bore interest at a rate per annum equal to, at our option, either (i) London Interbank Offered Rate ("LIBOR") plus an applicable margin of 2.50% for the Term Loan B Facility and 1.50% to 2.50%, for the Revolving Credit Facility (depending on the Company's Consolidated Total Leverage Ratio) or (ii) an alternate base rate plus an applicable margin that is 1.00% less than the LIBOR-based applicable margin. The Amendment includes a quarterly fee applicable through the fourth quarter of 2021 in an amount equal to a per annum rate of 0.50% on the average outstanding balance of the Revolving Credit Facility, payable on a quarterly basis.

Senior Notes

On February 18, 2016, we issued 9.50% Senior Notes due 2024 (the "Senior Notes") in an aggregate principal amount of $425.0 million, all of which was outstanding as of March 31,September 30, 2020. The Senior Notes were issued under an indenture with Wells Fargo Bank, National Association, as trustee, and are fully and unconditionally guaranteed, jointly and severally, on an unsecured basis by each of our domestic restricted subsidiaries who are a borrower or guarantor under the 2016 Credit Agreement.

Revolving Loan Facility

Our short-term secured revolving loan facility provided for borrowings of up to $30.0 million. During the first quarter of 2019, we repaid the outstanding balance on this facility, which matured on April 18, 2019.

Covenant Compliance

The 2016 Credit Agreement and indenture governing the Senior Secured Credit Facility contains limitations on our ability to effect mergers and change of control events as well as certain other limitations, including limitations on: (i) the declaration and payment of dividends or other restricted payments, (ii) incurrence of additional indebtedness or issuing preferred stock, (iii) the creation or existence of certain liens, (iv) incurrence of restrictions on the ability of certain of our subsidiaries to pay dividends or other payments, (v) transactions with affiliates and (vi) sales of assets.

As of March 31, 2020, our 2016 Credit Agreement contained financial covenants including, but not limited to (a) a Consolidated Interest Coverage Ratio, which measures the ratio of (i) Consolidated EBITDA to (ii) Consolidated Interest Expense, and (b) a Consolidated Total Leverage Ratio, which measures the ratio of (i) Consolidated Indebtedness to (ii) Consolidated EBITDA for the most recent four fiscal quarters, in each case, as defined in the 2016 Credit Agreement.

We were in compliance with all affirmative and negative covenants, including any financial covenants, pertaining to our financing arrangements, in effect as of March 31, 2020. As discussed above, on April 17, 2020, we entered into an Amendment to the 2016 Credit Agreement, to amend the financial covenants of the Revolving Credit Facility for periods aftersubsequent to March 31, 2020. We have estimated the negative impact of COVID-19 on its financial position, results of operations and cash flows; however, due to the inherent uncertainty of the severity and duration of the COVID-19 pandemic on the Company's business, management's estimates of the achievement of its financial covenants may change in the future. We were in compliance with all affirmative and negative covenants, including any financial covenants, pertaining to our financing arrangements, in effect as of September 30, 2020.

A summary of our outstanding financing obligations, excluding finance leases, is as follows:

(in millions) March 31, December 31,
 2020 2019
Revolving credit facility $244.9
 $141.8
Term Loan B facility 855.0
 855.0
9.50% Senior Notes due 2024 425.0
 425.0
Total debt $1,524.9
 $1,421.8

(in millions)September 30,December 31,
20202019
Revolving Credit Facility$182.9 $141.8 
Term Loan B Facility855.0 855.0 
9.50% Senior Notes due 2024425.0 425.0 
Total debt$1,462.9 $1,421.8 

Further information regarding our financing resources can be found in Part I, Item I of this Form 10-Q in Note 9, "Debt," and Note 20, "Subsequent Event," of the Notes to the Consolidated Financial Statements.

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Leasing Arrangements

We lease various assets under leasing arrangements. The future estimated payments under these arrangements are disclosed in Note 18, "Leases," of the Notes to the Consolidated Financial Statements included in Part II, Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2019.

Off-Balance Sheet Arrangements

As of March 31,September 30, 2020, we had no off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of SEC Regulation S-K.

Non-GAAP Financial Measures

We use certain non-GAAP financial measures discussed below to evaluate our results of operations, financial condition and liquidity. We believe that the presentation of these non-GAAP financial measures, when viewed as a supplement to our results prepared in accordance with U.S. GAAP, provides useful information to investors in evaluating the ongoing performance of our operating businesses, provides greater transparency into our results of operations and is consistent with how management evaluates our operating performance and liquidity. In addition, these non-GAAP measures address questions we routinely receive from analysts and investors and, in order to ensure that all investors have access to similar data, we make this data available to the public. None of the non-GAAP measures presented should be considered as an alternative to net earnings, earnings from operations, net cash used in operating activities, net sales or any other measures derived in accordance with U.S. GAAP. These non-GAAP measures have important limitations as analytical tools and should not be considered in isolation or as substitutes for financial measures presented in accordance with U.S. GAAP. The presentation of our non-GAAP financial measures may change from time to time, including as a result of changed business conditions, new accounting rules or otherwise. Further, our use of these terms may vary from the use of similarly-titled measures by other companies due to the potential inconsistencies in the method of calculation and differences due to items subject to interpretation.

Free Cash Flow

We refer to "Free Cash Flow", a non-GAAP measure, as our net cash provided by or used in operating activities less capital expenditures plus cash receipts on our beneficial interest in sold receivables and the related impact of terminating our accounts receivable securitization program during the first quarter of 2019. We believe this non-GAAP financial measure is useful to investors in measuring our ability to generate cash internally to fund our debt repayments, acquisitions, dividends and share repurchases, if any. Free Cash Flow reconciles to net cash used in operating activities included in our Consolidated Statements of Cash Flows presented in accordance with U.S. GAAP, as follows:

(in millions) Three Months Ended March 31,(in millions)Three Months Ended September 30,Nine Months Ended September 30,
2020 20192020201920202019
Net cash used in operating activities
$(72.5) $(357.0)
Net cash provided by (used in) operating activitiesNet cash provided by (used in) operating activities$37.5 $61.5 $(26.9)$(320.5)
Capital expenditures
(5.6) (4.8)Capital expenditures(5.4)(7.3)(15.9)(17.4)
Cash receipts on beneficial interest in sold receivables (1)

—
 196.0
Cash receipts on beneficial interest in sold receivables (1)
— — — 280.7 
Termination of accounts receivable securitization program (2)
 —
 96.9
Termination of accounts receivable securitization program (2)
— — — 96.9 
Free Cash Flow
$(78.1) $(68.9)Free Cash Flow$32.1 $54.2 $(42.8)$39.7 
(1)Represents the cash receipts from the beneficial interest on sold receivables within the accounts receivable securitization program and were classified as “Cash flows from investing activities” in the Consolidated Statements of Cash Flows through final settlement of the program in the second quarter of 2019.
(2)Represents the increase in accounts receivable resulting from the termination of the accounts receivable securitization program during the first quarter of 2019, which is reflected in "Cash flows from operating activities" in the Consolidated Statements of Cash Flows.
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Adjusted Operating EBITDA

In addition to analyzing our operating results on a U.S. GAAP basis, management also reviews our results on an “Adjusted Operating EBITDA” basis. Adjusted Operating EBITDA is defined as net earnings before interest expense, income taxes, other income or expense, depreciation and amortization expense plus certain other items such as loss from impairment of assets, gain or loss from disposal of assets, restructuring activities, loss on modification or extinguishment of debt, acquisition-related transaction and integration costs, Transformation Program expense and certain other items.items. Management uses Adjusted Operating EBITDA as the basis on which we evaluate our financial performance and make resource allocations and other operating decisions. Management considers it important that investors review the same operating information used by management. Our Adjusted Operating EBITDA reconciles to net earnings (loss) as presented in the Consolidated Statements of Operations in accordance with U.S. GAAP as follows:


(in millions, except percentage data) Three Months Ended March 31,(in millions, except percentage data)Three Months Ended September 30,Nine Months Ended September 30,
2020 20192020201920202019
Net loss $(15.1) $(2.6)
Net earnings (loss)Net earnings (loss)$4.9 $20.1 $(27.6)$37.5 
Income taxes (0.2) 0.1
Income taxes(1.2)9.4 (9.2)16.6 
Other (income) expense — net (5.4) 3.0
Other (income) expense — net(0.6)2.9 0.8 11.5 
Interest expense 21.3
 24.0
Interest expense18.1 22.4 58.5 70.9 
Earnings from operations 0.6
 24.5
Earnings from operations21.2 54.8 22.5 136.5 
Loss from impairment and disposal of assets — net 11.2
 —
Loss from impairment and disposal of assets — net0.4 0.2 11.7 0.2 
Restructuring activities (1)
 3.7
 4.2
Restructuring activities (1)
1.7 (0.2)6.3 5.8 
Amortization expense 10.0
 9.5
Amortization expense10.2 9.4 30.2 28.8 
Depreciation expense 5.2
 4.9
Depreciation expense5.1 5.3 15.5 16.2 
Transformation Program expense (2)
 11.6
 5.8
Transformation Program expense (2)
6.7 12.3 20.9 25.8 
Transaction costs (3)
 0.1
 0.4
Transaction costs (3)
0.1 0.3 0.2 0.9 
Other items (4)
 3.1
 0.8
Other items (4)
0.2 — 3.6 0.8 
Total Adjusted Operating EBITDA $45.5
 $50.1
Total Adjusted Operating EBITDA$45.6 $82.1 $110.9 $215.0 
    
Adjusted Operating EBITDA margin (5)
 13.8% 13.3%
Adjusted Operating EBITDA margin (5)
15.3 %20.0 %13.3 %17.7 %
(1) Restructuring activities include costs associated with actions to improve operating efficiencies and rationalization of our cost structure. Refer to Note 15, "Business Transformation Program and Restructuring" for discussion of the impact to the Consolidated Statements of Operations.
(2) Transformation Program expense includes consulting and other costs associated with executing our Transformation Program initiatives. Refer to Note 15, "Business Transformation Program and Restructuring" for discussion of the impact to the Consolidated Statements of Operations.
(3) Transaction costs are associated with acquisition-related transactionacquisition and integrationintegrated-related activities. Transaction costs recorded in "Cost of Sales" include $0.2 million related to inventory fair value purchase accounting adjustments for the threenine months ended March 31,September 30, 2019. Professional services and other direct acquisition and integration costs recorded in "Selling, general and administrative expenses" were $0.1 million and $0.2 million for the three and nine months ended March 31,September 30, 2020, respectively, and $0.3 million and $0.7 million for the three and nine months ended September 30, 2019, respectively.
(4)Other items are costs which are not representative of our operational performance. For the three and nine months ended March 31,September 30, 2020, other items represent the changes in the loss contingency estimate of amounts due for customcustoms duties, fees and interest on previously imported products, which are included in "Restructuring and other expenses." Refer to Note 12, "Contingencies and Significant Estimates" for discussion of the impact to the Consolidated Statements of Operations. For the threenine months ended March 31,September 30, 2019, the amount represents other professional fees which are included in "Selling, general and administrative expenses."
(5) Adjusted Operating EBITDA margin in the section above is calculated by dividing the dollar amount of Adjusted Operating EBITDA by net sales.


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Adjusted Diluted Net Earnings and Adjusted Diluted Net Earnings Per Share

We define Adjusted Diluted Net Earnings as net lossearnings (loss) before the impact of certain items, such as loss on modification or extinguishment of debt, loss from impairment of assets, gain or loss from disposal of assets, restructuring activities, Transformation Program expense, acquisition-related transaction and integration costs, certain other items, expenses associated with pension settlements, foreign currency transaction gain or loss and the tax effect of the aforementioned adjustments, as applicable. Adjusted Diluted Net Earnings Per Share for each period represents Adjusted Diluted Net Earnings while giving effect to all potentially dilutive shares of common stock that were outstanding during the period. We believe these measures are useful to investors in assessing the ongoing performance of our underlying businesses before the impact of certain items. The following table presents Adjusted Diluted Net Earnings and Adjusted Diluted Net Earnings Per Share reconciled to net loss and diluted net loss per share, respectively, presented in accordance with U.S. GAAP:

(in millions, except per share data) Three Months Ended March 31,(in millions, except per share data)Three Months Ended September 30,Nine Months Ended September 30,
2020 20192020201920202019
Net loss $(15.1) $(2.6)
Net earnings (loss)Net earnings (loss)$4.9 $20.1 $(27.6)$37.5 
Loss from impairment and disposal of assets — net 11.2
 —
Loss from impairment and disposal of assets — net0.4 0.2 11.7 0.2 
Restructuring activities (1)
 3.7
 4.2
Restructuring activities (1)
1.7 (0.2)6.3 5.8 
Transformation Program expense (2)
 11.6
 5.8
Transformation Program expense (2)
6.7 12.3 20.9 25.8 
Transaction costs (3)
 0.1
 0.4
Transaction costs (3)
0.1 0.3 0.2 0.9 
Other items (4)
 3.1
 0.8
Other items (4)
0.2 — 3.6 0.8 
Pension settlement (5)
 —
 1.2
Pension settlement (5)
— — — 1.2 
Foreign currency transaction (gain) loss (6)
 (7.7) 0.8
Foreign currency transaction (gain) loss (6)
(2.2)1.5 (4.2)6.5 
Tax effect of adjustments (7)
 (5.5) (3.2)
Tax effect of adjustments (7)
(1.9)(3.2)(9.5)(9.5)
Total Adjusted Net Earnings $1.4
 $7.4
Total Adjusted Net Earnings$9.9 $31.0 $1.4 $69.2 
    
Per share basis    Per share basis
Diluted net loss $(0.11) $(0.02)
Diluted net earnings (loss)Diluted net earnings (loss)$0.03 $0.14 $(0.20)$0.27 
Loss from impairment and disposal of assets — net 0.08
 —
Loss from impairment and disposal of assets — net0.01 — 0.08 — 
Restructuring activities (1)
 0.03
 0.03
Restructuring activities (1)
0.01 — 0.05 0.04 
Transformation Program expense (2)
 0.08
 0.04
Transformation Program expense (2)
0.05 0.09 0.15 0.18 
Transaction costs (3)
 —
 —
Transaction costs (3)
— — — 0.01 
Other items (4)
 0.02
 0.01
Other items (4)
— — 0.03 0.01 
Pension settlement (5)
 —
 0.01
Pension settlement (5)
— — — 0.01 
Foreign currency transaction (gain) loss (6)
 (0.05) —
Foreign currency transaction (gain) loss (6)
(0.02)0.01 (0.03)0.04 
Tax effect of adjustments (7)
 (0.04) (0.02)
Tax effect of adjustments (7)
(0.01)(0.02)(0.07)(0.07)
Total Adjusted Diluted Net Earnings $0.01
 $0.05
Total Adjusted Diluted Net Earnings$0.07 $0.22 $0.01 $0.49 
(1) Restructuring activities include costs associated with actions to improve operating efficiencies and rationalization of our cost structure. Refer to Note 15, "Business Transformation Program and Restructuring" for discussion of the impact to the Consolidated Statements of Operations.
(2) Transformation Program expense includes consulting and other costs associated with executing our Transformation Program initiatives. Refer to Note 15, "Business Transformation Program and Restructuring" for discussion of the impact to the Consolidated Statements of Operations.
(3) Transaction costs are associated with acquisition-related transactionacquisition and integrationintegrated-related activities. Transaction costs recorded in "Cost of Sales" include $0.2 million related to inventory fair value purchase accounting adjustments for the threenine months ended March 31,September 30, 2019. Professional services and other direct acquisition and integration costs recorded in "Selling, general and administrative expenses" were $0.1 million and $0.2 million for the three and nine months ended March 31,September 30, 2020, respectively, and $0.3 million and $0.7 million for the three and nine months ended September 30, 2019, respectively.
(4) Other items are costs which are not representative of our operational performance. For the three and nine months ended March 31,September 30, 2020, other items represent the changes in the loss contingency estimate of amounts due for customcustoms duties, fees and interest on previously imported products, which are included in "Restructuring and other expenses." Refer to Note 12, "Contingencies and Significant Estimates" for discussion of the impact to the Consolidated Statements of Operations. For the threenine months ended March 31,September 30, 2019, the amount represents other professional fees which are included in "Selling, general and administrative expenses."
(5) Pension settlement represents a non-cash pension settlement loss of $1.2 million incurred during the threenine months ended March 31,September 30, 2019, resulting from the settlement of a portion of our United Kingdom pension obligations.
(6) Foreign currency transaction gains and losses are inclusive of gains and losses on related foreign currency exchange contracts not designated as hedging instruments for accounting purposes.
(7) The tax effect of adjustments is determined using the statutory tax rates for the countries comprising such adjustments.
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Organic Net Sales

We define "Organic net sales" as net sales before the impacts of acquisitions and foreign currency translations during the period. We believe the Organic net sales measure is useful to investors in assessing the ongoing performance of our underlying businesses. Organic net sales reconcile to net sales presented in accordance with U.S. GAAP as follows:

(in millions) Three Months Ended March 31,(in millions)Three Months Ended September 30,Nine Months Ended September 30,
2020 20192020201920202019
Consolidated:    Consolidated:
Net sales $391.8
 $436.6
Net sales$343.7 $478.4 $981.9 $1,409.8 
Less: Intersegment sales (62.9) (61.3)Less: Intersegment sales(45.2)(67.9)(148.5)(197.7)
Net sales (as reported) 328.9
 375.3
Net sales (as reported)298.5 410.5 833.4 1,212.1 
Impact of foreign currency translation(1)
 2.9
 —
Impact of foreign currency translation(1)
(3.0)— 2.1 — 
Organic net sales $331.8
 $375.3
Organic net sales$295.5 $410.5 $835.5 $1,212.1 
    
Americas:    Americas:
Net sales $250.5
 $275.1
Net sales$221.8 $318.2 $630.9 $929.2 
Less: Intersegment sales (32.4) (34.3)Less: Intersegment sales(19.1)(33.4)(66.1)(101.0)
Third-party net sales 218.1
 240.8
Third-party net sales202.7 284.8 564.8 828.2 
Impact of foreign currency translation(1)
 0.4
 —
Impact of foreign currency translation(1)
0.3 — 1.5 — 
Total Americas organic net sales $218.5
 $240.8
Total Americas organic net sales$203.0 $284.8 $566.3 $828.2 
    
EMEA:    EMEA:
Net sales $90.0
 $106.7
Net sales$73.9 $95.8 $209.5 $301.3 
Less: Intersegment sales (18.4) (15.8)Less: Intersegment sales(15.9)(21.8)(45.9)(59.1)
Third-party net sales 71.6
 90.9
Third-party net sales58.0 74.0 163.6 242.2 
Impact of foreign currency translation(1)
 2.0
 —
Impact of foreign currency translation(1)
(3.1)— (0.4)— 
Total EMEA organic net sales $73.6
 $90.9
Total EMEA organic net sales54.9 $74.0 $163.2 $242.2 
    
APAC:    APAC:
Net sales $51.3
 $54.8
Net sales$48.0 $64.4 $141.5 $179.3 
Less: Intersegment sales (12.1) (11.2)Less: Intersegment sales(10.2)(12.7)(36.5)(37.6)
Third-party net sales 39.2
 43.6
Third-party net sales37.8 51.7 105.0 141.7 
Impact of foreign currency translation(1)
 0.5
 —
Impact of foreign currency translation(1)
(0.2)— 1.0 — 
Total APAC organic net sales $39.7
 $43.6
Total APAC organic net sales$37.6 $51.7 $106.0 $141.7 
(1) The impact from foreign currency translation is calculated by translating current period activity at the weighted average prior period rates.

Critical Accounting Policies

Our critical accounting policies have not materially changed since we filed our Annual Report on Form 10-K for the year ended December 31, 2019.

New Accounting Pronouncements

See Note 2, "Basis of Presentation and Summary of Significant Accounting Policies," to the Consolidated Financial Statements included in Part I, Item I of this Quarterly Report on Form 10-Q for recently issued accounting pronouncements applicable to us and the estimated impact of the adoption of these standards on our Consolidated Financial Statements and related disclosures.

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Cautionary Statements Regarding Forward-Looking Information

Certain statements contained in this Quarterly Report on Form 10-Q, including matters discussed under the heading "Management’s Discussion and Analysis of Financial Condition and Results of Operations," constitute "forward-looking statements" within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Statements that are not historical facts are forward-looking statements and include, for example: statements about the potential future impacts of the COVID-19 pandemic, on our business, results of operations, financial condition and cash flows (including demand, sales, operating expenses, Adjusted Operating EBITDA, net income (loss), operating cash flows, intangible assets, staffing levels, supply chain, government assistance and compliance with financial covenants), descriptions of the Business Transformation Program ("Transformation Program"), including related costs, completion dates and targeted annualized savings; expected impact of restructuring and other plans and objectives for future operations; assumptions on which all such projects, plans or objectives are based; and discussions of demand in the global foodservice market and foodservice equipment industry. Certain of these forward-looking statements can be identified by the use of words such as "anticipates," "believes," "intends," "estimates," "targets," "expects," "endeavors", "could," "will," "may," "plans," "projects," "assumes," "should" or other similar expressions. Such forward-looking statements involve known and unknown risks and uncertainties, and our actual results could differ materially from future results expressed or implied in these forward-looking statements. The forward-looking statements included in this report are based on the current beliefs and expectations of our management as of the date of this report. These statements are not guarantees or indicators of future performance. Important assumptions and other important factors that could cause actual results to differ materially from those forward-looking statements include, but are not limited to, those risks, uncertainties and factors described below and in more detail under the caption "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2019, this Quarterly Report on Form 10-Q for the quarterly period ended March 31,September 30, 2020 and in our other filings with the SEC. To the extent theThe COVID-19 pandemic adversely affects our business and financial results, it may also have the effect of amplifyingamplifies many of these risks, uncertainties and factors. We do not intend, and, except as required by law, we undertake no obligation, to update any of our forward-looking statements after the date of this report to reflect any future events or circumstances. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. Important risks, uncertainties and other factors that could affect our future results and could cause actual results to differ materially from those expressed or implied in the forward-looking statements included in this report include, but are not limited to:

•the impact of the COVID-19 pandemic and the measures taken by governmental authorities and third parties in response to the pandemic;
•risks related to adverse market conditions having the effect of changing one or more of the critical assumptions or estimates, which could change the estimation of fair value and could result in an impairment in the recorded value of our goodwill or intangible assets;
•risks related to our indebtedness, including our ability to comply with covenants contained in our debt agreements, generate sufficient cash to comply with principal and interest repayment obligations, meet working capital needs and cash requirements over the next 12 months, and refinance such indebtedness on favorable terms;
•our ability to timely and efficiently execute on manufacturing strategies, including reducing excess manufacturing capacity, opening or closing plants in a manner consistent with our strategy, executing workforce reductions, and/or consolidating existing facilities and operations;
•our ability to realize anticipated or targeted earnings enhancements, cost savings, strategic options and other synergies (through the Business Transformation Program or otherwise), and the anticipated timing to realize those enhancements, savings, synergies, and options;
•risks relating to the acquisition and integration of businesses or products, including: our ability to successfully identify, finance, acquire and integrate acquisition targets; our ability to complete divestitures, strategic alliances, joint ventures and other strategic alternatives on favorable terms; and uncertainties and unanticipated costs in completing such strategic transactions;
•risks that our actual operating performance and cash flows are substantially different from forecasted results impacting our ability to comply with our debt covenants or pursue our strategic objectives, among other things;
•our ability to compete against companies that are larger and have greater financial and other resources than we do;
•changes in the competitive conditions in the markets and countries in which we operate, including the impact of competitive pricing by our competitors or consolidation of dealers or distributors;
•the successful development of innovative products and market acceptance of new and innovative products;
•factors affecting demand for foodservice equipment, including: impacts of COVID-19 on the various economies in which we operate, foodservice equipment replacement cycles in the U.S. and other mature markets; unanticipated changes in consumer spending impacting the foodservice industry; and population and income growth in emerging markets;
•our ability to source raw materials and commodities on favorable terms and respond to volatility in the price of raw materials and commodities, including through the use of hedging transactions;
•risks associated with manufactured products, including issues related to product quality and reliability, our reliance on third-party sourced components and costs associated with product liability and product warranty claims;
•unanticipated issues associated with refresh/renovation plans, new product rollouts and/or new equipment by national restaurant accounts and global chains;
•natural disasters, acts of war, terrorism, pandemics (such as the recent outbreak of COVID-19) and other events that may disrupt the supply chain or distribution network in one or more regions of the world or otherwise cause instability of financial markets throughout the world;
•general worldwide political and economic risks, uncertainties and adverse events resulting in instability, including financial bailouts and defaults of sovereign nations;
•economic and other consequences associated with the United Kingdom's withdrawal from the European Union;
•unanticipated changes in capital and financial markets, including unfavorable changes in the interest rate environment and changes relating to the discontinuation, reform or replacement of LIBOR;
•foreign currency fluctuations and their impact on reported results and hedges in place;
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•issues related to compliance with complex and evolving laws, rules and regulations affecting our business, including increased costs of compliance, potentially conflicting laws among the countries in which we operate and our ability to quickly respond to changes in such laws;
•adverse changes in domestic or international tax laws, export and import controls or trade regulations, including new tariffs imposed by the U.S. or other governments, the adoption of trade restrictions affecting our products or suppliers, a U.S. withdrawal from, or significant renegotiation of, existing trade agreements without ratification of a replacement trade agreement, or the threat or occurrence of trade wars;
•the risk that our products could cause, or be alleged to cause, personal injury and adverse effects, leading to an increase in the volume of product liability lawsuits, unfavorable outcomes in such lawsuits and/or withdrawals of products from the market;
•the expense, timing and outcome of legal and regulatory proceedings, arbitrations, investigations, tax audits and other regulatory audits and the outcome of our review of our import practices in order to quantify additional customs duties and related fees and interest we may be assessed;
•our ability to comply with evolving and complex accounting rules, many of which involve the use of significant judgment and assumptions;
•the availability of, and our ability to obtain and maintain, adequate insurance coverage and/or our ability to cover or insure against the total amount of the claims and liabilities we face, whether through third-party insurance or self-insurance;
•unexpected costs incurred in connection with protecting our intellectual property rights and defending against challenges to such rights;
•costs of litigation and our ability to defend against lawsuits and other claims, including without limitation those disclosed in Part II, Item I "Legal Proceedings", of this Quarterly Report on Form 10-Q;
•costs associated with unanticipated environmental liabilities;
•our ability to generate cash and manage working capital consistent with our stated goals;
•our ability to recruit and retain highly qualified executives and other key personnel;
•risks associated with our labor relations, including work stoppages, delays in renewing labor agreements and our inability to renegotiate labor rates on favorable terms, as well as the availability of skilled and temporary labor at our manufacturing facilities and other locations;
•risks associated with data security and technology systems, including our ability to protect information systems against, or effectively respond to, a cybersecurity incident or other disruption;
•our ability to adequately prevent or mitigate against increasingly sophisticated methods to engage in illegal or fraudulent activities targeted at large, multi-national companies; actions of activist stockholders;
•unexpected issues affecting our current and future effective tax rate, including, but not limited to, tariffs, global tax policies, tax reform, tax legislation, the United Kingdom’s departure from the European Union and Organization for Economic Cooperation and Development ("OECD") initiatives, including the global anti-base erosion ("GloBE") proposal envisaging global minimum taxation;
•our ability to effectively transfer cash between foreign entities and/or jurisdictions, including in a manner that is consistent with our strategic goals and priorities;
•unanticipated issues associated with the resolution or settlement of unrecognized tax benefits or unfavorable resolution of tax audits;
•and other events outside our control.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company's quantitative and qualitative disclosures about market risk are incorporated by reference from Part II, Item 7A of the Company's Annual Report on Form 10-K for the year ended December 31, 2019. The Company's market risk exposures have not materially changed since its Annual Report on Form 10-K for the year ended December 31, 2019 was filed. 

We have global operations and are exposed to market risks in the ordinary course of our business. The recent COVID-19 pandemic has caused disruption on a global scale in commercial foodservice equipment end markets across the geographies in which we operate. Volatile market conditions arising from the COVID-19 pandemic may result in significant changes in exchange rates in the future, and in particular a weakening of foreign currencies relative to the U.S. dollar may negatively affect our results of operations, financial position and cash flows. Due to the inherent uncertainty of such factors, our estimates of the impact of COVID-19 on our business may change based on future developments.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

Our management has established and maintains disclosure controls and procedures that are designed to ensure that the information required to be disclosed by us in reports that we file or submit under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms, and that such information is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Management carried out an evaluation, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this report. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of March 31,September 30, 2020, our disclosure controls and procedures were effective.

Changes in Internal Control Over Financial Reporting

There was no change in our internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) that occurred during the period covered by this Quarterly Report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting despite the fact that many of our employees are working remotely due to the COVID-19 pandemic. We are continually monitoring and assessing the COVID-19 situation to minimize any impact on our disclosure controls and procedures and their operating effectiveness.

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PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

From time to time, we become involved in various lawsuits, claims and proceedings arising out of, or incident to, our ordinary course of business, including lawsuits, claims, investigations or proceedings pertaining to product liability, patent infringement, environmental matters, commercial disputes, warranty claims, trade practices and employment matters. While we cannot predict the outcome of any lawsuit, claim, investigation or proceeding with certainty, we do not believe that the ultimate disposition of any pending matter is likely to have a material adverse effect on our consolidated financial position, liquidity, or results of operations.

On December 13, 2018, a purported securities class action lawsuit was filed in the U.S. District Court for the Middle District of Florida against the Company and certain of its former executive officers. The lawsuit was captioned Schlimm v. Welbilt, Inc., et al., and alleged that the defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, and Rule 10b-5 promulgated thereunder, by making material misstatements or omissions in certain of its periodic reports filed with the Securities and Exchange Commission ("SEC") relating to, among other things, the Company's business operations and the effectiveness of its internal control over financial reporting. The lawsuit sought an unspecified amount of damages and an award of attorney’s fees, in addition to other relief. On October 17, 2019, the defendants filed a motion to dismiss the lawsuit. On February 6, 2020, the Court issued an order granting defendants’ motion and dismissed the Schlimm lawsuit without prejudice. On March 30, 2020, the Court issued an amended order of dismissal with prejudice. On April 2, 2020, the plaintiffs filed a notice of appeal regarding the Court’s order granting the defendants’ motion to dismiss. The appeal is pending.
On March 15, 2019, a purported stockholder derivative action was filed in the U.S. District Court for the District of Delaware against certain of the Company's current and former executive officers and directors, and the Company was named as a nominal defendant. The lawsuit is captioned Quinney v. Muehlhaeuser, et al., and alleges violation of Section 14(a) of the Securities Exchange Act of 1934 and breach of fiduciary duty, among other claims, based upon similar underlying allegations as those in the Schlimm lawsuit. The Quinney lawsuit seeks an unspecified amount of damages and an award of attorney’s fees, in addition to other relief. On June 5, 2019, the Delaware court stayed the Quinney lawsuit, pending further developments in the Schlimm lawsuit. On April 1, 2020, the parties filed a stipulation of dismissal, and the Delaware court dismissed the Quinney lawsuit without prejudice.
On September 4, 2019, a purported stockholder derivative action was filed in the U.S. District Court for the Middle District of Florida against certain of the Company's current and former executive officers and directors, and the Company was named as a nominal defendant. The lawsuit was captioned The Lee S. Kosby Trust v. Muehlhaeuser, et al., and alleged violation of Section 14(a) of the Securities Exchange Act of 1934 and breach of fiduciary duty, among other claims, based upon similar underlying allegations as those in the Quinney and Schlimm lawsuits. The Kosby lawsuit sought an unspecified amount of damages and an award of attorney’s fees, in addition to other relief. On March 18, 2020, the plaintiff filed a notice of voluntary dismissal, and on March 19, 2020, the Florida court dismissed the Kosby lawsuit without prejudice.
We intend to defend vigorously against all lawsuits, as they may arise in the ordinary course of business. However, litigation is inherently uncertain, and we are unable to predict the outcome of these lawsuits and are unable to estimate the range of loss, if any, that could result from an unfavorable outcome. We also cannot provide any assurance that the ultimate resolution of each of theseany lawsuits will not have a material adverse effect on our reputation, business, prospects, results of operations or financial condition.

For additional information concerning contingencies and uncertainties, see Note 12, "Contingencies and Significant Estimates," of the Notes to the Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

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ITEM 1A.  RISK FACTORS

Except as set forth below or as disclosed immediately above under "Item 1. Legal Proceedings" (which disclosure is incorporated herein by reference), there have been no material changes to the risk factors described under the caption "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2019. These risks, uncertainties and cautionary statements described therein, together with the other disclosures in this Quarterly Report on Form 10-Q and in our other public filings with the Securities and Exchange Commission should be carefully considered. Any such risks and uncertainties, as well as risks and uncertainties not currently known to us or that we currently deem to be immaterial, may materially adversely affect our business, financial condition and operating results.

The ongoing COVID-19 pandemic, and the measures implemented by governmental authorities and other third parties in response to the pandemic, have adversely impacted and will continue to adversely impact our business, results of operations, cash flows and financial position.

The global economy generally, and the foodservice industry in particular, have been disrupted and will almost certainly continue to be negatively impacted by the COVID-19 pandemic and actions taken to control the spread of the virus, including quarantines, curfews, travel restrictions, social distancing measures, and mandated non-essential business limitations and closures. Many professional kitchens have closed to dine-in customers, remaining open only for takeout, outdoor dining, drive-thru, and/or delivery, or closed completely. As a result, weThese developments have impacted and are likely to continue to adversely impact our business and results of operations in multiple ways, including, but not limited to, the following:
•We have modified our production schedules and experienced, and may continue to experience, a reduced demand for our products, which has negatively impacted and will likely continue to negatively impact our business and financial performance. If thisthe global economic effects caused by the pandemic continue or increase, demand for our products may continue to decrease, in demand continues forwhich could have a prolonged period,material and adverse effect on our business, results of operations cash flows and financial positioncondition.
•We have taken protective measures to modify our production environment to ensure the health and safety of our workers which has had an impact, and may continue to have an impact, on our productivity.
•The pandemic has caused us to modify our business practices (including employee travel, mandatory work-from-home policies and cancellation of physical participation in meetings, events and conferences), and we may take further actions that we determine are in the best interests of our employees, customers, partners and suppliers. There is no certainty that such measures will be sufficient to mitigate the risks posed by the disease, and our ability to perform critical functions could be materially adversely impacted. harmed.
•If a significant portion of our workforce or our suppliers’ workforce is affected by COVID-19 either directly or due to government closures or otherwise, associated work stoppages or facility closures could halt or delay production.
•Continued disruptions and uncertainties related to the pandemic for a sustained period could result in delays to the implementation of our Transformation Program or modifications to our strategic plans and hinder our ability to achieve our cost savings objectives.
•The financial impact of the pandemic could in turn, negatively impact our future compliance with financial covenants contained in agreements governing our indebtedness, potentially resulting in a default or an acceleration of indebtedness and could otherwise negatively impact our liquidity and ability to make additional borrowings under our revolving credit facility. The pandemic may also affect the health and availability of our workforce, as well as the workforce of our suppliers and customers.
•Weaker economic conditions may result in a decrease in fair value of our tangible or intangible assets, which, in turn, could result in an impairment charge in our financial statements.
•We have experienced minor disruptions and may also experience additional disruptions to our supply chain, resulting in difficulties and increased costs of acquiring raw materials.
•We could also incur delays in shipments of our products, which could harm our customer relations and adversely impact our sales. Any of these factors could lead to a further decline in our stock price.

The extent of the effect of the COVID-19 pandemic on our operational and financial performance will depend significantly on future developments, which are highly uncertain and cannot be predicted with certainty, including the duration, scope and severity of the pandemic, the actions taken to contain or mitigate its impact in each of the countries in which we operate, the development of treatments or vaccines, the availability of federal, state, local or non-U.S. funding programs, how quickly and to what extent normal economic and operating conditions can resume, particularly with respect to the foodservice industry,industry. We may continue to experience the effects of the pandemic even after it has waned, and our business, results of operations and financial condition could continue to be affected. The pandemic may also have the impacts on our supply chain.effect of manifesting or exacerbating many of the other risks previously disclosed in this "Risk Factors" section. Due to the inherent uncertainty of such factors, we cannot predict the extent or materiality of the ultimate impact of COVID-19 on our business with certainty or confidence at this time; however, it could have a material adverse impact on our results of operations, cash flows and financial position compared to our current expectations.

ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4.  MINE SAFETY DISCLOSURES

None.

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ITEM 5.  OTHER INFORMATION

None.


ITEM 6.  EXHIBITS

Exhibit No.DescriptionFilings for Incorporation by Reference
10.13.1
Exhibit 3.1 to Current Report on Form 8-K filed July 27, 2020
10.1
Exhibit 10.1 to Current Report on Form 8-K filed April 20, 2020
31.1
Certification of Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Filed herewith
31.2
Certification of Chief Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Filed herewith
32.1
Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
Furnished herewith
32.2
Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
Furnished herewith
101
The following materials from the Company's Quarterly Report on Form 10-Q for the quarterly period ended March 31,September 30, 2020 formatted in Inline Extensible Business Reporting Language ("iXBRL"): (i) the Consolidated Statements of Operations, (ii) the Consolidated Statements of Comprehensive Income (Loss), (iii) the Consolidated Balance Sheets, (iv) the Consolidated Statements of Cash Flows, (v) the Consolidated Statements of Equity and (vi) related notes, tagged as blocks of text and including detailed tags.
Filed herewith
104Cover page from the Company's Quarterly Report on Form 10-Q for the quarter ended March 31,September 30, 2020, formatted in iXBRL (included as Exhibit 101).Filed herewith

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SIGNATURES

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:

Date: May 6,November 4, 2020

Welbilt, Inc.
Welbilt, Inc.
/s/ Martin D. Agard
Martin D. Agard,
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
/s/ Jamie E. PalmKimberly Perez
Jamie E. Palm
Kimberly Perez, Vice President Corporate Controller and Chief Accounting Officer
(Principal Accounting Officer)


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