Document
false--12-31Q120192019-03-3110-Q0001433660falseLarge Accelerated FilerJohn Bean Technologies Corporationfalsejbt289900000294700000P20YP7Y000.010.01120000000120000000317416073174160731522377315223778800000P4Y2M15DP4Y3M15D01000000800000300000600000P9M219230219230 0001433660 2019-01-01 2019-03-31 0001433660 2019-04-24 0001433660 2018-01-01 2018-03-31 0001433660 2019-03-31 0001433660 2018-12-31 0001433660 2018-03-31 0001433660 2017-12-31 0001433660 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-01-01 2019-03-31 0001433660 us-gaap:RetainedEarningsMember 2018-12-31 0001433660 us-gaap:RetainedEarningsMember 2019-01-01 2019-03-31 0001433660 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-03-31 0001433660 us-gaap:CommonStockMember 2019-03-31 0001433660 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-12-31 0001433660 us-gaap:AdditionalPaidInCapitalMember 2018-12-31 0001433660 us-gaap:TreasuryStockMember 2019-03-31 0001433660 us-gaap:AdditionalPaidInCapitalMember 2019-01-01 2019-03-31 0001433660 us-gaap:CommonStockMember 2018-12-31 0001433660 us-gaap:RetainedEarningsMember 2019-03-31 0001433660 us-gaap:TreasuryStockMember 2018-12-31 0001433660 us-gaap:AdditionalPaidInCapitalMember 2019-03-31 0001433660 us-gaap:CommonStockMember 2018-03-31 0001433660 us-gaap:AdditionalPaidInCapitalMember 2018-01-01 2018-03-31 0001433660 us-gaap:TreasuryStockMember 2018-03-31 0001433660 us-gaap:TreasuryStockMember 2017-12-31 0001433660 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-01-01 2018-03-31 0001433660 us-gaap:AdditionalPaidInCapitalMember 2018-03-31 0001433660 2018-01-01 0001433660 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-03-31 0001433660 us-gaap:RetainedEarningsMember 2018-01-01 2018-03-31 0001433660 us-gaap:RetainedEarningsMember 2018-03-31 0001433660 us-gaap:CommonStockMember 2017-12-31 0001433660 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2017-12-31 0001433660 us-gaap:RetainedEarningsMember 2017-12-31 0001433660 us-gaap:AdditionalPaidInCapitalMember 2017-12-31 0001433660 us-gaap:AccountingStandardsUpdate201602Member 2019-01-01 0001433660 jbt:LEKTROMember 2019-02-01 2019-02-01 0001433660 jbt:FTNONMember 2018-07-12 0001433660 jbt:SchroderMember 2018-01-26 0001433660 jbt:LEKTROMember 2019-02-01 0001433660 jbt:SchroderMember 2018-01-26 2018-01-26 0001433660 jbt:FTNONMember 2018-07-12 2018-07-12 0001433660 2019-02-01 0001433660 2019-02-01 2019-02-01 0001433660 2018-01-01 2019-03-31 0001433660 srt:MaximumMember 2019-01-01 2019-03-31 0001433660 srt:MinimumMember 2019-01-01 2019-03-31 0001433660 jbt:AeroTechMember 2019-03-31 0001433660 jbt:FoodTechMember 2019-01-01 2019-03-31 0001433660 jbt:FoodTechMember 2018-12-31 0001433660 jbt:AeroTechMember 2019-01-01 2019-03-31 0001433660 jbt:AeroTechMember 2018-12-31 0001433660 jbt:FoodTechMember 2019-03-31 0001433660 jbt:PatentsAndAcquiredTechnologyMember 2018-12-31 0001433660 us-gaap:TrademarksAndTradeNamesMember 2018-12-31 0001433660 us-gaap:OtherIntangibleAssetsMember 2018-12-31 0001433660 us-gaap:OtherIntangibleAssetsMember 2019-03-31 0001433660 jbt:PatentsAndAcquiredTechnologyMember 2019-03-31 0001433660 us-gaap:CustomerRelationshipsMember 2018-12-31 0001433660 us-gaap:CustomerRelationshipsMember 2019-03-31 0001433660 us-gaap:TrademarksAndTradeNamesMember 2019-03-31 0001433660 us-gaap:DomesticPlanMember 2019-03-31 0001433660 us-gaap:PensionPlansDefinedBenefitMember 2018-01-01 2018-03-31 0001433660 us-gaap:PensionPlansDefinedBenefitMember 2019-01-01 2019-03-31 0001433660 us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember 2018-12-31 0001433660 us-gaap:AccumulatedTranslationAdjustmentMember 2019-03-31 0001433660 us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember 2019-03-31 0001433660 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2019-01-01 2019-03-31 0001433660 us-gaap:AccumulatedTranslationAdjustmentMember 2018-12-31 0001433660 us-gaap:AccumulatedTranslationAdjustmentMember 2019-01-01 2019-03-31 0001433660 us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember 2019-01-01 2019-03-31 0001433660 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2019-03-31 0001433660 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2018-12-31 0001433660 us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember 2019-01-01 2019-03-31 0001433660 us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2019-01-01 2019-03-31 0001433660 us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2018-01-01 2018-03-31 0001433660 us-gaap:AccumulatedTranslationAdjustmentMember 2018-03-31 0001433660 us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember 2018-03-31 0001433660 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2018-01-01 2018-03-31 0001433660 us-gaap:AccumulatedTranslationAdjustmentMember 2017-12-31 0001433660 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2018-03-31 0001433660 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2017-12-31 0001433660 us-gaap:AccumulatedTranslationAdjustmentMember 2018-01-01 2018-03-31 0001433660 us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember 2018-01-01 2018-03-31 0001433660 us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember 2017-12-31 0001433660 jbt:EuropeMiddleEastandAfricaMember jbt:AeroTechMember 2019-01-01 2019-03-31 0001433660 srt:LatinAmericaMember jbt:FoodTechMember 2018-01-01 2018-09-30 0001433660 srt:AsiaPacificMember jbt:AeroTechMember 2018-01-01 2018-09-30 0001433660 jbt:FoodTechMember us-gaap:TransferredAtPointInTimeMember 2018-01-01 2018-09-30 0001433660 jbt:RecurringMember jbt:AeroTechMember 2018-01-01 2018-09-30 0001433660 jbt:RecurringMember jbt:AeroTechMember 2019-01-01 2019-03-31 0001433660 jbt:RecurringMember jbt:FoodTechMember 2018-01-01 2018-09-30 0001433660 srt:LatinAmericaMember jbt:AeroTechMember 2019-01-01 2019-03-31 0001433660 jbt:NonRecurringMember jbt:AeroTechMember 2018-01-01 2018-09-30 0001433660 jbt:FoodTechMember 2018-01-01 2018-09-30 0001433660 jbt:AeroTechMember 2018-01-01 2018-09-30 0001433660 srt:LatinAmericaMember jbt:FoodTechMember 2019-01-01 2019-03-31 0001433660 jbt:EuropeMiddleEastandAfricaMember jbt:FoodTechMember 2018-01-01 2018-09-30 0001433660 srt:AsiaPacificMember jbt:AeroTechMember 2019-01-01 2019-03-31 0001433660 jbt:NonRecurringMember jbt:FoodTechMember 2018-01-01 2018-09-30 0001433660 jbt:AeroTechMember us-gaap:TransferredAtPointInTimeMember 2018-01-01 2018-09-30 0001433660 srt:AsiaPacificMember jbt:FoodTechMember 2019-01-01 2019-03-31 0001433660 jbt:RecurringMember jbt:FoodTechMember 2019-01-01 2019-03-31 0001433660 jbt:NonRecurringMember jbt:FoodTechMember 2019-01-01 2019-03-31 0001433660 srt:LatinAmericaMember jbt:AeroTechMember 2018-01-01 2018-09-30 0001433660 jbt:EuropeMiddleEastandAfricaMember jbt:FoodTechMember 2019-01-01 2019-03-31 0001433660 srt:AsiaPacificMember jbt:FoodTechMember 2018-01-01 2018-09-30 0001433660 srt:NorthAmericaMember jbt:AeroTechMember 2018-01-01 2018-09-30 0001433660 jbt:FoodTechMember us-gaap:TransferredAtPointInTimeMember 2019-01-01 2019-03-31 0001433660 srt:NorthAmericaMember jbt:FoodTechMember 2018-01-01 2018-09-30 0001433660 jbt:NonRecurringMember jbt:AeroTechMember 2019-01-01 2019-03-31 0001433660 jbt:AeroTechMember us-gaap:TransferredOverTimeMember 2018-01-01 2018-09-30 0001433660 jbt:AeroTechMember us-gaap:TransferredOverTimeMember 2019-01-01 2019-03-31 0001433660 jbt:FoodTechMember us-gaap:TransferredOverTimeMember 2018-01-01 2018-09-30 0001433660 jbt:FoodTechMember us-gaap:TransferredOverTimeMember 2019-01-01 2019-03-31 0001433660 srt:NorthAmericaMember jbt:AeroTechMember 2019-01-01 2019-03-31 0001433660 srt:NorthAmericaMember jbt:FoodTechMember 2019-01-01 2019-03-31 0001433660 jbt:EuropeMiddleEastandAfricaMember jbt:AeroTechMember 2018-01-01 2018-09-30 0001433660 jbt:AeroTechMember us-gaap:TransferredAtPointInTimeMember 2019-01-01 2019-03-31 0001433660 2019-03-31 2018-12-31 0001433660 2019-03-31 2019-03-31 0001433660 2018-08-10 0001433660 2018-01-01 2018-12-31 0001433660 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2018-12-31 0001433660 us-gaap:FairValueMeasurementsRecurringMember 2019-03-31 0001433660 us-gaap:FairValueMeasurementsRecurringMember 2018-12-31 0001433660 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2019-03-31 0001433660 us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2018-12-31 0001433660 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2018-12-31 0001433660 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2019-03-31 0001433660 us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2019-03-31 0001433660 us-gaap:InterestRateSwapMember us-gaap:NetInvestmentHedgingMember us-gaap:DesignatedAsHedgingInstrumentMember 2019-03-31 0001433660 us-gaap:InterestRateSwapMember us-gaap:CashFlowHedgingMember us-gaap:DesignatedAsHedgingInstrumentMember 2019-03-31 0001433660 us-gaap:ForeignExchangeContractMember us-gaap:NondesignatedMember 2019-01-01 2019-03-31 0001433660 us-gaap:InterestRateSwapMember us-gaap:NetInvestmentHedgingMember us-gaap:DesignatedAsHedgingInstrumentMember 2019-01-01 2019-03-31 0001433660 us-gaap:InterestRateSwapMember us-gaap:NetInvestmentHedgingMember us-gaap:DesignatedAsHedgingInstrumentMember us-gaap:InterestExpenseMember 2019-01-01 2019-03-31 0001433660 us-gaap:CashFlowHedgingMember us-gaap:DesignatedAsHedgingInstrumentMember 2019-03-31 0001433660 us-gaap:OtherAssetsMember us-gaap:InterestRateSwapMember us-gaap:NetInvestmentHedgingMember us-gaap:DesignatedAsHedgingInstrumentMember 2019-01-01 2019-03-31 0001433660 us-gaap:CashFlowHedgingMember us-gaap:DesignatedAsHedgingInstrumentMember 2019-01-01 2019-03-31 0001433660 us-gaap:ForeignExchangeContractMember us-gaap:NondesignatedMember 2019-03-31 0001433660 us-gaap:SalesMember 2019-01-01 2019-03-31 0001433660 us-gaap:SalesMember 2018-01-01 2018-03-31 0001433660 us-gaap:OtherIncomeMember 2019-01-01 2019-03-31 0001433660 us-gaap:CostOfSalesMember 2019-01-01 2019-03-31 0001433660 us-gaap:OtherIncomeMember 2018-01-01 2018-03-31 0001433660 us-gaap:CostOfSalesMember 2018-01-01 2018-03-31 0001433660 jbt:ForeignExchangeContractsandEmbeddedDerivativesMember 2018-12-31 0001433660 jbt:ForeignExchangeContractsandEmbeddedDerivativesMember 2019-03-31 0001433660 2019-01-01 0001433660 jbt:RealEstateLeasesMember 2019-01-01 2019-03-31 0001433660 jbt:CustomersFinancingArrangementsGuaranteeMember 2019-03-31 0001433660 us-gaap:PerformanceGuaranteeMember 2019-03-31 0001433660 us-gaap:FinancialGuaranteeMember 2019-03-31 0001433660 us-gaap:OperatingSegmentsMember jbt:JBTFoodTechMember 2019-01-01 2019-03-31 0001433660 us-gaap:OperatingSegmentsMember jbt:JBTAeroTechMember 2019-01-01 2019-03-31 0001433660 us-gaap:CorporateNonSegmentMember 2018-01-01 2018-03-31 0001433660 us-gaap:OperatingSegmentsMember jbt:JBTFoodTechMember 2018-01-01 2018-03-31 0001433660 us-gaap:CorporateNonSegmentMember 2019-01-01 2019-03-31 0001433660 us-gaap:OperatingSegmentsMember 2019-01-01 2019-03-31 0001433660 us-gaap:OperatingSegmentsMember jbt:JBTAeroTechMember 2018-01-01 2018-03-31 0001433660 us-gaap:OperatingSegmentsMember 2018-01-01 2018-03-31 0001433660 us-gaap:EmployeeSeveranceMember 2019-01-01 2019-03-31 0001433660 us-gaap:EmployeeSeveranceMember 2018-12-31 0001433660 us-gaap:OtherRestructuringMember 2019-03-31 0001433660 us-gaap:OtherRestructuringMember 2019-01-01 2019-03-31 0001433660 us-gaap:OtherRestructuringMember 2018-12-31 0001433660 us-gaap:EmployeeSeveranceMember 2019-03-31 0001433660 srt:MinimumMember jbt:JBTGlobalBusinessMember 2019-03-31 0001433660 srt:MaximumMember jbt:JBTGlobalBusinessMember 2019-03-31 0001433660 jbt:JBTGlobalBusinessMember 2019-01-01 2019-03-31 0001433660 jbt:RestructuringPlanTipperTieMember 2019-03-31 0001433660 jbt:ProsealUKLimitedMember us-gaap:SubsequentEventMember 2019-04-28 2019-04-28 jbt:acquisition jbt:derivative xbrli:shares xbrli:pure iso4217:USD iso4217:USD xbrli:shares iso4217:EUR


 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
 
 
 
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, 2019
 
or
Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
 
 
For the transition period from ______ to ______

Commission File Number 1-34036
 
 
 
 
 
 
John Bean Technologies Corporation
(Exact name of registrant as specified in its charter)
 
 
 
 
 
 
Delaware
 
91-1650317
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification No.)
 
 
 
70 West Madison Street, Suite 4400
Chicago, Illinois
 
60602
(Address of principal executive offices)
 
(Zip code)
 
(312) 861-5900
 
(Registrant’s telephone number, including area code)

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

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “non-accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated 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  ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
Class
 
Outstanding at April 24, 2019
Common Stock, par value $0.01 per share
 
31,629,922

1



PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

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


 
Three Months Ended
March 31,
(In millions, except per share data)
2019
 
2018
Revenue
$
417.5

 
$
409.2

Operating expenses:

 
 
Cost of sales
289.9

 
305.6

Selling, general and administrative expense
91.7

 
85.0

Restructuring expense
5.9

 
12.7

Operating income
30.0

 
5.9

Pension expense, other than service cost
0.5

 
0.2

Interest expense, net
3.3

 
3.7

Income from continuing operations before income taxes
26.2

 
2.0

Income tax provision
6.5

 
0.4

Income from continuing operations
19.7

 
1.6

Loss from discontinued operations, net of taxes

 
0.4

Net income
$
19.7

 
$
1.2

 
 
 
 
Basic earnings per share:
 
 
 
Income from continuing operations
$
0.62

 
$
0.05

Loss from discontinued operations

 
(0.01
)
Net income
$
0.62

 
$
0.04

Diluted earnings per share:
 
 
 
Income from continuing operations
$
0.62

 
$
0.05

Loss from discontinued operations
(0.01
)
 
(0.01
)
Net income
$
0.61

 
$
0.04


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

2



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

 
Three Months Ended
March 31,
(In millions)
2019
 
2018
Net income
$
19.7

 
$
1.2

Other comprehensive (loss) income, net of income taxes
 
 
 
Foreign currency translation adjustments
(0.7
)
 
2.5

Pension and other postretirement benefits adjustments
1.7

 
1.4

Derivatives designated as hedges
(0.7
)
 
1.1

Other comprehensive income
0.3

 
5.0

Comprehensive income
$
20.0

 
$
6.2


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

3



JOHN BEAN TECHNOLOGIES CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS

 
March 31, 2019
 
December 31, 2018
(In millions, except per share data and number of shares)
(Unaudited)
 
 
Assets:
 
 
 
Current Assets:
 
 
 
Cash and cash equivalents
$
43.9

 
$
43.0

Trade receivables, net of allowances
227.4

 
253.4

Contract assets
68.4

 
70.3

Inventories
226.4

 
206.1

Other current assets
60.7

 
45.7

Total current assets
626.8

 
618.5

Property, plant and equipment, net of accumulated depreciation of $294.7 and $289.9, respectively
237.5

 
239.7

Goodwill
342.6

 
321.4

Intangible assets, net
233.9

 
213.9

Deferred income taxes
10.9

 
15.0

Other assets
69.9

 
34.0

Total Assets
$
1,521.6

 
$
1,442.5

 
 
 
 
Liabilities and Stockholders' Equity:
 
 
 
Current Liabilities:
 
 
 
Short-term debt and current portion of long-term debt
$

 
$
0.5

Accounts payable, trade and other
154.8

 
191.2

Advance and progress payments
148.6

 
145.8

Other current liabilities
150.1

 
147.8

Total current liabilities
453.5

 
485.3

Long-term debt, less current portion
448.2

 
387.1

Accrued pension and other postretirement benefits, less current portion
70.3

 
72.5

Other liabilities
73.2

 
40.7

Commitments and contingencies (Note 12)


 


Stockholders' Equity:
 
 
 
Common stock, $0.01 par value; 120,000,000 shares authorized; March 31, 2019 and December 31, 2018: 31,741,607 issued and 31,522,377 outstanding
0.3

 
0.3

Common stock held in treasury, at cost; March 31, 2019 and December 31, 2018: 219,230 shares
(19.3
)
 
(19.3
)
Additional paid-in capital
248.5

 
245.9

Retained earnings
433.1

 
416.5

Accumulated other comprehensive loss
(186.2
)
 
(186.5
)
Total stockholders' equity
476.4

 
456.9

Total Liabilities and Stockholders' Equity
$
1,521.6

 
$
1,442.5


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

4



JOHN BEAN TECHNOLOGIES CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 
Three Months Ended March 31,
(In millions) 
2019
 
2018
Cash flows provided (required) by operating activities:
 
 
 
Net income
$
19.7

 
$
1.2

Loss from discontinued operations, net

 
0.4

Income from continuing operations
19.7

 
1.6

Adjustments to reconcile income from continuing operations to cash provided by continuing operating activities:
 
 
 
Depreciation and amortization
14.7

 
13.7

Stock-based compensation
2.6

 
2.4

Pension expense
0.9

 
0.7

Other
0.4

 
0.4

Changes in operating assets and liabilities:
 
 
 
Trade receivables, net and contract assets
27.8

 
(0.3
)
Inventories
(14.1
)
 
(1.4
)
Accounts payable, trade and other
(37.4
)
 
(0.1
)
Advance and progress payments
3.8

 
1.6

Accrued pension and other postretirement benefits, net
(0.2
)
 
(4.5
)
Other assets and liabilities, net
(16.2
)
 
(18.2
)
Cash provided (required) by continuing operating activities
2.0

 
(4.1
)
Cash required by discontinued operating activities
(0.1
)
 
(0.6
)
Cash provided (required) by operating activities
1.9

 
(4.7
)
 
 
 
 
Cash flows required by investing activities:
 
 
 
Acquisitions, net of cash acquired
(47.3
)
 
(18.8
)
Capital expenditures
(7.6
)
 
(10.4
)
Proceeds from disposal of assets

 
0.2

Cash required by investing activities
(54.9
)
 
(29.0
)
 
 
 
 
Cash flows provided by financing activities:
 
 
 
Net payments on short-term debt
(0.5
)
 
(0.1
)
Payments of short-term foreign credit facilities

 
(1.5
)
Net proceeds from domestic credit facilities
61.0

 
34.7

Deferred acquisition payments
(3.6
)
 

Dividends
(3.2
)
 
(3.2
)
Cash provided by financing activities
53.7

 
29.9

 
 
 
 
Effect of foreign exchange rate changes on cash and cash equivalents
0.2

 
0.4

 
 
 
 
Increase (decrease) in cash and cash equivalents
0.9

 
(3.4
)
Cash and cash equivalents, beginning of period
43.0

 
34.0

Cash and cash equivalents, end of period
$
43.9

 
$
30.6


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

5



JOHN BEAN TECHNOLOGIES CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(Unaudited)
(In millions)
Common Stock
 
Common Stock Held in Treasury
 
Additional Paid-In Capital
 
Retained Earnings
 
Accumulated Other Comprehensive Income (Loss)
 
Total Equity
December 31, 2018
$
0.3

 
$
(19.3
)
 
$
245.9

 
$
416.5

 
$
(186.5
)
 
$
456.9

Net income

 

 

 
19.7

 

 
19.7

Common stock cash dividends, $0.10 per share

 

 

 
(3.1
)
 

 
(3.1
)
Foreign currency translation adjustments, net of income taxes of ($0.8)

 

 

 

 
(0.7
)
 
(0.7
)
Derivatives designated as hedges, net of income taxes of ($0.1)

 

 

 

 
(0.7
)
 
(0.7
)
Pension and other postretirement liability adjustments, net of income taxes of $0.6

 

 

 

 
1.7

 
1.7

Stock-based compensation expense

 

 
2.6

 

 

 
2.6

March 31, 2019
$
0.3

 
$
(19.3
)
 
$
248.5

 
$
433.1

 
$
(186.2
)
 
$
476.4

(In millions)
Common Stock
 
Common Stock Held in Treasury
 
Additional Paid-In Capital
 
Retained Earnings
 
Accumulated Other Comprehensive Income (Loss)
 
Total Equity
December 31, 2017
$
0.3

 
$
(4.0
)
 
$
252.2

 
$
333.7

 
$
(140.3
)
 
$
441.9

Net income

 

 

 
1.2

 

 
1.2

Common stock cash dividends, $0.10 per share

 

 

 
(3.5
)
 

 
(3.5
)
Cumulative adjustment - Change in accounting policy ASC 606 restatement

 

 

 
(28.0
)
 

 
(28.0
)
Foreign currency translation adjustments, net of income taxes of $0.0

 

 

 

 
2.5

 
2.5

Derivatives designated as hedges, net of income taxes of $0.0

 

 

 

 
1.1

 
1.1

Pension and other postretirement liability adjustments, net of income taxes of $0.3

 

 

 

 
1.4

 
1.4

Stock-based compensation expense

 

 
2.4

 

 

 
2.4

March 31, 2018
$
0.3

 
$
(4.0
)
 
$
254.6

 
$
303.4

 
$
(135.3
)
 
$
419.0


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


6



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



NOTE 1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

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

Basis of Presentation
In accordance with Securities and Exchange Commission (“SEC”) rules for interim periods, the accompanying unaudited condensed consolidated financial statements (the “interim financial statements”) do not include all of the information and notes for complete financial statements as required by accounting principles generally accepted in the United States of America (“U.S. GAAP”). As such, the accompanying interim financial statements should be read in conjunction with the JBT Annual Report on Form 10-K for the year ended December 31, 2018, which provides a more complete understanding of the Company’s accounting policies, financial position, operating results, business, properties, and other matters. The year-end condensed consolidated balance sheet (the “Balance Sheet”) was derived from audited financial statements.

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

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

Recently adopted accounting standards
Beginning in February 2016, the FASB issued ASU No. 2016-02, Leases ("ASC 842"), plus a number of related statements designed to clarify and interpret ASC 842. The core principle of the ASU is the requirement for lessees to report a right of use asset ("ROU asset") and a lease payment obligation on the balance sheet, but recognize expenses on their income statements in a manner similar to legacy accounting. For lessors, the guidance remains substantially unchanged from legacy U.S. GAAP. We designed our disclosures to meet the objective of enabling users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases.
We adopted ASC 842 as of January 1, 2019, using the cumulative-effect transition method with the required modified retrospective approach. The cumulative-effect transition method enables an entity to record existing leases at the date of adoption without restating comparative periods; rather the cumulative effect of the change is recorded as an adjustment to equity, if needed, at the beginning of the year of adoption.

We elected the following practical expedients as permitted per the guidance:
The ‘package of practical expedients’ which permits us not to reassess under the new standard our prior conclusions about lease identification, lease classification and initial direct costs. We have elected this package of practical expedients in its entirety.
The short-term lease recognition exemption for all leases that qualify. This means, for those leases that qualify, we will not recognize ROU assets or lease liabilities for existing short-term leases of assets in transition.
The practical expedient to not separate lease and non-lease components for all of our leases other than leases of vehicles and communication equipment given the predominance of the service component for these leases.
The use of hindsight to determine the lease term for existing leases and assessing the likelihood that a lessee renewal, termination or purchase option will be exercised.

7




Adoption of the ASC 842 resulted in the recording of $32 million as ROU assets in Other assets and $34 million as lease liabilities in Other current liabilities and Other liabilities, as of January 1, 2019. The difference between the ROU assets and lease liabilities is driven primarily by lease incentives that were reclassified from a long-term liability account to the ROU asset balance. The income tax accounting impact of ASC 842 adoption resulted in recording of deferred tax asset and deferred tax liability of $8.8 million as of January 1, 2019. The standard did not materially impact our retained earnings nor consolidated net income, and had no impact on cash flows.

Recently issued accounting standards not yet adopted
In August 2018, the FASB issued ASU 2018-13, Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement, which amends Topic 820, Fair Value Measurement. ASU 2018-13 removes, modifies, and adds the disclosure requirements for fair value measurements. The ASU is effective for annual reporting periods, including interim periods within those annual periods, beginning after December 15, 2019, with early adoption permitted. The removed and modified disclosures will be adopted on a retrospective basis and the new disclosures will be adopted on a prospective basis. The Company is currently evaluating the impact of adopting ASU 2018-13 on its disclosures.

In August 2018, the FASB issued ASU 2018-14, Compensation-Retirement Benefits-Defined Benefit Plans-General (Subtopic 715-20): Disclosure Framework-Changes to the Disclosure Requirements for Defined Benefit Plans. ASU 2018-14 removes, modifies, and adds the disclosure requirements for defined benefit plans. The disclosure modifications in ASU 2018-14 would need to be applied on a retrospective basis. The ASU is effective for annual reporting periods, including interim periods within those annual periods, beginning after December 15, 2020, with early adoption permitted. The Company is currently evaluating the impact of adopting ASU 2018-14 on its disclosures.


NOTE 2. ACQUISITIONS

During 2019 and 2018 the Company acquired three businesses for an aggregate consideration of $104.8 million, net of cash acquired. A summary of the acquisitions made during the period is as follows:
Date
 
Type
 
Company/Product Line
 
Location (Near)
 
Segment
 
 
 
 
 
 
 
 
 
February 1, 2019
 
Stock
 
LEKTRO, Inc.
 
Warrenton, Oregon
 
AeroTech
 
 
 
 
 
 
 
 
 
A manufacturer of commercial aviation ground support equipment, including electric towbarless aircraft pushback tractors for narrow body and smaller aircrafts. With this acquistion, AeroTech will now be well positioned to lead in the market supporting the growing demand for emissions-free ground support equipment.
 
 
 
 
 
 
 
 
 
July 12, 2018
 
Stock
 
FTNON
 
Almelo, Netherlands
 
FoodTech
 
 
 
 
 
 
 
 
 
A manufacturer of equipment and solutions for the fresh produce, ready meals, and pet food industries.
 
 
 
 
 
 
 
 
 
January 26, 2018
 
Stock
 
Schröder
 
Breidenbach, Germany
 
FoodTech
 
 
 
 
 
 
 
 
 
Manufacturer of engineered processing solutions to the food industry.

Each acquisition has been accounted for as a business combination. Tangible and identifiable intangible assets acquired and liabilities assumed were recorded at their respective estimated fair values. The excess of the consideration transferred over the estimated fair value of the net assets received has been recorded as goodwill. The factors that contributed to the recognition of goodwill primarily relate to acquisition-driven anticipated cost savings and revenue enhancement synergies coupled with the assembled workforce acquired.

8



The following presents the allocation of acquisition consideration to the assets acquired and the liabilities assumed, based on their estimated values:
 
 
LEKTRO(1)
 
FTNON(2)
 
Schröder(3)
 
Total
(In millions)
 
 
 
 
 
 
 
 
Financial assets
 
$
4.2

 
$
17.2

 
$
4.3

 
$
25.7

Inventories
 
7.2

 
4.3

 
6.6

 
18.1

Property, plant and equipment
 
0.3

 
3.9

 
7.4

 
11.6

Other intangible assets (4)
 
26.7

 
19.0

 
4.2

 
49.9

Deferred taxes
 
(6.9
)
 
(3.4
)
 
0.4

 
(9.9
)
Financial liabilities
 
(4.4
)
 
(20.6
)
 
(4.5
)
 
(29.5
)
Total identifiable net assets
 
$
27.1

 
$
20.4

 
$
18.4

 
$
65.9


 
 
 
 
 
 
 
 
Cash consideration paid
 
$
49.0

 
$
43.6

 
$
20.3

 
$
112.9

Cash acquired
 
1.7

 
4.9

 
1.5

 
8.1

Net consideration
 
$
47.3

 
$
38.7

 
$
18.8

 
$
104.8

 
 
 
 
 
 
 
 
 
Goodwill
 
$
21.9

 
$
23.2

 
$
1.9

 
$
47.0



(1)
The purchase accounting for LEKTRO is provisional. The valuation of certain working capital balances, property, plant and equipment, intangibles, income tax balances and residual goodwill is not complete. These amounts are subject to adjustment as additional information is obtained within the measurement period (not to exceed 12 months from the acquisition date).
(2)
The purchase accounting for FTNON is provisional. The valuation of intangibles, income tax balances and residual goodwill is not complete. These amounts are subject to adjustment as additional information is obtained within the measurement period (not to exceed 12 months from the acquisition date). During the quarter ended March 31, 2019 we had no significant measurement period adjustments for FTNON.
(3)
The purchase accounting of Schröder was final as of December 31, 2018.
(4)
The acquired definite-lived intangibles are being amortized on a straight-line basis over their estimated useful lives, which range from seven to twenty years.

NOTE 3. GOODWILL AND INTANGIBLE ASSETS

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

(In millions)
JBT FoodTech
 
JBT AeroTech
 
Total
Balance as of December 31, 2018
$
310.3

 
$
11.1

 
$
321.4

Acquisitions
0.2

 
21.9

 
22.1

Currency translation
(1.0
)
 
0.1

 
(0.9
)
Balance as of March 31, 2019
$
309.5

 
$
33.1

 
$
342.6



9




Intangible assets consisted of the following:

 
March 31, 2019
 
December 31, 2018
(In millions)
Gross carrying amount
 
Accumulated amortization
 
Gross carrying amount
 
Accumulated amortization
Customer relationships
$
187.8

 
$
48.7

 
$
165.5

 
$
45.2

Patents and acquired technology
100.8

 
39.8

 
99.8

 
38.2

Tradenames
25.0

 
10.3

 
23.1

 
10.3

Indefinite lived intangible assets
15.6

 

 
15.6

 

Other
14.7

 
11.2

 
14.4

 
10.8

Total intangible assets
$
343.9

 
$
110.0

 
$
318.4

 
$
104.5




NOTE 4. INVENTORIES

Inventories consisted of the following:
(In millions)
March 31, 2019
 
December 31, 2018
Raw materials
$
92.7

 
$
82.1

Work in process
72.0

 
70.6

Finished goods
128.3

 
118.8

Gross inventories before LIFO reserves and valuation adjustments
293.0

 
271.5

LIFO reserves
(49.1
)
 
(48.2
)
Valuation adjustments
(17.5
)
 
(17.2
)
Net inventories
$
226.4

 
$
206.1




NOTE 5. PENSION

Components of net periodic benefit cost (income) were as follows:
 
Pension Benefits
 
Three Months Ended
March 31,
(In millions)
2019
 
2018
Service cost
$
0.4

 
$
0.5

Interest cost
2.6

 
2.7

Expected return on plan assets
(3.8
)
 
(4.2
)
Settlement charge

 
0.1

Amortization of net actuarial losses
1.7

 
1.6

Net periodic cost
$
0.9

 
$
0.7



We expect to contribute $12.4 million to our pension and other postretirement benefit plans in 2019, $10.0 million of which would be contributed to our U.S. qualified pension plan. We have made no contribution to our U.S. qualified pension plan during the three months ended March 31, 2019.


10




NOTE 6. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

Accumulated other comprehensive income or loss (“AOCI”) represents the cumulative balance of other comprehensive income, net of tax, as of the balance sheet date. For JBT, AOCI is primarily composed of adjustments related to pension and other postretirement benefit plans, derivatives designated as hedges, and foreign currency translation adjustments. Changes in the AOCI balances for the three months ended March 31, 2019 and 2018 by component are shown in the following tables:
 
Pension and Other Postretirement Benefits (1)
 
Derivatives Designated as Hedges (1)
 
Foreign Currency Translation (1)
 
Total (1)
(In millions)
 
 
 
 
 
 
 
Beginning balance, December 31, 2018
$
(140.4
)
 
$
2.0

 
$
(48.1
)
 
$
(186.5
)
Other comprehensive income (loss) before reclassification
0.4

 
(0.3
)
 
(0.3
)
 
(0.2
)
Amounts reclassified from accumulated other comprehensive income
1.3

 
(0.4
)
 
(0.4
)
 
0.5

Ending balance, March 31, 2019
$
(138.7
)
 
$
1.3

 
$
(48.8
)
 
$
(186.2
)


(1) All amounts are net of income taxes.

Reclassification adjustments from AOCI into earnings for pension and other postretirement benefit plans for the three months ended March 31, 2019 were $1.7 million of charges to pension expense, other than service cost, net of $0.4 million in provision for income taxes. Reclassification adjustments for derivatives designated as hedges for the same period were $0.5 million of benefit in interest expense, net of $0.1 million in provision for income taxes. Reclassification adjustments for foreign currency translation related to net investment hedges for the three months ended March 31, 2019 were $0.6 million of benefit in interest expense, net of $0.2 million in provision for income taxes.

 
Pension and Other Postretirement Benefits (1)
 
Derivatives Designated as Hedges (1)
 
Foreign Currency Translation
 
Total (1)
(In millions)
 
 
 
 
 
 
 
Beginning balance, December 31, 2017
$
(113.9
)
 
$
1.4

 
$
(27.8
)
 
$
(140.3
)
Other comprehensive income (loss) before reclassification

 
1.1

 
2.5

 
3.6

Amounts reclassified from accumulated other comprehensive income
1.4

 

 

 
1.4

Ending balance, March 31, 2018
$
(112.5
)
 
$
2.5

 
$
(25.3
)
 
$
(135.3
)


(1) All amounts are net of income taxes.

Reclassification adjustments from AOCI into earnings for pension and other postretirement benefit plans for the three months ended March 31, 2018 were $1.6 million of charged to pension expense, other than service cost, net of $0.2 million in provision for income taxes.


NOTE 7. REVENUE RECOGNITION

Revenue is measured based on consideration specified in a contract with a customer, and excludes any sales incentives and amounts collected on behalf of third parties when JBT is acting in an agent capacity. We recognize revenue when we satisfy a performance obligation by transferring control of a product or service to a customer.


11



Performance Obligations & Contract Estimates

A performance obligation is a promise in a contract to transfer a distinct good or service to the customer. A contract’s transaction price is allocated to each distinct performance obligation based on its respective stand-alone selling price and recognized as revenue when, or as, the performance obligation is satisfied. A large portion of our revenue across JBT is derived from manufactured equipment, which may be customized to meet customer specifications.

Our contracts with customers in both segments often include multiple promised goods and/or services. For instance, a contract may include equipment, installation, optional warranties, periodic service calls, etc. We frequently have contracts for which the equipment and installation are considered a single performance obligation. In these instances the installation services are not separately identifiable as the installation goes above and beyond the basic assembly, set-up and testing and therefore significantly customizes or modifies the equipment. However, we also have contracts where the installation services are deemed to be separately identifiable as the nature of these services are considered basic assembly, set-up and testing, and are therefore deemed to be a separate performance obligation. This generally occurs in contracts where we manufacture standard equipment.

When a performance obligation is separately identifiable, as defined in ASC 606, we allocate a portion of the contract price to the obligation and recognize it separately from the other performance obligations. Contract price allocation among multiple performance obligations is based on standalone selling price of each distinct good or service in the contract. When not sold separately, an estimate of the standalone selling price is determined using expected cost plus a reasonable margin.

The timing of revenue recognition for each performance obligation is either over time as control transfers or at a point in time. We recognize revenue over time for contracts that provide: service over a period of time, for refurbishments of customer-owned equipment, and for highly customized equipment for which we have a contractual, enforceable right to collect payment upon customer cancellation for performance completed to date. Revenue generated from standard equipment, highly customized equipment contracts without an enforceable right to payment for performance completed to date, as well as aftermarket parts and services sales, are recognized at a point in time.

We utilize the input method of “cost-to-cost” to recognize revenue over time. We measure progress based on costs incurred to date relative to total estimated cost at completion. Incurred cost represents work performed, which corresponds with, and therefore depicts, the transfer of control to the customer. Contract costs include labor, material, and certain allocated overhead expenses. Cost estimates are based on various assumptions to project the outcome of future events; including labor productivity and availability, the complexity of the work to be performed, the cost of materials, and the performance of subcontractors.

Revenue attributable to equipment which qualifies as point in time is recognized when our customers take control of the asset. For equipment where installation is separately identifiable, we generally determine that control transfers when the customer has obtained legal title and the risks and rewards of ownership, which is dependent upon the shipping terms within the contract. For customized equipment where installation is not separately identifiable, but where we do not have an enforceable right to payment for performance completed to-date, we define control transfer as the point in time in which we are able to objectively verify that the customer has the capability of full beneficial use of the asset as intended per the contract. Service revenue is recognized over time either proportionately over the period of the underlying contract or when services are complete, depending on the terms of the arrangement.

We generally bill customers in advance, and progress billings generally are issued upon the completion of certain phases of the work as stipulated in the contract. We may extend credit to customers in line with industry standards where it is strategically advantageous.

Within our AeroTech segment we provide maintenance and repair service for baggage handling systems, facilities, gate systems, and ground support equipment. The timing of contract billings is concurrent with the completion of the services, and therefore we have availed ourselves of the practical expedient that allows us to recognize revenue commensurate with the amount to which we have a right to invoice, which corresponds directly to the value to the customer of our performance completed to date.


12



Transaction price allocated to the remaining performance obligations

The majority of our contracts are completed within twelve months. For performance obligations that extend beyond one year, we had $278 million of remaining performance obligations as of March 31, 2019, 82% of which we expect to recognize as revenue in 2019 and the remainder in 2020. We have elected the following optional exemptions from the remaining performance obligation disclosures:

Contracts that have an original expected duration of one year or less; and
Performance obligations related to revenue recognized over time using the as-invoiced practical expedient.

Disaggregation of revenue

In the following table, revenue is disaggregated by type of good or service and primary geographical market. The table also includes a reconciliation of the disaggregated revenue with the reportable segments.

 
Three Months Ended
 
Three Months Ended
 
March 31, 2019
 
March 31, 2018(3)
in millions
FoodTech
 
AeroTech
 
FoodTech
 
AeroTech
Type of Good or Service
 
 
 
 
 
 
 
Recurring (1)
$
133.3

 
$
50.9

 
$
123.0

 
$
43.1

Non-recurring (1)
161.3

 
72.0

 
180.6

 
62.5

Total
294.6

 
122.9

 
303.6

 
105.6

 
 
 
 
 
 
 
 
Geographical Region (2)
 
 
 
 
 
 
 
North America
156.1

 
94.9

 
164.0

 
83.8

Europe, Middle East and Africa
79.4

 
23.4

 
76.3

 
14.1

Asia Pacific
37.7

 
4.1

 
40.2

 
7.0

Latin America
21.4

 
0.5

 
23.1

 
0.7

Total
294.6

 
122.9

 
303.6

 
105.6

 
 
 
 
 
 
 
 
Timing of Recognition
 
 
 
 
 
 
 
Point in time
146.0

 
68.6

 
162.0

 
60.2

Over time
148.6

 
54.3

 
141.6

 
45.4

Total
294.6

 
122.9

 
303.6

 
105.6


(1) Aftermarket parts and services and revenue from leasing contracts are considered recurring revenue. Non-recurring revenue includes new equipment and installation.

(2) Geographical region represents the region in which the end customer resides.

(3) These amounts include the transition impacts from the adoption of ASC 606 that were recognized throughout the year. The majority of the impact was driven by "previously recognized" amounts where installation was completed in 2018 and revenue on the full contract was recognized, however the same contract was previously recognized under legacy GAAP upon shipment in 2017.



13



Contract balances

The timing of revenue recognition, billings and cash collections results in Trade receivables, Contract assets, and Advance and progress payments (contract liabilities). Contract assets exist when revenue recognition occurs prior to billings. Contract assets are transferred to trade receivables when the right to payment becomes unconditional (i.e., when receipt of the amount is dependent only on the passage of time). Conversely, we often receive payments from our customers before revenue is recognized, resulting in contract liabilities. These assets and liabilities are reported on the Balance Sheet as Contract assets and within Advance and progress payments, respectively, on a contract-by-contract net basis at the end of each reporting period.

Our contract asset and liability balances for the period were as follows:
 
Balances as of
in millions
March 31, 2019
 
December 31, 2018
Contract assets
$
68.4

 
$
70.3

Contract liabilities
125.6

 
124.5



In the three months ended March 31, 2019, we recognized $65 million of the amount included in Contract Liabilities at December 31, 2018 into revenue. The remainder of the change from December 31, 2018 is driven by the timing of advanced and milestone payments received from customers. There were no significant changes in the contract balances other than those described above.

NOTE 8. EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted earnings per share from continuing operations for the respective periods and our basic and diluted shares outstanding:

 
Three Months Ended
March 31,
(In millions, except per share data)
2019
 
2018
Basic earnings per share:
 
 
 
Income from continuing operations
$
19.7

 
$
1.6

Weighted average number of shares outstanding
31.8

 
31.9

Basic earnings per share from continuing operations
$
0.62

 
$
0.05

Diluted earnings per share:
 
 
 
Income from continuing operations
$
19.7

 
$
1.6

Weighted average number of shares outstanding
31.8

 
31.9

Effect of dilutive securities:
 
 
 
Restricted stock
0.2

 
0.5

Total shares and dilutive securities
32.0

 
32.4

Diluted earnings per share from continuing operations
$
0.62

 
$
0.05



On August 10, 2018, the Board authorized new share repurchase program of up to $30 million of the Company's common stock, effective January 1, 2019 through December 31, 2021. Shares may be purchased from time to time in open market transactions, subject to market conditions. Repurchased shares become treasury shares, which are accounted for using the cost method and are intended to be used for future awards under the Incentive Compensation Plan.


14



NOTE 9. FAIR VALUE OF FINANCIAL INSTRUMENTS

The fair value framework requires the categorization of assets and liabilities into three levels based upon the assumptions (inputs) used to price the assets or liabilities. Level 1 provides the most reliable measure of fair value, whereas Level 3 generally requires significant management judgment. The three levels are defined as follows:

Level 1: Unadjusted quoted prices in active markets for identical assets and liabilities that the Company can assess at the measurement date.
Level 2: Observable inputs other than those included in Level 1 that are observable for the asset or liability, either directly or indirectly. For example, quoted prices for similar assets or liabilities in active markets or quoted prices for identical assets or liabilities in inactive markets.
Level 3: Unobservable inputs reflecting management’s own assumptions about the inputs used in pricing the asset or liability.

Financial assets and financial liabilities measured at fair value on a recurring basis are as follows:
 
As of March 31, 2019
 
As of December 31, 2018
(In millions)
Total
 
Level 1
 
Level 2
 
Level 3
 
Total
 
Level 1
 
Level 2
 
Level 3
Assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Investments
$
13.7

 
$
13.7

 
$

 
$

 
$
12.3

 
$
12.3

 
$

 
$

Derivatives
9.6

 

 
9.6

 

 
7.7

 

 
7.7

 

Total assets
$
23.3

 
$
13.7

 
$
9.6

 
$

 
$
20.0

 
$
12.3

 
$
7.7

 
$

Liabilities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Derivatives
$
5.6

 
$

 
$
5.6

 
$

 
$
2.0

 
$

 
$
2.0

 
$

Total liabilities
$
5.6

 
$

 
$
5.6

 
$

 
$
2.0

 
$

 
$
2.0

 
$



Investments represent securities held in a trust for the non-qualified deferred compensation plan. Investments are classified as trading securities and are valued based on quoted prices in active markets for identical assets that we have the ability to access. Investments are reported separately in Other assets on the Balance Sheets. Investments include an unrealized gain of $1.2 million as of March 31, 2019 and unrealized loss of $2.4 million as of December 31, 2018.

We use the income approach to measure the fair value of derivative instruments on a recurring basis. This approach calculates the present value of the future cash flow by measuring the change between the derivative contract rate and the published market indicative currency rate, multiplied by the contract notional values, and applying an appropriate discount rate as well as a factor of credit risk.

The carrying amounts of cash and cash equivalents, trade receivables and payables, as well as financial instruments included in other current assets and other current liabilities, approximate fair values because of their short-term maturities.

The carrying values of our long-term debt approximate their fair values due to their variable interest rates.

NOTE 10. DERIVATIVE FINANCIAL INSTRUMENTS AND RISK MANAGEMENT

Derivative Financial Instruments

All derivatives are recorded as other assets or liabilities in the Balance Sheets at their respective fair values. For derivatives designated as cash flow hedges, the unrealized gain or loss related to the derivatives are recorded in Other comprehensive income (loss) until the hedged transaction affects earnings. We assess at inception of the hedge, whether the derivative in the hedging transaction will be highly effective in offsetting changes in cash flows of the hedged item. Changes in the fair value of derivatives that do not meet the criteria for designation as a hedge are recognized in earnings.

Foreign Exchange: We manufacture and sell products in a number of countries throughout the world and, as a result, we are exposed to movements in foreign currency exchange rates. Our major foreign currency exposures involve the markets in Western Europe, South America and Asia. Some of our sales and purchase contracts contain embedded derivatives due to the nature of doing business in certain jurisdictions, which we take into consideration as part of our risk management policy. The purpose of our foreign currency hedging activities is to manage the economic impact of exchange rate volatility associated with

15



anticipated foreign currency purchases and sales made in the normal course of business. We primarily utilize forward foreign exchange contracts with maturities of less than 2 years in managing this foreign exchange rate risk. We have not designated these forward foreign exchange contracts, which had a notional value at March 31, 2019 of $556.6 million, as hedges and therefore do not apply hedge accounting.

The following table presents the fair value of foreign currency derivatives and embedded derivatives included within the Balance Sheets:
 
As of March 31, 2019
 
As of December 31, 2018
(In millions)
Derivative Assets
 
Derivative Liabilities
 
Derivative Assets
 
Derivative Liabilities
Total
$
3.8

 
$
5.6

 
$
3.7

 
$
2.1



A master netting arrangement allows counterparties to net settle amounts owed to each other as a result of separate offsetting derivative transactions. We enter into master netting arrangements with our counterparties when possible to mitigate credit risk in derivative transactions by permitting us to net settle for transactions with the same counterparty. However, we do not net settle with such counterparties. As a result, we present derivatives at their gross fair values in the Balance Sheets.  

As of March 31, 2019 and December 31, 2018, information related to these offsetting arrangements was as follows:

(In millions)
As of March 31, 2019
Offsetting of Assets
Gross Amounts of Recognized Assets
 
Gross Amounts Offset in the Consolidated Balance Sheets
 
Net Presented in the Consolidated Balance Sheets
 
Amount Subject to Master Netting Agreement
 
Net Amount
Derivatives
$
9.6

 
$

 
$
9.6

 
$
(2.5
)
 
$
7.1



(In millions)
As of March 31, 2019
Offsetting of Liabilities
Gross Amounts of Recognized Liabilities
 
Gross Amounts Offset in the Consolidated Balance Sheets
 
Net Presented in the Consolidated Balance Sheets
 
Amount Subject to Master Netting Agreement
 
Net Amount
Derivatives
$
5.6

 
$

 
$
5.6

 
$
(2.5
)
 
$
3.1



(In millions)
As of December 31, 2018
Offsetting of Assets
Gross Amounts of Recognized Assets
 
Gross Amounts Offset in the Consolidated Balance Sheets
 
Net Presented in the Consolidated Balance Sheets
 
Amount Subject to Master Netting Agreement
 
Net Amount
Derivatives
$
7.7

 
$

 
$
7.7

 
$
(1.5
)
 
$
6.2



(In millions)
As of December 31, 2018
Offsetting of Liabilities
Gross Amounts of Recognized Liabilities
 
Gross Amounts Offset in the Consolidated Balance Sheets
 
Net Presented in the Consolidated Balance Sheets
 
Amount Subject to Master Netting Agreement
 
Net Amount
Derivatives
$
2.0

 
$

 
$
2.0

 
$
(1.5
)
 
$
0.5




16



The following table presents the location and amount of the gain (loss) on foreign currency derivatives and on the remeasurement of assets and liabilities denominated in foreign currencies, as well as the net impact recognized in the Income Statement: 
Derivatives Not Designated
as Hedging Instruments
 
Location of Gain (Loss) Recognized
in Income on Derivatives
 
Amount of (Loss) Gain Recognized in Income
on Derivatives
 
 
 
 
Three Months Ended
March 31,
(In millions)
 
 
 
2019
 
2018
Foreign exchange contracts
 
Revenue
 
$
(2.0
)
 
$
(1.7
)
Foreign exchange contracts
 
Cost of sales
 
0.8

 
0.6

Foreign exchange contracts
 
Selling, general and administrative expense
 
(0.1
)
 
0.1

Total
 
 
 
(1.3
)
 
(1.0
)
Remeasurement of assets and liabilities in foreign currencies
 
 
 
0.4

 
0.1

Net (loss) gain on foreign currency transactions
 
 
 
$
(0.9
)
 
$
(0.9
)


Interest Rates: We have entered into three interest rate swaps to fix the interest rate applicable to certain of our variable-rate debt. The agreements swap one-month LIBOR for fixed rates. We have designated these swaps as cash flow hedges and all changes in fair value of the swaps are recognized in accumulated other comprehensive income (loss).

At March 31, 2019, the fair value of these derivatives designated as cash flow hedges were recorded in the Balance Sheet as other assets of $1.9 million and as accumulated other comprehensive income, net of tax, of $1.2 million.

Net Investment: We have entered into a cross currency swap agreement that synthetically swaps $116.4 million of fixed rate debt to Euro denominated fixed rate debt. The agreement is designated as a net investment hedge for accounting purposes. Accordingly, the gain or loss on this derivative instrument is included in the foreign currency translation component of other comprehensive income until the net investment is sold, diluted, or liquidated. Coupons received for the cross currency swap are excluded from the net investment hedge effectiveness assessment and are recorded in interest expense, net on the condensed consolidated statements of income. For the three months ended March 31, 2019, gains recorded in interest expense, net under the cross currency swap agreement were $0.6 million.
At March 31, 2019, the fair value of these derivatives designated as net investment hedges were recorded in the Balance Sheet as other assets of $4.3 million and as accumulated other comprehensive income, net of tax, of $3.2 million.

Refer to Note 9. Fair Value Of Financial Instruments for a description of how the values of the above financial instruments are determined.

Credit Risk

By their nature, financial instruments involve risk including credit risk for non-performance by counterparties. Financial instruments that potentially subject us to credit risk primarily consist of trade receivables and derivative contracts. We manage the credit risk on financial instruments by transacting only with financially secure counterparties, requiring credit approvals and establishing credit limits, and monitoring counterparties’ financial condition. Our maximum exposure to credit loss in the event of non-performance by the counterparty, for all receivables and derivative contracts as of March 31, 2019, is limited to the amount drawn and outstanding on the financial instrument. Allowances for losses are established based on collectability assessments.

NOTE 11. LEASES
Lessee Accounting

We adopted ASC 842 on January 1, 2019 and included below is our accounting policy for lessee accounting.

We lease office space, manufacturing facilities and various types of manufacturing and data processing equipment. Leases of real estate generally provide that we pay for repairs, property taxes and insurance. At the inception of an arrangement, we determine whether the arrangement is or contains a lease based on whether the contract conveys the right to control the use of identified property, plant or equipment for a period of time in exchange for consideration. Leases are classified as operating or

17



finance leases at the commencement date of the lease. Operating leases are included in operating lease ROU assets, other current liabilities, and operating lease liabilities in our consolidated balance sheet, which are reported within Other assets, Other current liabilities and Other liabilities, respectively. We do not currently have any leases that are classified as a finance lease. Lease liabilities are classified between current and long-term liabilities based on their payment terms. Per the standard, we have elected not to recognize leases with terms of less than one year on the balance sheet.

ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As the implicit rate is generally not readily determinable for most of our leases, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The operating lease ROU asset also includes prepaid rent and reflects the unamortized balance of lease incentives. Our leases may include renewal options, and we include the renewal option in the lease term if we conclude that it is reasonably certain that we will exercise that option. Lease expense for operating leases is recognized on a straight-line basis over the lease term.

We elected the practical expedient to not separate lease and non-lease components for leases other than leases of vehicles and communication equipment. For the asset categories of real estate, manufacturing, office and IT equipment, we account for the lease and non-lease components as a single lease component.

Some leases give us the option to renew, with renewal terms that may extend the lease term. The exercise of lease renewal options is at our sole discretion. Certain leases also include options to purchase the leased property. The depreciable life of the ROU assets are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise.

Our lease agreements do not contain any material residual value guarantees.

Our lease cost as of the three months ended March 31, 2019 was $3.5 million. The variable lease cost, short-term lease costs and sub-lease income was immaterial.

The following tables provide the required information regarding our leases for which we are lessee.

 
Balance as of
in millions
January 1, 2019
 
March 31, 2019
Assets
 
 
 
ROU assets
$
32.3

 
$
31.6

Total ROU assets
32.3

 
31.6

 
 
 
 
Liabilities
 
 
 
Current
10.8

 
11.0

Non-current
23.3

 
22.6

Total lease liabilities
$
34.1

 
$
33.6

 
 
 
 
Weighted-average remaining lease term (years )
4.3

 
4.2

Weighted-average discount rate 
5.7
%
 
5.7
%



18



The majority of our ROU assets and lease liabilities, approximately 80%, relate to real estate leases, with the remaining amounts driven primarily by vehicle leases.

Maturity of Operating Lease Liabilities:
Year 1
$
12.2

Year 2
9.5

Year 3
5.6

Year 4
3.8

Year 5
2.8

After Year 5
3.9

Total lease payments
37.8

Less: Interest on lease payments
(4.2
)
Present value of lease liabilities
$
33.6



Other Information:
 
Year-to-Date
 
March 31, 2019
Operating cash flows from operating leases 
$
3.4

New leases signed
1.7



Prior Year Disclosures

Although we have adopted ASC 842 using the cumulative effect transition method, which enables us to record existing leases at the date of adoption without restating comparative periods, we are required to include prior year disclosures that were in accordance with legacy GAAP. These disclosures included in our December 31, 2018 Form 10-K are included below:

We lease office space, manufacturing facilities and various types of manufacturing and data processing equipment. Leases of real estate generally provide that we pay for repairs, property taxes and insurance. Substantially all leases are classified as operating leases for accounting purposes. Rent expense under operating leases amounted to $10.5 million in 2018.

Future minimum lease payments under non-cancelable operating leases as of December 31, 2018, for the following fiscal years were:
in millions
Total Amount
 
2019
 
2020
 
2021
 
2022
 
2023
 
After 2024
Operating lease obligations
$
39.6

 
$
12.7

 
$
9.7

 
$
5.6

 
$
3.7

 
$
2.9

 
$
5.0



Lessor Accounting

JBT primarily leases food processing equipment, such as industrial juicers.

In most instances, JBT does include maintenance as a component of the lease agreement. ASC 842 requires lessors to separate lease and non-lease components and further defines maintenance as a non-lease component. We elected to exercise the available practical expedient of combining lease and non-lease components where the components meet both of the following criteria:

The timing and pattern of transfer to the lessee of the lease and non-lease component are the same, and
The lease component, if accounted for separately, would be classified as an operating lease.

As such, the leased asset and its respective maintenance component will not be accounted for separately.

In certain of our leases, consumables are included as a non-lease component. For these leases, the components do not qualify for the practical expedient as the timing and pattern of transfer to the lessee are not the same. In these instances, the non-lease component will be accounted for in accordance with ASC 606.

19




JBT monitors the risk associated with residual value of its leased assets. We review on an annual basis or more often as deemed necessary, and adjust residual values and useful lives of equipment leased to outside parties, as appropriate. Adjustments to residual values result in an adjustment to depreciation expense. Our annual review is based on a long-term view considering historical market price changes, market price trends, and expected life of the equipment.

Our lease agreements with our customers do not contain any material residual value guarantees. Certain lease agreements include terms and conditions resulting in variable lease payments. These payments typically rely upon the usage of the underlying asset.

Certain of our lease agreements provide renewal options, including some leases with an evergreen renewal option. The exercise of the lease renewal option is at the sole discretion of the lessee. In most instances, the lease can only be terminated in cases of breach of contract. In these instances, termination fees do not apply. Certain of our lease agreements also allow the lessee to purchase the leased asset at fair market value or a specific agreed upon price. The exercise of the lease purchase option is at the sole discretion of the lessee.

We do not have any lease agreements with related parties.

The following tables provide the required information regarding our leases for which we are lessor. We do not currently have leases that are considered finance leases.

Lease Revenue:
 
Three Months Ended
in millions
March 31, 2019
Fixed payment revenue
$
16.1

Variable payment revenue
5.4

Total
$
21.5



Lessor Maturity Analysis:
Less than 1 Year
$
56.7