GARDNER DENVER HOLDINGS, INC. (Form: 10-K, Received: 02/16/2018 16:52:34)

The before tax (loss) income, related income tax effect and accumulated balances are as follows:

	Cumulative Currency Translation Adjustment			Foreign Currency Gains and (Losses)			Unrealized (Losses) Gains on Cash Flow Hedges			Pension and Postretirement Benefit Plans			Accumulated Other Comprehensive Income
Balance at December 31, 2014	$	(111.7	)	$	42.4		$	(25.4	)	$	(40.6	)	$	(135.3	)
Before tax (loss) income		(136.3	)		56.8			(25.6	)		(13.3	)		(118.4	)
Income tax effect		-			(24.2	)		9.7			2.6			(11.9	)
Other comprehensive (loss) income		(136.3	)		32.6			(15.9	)		(10.7	)		(130.3	)
Balance at December 31, 2015		(248.0	)		75.0			(41.3	)		(51.3	)		(265.6	)
Before tax (loss) income		(76.2	)		21.0			(1.5	)		(14.3	)		(71.0	)
Income tax effect		-			(7.4	)		0.6			1.0			(5.8	)
Other comprehensive (loss) income		(76.2	)		13.6			(0.9	)		(13.3	)		(76.8	)
Balance at December 31, 2016		(324.2	)		88.6			(42.2	)		(64.6	)		(342.4	)
Before tax income (loss)		157.6			(82.8	)		20.0			29.8			124.6
Income tax effect		-			31.2			(7.6	)		(5.6	)		18.0
Other comprehensive income (loss)		157.6			(51.6	)		12.4			24.2			142.6
Balance at December 31, 2017		(166.6	)		37.0			(29.8	)		(40.4	)		(199.8	)

Changes in accumulated other comprehensive (loss) income by component for the periods described below are presented in the following table ⁽¹⁾ :

	Cumulative Currency Translation Adjustment			Foreign Currency (Losses) and Gains			Unrealized Gains (Losses) on Cash Flow Hedges			Pension and Postretirement Benefit Plans			Total
Balance as of December 31, 2015	$	(248.0	)	$	75.0		$	(41.3	)	$	(51.3	)	$	(265.6	)
Other comprehensive (loss) income before reclassifications		(76.2	)		13.6			(8.1	)		(15.2	)		(85.9	)
Amounts reclassified from accumulated other comprehensive income		-			-			7.2			1.9			9.1
Other comprehensive (loss) income		(76.2	)		13.6			(0.9	)		(13.3	)		(76.8	)
Balance at December 31, 2016	$	(324.2	)	$	88.6		$	(42.2	)	$	(64.6	)	$	(342.4	)
Other comprehensive income (loss) before reclassifications		157.6			(51.6	)		0.9			21.1			128.0
Amounts reclassified from accumulated other comprehensive income		-			-			11.5			3.1			14.6
Other comprehensive income (loss)		157.6			(51.6	)		12.4			24.2			142.6
Balance at December 31, 2017	$	(166.6	)	$	37.0		$	(29.8	)	$	(40.4	)	$	(199.8	)

⁽¹⁾

All amounts are net of tax. Amounts in parentheses indicate debits.

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Reclassifications out of accumulated other comprehensive (loss) income for the years ended December 31, 2017 and 2016 are presented in the following table.

Amount Reclassified from Accumulated Other Comprehensive (Loss) Income
Details about Accumulated Other Comprehensive Income Components	2017			2016			Affected Line in the Statement Where Net Income is Presented
Loss on cash flow hedges Interest rate swaps	$	18.5		$	11.6		Interest expense
		18.5			11.6		Total before tax
		(7.0	)		(4.4	)	Income tax benefit
	$	11.5		$	7.2		Net of tax

Amortization of defined benefit pension and other postretirement benefit items	$	5.0		$	3.0		⁽¹⁾
		5.0			3.0		Total before tax
		(1.9	)		(1.1	)	Income tax benefit
	$	3.1		$	1.9		Net of tax
Total reclassifications for the period	$	14.6		$	9.1		Net of tax

⁽¹⁾

These components are included in the computation of net periodic benefit cost (see Note 11 “Benefit Plans” for additional details).

Note 14:

Income Taxes

Loss before income taxes for the years ended December 31, 2017, 2016 and 2015 consisted of the following:

	2017			2016			2015

U.S.	$	(145.8	)	$	(149.4	)	$	(450.0	)
Non-U.S.		33.1			86.2			83.3
Loss before income taxes	$	(112.7	)	$	(63.2	)	$	(366.7	)

The following table details the components of the (benefit) provision for income taxes for the years ended December 31, 2017, 2016 and 2015.

	2017			2016			2015
Current:
U.S. federal	$	64.0		$	(6.6	)	$	-
U.S. state and local		3.0			1.3			1.6
Non-U.S.		49.8			57.8			46.7
Deferred:
U.S. federal		(217.5	)		(61.4	)		(31.5	)
U.S. state and local		-			(3.4	)		(9.3	)
Non-U.S.		(30.5	)		(19.6	)		(22.2	)
Benefit for income taxes	$	(131.2	)	$	(31.9	)	$	(14.7	)

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The U.S. federal corporate statutory rate is reconciled to the Company’s effective income tax rate for the years ended December 31, 2017, 2016 and 2015 as follows.

	2017			2016			2015
U.S. federal corporate statutory rate		35.0	%		35.0	%		35.0	%
State and local taxes, less federal tax benefit		3.1			4.0			2.3
U.S. deferred tax rate change from 35% to 21%		79.5			-			-
Net effects of foreign tax rate differential		6.2			19.9			1.5
Sale of subsidiary		(4.6	)		(17.1	)		-
Repatriation cost		3.8			4.4			(0.3	)
U.S. transition tax toll charge net of FTC		(56.2	)		-			-
ASC 740-30		61.2			26.3			(2.0	)
Valuation allowance changes		(1.1	)		(15.9	)		(0.5	)
Impairment of goodwill and intangible assets		-			(0.6	)		(31.7	)
Uncertain tax positions		1.9			(7.0	)		(0.4	)
Nondeductible equity compensation		(9.2	)		-			-
Nondeductible foreign interest expense		(3.0	)		-			-
Other, net		(0.3	)		1.5			0.1
Effective income tax rate		116.3	%		50.5	%		4.0	%

The principal items that gave rise to deferred income tax assets and liabilities as of December 31, 2017 and 2016 are as follows.

	2017			2016
Deferred Tax Assets:
Reserves and accruals	$	62.4		$	38.2
Postretirement benefits other than pensions		0.7			1.1
Postretirement benefits - pensions		15.6			20.9
Tax loss carryforwards		41.8			58.0
Foreign tax credit carryforwards		29.8			11.6
Other		19.4			33.1
Total deferred tax assets		169.7			162.9
Valuation allowance		(47.9	)		(33.6	)
Deferred Tax Liabilities:
LIFO inventory		(9.3	)		(17.0	)
Property, plant, and equipment		(21.0	)		(28.6	)
Intangibles		(322.2	)		(444.3	)
Unremitted foreign earnings		(9.3	)		(77.3	)
Other		3.5			(48.3	)
Total deferred tax liabilities		(358.3	)		(615.5	)
Net deferred income tax liability	$	(236.5	)	$	(486.2	)

The U.S. Tax Law change enacted in December 2017 impacted the comparison of the 2017 to the 2016 deferred tax changes by $158.6 million as a result of the U.S. tax rate reduction and the change in the ASC 740-30 deferred liability balance.

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The Company believes that it is more likely than not that it will realize its deferred tax assets through the reduction of future taxable income, other than for the deferred tax assets reflected below. Tax attributes and related valuation allowances as of December 31, 2017 were as follows.

	Tax Benefit		Valuation Allowance			Carryforward Period Ends
Tax Attributes to be Carried Forward
U.S. federal net operating loss	$	15.1	$	(2.0	)		2035-2037
U.S federal capital loss		6.9		(6.9	)		2021
U.S. federal tax credit		33.4		(29.9	)		2023-2037
Alternative minimum tax credit		0.9		-		Unlimited
U.S. state and local net operating losses		5.4		-			2034-2037
U.S. state and local tax credit		0.5		-			2018-2034
Non U.S. net operating losses		2.7		(0.8	)		2018-2037
Non U.S. net operating losses		8.1		(7.7	)	Unlimited
Non U.S. capital losses		0.5		(0.5	)	Unlimited
Other deferred tax assets		5.3		(0.1	)	Unlimited
Total tax carryforwards	$	78.8	$	(47.9	)

When comparing to prior year, the comparison is impacted by the US Tax Law change enacted December 22, 2017.

A reconciliation of the changes in the valuation allowance for deferred tax assets for the years ended December 31, 2017, 2016 and 2015 are as follows.

	2017			2016			2015
Valuation allowance for deferred tax assets at beginning of the period	$	33.6		$	23.8		$	27.5
Revaluation and change due to U.S. Tax Reform		10.7			-			-
Charged to tax expense		3.1			12.5			4.8
Charged to other accounts		1.6			(0.1	)		-
Deductions ⁽¹⁾		(1.1	)		(2.6	)		(8.5	)
Valuation allowance for deferred tax assets at end of the period	$	47.9		$	33.6		$	23.8

⁽¹⁾

Deductions relate to the realization of net operating losses or the removal of deferred tax assets.

Total unrecognized tax benefits were $12.6 million, $6.8 million and $4.8 million for the years ended December 31, 2017, 2016 and 2015, respectively. The net increase in this balance primarily relates to recording $11.2 million for tax positions in prior years, which were partially offset by the benefits associated with the lapse of applicable statutes of limitations of $0.3 million and settlements of $6.2 million. Included in total unrecognized benefits as of December 31, 2017 is $12.6 million of unrecognized tax benefits that would affect the Company's effective tax rate if recognized, of which $1.2 million would be offset by a reduction of a corresponding deferred tax asset. The balance of total unrecognized tax benefits is not expected to significantly increase or decrease within the next twelve months. Below is a tabular reconciliation of the changes in total unrecognized tax benefits during the years ended December 31, 2017, 2016 and 2015.

	2017			2016			2015
Beginning balance	$	6.8		$	4.8		$	4.0
Gross increases for tax positions of prior years		11.2			3.1			-
Gross decreases for tax positions of prior years		-			-			(0.4	)
Gross increases for tax positions of current year		0.6			-			1.8
Settlements		(6.2	)		(0.4	)		-
Lapse of statute of limitations		(0.3	)		(0.7	)		(0.6	)
Changes due to currency fluctuations		0.5			-			-
Ending balance	$	12.6		$	6.8		$	4.8

The Company includes interest expense and penalties related to unrecognized tax benefits as part of the provision for income taxes. The Company's income tax liabilities as of December 31, 2017 and 2016 include accrued interest and penalties of $0.8 million and $3.0 million, respectively.

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The statutes of limitations for U.S. Federal tax returns are open beginning with the 2014 tax year, and state returns are open beginning with the 2013 tax year. The Company closed the IRS audit of the short tax year ending December 31, 2013. On January 3, 2018 the Company received notification from the IRS stating that the Company is now under IRS audit for the tax years ending December 31, 2014, 2015 and 2016. The audit will begin in 2018.

The Company is subject to income tax in approximately 33 jurisdictions outside the U.S. The statute of limitations varies by jurisdiction with 2005 being the oldest year still open. The Company's significant operations outside the U.S. are located in the United Kingdom and Germany. In the United Kingdom, tax years prior to 2012 are closed. However, the Company is currently under audit in the United Kingdom, which has been expanded to include years 2012 to 2014. The audit has not been completed as of the date of these financial statements. In Germany, generally, the tax years 2010 and beyond remain open to examination. The general field tax audit of fiscal years 2008 to 2010 was settled during the tax year ended December 31, 2017. The Company also commenced a general tax audit for the tax years 2011 to 2014 for Germany during 2017. Additionally, in Italy, the withholding tax audit for the tax years 2012 to 2014 was settled during 2017.

The Company recorded a deferred tax liability of approximately $114.0 million as of the acquisition date by KKR for the anticipated repatriation of a limited amount of unremitted foreign earnings generated prior to date of acquisition, July 30, 2013. These accumulated earnings of non-U.S. subsidiaries amounting to approximately $287.0 million are expected to supplement the Company’s projected U.S. operating cash flow in meeting the Company’s debt service requirements along with other U.S. cash flow needs during the term of its credit agreement. This deferred tax liability was adjusted to $94.1 million as of December 31, 2014, 94.6 million as of December 31, 2015, $77.3 million as of December 31, 2016, and $9.3 million as of December 31, 2017 based upon the estimated need to repatriate accumulated earnings of approximately $200.0 million. As a result of the transition tax, the recorded deferred tax liability of $9.3 million as of December 31, 2017 relates to withholding tax.

Our accounting for the following elements of the Tax Act is incomplete, and we were not yet able to make reasonable estimates of the effects. Therefore, no provisional adjustments, other than the adjustment related to the effect of the transitional tax, were recorded related to ASC 740-30.

The Tax Act creates a new requirement that certain income (i.e., GILTI) earned by controlled foreign corporations (“CFC”) must be included currently in the gross income of the CFCs’ U.S. shareholder. GILTI is the excess of the shareholder’s “net CFC tested income” over the net deemed tangible income return, which is currently defined as the excess of (1) 10% of the aggregate of the U.S. shareholder’s pro rata share of the qualified business asset investment of each CFC with respect to which it is a U.S. shareholder over (2) the amount of certain interest expense taken into account in the determination of net CFC-tested income.

Because of the complexity of the new GILTI tax rules, we are continuing to evaluate this provision of the Tax Act and the application of ASC 740. Under U.S. GAAP, we are allowed to make an accounting policy choice of either (1) treating taxes due on future U.S. inclusions in taxable income related to GILTI as a current-period expense when incurred (the “period cost method”) or (2) factoring such amounts into a company’s measurement of its deferred taxes (the “deferred method”). Because whether we expect to have future U.S. inclusions in taxable income related to GILTI depends on not only our current structure and estimated future results of global operations but also our intent and ability to modify our structure and/or our business, we are not yet able to reasonably estimate the effect of this provision of the Tax Act.

Due to these complexities, we have not been able to determine if our company policy concerning permanent reinvestment will change as a result of the new Tax Act. With the exception of the $9.3 million withholding tax impact on the $200 million of accumulated earnings to be repatriated as discussed previously, no additional adjustments relating to ASC 740-30 have been recorded in accordance with SAB 118 as we are not currently able to reasonably estimate the impact as of the filing of the December 31, 2017 financial statements.

Except as noted above, we consider the excess of the amount for financial reporting over the tax basis (including undistributed and previously taxed earnings) of investments in our foreign subsidiaries as of December 31, 2017 to be indefinitely reinvested outside the United States on the basis of our plan for reinvestment and estimates that future domestic cash generation will be sufficient to meet future domestic cash needs. Therefore, we have not provided for deferred taxes related to such and it is not practicable to determine this amount.

Note 15:

Stock-Based Compensation Plans

2013 Stock Incentive Plan

The Company adopted the 2013 Stock Incentive Plan (“2013 Plan”) on October 14, 2013 as amended on April 27, 2015 under which the Company may grant stock-based compensation awards to employees, directors and advisors. The total number of shares available for grant under the 2013 Plan and reserved for issuance is 20.9 million shares. All stock options were granted to employees, directors, and advisors with an exercise price equal to the fair value of the Company’s per share common stock at the date of grant. Following the Company’s initial public offering, the Company may grant stock-based compensation awards pursuant to the 2017 Plan (defined below) and ceased granting new awards pursuant to the 2013 Plan.

Stock options awards vest over either five, four, or three years with 50% of each award vesting based on time and 50% of each award vesting based on the achievement of certain financial targets.

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Prior to the Company’s initial public offering in May 2017, the Company had certain repurchase rights on stock acquired through the exercise of a stock option that created an implicit service period and created a condition in which an optionee may not receive the economic benefits of the option until the repurchase rights are eliminated. The repurchase rights creating the implicit service period are eliminated at the earlier of an initial public offering or change of control event. Before the elimination of the repurchase rights, because an initial public offering or change of control were not probable of occurring, no compensation expense was recorded for equity awards.

The Company recognized a liability for compensation expense measured at intrinsic value when it was probable that an employee would receive benefits under the terms of the plan due to termination of employment.

Under the terms of the 2013 Plan, concurrent with the initial public offering, the Company no longer retains repurchase rights on stock acquired through the exercise of a stock option and the implicit service period was eliminated on outstanding stock options. For the year ended December 31, 2017, the Company recognized stock-based compensation expense of approximately $77.6 million, related to time-based and performance-based stock options included in “Other operating expense, net” in the Consolidated Statements of Operations. Certain stock awards are expected to be settled in cash (stock appreciation rights “SAR”) and are accounted for as liability awards. As of December 31, 2017, a liability of approximately $16.8 million for SARs is included in “Accrued liabilities” in the Consolidated Balance Sheets.

As of December 31, 2017 and December 31, 2016 there was $9.1 million and $68.0 million of total unrecognized compensation expense related to outstanding stock options.

A summary of the Company’s stock-based award plan activity, including stock options and SARs, for the years ended December 31, 2017, 2016 and 2015 is presented in the following table (underlying shares in thousands).

Stock-Based Compensation Awards
	Shares			Weighted-Average Exercise Price (per share)		Wtd. Avg. Remaining Contractual Term (years)	Aggregate Intrisic Value of In-The-Money Options (in millions)
Outstanding at December 31, 2014		18,214		$	8.23
Granted		1,075		$	10.61
Settled		(304	)	$	8.33
Forfeited		(1,952	)	$	8.43
Outstanding at December 31, 2015		17,033		$	8.36
Granted		2,427		$	10.75
Settled		(1,980	)	$	8.18
Forfeited		(2,931	)	$	8.31
Converted to liability		(1,264	)	$	8.16
Outstanding at December 31, 2016		13,285		$	8.85
Granted		799		$	20.00
Settled		(193	)	$	8.17
Forfeited		(1,057	)	$	8.34
Outstanding at December 31, 2017		12,834		$	9.54	6.81	$ 313.1
Vested at December 31, 2017		9,459		$	9.05	6.59	$ 235.4

The following assumptions were used to estimate the fair value of options and SARs granted during the fiscal years ended December 31, 2017, 2016 and 2015.

	2017		2016		2015
Assumptions:
Expected life of options (in years)		5.00 - 6.25		5.10		4.80
Risk-free interest rate		1.9 - 2.1%		1.3%		1.6%
Assumed volatility		41.2 - 45.8%		49.5%		49.9%
Expected dividend rate		0.0%		0.0%		0.0%

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Concurrent with the Company’s initial public offering in May of 2017, the Company’s Board authorized the grant of 5.5 million deferred stock units (“DSU”) to all permanent employees that had not previously received stock-based awards under the 2013 Plan. The DSUs vested immediately upon grant, however contain restrictions such that the employee may not sell or otherwise realize the economic benefits of the award until certain dates through April 2019. At the date of the grant, the fair value of a DSU was determined to be $17.20 assuming a share price at the pricing date of the initial public offering of $20.00 and a discount for lack of marketability commensurate with the period of the sale restrictions. At the date of the grant, certain DSU awards were expected to be settled in cash and had been carried at fair value on the balance sheet date. On November 20, 2017, the Company, having the intent and ability to register DSU awards in foreign jurisdictions, the Company remeasured the awards as of this date and then reclassified $6.0 million related to 0.2 million DSU awards from “Accrued liabilities” to “Capital in excess of par value”. In the year ended December 31, 2017, the Company recognized expense for the DSU awards of $97.4 million, included in “Other operating expense, net” in the Consolidated Statements of Operations.

The following assumptions were used to estimate the fair value of DSUs at the time of grant using the Finnerty discount for lack of marketability pricing model.

	2017
Assumptions:
Average length of holding period restrictions (years)		1.42
Assumed volatility		51.5	%

2017 Omnibus Incentive Plan

In May 2017, the Company’s Board approved the 2017 Omnibus Incentive Plan (“2017 Plan”). Under the terms of the Plan, the Company’s Board may grant up to 8.6 million stock based and other incentive awards. Any shares of common stock subject to outstanding awards granted under our 2013 Stock Incentive Plan that, after the effective date of the 2017 Plan, expire or are otherwise forfeited or terminated in accordance with their terms are also available for grant under the 2017 Plan. As of December 31, 2017, no awards have been granted from the 2017 Plan.

Note 16:

Hedging Activities, Derivative Instruments and Credit Risk

Hedging Activities

The Company is exposed to certain market risks during the normal course of its business arising from adverse changes in interest rates and foreign currency exchange rates. The Company selectively uses derivative financial instruments (“derivatives”), including foreign currency forward contracts and interest rate swaps, to manage the risks from fluctuations in foreign currency exchange rates and interest rates, respectively. The Company does not purchase or hold derivatives for trading or speculative purposes. Fluctuations in interest rates and foreign currency exchange rates can be volatile, and the Company’s risk management activities do not totally eliminate these risks. Consequently, these fluctuations could have a significant effect on the Company’s financial results.

The Company’s exposure to interest rate risk results primarily from its variable-rate borrowings. The Company manages its debt centrally, considering tax consequences and its overall financing strategies. The Company manages its exposure to interest rate risk by maintaining a mixture of fixed and variable rate debt and, from time to time, using pay-fixed interest rate swaps as cash flow hedges of variable rate debt in order to adjust the relative fixed and variable proportions.

A substantial portion of the Company’s operations is conducted by its subsidiaries outside of the United States in currencies other than the USD. Almost all of the Company’s non-U.S. subsidiaries conduct their business primarily in their local currencies, which are also their functional currencies. Other than the USD, the EUR, GBP, and Chinese Yuan are the principal currencies in which the Company and its subsidiaries enter into transactions. The Company is exposed to the impacts of changes in foreign currency exchange rates on the translation of its non-U.S. subsidiaries’ assets, liabilities and earnings into USD. The Company has certain U.S. subsidiaries borrow in currencies other than the USD.

The Company and its subsidiaries are also subject to the risk that arises when they, from time to time, enter into transactions in currencies other than their functional currency. To mitigate this risk, the Company and its subsidiaries typically settle intercompany trading balances monthly. The Company also selectively uses forward currency contracts to manage this risk. These contracts for the sale or purchase of European and other currencies generally mature within one year.

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Derivative Instruments

The following table summarizes the notional amounts, fair values and classification of the Company’s outstanding derivatives by risk category and instrument type within the Consolidated Balance Sheets as of December 31, 2017 and December 31, 2016.

	December 31, 2017
	Derivative Classification	Notional Amount ⁽¹⁾		Fair Value ⁽¹⁾ Other Current Assets		Fair Value ⁽¹⁾ Other Assets		Fair Value ⁽¹⁾ Accrued Liabilities		Fair Value ⁽¹⁾ Other Liabilities
Derivatives Designated as Hedging
Instruments
Interest rate swap contracts	Cash Flow	$	1,125.0	$	-	$	-	$	16.1	$	30.6
Derivatives Not Designated as Hedging
Instruments
Foreign currency forwards	Fair Value	$	94.4	$	-	$	-	$	1.2	$	-

	December 31, 2016
	Derivative Classification	Notional Amount ⁽¹⁾		Fair Value ⁽¹⁾ Other Current Assets		Fair Value ⁽¹⁾ Other Assets		Fair Value ⁽¹⁾ Accrued Liabilities		Fair Value ⁽¹⁾ Other Liabilities
Derivatives Designated as Hedging
Instruments
Cross currency interest rate swap contracts	Net Investment	$	200.0	$	-	$	26.8	$	-	$	-
Interest rate swap contracts	Cash Flow	$	1,125.0	$	-	$	-	$	16.3	$	47.2
Derivatives Not Designated as Hedging
Instruments
Foreign currency forwards	Fair Value	$	79.0	$	0.9	$	-	$	-	$	-
Foreign currency forwards	Fair Value	$	42.8	$	-	$	-	$	0.2	$	-

⁽¹⁾

Notional amounts represent the gross contract amounts of the outstanding derivatives excluding the total notional amount of positions that have been effectively closed through offsetting positions. The net gains and net losses associated with positions that have been effectively closed through offsetting positions but not yet settled are included in the asset and liability derivatives fair value columns, respectively.

Gains and losses on derivatives designated as cash flow hedges included in the Consolidated Statements of Comprehensive (Loss) Income for the years ended December 31, 2017, 2016 and 2015 are as presented in the table below.

	2017			2016			2015
Interest Rate Swap Contracts ⁽¹⁾
Gain (loss) recognized in AOCI on derivatives (effective portion)	$	1.5		$	(13.2	)	$	(26.9	)
Loss reclassified from AOCI into income (effective portion)	$	(18.5	)	$	(11.6	)	$	(1.3	)
(Loss) gain recognized in income on derivatives (ineffective
portion and amount excluded from effectiveness testing)	$	(2.1	)	$	0.2		$	0.3

⁽¹⁾

Losses on derivatives reclassified from accumulated other comprehensive income (“AOCI”) into income (effective portion) were included in “Interest expense” in the Consolidated Statements of Operations. Ineffective portions of changes in the fair value of cash flow hedges were recognized in earnings and included in “Interest expense” in the Consolidated Statements of Operations.

As of December 31, 2017, the Company is the fixed rate payor on 12 interest rate swap contracts that effectively fix the LIBOR-based index used to determine the interest rates charged on a total of $1,125.0 million of the Company’s LIBOR-based variable rate borrowings. These contracts carry fixed rates ranging from 2.9% to 4.4% and have expiration dates ranging from 2018 to 2020. These swap agreements qualify as hedging instruments and have been designated as cash flow hedges of forecasted LIBOR-based interest payments. Based on LIBOR-based swap yield curves as of December 31, 2017, the Company expects to reclassify losses of $17.8 million out of AOCI into earnings during the next 12 months. The Company’s LIBOR-based variable rate borrowings outstanding as of December 31, 2017 were $1,282.3 million and €613.5 million.

The Company had three foreign currency forward contracts outstanding as of December 31, 2017 with notional amounts ranging from $19.4 million to $46.0 million. These contracts are used to hedge the change in fair value of recognized foreign currency denominated assets or liabilities caused by changes in currency exchange rates. The changes in the fair value of these contracts generally offset the changes in the fair value of a corresponding amount of the hedged items, both of which are included in the “Other operating expense, net” line on the face of the Consolidated Statements of Operations. The Company’s foreign currency forward contracts are subject to master netting arrangements or agreements between the Company and each counterparty for the net settlement of all contracts through a single payment in a single currency in the event of default on or termination of any one contract with that certain counterparty. It is the Company’s practice to recognize the gross amounts in the Consolidated Balance Sheets. The amount available to be netted is not material.

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The Company’s (losses) gains on derivative instruments not designated as accounting hedges and total net foreign currency (losses) gains for the years ended December 31, 2017, 2016 and 2015 were as follows.

	2017			2016		2015
Gain on cross currency interest rate swaps not designated as hedges	$	-		$	-	$	8.0
Foreign currency forward contracts (losses) gains	$	(7.0	)	$	19.2	$	(0.5	)
Total foreign currency transaction (losses) gains, net	$	(9.3	)	$	5.9	$	(1.1	)

The Company has a significant investment in consolidated subsidiaries with functional currencies other than the USD, particularly the EUR. The Company designated its Original Euro Term Loan of approximately €387.0 million as of December 31, 2016 as a hedge of the Company’s net investment in subsidiaries with EUR functional currencies. The Original Euro Term Loan remained designated as a net investment hedge during 2017 until it was extinguished and replaced on August 17, 2017 by the €615.0 million Euro Term Loan, further described in Note 10 “Debt.” On August 17, 2017, the Company designated the €615.0 million Euro Term Loan as a hedge of the Company’s net investment in subsidiaries with EUR functional currencies. As of December 31, 2017, the Euro Term Loan of €613.5 million remained designated.

In December 2014, the Company entered into two cross currency interest rate swaps each with a USD notional amount of $100 million to further hedge the risk of changes in the USD equivalent value of its net investment in EUR functional currency subsidiaries. At the beginning of fiscal year 2015, one of the $100 million cross currency interest rate swaps was considered an effective hedge while the other was not determined to be an effective hedge for accounting purposes. Throughout 2015, the Company assessed its Euro equity position on a quarterly basis and incrementally designated additional portions of the second $100 million cross currency swap as a hedge for accounting purposes. The change in the fair value of the ineffective portion of the hedge was included in foreign exchange (gains) losses, net in “Other operating expense, net” in the Consolidated Statements of Operations. By the end of December 31, 2015, both cross currency interest rate swaps were designated as effective hedges for accounting purposes.

The cross currency interest rate swaps were designated as hedges for the year ended December 31, 2016 and for the period from January 1, 2017 until August 16, 2017 when they were terminated for proceeds of $6.2 million. The proceeds from the termination of the cross currency interest rate swaps are included in the “Proceeds from the termination of derivatives” line in the Consolidated Statements of Cash Flows. The recorded Accumulated Other Comprehensive (Loss) Income at the termination of the cross currency interest rate swaps will remain in Accumulated Other Comprehensive (Loss) Income until there is a substantial liquidation of the Company’s net investment in subsidiaries with EUR functional currencies.

The losses and gains from the change in fair value related to the effective portions of the net investment hedges were recorded through other comprehensive income. The losses and gains from changes in fair value of the ineffective portion of the hedge for the years ended December 31, 2017, 2016 and 2015 were included in foreign currency exchange (gains) losses, net in “Other operating expense, net” in the Consolidated Statements of Operations.

The Company’s gains and (losses), net of income tax, associated with changes in the value of debt and designated cross currency interest rate swaps for the years ended December 31, 2017 and 2016, and the net balance of such gains and (losses) included in accumulated other comprehensive income as of December 31, 2017 and 2016 were as follows.

	2017			2016
(Loss) gain, net of income tax, recorded through other comprehensive income	$	(50.2	)	$	12.6
Balance included in accumulated other comprehensive income (loss) at December 31, 2017 and 2016 respectively	$	32.1		$	82.3

With the exception of the cash proceeds from the termination of the cross currency interest rate swap contracts described earlier, all cash flows associated with derivatives are classified as operating cash flows in the Consolidated Statements of Cash Flows.

There were no off-balance sheet derivative instruments as of December 31, 2017 or 2016.

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Credit Risk

Credit risk related to derivatives arises when amounts receivable from a counterparty exceed those payable. Because the notional amount of the derivative instruments only serves as a basis for calculating amounts receivable or payable, the risk of loss with any counterparty is limited to a fraction of the notional amount. The Company minimizes the credit risk related to derivatives by transacting only with multiple, high-quality counterparties that are major financial institutions with investment-grade credit ratings. The Company has not experienced any financial loss as a result of counterparty nonperformance in the past. The majority of the derivative contracts to which the Company is a party, settle monthly or quarterly, or mature within one year. Because of these factors, the Company believes it has minimal credit risk related to derivative contracts as of December 31, 2017.

Concentrations of credit risk with respect to trade receivables are limited due to the wide variety of customers and industries to which the Company’s products and services are sold, as well as their dispersion across many different geographic areas. As a result, the Company does not believe it has any significant concentrations of credit risk as of December 31, 2017 or 2016.

Note 17:

Fair Value Measurements

A financial instrument is defined as cash or cash equivalents, evidence of an ownership interest in an entity, or a contract that creates a contractual obligation or right to deliver or receive cash or another financial instrument from another party. The Company’s financial instruments consist primarily of cash and cash equivalents, trade accounts receivables, trade accounts payables, deferred compensation assets and obligations, derivatives and debt instruments. The carrying values of cash and cash equivalents, trade accounts receivables, trade accounts payables, and variable rate debt instruments are a reasonable estimate of their respective fair values. The Company’s Senior Notes, valued utilizing Level 2 inputs, had a carrying value of $575.0 million and an estimated fair value of $573.6 million as of December 31, 2016. The Senior Notes were terminated in May of 2017.

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or more advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The fair value hierarchy is based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value as follows.

Level 1

Quoted Prices (unadjusted) in active markets for identical assets or liabilities as of the reporting date.

Level 2

Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities as of the reporting date.

Level 3

Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

For the year ended December 31, 2015, goodwill with a carrying value of $529.3 million in the P&IP reporting unit was written down to its estimated implied fair value of $186.0 million, resulting in a non-cash impairment charge of $343.3 million. In order to arrive at the implied fair value of goodwill, the Company calculated the fair value of all of the assets and liabilities of the reporting unit as if it had been acquired in a business combination. After assigning fair value to the assets and liabilities of the reporting unit, the result was the implied fair value of goodwill of $186.0 million, which represented a Level 3 asset measured at fair value on a nonrecurring basis subsequent to its original recognition. The fair value was determined using a combination of discounted cash flows and a market multiple approach using comparable companies.

The Company assessed indefinite-lived intangible assets, trademarks, in conjunction with the 2017 annual goodwill impairment test. The valuation of trademarks was based upon current sales projections and the relief from royalty method was applied. As a result of this analysis, trademarks with carrying amounts aggregating to $36.7 were written down to their estimated fair value of $35.2 million. These represented Level 3 assets measured on a nonrecurring basis subsequent to their original recognition. This resulted in a total non-cash impairment charge of $1.5 million. The fair value was determined using the relief from royalty method.

The Company assessed indefinite-lived intangible assets, trademarks, in conjunction with the 2016 annual goodwill impairment test. The valuation of trademarks was based upon current sales projections and the relief from royalty method was applied. As a result of this analysis, trademarks with carrying amounts aggregating to $179.3 million were written down to their estimated fair value of $154.9 million. These represented Level 3 assets measured on a nonrecurring basis subsequent to their original recognition. This resulted in a total non-cash impairment charge of $24.4 million. The fair value was determined using the relief from royalty method.

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The Company assessed indefinite-lived intangible assets, trademarks, in conjunction with the 2015 annual goodwill impairment test. The valuation of trademarks was based upon current sales projections and the relief from royalty method was applied. As a result of this analysis, trademarks with carrying amounts aggregating to $560.1 million were written down to their estimated fair value of $489.0 million. These represented Level 3 assets measured on a nonrecurring basis subsequent to their original recognition. This resulted in a total non-cash impairment charge of $71.1 million. The fair value was determined using the relief from royalty method.

Refer to Note 1 “Summary of Significant Accounting Policies” for a discussion of the valuation assumptions utilized in the valuation of goodwill and indefinite-lived intangible assets.

The following table summarizes the Company’s financial assets and liabilities measured at fair value on a recurring basis as of December 31, 2017 and 2016.

	December 31, 2017
	Level 1		Level 2		Level 3		Total
Financial Assets
Trading securities held in deferred compensation plan ⁽¹⁾	$	5.8	$	-	$	-	$	5.8
Total	$	5.8	$	-	$	-	$	5.8
Financial Liabilities
Foreign currency forwards ⁽²⁾	$	-	$	1.2	$	-	$	1.2
Interest rate swaps ⁽³⁾		-		46.7		-		46.7
Deferred compensation plan ⁽¹⁾		5.8		-		-		5.8
Total	$	5.8	$	47.9	$	-	$	53.7

	December 31, 2016
	Level 1		Level 2		Level 3		Total
Financial Assets
Foreign currency forwards ⁽²⁾	$	-	$	0.9	$	-	$	0.9
Cross currency interest rate swaps ⁽⁴⁾		-		26.8		-		26.8
Trading securities held in deferred compensation plan ⁽¹⁾		4.2		-		-		4.2
Total	$	4.2	$	27.7	$	-	$	31.9
Financial Liabilities
Foreign currency forwards ⁽²⁾	$	-	$	0.2	$	-	$	0.2
Interest rate swaps ⁽³⁾		-		63.5		-		63.5
Deferred compensation plan ⁽¹⁾		4.2		-		-		4.2
Total	$	4.2	$	63.7	$	-	$	67.9

⁽¹⁾	Based on the quoted price of publicly traded mutual funds which are classified as trading securities and accounted for using the mark-to-market method.

⁽²⁾	Based on calculations that use readily observable market parameters as their basis, such as spot and forward rates.

⁽³⁾	Measured as the present value of all expected future cash flows based on the LIBOR-based swap yield curves as of December 31, 2017. The present value calculation uses discount rates that have been adjusted to reflect the credit quality of the Company and its counterparties.

⁽⁴⁾

Based on observable foreign exchange market pricing parameters such as spot and forward rates and the present value of all expected future cash flows. The present value calculation incorporates foreign exchange market pricing, discount rates, and credit quality adjustments of the Company and its counterparties.

Note 18:

Contingencies

The Company is a party to various legal proceedings, lawsuits and administrative actions, which are of an ordinary or routine nature for a company of its size and sector. The Company believes that such proceedings, lawsuits and administrative actions will not materially adversely affect its operations, financial condition, liquidity or competitive position. A more detailed discussion of certain of these proceedings, lawsuits and administrative actions is set forth below.

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Asbestos and Silica Related Litigation

The Company has also been named as a defendant in a number of asbestos-related and silica-related personal injury lawsuits. The plaintiffs in these suits allege exposure to asbestos or silica from multiple sources and typically the Company is one of approximately 25 or more named defendants.

Predecessors to the Company sometimes manufactured, distributed and/or sold products allegedly at issue in the pending asbestos and silica-related lawsuits (the “Products”). However, neither the Company nor its predecessors ever mined, manufactured, mixed, produced or distributed asbestos fiber or silica sand, the materials that allegedly caused the injury underlying the lawsuits. Moreover, the asbestos-containing components of the Products, if any, were enclosed within the subject Products.

Although the Company has never mined, manufactured, mixed, produced or distributed asbestos fiber or silica sand nor sold products that could result in a direct asbestos or silica exposure, many of the companies that did engage in such activities or produced such products are no longer in operation. This has led to law firms seeking potential alternative companies to name in lawsuits where there has been an asbestos or silica related injury.

The Company believes that the pending and future asbestos and silica-related lawsuits are not likely to, in the aggregate, have a material adverse effect on its consolidated financial position, results of operations or liquidity, based on: the Company’s anticipated insurance and indemnification rights to address the risks of such matters; the limited potential asbestos exposure from the Products described above; the Company’s experience that the vast majority of plaintiffs are not impaired with a disease attributable to alleged exposure to asbestos or silica from or relating to the Products or for which the Company otherwise bears responsibility; various potential defenses available to the Company with respect to such matters; and the Company’s prior disposition of comparable matters. However, inherent uncertainties of litigation and future developments, including, without limitation, potential insolvencies of insurance companies or other defendants, an adverse determination in the Adams County Case (discussed below), or other inability to collect from the Company’s historical insurers or indemnitors, could cause a different outcome. While the outcome of legal proceedings is inherently uncertain, based on presently known facts, experience, and circumstances, the Company believes that the amounts accrued on its balance sheet are adequate and that the liabilities arising from the asbestos and silica-related personal injury lawsuits will not have a material adverse effect on the Company’s consolidated financial position, results of operations or liquidity. “Accrued liabilities” and “Other liabilities” on the Consolidated Balance Sheet include a total litigation reserve of $105.6 million and $108.5 million as of December 31, 2017 and December 31, 2016, with respect to potential liability arising from the Company’s asbestos-related litigation. Asbestos related defense costs are excluded from the asbestos claims liability and are recorded separately as services are incurred. In the event of unexpected future developments, it is possible that the ultimate resolution of these matters may be material to the Company’s consolidated financial position, results of operation or liquidity.

The Company has entered into a series of agreements with certain of its or its predecessors’ legacy insurers and certain potential indemnitors to secure insurance coverage and/or reimbursement for the costs associated with the asbestos and silica-related lawsuits filed against the Company. The Company has also pursued litigation against certain insurers or indemnitors, where necessary. The Company has an insurance recovery receivable for probable asbestos related recoveries of approximately $100.4 million and $97.3 million as of December 31, 2017 and December 31, 2016 which was included in “Other assets” on the Consolidated Balance Sheets.

The largest such recent action, Gardner Denver, Inc. v. Certain Underwriters at Lloyd’s, London, et al., was filed on July 9, 2010, in the Eighth Judicial Circuit, Adams County, Illinois, as case number 10-L-48 (the “Adams County Case”). In the lawsuit, the Company seeks, among other things, to require certain excess insurer defendants to honor their insurance policy obligations to the Company, including payment in whole or in part of the costs associated with the asbestos-related lawsuits filed against the Company. In October 2011, the Company reached a settlement with one of the insurer defendants, which had issued both primary and excess policies, for approximately the amount of such defendant’s policies that were subject to the lawsuit. Since then, the case has been proceeding through the discovery and motions process with the remaining insurer defendants. On January 29, 2016, the Company prevailed on the first phase of that discovery and motions process (“Phase I”). Specifically, the Court in the Adams County Case ruled that the Company has rights under all of the policies in the case, subject to their terms and conditions, even though the policies were sold to the Company’s former owners rather than to the Company itself. On June 9, 2016, the Court denied a motion by several of the insurers who sought permission to appeal the Phase I ruling immediately rather than waiting until the end of the whole case as is normally required. The case is now proceeding through the discovery process regarding the remaining issues in dispute (“Phase II”).

A majority of the Company’s expected future recoveries of the costs associated with the asbestos-related lawsuits are the subject of the Adams County Case.

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The amounts recorded by the Company for asbestos-related liabilities and insurance recoveries are based on currently available information and assumptions that the Company believes are reasonable based on an evaluation of relevant factors. The actual liabilities or insurance recoveries could be higher or lower than those recorded if actual results vary significantly from the assumptions. There are a number of key variables and assumptions including the number and type of new claims to be filed each year, the resolution or outcome of these claims, the average cost of resolution of each new claim, the amount of insurance available, allocation methodologies, the contractual terms with each insurer with whom the Company has reached settlements, the resolution of coverage issues with other excess insurance carriers with whom the Company has not yet achieved settlements, and the solvency risk with respect to the Company’s insurance carriers. Other factors that may affect the future liability include uncertainties surrounding the litigation process from jurisdiction to jurisdiction and from case to case, legal rulings that may be made by state and federal courts, and the passage of state or federal legislation. The Company makes the necessary adjustments for the asbestos liability and corresponding insurance recoveries on an annual basis unless facts or circumstances warrant assessment as of an interim date.

Environmental Matters

The Company has been identified as a potentially responsible party (“PRP”) with respect to several sites designated for cleanup under U.S. federal “Superfund” or similar state laws that impose liability for cleanup of certain waste sites and for related natural resource damages. Persons potentially liable for such costs and damages generally include the site owner or operator and persons that disposed or arranged for the disposal of hazardous substances found at those sites. Although these laws impose joint and several liability on PRPs, in application the PRPs typically allocate the investigation and cleanup costs based upon the volume of waste contributed by each PRP. Based on currently available information, the Company was only a small contributor to these waste sites, and the Company has, or is attempting to negotiate, de minimis settlements for their cleanup. The cleanup of the remaining sites is substantially complete and the Company’s future obligations entail a share of the sites’ ongoing operating and maintenance expense. The Company is also addressing four on-site cleanups for which it is the primary responsible party. Three of these cleanup sites are in the operation and maintenance stage and one is in the implementation stage.

The Company has undiscounted accrued liabilities of $7.5 million and $7.6 million as of December 31, 2017 and December 31, 2016, respectively, on its Consolidated Balance Sheet to the extent costs are known or can be reasonably estimated for its remaining financial obligations for the environmental matters discussed above and does not anticipate that any of these matters will result in material additional costs beyond amounts accrued. Based upon consideration of currently available information, the Company does not anticipate any material adverse effect on its results of operations, financial condition, liquidity or competitive position as a result of compliance with federal, state, local or foreign environmental laws or regulations, or cleanup costs relating to these matters.

Note 19:

Other Operating Expense

The components of “Other operating expense, net” for the years ended December 31, 2017, 2016 and 2015 are as follows.

	For the Years Ended December 31,
	2017		2016			2015
Other Operating Expense, Net
Foreign currency transaction losses (gains), net	$	9.3	$	(5.9	)	$	1.1
Restructuring charges ⁽¹⁾		5.3		32.9			4.7
Environmental remediation expenses ⁽²⁾		0.9		5.6			-
Stock-based compensation ⁽³⁾		194.2		-			-
Other, net		12.4		16.0			14.9
Total other operating expense, net	$	222.1	$	48.6		$	20.7

⁽¹⁾

See Note 4 “Restructuring.”

⁽²⁾

Estimated environmental remediation costs recorded on an undiscounted basis for a former production facility.

⁽³⁾

Represents stock-based compensation expense recognized for stock options outstanding ($77.6 million) and DSUs granted to employees at the date of the initial public offering ($97.4 million) under the 2013 Stock Incentive Plan, and employer taxes related to DSUs granted to employees at the date of the initial public offering ($19.2 million).

Note 20:

Segment Information

A description of the Company’s three reportable segments, including the specific products manufactured and sold follows below.

In the Industrials segment, the Company designs, manufactures, markets and services a broad range of air compression, vacuum and blower products across a wide array of technologies and applications. Almost every manufacturing and industrial facility, and many service and process industries, use air compression and vacuum products in a variety of applications such as operation of pneumatic air tools, vacuum packaging of food products and aeration of waste water. The Company maintains a leading position in its markets and serves customers globally. The Company offers comprehensive aftermarket parts and an experienced direct and distributor-based service network world-wide to complement all of its products.

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In the Energy segment, the Company designs, manufactures, markets and services a diverse range of positive displacement pumps, liquid ring vacuum pumps and compressors, and engineered loading systems and fluid transfer equipment, consumables, and associated aftermarket parts and services. It serves customers in the upstream, midstream, and downstream oil and gas markets, and various other markets including petrochemical processing, power generation, transportation, and general industrial. The Company is one of the largest suppliers in these markets and has long-standing customer relationships. Its positive displacement pumps are used in the oilfield for drilling, hydraulic fracturing, completion and well servicing. Its liquid ring vacuum pumps and compressors are used in many power generation, mining, oil and gas refining and processing, chemical processing and general industrial applications including flare gas and vapor recovery, geothermal gas removal, vacuum de-aeration, enhanced oil recovery, water extraction in mining and paper and chlorine compression in petrochemical operations. Its engineered loading systems and fluid transfer equipment ensure the safe handling and transfer of crude oil, liquefied natural gas, compressed natural gas, chemicals, and bulk materials.

In the Medical segment, the Company designs, manufactures and markets a broad range of highly specialized gas, liquid and precision syringe pumps and compressors primarily for use in the medical, laboratory and biotechnology end markets. The Company’s customers are mainly medium and large durable medical equipment suppliers that integrate the Company’s products into their final equipment for use in applications such as oxygen therapy, blood dialysis, patient monitoring, wound treatment, and others. Further, with the recent acquisitions, the Company has expanded into liquid handling components and systems used in biotechnology applications including clinical analysis instrumentation. The Company also has a broad range of end use deep vacuum products for laboratory science applications.

The Chief Operating Decision Maker (“CODM”) evaluates the performance of its reportable segments based on, among other measures, Segment Adjusted EBITDA. Management closely monitors the Segment Adjusted EBITDA of each reportable segment to evaluate past performance and actions required to improve profitability. Inter-segment sales and transfers are not significant. Administrative expenses related to the Company’s corporate offices and shared service centers in the United States and Europe, which includes transaction processing, accounting and other business support functions, are allocated to the business segments. Certain administrative expenses, including senior management compensation, treasury, internal audit, tax compliance, certain information technology, and other corporate functions, are not allocated to the business segments.

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The following table provides summarized information about the Company’s operations by reportable segment and reconciles Segment Adjusted EBITDA to Loss Before Income Taxes for the years ended December 31, 2017, 2016 and 2015.

	2017			2016			2015
Revenue
Industrials	$	1,130.7		$	1,082.3		$	1,149.7
Energy		1,014.5			628.4			753.5
Medical		230.2			228.7			223.7
Total Revenue	$	2,375.4		$	1,939.4		$	2,126.9
Segment Adjusted EBITDA
Industrials	$	242.7		$	217.6		$	197.6
Energy		296.1			143.8			186.8
Medical		62.4			61.9			59.5
Total Segment Adjusted EBITDA		601.2			423.3			443.9
Less items to reconcile Segment Adjusted EBITDA to
Loss Before Income Taxes ⁽¹⁾ :
Corporate expenses not allocated to segments		39.7			22.6			25.0
Interest expense		140.7			170.3			162.9
Depreciation and amortization expense		173.8			172.7			163.0
Impairment of goodwill and other intangible assets ^(a)		1.6			25.3			421.4
Sponsor fees and expenses ^(b)		17.3			4.8			4.6
Restructuring and related business transformation costs ^(c)		24.7			78.7			31.4
Acquisition related expenses and non-cash charges ^(d)		4.1			4.3			4.8
Environmental remediation loss reserve ^(e)		0.9			5.6			-
Expenses related to public stock offerings ^(f)		4.1			-			-
Establish public company financial reporting compliance ^(g)		8.1			0.2			-
Stock-based compensation ^(h)		194.2			-			-
Loss on extinguishment of debt ⁽ⁱ⁾		84.5			-			-
Foreign currency transaction losses (gains), net		9.3			(5.9	)		1.1
Other adjustments ^(j)		10.9			7.9			(3.6	)
Loss Before Income Taxes	$	(112.7	)	$	(63.2	)	$	(366.7	)

⁽¹⁾

In the fourth quarter of fiscal 2017, the Company provided greater detail in presenting reconciling items from Loss Before Income Taxes. The reconciling items for the years ended December 31, 2016 and 2015 have been restated to conform to the methodology used in the year ended December 31, 2017, and include the following.

^(a)

Represents non-cash charges for impairment of goodwill and other intangible assets.

^(b)

Represents management fees and expenses paid to our Sponsor, including a monitoring agreement termination fee of $16.2 million paid in 2017 concurrent with our initial public offering on May 12, 2017.

^(c)

Restructuring and related business transformation costs consist of the following.

	Year Ended December 31,
(in millions)	2017		2016		2015
Restructuring charges	$	5.3	$	32.9	$	4.7
Severance, sign-on, relocation and executive search costs		3.5		22.4		18.4
Facility reorganization, relocation and other costs		5.3		8.7		1.6
Information technology infrastructure transformation		5.2		2.3		-
Losses (gains) on asset and business disposals		0.8		0.1		(4.5	)
Consultant and other advisor fees		1.7		9.7		10.1
Other, net		2.9		2.6		1.1
Total restructuring and related business transformation costs	$	24.7	$	78.7	$	31.4

^(d)

Represents costs associated with successful and/or abandoned acquisitions, including third-party expenses, post-closure integration costs and non-cash charges and credits arising from fair value purchase accounting adjustments.

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^(e)

Represents estimated environmental remediation costs and losses relating to a former production facility.

^(f)

Represents expenses related to the Company’s initial stock offering and subsequent secondary offerings.

^(g)

Represents third party expenses to comply with the requirements of Sarbanes-Oxley in 2018 and the accelerated adoption of the new revenue recognition standard (ASC 606 – Revenue from Contracts with Customers) in the first quarter of 2018, one year ahead of the required adoption date for a private company. These expenses were previously included in ‘Expenses related to initial stock offering’ and prior periods have been restated to conform to the current period presentation.

^(h)

Represents stock-based compensation expense recognized for stock options outstanding for the year ended December 31, 2017 of ($77.6 million) and DSUs granted to employees at the date of the initial public offering for the year ended December 31, 2017 of ($97.4 million) and employer taxes related to DSUs granted to employees at the date of the initial public offering ($19.2 million). See Note 15 “Stock-Based Compensation.”

⁽ⁱ⁾

Represents losses on extinguishment of debt recognized on the redemption of the senior notes and pay down of a portion of the Original Dollar Term Loan Facility and proceeds from the initial public offering in May 2017 ($50.4 million) and in connection with the refinancing of the Original Dollar Term Loan Facility and Euro Term Loan Facility in August 2017 ($34.1 million).

^(j)

Includes (i) non-cash impact of net LIFO reserve adjustments, (ii) effects of amortization of prior service costs and amortization of gains in pension and other postretirement benefits (OPEB) expense, (iii) certain legal and compliance costs and (iv) other miscellaneous adjustments.

The following tables provide summarized information about the Company’s reportable segments.

Identifiable Assets

	2017		2016		2015
Industrials	$	2,029.4	$	1,943.6	$	2,078.9
Energy		1,681.5		1,501.0		1,572.8
Medical		511.1		486.3		469.6
Total		4,222.0		3,930.9		4,121.3
General corporate (unallocated)		399.2		385.1		340.7
Total identifiable assets	$	4,621.2	$	4,316.0	$	4,462.0

Depreciation and Amortization Expense

	2017		2016		2015
Industrials	$	94.5	$	96.0	$	89.1
Energy		56.7		55.5		53.8
Medical		22.6		21.2		20.1
Total depreciation and amortization expense	$	173.8	$	172.7	$	163.0

Capital Expenditures

	2017		2016		2015
Industrials	$	26.7	$	44.7	$	25.8
Energy		21.1		21.4		38.6
Medical		9.0		8.3		6.6
Total	$	56.8	$	74.4	$	71.0

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The following table presents revenues and property, plant and equipment by geographic region. Revenues have been attributed based on the products’ shipping destination. No country other than the United States comprises greater than 10% of consolidated revenue. Aggregating global revenues by product is currently not practical.

	Revenues						Property, Plant and Equipment, net
	2017		2016		2015		2017		2016		2015
United States	$	1,048.5	$	695.8	$	865.7	$	198.4	$	197.9	$	187.2
Other Americas		161.5		106.2		140.2		6.8		7.2		5.8
Total Americas		1,210.0		802.0		1,005.9		205.2		205.1		193.0
EMEA ⁽¹⁾		861.1		800.2		751.3		132.3		125.3		116.3
Asia Pacific		304.3		337.2		369.7		25.7		28.0		31.5
Total	$	2,375.4	$	1,939.4	$	2,126.9	$	363.2	$	358.4	$	340.8

⁽¹⁾

Europe, Middle East and Africa (“EMEA”)

Note 21:

Related Party

Affiliates of KKR participated as (i) a lender in the Company’s Senior Secured Credit Facilities discussed in Note 10, “Debt,” (ii) an underwriter in the Company’s initial public offering, and (iii) a provider of services for the debt refinancing transaction. KKR exited its position in the Original Dollar Term Loan Facility during 2015 and did not hold a position in the Original Dollar Term Loan Facility or the Original Euro Term Loan Facility until their extinguishment on August 17, 2017. KKR held a position in the Euro Term Loan Facility of €49.9 million as of December 31, 2017. KKR Capital Markets LLC, an affiliate of our Sponsor, acted as an underwriter in connection with the initial public offering of the Company’s stock and received underwriter discounts and commissions of approximately $8.9 million. In August 2017, KKR Capital Markets LLC received $1.5 million for services rendered in connection with the debt refinancing transaction.

The Company entered into a monitoring agreement, dated July 30, 2013, with KKR pursuant to which KKR will provide management, consulting and financial advisory services to the Company and its divisions, subsidiaries, parent entities and controlled affiliates. Under the terms of the monitoring agreement the Company was, among other things, obligated to pay KKR (or such affiliate(s) as KKR designates) an aggregate annual management fee in the initial annual amount of $3.5 million, payable in arrears at the end of each fiscal quarter, plus upon request all reasonable out of pocket expenses ($0.0 million, $0.7 million, and $0.7 million of expenses were incurred in the fiscal years ended December 31, 2017, 2016 and 2015) incurred in connection with the provision of services under the agreement. The management fee increases at a rate of 5% per year effective on January 1, 2014. The Company incurred management fees to KKR of $17.3 million, $4.1 million, and $3.9 million for the years ended December 31, 2017, 2016 and 2015. In connection with the Company’s initial public offering, the monitoring agreement was terminated in accordance with its terms and the Company paid a termination fee of $16.2 million during the year ended December 31, 2017 which is included in the “Selling and administrative expenses” line of the Consolidated Statements of Operations.

Note 22:

Earnings (Loss) Per Share

The computations of basic and diluted income (loss) per share are as follows.

	Years Ended December 31,
	2017		2016			2015
Net income (loss)	$	18.5	$	(31.3	)	$	(352.0	)
Less: Net income (loss) attributable to noncontrolling interest		0.1		5.3			(0.8	)
Net income (loss) attributable to Gardner Denver Holdings, Inc.	$	18.4	$	(36.6	)	$	(351.2	)
Average shares outstanding:
Basic		182.2		149.2			149.6
Diluted		188.4		149.2			149.6
Earnings (loss) per share:
Basic	$	0.10	$	(0.25	)	$	(2.35	)
Diluted	$	0.10	$	(0.25	)	$	(2.35	)

The DSUs described in Note 15 “Stock-Based Compensation” are considered outstanding shares for the purpose of computing basic earnings (loss) per share because they will become issued solely upon the passage of time.

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For the year ended December 31, 2017 there were 0.7 million anti-dilutive shares that were not included in the computation of diluted loss per share.

For the years ended December 31, 2016 and 2015 there were, 13.3 million and 17.0 million potentially dilutive stock-based awards that were not included in the computation of diluted loss per share because their inclusion would be anti-dilutive.

Note 23:

Subsequent Events

Subsequent to December 31, 2017, on February 8, 2018, the Company acquired 100% of the stock of Runtech Systems Oy (“Runtech”), a leading global manufacturer of turbo vacuum technology systems and optimization solutions for industrial applications. Runtech will be part of Gardner Denver’s Industrials Segment. The Company acquired all of the assets and assumed certain liabilities of Runtech for total cash consideration of approximately $93 million, net of cash acquired. The acquisition was funded by cash on hand.

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the stockholders and the Board of Directors of Gardner Denver Holdings, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Gardner Denver Holdings, Inc. and subsidiaries (the “Company”) as of December 31, 2017 and 2016, the related consolidated statements of operations, comprehensive income, shareholders' equity, and cash flows, for each of the three years in the period ended December 31, 2017, and the related notes and the schedule listed in the Index at Item 15 (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2017 and 2016, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2017, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ DELOITTE & TOUCHE LLP

Milwaukee, WI

February 16, 2018

We have served as the Company’s auditor since 2013.

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ITEM 9.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None

ITEM 9A.

CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Regulations under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), require public companies, including us, to maintain “disclosure controls and procedures,” which are defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act to mean a company’s controls and other procedures that are designed to ensure that information required to be disclosed in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to management, including our principal executive officer and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required or necessary disclosures. In designing and evaluating our disclosure controls and procedures, management recognizes that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. The design of any controls and procedures also is based on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Additionally, in designing disclosure controls and procedures, our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. Our management, with the participation of our principal executive officer and principal financial officer, has evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report. Based upon that evaluation and subject to the foregoing, our principal executive officer and principal financial officer concluded that, as of the end of the period covered by this report, the design and operation of our disclosure controls and procedures were effective to accomplish their objectives at a reasonable assurance level.

Management’s Report on Internal Control Over Financial Reporting

This Annual Report on Form 10-K does not include a report of management’s assessment regarding internal control over financial reporting or an attestation report of the Company’s registered public accounting firm due to a transition period established by rules of the SEC for newly public companies.

Changes in Internal Control Over Financial Reporting

Regulations under the Exchange Act require public companies, including our Company, to evaluate any change in our “internal control over financial reporting” as such term is defined in Rule 13a-15(f) and Rule 15d-15(f) of the Exchange Act. There have been no changes in the Company’s internal control over financial reporting during the Company’s most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

ITEM 9B.

OTHER INFORMATION

Special IPO Bonuses

On February 15, 2018, we determined to award each of Vicente Reynal, our Chief Executive Officer, Philip T. Herndon, our Vice President and Chief Financial Officer, Andrew Schiesl, our Vice President, General Counsel, Chief Compliance Officer and Secretary and Neil D. Snyder, our Vice President, Strategy, Business Development and Planning, a one-time discretionary IPO bonus for his extraordinary efforts in 2017 in connection with our initial public offering. The IPO bonuses were awarded in the following amounts: Mr. Reynal - $225,000; Mr. Herndon - $125,000; Mr. Schiesl - $100,000; and Mr. Snyder - $75,000.

Executive Severance Agreements

On February 15, 2018, in connection with our annual review of our executive compensation, we approved an increase to the benefits to which each of Neil D. Snyder, our Senior Vice President, Strategy, Business Development and Planning and Enrique Miñarro Viseras, our Vice President and General Manager, Industrials Group EMEA is entitled in the event of certain qualifying terminations to align them with the severance benefits to which our other senior executive officers are entitled.

Under the terms approved by the Compensation Committee of our Board of Directors on February 15, 2018, if the Com pany terminates Mr. Snyder’s employment without Cause (as that term is defined below under “Part III, Item 11, Executive Compensation―Potential Payments to Named Executive Officers upon Termination of Employment or Change in Control―Severance Arrangements and Restrictive Covenants”) or if Mr. Snyder terminates his employment with us for Good Reason (as that term is defined below under “Part III, Item 11, Executive Compensation―Potential Payments to Named Executive Officers upon Termination of Employment or Change in Control―Severance Arrangements and Restrictive Covenants”), subject to Mr. Snyder’s continued compliance with the restrictive covenants in his management equity agreements and his execution of a customary waiver and release agreement, he will be entitled to receive:

•

Continued payment over a 12-month period (the “Severance Period”) of his annual base salary earned in respect of our fiscal year preceding the fiscal year in which the termination date occurs, payable in substantially equal monthly installments over the Severance Period; and

•

Continued group health coverage (on the same basis as actively employed employees of the Company), subject to his electing to receive benefits under COBRA, for 12 months following the date his employment terminates (or, if earlier, through the date that he becomes employed by another employer and eligible for health insurance coverage at such employer).

The Compensation Committee of our Board of Directors also approved on February 15, 2018 a mutual twelve-month advance notice period for a termination of employment not for cause or without good reason, during which Mr. Miñarro Viseras may be released from his work duties but will still be entitled to remuneration.

PART III.

ITEM 10.

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Except as set forth below, the information required by this Item will be included in our definitive proxy statement for the 2018 Annual Meeting of Stockholders and is incorporated herein by reference. Gardner Denver Holdings, Inc. will file such definitive proxy statement with the SEC pursuant to Regulation 14A within 120 days of the fiscal year ended December 31, 2017.

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Code of Conduct

The Company has adopted a Code of Conduct that applies to all of the Company’s employees, including the Company’s Chief Executive Officer, Chief Financial Officer, Chief Accounting Officer, Controller and other persons performing similar functions. The Code of Conduct sets forth our policies and expectations on a number of topics, including conflicts of interest, corporate opportunities, confidentiality, compliance with laws (including insider trading laws), use of our assets and business conduct and fair dealing. This Code of Conduct also satisfies the requirements for a code of ethics, as defined by Item 406 of Regulation S-K promulgated by the SEC. The Company has posted a copy of the Code of Conduct on its website at www.gardnerdenver.com under the Investors and then the Corporate Governance link. In the event that we amend or grant any waiver from a provision of the code of ethics that applies to the Chief Executive Officer, Chief Financial Officer, Chief Accounting Officer or Controller and that requires disclosure under applicable SEC or NYSE rules, we intend to disclose such amendment or waiver and the reasons therefor on our Internet site.

ITEM 11.

EXECUTIVE COMPENSATION

Compensation Committee Report

The Compensation Committee has reviewed and discussed the following Compensation Discussion and Analysis with management. Based on its review and discussion with management, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Annual Report on Form 10-K for the fiscal year ended December 31, 2017 and in the Company’s proxy statement on Schedule 14A for the 2018 Annual Meeting of Stockholders.

Submitted by the Compensation Committee of the Board of Directors:

	Peter Stavros, Chair
	Nickolas Vande Steeg
	Joshua Weisenbeck

Compensation Discussion and Analysis

Introduction

This section describes our compensation philosophy and details the compensation programs that cover our named executive officers (“NEOs”).

Our NEOs for 2017 are:

•

Vicente Reynal, our Chief Executive Officer;

•

Philip T. Herndon, our Vice President and Chief Financial Officer; and

•

Our three other most highly compensated executive officers who served in such capacities as of December 31, 2017, namely:

•

Andrew Schiesl, our Vice President, General Counsel, Chief Compliance Officer and Secretary;

•

Neil D. Snyder, our Senior Vice President, Strategy, Business Development and Planning; and

•

Enrique Mi ñ arro Viseras, Vice President and General Manager, Industrials Segment EMEA

Executive Compensation Objectives and Philosophy

Our executive compensation philosophy is designed to attract and retain individuals with the qualifications to meet the Company’s strategic objectives and create value for our shareholders. We believe that the best way to align our executives with our objectives and create shareholder value is to emphasize two key compensation principles: (1) significant equity participation and (2) pay-for-performance.

In February 2018, following an evaluation with the assistance of Pearl Meyer of equity-based incentives for our executive officers, the Compensation Committee adopted a new long-term equity incentive program (the “2018 LTI Program”). Under the 2018 LTI Program, our NEOs will receive annual equity awards, 50% of which will be in the form of time-vesting restricted stock and 50% of which will be in the form of time-vesting stock options. The following charts illustrate our focus on equity participation by showing that 72% of our CEO’s expected 2018 target base salary, annual incentive, and long-term equity incentive compensation mix and 49% of our other NEOs’ expected 2018 mix is based on long-term equity incentives. See “Compensation Actions Taken in 2018―Long-Term Incentive Compensation”.

Our commitment to aligning the interests of our executives to the interests of our shareholders through equity participation is further evidenced by the fact that in 2017 we adopted what we believe is a market-leading stock ownership and retention policy for our executives and non-employee directors that combines robust stock ownership requirements with retention requirements. See “Stock Ownership and Retention Policy” below. All of our NEOs maintain a significant equity stake in the Company and currently exceed their respective ownership requirements through ownership of vested and exercisable stock options and/or direct investments in our common stock.

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In addition to equity participation, we strongly believe in a pay-for-performance culture. This is evidenced by the fact that our annual cash incentive program is 100% based on the financial performance of the Company and its business units and that it accounts for 50% of the expected total cash compensation of our CEO, and on average 41% for our other NEOs, in each case when paid out at target. When paid out at the maximum payout (capped at 200% of target), this percentage increases to 67% and 58%, respectively. Also, our execut ives receive no payout for below threshold performance and we believe that our threshold at 95% of target is more challenging than typical market practice. See “―Executive Compensation Program Elements―Cash Bonus Opportunities―Annual Cash Bonus Opportunity ”. Even more importantly, when our short-term cash incentive is combined with our long term equity incentive, it results in 84% of our CEO’s and 70% of our NEOs’ compensation being variable performance compensation.

In addition to equity compensation and our annual cash incentive opportunity, we provide NEOs a combination of the following other compensation components:

•

Base salary - Fixed pay that is market competitive and sufficient to engage high caliber talent;

•

Broad-based employee benefits – Fixed pay intended to attract and retain employees while providing them with retirement and health and welfare security; and

•

Severance and other benefits payable upon certain terminations of employment or a change in control - Encourages the continued attention and dedication of our NEOs and provides reasonable individual security to enable our NEOs to focus on our best interests, particularly when considering strategic alternatives.

In 2017 we did not make any equity grants to our NEOs believing that the equ ity grants made in prior years were sufficiently retentive and fostered the necessary level of alignment with shareholder interests. See “―Executive Compensation Program Elements―Long-Term Equity Incentive Awards”.

Strong Compensation Governance Practices and Policies

Within the context of the compensation philosophy and the Company’s business objectives, the Compensation Committee engages in an ongoing review of the Company’s executive compensation programs. In connection with this review, the Compensation Committee has adopted the following practices and policies reflecting what it believes to be a best practices approach to executive compensation.

Compensation Determination Process and Compensation Consultant Independence

Prior to our initial public offering, our Compensation Committee historically made all executive compensation decisions, including determinations as to the compensation of our NEOs. From the date of our initial public offering, the Compensation Committee has been responsible for determining the compensation of our Chief Executive Officer (“CEO”) and other executive officers and approving or recommending such compensation to the board of directors. Because of his daily involvement with the executive team, our CEO makes recommendations to the Compensation Committee regarding compensation for the executive officers other than himself. No member of management participates in discussions with the Compensation Committee regarding his or her own compensation.

In connection with our initial public offering, we engaged Pearl Meyer & Partners, LLC (“Pearl Meyer”), a compensation consulting firm, to assist us in evaluating the elements and levels of our executive compensation, including base salaries, annual cash incentive awards and equity-based incentives for our executive officers. In February 2018, the Compensation Committee determined that Pearl Meyer is independent from management and that Pearl Meyer’s work has not raised any conflicts of interest.

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The Compensation Committee did not benchmark 2017 compensation against a peer group. However, over the course of the second half of 2017 and early 2018, Pearl Meyer developed a compensation peer group, conducted a competitive market assessment and developed recommendations for the 2018 LTI Pro gram. See “Compensation Actions Taken in 2018―Long-Term Incentive Compensation.”

Executive Compensation Program Elements

Base Salaries

Base salary is the only fixed component of the Company’s NEOs’ cash compensation. An NEO’s base salary is related to the individual’s level of responsibility and provides them with a level of cash income predictability and stability with respect to a portion of their total compensation. The Compensation Committee believes that base salaries for executives should reflect competitive levels of pay and factors unique to each executive such as experience and breadth of responsibilities, performance, individual skill set, time in the role and internal pay parity. Base salaries are reviewed annually or at other times when appropriate and may be increased from time to time pursuant to such review. In connection with our annual review, we determined to increase the base salaries of each of our NEOs by not more than 3% based on their performance in 2016, effective April 2017. Mr. Miñarro Viseras is based in Germany and compensated in Euros; accordingly, his salary increase was based on his salary in Euros. The following table reflects the base salaries of our NEOs as of December 31, 2017.

	Base Salary as of December 31, 2016		Base Salary as of December 31, 2017
Vicente Reynal, Chief Executive Officer	$	750,000	$	766,500
Philip T. Herndon, Vice President and Chief Financial Officer	$	400,000	$	409,000
Andrew Schiesl, Vice President, General Counsel, Chief Compliance Officer and Secretary	$	450,000	$	460,000
Neil D. Snyder, Senior Vice President, Strategy, Business Development and Planning	$	345,000	$	353,000
Enrique Mi ñ arro Viseras, Vice President and General Manager, Industrials Segment EMEA ⁽¹⁾	$	304,288	$	337,814

(1)

Mr. Miñarro Viseras is based in Europe and is compensated in Euros. We converted his 2016 base salary (which was 275,000 Euros) to U.S. dollars at an exchange rate of 1.1065, which was the average monthly translation rate for 2016. We converted his 2017 base salary (which was 281,500 Euros) to U.S. dollars at an exchange rate of 1.20048, which was the end of month translation rate, December 2017.

Cash Bonus Opportunities

Annual Cash Bonus Opportunity

In order to tie a portion of their cash compensation to actual performance, each NEO is eligible for an annual cash bonus award under our management incentive plan ( “ MIP ” ) based on the achievement of our financial goals for the Company and their respective business units.

A target annual bonus, expressed as a percentage of an NEO ’ s base salary in effect at year-end, is established within certain NEOs ’ offer letters and employment agreements and may be adjusted from time to time by the Compensation Committee in connection with an NEO ’ s promotion or performance. The target annual bonus for 2017 for Messrs. Reynal and Herndon was 100% of their respective base salaries, for Mr. Schiesl was 75% of his base salary, for Mr. Snyder was 50% of his base salary and for Mr. Mi ñ arro Viseras was 45% of his base salary.

We generally believe that tying our corporate level NEOs ’ bonuses to company-wide performance goals encourages those NEOs to focus on company-wide priorities, and that tying the bonuses of our NEOs at the business segment and business unit level to business segment goals and business unit goals, respectively, rewards these NEOs for achievements with respect to their business segments and units. In 2017, the Compensation Committee decided to base MIP awards for Messrs. Reynal, Herndon and Snyder in part on the performance of our Industrials segment because each serves in roles at both the corporate level and the Industrials segment level and the Compensation Committee wanted them to continue to focus on the objectives of the Industrials segment since it typically accounts for a significant portion of our total revenue. A detailed description of the 2017 MIP metrics and the calculation of the actual amounts paid to each of our NEOs are provided below.

We chose to use Adjusted EBITDA, as that term is defined elsewhere in this Annual Report on Form 10-K because we believe that it provides a reliable indicator of our strategic growth and the strength of our overall financial results.

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Actual amounts paid to Messrs. Reynal, Herndon and Snyder under the 2017 MIP were calculated by multiplying their target annual bonus for 2017 by the sum of (1) 75% multiplied by the weighted average of the payout percentages associated with our achievement against the Adjusted EBITDA targets for the MIP Business Units (as defined below) and (2) 25% multiplied by the payout percentage associated with our achievement against the Industrials Segment Adjusted EBITDA target. The “MIP Business Units” include Energy P&IP, Energy Nash/Garo, Energy Emco, Industrials Americas, Industrials EMEA, Industrials APAC, and Medical. The weighting for each MIP Business Unit is determined by dividing fiscal 2017 Adjusted EBITDA budget for each business unit by the sum of fiscal 2017 Adjusted EBITDA budgets for all the MIP Business Units. To calculate the composite payout percentage for all MIP Business Units, each MIP Business Unit’s corresponding weighting is multiplied by the payout percentage associated with actual 2017 Adjusted EBITDA achievement against that business unit’s respective Adjusted EBITDA budget and the resulting amounts are summed.

We believe Adjusted EBITDA targets set for the MIP Business Units in 2017 provided reasonably achievable, but challenging goals for our NEOs and the other MIP participants at the corporate level. In addition, we believe the Industrials Segment Adjusted EBITDA target set in 2017 provided reasonably achievable, but challenging goals for our NEOs and other MIP participants in the Industrials segment.

Actual amounts paid to Mr. Schiesl under the 2017 MIP were calculated by multiplying his target annual bonus for 2017 by the weighted average of the payout percentages associated with our achievement against the Adjusted EBITDA targets for the MIP Business Units.

For our NEO at the business unit level, Mr. Mi ñ arro Viseras, the MIP award is tied to the financial results of his business segment and his business unit measured by Adjusted EBITDA. The actual amount paid to Mr. Mi ñ arro Viseras under the 2017 MIP was calculated by multiplying his target annual bonus for 2017 by the sum of (1) 50% multiplied by the payout percentage associated with our achievement against the Industrials Segment Adjusted EBITDA target and (2) 50% multiplied by the payout percentage associated with our achievement against the Industrials EMEA Adjusted EBITDA target. We believe the Industrials EMEA Adjusted EBITDA target set in 2017 provided a reasonably achievable, but challenging goal for Mr. Mi ñ arro Viseras and other MIP participants at our Industrials EMEA business unit.

The Adjusted EBITDA payout percentage for each of our segments and business units was determined by calculating actual achievement against the Adjusted EBITDA performance targets based on the pre-established scale set forth in the table below.

Achievement of Performance Target		Payout Percentage
Less than 95%		0%
95%		75%
100%		100%
110%		200%

No cash incentive award would have been paid to our NEOs whose awards were based partially or entirely on the performance of our MIP Business Units unless actual performance for fiscal 2017 for at least one of the MIP Business Units was at or above 95% of the applicable Adjusted EBITDA target (or, in the case of Mr. Mi ñ arro Viseras, if the performance of our Industrials segment for 2017 was at or above the Adjusted EBITDA target for our Industrials segment). Adjusted EBITDA results are adjusted to the extent that actual foreign exchange rates by country differ by more than 5% of budgeted foreign exchange rates. For performance percentages between the levels set forth above, the resulting payout percentage is adjusted on a linear basis. In addition to setting Adjusted EBITDA targets for our business units, we set an annual corporate expense budget each year and any difference between actual and budgeted corporate expense is allocated to the Adjusted EBITDA at our business units at the discretion of the Compensation Committee. While there are no individual goals for purposes of MIP award payments, the Compensation Committee, on the recommendation of Mr. Reynal, may adjust an incentive payment upward or downward for performance-related reasons. In addition, the Compensation Committee has discretion to adjust MIP award payments for unanticipated events. For 2017, the Compensation Committee did not make any discretionary adjustments to the calculated MIP award payments.

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The following table sets forth our actual payout percentage achieved with respect to each performance metric applicable to our NEOs and illustrates the calculation of the annual cash incentive awards payable to our NEOs under the 2017 MIP in light of these performance results.

								Adjusted EBITDA Payout Percentage
Name	2017 Base Salary		Target Bonus %			Target Bonus Amount		Industrials			Industrials EMEA			Weighted Average of Business Units (1)			Weighted Payout Percentage			Actual Bonus Paid
Vicente Reynal (2)	$	766,500		100	%	$	766,500		150	%		N/A			142	%		144	%	$	1,103,760
Philip T. Herndon (2)	$	409,000		100	%	$	409,000		150	%		N/A			142	%		144	%	$	588,960
Andrew Schiesl	$	460,000		75	%	$	345,000		N/A			N/A			142	%		142	%	$	489,900
Neil Snyder	$	353,000		50	%	$	176,500		150	%					142	%		144	%	$	254,160
Enrique Miñarro Viseras (3)	$	337,814		45	%	$	152,016		150	%		120	%		N/A			135	%	$	205,222

(1) Represents the weighted average of the payout percentages associated with our achievement against the Adjusted EBITDA targets for the MIP Business Units.

(2) Messrs. Reynal’s, Herndon’s and Snyder’s 2017 MIP opportunities were based 75% on the weighted average of the payout percentages associated with our achievement against the Adjusted EBITDA targets for the MIP Business Units and 25% on the payout percentage associated with our achievement against the Adjusted EBITDA target for the Industrials segment.

(3) Mr. Miñarro Viseras’s 2017 MIP opportunity was based 50% on the payout percentage associated with our achievement against the Adjusted EBITDA target for the Industrials segment and 50% on the payout percentage associated with our achievement against the Adjusted EBITDA target for the Industrials EMEA business unit.

IPO Bonuses

For their extraordinary efforts in 2017 in connection with our initial public offering, the Compensation Committee in February 2018 determined to award each of Messrs. Reynal, Herndon, Schiesl and Snyder a one-time discretionary IPO bonus. The IPO bonuses were awarded in the following amounts: Mr. Reynal - $225,000; Mr. Herndon - $125,000; Mr. Schiesl - $100,000; and Mr. Snyder - $75,000.

Sign-on Bonuses

From time to time, we may award sign-on bonuses in connection with the commencement of an NEO ’ s employment with us. Sign-on bonuses are used only when necessary to attract highly skilled officers to the Company. Generally, they are used to provide an incentive to candidates to leave their current employers or may be used to offset the loss of unvested compensation that they may forfeit as a result of leaving their current employers. Sign-on bonuses are typically subject to a clawback obligation if the officer voluntarily terminates his or her employment with us prior to the first anniversary of the employment commencement date. We did not award any sign-on bonuses to our NEOs in 2017.

Long-Term Equity Incentive Awards

Prior to our initial public offering, we granted long-term equity-based awards to our executives that were designed to align executives ’ and shareholders ’ interests, promote performance through a broad ownership mindset, incentivize our executives to remain in our service and align the interests of our executives with those of our ultimate equity holders. The awards we granted to our NEOs under our long-term incentive program (our “ Long-Term Incentive Program ” ) were in the form of stock options, with 50% of each award vesting based on time-based vesting conditions ( “ Time Options ” ) and 50% of each award vesting based on performance-based vesting conditions ( “ Performance Options ” ). The stock options generally vest, if at all, ratably over a three- to five-year period, subject to continued employment through the applicable vesting date and, in the case of the Performance Options, achievement of the applicable performance criteria. See “ Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards in 2017 ― Terms of Equity Awards ― Long-Term Incentive Plan Grants. ” The Compensation Committee determined that granting our NEOs stock options would meet our goals of fostering a culture of performance and commitment to our Company. Stock options serve as components of performance-based compensation because they only provide value to our NEOs if the value of our stock appreciates. All equity-based awards under our Long-Term Incentive Program were granted under the 2013 Stock Incentive Plan.

In addition to granting them long-term equity-based awards, we have given our executive officers the opportunity to, and in some cases, in connection with the commencement of their employment with us, have required them to, make meaningful investments in our common stock, subject to satisfaction of applicable securities law requirements. See “ Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards in 2017 ― Summary of NEO Offer Letters and Employment Agreements. ”

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In connection with our initial public off ering, we adopted a new incentive plan, the Gardner Denver Holdings, Inc. 2017 Stock Incentive Plan, pursuant to which we will grant our future long-term equity incentive awards. See “Compensation Actions Taken in 2018―Long-Term Incentive Compensation” bel ow.

Benefits and Perquisites

While our compensation philosophy is to focus on performance-based forms of compensation while providing only minimal executive benefits and perquisites, we provide to all of our employees, including our NEOs, broad-based employee benefits that are intended to attract and retain employees while providing them with retirement and health and welfare security. These include:

•

a 401(k) savings plan;

•

medical, dental, vision, life and disability insurance coverage; and

•

dependent care and healthcare flexible spending accounts.

401(k) Plan

Our U.S. eligible employees, including our NEOs, participate in the Gardner Denver, Inc. Retirement Savings Plan (the “ 401(k) plan ” ), which is a tax-qualified retirement savings plan. For employees hired after January 1, 2014, enrollment in the 401(k) plan is automatic for employees who meet eligibility requirements unless they decline participation. Under the 401(k) plan, we match 100% of the first 6% of a participant ’ s salary contributions to the 401(k) plan. Participants are 100% vested in employee and matching contributions. The maximum contribution to the 401(k) plan is 100% of an employee's annual eligible compensation, subject to regulatory and plan limitations.

Supplemental Excess Defined Contribution Plan

In addition to the 401(k) plan, U.S. employees with a salary grade of 20 or higher (generally senior managers and above), including the NEOs other than Mr. Mi ñ arro Viseras, are eligible to participate in the Gardner Denver, Inc. Supplemental Excess Defined Contribution Plan (the “ Excess Contribution Plan ” ), which is funded through a Rabbi Trust. This plan provides participants with a similar level of benefits afforded to all other eligible employees who are not subject to the limitations imposed by the IRS on our tax-qualified 401(k) plan.

Eligible employees may contribute to the Excess Contribution Plan when they exceed the annual IRS pre-tax contribution limits and the annual catch-up contribution limit for participants age 50 or over. Under the Excess Contribution Plan, we match 100% of the first 6% of a participant ’ s salary contributions to the Excess Contribution Plan. Company matching contributions under the Excess Contribution Plan are contributed in the form of cash rather than our common stock. All employee and Company matching contributions are fully vested immediately.

Limited Perquisites

Executive perquisites are not part of our general compensation philosophy, however we provide limited perquisites and personal benefits that are not generally available to all employees when necessary to attract top talent. These are typically set forth in the offer letters or employment agreements we enter into with our executive officers. See “ Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards in 2017 ― Summary of NEO Offer Letters and Employment Agreements.” For example, in 2017, per his employment agreement, Mr. Mi ñ arro Viseras was entitled to international school assistance and use of a company car. Mr. Snyder was also provided with a housing allowance. In addition, from time to time, we provide tax gross-ups on perquisites we provide in order to allow our NEOs to enjoy the full benefit of the perquisite we are providing.

Severance and Change in Control Agreements

The Company believes that reasonable and appropriate severance and change in control benefits are necessary in order to be competitive in the Company ’ s executive attraction and retention efforts. As discussed above, the offer letters we enter into with our NEOs provide for certain payments, rights and benefits to the NEOs upon an involuntary termination of employment without Cause (as defined in “ Potential Payments to Named Executive Officers Upon Termination of Employment or Change in Control-Severance Arrangements and Restrictive Covenants ” below) from the Company or a termination by the NEO for Good Reason (as defined in “ Potential Payments to Named Executive Officers Upon Termination of Employment or Change in Control-Severance Arrangements and Restrictive Covenants ” below). In addition, our equity award agreements provide for accelerated vesting upon a change in control in certain circumstances, as more fully described above under “― Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards in 2017 ― Terms of Equity Awards. ”

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Employment Agreements

We do not typically enter into employment agreements with our NEOs; however, we entered into an employment agreement and offer letter with Mr. Mi ñ arro Viseras and offer letters setting forth initial compensation and benefits, as well as severance terms, with each of our other NEOs. Full descriptions of the material terms of the employment agreement and offer letter we entered into with Mr. Mi ñ arro Viseras and the offer letters we entered into with Messrs. Reynal, Herndon, Schiesl and Snyder are presented below in “― Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards in 2017. ”

Risk Management

The Compensation Committee conducts a thorough review of all incentive programs and confirms that our executives are not incented to focus on short-term stock performance or take excessive risk in managing the business. In particular, long-term incentive awards, as a significant portion of total direct compensation and robust stock holding requirements, are structured to align management with the long-term health of the business.

Stock Ownership and Retention Policy

To align the interests of our management and directors with those of our stockholders, the Board of Directors concluded that certain of our executive officers (the “Covered Executives”) and directors should have a significant financial stake in the Company’s stock. To further that goal, we implemented stock ownership guidelines in 2017 (the “Guidelines”). The Covered Executives will be required to hold a specific level of equity ownership as outlined below:

Executives : The Guidelines will apply to the Covered Executives in the following Tiers:

Tier One:	Chief Executive Officer
Tier Two:	Chief Financial Officer and General Counsel
Tier Three:	P&L and Corporate Leaders

Covered Executives’ Stock Ownership Multiples : The stock ownership levels under the Guidelines, expressed as a multiple of the Covered Executive’s base annual salary rate as of January 1 ^st of the year, are as follows:

Tier One:	10 times base salary
Tier Two:	5 times base salary
Tier Three:	3 times base salary

Retention Requirement : There is no required time period within which a Covered Executive must attain the applicable stock ownership level under the Guidelines. However, until the applicable ownership level is achieved, Covered Executives must retain 75% of net shares granted to them. Once the ownership guideline is met, Covered Executives must retain 30% of net shares granted to them; however, this requirement drops to 20% for a Covered Executive upon the earlier of a (1) such Covered Executive reaching the age of 55 and (2) such covered executive achieving 10 years of service with the Company and terminates upon the earlier of (1) such Covered Executive reaching the age of 60 and (2) such covered executive achieving 15 years of service with the Company.

The shares counted toward these ownership requirements includes shares owned outright and vested stock options. The retention requirement applies to all prior and future grants.

These ownership requirements are set at levels that the Company believes are robust given the Covered Executives’ respective salaries and responsibilities.

Directors : Our directors are required to hold 75% of net shares granted to them under our benefit plans until they own equity equal to five times their annual cash retainers. Once the ownership guideline is met, directors must retain 30% of the net shares granted to them under our benefit plans until their retirement.

As of January 1, 2018, all of our NEOs and then serving directors were in compliance with the applicable stock ownership levels under the Guidelines.

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Hedging and Pledging Policies

The Company’s Securities Trading Policy requires executive officers and directors to consult the Company’s General Counsel prior to engaging in transactions involving the Company’s securities. The Company’s Securities Trading Policy prohibits directors and executive officers from hedging or monetization transactions including, but not limited to, through the use of financial instruments such as exchange funds, variable forward contracts, equity swaps, puts, calls, and other derivative instruments, or through the establishment of a short position in the Company’s securities. The Company’s Securities Trading Policy limits the pledging of Company securities to those situations approved by the Company’s General Counsel.

Section 162(m) of the Internal Revenue Code

We expect to be able to claim the benefit of a special exemption rule that applies to compensation paid (or compensation in respect of equity awards such as stock options granted) during a specified transition period following our initial public offering. This transition period was previously anticipated to potentially extend until our first annual stockholders meeting that occurs in 2021 pursuant to regulations under the Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”). However, the recently enacted Tax Cut and Jobs Act amended Section 162(m) of the Code in several respects, including the elimination the “performance-based compensation” exception under Section 162(m) of the Code for tax years beginning after December 31, 2017. Pending further guidance under Section 162(m) of the Code, it is unclear whether the post-IPO transition period exception under Section 162(m) will continue to apply to us for compensation paid or awards granted in 2018 or beyond. Once applicable guidance is released, we expect the Compensation Committee to consider the implications of Section 162(m) and such guidance in its future compensation decisions.

Compensation Actions Taken in 2018

Long-Term Incentive Compensation

In February 2018, following an evaluation with the assistance of Pearl Meyer of the equity-based incentives for our executive officers, the Compensation Committee adopted the 2018 LTI Program. Under the 2018 LTI Program, our NEOs will receive annual equity awards, 50% of which will be in the form of time-vesting restricted stock and 50% of which will be in the form of time-vesting stock options. The time-vesting restricted stock awards and the time-vesting options awards under the 2018 LTI Program will vest in equal annual installments on each of the first four anniversaries of the grant date, except that the awards granted in 2018 will vest in equal annual installments on each of the second, third, fourth and fifth anniversaries of the grant date. The Compensation Committee determined that, in 2018, awards under the 2018 LTI Program will be made to our NEOs in the following am ounts: Mr. Reynal ― $4,000,000; Mr. Herndon ― $1,000,000; Mr. Schiesl ― $675,000; Mr. Snyder ― $400,000; Mr. Mi ñarro Viseras ― $500,000. These grant amounts will be translated into a number of stock options and shares of restricted stock by taking such dol lar amount and dividing it by the per share or per option “fair value” that will be used for reporting the compensation expense associated with the grant under applicable accounting guidance, which “fair value” will be based in part on the per share closing price of our common stock on the NYSE on the date of grant.

Executive Severance Benefits – Mr. Snyder and Mr. Miñarro Viseras

In February 2018, in connection with our annual review of our executive compensation, we approved an increase to the benefits to which Messrs. Snyder and Miñarro Viseras are entitled in the event of certain qualifying terminations to align them with the severance benefits to which our other senior executive officers are entitled.

Under the terms approved by the Compensation Committee in February 2018, if the Company terminates Mr. Snyder’s employment without Cause (as that term is defined below under “Potential Payments to Named Executive Officers upon Termination of Employment or Change in Control―Severance Arrangements and Restrictive Covenants”) or if Mr. Snyder terminates his employment with us for Good Reason (as that term is defined below under “Potential Payments to Named Executive Officers upon Termination of Employment or Change in Control―Severance Arrangements and Restrictive Cove nants”), subject to Mr. Snyder’s continued compliance with the restrictive covenants in his management equity agreements and his execution of a customary waiver and release agreement, he will be entitled to receive:

•

The Compensation Committee also approved in February 2018 a mutual twelve-month advance notice period for a termination of Mr. Miñarro Viseras's employment not for cause or without good reason, during which Mr. Miñarro Viseras may be released from his work duties but will still be entitled to remuneration.

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Summary Compensation Table

The following table provides summary information concerning compensation of our NEOs for services rendered to us during the years indicated.

Name and Principal Position	Year	Salary ($) ⁽¹⁾		Bonus ($) ⁽²⁾		Option Awards ($)		Non-Equity Incentive Plan Compensation ($) ⁽³⁾		All Other Compensation ($) ⁽⁴⁾		Total ($)
Vicente Reynal, Chief Executive Officer	2017		765,754		225,000		―		1,103,760		285,581		2,380,095
	2016		750,000		―		4,568,331		877,500		233,614		6,429,445
Philip T. Herndon, Vice President and Chief Financial Officer	2017		406,750		125,000		―		588,960		11,258		1,131,968
	2016		347,917		―		3,257,821		446,262		7,897		4,059,972
Andrew Schiesl, Vice President, General Counsel, Chief Compliance Officer and Secretary	2017		457,500		100,000		―		489,900		75,872		1,123,272
	2016		450,000		―		610,717		367,875		49,565		1,478,082
Neil Snyder, Senior Vice President, Strategy, Business Development and Planning	2017		351,000		75,000		―		254,160		123,941		804,101
Enrique Mi ñ arro Viseras, Vice President and General Manager, Industrials Segment EMEA ⁽⁶⁾	2017		316,000		―		―		205,222		229,222		750,444
	2016		195,943		532,517		691,114		113,015		155,548		1,684,817

(1)	Reflects the salary amounts earned by our NEOs in the years indicated.

(2)	Reflects special, one-time IPO bonus amounts.

(3)	Amounts shown reflect amounts earned under our 2017 MIP.

(4)	Amounts reported under All Other Compensation reflect the following:

(a)

as to Mr. Reynal, reimbursement for tax preparation expenses, Company-paid life insurance premiums ($1,827), Company 401(k) match ($6,367) and Company Excess Contribution Plan match ($161,300). Mr. Reynal also received a tax equalization payment with respect to his cash compensation earned during his service in Europe in 2016 ($83,871).

(b)

as to Mr. Herndon, company-paid life insurance premiums ($792) and Company 401(k) match ($10,467).

(c)

as to Mr. Schiesl, company-paid life insurance premiums ($792), Company 401(k) match ($15,429, plus a contribution of $2,571 to a Roth IRA) and Company Excess Contribution Plan match ($57,081).

(d)

as to Mr. Snyder, company-paid life insurance premiums ($792), Company 401(k) match ($16,200), a housing allowance ($53,903) and a tax gross-up relating to his housing allowance ($53,047).

(e)

as to Mr. Miñarro Viseras, actual Company expenditures for use, including business use, of a Company car, including expenditures for the car lease and gas ($25,748), a housing allowance ($43,202), reimbursement of school fees for Mr. Miñarro Viseras’s children ($63,675), a tax gross-up relating to his housing allowance ($39,044) and a tax gross-up relating to our reimbursement of school fees ($57,553).

(5)

Mr. Miñarro Viseras is based in Europe and compensated in Euros. We converted his 2017 cash compensation, his amounts earned under our 2017 MIP, and amounts shown in the “All Other Compensation” column for him to U.S. dollars at an exchange rate of 1.20048, which was the end of month translation rate, December 2017.

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Grants of Plan-Based Awards in 2017

	Estimated Possible Payouts under Non-Equity Incentive Plan Awards (1)
Name	Threshold ($)		Target ($)		Maximum ($)
Vicente Reynal		8,083		766,500		1,533,000
Philip T. Herndon		4,313		409,000		818,000
Andrew Schiesl		10,914		345,000		690,000
Neil Snyder		3,722		176,500		353,000
Enrique Miñarro Viseras		57,006		152,016		304,032

(1) Reflects the possible payouts of cash incentive compensation under the 2017 MIP. The actual amounts earned are described in the “Non-Equity Incentive Plan Compensation” column of the “Summary Compensation Table.” Mr. Miñarro Viseras is based in Europe and compensated in Euros. His Estimated Possible Non-Equity Incentive Plan Payout amounts were converted to U.S. dollars at an exchange rate of 1.20048, which was the end of month translation rate, December 2017.

Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards in 2017

Summary of NEO Offer Letters and Employment Agreements

In general, the Company does not enter into employment agreements with employees, including our executive officers, however we do enter into offer letters with many of our executive officers. In addition, we did enter into an employment agreement with Mr. Miñarro Viseras as well as an offer letter. Descriptions of the offer letters we entered into with Messrs. Reynal, Herndon, Schiesl and Snyder and the employment agreement and offer letter we entered into with Mr. Miñarro Viseras are provided below. All current NEOs serve at the will of our board of directors.

Offer Letter with Mr. Reynal

The Company entered into an offer letter with Mr. Reynal, dated April 17, 2015, which was modified by a letter, dated November 19, 2015, we entered into with Mr. Reynal in connection with his promotion to Chief Executive Officer of the Company (the offer letter, dated April 17, 2015, as so modified, the “Reynal Offer Letter”). The Reynal Offer Letter provides that, as of January 1, 2016, Mr. Reynal is entitled to receive a base salary of $750,000, which base salary was increased to $766,500 in April, 2017, and that Mr. Reynal is entitled to participate in our annual MIP with a target award opportunity of 100% of his annual base salary. The Reynal Offer Letter further provides that, in 2016, Mr. Reynal’s MIP award would be based on the achievement of performance goals comparable to those that typically would be assigned to the Chief Executive Officer of the Industrials segment; however, following Mr. Reynal’s transition to devoting more of his business time and attention to the performance of duties as the Chief Executive Officer of the Company, his annual MIP award would transition to being based on the achievement of Company performance goals.

Mr. Reynal was eligible to receive two option grants under our Long-Term Incentive Program: one grant of 876,975 options upon commencement of his employment as the Chief Executive Officer of our Industrials segment, which he received in May 2015; and one grant of 585,403 options in connection with his promotion to Chief Executive Officer of the Company, which he received in May 2016. In addition, pursuant to the terms of the Reynal Offer Letter, Mr. Reynal was expected to invest a minimum of $2,000,000, and was given the opportunity to invest significantly more, into our common stock, subject to satisfaction of applicable securities law requirements.

During the time Mr. Reynal was based in Munich, Germany (the “Expat Period”), the Reynal Offer Letter provides that he was entitled to certain expatriate benefits, including an annual cost of living adjustment of $26,000, a monthly housing allowance of $5,533, payment or reimbursement of tuition to an international school for his dependent children, payment or reimbursement of school-sponsored transportation for his dependent children, reimbursement of expenses related to tax preparation performed by a tax preparation firm, use of a company car, reimbursement for expenses in connection with storage of household goods in the United States and reimbursement for business class travel to the United States or a comparable location for Mr. Reynal and his immediate family once per year. Mr. Reynal was also entitled to tax equalization on his cash compensation and expatriate benefits during the Expat Period; provided that the annual cost to the Company of such tax equalization shall not exceed $275,000.

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Mr. Reynal is also eligible to participate in the Company’s 401(k), Excess Contribution, medical, dental, life insurance and disability plans, along with a comprehensive wellness program.

The Reynal Offer Letter also contains severance arrangements, which are discussed below under “Potential Payments to Named Executive Officers upon Termination of Employment or Change in Control.”

Offer Letter with Mr. Herndon

The Company entered into an offer letter with Mr. Herndon, dated November 18, 2015, which was modified by an offer letter, dated September 2, 2016, we entered into with Mr. Herndon in connection with his promotion to Chief Financial Officer of the Company (the offer letter, dated November 18, 2015, as so modified, the “Herndon Offer Letter”). The Herndon Offer Letter provides that Mr. Herndon is entitled to receive a base salary of $400,000, which base salary was increased to $409,000 in April, 2017, and is eligible to participate in the annual MIP with a target award opportunity of 100% of his base salary.

Mr. Herndon was eligible to receive a grant of 468,323 options under our Long-Term Incentive Program, which he received in May 2016. In addition, pursuant to the terms of the Herndon Offer Letter, Mr. Herndon was expected to invest a minimum of $1,000,000, and was given the opportunity to invest significantly more, into our common stock, subject to satisfaction of applicable securities law requirements, no later than two months following the date his employment with us commenced.

Mr. Herndon is also eligible to participate in the Company’s 401(k), Excess Contribution, medical, dental, life insurance and disability plans, along with a comprehensive wellness program.

The Herndon Offer Letter also contains severance arrangements, which are discussed below under “Potential Payments to Named Executive Officers upon Termination of Employment or Change in Control.”

Offer Letter with Mr. Schiesl

The Company entered into an offer letter with Mr. Schiesl, dated November 25, 2013 (the “Schiesl Offer Letter”). The Schiesl Offer Letter provides that Mr. Schiesl is entitled to receive a base salary of $450,000, which base salary was increased to $460,000 in April, 2017, and is eligible to participate in the annual MIP with a target award opportunity of 75% of his base salary.

Mr. Schiesl was eligible to receive (i) a grant of 394,474 options under our Long-Term Incentive Program, which he received in March 2014, and (ii) a grant of 36,739 options (the “Investment Options”) which he received in lieu of a sign-on bonus in March 2014 and which vested on June 16, 2014.

Mr. Schiesl is also eligible to participate in the Company’s 401(k), Excess Contribution, medical, dental, life insurance and disability plans, along with a comprehensive wellness program.

The Schiesl Offer Letter also contains severance arrangements, which are discussed below under “Potential Payments to Named Executive Officers upon Termination of Employment or Change in Control.”

Offer Letter with Mr. Snyder

The Company entered into an offer letter with Mr. Snyder, dated December 18, 2015(the “Snyder Offer Letter”). The Snyder Offer Letter provides that Mr. Snyder is entitled to receive a base salary of $300,000, which base salary was increased to $353,000 in April, 2017, and is eligible to participate in the annual MIP with a target award opportunity of 45% of his base salary, which target award opportunity was increased to 50% in November 2016.

Mr. Snyder was eligible to receive a grant of 263,430 options under our Long-Term Incentive Program, which he received in December 2016. In addition, pursuant to the terms of the Snyder Offer Letter, Mr. Snyder was expected to invest a minimum of $90,000, and was given the opportunity to invest significantly more, into our common stock, subject to satisfaction of applicable securities law requirements, no later than two months following the date his employment with us commenced.

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Under the Snyder Offer Letter, Mr. Snyder received a lump sum cash signing bonus of $300,000 in February 2016. Such bonus was subject to a repayment obligation upon certain terminations of Mr. Snyder’s employment.

Under the Snyder Offer Letter, Mr. Snyder is entitled to reimbursement for his reasonable commuting expenses (consistent with our travel policies) related to travel to and from his home, as well as a tax gross-up relating to such reimbursement.

Mr. Snyder is also eligible to participate in the Company’s 401(k), Excess Contribution, medical, dental, life insurance and disability plans, along with a comprehensive wellness program.

The Snyder Offer Letter also contains severance arrangements, which are discussed below under “Potential Payments to Named Executive Officers upon Termination of Employment or Change in Control.”

Employment Agreement and Offer Letter with Mr. Miñarro Viseras

The Company entered into an employment agreement with Mr. Miñarro Viseras, dated April 29, 2016 and commencing on May 10, 2016 (the “Miñarro Viseras Employment Agreement”). The Miñarro Viseras Employment Agreement provides that Mr. Miñarro Viseras is entitled to receive a base salary of $330,013, which base salary was increased to $337,814 in April, 2017 (in each case, converted from Euros to U.S. dollars at an exchange rate of 1.20048, which was the end of monthy translation rate, December 2017), is eligible to participate in the annual MIP with an award opportunity of up to 45% of his base salary and is eligible to participate in our Management Equity Program.

Under the Miñarro Viseras Employment Agreement, Mr. Miñarro Viseras received a lump sum cash signing bonus of $470,263 (which amount was paid to Mr. Miñarro Viseras in Euros and has been converted to U.S. dollars at an exchange rate of 1.1065, which is the average monthly translation rate for 2016) in August 2016. Such bonus was subject to a repayment obligation upon certain terminations of Mr. Miñarro Viseras’s employment.

Under the Miñarro Viseras Employment Agreement, Mr. Miñarro Viseras is eligible for relocation benefits, use of a company car, and international school assistance for his children in the amount of $54,002 (converted from Euros to U.S. dollars at an exchange rate of 1.20048, which was the end of month translation rate, December 2017) for the first year of his employment and for $42,039 (converted from Euros to U.S. dollars at an exchange rate of 1.20048, which was the end of month translation rate, December 2017) for each year thereafter. Such relocation benefits are subject to a repayment obligation if Mr. Miñarro Viseras is terminated within 24 months by the Company for cause or by Mr. Miñarro Viseras without good reason.

Under the Miñarro Viseras Employment Agreement, Mr. Miñarro Viseras is also covered under the standard group accident insurance of the Company.

The Miñarro Viseras Employment Agreement provides for a mutual three-month advance notice period for a termination of employment not for cause or without good reason, during which Mr. Miñarro Viseras may be released from his work duties but will still be entitled to remuneration.

Under the terms of the Miñarro Viseras Employment Agreement, Mr. Miñarro Viseras is subject to certain restrictive covenants, including a perpetual confidentiality covenant, violation of which will constitute “cause” under such agreement, and a noncompetition covenant for the duration of the employment relationship. Mr. Miñarro Viseras may be required to pay certain contractual penalties for each breach of either restrictive covenant.

We also entered into an offer letter with Mr. Miñarro Viseras, dated March 16, 2016 (the “Miñarro Viseras Offer Letter”). The terms of the Miñarro Viseras Offer Letter are generally identical to those of the Miñarro Viseras Employment Agreement except that it does not contain any restrictive covenants, nor does it provide for a mutual three-month advance notice period for a termination of employment not for cause or without good reason. In addition, the Miñarro Viseras Offer Letter provided that Mr. Miñarro Viseras was eligible to receive a grant of 136,074 stock options under our Long-Term Incentive Plan, which he received in May 2016. The Miñarro Viseras Offer Letter also provided that Mr. Miñarro Viseras was expected to invest a minimum of $60,000, and he was given the opportunity to invest significantly more, into our common stock, subject to satisfaction of applicable securities law requirements.

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Terms of Equity Awards

Long-Term Incentive Plan Grants

Time Option Vesting Schedule . We granted Time Options in May 2016 to Messrs. Reynal, Herndon, Snyder and Miñarro Viseras and in December 2016 to Messrs. Herndon and Snyder. The Time Options granted to Messrs. Reynal, Herndon and Snyder in May 2016 vest and become exercisable over time with respect to 33.3% of such Time Options on December 31st of each of 2016, 2017 and 2018, subject to continued employment through the applicable vesting date. The Time Options granted in May 2016 to Mr. Miñarro Viseras and December 2016 to Messrs. Herndon and Snyder vest and become exercisable over time with respect to 20% or such Time Options on December 31st of each of 2016, 2017, 2018, 2019 and 2020, subject to continued employment through the applicable vesting date.

In addition, we granted Time Options to Mr. Schiesl in 2014, and to Mr. Reynal in 2015. The Time Options granted to Mr. Schiesl in 2014 vest and become exercisable over time with respect to 20% of such Time Options on December 31st of each of 2014, 2015, 2016, 2017 and 2018, subject to continued employment through the applicable vesting date. The Time Options granted to Mr. Reynal in 2015 vest and become exercisable over time with respect to 33.3% of such Time Options on December 31st of each of 2016, 2017 and 2018, subject to continued employment through the applicable vesting date.

Performance Option Vesting Schedule . We granted Performance Options in May 2016 to Messrs. Reynal, Herndon, Snyder and Miñarro Viseras and in December 2016 to Messrs. Herndon and Snyder. The Performance Options granted in May 2016 to Messrs. Reynal, Herndon and Snyder are eligible to vest and become exercisable with respect to up to 33.3% of such Performance Options on December 31st of each of 2016, 2017 and 2018 and the Performance Options granted in May 2016 and December 2016 to Mr. Miñarro Viseras and Messrs. Herndon and Snyder, respectively, are eligible to vest and become exercisable with respect to up to 20% of such Performance Options on December 31st of each of 2016, 2017, 2018, 2019 and 2020, subject to continued employment through the applicable vesting date, if and only to the extent that the Company achieves the annual adjusted EBITDA performance targets set by the Compensation Committee, where “adjusted EBITDA” refers to earnings before interest, taxes, depreciation and amortization plus transaction, management and/or similar fees paid to KKR and/or its affiliates; provided that the Board may, following consultation with the CEO, adjust the calculation of adjusted EBITDA to reflect, to the extent not contemplated in the management plan, any extraordinary or one-time events, including, without limitation, acquisitions, divestitures, major capital investment programs, changes in accounting standards, stock expense related to the issuance of stock options, or other extraordinary or unusual events or occurrences, or any costs or expenses incurred during such period relating to environmental remediation, litigation or other disputes in respect of events and exposures that occurred prior to the end of the relevant fiscal year.

We also granted Performance Options to Mr. Schiesl in 2014, and to Mr. Reynal in 2015. The Performance Options granted to Mr. Schiesl in 2014 were eligible to vest and become exercisable with respect to up to 20% of such Performance Options on December 31st of each of 2014, 2015, 2016, 2017 and 2018, subject to continued employment through the applicable vesting date, if and only to the extent that the Company achieves the annual adjusted EBITDA performance targets set by the Compensation Committee. The Performance Options granted to Mr. Reynal in 2015 were eligible to vest and become exercisable with respect to up to 33.3% of such Performance Options on December 31st of each of 2016, 2017 and 2018, subject to continued employment through the applicable vesting date, if and only to the extent that the Company achieves the annual adjusted EBITDA performance targets set by the Compensation Committee.

The fiscal 2017 adjusted EBITDA performance target for purposes of determining vesting of Performance Options was $470 million and our actual adjusted EBITDA performance for fiscal 2017 was $561.5 million. Therefore, 33.3% of the Performance Options granted in May 2016 to Messrs. Reynal, Herndon and Snyder and to Mr. Reynal in 2015 and 20% of the Performance Options granted in May 2016 to Mr. Miñarro Viseras, in December 2016 to Messrs. Herndon and Snyder and to Mr. Schiesl in 2014 vested on December 31, 2017.

If the Company does not achieve the adjusted EBITDA performance target in 2018, but the Company’s adjusted EBITDA in respect of fiscal year 2018 equals or exceeds the adjusted EBITDA performance threshold set by the Compensation Committee for fiscal year 2018 then one-quarter (1/4) of the Performance Options granted in 2016 to our NEOs in other than Mr. Miñarro Viseras eligible to vest on December 31st of such year shall vest on December 31st of such year and with respect to the remaining three-quarters (3/4) of the Performance Options eligible to vest on December 31st of such year, one-half (1/2) of such Performance Options shall vest on December 31, 2019 if the Company’s adjusted EBITDA in respect of fiscal year 2019 equals or exceeds the adjusted EBITDA target set by the Compensation Committee for fiscal year 2019 and one-half (1/2) of such Performance Options shall vest on December 31, 2020 if the Company’s adjusted EBITDA in respect of fiscal year 2020 equals or exceeds the adjusted EBITDA target set by the Compensation Committee for fiscal year 2020.

At the end of the yearly measurement period with respect to any award of Performance Options, any then outstanding Performance Options that were not vested and exercisable in any previous year in accordance with their terms shall become vested and exercisable to the extent that the cumulative performance objectives have been satisfied in respect of the applicable performance period.

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We believe that the adjusted EBITDA performance targets in all periods provide reasonably achievable, but challenging goals for our NEOs and other Long-Term Incentive Program participants and are intended to incentivize all participants to maximize their performance for the long-term benefit of our stockholders.

Effect of Change in Control on Vesting of Options . Notwithstanding the foregoing, immediately prior to any Change in Control (as defined below), any unvested portion of the Time Options shall vest and become immediately exercisable as to 100% of such Time Options. In addition, immediately prior to any Change in Control, the Performance Options shall vest and become immediately exercisable as to 100% of such Performance Options but only if, and to the extent that, as of such Change in Control, KKR achieves (x) a Sponsor IRR (as defined below) of 22.5% and (y) a Sponsor MOIC (as defined below) of 2.5x. No option will become exercisable as to any additional shares of the Company’s common stock following the termination of employment of an NEO for any reason and any option that is unexercisable as of the NEO’s termination of employment will immediately expire without payment.

“Sponsor IRR” means, as of a Change in Control, the cumulative internal rate of return of KKR, excluding any fees paid to KKR or expenses reimbursed to KKR from time to time (“Sponsor Fees”), on KKR’s aggregate investment in the Company determined on a fully diluted basis, assuming inclusion of all shares of the Company’s common stock underlying all then outstanding Time Options and Performance Options.

“Sponsor MOIC” means, as of a Change in Control, the result obtained by dividing (i) the cash consideration received by KKR (other than any Sponsor Fees) as of the Change in Control by (ii) the aggregate amount of cash invested in (and the initial gross asset value of any property (other than money) contributed to) the Company by KKR, directly or indirectly, from time to time in respect of such investment.

A “Change in Control” means, (i) in one or a series of related transactions, the sale of all or substantially all of the assets of the Company to any person (or group of persons acting in concert), other than to (x) KKR or one or more of its controlled affiliates or (y) any employee benefit plan (or trust forming a part thereof) maintained by the Company or its controlled affiliates; or (ii) a merger, recapitalization, or other sale by the Company, KKR, or any of their respective affiliates, to a person (or group of persons acting in concert) of the Company’s common stock that results in more than 50% of the common stock of the Company (or any resulting company after a merger) being held by a person (or group of persons acting in concert) that does not include (x) KKR or its affiliates or (y) an employee benefit plan (or trust forming a part thereof) maintained by the Company or its controlled affiliates; and in any event of clause (i) or (ii), which results in KKR and its controlled affiliates or such employee benefit plan ceasing to hold the ability to elect a majority of the members of the Company’s board of directors.

Expiration of Vested Options . Except as provided in the Management Stockholder’s Agreement described below under “Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards in 2017,” all vested options will expire upon the earliest to occur of the following events: (1) the tenth anniversary of the date such options were granted, so long as the NEO remains employed with the Company through such date; (2) the first anniversary of the termination of the NEO’s employment with the Company because of death or Disability (as defined in the option award agreement); (3) one hundred eighty (180) days after the termination of the NEO’s employment with the Company without Cause (as defined in the option award agreement) (except due to death or Disability) or the NEO’s resignation for Good Reason (as defined in the option award agreement); (4) the date the NEO’s employment is terminated by the Company for Cause; or (5) thirty (30) days after the NEO’s employment is terminated by the NEO without Good Reason. In addition, at the discretion of the Company, options may be cancelled at the effective date of a merger, consolidation, or other transaction or capital change of the Company, in accordance with the terms of the 2013 Stock Incentive Plan, in exchange for a payment (payable in cash or other consideration depending on the terms of the transaction) per share equal to the excess, if any, of (x) the per share consideration paid to stockholders of the Company in the transaction over (y) the exercise price of the option.

General Provisions for Options and Shares under the Management Stockholder’s Agreement

In connection with their initial equity awards, each of our NEOs became party to a Management Stockholder’s Agreement.

Under the Management Stockholder’s Agreement, shares of our common stock beneficially owned by our NEOs are generally nontransferable prior to the earlier of (i) a Change in Control or (ii) the fifth anniversary of the effective date of the applicable Management Stockholder’s Agreement.

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Our NEOs have limited “piggyback” registration rights with respect to shares of our common stock, provided that in lieu of piggyback rights where such rights would otherwise be available, our board of directors, in its sole discretion, may elect to waive the transfer restrictions (other than any such restrictions contained in an underwriters’ lock-up or in connection with a public offering) on the number of shares of Common Stock that would have been subject to such piggyback rights

Pursuant to the terms of the Management Stockholder’s Agreement, the NEOs are subject to covenants not to (1) disclose confidential information, (2) solicit customers and certain employees, consultants and independent contractors of the Company, (3) compete with the Company and (4) disparage the Company.

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Outstanding Equity Awards at 2017 Fiscal Year End

	Option Awards
Name	Grant Date	Number of Securities Underlying Unexercised Options (#) Exercisable ⁽¹⁾		Number of Securities Underlying Unexercised Options (#) Unexercisable ⁽²⁾		Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) ⁽³⁾		Option Exercise Price ($)		Option Expiration Date
Vicente Reynal	5/10/2015		438,487		109,622				10.61	5/10/2025
	5/10/2015		219,244				109,622		10.61	5/10/2025
	5/10/2016		195,135		97,568				10.61	5/10/2026
	5/10/2016		195,134				97,567		10.61	5/10/2026
Philip T. Herndon	5/10/2016		156,108		78,054				10.61	5/10/2026
	5/10/2016		156,108				78,054		10.61	5/10/2026
	12/9/2016		28,261		42,392				11.43	12/9/2026
	12/9/2016		28,261				42,392		11.43	12/9/2026
Andrew Schiesl	3/7/2014		157,789		39 ,447				8.16	3/7/2024
	3/7/2014		157,789				39 ,447		8.16	3/7/2024
	3/7/2014		36,739		-				8.16	3/7/2024
Neil Snyder	5/10/2016		87,810		43,905				10.61	5/10/2026
	5/10/2016		87,810				43,905		10.61	5/10/2026
	12/1/2016		9,420		14,131				11.43	12/1/2026
	12/1/2016		9,421				14,131		11.43	12/1/2026
Enrique Miñarro Viseras	5/10/2016		27,215		40 ,823				10.61	5/10/2026
	5/10/2016		27,214				40 ,822		10.61	5/10/2026

(1)

Reflects vested and exercisable Time Options, Performance Options and, in the case of Mr. Schiesl, Investment Options. 25% of the Time Options granted on 12/18/2013 and 3/7/2014 shown in this column vested on each of December 31, 2014, 2015, 2016 and 2017. 33.3% of the Time Options granted on 5/10/2015 shown in this column vested on each of December 31, 2015, 2016 and 2017. 50% of the Time Options granted on 5/10/2016, 12/9/2016 and 12/1/2017 shown in this column vested on each of December 31, 2016 and 2017. 25% of the Performance Options granted on 12/18/2013 and 3/7/2014 shown in this column vested on each of December 31, 2014, 2015 and 2016. 50% of the Performance Options granted on 5/10/2016, 12/9/2016 and 12/1/2016 shown in this column vested on each of December 31, 2016 and 2017.

(2)

Reflects unvested Time Options. The unvested Time Options granted on each of December 18, 2013, March 7, 2014, May 10, 2015 and May 10, 2016 shown in this column (other than those granted to Mr. Miñarro Viseras on May 10, 2016) will vest and become exercisable on December 31, 2018, subject to the NEO’s continued employment through such date. The unvested Time Options granted to Mr. Herndon on December 9, 2016, to Mr. Snyder on December 1, 2016 and to Mr. Miñarro Viseras on May 10, 2016 shown in this column will vest and become exercisable with respect to 33.3% of such Time Options on December 31st of each of 2018, 2019 and 2020, subject to the NEO’s continued employment through such date.

(3)

Reflects unvested Performance Options. As described in further detail under “Compensation Discussion and Analysis-Executive Compensation Program Elements-Long-Term Equity Incentive Awards,” the unvested Performance Options shown in this column will vest and become exercisable with respect to such Performance Options granted to Messrs. Reynal, Herndon and Snyder on May 10, 2016, to Mr. Schiesl on March 7, 2014 and to Mr. Reynal on March 10, 2015 on December 31, 2018, and with respect to 33.3% of such Performance Options granted to Mr. Herndon on December 9, 2016, Mr. Snyder on December 1, 2016 and Mr. Miñarro Viseras on May 10, 2016 on December 31st of each of 2018, 2019 and 2020, subject to the NEO’s continued employment through such date and our achievement of the relevant adjusted EBITDA target, or in full upon a Change in Control if we have achieved the Sponsor IRR and Sponsor MOIC targets at such time. The Performance Options eligible to vest on December 31st of 2018 (other than those granted to Mr. Miñarro Viseras) will vest and become exercisable with respect to 1/4 of such Performance Options on such date, subject to the NEO’s continued employment through such dates and our achievement of the relevant threshold adjusted EBITDA performance, and with respect to 3/8 of such Performance options on each of December 31st 2019 and 2020, subject to the NEO’s continued employment through such dates and our achievement of the relevant threshold adjusted EBITDA targets. At the end of the yearly measurement period with respect to any award of Performance Options, any then outstanding Performance Options that were not vested and exercisable in any previous year in accordance with their terms shall become vested and exercisable to the extent that the cumulative performance objectives have been satisfied in respect of the applicable performance period. We achieved the fiscal 2017 adjusted EBITDA target; accordingly the amounts reflected in the table reflect target performance.

Option Exercises and Stock Vested in 2017

During 2017, none of our NEOs exercised options or had any shares of stock or restricted stock or restricted stock units or similar instruments vest.

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Pension Benefits - Fiscal 2017

During 2017, no NEOs participated in either a tax-qualified or non-qualified defined benefit plan sponsored by the Company.

Non-Qualified Deferred Compensation - Fiscal 2017

Name

Executive

Contributions

in Last FY

($) ⁽¹⁾

Registrant

Contributions

in Last FY

($) ⁽²⁾

Aggregate

Earnings

in Last FY

($) ⁽³⁾

Aggregate

Withdrawals/

Distributions

($)

Aggregate

Balance

at Last FYE

($) ⁽⁴⁾

Vicente Reynal

888,016

161,300

140,712

―

1,499,684

Philip T. Herndon

―

Andrew Schiesl

57,081

37,994

―

301,805

Neil Snyder

―

Enrique Miñarro Viseras

―

(1)

The amounts in this column are reported as compensation for fiscal 2017 in the “Base Salary” and “Non-Equity Incentive Plan Compensation” columns of the Summary Compensation Table.

(2)

Represents the amount of the matching contribution made by us in accordance with our Excess Contribution Plan. Matching contributions are reported for the year in which the compensation against which the applicable deferral election is applied has been earned (regardless of whether such matching contribution is actually credited to the NEO’s non-qualified deferred compensation account in that year or the following year). The amounts in this column are reported as compensation for fiscal 2017 in the “All Other Compensation” column of the Summary Compensation Table.

(3)

Amounts in this column are not reported as compensation for fiscal 2017 in the Summary Compensation Table since they do not reflect above-market or preferential earnings.

(4)

Of the amounts reported in this column, $759,750 represents a portion of the compensation for 2016 reported in the “Base Salary” and “Non-Equity Incentive Plan Compensation” columns and $81,750 represents a portion of the compensation for 2016 reported in the “All Other Compensation” column of the Summary Compensation Table for Mr. Reynal and $32,768 represents a portion of the compensation for 2016 reported in the “Base Salary” and “Non-Equity Incentive Plan Compensation” columns and $32,768 represents a portion of the compensation for 2016 reported in the “All Other Compensation” column of the Summary Compensation Table for Mr. Schiesl.

Non-qualified Deferred Compensation Plan

In addition to the 401(k) plan, U.S. employees with a salary grade of 20 or higher (generally senior managers and above) are eligible to participate in the Excess Contribution Plan. Once a participant in the Excess Contribution Plan reaches the IRS annual limits for the 401(k) plan, contributions will be made to the Excess Contribution Plan based on the deferral percentage under the 401(k) plan. Such deferral percentage is selected at the time of enrollment in the Excess Contribution Plan or once per year in December for the following year. A separate election to defer from the annual MIP awards is made in December for the MIP award earned the following year and payable in the year thereafter. The Company matches each participant’s contributions with Company matching contributions. The Company match consists of $1 for each $1 contributed by a participant, up to the first 6% of a participant’s annual compensation. The Company match is credited in the form of cash.

Historically, the NEOs were also credited with a nonelective Company contribution of 12% of recognized compensation in excess of the IRS annual limit. The Company nonelective contributions were also contributed in cash and became fully vested after three years of employment. We discontinued the nonelective Company contributions in 2014.

Mr. Schiesl is fully vested in the nonelective Company contribution portion of the Excess Contribution Plan, and Messrs. Reynal and Herndon joined the Company after the nonelective contribution had been discontinued.

Participants in the Excess Contribution Plan may elect to receive distributions in either (x) a lump sum to be paid on the March 1 of the calendar year following the year of separation from the Company or (y) in a lump sum to be paid within 90 days after separation from service, subject to the terms and conditions of the Excess Contribution Plan. Loans and in-service withdrawals are not permitted under the Excess Contribution Plan.

The investment options available to the named executive officers under the Excess Contribution Plan are virtually the same as those offered to all of the participants in the 401(k) plan. Because some investment options available under the 401(k) plan are not available for the nonqualified plan, the Company has made similar investment options available to the nonqualified plan participants. The table below shows the funds available under the Excess Contribution Plan and their annual rate of return for the calendar year ended December 31, 2017, as reported by the administrator of the 401(k) plan.

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Name of Investment Fund	Ticker Symbol/Index Type	Annual Rate of Return %
JPMorgan SmartRetirement Income R5	JSIIX		11.11	%
JPMorgan SmartRetirement 2020 R5	JTTIX		13.96	%
JPMorgan SmartRetirement 2025 R5	JNSIX		16.32	%
JPMorgan SmartRetirement 2030 R5	JSMIX		18.99	%
JPMorgan SmartRetirement 2035 R5	SRJIX		20.42	%
JPMorgan SmartRetirement 2040 R5	SMTIX		21.83	%
JPMorgan SmartRetirement 2045 R5	JSAIX		22.05	%
JPMorgan SmartRetirement 2050 R5	JTSIX		22.08	%
JPMorgan SmartRetirement 2055 R5	JFFIX		22.01	%
American Funds EuroPacific Gr R6	RERGX		31.17	%
MFS International New Discovery R6	MIDLX		32.16	%
American Century Small Cap Value Inv	ASVIX		10.26	%
Vanguard Small Cap Growth Index Instl	VSGIX		21.94	%
Artisan Mid Cap Institutional	APHMX		20.75	%
Dreyfus Mid Cap Index Fund	PESPX		15.68	%
American Funds Growth Fund of Amer R6	RGAGX		26.53	%
Dodge & Cox Stock Fund	DODGX		18.33	%
JPMorgan Equity Index I	HLEIX		21.61	%
JPMorgan Core Bond R6	JCBUX		3.87	%
Vanguard Federal Money Market Inv	VMFXX		0.81	%

Potential Payments to Named Executive Officers upon Termination of Employment or Change in Control

The following table describes the potential payments and benefits that would have been payable to our NEOs under existing plans and arrangements assuming a qualifying termination if a termination or change in control occurred on December 29, 2017, the last business day of our 2017 fiscal year. A description of the provisions governing such payments under our agreements and any material conditions or obligations applicable to the receipt of payments is described below under “Severance Arrangements and Restrictive Covenants.”

The amounts shown in the table do not include payments and benefits to the extent they are provided generally to all salaried employees upon termination of employment and do not discriminate in scope, terms or operation in favor of the NEOs. These include accrued but unpaid salary and distributions of plan balances under our 401(k) savings plan.

Name

Cash

Severance

Payment

($) ⁽¹⁾

Continuation

of Group

Health

Coverage

($) ⁽²⁾

Accrued

but

Unused

Vacation

($) ⁽³⁾

Value of Time

Option and

Performance

Option

Acceleration

($) ⁽⁴⁾

Total

($)

Vicente Reynal

Qualifying Termination

1,644,000

20,052

―

1,664,052

Change in Control

―

9,663,318

Philip T. Herndon

Qualifying Termination

409,000

20,052

―

429,052

Change in Control

―

5,548,079

Andrew Schiesl

Qualifying Termination

827,875

20,052

―

847,927

Change in Control

―

2,033,098

Neil Snyder

Qualifying Termination

172,500

10,026

―

186,526

Change in Control

―

2,683,624

Enrique Miñarro Viseras

Qualifying Termination

―

Change in Control

―

1,903,961

(1)	Cash severance payment includes the following:

•

Mr. Reynal - continued payment in substantially equal monthly installments over a 12-month period of the sum of (x) his annual base salary and (y) his annual incentive award under the MIP earned in fiscal 2016.

•

Mr. Herndon - continued payment in substantially equal monthly installments over a 12-month period of his annual base salary.

•

Mr. Schiesl - continued payment in substantially equal monthly installments over a 12-month period of the sum of (x) his annual base salary and (y) his annual incentive award under the MIP earned in fiscal 2016.

•

Mr. Snyder - continued payment in substantially equal monthly installments over a 6-month period of the sum of his annual base salary earned in fiscal 2016.

(2)

With respect to Messrs. Reynal, Herndon and Schiesl, reflects the cost of providing continued group health coverage (on the same basis as actively employed employees of the Company), subject to the executive’s electing to receive benefits under the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”), for a period of 12 months, assuming 2017 rates. With respect to Mr. Snyder, reflects the cost of providing continued group health coverage (on the same basis as actively employed employees of the Company), subject to the executive’s electing to receive benefits under COBRA, for a period of 6 months, assuming 2017 rates.

(3)	Amounts reported in this column reflect zero accrued but unused vacation days for each of our NEOs.

(4)

Immediately prior to a Change in Control, all of our NEOs’ unvested Time Options would vest and become immediately exercisable. In addition, immediately prior to a Change in Control, all of our NEOs’ Performance Options would v est and become immediately exercisable but only if, and to the extent that, KKR achieves (x) a Sponsor IRR of 22.5% and (y) a Sponsor MOIC of 2.5. See “Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards―Terms of Equity Award s.” The amount reported in the table assumes that our Sponsor achieves the required Sponsor IRR and Sponsor MOIC.

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Severance Arrangements and Restrictive Covenants

We entered into offer letters with each of our NEOs, other than Mr. Miñarro Viseras, that contain severance terms. In 2017, Mr. Miñarro Viseras was not eligible for any severance pay and benefits not provided generally to all salaried employees upon termination of employment, however his employment agreement requires that we provide three months ’ notice in the event of his termination, with the option to terminate him immediately with a lump sum payment of three months’ salary. As discussed above under “Compensation Discussion and Analysis―Compensation Actions Taken in 2018,” in February 2018, we approved an increase to Mr. Miñarro Viseras’s termination benefits.

Messrs. Reynal and Schiesl

Under the terms of their offer letters, if the Company terminates either of Messrs. Reynal’s or Schiesl’s employment without Cause (as defined below) or either of Messrs. Reynal or Schiesl terminates his employment with us for Good Reason (as defined below), subject in Mr. Reynal’s case to his continued compliance with the restrictive covenants in his management equity agreements, in Mr. Schiesl’s case to certain provisions in the Severance Plan, and in either case to the NEO’s execution of a customary waiver and release agreement, he will be entitled to receive:

•

Continued payment over a 12-month period (the “Severance Period”) of the sum of (x) his annual base salary and (y) the annual incentive award under the MIP, if any, earned in respect of our fiscal year preceding the fiscal year in which the termination date occurs, payable in substantially equal monthly installments over the Severance Period; and

•

Continued group health coverage (on the same basis as actively employed employees of the Company), subject to the NEO’s electing to receive benefits under COBRA, for 12 months following the date his employment terminates (or, if earlier, through the date the NEO becomes employed by another employer and eligible for health insurance coverage at such employer).

Mr. Herndon

Under the terms of Mr. Herndon’s offer letter, if the Company terminates Mr. Herndon’s employment without Cause or if Mr. Herndon terminates his employment with us for Good Reason, subject to Mr. Herndon’s continued compliance with the restrictive covenants in his management equity agreements and his execution of a customary waiver and release agreement, he will be entitled to receive:

•

Continued payment over a 12-month period (the “Severance Period”) of his annual base salary, payable in substantially equal monthly installments over the Severance Period; and

•

Mr. Snyder

Under the terms of Mr. Snyder’s offer letter, if the Company terminates Mr. Snyder’s employment without Cause or if Mr. Snyder terminates his employment with us for Good Reason, subject to Mr. Snyder’s continued compliance with the restrictive covenants in his management equity agreements and his execution of a customary waiver and release agreement, he will be entitled to receive:

•

Continued payment over a 6-month period (the “Severance Period”) of his annual base salary earned in respect of our fiscal year preceding the fiscal year in which the termination date occurs, payable in substantially equal monthly installments over the Severance Period; and

•

Continued group health coverage (on the same basis as actively employed employees of the Company), subject to his electing to receive benefits under COBRA, for 6 months following the date his employment terminates (or, if earlier, through the date that he becomes employed by another employer and eligible for health insurance coverage at such employer).

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As described above under “Compensation Discussion and Analysis―Compensation Actions Taken in 2018,” in February 2018, we approved an increase to Mr. Snyder’s termination benefits.

In addition to the payments described above, each of our NEOs is entitled to receive a di stribution of all vested amounts under our Excess Contribution Plan. See “―Non-Qualified Deferred Compensation ― Fiscal 2017.”

For purposes of each of the severance arrangements described above:

“Cause” means the occurrence of any of the following with respect to an NEO: (1) a material breach by the NEO of the terms of the Company’s policies, the terms of which have previously been provided to such NEO; (2) any act of theft, misappropriation, embezzlement, fraud or similar conduct by the NEO involving the Company or any of its affiliates; (3) the NEO’s failure to act in accordance with any specific lawful instructions given to the NEO by the board of directors (or any committee thereof) in connection with the performance of the NEO’s duties for the Company or any subsidiary of the Company, which continues beyond ten (10) business days after a written demand for substantial performance is delivered to the NEO by the Company (the “Cure Period”); (4) any damage of a material nature to the business or property of the Company or any affiliate caused by NEO’s willful or grossly negligent conduct which continues beyond the Cure Period (to the extent that, in the board of directors’ reasonable judgment, such breach can be cured); (5) any intentional misconduct by the NEO which is reasonably likely to be materially damaging to the Company without a reasonable good faith belief by the NEO that such conduct was in the best interests of the Company; (6) the conviction or the plea of nolo contendere or the equivalent in respect of any felony or a misdemeanor involving an act of dishonesty, moral turpitude, deceit, or fraud by the NEO; or (7) a knowing and material breach of any written agreement with the Company to which the NEO is a party, which continues beyond the Cure Period (to the extent that, in the board of directors’ reasonable judgment, such breach can be cured). A termination for Cause shall be effective when the Company has given the NEO written notice of its intention to terminate for Cause, describing those acts or omissions that are believed to constitute Cause, and has given the NEO the Cure Period within which to respond.

“Good Reason” means any of the following actions if taken without an NEO’s prior written consent (which will be deemed to have been given if the NEO does not provide written notification of an event described in clauses (1) and (2) within 90 days after the NEO knows or has reason to know of the occurrence of any such event): (1) a material adverse change in the NEO’s position causing it to be of materially less stature, responsibility, or authority or the assignment to the NEO of any material duties inconsistent with the customary duties of the NEO’s position, in each case without the NEO’s written consent (provided that if, after an initial public offering of equity securities of the Company, at a later date the Company or its successor entity ceases to be a publicly traded entity, such fact shall not constitute a change in the NEO’s existing position); (2) the relocation of the offices at which the NEO is principally employed to a location which is more than 50 miles from the offices at which the NEO is principally employed immediately prior to such relocation; or (3) a reduction, without the NEO’s written consent, in the NEO’s base salary or the target bonus amount the NEO is eligible to earn under the MIP; provided, however, that nothing herein shall be construed to guarantee the NEO’s MIP award payable for any fiscal year if the applicable performance targets are not met; and provided, further, that it shall not constitute Good Reason if the Company makes an appropriate pro rata adjustment to the applicable amount payable and targets under the MIP in the event of a change in the fiscal year.

Notwithstanding the foregoing, any event described in clauses (1) or (2) above must be an event that would result in a material negative change in the Executive’s employment relationship with the Company and thus effectively constitute an involuntary termination of employment for purposes of Section 409A of the Code.

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Director Compensation in Fiscal 2017

Name

Fees Earned or

Paid In Cash

($)

Option

Awards

($) ⁽¹⁾

Total

($)

Brandon F. Brahm

―

William P. Donnelly ⁽²⁾

75,000

400,000

475,000

John Humphrey ⁽³⁾

―

William E. Kassling

75,000

⁽²⁾

75,000

Michael V. Marn

75,000

⁽²⁾

75,000

Peter M. Stavros

―

Nickolas Vande Steeg

75,000

⁽²⁾

75,000

Pastor Velasco ⁽⁴⁾

75,000

422,519

⁽²⁾

497,519

Joshua T. Weisenbeck

―

(1)

Represents, as to Mr. Donnelly, the aggregate grant date fair value of option awards granted during 2017 computed in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718 and, as to Mr. Velasco, the incremental fair value, computed as of the modification date, in connection with the modification of his outstanding option award. In May 2017, we granted 44,799 time-vesting options to Mr. Donnelly (the “Donnelly Time Options”). Of the Donnelly Time Options, 22,399 are fully vested and exercisable. The remaining 22,400 Donnelly Time Options will vest and become exercisable on December 31, 2018. In October 2017, in connection with his resignation from our board, Mr. Velasco and the Company agreed that Mr. Velasco’s options would remain outstanding and eligible to vest as if he had continued to provide services to the Company through each applicable vesting date.

In December 2013, we granted 57,534 time-vesting options (the “Director Time Options”) to purchase shares of our common stock at an exercise price of $8.16 per share to each non-employee director who was not associated with our Sponsor: Messrs. Kassling, Marn, Vande Steeg and Velasco. Of the Director Time Options, 46,026 are fully vested and exercisable. The remaining 11,507 Director Time Options will vest and become exercisable on December 31, 2018.

(2)

Mr. Donnelly joined our board of directors in May 2017.

(3)

Mr. Humphrey joined our board of directors in February 2018.

(4)

Mr. Velasco resigned from our board in October 2017. In connection with his resignation, Mr. Velasco and the Company agreed that Mr. Velasco’s options would remain outstanding and eligible to vest as if he had continued to provide services to the Company through each applicable vesting date.

Description of Director Compensation

This section contains a description of the material terms of our compensation arrangements for our non-employee directors in 2017.

Sponsor Directors

Our non-employee directors associated with KKR, including Messrs. Brahm, Stavros and Weisenbeck, received no compensation for their service on our board of directors in 2017.

Messrs. Donnelley, Kassling, Marn, Vande Steeg and Velasco

Each of Messrs. Donnelly, Kassling, Marn, Vande Steeg and Velasco was entitled to receive an annual $75,000 cash retainer for his service on the board of directors in fiscal 2017, payable quarterly in arrears and pro-rated for any portion of a calendar quarter during which he commences or terminates service as a director, as well as reimbursement of his reasonable travel and related expenses associated with attendance at board or committee meetings. In addition, Mr. Donnelly was eligible to receive an annual $25,000 cash retainer for his service as chairperson of the Audit Committee, payable in quarterly installments in arrears and pro-rated for any portion of a calendar quarter during which he commences or terminates service as chairperson of the Audit Committee. The Board of Directors also approved in 2017 an annual $25,000 cash retainer for any non-employee director not associated with KKR who serves as chairperson of the Compensation Committee, payable in quarterly installments in arrears and pro-rated for any portion of a calendar quarter during which such director commences or terminates service as chairperson of the Compensation Committee; however, Mr. Stavros, the chairperson of our Compensation Committee was ineligible to receive compensation for his service.

In connection with his election to our board of directors, Mr. Donnelly received the Donnelly Time Options, a grant of options under the 2013 Stock Incentive Plan with a fair value of $400,000 and vesting and becoming exercisable in equal parts on December 31, 2017 and December 31, 2018.

In addition, in December 2013, we granted each of Messrs. Kassling, Marn, Vande Steeg and Velasco 57,534 Director Time Options pursuant to the 2013 Stock Incentive Plan. Prior to our initial public offering, we also gave our non-employee directors not associated with our sponsor the opportunity to make investments in our common stock, subject to satisfaction of applicable securities law requirements, and each of Messrs. Marn and Vande Steeg has done so.

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The Director Time Options vested and became exercisable or will vest and become exercisable with respect to 20% of such Director Time Options on December 31st of each of 2014, 2015, 2016, 2017 and 2018, subject to the director’s continued service through such date.

Vested Director Time Options and Donnelly Time Options expire upon the earliest to occur of the following events: (1) the tenth anniversary of the date such options were granted; (2) the first anniversary of the cessation of the director’s service to the Company because of death or Disability (as defined in the option award agreement); (3) one hundred eighty (180) days after the cessation of the director’s service to the Company without Cause (as defined in the option award agreement) (except due to death or Disability); (4) the date the director’s service is terminated by the Company for Cause; or (5) pursuant to the repurchase rights in the Director Stockholder’s Agreement described below. In addition, at the discretion of the Company, options may be cancelled at the effective date of a merger, consolidation, or other transaction or capital change of the Company, in accordance with the terms of the 2013 Stock Incentive Plan, in exchange for a payment (payable in cash or other consideration depending on the terms of the transaction) per share equal to the excess of (x) the per share consideration paid to stockholders of the Company in the transaction over (y) the exercise price of the option.

Except as described below with respect to Mr. Velasco’s Director Time Options, the Director Time Options and the Donnelly Time Options will not become exercisable as to any additional shares following the cessation of director’s service to the Company for any reason except in connection with a Change in Control. Notwithstanding the foregoing, immediately pri or to any Change in Control (as defined in “Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards in 2017― Terms of Equity Awards”), any unvested portion of the Director Time Options and Donnelly Time Options shall vest and bec ome immediately exercisable as to 100% of such Time Options.

On October 23, 2017, in connection with his resignation from our board of directors, we agreed to allow Mr. Velasco’s unvested Director Time Options to remain outstanding and eligible to vest following Mr. Velasco’s resignation as if Mr. Velasco had continued to provide services to the Company through each applicable vesting date. The incremental fair value in connection with such modification is reflected in the “Option Awards” column of the “Director Compensation in Fiscal 2017” table above.

In connection with their option awards, each of Messrs. Donnelly, Kassling, Marn, Vande Steeg and Velasco became party to a Director Stockholder’s Agreement.

Under the Director Stockholder’s Agreement, shares of our common stock beneficially owned by our directors are generally nontransferable prior to the earlier of (i) a Change in Control or (ii) the fifth anniversary of the effective date of the applicable Director Stockholder’s Agreement.

Our directors party to a Director Stockholder’s Agreement have limited “piggyback” registration rights with respect to shares of our common stock, provided that in lieu of piggyback rights where such rights would otherwise be available, our board of directors, in its sole discretion, may elect to waive the transfer restrictions (other than any such restrictions contained in an underwriters’ lock-up or in connection with a public offering) on the number of shares of Common Stock that would have been subject to such piggyback rights.

Pursuant to the terms of the Director Stockholder’s Agreement, the directors party to such agreement are subject to covenants not to (1) disclose confidential information, (2) solicit customers and certain employees, consultants and independent contractors of the Company, (3) compete with the Company and (4) disparage the Company.

Mr. Humphrey

Mr. Humphrey, who joined our Board on February 7, 2018, will be entitled to receive the compensation described below under “Director Compensation in 2018.” However, while our directors who served prior to 2018 will not receive their first annual equity grant until 2019, Mr. Humphrey will receive in 2018 an award of restricted stock having a fair market value of $125,000 which vests on the anniversary of the grant date.

Director Compensation in 2018

Following a competitive market assessment of non-employee director compensation conducted by Pearl Meyer, the Board adopted the following director compensation program for each of our non-employee directors not associated with KKR:

Cash retainer of $75,000, payable quarterly in arrears;

Additional cash retainer of $25,000 payable quarterly in arrears for serving as the chairperson of our Audit Committee or $12,500 payable quarterly in arrears for serving as the chairperson of our Compensation Committee; and

An annual equity award having a fair market value of $125,000 payable in restricted stock which vests on the anniversary of the grant date.

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Our directors will not be paid any fees for attending meetings, however, our directors will be reimbursed for reasonable travel and related expenses associated with attendance at board or committee meetings. Because each of our non-employee directors not associated with KKR other than Mr. Humphrey was granted an equity award at or before our initial public offering, such directors will not receive their first equity awards under our newly-adopted director compensation program until 2019.

Compensation Committee Interlocks and Insider Participation

During 2017, none of the members of our Compensation Committee has at any time been one of our executive officers or employees. None of our executive officers currently serves, or has served during the last completed fiscal year, on the compensation committee or board of directors of any other entity that has one or more executive officers serving as a member of our Board of Directors or Compensation Committee. We are parties to certain transactions with KKR described below under “Item 13. Certain Relations hips and Related Transactions, and Director Independence―Transactions with Related Persons”.

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ITEM 12.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

Equity Compensation Plan Information

The following table provides information as of December 31, 2017 about our common stock that may be issued upon the exercise of options, warrants and rights granted to employees, consultants or directors under all of our existing equity compensation plans including our 2013 Stock Incentive Plan and 2017 Omnibus Incentive Plan. All equity compensation plans are described more fully in Note 15 “Stock-Based Compensation Plans” to the Consolidated Financial Statements in Item 8 of this Annual Report on Form 10-K.

Plan Category	Number of Securities to be issued upon Exercise of Outstanding Options, Warrants And Rights ⁽¹⁾		Weighted Average Exercise Price of Outstanding Options, Warrants and Rights		Number of Securities Remaining Available for Future Issuance under Equity Compensation Plans (excluding Securities reflected in the first column) ⁽²⁾
Equity compensation plans approved by securityholders	12,134,766		$9.58		8,897,879

(1)

Total includes 11,986,363 stock options and 148,403 share-settled stock appreciation rights under the Company's 2013 Stock Incentive Plan.

(2)

These shares are available for grant as of December 31, 2017 under the Company's 2017 Omnibus Incentive Plan. This includes 8,550,000 shares initially authorized for issuance under the Company's 2017 Omnibus Incentive Plan and shares subject to awards under the Company's 2013 Stock Incentive Plan that expired or were otherwise forfeited or terminated in accordance with their terms without the delivery of shares of the Company's common stock in settlement thereof.

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ITEM 13.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Except as set forth below, the information required by this item will be included in our definitive proxy statement for the 2018 Annual Meeting of Stockholders and is incorporated herein by reference. Gardner Denver Holdings, Inc. will file such definitive proxy statement with the SEC pursuant to Regulation 14A within 120 days of the fiscal year ended December 31, 2017.

Arrangements with Our Executive Officers, Directors and Advisors

We have entered into letter agreements with certain members of management, including each of our executive officers, and our directors and certain advisors, pursuant to which such individuals agreed to invest in our stock and/or through the purchase of our shares with cash. In addition, our Board of Directors granted options to purchase shares of our common stock to certain members of management and key employees, including to our executive officers. In connection with the grants of new options described above, the participating members of our management, including our executive officers, were required to enter into a Management Stockholder’s Agreement as well as a stock option agreement, as applicable.

Below is a brief summary of the principal terms of the Management Stockholder’s Agreements, the Director Stockholder’s Agreements and the Advisor Stockholder’s Agreements, which are qualified in their entirety by reference to the agreements themselves, forms of which are filed as exhibits to this Annual Report on Form 10-K.

Management, Director and Advisor Stockholder’s Agreements

The Management Stockholder’s Agreements impose significant restrictions on transfers of shares of our common stock. Generally, shares held by our management are nontransferable by any means at any time prior to the earlier of (i) the occurrence of a Change in Control (as defined in the Management Stockholder’s Agreements) or (ii) the later to occur of (a) the fifth anniversary of the execution of the applicable Management Stockholder’s Agreement or (b) the consummation of an Initial Public Offering (as defined in the Management Stockholder’s Agreements). These transfer restrictions are subject to certain exceptions, including transfers approved by our Board of Directors; transfers upon the death or Disability (as defined in the Management Stockholder’s Agreements) of the holder; transfers to immediate family members or estate planning vehicles, provided such transferees become party to the applicable Management Stockholder’s Agreement; or repurchases of such shares by the Company.

Additionally, management stockholders have limited “piggyback” registration rights with respect to certain registered offerings conducted by the Company. The maximum number of shares of common stock which a management stockholder may register is generally proportionate with the percentage of common stock being sold by certain affiliates of KKR (relative to their holdings thereof). The Management Stockholder’s Agreements also contain certain lock-up provisions in the event that any shares are offered to the public pursuant to an effective registration statement under the Securities Act.

The Director Stockholder’s Agreements and Advisor Stockholder’s Agreements are substantially similar to the Management Stockholder’s Agreements. In addition to certain exceptions to transfer restrictions related to piggyback rights available to Management Stockholders, the Director and Advisor Stockholder’s Agreements further provide that in lieu of piggyback registration rights in connection with a public offering in which such piggyback rights would otherwise be available, the Board of Directors may waive transfer restrictions with respect to the number of shares that would have been subject to such piggyback rights.

Arrangements with KKR

Stockholders Agreement

In connection with our initial public offering, we entered into a stockholders agreement with certain affiliates of KKR. This agreement grants affiliates of KKR the right to nominate to our Board of Directors a number of designees equal to: (i) at least a majority of the total number of directors comprising our Board of Directors at such time as long as affiliates of KKR beneficially own at least 50% of the shares of our common stock entitled to vote generally in the election of our directors; (ii) at least 40% of the total number of directors comprising our Board of Directors at such time as long as affiliates of KKR beneficially own at least 40% but less than 50% of the shares of our common stock entitled to vote generally in the election of our directors; (iii) at least 30% of the total number of directors comprising our Board of Directors at such time as long as affiliates of KKR beneficially own at least 30% but less than 40% of the shares of our common stock entitled to vote generally in the election of our directors; (iv) at least 20% of the total number of directors comprising our Board of Directors at such time as long as affiliates of KKR beneficially own at least 20% but less 30% of the shares of our common stock entitled to vote generally in the election of our directors; and (v) at least 10% of the total number of directors comprising our Board of Directors at such time as long as affiliates of KKR beneficially own at least 5% but less than 20% of the shares of our common stock entitled to vote generally in the election of our directors. For purposes of calculating the number of directors that affiliates of KKR are entitled to nominate pursuant to the formula outlined above, any fractional amounts would be rounded up to the nearest whole number and the calculation would be made on a pro forma basis, taking into account any increase in the size of our Board of Directors (e.g., one and one quarter (1 ^1/4 ) directors shall equate to two directors). In addition, in the event a vacancy on the Board of Directors is created by the death, disability, retirement or resignation of a Sponsor director designee, affiliates of KKR shall, to the fullest extent permitted by law, have the right to have the vacancy filled by a new Sponsor director-designee. In addition, the stockholders agreement grants to KKR special governance rights, for as long as KKR maintains ownership of at least 30% of our outstanding common stock, including rights of approval over certain corporate and other transactions such as mergers or other transactions involving a change in control and certain rights regarding the appointment of our chief executive officer.

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Registration Rights Agreement

In connection with the KKR Transaction, certain affiliates of KKR entered into a registration rights agreement with us. In connection with the completion of our initial public offering, we and KKR entered into an amended and restated registration rights agreement. The amended and restated registration rights agreement grants such affiliates of KKR the right to cause us to register shares of our common stock held by it under the Securities Act and, if requested, to use our reasonable best efforts (if we are not eligible to use an automatic shelf registration statement at the time of filing) to maintain a shelf registration statement effective with respect to such shares. Certain affiliates of KKR are also entitled to participate on a pro rata basis in any registration of our common stock under the Securities Act that we may undertake. The amended and restated registration rights agreement also provides that we will pay certain expenses relating to such registrations and indemnify certain affiliates of KKR and members of management participating in any offering against certain liabilities, which may arise under the Securities Act, the Exchange Act, any state securities law or any rule or regulation thereunder applicable to us.

Monitoring Agreement

In connection with the KKR Transaction, we entered into a monitoring agreement with KKR pursuant to which KKR provided various management and advisory services to us and our direct and indirect divisions, subsidiaries, parent entities and controlled affiliates and received fees and reimbursements of related out-of-pocket expenses. We paid management fees of $17.3 million to KKR for the year ended December 31, 2017. In May 2017, the monitoring agreement was terminated in accordance with its terms and we paid a termination fee of approximately $16.2 million.

Indemnification Agreement

In connection with entering into the monitoring agreement, we also entered into a separate indemnification agreement with KKR and certain of its affiliates, which provides customary exculpation and indemnification provisions in favor of KKR and such affiliates in connection with the services provided to us under the monitoring, transaction fee and syndication fee agreements.

Relationship with KKR Capstone Americas LLC

We have utilized and may continue to utilize KKR Capstone Americas LLC and/or its affiliates (“KKR Capstone”), a consulting company that works exclusively with KKR’s portfolio companies, for consulting services, and have paid to KKR Capstone related fees and expenses. KKR Capstone is not a subsidiary or affiliate of KKR. KKR Capstone operates under several consulting agreements with KKR & Co. and uses the “KKR” name under license from KKR & Co.

Relationship with KKR Credit

Since 2014, investment funds or accounts managed or advised by the global credit business of KKR (“KKR Credit”) were participating lenders under our existing credit agreements and holders of notes issued by us, and as of December 31, 2017, had received in aggregate principal payments of approximately $0.5 million and interest payments of approximately $4.0 million. As of December 31, 2017, investment funds or accounts managed or advised by KKR Credit held a position in the debt of the Company.

Financing Arrangements with Related Parties

In May 2017, KKR Capital Markets LLC, an affiliate of KKR, acted as an underwriter in connection with the initial public offering of the Company’s stock and received underwriter discounts and commissions of approximately $8.9 million. In August 2017, KKR Capital Markets LLC received $1.5 million for services rendered in connection with a debt refinancing transaction. In November 2017, KKR Capital Markets LLC acted as an underwriter in connection with an offering of Company’s stock by certain selling shareholders, and earned underwriter discounts and commissions of approximately $3.5 million.

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Policies and Procedures for Related Person Transactions

Our Board of Directors has adopted a written statement of policy regarding transactions with related persons, which we refer to as our “related person transaction policy.” Our related person transaction policy requires that (a) any “related person transaction” (defined as any transaction that is anticipated would be reportable by us under Item 404(a) of Regulation S-K in which we were or are to be a participant and the amount involved exceeds $120,000 and in which any related person had or will have a direct or indirect material interest) be approved or ratified by an approving body comprised of the disinterested members of our Board of Directors or any committee of the Board of Directors (provided that a majority of the members of the Board of Directors or such committee, respectively, are disinterested) and (b) any employment relationship or transaction involving an executive officer and any related compensation be approved by the Compensation Committee of the Board of Directors or recommended by the Compensation Committee to the Board of Directors for its approval. In connection with the review and approval or ratification of a related person transaction:

management must disclose to the committee or disinterested directors, as applicable, the name of the related person and the basis on which the person is a related person, the material terms of the related person transaction, including the approximate dollar value of the amount involved in the transaction, and all the material facts as to the related person’s direct or indirect interest in, or relationship to, the related person transaction;

management must advise the committee or disinterested directors, as applicable, as to whether the related person transaction complies with the terms of our agreements governing our material outstanding indebtedness that limit or restrict our ability to enter into a related person transaction;

management must advise the committee or disinterested directors, as applicable, as to whether the related person transaction will be required to be disclosed in our applicable filings under the Securities Act or the Exchange Act, and related rules, and, to the extent required to be disclosed, management must ensure that the related person transaction is disclosed in accordance with such Acts and related rules; and

management must advise the committee or disinterested directors, as applicable, as to whether the related person transaction constitutes a “personal loan” for purposes of Section 402 of the Sarbanes-Oxley Act of 2002.

In addition, the related person transaction policy provides that the committee or disinterested directors, as applicable, in connection with any approval or ratification of a related person transaction involving a non-employee director or director nominee, should consider whether such transaction would compromise the director or director nominee’s status as an “independent,” “outside,” or “non-employee” director, as applicable, under the rules and regulations of the SEC, the NYSE and the Internal Revenue Code.

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ITEM 14.

PRINCIPAL ACCOUNTING FEES AND SERVICES

Audit Fees

In connection with the audit of the 2017 financial statements, we entered into an agreement with Deloitte & Touche LLP which sets forth the terms by which Deloitte & Touche LLP would perform audit services for the Company.

The following tables sets forth the aggregate fees for professional services provided by Deloitte & Touche LLP for the audit of our financial statements for the fiscal years ended December 31, 2017 and 2016 and fees billed for other services rendered by Deloitte & Touche LLP for those periods, all of which were approved by the Audit Committee.

	For the Years Ended December 31, (in thousands)
	2017		2016
Fees:
Audit fees	$	2,952	$	3,019
Audit Related fees ⁽¹⁾		773		75
Tax fees ⁽²⁾		298		344
All other fees ⁽³⁾		298		-
Total	$	4,321	$	3,438

⁽¹⁾

Audit related fees include fees related to the Company’s public offerings, Sarbanes-Oxley readiness and a license for an accounting research tool.

⁽²⁾

Tax fees include fees for income tax compliance and transfer pricing services.

⁽³⁾

All other fees include fees related to professional services rendered in connection with the Company’s issuance of deferred stock units during 2017.

The Audit Committee of the Board considered whether providing the non-audit services included in this table was compatible with maintaining Deloitte & Touche LLP’s independence and concluded that it was.

Consistent with SEC policies regarding auditor independence and our Audit Committee’s charter, the Audit Committee has responsibility for engaging, setting compensation for and reviewing the performance of the independent registered public accounting firm. In exercising this responsibility, the Audit Committee has established procedures relating to the approval of all audit and non-audit services that are to be performed by our independent registered public accounting firm and pre-approves all audit and permitted non-audit services provided by any independent registered public accounting firm prior to each engagement.

PART IV

ITEM 15.

EXHIBITS, FINANCIAL STATEMENT SCHEDULE

Financial Statements, Financial Statement Schedule and Exhibits

The consolidated financial statements listed in the accompanying index to consolidated financial statements are filed as part of this Annual Report on Form 10-K.

All financial statement schedules are omitted since the required information is not present or is not present in amounts sufficient to require submission of the schedules, or because the information required is included in the consolidated financial statements and notes thereto.

The exhibits listed in the accompanying exhibit index are filed as part of this Annual Report on Form 10-K.

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Index to Consolidated Financial Statements

Consolidated Statements of Operations – For the years ended December 31, 2017, 2016 and 2015	53
Consolidated Statements of Comprehensive Income (Loss) – For the years ended December 31, 2017, 2016 and 2015	54
Consolidated Balance Sheets – As of December 31, 2017 and 2016	55
Consolidated Statements of Stockholders’ Equity – For the years ended December 31, 2017, 2016 and 2015	56
Consolidated Statements of Cash Flows – For the years ended December 31, 2017, 2016 and 2015	57
Notes to Consolidated Financial Statements	58
Report of Independent Registered Public Accounting Firm	101

Schedule to Consolidated Financial Statements

Schedule I – Condensed Financial Statements Gardner Denver Holdings, Inc. (Parent Company Only)

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Exhibits

Exhibit Number		Exhibit Description
3.1		Second Amended and Restated Certificate of Incorporation of Gardner Denver Holdings, Inc. (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on May 17, 2017 (File no. 001-38095))

3.2		Amended and Restated Bylaws of Gardner Denver Holdings, Inc. (incorporated by reference to Exhibit 3.2 to the Registrant’s Current Report on Form 8-K filed on May 17, 2017 (File no. 001-38095))

4.1		Form of Common Stock Certificate (incorporated by reference to Exhibit 4.1 to Amendment No. 4 to the Registrant’s Registration Statement on Form S-1 filed on May 3, 2017 (File no. 333-216320))

4.2		Amended and Restated Registration Rights Agreement, dated as of May 17, 2017, by and among KKR Renaissance Aggregator L.P.; KKR Renaissance Aggregator GP LLC; Gardner Denver Holdings, Inc. and each of the other parties thereto (incorporated by reference to Exhibit 4.2 to the Registrant’s Current Report on Form 8-K filed on May 17, 2017 (File no. 001-38095))

10.1†		2013 Stock Incentive Plan for Key Employees of Gardner Denver Holdings, Inc. (formerly known as Renaissance Parent Corp.) and its Subsidiaries (incorporated by reference to Exhibit 10.1 to the Registrant’s Registration Statement on Form S-1 filed on February 28, 2017 (File no. 333-216320))

10.2		Senior Secured Credit Agreement, dated as of July 30, 2013, among Renaissance Acquisition Corp., the foreign borrowers described therein, Gardner Denver Holdings, Inc. (formerly known as Renaissance Parent Corp.), UBS AG, Stamford Branch, as administrative agent, and other agents and lenders party thereto (incorporated by reference to Exhibit 10.2 to the Registrant’s Registration Statement on Form S-1 filed on February 28, 2017 (File no. 333-216320))

10.3		Amendment No. 1 to the Senior Secured Credit Agreement, dated as of March 4, 2016, among Gardner Denver Holdings, Inc. (formerly known as Renaissance Parent Corp.), Gardner Denver, Inc., GD German Holdings II GmbH (as successor in interest to Gardner Denver Holdings GmbH & Co. KG), GD First (UK) Limited, UBS AG, Stamford Branch, as administrative agent, and other agents and lenders party thereto (incorporated by reference to Exhibit 10.3 to the Registrant’s Registration Statement on Form S-1 filed on February 28, 2017 (File no. 333-216320))

10.4		Amendment No. 2 to the Credit Agreement, dated as of August 17, 2017, among Gardner Denver Holdings, Inc., Gardner Denver, Inc., GD German Holdings II GmbH, GD First (UK) Limited, UBS AG, Stamford Branch, as administrative agent, and the other parties and lenders party thereto (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on August 18, 2017 (File no. 001-38095))

10.5		Pledge Agreement, dated as of July 30, 2013, among Gardner Denver Holdings, Inc. (formerly known as Renaissance Parent Corp.), Renaissance Acquisition Corp., the subsidiary pledgors identified therein and UBS AG, Stamford Branch, as collateral agent (incorporated by reference to Exhibit 10.4 to the Registrant’s Registration Statement on Form S-1 filed on February 28, 2017 (File no. 333-216320))

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Exhibit Number		Exhibit Description
10.6		Security Agreement, dated as of July 30, 2013, among Gardner Denver Holdings, Inc. (formerly known as Renaissance Parent Corp.), Renaissance Acquisition Corp., the subsidiary grantors identified therein and UBS AG, Stamford Branch, as collateral agent (incorporated by reference to Exhibit 10.5 to the Registrant’s Registration Statement on Form S-1 filed on February 28, 2017 (File no. 333-216320))

10.7		Guarantee Agreement, dated as of July 30, 2013, among Gardner Denver Holdings, Inc. (formerly known as Renaissance Parent Corp.), the subsidiary guarantors identified therein and UBS AG, Stamford Branch, as administrative agent and collateral agent (incorporated by reference to Exhibit 10.6 to the Registrant’s Registration Statement on Form S-1 filed on February 28, 2017 (File no. 333-216320))

10.8		Receivables Financing Agreement, dated as of May 17, 2016, by and among Gardner Denver Finance II LLC, Gardner Denver, Inc., as initial servicer, the various lenders and LC participants from time to time party thereto, PNC Bank, National Association, as LC bank and administrative agent, and PNC Capital Markets LLC, as structuring agent. (incorporated by reference to Exhibit 10.7 to the Registrant’s Registration Statement on Form S-1 filed on February 28, 2017 (File no. 333-216320))

10.9		Monitoring Agreement, dated as of July 30, 2013, by and between Gardner Denver Holdings, Inc. (formerly known as Renaissance Parent Corp.) and Kohlberg Kravis Roberts & Co. L.P. (incorporated by reference to Exhibit 10.8 to Amendment No. 1 to the Registrant’s Registration Statement on Form S-1 filed on April 4, 2017 (File no. 333-216320))

10.10		First Amendment, dated as of June 9, 2014, to the Monitoring Agreement, dated as of July 30, 2013, by and between Garner Denver Holdings, Inc. (formerly known as Renaissance Parent Corp.) and Kohlberg Kravis Roberts & Co. L.P. (incorporated by reference to Exhibit 10.9 to Amendment No. 1 to the Registrant’s Registration Statement on Form S-1 filed on April 4, 2017 (File no. 333-216320))

10.11		Indemnification Agreement, dated as of July 30, 2013, by and among KKR Renaissance Aggregator L.P.; KKR Renaissance Aggregator GP LLC; Gardner Denver Holdings, Inc. (formerly known as Renaissance Parent Corp.); Gardner Denver, Inc. and Kohlberg Kravis Roberts & Co. L.P. (incorporated by reference to Exhibit 10.10 to the Registrant’s Registration Statement on Form S-1 filed on February 28, 2017 (File no. 333-216320))

10.12		Transaction Fee Letter, dated as of July 30, 2013, by and between Kohlberg Kravis Roberts & Co. L.P. and Gardner Denver Holdings, Inc. (formerly known as Renaissance Parent Corp.) (incorporated by reference to Exhibit 10.11 to the Registrant’s Registration Statement on Form S-1 filed on February 28, 2017 (File no. 333-216320))

10.13		Stockholders Agreement, dated as of May 17, 2017, between Gardner Denver Holdings, Inc. and KKR Renaissance Aggregator L.P. (incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed on May 17, 2017 (File no. 001-38095))

10.14 †		Form of Management Stockholder’s Agreement (incorporated by reference to Exhibit 10.13 to the Registrant’s Registration Statement on Form S-1 filed on February 28, 2017 (File no. 333-216320))

10.15 †		Form of Director Stockholder’s Agreement (incorporated by reference to Exhibit 10.14 to the Registrant’s Registration Statement on Form S-1 filed on February 28, 2017 (File no. 333-216320))

10.16		Form of Advisor Stockholder’s Agreement (incorporated by reference to Exhibit 10.15 to the Registrant’s Registration Statement on Form S-1 filed on February 28, 2017 (File no. 333-216320))

10.17 †		Form of Director Stock Option Agreement under the 2013 Stock Incentive Plan for Key Employees of Gardner Denver Holdings, Inc. (formerly known as Renaissance Parent Corp.) and its Subsidiaries (incorporated by reference to Exhibit 10.16 to the Registrant’s Registration Statement on Form S-1 filed on February 28, 2017 (File no. 333-216320))

10.18†		Form of Management Stock Option Agreement (December 2013) under the 2013 Stock Incentive Plan for Key Employees of Gardner Denver Holdings, Inc. (formerly known as Renaissance Parent Corp.) and its Subsidiaries (incorporated by reference to Exhibit 10.17 to the Registrant’s Registration Statement on Form S-1 filed on February 28, 2017 (File no. 333-216320))

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Exhibit Number		Exhibit Description
10.19†		Form of Management Stock Option Agreement (May 2015) under the 2013 Stock Incentive Plan for Key Employees of Gardner Denver Holdings, Inc. (formerly known as Renaissance Parent Corp.) and its Subsidiaries (incorporated by reference to Exhibit 10.18 to the Registrant’s Registration Statement on Form S-1 filed on February 28, 2017 (File no. 333-216320))

10.20†		Form of Management Stock Option Agreement (May 2016, 3 year vesting) under the 2013 Stock Incentive Plan for Key Employees of Gardner Denver Holdings, Inc. (formerly known as Renaissance Parent Corp.) and its Subsidiaries (incorporated by reference to Exhibit 10.19 to the Registrant’s Registration Statement on Form S-1 filed on February 28, 2017 (File no. 333-216320))

10.21†		Form of Management Stock Option Agreement (May 2016, 5 year vesting) under the 2013 Stock Incentive Plan for Key Employees of Gardner Denver Holdings, Inc. (formerly known as Renaissance Parent Corp.) and its Subsidiaries (incorporated by reference to Exhibit 10.20 to the Registrant’s Registration Statement on Form S-1 filed on February 28, 2017 (File no. 333-216320))

10.22†		Form of Management Stock Option Agreement (December 2016) under the 2013 Stock Incentive Plan for Key Employees of Gardner Denver Holdings, Inc. (formerly known as Renaissance Parent Corp.) and its Subsidiaries (incorporated by reference to Exhibit 10.21 to the Registrant’s Registration Statement on Form S-1 filed on February 28, 2017 (File no. 333-216320))

10.23†		Form of Amendment to Stock Option Agreement or Stock Appreciation Right Agreement under the 2013 Stock Incentive Plan for Key Employees of Gardner Denver Holdings, Inc. (formerly known as Renaissance Parent Corp.) and its Subsidiaries (incorporated by reference to Exhibit 10.22 to the Registrant’s Registration Statement on Form S-1 filed on February 28, 2017 (File no. 333-216320))

10.24†		Stock Option Agreement, dated as of March 7, 2014, between under the 2013 Stock Incentive Plan for Key Employees of Gardner Denver Holdings, Inc. (formerly known as Renaissance Parent Corp.) between Gardner Denver Holdings, Inc. (formerly known as Renaissance Parent Corp.) and Andrew Schiesl (incorporated by reference to Exhibit 10.23 to the Registrant’s Registration Statement on Form S-1 filed on February 28, 2017 (File no. 333-216320))

10.25†		Form of Sale Participation Agreement (incorporated by reference to Exhibit 10.24 to the Registrant’s Registration Statement on Form S-1 filed on February 28, 2017 (File no. 333-216320))

10.26†		Offer Letter, dated April 17, 2015, between Vicente Reynal and Gardner Denver, Inc. (incorporated by reference to Exhibit 10.25 to the Registrant’s Registration Statement on Form S-1 filed on February 28, 2017 (File no. 333-216320))

10.27†		Offer Letter, dated November 19, 2015, between Vicente Reynal and Gardner Denver, Inc. (incorporated by reference to Exhibit 10.26 to the Registrant’s Registration Statement on Form S-1 filed on February 28, 2017 (File no. 333-216320))

10.28†		Offer Letter, dated November 18, 2015, between Todd Herndon and Gardner Denver, Inc. (incorporated by reference to Exhibit 10.27 to the Registrant’s Registration Statement on Form S-1 filed on February 28, 2017 (File no. 333-216320))

10.29†		Offer Letter, dated September 2, 2016, between Todd Herndon and Gardner Denver, Inc. (incorporated by reference to Exhibit 10.28 to the Registrant’s Registration Statement on Form S-1 filed on February 28, 2017 (File no. 333-216320))

10.32†		Offer Letter, dated November 25, 2013, between Gardner Denver, Inc. and Andy Schiesl (incorporated by reference to Exhibit 10.31 to the Registrant’s Registration Statement on Form S-1 filed on February 28, 2017 (File no. 333-216320))

10.33†		Employment Contract, dated April 29, 2016, between Gardner Denver Deutschland GmbH and Enrique Mifiarro Viseras (incorporated by reference to Exhibit 10.32 to the Registrant’s Registration Statement on Form S-1 filed on February 28, 2017 (File no. 333-216320))

133

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Exhibit Number		Exhibit Description
10.34†		Offer Letter, dated March 16, 2016, between Gardner Denver Deutschland GmbH and Enrique Mifiarro Viseras (incorporated by reference to Exhibit 10.33 to the Registrant’s Registration Statement on Form S-1 filed on February 28, 2017 (File no. 333-216320))

10.37†		2017 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed on May 17, 2017 (File no. 001-38095))

10.38		Monitoring Fee Termination Agreement, dated as of May 17, 2017, between Gardner Denver Holdings, Inc. Kohlberg Kravis Roberts & Co. L.P. (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on May 17, 2017 (File no. 001-38095))

10.39†		Offer letter dated December 18, 2015, between Gardner Denver, Inc. and Neil Snyder.

10.40†		Gardner Denver, Inc. Supplemental Excess Defined Contribution Plan (December, 2017 Restatement)

10.41†		Form of Director Restricted Stock Grant Notice and Agreement under the Gardner Denver Holdings, Inc. 2017 Omnibus Incentive Plan

10.42†		Form of Stock Option Grant Notice and Agreement under the Gardner Denver Holdings, Inc. 2017 Omnibus Incentive Plan

21		Subsidiaries of Gardner Denver Holdings, Inc. as of December 31, 2017

23		Consent of Independent Registered Public Accounting Firm

31.1		Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or 15d-14(a)

31.2		Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a)

32.1		Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350

32.2		Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350

† Identifies exhibits that consist of a management contract or compensatory plan or arrangement.

ITEM 16.

FORM 10-K SUMMARY

None

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.

		Gardner Denver Holdings, Inc.

	By:	/s/ Vicente Reynal
		Name: Vicente Reynal
		Title: Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below on the 16th day of February 2018 by the following persons on behalf of the registrant and in the capacities indicated.

Signature		Capacity

/s/ Vicente Reynal		Chief Executive Officer and Director
Vicente Reynal		(principal executive officer)

/s/ Philip T. Herndon		Vice President and Chief Financial Officer
Philip T. Herndon		(principal financial officer)

/s/ Mark R. Sweeney		Vice President, Chief Accounting Officer and Corporate Controller
Mark R. Sweeney		(principal accounting officer)

/s/ Peter Stavros		Director
Peter Stavros

/s/ Brandon F. Brahm		Director
Brandon F. Brahm

/s/ William P. Donnelly		Director
William P. Donnelly

/s/ John Humphrey		Director
John Humphrey

/s/ William E. Kassling		Director
William E. Kassling

/s/ Michael V. Marn		Director
Michael V. Marn

/s/ Nickolas Vande Steeg		Director
Nickolas Vande Steeg

/s/ Joshua T. Weisenbeck		Director
Joshua T. Weisenbeck

135

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SCHEDULE 1 – GARDNER DENVER HOLDINGS, INC

(PARENT COMPANY ONLY)

STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(Dollars in millions)

	For the Years Ended December 31,
	2017			2016			2015

Revenues	$	-		$	-		$	-
Cost of sales		-			-			-
Gross Profit		-			-			-
Operating costs		19.5			12.9			7.4
Other operating expense, net		175.0			-			-
Operating Loss		(194.5	)		(12.9	)		(7.4	)
Interest income		20.7			-			-
Other income, net		-			-			-
Loss Before Income Taxes		(173.8	)		(12.9	)		(7.4	)
Income tax benefit		(16.1	)		(4.5	)		(2.5	)
Loss of Parent Company		(157.7	)		(8.4	)		(4.9	)
Equity in undistributed income (loss) of subsidiaries		176.1			(28.2	)		(346.3	)
Net Income (Loss)		18.4			(36.6	)		(351.2	)
Other comprehensive income (loss)		142.6			(76.8	)		(130.3	)
Comprehensive Income (Loss)	$	161.0		$	(113.4	)	$	(481.5	)

136

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SCHEDULE 1 – GARDNER DENVER HOLDINGS, INC

(PARENT COMPANY ONLY)

BALANCE SHEETS

(Dollars in millions)

	As of December 31,
	2017			2016
Assets
Current assets:
Cash and cash equivalents	$	0.2		$	0.3
Total current assets		0.2			0.3
Equity in net assets of subsidiaries		605.9			276.9
Intercompany receivables		865.1			-
Deferred tax assets		22.2			7.0
Total assets	$	1,493.4		$	284.2

Liabilities and Stockholders' Equity
Intercompany payables	$	-		$	18.2
Other liabilities		16.6			0.1
Total liabilities		16.6			18.3
Stockholders' equity:
Common stock, $0.01 par value; 1,000,000,000 shares authorized;198,377,237 and 150,552,360 shares issued at December 31, 2017		2.0			1.5
Capital in excess of par value		2,275.4			1,222.4
Accumulated deficit		(577.8	)		(596.2	)
Treasury stock at cost; 2,159,266 and 1,897,454 shares at
December 31, 2017 and 2016, respectively		(23.0	)		(19.4	)
Accumulated other comprehensive loss		(199.8	)		(342.4	)
Total Gardner Denver Holdings, Inc. stockholders' equity		1,476.8			265.9
Total liabilities and stockholders' equity	$	1,493.4		$	284.2

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SCHEDULE 1 – GARDNER DENVER HOLDINGS, INC

(PARENT COMPANY ONLY)

CONDENSED STATEMENTS OF CASH FLOWS

(Dollars in millions)

	For the Years Ended December 31,
	2017			2016			2015

Cash Flows From Operating Activities:
Net cash provided by (used in) operating activities	$	9.2		$	11.1		$	(2.0	)

Cash Flows From Investing Activities:
Advances to subsidiaries		(899.3)			-			-
Net cash used in investing activities		(899.3)			-			-

Cash Flows From Financing Activities:
Purchases of treasury stock		(3.6	)		(14.1	)		(2.1	)
Proceeds from the issuance of common stock		893.6			3.3			4.2
Net cash provided by (used in) financing activities		890.0			(10.9	)		2.1
(Decrease) increase in cash and cash equivalents		(0.1	)		0.2			0.0
Cash and cash equivalents, beginning of year		0.3			0.1			0.0
Cash and cash equivalents, end of year	$	0.2		$	0.3		$	0.1

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SCHEDULE I - GARDNER DENVER HOLDINGS, INC.

(PARENT COMPANY ONLY)

NOTES TO CONDENSED FINANCIAL STATEMENTS

1. Overview and Basis of Presentation

On July 30, 2013, Gardner Denver, Inc. was acquired by an affiliate of Kohlberg Kravis Roberts & Co. L.P. (“KKR”). The acquisition (also referred to as the “Merger”) was effected by the merger of Renaissance Acquisition Corp. with and into Gardner Denver, Inc., with Gardner Denver, Inc. being the surviving corporation. As a result of the Merger, Gardner Denver, Inc. became a wholly-owned subsidiary of Gardner Denver Holdings, Inc. (formerly Renaissance Parent Corp.)

Gardner Denver Holdings, Inc. Parent Company only financial information has been derived from its consolidated financial statements and should be read in conjunction with the consolidated financial statements included in this report. The accounting policies for the registrant are the same as those described in Note 1 in the section, “Notes to the Consolidated Financial Statements”.

2. Subsidiary Transactions

Investment in Subsidiaries

Gardner Denver Holdings, Inc.’s investment in subsidiaries is stated at cost plus equity in undistributed earnings of subsidiaries.

Advances to Subsidiaries

On June 30, 2017, Gardner Denver Holdings Inc, entered into an $899.3 million promissory note receivable from Gardner Denver Inc. The promissory note bears an annual interest rate of 4.5677% and payments are due on last day of December, or the first regular business day immediately following such date, commencing on December 31, 2017. The principal balance may be increased in lieu of payment of interest with the mutual agreement of both the borrower and the lender. Principal shall become due and payable in full on demand.

Dividends and Capital Distributions

There were no dividends received from subsidiaries during the years ended December 31, 2017, 2016 and 2015.

3. Debt

A discussion of long-term debt, including the five-year debt maturity schedule, can be found in Note 10 in the section, “Notes to the Consolidated Financial Statements”. Gardner Denver Holdings, Inc. had no long-term debt obligations as of December 31, 2017 and 2016.

4. Contingencies

For a summary of contingencies, see Note 18 in the section, “Notes to the Consolidated Financial Statements”.

139

Exhibit 10.40

GARDNER DENVER, INC.

SUPPLEMENTAL EXCESS

DEFINED CONTRIBUTION PLAN

(December, 2017 Restatement)

GARDNER DENVER, INC.

SUPPLEMENTAL EXCESS

DEFINED CONTRIBUTION PLAN

(December, 2017 Restatement)

Section		Page

ARTICLE I DEFINITIONS		2

1.1	Definitions	2
1.2	Construction	4

ARTICLE II ELIGIBILITY		5

2.1	Eligibility	5

ARTICLE III SUPPLEMENTAL CONTRIBUTIONS		6

3.1	Employee Pre-tax Contributions	6
3.2	Supplemental Matching Contributions	7
3.3	Supplemental Non-Elective Contributions	7

ARTICLE IV SEPARATE ACCOUNTS		8

4.1	Types of Separate Accounts	8
4.2	Deemed Investments	8

ARTICLE V DISTRIBUTION		9

5.1	Vesting	9
5.2	Time and Form of Payment	9
5.3	Specified Employee Restriction	10
5.4	Preservation of Prior Distribution Rules	10

ARTICLE VI BENEFICIARIES		11

ARTICLE VII ADMINISTRATIVE PROVISIONS		12

7.1	Administration	12
7.2	Powers and Authorities of the Administrator	12
7.3	Indemnification	12

ARTICLE VIII AMENDMENT AND TERMINATION		13

ARTICLE IX ADOPTION BY AFFILIATES		14

ARTICLE X MISCELLANEOUS		15

10.1	Non-Alienation of Benefits	15
10.2	Payment of Benefits to Others	15
10.3	Plan Non-Contractual	15
10.4	Funding	15

10.5	Forfeiture for Cause	15
10.6	Claims of Other Persons	15
10.7	Severability	15
10.8	Governing Law	16
10.9	Tax Withholding	16
10.10	Offset	16
10.11	Claims Review Procedure	16

GARDNER DENVER, INC. SUPPLEMENTAL EXCESS

DEFINED CONTRIBUTION PLAN

(December 2017 Restatement)

WHEREAS , effective as of March 1, 1994, Gardner Denver, Inc. (heretofore known as Gardner Denver Machinery Inc. and hereinafter referred to as the “Company”) established a supplemental retirement plan for the benefit of a select group of management or highly compensated employees employed by the Company or an Affiliate thereof whose benefits under the Gardner Denver, Inc. Retirement Savings Plan are limited by the provisions of Section 401(a)(17) or Section 415 of the Internal Revenue Code of 1986, as amended, or are reduced otherwise due to participation in a deferred compensation program; and

WHEREAS , effective as of September 1, 1998, the Plan was amended and restated; and

WHEREAS , effective as of January 1, 2008, the Plan was amended and restated to incorporate the requirements of Section 409A of the Internal Revenue Code of 1986, as amended, and to make certain other changes;

WHEREAS , effective as of December 31, 2016, the Plan was amended and restated to incorporate amendments made since 2008 and to make certain other changes to reflect the Plan’s administration as in effect in 2016;

WHEREAS , the Company desires to amend and restate the Plan as of December, 2017 to make certain revisions, as permitted by Article VIII of the Plan.

NOW, THEREFORE , the Plan is hereby amended and restated in the manner hereinafter set forth, except that where an earlier date is indicated, and the context so requires, the Plan is amended effective as of such earlier date with respect to such provisions and, notwithstanding the effective date of this amended and restated Plan, the Administrator may implement administrative changes necessary to effectuate the Plan changes prior to such date (such as provide open enrollment forms consistent with the changes described in the Plan).

ARTICLE I

DEFINITIONS

1.1 Definitions

Except as otherwise required by the context, the terms used in the Plan shall have the meaning hereinafter set forth.

The term “ 401(k) Plan ” shall mean the Gardner Denver Retirement Savings Plan or any successor thereto, as amended from time to time.

The term “ Administrator ” shall mean the Committee or a person to whom the Committee has delegated its powers under this Plan to the extent of such delegation.

The term “ Affiliate ” shall mean any member of a controlled group of corporations (as determined under Section 414(b) of the Code) of which the Company is a member; any member of a group of trades or businesses under common control (as determined under Section 414(c) of the Code) with the Company; and any member of an affiliated service group (as determined under Section 414(m) of the Code) of which the Company is a member.

The term “ Basic Contributions ” shall mean Pre-Tax and Roth Matched Contributions under the 401(k) Plan.

The term “ Beneficiary ” shall mean the person(s) who shall be entitled to receive a distribution hereunder in the event a Participant dies before his or her interest under the Plan has been distributed to him in full. The Participant shall be entitled to make (and change) a Beneficiary designation in accordance with the procedures established by the Company.

The term “ Board ” shall mean the Board of Directors of the Company.

The term “ Cause ” shall mean (1) violation of any employment, non-compete, confidentiality or other agreement in effect with the Company or any Affiliate, or the Company’s or an Affiliate’s code of ethics, as then in effect, (2) conduct rising to the level of gross negligence or willful misconduct in the course of employment with the Company or an Affiliate, (3) commission of an act of dishonesty or disloyalty involving the Company or an Affiliate, or taking any action which damages or negatively reflects on the reputation of the Company or an Affiliate, (4) failure to comply with applicable laws relating to trade secrets, confidential information or unfair competition or a violation of any other federal, state, or local law in connection with the Participant’s employment or service, (5) breach of any fiduciary duty to the Company or an Affiliate, or (6) conviction of a felony.

The term “ Code ” shall mean the Internal Revenue Code of 1986, as amended from time to time. Reference to a section of the Code shall include such section and any comparable sections of any future legislation that amends, supplements, or supersedes such section, and any regulations thereunder.

The term “ Committee ” shall mean the Compensation Committee of the Board.

The term “ Company ” shall mean Gardner Denver, Inc., its corporate successors, and the surviving corporation resulting from any merger of Gardner Denver, Inc. with any other corporation or corporations.

The term “ Compensation ” shall mean:

(1) the total wages and salary, including overtime payments, commissions, performance-based bonuses and other monetary remuneration, if any, which is included in a Participant’s gross pay with respect to a month for services rendered to an Employer, but excluding any relocation expense reimbursements (including mortgage interest differentials) or other expense allowances or similar items, foreign service premiums and allowances, severance pay (whether paid periodically or in a lump sum), and amounts received in connection with any equity compensation (whether received upon grant, exercise or otherwise), plus

(2) Basic Contributions made on behalf of such Participant on a pre-tax basis under the 401(k) and Supplemental Basic Contributions credited to such Participant under Section 3.1(1) of the Plan.

The term “ Employer ” shall mean the Company as well as any Affiliate which may adopt the Plan in accordance with the provisions of Article IX.

The term “ MIP ” shall mean the Gardner Denver, Inc. Management Incentive Program, or such successor or other bonus program specified by the Company in its discretion.

The term “ Participant ” shall mean any employee of an Employer or any other individual who participates in the Plan pursuant to Article II of the Plan. Where the context so requires, a Participant also means a former employee or Beneficiary entitled to receive a benefit hereunder.

The term “ Plan ” shall mean the Gardner Denver, Inc. Supplemental Excess Defined Contribution Plan as set forth herein, as it may be amended from time to time.

The term “ Separate Account ” shall mean each of the accounts maintained in the name of a Participant pursuant to Section 4.1 of the Plan.

The term “ Specified Employee ” means a specified employee determined in accordance with the meaning of such term under Code Section 409A. The Company shall determine whether an individual is a Specified Employee by applying reasonable specified employee identification procedures set forth in a resolution of the Board.

The term “ Supplemental Basic Account ” shall mean the Separate Account to which Supplemental Basic Contributions and Supplemental MIP Contributions are credited in accordance with the provisions of Sections 3.1 and 4.1 of the Plan.

The term “ Supplemental Basic Contributions ” shall mean the pre-tax contributions deducted from the Participant’s Compensation pursuant to Section 3.1(1) of the Plan.

The term “ Supplemental Matching Account ” shall mean the Separate Account to which Supplemental Matching Contributions are credited in accordance with the provisions of Sections 3.2 and 4.1 of the Plan.

The term “ Supplemental Matching Contributions ” shall mean the Employer contributions credited to a Participant under the Plan pursuant to Section 3.2.

The term “ Supplemental MIP Contributions ” shall mean the contributions deducted from the Participant’s MIP payment in accordance with the provisions of Section 3.1(2) of the Plan.

The term “ Supplemental Non-Elective Account ” shall mean the Separate Account to which Supplemental Non-Elective Contributions are credited in accordance with the provisions of Sections 3.3 and 4.1 of the Plan.

The term “ Supplemental Non-Elective Contributions ” shall mean the contributions credited under the Plan pursuant to Section 3.3 of the Plan to each Participant who participated in the Gardner Denver, Inc. Supplemental Excess Defined Benefit Plan on October 31, 2006 and each such other Participant, if any, as may be so designated by the Chief Executive Officer of the Company and/or the Board (or a committee thereof) as eligible to have such Supplemental Non-Elective Contributions credited to his or her Supplemental Non-Elective Account. Notwithstanding the foregoing, a Participant who was hired or rehired on or after July 30, 2013 shall not be eligible to receive Supplemental Non-Elective Contributions.

The term “ Termination ” shall mean a termination of services from the Company and its Affiliates for any reason. A Participant shall be deemed to have terminated services if the Company and the Participant reasonably anticipate a permanent reduction in his or her level of bona fide services to a level less than twenty-one percent (21%) of the average level of bona fide services provided by the Participant in the immediately preceding 36-month period. Notwithstanding the preceding sentence, no termination of services shall occur (1) while the Participant is on military leave, sick leave, or other bona fide leave of absence which does not exceed six months or such longer period during which the Participant retains a right to reemployment with the Company pursuant to law or by contract; or (2) while the Participant is on a leave of absence due to a medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of six months or more and results in the Participant being unable to perform services for the Company in his or her position or a substantially similar position and such leave does not exceed 29 months. A leave of absence will be a bona fide leave of absence only if there is a reasonable expectation that the Participant will return to perform services for the Company. A Participant who transfers employment to any subsidiary of the Company or other entity in which the Company has a fifty percent (50%) or greater ownership interest shall be deemed not to have terminated employment as long as such Participant is an employee of such a subsidiary or entity. Such term shall be construed in a manner consistent with Section 409A of the Code.

1.2 Construction Where necessary or appropriate to the meaning hereof, the singular shall be deemed to include the plural, the plural to include the singular, the masculine to include the feminine, and the feminine to include the masculine.

ARTICLE II

ELIGIBILITY

2.1 Eligibility .

(1) Any employee of an Employer in a Salary Grade 20 or higher position is automatically eligible to participate in the Plan.

(2) Any other person that the Administrator selects for participation in the Plan shall be eligible to participate, effective upon the date the Administrator selects such person for participation.

(3) Notwithstanding the foregoing, any individual who, prior to December 1, 2017 was a Participant in the Plan shall remain eligible until such individual’s Termination, or until the Administrator decides otherwise.

ARTICLE III

SUPPLEMENTAL CONTRIBUTIONS

3.1 Employee Pre-tax Contributions

(1) Supplemental Basic Contributions . As soon as practicable after the end of each pay period, the Supplemental Basic Accounts (pre-tax) of each Participant shall be credited with Supplemental Basic Contributions equal to the Basic Contributions that would have been contributed to the 401(k) Plan on his or her behalf for such pay period except for the provisions of Sections 401(k), 401(a)(17), 402(g) and Section 415 of the Code and that were deferred from his or her Compensation in accordance with a duly executed and filed Compensation reduction authorization form; provided, that:

(a) In no event shall Supplemental Basic Contributions, when added to the amount of Basic Contributions for such Participant for such pay period under the 401(k) Plan, exceed the maximum percentage of such Participant’s Compensation permitted to be deferred under the 401(k) Plan on behalf of such Participant.

(b) A Participant’s election to participate in this Plan must be properly filed, as prescribed by the Company, but in no event later than the day immediately preceding the first day of the calendar year to which it relates. Notwithstanding the foregoing, the Company may, in its sole discretion, permit deferral elections at other times to the extent consistent with Code Section 409A.

(c) A Participant’s election shall be irrevocable with respect to Compensation earned during the calendar year (or other period) to which the election relates. A Participant’s election to defer compensation shall not carry over from year to year unless otherwise allowed by the Administrator in its sole discretion.

(d) In no event shall the election with respect to Supplemental Basic Contributions include any portion of any Compensation payable under the MIP.

(2) Supplemental MIP Contributions . A Participant shall be permitted to make a separate election to defer all or a portion of his or her Compensation payable under the MIP. A Participant’s Supplemental Basic Account shall be credited, as soon as practicable after the date the MIP amount is payable, with the amount deferred hereunder in accordance with the following, as determined by the Company:

(a) A Participant’s MIP election may be made at the same time as the Supplemental Basic Contributions election is made pursuant to subsection (1)(b).

(b) To the extent the MIP provides for performance-based compensation as determined under Section 409A of the Code, the Company may permit a Participant to make an election no later than six months before the end of the applicable performance period, provided that the Participant performs services continuously from the later of the beginning of such performance period or the date the performance criteria are established through the date an election is made under this Section and provided further that in no event may an election to defer compensation payable under the MIP be made after such Compensation has become readily ascertainable.

(c) A Participant’s MIP election shall be irrevocable with respect to Compensation earned under the MIP for the calendar year (or other period) to which the election relates. A Participant’s MIP election shall not carry over from year to year unless otherwise allowed by the Administrator in its sole discretion.

(3) Other Compensation Contributions . A Participant shall be permitted to make a separate election to defer any other compensation that the Administrator designates is eligible for deferral hereunder.

(4) Rules for Deferrals . All elections shall be made in such form and at such times as are determined by the Company. If a Participant elects to defer more than ninety percent (90%) of his or her MIP payment, then such deferral shall be made after applicable FICA taxes are deducted therefrom.

(5) Cancellation of Deferral Elections . If the Administrator determines that a Participant’s deferral elections made according to this Section 3.1 must be cancelled for the Participant to receive a hardship distribution under the 401(k) Plan (or any other 401(k) plan maintained by the Company or an Affiliate), then the Participant’s deferral election(s) shall be cancelled. A Participant whose deferral election(s) are canceled pursuant to this subsection (5) may make new deferral elections with respect to future calendar years, unless otherwise prohibited by the Company.

3.2 Supplemental Matching Contributions . As soon as practicable after the end of each pay period, the Supplemental Matching Account of each Participant shall be credited with Supplemental Matching Contributions equal to the amount that would have been contributed by his or her Employer under the 401(k) Plan for such pay period as matching contributions if Basic Contributions had been contributed thereunder in the amount of the Supplemental Basic Contributions and Supplemental MIP Contributions credited under this Plan on such Participant’s behalf for such pay period without regard to the limitations under Sections 401(k), 401(a)(17), 402(g) and Section 415 of the Code.

3.3 Supplemental Non-Elective Contributions . As of each pay date prior to January 1, 2015, the Supplemental Non-Elective Account of each Participant who was hired or rehired before July 30, 2013 and who had been designated by the Chief Executive Officer of the Company and/or the Board (or a committee thereof), in his and/or its sole discretion, as being eligible to receive Supplemental Non-Elective Contributions credits shall be credited with Supplemental Non-Elective Contributions equal to twelve percent (12%) of such Participant’s Compensation which, when added to such Participant’s Compensation for all prior pay periods during the calendar year, is in excess of the limitation set forth in Code Section 401(a)(17). A Participant who was hired or rehired on or after July 30, 2013 shall not be eligible to receive Supplemental Non-Elective Contributions. No Supplemental Non-Elective Contributions shall be made after 2014.

ARTICLE IV

SEPARATE ACCOUNTS

4.1 Types of Separate Accounts . Each Participant shall have established in his or her name Separate Accounts which shall reflect the type of contributions described below as well as any earnings (or losses) credited thereon pursuant to Section 4.2. Such Separate Accounts shall be as follows:

(1) a Supplemental Basic Account, which shall reflect the Supplemental Basic Contributions credited to a Participant pursuant to Section 3.1(1), the Supplemental MIP Contributions credited to a Participant under Section 3.1(2), and any other compensation contributions credited to a Participant under Section 3.1(3);

(2) a Supplemental Matching Account, which shall reflect the Supplemental Matching Contributions credited to a Participant pursuant to Section 3.2; and

(3) a Supplemental Non-Elective Account, which shall reflect the Supplemental Non-Elective Contributions credited to a Participant pursuant to Section 3.3.

The Separate Accounts may include one or more sub-accounts to reflect the form of payment applicable to the balance in such sub-account.

4.2 Deemed Investments . All Separate Accounts of a Participant shall be deemed each business day to be credited with earnings (and losses) equal to the earnings and losses in such investment(s) as may be permitted by the Company from time to time and as the Participant may elect in such form, time and manner as the Company may prescribe. Investments in which the Separate Accounts may be permitted to be deemed invested in accordance with this Section shall be substantially similar in the aggregate to those available under the 401(k) Plan, but in no event may they be permitted to be deemed invested in the common stock of the Company.

ARTICLE V

DISTRIBUTION

5.1 Vesting . Subject to Section 10.5, a Participant shall be 100 percent vested in the balance credited to all of his or her Separate Accounts other than the Supplemental Non-Elective Account. A Participant shall be vested in the balance of his or her Supplemental Non-Elective Account based on Years of Vesting Service, as determined under the 401(k) Plan, in accordance with the following schedule:

Full Years of Vesting Service	Vested Interest

Less than 3 Years	0%
3 Years or More	100%

5.2 Time and Form of Payment Elections . The vested balance credited to a Participant’s Separate Accounts shall be distributed to such Participant in the form elected by the Participant. Except as otherwise provided in Section 5.3, a Participant may elect, in accordance with such procedures as the Company may establish from time to time, to have his or her vested balance distributed in either:

(1) a single lump sum payment within ninety (90) days following the date the Participant Terminates;

(2) a single lump sum payment payable on March 1 of the calendar year following the calendar year in which the Participant Terminates, or as soon as practicable thereafter;

(3) with respect to contributions made for periods after December 31, 2017, five (5) annual installment payments, commencing within ninety (90) days following the date the Participant Terminates; or

(4) with respect to contributions made for periods after December 31, 2017, ten (10) annual installment payments, commencing within ninety (90) days following the date the Participant Terminates.

If a Participant elects installment payments, after the first installment is paid, all subsequent installments will be paid in the first calendar quarter of each year beginning with the year after the year in which the first installment is paid.

A Participant must make his or her election at the same time as he or she files an initial deferral election. If a Participant fails to make an election at the time he or she files an initial deferral election, such Participant will be deemed to have elected to have his or her vested balance distributed in a single lump sum payment within ninety (90) days following the date the Participant Terminates. A Participant’s election, including a deemed election, is final and binding and cannot be changed in the future.

Notwithstanding the foregoing, a Participant who will be eligible for contributions with respect to periods after December 31, 2017 will be permitted to elect a time and form of payment for such post-2017 contributions from the options listed above during the enrollment period with respect to the 2018 calendar year. In the absence of an election, the prior election on file will continue to be effective. Such an election is final and binding and cannot be changed in the future.

5.3 Specified Employee Restriction . Notwithstanding the foregoing, distribution shall be made on the first payroll date which is more than six (6) months after the date of a Participant’s Termination with respect to the payment of benefits on termination of employment to a Participant who is determined to be a Specified Employee, to the extent required to avoid the adverse tax consequences to the Participant under Section 409A of the Code, or, if earlier, death.

5.4 Preservation of Prior Distribution Rules . If the Plan previously allowed times and forms of payment different than those currently permitted by Section 5.2, then amounts deferred prior to January 1, 2018 shall be distributed according to those times and forms of payment.

ARTICLE VI

BENEFICIARIES

In the event a Participant dies before his or her vested interest under the Plan has been distributed to him or her in full, any remaining vested interest shall be distributed pursuant to Article V to his or her Beneficiary. Notwithstanding the foregoing, if (a) any designated Beneficiary predeceases the Participant (or dies at the same time as the Participant), then the portion of the vested interest that would have been paid to such Beneficiary shall instead be paid to the Participant’s estate, and (b) any designated Beneficiary dies after the Participant but before receiving his or her entire amount due hereunder, the remainder of such amount shall be paid to the Beneficiary’s estate. Payment shall be made at the same time payment would have been made to the Participant.

ARTICLE VII

ADMINISTRATIVE PROVISIONS

7.1 Administration . The Plan shall be administered by the Administrator, which shall administer it in a manner consistent with the terms hereof and otherwise consistent with the administration of the 401(k) Plan, except that the Plan shall be administered as an unfunded plan not intended to meet the qualification requirements of Section 401 of the Code.

7.2 Powers and Authorities of the Administrator . The Administrator shall have full power, authority and discretion to interpret, construe and administer the Plan and its interpretations and construction hereof, and actions hereunder, including the timing, form, amount or recipient of any payment to be made hereunder, shall be binding and conclusive on all persons for all purposes. The Administrator may delegate any of its powers, authorities, or responsibilities for the operation and administration of the Plan to any person or committee so designated in writing by it and may employ such attorneys, agents, and accountants as it may deem necessary or advisable to assist it in carrying out its duties hereunder. The Administrator shall not be liable to any person for any action taken or omitted in connection with the interpretation and administration of the Plan unless attributable to his or her own willful misconduct or lack of good faith. No individual shall participate in any action or determination regarding his or her own benefits, if any, payable under the Plan.

7.3 Indemnification . In addition to whatever rights of indemnification the Administrator may be entitled under the articles of incorporation, regulations, or by-laws of the Company, under any provision of law, or under any other agreement, the Company shall satisfy any liability actually and reasonably incurred by the Administrator, including expenses, attorneys’ fees, judgments, fines, and amounts paid in settlement, in connection with any threatened, pending, or completed action, suit, or proceeding which is related to the Administrator’s exercise or failure to exercise the powers, authority, responsibilities, or discretion provided under the Plan.

ARTICLE VIII

AMENDMENT AND TERMINATION

The Company reserves the right to amend or terminate the Plan at any time by action of the Committee; provided, however, that no such action shall adversely affect any Participant who is receiving supplemental benefits under the Plan or whose Separate Accounts are credited with any contributions thereto, unless an equivalent benefit is provided under another plan or program sponsored by the Employer.

ARTICLE IX

ADOPTION BY AFFILIATES

Any Affiliate of the Company which is not already an Employer may, with the consent of the Company, adopt the Plan and become the Employer hereunder by causing an appropriate written instrument evidencing such adoption to be executed pursuant to the authority of its Board of Directors and filed with the Company.

ARTICLE X

MISCELLANEOUS

10.1 Non-Alienation of Benefits . No benefit under the Plan shall at any time be subject in any manner to alienation or encumbrance. If any Participant or Beneficiary shall attempt to, or shall, alienate or in any way encumber his or her benefits under the Plan, or any part thereof, or if by reason of his or her bankruptcy or other event happening at any time any such benefits would otherwise be received by anyone else or would not be enjoyed by him or her, then his or her interest in all such benefits shall automatically terminate and the same shall be held or applied to or for the benefit of such person, his or her spouse, children or other dependents as the Administrator may select. As a result of this provision, a Participant may not borrow money from the Plan or otherwise pledge his or her benefits under the Plan as collateral for a loan.

10.2 Payment of Benefits to Others . If any Participant or Beneficiary to whom a benefit is payable is unable to care for his or her affairs because of illness or accident, any payment due (unless prior claim therefor shall have been made by a duly qualified guardian or other legal representative) may be paid to the spouse, parent, brother, or sister, or any other individual deemed by the Administrator to be maintaining or responsible for the maintenance of such person. Any payment made in accordance with the provisions of this Section 10.2 shall be a complete discharge of any liability of the Plan with respect to the benefit so paid.

10.3 Plan Non-Contractual . Nothing herein contained shall be construed as a commitment or agreement on the part of any person employed by the Employer to continue his or her employment with the Employer, and nothing herein contained shall be construed as a commitment on the part of the Employer to continue the employment or the annual rate of compensation of any such person for any period, and all Participants shall remain subject to discharge to the same extent as if the Plan had never been established.

10.4 Funding . In order to provide a source of payment for its obligations under the Plan, the Company may establish a trust fund. Subject to the provisions of the trust agreement governing such trust fund, the obligation of the Employer under the Plan to provide a Participant or a Beneficiary with a benefit constitutes the unsecured promise of such Employer to make payments as provided herein, and no person shall have any interest in, or a lien or prior claim upon, any property of the Employer.

10.5 Forfeiture for Cause . Notwithstanding any other provision of the Plan, if a Participant’s Termination is for Cause, or if it is determined by the Company after a Participant’s Termination other than for Cause that the Participant could have been Terminated for Cause had all the facts been known to the Company at the time of Termination, then the Company may determine in its sole discretion that such Participant’s Supplemental Matching Account and Supplemental Non-Elective Account under the Plan shall be forfeited and shall not be payable hereunder.

10.6 Claims of Other Persons . The provisions of the Plan shall in no event be construed as giving any person, firm or corporation any legal or equitable right as against the Employer, its officers, employees or directors except any such rights as are specifically provided for in the Plan or are hereafter created in accordance with the terms and provisions of the Plan.

10.7 Severability . The invalidity or unenforceability of any particular provision of the Plan shall not affect any other provision hereof, and the Plan shall be construed in all respects as if such invalid or unenforceable provision were omitted herefrom.

10.8 Governing Law . The provisions of the Plan shall be governed and construed in accordance with the laws of the State of Wisconsin to the extent not preempted by Federal law.

10.9 Tax Withholding . The Company or any Affiliate shall have the right to deduct from any deferral or payment made hereunder, or from any other amount due a Participant, the amount of cash sufficient to satisfy the Company’s or Affiliate’s foreign, federal, state or local income tax withholding obligations with respect to such deferral (or vesting thereof) or payment. In addition, if prior to the date of distribution of any amount hereunder, the Federal Insurance Contributions Act (FICA) tax imposed under Code Sections 3101, 3121(a) and 3121(v)(2), where applicable, becomes due, the Participant’s Account balance shall be reduced by the amount needed to pay the Participant’s portion of such tax, plus an amount equal to the withholding taxes due under federal, state or local law resulting from the payment of such FICA tax, and an additional amount to pay the additional income tax at source on wages attributable to the pyramiding of the Code Section 3401 wages and taxes, but no greater than the aggregate of the FICA tax amount and the income tax withholding related to such FICA tax amount.

10.10 Offset . The Company or any Affiliate shall have the right to offset from the benefits payable hereunder (at the time such benefit would have otherwise been paid) any amount that the Participant owes to the Company or any Affiliate without the consent of the Participant (or his or her Beneficiary, in the event of the Participant’s death).

10.11 Claims Review Procedure .

(1) A Participant or Beneficiary or other person who believes that he or she is being denied a benefit to which he or she is entitled (hereinafter referred to as “Claimant”), or his or her representative, may file a written request for such benefit with his or her local human resources representative setting forth his or her claim. Claimant must file his or her claim no later than one (1) year after the date the payment should have been made according to the terms of this Plan.

(2) Upon receipt of a claim, the local human resources representative shall make a determination of the claim and provide written notice thereof to the Claimant within ninety (90) days of receipt of such claim. However, the local human resources representative may extend the reply period for an additional ninety (90) days for reasonable cause. If the reply period will be extended, the local human resources representative shall advise the Claimant in writing during the initial ninety (90)-day period indicating the special circumstances requiring an extension and the date by which the local human resources representative expects to render the benefit determination. If the claim is denied in whole or in part, the local human resources representative will render a written opinion using language calculated to be understood by the Claimant setting forth the information required by ERISA.

(3) Within sixty (60) days after the receipt by the Claimant of the written opinion described above, the Claimant may request in writing that the Corporate Human Resources Manager review the local human resources representative’s prior determination. Such request must be addressed to: Corporate Human Resources Manager, Gardner Denver, 222 East Erie Street, Suite 500, Milwaukee, WI 53202. The Claimant or his or her duly authorized representative may submit written comments, documents, records or other information relating to the denied claim, which such information shall be considered in the review under this subsection without regard to whether such information was submitted or considered in the initial benefit determination. The Claimant or his or her duly authorized representative shall be provided, upon request and free of charge, reasonable access to, and copies of, all documents, records and other information which (i) was relied upon by the local human resources representative in making his or her initial claims decision, (ii) was submitted, considered or generated in the course of the local human resources representative making his or her initial claims decision, without regard to whether such instrument was actually relied upon by the local human resources representative in making his or her decision or (iii) demonstrates compliance by the local human resources representative with his or her administrative processes and safeguards designed to ensure and to verify that benefit claims determinations are made in accordance with governing Plan documents and that, where appropriate, the Plan provisions have been applied consistently with respect to similarly situated claimants. If the Claimant does not request a review of the local human resources representative’s determination within such sixty (60)-day period, he or she shall be barred and estopped from challenging such determination.

Within a reasonable period of time, ordinarily not later than sixty (60) days, after the Corporate Human Resources Manager’s receipt of a request for review, it will review the prior determination. If special circumstances require that the sixty (60)-day time period be extended, the Corporate Human Resources Manager will so notify the Claimant within the initial sixty (60)-day period indicating the special circumstances requiring an extension and the date by which the Corporate Human Resources Manager expects to render his or her decision on review, which shall be as soon as possible but not later than 120 days after receipt of the request for review. The Corporate Human Resources Manager has discretionary authority to determine eligibility for benefits and to interpret the terms of the Plan. Benefits under the Plan will be paid only if the Corporate Human Resources Manager decides in his or her discretion that the applicant is entitled to them. The decision of the Corporate Human Resources Manager shall be final and non-reviewable unless found to be arbitrary and capricious by a court of competent review. Such decision will be binding upon the Employer and the Claimant. If the Corporate Human Resources Manager makes an adverse benefit determination on review, the Corporate Human Resources Manager will render a written opinion using language calculated to be understood by the Claimant setting forth the information required by ERISA.

GARDNER DENVER, INC.

By:
	Title:	Chief Executive Officer

	Date:

By:
	Title: Vice President and Chief Compliance Officer, General Counsel and Secretary

	Date:

Delaware		46-2393770
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

Title of Each Class		Name of Each Exchange on Which Registered
Common Stock, $0.01 Par Value		New York Stock Exchange

Large accelerated filer	☐	Accelerated filer	☐

Non-accelerated filer	☒ (Do not check if a smaller reporting company)	Smaller reporting company	☐

Emerging growth company	☐

			Page No.
PART I
	Item 1.	Business	3
	Item 1A.	Risk Factors	11
	Item 1B.	Unresolved Staff Comments	21
	Item 2.	Properties	21
	Item 3.	Legal Proceedings	21
	Item 4.	Mine Safety Disclosures	23

PART II
	Item 5.	Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	23
	Item 6.	Selected Financial Data	24
	Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	28
	Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	51
	Item 8.	Financial Statements and Supplementary Data	53
		Consolidated Statements of Operations – For the years ended December 31, 2017, 2016, and 2015	53
		Consolidated Statements of Comprehensive Income (Loss) – For the years ended December 31, 2017, 2016, and 2015	54
		Consolidated Balance Sheets – As of December 31, 2017 and 2016	55
		Consolidated Statements of Stockholders’ Equity – For the years ended December 31, 2017, 2016 and 2015	56
		Consolidated Statements of Cash Flows – For the years ended December 31, 2017, 2016, and 2015	57
		Notes to Consolidated Financial Statements	58
	Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	102
	Item 9A.	Controls and Procedures	102
	Item 9B.	Other Information	102

PART III
	Item 10.	Directors, Executive Officers and Corporate Governance	102
	Item 11.	Executive Compensation	103
	Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	126
	Item 13.	Certain Relationships and Related Transactions, and Director Independence	127
	Item 14.	Principal Accounting Fees and Services	130

PART IV
	Item 15.	Exhibits and Financial Statement Schedules	130
	Item 16.	Form 10-K Summary	134

SIGNATURES			135

SCHEDULE I			136

	Stock Price
	High		Low
Fiscal year ended December 31, 2017:
Second quarter ended June 30, 2017 (beginning on May 12, 2017)	$	24.55	$	19.91
Third quarter ended September 30, 2017	$	27.65	$	20.55
Fourth quarter ended December 31, 2017	$	34.63	$	26.10

	Type of Significant Property
	Manufacturing		Warehouse		Other		Total
Industrials
Americas		5		1		0	6
EMEA		9		1		15	25
APAC		1		1		8	10
Industrials Total		15		3		23	41

Energy
Americas		8		2		9	19
EMEA		5		0		2	7
APAC		2		0		2	4
Energy Total		15		2		13	30

Medical
Americas		3		0		0	3
EMEA		4		0		1	5
APAC		1		0		0	1
Medical Total		8		0		1	9

Total (All Segments)
Americas		16		3		9	28
EMEA		18		1		18	37
APAC		4		1		10	15
Company Total ⁽¹⁾		38		5		37	80

Period	Total Number of Shares Purchased ⁽¹⁾		Average Price Paid Per Share ⁽²⁾		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Maximum Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs
October 1, 2017 - October 31, 2017		9,469	$	29.21		-		-
November 1, 2017 - November 30, 2017		24,297	$	27.23		-		-
December 1, 2017 - December 31, 2017		-	$	-		-		-

	Successor															Predecessor
(in millions, except per share amounts)	Year Ended December 31, 2017			Year Ended December 31, 2016			Year Ended December 31, 2015			Year Ended December 31, 2014			July 30, 2013 – December 31, 2013			January 1, 2013 – July 29, 2013
Consolidated Statements of Operations:
Revenues	$	2,375.4		$	1,939.4		$	2,126.9		$	2,570.0		$	978.4		$	1,231.6
Cost of sales		1,477.5			1,222.7			1,347.8			1,633.2			666.5			799.5
Gross profit		897.9			716.7			779.1			936.8			311.9			432.1
Selling and administrative expenses		446.6			414.3			427.0			476.0			193.7			263.8
Amortization of intangible assets		118.9			124.2			115.4			113.3			111.9			9.9
Impairment of goodwill		-			-			343.3			220.6			-			-
Impairment of other intangible assets		1.6			25.3			78.1			14.4			-			-
Other operating expense, net		222.1			48.6			20.7			64.3			76.9			46.5
Operating income (loss)		108.7			104.3			(205.4	)		48.2			(70.6	)		111.9
Interest expense		140.7			170.3			162.9			164.4			65.4			6.6
Loss on extinguishment of debt		84.5			-			-			-			-			-
Other income, net		(3.8	)		(2.8	)		(1.6	)		(3.3	)		(2.1	)		(2.0	)
(Loss) income before income taxes		(112.7	)		(63.2	)		(366.7	)		(112.9	)		(133.9	)		107.3
(Benefit) provision for income taxes		(131.2	)		(31.9	)		(14.7	)		23.0			(59.4	)		35.4
Net income (loss)		18.5			(31.3	)		(352.0	)		(135.9	)		(74.5	)		71.9
Less: Net income (loss) attributable to noncontrolling interest		0.1			5.3			(0.8	)		(0.9	)		(1.1	)		0.7
Net income (loss) attributable to Gardner Denver Holdings, Inc.	$	18.4		$	(36.6	)	$	(351.2	)	$	(135.0	)	$	(73.4	)	$	71.2

Earnings (Loss) per share, basic	$	0.10		$	(0.25	)	$	(2.35	)	$	(0.91	)
Earnings (Loss) per share, diluted	$	0.10		$	(0.25	)	$	(2.35	)	$	(0.91	)
Weighted average shares, basic		182.2			149.2			149.6			148.9
Weighted average shares, diluted		188.4			149.2			149.6			148.9

Statement of Cash Flow Data:
Cash flows - operating activities	$	200.5		$	165.6		$	172.1		$	141.8		$	(15.2	)	$	77.4
Cash flows - investing activities		(60.8	)		(82.1	)		(84.0	)		(155.4	)		(3,806.7	)		(15.1	)
Cash flows - financing activities		(17.4	)		(43.0	)		(35.0	)		(3.7	)		3,929.5			(205.0	)

Balance Sheet Data (at period end):
Cash and cash equivalents	$	393.3		$	255.8		$	228.3		$	184.2		$	218.7		$	107.4
Total assets		4,621.2			4,316.0			4,462.0			5,107.1			5,420.7			2,376.4
Total liabilities		3,144.4			4,044.2			4,056.5			4,218.5			4,226.4			847.3
Total stockholders’ equity		1,476.8			271.8			405.5			888.6			1,194.3			1,529.1

Other Financial Data (unaudited):
Adjusted EBITDA ⁽¹⁾	$	561.5		$	400.7		$	418.9
Adjusted net income ⁽¹⁾		249.3			133.6			128.1
Capital expenditures		56.8			74.4			71.0
Free cash flow ⁽¹⁾		143.7			91.2			101.1

	Years Ended December 31,									Percent Change						Constant Currency Percent Change
(dollars in millions)	2017			2016			2015			2017 vs. 2016			2016 vs. 2015			2017 vs. 2016			2016 vs. 2015

Segment Revenues	$	1,130.7		$	1,082.4		$	1,149.7			4.5	%		(5.9	)%		3.4	%		(4.0	)%
Segment Adjusted EBITDA	$	242.7		$	217.6		$	197.6			11.5	%		10.1	%		10.2	%		12.0	%
Segment Margin		21.5	%		20.1	%		17.2	%	140 bps			290 bps

(in millions, except per share amounts)	Year Ended December 31, 2017										Year Ended December 31, 2016
		Q1			Q2			Q3		Q4 ⁽²⁾		Q1			Q2			Q3			Q4
Revenues	$	481.7		$	579.1		$	649.6	$	665.0	$	437.1		$	462.0		$	462.6		$	577.7
Gross profit		174.6			215.9			253.9		253.5		158.9			171.5			164.2			222.1
Operating income (loss)		36.7			(101.6	)		95.9		77.7		19.6			26.0			20.2			38.5
Net (loss) income		(7.0	)		(146.3	)		28.0		143.8		(9.9	)		(4.1	)		(13.0	)		(4.3	)
Weighted average shares, basic					176.9			201.3		201.4
Weighted average shares, diluted					176.9			208.1		209.3
Basic (loss) earnings per share ⁽¹⁾					(0.83	)		0.14		0.71
Diluted (loss) earnings per share ⁽¹⁾					(0.83	)		0.13		0.69
Adjusted EBITDA ⁽¹⁾		92.1			132.1			164.7		172.6		76.8			86.6			89.0			148.3

			Payments Due by Period
(in millions) Contractual Obligations	Total		2018			2019-2020		2021-2022	More than 5 years
Debt	$	2,018.2	$	20.2	$	40.5	$	40.5	$	1,917.0
Estimated interest payments ⁽¹⁾		666.6		102.6		216.8		184.8		162.4
Capital leases		26.9		0.7		1.9		2.3		22.0
Operating leases		82.1		22.9		32.6		14.3		12.3
Purchase obligations ⁽²⁾		338.5		318.9		19.4		0.2		-
Total	$	3,132.3	$	465.3	$	311.2	$	242.1	$	2,113.7

	Change in Discount Rate						Change in Expected Return						Change in Market Value of Assets
(in millions)	Plus 100 bps			Minus 100 bps			Plus 100 bps			Minus 100 bps			Plus 5%			Minus 5%
(Decrease) increase in 2017 net benefit cost	$	(2.7	)	$	3.2		$	(1.7	)	$	1.8		$	(1.7	)	$	1.8
(Decrease) increase in projected benefit obligation		(58.7	)		70.8			(3.0	)		3.9			-			-
Increase (decrease) in funded status		56.3			(67.6	)		0.5			(0.7	)		15.1			(15.1	)

	U.S. Dollar			Euro			British Pound			Chinese Renminbi			Other
Year Ended December 31, 2017
Revenues		48	%		30	%		5	%		5	%		12	%
Gross profit		45	%		34	%		5	%		6	%		10	%

Year Ended December 31, 2016
Revenues		39	%		34	%		6	%		6	%		15	%
Gross profit		36	%		38	%		7	%		7	%		12	%

	December 31, 2017			December 31, 2016
Assets
Current assets:
Cash and cash equivalents	$	393.3		$	255.8
Accounts receivable, net of allowance for doubtful accounts of $18.7 and $18.7, respectively		536.3			441.6
Inventories		494.5			443.9
Other current assets		39.5			47.2
Total current assets		1,463.6			1,188.5
Property, plant and equipment, net of accumulated depreciation of $203.8 and $146.1, respectively		363.2			358.4
Goodwill		1,227.6			1,154.7
Other intangible assets, net		1,431.2			1,469.9
Deferred tax assets		1.0			1.4
Other assets		134.6			143.1
Total assets	$	4,621.2		$	4,316.0
Liabilities and Stockholders' Equity
Current liabilities:
Short-term borrowings and current maturities of long-term debt	$	20.9		$	24.5
Accounts payable		269.7			214.9
Accrued liabilities		271.2			258.5
Total current liabilities		561.8			497.9
Long-term debt, less current maturities		2,019.3			2,753.8
Pensions and other postretirement benefits		99.8			122.7
Deferred income taxes		237.5			487.6
Other liabilities		226.0			182.2
Total liabilities		3,144.4			4,044.2
Commitments and contingencies (Note 18)
Stockholders' equity:
Common stock, $0.01 par value; 1,000,000,000 shares authorized; 198,377,237 and 150,552,360 shares issued at December 31, 2017 and December 31, 2016, respectively		2.0			1.5
Capital in excess of par value		2,275.4			1,222.4
Accumulated deficit		(577.8	)		(596.2	)
Accumulated other comprehensive loss		(199.8	)		(342.4	)
Treasury stock at cost; 2,159,266 and 1,897,454 shares at December 31, 2017 and 2016, respectively		(23.0	)		(19.4	)
Total Gardner Denver Holdings, Inc. stockholders' equity		1,476.8			265.9
Noncontrolling interests		-			5.9
Total stockholders' equity		1,476.8			271.8
Total liabilities and stockholders' equity	$	4,621.2		$	4,316.0

	December 31, 2017			December 31, 2016			December 31, 2015

Number of Common Shares Issued (in millions)
Balance at beginning of period		150.6			150.3			149.9
Common stock issued for initial public offering		47.5			-			-
Common stock issued to employees for deferred stock units		0.2			-			-
Exercise of stock options		0.1			-			-
Common stock issued for management		-			0.3			0.4
Balance at end of period		198.4			150.6			150.3
Common Stock
Balance at beginning of period	$	1.5		$	1.5		$	1.5
Exercise of stock options		-			-			-
Common stock issued for initial public offering		0.5			-			-
Balance at end of period	$	2.0		$	1.5		$	1.5
Capital in Excess of Par Value
Balance at beginning of period	$	1,222.4		$	1,219.2		$	1,215.0
Common stock issued for initial public offering, net of underwritting discounts and commissions		897.2			-			-
Costs related to initial public offering		(4.6	)		-			-
Stock-based compensation		157.3			-			-
Exercise of stock options		0.7			-			-
Purchase of noncontrolling interest		2.4			-			-
Common stock issued for management		-			3.2			4.2
Balance at end of period	$	2,275.4		$	1,222.4		$	1,219.2
Accumulated Deficit
Balance at beginning of period	$	(596.2	)	$	(559.6	)	$	(208.4	)
Net income (loss) attributable to Gardner Denver Holdings, Inc.		18.4			(36.6	)		(351.2	)
Balance at end of period	$	(577.8	)	$	(596.2	)	$	(559.6	)
Accumulated Other Comprehensive Loss
Balance at beginning of period	$	(342.4	)	$	(265.6	)	$	(135.3	)
Foreign currency translation adjustments, net		157.6			(76.2	)		(136.3	)
Foreign currency (losses) gains, net		(51.6	)		13.6			32.6
Unrecognized gains (losses) on cash flow hedges, net		12.4			(0.9	)		(15.9	)
Pension and other postretirement prior service cost and gain or loss, net		24.2			(13.3	)		(10.7	)
Balance at end of period	$	(199.8	)	$	(342.4	)	$	(265.6	)
Treasury Stock
Balance at beginning of period	$	(19.4	)	$	(5.3	)	$	(3.2	)
Purchases of treasury stock		(3.6	)		(14.1	)		(2.1	)
Balance at end of period	$	(23.0	)	$	(19.4	)	$	(5.3	)
Total Gardner Denver Holdings, Inc. Stockholders' Equity	$	1,476.8		$	265.9		$	390.2
Noncontrolling Interests
Balance at beginning of period	$	5.9		$	15.3		$	19.0
Net income (loss) attributable to noncontrolling interests		0.1			5.3			(0.8	)
Dividends to minority stockholders		-			(0.9	)		(0.9	)
Purchase of noncontrolling interest		(7.6	)		-			-
Transfer of noncontrolling interest AOCI to consolidated AOCI		1.6			1.4			(2.0	)
Correction of purchase accounting allocation		-			(15.2	)		-
Balance at end of period	$	-		$	5.9		$	15.3
Total Stockholders' Equity	$	1,476.8		$	271.8		$	405.5

	Industrials Program			Energy Program			Medical Program			Total
Balance at December 31, 2014	$	2.5		$	-		$	-		$	2.5
Charged to expense - termination benefits		3.8			-			-			3.8
Charged to expense - other		0.9			-			-			0.9
Payments		(5.1	)		-			-			(5.1	)
Other, net		(0.1	)		-			-			(0.1	)
Balance at December 31, 2015	$	2.0		$	-		$	-		$	2.0
Charged to expense - termination benefits		21.0			4.9			4.2			30.1
Charged to expense - other		2.0			0.8			-			2.8
Payments		(13.3	)		(0.3	)		-			(13.6	)
Other, net		(0.6	)		0.2			-			(0.4	)
Balance at December 31, 2016	$	11.1		$	5.6		$	4.2		$	20.9
Charged to expense - termination benefits		3.6			(0.1	)		(1.1	)		2.4
Charged to expense - other		2.1			0.7			0.1			2.9
Payments		(13.2	)		(4.9	)		(2.5	)		(20.6	)
Other, net		0.7			-			0.4			1.1
Balance at December 31, 2017	$	4.3		$	1.3		$	1.1		$	6.7

	2017		2016
Raw materials, including parts and subassemblies	$	362.6	$	312.9
Work-in-process		57.9		45.3
Finished goods		60.6		69.8
		481.1		428.0
Excess of LIFO costs over FIFO costs		13.4		15.9
Inventories	$	494.5	$	443.9

	2017			2016
Land and land improvements	$	34.7		$	34.4
Buildings		137.4			122.7
Machinery and equipment		261.8			217.3
Tooling, dies, patterns, etc.		55.9			42.9
Office furniture and equipment		37.3			26.6
Other		16.9			9.8
Construction in progress		23.0			50.8
		567.0			504.5
Accumulated depreciation		(203.8	)		(146.1	)
Property, plant and equipment, net	$	363.2		$	358.4

	2017					2016
	Gross Carrying Amount		Accumulated Amortization			Gross Carrying Amount		Accumulated Amortization
Amortized intangible assets:
Customer lists and relationships	$	1,226.8	$	(473.0	)	$	1,160.5	$	(345.5	)
Acquired technology		8.1		(4.0	)		7.1		(2.2	)
Trademarks		30.3		(10.6	)		27.4		(6.9	)
Backlog		65.5		(65.5	)		60.3		(60.3	)
Other		53.6		(23.5	)		36.4		(16.4	)
Unamortized intangible assets:
Trademarks		623.5		-			609.5		-
Total other intangible assets	$	2,007.8	$	(576.6	)	$	1,901.2	$	(431.3	)

	2017		2016
Salaries, wages, and related fringe benefits	$	97.3	$	56.5
Restructuring		6.5		20.2
Taxes		34.5		37.1
Advance payments on sales contracts		42.7		43.0
Product warranty		22.3		21.7
Accrued interest		0.8		15.5
Other		67.1		64.5
Total accrued liabilities	$	271.2	$	258.5

	2017			2016

Short-term borrowings	$	-		$	-
Long-term debt:
Revolving credit facility, due 2020	$	-		$	-
Receivables financing agreement, due 2020		-			-
Term loan denominated in U.S. dollars, due 2020 ^{(1) (3)}		-			1,833.2
Term loan denominated in Euros, due 2020 ^{(2) (4)}		-			405.5
Term loan denominated in U.S. dollars, due 2024 ⁽⁵⁾		1,282.3			-
Term loan denomoinated in Euros, due 2024 ⁽⁶⁾		735.9			-
Senior notes, due 2021 ⁽⁷⁾		-			575.0
Second mortgages ⁽⁸⁾		-			1.9
Capitalized leases and other long-term debt		26.9			21.6
Unamortized debt issuance costs		(4.9	)		(58.9	)
Total long-term debt, net, including current maturities		2,040.2			2,778.3
Current maturities of long-term debt		20.9			24.5
Total long-term debt, net	$	2,019.3		$	2,753.8

	Pension Benefits
	U.S. Plans						Non-U.S. Plans						Other Postretirement Benefits
	2017			2016			2017			2016			2017			2016

Reconciliation of Benefit Obligations:
Beginning balance	$	59.7		$	67.1		$	323.7		$	310.4		$	3.2		$	3.3
Service cost		-			-			1.9			1.6			-			-
Interest cost		2.3			2.5			7.8			8.8			0.1			0.2
Actuarial (gains) losses		2.0			(4.1	)		(22.5	)		51.5			0.2			-
Benefit payments		(2.8	)		(2.9	)		(9.1	)		(9.2	)		(0.2	)		(0.2	)
Plan curtailments		-			-			-			(0.1	)		-			-
Plan settlements		(1.5	)		(2.9	)		-			-			-			-
Effect of foreign currency exchange rate changes		-			-			34.1			(39.3	)		0.1			(0.1	)
Benefit obligations ending balance	$	59.7		$	59.7		$	335.9		$	323.7		$	3.4		$	3.2
Reconciliation of Fair Value of Plan Assets:
Beginning balance	$	59.3		$	60.8		$	202.9		$	204.4
Actual return on plan assets		8.0			4.2			17.9			32.8
Employer contributions		0.1			0.1			5.7			5.2
Plan settlements		(1.5	)		(2.9	)		-			-
Benefit payments		(2.8	)		(2.9	)		(9.1	)		(9.2	)
Effect of foreign currency exchange rate changes		-			-			21.3			(30.3	)
Fair value of plan assets ending balance	$	63.1		$	59.3		$	238.7		$	202.9
Funded Status as of Period End	$	3.4		$	(0.4	)	$	(97.2	)	$	(120.8	)	$	(3.4	)	$	(3.2	)

	U.S. Pension Plans				Non-U.S. Pension Plans				Other Postretirement Benefits
	2017		2016		2017		2016		2017			2016
Net actuarial losses (gains)	$	0.9	$	2.4	$	50.5	$	78.9	$	(0.1	)	$	(0.3	)
Amounts included in accumulated other comprehensive (loss) income	$	0.9	$	2.4	$	50.5	$	78.9	$	(0.1	)	$	(0.3	)

	Pension Benefits - U.S. Plans
	2017			2016			2015
Discount rate		4.0	%		4.1	%		3.8	%
Expected long-term rate of return on plan assets		7.75	%		7.75	%		7.75	%

	Pension Benefits - Non-U.S. Plans
	2017			2016			2015
Discount rate		2.3	%		3.3	%		3.1	%
Expected long-term rate of return on plan assets		5.0	%		6.2	%		6.2	%
Rate of compensation increases		2.8	%		2.9	%		3.0	%

	U.S. Plan			UK Plan
Asset category:
Cash and cash equivalents		1	%		4	%
Equity		52	%		50	%
Fixed income		37	%		26	%
Real estate and other		10	%		20	%
Total		100	%		100	%

	December 31, 2017
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Investments Measured at NAV ⁽⁵⁾		Total
Asset Category
Cash and cash equivalents ⁽¹⁾	$	2.3	$	-	$	-	$	-	$	2.3
Equity funds:
U.S. large-cap		-		12.6		-		19.5		32.1
U.S. mid-cap and small-cap		-		-		-		3.1		3.1
International ⁽²⁾		19.3		71.9		-		49.7		140.9
Total equity funds		19.3		84.5		-		72.3		176.1
Fixed income funds:
Corporate bonds - domestic		-		-		-		13.2		13.2
Corporate bonds - international		-		20.9		-		-		20.9
UK index-linked gilts		-		35.7		-		-		35.7
Diversified domestic securities		-		-		-		10.1		10.1
Total fixed income funds		-		56.6		-		23.3		79.9
Other types of investments:
U.S. real estate ⁽³⁾		-		-		-		6.4		6.4
International real estate ⁽³⁾		-		20.8		-		-		20.8
Other ⁽⁴⁾		-		-		16.3		-		16.3
Total	$	21.6	$	161.9	$	16.3	$	102.0	$	301.8

Participant :	[ Insert Name of Participant ]

Date of Grant :	[ Insert Date of Grant ]

Vesting Commencement Date:	[ Insert Vesting Commencement Date ]

Number of Restricted Stock:	[ Insert No. of Shares of Restricted Stock Granted ]

Vesting Schedule :	Provided the Participant has not undergone a Termination, 100% of the Restricted Stock shall vest on the first anniversary of the Vesting Commencement Date.

	In the event of the Participant’s Termination for any reason, all vesting with respect to the shares of Restricted Stock shall cease and all unvested shares of Restricted Stock shall be forfeited by the Participant for no consideration as of the date of such Termination.

Additional Terms:	You must notify us immediately if you are making an Internal Revenue Code Section 83(b) Election with respect to the Restricted Stock and you must send us a copy of the same.

Entity Name	Jurisdiction of Incorporation or Organization
Gardner Denver SudAmerica S.r.l.	Argentina
Gardner Denver Industries Pty Ltd.	Australia
CompAir GmbH	Austria
Gardner Denver Austria GmbH	Austria
Gardner Denver Intl Ltd., Mid East Reg Rep Office	Bahrain
Gardner Denver Belgium NV	Belgium
Gardner Denver Brasil Industria E Comercio de Maquinas Ltda.	Brazil
Gardner Denver Nash Brasil Industria E Comercio De Bombas Ltda	Brazil
Gardner Denver Canada Corp	Canada
CompAir International Trading (Shanghai) Co Ltd	China
Gardner Denver Machinery (Shanghai) Co., Ltd.	China
Gardner Denver Nash Machinery Ltd.	China
Gardner Denver Thomas Pneumatic Systems (Wuxi) Co., Ltd.	China
ILMVAC Trading (Shanghai) Co. Ltd.	China
Robuschi Fluid Technology (Shanghai) Co. Ltd.	China
Shanghai CompAir Compressors Co Ltd	China
Gardner Denver CZ + SK sro	Czech Republic
Gardner Denver Oy	Finland
GD Investment KY	Finland
Tamrotor Kompressorit OY	Finland
Gardner Denver France SAS	France
Darius Real Estate GmbH & Co KG	Germany
Emco Wheaton Gmbh	Germany
Gardner Denver Bad Neustadt Real Estate GmbH & Co KG	Germany
Gardner Denver Deutschland GmbH	Germany
Gardner Denver Finance Inc & Co KG	Germany
Gardner Denver Kirchhain Real Estate GmbH & Co KG	Germany
Gardner Denver Schopfheim GmbH	Germany
Gardner Denver Schopfheim Real Estate GmbH & Co KG	Germany
Gardner Denver Thomas GmbH	Germany
Gardner Denver Thomas Real Estate GmbH & Co KG	Germany
GD German Holdings GmbH	Germany
GD German Holdings II GmbH	Germany
ILS Inovative Laborsysteme GmbH	Germany
TIWR Real Estate GmbH & Co. KG	Germany
Zinsser Analytik GmbH	Germany
Gardner Denver Hong Kong Investments Limited	Hong Kong
Gardner Denver Hong Kong Ltd	Hong Kong
Gardner Denver Engineered Products India Private Limited	India
Gardner Denver Italy Holdings S.r.L.	Italy

Gardner Denver S.r.l.	Italy
Garo Dott. Ing. Roberto Gabbioneta S.p.A.	Italy
Gardner Denver Japan, Ltd.	Japan
CompAir (Hankook) Korea Co. Ltd.	Korea
CompAir Korea Ltd	Korea
Gardner Denver Korea, Ltd.	Korea
GD Global Holdings I S.a.r.l.	Luxembourg
GD Global Holdings II S.a.r.l.	Luxembourg
GD Industrial Products Malaysia SDN. BHD.	Malaysia
Gardner Denver Nederland BV	Netherlands
Gardner Denver Nederland Investments B.V.	Netherlands
GD Global Holdings CV	Netherlands
GD International Holdings C.V.	Netherlands
Robuschi Benelux B.V.	Netherlands
Tamrotor Marine Comp AS Norway	Norway
Gardner Denver Polska Sp z.o.o.	Poland
CompAir Far East Pte Ltd.	Singapore
Gardner Denver Nash Singapore Pte Ltd	Singapore
Gardner Denver Slovakia, s.r.o.	Slovakia
CompAir South Africa (SA) (Pty) Ltd.	South Africa
Gardner Denver Ltd. (South Africa)	South Africa
Gardner Denver Iberica, SL	Spain
Gardner Denver Sweden AB	Sweden
Gardner Denver Schweiz AG	Switzerland
Gardner Denver Taiwan Ltd.	Taiwan
Gardner Denver (Thailand) Co. Ltd.	Thailand
Gardner Denver FZE	United Arab Emirates
CompAir Acquisition (No. 2) Ltd.	United Kingdom
CompAir Acquisition Ltd.	United Kingdom
CompAir BroomWade Ltd.	United Kingdom
CompAir Finance Ltd.	United Kingdom
CompAir Holdings Limited	United Kingdom
CompAir Holman Ltd	United Kingdom
Gardner Denver Group Svcs Ltd	United Kingdom
Gardner Denver Holdings Limited	United Kingdom
Gardner Denver Industries Ltd.	United Kingdom
Gardner Denver International Ltd.	United Kingdom
Gardner Denver Ltd.	United Kingdom
GD Aria Holdings #2 Limited	United Kingdom
GD Aria Holdings Limited	United Kingdom
GD Aria Investments Limited	United Kingdom
GD First UK Ltd	United Kingdom
GD Global Holdings UK II Ltd.	United Kingdom
ILMVAC (UK) Ltd.	United Kingdom
Shanghai Compressors & Blowers Ltd.	United Kingdom

211 E. Russell Road LLC	USA
Emco Wheaton USA Inc	USA
Gardner Denver Finance II LLC	USA
Gardner Denver Holdings, Inc.	USA
Gardner Denver International, Inc.	USA
Gardner Denver Investments, Inc.	USA
Gardner Denver Nash LLC	USA
Gardner Denver Oberdorfer Pumps, Inc	USA
Gardner Denver Petroleum Pumps, LLC	USA
Gardner Denver Thomas, Inc.	USA
Gardner Denver, Inc.	USA
LeRoi International Inc	USA
Rotary Compression Technologies, Inc.	USA
Thomas Industries, Inc.	USA
Tri-Continent Scientific, Inc.	USA
Zinsser NA, Inc.	USA

Date: February 16, 2018

	/s/ Vicente Reynal
	Vicente Reynal
	Chief Executive Officer and Director
	(Principal Executive Officer)