UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
|
☒ |
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the quarterly period ended September 30, 2013
or
|
☐ |
Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the transition period from to
Commission File Number 1-34036
John Bean Technologies Corporation
(Exact name of registrant as specified in its charter)
|
Delaware |
91-1650317 |
|
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
|
70 West Madison Street, Chicago, Illinois |
60602 |
|
(Address of principal executive offices) |
(Zip code) |
(312) 861-5900
(Registrant’s telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” “non-accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
|
Large accelerated filer |
☐ |
Accelerated filer |
☒ |
|
Non-accelerated filer |
☐ |
Smaller reporting company |
☐ |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
|
Class |
Outstanding at October 29, 2013 |
|
|
Common Stock, par value $0.01 per share |
28,957,777 |
PART I—FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
John Bean Technologies Corporation
Condensed Consolidated statements of income
(U naudited)
|
Three Months Ended |
Nine Months Ended |
|||||||||||||||
|
September 30, |
September 30, |
|||||||||||||||
|
(In millions, except per share data) |
2013 |
2012 |
2013 |
2012 |
||||||||||||
|
Revenue |
$ | 233.5 | $ | 205.3 | $ | 646.1 | $ | 624.4 | ||||||||
|
Operating expenses: |
||||||||||||||||
| Cost of sales | 179.3 | 153.3 | 482.5 | 468.0 | ||||||||||||
| Selling, general and administrative expense | 39.2 | 37.9 | 120.6 | 114.6 | ||||||||||||
| Research and development expense | 3.7 | 3.3 | 10.6 | 10.5 | ||||||||||||
| Other (income) expense, net | (0.3 | ) | 0.5 | (0.6 | ) | (0.8 | ) | |||||||||
|
Operating income |
11.6 | 10.3 | 33.0 | 32.1 | ||||||||||||
| Interest income | 0.6 | 0.1 | 1.4 | 0.2 | ||||||||||||
| Interest expense | 1.8 | 1.9 | 5.6 | 5.4 | ||||||||||||
|
Income from continuing operations before income taxes |
10.4 | 8.5 | 28.8 | 26.9 | ||||||||||||
| Provision for income taxes | 3.0 | 2.3 | 8.5 | 8.8 | ||||||||||||
|
Income from continuing operations |
7.4 | 6.2 | 20.3 | 18.1 | ||||||||||||
| Loss from discontinued operations, net of taxes | 0.6 | 0.1 | 0.8 | 0.4 | ||||||||||||
|
Net income |
$ | 6.8 | $ | 6.1 | $ | 19.5 | $ | 17.7 | ||||||||
|
Basic earnings per share: |
||||||||||||||||
| Income from continuing operations | $ | 0.25 | $ | 0.21 | $ | 0.69 | $ | 0.62 | ||||||||
| Loss from discontinued operations | (0.02 | ) | - | (0.02 | ) | (0.01 | ) | |||||||||
| Net income | $ | 0.23 | $ | 0.21 | $ | 0.67 | $ | 0.61 | ||||||||
|
Diluted earnings per share: |
||||||||||||||||
| Income from continuing operations | $ | 0.25 | $ | 0.21 | $ | 0.68 | $ | 0.61 | ||||||||
| Loss from discontinued operations | (0.02 | ) | (0.01 | ) | (0.02 | ) | (0.01 | ) | ||||||||
| Net income | $ | 0.23 | $ | 0.20 | $ | 0.66 | $ | 0.60 | ||||||||
|
Cash dividends declared per share |
$ | 0.09 | $ | 0.07 | $ | 0.25 | $ | 0.21 | ||||||||
John Bean Technologies Corporation
Condensed Consolidated statements of comprehensive income
(U naudited)
|
Three Months Ended |
Nine Months Ended |
|||||||||||||||
|
September 30, |
September 30, |
|||||||||||||||
|
(In millions) |
2013 |
2012 |
2013 |
2012 |
||||||||||||
|
Net income |
$ | 6.8 | $ | 6.1 | $ | 19.5 | $ | 17.7 | ||||||||
|
Other comprehensive income (loss) |
||||||||||||||||
| Foreign currency translation adjustments | 3.6 | 4.0 | (3.5 | ) | 0.5 | |||||||||||
| Derivatives designated as hedges net of tax | - | 0.1 | - | 0.2 | ||||||||||||
| Pension and other postretirement benefits adjustments, net of tax | 0.8 | 0.3 | 1.9 | 1.0 | ||||||||||||
|
Other comprehensive income (loss) |
4.4 | 4.4 | (1.6 | ) | 1.7 | |||||||||||
|
Comprehensive income |
$ | 11.2 | $ | 10.5 | $ | 17.9 | $ | 19.4 | ||||||||
The accompanying notes are an integral part of the condensed consolidated financial statements.
John Bean Technologies Corporation
Condensed Consolidated balance sheets
September 30, 2013
December 31, 2012
(In millions, except per share data and number of shares)
(Unaudited)
Assets:
Current Assets:
Total current assets
Property, plant and equipment, net of accumulated depreciation of $241.0 and $235.5, respectively
Other assets
Total Assets
Liabilities and Stockholders' Equity:
Current Liabilities:
Total current liabilities
Long-term debt, less current portion
Accrued pension and other postretirement benefits, less current portion
Other liabilities
Stockholders' equity:
Common stock, $0.01 par value; 120,000,000 shares authorized; 2013: 28,957,777
issued and 28,957,777 outstanding; 2012: 28,946,413 issued and 28,732,211 outstanding
Total stockholders' equity
Total Liabilities and Stockholders' Equity
Cash and cash equivalents
$
35.6
$
99.0
Trade receivables, net of allowances of $2.5 and $3.7, respectively
141.3
188.4
Inventories
145.0
109.2
Other current assets
58.4
51.5
Assets held for sale
3.0
3.0
383.3
451.1
129.1
126.2
94.7
100.7
$
607.1
$
678.0
Short-term debt and current portion of long-term debt
$
5.9
$
2.0
Accounts payable, trade and other
83.9
88.7
Advance and progress payments
92.6
74.3
Other current liabilities
79.8
85.8
262.2
250.8
102.6
189.1
93.3
104.6
30.2
27.9
Preferred stock, $0.01 par value; 20,000,000 shares authorized; no shares issued
-
-
0.3
0.3
Common stock held in treasury, at cost; 2012: 214,202 shares
-
(3.4
)
Additional paid-in capital
65.6
66.2
Retained earnings
135.5
123.5
Accumulated other comprehensive loss
(82.6
)
(81.0
)
118.8
105.6
$
607.1
$
678.0
The accompanying notes are an integral part of the condensed consolidated financial statements.
John Bean Technologies Corporation
Condensed Consolidated statementS of cash flows
(U naudited)
|
Nine Months Ended |
||||||||
|
September 30, |
||||||||
|
(In millions) |
2013 |
2012 |
||||||
|
Cash Flows From Operating Activities: |
||||||||
|
Net income |
$ | 19.5 | $ | 17.7 | ||||
|
Loss from discontinued operations, net of income taxes |
0.8 | 0.4 | ||||||
|
Income from continuing operations |
20.3 |
18.1 | ||||||
|
Adjustments to reconcile income from continuing operations to cash provided (required) by operating activities of continuing operations: |
||||||||
|
Depreciation and amortization |
18.8 | 17.9 | ||||||
|
Stock-based compensation |
5.1 | 5.4 | ||||||
|
Other |
0.1 | 3.3 | ||||||
|
Changes in operating assets and liabilities: |
||||||||
|
Trade receivables, net |
45.9 | 42.5 | ||||||
|
Inventories |
(37.2 | ) | (18.9 | ) | ||||
|
Accounts payable, trade and other |
(4.5 | ) | (4.5 | ) | ||||
|
Advance and progress payments |
18.1 | 33.0 | ||||||
|
Other assets and liabilities, net |
(17.7 | ) | (28.2 | ) | ||||
|
Cash provided by continuing operating activities |
48.9 | 68.6 | ||||||
|
Net cash required by discontinued operating activities |
(0.5 | ) | (0.5 | ) | ||||
|
Cash provided by operating activities |
48.4 | 68.1 | ||||||
|
Cash Flows From Investing Activities: |
||||||||
|
Acquisition |
- | (5.0 | ) | |||||
|
Capital expenditures |
(20.8 | ) | (17.3 | ) | ||||
|
Proceeds from disposal of assets |
0.7 | 0.9 | ||||||
|
Cash required by investing activities |
(20.1 | ) | (21.4 | ) | ||||
|
Cash Flows From Financing Activities: |
||||||||
|
Net decrease in short-term debt |
(0.5 | ) | (0.7 | ) | ||||
|
Net (payments) proceeds on credit facilities |
(89.0 | ) | 37.6 | |||||
|
Repayment of long-term debt |
(0.1 | ) | (1.1 | ) | ||||
|
Issuance of long-term debt |
8.0 | 0.8 | ||||||
|
Excess tax benefits |
0.3 | 0.6 | ||||||
|
Tax withholdings on stock-based compensation awards |
(2.3 | ) | (2.3 | ) | ||||
|
Dividends |
(7.5 | ) | (6.4 | ) | ||||
|
Other |
(0.3 | ) | 0.1 | |||||
|
Cash (required) provided by financing activities |
(91.4 | ) | 28.6 | |||||
|
Effect of foreign exchange rate changes on cash and cash equivalents |
(0.3 | ) | 0.1 | |||||
|
(Decrease) increase in cash and cash equivalents |
(63.4 | ) | 75.4 | |||||
|
Cash and cash equivalents, beginning of period |
99.0 | 9.0 | ||||||
|
Cash and cash equivalents, end of period |
$ | 35.6 | $ | 84.4 | ||||
The accompanying notes are an integral part of the condensed consolidated financial statements.
John Bean Technologies Corporation
Notes to Condensed Consolidated Financial Statements
(U naudited)
Note 1. Description of Business and Basis of Presentation
Description of Business
John Bean Technologies Corporation and its majority-owned consolidated subsidiaries (“JBT” or “we”) provide global technology solutions for the food processing and air transportation industries. We design, manufacture, test and service technologically sophisticated systems and products for customers through our JBT FoodTech and JBT AeroTech segments . We have manufacturing operations worldwide and are strategically located to facilitate delivery of our products and services to our customers.
Basis of Presentation
The preceding condensed consolidated balance sheet as of December 31, 2012, which has been derived from audited financial statements, and unaudited interim condensed consolidated financial statements, together with the notes thereto (the “statements”), of JBT have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. As permitted under those rules, certain footnotes and other financial information that are normally required by accounting principles generally accepted in the United States has been condensed or omitted. Therefore, these statements should be read in conjunction with the audited annual consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2012.
In the opinion of management, the statements reflect all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of our financial condition and operating results as of and for the periods presented. Revenue, expenses, assets and liabilities can vary during each quarter of the year. Therefore, the results and trends in these statements may not be representative of those for the full year or any future period.
Note 2. Inventories
Inventories consisted of the following:
(In millions)
September 30, 2013
December 31, 2012
Raw materials
Work in process
Finished goods
Gross inventories before LIFO reserves and valuation adjustments
LIFO reserves and valuation adjustments
$
64.7
$
59.9
55.0
30.6
90.7
82.0
210.4
172.5
(65.4
)
(63.3
)
Net inventories
$
145.0
$
109.2
Note 3. INCOME TAXES
The provision for income taxes for 2013 is based on a 34% effective tax rate and includes favorable discrete adjustments reflecting a lower tax liability for fiscal year 2012 of $0.6 million and $1.3 million for the three and nine month periods ended September 30, 2013, respectively. For 2012, the provision for income taxes is based on a 35% effective tax rate and includes favorable discrete adjustments reflecting a lower tax liability for fiscal year 2011 of $0.7 million and $0.6 million for the three and nine month periods ended September 30, 2012, respectively.
Note 4. Pension and Other Postretirement Benefits
Components of net periodic benefit cost (income) were as follows:
Pension Benefits
Other Postretirement Benefits
Three Months Ended
Nine Months Ended
Three Months Ended
Nine Months Ended
September 30,
September 30,
September 30,
September 30,
(In millions)
2013
2012
2013
2012
2013
2012
2013
2012
Service cost
Interest cost
Expected return on assets
Amortization of prior service cost (benefit)
Amortization of actuarial losses, net
Net periodic benefit cost (income)
$
0.4
$
0.4
$
1.3
$
1.1
$
0.1
$
-
$
0.1
$
-
3.4
3.4
10.2
10.3
-
0.1
0.2
0.3
(4.5
)
(4.4
)
(13.5
)
(13.2
)
-
-
-
-
0.1
-
0.1
0.1
(0.1
)
(0.2
)
(0.3
)
(0.6
)
1.1
0.9
3.2
2.4
-
-
-
-
$
0.5
$
0.3
$
1.3
$
0.7
$
-
$
(0.1
)
$
-
$
(0.3
)
Note 5. accumulated other comprehensive income (loss)
Accumulated other comprehensive income or loss (“AOCI”) represents the cumulative balance of other comprehensive income, net of tax, as of the balance sheet date. For JBT, AOCI is primarily composed of adjustments related to pension and other postretirement benefits plans and foreign currency translation adjustments. Changes in the AOCI balances for the quarter ended September 30, 2013 by component are shown in the following table:
Pension and
Other
Postretirement
Benefits
Foreign
Currency
Translation
Total
(In millions)
Beginning balance, June 30, 2013
Other comprehensive income before reclassification
Amounts reclassified from accumulated other comprehensive income
Net current period other comprehensive income
Ending balance, September 30, 2013
$
(84.3
)
$
(2.7
)
$
(87.0
)
-
3.6
3.6
0.8
-
0.8
0.8
3.6
4.4
$
(83.5
)
$
0.9
$
(82.6
)
Reclassification adjustments from AOCI into earnings for pension and other postretirement benefits plans for the three months ended September 30, 2013 were $1.1 million in selling, general and administrative expense and $0.3 million in provision for income taxes.
Changes in the AOCI balances for the nine months ended September 30, 2013 by component are shown in the following table:
Pension and
Other
Postretirement
Benefits
Foreign
Currency
Translation
Total
(In millions)
Beginning balance, December 31, 2012
Other comprehensive loss before reclassification
Amounts reclassified from accumulated other comprehensive income
Net current period other comprehensive income (loss)
Ending balance, September 30, 2013
$
(85.4
)
$
4.4
$
(81.0
)
-
(3.5
)
(3.5
)
1.9
-
1.9
1.9
(3.5
)
(1.6
)
$
(83.5
)
$
0.9
$
(82.6
)
Reclassification adjustments from AOCI into earnings for pension and other postretirement benefits plans for the nine months ended September 30, 2013 were $3.0 million in selling, general and administrative expense and $1.1 million in provision for income taxes.
Note 6. Earnings Per Share
The following table sets forth the computation of basic and diluted earnings per share from continuing operations for the respective periods and our basic and dilutive shares outstanding:
Three Months Ended
Nine Months Ended
September 30,
September 30,
(In millions, except per share data)
2013
2012
2013
2012
Basic earnings per share:
Income from continuing operations
Weighted average number of shares outstanding
Basic earnings per share from continuing operations
Diluted earnings per share:
Income from continuing operations
Weighted average number of shares outstanding
Effect of dilutive securities:
Restricted stock
Total shares and dilutive securities
Diluted earnings per share from continuing operations
$
7.4
$
6.2
$
20.3
$
18.1
29.2
29.2
29.2
29.1
$
0.25
$
0.21
$
0.69
$
0.62
$
7.4
$
6.2
$
20.3
$
18.1
29.2
29.2
29.2
29.1
0.5
0.4
0.4
0.4
29.7
29.6
29.6
29.5
$
0.25
$
0.21
$
0.68
$
0.61
Note 7. Derivative Financial Instruments and Risk Management
Derivative Financial Instruments
We hold derivative financial instruments for the purpose of hedging foreign currency risks for certain identifiable and anticipated transactions.
We manufacture and sell our products in a number of countries throughout the world and, as a result, are exposed to movements in foreign currency exchange rates. Our major foreign currency exposures involve the markets in Western Europe, South America and Asia. Many of our sales and purchase contracts are written contemplating this risk and therefore contain embedded derivatives, which we take into consideration as part of our risk management policy. The purpose of our foreign currency hedging activities is to manage the economic impact of exchange rate volatility associated with anticipated foreign currency purchases and sales made in the normal course of business. We primarily utilize forward foreign exchange contracts with maturities of less than 2 years. We do not apply hedge accounting for these forward foreign exchange contracts. As of September 30, 2013, we held forward foreign exchange contracts with an aggregate notional value of $486.8 million.
The following table presents the fair value of foreign currency derivatives included within the condensed consolidated balance sheets:
As of September 30, 2013
As of December 31, 2012
(In millions)
Derivative Assets
Derivative Liabilities
Derivative Assets
Derivative Liabilities
Other current assets / liabilities
Other assets / liabilities
Total
$
3.7
$
3.8
$
5.9
$
6.6
2.6
0.5
1.7
0.4
$
6.3
$
4.3
$
7.6
$
7.0
Refer to Note 8. Fair Value of Financial Instruments, for a description of how the values of the above financial instruments are determined.
A master netting arrangement allows counterparties to net settle amounts owed to each other as a result of separate offsetting derivative transactions. We enter into master netting arrangements with our counterparties when possible to mitigate credit risk in derivative transactions by permitting us to net settle for transactions with the same counterparty. However, we do not net settle with such counterparties. We present our derivatives at gross fair values in the condensed consolidated balance sheets. As of September 30, 2013 and December 31, 2012, information related to these offsetting arrangements was as follows:
(in millions)
As of September 30, 2013
Offsetting of Assets
Gross Amounts Not Offset in the Consolidated Balance Sheets
Gross Amounts of Recognized Assets
Gross Amounts Offset in the Consolidated Balance Sheets
Net Presented in the Consolidated Balance Sheets
Financial Instruments
Net Amount
Derivatives
Offsetting of Liabilities
As of September 30, 2013
Gross Amounts Not Offset in the Consolidated Balance Sheets
Gross Amounts of Recognized Liabilities
Gross Amounts Offset in the Consolidated Balance Sheets
Net Presented in the Consolidated Balance Sheets
Financial Instruments
Net Amount
Derivatives
(in millions)
As of December 31, 2012
Offsetting of Assets
Gross Amounts Not Offset in the Consolidated Balance Sheets
Gross Amounts of Recognized Assets
Gross Amounts Offset in the Consolidated Balance Sheets
Net Presented in the Consolidated Balance Sheets
Financial Instruments
Net Amount
Derivatives
Offsetting of Liabilities
As of December 31, 2012
Gross Amounts Not Offset in the Consolidated Balance Sheets
Gross Amounts of Recognized Liabilities
Gross Amounts Offset in the Consolidated Balance Sheets
Net Presented in the Consolidated Balance Sheets
Financial Instruments
Net Amount
Derivatives
$
6.3
$
-
$
6.3
$
(3.2
)
$
3.1
$
4.3
$
-
$
4.3
$
(3.2
)
$
1.1
$
7.6
$
-
$
7.6
$
(3.8
)
$
3.8
$
7.0
$
-
$
7.0
$
(3.8
)
$
3.2
The following table presents the location and amount of gains (losses) from derivatives not designated as hedging instruments in the condensed consolidated statements of income:
Derivatives not designated as hedging instruments
Location of Gain (Loss) Recognized in Income on Derivatives
Amount of Gain (Loss) Recognized in Income on Derivatives
Three Months Ended September 30,
Nine Months Ended September 30,
(In millions)
2013
2012
2013
2012
Foreign exchange contracts
Revenue
Foreign exchange contracts
Cost of sales
Foreign exchange contracts
Other income, net
Total
Remeasurement of assets and liabilities in foreign currencies
Net (loss) gain on foreign currency transactions
$
(0.6
)
$
1.3
$
0.9
$
3.2
(0.3
)
(0.6
)
(0.4
)
(1.0
)
(0.1
)
0.1
(0.5
)
0.2
(1.0
)
0.8
-
2.4
(0.6
)
(0.8
)
(0.6
)
(1.1
)
$
(1.6
)
$
-
$
(0.6
)
$
1.3
Credit Risk
By their nature, financial instruments involve risk including credit risk for non-performance by counterparties. Financial instruments that potentially subject us to credit risk primarily consist of trade receivables and derivative contracts. We manage the credit risk on financial instruments by transacting only with financially secure counterparties, requiring credit approvals and credit limits, and monitoring counterparties’ financial condition. Our maximum exposure to credit loss in the event of non-performance by the counterparty is limited to the amount drawn and outstanding on the financial instrument. Allowances for the losses are established based on collectability assessments.
Note 8. Fair Value of Financial Instruments
The fair value framework requires the categorization of assets and liabilities into three levels based upon the assumptions (inputs) used to price the assets or liabilities. Level 1 provides the most reliable measure of fair value, whereas Level 3 generally requires significant management judgment. The three levels are defined as follows:
|
• |
Level 1 : Unadjusted quoted prices in active markets for identical assets and liabilities. |
|
• |
Level 2 : Observable inputs other than those included in Level 1. For example, quoted prices for similar assets or liabilities in active markets or quoted prices for identical assets or liabilities in inactive markets. |
|
• |
Level 3 : Unobservable inputs reflecting management’s own assumptions about the inputs used in pricing the asset or liability. |
Financial assets and financial liabilities measured at fair value on a recurring basis are as follows:
As of September 30, 2013
As of December 31, 2012
(In millions)
Total
Level 1
Level 2
Level 3
Total
Level 1
Level 2
Level 3
Assets:
Investments
Derivatives
Total assets
Liabilities:
Derivatives
$
11.2
$
11.2
$
-
$
-
$
11.1
$
11.1
$
-
$
-
$
6.3
-
6.3
-
7.6
-
7.6
-
$
17.5
$
11.2
$
6.3
$
-
$
18.7
$
11.1
$
7.6
$
-
$
4.3
$
-
$
4.3
$
-
$
7.0
$
-
$
7.0
$
-
Investments represent securities held in a trust for the non-qualified deferred compensation plan. Investments are classified as trading securities and are valued based on quoted prices in active markets for identical assets that we have the ability to access. Investments are included in other assets in the condensed consolidated balance sheets. Investments include an unrealized gain of $0.4 million as of September 30, 2013 and an unrealized gain of $0.4 million as of December 31, 2012.
We use the income approach to measure the fair value of derivative instruments on a recurring basis. This approach calculates the present value of the future cash flow by measuring the change between the derivative contract rate and the published market indicative currency rate, multiplied by the contract notional values, and applying an appropriate discount rate as well as a factor of credit risk.
The carrying amounts of cash and cash equivalents, trade receivables and accounts payables, as well as financial instruments included in other current assets and other current liabilities, approximate fair values because of their short-term maturities.
The carrying values and the estimated fair values of our debt financial instruments are summarized in the table below:
As of September 30, 2013
As of December 31, 2012
(In millions)
Carrying Value
Estimated Fair Value
Carrying Value
Estimated Fair Value
Senior unsecured notes due July 31, 2015
Revolving credit facility, expires November 30, 2017
Brazilian loan due August 20, 2014
Brazilian loan due April 15, 2016
Foreign credit facilities
Other
$
75.0
$
81.2
$
75.0
$
83.9
24.4
24.4
113.5
113.5
4.0
4.0
-
-
3.5
3.0
-
-
1.0
1.0
1.8
1.8
0.6
0.6
0.8
0.8
There is no active or observable market for our senior unsecured notes or our Brazilian loans. Therefore, the estimated fair value of the notes and the loans are based on discounted cash flows using current interest rates available for debt with similar terms and remaining maturities. The estimate of the all-in interest rate for discounting the notes and the loans are based on a broker quote for notes and loans with similar terms. We do not have a rate adjustment for risk profile changes, covenant issues or credit rating changes, therefore the broker quote is deemed to be the closest approximation of current market rates. The carrying values of the remaining borrowings approximate their fair values due to their variable interest rates.
Note 9. Commitments and Contingencies
We are involved in legal proceedings arising in the ordinary course of business. Although the results of litigation cannot be predicted with certainty, we do not believe that the resolution of the proceedings that we are involved in, either individually or taken as a whole, will have a material adverse effect on our business, results of operations or financial condition.
Under our Separation and Distribution Agreement with FMC Technologies, we have assumed liabilities related to specified legal proceedings arising from our business prior to the spin-off. As a result, although FMC Technologies will remain the named defendant, we will manage the litigation and indemnify FMC Technologies for costs, expenses and judgments arising from litigation. We do not believe that any existing litigation we have assumed will have a material effect on our business, results of operations or financial condition.
Guarantees and Product Warranties
In the ordinary course of business with customers, vendors and others, we issue standby letters of credit, performance bonds, surety bonds and other guarantees. These financial instruments, which totaled $87.0 million at September 30, 2013, represent guarantees of our future performance. We also have provided $5.2 million of bank guarantees and letters of credit to secure a portion of our existing financial obligations. The majority of these financial instruments expire within two years, and we expect to replace them through the issuance of new or the extension of existing letters of credit and surety bonds. In some instances we guarantee a small portion of our customers’ financing arrangements and retain recourse to the equipment sold. As of September 30, 2013, the maximum future payment obligation of such guarantees was $2.7 million. Historically, we have not made significant payments associated with guarantees of our customers’ financing arrangements.
We provide warranties of various lengths and terms to certain of our customers based on standard terms and conditions and negotiated agreements. We provide for the estimated cost of warranties at the time revenue is recognized for products where reliable, historical experience of warranty claims and costs exists. We also provide warranty liability when additional specific obligations are identified. The obligation reflected in other current liabilities in the condensed consolidated balance sheets is based on historical experience by product and considers failure rates and the related costs in correcting a product failure. Warranty cost and accrual information were as follows:
Three Months Ended
Nine Months Ended
September 30,
September 30,
(In millions)
2013
2012
2013
2012
Balance at beginning of period
Expense for new warranties
Adjustments to existing accruals
Claims paid
Balance at end of period
$
6.6
$
6.6
$
7.3
$
7.3
3.2
2.5
8.4
6.3
-
(0.6
)
(0.6
)
(0.8
)
(2.7
)
(2.9
)
(8.0
)
(7.2
)
$
7.1
$
5.6
$
7.1
$
5.6
Note 10. Business Segment Information
Segment operating profit is defined as total segment revenue less segment operating expenses. Business segment information was as follows:
Three Months Ended
Nine Months Ended
September 30,
September 30,
(In millions)
2013
2012
2013
2012
Revenue
JBT FoodTech
JBT AeroTech
Other revenue (1) and intercompany eliminations
Total revenue
Income before income taxes
Segment operating profit:
JBT FoodTech
JBT AeroTech
Total segment operating profit
Corporate items:
Corporate expense (2)
Other expense, net (1)
Net interest expense
Total corporate items
Income from continuing operations before income taxes
$
138.2
$
117.1
$
395.3
$
370.9
97.0
88.0
250.9
251.5
(1.7
)
0.2
(0.1
)
2.0
$
233.5
$
205.3
$
646.1
$
624.4
$
12.3
$
9.0
$
39.9
$
29.8
8.8
8.4
16.9
21.2
21.1
17.4
56.8
51.0
(5.5
)
(4.0
)
(15.0
)
(12.3
)
(4.0
)
(3.1
)
(8.8
)
(6.6
)
(1.2
)
(1.8
)
(4.2
)
(5.2
)
(10.7
)
(8.9
)
(28.0
)
(24.1
)
$
10.4
$
8.5
$
28.8
$
26.9
1) Other revenue comprises certain gains and losses on derivatives related to foreign exchange exposure. Other expense, net, generally includes stock-based compensation, other employee benefits, LIFO adjustments, restructuring costs, foreign exchange gains and losses, and the impact of unusual or strategic transactions not representative of segment operations.
● In the first quarter of 2012, we released $0.3 million of restructuring reserves recorded in 2010 related to JBT AeroTech.
(2) Corporate expense primarily includes corporate staff expenses.
In the fourth quarter of 2011, we implemented a cost reduction plan designed to grow margins by lowering costs in JBT FoodTech across the developed world. The cost reduction plan consisted primarily of a net workforce reduction of approximately 115 positions. We paid $0.9 million, $0.2 million and $0.3 million related to the plan in the first, second and third quarters of 2013, respectively. We expect to pay approximately $0.2 million in the fourth quarter of 2013 to complete the plan.
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Cautionary Note Regarding Forward-Looking Statements
This Form 10-Q, our Annual Report on Form 10-K and other materials filed or to be filed by us with the Securities and Exchange Commission, as well as information in oral statements or other written statements made or to be made by us, contain statements that are, or may be considered to be, forward-looking statements. All statements that are not historical facts, including statements about our beliefs or expectations, are forward-looking statements. You can identify these forward-looking statements by the use of forward-looking words such as “outlook,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” “should,” “seeks,” “approximately,” “predicts,” “intends,” “plans,” “estimates,” “anticipates,” “foresees” or the negative version of those words or other comparable words and phrases. Any forward-looking statements contained in this Form 10-Q are based upon our historical performance and on current plans, estimates and expectations. The inclusion of this forward-looking information should not be regarded as a representation by us or any other person that the future plans, estimates or expectations contemplated by us will be achieved.
We believe that the factors that could cause our actual results to differ materially include but are not limited to the factors we described in our Form 10-K under “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” If one or more of those or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, actual results may vary materially from what we projected. Consequently, actual events and results may vary significantly from those included in or contemplated or implied by our forward-looking statements. The forward-looking statements included in this Form 10-Q are made only as of the date hereof, and we undertake no obligation to publicly update or review any forward-looking statement made by us or on our behalf, whether as a result of new information, future developments, subsequent events or circumstances or otherwise.
Executive Overview
We are a global technology solutions provider for the food processing and air transportation industries. We design, manufacture, test and service technologically sophisticated systems and products for customers. We have established a large installed base of food processing equipment as well as airport equipment and have built a strong global presence with manufacturing, sourcing, sales and service organizations located on six continents to support our equipment that has been delivered to more than 100 countries.
We announced the implementation of a management succession plan in the third quarter of 2013. The Company named Tom Giacomini President and Chief Executive Officer, effective September 9, 2013. Charlie Cannon, previously Chairman, Chief Executive Officer and President, remains with the company as Executive Chairman of the Board. Ron Mambu, Chief Financial Officer, announced plans to retire upon the identification of his successor.
We report financial results for two business segments: JBT FoodTech and JBT AeroTech.
Third Quarter Summary:
|
● |
Revenue increased $28.2 million or 13.7% in third quarter 2013, compared to the same period in 2012 |
|
● |
Our FoodTech and AeroTech segment generated operating income of $12.3 million and $8.8 million, respectively, in the third quarter of 2013, compared to $9.0 million and $8.4 million, respectively, in the third quarter of 2012 |
|
● |
We generated cash from continuing operating activities of $48.9 million during the nine months ended September 30, 2013 compared to $68.6 million in the same period in 2012 |
|
● |
Backlog at September 30, 2013 was $366.3 million, an increase of $22.4 million and $83.2 million compared to September 30 and December 31, 2012, respectively. Third quarter inbound orders were $247.5 million, a decrease of $11.2 million compared to the same period in 2012 |
|
● |
Debt, net of cash, at September 30, 2013 was $72.9 million, a decrease of $19.2 million since December 31, 2012. |
CONSOLIDATED RESULTS OF OPERATIONS
Three Months Ended
Favorable /
September 30,
(Unfavorable)
(In millions, except %)
2013
2012
%
Revenue
Cost of sales
Gross profit
Selling, general and administrative expense
Research and development expense
Other (income) expense, net
Operating income
Interest income
Interest expense
Income from continuing operations before income taxes
Provision for income taxes
Income from continuing operations
Loss from discontinued operations, net of taxes
Net income
____________
$
$
233.5
$
205.3
$
28.2
13.7
179.3
153.3
(26.0
)
(17.0
)
54.2
52.0
2.2
4.2
39.2
37.9
(1.3
)
(3.4
)
3.7
3.3
(0.4
)
(12.1
)
(0.3
)
0.5
0.8
*
11.6
10.3
1.3
12.6
0.6
0.1
0.5
*
1.8
1.9
0.1
5.3
10.4
8.5
1.9
22.4
3.0
2.3
(0.7
)
(30.4
)
7.4
6.2
1.2
19.4
0.6
0.1
(0.5
)
*
$
6.8
$
6.1
$
0.7
11.5
* Not meaningful
Total revenue increased $28.2 million in the third quarter of 2013 compared to the same period in 2012. Equipment revenue increased $21.4 million in the third quarter of 2013 driven by both FoodTech and AeroTech. Aftermarket sales contributed $9.3 million in increased revenue with $6.9 million of the increase attributable to FoodTech and $2.4 million achieved by AeroTech. These increases were partially offset by a decrease of approximately $2 million in AeroTech airport service revenue and unfavorable foreign currency translation of approximately $1.1 million that was primarily the result of a weaker Brazilian real.
Operating income increased by $1.3 million or 12.6% in the third quarter of 2013 compared to the same period in 2012 resulting from the following:
|
● |
Gross profit increased by $2.2 million. Higher volume contributed $7.4 million but was partly offset by lower gross margin which decreased operating profit by $4.8 million. Lower gross profit margin was mostly the result of a shift in mix as a higher proportion of revenue came from lower margin product lines in the three months ended September 30, 2013. |
|
● |
Selling, general and administrative expenses increased by $1.3 million. The increase was primarily attributable to $1.0 million of cost related to a management succession plan. The remaining increase was driven by higher incentive compensation and pension expense. |
|
● |
Research and development expense increased by $0.4 million due to higher expenditures across FoodTech protein processing product lines as part of our continued 4G value creation strategy. |
|
● |
Other expense (income), net improved by $0.8 million, driven primarily by the absence of the strategy expenses incurred in the same period of 2012. |
Interest expense remained relatively flat in the third quarter of 2013 compared to the same period in 2012. The increase in interest income of $0.5 million was generated by cash invested overseas during the third quarter of 2013.
Income tax expense in the third quarter of 2013 and 2012 reflected an expected effective income tax rate for the full year of 34% and 35%, respectively. We recognized tax benefits of $0.6 million in the three months ended September 30, 2013, reflecting the determination of lower income tax liabilities for previous years.
OPERATING RESULTS OF BUSINESS SEGMENTS
THREE MONTHS ENDED SEPTEMBER 30, 2013 AND 2012
|
Three Months Ended |
Favorable / |
|||||||||||||||
|
September 30, |
(Unfavorable) |
|||||||||||||||
|
(In millions, except %) |
2013 |
2012 |
% |
|||||||||||||
|
Revenue |
||||||||||||||||
|
JBT FoodTech |
$ | 138.2 | $ | 117.1 | $ | 21.1 | 18.0 | |||||||||
|
JBT AeroTech |
97.0 | 88.0 | 9.0 | 10.2 | ||||||||||||
|
Other revenue and intercompany eliminations |
(1.7 | ) | 0.2 | (1.9 | ) | * | ||||||||||
|
Total revenue |
$ | 233.5 | $ | 205.3 | $ | 28.2 | 13.7 | |||||||||
|
Income before income taxes |
||||||||||||||||
|
Segment operating profit: |
||||||||||||||||
|
JBT FoodTech |
$ | 12.3 | $ | 9.0 | $ | 3.3 | 36.7 | |||||||||
|
JBT AeroTech |
8.8 | 8.4 | 0.4 | 4.8 | ||||||||||||
|
Total segment operating profit |
21.1 | 17.4 | 3.7 | 21.3 | ||||||||||||
|
Corporate items: |
||||||||||||||||
|
Corporate expense |
(5.5 | ) | (4.0 | ) | (1.5 | ) | (37.5 | ) | ||||||||
|
Other expense, net |
(4.0 | ) | (3.1 | ) | (0.9 | ) | (29.0 | ) | ||||||||
|
Net interest expense |
(1.2 | ) | (1.8 | ) | 0.6 | 33.3 | ||||||||||
|
Total corporate items |
(10.7 | ) | (8.9 | ) | (1.8 | ) | (20.2 | ) | ||||||||
|
Income from continuing operations before income taxes |
$ | 10.4 | $ | 8.5 | $ | 1.9 | 22.4 | |||||||||
* Not meaningful
Segment operating profit is defined as total segment revenue less segment operating expenses. The following items have been excluded in computing segment operating profit: corporate staff expense, foreign currency-related gains and losses, LIFO provisions, restructuring costs, certain employee benefit expenses, interest income and expense and income taxes.
JBT FoodTech
JBT FoodTech revenue increased by $21.1 million in the third quarter of 2013 compared to the same period in 2012. Higher equipment sales and aftermarket revenue contributed $14.6 million and $6.9 million, respectively. In-container equipment sales added $6.2 million while fruit and juice processing equipment sales contributed $4.7 million. Freezing and protein processing products sales increased by $3.4 million which was driven mostly by growth in North America and Asia. The strongest growth in aftermarket sales was in-container equipment also with contribution from North America freezing and protein processing products. These increases were partially offset by lower freezing equipment volume out of Europe which decreased revenue by approximately $11 million. Unfavorable foreign currency translation that was primarily the result of a weaker Brazilian real impacted revenue by $0.8 million.
JBT FoodTech operating profit increased by $3.3 million in the third quarter of 2013 compared to the same period in 2012. Operating margin increased from 7.7% in the third quarter of 2012 to 8.9% in the same period in 2013. This was primarily driven by higher sales volume which contributed $6.3 million in higher profit. Lower gross profit margin decreased operating profit by $1.7 million, primarily the result of a higher proportion of revenue from certain lower margin in-container equipment product lines. Selling, general and administrative expense increased by $0.6 million primarily driven by business growth of in-container equipment as well as increased employee-related expense in Asia and Latin America. Research and development expense increased by $0.4 million reflecting investment in protein processing product lines.
JBT AeroTech
JBT AeroTech revenue increased by $9.0 million in the third quarter of 2013, compared to the same period in 2012. Higher revenue was driven primarily by improved deicer demand as well as increased automated systems sales. Higher ground supports and gate equipment aftermarket sales also contributed to the higher revenue. These increases were partially offset by a decrease in airport service revenue and Halvorsen product line sales.
JBT AeroTech third quarter operating profit increased by $0.4 million but operating margin declined compared to the same period in 2012. Higher volume in ground support equipment and automated systems contributed $2.0 million in profit. The increase was offset by a decrease in profit of $2.2 million due to lower gross margins which was mainly the result of an unfavorable gate equipment product mix. Selling, general and administrative expense decreased by $0.6 million, compared to the same period in 2012, as the result of lower employee-related costs and legal expenses.
Corporate Items
Corporate items increased by $1.8 million in the third quarter of 2013 compared to the same period in 2012. The increase was primarily driven by costs related to a management succession plan of approximately $1.0 million and higher foreign currency losses of approximately $1.6 million. The increase was offset by lower net interest expense of $0.6 million.
CONSOLIDATED RESULTS OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 2013 AND 2012
Nine Months Ended
Favorable /
September 30,
(Unfavorable)
(In millions, except %)
2013
2012
%
Revenue
Cost of sales
Gross profit
Selling, general and administrative expense
Research and development expense
Other income, net
Operating income
Interest income
Interest expense
Income from continuing operations before income taxes
Provision for income taxes
Income from continuing operations
20.3
Loss from discontinued operations, net of taxes
Net income
___________
$
646.1
$
624.4
$
21.7
3.5
482.5
468.0
(14.5
)
(3.1
)
163.6
156.4
7.2
4.6
120.6
114.6
(6.0
)
(5.2
)
10.6
10.5
(0.1
)
(1.0
)
(0.6
)
(0.8
)
(0.2
)
(25.0
)
33.0
32.1
0.9
2.8
1.4
0.2
1.2
*
5.6
5.4
(0.2
)
3.7
28.8
26.9
1.9
7.1
8.5
8.8
0.3
3.4
18.1
2.2
12.2
0.8
0.4
(0.4
)
*
$
19.5
$
17.7
$
1.8
10.2
* Not meaningful
Total revenue increased by $21.7 million in the nine months ended September 30, 2013 compared to the same period in 2012. Increased revenue was driven primarily by new equipment sales of $21.4 million in FoodTech. Strong aftermarket sales growth of $5.5 million from both FoodTech and AeroTech also contributed to the revenue increase. These increases were partially offset by decreased airport service revenue of $3.9 million and unfavorable foreign exchange impact of $2.3 million that primarily was the result of weaker a Brazilian real.
Operating income increased $0.9 million or 2.8% in the nine months ended September 30, 2013 compared to the same period in 2012 resulting from the following:
|
● |
Higher sales volume drove $6.0 million in higher operating profit. Margin improvement contributed $3.2 million. The lower production costs of high capacity freezers manufactured in the U.S. and various margin improvement initiatives across JBT FoodTech contributed $7.5 million. This was partially offset by a decrease of $4.9 million due to lower margins in gate equipment in JBT AeroTech. |
|
● |
Selling, general and administrative expenses increased by $6.0 million. Higher selling costs, employee-related costs and legal costs in JBT FoodTech contributed approximately $3.7 million to the increase. Incentive compensation expense and pension expense increased by $0.9 million and $0.6 million, respectively. |
|
● |
Research and development spending are consistent with the same period in 2012. |
|
● |
Other income, net decreased by $0.2 million primarily due to foreign currency losses. |
Income tax expense in the nine months ended September 30, 2013 and 2012 reflected an expected effective income tax rate for the full year of 34% and 35%, respectively. We recognized tax benefits of $1.3 million in the nine months ended September 30, 2013, reflecting the determination of lower income tax liabilities for the previous years.
OPERATING RESULTS OF BUSINESS SEGMENTS
NINE MONTHS ENDED SEPTEMBER 30, 2013 AND 2012
Nine Months Ended
Favorable /
September 30,
(Unfavorable)
(In millions, except %)
2013
2012
%
Revenue
JBT FoodTech
JBT AeroTech
Other revenue and intercompany eliminations
Total revenue
Income before income taxes
Segment operating profit:
JBT FoodTech
JBT AeroTech
Total segment operating profit
Corporate items:
Corporate expense
Other expense, net
Net interest expense
Total corporate items
Income from continuing operations before income taxes
$
395.3
$
370.9
$
24.4
6.6
250.9
251.5
(0.6
)
(0.2
)
(0.1
)
2.0
(2.1
)
*
$
646.1
$
624.4
$
21.7
3.5
$
39.9
$
29.8
$
10.1
33.9
16.9
21.2
(4.3
)
(20.3
)
56.8
51.0
5.8
11.4
(15.0
)
(12.3
)
(2.7
)
(22.0
)
(8.8
)
(6.6
)
(2.2
)
(33.3
)
(4.2
)
(5.2
)
1.0
19.2
(28.0
)
(24.1
)
(3.9
)
(16.2
)
$
28.8
$
26.9
$
1.9
7.1
____________
* Not meaningful
Segment operating profit is defined as total segment revenue less segment operating expenses. The following items have been excluded in computing segment operating profit: corporate staff expense, foreign currency related gains and losses, LIFO provisions, restructuring costs, certain employee benefit expenses, interest income and expense and income taxes.
JBT FoodTech
JBT FoodTech revenue increased by $24.4 million in the nine months ended September 30, 2013 compared to the same period in 2012. The increase was primarily driven by approximately $21 million in higher new equipment sales. Fruit and juice processing equipment sales contributed $14.0 million and in-container equipment added $5.5 million. Revenue from freezing and protein processing products increased by $1.1 million primarily driven by growth in North America partially offset by lower revenue in Europe. Aftermarket revenue increased by $2.4 million primarily driven by in-container aftermarket sales. Unfavorable foreign currency translation that was primarily the result of a weaker Brazilian real reduced revenue by $1.8 million.
JBT FoodTech operating profit increased by $10.1 million in the nine months ended September 30, 2013 compared to the same period in 2012. Strong sales volume resulted in $7.4 million of higher profit. Operating margin increased from 8.0% in the third quarter of 2012 to 10.0% in the same period in 2013. Higher gross profit margin contributed $7.5 million of higher profit which was primarily the result of lower costs on freezing and chilling products manufactured in North America, historically exported from Sweden. Savings from cost reduction initiatives across FoodTech and improved productivity also contributed to the higher gross profit margin. Selling, general and administrative expense increased by $3.7 million. The increase was primarily driven by higher legal costs in Europe and increased employee-related spending in Europe and Asia. An increase in selling costs due to in-container equipment business growth also contributed to the increase. Research and development expense increased by $0.5 million reflecting investment in protein processing product lines.
JBT AeroTech
JBT AeroTech’s revenue in the nine months ended September 30, 2013 remained relatively flat compared to the same period of 2012. Revenue increases from ground support equipment and aftermarket contributed $10.5 million and $5.0 million, respectively. The higher product revenue was primarily driven by higher demand for deicers. These increases were partially offset by decreased equipment sales of $2.0 million in gate equipment and decreased automated systems sales of $3.2 million. Halvorsen products sales declined by $5.7 million. Airport services sales decreased by $3.7 million.
JBT AeroTech’s operating profit decreased by $4.3 million in the nine months ended September 30, 2013, compared to the same period of 2012. Operating margin decreased from 8.4% in third quarter of 2012 to 6.7% in the same period of 2013. Lower profit margin accounted for $3.5 million of the profit decline that was primarily attributable to an unfavorable gate equipment product mix. The absence of a $1.4 million gain on the sale of our French hospital automated systems contracts and services to Swisslog in the second quarter of 2012 also contributed to the profit decline. Selling, general and administrative spending remained relatively consistent with the same period in 2012. Research and development expense decreased by $0.6 million as the result of shifting engineering resources from research and development efforts to project production.
Corporate Items
Corporate items increased by $3.9 million in the nine months ended September 30, 2013 compared to the same period in 2012. The increase was primarily driven by higher foreign currency loss of $1.9 million, higher long term incentive compensation and pension expenses of $1.4 million, approximately $1.0 million in costs related to a management succession plan and $0.6 million higher consulting expense. The increases were partly offset by $1.0 million lower net interest expense.
Inbound Orders and Order Backlog
Inbound orders represent the estimated sales value of confirmed customer orders received during the reporting period. Inbound orders were as follows:
Three Months Ended
Nine Months Ended
September 30,
September 30,
(In millions)
2013
2012
2013
2012
JBT FoodTech
JBT AeroTech
Other and intercompany eliminations
Total inbound orders
$
127.9
$
135.7
$
432.3
$
445.5
121.3
122.8
297.1
292.3
(1.7
)
0.2
(0.1
)
2.0
$
247.5
$
258.7
$
729.3
$
739.8
Order backlog is calculated as the estimated sales value of unfilled, confirmed customer orders at the reporting date.
Order Backlog
(In millions)
September 30, 2013
December 31, 2012
September 30, 2012
JBT FoodTech
JBT AeroTech
Total order backlog
$
184.8
$
147.8
$
173.1
181.5
135.3
170.8
$
366.3
$
283.1
$
343.9
Order backlog in our JBT FoodTech segment at September 30, 2013 increased by $37.0 million over December 31, 2012 and by $11.7 million as compared to September 30, 2012. The increase over December 31, 2012 was primarily driven by approximately $24 million of higher backlog for freezing/chilling and protein processing products in Europe and Asia Pacific regions. Higher backlog for in-container processing equipment contributed approximately $10 million to the increase. The increase in order backlog as compared to September 30, 2012 was primarily driven by higher backlog for freezing and chilling products in Asia Pacific region and in-container processing equipment as well as fruit and juice equipment. These increases were partly offset by decreased freezing/chilling and protein processing products backlog in North America. Order backlog in our JBT AeroTech segment at September 30, 2013 increased by $46.2 million over December 31, 2012 primarily driven by orders for automated systems and gate equipment. Order backlog increased by $10.7 million as compared to September 30, 2012, primarily driven by higher automated system and gate equipment orders.
Liquidity and Capital Resources
Our primary sources of liquidity are cash provided by operating activities of our U.S. and foreign operations and borrowings from our credit facility. The cash flows generated by our operations and the credit facility have historically been sufficient to satisfy our working capital needs, research and development activities, capital expenditures, pension contributions, authorized share repurchases, dividends, acquisitions and other financing requirements. We are not aware of any circumstances that are likely to result in our liquidity increasing or decreasing materially in the near-term.
As of September 30, 2013, we had $35.6 million of cash and cash equivalents, $32.4 million of which was held by our foreign subsidiaries. Although these funds are considered permanently invested in our foreign subsidiaries, we are not presently aware of any restrictions on the repatriation of these funds. We maintain significant operations outside of the U.S. and use our cash for working capital, capital expenditures and business acquisitions in these foreign subsidiaries. If these funds were needed to fund our operations or satisfy obligations in the U.S., they could be repatriated and their repatriation to the U.S. could cause us to incur additional U.S. income taxes and potential foreign withholding taxes. Any additional taxes may be offset, in part or in whole, by foreign tax credits. The amount of such taxes and application of tax credits would depend on the income tax laws and other circumstances at the time of repatriation.
Permanently invested funds held outside of the U.S. are available to fund operations in non-U.S. subsidiaries; such cash is also loaned to the U.S. parent company. Under the Internal Revenue Code, these loans are permitted to be outstanding for 30 days or less and all such loans are required to be outstanding for a total of less than 60 days during the year. Amounts outstanding subject to this rule at September 30, 2013 were $97.3 million. We may choose to access such funds again in the future as allowed under the rule.
Cash Flows
Cash flows for the nine months ended September 30, 2013 and 2012 were as follows:
(In millions)
2013
2012
Cash provided by continuing operating activities
Cash required by investing activities
Cash (required) provided by financing activities
Net cash required by discontinued operations
Effect of foreign exchange rate changes on cash and cash equivalents
Increase (decrease) in cash and cash equivalents
$
48.9
$
68.6
(20.1
)
(21.4
)
(91.4
)
28.6
(0.5
)
(0.5
)
(0.3
)
0.1
$
(63.4
)
$
75.4
Cash provided by continuing operating activities during the nine months ended September 30, 2013 was $48.9 million, representing a $19.7 million decrease compared to the same period in 2012. The change in operating cash flows was primarily attributable to higher inventory investment in the third quarter of 2013 as a result of higher backlog compared to the same period in 2012.
Cash required by investing activities during the nine months ended September 30, 2013 was $20.1 million, relatively unchanged compared to the same period in 2012. The absence of acquisition spending of $5.0 million that occurred in May 2012 was partially offset by increased capital expenditures of approximately $4 million. Much of our capital spending supports the maintenance and upgrading of our installed base of leased equipment. We anticipate spending $16 million to $19 million on construction of a new JBT FoodTech plant in Lakeland, Florida to replace an existing plant in the same area. We expect to spend approximately $3 million on its construction in the fourth quarter of 2013.
Cash required by financing activities during the nine months ended September 30, 2013 was $91.4 million compared to cash provided by financing activities of $28.6 million in the same period in 2012. The change in financing cash flow was primarily driven by the reduction of our borrowings under the 5-year revolving credit facility.
Financing Arrangements
We have a $300 million 5-year revolving credit facility that expires on November 30, 2017. Borrowings under the credit facility bear interest, at our option, at LIBOR or an alternative base rate, which is the greater of JPMorgan Chase, N.A.’s Prime Rate, the Federal Funds Rate plus 50 basis points, and LIBOR plus 1%, plus a margin dependent on our leverage ratio. We are required to make periodic interest payments on the borrowed amounts and pay an annual facility fee ranging from 15.0 to 27.5 basis points, depending on our leverage ratio. As of September 30, 2013, we had $24.4 million drawn on the credit facility, $6.5 million in letters of credit issued under the credit facility and approximately $269 million of additional available funds.
We have $75 million of 6.66% senior unsecured notes outstanding. The senior unsecured notes are due on July 31, 2015 and require us to make semiannual interest payments.
Our Brazilian subsidiary entered into two loans during the nine months ended September 30, 2013. The first loan is a $4.0 million loan with an annual interest cost of 5.5% that has a first installment payment of $2.0 million due on February 21, 2014 and a second installment payment due at maturity on August 20, 2014. The second loan is a Brazilian real denominated loan in the amount of Br7.9 million (approximately $3.5 million) and bears an annual interest rate of 5.5%. The first payment on this loan is due on May 14, 2014, with equal monthly payments required for 24 months.
We have several credit facilities in China and India under which we have drawn $1.0 million and have $8.8 million of additional available funds as of September 30, 2013.
Our credit agreement and notes include restrictive covenants that, if not met, could lead to a renegotiation of our credit lines, requirement to repay our borrowings and/or a significant increase in our cost of financing. At September 30, 2013, we were in compliance with all covenants of our contractual obligations as shown in the following table:
Debt Instrument / Covenant
Measurement
Result as of September 30, 2013
Revolving credit facility
Not less than 3.5
12.38
Not greater than 3.25
1.22
Not greater than $44.0 million
7.7 million
6.66% senior unsecured notes
Not less than 2.75
12.38
Not greater than 3.25
1.22
Interest coverage ratio
(1)
Leverage ratio
(2)
Restricted payments
(3)
Interest coverage ratio
(1)
Leverage ratio
(2)
|
(1) |
Interest coverage ratio is a comparison of the trailing twelve months Consolidated EBITDA, defined as net income plus interest expense plus income tax expense plus depreciation and amortization plus non-cash expenses and extraordinary, unusual and non-recurring items, to trailing twelve months interest expense. |
|
(2) |
Leverage ratio is a comparison of the total indebtedness, defined as total debt plus guarantees of indebtedness of others plus obligations under financial letters of credit issued against the credit facility, to the trailing twelve months Consolidated EBITDA, as defined above. |
|
(3) |
Restricted payments include all payments to shareholders such as dividends and share repurchases. Restricted payments during any fiscal year shall not exceed the sum of $25.0 million plus 50% of cumulative consolidated net income for the most recently ended four fiscal quarters at the time of making of such restricted payments. |
We expect to remain in compliance with all restrictive covenants in the foreseeable future. However, there can be no assurance that continued or increased volatility in the global economic conditions will not impair our ability to meet our restrictive covenants, or that the volatility in the capital and credit markets will not impair our ability to access these markets on terms acceptable to us or at all.
Outlook
JBT FoodTech is expected to achieve mid-to-high single digit percentage growth in segment revenue in 2013. Full year 2013 JBT FoodTech operating profit margin is expected to approach 11%. In JBT AeroTech, low single digit percentage revenue growth and approximately 8.5% segment operating profit margin is projected in 2013. Largely as a result of incremental management succession plan-related expenses incurred in the third quarter and anticipated in the fourth quarter, and a net loss on foreign currency positions incurred in the third quarter, the Company projects its 2013 diluted earnings per share from continuing operations to be in the range of $1.26 - $1.32.
CRITICAL ACCOUNTING ESTIMATES
Refer to our Annual Report on Form 10-K for the year ended December 31, 2012 for a discussion of our critical accounting estimates. During the nine months ended September 30, 2013, there were no material changes in our judgments and assumptions associated with the development of our critical accounting estimates.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There have been no material changes in reported market risks from the information reported in our Annual Report on Form 10-K for the year ended December 31, 2012.
ITEM 4. CONTROLS AND PROCEDURES
Under the direction of our principal executive officer and principal financial officer, we have evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of September 30, 2013. We have concluded that our disclosure controls and procedures were:
|
i) |
effective in ensuring that information required to be disclosed is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms; and |
|
ii) |
effective in ensuring that information required to be disclosed is accumulated and communicated to management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure. |
There were no changes in controls identified in the evaluation for the quarter ended September 30, 2013 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting, as defined in Rule 13a-15(f) under the Exchange Act.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of Directors and Shareholders
John Bean Technologies Corporation:
We have reviewed the accompanying condensed consolidated balance sheet of John Bean Technologies Corporation and subsidiaries as of September 30, 2013, the related condensed consolidated statements of income and comprehensive income for the three-month and nine-month periods ended September 30, 2013 and 2012, and the related condensed consolidated statements of cash flows for the nine-month periods ended September 30, 2013 and 2012.These condensed consolidated financial statements are the responsibility of the Company’s management.
We conducted our reviews in accordance with the standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the Public Company Accounting Oversight Board (United States), the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our reviews, we are not aware of any material modifications that should be made to the condensed consolidated financial statements referred to above for them to be in conformity with U.S. generally accepted accounting principles.
We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet of John Bean Technologies Corporation and subsidiaries as of December 31, 2012, and the related consolidated statements of income, comprehensive income, changes in stockholders’ equity, and cash flows for the year then ended (not presented herein); and in our report dated March 7, 2013, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of December 31, 2012, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.
/s/ KPMG LLP
Chicago, Illinois
November 1, 2013
PART II—OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
There have been no material legal proceedings identified or material developments in existing legal proceedings during the nine months ended September 30, 2013.
ITEM 1A. RISK FACTORS
There have been no material changes in reported risk factors from the information reported in our Annual Report on Form 10-K for the year ended December 31, 2012.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
We had no unregistered sales of equity securities during the three months ended September 30, 2013.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS
All exhibits as set forth on the Exhibit Index, which is incorporated herein by reference.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
John Bean Technologies Corporation |
|
(Registrant) |
|
/s/ Megan J. Rattigan |
|
Megan J. Rattigan |
|
Chief Accounting Officer, and duly authorized officer |
|
Date: November 1, 2013 |
EXHIBIT INDEX
|
Number in Exhibit Table |
Description | |
|
10.1 |
Employment Agreement, dated August 22, 2013 between John Bean Technologies Corporation and Thomas Giacomini. |
|
|
10.2 |
Letter Agreement, dated August 23, 2013 between John Bean Technologies Corporation and Charles H. Cannon, Jr. |
|
|
10.3 |
Long Term Incentive Restricted Stock Unit Agreement Pursuant to the John Bean Technologies Corporation Incentive Compensation and Stock Plan issued to Thomas Giacomini on September 10, 2013. |
|
|
10.4 |
Long Term Incentive Restricted Stock Unit Agreement Pursuant to the John Bean Technologies Corporation Incentive Compensation and Stock Plan issued to Thomas Giacomini on September 10, 2013. |
|
|
15 |
Letter re: Unaudited interim financial information. |
|
|
31.1 |
Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) /15d-14(a). |
|
|
31.2 |
Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) /15d-14(a). |
|
|
32.1 |
Certification of Chief Executive Officer Pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
|
|
32.2 |
Certification of Chief Financial Officer Pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
|
|
101* |
The following materials from John Bean Technologies Corporation’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2013, formatted in XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Statements of Income, (ii) Condensed Consolidated Statements of Comprehensive Income, (iii) Condensed Consolidated Balance Sheets, (iv) Condensed Consolidated Statements of Cash Flows, and (v) Notes to Condensed Consolidated Financial Statements. |
|
* Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.
22
Ex hibit 10.1
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the “ Agreement ”) between John Bean Technologies Corporation, a Delaware corporation (the “ Company ”), and Thomas Giacomini (the “ Executive ”) is entered into as of August 22, 2013. In consideration of the covenants contained herein, the parties agree as follows:
SECTION 1. Employment . The term of Executive's employment under this Agreement shall commence on September 9, 2013 (the “ Effective Date ”) and shall terminate on the earlier of (i) August 31, 2016 and (ii) the termination of the Executive’s employment under this Agreement. The period from the Effective Date until the termination of the Executive's employment under this Agreement is referred to as the “ Employment Period .” Unless the Company and the Executive shall otherwise agree, upon the expiration of the Employment Period, Executive’s employment shall continue at-will, subject to the applicable plans, programs and policies of the Company in effect from time to time thereafter.
SECTION 2. Position and Duties . During the Employment Period, Executive shall serve as the President and Chief Executive Officer of the Company and shall have the customary duties, responsibilities and authority of an executive serving in such positions, including all employees reporting directly or indirectly to Executive (and upon retirement of the current Executive Chairman will become the senior-most executive officer of the Company), reporting and subject to the direction of the Board of Directors of the Company (the “ Board ”). On or promptly following the Effective Date, Executive shall be appointed to serve as a member of the Board. At each annual meeting of the Company’s stockholders during the Employment Period, the Company shall nominate Executive to serve as a member of the Board, with such Board service subject to any required stockholder approval. During the Employment Period, Executive shall devote his full business time and efforts to the business and affairs of the Company and its subsidiaries. Executive shall not become a director of any for-profit entity without first receiving the approval of the Nominating and Governance Committee of the Board.
SECTION 3. Compensation and Benefits . a) Base Salary . As compensation for Executive’s performance of Executive’s duties hereunder, Company shall pay to Executive an initial Base Salary of $725,000 per year, payable in accordance with the normal payroll practices of the Company, less required deductions for state and federal withholding tax, social security and all other employment taxes and payroll deductions. The Base Salary shall be reviewed for increases by the Board in good faith, based upon Executive’s performance and the Company’s pay philosophy, not less often than annually. The term “ Base Salary ” shall refer to the Base Salary as so increased by the Board.
a. Annual Incentive Compensation . During the Employment Period, Executive shall be eligible to participate in Company’s annual incentive compensation program (the “ Annual Incentive Program ”), with a minimum target annual bonus equal to 100% of Base Salary for each year in which Executive participates in the Annual Incentive Program. The actual amount of the annual bonus earned by and payable to Executive in any year shall be determined upon the satisfaction of goals and objectives established by the Compensation Committee of the Board (the “ Compensation Committee ”) and communicated to Executive, and shall be subject to such other terms and conditions of the Company’s Annual Incentive Program applicable to senior executives as in effect from time to time; provided , however , that for 2013, the annual bonus payable under the Annual Incentive Program shall be based on actual Company performance (but in any event shall not be less than 100% of Base Salary), prorated based on the number of days Executive was employed by the Company during 2013. Each bonus paid under the Annual Incentive Program shall be paid to Executive no later than March 15th of the calendar year following the calendar year in which the bonus is earned.
b. Make-Whole/Sign-On Compensation . In consideration of the commencement of the Executive’s employment hereunder and to compensate Executive for compensation forfeited at his prior employer, the Executive shall receive a make-whole cash bonus of $1,200,000 (the “ Make-Whole Bonus ”), paid to Executive in a lump sum on the Effective Date. Notwithstanding anything herein to the contrary, if the Company terminates the Executive’s employment for Cause (as defined in the Amended and Restated Executive Severance Agreement, to be entered into and dated as of the Effective Date , between the Company and Executive (the “ Executive Severance Agreement ”)) or the Executive resigns from the Company for any reason other than for Good Reason (as defined below), in each case, prior to the one-year anniversary of the Effective Date, the Executive shall repay to the Company the Make-Whole Bonus within ten (10) days of the Executive’s termination of employment; provided , further , to the extent permitted by applicable law and in accordance with Section 409A of the Internal Revenue Code of 1986, as amended (the “ Code ”), if the Executive is required to repay the Make-Whole Bonus, then, in lieu of the Executive’s direct repayment, the Company shall be entitled to offset from the required repayment amount any compensation or other amounts due from the Company to the Executive. In addition, in consideration of the commencement of the Executive’s employment hereunder, the Executive shall also receive a performance-based restricted stock unit award with a grant date fair value, determined in accordance with ASC Topic 718, equal to $2,614,000, with vesting subject to the achievement of the performance conditions established by the Compensation Committee and set forth in the agreement evidencing the award (the “ Initial Equity ”). The Initial Equity shall (i) be issued under the Company’s Incentive Compensation and Stock Plan (the “ Plan ”), (ii) assuming attainment of the performance measures, vest in two equal annual installments on the first and second anniversaries of the Effective Date and (iii) be subject to the form of restricted stock unit award agreement attached hereto as Exhibit A.
c. Definition of Good Reason . For purposes of this Agreement, Good Reason means, without the Executive’s express written consent, the occurrence of any one or more of the following:
(i) The assignment of the Executive to duties materially inconsistent with the Executive’s authorities, duties, responsibilities, and status (including, without limitation, offices, titles and reporting requirements) as an employee of the Company (including, without limitation, any material change in duties or status as a result of the stock of the Company ceasing to be publicly traded or of the Company becoming a subsidiary of another entity, or any material change in the Executive’s reporting relationship, such as ceasing to report to the Board of Directors of a publicly traded company), or a material reduction or alteration in the nature or status of the Executive’s authorities, duties, or responsibilities from those contemplated by Section 2 of this Agreement;
(ii) The Company’s requiring the Executive to be based at a location which is at least fifty (50) miles further from the Executive’s primary residence as of the Effective Date than is such residence from the office where the Executive is located as of the Effective Date, except for required travel on the Company’s business to an extent substantially consistent with the Executive’s business obligations;
(iii) A material reduction by the Company in the Executive’s Base Salary as in effect on the Effective Date or as the same may be increased from time to time;
(iv) A material reduction in the Executive’s level of participation in any of the Company’s short- and/or long-term incentive compensation plans, or employee benefit or retirement plans, policies, practices, or arrangements in which the Executive participates; provided that the compensation to be paid pursuant to Section 3(c) of this Agreement shall not be taken into account in determining whether such a material reduction has occurred; or
(v) The failure of the Company to assume and agree to perform this Agreement in all material respects.
The existence of Good Reason will not be affected by the Executive’s temporary incapacity due to physical or mental illness not constituting a Disability (as defined in the Executive Severance Agreement). The Executive’s continued employment will not constitute a waiver of the Executive’s rights with respect to any circumstance constituting Good Reason. Notwithstanding the above to the contrary, “Good Reason” for Executive’s separation from employment will exist only if (i) the Executive provides written notice to the Company within ninety (90) days of the occurrence of any of the above listed events, (ii) the Company fails to cure the event within thirty (30) days following the Company’s receipt of the Executive’s written notice, and (iii) the Executive separates from employment with the Company effective not later than sixty (60) days after the end of the Company’s cure period.
d. Equity Compensation .
|
(a) |
2013 Equity Compensation . During the Employment Period, the Executive shall be eligible for equity compensation under the Plan or such other plans as may be maintained by the Company from time to time. On the Effective Date, the Executive shall receive a performance-based restricted stock unit award under the Plan with a grant date fair value, determined in accordance with ASC Topic 718, equal to $800,000, with vesting subject to the achievement of the performance conditions established by the Compensation Committee and set forth in the agreement evidencing the award (the “ 2013 Equity Compensation ”). The 2013 Equity Compensation shall vest, assuming attainment of the performance measures, in two equal annual installments on the first and second anniversaries of the Effective Date and shall be subject to the form of restricted stock unit award agreement attached hereto as Exhibit B . |
|
(b) |
2014 Equity Compensation . As part of its annual equity grants to executive officers in 2014, the Compensation Committee expects to approve the following equity awards to Executive under the Plan: (A) a restricted stock unit award with a grant date fair value, determined in accordance with ASC Topic 718, equal to $400,000 which shall vest on the third-anniversary of the grant date; and (B) performance-based restricted stock units with a grant date fair value, determined in accordance with ASC Topic 718, equal to $1,200,000, and subject to the achievement of EBITDA growth, net contribution or other performance goals approved by the Compensation Committee of the Board (together, with the restricted stock unit award set forth in clause (A) of this sentence, the “ 2014 Equity Compensation ”); provided, however constituted, the 2014 Equity Compensation will have an aggregate ASC Topic 718 grant date fair value of not less than $1,600,000. The 2014 Equity Compensation shall be subject to the Company’s standard form of equity award agreement applicable to the award and the same terms and conditions applicable to the 2014 annual equity grants made to other senior executives of the Company. |
|
e. |
Other Benefits . |
|
(a) |
Savings and Retirement Plans . Except as otherwise limited by applicable law, Executive shall be entitled to participate in all qualified and non-qualified savings and retirement plans applicable generally to other senior executives of Company, in accordance with the terms of the plans, as may be amended from time to time; provided , however , that Executive shall not be eligible to participate in the Company’s U.S. Pension and Supplemental Executive Retirement Plans (or any other pension or supplemental executive retirement plans), each of which was frozen in 2009. |
|
(b) |
Welfare Benefit Plans . Except as otherwise limited by applicable law, Executive and/or his eligible dependents shall be eligible to participate in and shall receive all benefits under the Company’s welfare benefit plans and programs applicable generally to other senior executives of Company, in accordance with the terms of the plans, as may be amended from time to time. |
|
(c) |
Fringe Benefits . Except as otherwise limited by applicable law, Executive shall be entitled to such fringe benefits as may be available generally to other senior executives of Company. As of the date hereof, such fringe benefits include a financial counseling allowance of $20,000 per calendar year and complimentary parking at the Company’s corporate headquarters. |
|
(d) |
Vacation . Executive shall be entitled to paid vacation time consistent with the applicable policies of Company as in effect from time to time, but in any event no less than four weeks of such vacation per year. |
|
(e) |
Legal Fees . Company shall reimburse Executive for any reasonable legal fees and expenses incurred by Executive in connection with the review of this Agreement and any documents ancillary thereto, in an amount not to exceed $15,000. |
|
(f) |
Business Expenses . Subject to Section 14 , Executive shall be reimbursed for reasonable travel and other expenses incurred in the performance of Executive’s duties on behalf of Company in a manner consistent with the Company’s policies regarding such reimbursements, as may be in effect from time to time. |
SECTION 4. Termination of Employment . b) The Executive’s employment under this Agreement shall terminate upon the earlier to occur of: (i) the expiration of the term of this Agreement pursuant to Section 1 hereof; (ii) termination of Executive’s employment by reason of Executive’s complete and permanent inability by reason of illness or accident to perform the duties of the President and Chief Executive Officer (“ Termination due to Disability ”); (iii) termination of Executive’s employment by the Company for any reason other than Termination due to Disability; (iv) Executive’s death; or (v) termination of Executive’s employment by Executive for any reason. Upon the termination of Executive’s employment with the Company for any reason, the Executive shall be deemed to have resigned from the Board and all other positions with the Company or any of its affiliates held by Executive as of the date immediately preceding his termination of employment.
a. If the Employment Period ends for any reason set forth in Section 4(a) , except as otherwise contemplated in this Section 4(b) , Executive shall cease to have any rights to salary, bonus (if any) or benefits hereunder, other than (i) payment of unpaid Base Salary through and including the date of termination or resignation (which shall be paid on the next regularly scheduled payroll date), (ii) Executive’s business expenses that are reimbursable pursuant to Section 3(f) but have not been reimbursed by the Company as of the date of termination, (iii) any accrued vacation pay to the extent not theretofore paid, and (iv) any other amounts or benefits required to be paid or provided by law or under any plan, program, policy or practice of the Company. Executive shall participate in the Company’s Executive Severance Plan, as in effect on the Effective Date (the “ Executive Severance Plan ”), and, on the Effective Date, shall enter into the Executive Severance Agreement, each attached hereto as Exhibits C and D ; provided , however , for purposes of the Executive Severance Plan (including a Company termination of Executive’s employment other than for Cause), the amount of severance payment and the amount of medical/dental benefits shall be based on 18 months rather than the 15 months specified in the Executive Severance Plan and provided further , that the Executive understands that the Executive Severance Plan is currently under review by the Company for possible amendment and provided further that in the event of such an amendment, the Executive shall participate in such amended Executive Severance Plan with the amount of severance payment and the amount of medical/dental benefits to be provided to the Executive thereunder to be no less than the amount of such payment and benefits that would be provided to the Executive under the current version of the Executive Severance Plan, as modified per this Agreement. In addition, in the event of the Executive’s death, termination due to Disability (as defined in the applicable award agreement) or the occurrence of a Change in Control (as defined in the Executive Severance Agreement), all outstanding restricted stock units held by the Executive shall vest in full, with awards subject to performance criteria vesting at the target level for such awards.
SECTION 5. Restrictive Covenants .
a. Non-Competition . The Executive acknowledges and recognizes the confidential information and records provided by the Company and its successors and assigns, the benefits contemplated hereunder, and the professional training and experience he will receive from the Company, as well as the highly competitive nature of the Company’s business, and in consideration of all of the above, agrees that during the Executive’s employment with the Company and for the twenty-four months thereafter, the Executive shall not compete with the business of the Company. For purposes hereof, “competition” shall mean any engaging, directly or indirectly, in the “Covered Business” (as hereinafter defined) in any state of the United States of America or any nation in which the Company is conducting business as of the effective date of Executive’s termination of employment. For purposes of this Agreement, “ Covered Business ” shall mean any business engaged by the Company immediately prior to the Executive’s effective date of termination of employment. For purposes of this Section 5 , the phrase “engaging, directly or indirectly” shall mean engaging directly or having an interest, directly or indirectly, as owner, partner, shareholder, agent, representative, employee, officer, director, independent contractor, capital investor, lender, consultant or advisor (other than as the holder of less than 2% of the outstanding stock of a publicly-traded corporation), either alone or in association with others, in the operation of any aspect of any type of business or enterprise engaged in any aspect of the Covered Business.
b. Non-Solicitation . The Executive agrees that during the Executive’s employment with the Company and for the twenty-four months thereafter, he shall not (i) directly or indirectly solicit or attempt to solicit any of the employees, agents, consultants, or representatives of the Company or affiliates of the Company to leave any of such entities; or (ii) directly or indirectly solicit or attempt to solicit any of the employees, agents, consultants or representatives of the Company or affiliates of the Company to become employees, agents, representatives or consultants of any other person or entity.
c. Reasonableness . The Executive understands that the provisions of Sections 5(a) and (b) may limit Executive’s ability to earn a livelihood in a business similar to the business of the Company but nevertheless agrees and hereby acknowledges that the restrictions and limitations thereof are reasonable in scope, area, and duration, are reasonably necessary to protect the goodwill and business interests of the Company, and that the consideration provided under, or contemplated by, this Agreement is sufficient to justify the restrictions contained in such provisions. Accordingly, in consideration thereof and in light of the Executive's education, skills and abilities, the Executive agrees that he shall not assert that, and it should not be considered that, such provisions are either unreasonable in scope, area, or duration, or will prevent him from earning a living, or otherwise are void, voidable, or unenforceable or should be voided or held unenforceable.
d. Enforcement .
|
(a) |
The parties hereto agree and acknowledge that the covenants and agreements contained herein are reasonable in scope, area, and duration and necessary to protect the reasonable competitive business interests of the Company, including, without limitation, the value of the proprietary information and goodwill of the Company. |
|
(b) |
The Executive agrees that the covenants and undertakings contained in Section 5 of this Agreement relate to matters which are of a special, unique and extraordinary character and that the Company cannot be reasonably or adequately compensated in damages in an action at law in the event the Executive breaches any of these covenants or undertakings. Therefore, the Executive agrees that the Company shall be entitled, as a matter of course, without the need to prove irreparable injury, to an injunction, restraining order or other equitable relief from any court of competent jurisdiction, restraining any violation or threatened violation of any of such terms by the Executive and such other persons as the court shall order. The Executive agrees to pay costs and legal fees incurred by the Company in obtaining such injunction and the Company agrees to pay costs and legal fees incurred by the Executive in any unsuccessful effort to obtain such injunction. |
|
(c) |
Rights and remedies provided for in this Section 5(d) are cumulative and shall be in addition to rights and remedies otherwise available to the parties under any other agreement or applicable law. |
|
(d) |
In the event that any provision of this Agreement shall to any extent be held invalid, unreasonable or unenforceable in any circumstances, the parties hereto agree that the remainder of this Agreement and the application of such provision of this Agreement to other circumstances shall be valid and enforceable to the fullest extent permitted by law. If any provision of this Agreement is held to be unenforceable because of the scope or duration of or the area covered by such provision, the parties hereto agree that the court or arbitrator making such determination shall reduce the scope, duration and/or area of such provision (and shall substitute appropriate provisions for any such unenforceable provisions) in order to make such provision enforceable to the fullest extent permitted by law, and/or shall delete specific words and phrases, and such modified provision shall then be enforceable and shall be enforced. The parties hereto recognize that if, in any judicial proceeding, a court shall refuse to enforce any of the separate covenants contained in this Agreement; then that unenforceable covenant contained in this Agreement shall be deemed eliminated from these provisions to the extent necessary to permit the remaining separate covenants to be enforced. In the event that any court or arbitrator determines that the time period or the area, or both, are unreasonable and that any of the covenants is to that extent unenforceable, the parties hereto agree that such covenants will remain in full force and effect, first, for the greatest time period, and second, in the greatest geographical area that would not render them unenforceable. |
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(e) |
In the event of the Executive's breach of this Section 5 , in addition to all other rights the Company may have hereunder or in law or in equity, all payments and benefits to Executive shall cease; all options, stock, and other securities granted by the Company or its successor, including stock obtained through prior exercise of options, shall be immediately forfeited (whether or not vested), and the original purchase price, if any, shall be returned to the Executive; and all profits received through exercise of options or sale of stock, and all previous payments and benefits made or provided hereunder shall be promptly returned and repaid to the Company. |
e. Confidential Information . The Executive shall hold in a fiduciary capacity for the benefit of the Company all secret or confidential information, knowledge or data relating to the Company or any of its affiliated companies, and their respective businesses, which shall have been obtained by the Executive during the Executive's employment by the Company or any of its affiliated companies and which shall not be or become public knowledge (other than by acts by the Executive or representatives of the Executive in violation of this Agreement). After termination of the Executive's employment with the Company, the Executive shall not, without the prior written consent of the Company or as may otherwise be required by law or legal process, communicate or divulge any such information, knowledge or data to anyone other than the Company and those designated by it.
(f) Release . The Executive's execution of a complete and general release of any and all of his potential claims (other than for vested benefits described in this Agreement or any other vested benefits with the Company and/or its affiliates) against the Company, any of its affiliated companies, and their respective successors and any officers, employees, agents, directors, attorneys, insurers, underwriters, and assigns of the Company, its affiliates and/or successors, is an express condition of the Executive's right to receive termination payments, vesting, and benefits under the Executive Severance Plan, the Executive Severance Agreement, equity awards or this Agreement. The Executive shall be required to execute a Waiver and Release Agreement which documents the release required under this Section 5(f) , the customary form of which shall be provided to the Executive by Company, provided that such waiver and release agreement will not contain any covenant applicable to the Executive’s post-termination conduct (other than covenants relating to the claims and causes of action waived or released subject to such Waiver and Release Agreement) other than a re-affirmation of any covenants included in this Agreement or to which he is otherwise subject at the time of the execution of such Waiver and Release Agreement.
SECTION 6. Insurance and Indemnification . Executive shall be named as an insured and covered against the same claims and at the same level of insurance under the Directors and Officers insurance purchased by the Company for members of the Board. Executive shall be entitled to indemnification and advancement of expenses to the maximum extent permitted by law.
SECTION 7. Survival . Sections 5 , 6 , 7 , 14 and 15 hereof shall survive and continue in full force and effect in accordance with their respective terms, notwithstanding any termination of the Employment Period.
SECTION 8. Notices . Any notice provided for in this Agreement shall be in writing and shall be delivered (i) personally, (ii) by certified mail, postage prepaid, (iii) by Federal Express or other reputable courier service regularly providing evidence of delivery (with charges paid by the party sending the notice), or (iv) by facsimile or a PDF or similar attachment to an email, provided that such telecopy or email attachment shall be followed within one (1) business day by delivery of such notice pursuant to clause (i), (ii) or (iii) above. Any such notice to a party shall be addressed at the address set forth below (subject to the right of a party to designate a different address for itself by notice similarly given):
If to the Company
:
John Bean Technologies Corporation
70 West Madison Street
Chicago, Illinois 60602
Attention: Chairperson, Compensation Committee of the Board of Directors
Facsimile: 312-861-7127
If to the Executive
Thomas Giacomini
At the most recent address on file with the Company
SECTION 9. Entire Agreement; Inconsistency . This Agreement constitutes the entire agreement and understanding between the parties with respect to the subject matter hereof and supersedes and preempts any prior understandings, agreements or representations by or between the parties, written or oral, which may have related in any manner to the subject matter hereof. In the event of any inconsistency between the provisions of this Agreement and any other plan, program, practice or agreement in which Executive is a participant or a party, this Agreement shall control.
SECTION 10. Successors and Assigns . This Agreement shall inure to the benefit of and be enforceable by Executive and his heirs, executors and personal representatives (including any amounts becoming payable under Section 4(b) prior to Executive’s death), and the Company and its successors and assigns. Any successor or assignee of the Company shall assume the liabilities of the Company hereunder.
SECTION 11. Governing Law . This Agreement shall be governed by the internal laws (as opposed to the conflicts of law provisions) of the State of Illinois.
SECTION 12. Amendment and Waiver . The provisions of this Agreement may be amended or waived only with the prior written consent of the Company and Executive, and no course of conduct or failure or delay in enforcing the provisions of this Agreement shall affect the validity, binding effect or enforceability of this Agreement.
SECTION 13. Withholding . All payments and benefits under this Agreement are subject to withholding of all applicable taxes.
SECTION 14. Code Section 409A . This Agreement is intended to comply with the requirements of Section 409A of the Code, and shall be interpreted and construed consistently with such intent. In the event the terms of this Agreement would subject Executive to taxes or penalties under Section 409A of the Code (“ 409A Penalties ”), the Company and Executive shall cooperate diligently to amend the terms of the Agreement to avoid such 409A Penalties, to the extent possible. To the extent any amounts under this Agreement are payable by reference to Executive’s “termination of employment” such term and similar terms shall be deemed to refer to Executive’s “separation from service,” within the meaning of Section 409A of the Code. Notwithstanding any other provision in this Agreement, to the extent any payments made or contemplated hereunder constitutes nonqualified deferred compensation, within the meaning of Section 409A, then (i) each such payment which is conditioned upon Executive’s execution of a release and which is to be paid or provided during a designated period that begins in one taxable year and ends in a second taxable year, shall be paid or provided in the later of the two taxable years and (ii) if Executive is a specified employee (within the meaning of Section 409A of the Code) as of the date of Executive’s separation from service, each such payment that is payable upon Executive’s separation from service and would have been paid prior to the six-month anniversary of Executive’s separation from service, shall be delayed until the earlier to occur of (A) the first day of the seventh month following Executive’s separation from service or (B) the date of Executive’s death. Any reimbursement payable to Executive pursuant to this Agreement shall be conditioned on the submission by Executive of all expense reports reasonably required by Employer under any applicable expense reimbursement policy, and shall be paid to Executive within 30 days following receipt of such expense reports, but in no event later than the last day of the calendar year following the calendar year in which Executive incurred the reimbursable expense. Any amount of expenses eligible for reimbursement, or in-kind benefit provided, during a calendar year shall not affect the amount of expenses eligible for reimbursement, or in-kind benefit to be provided, during any other calendar year. The right to any reimbursement or in-kind benefit pursuant to this Agreement shall not be subject to liquidation or exchange for any other benefit.
SECTION 15. Clawback . The payments to the Executives pursuant to this Agreement are subject to forfeiture, recovery by the Company or other action pursuant to any clawback or recoupment policy which the Company may adopt from time to time, including without limitation any such policy which the Company may be required to adopt under the Dodd-Frank Wall Street Reform and Consumer Protection Act and implementing rules and regulations thereunder, or as otherwise required by law.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above.
JOHN BEAN TECHNOLOGIES CORPORATION
By:
/James E. Goodwin/
Name:
James E. Goodwin
Title:
Director
EXECUTIVE:
/Thomas Giacomini/
Exhibit 10.2
August 23, 2013
Mr. Charles H. Cannon, Jr.
70 West Madison Street
Chicago, IL 60602
Dear Charlie:
We want to acknowledge the notification you gave us yesterday of your decision to retire as our Chief Executive Officer and President and to thank you for your dedicated service and commitment to John Bean Technologies Corporation (the “Company”).
The purpose of this letter is to memorialize certain terms by which you will continue to be engaged by the Company as the Company’s Executive Chairman of the Board of Directors following that retirement.
Term. Your voluntary retirement as Chief Executive Officer and President shall become effective on September 9, 2013 (the “Termination Date”). Following the Termination Date, you agree to serve as Executive Chairman for the remainder of your current term as a director of the Company, subject to the Company’s Amended and Restated Certificate of Incorporation and Amended and Restated By-Laws, and you shall remain an employee of the Company until May 31, 2014 (the “Term”). In addition to the duties normally assigned to an Executive Chairman of a publicly-traded corporation, you agree to provide transition and other related services to the Company from the Termination Date through December 31, 2013 (the “Transition Period”) to provide an effective transition of your executive responsibilities to the Company’s incoming Chief Executive Officer and President. You and the Company agree that the anticipated level of all services that you will perform for the Company during the Term will be in excess of 20% of the average level of services that you had performed for the Company during the three-year period prior to the Termination Date.
Compensation. During the Transition Period, your compensation and benefits arrangements will continue at the same level that they have been during 2013 up to the beginning of the Transition Period. From the end of the Transition Period through the later of (a) the 2014 Annual Meeting of Stockholders and (b) May 31, 2014 (the remainder of the Term), you shall be compensated at a rate of $40,000 per month and your welfare benefits and perquisite arrangements will continue at the same level that they were during 2013. For the avoidance of doubt, you will not participate in the Company’s annual incentive program or be eligible to participate in the Company’s long-term incentive programs and you will be entitled to no additional compensation for your services following the Termination Date except as set forth in this letter agreement or as otherwise approved by the Compensation Committee of the Board of Directors.
Executive Severance Plan and Amended and Restated Executive Severance Agreement. You and the Company hereby acknowledge and agree that your voluntary retirement as Chief Executive Officer and President of the Company does not entitle you to any benefits under the Executive Severance Plan or your Amended and Restated Executive Severance Agreement, dated as of December 15, 2011. Accordingly, effective on the Termination Date, you shall cease to participate in the Executive Severance Plan and your Amended and Restated Executive Severance Agreement shall terminate; provided , however , you acknowledge that you shall continue to be bound by the covenants set forth in Article 10 of the Amended and Restated Executive Severance Agreement including, without limitation, the non-competition, non-solicitation and confidentiality covenants set forth therein. Please note that your retirement as Chief Executive Officer and President will not impact the termination or change in control provisions included in your outstanding equity awards with the Company.
Again, thank you for your many years of dedicated service to the Company and your agreement to assist the Company in its leadership transition.
Sincerely,
JOHN BEAN TECHNOLOGIES CORPORATION
By:
/James E. Goodwin/
Lead Director, on Behalf of the Board of Directors
This letter agreement correctly reflects our understanding, and I hereby confirm my agreement to the same as of the date set forth above.
/Charles H. Cannon, Jr./
CHARLES H. CANNON, JR.
Exhibit 10.3
LONG TERM INCENTIVE RESTRICTED STOCK UNIT AGREEMENT
PURSUANT TO THE JOHN BEAN TECHNOLOGIES CORPORATION
INCENTIVE COMPENSATION AND STOCK PLAN
This Agreement is made as of September 9, 2013 (the "Grant Date") by JOHN BEAN TECHNOLOGIES CORPORATION, a Delaware corporation, (the "Company") and Thomas Giacomini (the "Employee").
In 2008, the Board of Directors of the Company (the “Board”) adopted the John Bean Technologies Corporation Incentive Compensation and Stock Plan (the "Plan"). The Plan, as it may be amended and continued, is incorporated by reference and made a part of this Agreement and will control the rights and obligations of the Company and the Employee under this Agreement. Except as otherwise expressly provided herein, all capitalized terms have the meanings provided in the Plan. To the extent there is a conflict between the Plan and this Agreement, the provisions of the Plan will control.
The Compensation Committee of the Board (the “Committee”) determined that it would be to the competitive advantage and interest of the Company and its stockholders to grant an award of restricted stock units to the Employee as an inducement for the Employee to join the Company, and as an incentive for Employee’s efforts during such service.
The Committee, on behalf of the Company, grants to the Employee an award of 114,498 restricted stock units (the “RSUs”), which is equal to an equivalent number of shares of the Company’s common stock, par value of $.01 per share (the "Common Stock").
The award is made upon the following terms and conditions:
1. Vesting . The RSUs will vest in 50% increments on each of the first and second anniversaries of the Grant Date (each, a “Vesting Date”); provided that (i) the Employee remains continuously employed through the applicable vesting date and (ii) for the period from September 9, 2013 through December 31, 2013, the Company attains, and the Committee certifies, the achievement of $19 million in Earnings Before Interest, Taxes, Depreciation and Amortization, with such achievement determined in accordance with the methodology used for determining such measure under the Company’s 2013 Annual Cash Management Incentive Plan but prior to any special charges against earnings approved by the Committee under the 2013 Annual Cash Management Incentive Plan. Upon the applicable Vesting Date, the vested RSUs will be immediately settled in shares of Common Stock and will be immediately transferable thereafter. Notwithstanding the foregoing and subject to Section 14 hereof and Employee’s execution of a release of claims in favor of the Company in accordance with Section 5(f) of the Employment Agreement, dated August 22, 2013, between the Company and Employee, the RSUs will vest in the event of the Employee’s death, Disability, termination by the Company without Cause or termination by the Employee due to Good Reason, or a Change in Control of the Company, provided that the above performance condition has been, or if occurring before December 31, 2013 is, achieved, and such RSUs will be immediately settled in shares of Common Stock and be immediately transferable thereafter (but in any event within 70 days of the qualifying vesting event or, if such vesting event occurs on or prior to December 31, 2013, within 70 days following December 31, 2013). All RSUs will be forfeited upon termination of the Employee's employment with the Company before the Vesting Date for a reason other than death, Disability, termination by the Company without Cause or termination by the Employee due to Good Reason. For purposes of this Agreement, (i) Cause shall have the meaning provided in the Amended and Restated Executive Severance Agreement, dated as of September 9, 2013 , between the Company and Employee, (ii) Good Reason shall have the meaning provided in the Employment Agreement, dated as of August 22, 2013, between the Company and Employee and (iii) Disability shall have the meaning provided in Section 409A(a)(2)(c) of the Internal Revenue Code of 1986, as amended (the “Code”).
2. Adjustment . The Committee shall make equitable substitutions or adjustments in the RSUs as it determines to be appropriate in the event of any corporate event or transaction such as a stock split, merger, consolidation, separation, including a spin-off or other distribution of stock or property of the Company, reorganization or any partial or complete liquidation of the Company.
3. Rights as Stockholder.
(a) Until the RSUs vest and are settled in shares of Common Stock, the Employee shall have no rights as a stockholder of the Company. The vested RSUs will be settled in shares of Common Stock and issued in the form of a book entry registration.
(b) Prior to the applicable Vesting Date, the Employee may not vote, sell, exchange, transfer, pledge, hypothecate or otherwise dispose of any of the RSUs. The RSUs have Dividend Equivalent Rights subject to the same vesting requirements as stated in Section 1 of this agreement and such rights are subject to forfeiture to the same extent as the underlying RSUs.
4. No Limitation on Rights of the Company . The granting of RSUs will not in any way affect the right or power of the Company to make adjustments, reclassifications or changes in its capital or business structure or to merge, consolidate, reincorporate, dissolve, liquidate or sell or transfer all or any part of its business or assets.
5. Employment . Nothing in this Agreement or in the Plan will be construed as constituting a commitment, guarantee, agreement or understanding of any kind or nature that the Company will continue to employ the Employee, or as affecting in any way the right of the Company to terminate the employment of the Employee at any time.
6. Government Regulation . The Company's obligation to deliver Common Stock following the Vesting Date will be subject to all applicable laws, rules and regulations and to such approvals by any governmental agencies or national securities exchanges as may be required.
7. Withholding . The Company will comply with all applicable withholding tax laws, and will be entitled to take any action necessary to effectuate such compliance. The Company may withhold a portion of the Common Stock to which the Employee or beneficiary otherwise would be entitled equivalent in value to the taxes required to be withheld, determined based upon the Fair Market Value of the Common Stock. For purposes of withholding, Fair Market Value shall be equal to the closing price of the Common Stock on the Vesting Date, or, if the Vesting Date is not a business day, the next business day immediately following the Vesting Date. Common Stock withheld may not have an aggregate Fair Market Value in excess of the amount determined by applying the minimum statutory withholding rate.
8. Notice . Any notice to the Company provided for in this Agreement will be addressed to it in care of its Secretary, John Bean Technologies Corporation, 70 West Madison Street, Suite 4400, Chicago, Illinois 60602, and any notice to the Employee (or other person entitled to receive the RSUs) will be addressed to such person at the Employee’s address now on file with the Company, or to such other address as either may designate to the other in writing. Any notice will be deemed to be duly given when enclosed in a properly sealed envelope addressed as stated above and deposited, postage paid, in a post office or branch post office regularly maintained by the United States government.
9. Administration . The Committee administers the Plan. The Employee’s rights under this Agreement are expressly subject to the terms and conditions of the Plan, a copy of which may be accessed through the Fidelity NetBenefits website, including any guidelines the Committee adopts from time to time.
10. Binding Effect . This Agreement will inure to the benefit of and be binding upon the parties hereto and their respective heirs, executors, administrators, successors and permitted assigns.
11. Sole Agreement . This Agreement is the entire agreement between the parties to it, and any and all prior oral and written representations are merged into this Agreement. This Agreement may only be amended by written agreement between the Company and the Employee. Employee expressly acknowledges that the form of the grant agreement that the Employee accepts electronically through the Fidelity NetBenefits website is intended to facilitate the administration of this RSU award and may not be a full version of this Agreement due to limitations inherit in such website that are imposed by Fidelity. The terms of this Agreement will govern the Employee’s award in the event of any inconsistency with the agreement viewed or accepted by the Employee on the Fidelity NetBenefits website.
12. Governing Law . The interpretation, performance and enforcement of this Agreement will be governed by the laws of the State of Delaware.
13. Privacy . Employee acknowledges and agrees to the Company transferring certain personal data of such Employee to the Company for purposes of implementing, performing or administering the Plan or any related benefit. Employee expressly gives his consent to the Company to process such personal data.
14. Code Section 409A . This Agreement is intended to comply with the requirements of Section 409A of the Code, and shall be interpreted and construed consistently with such intent. In the event the terms of this Agreement would subject Employee to taxes or penalties under Section 409A of the Code (“409A Penalties”), the Company and Employee shall cooperate diligently to amend the terms of the Agreement to avoid such 409A Penalties, to the extent possible. To the extent the RSUs under this Agreement are payable by reference to Employee’s “termination of employment” such term and similar terms shall be deemed to refer to Employee’s “separation from service,” within the meaning of Section 409A of the Code. Notwithstanding any other provision in this Agreement, to the extent the RSUs constitute nonqualified deferred compensation, within the meaning of Section 409A, then (i) if such RSUs are conditioned upon Employee’s execution of a release and are scheduled to be paid during a designated period that begins in one taxable year and ends in a second taxable year, such RSUs shall be paid in the later of the two taxable years and (ii) if Employee is a specified employee (within the meaning of Section 409A of the Code) as of the date of Employee’s separation from service, if such RSUs are payable upon Employee’s separation from service and would have been paid prior to the six-month anniversary of Employee’s separation from service, then the payment of such RSUs shall be delayed until the earlier to occur of (A) the first day of the seventh month following Employee’s separation from service or (B) the date of Employee’s death.
Executed as of the Grant Date.
JOHN BEAN TECHNOLOGIES CORPORATION
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By: |
/Mark Montague/ |
/Tom Giacomini/ |
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Vice President, Human Resources |
Employee |
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09/10/13 |
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Acceptance Date |
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This document constitutes part of a prospectus covering securities that have been registered under the Securities Act of 1933.
Exhibit 10.4
LONG TERM INCENTIVE RESTRICTED STOCK UNIT AGREEMENT
PURSUANT TO THE JOHN BEAN TECHNOLOGIES CORPORATION
INCENTIVE COMPENSATION AND STOCK PLAN
This Agreement is made as of September 9, 2013 (the "Grant Date") by JOHN BEAN TECHNOLOGIES CORPORATION, a Delaware corporation, (the "Company") and Thomas Giacomini (the "Employee").
In 2008, the Board of Directors of the Company (the “Board”) adopted the John Bean Technologies Corporation Incentive Compensation and Stock Plan (the "Plan"). The Plan, as it may be amended and continued, is incorporated by reference and made a part of this Agreement and will control the rights and obligations of the Company and the Employee under this Agreement. Except as otherwise expressly provided herein, all capitalized terms have the meanings provided in the Plan. To the extent there is a conflict between the Plan and this Agreement, the provisions of the Plan will control.
The Compensation Committee of the Board (the “Committee”) determined that it would be to the competitive advantage and interest of the Company and its stockholders to grant an award of restricted stock units to the Employee as an inducement for the Employee to join the Company, and as an incentive for Employee’s efforts during such service.
The Committee, on behalf of the Company, grants to the Employee an award of 35,042 restricted stock units (the “RSUs”), which is equal to an equivalent number of shares of the Company’s common stock, par value of $.01 per share (the "Common Stock").
The award is made upon the following terms and conditions:
1. Vesting . The RSUs will vest in 50% increments on each of the first and second anniversaries of the Grant Date (each, a “Vesting Date”); provided that (i) the Employee remains continuously employed through the applicable vesting date and (ii) for the period from September 9, 2013 through December 31, 2013, the Company attains, and the Committee certifies, the achievement of $19 million in Earnings Before Interest, Taxes, Depreciation and Amortization, with such achievement determined in accordance with the methodology used for determining such measure under the Company’s 2013 Annual Cash Management Incentive Plan but prior to any special charges against earnings approved by the Committee under the 2013 Annual Cash Management Incentive Plan. Upon the applicable Vesting Date, the vested RSUs will be immediately settled in shares of Common Stock and will be immediately transferable thereafter. Notwithstanding the foregoing and subject to Section 14 hereof and Employee’s execution of a release of claims in favor of the Company in accordance with Section 5(f) of the Employment Agreement, dated August 22, 2013, between the Company and Employee, the RSUs will vest (i) in full in the event of the Employee’s death or Disability or a Change in Control of the Company or (ii) 50% in the event of a termination by the Company without Cause or termination by the Employee due to Good Reason prior to the one-year anniversary of the Grant Date, provided that the above performance condition has been, or if occurring before December 31, 2013 is, achieved, and such RSUs will be immediately settled in shares of Common Stock and be immediately transferable thereafter (but in any event within 70 days of the qualifying vesting event or, if such vesting event occurs on or prior to December 31, 2013, within 70 days following December 31, 2013). All RSUs will be forfeited upon termination of the Employee's employment with the Company before the Vesting Date for a reason other than death, Disability, termination by the Company without Cause or termination by the Employee due to Good Reason. For purposes of this Agreement, (i) Cause shall have the meaning provided in the Amended and Restated Executive Severance Agreement, dated as of September 9, 2013 , between the Company and Employee, (ii) Good Reason shall have the meaning provided in the Employment Agreement, dated as of August 22, 2013, between the Company and Employee and (iii) Disability shall have the meaning provided in Section 409A(a)(2)(c) of the Internal Revenue Code of 1986, as amended (the “Code”).
2. Adjustment . The Committee shall make equitable substitutions or adjustments in the RSUs as it determines to be appropriate in the event of any corporate event or transaction such as a stock split, merger, consolidation, separation, including a spin-off or other distribution of stock or property of the Company, reorganization or any partial or complete liquidation of the Company.
3. Rights as Stockholder.
(a) Until the RSUs vest and are settled in shares of Common Stock, the Employee shall have no rights as a stockholder of the Company. The vested RSUs will be settled in shares of Common Stock and issued in the form of a book entry registration.
(b) Prior to the applicable Vesting Date, the Employee may not vote, sell, exchange, transfer, pledge, hypothecate or otherwise dispose of any of the RSUs. The RSUs have Dividend Equivalent Rights subject to the same vesting requirements as stated in Section 1 of this agreement and such rights are subject to forfeiture to the same extent as the underlying RSUs.
4. No Limitation on Rights of the Company . The granting of RSUs will not in any way affect the right or power of the Company to make adjustments, reclassifications or changes in its capital or business structure or to merge, consolidate, reincorporate, dissolve, liquidate or sell or transfer all or any part of its business or assets.
5. Employment . Nothing in this Agreement or in the Plan will be construed as constituting a commitment, guarantee, agreement or understanding of any kind or nature that the Company will continue to employ the Employee, or as affecting in any way the right of the Company to terminate the employment of the Employee at any time.
6. Government Regulation . The Company's obligation to deliver Common Stock following the Vesting Date will be subject to all applicable laws, rules and regulations and to such approvals by any governmental agencies or national securities exchanges as may be required.
7. Withholding . The Company will comply with all applicable withholding tax laws, and will be entitled to take any action necessary to effectuate such compliance. The Company may withhold a portion of the Common Stock to which the Employee or beneficiary otherwise would be entitled equivalent in value to the taxes required to be withheld, determined based upon the Fair Market Value of the Common Stock. For purposes of withholding, Fair Market Value shall be equal to the closing price of the Common Stock on the Vesting Date, or, if the Vesting Date is not a business day, the next business day immediately following the Vesting Date. Common Stock withheld may not have an aggregate Fair Market Value in excess of the amount determined by applying the minimum statutory withholding rate.
8. Notice . Any notice to the Company provided for in this Agreement will be addressed to it in care of its Secretary, John Bean Technologies Corporation, 70 West Madison Street, Suite 4400, Chicago, Illinois 60602, and any notice to the Employee (or other person entitled to receive the RSUs) will be addressed to such person at the Employee’s address now on file with the Company, or to such other address as either may designate to the other in writing. Any notice will be deemed to be duly given when enclosed in a properly sealed envelope addressed as stated above and deposited, postage paid, in a post office or branch post office regularly maintained by the United States government.
9. Administration . The Committee administers the Plan. The Employee’s rights under this Agreement are expressly subject to the terms and conditions of the Plan, a copy of which may be accessed through the Fidelity NetBenefits website, including any guidelines the Committee adopts from time to time.
10. Binding Effect . This Agreement will inure to the benefit of and be binding upon the parties hereto and their respective heirs, executors, administrators, successors and permitted assigns.
11. Sole Agreement . This Agreement is the entire agreement between the parties to it, and any and all prior oral and written representations are merged into this Agreement. This Agreement may only be amended by written agreement between the Company and the Employee. Employee expressly acknowledges that the form of the grant agreement that the Employee accepts electronically through the Fidelity NetBenefits website is intended to facilitate the administration of this RSU award and may not be a full version of this Agreement due to limitations inherit in such website that are imposed by Fidelity. The terms of this Agreement will govern the Employee’s award in the event of any inconsistency with the agreement viewed or accepted by the Employee on the Fidelity NetBenefits website.
12. Governing Law . The interpretation, performance and enforcement of this Agreement will be governed by the laws of the State of Delaware.
13. Privacy . Employee acknowledges and agrees to the Company transferring certain personal data of such Employee to the Company for purposes of implementing, performing or administering the Plan or any related benefit. Employee expressly gives his consent to the Company to process such personal data.
14. Code Section 409A . This Agreement is intended to comply with the requirements of Section 409A of the Code, and shall be interpreted and construed consistently with such intent. In the event the terms of this Agreement would subject Employee to taxes or penalties under Section 409A of the Code (“409A Penalties”), the Company and Employee shall cooperate diligently to amend the terms of the Agreement to avoid such 409A Penalties, to the extent possible. To the extent the RSUs under this Agreement are payable by reference to Employee’s “termination of employment” such term and similar terms shall be deemed to refer to Employee’s “separation from service,” within the meaning of Section 409A of the Code. Notwithstanding any other provision in this Agreement, to the extent the RSUs constitute nonqualified deferred compensation, within the meaning of Section 409A, then (i) if such RSUs are conditioned upon Employee’s execution of a release and are scheduled to be paid during a designated period that begins in one taxable year and ends in a second taxable year, such RSUs shall be paid in the later of the two taxable years and (ii) if Employee is a specified employee (within the meaning of Section 409A of the Code) as of the date of Employee’s separation from service, if such RSUs are payable upon Employee’s separation from service and would have been paid prior to the six-month anniversary of Employee’s separation from service, then the payment of such RSUs shall be delayed until the earlier to occur of (A) the first day of the seventh month following Employee’s separation from service or (B) the date of Employee’s death.
Executed as of the Grant Date.
JOHN BEAN TECHNOLOGIES CORPORATION
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By: |
/Mark Montague/ |
/Tom Giacomini/ |
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Vice President, Human Resources |
Employee |
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9/10/13 |
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Acceptance Date |
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This document constitutes part of a prospectus covering securities that have been registered under the Securities Act of 1933.
Exhibit 15
Letter re: Unaudited Interim Financial Information
John Bean Technologies Corporation
Chicago, Illinois
Re: Registration Statements on Form S-8 (No. 333-152682 and 333-152685)
With respect to the subject registration statements, we acknowledge our awareness of the incorporation by reference therein of our report dated November 1, 2013, related to our review of interim financial information.
Pursuant to Rule 436(c) under the Securities Act of 1933 (the “Act”), such report is not considered part of a registration statement prepared or certified by an independent registered public accounting firm, or a report prepared or certified by an independent registered public accounting firm within the meaning of Sections 7 and 11 of the Act.
/s/ KPMG LLP
Chicago, Illinois
November 1, 2013
Exhibit 31.1
CHIEF EXECUTIVE OFFICER CERTIFICATION
I, Thomas W. Giacomini, certify that:
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1. |
I have reviewed this quarterly report on Form 10-Q of John Bean Technologies Corporation (the “registrant”); |
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2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
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3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
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4. |
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
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a) |
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
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b) |
designed such internal control over financial reporting, or caused such internal control over financial reporting, to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
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c) |
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
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d) |
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; |
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5. |
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
|
a) |
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
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b) |
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: November 1, 2013
/s/ Thomas W. Giacomini
Thomas W. Giacomini
President and Chief Executive Officer
(Principal Executive Officer)
Exhibit 31.2
CHIEF FINANCIAL OFFICER CERTIFICATION
I, Ronald D. Mambu, certify that:
|
1. |
I have reviewed this quarterly report on Form 10-Q of John Bean Technologies Corporation (the “registrant”); |
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2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
|
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
|
4. |
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
|
a) |
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
|
b) |
designed such internal control over financial reporting, or caused such internal control over financial reporting, to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
|
c) |
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
|
d) |
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; |
|
5. |
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
|
a) |
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
|
b) |
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
|
Date: November 1, 2013 |
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|
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/s/ Ronald D. Mambu |
|
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Ronald D. Mambu |
|
|
Vice President and Chief Financial Officer (Principal Financial Officer) |
Exhibit 32.1
Certification
of
Chief Executive Officer
Pursuant to 18 U.S.C. 1350
as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
I, Thomas W. Giacomini, President and Chief Executive Officer of John Bean Technologies Corporation (the “Company”), do hereby certify, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
|
(a) |
the Quarterly Report on Form 10-Q of the Company for the fiscal quarter ended September 30, 2013, as filed with the Securities and Exchange Commission (the “Report”), fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
|
(b) |
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
|
Date: November 1, 2013 |
|
|
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/s/ Thomas W. Giacomini |
|
|
Thomas W. Giacomini |
|
|
President and Chief Executive Officer (Principal Executive Officer) |
Exhibit 32.2
Certification
of
Chief Financial Officer
Pursuant to 18 U.S.C. 1350
as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
I, Ronald D. Mambu, Vice President and Chief Financial Officer of John Bean Technologies Corporation (the “Company”), do hereby certify, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
|
(a) |
the Quarterly Report on Form 10-Q of the Company for the fiscal quarter ended September 30, 2013, as filed with the Securities and Exchange Commission (the “Report”), fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
|
(b) |
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
|
Date: November 1, 2013 |
|
|
|
/s/ Ronald D. Mambu |
|
|
Ronald D. Mambu |
|
|
Vice President and Chief Financial Officer (Principal Financial Officer) |