Tennant Company Annual Report 2020

Plain-text annual report

UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549 FORM 10-K(Mark One) ☑ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2020OR ☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period from __________ to __________. Commission File Number 001-16191TENNANT COMPANY(Exact name of registrant as specified in its charter) Minnesota 41-0572550State or other jurisdiction of (I.R.S. Employerincorporation or organization Identification No.) 10400 Clean StreetEden Prairie, Minnesota 55344(Address of principal executive offices)(Zip Code)763-540-1200(Registrant's telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: Title of each class Trading Symbol(s) Name of exchange on which registeredCommon Stock, par value $0.375 per share TNC New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined by Rule 405 of the Securities Act. ☑Yes NoIndicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes☑NoIndicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the SecuritiesExchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file suchreports), and (2) has been subject to such filing requirements for the past 90 days. ☑Yes NoIndicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submittedpursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that theregistrant was required to submit such files). ☑Yes NoIndicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or emerginggrowth company. See definitions of “large accelerated filer,” "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of theExchange Act.Large accelerated filer☑ Accelerated filer☐ Non-accelerated filer☐ Smaller reporting company☐ Emerging growth company☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period forcomplying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of theeffectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act by the registered publicaccounting firm that prepared or issued its audit report. ☑ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). ☐Yes☑No The aggregate market value of the voting and non-voting common equity held by non-affiliates as of June 30, 2020, was $1,107,917,527. As of January 29, 2021, there were 18,516,296 shares of Common Stock outstanding. DOCUMENTS INCORPORATED BY REFERENCE Portions of the registrant’s Proxy Statement for its 2021 annual meeting of shareholders (the “2021 Proxy Statement”) are incorporated by reference in Part III. 1Table of Contents Tennant CompanyForm 10–KTable of Contents PART I Page Item 1Business3 Item 1ARisk Factors5 Item 1BUnresolved Staff Comments8 Item 2Properties8 Item 3Legal Proceedings8 Item 4Mine Safety Disclosures8PART II Item 5Market for Registrant's Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities9 Item 6[Reserved]10 Item 7Management's Discussion and Analysis of Financial Condition and Results of Operations11 Item 7AQuantitative and Qualitative Disclosures About Market Risk18 Item 8Financial Statements and Supplementary Data19 Report of Independent Registered Public Accounting Firm19 Consolidated Financial Statements23 Consolidated Statements of Operations23 Consolidated Statements of Comprehensive Income24 Consolidated Balance Sheets25 Consolidated Statements of Cash Flows26 Consolidated Statements of Equity27 Notes to the Consolidated Financial Statements28 1Summary of Significant Accounting Policies28 2Newly Adopted Accounting Pronouncements32 3Revenue33 4Management Actions34 5Acquisitions and Divestitures35 6Inventories36 7Property, Plant and Equipment36 8Goodwill and Intangible Assets36 9Debt37 10Other Current Liabilities40 11Derivatives40 12Fair Value Measurements42 13Retirement Benefit Plans44 14Shareholders' Equity48 15Leases48 16Commitments and Contingencies49 17Income Taxes50 18Share-Based Compensation52 19Earnings Attributable to Tennant Company Per Share55 20Segment Reporting55 21Subsequent Events55 Item 9Changes in and Disagreements with Accountants on Accounting and Financial Disclosure56 Item 9AControls and Procedures56 Item 9BOther Information56PART III Item 10Directors, Executive Officers and Corporate Governance57 Item 11Executive Compensation57 Item 12Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters57 Item 13Certain Relationships and Related Transactions, and Director Independence57 Item 14Principal Accountant Fees and Services57PART IV Item 15Exhibits and Financial Statement Schedules58 Item 16Form 10-K Summary61 Signatures62 2Table of Contents TENNANT COMPANY2020ANNUAL REPORTForm 10–K(Pursuant to Securities Exchange Act of 1934)PART IITEM 1 – Business General Development of Business Founded in 1870 by George H. Tennant, Tennant Company ("the Company,we, us, or our"), a Minnesota corporation incorporated in 1909, began as a one-man woodworking business, evolved into a successful wood flooring and woodproducts company, and eventually into a manufacturer of floor cleaningequipment. Throughout its history, the Company has remained focused onadvancing our industry by aggressively pursuing new technologies and creatinga culture that celebrates innovation. Today, the Company is a recognized leader of the cleaning industry. Weare passionate about developing innovative and sustainable solutions that helpour customers clean spaces more effectively, addressing various cleaningchallenges. The Company operates in three geographic business unitsincluding the Americas, Europe, Middle East and Africa (EMEA) and AsiaPacific (APAC). The Company is committed to empowering our customers to create acleaner, safer and healthier world with high-performance solutions that minimizewaste, reduce costs, improve safety and further sustainability goals. Principal Products, Markets and Distribution The Company offers products and solutions consisting of mechanizedcleaning equipment, detergent-free and other sustainable cleaningtechnologies, aftermarket parts and consumables, equipment maintenance andrepair service, and business solutions such as financing, rental and leasingprograms, and machine-to-machine asset management solutions. The Company's products are used in many types of environmentsincluding: retail establishments, distribution centers, factories and warehouses,public venues such as arenas and stadiums, office buildings, schools anduniversities, hospitals and clinics, parking lots and streets, and more. TheCompany markets its offerings under the following brands: Tennant®, Nobles®,Alfa Uma Empresa Tennant™, IRIS®, VLX™, IPC brands, Gaomei and Rongenbrands as well as private-label brands. The Company's customers includecontract cleaners to whom organizations outsource facilities maintenance, aswell as businesses that perform facilities maintenance themselves. TheCompany reaches these customers through the industry's largest direct salesand service organization and through a strong and well-supported network ofauthorized distributors worldwide. Raw Materials The Company has not experienced any significant or unusual problems inthe availability of raw materials or other product components, other than thosementioned in Item 1A - Risk Factors. The Company has sole-source vendorsfor certain components. A disruption in supply from such vendors may disruptthe Company’s operations. However, the Company believes that it can findalternate sources in the event there is a disruption in supply from suchvendors. Intellectual Property Although the Company considers that its patents, proprietary technologiesand trade secrets, customer relationships, licenses, trademarks, trade namesand brand names in the aggregate constitute a valuable asset, it does notregard its business as being materially dependent upon any single item orcategory of intellectual property. We take appropriate measures to protect ourintellectual property to the extent such intellectual property can be protected. Seasonality Although the Company’s business is not seasonal in the traditional sense,the percentage of revenues in each quarter typically ranges from 22% to 28%of the total year. The first quarter tends to be at the low end of the rangereflecting customers’ initial slow ramp up of capital purchases and theCompany’s efforts to close out orders at the end of each year. The second andfourth quarters tend to be toward the high end of the range and the third quarteris typically in the middle of the range. Major Customers The Company sells its products to a wide variety of customers, none ofwhich are of material importance in relation to the business as a whole. Thecustomer base includes several governmental entities which generally haveterms similar to other customers. 3Table of Contents Competition Public industry data concerning global market share is limited; however,through an assessment of validated third-party sources and sponsored third-party market studies, the Company is confident in its position as a world-leading manufacturer of floor maintenance and cleaning equipment. Severalglobal competitors compete with the Company in virtually every geography ofthe world. However, small regional competitors are also significant competitorswho vary by country, vertical market, product category or channel. TheCompany competes primarily on the basis of offering a broad line of high-quality, innovative products supported by an extensive sales and servicenetwork in major markets. Human Capital Tennant Company has a commitment to our employees to foster a cultureof integrity and stewardship. This guides our actions as we manage ourbusiness and holds us accountable to our colleagues to care for one anotherand work together for our mutual safety. To that end, our executive leadership,as well as our Board of Directors, emphasize the importance of positive humancapital management. The following are key human capital measures andobjectives that the Company currently focuses on: Employee Safety - We prioritize the health and safety of all of ouremployees. In our manufacturing facilities, we have established safetyteams that proactively identify areas of improvement and help to reinforceemployee behaviors in order to reduce or eliminate incidents. In ourmanufacturing facilities, behavioral safety culture is a primary focus, with aspecific growing emphasis on “near-miss” reporting and resolution. Wedefine a near-miss event as a situation where no property was damaged,and no personal injury was sustained, but given a slight shift in time orposition, damage and/or injury could have occurred. This focus hasincreased awareness to potential incidents at our facilities. The result is acontinuing positive trend in safety issues in our facilities. Additionally, wehave an experienced team of Enterprise Health and Safety professionalsthat provide onsite and corporate level support to our global teams. Diversity, Equity, and Inclusion - Tennant is proud to be an equalopportunity employer where we foster and maintain an ethical workenvironment free of discrimination. Employment decisions are made onthe basis of individual skill, ability, reliability, productivity, and other factorsimportant to performance. We do not discriminate on the basis of race,color, creed, religion, sex, national origin, physical or mental disability,age, veteran status, pregnancy, sexual orientation, genetic information,gender identity, or any other basis protected by state or federal law or localordinance. Diversity in Governance - As of December 31, 2020, women represented29% of our executive management team and 33% of our Board ofDirectors. Gender Equitable Pay - In 2020, Tennant Company performed a genderwage gap analysis to evaluate any gender differences in pay. The medianincome for women working full time in the United States was reported to be99.36% as compared to their male counterparts. In other words, women atTennant were seen to be making 99.36 cents to every $1 men earned. Toput this figure in context, Tennant’s wage gap findings were compared tothe national average. According to the national statistics published byBureau of Labor Statistics (BLS) in 2019, women on average made 81.6%of the earnings made by males. The adjusted pay gap at Tennant wasfound to be 99.89% after controlling for variables such as title, grade, andwork location, that are legitimate and non-discretionary reasons for paydifference. Also, this leftover gap of 0.11% was statistically not significant,suggesting that there is no evidence of pay gap at Tennant Company. Available Information The Company's internet address is www.tennantco.com. The Companymakes available free of charge, through the Investor Relations website atinvestors.tennantco.com, its annual report on Form 10-K, quarterly reports onForm 10-Q, current reports on Form 8-K and amendments to those reports filedor furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Actof 1934, as amended, as soon as reasonably practicable when such materialis filed electronically with, or furnished to, the Securities and ExchangeCommission (“SEC”). The SEC also maintains an internet site that containsreports, proxy and information statements, and other information, which can beaccessed at sec.gov. Information About Our Executive Officers The list below identifies those persons designated as executive officers ofthe Company, including their age, positions held with the Company and theirbusiness experience during the past five or more years. Daniel E. Glusick, Senior Vice President, Global Operations Daniel E. Glusick (48) joined the Company in November 2020 as SeniorVice President of Global Operations. Prior to joining Tennant, he was SeniorVice President of Operations at The Vollrath Company, a manufacturer offoodservice equipment and supplies, from June 2018 to October 2020. Prior tohis time at The Vollrath Company, he held different roles with increasingresponsibilities at Rexnord Industries, a machinery manufacturer, from 2008 toJune 2018, leaving when he was VP of Engineering, Innovation and RexnordBusiness System. Prior to Rexnord, Mr. Glusick also served for three years asDirector, Global Manufacturing at Intermatic and for nine years he held variousoperations and supply chain leadership roles at Harley-Davidson. FemaleMaleTotal Americas4381,7862,224 Europe, Middle East,Africa3971,2111,608 Asia Pacific150277427 Total9853,2744,259 4Table of Contents David W. Huml, Senior Vice President and Chief Operating Officer David W. Huml (52) joined the Company in November 2014 as Senior VicePresident, Global Marketing. In January 2016, he also assumed oversight forthe Company's APAC business unit. In January 2017, he assumed oversight forthe Company's EMEA business and in June 2018 he assumed responsibilityfor Global Operations. In April 2020, he was named Chief Operating Officer. From 2006 to October 2014, he held various positions with Pentair plc, a globalmanufacturer of water and fluid solutions, valves and controls, equipmentprotection and thermal management products, most recently as VicePresident, Applied Water Platform. From 1992 to 2006, he held variouspositions with Graco Inc., a designer, manufacturer and marketer of systemsand equipment to move, measure, control, dispense and spray fluid andcoating materials, including Worldwide Director of Marketing, ContractorEquipment Division. Beginning on March 1, 2021, Mr. Huml will be TennantCompany's Chief Executive Officer and will join the Company's Board ofDirectors. H. Chris Killingstad, President and Chief Executive Officer H. Chris Killingstad (65) joined the Company in April 2002 as VicePresident, North America and was named President and CEO in 2005. From1990 to 2002, he was employed by The Pillsbury Company, a consumer foodsmanufacturer. From 1999 to 2002 he served as Senior Vice President andGeneral Manager of Frozen Products for Pillsbury North America; from 1996 to1999 he served as Regional Vice President and Managing Director of PillsburyEurope, and from 1990 to 1996 was Regional Vice President of Häagen-DazsAsia Pacific. He held the position of International Business DevelopmentManager at PepsiCo Inc., from 1982 to 1990 and Financial Manager for GeneralElectric, from 1978 to 1980. Mr. Killingstad is retiring as the Company's ChiefExecutive Officer on March 1, 2021 and will serve as a strategic advisor untilthe end of 2021. Carol E. McKnight, Senior Vice President, Chief Administrative Officer Carol E. McKnight (53) joined the Company in June 2014 as Senior VicePresident of Global Human Resources. In 2017, she was named Senior VicePresident and Chief Administrative Officer. Prior to joining the Company, shewas Vice President of Human Resources at Alliant Techsystems (ATK) whereshe held divisional and corporate leadership positions in the areas ofcompensation, talent management, talent acquisition and general humanresource management from 2002 to 2014. Prior to ATK, she was with NewJersey-based NRG Energy, Inc. Thomas Paulson, Interim Chief Financial Officer and Interim PrincipalAccounting Officer Thomas Paulson (64) was most recently Tennant's Senior Vice Presidentand Chief Financial Officer from 2006 until he retired in 2019. Prior to joiningTennant, he was Chief Financial Officer and Senior Vice President of Innovexfrom 2001 to February 2006. Prior to joining Innovex, he worked for ThePillsbury Company for over 19 years. He became a Vice President at Pillsburyin 1995 and was the Vice President of Finance for the North American FoodsDivision for over two years before joining Innovex. Kristin A. Stokes, Senior Vice President, General Counsel and CorporateSecretary Kristin A. Stokes (48) joined the Company in April 2008 as AssociateGeneral Counsel and was named Senior Vice President, General Counsel andCorporate Secretary in December 2020. In July 2020, she was named InterimGeneral Counsel and Corporate Secretary after having previously served asVice President, Deputy General Counsel and Chief Compliance Officer, andDeputy General Counsel. Prior to joining Tennant in 2008, she served as SeniorCounsel and Assistant Secretary for MoneyGram International, Inc., from 2004to 2008. She started her career as a corporate attorney for Lindquist &Vennum, PLLP (n/k/a Ballard Spahr LLP). Richard H. Zay, Senior Vice President, Technology and Innovation Richard H. Zay (50) joined the Company in June 2010 as Vice President,Global Marketing and was named Senior Vice President, Global Marketing inOctober 2013. In 2014, he was named Senior Vice President of the Americasbusiness unit for the Company and in 2018 he also assumed responsibility forTennant Research and Development. From 2006 to 2010, Mr. Zay held variouspositions with Whirlpool Corporation, a manufacturer of major homeappliances, most recently as General Manager, KitchenAid Brand. From 1993to 2006, Mr. Zay held various positions with Maytag Corporation, including VicePresident, Jenn-Air Brand, Director of Marketing, Maytag Brand, and Directorof Cooking Category Management. ITEM 1A – Risk Factors The following are material factors known to us that could materiallyadversely affect our business, financial condition or operating results. Macroeconomic Risks We may encounter financial difficulties if the United States or otherglobal economies experience an additional or continued long-termeconomic downturn, decreasing the demand for our products andnegatively affecting our sales growth. Our product sales are sensitive to declines in capital spending by ourcustomers. Decreased demand for our products could result in decreasedrevenues, profitability and cash flows and may impair our ability to maintain ouroperations and fund our obligations to others. In the event of a continued long-term economic downturn in the U.S. or other global economies, our revenuescould decline to the point that we may have to take cost-saving measures,such as restructuring actions. In addition, other fixed costs would have to bereduced to a level that is in line with a lower level of sales. A long-termeconomic downturn that puts downward pressure on sales could alsonegatively affect investor perception relative to our publicly stated growthtargets. Uncertainty surrounding the impacts and duration of the COVID-19pandemic. The coronavirus ("COVID-19") outbreak that originated in China and wasdeclared a global pandemic by the World Health Organization at the beginningof 2020 continues to cause volatility and economic disruption across the globe.The impact of COVID-19, or any variant thereof, on our business and financialperformance depends on evolving factors that we cannot accurately predict,including the duration of the pandemic, restrictions on travel and transportation,the effect on our customers and on the global supply chain, the demand for ourproducts, government actions that have or could result in further closures of orrestrictions on our manufacturing plants, and the pace of economic recoverywhen the COVID-19 pandemic subsides. During 2020, certain of our manufacturing plants suspended operationstemporarily either due to government restrictions or employee health concerns.There may be a risk of future health concerns and we cannot predict futuredisruptions of our plants or the duration of such future disruptions. Our customers have been negatively impacted which has had, and maycontinue to have, a material adverse impact on our sales. In addition, oursuppliers may not have the ability to provide us with parts needed tomanufacture our products. This may result in delays in shipments to us andalso to our customers, which would affect our results of operations. If the COVID-19 or other health pandemic continues for an extended periodof time, we will need to assess our liquidity needs. A sustained disruption inthe global economy could materially affect our ability to generate sufficientcash from operations and could require us to seek additional sources ofliquidity or take further actions. It could also impact our strategic objectives. 5Table of Contents Our global operations are subject to laws and regulations that imposesignificant compliance costs and create reputational and legal risk. Due to the international scope of our operations, we are subject to acomplex system of commercial, tax and trade regulations around the world.Recent years have seen an increase in the development and enforcement oflaws regarding trade, tax compliance, data-privacy, labor and safety and anti-corruption, such as the U.S. Foreign Corrupt Practices Act, and similar lawsfrom other countries. Our numerous foreign subsidiaries and affiliates aregoverned by laws, rules and business practices that differ from those of theU.S., but because we are a U.S.-based company, oftentimes they are alsosubject to U.S. laws which can create a conflict. Despite our due diligence,there is a risk that we do not have adequate resources or comprehensiveprocesses to stay current on changes in laws or regulations applicable to usworldwide and maintain compliance with those changes. Increased compliancerequirements may lead to increased costs and erosion of desired profit margin.As a result, it is possible that the activities of these entities may not complywith U.S. laws or business practices or our Business Ethics Guide. Violationsof the U.S. or local laws may result in severe criminal or civil sanctions, coulddisrupt our business, and result in an adverse effect on our reputation,business and results of operations or financial condition. We cannot predict thenature, scope or effect of future regulatory requirements to which our operationsmight be subject or the manner in which existing laws might be administered orinterpreted. Industry Risks We may be unable to take advantage of product pricing due to thecompetitive marketplace and increased price sensitivity. Simplification of our customer product pricing is a key initiative to reducethe complexity in which we operate. The current competitive landscape,coupled with macroeconomic factors, could impact our ability to achieve ourpricing targets. These pressures, along with internal constraints, may limit ourability to sell our products at our expected prices and may result in a changeto the mix of product offerings or where we have a competitiveadvantage. Increasing our prices in this competitive market, where customersare very price sensitive, could have an adverse effect on our financial conditionor operating results. We are subject to competitive risks associated with developinginnovative products and technologies, including, but not limited to, ourinability to expand as rapidly or aggressively in the global market as ourcompetitors, our customers ceasing to pay for innovation and competitivechallenges to our products, technology and the underlying intellectualproperty. Our products are sold in competitive markets throughout the world.Competition is based on product features and design, brand recognition,reliability, durability, technology, breadth of product offerings, price, customerrelationships and after-sale service. Although we believe that the performanceand price characteristics of our products will produce competitive solutions forour customers’ needs, our products are generally priced higher than ourcompetitors’ products. This is due to our dedication to innovation and continuedinvestments in research and development. We believe that customers will payfor the innovations and quality in our products. However, it may be difficult forus to compete with lower priced products offered by our competitors and therecan be no assurance that our customers will continue to choose our productsover products offered by our competitors. If our products, markets and servicesare not competitive, we may experience a decline in sales volume, an increasein price discounting and a loss of market share, which would adversely impactour revenues, margin and the success of our operations. Competitors may also initiate litigation to challenge the validity of ourpatents or claims, allege that we infringe upon their patents, violate our patentsor they may use their resources to design comparable products that avoidinfringing our patents. Regardless of whether such litigation is successful, suchlitigation could significantly increase our costs and divert management’sattention from the operation of our business, which could adversely affect ourresults of operations and financial condition. Increases in the cost of, quality, or disruption in the availability of,raw materials and components that we purchase or labor required tomanufacture our products could negatively impact our operating resultsor financial condition. Our sales growth, expanding geographical footprint and continued use ofsole-source vendors, coupled with suppliers’ potential credit issues, could leadto an increased risk of a breakdown in our supply chain. Our use of sole-source vendors creates a concentration risk. There is an increased risk ofdefects due to the highly configured nature of our purchased component partsthat could result in quality issues, returns or production slowdowns. In addition,modularization may lead to more sole-sourced products and as we seek tooutsource the design of certain key components, we risk loss of proprietarycontrol and becoming more reliant on a sole source. There is also a risk thatthe vendors we choose to supply our parts and equipment fail to comply withour quality expectations, thus damaging our reputation for quality andnegatively impacting sales. A global semiconductor supply shortage is impacting multiple industriesand could have an impact on the production of our products, and in turn, couldimpact our performance in 2021. Additionally, recent disruptions oftransportation, including reduced availability of containers and air transport inaddition to port or border congestion, have caused, and may continue tocause, increased costs and delays in certain instances. These pressures onobtaining raw materials and shipping finished goods to customers couldadversely impact our financial results. We have and may continue to experience higher than normal wage inflationdue to skilled labor shortages. In addition, we have incurred costs associatedwith tariffs on certain raw materials used in our manufacturing processes. Thelabor shortages and tariff costs have unfavorably impacted our gross profitmargins and could continue to do so if actions we are taking are not effective atoffsetting these rising costs. Changes and uncertainties related to governmentfiscal and tax policies, including increased duties, tariffs, or other restrictions,could adversely affect demand for our products, the cost of the products wemanufacture or our ability to cost-effectively source raw materials, all of whichcould have a negative impact on our financial results. Increasing cost pressures could negatively impact our ability toachieve our strategic objectives and affect our financial results. We are dependent on key suppliers to make certain materials available ata contracted price. If labor, overhead, and material costs increase, we may notbe able to offset these increased manufacturing costs with a higher finishedproduct price. We also may not be able to push those direct cost increasesonto our customers in a timely manner given the competitive environment. Adecline in demand for our products may have a direct impact on our ability toachieve better pricing through volume discounts. We are subject to product liability claims and product quality issuesthat could adversely affect our operating results or financial condition. Our business exposes us to potential product liability risks that areinherent in the design, manufacturing and distribution of our products. Ifproducts are used incorrectly by our customers, injury may result leading toproduct liability claims against us. Some of our products or productimprovements may have defects or risks that we have not yet identified thatmay give rise to product quality issues, liability and warranty claims. Qualityissues may also arise due to changes in parts or specifications with suppliersand/or changes in suppliers. If product liability claims are brought against usfor damages that are in excess of our insurance coverage or for uninsuredliabilities and it is determined we are liable, our business could be adverselyimpacted. Any losses we suffer from any liability claims, and the effect thatany product liability litigation may have upon the reputation and marketability ofour products, may have a negative impact on our business and operatingresults. We could experience a material design or manufacturing failure in ourproducts, a quality system failure, other safety issues, or heightenedregulatory scrutiny that could warrant a recall of some of our products. Anyunforeseen product quality problems could result in loss of market share,reduced sales and higher warranty expense. 6Table of Contents Operational Risks Our ability to effectively operate our Company could be adverselyaffected if we are unable to attract and retain key personnel and otherhighly skilled employees, provide employee development opportunitiesand create effective succession planning strategies. Our growth strategy, expanding global footprint, changing workforcedemographics and increased improvements in technology and businessprocesses designed to enhance the customer experience are putting increasedpressure on human capital strategies designed to recruit, retain and developtop talent. Our continued success will depend on, among other things, the skills andservices of our executive officers and other key personnel. Our ability to attractand retain highly qualified managerial, technical, manufacturing, research,sales and marketing personnel also impacts our ability to effectively operateour business. As companies grow and increase their hiring activities, there isan inherent risk of increased employee turnover and the loss of valuableemployees in key positions, especially in emerging markets. We believe theincreased loss of key personnel within a concentrated region could adverselyaffect our sales growth. In addition, there is a risk that we may not have adequate talent acquisitionresources and employee development resources to support our future hiringneeds and provide training and development opportunities to all employees.This, in turn, could impede our workforce from embracing change andleveraging the improvements we have made in technology and other businessprocess enhancements. We may not be able to develop or manage strategic planning andgrowth processes or the related operational plans to deliver on ourstrategies and establish a broad organization alignment, therebyimpairing our ability to achieve future performance expectations. We are continuing to refine our global company strategy to guide our nextphase of performance as our structure has become more complex due torecent acquisitions. We continue to consolidate and reallocate resources aspart of our ongoing efforts to optimize our cost structure and to drive synergiesand growth. Our operating results may be negatively impacted if we are unableto implement new processes and manage organizational changes, whichinclude changes to our go-to-market strategy, systems and processes;simultaneous focus on expense control and growth; and introduction ofalternative cleaning methods. In addition, if we do not effectively realize andsustain the benefits that these transformations are designed to produce, wemay not fully realize the anticipated savings of these actions or they maynegatively impact our ability to serve our customers or meet our strategicobjectives. We may not be able to upgrade and evolve our informationtechnology systems as quickly as we wish and we may encounterdifficulties as we upgrade and evolve these systems to support our growthstrategy and business operations, which could adversely impact ourabilities to accomplish anticipated future cost savings and better serve ourcustomers. We have many information technology systems that are important to theoperation of our business and are in need of upgrading in order to effectivelyimplement our growth strategy. Given our greater emphasis on customer-facingtechnologies, we may not have adequate resources to upgrade our systems atthe pace which the current business environment demands. Additionally,significantly upgrading and evolving the capabilities of our existing systemscould lead to inefficient or ineffective use of our technology due to lack oftraining or expertise in these evolving technology systems. These factors,among other things, could lead to significant expenses, adversely impactingour results of operations and hindering our ability to offer better technologysolutions to our customers. We may encounter risks to our IT infrastructure, such as access andsecurity, that may not be adequately designed to protect critical data andsystems from theft, corruption, unauthorized usage, viruses, sabotage orunintentional misuse. Global cybersecurity threats and incidents can range from uncoordinatedindividual attempts to gain unauthorized access to IT systems to sophisticatedand targeted measures known as advanced persistent threats, directed at theCompany, its products and its customers. We seek to deploy comprehensivemeasures to deter, prevent, detect, react to and mitigate these threats,including identity and access controls, data protection, vulnerabilityassessments, continuous monitoring of our IT networks and systems andmaintenance of backup and protective systems. Despite these efforts, cybersecurity incidents, depending on their natureand scope, could potentially result in the misappropriation, destruction,corruption or unavailability of critical data and confidential or proprietaryinformation (our own or that of third parties) and the disruption of businessoperations. The potential consequences of a material cybersecurity incidentinclude financial loss, reputational damage, litigation with third parties, theft ofintellectual property, diminution in the value of our investment in research,development and engineering, and increased cybersecurity protection andremediation costs due to the increasing sophistication and proliferation ofthreats, which in turn could adversely affect our competitiveness and results ofoperations. We may be unable to conduct business if we experience a significantbusiness interruption in our computer systems, manufacturing plants ordistribution facilities for a significant period of time. We rely on our computer systems, manufacturing plants and distributionfacilities to efficiently operate our business. If we experience an interruption inthe functionality in any of these items for a significant period of time for anyreason, we may not have adequate business continuity planning contingenciesin place to allow us to continue our normal business operations on a long-termbasis. In addition, the increase in customer-facing technology raises the risk ofa lapse in business operations. Therefore, significant long-term interruption inour business could cause a decline in sales, an increase in expenses andcould adversely impact our financial results. Our ability to manage the health and safety of our global workforcemay lead to increased business disruption and financial penalties. We remain focused on the health and safety measures that impact ourbusiness from a manufacturing perspective. The Company had to adjustquickly to new working conditions as a result of the COVID-19 pandemic,including making enhancements as new health information was received. In thefuture, the Company may not adapt to new health crises quickly enough,resulting in a decrease in resource capacity and overall health and wellness ofour workforce that could cause fines, reputational damage, or businessdisruptions. Also, there may be further enhancements and costs to theCompany related to any new health guidelines and protocols. Ourmanufacturing teams monitor the effectiveness of our wellness and safetyprograms, while the Company continues to implement more tailored healthinitiatives for those working from home. Managing additional health guidelinesand protocols for the health and safety of our employees may adversely affectour business, financial conditions or operating results. 7Table of Contents We may consider acquisitions of suitable candidates to accomplishour growth objectives. We may not be able to successfully integrate thebusinesses we acquire to achieve operational efficiencies, includingsynergistic and other benefits of acquisition. We may consider, as part of our growth strategy, supplementing ourorganic growth through acquisitions of complementary businesses or products.We have engaged in acquisitions in the past and we may determine that futureacquisitions may provide meaningful opportunities to grow our business andimprove profitability. Acquisitions allow us to enhance the breadth of ourproduct offerings and expand the market and geographic participation of ourproducts and services. However, our success in growing by acquisition is dependent uponidentifying businesses to acquire, integrating the newly acquired businesseswith our existing businesses and complying with the terms of our creditfacilities. We may incur difficulties in the realignment and integration ofbusiness activities when assimilating the operations and products of anacquired business or in realizing projected efficiencies, cost savings, revenuesynergies and profit margins. Acquired businesses may not achieve the levelsof revenue, profit, productivity or otherwise perform as expected. We are alsosubject to incurring unanticipated liabilities and contingencies associated withan acquired entity that are not identified or fully understood in the due diligenceprocess. Current or future acquisitions may not be successful or accretive toearnings if the acquired businesses do not achieve expected financial results. In addition, we may record significant goodwill or other intangible assets inconnection with an acquisition. We are required to perform impairment tests atleast annually and whenever events indicate that the carrying value may not berecoverable from future cash flows. If we determine that any intangible assetvalues need to be written down to their fair values, this could result in a chargethat may be material to our operating results and financial condition. Inadequate funding or insufficient innovation of new technologiesmay result in an inability to develop and commercialize new innovativeproducts and services. We strive to develop new and innovative products and services todifferentiate ourselves in the marketplace. New product development reliesheavily on our financial and resource investments in both the short term andlong term. If we fail to adequately fund product development projects or fund aproject which ultimately does not gain the market acceptance we anticipated,we risk not meeting our customers' expectations, which could result indecreased revenues, declines in margin and loss of market share. ITEM 1B – Unresolved Staff Comments None. ITEM 2 – Properties The Company’s corporate offices are owned by the Company and arelocated in the Minneapolis, Minnesota, metropolitan area. Manufacturingfacilities located in Minneapolis, Minnesota; Holland, Michigan; Uden, TheNetherlands and the Italian cities of Venice, Cremona and Reggio Emilia and inthe Province of Padua are owned by the Company. Manufacturing facilitieslocated in Louisville, Kentucky; São Paulo, Brazil; Hefei, China, and anotherfacility in the Province of Padua are leased to the Company. In addition, IPCGroup (IPC) (which we acquired in 2017) uses a dedicated, third-party plant inGermany that specially manufactures heavy–duty stainless steel scrubbersand sweepers to IPC designs. IPC also owns a minor tools and suppliesassembly operation in China to service local customers. The facilities are ingood operating condition, suitable for their respective uses and adequate forcurrent needs. Sales offices, warehouse and storage facilities are leased in variouslocations in the United States, Canada, Mexico, Portugal, Spain, Italy,Germany, France, The Netherlands, Belgium, Norway, the United Kingdom,Japan, China, India, Australia, New Zealand and Brazil. The Company’sfacilities are in good operating condition, suitable for their respective uses andadequate for current needs. Further information regarding the Company’s property and leasecommitments is included in the Part II, Item 7, "Management's Discussion andAnalysis of Financial Condition and Results of Operations - ContractualObligations" and in Note 15 to the Consolidated Financial Statements. ITEM 3 – Legal Proceedings There are no material pending legal proceedings other than ordinary routinelitigation incidental to the Company’s business. ITEM 4 – Mine Safety Disclosures Not applicable. 8Table of Contents PART II ITEM 5 – Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities MARKET INFORMATION – Tennant's common stock is traded on the New York Stock Exchange, under the ticker symbol TNC. As of February 12, 2021,there were 280 shareholders of record. DIVIDEND INFORMATION – Cash dividends on Tennant’s common stock have been paid for 76 consecutive years. Tennant’s annual cash dividend payoutincreased for the 49th consecutive year to $0.89 per share in 2020, an increase of $0.01 per share over 2019. Dividends are generally declared each quarter. OnFebruary 17, 2021, the Company announced a quarterly cash dividend of $0.23 per share payable March 15, 2021, to shareholders of record on March 1, 2021. DIVIDEND REINVESTMENT OR DIRECT DEPOSIT OPTIONS – Shareholders have the option of reinvesting quarterly dividends in additional shares ofCompany stock or having dividends deposited directly to a bank account. The Transfer Agent should be contacted for additional information. TRANSFER AGENT AND REGISTRAR – Shareholders with a change of address or questions about their account may contact: Equiniti Trust CompanyShareowner ServicesP.O. Box 64874St. Paul, MN 55164-0854(800) 468-9716 SHARE REPURCHASES – On October 31, 2016, the Board of Directors authorized the repurchase of an additional 1,000,000 shares of our common stock.This is in addition to the 392,892 shares remaining under our prior repurchase program. Share repurchases are made from time to time in the open market orthrough privately negotiated transactions. As of December 31, 2020, our 2017 Credit Agreement restricts the payment of dividends or repurchasing of stock if,after giving effect to such payments and assuming no default exists or would result from such payment, our leverage ratio is greater than 2.50 to 1, in such caselimiting such payments to an amount ranging from $50.0 million to $75.0 million during any fiscal year based on our leverage ratio after giving effect to suchpayment. Our Senior Notes due 2025 also contain certain restrictions, which are generally less restrictive than those contained in the 2017 Credit Agreement. For the Quarter Ended Total Number ofShares Average PricePaid Total Number ofShares Purchased asPart of PubliclyAnnounced Plans or Maximum Numberof Shares that MayYet Be PurchasedUnder the Plans or December 31, 2020 Purchased(1) Per Share Programs Programs October 1–31, 2020 18 $60.36 — 1,392,363 November 1–30, 2020 — — — 1,392,363 December 1–31, 2020 — — — 1,392,363 Total 18 $60.36 — 1,392,363 (1)Includes 18 shares delivered or attested to in satisfaction of the exercise price and/or tax withholding obligations by employees who exercised stockoptions or restricted stock under employee share-based compensation plans. 9Table of Contents STOCK PERFORMANCE GRAPH – The following graph compares the cumulative total shareholder return on Tennant’s common stock to two indices: S&PSmallCap 600 and S&P 500 Industrials (Sector). The graph below compares the performance for the last five fiscal years, assuming an investment of $100 onDecember 31, 2015, including the reinvestment of all dividends. The S&P 500 Industrials (Sector) replaces the Morningstar Industrials Sector Index in thisanalysis and going forward, as the latter data is no longer accessible at a reasonable cost. The latter index has been included with data through 2019 on atransitional basis. 5-YEAR CUMULATIVE TOTAL RETURN COMPARISON 2015 2016 2017 2018 2019 2020 Tennant Company $100 $128 $133 $96 $146 $133 S&P SmallCap 600 $100 $98 $111 $102 $125 $139 Morningstar Industrials Sector $100 $119 $145 $128 $168 n/a S&P 500 Industrials (Sector) (TR) $100 $119 $144 $125 $161 $179 ITEM 6 – [Reserved] 10Table of Contents ITEM 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations Overview The Company is a world leader in designing, manufacturing and marketing solutions that empower customers to achieve quality cleaning performance, reduceenvironmental impact and help create a cleaner, safer, healthier world. The Company is committed to creating and commercializing breakthrough, sustainablecleaning innovations to enhance its broad suite of products, including floor maintenance and outdoor cleaning equipment, detergent-free and other sustainablecleaning technologies, aftermarket parts and consumables, equipment maintenance and repair service, specialty surface coatings and asset managementsolutions. Our products are used in many types of environments, including retail establishments, distribution centers, factories and warehouses, public venuessuch as arenas and stadiums, office buildings, schools and universities, hospitals and clinics, parking lots and streets, and more. Customers include contractcleaners to whom organizations outsource facilities maintenance, as well as businesses that perform facilities maintenance themselves. The Company reachesthese customers through the industry's largest direct sales and service organization and through a strong and well-supported network of authorized distributorsworldwide. The year-over-year comparisons in this Management's Discussion and Analysis of Financial Condition and Results of Operations are as of and for the yearsended December 31, 2020 and December 31, 2019, unless stated otherwise. The discussion of 2018 results and related year-over-year comparisons as of and forthe years ended December 31, 2019 and December 31, 2018 are found in Part II, Item 7, "Management's Discussion and Analysis of Financial Condition andResults of Operations", of our Form 10-K for the year ended December 31, 2019. Impact of COVID-19 Because we are a global company, our results of operations are affected by macroeconomic conditions. We continue to see economic and geopoliticaluncertainty in many regions around the world. The coronavirus (COVID-19) pandemic has increased the uncertainty globally and has resulted in general economicdisruption. Governments across the world have taken numerous actions to limit the spread of COVID-19, including stay-at-home orders, which have reducedoperating activities across global businesses. To date, the primary impact of the pandemic on the Company's business has been related to a slowdown in sales to some end markets amid widespreadclosures of customer facilities and operations. We have experienced, and expect to continue experiencing, lower demand and volume for our products, includingdelivery and shipping delays that adversely impact our businesses. During 2020, we experienced an organic sales decline of 11.8%. We believe most of theorganic sales decline in the second through fourth quarters of 2020 was due to the pandemic. We are unsure whether or not this level of decline, or if the trend inthe sales decline on a quarter-to-quarter basis, will continue in the future. We are actively managing our business to respond to the COVID-19 impact. We have prioritized the health and safety of our employees and customers. Wehave established a dedicated enterprise-wide response team and implemented work-from-home processes for much of our workforce. We have established cross-functional and daily communications with suppliers to review, track and prioritize high-risk components. We have also identified and activated alternativesuppliers, materials and components as needed. To date, we have been able to avoid major supply disruptions. Regarding transportation, we have set up tracking,reporting and communication channels with carriers to understand their risks and to evaluate available options where necessary. For the majority of 2020, therewere a limited number of restrictions on our manufacturing operations. Although end market demand was significantly lower than the same period last year, all ofour factories had the ability to operate at full capacity. We have also taken a number of actions globally to minimize the financial impact such as suspending a significant amount of business-related travel,reducing non-essential discretionary and project spending, applying for government wage subsidies and implementing merit freezes, hiring freezes, and otherheadcount-related actions, including a combination of salary cuts, reduced work schedules and/or furlough programs for all employees globally, while operatingwithin the local laws and regulations, and developing multiple financial scenarios to ensure liquidity and to identify additional actions, if needed. We continue to monitor the continuously evolving situation and guidance from authorities. As a result of the disruptions and volatility caused by COVID-19,we cannot reasonably estimate the long-term impact of the pandemic on our financials results. We expect that the longer the period of disruption continues, themore material the adverse impact will be on our business operations, financial performance and results of operations. 11Table of Contents Historical Results The following table compares the historical results of operations for the years ended December 31, 2020, 2019 and 2018 in dollars and as a percentage of NetSales (in millions, except per share amounts and percentages): 2020 % 2019 % 2018 % Net Sales $1,001.0 100.0 $1,137.6 100.0 $1,123.5 100.0 Cost of Sales 593.2 59.3 675.9 59.4 678.5 60.4 Gross Profit 407.8 40.7 461.7 40.6 445.0 39.6 Operating Expense: Research and Development Expense 30.1 3.0 32.7 2.9 30.7 2.7 Selling and Administrative Expense 314.0 31.4 357.2 31.4 356.3 31.7 Total Operating Expense 344.1 34.4 389.9 34.3 387.0 34.4 Profit from Operations 63.7 6.4 71.8 6.3 58.0 5.2 Other Income (Expense): Interest Income 3.3 0.3 3.3 0.3 3.0 0.3 Interest Expense (20.7) (2.1) (21.1) (1.9) (23.3) (2.1)Net Foreign Currency Transaction Losses (5.3) (0.5) (0.7) (0.1) (1.1) (0.1)Other Income (Expense), Net 0.1 0.0 0.7 0.1 (0.8) (0.1)Total Other Expense, Net (22.6) (2.3) (17.8) (1.6) (22.2) (2.0)Profit Before Income Taxes 41.1 4.1 54.0 4.7 35.8 3.2 Income Tax Expense 7.4 0.7 8.1 0.7 2.3 0.2 Net Earnings Including Noncontrolling Interest 33.7 3.4 45.9 4.0 33.5 3.0 Net Earnings Attributable to Noncontrolling Interest — — 0.1 — 0.1 — Net Earnings Attributable to Tennant Company $33.7 3.4 $45.8 4.0 $33.4 3.0 Net Earnings Attributable to Tennant Company per Share - Diluted $1.81 $2.48 $1.82 Net Sales Net Sales in 2020 totaled $1,001.0 million, a 12.0% decrease as compared to Net Sales of $1,137.6 million in 2019. The components of the consolidated Net Sales change for 2020 as compared to 2019, and 2019 as compared to 2018, were as follows: 2020 v. 2019 2019 v. 2018Total reported net sales (12.0)% 1.3%Foreign currency (0.2)% (2.2)%Acquisitions 0.0% 1.3%Total organic net sales (11.8)% 2.2% The 12.0% decrease in consolidated Net Sales for 2020 as compared to 2019 was driven by: •Organic sales decreased approximately 11.8% which excludes the effects of foreign currency translation exchange. The organic sales decrease wasprimarily driven by volume declines across all regions, largely driven by the impact of the COVID-19 pandemic. The decrease was partially offset bycontinued strong demand for our autonomous cleaning machines in North America; and •An unfavorable impact from foreign currency exchange of approximately 0.2%. The following table sets forth annual Net Sales by geographic area and the related percentage change from the prior year (in millions, except percentages): 2020 % 2019 % 2018 Americas $631.0 (12.7) $722.4 4.5 $691.0 Europe, Middle East and Africa 278.2 (9.6) 307.6 (8.3) 335.6 Asia Pacific 91.8 (14.7) 107.6 11.0 96.9 Total $1,001.0 (12.0) $1,137.6 1.3 $1,123.5 Americas – In 2020, Americas Net Sales decreased 12.7% to $631.0 million as compared with $722.4 million in 2019. Foreign currency exchange within theAmericas unfavorably impacted Net Sales by approximately 1.1% in 2020. Organic sales declines in the Americas unfavorably impacted Net Sales byapproximately 11.6% due to the impact of COVID-19 throughout the entire region, partially offset by continued demand for our autonomous cleaning machines inNorth America. 12Table of Contents Europe, Middle East and Africa – EMEA Net Sales in 2020 decreased 9.6% to $278.2 million as compared to 2019 Net Sales of $307.6 million. Foreigncurrency exchange within EMEA favorably impacted Net Sales by approximately 1.4%. Organic sales declines in EMEA unfavorably impacted Net Sales byapproximately 11.0% due to the impact of COVID-19 throughout the region. Asia Pacific – APAC Net Sales in 2020 decreased 14.7% to $91.8 million as compared to 2019 Net Sales of $107.6 million. Foreign currency exchangewithin APAC favorably impacted Net Sales by approximately 0.2%. Organic sales declines in APAC unfavorably impacted Net Sales by approximately 14.9% in2020, primarily due to the impact of COVID-19 throughout the region. Gross Profit Gross Profit margin was 40.7%, or 10 basis points higher in 2020 compared to 2019. The increase was primarily driven by actions directly resulting from theCompany's enterprise strategy efforts such as pricing and cost-out initiatives, benefits from government programs related to COVID-19 and cost-reduction actions,partially offset by volume deleverage, higher material costs, and strategic investments in the business. The government benefits included in Gross Profit in 2020were $4.9 million and were recorded in the second and fourth quarters of 2020. The benefits represent wage-related subsidies from various European, Canadian,and U.S. authorities that are not required to be repaid. Of the government benefits, $1.1 million were related to employee retention credits for U.S. employeesprovided by the Coronavirus Aid, Relief and Economic Security ("CARES") Act. Operating Expenses Research and Development Expense – The Company continues to invest in innovative product development with 3.0% of 2020 Net Sales spent onResearch and Development ("R&D"). We continue to invest in developing innovative new products and technologies and the advancement of detergent-freeproducts, fleet management, autonomous vehicles and other sustainable technologies. R&D Expense decreased $2.6 million, or 8.0%, in 2020 as compared to 2019. As a percentage of Net Sales, 2020 R&D Expense increased 10 basis pointscompared to the prior year. Selling and Administrative Expense – Selling and Administrative Expense ("S&A Expense") decreased by $43.2 million, or 12.1%, in 2020 compared to2019. As a percentage of Net Sales, 2020 S&A Expense remained flat at 31.4%. The S&A Expense decline was primarily driven by cost-containment initiativesthroughout the Company, including employee furloughs, reduction in travel spending, and temporary pay reductions as well as benefits from governmentprograms related to COVID-19 and adjustments to management incentives. The government benefits included in S&A Expense in 2020 were $3.0 million andwere recorded in the second and fourth quarters of 2020. The benefits represent wage-related subsidies from various European, Canadian and U.S. authoritiesthat are not required to be repaid. Of the government benefits, $1.4 million were related to employee retention credits for U.S. employees provided by theCARES Act. The remaining decrease included a lower fair value adjustment to the acquisition-related contingent consideration, an adjustment to an acquisition-related liability and lower acquisition and integration costs in 2020 as compared to 2019. The decrease in S&A Expense was offset slightly by increases inrestructuring costs and professional fees. Total Other Expense, Net Interest Income – Interest Income was $3.3 million in 2020, flat from 2019. Interest Expense – Interest Expense was $20.7 million in 2020, as compared to $21.1 million in 2019. The lower Interest Expense in 2020 was primarily dueto carrying a lower level of debt due to debt paydowns, as further described in the Liquidity and Capital Resources section that follows. Net Foreign Currency Transaction Losses – Net Foreign Currency Transaction Losses were $5.3 million in 2020 as compared to $0.7 million of losses in2019. The unfavorable change in the impact from foreign currency transactions in 2020 was primarily due to fluctuations in foreign currency rates, specificallybetween the Brazilian real, Mexican peso and the U.S. dollar, and settlements of transactional hedging activity in the normal course of business. Other Income (Expense), Net – Other Income (Expense), Net was $0.1 million of income in 2020 as compared to $0.7 million of income in 2019. Income Taxes The overall effective income tax rate was 17.9% and 15.1% in 2020 and 2019, respectively. The expense for 2020 included $2.2 million of tax benefits associated with $7.5 million of non-recurring expenses, which reduced the effective tax rate by 1.6percentage points. Our effective tax rate fluctuates from year to year due to the global nature of our operations. The effective tax rate increased to 17.9% in 2020 from 15.1% in2019 primarily due to the mix in full year taxable earnings by country, fewer tax benefits related to the exercise of stock options, and a non-recurring benefit in2019 related to a change in valuation allowances in The Netherlands and the U.S. 13Table of Contents Other Comprehensive Income (Loss) Foreign Currency Translation Adjustments – For the years ended December 31, 2020 and 2019, we recorded a pre-tax foreign currency translation gain of$16.4 million and a loss of $4.5 million, respectively. These adjustments resulted from translating the financial statements of our non-U.S. dollar functionalcurrency subsidiaries into our reporting currency, which is the U.S. dollar, as well as other adjustments permitted by foreign currency accounting rules. During 2020, we recorded a pre-tax currency translation gain of $16.4 million. This gain was caused primarily by the weakening of the U.S. dollar to mostcurrencies. In 2020, the U.S. dollar weakened by approximately 9% to the euro and 7% to the Chinese renminbi. Currency translation gains were partially offsetby a loss in Brazilian real denominated net assets due to a 23% strengthening of the U.S dollar to the Brazilian real. Pension and Postretirement Medical Benefits – The summarized changes in Accumulated Other Comprehensive (Income) Loss for the three years endedDecember 31 were as follows (in millions): Pension and Postretirement Medical Benefits 2020 2019 2018 Prior service costs $0.1 $— $0.1 Net actuarial loss (gain) 1.3 0.4 (1.7)Amortization of net actuarial loss (0.1) 0.1 (0.1)Total recognized in other comprehensive loss (income) $1.3 $0.5 $(1.7) The $1.3 million loss in 2020 was primarily due to a $1.3 million actuarial loss relating to an annual actuarial analysis resulting from a 95 basis pointdecrease in the U.S. pension discount rate, a 37 basis point decrease in the non-U.S. discount rate and a 99 basis point decrease in the postretirement discountrate. Cash Flow Hedging – For the years ended December 31, 2020 and 2019, we recorded pre-tax adjustments on cash flow hedge financial instruments of again of $2.9 million and a gain of $4.6 million, respectively, in Other Comprehensive Income (Loss) as further disclosed in Note 11 to the Company'sConsolidated Financial Statements. The $2.9 million gain in 2020 was primarily due to the fall in interest rates in the U.S. and Europe during 2020 and the impact on hedge derivatives held in theCompany's cross currency swap hedge program. Gains of hedge derivatives were partially offset by the weakening of the U.S. dollar relative to the euro. During2020, the U.S. dollar weakened approximately 9% to the euro. Liquidity and Capital Resources Liquidity – Cash, Cash Equivalents and Restricted Cash totaled $141.0 million at December 31, 2020, as compared to $74.6 million as of December 31,2019. Cash, Cash Equivalents and Restricted Cash held by our foreign subsidiaries totaled $76.2 million as of December 31, 2020, as compared to $45.7 millionas of December 31, 2019. Wherever possible, cash management is centralized and intercompany financing is used to provide working capital to subsidiaries asneeded. At the end of March 2020, we borrowed $125 million from our revolving credit line as a precaution to ensure we would be able to cover our cashrequirements if the COVID-19 pandemic were to continue for an extended period of time. In the second quarter of 2020, we repaid the entire $125 million borrowedin March 2020 as we determined our existing cash and cash flows were sufficient for our business needs. Our current ratio was 1.9 as of December 31, 2020, and1.7 as of December 31, 2019, and our working capital was $239.3 million and $206.1 million, respectively. Our Debt-to-Capital ratio was 43.2% as of December 31, 2020, compared with 48.5% as of December 31, 2019. Our capital structure was comprised of$308.5 million of Debt and $404.8 million of Tennant Company Shareholders’ Equity as of December 31, 2020. Operating Activities – Cash provided by operating activities was $133.8 million in 2020 and $71.9 million in 2019. In 2020, cash provided by operatingactivities was driven primarily by net earnings adding back non-cash items of $59.6 million, a $26.0 million decrease in Net Receivables, an $18.3 milliondecrease in Inventories and an $8.5 million increase in Accounts Payable. These cash inflows were partially offset by cash outflows from a $10.0 million decreasein Employee Compensation and Benefits liabilities, primarily related to 2019 incentive payments to employees. Investing Activities – Net cash used in investing activities was $29.9 million in 2020 and $55.6 million in 2019. In 2020, we used $29.8 million for net capitalexpenditures. Net capital expenditures included investments in a new administrative building, information technology process improvement projects, toolingrelated to new product development and manufacturing equipment. Financing Activities – Net cash used in financing activities was $42.8 million in 2020 and $27.4 million in 2019. In 2020, we made $157.5 million of Debtpayments and dividend payments of $16.3 million. Our annual cash dividend payout increased for the 49th consecutive year to $0.89 per share in 2020, anincrease of $0.01 per share over 2019. These cash outflows were partially offset by proceeds from Borrowings of $126.4 million and proceeds from the issuance ofCommon Stock of $4.9 million. At December 31, 2020, there were 1,392,363 remaining shares authorized for repurchase. There were no shares repurchased in 2020, 2019 or 2018. Our 2017 Credit Agreement, as defined below, restricts the payment of dividends or repurchasing ofstock if, after giving effect to such payments and assuming no default exists or would result from such payment, our leverage ratio is greater than 2.50 to 1, insuch case limiting such payments to an amount ranging from $50.0 million to $75.0 million during any fiscal year based on our leverage ratio after giving effect tosuch payment. Our Senior Notes due 2025 (the "Notes") also contain certain restrictions, which are generally less restrictive than those contained in the 2017Credit Agreement. 14Table of Contents Indebtedness – During 2017, the Company and certain of our foreign subsidiaries entered into a Credit Agreement (the “2017 Credit Agreement”) withJPMorgan, as administrative agent, Goldman Sachs Bank USA, as syndication agent, Wells Fargo, National Association, U.S. Bank National Association, andHSBC Bank USA, National Association, as co-documentation agents, and the lenders (including JPMorgan) from time to time party thereto. Borrowings denominated in U.S. dollars under the 2017 Credit Agreement bear interest at a rate per annum equal to the adjusted London interbank offeredrate ("LIBOR") for a one month period and do not have fallback language for when LIBOR is no longer available. Uncertainty related to the LIBOR phase out at theend of 2021 may adversely impact the value of, and our obligations under, the 2017 Credit Agreement. We may need to renegotiate our financial obligations thatutilize LIBOR. The Company continues to assess and monitor regulatory developments during the transition period. For further details regarding our indebtedness, see Note 9 to the Consolidated Financial Statements. Contractual Obligations – Our contractual obligations as of December 31, 2020, are summarized by period due in the following table (in millions): Total Less Than 1Year 1 - 3 Years 3 - 5 Years More Than 5Years Long-term debt(1) $310.0 $10.0 $— $300.0 $— Interest payments on long-term debt(1) 73.3 17.0 33.8 22.5 — Finance leases 0.1 0.1 — — — Secured borrowings payment 1.5 0.8 0.7 — — Interest payments on secured borrowings 0.1 0.1 — — — Retirement benefit plans(2) 1.2 1.2 — — — Deferred compensation arrangements(3) 3.8 1.7 0.7 0.3 1.1 Operating leases(4) 48.0 17.6 22.4 7.1 0.9 Purchase obligations(5) 56.3 56.3 — — — Total contractual obligations $494.3 $104.8 $57.6 $329.9 $2.0 (1)Long-term debt represents borrowings through the Notes and the 2017 Credit Agreement with JPMorgan. Interest on the Notes accrues at the rate of 5.625% perannum and is payable semiannually in cash on each May 1 and November 1. Repayment of the principal amount of the Senior Notes is due upon expiration of theagreement in 2025. Interest payments on our 2017 Credit Agreement with JPMorgan were calculated using the December 31, 2020 30-day LIBOR rate plus aspread. (2)Our retirement benefit plans, as described in Note 13 to the Consolidated Financial Statements, require us to make contributions to the plans from time to time.Contributions to the various plans are dependent upon a number of factors including the market performance of plan assets, if any, and future changes in interestrates, which impact the actuarial measurement of plan obligations. As a result, we have only included our 2021 expected contribution in the contractual obligationstable. (3)The unfunded deferred compensation arrangements covering certain current and retired management employees totaled $3.8 million as of December 31, 2020.Our estimated distributions in the contractual obligations table are based upon a number of assumptions including termination dates and participant distributionelections. (4)Operating lease commitments consist primarily of office and warehouse facilities, vehicles and office equipment as well as the estimated liability for residualvalue guarantee as discussed in Note 15 to the Consolidated Financial Statements. (5)Purchase obligations include all known open purchase orders, contractual purchase commitments and contractual obligations as of December 31, 2020. Total contractual obligations exclude our gross unrecognized tax benefits of $6.4 million and accrued interest and penalties of $0.7 million as of December 31,2020. We expect to make cash outlays in the future related to uncertain tax positions. However, due to the uncertainty of the timing of future cash flows, we areunable to make reasonably reliable estimates of the period of cash settlement, if any, with the respective taxing authorities. For further information related tounrecognized tax benefits, see Note 17 to the Consolidated Financial Statements. Newly Issued Accounting Guidance See Note 1 to the Consolidated Financial Statements for information on new accounting pronouncements. No other new accounting pronouncements issued but not yet effective have had, or are expected to have, a material impact on our results of operations orfinancial position. 15Table of Contents Critical Accounting Policies and Estimates Our Consolidated Financial Statements are based on the selection and application of accounting principles generally accepted in the United States ofAmerica, which require us to make estimates and assumptions about future events that affect the amounts reported in our Consolidated Financial Statementsand the accompanying notes. Our significant accounting policies are described in Note 1 to the Consolidated Financial Statements. Future events and theireffects cannot be determined with absolute certainty. Therefore, the determination of estimates requires the exercise of judgment. Actual results could differ fromthose estimates, and any such differences may be material to the Consolidated Financial Statements. We believe that the following policies may involve a higherdegree of judgment and complexity in their application and represent the critical accounting policies used in the preparation of our Consolidated FinancialStatements. If different assumptions or conditions were to prevail, the results could be materially different from our reported results. Goodwill – Goodwill represents the excess of cost over the fair value of net assets of businesses acquired and is allocated to our reporting units at the timeof the acquisition. We analyze goodwill on an annual basis and when an event occurs or circumstances change that may reduce the fair value of a reporting unitbelow its carrying amount. We have the option of first analyzing qualitative factors to determine whether it is more likely than not that the fair value of anyreporting unit is less than its carrying amount. However, we may elect to perform a quantitative goodwill impairment test in lieu of the qualitative test. An entitymust recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. Subsequent reversal of goodwillimpairment charges is not permitted. When we perform a qualitative goodwill test, we analyze qualitative factors to determine whether it is more likely than not that the fair value of a reporting unitis less than its carrying amount as a basis for determining whether it is necessary to perform the quantitative goodwill impairment test. If the qualitative testindicates there may be an impairment, we perform the quantitative test, which measures the amount of the goodwill impairment, if any. To perform the quantitativetest, we calculate the fair value of each reporting unit, primarily utilizing the income approach. The income approach is based on discounted cash flow modelsthat use reporting unit estimates for forecasted future financial performance, including revenues, margins, operating expenses, capital expenditures, depreciation,amortization, tax and discount rates. These estimates are developed as part of our planning process based on assumed growth rates, along with historical dataand various internal estimates. Projected future cash flows are then discounted to a present value employing a discount rate that properly accounts for theestimated risk-adjusted weighted-average cost of capital relevant to each reporting unit. We perform our annual goodwill impairment analysis as of October 1 and when an event occurs or circumstances change that may reduce the fair value of areporting unit below its carrying amount. In 2020, we changed the goodwill impairment assessment date from December 31 to October 1 to better align with thetiming of our annual planning process. The change did not result in any adjustments to our consolidated financial statements. In 2020, we elected to perform the quantitative goodwill test, which indicated that there was no goodwill impairment in any of our reporting units as of ourannual assessment date. The EMEA reporting unit was the only reporting unit for which the fair value was not substantially in excess of its carrying value. TheEMEA reporting unit, with $168.8 million of carrying value of goodwill at December 31, 2020, had an excess of reporting unit fair value over carrying value of 7% asof our annual assessment date. We had goodwill of $207.8 million as of December 31, 2020. Income Taxes – We are required to estimate our income taxes in each of the jurisdictions in which we operate. This process involves estimating our actualcurrent tax obligations based on expected income, statutory tax rates and tax planning opportunities in the various jurisdictions. We also establish reserves foruncertain tax matters that are complex in nature and uncertain as to the ultimate outcome. Although we believe that our tax return positions are fully supportable,we consider our ability to ultimately prevail in defending these matters when establishing these reserves. We adjust our reserves in light of changing facts andcircumstances, such as the closing of a tax audit. We believe that our current reserves are adequate. However, the ultimate outcome may differ from ourestimates and assumptions and could impact the income tax expense reflected in our Consolidated Statements of Operations. Tax law requires certain items to be included in our tax return at different times than the items are reflected in our results of operations. Some of thesedifferences are permanent, such as expenses that are not deductible in our tax returns, and some differences will reverse over time, such as depreciationexpense on property, plant and equipment. These temporary differences result in deferred tax assets and liabilities, which are included within our ConsolidatedBalance Sheets. Deferred tax assets generally represent items that can be used as a tax deduction or credit in our tax returns in future years but have alreadybeen recorded as an expense in our Consolidated Statements of Operations. We assess the likelihood that our deferred tax assets will be recovered from futuretaxable income, and, based on management’s judgment, to the extent we believe that recovery is not more likely than not, we establish a valuation reserveagainst those deferred tax assets. The deferred tax asset valuation allowance could be materially different from actual results because of changes in the mix offuture taxable income, the relationship between book and taxable income and our tax planning strategies. As of December 31, 2020, a valuation allowance of $7.5million was recorded against foreign tax loss carryforwards, foreign tax credit carryforwards and state credit carryforwards. 16Table of Contents Cautionary Factors Relevant to Forward-Looking Information This Annual Report on Form 10-K, including “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7,contains certain statements that are considered “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements generally can be identified by the use of forward-looking terminology such as “may,” “will,” “expect,” “intend,” “estimate,” “anticipate,” “believe,”“project,” or “continue” or similar words or the negative thereof. These statements do not relate to strictly historical or current facts and provide currentexpectations of forecasts of future events. Any such expectations or forecasts of future events are subject to a variety of factors. Particular risks and uncertaintiespresently facing us include: •Geopolitical and economic uncertainty throughout the world. •Uncertainty surrounding the COVID-19 pandemic. •Ability to comply with global laws and regulations. •Ability to adapt to price sensitivity. •Competition in our business. •Fluctuations in the cost, quality or availability of raw materials and purchased components. •Ability to adjust pricing to respond to cost pressures. •Unforeseen product liability claims or product quality issues. •Ability to attract, retain and develop key personnel and create effective succession planning strategies. •Ability to effectively manage strategic plan or growth processes. •Ability to successfully upgrade and evolve our information technology systems. •Ability to successfully protect our information technology systems from cybersecurity risks. •Occurrence of a significant business interruption. •Ability to maintain the health and safety of our workforce. •Ability to integrate acquisitions. •Ability to develop and commercialize new innovative products and services. We caution that forward-looking statements must be considered carefully and that actual results may differ in material ways due to risks and uncertaintiesboth known and unknown. Information about factors that could materially affect our results can be found in Part I, Item 1A "Risk Factors" of this Form 10-K.Shareholders, potential investors and other readers are urged to consider these factors in evaluating forward-looking statements and are cautioned not to placeundue reliance on such forward-looking statements. We undertake no obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, except asrequired by law. Investors are advised to consult any further disclosures by us in our filings with the SEC and in other written statements on related subjects. It isnot possible to anticipate or foresee all risk factors, and investors should not consider any list of such factors to be an exhaustive or complete list of all risks oruncertainties. 17Table of Contents ITEM 7A – Quantitative and Qualitative Disclosures About Market Risk Commodity Risk – We are subject to exposures resulting from potential cost increases related to our purchase of raw materials or other productcomponents. We do not use derivative commodity instruments to manage our exposures to changes in commodity prices such as steel, oil, gas, lead and othercommodities. Various factors beyond our control affect the price of oil and gas, including, but not limited to, worldwide and domestic supplies of oil and gas, politicalinstability or armed conflict in oil-producing regions, the price and level of foreign imports, the level of consumer demand, the price and availability of alternativefuels, domestic and foreign governmental regulation, weather-related factors and the overall economic environment. We purchase petroleum-related componentparts for use in our manufacturing operations. In addition, our freight costs associated with shipping and receiving product and sales and service vehicle fuel costsare impacted by fluctuations in the cost of oil and gas. Fluctuations in worldwide demand and other factors affect the price for lead, steel and related products. We do not maintain an inventory of raw or fabricatedsteel or batteries in excess of near-term production requirements. As a result, increases in the price of lead or steel can significantly increase the cost of ourlead- and steel-based raw materials and component parts. We continue to focus on mitigating the risk of future raw material or other product component cost increases through supplier negotiations, ongoingoptimization of our supply chain, the continuation of cost-reduction actions and product pricing. The success of these efforts will depend upon our ability toleverage our commodity spend in the current global economic environment. If the commodity prices increase significantly and we are not able to offset theincreases with higher selling prices, our results may be unfavorably impacted in the future. Foreign Currency Exchange Rate Risk – Due to the global nature of our operations, we are subject to exposures resulting from foreign currency exchangefluctuations in the normal course of business. Our primary exchange rate exposures are with the euro, Australian and Canadian dollars, British pound, Japaneseyen, Chinese renminbi, Brazilian real and Mexican peso against the U.S. dollar. The direct financial impact of foreign currency exchange includes the effect oftranslating profits from local currencies to U.S. dollars, the impact of currency fluctuations on the transfer of goods between our operations in the United Statesand our international operations and transaction gains and losses. In addition to the direct financial impact, foreign currency exchange has an indirect financialimpact on our results, including the effect on sales volume within local economies and the impact of pricing actions taken as a result of foreign exchange ratefluctuations. In the normal course of business, we actively manage the exposure of our foreign currency exchange rate market risk by entering into various hedginginstruments with counterparties that are highly rated financial institutions. We may use foreign exchange purchased options or forward contracts to hedge ourforeign currency denominated forecasted revenues or forecasted sales to wholly-owned foreign subsidiaries. Additionally, we hedge our net recognized foreigncurrency assets and liabilities with foreign exchange forward contracts. We hedge these exposures to reduce the risk that our net earnings and cash flows will beadversely affected by changes in foreign exchange rates. We do not enter into any of these instruments for speculative or trading purposes to generate revenue. These contracts are carried at fair value and have maturities between one and 12 months. The gains and losses on these contracts generally approximatechanges in the value of the related assets, liabilities or forecasted transactions. Some of the derivative instruments we enter into do not meet the criteria for cashflow hedge accounting treatment; therefore, changes in fair value are recorded in Foreign Currency Transaction Losses on our Consolidated Statements ofOperations. We use foreign currency exchange rate derivatives to hedge our exposure to fluctuations in exchange rates for anticipated intercompany cash transactionsbetween the Company and its subsidiaries. During 2017, we entered into euro to U.S. dollar foreign exchange cross-currency swaps for all of the anticipated cashflows associated with an intercompany loan from a wholly-owned European subsidiary. We entered into these foreign exchange cross-currency swaps to hedgethe foreign currency-denominated cash flows associated with this intercompany loan, and accordingly, they are not speculative in nature. We designated thesecross-currency swaps as cash flow hedges. The hedged cash flows as of December 31, 2020 included €159.6 million of total notional value. As of December 31,2020, the aggregate scheduled interest payments over the course of the loan and related swaps amounted to €9.6 million. The scheduled maturity and principalpayment of the loan and related swaps of €150.0 million are due in April 2022. There were no new cross-currency swaps designated as cash flow hedges as ofDecember 31, 2020. For further information regarding our foreign currency derivatives and hedging programs, see Note 11 to the Consolidated Financial Statements. For details of the estimated effects of currency translation on the operations of our operating segments, see Part II, Item 7 – "Management's Discussion andAnalysis of Financial Condition and Results of Operations." Other Matters – Management regularly reviews our business operations with the objective of improving financial performance and maximizing our return oninvestment. As a result of this ongoing process to improve financial performance, we may incur additional restructuring charges in the future which, if taken, couldbe material to our financial results. 18Table of Contents ITEM 8 – Financial Statements and Supplementary Data REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the shareholders and the Board of Directors of Tennant Company. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheet of Tennant Company and subsidiaries (the "Company") as of December 31, 2020, the relatedconsolidated statements of operations, comprehensive income, cash flows, and equity, for the year ended December 31, 2020, and the related notes and theschedule listed in the Index at Item 15 (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in allmaterial respects, the financial position of the Company as of December 31, 2020, and the results of its operations and its cash flows for the period endedDecember 31, 2020, in conformity with accounting principles generally accepted in the United States of America. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internalcontrol over financial reporting as of December 31, 2020, based on criteria established in Internal Control — Integrated Framework (2013) issued by theCommittee of Sponsoring Organizations of the Treadway Commission and our report dated February 25, 2021, expressed an unqualified opinion on theCompany's internal control over financial reporting. Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financialstatements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Companyin accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonableassurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing proceduresto assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also includedevaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financialstatements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or requiredto be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved ourespecially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financialstatements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or onthe accounts or disclosures to which it relates. 19 Goodwill – EMEA Reporting Unit - Refer to Notes 1, 5, 8 to the consolidated financial statements Critical Audit Matter Description The Company’s annual evaluation of goodwill for impairment involves the comparison of the fair value to its carrying value. The Company determined the fairvalue of the EMEA reporting unit using the combination of an income and a market approach. The income approach utilizes a discounted cash flow modelwhich requires management to make significant estimates and assumptions related to forecasts of future revenues, profit margins, and discount rates. Thedetermination of the fair value using the market approach requires management to make significant assumptions related to earnings before interest, taxes,depreciation, and amortization (EBITDA) multiples. The EMEA goodwill balance was $169 million as of December 31, 2020. The fair value of the EMEA reporting unit exceeded its carrying value as of themeasurement date and, therefore, no impairment was recognized. Changes in these estimates and related assumptions could have a significant impact oneither the fair value, the amount of any goodwill impairment charge, or both. Given the significant judgments made by management to estimate the fair value of the EMEA reporting unit and the differences between its fair value andcarrying value, performing audit procedures to evaluate the reasonableness of management’s estimates and assumptions related to forecasts of futurerevenues, profit margins, discount rates, and EBITDA multiples, required a high degree of auditor judgment and an increased extent of effort, including theneed to involve our fair value specialists. How the Critical Audit Matter Was Addressed in the Audit Our audit procedures related to forecasts of future revenues, reporting unit profit margins, selection of discount rates, and EBITDA multiples for the EMEAreporting unit included the following, among others: ●We tested the effectiveness of controls over goodwill, including the underlying assumptions to forecast future revenue and profit margins, and theselection of the discount rate and EBITDA multiples. ●We evaluated management’s ability to accurately forecast future revenues and profit margins by comparing actual results to management’shistorical forecasts. ●We evaluated the reasonableness of management’s forecasted revenue and profit margins by comparing the forecasts to (1) historical results, (2)internal communications to management and the Board of Directors, and (3) forecasted information included in Company press releases as well asin analyst and industry reports of the Company and companies in its peer group. ●With the assistance of our fair value specialists, we evaluated the discount rates, including testing the underlying source information and themathematical accuracy of the calculations, and developing a range of independent estimates and comparing those to the discount rates selectedby management. ●With the assistance of our fair value specialists, we evaluated the EBITDA multiples, including testing the underlying source information andmathematical accuracy of the calculations, and comparing the multiples selected by management to its guideline companies. ●With the assistance of our fair value specialists, we compared the aggregated fair value estimates of the Company’s reporting units to theCompany’s market capitalization and evaluated the implied control premium. /s/ Deloitte & Touche LLP Minneapolis, MinnesotaFebruary 25, 2021 We have served as the Company's auditor since 2019. 20Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the shareholders and the Board of Directors of Tennant Company. Opinion on Internal Control over Financial Reporting We have audited the internal control over financial reporting of Tennant Company and subsidiaries (the “Company”) as of December 31, 2020, based on criteriaestablished in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2020, based on criteriaestablished in Internal Control — Integrated Framework (2013) issued by COSO. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidatedfinancial statements as of and for the year ended December 31, 2020, of the Company and our report dated February 25, 2021, expressed an unqualifiedopinion on those financial statements. Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness ofinternal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility isto express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with thePCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules andregulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonableassurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining anunderstanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operatingeffectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. Webelieve that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting andthe preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control overfinancial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflectthe transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are beingmade only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention ortimely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation ofeffectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree ofcompliance with the policies or procedures may deteriorate. /s/ Deloitte & Touche LLP Minneapolis, MinnesotaFebruary 25, 2021 21Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Shareholders and Board of DirectorsTennant Company: Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheet of Tennant Company and subsidiaries (the Company) as of December 31, 2019, the relatedconsolidated statements of operations, comprehensive income, equity, and cash flows for each of the years in the two-year period ended December 31, 2019, andthe related notes and financial statement Schedule II – Valuation and Qualifying Accounts (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2019, andthe results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2019, in conformity with U.S. generally acceptedaccounting principles. Change in Accounting Principle As discussed in Note 2 to the consolidated financial statements, the Company has changed its method of accounting for leases as of January 1, 2019 due to theadoption of Accounting Standards Update 2016-02, Leases (Topic 842), and related amendments. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidatedfinancial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to theCompany in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and thePCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonableassurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performingprocedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures thatrespond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financialstatements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overallpresentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. /s/ KPMG LLP We have served as the Company's auditor from 1954 to 2020 Minneapolis, MinnesotaFebruary 27, 2020 22Table of Contents Consolidated Statements of OperationsTENNANT COMPANY AND SUBSIDIARIES (In millions, except shares and per share data) Years ended December 31 2020 2019 2018 Net Sales $1,001.0 $1,137.6 $1,123.5 Cost of Sales 593.2 675.9 678.5 Gross Profit 407.8 461.7 445.0 Operating Expense: Research and Development Expense 30.1 32.7 30.7 Selling and Administrative Expense 314.0 357.2 356.3 Total Operating Expense 344.1 389.9 387.0 Profit from Operations 63.7 71.8 58.0 Other Income (Expense): Interest Income 3.3 3.3 3.0 Interest Expense (20.7) (21.1) (23.3)Net Foreign Currency Transaction Losses (5.3) (0.7) (1.1)Other Income (Expense), Net 0.1 0.7 (0.8)Total Other Expense, Net (22.6) (17.8) (22.2)Profit Before Income Taxes 41.1 54.0 35.8 Income Tax Expense 7.4 8.1 2.3 Net Earnings Including Noncontrolling Interest 33.7 45.9 33.5 Net Earnings Attributable to Noncontrolling Interest — 0.1 0.1 Net Earnings Attributable to Tennant Company $33.7 $45.8 $33.4 Net Earnings Attributable to Tennant Company per Share: Basic $1.84 $2.53 $1.86 Diluted $1.81 $2.48 $1.82 Weighted Average Shares Outstanding: Basic 18,349,724 18,118,486 17,940,438 Diluted 18,635,002 18,453,145 18,338,569 See accompanying Notes to Consolidated Financial Statements. 23Table of Contents Consolidated Statements of Comprehensive IncomeTENNANT COMPANY AND SUBSIDIARIES (In millions) Years ended December 31 2020 2019 2018 Net Earnings Including Noncontrolling Interest $33.7 $45.9 $33.5 Other Comprehensive Income (Loss): Foreign currency translation adjustments 16.4 (4.5) (16.2)Pension and postretirement medical benefits (1.3) (0.5) 1.7 Cash flow hedge 2.9 4.6 1.3 Income Taxes: Foreign currency translation adjustments 0.8 0.1 0.2 Pension and postretirement medical benefits 0.3 0.1 (0.5)Cash flow hedge (0.7) (1.1) (1.4)Total Other Comprehensive Income (Loss), net of tax 18.4 (1.3) (14.9)Total Comprehensive Income Including Noncontrolling Interest 52.1 44.6 18.6 Comprehensive Income Attributable to Noncontrolling Interest — 0.1 0.1 Comprehensive Income Attributable to Tennant Company $52.1 $44.5 $18.5 See accompanying Notes to Consolidated Financial Statements. 24Table of Contents Consolidated Balance SheetsTENNANT COMPANY AND SUBSIDIARIES (In millions, except shares and per share data) December 31 2020 2019 ASSETS Current Assets: Cash, Cash Equivalents, and Restricted Cash $141.0 $74.6 Receivables: Trade, less Allowances of $4.6 and $3.6, respectively 195.4 216.5 Other 4.5 6.8 Net Receivables 199.9 223.3 Inventories 127.7 150.1 Prepaid and Other Current Assets 25.0 33.0 Total Current Assets 493.6 481.0 Property, Plant and Equipment 437.5 412.5 Accumulated Depreciation (252.0) (239.2)Property, Plant and Equipment, Net 185.5 173.3 Operating Lease Assets 44.5 46.6 Goodwill 207.8 195.1 Intangible Assets, Net 126.2 137.7 Other Assets 25.0 29.2 Total Assets $1,082.6 $1,062.9 LIABILITIES AND TOTAL EQUITY Current Liabilities: Current Portion of Long-Term Debt $10.9 $31.3 Accounts Payable 106.3 94.1 Employee Compensation and Benefits 53.7 63.5 Other Current Liabilities 83.4 86.0 Total Current Liabilities 254.3 274.9 Long-Term Liabilities: Long-Term Debt 297.6 307.5 Long-Term Operating Lease Liability 28.7 30.3 Employee-Related Benefits 17.9 19.4 Deferred Income Taxes 39.1 41.7 Other Liabilities 38.9 27.8 Total Long-Term Liabilities 422.2 426.7 Total Liabilities 676.5 701.6 Commitments and Contingencies (Note 16) Equity: Common Stock, $0.375 par value per share, 60,000,000 shares authorized; 18,503,805 and 18,336,010 issued andoutstanding, respectively 6.9 6.9 Additional Paid-In Capital 54.7 45.5 Retained Earnings 363.3 346.0 Accumulated Other Comprehensive Loss (20.1) (38.5)Total Tennant Company Shareholders' Equity 404.8 359.9 Noncontrolling Interest 1.3 1.4 Total Equity 406.1 361.3 Total Liabilities and Total Equity $1,082.6 $1,062.9 See accompanying Notes to Consolidated Financial Statements. 25Table of Contents Consolidated Statements of Cash FlowsTENNANT COMPANY AND SUBSIDIARIES (In millions) Years ended December 31 2020 2019 2018 OPERATING ACTIVITIES Net Earnings Including Noncontrolling Interest $33.7 $45.9 $33.5 Adjustments to Reconcile Net Earnings to Net Cash Provided by Operating Activities: Depreciation 32.6 32.2 32.3 Amortization of Intangible Assets 20.8 22.2 22.1 Amortization of Debt Issuance Costs 1.4 1.3 2.4 Fair Value Step-Up Adjustment to Acquired Inventory — 0.9 — Deferred Income Taxes (4.0) (9.6) (10.9)Share-Based Compensation Expense 6.0 11.4 8.3 Allowance for Doubtful Accounts and Returns 2.0 2.5 0.8 Acquisition Contingent Consideration Adjustment (0.4) (2.3) — Note Receivable Write-down — 2.7 — Other, Net 1.2 1.1 (0.4)Changes in Operating Assets and Liabilities, Net of Assets Acquired: Receivables, Net 26.0 (8.5) (7.6)Inventories 18.3 (17.8) (16.6)Accounts Payable 8.5 (7.5) 4.6 Employee Compensation and Benefits (10.0) 4.5 12.7 Other Current Liabilities (2.8) (1.4) (0.7)Other Assets and Liabilities 0.5 (5.7) (0.5)Net Cash Provided by Operating Activities 133.8 71.9 80.0 INVESTING ACTIVITIES Purchases of Property, Plant and Equipment (29.9) (38.4) (18.8)Proceeds from Disposals of Property, Plant and Equipment 0.1 0.1 0.1 Proceeds from Principal Payments Received on Long-Term Note Receivable — 2.9 1.4 Acquisitions of Businesses, Net of Cash, Cash Equivalents and Restricted Cash Acquired — (19.7) — Purchase of Intangible Asset (0.1) (0.5) (2.8)Proceeds from Sale of Business — — 4.0 Net Cash Used in Investing Activities (29.9) (55.6) (16.1)FINANCING ACTIVITIES Proceeds from Credit Facility Borrowings 126.4 25.0 14.9 Repayments of Debt (157.5) (41.8) (38.3)Change in Finance Lease Obligations (0.2) (0.2) — Proceeds from Issuances of Common Stock 4.9 6.1 5.9 Purchase of Noncontrolling Owner Interest (0.1) (0.5) — Dividends Paid (16.3) (16.0) (15.3)Net Cash Used in Financing Activities (42.8) (27.4) (32.8)Effect of Exchange Rate Changes on Cash, Cash Equivalents and Restricted Cash 5.3 (0.4) (4.0)NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH 66.4 (11.5) 27.1 Cash, Cash Equivalents and Restricted Cash at Beginning of Year 74.6 86.1 59.0 CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF YEAR $141.0 $74.6 $86.1 SUPPLEMENTAL CASH FLOW INFORMATION Years ended December 31 2020 2019 2018 Cash Paid for: Income Taxes $12.0 $21.7 $11.1 Interest $18.3 $19.7 $22.4 Supplemental Non-Cash Investing and Financing Activities: Capital Expenditures in Accounts Payable $3.8 $3.9 $2.3 See accompanying Notes to Consolidated Financial Statements. 26Table of Contents Consolidated Statements of EquityTENNANT COMPANY AND SUBSIDIARIES (In millions, except shares and per share data) Tennant Company Shareholders CommonShares CommonStock AdditionalPaid-inCapital RetainedEarnings AccumulatedOtherComprehensiveLoss TennantCompanyShareholders'Equity NoncontrollingInterest TotalEquity Balance, December 31, 2017 17,881,177 $6.7 $15.1 $297.0 $(22.3) $296.5 $2.0 $298.5 Net Earnings — — — 33.4 — 33.4 0.1 33.5 Other Comprehensive Loss — — — — (14.9) (14.9) — (14.9)Issue Stock for Directors, Employee Benefitand Stock Plans, net of related taxwithholdings of 9,598 shares 244,024 0.1 5.1 — — 5.2 — 5.2 Share-Based Compensation — — 8.3 — — 8.3 — 8.3 Dividends paid $0.85 per Common Share — — — (15.3) — (15.3) — (15.3)Recognition of Noncontrolling Interests — — — — — — (0.2) (0.2)Adjustments to beginning Retained Earningsresulting from newly adopted accountingpronouncements — — — 1.2 — 1.2 — 1.2 Balance, December 31, 2018 18,125,201 $6.8 $28.5 $316.3 $(37.2) $314.4 $1.9 $316.3 Net Earnings — — — 45.8 — 45.8 0.1 45.9 Other Comprehensive Loss — — — — (1.3) (1.3) — (1.3)Issue Stock for Directors, Employee Benefitand Stock Plans, net of related taxwithholdings of 12,198 shares 210,809 0.1 5.1 — — 5.2 — 5.2 Share-Based Compensation — — 11.4 — — 11.4 — 11.4 Dividends paid $0.88 per Common Share — — — (16.0) — (16.0) — (16.0)Purchase of Noncontrolling Interests — — 0.5 — — 0.5 (0.5) — Other — — — (0.1) — (0.1) (0.1) (0.2)Balance, December 31, 2019 18,336,010 $6.9 $45.5 $346.0 $(38.5) $359.9 $1.4 $361.3 Net Earnings — — — 33.7 — 33.7 — 33.7 Other Comprehensive Income — — — — 18.4 18.4 — 18.4 Issue Stock for Directors, Employee Benefitand Stock Plans, net of related taxwithholdings of 20,494 shares 167,795 — 3.3 — — 3.3 — 3.3 Share-Based Compensation — — 6.0 — — 6.0 — 6.0 Dividends paid $0.89 per Common Share — — — (16.3) — (16.3) — (16.3)Purchase of Noncontrolling Interests — — (0.1) — — (0.1) — (0.1)Other — — — (0.1) — (0.1) (0.1) (0.2)Balance, December 31, 2020 18,503,805 $6.9 $54.7 $363.3 $(20.1) $404.8 $1.3 $406.1 See accompanying Notes to Consolidated Financial Statements. 27Table of Contents NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Tables in millions, except shares and per share data) 1.Summary of Significant Accounting Policies Nature of Operations – We are a world leader in designing, manufacturing and marketing solutions that empower customers to achieve quality cleaningperformance, significantly reduce environmental impact and help create a cleaner, safer, healthier world. We offer products and solutions consisting ofmechanized cleaning equipment, detergent-free and other sustainable cleaning technologies, aftermarket parts and consumables, equipment maintenance andrepair service, specialty surface coatings, and business solutions such as financing, rental and leasing programs, and machine-to-machine asset managementsolutions. Our products are used in many types of environments including: retail establishments, distribution centers, factories and warehouses, public venuessuch as arenas and stadiums, office buildings, schools and universities, hospitals and clinics, parking lots and streets, and more. Customers include contractcleaners to whom organizations outsource facilities maintenance, as well as businesses that perform facilities maintenance themselves. The Company reachesthese customers through the industry's largest direct sales and service organization and through a strong and well-supported network of authorized distributorsworldwide. Reclassification – We reclassified $5.0 million of costs from Selling and Administrative Expense to Cost of Sales in the Consolidated Statement ofOperations for the year ended December 31, 2020 as part of a global alignment of costs across all regions. Consolidation – The Consolidated Financial Statements include the accounts of the Company and its subsidiaries. All intercompany transactions andbalances have been eliminated. Translation of Non-U.S. Currency – Foreign currency-denominated assets and liabilities have been translated to U.S. dollars at year-end exchange rates,while income and expense items are translated at average exchange rates prevailing during the year. Gains or losses resulting from translation are included as aseparate component of Accumulated Other Comprehensive Loss. The balance of cumulative foreign currency translation adjustments recorded withinAccumulated Other Comprehensive Loss as of December 31, 2020, 2019 and 2018 was a net loss of $19.1 million, $36.3 million and $31.9 million, respectively.The majority of translation adjustments are not adjusted for income taxes as substantially all translation adjustments relate to permanent investments in non-U.S.subsidiaries. Net Foreign Currency Transaction Losses are included in Total Other Expense, Net. Use of Estimates – In preparing the consolidated financial statements in conformity with U.S. generally accepted accounting principles ("U.S. GAAP"),management must make decisions that impact the reported amounts of assets, liabilities, revenues, expenses and the related disclosures, including disclosuresof contingent assets and liabilities. Such decisions include the selection of the appropriate accounting principles to be applied and the assumptions on which tobase accounting estimates. Estimates are used in determining, among other items, sales promotions and incentives accruals, inventory valuation, warrantyreserves, allowance for doubtful accounts, pension and postretirement accruals, useful lives for intangible assets, and future cash flows associated withimpairment testing for goodwill and other long-lived assets. These estimates and assumptions are based on management’s best estimates and judgments.Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors that management believes to bereasonable under the circumstances. We adjust such estimates and assumptions when facts and circumstances dictate. A number of these factors include,among others, economic conditions, credit markets, foreign currency, commodity cost volatility and consumer spending and confidence, all of which havecombined to increase the uncertainty inherent in such estimates and assumptions. As future events and their effects cannot be determined with precision, actualamounts could differ significantly from those estimated at the time the consolidated financial statements are prepared. Changes in those estimates resulting fromcontinuing changes in the economic environment will be reflected in the financial statements in future periods. Cash and Cash Equivalents – We consider all highly liquid investments with original maturities of three months or less from the date of purchase to be cashequivalents. Restricted Cash – We have a total of $0.6 million and $0.5 million as of December 31, 2020 and 2019 that serves as collateral backing certain bankguarantees and is therefore restricted. This money is invested in time deposits. Receivables – Credit is granted to our customers in the normal course of business. Receivables are recorded at original carrying value less reserves forestimated uncollectible accounts and sales returns. To assess the collectability of these receivables, we perform ongoing credit evaluations of our customers’financial condition. Through these evaluations, we may become aware of a situation where a customer may not be able to meet its financial obligations due todeterioration of its financial viability, credit ratings or bankruptcy. The reserve requirements are based on the best facts available to us and are reevaluated andadjusted as additional information becomes available. Our reserves are also based on amounts determined by using percentages applied to trade receivables, using a loss rate method. We considered thefollowing in determining the expected loss rate: (1) historical loss rate, (2) macroeconomic factors, and (3) creditworthiness of customers. The historical loss rateis calculated by taking the yearly write-off expense, net of collections, as a percentage of the annual average balance of trade receivables for each of the pastthree years. An account is considered past-due or delinquent when it has not been paid within the contractual terms. Uncollectible accounts are written offagainst the reserves when it is deemed that a customer account is uncollectible. Inventories – Inventories are valued at the lower of cost or net realizable value. Cost is determined on a first-in, first-out (“FIFO”) basis except for Inventoriesin North America, which are determined on a last-in, first-out (“LIFO”) basis. Property, Plant and Equipment – Property, plant and equipment is carried at cost. Additions and improvements that extend the lives of the assets arecapitalized, while expenditures for repairs and maintenance are expensed as incurred. We generally depreciate buildings and improvements by the straight-linemethod over a life of 30 years. Other property, plant and equipment are generally depreciated using the straight-line method based on lives of 3 years to 15 years. 28Table of Contents NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Tables in millions, except shares and per share data) Leases – We assess whether an arrangement is a lease at inception. Operating leases with an initial term of 12 months or less are expensed as incurred as short-term lease cost. We have elected the practical expedient to notseparate lease and non-lease components for all asset classes. Operating lease assets and operating lease liabilities are calculated based on the present valueof the future lease payments over the lease term at the lease commencement date. When future lease payments are based on an index or rate, operating leaseassets and operating lease liabilities are calculated using the prevailing index or rate at the lease commencement date. As the implicit rate is not readilydeterminable, we use our incremental borrowing rate based on the information available at the lease start date in determining the present value of futurepayments. Information used in determining the incremental borrowing rates for the Company's leases includes: (1) the market yield on the Company's tradedbond, adjusted for the presence of collateral and the difference in terms of the bond and the leases, (2) consideration of the currency in which each lease wasdenominated, and (3) the lease term. The operating lease asset is increased by any lease payments made at or before the lease start date, increased by initialdirect costs incurred, and reduced by lease incentives. The lease term includes options to renew or terminate the lease when it is reasonably certain that we willexercise that option. The exercise of lease renewal options is at our sole discretion. The useful life of lease assets and leasehold improvements are limited by thelease term, unless there is a transfer of title or purchase option reasonably certain of exercise. Certain leases also include options to purchase the leased asset.Lease expense for operating leases is recognized on a straight-line basis over the lease term. Certain leases contain variable lease payments for items such asindex-based changes in rent, fuel and common area maintenance, which we expense as incurred as variable lease cost. Finance leases are not material to our Consolidated Financial Statements. Further details regarding leases are discussed in Note 15. Goodwill – Goodwill represents the excess of cost over the fair value of net assets of businesses acquired and is allocated to our reporting units at the timeof the acquisition. We analyze goodwill on an annual basis as of October 1 and when an event occurs or circumstances change that may reduce the fair value ofone of our reporting units below its carrying amount. We have the option of first analyzing qualitative factors to determine whether it is more likely than not thatthe fair value of any reporting unit is less than its carrying amount. However, we may elect to perform a quantitative goodwill impairment test in lieu of thequalitative test. In 2020, we elected to perform the quantitative test, which indicated that there was no goodwill impairment in any of our reporting units as of our annualassessment date. Our Europe, Middle East and Africa (EMEA) reporting unit was the only reporting unit for which the fair value was not substantially in excessof its carrying value. The EMEA reporting unit, with $168.8 million carrying value of goodwill at December 31, 2020, had an excess of reporting unit fair value overcarrying value of 7% as of our annual assessment date. Intangible Assets – Intangible Assets consist of definite lived customer lists, trade names and technology. Generally, intangible assets classified as tradenames are amortized on a straight-line basis and intangible assets classified as customer lists or technology are amortized using an accelerated method ofamortization. Impairment of Long-lived Assets and Assets Held for Sale – We periodically review our intangible and long-lived assets for impairment and assesswhether events or circumstances indicate that the carrying amount of the assets may not be recoverable. We generally deem an asset group to be impaired if anestimate of undiscounted future operating cash flows is less than its carrying amount. If impaired, an impairment loss is recognized based on the excess of thecarrying amount of the individual asset group over its fair value. Assets held for sale are measured at the lower of their carrying value or fair value less costs to sell. Upon retirement or disposition, the asset cost and relatedaccumulated depreciation or amortization are removed from the accounts and a gain or loss is recognized based on the difference between the fair value ofproceeds received and carrying value of the assets held for sale. Purchase of Common Stock – We repurchase our Common Stock under 2016 and 2015 repurchase programs authorized by our Board of Directors. Theseprograms allow us to repurchase up to an aggregate of 1,392,892 shares of our Common Stock. Upon repurchase, the par value is charged to Common Stockand the remaining purchase price is charged to Additional Paid-in Capital. If the amount of the remaining purchase price causes the Additional Paid-in Capitalaccount to be in a negative position, this amount is then reclassified to Retained Earnings. Common Stock repurchased is included in shares authorized but isnot included in shares outstanding. Warranty – We record a liability for estimated warranty claims at the time of sale. The amount of the liability is based on the trend in the historical ratio ofclaims to sales, the historical length of time between the sale and resulting warranty claim, new product introductions and other factors. In the event wedetermine that our current or future product repair and replacement costs exceed our estimates, an adjustment to these reserves would be charged to earnings inthe period such determination is made. Warranty terms on machines range from one to four years. However, the majority of our claims are paid out within the firstsix to nine months following a sale. The majority of the liability for estimated warranty claims represents amounts to be paid out in the near term for qualifiedwarranty issues, with immaterial amounts reserved to be paid out for older equipment warranty issues. Warranty costs are recorded as a component of Sellingand Administrative Expense in the Consolidated Statements of Operations. Debt Issuance Costs – We record all applicable debt issuance costs related to a recognized debt liability in the Consolidated Balance Sheets as a directdeduction from the carrying amount of the debt liability, if not a line-of-credit arrangement. All debt issuance costs related to line-of-credit arrangements arerecorded as part of Other Assets in the Consolidated Balance Sheets. We amortize our debt issuance costs using the effective interest method over the term ofthe debt instrument or line-of-credit arrangement. Amortization of these costs is included as part of Interest Expense in the Consolidated Statements ofOperations. Environmental – We record a liability for environmental clean-up on an undiscounted basis when a loss is probable and can be reasonably estimated. 29Table of Contents NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Tables in millions, except shares and per share data) Pension and Profit Sharing Plans – Substantially all U.S. employees are covered by various retirement benefit plans, including postretirement medicalplans and defined contribution savings plans. Retirement benefits for eligible employees in foreign locations are funded principally through defined benefit plans,annuity or government programs. For further details regarding our retirement benefit plans, see Note 13. Postretirement Benefits – We accrue and recognize the cost of retiree health benefits over the employees’ period of service based on actuarial estimates.Benefits are only available for U.S. employees hired before January 1, 1999. Derivative Financial Instruments – In countries outside the U.S., we transact business in U.S. dollars and in various other currencies. We hedge our netrecognized foreign currency-denominated assets and liabilities with foreign exchange forward contracts to reduce the risk that the value of these assets andliabilities will be adversely affected by changes in exchange rates. We may also use foreign exchange option contracts or forward contracts to hedge certain cashflow exposures resulting from changes in foreign currency exchange rates. We enter into these foreign exchange contracts to hedge a portion of our forecastedcurrency-denominated revenue in the normal course of business, and accordingly, they are not speculative in nature. We account for our foreign currency hedging instruments as either assets or liabilities on the balance sheet and measure them at fair value. Gains andlosses resulting from changes in fair value are accounted for depending on the use of the derivative and whether it is designated and qualifies for hedgeaccounting. Gains and losses from foreign exchange forward contracts that hedge certain balance sheet positions are recorded each period to Net ForeignCurrency Transaction Losses in our Consolidated Statements of Operations. Foreign exchange option contracts or forward contracts hedging forecasted foreigncurrency revenue are designated as cash flow hedges under accounting for derivative instruments and hedging activities, with gains and losses recorded eachperiod to Accumulated Other Comprehensive Loss in our Consolidated Balance Sheets, until the forecasted transaction occurs. When the forecasted transactionoccurs, we reclassify the related gain or loss on the cash flow hedge to Net Sales. In the event the underlying forecasted transaction does not occur, or itbecomes probable that it will not occur, we reclassify the gain or loss on the related cash flow hedge from Accumulated Other Comprehensive Loss to NetForeign Currency Transaction Losses in our Consolidated Statements of Operations at that time. If we do not elect hedge accounting, or the contract does notqualify for hedge accounting treatment, the changes in fair value from period to period are recorded in Net Foreign Currency Transaction Losses in ourConsolidated Statements of Operations. See Note 11 for additional information regarding our hedging activities. Revenue Recognition – Revenue is recognized when control transfers under the terms of the contract with our customers. Revenue is measured as theamount of consideration we expect to receive in exchange for transferring goods or providing services. Sales and other taxes we collect concurrent with revenue-producing activities are excluded from revenue. We do not account for shipping and handling as a distinct performance obligation as we generally performshipping and handling activities after we transfer control of goods to the customer. We have elected to account for shipping and handling costs associated withoutbound freight after control of goods has transferred to a customer as a fulfillment cost. Incidental items that are immaterial in the context of the contract arenot recognized as a separate performance obligation. We do not have any significantly extended payment terms as payment is generally received within one yearof the point of sale. In general, we transfer control and recognize a sale at the point in time when products are shipped from our manufacturing facilities both direct to consumersand to distributors. Service revenue is recognized in the period the service is performed or ratably over the period of the related service contract. Considerationrelated to service contracts is deferred if the proceeds are received in advance of the satisfaction of the performance obligations and recognized over the contractperiod as the performance obligation is met. We use an output method to measure progress toward completion for certain prepaid service contracts, as thismethod appropriately depicts performance toward satisfaction of the performance obligations. For contracts with multiple performance obligations (i.e., a product and service component), we allocate the transaction price to the performance obligationsin proportion to their stand-alone selling prices. We use an observable price to determine the stand-alone selling price for separate performance obligations. Whenallocating on a relative stand-alone selling price basis, any discounts contained within the contract are allocated proportionately to all of the performanceobligations in the contract. We generally expense the incremental costs of obtaining a contract when incurred because the amortization period would be less than one year. These costsrelate primarily to sales commissions and are recorded in Selling and Administrative Expense in the Consolidated Statements of Operations. We do not disclose the value of unsatisfied performance obligations for contracts with an original expected length of one year or less. In addition, we do notadjust the promised amount of consideration for the effects of a significant financing component if we expect, at contract inception, that the period between whenwe transfer a promised good or service to a customer and when the customer pays for that good or service will be one year or less. We adopted ASU No. 2014-9, Revenue from Contracts with Customers (Topic 606), in January 2018 using the modified retrospective method. Further detailsregarding revenue recognition are discussed in Note 3. Share-based Compensation – We account for employee share-based compensation using the fair value based method. Our share-based compensationplans are more fully described in Note 18. Research and Development – Research and development costs are expensed as incurred. 30Table of Contents NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Tables in millions, except shares and per share data) Advertising Costs – We advertise products, technologies and solutions to customers and prospective customers through a variety of marketing campaignand promotional efforts. These efforts include tradeshows, online advertising, e-mail marketing, mailings, sponsorships and telemarketing. Advertising costs areexpensed as incurred. In 2020, 2019 and 2018, such activities amounted to $5.0 million, $8.2 million and $8.8 million, respectively. Income Taxes – Deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the book andtax bases of existing assets and liabilities. A valuation allowance is provided when, in management’s judgment, it is more likely than not that some portion or allof the deferred tax asset will not be realized. We have established uncertain tax position accruals using management’s best judgment. We follow guidanceprovided by Accounting Standards Codification (ASC) 740, Income Taxes, regarding uncertainty in income taxes, to record these uncertain tax position accruals(refer to Note 17 for additional information). We adjust these accruals as facts and circumstances change. Interest expense is recognized in the first period theinterest would begin accruing. Penalties are recognized in the period we claim or expect to claim the position in our tax return. Interest and penalty expenses areclassified as an income tax expense. Earnings per Share – Basic earnings per share is computed by dividing Net Earnings Attributable to Tennant Company by the Weighted Average SharesOutstanding during the period. Diluted earnings per share assumes conversion of potentially dilutive stock options, performance shares, restricted shares andrestricted stock units. These conversions are not included in our computation of diluted earnings per share if we have a net loss attributable to the Company in areporting period or if the instruments are out-of-the-money, as the effects are anti-dilutive. New Accounting Pronouncements – In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting forIncome Taxes, which simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. The amendment is effectivefor interim and annual periods beginning after December 15, 2020. Early adoption is permitted. We plan to adopt this ASU in the first quarter of 2021. Adoption isnot expected to have a material impact on our financial statements. In March 2020, the Financial Accounting Standards Board ("FASB") issued Accounting Standard Update (“ASU”) No. 2020-04, Reference Rate Reform (Topic848). This ASU provides optional expedients to applying generally accepted accounting principles to certain contract modifications, hedging relationships, andother transactions affected by the reference rate reform, which affects the London Inter-bank Offered Rate, if certain criteria are met. The amendments areeffective March 12, 2020 through December 31, 2022. We are evaluating whether to apply any of the expedients and/or exceptions. Further details regarding the adoption of new accounting standards are discussed in Note 2. 31Table of Contents NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Tables in millions, except shares and per share data) 2.Newly Adopted Accounting Pronouncements Defined Benefit Plans In December 2020, we adopted ASU No. 2018-14, Compensation-Retirement Benefits- Defined Benefit Plans-General (Subtopic 715-20): DisclosureFramework-Changes to the Disclosure Requirements for Defined Benefit Plans which updates disclosure requirements for defined benefit pension and otherpostretirement plans. Adoption of this ASU did not have a material impact on our consolidated financial statements. Financial Instruments On January 1, 2020, we adopted ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on FinancialInstruments, and all related amendments. This ASU improves financial reporting by requiring more timely recording of credit losses on loans and other financialinstruments held by financial institutions and other organizations. Under the new guidance, the ASU requires an organization to measure all expected creditlosses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable supportable forecasts. We evaluated theimpact of this amended guidance on our consolidated financial statements and related disclosures and concluded that it is immaterial. We estimate an allowance for doubtful accounts using a loss rate method. We considered the following in determining the expected loss rate: (1) historicalloss rate, (2) macroeconomic factors, and (3) creditworthiness of customers. The historical loss rate is calculated by taking the yearly write-off expense, net of collections, as a percentage of the annual average balance of tradereceivables for each of the past three years. A reconciliation of the beginning and ending balance of the allowance for doubtful accounts for the years ended December 31 is as follows: 2020 2019 2018 Balance at beginning of year $3.6 $2.5 $2.4 Charged to costs and expenses 2.2 2.5 0.4 Reclassification(1) — 0.5 0.8 Charged to other accounts(2) — — (0.2)Deductions(3) (1.2) (1.9) (0.9)Balance at end of year $4.6 $3.6 $2.5 (1)Includes amount reclassified between Allowance for Doubtful Accounts and Other Receivables related to a customer's open receivables balance forproper classification and acquisition-related adjustments. (2)Primarily includes impact from foreign currency fluctuations. (3)Includes accounts determined to be uncollectible and charged against reserves, net of collections on accounts previously charged against reserves. Leases On January 1, 2019, we adopted ASU No. 2016-02, Leases (Topic 842). This ASU requires lessees to recognize operating lease assets and operating leaseliabilities on the balance sheet. Under the new guidance, lessor accounting is largely unchanged. We have elected to adopt the standard on the modified retrospective basis. We have also elected the package of practical expedients, which permits us not toreassess our prior conclusions about lease identification, lease classification and initial direct costs. In addition, we have elected the short-term leaserecognition whereby we will not recognize operating lease related assets or liabilities for leases with a lease term less than one year. We have also electedthe practical expedient to not separate lease and non-lease components for our asset classes. We did not elect the hindsight practical expedient to determinethe reasonably certain term of existing leases. The impact of adopting the new lease standard was the recognition of $44.8 million of lease assets and lease liabilities related to our operating leases. Theadoption of the new lease standard had no impact to our Consolidated Statements of Earnings, Consolidated Statements of Cash Flows or ConsolidatedStatements of Equity. 32Table of Contents NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Tables in millions, except shares and per share data) 3.Revenue Revenue is recognized upon transfer of control of promised products or services to customers in an amount that reflects the consideration we expect toreceive in exchange for those products and services. Generally, these criteria are met at the time the product is shipped. We also enter into contracts that can include combinations of products and services, which are generally capable of being distinct and are accounted for asseparate performance obligations. Revenue is recognized net of allowances for returns and any taxes collected from customers, which are subsequently remittedto governmental authorities. Further information on revenue recognition is described in Note 1. Disaggregation of Revenue The following tables illustrate the disaggregation of revenue by geographic area, groups of similar products and services and sales channels for the yearsended December 31 (in millions): Net Sales by geographic area 2020 2019 2018 Americas $631.0 $722.4 $691.0 Europe, Middle East and Africa 278.2 307.6 335.6 Asia Pacific 91.8 107.6 96.9 Total $1,001.0 $1,137.6 $1,123.5 Net Sales are attributed to each geographic area based on the end user country and are net of intercompany sales. Net Sales by groups of similar products and services 2020 2019 2018 Equipment $629.7 $741.8 $730.0 Parts and consumables 205.8 221.9 222.3 Specialty surface coatings 22.7 25.7 29.8 Service and other 142.8 148.2 141.4 Total $1,001.0 $1,137.6 $1,123.5 For the twelve months ended December 31, 2019, we reclassified $0.9 million from Equipment to Parts and Consumables. Net Sales by sales channel 2020 2019 2018 Sales direct to consumer $664.9 $750.9 $735.2 Sales to distributors 336.1 386.7 388.3 Total $1,001.0 $1,137.6 $1,123.5 Contract Liabilities Sales Returns The right of return may exist explicitly or implicitly with our customers. When the right of return exists, we adjust the transaction price for the estimated effectof returns. We estimate the expected returns using the expected value method by assessing historical sales levels and the timing and magnitude of historicalsales return levels as a percent of sales and projecting this experience into the future. Sales Incentives Our sales contracts may contain various customer incentives, such as volume-based rebates or other promotions. We reduce the transaction price for certaincustomer programs and incentive offerings that represent variable consideration. Sales incentives given to our customers are recorded using the most likelyamount approach for estimating the amount of consideration to which the Company will be entitled. We forecast the most likely amount of the incentive to be paidat the time of sale, update this forecast quarterly, and adjust the transaction price accordingly to reflect the new amount of incentives expected to be earned bythe customer. A majority of our customer incentives are settled within one year. We record our accruals for volume-based rebates and other promotions in OtherCurrent Liabilities on our Consolidated Balance Sheets. The change in our sales incentive accrual balance for the years ended December 31, 2020 and 2019 was as follows: 2020 2019 Beginning balance $13.7 $16.7 Additions to sales incentive accrual 18.2 24.7 Contract payments (20.0) (27.7)Foreign currency fluctuations 0.2 — Ending balance $12.1 $13.7 33Table of Contents NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Tables in millions, except shares and per share data) Deferred Revenue We sell separately priced prepaid contracts to our customers where we receive payment at the inception of the contract and defer recognition of theconsideration received because we have to satisfy future performance obligations. Our deferred revenue balance is primarily attributed to prepaid maintenancecontracts on our machines ranging from 12 months to 60 months. In circumstances where prepaid contracts are sold simultaneously with machines, we use anobservable price to determine stand-alone selling price for separate performance obligations. The change in the deferred revenue balance for the years ended December 31, 2020 and 2019 was as follows: 2020 2019 Beginning balance $10.7 $8.5 Increase in deferred revenue representing our obligation to satisfy future performance obligations 21.0 26.0 Deferred revenue acquired from acquisition of Gaomei Cleaning Equipment Company — 1.4 Decrease in deferred revenue for amounts recognized in net sales for satisfied performance obligations (21.8) (25.2)Foreign currency fluctuations (0.6) — Ending balance $9.3 $10.7 As of December 31, 2020, $5.9 million and $3.4 million of deferred revenue was reported in Other Current Liabilities and Other Liabilities, respectively, on ourConsolidated Balance Sheets. Of this, we expect to recognize the following approximate amounts in Net Sales in the following periods: 2021 $5.9 2022 2.0 2023 0.9 2023 0.9 2024 0.4 2025 0.1 Thereafter — Total $9.3 As of December 31, 2019, $6.8 million and $3.9 million of deferred revenue was reported in Other Current Liabilities and Other Liabilities, respectively, on ourConsolidated Balance Sheets. 4.Management Actions Restructuring Actions In the fourth quarter of 2020, we implemented a restructuring action as part of our global reorganization efforts. The pre-tax charge of $3.5 million in 2020consisted of severance-related costs included in Selling and Administrative Expense in the Consolidated Statements of Operations. The charge primarilyimpacted our EMEA operating segment but also impacted the Americas and APAC operating segments. All restructuring costs have been substantially incurredin 2020. In the third quarter of 2020, we implemented a restructuring action to consolidate our Gaomei business and our existing China business in order to delivercost synergies and improve our profitability. The pre-tax charge of $3.1 million in 2020 consisted of $1.4 million of severance-related costs and $1.7 million ofother costs. Of the restructuring costs, $1.2 million were included in Cost of Sales and $1.9 million in Selling and Administrative Expense in the ConsolidatedStatements of Operations. The charge impacted our APAC operating segment. We estimate the savings will offset the pre-tax charge approximately oneyear from the date of the action. All restructuring costs have been substantially incurred in 2020. In the first quarter of 2020, we implemented a restructuring action in an effort to streamline our operating model in Japan. The pre-tax charge of $2.0 million in2020 consisted of $1.3 million of severance-related costs and $0.7 million of other costs. Of the restructuring costs, $0.3 million were included in Cost of Salesand $1.7 million in Selling and Administrative Expense in the Consolidated Statements of Operations. The charge impacted our APAC operating segment. Weestimate the savings will offset the pre-tax charge approximately one year from the date of the action. All restructuring costs have been substantially incurred in2020. During 2019, we implemented restructuring actions to further our integration efforts related to the IPC Group. The pre-tax charge of $4.8 million consisting ofseverance was included, with $0.3 million in Cost of Sales and $4.5 million in Selling and Administrative Expense in the Consolidated Statements of Operations.The charge impacted our EMEA and Americas operating segments. We estimate the savings will offset the pre-tax charge approximately one year from the dateof the action. A reconciliation to the ending liability balance of severance and related costs as of December 31, 2020 is as follows: Severance and Related Costs December 31, 2018 balance $2.2 2019 charges and utilization: New charges 6.1 Cash payments (2.5)Foreign currency adjustments (1.3)December 31, 2019 balance 4.5 2020 charges and utilization: New charges 6.2 Cash payments (5.4)Foreign currency adjustments 0.2 Adjustment to accrual (1.0)December 31, 2020 balance $4.5 34Table of Contents NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Tables in millions, except shares and per share data) Other Actions In 2019, we made the decision to exit certain product lines, and as a result, recorded $3.3 million in Cost of Sales to reflect our estimate of inventory that willnot be sold. During the year ended December 31, 2020, we recorded an additional $1.7 million in Cost of Sales in the Consolidated Statements of Operations toreflect our estimate of inventory that will not be sold, all of which was recorded in the first quarter 2020. During the second quarter of 2019, we recorded a $2.7 million write-down of a portion of a note receivable related to the divestiture of the Green Machinebusiness to adjust the balance to net realizable value. This write-down was recorded in Selling and Administrative Expense. In the third quarter of 2019, wecollected the remaining balance of the note receivable. 5.Acquisitions and Divestitures Gaomei On January 4, 2019, we completed the acquisition of Hefei Gaomei Cleaning Machines Co., Ltd. and Anhui Rongen Environmental Protection Technology Co.,Ltd. (collectively "Gaomei"), privately held designers and manufacturers of commercial cleaning solutions based in China. The financial results for Gaomei havebeen included in the consolidated financial results since the date of closing. The fair value measurements were final as of December 31, 2019. The total purchase price includes the following: •$11.3 million which was paid during the first quarter of 2019 upon close of the transaction; •$11.3 million which was paid in the fourth quarter of 2019; •$4.7 million which represents the estimated fair value of contingent consideration at the acquisition date. The estimate is based on a probability-weightedscenario analysis of achieving certain levels of gross profit growth over a three year period. In April 2020, the earnout agreement was modified. The finalpayment is based on a fixed payment plus variable payments contingent on achieving certain levels of gross profit and milestones during 2020. Based onthe financial results of 2020 and the milestones achieved, consideration of $1.8 million will be paid in March 2021; and •$(0.2) million which represents a working capital purchase price adjustment. None of the goodwill is expected to be deductible for income tax purposes. The expected lives of the acquired amortizable intangible assets range from 10years to 15 years and are being amortized on a straight-line basis. The pro forma effects of this acquisition are not significant to the Company. Waterstar During 2018, we sold substantially all of the assets of our Waterstar business for $4.0 million in cash. The resulting gain was approximately $1.0 million andis reflected within Selling and Administrative Expense in operating profit in our Consolidated Statements of Operations. 35Table of Contents NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Tables in millions, except shares and per share data) 6.Inventories Inventories as of December 31 consisted of the following: 2020 2019 Inventories carried at LIFO: Finished goods $42.4 $50.9 Raw materials, production parts and work-in-process 21.6 32.5 Excess of FIFO over LIFO cost(a) (31.4) (33.4)Total LIFO inventories $32.6 $50.0 Inventories carried at FIFO: Finished goods $55.0 $60.1 Raw materials, production parts and work-in-process 40.1 40.0 Total FIFO inventories $95.1 $100.1 Total inventories $127.7 $150.1 (a)Inventories of $32.6 million as of December 31, 2020, and $50.0 million as of December 31, 2019, were valued at LIFO. The difference betweenreplacement cost and the stated LIFO inventory value is not materially different from the reserve for the LIFO valuation method. 7.Property, Plant and Equipment Property, Plant and Equipment and related Accumulated Depreciation, including equipment under finance leases, as of December 31,consisted of the following: 2020 2019 Property, Plant and Equipment: Land $23.3 $19.2 Buildings and improvements 131.5 98.7 Machinery and manufacturing equipment 157.0 165.2 Office equipment 118.0 107.2 Construction in progress 7.7 22.2 Total Property, Plant and Equipment 437.5 412.5 Less: Accumulated Depreciation (252.0) (239.2)Property, Plant and Equipment, Net $185.5 $173.3 Depreciation expense was $32.6 million in 2020, $32.2 million in 2019 and $32.3 million in 2018. 8.Goodwill and Intangible Assets For purposes of performing our goodwill impairment analysis, we have identified our reporting units as North America, Latin America, Coatings, EMEA andAPAC. We have the option of first analyzing qualitative factors to determine whether it is more likely than not that the fair value of any reporting unit is less thanits carrying amount. However, we may elect to perform a quantitative goodwill impairment test in lieu of the qualitative test. Based on our analysis, wedetermined that there was no goodwill impairment as of December 31, 2020 and 2019. The changes in the carrying amount of Goodwill are as follows: Accumulated Impairment Goodwill Losses Total Balance as of December 31, 2018 $221.7 $(39.0) $182.7 Additions 15.6 — 15.6 Foreign currency fluctuations (2.2) (1.0) (3.2)Balance as of December 31, 2019 $235.1 $(40.0) $195.1 Additions — — — Foreign currency fluctuations 14.4 (1.7) 12.7 Balance as of December 31, 2020 $249.5 $(41.7) $207.8 36Table of Contents NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Tables in millions, except shares and per share data) The balances of acquired Intangible Assets, excluding Goodwill, are as follows: Customer Trade Lists Names Technology Total Balance as of December 31, 2020 Original cost $166.2 $34.4 $17.9 $218.5 Accumulated amortization (70.3) (12.3) (9.7) (92.3)Carrying amount $95.9 $22.1 $8.2 $126.2 Weighted-average original life (in years) 15 11 11 Balance as of December 31, 2019 Original cost $154.1 $31.8 $17.1 $203.0 Accumulated amortization (49.8) (8.2) (7.3) (65.3)Carrying amount $104.3 $23.6 $9.8 $137.7 Weighted-average original life (in years) 15 11 11 Amortization expense on Intangible Assets was $20.8 million, $22.2 million and $22.1 million for the years ended December 31, 2020, 2019 and 2018,respectively. Estimated aggregate amortization expense based on the current carrying amount of amortizable Intangible Assets for each of the fivesucceeding years is as follows: 2021 $20.5 2022 18.3 2023 16.6 2024 14.9 2025 13.5 Thereafter 42.4 Total $126.2 9.Debt Credit Facility Borrowings 2017 Credit Agreement In 2017, the Company and certain of our foreign subsidiaries entered into a secured Credit Agreement (the "2017 Credit Agreement") with JPMorgan, asadministrative agent, Goldman Sachs Bank USA, as syndication agent, Wells Fargo, National Association, U.S. Bank National Association, and HSBC BankUSA, National Association, as co-documentation agents, and the lenders (including JPMorgan) from time to time party thereto. The fee for committed funds under the revolving facility of the 2017 Credit Agreement ranges from an annual rate of 0.175% to 0.35%, depending on theCompany’s leverage ratio. Borrowings denominated in U.S. dollars under the 2017 Credit Agreement bear interest at a rate per annum equal to (a) the greatest of(i) the prime rate, (ii) the federal funds rate plus 0.50% and (iii) the adjusted LIBOR rate for a one month period, but in any case, not less than 0%, plus, in anysuch case, 1.00%, plus an additional spread of 0.075% to 0.90% for revolving loans and 0.25% to 1.25% for term loans, depending on the company’s leverageratio, or (b) the LIBOR Rate, as adjusted for statutory reserve requirements for eurocurrency liabilities, but in any case, not less than 0%, plus an additionalspread of 1.075% to 1.90% for revolving loans and 1.25% to 2.25% for term loans, depending on the Company’s leverage ratio. The 2017 Credit Agreement contains customary representations, warranties and covenants, including, but not limited to, covenants restricting the Company’sability to incur indebtedness and liens and merge or consolidate with another entity. The 2017 Credit Agreement also contains financial covenants, requiring us tomaintain a ratio of consolidated total indebtedness to consolidated earnings before income, taxes, depreciation and amortization, subject to certain adjustments("Adjusted EBITDA") of not greater than 4.00 to 1, as well as requiring us to maintain a ratio of consolidated Adjusted EBITDA to consolidated interest expense ofno less than 3.50 to 1 for the year ended December 31, 2020. The 2017 Credit Agreement also contains a financial covenant requiring us to maintain a seniorsecured net indebtedness to Adjusted EBITDA ratio of not greater than 3.50 to 1. These financial covenants may restrict our ability to pay dividends and purchaseoutstanding shares of our common stock. In connection with the closing of the Gaomei acquisition, we elected an acquisition holiday as provided for under the2017 Credit Agreement, which increased the net leverage ratio from 4.00 to 1 to 4.50 to 1 and the senior secured net leverage ratio from 3.50 to 1 to 4.00 to 1during each quarter of 2019. We were in compliance with our financial covenants at December 31, 2020. 37Table of Contents NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Tables in millions, except shares and per share data) In 2018, the Company signed Amendment No. 1 to the 2017 Credit Agreement, which clarified that the adoption of the new lease accounting standard in 2019would have no effect on any financial covenant calculations. Effective with the year ended December 31, 2018, we are required to repay the senior credit agreement with 25% to 50% of our excess cash flow from thepreceding fiscal year, as defined in the agreement, unless our net leverage ratio for such preceding fiscal year is less than or equal to 3.00 to 1. We were notrequired to repay any additional amount of the Notes (as defined below) due to this clause. Senior Unsecured Notes On April 18, 2017, we issued and sold $300.0 million in aggregate principal amount of our 5.625% Senior Notes due 2025 (the “Notes”), pursuant to anIndenture, dated as of April 18, 2017, among the Company, the Guarantors (as defined therein), and Wells Fargo Bank, National Association, a national bankingassociation, as trustee. The Notes are guaranteed by Tennant Coatings, Inc., and Tennant Sales and Service Company (collectively, the “Guarantors”), which arewholly-owned subsidiaries of the Company. The Notes will mature on May 1, 2025. Interest on the Notes accrues at the rate of 5.625% per annum and is payable semiannually in cash on each May 1and November 1, commencing on November 1, 2017. The Notes and the guarantees constitute senior unsecured obligations of the Company and the Guarantors, respectively. The Notes and the guarantees,respectively, are: (a) equal in right of payment with all of the Company’s and the Guarantors’ senior debt, without giving effect to collateral arrangements;(b) senior in right of payment to all of the Company’s and the Guarantors’ future subordinated debt, if any; (c) effectively subordinated in right of payment to all ofthe Company’s and the Guarantors’ debt and obligations that are secured, including borrowings under the Company’s senior secured credit facilities for so longas the senior secured credit facilities are secured, to the extent of the value of the assets securing such liens; and (d) structurally subordinated in right ofpayment to all liabilities (including trade payables) of the Company’s and the Guarantors’ subsidiaries that do not guarantee the Notes. The Notes also containcustomary representations, warranties and covenants, and are less restrictive than those contained in the 2017 Credit Agreement. We used the net proceeds from this offering to refinance a $300.0 million term loan under our 2017 Credit Agreement that we borrowed as part of thefinancing for the acquisition of the IPC Group and to pay related fees and expenses. In the second quarter of 2020, the Company early adopted the SEC's rule titled "Financial Disclosures about Guarantors and Issuers of GuaranteedSecurities and Affiliates Whose Securities Collateralize a Registrant's Securities," which simplifies the disclosure requirements related to the Notes under Rule 3-10 of Regulation S-X. Under this amended rule, the Company is not required to disclose separate financial statements for the guarantees as it no longer has areporting requirement. The Company has filed a Form 15 for the Guarantors to suspend the Company's duty to file reports on the Guarantor financial statements. The Indenture governing the Notes contains covenants that limit, among other things, our ability and the ability of our restricted subsidiary to incur additionalindebtedness (including guarantees thereof); incur or create liens on assets securing indebtedness; make certain restricted payments; make certain investments;dispose of certain assets; allow to exist certain restrictions on the ability of our restricted subsidiaries to pay dividends or make other payments to us; engage incertain transactions with affiliates; and consolidate or merge with or into other companies. If we experience certain kinds of changes of control, we may berequired to repurchase the Notes at a price equal to 101% of the principal amount of the Notes, plus accrued and unpaid interest, if any, to, but excluding, thedate of repurchase. If we make certain asset sales and do not use the net proceeds for specified purposes, we may be required to offer to repurchase the Notesat a price equal to 100% of the principal amount, plus accrued and unpaid interest, if any, to, but excluding, the date of repurchase. 38Table of Contents NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Tables in millions, except shares and per share data) Registration Rights Agreement In connection with the issuance and sale of the Notes, the Company entered into a Registration Rights Agreement, dated April 18, 2017, among theCompany, the Guarantors and Goldman, Sachs & Co. and J.P. Morgan Securities LLC (the “Registration Rights Agreement”). Pursuant to the Registration RightsAgreement, the Company agreed (1) to use its commercially reasonable efforts to consummate an exchange offer to exchange the original Notes for newregistered notes (the "Exchange Notes"), with terms substantially identical in all material respects with the Original Notes (except that the Exchange Notes willnot contain terms with respect to additional interest, registration rights or transfer restrictions) and (2) if required, to have a shelf registration statement declaredeffective with respect to resales of the Notes. During the first quarter of 2018, we commenced the exchange offer required by the Registration Rights Agreement. The exchange offer closed during the firstquarter of 2018. We did not incur any additional indebtedness as a result of the exchange offer. As a result, we were not required to pay additional interest on theNotes. Debt outstanding as of December 31 consisted of the following: 2020 2019 Senior unsecured notes $300.0 $300.0 Secured credit facility borrowings 10.0 40.0 Other secured borrowings 1.5 2.4 Finance lease liabilities 0.1 0.2 Unamortized debt issuance costs (3.1) (3.8)Total debt 308.5 338.8 Less: current portion of long-term debt(1) (10.9) (31.3)Long-term portion $297.6 $307.5 (1)Current portion of long-term debt includes $10.0 million of anticipated repayment on Secured Credit Facility Borrowings under our 2017 Credit Agreement,$0.8 million of current maturities of other secured borrowings and $0.1 million of current maturities of finance lease obligations. As of December 31, 2020, we had outstanding borrowings under our Senior Unsecured Notes of $300.0 million. We had outstanding borrowings of $10.0million under our revolving facility and had letters of credit and bank guarantees outstanding in the amount of $3.3 million, leaving approximately $186.7 million ofunused borrowing capacity on our revolving facility. Although we are not required to make a minimum principal payment on our revolving facility during 2021, wehave both the intent and the ability to pay an additional $10.0 million during 2021. As such, we have classified $10.0 million as current maturities of long-termdebt. Commitment fees on unused lines of credit for the year ended December 31, 2020 were $0.6 million. The overall weighted average cost of debt isapproximately 5.5% and, net of a related cross-currency swap instrument, is approximately 4.5%. Further details regarding the cross-currency swap instrumentare discussed in Note 11. The aggregate maturities of our outstanding debt, excluding unamortized debt issuance costs, as of December 31, 2020, are as follows: 2021 $10.9 2022 0.5 2023 0.2 2024 — 2025 300.0 Thereafter — Total aggregate maturities $311.6 39Table of Contents NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Tables in millions, except shares and per share data) 10.Other Current Liabilities Other Current Liabilities as of December 31 consisted of the following: 2020 2019 Other Current Liabilities: Taxes $12.5 $10.4 Warranty 11.1 12.7 Deferred revenue 5.9 6.8 Customer sales incentives 12.1 13.7 Freight 4.6 4.9 Restructuring 4.5 4.5 Operating leases 16.3 16.7 Miscellaneous accrued expenses 11.3 11.6 Other 5.1 4.7 Total Other Current Liabilities $83.4 $86.0 The changes in warranty reserves for the three years ended December 31 were as follows: 2020 2019 2018 Beginning balance $12.7 $13.1 $12.7 Product warranty provision 11.9 11.1 13.2 Foreign currency 0.1 — (0.2)Claims paid (13.6) (11.5) (12.6)Ending balance $11.1 $12.7 $13.1 11.Derivatives Hedge Accounting and Hedging Programs In 2015, we expanded our foreign currency hedging programs to include foreign exchange purchased options and forward contracts to hedge our foreigncurrency-denominated revenue. We recognize all derivative instruments as either assets or liabilities in our Consolidated Balance Sheets and measure them atfair value. Gains and losses resulting from changes in fair value are accounted for depending on the use of the derivative and whether it is designated and qualifiesfor hedge accounting. We evaluate hedge effectiveness on our hedges that are designated and qualify for hedge accounting at the inception of the hedge prospectively, as well asretrospectively, and record any ineffective portion of the hedging instruments in Net Foreign Currency Transaction Losses on our Consolidated Statements ofOperations. The time value of purchased contracts is recorded in Net Foreign Currency Transaction Losses in our Consolidated Statements of Operations. Our hedging policy establishes maximum limits for each counterparty to mitigate any concentration of risk. Balance Sheet Hedging Hedges of Foreign Currency Assets and Liabilities We hedge our net recognized foreign currency-denominated assets and liabilities with foreign exchange forward contracts to reduce the risk that the value ofthese assets and liabilities will be adversely affected by changes in exchange rates. These contracts hedge assets and liabilities that are denominated in foreigncurrencies and are carried at fair value as either assets or liabilities on the Consolidated Balance Sheets with changes in the fair value recorded to Net ForeignCurrency Transaction Losses in our Consolidated Statements of Operations. These contracts do not subject us to material balance sheet risk due to exchangerate movements because gains and losses on these derivatives are intended to offset gains and losses on the assets and liabilities being hedged. At December31, 2020 and December 31, 2019, the notional amounts of foreign currency forward exchange contracts outstanding not designated as hedging instruments were$57.3 million and $41.9 million, respectively. 40Table of Contents NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Tables in millions, except shares and per share data) Cash Flow Hedging Hedges of Forecasted Foreign Currency Transactions In countries outside the U.S., we transact business in U.S. dollars and in various other currencies. We may use foreign exchange option contracts or forwardcontracts to hedge certain cash flow exposures resulting from changes in these foreign currency exchange rates. These foreign exchange contracts, carried atfair value, have maturities of up to one year. We enter into these foreign exchange contracts to hedge a portion of our forecasted foreign currency-denominatedrevenue in the normal course of business, and accordingly, they are not speculative in nature. The notional amount of outstanding foreign currency forwardcontracts designated as cash flow hedges was $2.7 million and $3.0 million as of December 31, 2020 and December 31, 2019, respectively. The notional amountof outstanding foreign currency option contracts designated as cash flow hedges was $8.2 million and $9.8 million as of December 31, 2020 and December 31,2019, respectively. Foreign Currency Derivatives We use foreign currency exchange rate derivatives to hedge our exposure to fluctuations in exchange rates for anticipated intercompany cash transactionsbetween the Company and its subsidiaries. During 2017, we entered into euro to U.S. dollar foreign exchange cross-currency swaps for all of the anticipated cashflows associated with an intercompany loan from a wholly-owned European subsidiary. We entered into these foreign exchange cross-currency swaps to hedgethe foreign currency-denominated cash flows associated with this intercompany loan, and accordingly, they are not speculative in nature. We designated thesecross-currency swaps as cash flow hedges. The hedged cash flows as of December 31, 2020 included €159.6 million of total notional value. As of December 31,2020, the aggregate scheduled interest payments over the course of the loan and related swaps amounted to €9.6 million. The scheduled maturity and principalpayment of the loan and related swaps of €150.0 million are due in April 2022. There were no new cross-currency swaps designated as cash flow hedges as ofDecember 31, 2020. To receive hedge accounting treatment, all hedging relationships are formally documented at the inception of the hedge, and the hedges must be highlyeffective in offsetting changes to future cash flows on hedged transactions. We record changes in the fair value of these cash flow hedges in Accumulated OtherComprehensive Loss in our Consolidated Balance Sheets, until the forecasted transaction occurs. When the forecasted transaction occurs, we reclassify therelated gain or loss on the cash flow hedge to Net Sales. In the event the underlying forecasted transaction does not occur, or it becomes probable that it will notoccur, we reclassify the gain or loss on the related cash flow hedge from Accumulated Other Comprehensive Loss to Net Foreign Currency Transaction Losses inour Consolidated Statements of Operations at that time. If we do not elect hedge accounting, or the contract does not qualify for hedge accounting treatment, thechanges in fair value from period to period are recorded in Net Foreign Currency Transaction Losses in our Consolidated Statements of Operations. The fair value of derivative instruments on our Consolidated Balance Sheets as of December 31 consisted of the following: Derivative Assets Derivative Liabilities Balance SheetLocation December31, 2020 December31, 2019 Balance SheetLocation December31, 2020 December31, 2019 Derivatives designated as hedging instruments: Foreign currency forward contracts(1) Other CurrentAssets $1.9 $2.5 Other CurrentLiabilities — — Foreign currency forward contracts(1) Other Assets — — Other Liabilities $24.1 $12.6 Derivatives not designated as hedginginstruments: Foreign currency forward contracts(1) Other CurrentAssets 0.4 0.6 Other CurrentLiabilities 0.7 0.3 (1)Contracts that mature within the next 12 months are included in Other Current Assets and Other Current Liabilities for asset derivatives and liabilities derivatives,respectively, on our Consolidated Balance Sheets. Contracts with maturities greater than 12 months are included in Other Assets and Other Liabilities for assetderivatives and liability derivatives, respectively, in our Consolidated Balance Sheets. Amounts included in our Consolidated Balance Sheets are recorded netwhere a right of offset exists with the same derivative counterparty. As of December 31, 2020, we anticipate reclassifying approximately $1.8 million of gains from Accumulated Other Comprehensive Loss to Net Earningsduring the next 12 months. 41Table of Contents NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Tables in millions, except shares and per share data) The following tables include the amounts in the Consolidated Statements of Operations in which the effects of cash flow hedges are recordedand the effects of cash flow hedge activity on these line items for the years ended December 31, 2020 and December 31, 2019: 2020 2019 Total Amount of Gain (Loss)on Cash Flow HedgeActivity Total Amount of Gain (Loss)on Cash Flow HedgeActivity Net Sales $1,001.0 $(0.2) $1,137.6 $(0.1)Interest Income 3.3 2.7 3.3 2.9 Net Foreign Currency Transaction Losses (5.3) (15.0) (0.7) 3.4 The effect of foreign currency derivative instruments designated as cash flow hedges and foreign currency derivative instruments notdesignated as hedges in our Consolidated Statements of Operations for the three years ended December 31 were as follows: 2020 2019 2018 ForeignCurrencyOptionContracts ForeignCurrencyForwardContracts ForeignCurrencyOptionContracts ForeignCurrencyForwardContracts ForeignCurrencyOptionContracts ForeignCurrencyForwardContracts Derivatives in cash flow hedging relationships: Net gain (loss) recognized in Other Comprehensive Income(Loss), net of tax(1) $(0.1) $(7.4) $(0.3) $8.6 $0.1 $9.0 Net (loss) gain reclassified from Accumulated OtherComprehensive Loss into earnings, net of tax, effectiveportion to Net Sales — (0.1) — — (0.1) — Net gain reclassified from Accumulated OtherComprehensive Loss in earnings, net of tax, effectiveportion to Interest Income — 2.0 — 2.2 — 1.9 Net gain (loss) reclassified from Accumulated OtherComprehensive Loss into earnings, net of tax, effectiveportion to Net Foreign Currency Transaction Losses — (11.6) — 2.6 — 6.4 Derivatives not designated as hedging instruments: Net loss recognized in earnings(2) — (5.0) — (1.3) — (2.5) (1)Net change in the fair value of the effective portion classified in Other Comprehensive (Loss) Income. (2)Classified in Net Foreign Currency Transaction Losses. 12.Fair Value Measurements Estimates of fair value for financial assets and financial liabilities are based on the framework established in the accounting guidance for fair valuemeasurements. The framework defines fair value, provides guidance for measuring fair value and requires certain disclosures. The framework discusses valuationtechniques, such as the market approach (comparable market prices), the income approach (present value of future income or cash flow) and the cost approach(cost to replace the service capacity of an asset or replacement cost). The framework utilizes a fair value hierarchy that prioritizes the inputs to valuationtechniques used to measure fair value into three broad levels. The following is a brief description of those three levels: •Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities. •Level 2: Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. These include quoted prices forsimilar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active. •Level 3: Unobservable inputs that reflect the reporting entity’s own assumptions. 42Table of Contents NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Tables in millions, except shares and per share data) Our population of assets and liabilities subject to fair value measurements as of December 31, 2020 were as follows: Fair Value Level 1 Level 2 Level 3 Assets: Foreign currency forward exchange contracts $3.0 — $3.0 — Total Assets 3.0 — 3.0 — Liabilities: Foreign currency forward exchange contracts 25.5 — 25.5 — Contingent consideration 1.8 — — 1.8 Total Liabilities $27.3 — $25.5 $1.8 Our population of assets and liabilities subject to fair value measurements as of December 31, 2019 were as follows: Fair Value Level 1 Level 2 Level 3 Assets: Foreign currency forward exchange contracts $6.4 — $6.4 — Total Assets 6.4 — 6.4 — Liabilities: Foreign currency forward exchange contracts 16.2 — 16.2 — Contingent consideration 2.1 — — 2.1 Total Liabilities $18.3 — $16.2 $2.1 Our foreign currency forward exchange and option contracts are valued using observable Level 2 market expectations at the measurement date and standardvaluation techniques to convert future amounts to a single present value amount. Further details regarding our foreign currency forward exchange and optioncontracts are discussed in Note 11. The carrying amounts reported in the Consolidated Balance Sheets for Cash and Cash Equivalents, Restricted Cash, Receivables, Other Current Assets,Accounts Payable and Other Current Liabilities approximate fair value due to their short-term nature. The fair value and carrying value of total debt, including current portion, was $323.4 million and $308.5 million, respectively, as of December 31, 2020. The fairvalue was calculated based on the borrowing rates currently available to us for bank loans with similar terms and remaining maturities, which is a Level 2 in thefair value hierarchy. From time to time, we measure certain assets at fair value on a non-recurring basis, including evaluation of long-lived assets, goodwill and other intangibleassets, as part of a business acquisition. These assets are measured and recognized at amounts equal to the fair value determined as of the date of acquisition.Fair value valuations are based on the information available as of the acquisition date and the expectations and assumptions that have been deemed reasonableby us. There are inherent uncertainties and management judgment required in these determinations. The fair value measurements of assets acquired andliabilities assumed as part of a business acquisition are based on valuations involving significant unobservable inputs, or Level 3, in the fair value hierarchy. These assets are also subject to periodic impairment testing by comparing the respective carrying value of each asset to the estimated fair value of thereporting unit or asset group in which they reside. In the event we determine these assets to be impaired, we would recognize an impairment loss equal to theamount by which the carrying value of the reporting unit, impaired asset or asset group exceeds its estimated fair value. These periodic impairment tests utilizecompany-specific assumptions involving significant unobservable inputs, or Level 3, in the fair value hierarchy. 43Table of Contents NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Tables in millions, except shares and per share data) 13.Retirement Benefit Plans Substantially all U.S. employees are covered by various retirement benefit plans, including postretirement medical plans and defined contribution savingsplans. Retirement benefits for eligible employees in foreign locations are funded principally through defined benefit plans, annuity or government programs. Thetotal cost of benefits for our plans was $12.3 million, $13.7 million and $11.9 million in 2020, 2019 and 2018, respectively. We had a qualified, funded defined benefit retirement plan (the “U.S. Pension Plan”) covering certain current and retired employees in the U.S. During 2015,the plan was amended to freeze benefits for all participants effective January 31, 2017. On February 15, 2017, the Board of Directors approved the termination ofthe U.S. Pension Plan, effective May 15, 2017. Participants who elected an immediate lump sum distribution were paid out in December 2017. Assets forparticipants who elected or are currently receiving annuity payments and those who have elected to defer their benefits were transferred to the annuity company,Pacific Life, in December 2017. Excess assets were transferred from the Tennant Company Pension Trust to the Tennant Company Retirement Savings Plan todeliver future discretionary benefits to plan participants. During 2020, all remaining excess assets were utilized, and none remained outstanding as of December31, 2020. We have a U.S. postretirement medical benefit plan (the “U.S. Retiree Plan”) to provide certain healthcare benefits for U.S. employees hired before January 1,1999. Eligibility for those benefits is based upon a combination of years of service with us and age upon retirement. Our defined contribution savings plan (“401(k) plan”) covers substantially all U.S. employees. Under this plan, we match up to 3% of the employee’s annualcompensation in cash to be invested per their election. We also make a profit sharing contribution to the 401(k) plan for employees with more than one year ofservice in accordance with our Profit Sharing Plan. This contribution is based upon our financial performance and can be funded in the form of Tennant stock, cashor a combination of both. Expenses for the 401(k) plan were $7.2 million, $9.8 million and $8.1 million during 2020, 2019 and 2018, respectively. We have a U.S. nonqualified supplemental benefit plan (the “U.S. Nonqualified Plan”) to provide additional retirement benefits for certain employees whosebenefits under our 401(k) plan or U.S. Pension Plan are limited by either the Employee Retirement Income Security Act or the Internal Revenue Code. We also have defined benefit pension plans in the United Kingdom, Germany and Italy (the “U.K. Pension Plan”, the “German Pension Plan” and the "ItalianPension Plan"). The U.K. Pension Plan, German Pension Plan and Italian Pension Plan cover certain current and retired employees and all plans are closed tonew participants. In December 2018, the U.K. Pension Plan was amended to close all future accrual of benefits to existing active members, resulting in acurtailment gain of $0.1 million relating to past service benefits. The Italian Plan is an employee termination indemnity mandated by Italian law to all employeesemployed prior to 2008. Benefits are paid out when employees covered under the plan are terminated for any reason. Due to changes in Italian law, suchtermination indemnities are no longer available to new participants. Prior year Non-U.S. Pension Benefits disclosures have been updated to include the ItalianPension Plan. We expect to contribute approximately $0.1 million to our U.S. Nonqualified Plan, $0.7 million to our U.S. Retiree Plan, and $0.4 million to our U.K. PensionPlan in 2021. We expect contributions to our German and Italian Pension Plans to be less than $0.1 million in 2021. Weighted-average asset allocations by asset category of the U.K. Pension Plan as of December 31, 2020 is as follows: Quoted Prices inActive Markets forIdentical Assets SignificantObservable Inputs SignificantUnobservableInputs Asset category Fair Value (Level 1) (Level 2) (Level 3) Investment account held by pension plan(1) $13.3 $— $— $13.3 Total $13.3 $— $— $13.3 (1)This category is comprised of investments in insurance contracts. Weighted-average asset allocations by asset category of the U.K. Pension Plan and the Tennant Company Retirement Savings Plan as ofDecember 31, 2019 are as follows: Quoted Prices inActive Markets forIdentical Assets SignificantObservable Inputs SignificantUnobservableInputs Asset category Fair Value (Level 1) (Level 2) (Level 3) Cash and Cash Equivalents $2.8 $2.8 $— $— Investment account held by pension plan(1) 12.2 — — 12.2 Total $15.0 $2.8 $— $12.2 (1)This category is comprised of investments in insurance contracts. 44Table of Contents NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Tables in millions, except shares and per share data) Estimates of the fair value of the U.K. Pension Plan and the Tennant Company Retirement Savings Plan assets are based on the framework established inthe accounting guidance for fair value measurements. A brief description of the three levels can be found in Note 12. The Investment Account held by the U.K.Pension Plan invests in insurance contracts for purposes of funding the U.K. Pension Plan and is classified as Level 3. The fair value of the Investment Account isthe cash surrender values as determined by the provider which are the amounts the plan would receive if the contracts were cashed out at year end. Theunderlying assets held by these contracts are primarily invested in assets traded in active markets. A reconciliation of the beginning and ending balances of the Level 3 investments of our U.K. Pension Plan during the years ended December31 is as follows: 2020 2019 Fair value at beginning of year $12.2 $10.8 Purchases, sales, issuances and settlements, net 0.1 0.2 Net gain 0.6 0.8 Foreign currency 0.4 0.4 Fair value at end of year $13.3 $12.2 The primary objective of our U.K. Pension Plan is to meet retirement income commitments to plan participants at a reasonable cost to us and to maintain asound actuarially funded status. This objective is accomplished through growth of capital and safety of funds invested. Assets are invested in securities to achievegrowth of capital over inflation through appreciation and accumulation and reinvestment of dividend and interest income. Investments are diversified to control risk.The U.K. Pension Plan is invested in insurance contracts with underlying investments primarily in equity and fixed income securities. Our German Pension Planis unfunded, which is customary in that country. Weighted-average assumptions used to determine benefit obligations as of December 31 are as follows: Non-U.S. Postretirement U.S. Nonqualified Plan Pension Benefits Medical Benefits 2020 2019 2020 2019 2020 2019 Discount rate 2.06% 3.01% 1.05% 1.42% 2.07% 3.06%Rate of compensation increase —% —% —% —% —% —% Weighted-average assumptions used to determine net periodic benefit costs as of December 31 are as follows: Non-U.S. Postretirement U.S. Nonqualified Plan Pension Benefits Medical Benefits 2020 2019 2018 2020 2019 2018 2020 2019 2018 Discount rate 3.01% 3.95% 3.28% 1.42% 1.92% 2.08% 3.06% 3.95% 3.26%Expected long-term rate of return on plan assets —% —% —% 3.30% 3.80% 3.80% —% —% —%Rate of compensation increase —% —% —% —% —% 3.50% —% —% —% The discount rate is used to discount future benefit obligations back to today’s dollars. Our discount rates were determined based on high-quality fixedincome investments. The resulting discount rates are consistent with the duration of plan liabilities. The Mercer Above Mean Yield Curve for high-quality corporatebonds is used in determining the discount rate for the U.S. Nonqualified Plan in 2020. The Mercer Yield Curve is used in determining the discount rate for the Non-U.S. Plans in 2020. Before 2019, the FTSE (formerly known as Citigroup) Above Median Spot rates for high-quality corporate bonds were used in determining thediscount rate for the U.S. Plans. The iBoxx € Corporates AA 7-10 and iBoxx € Corporates AA 10+ Benchmark is used to determine the discount rate for theItalian Pension Plan. The expected return on assets assumption on the investment portfolios for the pension plans is based on the long-term expected returns forthe investment mix of assets currently in the portfolio. Management uses historic return trends of the asset portfolio combined with recent market conditions toestimate the future rate of return. The accumulated benefit obligations as of December 31 for all defined benefit plans are as follows: 2020 2019 U.S. Nonqualified Plan $1.2 $1.3 U.K. Pension Plan 12.2 10.4 German Pension Plan 1.2 1.0 Italian Pension Plan 4.2 4.3 Information for our plans with an accumulated benefit obligation in excess of plan assets as of December 31 is as follows: 2020 2019 Accumulated benefit obligation $6.6 $6.6 Fair value of plan assets — — As of December 31, 2020 and 2019, the U.S. Nonqualified, the German Pension and the Italian Pension Plans had an accumulated benefit obligation inexcess of plan assets. 45Table of Contents NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Tables in millions, except shares and per share data) Information for our plans with a projected benefit obligation in excess of plan assets as of December 31 is as follows: 2020 2019 Projected benefit obligation $6.6 $6.5 Fair value of plan assets — — As of December 31, 2020 and 2019, the U.S. Nonqualified, the German Pension and the Italian Pension Plans had a projected benefit obligation in excess ofplan assets. Assumed healthcare cost trend rates as of December 31 are as follows: 2020 2019 Healthcare cost trend rate assumption for the next year Pre-65 5.90% 6.22%Healthcare cost trend rate assumption for the next year Post-65 6.20% 6.22%Rate to which the cost trend rate is assumed to decline (the ultimate trend rate) 4.50% 5.00%Year that the rate reaches the ultimate trend rate 2037 2032 Summaries related to changes in benefit obligations and plan assets and to the funded status of our defined benefit and postretirementmedical benefit plans are as follows: Non-U.S. Postretirement U.S. Nonqualified Plan Pension Benefits Medical Benefits 2020 2019 2020 2019 2020 2019 Change in benefit obligation: Benefit obligation at beginning of year $1.3 $1.3 $15.7 $15.0 $7.8 $8.6 Service cost — — — — 0.1 — Interest cost — 0.1 0.2 0.3 0.2 0.3 Actuarial loss (gain) — — 1.7 1.0 (0.3) (0.1)Foreign exchange — — 0.8 0.2 — — Benefits paid (0.1) (0.1) (0.8) (0.8) (0.5) (1.0)Benefit obligation at end of year $1.2 $1.3 $17.6 $15.7 $7.3 $7.8 Change in fair value of plan assets and net accrued liabilities: Fair value of plan assets at beginning of year $— $— $12.2 $10.8 $— $— Actual return on plan assets — — 0.6 0.8 — — Employer contributions 0.1 0.1 0.9 1.0 0.5 1.0 Foreign exchange — — 0.4 0.4 — — Benefits paid (0.1) (0.1) (0.8) (0.8) (0.5) (1.0)Fair value of plan assets at end of year — — 13.3 12.2 — — Funded status at end of year $(1.2) $(1.3) $(4.3) $(3.5) $(7.3) $(7.8)Amounts recognized in the Consolidated Balance Sheets consist of: Noncurrent Other Assets $— $— $1.1 $1.8 $— $— Current Liabilities (0.1) (0.2) — — (0.7) (0.7)Long-Term Liabilities (1.1) (1.1) (5.4) (5.3) (6.6) (7.1)Net accrued liability $(1.2) $(1.3) $(4.3) $(3.5) $(7.3) $(7.8)Amounts recognized in Accumulated Other Comprehensive Loss consistof: Prior service cost $— $— $(0.2) $(0.1) $— $— Net actuarial (loss) gain (0.9) (0.9) (2.0) (0.4) 0.8 0.4 Accumulated Other Comprehensive (Loss) Income $(0.9) $(0.9) $(2.2) $(0.5) $0.8 $0.4 46Table of Contents NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Tables in millions, except shares and per share data) The components of the net periodic benefit cost (credit) for the three years ended December 31 were as follows: Non-U.S. Postretirement U.S. Nonqualified Plan Pension Benefits Medical Benefits 2020 2019 2018 2020 2019 2018 2020 2019 2018 Service cost $— $— $— $— $— $0.1 $0.1 $— $0.1 Interest cost — 0.1 — 0.2 0.3 0.3 0.2 0.3 0.3 Expected return on plan assets — — — (0.3) (0.4) (0.4) — — — Amortization of net actuarial loss (gain) 0.1 — 0.1 — — — — (0.1) — Net periodic benefit cost (credit) 0.1 0.1 0.1 (0.1) (0.1) — 0.3 0.2 0.4 Curtailment — — — — — (0.1) — — — Net benefit cost (credit) $0.1 $0.1 $0.1 $(0.1) $(0.1) $(0.1) $0.3 $0.2 $0.4 The changes in Accumulated Other Comprehensive Loss for the three years ended December 31 were as follows: Non-U.S. Postretirement U.S. Nonqualified Plan Pension Benefits Medical Benefits 2020 2019 2018 2020 2019 2018 2020 2019 2018 Prior service cost $— $— $— $0.1 $— $0.1 $— $— $— Net actuarial loss (gain) — 0.1 — 1.6 0.4 (1.2) (0.3) (0.1) (0.5)Amortization of net actuarial (loss) gain (0.1) — (0.1) — — — — 0.1 — Total recognized in other comprehensive(income) loss $(0.1) $0.1 $(0.1) $1.7 $0.4 $(1.1) $(0.3) $— $(0.5)Total recognized in net benefit cost (credit)and other comprehensive loss (income) $— $0.2 $— $1.6 $0.3 $(1.2) $— $0.2 $(0.1) The following benefit payments, which reflect expected future service, are expected to be paid: U.S. Non-U.S. Postretirement Nonqualified Plan Pension Benefits Medical Benefits 2021 $0.2 $0.3 $0.7 2022 0.1 0.7 0.6 2023 0.1 0.8 0.6 2024 0.1 0.8 0.6 2025 0.1 0.8 0.6 2026 to 2030 0.4 4.0 2.5 Total $1.0 $7.4 $5.6 47Table of Contents NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Tables in millions, except shares and per share data) 14.Shareholders' Equity Authorized Shares We are authorized to issue an aggregate of 60,000,000 shares, all of which are designated as Common Stock having a par value of $0.375 per share. TheBoard of Directors is authorized to establish one or more series of preferred stock, setting forth the designation of each such series, and fixing the relative rightsand preferences of each such series. Accumulated Other Comprehensive Loss Components of Accumulated Other Comprehensive Loss, net of tax, within the Consolidated Balance Sheets and Consolidated Statements ofEquity as of December 31 are as follows: 2020 2019 2018 Foreign currency translation adjustments $(19.1) $(36.3) $(31.9)Pension and postretirement medical benefits (1.7) (0.7) (0.3)Cash flow hedge 0.7 (1.5) (5.0)Total Accumulated Other Comprehensive Loss $(20.1) $(38.5) $(37.2) The changes in components of Accumulated Other Comprehensive Loss, net of tax, are as follows: ForeignCurrencyTranslationAdjustments Pension andPostretirementMedicalBenefits Cash FlowHedge Total December 31, 2019 $(36.3) $(0.7) $(1.5) $(38.5)Other comprehensive income (loss) before reclassifications 17.2 (1.0) (7.5) 8.7 Amounts reclassified from Accumulated Other Comprehensive Loss — — 9.7 9.7 Net current period other comprehensive income (loss) 17.2 (1.0) 2.2 18.4 December 31, 2020 $(19.1) $(1.7) $0.7 $(20.1) Accumulated Other Comprehensive Loss associated with pension and postretirement benefits and cash flow hedges is included in Notes 13 and 11,respectively. 15.Leases We lease facilities, vehicles and equipment under the operating lease agreements, which include both monthly and longer-term arrangements. Certain operating leases for vehicles contain residual value guarantee provisions, which would become due at the expiration of the operating lease agreementif the fair value of the leased vehicles is less than the guaranteed residual value. As of December 31, 2020, of those leases that contain residual value guarantees,the aggregate residual value at lease expiration was $10.6 million, of which we have guaranteed $8.2 million. The lease assets and liabilities as of December 31 are as follows: Leases Classification 2020 2019 Assets Operating lease assets Operating Lease Assets $44.5 $46.6 Finance lease assets Property, Plant and Equipment(a) 0.1 0.3 Total leased assets $44.6 $46.9 Liabilities Current: Operating Other Current Liabilities $16.3 $16.7 Finance Current Portion of Long-term Debt 0.1 0.2 Noncurrent: Operating Long-term Operating Lease Liabilities 28.7 30.3 Finance Long-term Debt — — Total lease liabilities $45.1 $47.2 (a) Finance lease assets are recorded net of accumulated amortization of $0.2 million and $0.5 million as of December 31, 2020 and December 31, 2019,respectively. 48Table of Contents NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Tables in millions, except shares and per share data) The lease cost for the three years ended December 31 was as follows: Lease Cost 2020 2019 2018 Operating lease cost $25.1(a) $27.5(a) $23.3 Finance lease cost(b) 0.2 0.3 0.4 Total lease cost $25.3 $27.8 $23.7 (a)Includes short-term lease costs of $3.5 million and $3.1 million and variable lease costs of $1.6 million and $2.4 million for the years ended December 31,2020 and December 31, 2019, respectively. (b)Includes amortization of leased assets and interest on lease liabilities. The maturity of lease liabilities as of December 31, 2020 was as follows: Maturity of Lease Liabilities OperatingLeases FinanceLeases Total 2021 $17.6 $0.1 $17.7 2022 13.0 — 13.0 2023 9.4 — 9.4 2024 5.0 — 5.0 2025 2.1 — 2.1 Thereafter 0.9 — 0.9 Total lease payments $48.0 $0.1 $48.1 Less: Interest (3.0) — (3.0)Present value of lease liabilities $45.0 $0.1 $45.1 The lease term and discount rate as of December 31 were as follows: Lease Term and Discount Rate 2020 2019 Weighted-average remaining lease term (years): Operating leases 3.4 3.7 Finance leases 1.0 1.5 Weighted-average discount rate: Operating leases 3.8% 3.7%Finance leases 2.5% 2.5% Other information related to cash paid related to lease liabilities and lease assets obtained for the years ended December 31 was as follows: Other Information 2020 2019 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $19.7 $22.7 Financing cash flows from finance leases 0.1 0.3 Lease assets obtained in exchange for new finance lease liabilities — 0.1 Lease assets obtained in exchange for new operating lease liabilities 14.8 26.4 16.Commitments and Contingencies In the ordinary course of business, we may become liable with respect to pending and threatened litigation, tax, environmental and other matters. While theultimate results of current claims, investigations and lawsuits involving us are unknown at this time, we do not expect that these matters will have a materialadverse effect on our consolidated financial position or results of operations. Legal costs associated with such matters are expensed as incurred. 49Table of Contents NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Tables in millions, except shares and per share data) 17.Income Taxes On December 22, 2017, the Tax Cuts and Jobs Act of 2017 (the "Tax Act") was signed into law. The Tax Act made broad and complex changes to the U.S.tax code which included a lowering of the U.S. federal corporate income tax rate from 35% to 21% effective January 1, 2018, accelerated expensing of qualifiedcapital investments for a specific period, limitations of the deductibility of interest expense and executive compensation, and a transition from a worldwide to aterritorial tax system, which required companies to pay a one-time transition tax on certain unrepatriated earnings from foreign subsidiaries. The accounting for the remeasurement of the deferred taxes and transition tax was finalized in the third quarter of 2018. Adjustments to the provisionalamounts were not material to the consolidated financial statements. The accounting for the income tax effects of the Tax Act was complete as of December 31,2018. Profit (loss) before income taxes for the three years ended December 31 was as follows: 2020 2019 2018 U.S. operations $46.6 $50.1 $23.9 Foreign operations (5.5) 3.9 11.9 Total $41.1 $54.0 $35.8 Income tax expense (benefit) for the three years ended December 31 was as follows: 2020 2019 2018 Current: Federal $4.2 $9.6 $3.7 Foreign 3.8 5.6 7.0 State 1.8 2.1 1.0 $9.8 $17.3 $11.7 Deferred: Federal $4.4 $(2.4) $(3.1)Foreign (6.9) (6.7) (6.0)State 0.1 (0.1) (0.3) $(2.4) $(9.2) $(9.4)Total: Federal $8.6 $7.2 $0.6 Foreign (3.1) (1.1) 1.0 State 1.9 2.0 0.7 Total Income Tax Expense $7.4 $8.1 $2.3 In general, it is our practice and intention to permanently reinvest the earnings of our foreign subsidiaries and repatriate earnings only when the tax impact iszero or immaterial. Accordingly, no deferred taxes have been provided for withholding taxes or other taxes that would result upon repatriation of our approximately$68.8 million of undistributed earnings from foreign subsidiaries to the United States as those earnings continue to be permanently reinvested. Our effective income tax rate varied from the U.S. federal statutory tax rate for the three years ended December 31 as follows: 2020 2019 2018 Tax at statutory rate 21.0% 21.0% 21.0%(Decreases) increases in the tax rate from: State and local taxes, net of federal benefit 3.5 1.9 1.4 Effect of foreign operations (3.7) 3.5 (4.3)Transaction costs — 0.1 (4.2)Effect of 2017 deferred rate change — — (1.0)Transition Tax — — (1.0)Effect of changes in valuation allowances 0.5 (9.7) 6.6 Domestic production activities deduction — (0.3) 0.4 Executive compensation over $1 million 2.1 2.5 1.0 Share-based payments (0.9) (2.0) (5.7)Research & Development credit (3.3) (1.9) (3.6)Other, net (1.3) — (4.2)Effective income tax rate 17.9% 15.1% 6.4% 50Table of Contents NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Tables in millions, except shares and per share data) Deferred tax assets and liabilities were comprised of the following as of December 31: 2020 2019 Deferred Tax Assets: Inventory costing and valuation methods $4.5 $4.6 Employee wages and benefits, principally due to accruals for financial reporting purposes 14.0 13.7 Warranty reserves accrued for financial reporting purposes 2.3 2.5 Receivables, principally due to allowance for doubtful accounts and tax accounting method for equipment rentals 2.3 1.9 Operating lease liability 11.2 11.4 Tax loss carryforwards 9.6 6.6 Tax credit carryforwards 3.6 3.2 Other 2.5 3.2 Gross Deferred Tax Assets $50.0 $47.1 Less: valuation allowance (7.5) (6.2)Total Net Deferred Tax Assets $42.5 $40.9 Deferred Tax Liabilities: Lease right of use assets $11.2 $11.4 Property, Plant and Equipment, principally due to differences in depreciation and related gains 14.0 10.2 Goodwill and Intangible Assets 41.5 43.4 Total Deferred Tax Liabilities $66.7 $65.0 Net Deferred Tax Liabilities $(24.2) $(24.1) Tax credit carryforwards consist of $2.2 million U.S. federal and state tax credits and $1.4 million of Netherlands tax credits. We have non-U.S. cumulativetax losses of $40.9 million in various countries. Cumulative losses can be used to offset the income tax liabilities on future income in these countries. $18.9million of these losses have unlimited carryforward periods. $22.0 million of these losses have a limited carryforward period which must be utilized during 2021 to2028. The valuation allowance as of December 31, 2020 principally applies to Dutch net operating loss and tax credit carryforwards, and state tax creditcarryforwards that, in the opinion of management, are more likely than not to expire unutilized. However, to the extent that tax benefits related to thesecarryforwards are realized in the future, the reduction in the valuation allowance will reduce income tax expense. A valuation allowance for the remaining tax losscarryforwards is not required since it is more likely than not that they will be realized through carryback to taxable income in prior years, future reversals ofexisting taxable temporary differences and future taxable income. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows: 2020 2019 Balance at January 1 $7.5 $5.6 Increases as a result of tax positions taken during a prior period 0.3 0.1 Increases as a result of tax positions taken during the current year 0.4 0.5 Increase related to prior period tax positions of acquired entities — 2.5 Decreases relating to settlement with tax authorities (0.8) (0.1)Reductions as a result of a lapse of the applicable statute of limitations (1.4) (1.0)Increases as a result of foreign currency fluctuations 0.4 (0.1)Balance at December 31 $6.4 $7.5 Included in the balance of unrecognized tax benefits as of December 31, 2020 and 2019 are potential benefits of $6.3 million and $7.4 million, respectively,that if recognized, would affect the effective tax rate. We recognize potential accrued interest and penalties related to unrecognized tax benefits as a component of income tax expense. In addition to the liabilityof $6.4 million and $7.5 million for unrecognized tax benefits as of December 31, 2020 and 2019, there was approximately $0.7 million and $0.6 million,respectively, for accrued interest and penalties. To the extent interest and penalties are not assessed with respect to uncertain tax positions, the amountsaccrued will be revised and reflected as an adjustment to income tax expense. We and our subsidiaries are subject to U.S. federal income tax as well as income tax of numerous state and foreign jurisdictions. We are generally no longersubject to U.S. federal tax examinations for taxable years before 2018 and, with limited exceptions, state and foreign income tax examinations for taxable yearsbefore 2015. The Internal Revenue Service completed its examination of the U.S. income tax returns for tax years 2016 and 2017 during the third quarter. TheIRS’s adjustments to certain tax positions were not material and were fully reserved. We are currently undergoing income tax examinations in various foreignjurisdictions. Although the final outcome of these examinations cannot be currently determined, we believe that we have adequate reserves with respect to theseexaminations. 51Table of Contents NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Tables in millions, except shares and per share data) 18.Share-Based Compensation We have five plans under which we have awarded share-based compensation grants: The 1997 Non-Employee Directors Option Plan ("1997 Plan"), whichprovided for stock option grants to our non-employee Directors, the 2007 Stock Incentive Plan (“2007 Plan”), the Amended and Restated 2010 Stock IncentivePlan, as Amended (“2010 Plan”), the 2017 Stock Incentive Plan ("2017 Plan") and the 2020 Stock Incentive Plan ("2020 Plan"), which were adopted as acontinuing step toward aggregating our equity compensation programs to reduce the complexity of our equity compensation programs. The 2010 Plan, originally approved by our shareholders on April 28, 2010 and amended and restated by our shareholders on April 25, 2012, terminated ourrights to grant awards under the 2007 Plan; however, any awards granted under the 2007 or 2010 Plans that do not result in the issuance of shares of CommonStock may again be used for an award under the 2010 Plan. The 2010 Plan was amended and restated by our shareholders on April 24, 2013, increasing thenumber of shares available under the amended 2010 Plan from 1,500,000 shares to 2,600,000 shares. The 2017 Plan approved by our shareholders on April 26, 2017 terminated our rights to grant awards under previous plans; however, any awards granted underprevious plans that do not result in the issuance of shares of Common Stock may again be used for an award under the 2017 Plan. There were 1,200,000 sharesmade available under the approved 2017 Plan. The 2020 Plan approved by our shareholders on April 29, 2020 terminated our rights to grant awards under previous plans; however, any awards granted underprevious plans that do not result in the issuance of shares of Common Stock may again be used for an award under the 2020 Plan. There were 1,750,000 sharesmade available under the approved 2020 Plan. As of December 31, 2020, there were 1,081,982 shares reserved for issuance under the 2007 Plan, the 2010 Plan and the 2017 Plan for outstandingcompensation awards. There were 1,833,080 shares available for issuance under the 2020 Plan for current and future equity awards as of December 31, 2020.The Compensation Committee of the Board of Directors determines the number of shares awarded and the grant date, subject to the terms of our equity awardpolicy. We recognized total Share-Based Compensation Expense of $6.0 million, $11.4 million and $8.3 million, respectively, during the years ended 2020, 2019 and2018. The total excess tax benefit recognized for share-based compensation arrangements during the years ended 2020, 2019 and 2018 was $0.3 million, $1.1million and $2.1 million, respectively. Stock Option Awards We determined the fair value of our stock option awards using the Black-Scholes valuation model that uses the assumptions noted in the table below. Theexpected term selected for stock options granted during the year represents the period of time that the stock options are expected to be outstanding based onhistorical data of stock option holder exercise and termination behavior of similar grants. The risk-free interest rate for periods within the contractual life of thestock option is based on the U.S. Treasury rate over the expected life at the time of grant. Expected volatilities are based upon historical volatility of our stockover a period equal to the expected life of each stock option grant. Dividend yield is estimated over the expected life based on our dividend policy and historicaldividends paid. To determine the amount of compensation cost to be recognized in each period, we account for forfeitures as they occur. The following table illustrates the valuation assumptions used for the 2020, 2019 and 2018 grants: 2020 2019 2018 Expected volatility 27 - 32% 26 - 27% 25%Weighted-average expected volatility 27% 26% 25%Expected dividend yield 1.3% 1.2 - 1.4% 1.2%Weighted-average expected dividend yield 1.3% 1.2% 1.2%Expected term, in years 5 5 5 Risk-free interest rate 0.3 - 1.3% 1.6 - 2.5% 2.6 - 2.9% New stock option awards granted vest one-third each year over a three year period and have a ten year contractual term. Compensation expense equal to thegrant date fair value is recognized for these awards on a straight-line basis over the awards' vesting period. Stock options granted to employees are subject toaccelerated expensing if the option holder meets the retirement definition set forth in the 2020, 2017 and 2010 Plans. 52Table of Contents NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Tables in millions, except shares and per share data) The following table summarizes the activity during the year ended December 31, 2020 for stock option awards: Shares Weighted-AverageExercise Price Outstanding at beginning of year 1,071,777 $60.01 Granted 76,251 81.20 Exercised (110,595) 44.29 Forfeited (42,083) 70.83 Expired (4,687) $68.01 Outstanding at end of year 990,663 $62.90 Exercisable at end of year 767,655 $61.04 The weighted-average grant date fair value of stock options granted during the years ended December 31, 2020, 2019 and 2018 was $18.45, $15.37 and$16.07, respectively. The total intrinsic value of stock options exercised during the years ended December 31, 2020, 2019 and 2018 was $3.3 million, $6.8 millionand $10.3 million, respectively. The aggregate intrinsic value of options outstanding and exercisable at December 31, 2020 was $8.4 million and $7.5 million,respectively. The weighted-average remaining contractual life for options outstanding and exercisable as of December 31, 2020 was 5.7 years and 5.0 years,respectively. As of December 31, 2020, there was unrecognized compensation cost for nonvested options of $1.0 million, which is expected to be recognized overa weighted-average period of 1.1 years. Restricted Share Awards Restricted share awards for employees generally have a three year vesting period from the effective date of the grant. Restricted share awards to non-employee directors vest upon a change of control or upon termination of service as a director occurring at least six months after grant date of the award so longas termination is for one of the following reasons: death; disability; retirement in accordance with Tennant policy (e.g., age, term limits, etc.); resignation atrequest of Board (other than for gross misconduct); resignation following at least six months’ advance notice; failure to be renominated (unless due tounwillingness to serve) or reelected by shareholders; or removal by shareholders. We use the closing share price the day before the grant date to determine thefair value of our restricted share awards. Expenses on these awards are recognized over the vesting period. The following table summarizes the activity during the year ended December 31, 2020 for nonvested restricted share awards: Shares Weighted-AverageGrant Date FairValue Nonvested at beginning of year 93,599 $54.27 Granted 17,348 81.07 Vested (10,038) 73.20 Forfeited (6,866) 73.19 Nonvested at end of year 94,043 $55.81 The total fair value of restricted shares vested during the years ended December 31, 2020, 2019 and 2018 was $0.7 million, $1.0 million and $1.0 million,respectively. As of December 31, 2020, there was $1.2 million of total unrecognized compensation cost related to nonvested restricted shares which is expectedto be recognized over a weighted-average period of 1.8 years. 53Table of Contents NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Tables in millions, except shares and per share data) Performance Share Awards We grant performance share awards to key employees as a part of our long-term management compensation program. These awards are earned based uponachievement of certain financial performance targets over a three year period. The number of shares of common stock a participant receives will be increased (upto 200 percent of target levels) or reduced (down to zero) based on the level of achievement of the financial performance targets. We use the closing share pricethe day before the grant date to determine the fair value of our performance share awards. Expenses on these awards are recognized over a three yearperformance period. Performance shares are granted in restricted stock units. They are payable in stock and vest solely upon achievement of certain financialperformance targets during this three year period. The following table summarizes the activity during the year ended December 31, 2020 for nonvested performance share awards: Shares Weighted-AverageGrant Date FairValue Nonvested at beginning of year 120,714 $67.45 Granted 55,142 76.66 Vested (29,595) 72.82 Forfeited (22,042) 70.72 Nonvested at end of year 124,219 $69.68 No performance shares vested during the years ended December 31, 2019, and December 31, 2018. As of December 31, 2020, we expect to recognize $0.9million of total compensation costs over a weighted-average period of 1.0 years. Restricted Stock Units We grant restricted stock units to employees and non-employee directors, which generally vest within three years from the date of the grant. Vestedrestricted stock units are paid out in stock. We use the closing share price the day before the grant date to determine the fair value of our restricted stock units.Expenses on these awards are recognized on a straight-line basis over the vesting period of the award. The following table summarizes the activity during the year ended December 31, 2020 for nonvested restricted stock units: Shares Weighted-AverageGrant Date FairValue Nonvested at beginning of year 103,287 $64.72 Granted 42,248 69.93 Vested (37,389) 70.46 Forfeited (10,661) 63.11 Nonvested at end of year 97,485 $64.95 The total fair value of shares vested during the years ended December 31, 2020, 2019 and 2018 was $2.6 million, $2.2 million, and $0.9 million, respectively.As of December 31, 2020, there was $2.3 million of total unrecognized compensation cost related to nonvested shares which is expected to be recognized over aweighted-average period of 1.4 years. Share-Based Liabilities As of December 31, 2020 and 2019, we had $0.3 million and $0.2 million in total share-based liabilities recorded on our Consolidated Balance Sheets,respectively. 54Table of Contents NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Tables in millions, except shares and per share data) 19.Earnings Attributable to Tennant Company Per Share The computations of Basic and Diluted Earnings Attributable to Tennant Company per Share for the years ended December 31 were as follows: 2020 2019 2018 Numerator: Net Earnings Attributable to Tennant Company $33.7 $45.8 $33.4 Denominator: Basic - Weighted Average Shares Outstanding 18,349,724 18,118,486 17,940,438 Effect of dilutive securities 285,278 334,659 398,131 Diluted - Weighted Average Shares Outstanding 18,635,002 18,453,145 18,338,569 Basic Earnings per Share $1.84 $2.53 $1.86 Diluted Earnings per Share $1.81 $2.48 $1.82 Excluded from the dilutive securities shown above were options to purchase and shares to be paid out under share-based compensation plans of 610,118,552,402 and 293,356 shares of common stock during 2020, 2019 and 2018, respectively. These exclusions were made if the exercise prices of these options aregreater than the average market price of our common stock for the period, if the number of shares we can repurchase under the treasury stock method exceedsthe weighted shares outstanding in the options or if we have a net loss, as these effects are anti-dilutive. 20.Segment Reporting We are organized into four operating segments: North America; Latin America; Europe, Middle East, Africa; and Asia Pacific. We combine our NorthAmerica and Latin America operating segments into the "Americas" for reporting net sales by geographic area. In accordance with the objective and basicprinciples of the applicable accounting guidance, we aggregate our operating segments into one reportable segment that consists of the design, manufacture andsale of products used primarily in the maintenance of nonresidential surfaces. The following table presents Net Sales by geographic area for the three years ended December 31: 2020 2019 2018 Net Sales: United States $546.2 $609.6 $579.8 Other Americas 84.8 112.8 111.2 Americas 631.0 722.4 691.0 Europe, Middle East, Africa 278.2 307.6 335.6 Asia Pacific 91.8 107.6 96.9 Total $1,001.0 $1,137.6 $1,123.5 Accounting policies of the operations in various operating segments are the same as those described in Note 1. Net Sales are attributed to each operatingsegment based on the end user country and are net of intercompany sales. Apart from the United States shown in the table above, there were no individualforeign locations which had Net Sales which represented more than 10% of our consolidated Net Sales. No single customer represents more than 10% of ourconsolidated Net Sales. The following table presents long-lived assets by geographic area as of December 31: 2020 2019 2018 Long-lived assets: United States $121.9 $114.5 $107.3 Other Americas 14.7 12.8 11.3 Americas 136.6 127.3 118.6 Italy 321.5 325.2 355.5 Other Europe, Middle East, Africa 34.0 28.6 30.2 Europe, Middle East, Africa 355.5 353.8 385.7 Asia Pacific 37.5 36.6 4.1 Total $529.6 $517.7 $508.4 Long-lived assets consist of Property, Plant and Equipment, Goodwill, Intangible Assets and certain other assets. Apart from the United States and Italyshown in the table above, there are no other individual foreign locations which have long-lived assets which represent more than 10% of our consolidated long-livedassets. 21. Subsequent Event On February 1, 2021, we closed on the sale of our Coatings business. We expect to record a gain on the sale in the first quarter of 2021. As of December31, 2020, this business was considered held for sale, with assets held for sale of $15.0 million and liabilities held for sale of $3.2 million. 55Table of Contents ITEM 9 – Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None. ITEM 9A – Controls and Procedures Disclosure Controls and Procedures Our management, including our Chief Executive Officer and Interim Chief Financial Officer and Interim Principal Accounting Officer, have conducted anevaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities ExchangeAct of 1934, as amended (the Exchange Act)) as of December 31, 2020. Based on that evaluation, our Chief Executive Officer and Interim Chief Financial Officerand Interim Principal Accounting Officer concluded that, as of December 31, 2020, our disclosure controls and procedures were effective. For purposes of Rule 13a-15(e), the term disclosure controls and procedures means controls and other procedures of an issuer that are designed to ensurethat information required to be disclosed by the issuer in the reports that it files or submits under the Exchange Act (15 U.S.C. 78a et seq.) is recorded,processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, withoutlimitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under theExchange Act is accumulated and communicated to the issuer’s management, including its Chief Executive Officer and Interim Chief Financial Officer and InterimPrincipal Accounting Officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Management’s Report on Internal Control over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13a-15(f)under the Exchange Act. The Company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reportingand the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control overfinancial reporting includes those policies and procedures that: (i)Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of thecompany; (ii)Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generallyaccepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations ofmanagement and directors of the company; and (iii)Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that couldhave a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation ofeffectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliancewith the policies or procedures may deteriorate. A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that amaterial misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. Under the supervision of the Audit Committee of the Board of Directors and with the participation of our management, including our Chief Executive Officerand Interim Chief Financial Officer and Interim Principal Accounting Officer, we conducted an evaluation of the effectiveness of our internal control over financialreporting using the criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the TreadwayCommission (COSO). Based on our assessment and those criteria, our Chief Executive Officer and Interim Chief Financial Officer and Interim PrincipalAccounting Officer concluded that our internal control over financial reporting was effective as of December 31, 2020. Deloitte & Touche LLP, our independent registered public accounting firm, has audited the effectiveness of the Company's internal control over financialreporting as of December 31, 2020 and has issued a report which is included in Item 8 of this Annual Report on Form 10-K. Changes in Internal Control Over Financial Reporting There were no significant changes in the Company's internal control over financial reporting during the quarter ended December 31, 2020 that have materiallyaffected, or are reasonably likely to materially affect, the Company's internal control over financial reporting. ITEM 9B – Other Information None. 56Table of Contents PART III ITEM 10 – Directors, Executive Officers and Corporate Governance Information required under this item with respect to directors is contained in the sections entitled “Board of Directors” as part of our 2021 Proxy Statementand is incorporated herein by reference. See also Item 1, Information About Our Executive Officers in Part I hereof. Business Ethics Guide We have adopted the Tennant Company Business Ethics Guide, which applies to all of our employees, directors, consultants, agents and anyone else actingon our behalf. The Business Ethics Guide includes particular provisions applicable to our senior financial management, which includes our Chief Executive Officer,Chief Financial Officer, Controller and other employees performing similar functions. A copy of our Business Ethics Guide is available on the Investor Relationswebsite at investors.tennantco.com. We intend to post on our website any amendment to, or waiver from, a provision of our Business Ethics Guide that applies toour Principal Executive Officer, Principal Financial Officer, Principal Accounting Officer, Controller and other persons performing similar functions promptlyfollowing the date of such amendment or waiver. In addition, we have also posted copies of our Corporate Governance Principles and the Charters for our Audit,Compensation, Governance and Executive Committees on our website. ITEM 11 – Executive Compensation Information required under this item is contained in the sections entitled “Director Compensation," “Executive Compensation Information,” and "Pay Ratio" aspart of our 2021 Proxy Statement and is incorporated herein by reference. ITEM 12 – Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters Information required under this item is contained in the sections entitled “Security Ownership of Certain Beneficial Owners and Management” and "EquityCompensation Plan Information" as part of our 2021 Proxy Statement and are incorporated herein by reference. ITEM 13 – Certain Relationships and Related Transactions, and Director Independence Information required under this item is contained in the sections entitled “Director Independence” and “Related-Person Transaction Approval Policy” as part ofour 2021 Proxy Statement and is incorporated herein by reference. ITEM 14 – Principal Accountant Fees and Services Information required under this item is contained in the section entitled “Fees Paid to Independent Registered Public Accounting Firm” as part of our 2021Proxy Statement and is incorporated herein by reference. 57Table of Contents PART IV ITEM 15 – Exhibits and Financial Statement Schedules A.The following documents are filed as a part of this report: 1.Financial Statements Consolidated Financial Statements filed as part of this report are contained in Item 8 of this Annual Report on Form 10-K. 2.Financial Statement Schedule Schedule II - Valuation and Qualifying Accounts (In millions) 2020 2019 2018 Allowance for doubtful accounts: Balance at beginning of year $3.6 $2.5 $2.4 Charged to costs and expenses 2.2 2.5 0.4 Reclassification(1) — 0.5 0.8 Charged to other accounts(2) — — (0.2)Deductions(3) (1.2) (1.9) (0.9)Balance at end of year $4.6 $3.6 $2.5 Sales returns reserve: Balance at beginning of year $1.2 $1.3 $0.8 Charged to costs and expenses 0.2 0.1 0.7 Deductions(3) (0.4) (0.2) (0.2)Balance at end of year $1.0 $1.2 $1.3 Allowance for excess and obsolete inventories: Balance at beginning of year $9.8 $5.6 $4.1 Charged to costs and expenses 4.4 4.6 1.9 Charged to other accounts(2) 0.2 — (0.1)Deductions(4) (0.8) (0.4) (0.3)Balance at end of year $13.6 $9.8 $5.6 Valuation allowance for deferred tax assets: Balance at beginning of year $6.2 $11.5 $9.7 Charged to costs and expenses 0.9 (5.2) 2.4 Charged to other accounts(2) 0.4 (0.1) (0.6)Balance at end of year $7.5 $6.2 $11.5 (1)Includes amount reclassified between Allowance for Doubtful Accounts and Other Receivables related to a customer's open receivables balance for properclassification and acquisition-related adjustments. (2)Primarily includes impact from foreign currency fluctuations. (3)Includes accounts determined to be uncollectible and charged against reserves, net of collections on accounts previously charged against reserves. (4)Includes inventory identified as excess, slow moving or obsolete and charged against reserves. All other schedules are omitted because they are not applicable or the required information is shown in the Consolidated Financial Statements or notesthereto. 58Table of Contents 3.Exhibits Item # Description Method of Filing2.1 Share Purchase Agreement dated as of February 22, 2017, amongTennant Company, Ambienta SGR S.p.A., Federico De Angelis, PietroCorsano Annibaldi, Antonio Perosa and Giulio Vernazza Incorporated by reference to Exhibit 2.1 to the Company's Current Report on Form8-K filed February 28, 2017.3.1 Restated Articles of Incorporation Incorporated by reference to Exhibit 3i to the Company’s Form 10-Q for the quarterended June 30, 2006.3.2 Amended and Restated By-Laws Incorporated by reference to Exhibit 3iii to the Company’s Current Report on Form8-K dated December 14, 2010.3.3 Articles of Amendment of Restated Articles of Incorporation of TennantCompany Incorporated by reference to Exhibit 3iii to the Company's Form 10-Q for thequarter ended March 31, 2018.4.1 Description of Securities Incorporated by reference to Exhibit 4.1 to the Company's Annual Report on Form10-K for the year ended December 31, 2019.4.2 Indenture dated as of April 18, 2017 Incorporated by reference to Exhibit 4.1 to the Company's Current Report on Form8-K filed April 24, 2017.4.3 Registration Rights Agreement dated April 18, 2017 Incorporated by reference to Exhibit 4.2 to the Company's Current Report on Form8-K filed April 24, 2017.4.4 Form 5.625% Senior Note due 2025 Incorporated by reference to Exhibit 4(b)(1) to the Company's RegistrationStatement on Form S-4 filed January 8, 2018.10.1 Tennant Company Executive Nonqualified Deferred Compensation Plan,as restated effective January 1, 2009, as amended* Incorporated by reference to Exhibit 10.1 to the Company’s Form 10-Q for thequarter ended September 30, 2012.10.2 Form of Amended and Restated Management Agreement and ExecutiveEmployment Agreement* Incorporated by reference to Exhibit 10.3 to the Company's Form 10-K for the yearended December 31, 2011.10.3 Schedule of parties to Management and Executive EmploymentAgreement Incorporated by reference to Exhibit 10.3 to the Company's Form 10-K for the yearended December 31, 2019.10.4 Tennant Company Non-Employee Director Stock Option Plan (asamended and restated effective May 6, 2004)* Incorporated by reference to Exhibit 10.6 to the Company’s Form 10-Q for thequarter ended June 30, 2004.10.5 Tennant Company Amended and Restated 1999 Stock Incentive Plan* Incorporated by reference to Appendix A to the Company’s Proxy Statement for the2006 Annual Meeting of Shareholders filed on March 15, 2006.10.6 Tennant Company 2007 Stock Incentive Plan* Incorporated by reference to Appendix A to the Company’s Proxy Statement for the2007 Annual Meeting of Shareholders filed on March 15, 2007.10.7 Deferred Stock Unit Agreement (awards in and after 2008)* Incorporated by reference to Exhibit 10.17 to the Company's Form 10-K for theyear ended December 31, 2007.10.8 Tennant Company 2014 Short-Term Incentive Plan* Incorporated by reference to Appendix B to the Company's Proxy Statement for the2013 Annual Meeting of Shareholders filed on March 11, 2013.10.9 Amended and Restated 2010 Stock Incentive Plan, as Amended* Incorporated by reference to Appendix A to the Company's Proxy Statement for the2013 Annual Meeting of Shareholders filed on March 11, 2013.10.10 Credit Agreement dated as of April 4, 2017 Incorporated by reference to Exhibit 10.1 to the Company's Current Report onForm 8-K filed April 5, 2017.10.11 2017 Stock Incentive Plan* Incorporated by reference to Appendix A on the Company's Proxy Statement for the2017 Annual Meeting of Shareholders filed March 15, 2017. 59Table of Contents 10.12 Form of Tennant Company 2017 Stock Incentive Plan Non-Statutory StockOption Agreement* Incorporated by reference to Exhibit 10.3 to the Company's Form 10-Q for thequarter ended June 30, 2017.10.13 Form of Tennant Company 2017 Stock Incentive Plan Restricted StockAgreement* Incorporated by reference to Exhibit 10.4 to the Company's Form 10-Q for thequarter ended June 30, 2017.10.14 Form of Tennant Company 2017 Stock Incentive Plan Non-EmployeeDirector Restricted Stock Agreement* Incorporated by reference to Exhibit 10.5 to the Company's Form 10-Q for thequarter ended June 30, 2017.10.15 Form of Tennant Company 2017 Stock Incentive Plan Restricted StockUnit Agreement* Incorporated by reference to Exhibit 10.6 to the Company's Form 10-Q for thequarter ended June 30, 2017.10.16 Form of Tennant Company 2017 Stock Incentive Plan Non-EmployeeDirector Restricted Stock Unit Agreement* Incorporated by reference to Exhibit 10.1 to the Company's Form 10-Q for thequarter ended June 30, 2018.10.17 Tennant Company Executive Officer Cash Incentive Plan* Incorporated by reference to Exhibit 10.1 to the Company's Current Report onForm 8-K filed August 20, 2018.10.18 Tennant Company Executive Officer Severance Plan and Summary PlanDescription* Incorporated by reference to Exhibit 10.1 to the Company's Current Report onForm 8-K filed October 10, 2018.10.19 Separation Agreement by and between Tennant Company and Mary E.Talbott, dated July 8, 2020* Incorporated by reference to Exhibit 10 to the Company's Current Report on Form8-K filed July 10, 2020.10.20 Separation Letter with Keith Woodward dated May 4, 2020* Incorporated by reference to Exhibit 10.1 to the Company’s Form 10-Q for thequarter ended June 30, 2020.10.21 Cash Retention Award for Richard Zay dated May 1, 2020* Incorporated by reference to Exhibit 10.2 to the Company’s Form 10-Q for thequarter ended June 30, 2020.10.22 Tennant Company 2020 Stock Incentive Plan* Incorporated by reference to Exhibit 10.3 to the Company’s Form 10-Q for thequarter ended June 30, 2020.10.23 Form of Tennant Company 2020 Stock Incentive Plan Non-Statutory StockOption Agreement* Incorporated by reference to Exhibit 10.4 to the Company’s Form 10-Q for thequarter ended June 30, 2020.10.24 Form of Tennant Company 2020 Stock Incentive Plan Restricted StockAgreement* Incorporated by reference to Exhibit 10.5 to the Company’s Form 10-Q for thequarter ended June 30, 2020.10.25 Form of Tennant Company 2020 Stock Incentive Plan Restricted StockUnit Agreement* Incorporated by reference to Exhibit 10.6 to the Company’s Form 10-Q for thequarter ended June 30, 2020.10.26 Form of Tennant Company 2020 Stock Incentive Plan Non-EmployeeDirector Restricted Stock Unit Agreement* Incorporated by reference to Exhibit 10.7 to the Company’s Form 10-Q for thequarter ended June 30, 2020.10.27 Form of Tennant Company 2020 Stock Incentive Plan PerformanceRestricted Stock Unit Agreement* Incorporated by reference to Exhibit 10.8 to the Company’s Form 10-Q for thequarter ended June 30, 2020.10.28 Form of Tennant Company 2020 Stock Incentive Plan SpecialPerformance Restricted Stock Unit Agreement* Incorporated by reference to Exhibit 10.9 to the Company’s Form 10-Q for thequarter ended June 30, 2020.21 Subsidiaries of the Registrant Filed herewith electronically.22 Subsidiary Guarantors Filed herewith electronically.23.1 Consent of Deloitte & Touche LLP Independent Registered PublicAccounting Firm Filed herewith electronically.23.2 Consent of KPMG LLP Independent Registered Public Accounting Firm Filed herewith electronically.24.1 Powers of Attorney Included on signature page.31.1 Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer Filed herewith electronically.31.2 Rule 13a-14(a)/15d-14(a) Certification of Interim Chief Financial Officer Filed herewith electronically.32.1 Section 1350 Certification of Chief Executive Officer Filed herewith electronically.32.2 Section 1350 Certification of Interim Chief Financial Officer Filed herewith electronically.101 The following financial information from Tennant Company’s annualreport on Form 10-K for the period ended December 31, 2020, filed withthe SEC on February 25, 2021, formatted in Inline Extensible BusinessReporting Language (iXBRL): (i) the Consolidated Statements ofOperations for the years ended December 31, 2020, 2019, and 2018, (ii)the Consolidated Statements of Comprehensive Income for the yearsended December 31, 2020, 2019, and 2018, (iii) the ConsolidatedBalance Sheets as of December 31, 2020 and 2019, (iv) theConsolidated Statements of Cash Flows for the years ended December31, 2020, 2019, and 2018, (v) the Consolidated Statements of Equity forthe years ended December 31, 2020, 2019, and 2018, and (vi) Notes tothe Consolidated Financial Statements. Filed herewith electronically.104 Inline Extensible Business Reporting language (iXBRL) for the coverpage of this Annual Report on Form 10-K, included in Exhibit 101 Filed herewith electronically. * Management contract or compensatory plan or arrangement required to be filed as an exhibit to this annual report on Form 10-K. 60Table of Contents ITEM 16 – Form 10-K Summary None. 61Table of Contents SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on itsbehalf by the undersigned, thereunto duly authorized. TENNANT COMPANY By /s/ H. Chris Killingstad H. Chris Killingstad President, CEO and Board of Directors Date February 25, 2021 Each of the undersigned hereby appoints H. Chris Killingstad and Kristin A. Stokes, and each of them (with full power to act alone), as attorneys and agentsfor the undersigned, with full power of substitution, for and in the name, place and stead of the undersigned, to sign and file with the Securities and ExchangeCommission under the Securities Exchange Act of 1934, any and all amendments and exhibits to this annual report on Form 10-K and any and all applications,instruments, and other documents to be filed with the Securities and Exchange Commission pertaining to this annual report on Form 10-K or any amendmentsthereto, with full power and authority to do and perform any and all acts and things whatsoever requisite and necessary or desirable. Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf ofthe Registrant and in the capacities and on the dates indicated. By /s/ H. Chris Killingstad By /s/ Timothy R. Morse H. Chris Killingstad Timothy R. Morse President, CEO and Board of Directors Board of DirectorsDate February 25, 2021 Date February 25, 2021 By /s/ Thomas Paulson By /s/ Donal L. Mulligan Thomas Paulson Donal L. Mulligan Interim Chief Financial Officer and Interim PrincipalAccounting Officer Board of DirectorsDate February 25, 2021 Date February 25, 2021 By /s/ Azita Arvani By /s/ Steven A. Sonnenberg Azita Arvani Steven A. Sonnenberg Board of Directors Board of DirectorsDate February 25, 2021 Date February 25, 2021 By /s/ William F. Austen By /s/ David S. Wichmann William F. Austen David S. Wichmann Board of Directors Board of DirectorsDate February 25, 2021 Date February 25, 2021 By /s/ Carol S. Eicher By /s/ David Windley Carol S. Eicher David Windley Board of Directors Board of DirectorsDate February 25, 2021 Date February 25, 2021 By /s/ Maria C. Green Maria C. Green Board of Directors Date February 25, 2021 62

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