10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2016

or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-33209

ALTRA INDUSTRIAL MOTION CORP.

(Exact name of registrant as specified in its charter)

Delaware	61-1478870
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
300 Granite Street, Suite 201, Braintree, MA	02184
(Address of principal executive offices)	(Zip Code)

(781) 917-0600

(Registrant’s telephone number, including area code)

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

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

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

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☒

As of October 19, 2016, 25,884,323 shares of Common Stock, $0.001 par value per share, were outstanding.

TABLE OF CONTENTS

		Page #
PART I - FINANCIAL INFORMATION
Item 1.	Financial Statements (unaudited)	3
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	35
Item 4.	Controls and Procedures	35
PART II - OTHER INFORMATION
Item 1.	Legal Proceedings	36
Item 1A.	Risk Factors	36
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	36
Item 3.	Defaults Upon Senior Securities	37
Item 4.	Mine Safety Disclosures	37
Item 5.	Other Information	37
Item 6.	Exhibits	38
SIGNATURES		40
EXHIBITS		41
EX-31.1 Section 302 Certification of Chief Executive Officer
EX-31.2 Section 302 Certification of Chief Financial Officer
EX-32.1 Section 906 Certification of Chief Executive Officer
EX-32.2 Section 906 Certification of Chief Financial Officer
EX-101 Certain materials formatted in XBRL

2

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements (unaudited)

ALTRA INDUSTRIAL MOTION CORP.

Condensed Consolidated Balance Sheets

Amounts in thousands, except share amounts

	September 30, 2016			December 31, 2015
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	39,765		$	50,320
Trade receivables, less allowance for doubtful accounts of $2,150 and $2,165 at    September 30, 2016 and December 31, 2015, respectively		104,671			94,720
Inventories		121,443			121,156
Income tax receivable		2,644			5,146
Prepaid expenses and other current assets		10,486			11,217
Assets held for sale		4,732			4,597
Total current assets		283,741			287,156
Property, plant and equipment, net		142,748			145,413
Intangible assets, net		90,508			96,069
Goodwill		97,775			97,309
Deferred income taxes		3,197			3,201
Other non-current assets, net		2,489			3,184
Total assets	$	620,458		$	632,332
LIABILITIES, AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	41,845		$	40,297
Accrued payroll		22,141			22,312
Accruals and other current liabilities		36,721			34,990
Income tax payable		3,891			3,563
Current portion of long-term debt		400			3,187
Total current liabilities		104,998			104,349
Long-term debt - less current portion and net of unaccreted discount		209,754			231,568
Deferred income taxes		44,299			44,185
Pension liabilities		9,171			8,328
Long-term taxes payable		670			647
Other long-term liabilities		691			688
Stockholders’ equity:
Common stock ($0.001 par value, 90,000,000 shares authorized, 25,684,806 and    25,772,507 issued and outstanding at September 30, 2016 and December 31, 2015,    respectively)		26			26
Additional paid-in capital		122,203			124,834
Retained earnings		193,344			181,539
Accumulated other comprehensive loss		(64,698	)		(63,832	)
Total stockholders’ equity		250,875			242,567
Total liabilities, and stockholders’ equity	$	620,458		$	632,332

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

3

ALTRA INDUSTRIAL MOTION CORP.

Condensed Consolidated Statements of Operations

Amounts in thousands, except per share data

	Quarter Ended				Year to Date Ended
	September 30, 2016		September 30, 2015		September 30, 2016			September 30, 2015
	(Unaudited)		(Unaudited)		(Unaudited)			(Unaudited)
Net sales	$	173,132	$	183,053	$	536,259		$	573,024
Cost of sales		118,957		127,253		369,254			398,765
Gross profit		54,175		55,800		167,005			174,259
Operating expenses:
Selling, general and administrative expenses		36,142		34,279		105,548			105,733
Research and development expenses		4,267		4,210		13,345			13,506
Restructuring costs		3,397		651		6,591			4,994
		43,806		39,140		125,484			124,233
Income from operations		10,369		16,660		41,521			50,026
Other non-operating income and expense:
Interest expense, net		2,815		2,924		8,615			8,858
Other non-operating expense (income), net		45		685		(438	)		606
		2,860		3,609		8,177			9,464
Income before income taxes		7,509		13,051		33,344			40,562
Provision for income taxes		2,196		2,830		9,872			11,326
Net income		5,313		10,221		23,472			29,236
Net loss attributable to non-controlling interest		—		—		—			63
Net income attributable to Altra Industrial Motion Corp.	$	5,313	$	10,221	$	23,472		$	29,299
Weighted average shares, basic		25,726		26,145		25,684			26,140
Weighted average shares, diluted		26,021		26,145		25,813			26,184
Net income per share:
Basic net income attributable to Altra Industrial Motion Corp.	$	0.21	$	0.39	$	0.91		$	1.12
Diluted net income attributable to Altra Industrial Motion Corp.	$	0.20	$	0.39	$	0.91		$	1.12
Cash dividend declared	$	0.15	$	0.15	$	0.45		$	0.42

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

4

ALTRA INDUSTRIAL MOTION CORP.

Condensed Consolidated Statements of Comprehensive Income (Loss)

Amounts in thousands

	Quarter Ended					Year to Date Ended
	September 30, 2016		September 30, 2015			September 30, 2016			September 30, 2015
	(Unaudited)		(Unaudited)			(Unaudited)			(Unaudited)
Net Income	$	5,313	$	10,221		$	23,472		$	29,236
Other Comprehensive income (loss):
Foreign currency translation adjustment		104		(4,474	)		(866	)		(16,242	)
Change in fair value of interest rate swap, net of tax		—		(64	)		—			(283	)
Other comprehensive loss		104		(4,538	)		(866	)		(16,525	)
Comprehensive income		5,417		5,683			22,606			12,711
Comprehensive loss attributable to non-controlling interest		—		—			—			(192	)
Comprehensive income attributable to Altra Industrial    Motion Corp.	$	5,417	$	5,683		$	22,606		$	12,903

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

5

ALTRA INDUSTRIAL MOTION CORP.

Condensed Consolidated Statements of Cash Flows

Amounts in thousands

	Year to Date Ended
	September 30, 2016			September 30, 2015
	(Unaudited)			(Unaudited)
Cash flows from operating activities
Net income	$	23,472		$	29,236
Adjustments to reconcile net income to net cash flows:
Depreciation		16,235			16,232
Amortization of intangible assets		6,384			6,437
Amortization of deferred financing costs		590			689
Gain on foreign currency, net		(130	)		(128	)
Accretion of debt discount, net		2,970			2,740
Loss on disposal / impairment of fixed assets		582			856
Stock based compensation		3,370			3,231
Changes in assets and liabilities:
Trade receivables		(10,461	)		(1,552	)
Inventories		(837	)		2,367
Accounts payable and accrued liabilities		3,226			7,106
Other current assets and liabilities		728			(2,609	)
Other operating assets and liabilities		765			(1,060	)
Net cash provided by operating activities		46,894			63,545
Cash flows from investing activities
Purchase of property, plant and equipment		(15,684	)		(19,181	)
Proceeds from sale of land		—			1,201
Net cash used in investing activities		(15,684	)		(17,980	)
Cash flows from financing activities
Payments on term loan facility		—			(16,027	)
Payments on Revolving Credit Facility		(30,870	)		(9,000	)
Dividend payments		(7,784	)		(7,130	)
Proceeds from equipment and working capital notes		2,893			1,100
Borrowing under Revolving Credit Facility		3,000			6,000
Payments of equipment and working capital notes		(2,832	)		(3,639	)
Proceeds from mortgages and other debt		—			7,085
Shares surrendered for tax withholding		(1,288	)		(1,182	)
Payments on mortgages and other debt		(349	)		(352	)
Purchase of non-controlling interest		—			(878	)
Purchases of common stock under share repurchase program		(4,713	)		(14,285	)
Net cash used in financing activities		(41,943	)		(38,308	)
Effect of exchange rate changes on cash and cash equivalents		178			(5,111	)
Net change in cash and cash equivalents		(10,555	)		2,146
Cash and cash equivalents at beginning of year		50,320			47,503
Cash and cash equivalents at end of period	$	39,765		$	49,649
Cash paid during the period for:
Interest	$	5,856		$	5,995
Income taxes	$	7,665		$	10,833

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

6

ALTRA INDUSTRIAL MOTION CORP.

Consolidated Statements of Stockholders’ Equity

Amounts in thousands

(Unaudited)

	Common Stock		Shares			Additional Paid in Capital			Retained Earnings			Accumulated Other Comprehensive Loss			Total			Redeemable Non- Controlling Interest
Balance at January 1, 2015	$	26		26,354		$	139,087		$	161,061		$	(41,415	)	$	258,759		$	883
Stock-based compensation and vesting    of restricted stock		—		76			2,049			—			—			2,049			—
Net income attributable to Altra    Industrial Motion Corp.		—		—			—			29,299			—			29,299			—
Net loss attributable to Minority Interest		—		—			—			—			—			—			(63	)
Purchase of Minority Interest		—		—			223						(410	)		(187	)		(691	)
Dividends declared		—		—			—			(11,038	)					(11,038	)		—
Change in fair value of interest rate    swap		—		—			—			—			(283	)		(283	)		—
Cumulative foreign currency    translation adjustment		—		—			—			—			(16,242	)		(16,242	)		(129	)
Repurchases of common    stock - 547,780 shares		—		(548	)		(14,285	)		—			—			(14,285	)		—
Balance at September 30, 2015	$	26		25,882			127,074			179,322			(58,350	)		248,072			—
Balance at January 1, 2016	$	26		25,773		$	124,834		$	181,539		$	(63,832	)	$	242,567		$	—
Stock-based compensation and vesting    of restricted stock		—		89			2,082			—			—			2,082			—
Net income attributable to Altra    Industrial Motion Corp.		—		—			—			23,472			—			23,472			—
Dividends declared		—		—			—			(11,667	)		—			(11,667	)		—
Cumulative foreign currency    translation adjustment		—		—			—			—			(866	)		(866	)		—
Repurchases of common    stock - 177,053 shares		—		(177	)		(4,713	)		—			—			(4,713	)		—
Balance at September 30, 2016	$	26		25,685		$	122,203		$	193,344		$	(64,698	)	$	250,875		$	—

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

7

ALTRA INDUSTRIAL MOTION CORP.

Notes to Unaudited Condensed Consolidated Interim Financial Statements

Amounts in thousands, unless otherwise noted

1. Organization and Nature of Operations

Headquartered in Braintree, Massachusetts, Altra Industrial Motion Corp. (the “Company”) is a leading multi-national designer, producer and marketer of a wide range of electro-mechanical power transmission products. The Company brings together strong brands covering over 42 product lines with production facilities in twelve countries. Altra’s leading brands include Ameridrives Couplings, Bauer Gear Motor, Bibby Turboflex, Boston Gear, Delroyd Worm Gear, Formsprag Clutch, Guardian Couplings, Huco, Industrial Clutch, Inertia Dynamics, Kilian Manufacturing, Lamiflex Couplings, Marland Clutch, Matrix, Nuttall Gear, Stieber Clutch, Svendborg Brakes, TB Wood’s, Twiflex, Warner Electric, Warner Linear, and Wichita Clutch.

2. Basis of Presentation

The Company’s unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and do not include all of the information and note disclosures required by accounting principles generally accepted in the United States of America. These statements should be read in conjunction with the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015. In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments, consisting of normal recurring adjustments, necessary to present fairly the Company’s financial position for the interim periods presented, and cash flows for the interim periods presented.  The results are not necessarily indicative of future results.  The Company considers events or transactions that occur after the balance sheet date but before the financial statements are issued to provide additional evidence relative to certain estimates or to identify matters that require additional disclosure.

3. Recent Accounting Pronouncements

In August 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2016-15, Statement of Cash Flows (Topic 230): Classification of certain cash receipts and cash payments (a consensus of the emerging issues task force) (“ASU 2016-15”). This ASU addresses the following eight specific cash flow issues: Debt prepayment or debt extinguishment costs; settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing; contingent consideration payments made after a business combination; proceeds from the settlement of insurance claims; proceeds from the settlement of corporate-owned life insurance policies (including bank-owned life insurance policies); distributions received from equity method investees; beneficial interests in securitization transactions; and separately identifiable cash flows and application of the predominance principle. This guidance will be effective for the Company on January 1, 2018. We are currently evaluating the impact this guidance will have on our consolidated financial statements.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). ASU 2016-13 is intended to provide more decision-useful information about expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date.  The main provisions include presenting financial assets measured at amortized cost at the amount expected to be collected, which is net of an allowance for credit losses, and recording credit losses related to available-for-sale securities through an allowance for credit losses.  The amendments in ASU 2016-13 are effective for fiscal years beginning after December 15, 2019, and must be applied using a modified retrospective approach with earlier adoption permitted for fiscal years beginning after December 15, 2018. We are currently evaluating the impact this guidance will have on our consolidated financial statements.

In March 2016, the FASB issued ASU 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting (“ASU 2016-09”). The updated guidance revises aspects of stock-based compensation guidance which include income tax consequences, classification of awards as equity or liabilities, and classification on the statement of cash flows. The new standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016. Early adoption is permitted. We are evaluating the impact of adopting this new accounting guidance on our consolidated financial statements.

In February 2015, the FASB issued ASU 2016-02, Leases (Topic 842) (“ASU 2016-02”). The ASU requires management to recognize lease assets and lease liabilities by lessees for all operating leases. The ASU is effective for periods beginning after December 15, 2018 and interim periods therein on a modified retrospective basis. We are currently evaluating the impact this guidance will have on our consolidated financial statements.

8

ALTRA INDUSTRIAL MOTION CORP.

Notes to Unaudited Condensed Consolidated Interim Financial Statements

Amounts in thousands, unless otherwise noted

In May 2014, the FASB issued ASU No. 2014-09 Revenue from Contracts with Customers (“ASU 2014-09”). ASU 2014-09 provides a single principles-based, five-step model to be applied to all contracts with customers. The five steps are to (i) identify the contracts with the customer, (ii) identify the performance obligations in the contact, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract and (v) recognize revenue when each performance obligation is satisfied. Revenue will be recognized when promised goods or services are transferred to the customer in an amount that reflects the consideration expected in exchange for those goods or services. In July 2015, the FASB agreed to delay the effective date of ASU 2014-09 for one year and to permit early adoption by entities as of the original effective dates. Considering the one year deferral, ASU 2014-09 will be effective for the Company beginning on January 1, 2018 and the standard allows for either full retrospective adoption or modified retrospective adoption. The Company is continuing to evaluate the impact that the adoption of this guidance will have on our financial condition, results of operations and the presentation of our consolidated financial statements.

4. Fair Value of Financial Instruments

Fair value is determined based upon the exit price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants, as determined by either the principal market or the most advantageous market. Inputs used in the valuation techniques to derive fair values are classified based on a three-level hierarchy, as follows:

• Level 1- Quoted prices in active markets for identical assets or liabilities.

• Level 2- Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets with insufficient volume or infrequent transactions (less active markets); or model-derived

• Level 3- Unobservable inputs to the valuation methodology that are significant to the measurement of fair value of assets or liabilities.

The Company considers all highly liquid investments purchased with a remaining maturity of three months or less to be cash equivalents.

The carrying values of financial instruments, including accounts receivable, cash equivalents, accounts payable, and other accrued liabilities approximate fair value. Debt under the Company’s 2015 Credit Agreement approximates the fair value due to the variable rate nature at current market rates.

The carrying amount of the 2.75% Convertible Notes (the “Convertible Notes”) was $85 million at both September 30, 2016 and December 31, 2015. The estimated fair value of the Convertible Notes at September 30, 2016 and December 31, 2015 was $101.6 million and $91.7 million, respectively, based on inputs other than quoted prices that are observable for the Convertible Notes (Level 2).

Included in cash and cash equivalents at September 30, 2016 and December 31, 2015 are money market fund investments of $0.3 million, which are reported at fair value based on quoted market prices for such investments (Level 1).

5. Changes in Accumulated Other Comprehensive Loss by Component

The following is a reconciliation of changes in accumulated other comprehensive loss by component for the periods presented:

	Gains and Losses on Cash Flow Hedges			Defined Benefit Pension Plans			Cumulative Foreign Currency Translation Adjustment			Total
Accumulated Other Comprehensive Loss by Component,    January 1, 2016	$	(140	)	$	(5,807	)	$	(57,885	)	$	(63,832	)
Net current-period Other Comprehensive Income (Loss)		—			134			(1,000	)		(866	)
Accumulated Other Comprehensive Loss by Component,    September 30, 2016	$	(140	)	$	(5,673	)	$	(58,885	)	$	(64,698	)

9

ALTRA INDUSTRIAL MOTION CORP.

Notes to Unaudited Condensed Consolidated Interim Financial Statements

Amounts in thousands, unless otherwise noted

	Gains and Losses on Cash Flow Hedges			Defined Benefit Pension Plans			Cumulative Foreign Currency Translation Adjustment			Total
Accumulated Other Comprehensive Income (Loss) by    Component, January 1, 2015	$	143		$	(4,818	)	$	(36,740	)	$	(41,415	)
Cumulative losses transferred from Lamiflex		—			—			(410	)		(410	)
Net current-period Other Comprehensive Loss		(283	)		—			(16,242	)		(16,525	)
Accumulated Other Comprehensive Loss by Component,    September 30, 2015	$	(140	)	$	(4,818	)	$	(53,392	)	$	(58,350	)

6. Net Income per Share

Basic earnings per share is based on the weighted average number of shares of common stock outstanding, and diluted earnings per share is based on the weighted average number of shares of common stock outstanding and all potentially dilutive common stock equivalents outstanding. Common stock equivalents are included in the per share calculations when the effect of their inclusion is dilutive.

The following is a reconciliation of basic to diluted net income per share:

	Quarter Ended				Year to Date Ended
	September 30, 2016		September 30, 2015		September 30, 2016		September 30, 2015
Net income attributable to Altra Industrial Motion Corp.	$	5,313	$	10,221	$	23,472	$	29,299
Shares used in net income per common share - basic		25,726		26,145		25,684		26,140
Dilutive effect of the equity premium on Convertible Notes    at the average price of common stock		295		-		123		38
Incremental shares of unvested restricted common stock		-		-		6		6
Shares used in net income per common share - diluted		26,021		26,145		25,813		26,184
Earnings per share:
Basic net income attributable to Altra Industrial    Motion Corp.	$	0.21	$	0.39	$	0.91	$	1.12
Diluted net income attributable to Altra Industrial    Motion Corp.	$	0.20	$	0.39	$	0.91	$	1.12

During the quarter ended September 30, 2016, the Company’s common stock price exceeded the current conversion price of the Company’s Convertible Notes, resulting in additional shares being included in net income per common share in the diluted earnings per share calculation above.

7. Inventories

Inventories at September 30, 2016 and December 31, 2015 consisted of the following:

	September 30, 2016		December 31, 2015
Raw materials	$	35,758	$	34,169
Work in process		11,915		12,864
Finished goods		73,770		74,123
	$	121,443	$	121,156

10

ALTRA INDUSTRIAL MOTION CORP.

Notes to Unaudited Condensed Consolidated Interim Financial Statements

Amounts in thousands, unless otherwise noted

8. Goodwill and Intangible Assets

Changes in goodwill from January 1, through September 30, 2016 were as follows:

	Couplings, Clutches & Brakes		Electromagnetic Clutches & Brakes		Gearing		Total
Net goodwill balance January 1, 2016	$	25,290	$	24,661	$	47,358	$	97,309
Impact of changes in foreign currency and other		136		29		301		466
Net goodwill balance September 30, 2016	$	25,426	$	24,690	$	47,659	$	97,775

Other intangible assets as of September 30, 2016 and December 31, 2015 consisted of the following:

	September 30, 2016						December 31, 2015
	Cost		Accumulated Amortization		Net		Cost		Accumulated Amortization		Net
Other intangible assets
Intangible assets not subject to amortization:
Tradenames and trademarks	$	39,305	$	—	$	39,305	$	39,625	$	—	$	39,625
Intangible assets subject to amortization:
Customer relationships		113,309		62,744	$	50,565		112,408		56,677		55,731
Product technology and patents		6,111		5,473	$	638		6,049		5,336		713
Total intangible assets	$	158,725	$	68,217	$	90,508	$	158,082	$	62,013	$	96,069

The Company recorded $2.1 million of amortization expense in each of the quarters ended September 30, 2016 and 2015, and recorded $6.4 of amortization in each of the year to date periods ended September 30, 2016 and 2015.

The estimated amortization expense for intangible assets is approximately $2.0 million for the remainder of 2016, $8.3 million in each of the next four years and then $16.1 million thereafter.

9. Warranty Costs

The contractual warranty period of the Company's products generally ranges from three months to two years with certain warranties extending for longer periods. Estimated expenses related to product warranties are accrued at the time products are sold to customers and are recorded in accruals and other current liabilities on the unaudited condensed consolidated balance sheet. Estimates are established using historical information as to the nature, frequency and average costs of warranty claims. Changes in the carrying amount of accrued product warranty costs for each of the year-to-date periods ended September 30, 2016 and September 30, 2015 are as follows:  

	September 30, 2016			September 30, 2015
Balance at beginning of period	$	9,468		$	7,792
Accrued current period warranty expense		1,732			3,641
Payments and adjustments		(2,700	)		(1,760	)
Balance at end of period	$	8,500		$	9,673

11

ALTRA INDUSTRIAL MOTION CORP.

Notes to Unaudited Condensed Consolidated Interim Financial Statements

Amounts in thousands, unless otherwise noted

10. Debt

Outstanding debt obligations at September 30, 2016 and December 31, 2015 were as follows.

	September 30, 2016			December 31, 2015
Debt:
Revolving Credit Facility	$	117,509		$	145,152
Convertible Notes		85,000			85,000
Mortgages		13,339			10,333
Equipment and working capital notes		—			2,832
Capital leases		398			500
Total debt		216,246			243,817
Less: debt discount, net of accretion		(6,092	)		(9,062	)
Total debt, net of unaccreted discount	$	210,154		$	234,755
Less current portion of long-term debt		(400	)		(3,187	)
Total long-term debt, net of unaccreted discount	$	209,754		$	231,568

Second Amended and Restated Credit Agreement

On October 22, 2015, the Company entered into a Second Amended and Restated Credit Agreement by and among the Company, Altra Industrial Motion Netherlands, B.V. (“Altra Netherlands”), one of the Company’s foreign subsidiaries (collectively with the Company, the “Borrowers”), the lenders party to the Second Amended and Restated Credit Agreement from time to time (collectively, the “Lenders”), J.P. Morgan Securities LLC, Wells Fargo Securities, LLC, and KeyBanc Capital Markets, Inc., as joint lead arrangers and joint bookrunners, and JPMorgan Chase Bank, N.A., as administrative agent (the “Administrative Agent”), to be guaranteed through a Guarantee Agreement by certain domestic subsidiaries of the Company (each a “Guarantor” and collectively the “Guarantors”; the Guarantors collectively with the Borrowers, the “Loan Parties”), and which may be amended from time to time (the “2015 Credit Agreement”). The 2015 Credit Agreement amends and restates the Company’s former Amended and Restated Credit Agreement, dated as of December 6, 2013, as amended (the “2013 Credit Agreement”), by and among the Company, and certain of its domestic subsidiaries, including former subsidiary Altra Power Transmission, Inc., the lenders party to the Amended and Restated Credit Agreement from time to time (the “Former Lenders”), J.P. Morgan Securities LLC, Wells Fargo Securities, LLC, and KeyBanc Capital Markets, Inc., as joint lead arrangers and joint bookrunners, and the Administrative Agent, guaranteed by certain domestic subsidiaries of the Company. The 2013 Credit Agreement itself was an amendment and restatement of a prior credit agreement. Pursuant to the 2013 Credit Agreement, the Former Lenders had made available to the Borrowers a revolving credit facility (the “Prior Revolving Credit Facility”) of $200 million, which continued in effect an existing term loan then having a balance of approximately $94 million, and made an additional term loan of €50 million to Altra Netherlands. The two term loans described in the prior sentence are collectively referred to as the “Term Loans.”

Under the 2015 Credit Agreement, the amount of the Prior Revolving Credit Facility was increased to $350 million (the “2015 Revolving Credit Facility”). The amounts available under the 2015 Revolving Credit Facility can be used for general corporate purposes, including acquisitions, and to repay existing indebtedness. A portion of the 2015 Revolving Credit Facility was used to repay the Term Loans. The Company wrote off approximately $0.5 million of previously recognized deferred financing costs in connection with the repayment.

The stated maturity of the 2015 Revolving Credit Facility was extended to October 22, 2020. The maturity of the Prior Revolving Credit Facility had been December 6, 2018. The 2015 Credit Agreement continues to provide for a possible expansion of the credit facilities by an additional $150 million, which can be allocated as additional term loans and/or additional revolving credit loans.

The amounts available under the 2015 Revolving Credit Facility may be drawn upon in accordance with the terms of the 2015 Credit Agreement. All amounts outstanding under the 2015 Revolving Credit Facility are due on the stated maturity or such earlier time, if any, required under the 2015 Credit Agreement. The amounts owed under the 2015 Revolving Credit Facility may be prepaid at any time, subject to usual notification and breakage payment provisions. Interest on the amounts outstanding under the 2015 Revolving Credit Facility is calculated using either an ABR Rate or Eurodollar Rate, plus the applicable margin. The applicable margins for Eurodollar Loans are between 1.25% to 2.00%, and for ABR Loans are between 0.25% and 1.00%. The amounts of the

12

ALTRA INDUSTRIAL MOTION CORP.

Notes to Unaudited Condensed Consolidated Interim Financial Statements

Amounts in thousands, unless otherwise noted

margins are calculated based on either a consolidated total net leverage ratio (as defined in the 2015 Credit Agreement), or the then applicable rating(s) of the Company’s debt and then to the extent as provided in the 2015 Credit Agreement. The rate at December 31, 2015 was 1.5%.  A portion of the 2015 Revolving Credit Facility may also be used for the issuance of letters of credit, and a portion of the amount of the 2015 Revolving Credit Facility is available for borrowings in certain agreed upon foreign currencies. The 2015 Credit Agreement contains various affirmative and negative covenants and restrictions, which among other things, will require the Borrowers to provide certain financial reports to the Lenders, require the Company to maintain certain financial covenants relating to consolidated leverage and interest coverage, limit maximum annual capital expenditures, and limit the ability of the Company and its subsidiaries to incur or guarantee additional indebtedness, pay dividends or make other equity distributions, purchase or redeem capital stock or debt, make certain investments, sell assets, engage in certain transactions, and effect a consolidation or merger. The 2015 Credit Agreement also contains customary events of default.

Ratification Agreement

Pursuant to an Omnibus Reaffirmation and Ratification and Amendment of Collateral Documents entered into on October 22, 2015 in connection with the 2015 Credit Agreement by and among the Company, the Loan Parties and the Administrative Agent (the “Ratification Agreement”), the Loan Parties (exclusive of the foreign subsidiary Borrower) have reaffirmed their obligations to the Lenders under the Pledge and Security Agreement dated November 20, 2012 (the “Pledge and Security Agreement”), pursuant to which each Loan Party pledges, assigns and grants to the Administrative Agent, on behalf of and for the ratable benefit of the Lenders, a security interest in all of its right, title and interest in, to and under all personal property, whether now owned by or owing to, or after acquired by or arising in favor of such Loan Party (including under any trade name or derivations), and whether owned or consigned by or to, or leased from or to, such Loan Party, and regardless of where located, except for specific excluded personal property identified in the Pledge and Security Agreement (collectively, the “Collateral”). Notwithstanding the foregoing, the Collateral does not include, among other items, more than 65% of the capital stock of the first tier foreign subsidiaries of the Company. The Pledge and Security Agreement contains other customary representations, warranties and covenants of the parties. The 2015 Credit Agreement provides that the obligation to grant the security interest can cease upon the obtaining of certain corporate family credit ratings for the Company, but the obligation to grant a security interest is subject to subsequent reinstatement if the ratings are not maintained as provided in the 2015 Credit Agreement.

Pursuant to the Ratification Agreement, the Loan Parties (other than the foregoing subsidiary Borrower) have also reaffirmed their obligations under each of the Patent Security Agreement and a Trademark Security Agreement in favor of the Administrative Agent dated November 20, 2012 (the “2012 Security Agreements”) pursuant to which each of the Loan Parties signatory thereto pledges, assigns and grants to the Administrative Agent, on behalf of and for the ratable benefit of the Lenders, a security interest in all of its right, title and interest in, to and under all registered patents, patent applications, registered trademarks and trademark applications owned by such Loan Parties.

Additional Trademark Security Agreement and Patent Security Agreement

In connection with the reaffirmation of the Pledge and Security Agreement, certain of the Loan Parties delivered a new Patent Security Agreement and a new Trademark Security Agreement in favor of the Administrative Agent pursuant to which each of the Loan Parties signatory thereto pledges, assigns and grants to the Administrative Agent, on behalf of and for the ratable benefit of the Lenders, a security interest in all of its right, title and interest in, to and under all registered patents, patent applications, registered trademarks and trademark applications owned by such Loan Parties and not covered by the 2012 Security Agreements.

As of September 30, 2016 we had $117.5 million outstanding on our 2015 Revolving Credit Facility, including $109.2 million outstanding on our USD tranche at an interest rate of 2.0% and $8.3 million outstanding on our Euro tranche at an interest rate of 1.5%. As of September 30, 2016 and December 31, 2015, we had $4.1 million and $7.0 million in letters of credit outstanding, respectively. We had $228.4 million available to borrow under the 2015 Revolving Credit Facility at September 30, 2016.

Convertible Senior Notes

In March 2011, the Company issued the Convertible Notes due March 1, 2031. The Convertible Notes are guaranteed by the Company’s U.S. domestic subsidiaries. Interest on the Convertible Notes is payable semi-annually in arrears, on March 1 and September 1 of each year, commencing on September 1, 2011 at an annual rate of 2.75%. Proceeds from the offering were $81.3 million, net of fees and expenses that were capitalized. The proceeds from the offering were used to fund the acquisition of substantially all of the assets and liabilities of Danfoss Bauer GmbH relating to its gear motor business, as well as bolster the Company’s cash position.

13

ALTRA INDUSTRIAL MOTION CORP.

Notes to Unaudited Condensed Consolidated Interim Financial Statements

Amounts in thousands, unless otherwise noted

The Convertible Notes will mature on March 1, 2031, unless earlier redeemed, repurchased by the Company or converted, and are convertible into cash or shares, or a combination thereof, at the Company’s election. The Convertible Notes are convertible into shares of the Company’s common stock based on an initial conversion rate, subject to adjustment, of 36.0985 shares per $1,000 principal amount of notes (which represents an initial conversion price of approximately $27.70 per share of our common stock), in certain circumstances. The conversion price at September 30, 2016 is $25.70 per share. Prior to March 1, 2030, the Convertible Notes are convertible only in the following circumstances: (1) during any fiscal quarter commencing after June 30, 2011 if the last reported sale price of the Company’s common stock is greater than or equal to 130% of the applicable conversion price for at least 20 trading days in the period of 30 consecutive trading days ending on the last trading day of the preceding fiscal quarter; (2) during the 5 business day period after any 10 consecutive trading day period (the “measurement period”) in which the trading price per $1,000 principal amount of notes for each trading day in the measurement period was less than 97% of the product of the last reported sale price of the Company’s common stock and the conversion rate on such trading day; (3) if the Convertible Notes have been called for redemption; or (4) upon the occurrence of specified corporate transactions. On or after March 1, 2030, and ending at the close of business on the second business day immediately preceding the maturity date, holders may convert their Convertible Notes at any time, regardless of the foregoing circumstances. Upon conversion, the Company will pay or deliver, as the case may be, cash, shares of common stock, or a combination thereof, at the Company’s election. The Company intends to settle the principal amount in cash and any additional amounts in shares of stock.

If a fundamental change occurs, the Convertible Notes are redeemable at a price equal to 100% of the principal amount of the notes to be repurchased, plus accrued and unpaid interest (including contingent interest and additional interest, if any) to, but excluding, the repurchase date. The Convertible Notes are also redeemable on each of March 1, 2018, March 1, 2021, and March 1, 2026 for cash at a price equal to 100% of the principal amount of the notes to be repurchased, plus accrued and unpaid interest (including contingent interest and additional interest, if any) to, but excluding, the option repurchase date.

As of March 1, 2015, the Company may call all or part of the Convertible Notes at a redemption price equal to 100% of the principal amount of the Convertible Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date, plus a “make-whole premium” payment in cash, shares of the Company’s common stock, or combination thereof, at the Company’s option, equal to the sum of the present values of the remaining scheduled payments of interest on the Convertible Notes to be redeemed through March 1, 2018 to, but excluding, the redemption date, if the last reported sale price of the Company’s common stock for 20 or more trading days in a period of 30 consecutive trading days ending on the trading day prior to the date the Company provides notice of redemption exceeds 130% of the conversion price in effect on each such trading day. On or after March 1, 2018, the Company may redeem for cash all or a portion of the notes at a redemption price of 100% of the principal amount of the Convertible Notes to be redeemed, plus accrued and unpaid interest (including contingent and additional interest, if any) to, but not including, the redemption date.

The Company separately accounted for the debt and equity components of the Convertible Notes to reflect the issuer’s non-convertible debt borrowing rate, which interest costs are to be recognized in subsequent periods. The note payable principal balance at the date of issuance of $85 million was bifurcated into a debt component of $60.5 million and an equity component of $24.5 million. The difference between the note payable principal balance and the value of the debt component is being accreted to interest expense over the term of the notes. The debt component was recognized at the present value of associated cash flows discounted using a 8.25% discount rate, the borrowing rate at the date of issuance for a similar debt instrument without a conversion feature. The Company paid approximately $3.7 million of issuance costs associated with the Convertible Notes. The Company recorded $1.0 million of debt issuance costs as an offset to additional paid-in capital. The balance of $2.7 million of debt issuance costs is classified as other non-current assets and will be amortized over the term of the notes using the effective interest method.

Because the last reported sale price of the Company's common stock did not exceed 130% of the current conversion price, which was $25.70, for at least 20 of the last 30 consecutive trading days in the fiscal quarter ended September 30, 2016, the Convertible Notes are not convertible at the election of the holders of the Convertible Notes at any time during the fiscal quarter ending December 31, 2016.  The future convertibility will be monitored at each quarterly reporting date and will be analyzed dependent upon market prices of the Company’s common stock during the prescribed measurement periods.

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ALTRA INDUSTRIAL MOTION CORP.

Notes to Unaudited Condensed Consolidated Interim Financial Statements

Amounts in thousands, unless otherwise noted

The carrying amount of the principal amount of the liability component, the unamortized discount, and the net carrying amount are as follows.

	Year to Date Ended
	September 30, 2016		December 31, 2015
Principal amount of debt	$	85,000	$	85,000
Unamortized discount		6,092		9,062
Carrying value of debt	$	78,908	$	75,938

Interest expense associated with the Convertible Notes consists of the following components.

	Quarter Ended
	September 30, 2016		September 30, 2015
Contractual coupon rate of interest	$	584	$	586
Accretion of Convertible Notes discount and amortization of    deferred financing costs		1,097		840
Interest expense for the convertible notes	$	1,681	$	1,426

	Year to Date Ended
	September 30, 2016		September 30, 2015
Contractual coupon rate of interest	$	1,753	$	1,753
Accretion of Convertible Notes discount and amortization of    deferred financing costs		3,237		2,740
Interest expense for the convertible notes	$	4,990	$	4,493

The effective interest yield of the Convertible Notes due in 2031 is 8.5% at September 30, 2016 and the cash coupon interest rate is 2.75%.             

Mortgages

Heidelberg Germany

During 2015, a foreign subsidiary of the Company entered into a mortgage with a bank for €1.5 million, or $1.7 million, secured by its facility in Heidelberg, Germany to replace its previously existing mortgage. The mortgage has an interest rate of 1.79%, which is payable in monthly installments through August 2023.  The mortgage has a remaining principal balance of € 1.3 million, or $1.5 million, at September 30, 2016.

Esslingen Germany

During 2015, a foreign subsidiary of the Company entered into a mortgage with a bank for €6.0 million, or $6.8 million, secured by its facility in Esslingen, Germany. The mortgage has an interest rate of 2.5% per year, which is payable in annual interest payments of €0.1 million, or $0.1 million, to be paid in monthly installments. The mortgage has a remaining principal balance of €6.0 million, or $6.7 million, at September 30, 2016. The principal portion of the mortgage will be due in a lump-sum payment in May 2019.

During the quarter ended March 31, 2016, a foreign subsidiary of the Company entered in to a loan with a bank to equip its facility in Zlate Moravce, Slovakia. As of September 30, 2016, the total available to borrow was €3.0 million, or $3.4 million, and is guaranteed by land security at its parent company facility in Esslingen, Germany. The loan is due in installments from 2016 through 2020, with an interest rate of 1.95%.

15

ALTRA INDUSTRIAL MOTION CORP.

Notes to Unaudited Condensed Consolidated Interim Financial Statements

Amounts in thousands, unless otherwise noted

Angers France

During 2015, a foreign subsidiary of the Company entered into a mortgage with a bank for €2.0 million, or $2.2 million, secured by its facility in in Angers, France. The mortgage has an interest rate of 1.85% per year which is payable in monthly installments from June 2016 until May 2025.  The mortgage has a balance of €2.0 million, or $2.2 million, at September 30, 2016.

Capital Leases

The Company leases certain equipment under capital lease arrangements, whose obligations are included in both short-term and long-term debt. Capital lease obligations amounted to approximately $0.4 million at September 30, 2016 and approximately $0.5 million at December 31, 2015.  Assets subject to capital leases are included in property, plant and equipment with the related amortization recorded as depreciation expense.

Overdraft Agreements

Certain of our foreign subsidiaries maintain overdraft agreements with financial institutions. There were no borrowings as of September 30, 2016 or December 31, 2015 under any of the overdraft agreements.

11. Stockholders’ Equity

Stock-Based Compensation

The Company’s 2004 Equity Incentive Plan (the “2004 Plan”) permitted the grant of various forms of stock based compensation to our officers and senior level employees. The 2004 Plan expired in 2014 and, upon expiration, there were 750,576 shares subject to outstanding awards under the 2004 Plan. The 2014 Omnibus Incentive Plan (the “2014 Plan”) was approved by the Company’s shareholders at its 2014 annual meeting. The 2014 Plan provides for various forms of stock based compensation to our directors, executive personnel and other key employees and consultants. Under the 2014 Plan, the total number of shares of common stock available for delivery pursuant to the grant of awards (“Awards”) was originally 750,000. Shares of our common stock subject to Awards awarded under the 2004 Plan and outstanding as of the effective date of the 2014 Plan (except for substitute awards) that terminate without being exercised, expire, are forfeited or canceled, are exchanged for Awards that did not involve shares of common stock, are not issued on the stock settlement of a stock appreciation right, are withheld by the Company or tendered by a participant (either actually or by attestation) to pay an option exercise price or to pay the withholding tax on any Award, or are settled in cash in lieu of shares will again be available for Awards under the 2014 Plan.

The restricted shares issued pursuant to the 2014 Plan generally vest ratably over a period ranging from immediately to five years from the date of grant, provided, that the vesting of the restricted shares may accelerate upon the occurrence of certain events. Common stock awarded under the 2014 Plan is generally subject to restrictions on transfer, repurchase rights, and other limitations and rights as set forth in the applicable award agreements. The shares are valued based on the share price on the date of grant.

The 2014 Plan permits the Company to grant, among other things, restricted stock, restricted stock units, and performance share awards to key employees and other persons who make significant contributions to the success of the Company. The restrictions and vesting schedule for restricted stock granted under the 2014 Plan are determined by the Personnel and Compensation Committee of the Board of Directors.

Stock-based compensation expense recorded during the year-to-date periods ended September 30, 2016 and September 30, 2015, was $3.4 million and $3.2 million, respectively.  The Company recognizes stock-based compensation expense on a straight-line basis for the shares vesting ratably under the plan and uses the graded-vesting method of recognizing stock-based compensation expense for the performance share awards based on the probability of the specific performance metrics being achieved over the requisite service period.

16

ALTRA INDUSTRIAL MOTION CORP.

Notes to Unaudited Condensed Consolidated Interim Financial Statements

Amounts in thousands, unless otherwise noted

The following table sets forth the activity of the Company’s restricted stock and performance share grants in the year to date period ended September 30, 2016:

	Shares			Weighted-average grant date fair value
Shares unvested January 1, 2016		161,010		$	28.62
Shares granted		170,926			22.84
Shares for which restrictions lapsed		(131,002	)		27.90
Shares unvested September 30, 2016		200,934		$	24.67

Total remaining unrecognized compensation cost was $4.9 million as of September 30, 2016, which will be recognized over a weighted average remaining period of 3 years. The fair market value of the shares for which the restrictions have lapsed during the year to date period ended September 30, 2016 was $3.7 million. Restricted shares granted are valued based on the fair market value of the stock on the date of grant.

Share Repurchase Program

In May 2014, our board of directors approved a share repurchase program authorizing the buyback of up to $50.0 million of the Company’s common stock. Under the program, the Company may purchase shares on the open market, through block trades, in privately negotiated transactions, in compliance with SEC Rule 10b-18 (including through Rule 10b5-1 plans), or in any other appropriate manner. The timing of the shares repurchased will be at the discretion of management and will depend on a number of factors, including price, market conditions and regulatory requirements. Shares acquired through the repurchase program will be retired. The Company retains the right to limit, terminate or extend the share repurchase program at any time without prior notice.

For the quarter ended September 30, 2016, the Company repurchased 5,461 shares of common stock at an average purchase price of $27.45 per share. As of September 30, 2016, up to $10.5 million was available to purchase additional shares under the repurchase program, which was scheduled to expire on December 31, 2016. On October 19, 2016, our board of directors approved a new share repurchase program authorizing the buyback of up to $30.0 million of the Company's common stock through December 31, 2019. This plan replaces the previous share repurchase program that was initiated in May 2014 and has now been terminated. The Company expects to purchase shares on the open market, through block trades, in privately negotiated transactions, in compliance with SEC Rule 10b-18 (including through Rule 10b5-1 plans), or in any other appropriate manner. The timing of the shares repurchased will be at the discretion of management and will depend on a number of factors, including price, market conditions and regulatory requirements. Shares acquired through the repurchase program will be held as treasury shares and may be used for general corporate purposes. The Company retains the right to limit, terminate or extend the share repurchase program at any time without prior notice. The Company expects to fund any further repurchases of its common stock through a combination of cash on hand and cash generated by operations.

Dividends

The Company declared a dividend of $0.15 per share of common stock related to the quarter ended September 30, 2016. The dividend for the quarter ended September 30, 2016 was accrued in the balance sheet at September 30, 2016.   

Future declarations of quarterly cash dividends are subject to approval by the Board of Directors and to the Board’s continuing determination that the declaration of dividends are in the best interest of the Company’s stockholders and are in compliance with all laws and agreements of the Company applicable to the declaration and payment of cash dividends.

12. Restructuring, Asset Impairment, and Transition Expenses

From time to time, the Company has initiated various restructuring programs and incurred severance and other restructuring costs.

In the quarter ended March 31, 2015, the Company commenced a restructuring plan (“2015 Altra Plan”) as a result of weak demand in Europe and to make certain adjustments to improve business effectiveness, reduce the number of facilities and streamline

17

ALTRA INDUSTRIAL MOTION CORP.

Notes to Unaudited Condensed Consolidated Interim Financial Statements

Amounts in thousands, unless otherwise noted

the Company's cost structure. The actions taken pursuant to the 2015 Altra Plan included reducing headcount, facility consolidations and related asset impairments, and limiting discretionary spending to improve profitability.

The following table details restructuring charges incurred by segment for the periods presented.

	Quarter Ended				Year to Date Period Ended
	September 30, 2016		September 30, 2015		September 30, 2016		September 30, 2015
Couplings, Clutches & Brakes	$	3,022	$	103	$	4,425	$	741
Electromagnetic Clutches & Brakes		169		7		1,276		1,373
Gearing		68		541		84		2,880
Corporate		138		—		806		—
Total	$	3,397	$	651	$	6,591	$	4,994

The amounts for the year to date period ended September 30, 2016 are comprised of approximately $2.0 million in severance, $0.7 million in consolidation costs, $2.4 million in moving and relocation costs, $0.7 million in building impairments, and $0.8 million in travel-related and other restructuring costs. The amounts for the year to date period ended September 30, 2015 were limited to severance costs related to staff reductions, moving costs and plant closures and are classified in the accompanying unaudited condensed consolidated statement of income as restructuring costs.

The following is a reconciliation of the accrued restructuring costs between January 1, 2016 and September 30, 2016:

	All Plans
Balance at January 1, 2016	$	2,211
Restructuring expense incurred		6,591
Non-cash loss on impairment of fixed assets		(706	)
Cash payments		(6,206	)
Balance at September 30, 2016	$	1,890

The total restructuring reserve as of September 30, 2016 relates to severance costs to be paid to employees and is recorded in accruals and other current liabilities on the accompanying unaudited condensed consolidated balance sheet which are expected to be paid during 2016.  The Company expects to incur between approximately $7.0 - $9.0 million in additional restructuring expenses between 2016 and 2018 under the 2015 Altra Plan, primarily in the Couplings, Clutches & Brakes and Gearing business segments.

13. Segments, Concentrations and Geographic Information

Segments

The Company currently operates through three business segments that are aligned with key product types and end markets served:

• Couplings, Clutches & Brakes.

Couplings are the interface between two shafts, which enable power to be transmitted from one shaft to the other. Clutches in this segment are devices which use mechanical, hydraulic, pneumatic, or friction type connections to facilitate engaging or disengaging two rotating members. Brakes are combinations of interacting parts that work to slow or stop machinery. Products in this segment are generally used in heavy industrial applications and energy markets.

• Electromagnetic Clutches & Brakes.

Products in this segment include brakes and clutches that are used to electronically slow, stop, engage or disengage equipment utilizing electromagnetic friction type connections.   Products in this segment are used in industrial and commercial markets including agricultural machinery, material handling, motion control, and turf & garden.

• Gearing.

Gears are utilized to reduce the speed and increase the torque of an electric motor or engine to the level required to drive a particular piece of equipment.  Gears produced by the Company are primarily utilized in industrial applications.

18

ALTRA INDUSTRIAL MOTION CORP.

Notes to Unaudited Condensed Consolidated Interim Financial Statements

Amounts in thousands, unless otherwise noted

The segment information presented below for the prior periods has been reclassified to conform to the new presentation.

Segment financial information and a reconciliation of segment results to consolidated results follows:

	Quarters Ended September 30,						Year to date periods Ended September 30,
	2016			2015			2016			2015
Net Sales:
Couplings, Clutches & Brakes	$	77,446		$	85,760		$	231,225		$	265,225
Electromagnetic Clutches & Brakes		50,680			50,393			165,083			166,279
Gearing		47,023			48,783			145,038			147,599
Inter-segment eliminations		(2,017	)		(1,883	)		(5,087	)		(6,079	)
Net sales	$	173,132		$	183,053		$	536,259		$	573,024
Income from operations:
Segment earnings:
Couplings, Clutches & Brakes	$	6,596		$	8,910		$	20,441		$	29,672
Electromagnetic Clutches & Brakes		6,589			4,771			20,120			16,293
Gearing		5,650			6,197			17,280			17,022
Restructuring		(3,397	)		(651	)		(6,591	)		(4,994	)
Corporate expenses (1)		(5,069	)		(2,567	)		(9,729	)		(7,967	)
Income from operations	$	10,369		$	16,660		$	41,521		$	50,026
Other non-operating (income) expense:
Net interest expense	$	2,815		$	2,924		$	8,615		$	8,858
Other non-operating  expense (income), net		45			685			(438	)		606
		2,860			3,609			8,177			9,464
Income before income taxes		7,509			13,051			33,344			40,562
Provision for income taxes		2,196			2,830			9,872			11,326
Net income	$	5,313		$	10,221		$	23,472		$	29,236

(1) Certain expenses are maintained at the corporate level and not allocated to the segments. These include various administrative expenses related to corporate headquarters, depreciation on capitalized software costs, non-capitalizable software implementation costs and acquisition related expenses.

Selected information by segment (continued)

	Quarter Ended				Year to Date Period Ended
	September 30, 2016		September 30, 2015		September 30, 2016		September 30, 2015
Depreciation and amortization:
Couplings, Clutches & Brakes	$	4,028	$	3,926	$	11,485	$	11,922
Electromagnetic Clutches & Brakes		1,176		1,195		3,501		3,481
Gearing		1,862		1,613		5,261		4,970
Corporate		791		803		2,372		2,296
Total depreciation and amortization	$	7,857	$	7,537	$	22,619	$	22,669
	September 30, 2016		December 31, 2015
Total assets:
Couplings, Clutches & Brakes	$	329,621	$	312,117
Electromagnetic Clutches & Brakes		129,576		125,887
Gearing		133,483		150,860
Corporate (2)		27,778		43,468
Total assets	$	620,458	$	632,332

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ALTRA INDUSTRIAL MOTION CORP.

Notes to Unaudited Condensed Consolidated Interim Financial Statements

Amounts in thousands, unless otherwise noted

(2) Corporate assets are primarily cash and cash equivalents, tax related asset accounts, certain capitalized software costs, property, plant and equipment and deferred financing costs.

Net sales to third parties by geographic region are as follows:

	Net Sales
	Quarter Ended				Year to Date Period Ended
	September 30, 2016		September 30, 2015		September 30, 2016		September 30, 2015
North America (primarily U.S.)	$	99,995	$	108,959	$	316,957	$	350,753
Europe		54,344		52,757		165,694		164,829
Asia and other		18,793		21,337		53,608		57,442
Total	$	173,132	$	183,053	$	536,259	$	573,024

Net sales to third parties are attributed to the geographic regions based on the country in which the shipment originates.

Concentrations

Financial instruments, which are potentially subject to counter party performance and concentrations of credit risk, consist primarily of trade accounts receivable. The Company manages these risks by conducting credit evaluations of customers prior to delivery or commencement of services. When the Company enters into a sales contract, collateral is normally not required from the customer. Payments are typically due within 30 days of billing. An allowance for potential credit losses is maintained, and losses have historically been within management’s expectations. While the Company did not have any customers that represented total sales greater than 10% for each of the quarters ended September 30, 2016 and 2015, the Gearing business had one customer that approximated 10% of total sales for that segment during the quarter ended September 30, 2015.

The Company is also subject to counter party performance risk of loss in the event of non-performance by counterparties to financial instruments, such as cash and investments. Cash and cash equivalents are held by well-established financial institutions and invested in AAA rated mutual funds. The Company is exposed to swap counterparty credit risk with well-established financial institutions.

14. Commitments and Contingencies

General Litigation

The Company is involved in various pending legal proceedings arising out of the ordinary course of business. These proceedings primarily involve commercial claims, product liability claims, personal injury claims, and workers’ compensation claims. None of these legal proceedings are expected to have a material adverse effect on the results of operations, cash flows, or financial condition of the Company. With respect to these proceedings, management believes that the Company will prevail, has adequate insurance coverage or has established appropriate reserves to cover potential liabilities. Any costs that management estimates may be paid related to these proceedings or claims are accrued when the liability is considered probable and the amount can be reasonably estimated. There can be no assurance, however, as to the ultimate outcome of any of these matters, and if all or substantially all of these legal proceedings were to be determined adversely to the Company, there could be a material adverse effect on the results of operations, cash flows, or financial condition of the Company. We have established loss provisions for matters in which losses are probable and can be reasonably estimated. There were no material amounts accrued in the accompanying unaudited condensed consolidated balance sheet for potential litigation as of September 30, 2016 or December 31, 2015. For matters where a reserve has not been established and for which we believe a loss is reasonably possible, as well as for matters where a reserve has been recorded but for which an exposure to loss in excess of the amount accrued is reasonably possible, we believe that such losses, individually and in the aggregate, will not have a material effect on our unaudited condensed consolidated financial statements.

The Company also risks exposure to product liability claims in connection with products it has sold and those sold by businesses that the Company acquired. Although in some cases third parties have retained responsibility for product liability claims relating to products manufactured or sold prior to the acquisition of the relevant business and in other cases the persons from whom

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ALTRA INDUSTRIAL MOTION CORP.

Notes to Unaudited Condensed Consolidated Interim Financial Statements

Amounts in thousands, unless otherwise noted

the Company has acquired a business may be required to indemnify the Company for certain product liability claims subject to certain caps or limitations on indemnification, the Company cannot assure that those third parties will in fact satisfy their obligations with respect to liabilities retained by them or their indemnification obligations. If those third parties become unable to or otherwise do not comply with their respective obligations including indemnity obligations, or if certain product liability claims for which the Company is obligated were not retained by third parties or are not subject to these indemnities, the Company could become subject to significant liabilities or other adverse consequences. Moreover, even in cases where third parties retain responsibility for product liability claims or are required to indemnify the Company, significant claims arising from products that have been acquired could have a material adverse effect on the Company’s ability to realize the benefits from an acquisition, could result in the reduction of the value of goodwill that the Company recorded in connection with an acquisition, or could otherwise have a material adverse effect on the Company’s business, financial condition, or operations.

15. Subsequent Events

Dividend

On October 19, 2016, the Company declared a dividend of $0.15 per share for the quarter ended December 31, 2016, payable on January 4, 2017 to shareholders of record as of December 19, 2016.

Share Repurchase Program

On October 19, 2016, our board of directors approved a new share repurchase program authorizing the buyback of up to $30.0 million of the Company's common stock through December 31, 2019. This plan replaces the previous share repurchase program that was initiated in May 2014 and has now been terminated. The Company expects to purchase shares on the open market, through block trades, in privately negotiated transactions, in compliance with SEC Rule 10b-18 (including through Rule 10b5-1 plans), or in any other appropriate manner. The timing of the shares repurchased will be at the discretion of management and will depend on a number of factors, including price, market conditions and regulatory requirements. Shares acquired through the repurchase program will be held as treasury shares and may be used for general corporate purposes. The Company retains the right to limit, terminate or extend the share repurchase program at any time without prior notice. The Company expects to fund any repurchases of its common stock through a combination of cash on hand and cash generated by operations.

Stromag Acquisition

On October 21, 2016, the Company entered into a binding agreement (the “French Agreement”) with GKN Industries, Limited (“GKN”).The French Agreement provides that, subject to completion of certain employee consultation procedures required under applicable law and certain other customary conditions, the parties to the French Agreement will enter into a definitive sale and purchase agreement, attached as an exhibit to the French Agreement (the “Agreed Form Sale and Purchase Agreement”), providing for the sale and transfer of GKN’s Germany-based Stromag AG business (the “Acquired Company”) for a purchase price comprised of the assumption of debt totaling 14 million euros and cash consideration, payable at closing, of approximately 184 million euros, subject to certain adjustments (the “Stromag Acquisition”).

Under the French Agreement, GKN has agreed to promptly commence the employee consultation process required under applicable law to obtain opinions of the Stromag works councils in France. Subject to the conditions set forth in the French Agreement, the parties to the French Agreement will execute and deliver the Agreed Form Sale and Purchase Agreement within two business days following the satisfaction of the employee consultation process requirements.

The French Agreement and the Agreed Form Sale and Purchase Agreement contain representations, warranties, and covenants that we believe are customary for a transaction of this size and type, as well as indemnification provisions subject to specified limitations. The closing of the transaction is subject to several customary closing conditions, including receipt of required regulatory approvals, as well as the aforementioned consultation process with the Stromag works councils, and is expected to take place during the first quarter of 2017. No assurances can be given that the Stromag Acquisition will be timely consummated or consummated at all.

The foregoing summary of the French Agreement and the transactions contemplated thereby is not intended to be complete and is qualified in its entirety by reference to the actual French Agreement, which will be filed as an exhibit to the Company’s Annual Report on Form 10-K for its fiscal year ending December 31, 2016.

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ALTRA INDUSTRIAL MOTION CORP.

Notes to Unaudited Condensed Consolidated Interim Financial Statements

Amounts in thousands, unless otherwise noted

Amended and Restated Credit Agreement

On October 21, 2016, the Company entered into a First Amendment to the Second Amended and Restated Credit Agreement (the “First Amendment”) by and among the Company and Altra Industrial Motion Netherlands, B.V. (“Altra B.V.”), one of the Company’s foreign subsidiaries (collectively, the “Borrowers”), the Subsidiary Guarantors to the First Amendment, JPMorgan Chase Bank, N.A., as Administrative Agent, as Joint Lead Arranger and Joint Bookrunner, Wells Fargo Bank, N.A., as Joint Lead Arranger and Joint Bookrunner, KeyBank National Association, as Joint Lead Arranger and Joint Bookrunner, and certain lender parties to the First Amendment (collectively, the “Lenders”).

The First Amendment would amend the Company’s Second Amended and Restated Credit Agreement, dated as of October 22, 2015 (the “Credit Agreement”). However, the amendments to the Credit Agreement contained in the First Amendment will not be effective and will not amend the Credit Agreement unless and until certain conditions precedent have been met, including that the Company has provided the Administrative Agent with written notice that the conditions precedent to the closing of the Stromag Acquisition have been satisfied. In the event that the Stromag Acquisition does not occur, or if the other conditions precedent are not satisfied or waived, then the First Amendment shall not become effective.

If it becomes effective, the First Amendment, would increase the revolving credit facility under the Credit Agreement by $75,000,000 (the “Revolver Increase”), so that after giving effect to the Revolver Increase, the aggregate revolving commitments would total $425,000,000. The First Amendment would also reset the possible expansion of additional future loan commitments to $150,000,000.  In addition, the First Amendment would increase the multicurrency sublimit to $250 million and adjust certain financial covenants. The Company expects to use the increased facility to finance the Stromag Acquisition. Except as otherwise expressly provided by the First Amendment, all of the respective terms, conditions and provisions of the Credit Agreement and the other loan documents remain the same.

The foregoing summary of the First Amendment and the transactions contemplated thereby is not intended to be complete and is qualified in its entirety by reference to the actual First Amendment, which will be filed as an exhibit to the Company’s Annual Report on Form 10-K for its fiscal year ending December 31, 2016.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Cautionary Statement Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements, within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which reflect the Company’s current estimates, expectations and projections about the Company’s future results, performance, prospects and opportunities. Forward-looking statements include, among other things, the information concerning the Company’s possible future results of operations including revenue, costs of goods sold, gross margin, future profitability, future economic improvement, business and growth strategies, financing plans, the Company’s competitive position and the effects of competition, the projected growth of the industries in which we operate, and the Company’s ability to consummate strategic acquisitions and other transactions. Forward-looking statements include statements that are not historical facts and can be identified by forward-looking words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “plan,” “may,” “should,” “will,” “would,” “project,” “forecast” and similar expressions. These forward-looking statements are based upon information currently available to the Company and are subject to a number of risks, uncertainties, and other factors that could cause the Company’s actual results, performance, prospects, or opportunities to differ materially from those expressed in, or implied by, these forward-looking statements. Important factors that could cause the Company’s actual results to differ materially from the results referred to in the forward-looking statements the Company makes in this report include:

• the effects of intense competition in the markets in which we operate;

• the cyclical nature of the markets in which we operate;

• changes in market conditions in which we operate that would influence the value of the Company’s stock;

• the Company’s ability to achieve its business plans, including with respect to an uncertain economic environment;

• the risks associated with international operations, including currency risks;

• the Company’s ability to retain existing customers and our ability to attract new customers for growth of our business;

• the effects of the loss or bankruptcy of or default by any significant customer, suppliers, or other entity relevant to the Company’s operations;

• political and economic conditions nationally, regionally, and in the markets in which we operate;

• natural disasters, war, civil unrest, terrorism, fire, floods, tornadoes, earthquakes, hurricanes, or other matters beyond the Company’s control;

• the Company’s risk of loss not covered by insurance;

• the accuracy of estimated forecasts of OEM customers and the impact of the current global and European economic environment on our customers;

• the risks associated with certain minimum purchase agreements we have with suppliers;

• fluctuations in the costs of raw materials used in our products;

• the outcome of litigation to which the Company is a party from time to time, including product liability claims;

• work stoppages and other labor issues;

• changes in employment, environmental, tax and other laws and changes in the enforcement of laws;

• the Company’s ability to attract and retain key executives and other personnel;

• the Company’s ability to successfully pursue the Company’s development activities and successfully integrate new operations and systems, including the realization of revenues, economies of scale, cost savings, and productivity gains associated with such operations;

• the Company’s ability to obtain or protect intellectual property rights;

• the risks associated with the portion of the Company’s total assets comprised of goodwill and indefinite lived intangibles;

• changes in market conditions that would result in the impairment of goodwill or other assets of the Company;

• changes in accounting rules and standards, audits, compliance with the Sarbanes-Oxley Act, and regulatory investigations;

• the effects of changes to critical accounting estimates;

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• changes in volatility of the Company’s stock price and the risk of litigation following a decline in the price of the Company’s stock;

• failure of the Company’s operating equipment or information technology infrastructure;

• the Company’s ability to implement our Enterprise Resource Planning (ERP) system;

• the Company’s access to capital, credit ratings, indebtedness, and ability to raise additional capital and operate under the terms of the Company’s debt obligations;

• the risks associated with our debt;

• the risks associated with the Company’s exposure to variable interest rates and foreign currency exchange rates;

• the risks associated with interest rate swap contracts;

• the risks associated with the potential dilution of our common stock as a result of our convertible bonds;

• the risks associated with the Company’s exposure to renewable energy markets;

• the risks related to regulations regarding conflict minerals;

• the risks associated with the global recession and European economic downturn and volatility and disruption in the global financial markets;

• the Company’s ability to successfully execute, manage and integrate key acquisitions and mergers, including but not limited to the Svendborg Acquisition, the Guardian Acquisition and the Stromag Acquisition;

• the risks associated with the Company’s closure of its manufacturing facility in Changzhou, China; 

• the Company’s ability to achieve the efficiencies, savings and other benefits anticipated from our cost reduction, margin improvement, restructuring, plant consolidation and other business optimization initiatives;

• the risk associated with the UK vote to leave the European Union; and

• other factors, risks, and uncertainties referenced in the Company’s filings with the Securities and Exchange Commission, including the “Risk Factors” set forth in this document.

ALL FORWARD-LOOKING STATEMENTS SPEAK ONLY AS OF THE DATE OF THIS REPORT. EXCEPT AS REQUIRED BY LAW, WE UNDERTAKE NO OBLIGATION TO PUBLICLY UPDATE OR RELEASE ANY REVISIONS TO THESE FORWARD-LOOKING STATEMENTS TO REFLECT ANY EVENTS OR CIRCUMSTANCES AFTER THE DATE OF THIS REPORT OR TO REFLECT THE OCCURRENCE OF UNANTICIPATED EVENTS. ALL SUBSEQUENT WRITTEN AND ORAL FORWARD-LOOKING STATEMENTS ATTRIBUTABLE TO US OR ANY PERSON ACTING ON THE COMPANY’S BEHALF ARE EXPRESSLY QUALIFIED IN THEIR ENTIRETY BY THE CAUTIONARY STATEMENTS CONTAINED OR REFERRED TO IN THIS SECTION AND IN OUR RISK FACTORS SET FORTH IN PART I, ITEM 1A OF THE COMPANY’S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2015, AND IN OTHER REPORTS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION BY THE COMPANY.

The following discussion of the financial condition and results of operations of Altra Industrial Motion Corp. and its subsidiaries should be read together with the audited financial statements of Altra Industrial Motion Corp. and its subsidiaries and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015. Unless the context requires otherwise, the terms “Altra,” “Altra Industrial Motion Corp.,” “the Company,” “we,” “us,” and “our” refer to Altra Industrial Motion Corp. and its subsidiaries.

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General

We are a leading global designer, producer and marketer of a wide range of electromechanical power transmission and motion control products with a presence in over 70 countries. Our global sales and marketing network includes over 1,000 direct OEM customers and over 3,000 distributor outlets. Our product portfolio includes industrial clutches and brakes, enclosed gear drives, open gearing, couplings, engineered bearing assemblies, linear components, gear motors, and other related products. Our products serve a wide variety of end markets including energy, general industrial, material handling, mining, transportation and turf and garden. We primarily sell our products to a wide range of OEMs and through long-standing relationships with industrial distributors such as Motion Industries, Applied Industrial Technologies, Kaman Industrial Technologies and W.W. Grainger.

Business Segments

Segments

During the quarter ended September 30, 2015, the Company realigned its reporting and management structure and corresponding reportable business segments as part of its business simplification efforts. This new structure is better aligned across the Company’s end markets and will better facilitate the Company’s strategic initiatives for growth, procurement and facility consolidation.

The Company currently operates through three business segments that are aligned with key product types and end markets served:

• Couplings, Clutches & Brakes.

Couplings are the interface between two shafts, which enable power to be transmitted from one shaft to the other. Clutches in this segment are devices which use mechanical, hydraulic, pneumatic, or friction type connections to facilitate engaging or disengaging two rotating members. Brakes are combinations of interacting parts that work to slow or stop machinery.  Products in this segment are generally used in heavy industrial applications and energy markets.

• Electromagnetic Clutches & Brakes.

Products in this segment include brakes and clutches that are used to electronically slow, stop, engage or disengage equipment utilizing electromagnetic friction type connections.   Products in this segment are used in industrial and commercial markets including agricultural machinery, material handling, motion control, and turf & garden.

• Gearing.

Gears are utilized to reduce the speed and increase the torque of an electric motor or engine to the level required to drive a particular piece of equipment.  Gears produced by the Company are primarily utilized in industrial applications.

The following tables show the percentage of net sales and operating income generated by each of our three segments for the quarters ended September 30, 2016 and 2015:

	Net Sales						Net Sales
	Quarter Ended						Year to Date Ended
	September 30, 2016			September 30, 2015			September 30, 2016			September 30, 2015
Couplings, Clutches & Brakes		45	%		47	%		43	%		47	%
Electromagnetic Clutches & Brakes		29	%		28	%		31	%		29	%
Gearing		26	%		25	%		26	%		24	%

	Operating Income						Operating Income
	Quarter Ended						Year to Date Ended
	September 30, 2016			September 30, 2015			September 30, 2016			September 30, 2015
Couplings, Clutches & Brakes		35	%		45	%		35	%		47	%
Electromagnetic Clutches & Brakes		35	%		24	%		35	%		26	%
Gearing		30	%		31	%		30	%		27	%

Our Internet address is www.altramotion.com. By following the link “Investor Relations” and then “SEC filings” on our Internet website, we make available, free of charge, our Annual Report on Form 10-K, our Quarterly Reports on Form 10-Q, our Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) as soon as reasonably practicable after such forms are filed with or furnished to the

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Securities and Exchange Commission. We are not including the information contained on or available through our website as a part of, or incorporating such information by reference into, this Quarterly Report on Form 10-Q.

Business Outlook

Our future financial performance depends, in large part, on conditions in the markets that we serve and on the U.S., European, and global economies in general.

Foreign currency translation continues to have a negative impact on our performance, and several of our end markets remain weak. Performance in the oil & gas, agriculture, mining and metals end markets, which are some of our largest markets, remains challenging and continues to weigh on our performance. Furthermore, we expect the challenges in our agriculture, oil and gas, mining and metals end markets to continue for some time.

As these conditions persist, we are managing the business to the level of demand we are seeing. We expect ongoing benefits from the restructuring and cost reduction initiatives which include actions taken under the 2015 Altra Plan which we commenced in the quarter ended March 31, 2015 and which has also helped improve the profitability of our Gearing segment.  We had completed six facility consolidations by the end of the third quarter, and we are working to complete one additional consolidation during the remainder of the year.

Critical Accounting Policies

The preparation of our unaudited condensed consolidated financial statements and related disclosures in conformity with accounting principles generally accepted in the United States requires management to make judgments, assumptions and estimates that affect our reported amounts of assets, revenues and expenses, as well as related disclosures of contingent assets and liabilities. We base our estimates on past experiences and other assumptions we believe to be appropriate, and we evaluate these estimates on an on-going basis. See the discussion of critical accounting policies in our Annual Report on Form 10-K for the year ended December 31, 2015. During the reporting period, except as otherwise described below, there were no material changes to the critical accounting policies in our Annual Report on Form 10-K for the year ended December 31, 2015.

Goodwill, Intangibles and other long-lived assets.    In connection with our acquisitions, goodwill and intangible assets were identified and recorded at fair value. We recorded intangible assets for customer relationships, trade names and trademarks, product technology, patents and goodwill. In valuing the customer relationships, trade names, and trademarks, we utilized variations of the income approach. The income approach was considered the most appropriate valuation technique because the inherent value of these assets is their ability to generate current and future income. The income approach relies on historical financial and qualitative information, as well as assumptions and estimates for projected financial information. Projected financial information is subject to risk if our estimates are incorrect. The most significant estimate relates to our projected revenues and profitability. If we do not meet the projected revenues and profitability used in the valuation calculations then the intangible assets could be impaired. In determining the value of customer relationships, we reviewed historical customer attrition rates which were determined to be approximately 5% per year. Most of our customers tend to be long-term customers with very little turnover. While we do not typically have long-term contracts with customers, we have established long-term relationships with customers which make it difficult for competitors to displace us. Additionally, we assessed historical revenue growth within our industry and customers’ industries in determining the value of customer relationships. The value of our customer relationships intangible asset could become impaired if future results differ significantly from any of the underlying assumptions. This could include a higher customer attrition rate or a change in industry trends such as the use of long-term contracts which we may not be able to obtain successfully. Customer relationships and product technology and patents are considered finite-lived assets, with estimated lives ranging from 8 years to 17 years. The estimated lives were determined by calculating the number of years necessary to obtain 95% of the value of the discounted cash flows of the respective intangible asset.

Goodwill and trade names and trademarks are considered indefinite lived assets. Other intangible assets include trade names and trademarks that identify us and differentiate us from competitors, and therefore competition does not limit the useful life of these assets. Additionally, we believe that our trade names and trademarks will continue to generate product sales for an indefinite period.

Accounting standards require that an annual goodwill impairment assessment be conducted at the reporting unit level using either a quantitative or qualitative approach. The Company has determined that its Couplings, Clutches, and Brakes (CCB) operating segment is comprised of two reporting units which are the Couplings reporting unit and the Heavy Duty and Overrunning Clutches and Brakes reporting unit. The Company has determined that its Gearing operating segment is comprised of two reporting units which are the Domestic Gearing reporting unit and the Bauer Gearing reporting unit. The Company has also determined that the Electromagnetic, Clutches and Brakes (ECB) operating segment comprises a single reporting unit.

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As part of the annual goodwill impairment assessment we performed a quantitative assessment and estimated the fair value of each of our five reporting units using an income approach. We forecasted future cash flows by reporting unit for each of the next five years and applied a long term growth rate to the final year of forecasted cash flows. The cash flows were then discounted using our estimated discount rate. The forecasts of revenue and profitability growth for use in the long-range plan and the discount rate were the key assumptions in our goodwill fair value analysis.

As of December 31, 2015, each of our reporting units had estimated fair values that were substantially in excess of the carrying value.

Management believes the preparation of revenue and profitability growth rates for use in the long-range plan and the discount rate requires significant use of judgment. If any of our operating segments do not meet our forecasted revenue and/or profitability estimates, we could be required to perform an interim goodwill impairment analysis in future periods. In addition, if our discount rate increases, we could be required to perform an interim goodwill impairment analysis. Given the substantial excess fair value, we believe that a significant change in key valuation assumptions, including a decrease in revenues or profitability, or an increase in the discount rate, would not result in an indication of impairment.

Based on the above procedures, we did not identify any reporting unit that would be required to perform a step 2 goodwill impairment analysis as of December 31, 2015.

Recent Accounting Pronouncements

In August 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2016-15, Statement of Cash Flows (Topic 230): Classification of certain cash receipts and cash payments (a consensus of the emerging issues task force) (“ASU 2016-15”). This ASU addresses the following eight specific cash flow issues: Debt prepayment or debt extinguishment costs; settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing; contingent consideration payments made after a business combination; proceeds from the settlement of insurance claims; proceeds from the settlement of corporate-owned life insurance policies (including bank-owned life insurance policies); distributions received from equity method investees; beneficial interests in securitization transactions; and separately identifiable cash flows and application of the predominance principle. This guidance will be effective for the Company on January 1, 2018. We are currently evaluating the impact this guidance will have on our consolidated financial statements.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). ASU 2016-13 is intended to provide more decision-useful information about expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date.  The main provisions include presenting financial assets measured at amortized cost at the amount expected to be collected, which is net of an allowance for credit losses, and recording credit losses related to available-for-sale securities through an allowance for credit losses.  The amendments in ASU 2016-13 are effective for fiscal years beginning after December 15, 2019, and must be applied using a modified retrospective approach with earlier adoption permitted for fiscal years beginning after December 15, 2018. We are currently evaluating the impact this guidance will have on our consolidated financial statements.

In March 2016, the FASB issued ASU 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting (“ASU 2016-09”). The updated guidance revises aspects of stock-based compensation guidance which include income tax consequences, classification of awards as equity or liabilities, and classification on the statement of cash flows. The new standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016. Early adoption is permitted. We are evaluating the impact of adopting this new accounting guidance on our consolidated financial statements.

In February 2015, the FASB issued ASU 2016-02, Leases (Topic 842) (“ASU 2016-02”). The ASU requires management to recognize lease assets and lease liabilities by lessees for all operating leases. The ASU is effective for periods beginning after December 15, 2018 and interim periods therein on a modified retrospective basis. We are currently evaluating the impact this guidance will have on our financial statements.

In May 2014, the FASB issued ASU No. 2014-09 Revenue from Contracts with Customers (“ASU 2014-09”). ASU 2014-09 provides a single principles-based, five-step model to be applied to all contracts with customers. The five steps are to (i) identify the contracts with the customer, (ii) identify the performance obligations in the contact, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract and (v) recognize revenue when each performance obligation is satisfied. Revenue will be recognized when promised goods or services are transferred to the customer in an amount that reflects the consideration expected in exchange for those goods or services. In July 2015, the FASB agreed to delay the effective date of ASU

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2014-09 for one year and to permit early adoption by entities as of the original effective dates. Considering the one year deferral, ASU 2014-09 will be effective for the Company beginning on January 1, 2018 and the standard allows for either full retrospective adoption or modified retrospective adoption. The Company is continuing to evaluate the impact that the adoption of this guidance will have on our financial condition, results of operations and the presentation of our financial statements.

Results of Operations

(Amounts in thousands, unless otherwise noted)

	Quarter Ended						Year to Date Ended
	September 30, 2016			September 30, 2015			September 30, 2016			September 30, 2015
Net sales	$	173,132		$	183,053		$	536,259		$	573,024
Cost of sales		118,957			127,253			369,254			398,765
Gross profit		54,175			55,800			167,005			174,259
Gross profit percentage		31.3	%		30.5	%		31.1	%		30.4	%
Selling, general and administrative expenses		36,142			34,279			105,548			105,733
Research and development expenses		4,267			4,210			13,345			13,506
Restructuring costs		3,397			651			6,591			4,994
Income from operations		10,369			16,660			41,521			50,026
Interest expense, net		2,815			2,924			8,615			8,858
Other non-operating income (loss), net		45			685			(438	)		606
Income before income taxes		7,509			13,051			33,344			40,562
Provision for income taxes		2,196			2,830			9,872			11,326
Net income		5,313			10,221			23,472			29,236
Net loss attributable to non-controlling interest		—			—			—			63
Net income attributable to Altra Industrial Motion Corp.	$	5,313		$	10,221		$	23,472		$	29,299

Quarter Ended September 30, 2016 compared with Quarter Ended September 30, 2015

(Amounts in thousands, unless otherwise noted)

Amounts in thousands, except percentage data	Quarter-Ended
	September 30, 2016		September 30, 2015		Change			%
Net sales	$	173,132	$	183,053		(9,921	)		(5.4	)%

The decrease in sales during the quarter ended September 30, 2016 was due to the effect of foreign exchange rates, and lower sales levels in several end markets.  Of the decrease in sales, approximately $2.8 million relates to the impact of changes to foreign exchange rates primarily for the Chinese Renminbi and British Pound compared to the prior year.  In addition, $4.3 million relates to decreased sales in various end markets, primarily oil and gas, and mining in our Couplings, Clutches and Brakes business segment and agriculture in our Electromagnetic Clutches and Brakes business segment.

Amounts in thousands, except percentage data	Quarter Ended
	September 30, 2016			September 30, 2015			Change			%
Gross Profit	$	54,175		$	55,800			(1,625	)		(2.9	)%
Gross Profit as a percent of sales		31.3	%		30.5	%

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Gross profit as a percentage of sales increased during the quarter ended September 30, 2016. The increase is due to improvements realized from our consolidation and cost saving efforts, partially offset by unfavorable product mix and redundant labor costs associated with ongoing consolidation activities.  We expect the gross profit as a percentage of sales will remain relatively consistent for the remainder of 2016.

Amounts in thousands, except percentage data	Quarter Ended
	September 30, 2016			September 30, 2015			Change		%
Selling, general and administrative expense (“SG&A”)	$	36,142		$	34,279		$	1,863		5.4	%
SG&A as a percent of sales		20.9	%		18.7	%

The increase in SG&A as a percent of sales relates primarily to the impact of acquisition costs of $1.1 million during the period ended September 30, 2016 not present during the same period in the prior year.

Amounts in thousands, except percentage data	Quarter Ended
	September 30, 2016		September 30, 2015		Change		%
Research and development expenses (“R&D”)	$	4,267	$	4,210		57		1.4	%

R&D remained consistent compared to the prior year. We continue to expect R&D expenses to approximate 2.0% - 2.5% of sales in future periods.

Amounts in thousands, except percentage data	Quarter Ended
	September 30, 2016		September 30, 2015		Change		%
Restructuring Costs	$	3,397	$	651		2,746		421.8	%

During the quarter ended March 31, 2015, the Company adopted a restructuring plan (“2015 Altra Plan”) in response to weak demand and to make certain adjustments to improve business effectiveness, reduce the number of facilities and streamline the Company’s cost structure. The actions taken pursuant to the 2015 Altra Plan included reducing headcount and limiting discretionary spending to improve profitability. Approximately $3.0 million, $0.2 million, and $0.1 million were related to the Couplings, Clutches and Brakes segment, Electromagnetic Clutches and Brakes segment, and Corporate business segments, respectively. The Company expects to incur approximately $7.0 - $9.0 million in additional expenses associated with the 2015 Altra Plan through 2018. We expect to realize cost savings of approximately $0.5 million related to these actions during the remainder of 2016.

Amounts in thousands, except percentage data	Quarter Ended
	September 30, 2016		September 30, 2015		Change			%
Interest Expense, net	$	2,815	$	2,924		(109	)		(3.7	)%

Net interest expense remained relatively consistent between 2015 and 2016.

Amounts in thousands, except percentage data	Quarter Ended
	September 30, 2016		September 30, 2015		Change			%
Other non-operating income, net	$	45	$	685		(640	)		(93.4	)%

Other non-operating expense in each period in the chart above relates primarily to foreign currency transaction gains and losses arising from changes in exchange rates related to the Euro, British Pound, and Chinese Renminbi.

Amounts in thousands, except percentage data	Quarter Ended
	September 30, 2016			September 30, 2015			Change			%
Provision for income taxes		2,196			2,830		$	(634	)		(22.4	)%
Provision for income taxes as a % of income before    income taxes		29.2	%		21.7	%

The provision for income tax, as a percentage of income before taxes, during the quarter ended September 30, 2016 was higher than that of the quarter ended September 30, 2015. The Company benefited from a foreign tax credit of approximately $0.9 million during the quarter ended September 30, 2015 that was not present in the current quarter ended September 30, 2016.

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Year to Date Ended September 30, 2016 compared with Year to Date Ended September 30, 2015

(Amounts in thousands, unless otherwise noted)

Amounts in thousands, except percentage data	Year to Date Ended
	September 30, 2016		September 30, 2015		Change			%
Net sales		536,259		573,024	$	(36,765	)		(6.4	)%

The decrease in sales during the year to date period ended September 30, 2016 was due to weaker foreign exchange rates, and lower sales levels in several end markets. Of the decrease in sales, approximately $6.8 million relates to the impact of changes to foreign exchange rates primarily attributed to the Euro, British Pound, and Chinese Renminbi compared to the prior year.  In addition, $29.8 million relates to decreases in sales in the oil & gas, mining, and agriculture end markets.

Amounts in thousands, except percentage data	Year to Date Ended
	September 30, 2016			September 30, 2015			Change			%
Gross Profit		167,005			174,259			(7,254	)		(4.2	)%
Gross Profit as a percent of sales		31.1	%		30.4	%

Gross profit as a percentage of sales increased slightly during the year to date period ended September 30, 2016. The increase is due to improvements realized from our consolidation and cost saving efforts, partially offset by unfavorable product mix and redundant labor costs associated with ongoing consolidation activities.

Amounts in thousands, except percentage data	Year to Date Ended
	September 30, 2016			September 30, 2015			Change			%
Selling, general and administrative expense (“SG&A”)		105,548			105,733		$	(185	)		(0.2	)%
SG&A as a percent of sales		19.7	%		18.5	%

The decrease in SG&A costs primarily relates to the impact of changes to foreign exchange rates primarily offset by an increase in acquisition costs.

Amounts in thousands, except percentage data	Year to Date Ended
	September 30, 2016		September 30, 2015		Change			%
Research and development expenses (“R&D”)	$	13,345	$	13,506		(161	)		(1.2	)%

R&D remained consistent compared to the prior year. We continue to expect R&D expenses to approximate 2.0% - 2.5% of sales in future periods.

Amounts in thousands, except percentage data	Year to Date Ended
	September 30, 2016		September 30, 2015		Change		%
Restructuring Costs	$	6,591	$	4,994		1,597		32.0	%

Approximately $4.4 million, $1.3 million, and $0.8 million of the restructuring costs, associated with the 2015 Altra Plan, were related to the Couplings, Clutches and Brakes, Electromagnetic Clutches and Brakes, and Corporate, respectively.

Amounts in thousands, except percentage data	Year to Date Ended
	September 30, 2016		September 30, 2015		Change			%
Interest Expense, net	$	8,615	$	8,858		(243	)		(2.7	)%

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Net interest expense remained relatively consistent with the comparable 2015 period.

Amounts in thousands, except percentage data	Year to Date Ended
	September 30, 2016			September 30, 2015		Change			%
Other non-operating income, net	$	(438	)	$	606		(1,044	)		(172.3	)%

Other non-operating expense in each period in the chart above relates primarily to foreign currency transaction gains and losses arising from changes in exchange rates related to the Euro, British Pound, and Chinese Renminbi.

Amounts in thousands, except percentage data	Year to Date Ended
	September 30, 2016			September 30, 2015			Change			%
Provision for income taxes		9,872			11,326		$	(1,454	)		(12.8	)%
Provision for income taxes as a % of income before    income taxes		29.6	%		27.9	%

The increase in the provision for income taxes, as a percentage of income before taxes, for the year to date period ended September 30, 2016 compared to the year to date period ended September 30, 2015 is primarily due to the favorable discrete item in 2015 of $0.9 million related to a foreign tax credit that was not present in the current quarter ended September 30, 2016.

Segment Performance.

Amounts in thousands, except percentage data

	Quarters Ended September 30,						Year to date periods Ended September 30,
	2016			2015			2016			2015
Net Sales:
Couplings, Clutches & Brakes	$	77,446		$	85,760		$	231,225		$	265,225
Electromagnetic Clutches & Brakes		50,680			50,393			165,083			166,279
Gearing		47,023			48,783			145,038			147,599
Intra-segment eliminations		(2,017	)		(1,883	)		(5,087	)		(6,079	)
Net sales	$	173,132		$	183,053		$	536,259		$	573,024
Income from operations:
Segment earnings:
Couplings, Clutches & Brakes	$	6,596		$	8,910		$	20,441		$	29,672
Electromagnetic Clutches & Brakes		6,589			4,771			20,120			16,293
Gearing		5,650			6,197			17,280			17,022
Restructuring		(3,397	)		(651	)		(6,591	)		(4,994	)
(1) Corporate expenses		(5,069	)		(2,567	)		(9,729	)		(7,967	)
Income from operations	$	10,369		$	16,660		$	41,521		$	50,026

(1) Certain expenses are maintained at the corporate level and not allocated to the segments. These include various administrative expenses related to the corporate headquarters, depreciation on capitalized software costs, non-capitalizable software implementation costs and acquisition related expenses.

Couplings, Clutches & Brakes

Net sales in the Couplings, Clutches & Brakes segment were $77.4 million in the quarter ended September 30, 2016, a decrease of approximately $8.3 million or 10.0%, from the quarter ended September 30, 2015.  Approximately $1.7 million of the decrease was due to the impact of changes to foreign exchange rates primarily related to the British Pound and Chinese Renminbi compared to the prior year.  The remainder of the decrease was due primarily to weakness in the oil and gas, metals and mining markets.  Segment operating income decreased approximately $5.5 million compared to the prior period primarily as a result of the impact of the decrease in sales described above.

Electromagnetic Clutches & Brakes

Net sales in the Electromagnetic Clutches & Brakes segment were $50.7 million in the quarter ended September 30, 2016, an increase of approximately $0.3 million, or 1.0%, from the quarter ended September 30, 2015. Segment operating

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income increased $1.8 million compared to the prior period primarily as a result of the impact of the restructuring activities initiated during 2015 and early 2016.

Gearing

Net sales in the Gearing segment were $47.0 million in the quarter ended September 30, 2016, compared with $48.8 million in the quarter ended September 30, 2015, a decrease of $1.8 million. This is primarily due to weakness in the Oil and Gas end market. Segment operating income decreased $0.6 million compared to the prior period primarily due to the impact of changes to foreign exchange rates primarily related to the British Pound and Chinese Renminbi.

Liquidity and Capital Resources

Overview

We finance our capital and working capital requirements through a combination of cash flows from operating activities and borrowings under our Revolving Credit Facility (defined below). We expect that our primary ongoing requirements for cash will be for working capital, debt service, capital expenditures, acquisitions, pensions, dividends and share repurchases. In the event additional funds are needed for operations, we could borrow additional funds available under our existing Revolving Credit Facility, request an expansion by up to $150 million of the amount available to be borrowed under the 2015 Credit Agreement, attempt to secure new debt, attempt to refinance our loans under the 2015 Credit Agreement, or attempt to raise capital in the equity markets. As of September 30, 2016, we have the ability under our Revolving Credit Facility to borrow an additional $228.4 million based on current availability calculations. There can be no assurance however that additional debt financing will be available on commercially acceptable terms, if at all. Similarly, there can be no assurance that equity financing will be available on commercially acceptable terms, if at all.

Second Amended and Restated Credit Agreement

On October 22, 2015, the Company entered into a Second Amended and Restated Credit Agreement by and among the Company, Altra Industrial Motion Netherlands, B.V. (“Altra Netherlands”), one of the Company’s foreign subsidiaries (collectively with the Company, the “Borrowers”), the lenders party to the Second Amended and Restated Credit Agreement from time to time (collectively, the “Lenders”), J.P. Morgan Securities LLC, Wells Fargo Securities, LLC, and KeyBanc Capital Markets, Inc., as joint lead arrangers and joint bookrunners, and JPMorgan Chase Bank, N.A., as administrative agent (the “Administrative Agent”), to be guaranteed through a Guarantee Agreement by certain domestic subsidiaries of the Company (each a “Guarantor” and collectively the “Guarantors”; the Guarantors collectively with the Borrowers, the “Loan Parties”), and which may be amended from time to time (the “2015 Credit Agreement”). The 2015 Credit Agreement amends and restates the Company’s former Amended and Restated Credit Agreement, dated as of December 6, 2013, as amended (the “2013 Credit Agreement”), by and among the Company, and certain of its domestic subsidiaries, including former subsidiary Altra Power Transmission, Inc., the lenders party to the Amended and Restated Credit Agreement from time to time (the “Former Lenders”), J.P. Morgan Securities LLC, Wells Fargo Securities, LLC, and KeyBanc Capital Markets, Inc., as joint lead arrangers and joint bookrunners, and the Administrative Agent, guaranteed by certain domestic subsidiaries of the Company. The 2013 Credit Agreement itself was an amendment and restatement of a prior credit agreement. Pursuant to the 2013 Credit Agreement, the Former Lenders had made available to the Borrowers a revolving credit facility (the “Prior Revolving Credit Facility”) of $200 million, continued in effect an existing term loan then having a balance of approximately $94 million, and made an additional term loan of €50.0 million to Altra Netherlands. The two term loans described in the prior sentence are collectively referred to as the “Term Loans”.

Under the 2015 Credit Agreement, the amount of the Prior Revolving Credit Facility has been increased to $350 million (the “2015 Revolving Credit Facility”). The amounts available under the 2015 Revolving Credit Facility can be used for general corporate purposes, including acquisitions, and to repay existing indebtedness. A portion of the 2015 Revolving Credit Facility was used to repay the Term Loans. The Company wrote off approximately $0.5 million of financing costs in connection with the repayment.

The stated maturity of the 2015 Revolving Credit Facility was extended to October 22, 2020. The maturity of the Prior Revolving Credit Facility was December 6, 2018. The 2015 Credit Agreement continues to provide for a possible expansion of the credit facilities by an additional $150.0 million, which can be allocated as additional term loans and/or additional revolving credit loans.

The amounts available under the 2015 Revolving Credit Facility may be drawn upon in accordance with the terms of the 2015 Credit Agreement. All amounts outstanding under the 2015 Revolving Credit Facility are due on the stated maturity or such earlier time, if any, required under the 2015 Credit Agreement. The amounts owed under the 2015 Revolving Credit Facility may be prepaid at any time, subject to usual notification and breakage payment provisions. Interest on the amounts outstanding under the credit facilities is calculated using either an ABR Rate or Eurodollar Rate, plus the applicable margin. The applicable margins for Eurodollar

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Loans are between 1.25% to 2.00%, and for ABR Loans are between 0.25% and 1.00%. The amounts of the margins are calculated based on either a consolidated total net leverage ratio (as defined in the 2015 Credit Agreement), or the then applicable rating(s) of the Company’s debt if and then to the extent as provided in the 2015 Credit Agreement. A portion of the 2015 Revolving Credit Facility may also be used for the issuance of letters of credit, and a portion of the amount of the 2015 Revolving Credit Facility is available for borrowings in certain agreed upon foreign currencies. The 2015 Credit Agreement contains various affirmative and negative covenants and restrictions, which among other things, will require the Borrowers to provide certain financial reports to the Lenders, require the Company to maintain certain financial covenants relating to consolidated leverage and interest coverage, limit maximum annual capital expenditures, and limit the ability of the Company and its subsidiaries to incur or guarantee additional indebtedness, pay dividends or make other equity distributions, purchase or redeem capital stock or debt, make certain investments, sell assets, engage in certain transactions, and effect a consolidation or merger. The 2015 Credit Agreement also contains customary events of default.

Ratification Agreement

Pursuant to an Omnibus Reaffirmation and Ratification and Amendment of Collateral Documents entered into on October 22, 2015 in connection with the 2015 Credit Agreement by and among the Company, the Loan Parties and the Administrative Agent (the “Ratification Agreement”), the Loan Parties (exclusive of the foreign subsidiary Borrower) have reaffirmed their obligations to the Lenders under the Pledge and Security Agreement dated November 20, 2012 (the “Pledge and Security Agreement”), pursuant to which each Loan Party pledges, assigns and grants to the Administrative Agent, on behalf of and for the ratable benefit of the Lenders, a security interest in all of its right, title and interest in, to and under all personal property, whether now owned by or owing to, or after acquired by or arising in favor of such Loan Party (including under any trade name or derivations), and whether owned or consigned by or to, or leased from or to, such Loan Party, and regardless of where located, except for specific excluded personal property identified in the Pledge and Security Agreement (collectively, the “Collateral”). Notwithstanding the foregoing, the Collateral does not include, among other items, more than 65% of the capital stock of the first tier foreign subsidiaries of the Company. The Pledge and Security Agreement contains other customary representations, warranties and covenants of the parties. The 2015 Credit Agreement provides that the obligation to grant the security interest can cease upon the obtaining of certain corporate family credit ratings for the Company, but the obligation to grant a security interest is subject to subsequent reinstatement if the ratings are not maintained as provided in the 2015 Credit Agreement.

Pursuant to the Ratification Agreement, the Loan Parties (other than the foregoing subsidiary Borrower) have also reaffirmed their obligations under each of the Patent Security Agreement and a Trademark Security Agreement in favor of the Administrative Agent dated November 20, 2012 (the “2012 Security Agreements”) pursuant to which each of the Loan Parties signatory thereto pledges, assigns and grants to the Administrative Agent, on behalf of and for the ratable benefit of the Lenders, a security interest in all of its right, title and interest in, to and under all registered patents, patent applications, registered trademarks and trademark applications owned by such Loan Parties.

Additional Trademark Security Agreement and Patent Security Agreement

In connection with the reaffirmation of the Pledge and Security Agreement, certain of the Loan Parties delivered a new Patent Security Agreement and a new Trademark Security Agreement in favor of the Administrative Agent pursuant to which each of the Loan Parties signatory thereto pledges, assigns and grants to the Administrative Agent, on behalf of and for the ratable benefit of the Lenders, a security interest in all of its right, title and interest in, to and under all registered patents, patent applications, registered trademarks and trademark applications owned by such Loan Parties and not covered by the 2012 Security Agreements.

As of September 30, 2016 we had $117.5 million outstanding on our 2015 Revolving Credit Facility.  As of December 31, 2015 we had $145.2 million outstanding on our Prior Revolving Credit Facility. As of September 30, 2016 and December 31, 2015, we had $4.1 million, and $7.0 million in letters of credit outstanding, respectively. We had $228.4 million available to borrow under the 2015 Revolving Credit Facility at September 30, 2016. On October 21, 2016, the Company entered into a First Amendment to the Second Amended and Restated Credit Agreement. See Part II – Item 5 of this Quarterly Report for details on the First Amendment.

We were in compliance in all material respects with all covenants of the indenture governing the 2015 Credit Agreement at September 30, 2016.

Convertible Senior Notes

In March 2011, the Company issued Convertible Senior Notes (the “Convertible Notes”) due March 1, 2031. The Convertible Notes are guaranteed by the Company’s U.S. domestic subsidiaries. Interest on the Convertible Notes is payable semi-annually in arrears, on March 1 and September 1 of each year, commencing on September 1, 2011 at an annual rate of 2.75%. Proceeds from the offering were $81.3 million, net of fees and expenses that were capitalized.

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We were in compliance in all material respects with all covenants of the indenture governing the Convertible Notes at September 30, 2016

Borrowings

	Amounts in millions
	September 30, 2016		December 31, 2015
Debt:
Revolving Credit Facility	$	117.5	$	145.2
Convertible Notes		85.0		85.0
Equipment and working capital notes		-		2.8
Mortgages		13.3		10.3
Capital leases		0.5		0.5
Total debt	$	216.3	$	243.8

Cash and Cash Equivalents

The following is a summary of our cash balances and cash flows (in thousands) as of and for the year to date periods ended September 30, 2016 and September 30, 2015, respectively:

	September 30, 2016			September 30, 2015			Change
Cash and cash equivalents at the beginning of the year	$	50,320		$	47,503		$	2,817
Cash flows from operating activities		46,894			63,545			(16,651	)
Cash flows used in investing activities		(15,684	)		(17,980	)		2,296
Cash flows used in financing activities		(41,943	)		(38,308	)		(3,635	)
Effect of exchange rate changes on cash and cash    equivalents		178			(5,111	)		5,289
Cash and cash equivalents at the end of the period	$	39,765		$	49,649		$	(9,884	)

Cash Flows for 2016

Net cash provided from operating activities was approximately $46.9 million for the year to date period ended September 30, 2016. The net impact of the add-back of certain items including non-cash depreciation, amortization, stock-based compensation, accretion of debt discount, deferred financing costs, loss on impairment, and non-cash loss on foreign currency was approximately $26.9 million. Additionally, there was a net increase in current assets and liabilities of approximately $10.8 million.

Net cash used in investing activities for the quarter ended September 30, 2016 decreased approximately $2.3 million compared to the year to date period ended September 30, 2015. The decrease is attributed to lower capital expenditure spend compared to prior year.

Net cash used in financing activities in the quarter ended September 30, 2016 as compared to the quarter ended September 30, 2015 increased by $3.6 million. This increase relates primarily to the payment of debt under the Revolving Credit Facility partially offset by a decrease of $9.5 million in stock repurchases related to the Company’s share repurchase program compared with the prior year period.

We intend to use our remaining existing cash and cash equivalents and cash flow from operations to provide for our working capital needs, to fund potential future acquisitions, debt service, including principal payments, capital expenditures, pension funding, and to pay returns to our stockholders. As of September 30, 2016 we have approximately $34.9 million of cash and cash equivalents held by foreign subsidiaries that are generally subject to U.S. income taxation on repatriation to the U.S. We believe our future operating cash flows will be sufficient to meet our future operating and investing cash needs. Furthermore, the existing cash balances and the availability of additional borrowings under our Revolving Credit Facility provide additional potential sources of liquidity should they be required.

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Contractual Obligations

There were no material changes in our contractual obligations during the period ended September 30, 2016.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

We are exposed to various market risk factors such as fluctuating interest rates, changes in foreign currency rates, and changes in commodity prices. During the reporting period, there have been no material changes to the quantitative and qualitative disclosures regarding our market risk set forth in our Annual Report on Form 10-K for the year ended December 31, 2015.

Item 4. Controls and Procedures

Disclosure Controls and Procedures

As of September 30, 2016, our management, under the supervision and with the participation of our chief executive officer and chief financial officer, carried out an evaluation of the effectiveness of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act. Our disclosure controls and procedures are designed to provide reasonable assurance that information required to be disclosed in reports filed under the Exchange Act, such as this Form 10-Q, is (i) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and (ii) accumulated and communicated to management, including the principal executive and financial officers, as appropriate, to allow timely decisions regarding required disclosures. Based upon that evaluation, our chief executive officer and chief financial officer have concluded that, as of September 30, 2016, our disclosure controls and procedures are effective at a reasonable assurance level.

Changes in Internal Control Over Financial Reporting

There has been no change in our internal control over financial reporting (as defined in Rule 13a—15(f) under the Exchange Act) that occurred during our fiscal quarter ended September 30, 2016, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II - OTHER INFORMATION

Item 1. Legal Proceedings

We are, from time to time, party to various legal proceedings arising out of our business. During the reporting period, there have been no material changes to the description of legal proceedings set forth in our Annual Report on Form 10-K for the year ended December 31, 2015.

Item 1A. Risk Factors

The reader should carefully consider the Risk Factors described in our Annual Report on Form 10-K for the year ended December 31, 2015 filed with the Securities and Exchange Commission. Those risk factors described elsewhere in this report on Form 10-Q and in our Annual Report on Form 10-K for the year ended December 31, 2015 are not the only ones we face, but are considered to be the most material. These risk factors could cause our actual results to differ materially from those stated in forward looking statements contained in this Form 10-Q and elsewhere. All risk factors stated in our Annual Report on Form 10-K for the year ended December 31, 2015 are incorporated herein by reference.

During the reporting period, except as otherwise described below, there were no material changes to the risk factors previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2015 and in our Quarterly Report on Form 10-Q/A for the quarter ended June 30, 2016.

Our stockholders may experience dilution upon the conversion of our Convertible Notes.

Our Convertible Notes are convertible into shares of our common stock beginning March 1, 2030 or, under certain circumstances including where our stock trades above 130% of the conversion price for a specified period of time as set forth in the Convertible Notes, earlier. Upon conversion, we must deliver shares of our common stock or cash. The conversion rate of our Convertible Notes was initially 36.0985 shares of our common stock per $1,000 principal amount of our convertible notes (equivalent to a conversion price of approximately $27.70 per share of common stock), and as of December 31, 2015 is 38.26 shares of our common stock per $1,000 principal amount of our convertible notes (equivalent to a conversion price of approximately $26.13 per share of common stock), subject to adjustment in certain circumstances. Based on the current conversion rate, the maximum number of shares of common stock that could be issued upon conversion of the $85.0 million convertible debt currently outstanding is 3,252,363. In addition, our stockholders will experience dilution in their ownership percentage of our common stock upon our issuance of common stock in connection with the conversion of our convertible notes and any dividends paid on our common stock will also be paid on shares issued in connection with such conversion after such issuance. In the event the average price of our stock exceeds the conversion price we will be required to include an additional amount of shares in our calculation of diluted weighted average shares outstanding, in accordance with ASC 260-10-45-43 through 45-47, which will have the effect of decreasing our earnings per share. Currently, in the event the average price of our stock exceeds the conversion price, we will include an amount of shares equal to this excess, the conversion premium, in our calculation of diluted weighted average shares outstanding based on our application of ASC-260-10-45-43 through 45-47.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The following table summarizes our share repurchase activity by month for the quarter ended September 30, 2016.

Period	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1)		Approximate Dollar Value of Shares That May Yet be Purchased Under The Plans or Programs
July 1, 2016 to July 11, 2016		5,461	$	27.45		5,461	$	10,542,556
July 1, 2016 to July 31, 2016		—	$	—		—	$	10,542,556
August 1, 2016 to August 31, 2016		—	$	—		—	$	10,542,556

(1) During the quarter ended September 30, 2016, the Company repurchased shares of common stock under its share repurchase program initiated in May 2014, which authorized the buyback of up to $50.0 million of the Company’s common stock.  Under the program, the Company is authorized to purchase shares on the open market, through block trades, in privately negotiated transactions, in compliance with SEC Rule 10b-18 (including through Rule 10b5-1 plans), or in other appropriate manners. The Company has adopted a Rule 10b5-1 plan under which it is making purchases in compliance with the terms of such plan. The

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Company is also making open market share repurchases at the discretion of management.  Shares acquired through the repurchase program will be retired. The share repurchase plan terminates on December 31, 2016.  The Company retains the right to limit, terminate or extend the share repurchase program at any time without prior notice.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not Applicable.

Item 5. Other Information

Stromag Acquisition

On October 21, 2016, the Company entered into a binding agreement (the “French Agreement”) with GKN Industries, Limited (“GKN”). The French Agreement provides that, subject to completion of certain employee consultation procedures required under applicable law and certain other customary conditions, the parties to the French Agreement will enter into a definitive sale and purchase agreement, attached as an exhibit to the French Agreement (the “Agreed Form Sale and Purchase Agreement”), providing for the sale and transfer of GKN’s Germany-based Stromag AG business (the “Acquired Company”) for a purchase price comprising of the assumption of debt totaling 14 million euros and cash consideration, payable at closing, of approximately 184 million euros, subject to certain adjustments (the “Stromag Acquisition”).

Under the French Agreement, GKN has agreed to promptly commence the employee consultation process required under applicable law to obtain opinions of the Stromag works councils in France. Subject to the conditions set forth in the French Agreement, the parties to the French Agreement will execute and deliver the Agreed Form Sale and Purchase Agreement within two business days following the satisfaction of the employee consultation process requirements.

The French Agreement contains representations, warranties, and covenants that we believe are customary for a transaction of this size and type, as well as indemnification provisions subject to specified limitations. The closing of the transaction is subject to several customary closing conditions, including receipt of required regulatory approvals, as well as the aforementioned consultation process with the Stromag works councils, and is expected to take place during the first quarter of 2017. No assurances can be given that the Stromag Acquisition will be timely consummated or consummated at all.

The foregoing summary of the French Agreement and the transactions contemplated thereby is not intended to be complete and is qualified in its entirety by reference to the actual French Agreement, which will be filed as an exhibit to the Company’s Annual Report on Form 10-K for its fiscal year ending December 31, 2016.

Amended and Restated Credit Agreement

On October 21, 2016, the Company entered into a First Amendment to the Second Amended and Restated Credit Agreement (the “First Amendment”) by and among the Company and Altra Industrial Motion Netherlands, B.V. (“Altra B.V.”), one of the Company’s foreign subsidiaries (collectively, the “Borrowers”), the Subsidiary Guarantors to the First Amendment, JPMorgan Chase Bank, N.A., as Administrative Agent, as Joint Lead Arranger and Joint Bookrunner, Wells Fargo Bank, N.A., as Joint Lead Arranger and Joint Bookrunner, KeyBank National Association, as Joint Lead Arranger and Joint Bookrunner, and certain lender parties to the First Amendment (collectively, the “Lenders”).

The First Amendment would amend the Company’s Second Amended and Restated Credit Agreement, dated as of October 22, 2015 (the “Credit Agreement”). However, the amendments to the Credit Agreement contained in the First Amendment will not be effective and will not amend the Credit Agreement unless and until certain conditions precedent have been met, including that the Company has provided the Administrative Agent with written notice that the conditions precedent to the closing of the Stromag Acquisition have been satisfied. In the event that the Stromag Acquisition does not occur, or if the other conditions precedent are not satisfied or waived, then the First Amendment shall not become effective.

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If it becomes effective, the First Amendment, would increase the revolving credit facility under the Credit Agreement by $75,000,000 (the “Revolver Increase”), so that after giving effect to the Revolver Increase, the aggregate revolving commitments would total $425,000,000. The First Amendment would also reset the possible expansion of additional future loan commitments to $150,000,000.  In addition, the First Amendment would increase the multicurrency sublimit to $250 million and adjust certain financial covenants. The Company expects to use the increased facility to finance the Stromag Acquisition. Except as otherwise expressly provided by the First Amendment, all of the respective terms, conditions and provisions of the Credit Agreement and the other loan documents remain the same.

The foregoing summary of the First Amendment and the transactions contemplated thereby is not intended to be complete and is qualified in its entirety by reference to the actual First Amendment, which will be filed as an exhibit to the Company’s Annual Report on Form 10-K for its fiscal year ending December 31, 2016.

Disclosure of Activities Under Section 13(r) of the Securities Exchange Act of 1934

Under Section 219 of the Iran Threat Reduction and Syria Human Rights Act of 2012, which added Section 13(r) to the Securities Exchange Act of 1934, as amended, we are required to disclose whether Altra or any of its affiliates knowingly engaged in certain activities, transactions or dealings relating to Iran or certain designated individuals or entities. Disclosure is required even when the activities were conducted outside the United States by non-U.S. entities and even when such activities were conducted in compliance with applicable law.  The following information is disclosed pursuant to Section 13(r).  None of the following activities involved U.S. affiliates of Altra.

1. During the reporting period, Bauer Gear Motor GmbH, a subsidiary of Altra organized and existing under the laws of Germany (“Bauer”), sold (i) one (1) gear motor to Tak Yab Asia Group (“Tak Yab”), a distributor located in Tehran, Iran, for Tak Yab’s use in a product fair and (ii) ten (10) gear motors to Tak Yab for re-sale to and ultimate end use by Iran Khodro, also located in Tehran, Iran, for use in a painting booth produced by Iran Khodro.  Gross revenues received by Bauer in connection with these transactions were approximately EUR 1.9 thousand and net profits were approximately EUR 1.2 thousand.  Bauer intends to continue pursuing opportunities with this distributor and end customer, to the extent compliant with applicable law.

2. During the reporting period, Svendborg Brakes ApS, a subsidiary of Altra organized and existing under the laws of Denmark (“Svendborg Brakes”), sold four (4) brake indicators to National Iranian Copper Industries (“NICI”), a company located in Tehran, Iran, for use in a brake installed in a mine.  Gross revenues received by Svendborg Brakes in connection with this transaction were approximately EUR 2 thousand and net profits were approximately EUR 1.5 thousand.  Svendborg Brakes intends to continue pursuing opportunities with this customer, to the extent compliant with applicable law.

Item 6. Exhibits

The following exhibits are filed as part of this report:

Exhibit Number	Description
3.1(1)	Second Amended and Restated Certificate of Incorporation of the Registrant
3.2(2)	Second Amended and Restated Bylaws of the Registrant
31.1*	Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*	Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1**	Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2**	Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

38

101* The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2016, formatted in XBRL (Extensible Business Reporting Language): (i) the Unaudited Condensed Consolidated Statement of Operations, (ii) the Unaudited Condensed Consolidated Statement of Comprehensive Income (Loss), (iii) the Unaudited Condensed Consolidated Balance Sheet, (iv) the Unaudited Condensed Consolidated Statement of Cash Flows, (v) the Unaudited Consolidated Statement of Stockholders’ Equity and (vi) Notes to Unaudited Condensed Consolidated Interim Financial Statements.

* Filed herewith.

** Furnished herewith.

(1) Incorporated by reference to Altra Industrial Motion Corp.’s (formerly known as Altra Holdings, Inc.) Registration Statement on Form S-1A, as amended, filed with the Securities and Exchange Commission on December 4, 2006.

(2) Incorporated by reference to Altra Industrial Motion Corp.’s Current Report on Form 8-K filed on October 27, 2008.

39

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		ALTRA INDUSTRIAL MOTION CORP.
October 26, 2016	By:	/s/ Carl R. Christenson
	Name:	Carl R. Christenson
	Title	Chairman and Chief Executive Officer
October 26, 2016	By:	/s/ Christian Storch
	Name:	Christian Storch
	Title:	Vice President and Chief Financial Officer
October 26, 2016	By:	/s/ Todd B. Patriacca
	Name:	Todd B. Patriacca
	Title:	Vice President of Finance, Corporate Controller and Treasurer

40

EXHIBIT INDEX

Exhibit Number	Description
31.1*	Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*	Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1**	Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2**	Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101*	The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2016, formatted in XBRL (Extensible Business Reporting Language): (i) the Unaudited Condensed Consolidated Statement of Operations, (ii) the Unaudited Condensed Statement of Comprehensive Income (Loss), (iii) the Unaudited Condensed Consolidated Balance Sheet, (iv) the Unaudited Condensed Consolidated Statement of Cash Flows, (v) the Unaudited Consolidated Statement of Stockholders’ Equity and (vi) Notes to Unaudited Condensed Consolidated Interim Financial Statements.

* Filed herewith.

** Furnished herewith.

41

EX-31.1

EXHIBIT 31.1

Certification of Chief Executive Officer

I, Carl R. Christenson, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Altra Industrial Motion Corp.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: October 26, 2016	By:	/s/ Carl R. Christenson
	Name:	Carl R. Christenson
	Title:	Chairman and Chief Executive Officer

EX-31.2

EXHIBIT 31.2

Certification of Chief Financial Officer

I, Christian Storch, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Altra Industrial Motion Corp.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: October 26, 2016	By:	/s/ Christian Storch
	Name:	Christian Storch
	Title:	Vice President and Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Altra Industrial Motion Corp. (the “Company”) on Form 10-Q for the period ended September 30, 2016 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Carl R. Christenson, Chairman and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002:

1. The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: October 26, 2016	By:	/s/ Carl R. Christenson
	Name:	Carl R. Christenson
	Title:	Chairman and Chief Executive Officer

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Altra Industrial Motion Corp. (the “Company”) on Form 10-Q for the period ended September 30, 2016 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Christian Storch, Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002:

1. The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: October 26, 2016	By:	/s/ Christian Storch
	Name:	Christian Storch
	Title:	Vice President and Chief Financial Officer

XML

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2016	Oct. 19, 2016
Document And Entity Information [Abstract]
Entity Registrant Name	Altra Industrial Motion Corp.
Entity Central Index Key	0001374535
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Document Type	10-Q
Document Period End Date	Sep. 30, 2016
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	Q3
Amendment Flag	false
Entity Common Stock, Shares Outstanding (in shares)		25,884,323

XML

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Current assets:
Cash and cash equivalents	$ 39,765	$ 50,320
Trade receivables, less allowance for doubtful accounts of $2,150 and $2,165 at September 30, 2016 and December 31, 2015, respectively	104,671	94,720
Inventories	121,443	121,156
Income tax receivable	2,644	5,146
Prepaid expenses and other current assets	10,486	11,217
Assets held for sale	4,732	4,597
Total current assets	283,741	287,156
Property, plant and equipment, net	142,748	145,413
Intangible assets, net	90,508	96,069
Goodwill	97,775	97,309
Deferred income taxes	3,197	3,201
Other non-current assets, net	2,489	3,184
Total assets	620,458	632,332
Current liabilities:
Accounts payable	41,845	40,297
Accrued payroll	22,141	22,312
Accruals and other current liabilities	36,721	34,990
Income tax payable	3,891	3,563
Current portion of long-term debt	400	3,187
Total current liabilities	104,998	104,349
Long-term debt - less current portion and net of unaccreted discount	209,754	231,568
Deferred income taxes	44,299	44,185
Pension liabilities	9,171	8,328
Long-term taxes payable	670	647
Other long-term liabilities	691	688
Stockholders’ equity:
Common stock ($0.001 par value, 90,000,000 shares authorized, 25,684,806 and 25,772,507 issued and outstanding at September 30, 2016 and December 31, 2015, respectively)	26	26
Additional paid-in capital	122,203	124,834
Retained earnings	193,344	181,539
Accumulated other comprehensive loss	(64,698)	(63,832)
Total stockholders’ equity	250,875	242,567
Total liabilities, and stockholders’ equity	$ 620,458	$ 632,332

XML

Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Statement Of Financial Position [Abstract]
Allowance for doubtful accounts	$ 2,150	$ 2,165
Common stock, par value (in usd per share)	$ 0.001	$ 0.001
Common stock, shares authorized (in shares)	90,000,000	90,000,000
Common stock, shares issued (in shares)	25,684,806	25,772,507
Common stock, shares outstanding (in shares)	25,684,806	25,772,507

XML

Condensed Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Income Statement [Abstract]
Net sales	$ 173,132	$ 183,053	$ 536,259	$ 573,024
Cost of sales	118,957	127,253	369,254	398,765
Gross profit	54,175	55,800	167,005	174,259
Operating expenses:
Selling, general and administrative expenses	36,142	34,279	105,548	105,733
Research and development expenses	4,267	4,210	13,345	13,506
Restructuring costs	3,397	651	6,591	4,994
Total operating expenses	43,806	39,140	125,484	124,233
Income from operations	10,369	16,660	41,521	50,026
Other non-operating income and expense:
Interest expense, net	2,815	2,924	8,615	8,858
Other non-operating expense (income), net	45	685	(438)	606
Total other non-operating expense, net	2,860	3,609	8,177	9,464
Income before income taxes	7,509	13,051	33,344	40,562
Provision for income taxes	2,196	2,830	9,872	11,326
Net income	5,313	10,221	23,472	29,236
Net loss attributable to non-controlling interest	0	0	0	63
Net income attributable to Altra Industrial Motion Corp.	$ 5,313	$ 10,221	$ 23,472	$ 29,299
Weighted average shares, basic	25,726	26,145	25,684	26,140
Weighted average shares, diluted	26,021	26,145	25,813	26,184
Net income per share:
Basic net income attributable to Altra Industrial Motion Corp.	$ 0.21	$ 0.39	$ 0.91	$ 1.12
Diluted net income attributable to Altra Industrial Motion Corp.	0.20	0.39	0.91	1.12
Cash dividend declared	$ 0.15	$ 0.15	$ 0.45	$ 0.42

XML

Condensed Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Statement Of Income And Comprehensive Income [Abstract]
Net Income	$ 5,313	$ 10,221	$ 23,472	$ 29,236
Other Comprehensive income (loss):
Foreign currency translation adjustment	104	(4,474)	(866)	(16,242)
Change in fair value of interest rate swap, net of tax	0	(64)	0	(283)
Other comprehensive loss	104	(4,538)	(866)	(16,525)
Comprehensive income	5,417	5,683	22,606	12,711
Comprehensive loss attributable to non-controlling interest	0	0	0	(192)
Comprehensive income attributable to Altra Industrial Motion Corp.	$ 5,417	$ 5,683	$ 22,606	$ 12,903

XML

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Cash flows from operating activities
Net Income	$ 23,472	$ 29,236
Adjustments to reconcile net income to net cash flows:
Depreciation	16,235	16,232
Amortization of intangible assets	6,384	6,437
Amortization of deferred financing costs	590	689
Gain on foreign currency, net	(130)	(128)
Accretion of debt discount, net	2,970	2,740
Loss on disposal / impairment of fixed assets	582	856
Stock based compensation	3,370	3,231
Changes in assets and liabilities:
Trade receivables	(10,461)	(1,552)
Inventories	(837)	2,367
Accounts payable and accrued liabilities	3,226	7,106
Other current assets and liabilities	728	(2,609)
Other operating assets and liabilities	765	(1,060)
Net cash provided by operating activities	46,894	63,545
Cash flows from investing activities
Purchase of property, plant and equipment	(15,684)	(19,181)
Proceeds from sale of land		1,201
Net cash used in investing activities	(15,684)	(17,980)
Cash flows from financing activities
Payments on term loan facility	0	(16,027)
Payments on Revolving Credit Facility	(30,870)	(9,000)
Dividend payments	(7,784)	(7,130)
Proceeds from equipment and working capital notes	2,893	1,100
Borrowing under Revolving Credit Facility	3,000	6,000
Payments of equipment and working capital notes	(2,832)	(3,639)
Proceeds from mortgages and other debt	0	7,085
Shares surrendered for tax withholding	(1,288)	(1,182)
Payments on mortgages and other debt	(349)	(352)
Purchase of non-controlling interest	0	(878)
Purchases of common stock under share repurchase program	(4,713)	(14,285)
Net cash used in financing activities	(41,943)	(38,308)
Effect of exchange rate changes on cash and cash equivalents	178	(5,111)
Net change in cash and cash equivalents	(10,555)	2,146
Cash and cash equivalents at beginning of year	50,320	47,503
Cash and cash equivalents at end of period	39,765	49,649
Cash paid during the period for:
Interest	5,856	5,995
Income taxes	$ 7,665	$ 10,833

XML

Consolidated Statements of Stockholders' Equity - USD ($) shares in Thousands, $ in Thousands	Total	Common Stock [Member]	Additional Paid in Capital [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive Loss [Member]	Redeemable Non-Controlling Interest [Member]
Beginning balance at Dec. 31, 2014	$ 258,759	$ 26	$ 139,087	$ 161,061	$ (41,415)	$ 883
Beginning balance (in shares) at Dec. 31, 2014		26,354
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock-based compensation and vesting of restricted stock	2,049		2,049
Stock-based compensation and vesting of restricted stock (in shares)		76
Net income attributable to Altra Industrial Motion Corp.	29,299			29,299
Net loss attributable to non-controlling interest	63					(63)
Purchase of Minority Interest	(187)		223		(410)	(691)
Dividends declared	(11,038)			(11,038)
Change in fair value of interest rate swap	(283)				(283)
Cumulative foreign currency translation adjustment	(16,242)				(16,242)	$ (129)
Repurchases of common stock	(14,285)		(14,285)
Repurchases of common stock (in shares)		(548)
Ending balance at Sep. 30, 2015	248,072	$ 26	127,074	179,322	(58,350)
Ending balance (in shares) at Sep. 30, 2015		25,882
Beginning balance at Dec. 31, 2015	242,567	$ 26	124,834	181,539	(63,832)
Beginning balance (in shares) at Dec. 31, 2015		25,773
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock-based compensation and vesting of restricted stock	2,082		2,082
Stock-based compensation and vesting of restricted stock (in shares)		89
Net income attributable to Altra Industrial Motion Corp.	23,472			23,472
Net loss attributable to non-controlling interest	0
Dividends declared	(11,667)			(11,667)
Cumulative foreign currency translation adjustment	(866)				(866)
Repurchases of common stock	(4,713)		(4,713)
Repurchases of common stock (in shares)		(177)
Ending balance at Sep. 30, 2016	$ 250,875	$ 26	$ 122,203	$ 193,344	$ (64,698)
Ending balance (in shares) at Sep. 30, 2016		25,685

XML

Organization and Nature of Operations

9 Months Ended

Sep. 30, 2016

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Organization and Nature of Operations

1. Organization and Nature of Operations

Headquartered in Braintree, Massachusetts, Altra Industrial Motion Corp. (the “Company”) is a leading multi-national designer, producer and marketer of a wide range of electro-mechanical power transmission products. The Company brings together strong brands covering over 42 product lines with production facilities in twelve countries. Altra’s leading brands include Ameridrives Couplings, Bauer Gear Motor, Bibby Turboflex, Boston Gear, Delroyd Worm Gear, Formsprag Clutch, Guardian Couplings, Huco, Industrial Clutch, Inertia Dynamics, Kilian Manufacturing, Lamiflex Couplings, Marland Clutch, Matrix, Nuttall Gear, Stieber Clutch, Svendborg Brakes, TB Wood’s, Twiflex, Warner Electric, Warner Linear, and Wichita Clutch.

XML

Basis of Presentation

9 Months Ended

Sep. 30, 2016

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Basis of Presentation

2. Basis of Presentation

The Company’s unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and do not include all of the information and note disclosures required by accounting principles generally accepted in the United States of America. These statements should be read in conjunction with the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015. In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments, consisting of normal recurring adjustments, necessary to present fairly the Company’s financial position for the interim periods presented, and cash flows for the interim periods presented.  The results are not necessarily indicative of future results.  The Company considers events or transactions that occur after the balance sheet date but before the financial statements are issued to provide additional evidence relative to certain estimates or to identify matters that require additional disclosure.

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Recent Accounting Pronouncements

9 Months Ended

Sep. 30, 2016

Accounting Changes And Error Corrections [Abstract]

Recent Accounting Pronouncements

3. Recent Accounting Pronouncements

In August 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2016-15, Statement of Cash Flows (Topic 230): Classification of certain cash receipts and cash payments (a consensus of the emerging issues task force) (“ASU 2016-15”). This ASU addresses the following eight specific cash flow issues: Debt prepayment or debt extinguishment costs; settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing; contingent consideration payments made after a business combination; proceeds from the settlement of insurance claims; proceeds from the settlement of corporate-owned life insurance policies (including bank-owned life insurance policies); distributions received from equity method investees; beneficial interests in securitization transactions; and separately identifiable cash flows and application of the predominance principle. This guidance will be effective for the Company on January 1, 2018. We are currently evaluating the impact this guidance will have on our consolidated financial statements.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). ASU 2016-13 is intended to provide more decision-useful information about expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date.  The main provisions include presenting financial assets measured at amortized cost at the amount expected to be collected, which is net of an allowance for credit losses, and recording credit losses related to available-for-sale securities through an allowance for credit losses.  The amendments in ASU 2016-13 are effective for fiscal years beginning after December 15, 2019, and must be applied using a modified retrospective approach with earlier adoption permitted for fiscal years beginning after December 15, 2018. We are currently evaluating the impact this guidance will have on our consolidated financial statements.

In March 2016, the FASB issued ASU 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting (“ASU 2016-09”). The updated guidance revises aspects of stock-based compensation guidance which include income tax consequences, classification of awards as equity or liabilities, and classification on the statement of cash flows. The new standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016. Early adoption is permitted. We are evaluating the impact of adopting this new accounting guidance on our consolidated financial statements.

In February 2015, the FASB issued ASU 2016-02, Leases (Topic 842) (“ASU 2016-02”). The ASU requires management to recognize lease assets and lease liabilities by lessees for all operating leases. The ASU is effective for periods beginning after December 15, 2018 and interim periods therein on a modified retrospective basis. We are currently evaluating the impact this guidance will have on our consolidated financial statements.

In May 2014, the FASB issued ASU No. 2014-09 Revenue from Contracts with Customers (“ASU 2014-09”). ASU 2014-09 provides a single principles-based, five-step model to be applied to all contracts with customers. The five steps are to (i) identify the contracts with the customer, (ii) identify the performance obligations in the contact, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract and (v) recognize revenue when each performance obligation is satisfied. Revenue will be recognized when promised goods or services are transferred to the customer in an amount that reflects the consideration expected in exchange for those goods or services. In July 2015, the FASB agreed to delay the effective date of ASU 2014-09 for one year and to permit early adoption by entities as of the original effective dates. Considering the one year deferral, ASU 2014-09 will be effective for the Company beginning on January 1, 2018 and the standard allows for either full retrospective adoption or modified retrospective adoption. The Company is continuing to evaluate the impact that the adoption of this guidance will have on our financial condition, results of operations and the presentation of our consolidated financial statements.

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Fair Value of Financial Instruments

9 Months Ended

Sep. 30, 2016

Fair Value Disclosures [Abstract]

Fair Value of Financial Instruments

4. Fair Value of Financial Instruments

Fair value is determined based upon the exit price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants, as determined by either the principal market or the most advantageous market. Inputs used in the valuation techniques to derive fair values are classified based on a three-level hierarchy, as follows:

• Level 1- Quoted prices in active markets for identical assets or liabilities.

• Level 2- Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets with insufficient volume or infrequent transactions (less active markets); or model-derived

• Level 3- Unobservable inputs to the valuation methodology that are significant to the measurement of fair value of assets or liabilities.

The Company considers all highly liquid investments purchased with a remaining maturity of three months or less to be cash equivalents.

The carrying values of financial instruments, including accounts receivable, cash equivalents, accounts payable, and other accrued liabilities approximate fair value. Debt under the Company’s 2015 Credit Agreement approximates the fair value due to the variable rate nature at current market rates.

The carrying amount of the 2.75% Convertible Notes (the “Convertible Notes”) was $85 million at both September 30, 2016 and December 31, 2015. The estimated fair value of the Convertible Notes at September 30, 2016 and December 31, 2015 was $101.6 million and $91.7 million, respectively, based on inputs other than quoted prices that are observable for the Convertible Notes (Level 2).

Included in cash and cash equivalents at September 30, 2016 and December 31, 2015 are money market fund investments of $0.3 million, which are reported at fair value based on quoted market prices for such investments (Level 1).

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Changes in Accumulated Other Comprehensive Loss by Component

9 Months Ended

Sep. 30, 2016

Equity [Abstract]

Changes in Accumulated Other Comprehensive Income (Loss) by Component

5. Changes in Accumulated Other Comprehensive Loss by Component

The following is a reconciliation of changes in accumulated other comprehensive loss by component for the periods presented:

	Gains and Losses on Cash Flow Hedges			Defined Benefit Pension Plans			Cumulative Foreign Currency Translation Adjustment			Total
Accumulated Other Comprehensive Loss by Component,    January 1, 2016	$	(140	)	$	(5,807	)	$	(57,885	)	$	(63,832	)
Net current-period Other Comprehensive Income (Loss)		—			134			(1,000	)		(866	)
Accumulated Other Comprehensive Loss by Component,    September 30, 2016	$	(140	)	$	(5,673	)	$	(58,885	)	$	(64,698	)

	Gains and Losses on Cash Flow Hedges			Defined Benefit Pension Plans			Cumulative Foreign Currency Translation Adjustment			Total
Accumulated Other Comprehensive Income (Loss) by    Component, January 1, 2015	$	143		$	(4,818	)	$	(36,740	)	$	(41,415	)
Cumulative losses transferred from Lamiflex		—			—			(410	)		(410	)
Net current-period Other Comprehensive Loss		(283	)		—			(16,242	)		(16,525	)
Accumulated Other Comprehensive Loss by Component,    September 30, 2015	$	(140	)	$	(4,818	)	$	(53,392	)	$	(58,350	)

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Net Income per Share

9 Months Ended

Sep. 30, 2016

Earnings Per Share [Abstract]

Net Income per Share

6. Net Income per Share

Basic earnings per share is based on the weighted average number of shares of common stock outstanding, and diluted earnings per share is based on the weighted average number of shares of common stock outstanding and all potentially dilutive common stock equivalents outstanding. Common stock equivalents are included in the per share calculations when the effect of their inclusion is dilutive.

The following is a reconciliation of basic to diluted net income per share:

	Quarter Ended				Year to Date Ended
	September 30, 2016		September 30, 2015		September 30, 2016		September 30, 2015
Net income attributable to Altra Industrial Motion Corp.	$	5,313	$	10,221	$	23,472	$	29,299
Shares used in net income per common share - basic		25,726		26,145		25,684		26,140
Dilutive effect of the equity premium on Convertible Notes    at the average price of common stock		295		-		123		38
Incremental shares of unvested restricted common stock		-		-		6		6
Shares used in net income per common share - diluted		26,021		26,145		25,813		26,184
Earnings per share:
Basic net income attributable to Altra Industrial    Motion Corp.	$	0.21	$	0.39	$	0.91	$	1.12
Diluted net income attributable to Altra Industrial    Motion Corp.	$	0.20	$	0.39	$	0.91	$	1.12

During the quarter ended September 30, 2016, the Company’s common stock price exceeded the current conversion price of the Company’s Convertible Notes, resulting in additional shares being included in net income per common share in the diluted earnings per share calculation above.

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Inventories

9 Months Ended

Sep. 30, 2016

Inventory Disclosure [Abstract]

Inventories

7. Inventories

Inventories at September 30, 2016 and December 31, 2015 consisted of the following:

	September 30, 2016		December 31, 2015
Raw materials	$	35,758	$	34,169
Work in process		11,915		12,864
Finished goods		73,770		74,123
	$	121,443	$	121,156

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Goodwill and Intangible Assets

9 Months Ended

Sep. 30, 2016

Goodwill And Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets

8. Goodwill and Intangible Assets

Changes in goodwill from January 1, through September 30, 2016 were as follows:

	Couplings, Clutches & Brakes		Electromagnetic Clutches & Brakes		Gearing		Total
Net goodwill balance January 1, 2016	$	25,290	$	24,661	$	47,358	$	97,309
Impact of changes in foreign currency and other		136		29		301		466
Net goodwill balance September 30, 2016	$	25,426	$	24,690	$	47,659	$	97,775

Other intangible assets as of September 30, 2016 and December 31, 2015 consisted of the following:

	September 30, 2016						December 31, 2015
	Cost		Accumulated Amortization		Net		Cost		Accumulated Amortization		Net
Other intangible assets
Intangible assets not subject to amortization:
Tradenames and trademarks	$	39,305	$	—	$	39,305	$	39,625	$	—	$	39,625
Intangible assets subject to amortization:
Customer relationships		113,309		62,744	$	50,565		112,408		56,677		55,731
Product technology and patents		6,111		5,473	$	638		6,049		5,336		713
Total intangible assets	$	158,725	$	68,217	$	90,508	$	158,082	$	62,013	$	96,069

The Company recorded $2.1 million of amortization expense in each of the quarters ended September 30, 2016 and 2015, and recorded $6.4 of amortization in each of the year to date periods ended September 30, 2016 and 2015.

The estimated amortization expense for intangible assets is approximately $2.0 million for the remainder of 2016, $8.3 million in each of the next four years and then $16.1 million thereafter.

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Warranty Costs

9 Months Ended

Sep. 30, 2016

Guarantees [Abstract]

Warranty Costs

9. Warranty Costs

The contractual warranty period of the Company's products generally ranges from three months to two years with certain warranties extending for longer periods. Estimated expenses related to product warranties are accrued at the time products are sold to customers and are recorded in accruals and other current liabilities on the unaudited condensed consolidated balance sheet. Estimates are established using historical information as to the nature, frequency and average costs of warranty claims. Changes in the carrying amount of accrued product warranty costs for each of the year-to-date periods ended September 30, 2016 and September 30, 2015 are as follows:  

	September 30, 2016			September 30, 2015
Balance at beginning of period	$	9,468		$	7,792
Accrued current period warranty expense		1,732			3,641
Payments and adjustments		(2,700	)		(1,760	)
Balance at end of period	$	8,500		$	9,673

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Debt

9 Months Ended

Sep. 30, 2016

Debt Disclosure [Abstract]

Debt

10. Debt

Outstanding debt obligations at September 30, 2016 and December 31, 2015 were as follows.

	September 30, 2016			December 31, 2015
Debt:
Revolving Credit Facility	$	117,509		$	145,152
Convertible Notes		85,000			85,000
Mortgages		13,339			10,333
Equipment and working capital notes		—			2,832
Capital leases		398			500
Total debt		216,246			243,817
Less: debt discount, net of accretion		(6,092	)		(9,062	)
Total debt, net of unaccreted discount	$	210,154		$	234,755
Less current portion of long-term debt		(400	)		(3,187	)
Total long-term debt, net of unaccreted discount	$	209,754		$	231,568

Second Amended and Restated Credit Agreement

On October 22, 2015, the Company entered into a Second Amended and Restated Credit Agreement by and among the Company, Altra Industrial Motion Netherlands, B.V. (“Altra Netherlands”), one of the Company’s foreign subsidiaries (collectively with the Company, the “Borrowers”), the lenders party to the Second Amended and Restated Credit Agreement from time to time (collectively, the “Lenders”), J.P. Morgan Securities LLC, Wells Fargo Securities, LLC, and KeyBanc Capital Markets, Inc., as joint lead arrangers and joint bookrunners, and JPMorgan Chase Bank, N.A., as administrative agent (the “Administrative Agent”), to be guaranteed through a Guarantee Agreement by certain domestic subsidiaries of the Company (each a “Guarantor” and collectively the “Guarantors”; the Guarantors collectively with the Borrowers, the “Loan Parties”), and which may be amended from time to time (the “2015 Credit Agreement”). The 2015 Credit Agreement amends and restates the Company’s former Amended and Restated Credit Agreement, dated as of December 6, 2013, as amended (the “2013 Credit Agreement”), by and among the Company, and certain of its domestic subsidiaries, including former subsidiary Altra Power Transmission, Inc., the lenders party to the Amended and Restated Credit Agreement from time to time (the “Former Lenders”), J.P. Morgan Securities LLC, Wells Fargo Securities, LLC, and KeyBanc Capital Markets, Inc., as joint lead arrangers and joint bookrunners, and the Administrative Agent, guaranteed by certain domestic subsidiaries of the Company. The 2013 Credit Agreement itself was an amendment and restatement of a prior credit agreement. Pursuant to the 2013 Credit Agreement, the Former Lenders had made available to the Borrowers a revolving credit facility (the “Prior Revolving Credit Facility”) of $200 million, which continued in effect an existing term loan then having a balance of approximately $94 million, and made an additional term loan of €50 million to Altra Netherlands. The two term loans described in the prior sentence are collectively referred to as the “Term Loans.”

Under the 2015 Credit Agreement, the amount of the Prior Revolving Credit Facility was increased to $350 million (the “2015 Revolving Credit Facility”). The amounts available under the 2015 Revolving Credit Facility can be used for general corporate purposes, including acquisitions, and to repay existing indebtedness. A portion of the 2015 Revolving Credit Facility was used to repay the Term Loans. The Company wrote off approximately $0.5 million of previously recognized deferred financing costs in connection with the repayment.

The stated maturity of the 2015 Revolving Credit Facility was extended to October 22, 2020. The maturity of the Prior Revolving Credit Facility had been December 6, 2018. The 2015 Credit Agreement continues to provide for a possible expansion of the credit facilities by an additional $150 million, which can be allocated as additional term loans and/or additional revolving credit loans.

The amounts available under the 2015 Revolving Credit Facility may be drawn upon in accordance with the terms of the 2015 Credit Agreement. All amounts outstanding under the 2015 Revolving Credit Facility are due on the stated maturity or such earlier time, if any, required under the 2015 Credit Agreement. The amounts owed under the 2015 Revolving Credit Facility may be prepaid at any time, subject to usual notification and breakage payment provisions. Interest on the amounts outstanding under the 2015 Revolving Credit Facility is calculated using either an ABR Rate or Eurodollar Rate, plus the applicable margin. The applicable margins for Eurodollar Loans are between 1.25% to 2.00%, and for ABR Loans are between 0.25% and 1.00%. The amounts of the margins are calculated based on either a consolidated total net leverage ratio (as defined in the 2015 Credit Agreement), or the then applicable rating(s) of the Company’s debt and then to the extent as provided in the 2015 Credit Agreement. The rate at December 31, 2015 was 1.5%.  A portion of the 2015 Revolving Credit Facility may also be used for the issuance of letters of credit, and a portion of the amount of the 2015 Revolving Credit Facility is available for borrowings in certain agreed upon foreign currencies. The 2015 Credit Agreement contains various affirmative and negative covenants and restrictions, which among other things, will require the Borrowers to provide certain financial reports to the Lenders, require the Company to maintain certain financial covenants relating to consolidated leverage and interest coverage, limit maximum annual capital expenditures, and limit the ability of the Company and its subsidiaries to incur or guarantee additional indebtedness, pay dividends or make other equity distributions, purchase or redeem capital stock or debt, make certain investments, sell assets, engage in certain transactions, and effect a consolidation or merger. The 2015 Credit Agreement also contains customary events of default.

Ratification Agreement

Pursuant to an Omnibus Reaffirmation and Ratification and Amendment of Collateral Documents entered into on October 22, 2015 in connection with the 2015 Credit Agreement by and among the Company, the Loan Parties and the Administrative Agent (the “Ratification Agreement”), the Loan Parties (exclusive of the foreign subsidiary Borrower) have reaffirmed their obligations to the Lenders under the Pledge and Security Agreement dated November 20, 2012 (the “Pledge and Security Agreement”), pursuant to which each Loan Party pledges, assigns and grants to the Administrative Agent, on behalf of and for the ratable benefit of the Lenders, a security interest in all of its right, title and interest in, to and under all personal property, whether now owned by or owing to, or after acquired by or arising in favor of such Loan Party (including under any trade name or derivations), and whether owned or consigned by or to, or leased from or to, such Loan Party, and regardless of where located, except for specific excluded personal property identified in the Pledge and Security Agreement (collectively, the “Collateral”). Notwithstanding the foregoing, the Collateral does not include, among other items, more than 65% of the capital stock of the first tier foreign subsidiaries of the Company. The Pledge and Security Agreement contains other customary representations, warranties and covenants of the parties. The 2015 Credit Agreement provides that the obligation to grant the security interest can cease upon the obtaining of certain corporate family credit ratings for the Company, but the obligation to grant a security interest is subject to subsequent reinstatement if the ratings are not maintained as provided in the 2015 Credit Agreement.

Pursuant to the Ratification Agreement, the Loan Parties (other than the foregoing subsidiary Borrower) have also reaffirmed their obligations under each of the Patent Security Agreement and a Trademark Security Agreement in favor of the Administrative Agent dated November 20, 2012 (the “2012 Security Agreements”) pursuant to which each of the Loan Parties signatory thereto pledges, assigns and grants to the Administrative Agent, on behalf of and for the ratable benefit of the Lenders, a security interest in all of its right, title and interest in, to and under all registered patents, patent applications, registered trademarks and trademark applications owned by such Loan Parties.

Additional Trademark Security Agreement and Patent Security Agreement

In connection with the reaffirmation of the Pledge and Security Agreement, certain of the Loan Parties delivered a new Patent Security Agreement and a new Trademark Security Agreement in favor of the Administrative Agent pursuant to which each of the Loan Parties signatory thereto pledges, assigns and grants to the Administrative Agent, on behalf of and for the ratable benefit of the Lenders, a security interest in all of its right, title and interest in, to and under all registered patents, patent applications, registered trademarks and trademark applications owned by such Loan Parties and not covered by the 2012 Security Agreements.

As of September 30, 2016 we had $117.5 million outstanding on our 2015 Revolving Credit Facility, including $109.2 million outstanding on our USD tranche at an interest rate of 2.0% and $8.3 million outstanding on our Euro tranche at an interest rate of 1.5%. As of September 30, 2016 and December 31, 2015, we had $4.1 million and $7.0 million in letters of credit outstanding, respectively. We had $228.4 million available to borrow under the 2015 Revolving Credit Facility at September 30, 2016.

Convertible Senior Notes

In March 2011, the Company issued the Convertible Notes due March 1, 2031. The Convertible Notes are guaranteed by the Company’s U.S. domestic subsidiaries. Interest on the Convertible Notes is payable semi-annually in arrears, on March 1 and September 1 of each year, commencing on September 1, 2011 at an annual rate of 2.75%. Proceeds from the offering were $81.3 million, net of fees and expenses that were capitalized. The proceeds from the offering were used to fund the acquisition of substantially all of the assets and liabilities of Danfoss Bauer GmbH relating to its gear motor business, as well as bolster the Company’s cash position.

The Convertible Notes will mature on March 1, 2031, unless earlier redeemed, repurchased by the Company or converted, and are convertible into cash or shares, or a combination thereof, at the Company’s election. The Convertible Notes are convertible into shares of the Company’s common stock based on an initial conversion rate, subject to adjustment, of 36.0985 shares per $1,000 principal amount of notes (which represents an initial conversion price of approximately $27.70 per share of our common stock), in certain circumstances. The conversion price at September 30, 2016 is $25.70 per share. Prior to March 1, 2030, the Convertible Notes are convertible only in the following circumstances: (1) during any fiscal quarter commencing after June 30, 2011 if the last reported sale price of the Company’s common stock is greater than or equal to 130% of the applicable conversion price for at least 20 trading days in the period of 30 consecutive trading days ending on the last trading day of the preceding fiscal quarter; (2) during the 5 business day period after any 10 consecutive trading day period (the “measurement period”) in which the trading price per $1,000 principal amount of notes for each trading day in the measurement period was less than 97% of the product of the last reported sale price of the Company’s common stock and the conversion rate on such trading day; (3) if the Convertible Notes have been called for redemption; or (4) upon the occurrence of specified corporate transactions. On or after March 1, 2030, and ending at the close of business on the second business day immediately preceding the maturity date, holders may convert their Convertible Notes at any time, regardless of the foregoing circumstances. Upon conversion, the Company will pay or deliver, as the case may be, cash, shares of common stock, or a combination thereof, at the Company’s election. The Company intends to settle the principal amount in cash and any additional amounts in shares of stock.

If a fundamental change occurs, the Convertible Notes are redeemable at a price equal to 100% of the principal amount of the notes to be repurchased, plus accrued and unpaid interest (including contingent interest and additional interest, if any) to, but excluding, the repurchase date. The Convertible Notes are also redeemable on each of March 1, 2018, March 1, 2021, and March 1, 2026 for cash at a price equal to 100% of the principal amount of the notes to be repurchased, plus accrued and unpaid interest (including contingent interest and additional interest, if any) to, but excluding, the option repurchase date.

As of March 1, 2015, the Company may call all or part of the Convertible Notes at a redemption price equal to 100% of the principal amount of the Convertible Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date, plus a “make-whole premium” payment in cash, shares of the Company’s common stock, or combination thereof, at the Company’s option, equal to the sum of the present values of the remaining scheduled payments of interest on the Convertible Notes to be redeemed through March 1, 2018 to, but excluding, the redemption date, if the last reported sale price of the Company’s common stock for 20 or more trading days in a period of 30 consecutive trading days ending on the trading day prior to the date the Company provides notice of redemption exceeds 130% of the conversion price in effect on each such trading day. On or after March 1, 2018, the Company may redeem for cash all or a portion of the notes at a redemption price of 100% of the principal amount of the Convertible Notes to be redeemed, plus accrued and unpaid interest (including contingent and additional interest, if any) to, but not including, the redemption date.

The Company separately accounted for the debt and equity components of the Convertible Notes to reflect the issuer’s non-convertible debt borrowing rate, which interest costs are to be recognized in subsequent periods. The note payable principal balance at the date of issuance of $85 million was bifurcated into a debt component of $60.5 million and an equity component of $24.5 million. The difference between the note payable principal balance and the value of the debt component is being accreted to interest expense over the term of the notes. The debt component was recognized at the present value of associated cash flows discounted using a 8.25% discount rate, the borrowing rate at the date of issuance for a similar debt instrument without a conversion feature. The Company paid approximately $3.7 million of issuance costs associated with the Convertible Notes. The Company recorded $1.0 million of debt issuance costs as an offset to additional paid-in capital. The balance of $2.7 million of debt issuance costs is classified as other non-current assets and will be amortized over the term of the notes using the effective interest method.

Because the last reported sale price of the Company's common stock did not exceed 130% of the current conversion price, which was $25.70, for at least 20 of the last 30 consecutive trading days in the fiscal quarter ended September 30, 2016, the Convertible Notes are not convertible at the election of the holders of the Convertible Notes at any time during the fiscal quarter ending December 31, 2016.  The future convertibility will be monitored at each quarterly reporting date and will be analyzed dependent upon market prices of the Company’s common stock during the prescribed measurement periods.

The carrying amount of the principal amount of the liability component, the unamortized discount, and the net carrying amount are as follows.  

	Year to Date Ended
	September 30, 2016		December 31, 2015
Principal amount of debt	$	85,000	$	85,000
Unamortized discount		6,092		9,062
Carrying value of debt	$	78,908	$	75,938

Interest expense associated with the Convertible Notes consists of the following components.

	Quarter Ended
	September 30, 2016		September 30, 2015
Contractual coupon rate of interest	$	584	$	586
Accretion of Convertible Notes discount and amortization of    deferred financing costs		1,097		840
Interest expense for the convertible notes	$	1,681	$	1,426

	Year to Date Ended
	September 30, 2016		September 30, 2015
Contractual coupon rate of interest	$	1,753	$	1,753
Accretion of Convertible Notes discount and amortization of    deferred financing costs		3,237		2,740
Interest expense for the convertible notes	$	4,990	$	4,493

The effective interest yield of the Convertible Notes due in 2031 is 8.5% at September 30, 2016 and the cash coupon interest rate is 2.75%.             

Mortgages

Heidelberg Germany

During 2015, a foreign subsidiary of the Company entered into a mortgage with a bank for €1.5 million, or $1.7 million, secured by its facility in Heidelberg, Germany to replace its previously existing mortgage. The mortgage has an interest rate of 1.79%, which is payable in monthly installments through August 2023.  The mortgage has a remaining principal balance of € 1.3 million, or $1.5 million, at September 30, 2016.

Esslingen Germany

During 2015, a foreign subsidiary of the Company entered into a mortgage with a bank for €6.0 million, or $6.8 million, secured by its facility in Esslingen, Germany. The mortgage has an interest rate of 2.5% per year, which is payable in annual interest payments of €0.1 million, or $0.1 million, to be paid in monthly installments. The mortgage has a remaining principal balance of €6.0 million, or $6.7 million, at September 30, 2016. The principal portion of the mortgage will be due in a lump-sum payment in May 2019.

During the quarter ended March 31, 2016, a foreign subsidiary of the Company entered in to a loan with a bank to equip its facility in Zlate Moravce, Slovakia. As of September 30, 2016, the total available to borrow was €3.0 million, or $3.4 million, and is guaranteed by land security at its parent company facility in Esslingen, Germany. The loan is due in installments from 2016 through 2020, with an interest rate of 1.95%.

Angers France

During 2015, a foreign subsidiary of the Company entered into a mortgage with a bank for €2.0 million, or $2.2 million, secured by its facility in in Angers, France. The mortgage has an interest rate of 1.85% per year which is payable in monthly installments from June 2016 until May 2025.  The mortgage has a balance of €2.0 million, or $2.2 million, at September 30, 2016.

Capital Leases

The Company leases certain equipment under capital lease arrangements, whose obligations are included in both short-term and long-term debt. Capital lease obligations amounted to approximately $0.4 million at September 30, 2016 and approximately $0.5 million at December 31, 2015.  Assets subject to capital leases are included in property, plant and equipment with the related amortization recorded as depreciation expense.

Overdraft Agreements

Certain of our foreign subsidiaries maintain overdraft agreements with financial institutions. There were no borrowings as of September 30, 2016 or December 31, 2015 under any of the overdraft agreements.

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Stockholders' Equity

9 Months Ended

Sep. 30, 2016

Stockholders Equity Note [Abstract]

Stockholders' Equity

11. Stockholders’ Equity

Stock-Based Compensation

The Company’s 2004 Equity Incentive Plan (the “2004 Plan”) permitted the grant of various forms of stock based compensation to our officers and senior level employees. The 2004 Plan expired in 2014 and, upon expiration, there were 750,576 shares subject to outstanding awards under the 2004 Plan. The 2014 Omnibus Incentive Plan (the “2014 Plan”) was approved by the Company’s shareholders at its 2014 annual meeting. The 2014 Plan provides for various forms of stock based compensation to our directors, executive personnel and other key employees and consultants. Under the 2014 Plan, the total number of shares of common stock available for delivery pursuant to the grant of awards (“Awards”) was originally 750,000. Shares of our common stock subject to Awards awarded under the 2004 Plan and outstanding as of the effective date of the 2014 Plan (except for substitute awards) that terminate without being exercised, expire, are forfeited or canceled, are exchanged for Awards that did not involve shares of common stock, are not issued on the stock settlement of a stock appreciation right, are withheld by the Company or tendered by a participant (either actually or by attestation) to pay an option exercise price or to pay the withholding tax on any Award, or are settled in cash in lieu of shares will again be available for Awards under the 2014 Plan.

The restricted shares issued pursuant to the 2014 Plan generally vest ratably over a period ranging from immediately to five years from the date of grant, provided, that the vesting of the restricted shares may accelerate upon the occurrence of certain events. Common stock awarded under the 2014 Plan is generally subject to restrictions on transfer, repurchase rights, and other limitations and rights as set forth in the applicable award agreements. The shares are valued based on the share price on the date of grant.

The 2014 Plan permits the Company to grant, among other things, restricted stock, restricted stock units, and performance share awards to key employees and other persons who make significant contributions to the success of the Company. The restrictions and vesting schedule for restricted stock granted under the 2014 Plan are determined by the Personnel and Compensation Committee of the Board of Directors.

Stock-based compensation expense recorded during the year-to-date periods ended September 30, 2016 and September 30, 2015, was $3.4 million and $3.2 million, respectively.  The Company recognizes stock-based compensation expense on a straight-line basis for the shares vesting ratably under the plan and uses the graded-vesting method of recognizing stock-based compensation expense for the performance share awards based on the probability of the specific performance metrics being achieved over the requisite service period.

The following table sets forth the activity of the Company’s restricted stock and performance share grants in the year to date period ended September 30, 2016:

	Shares			Weighted-average grant date fair value
Shares unvested January 1, 2016		161,010		$	28.62
Shares granted		170,926			22.84
Shares for which restrictions lapsed		(131,002	)		27.90
Shares unvested September 30, 2016		200,934		$	24.67

Total remaining unrecognized compensation cost was $4.9 million as of September 30, 2016, which will be recognized over a weighted average remaining period of 3 years. The fair market value of the shares for which the restrictions have lapsed during the year to date period ended September 30, 2016 was $3.7 million. Restricted shares granted are valued based on the fair market value of the stock on the date of grant.

Share Repurchase Program

In May 2014, our board of directors approved a share repurchase program authorizing the buyback of up to $50.0 million of the Company’s common stock. Under the program, the Company may purchase shares on the open market, through block trades, in privately negotiated transactions, in compliance with SEC Rule 10b-18 (including through Rule 10b5-1 plans), or in any other appropriate manner. The timing of the shares repurchased will be at the discretion of management and will depend on a number of factors, including price, market conditions and regulatory requirements. Shares acquired through the repurchase program will be retired. The Company retains the right to limit, terminate or extend the share repurchase program at any time without prior notice.

For the quarter ended September 30, 2016, the Company repurchased 5,461 shares of common stock at an average purchase price of $27.45 per share. As of September 30, 2016, up to $10.5 million was available to purchase additional shares under the repurchase program, which was scheduled to expire on December 31, 2016. On October 19, 2016, our board of directors approved a new share repurchase program authorizing the buyback of up to $30.0 million of the Company's common stock through December 31, 2019. This plan replaces the previous share repurchase program that was initiated in May 2014 and has now been terminated. The Company expects to purchase shares on the open market, through block trades, in privately negotiated transactions, in compliance with SEC Rule 10b-18 (including through Rule 10b5-1 plans), or in any other appropriate manner. The timing of the shares repurchased will be at the discretion of management and will depend on a number of factors, including price, market conditions and regulatory requirements. Shares acquired through the repurchase program will be held as treasury shares and may be used for general corporate purposes. The Company retains the right to limit, terminate or extend the share repurchase program at any time without prior notice. The Company expects to fund any further repurchases of its common stock through a combination of cash on hand and cash generated by operations.

Dividends

The Company declared a dividend of $0.15 per share of common stock related to the quarter ended September 30, 2016. The dividend for the quarter ended September 30, 2016 was accrued in the balance sheet at September 30, 2016.   

Future declarations of quarterly cash dividends are subject to approval by the Board of Directors and to the Board’s continuing determination that the declaration of dividends are in the best interest of the Company’s stockholders and are in compliance with all laws and agreements of the Company applicable to the declaration and payment of cash dividends.

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Restructuring, Asset Impairment, and Transition Expenses

9 Months Ended

Sep. 30, 2016

Restructuring And Related Activities [Abstract]

Restructuring, Asset Impairment, and Transition Expenses

12. Restructuring, Asset Impairment, and Transition Expenses

From time to time, the Company has initiated various restructuring programs and incurred severance and other restructuring costs.

In the quarter ended March 31, 2015, the Company commenced a restructuring plan (“2015 Altra Plan”) as a result of weak demand in Europe and to make certain adjustments to improve business effectiveness, reduce the number of facilities and streamline the Company's cost structure. The actions taken pursuant to the 2015 Altra Plan included reducing headcount, facility consolidations and related asset impairments, and limiting discretionary spending to improve profitability.

The following table details restructuring charges incurred by segment for the periods presented.

	Quarter Ended				Year to Date Period Ended
	September 30, 2016		September 30, 2015		September 30, 2016		September 30, 2015
Couplings, Clutches & Brakes	$	3,022	$	103	$	4,425	$	741
Electromagnetic Clutches & Brakes		169		7		1,276		1,373
Gearing		68		541		84		2,880
Corporate		138		—		806		—
Total	$	3,397	$	651	$	6,591	$	4,994

The amounts for the year to date period ended September 30, 2016 are comprised of approximately $2.0 million in severance, $0.7 million in consolidation costs, $2.4 million in moving and relocation costs, $0.7 million in building impairments, and $0.8 million in travel-related and other restructuring costs. The amounts for the year to date period ended September 30, 2015 were limited to severance costs related to staff reductions, moving costs and plant closures and are classified in the accompanying unaudited condensed consolidated statement of income as restructuring costs.

The following is a reconciliation of the accrued restructuring costs between January 1, 2016 and September 30, 2016:

	All Plans
Balance at January 1, 2016	$	2,211
Restructuring expense incurred		6,591
Non-cash loss on impairment of fixed assets		(706	)
Cash payments		(6,206	)
Balance at September 30, 2016	$	1,890

The total restructuring reserve as of September 30, 2016 relates to severance costs to be paid to employees and is recorded in accruals and other current liabilities on the accompanying unaudited condensed consolidated balance sheet which are expected to be paid during 2016.  The Company expects to incur between approximately $7.0 - $9.0 million in additional restructuring expenses between 2016 and 2018 under the 2015 Altra Plan, primarily in the Couplings, Clutches & Brakes and Gearing business segments.

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Segments, Concentrations and Geographic Information

9 Months Ended

Sep. 30, 2016

Segment Reporting [Abstract]

Segments, Concentrations and Geographic Information

13. Segments, Concentrations and Geographic Information

Segments

The Company currently operates through three business segments that are aligned with key product types and end markets served:

• Couplings, Clutches & Brakes.

Couplings are the interface between two shafts, which enable power to be transmitted from one shaft to the other. Clutches in this segment are devices which use mechanical, hydraulic, pneumatic, or friction type connections to facilitate engaging or disengaging two rotating members. Brakes are combinations of interacting parts that work to slow or stop machinery. Products in this segment are generally used in heavy industrial applications and energy markets.

• Electromagnetic Clutches & Brakes.

Products in this segment include brakes and clutches that are used to electronically slow, stop, engage or disengage equipment utilizing electromagnetic friction type connections.   Products in this segment are used in industrial and commercial markets including agricultural machinery, material handling, motion control, and turf & garden.

• Gearing.

Gears are utilized to reduce the speed and increase the torque of an electric motor or engine to the level required to drive a particular piece of equipment.  Gears produced by the Company are primarily utilized in industrial applications.

The segment information presented below for the prior periods has been reclassified to conform to the new presentation.

Segment financial information and a reconciliation of segment results to consolidated results follows:

	Quarters Ended September 30,						Year to date periods Ended September 30,
	2016			2015			2016			2015
Net Sales:
Couplings, Clutches & Brakes	$	77,446		$	85,760		$	231,225		$	265,225
Electromagnetic Clutches & Brakes		50,680			50,393			165,083			166,279
Gearing		47,023			48,783			145,038			147,599
Inter-segment eliminations		(2,017	)		(1,883	)		(5,087	)		(6,079	)
Net sales	$	173,132		$	183,053		$	536,259		$	573,024
Income from operations:
Segment earnings:
Couplings, Clutches & Brakes	$	6,596		$	8,910		$	20,441		$	29,672
Electromagnetic Clutches & Brakes		6,589			4,771			20,120			16,293
Gearing		5,650			6,197			17,280			17,022
Restructuring		(3,397	)		(651	)		(6,591	)		(4,994	)
Corporate expenses (1)		(5,069	)		(2,567	)		(9,729	)		(7,967	)
Income from operations	$	10,369		$	16,660		$	41,521		$	50,026
Other non-operating (income) expense:
Net interest expense	$	2,815		$	2,924		$	8,615		$	8,858
Other non-operating  expense (income), net		45			685			(438	)		606
		2,860			3,609			8,177			9,464
Income before income taxes		7,509			13,051			33,344			40,562
Provision for income taxes		2,196			2,830			9,872			11,326
Net income	$	5,313		$	10,221		$	23,472		$	29,236

(1) Certain expenses are maintained at the corporate level and not allocated to the segments. These include various administrative expenses related to corporate headquarters, depreciation on capitalized software costs, non-capitalizable software implementation costs and acquisition related expenses.

Selected information by segment (continued)

	Quarter Ended				Year to Date Period Ended
	September 30, 2016		September 30, 2015		September 30, 2016		September 30, 2015
Depreciation and amortization:
Couplings, Clutches & Brakes	$	4,028	$	3,926	$	11,485	$	11,922
Electromagnetic Clutches & Brakes		1,176		1,195		3,501		3,481
Gearing		1,862		1,613		5,261		4,970
Corporate		791		803		2,372		2,296
Total depreciation and amortization	$	7,857	$	7,537	$	22,619	$	22,669
	September 30, 2016		December 31, 2015
Total assets:
Couplings, Clutches & Brakes	$	329,621	$	312,117
Electromagnetic Clutches & Brakes		129,576		125,887
Gearing		133,483		150,860
Corporate (2)		27,778		43,468
Total assets	$	620,458	$	632,332

(2) Corporate assets are primarily cash and cash equivalents, tax related asset accounts, certain capitalized software costs, property, plant and equipment and deferred financing costs.

Net sales to third parties by geographic region are as follows:

	Net Sales
	Quarter Ended				Year to Date Period Ended
	September 30, 2016		September 30, 2015		September 30, 2016		September 30, 2015
North America (primarily U.S.)	$	99,995	$	108,959	$	316,957	$	350,753
Europe		54,344		52,757		165,694		164,829
Asia and other		18,793		21,337		53,608		57,442
Total	$	173,132	$	183,053	$	536,259	$	573,024

Net sales to third parties are attributed to the geographic regions based on the country in which the shipment originates.

Concentrations

Financial instruments, which are potentially subject to counter party performance and concentrations of credit risk, consist primarily of trade accounts receivable. The Company manages these risks by conducting credit evaluations of customers prior to delivery or commencement of services. When the Company enters into a sales contract, collateral is normally not required from the customer. Payments are typically due within 30 days of billing. An allowance for potential credit losses is maintained, and losses have historically been within management’s expectations. While the Company did not have any customers that represented total sales greater than 10% for each of the quarters ended September 30, 2016 and 2015, the Gearing business had one customer that approximated 10% of total sales for that segment during the quarter ended September 30, 2015.

The Company is also subject to counter party performance risk of loss in the event of non-performance by counterparties to financial instruments, such as cash and investments. Cash and cash equivalents are held by well-established financial institutions and invested in AAA rated mutual funds. The Company is exposed to swap counterparty credit risk with well-established financial institutions.

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Commitments and Contingencies

9 Months Ended

Sep. 30, 2016

Commitments And Contingencies Disclosure [Abstract]

Commitments and Contingencies

14. Commitments and Contingencies

General Litigation

The Company is involved in various pending legal proceedings arising out of the ordinary course of business. These proceedings primarily involve commercial claims, product liability claims, personal injury claims, and workers’ compensation claims. None of these legal proceedings are expected to have a material adverse effect on the results of operations, cash flows, or financial condition of the Company. With respect to these proceedings, management believes that the Company will prevail, has adequate insurance coverage or has established appropriate reserves to cover potential liabilities. Any costs that management estimates may be paid related to these proceedings or claims are accrued when the liability is considered probable and the amount can be reasonably estimated. There can be no assurance, however, as to the ultimate outcome of any of these matters, and if all or substantially all of these legal proceedings were to be determined adversely to the Company, there could be a material adverse effect on the results of operations, cash flows, or financial condition of the Company. We have established loss provisions for matters in which losses are probable and can be reasonably estimated. There were no material amounts accrued in the accompanying unaudited condensed consolidated balance sheet for potential litigation as of September 30, 2016 or December 31, 2015. For matters where a reserve has not been established and for which we believe a loss is reasonably possible, as well as for matters where a reserve has been recorded but for which an exposure to loss in excess of the amount accrued is reasonably possible, we believe that such losses, individually and in the aggregate, will not have a material effect on our unaudited condensed consolidated financial statements.

The Company also risks exposure to product liability claims in connection with products it has sold and those sold by businesses that the Company acquired. Although in some cases third parties have retained responsibility for product liability claims relating to products manufactured or sold prior to the acquisition of the relevant business and in other cases the persons from whom the Company has acquired a business may be required to indemnify the Company for certain product liability claims subject to certain caps or limitations on indemnification, the Company cannot assure that those third parties will in fact satisfy their obligations with respect to liabilities retained by them or their indemnification obligations. If those third parties become unable to or otherwise do not comply with their respective obligations including indemnity obligations, or if certain product liability claims for which the Company is obligated were not retained by third parties or are not subject to these indemnities, the Company could become subject to significant liabilities or other adverse consequences. Moreover, even in cases where third parties retain responsibility for product liability claims or are required to indemnify the Company, significant claims arising from products that have been acquired could have a material adverse effect on the Company’s ability to realize the benefits from an acquisition, could result in the reduction of the value of goodwill that the Company recorded in connection with an acquisition, or could otherwise have a material adverse effect on the Company’s business, financial condition, or operations.

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Subsequent Events

9 Months Ended

Sep. 30, 2016

Subsequent Events [Abstract]

Subsequent Events

15. Subsequent Events

Dividend

On October 19, 2016, the Company declared a dividend of $0.15 per share for the quarter ended December 31, 2016, payable on January 4, 2017 to shareholders of record as of December 19, 2016.

Share Repurchase Program

On October 19, 2016, our board of directors approved a new share repurchase program authorizing the buyback of up to $30.0 million of the Company's common stock through December 31, 2019. This plan replaces the previous share repurchase program that was initiated in May 2014 and has now been terminated. The Company expects to purchase shares on the open market, through block trades, in privately negotiated transactions, in compliance with SEC Rule 10b-18 (including through Rule 10b5-1 plans), or in any other appropriate manner. The timing of the shares repurchased will be at the discretion of management and will depend on a number of factors, including price, market conditions and regulatory requirements. Shares acquired through the repurchase program will be held as treasury shares and may be used for general corporate purposes. The Company retains the right to limit, terminate or extend the share repurchase program at any time without prior notice. The Company expects to fund any repurchases of its common stock through a combination of cash on hand and cash generated by operations.

Stromag Acquisition

On October 21, 2016, the Company entered into a binding agreement (the “French Agreement”) with GKN Industries, Limited (“GKN”).The French Agreement provides that, subject to completion of certain employee consultation procedures required under applicable law and certain other customary conditions, the parties to the French Agreement will enter into a definitive sale and purchase agreement, attached as an exhibit to the French Agreement (the “Agreed Form Sale and Purchase Agreement”), providing for the sale and transfer of GKN’s Germany-based Stromag AG business (the “Acquired Company”) for a purchase price comprised of the assumption of debt totaling 14 million euros and cash consideration, payable at closing, of approximately 184 million euros, subject to certain adjustments (the “Stromag Acquisition”).

Under the French Agreement, GKN has agreed to promptly commence the employee consultation process required under applicable law to obtain opinions of the Stromag works councils in France. Subject to the conditions set forth in the French Agreement, the parties to the French Agreement will execute and deliver the Agreed Form Sale and Purchase Agreement within two business days following the satisfaction of the employee consultation process requirements.

The French Agreement and the Agreed Form Sale and Purchase Agreement contain representations, warranties, and covenants that we believe are customary for a transaction of this size and type, as well as indemnification provisions subject to specified limitations. The closing of the transaction is subject to several customary closing conditions, including receipt of required regulatory approvals, as well as the aforementioned consultation process with the Stromag works councils, and is expected to take place during the first quarter of 2017. No assurances can be given that the Stromag Acquisition will be timely consummated or consummated at all.

The foregoing summary of the French Agreement and the transactions contemplated thereby is not intended to be complete and is qualified in its entirety by reference to the actual French Agreement, which will be filed as an exhibit to the Company’s Annual Report on Form 10-K for its fiscal year ending December 31, 2016.

Amended and Restated Credit Agreement

On October 21, 2016, the Company entered into a First Amendment to the Second Amended and Restated Credit Agreement (the “First Amendment”) by and among the Company and Altra Industrial Motion Netherlands, B.V. (“Altra B.V.”), one of the Company’s foreign subsidiaries (collectively, the “Borrowers”), the Subsidiary Guarantors to the First Amendment, JPMorgan Chase Bank, N.A., as Administrative Agent, as Joint Lead Arranger and Joint Bookrunner, Wells Fargo Bank, N.A., as Joint Lead Arranger and Joint Bookrunner, KeyBank National Association, as Joint Lead Arranger and Joint Bookrunner, and certain lender parties to the First Amendment (collectively, the “Lenders”).

The First Amendment would amend the Company’s Second Amended and Restated Credit Agreement, dated as of October 22, 2015 (the “Credit Agreement”). However, the amendments to the Credit Agreement contained in the First Amendment will not be effective and will not amend the Credit Agreement unless and until certain conditions precedent have been met, including that the Company has provided the Administrative Agent with written notice that the conditions precedent to the closing of the Stromag Acquisition have been satisfied. In the event that the Stromag Acquisition does not occur, or if the other conditions precedent are not satisfied or waived, then the First Amendment shall not become effective.

If it becomes effective, the First Amendment, would increase the revolving credit facility under the Credit Agreement by $75,000,000 (the “Revolver Increase”), so that after giving effect to the Revolver Increase, the aggregate revolving commitments would total $425,000,000. The First Amendment would also reset the possible expansion of additional future loan commitments to $150,000,000.  In addition, the First Amendment would increase the multicurrency sublimit to $250 million and adjust certain financial covenants. The Company expects to use the increased facility to finance the Stromag Acquisition. Except as otherwise expressly provided by the First Amendment, all of the respective terms, conditions and provisions of the Credit Agreement and the other loan documents remain the same.

The foregoing summary of the First Amendment and the transactions contemplated thereby is not intended to be complete and is qualified in its entirety by reference to the actual First Amendment, which will be filed as an exhibit to the Company’s Annual Report on Form 10-K for its fiscal year ending December 31, 2016.

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Basis of Presentation (Policies)

9 Months Ended

Sep. 30, 2016

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Basis of Presentation

Basis of Presentation

The Company’s unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and do not include all of the information and note disclosures required by accounting principles generally accepted in the United States of America. These statements should be read in conjunction with the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015. In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments, consisting of normal recurring adjustments, necessary to present fairly the Company’s financial position for the interim periods presented, and cash flows for the interim periods presented.  The results are not necessarily indicative of future results.  The Company considers events or transactions that occur after the balance sheet date but before the financial statements are issued to provide additional evidence relative to certain estimates or to identify matters that require additional disclosure.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

In August 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2016-15, Statement of Cash Flows (Topic 230): Classification of certain cash receipts and cash payments (a consensus of the emerging issues task force) (“ASU 2016-15”). This ASU addresses the following eight specific cash flow issues: Debt prepayment or debt extinguishment costs; settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing; contingent consideration payments made after a business combination; proceeds from the settlement of insurance claims; proceeds from the settlement of corporate-owned life insurance policies (including bank-owned life insurance policies); distributions received from equity method investees; beneficial interests in securitization transactions; and separately identifiable cash flows and application of the predominance principle. This guidance will be effective for the Company on January 1, 2018. We are currently evaluating the impact this guidance will have on our consolidated financial statements.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). ASU 2016-13 is intended to provide more decision-useful information about expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date.  The main provisions include presenting financial assets measured at amortized cost at the amount expected to be collected, which is net of an allowance for credit losses, and recording credit losses related to available-for-sale securities through an allowance for credit losses.  The amendments in ASU 2016-13 are effective for fiscal years beginning after December 15, 2019, and must be applied using a modified retrospective approach with earlier adoption permitted for fiscal years beginning after December 15, 2018. We are currently evaluating the impact this guidance will have on our consolidated financial statements.

In March 2016, the FASB issued ASU 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting (“ASU 2016-09”). The updated guidance revises aspects of stock-based compensation guidance which include income tax consequences, classification of awards as equity or liabilities, and classification on the statement of cash flows. The new standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016. Early adoption is permitted. We are evaluating the impact of adopting this new accounting guidance on our consolidated financial statements.

In February 2015, the FASB issued ASU 2016-02, Leases (Topic 842) (“ASU 2016-02”). The ASU requires management to recognize lease assets and lease liabilities by lessees for all operating leases. The ASU is effective for periods beginning after December 15, 2018 and interim periods therein on a modified retrospective basis. We are currently evaluating the impact this guidance will have on our consolidated financial statements.

In May 2014, the FASB issued ASU No. 2014-09 Revenue from Contracts with Customers (“ASU 2014-09”). ASU 2014-09 provides a single principles-based, five-step model to be applied to all contracts with customers. The five steps are to (i) identify the contracts with the customer, (ii) identify the performance obligations in the contact, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract and (v) recognize revenue when each performance obligation is satisfied. Revenue will be recognized when promised goods or services are transferred to the customer in an amount that reflects the consideration expected in exchange for those goods or services. In July 2015, the FASB agreed to delay the effective date of ASU 2014-09 for one year and to permit early adoption by entities as of the original effective dates. Considering the one year deferral, ASU 2014-09 will be effective for the Company beginning on January 1, 2018 and the standard allows for either full retrospective adoption or modified retrospective adoption. The Company is continuing to evaluate the impact that the adoption of this guidance will have on our financial condition, results of operations and the presentation of our consolidated financial statements.

Fair Value of Financial Instruments

Fair Value of Financial Instruments

Fair value is determined based upon the exit price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants, as determined by either the principal market or the most advantageous market. Inputs used in the valuation techniques to derive fair values are classified based on a three-level hierarchy, as follows:

• Level 1- Quoted prices in active markets for identical assets or liabilities.

• Level 2- Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets with insufficient volume or infrequent transactions (less active markets); or model-derived

• Level 3- Unobservable inputs to the valuation methodology that are significant to the measurement of fair value of assets or liabilities.

The Company considers all highly liquid investments purchased with a remaining maturity of three months or less to be cash equivalents.

The carrying values of financial instruments, including accounts receivable, cash equivalents, accounts payable, and other accrued liabilities approximate fair value. Debt under the Company’s 2015 Credit Agreement approximates the fair value due to the variable rate nature at current market rates.

Net Income per Share

Net Income per Share

Basic earnings per share is based on the weighted average number of shares of common stock outstanding, and diluted earnings per share is based on the weighted average number of shares of common stock outstanding and all potentially dilutive common stock equivalents outstanding. Common stock equivalents are included in the per share calculations when the effect of their inclusion is dilutive.

Warranty Costs

Warranty Costs

The contractual warranty period of the Company's products generally ranges from three months to two years with certain warranties extending for longer periods. Estimated expenses related to product warranties are accrued at the time products are sold to customers and are recorded in accruals and other current liabilities on the unaudited condensed consolidated balance sheet. Estimates are established using historical information as to the nature, frequency and average costs of warranty claims.

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Changes in Accumulated Other Comprehensive Loss by Component (Tables)

9 Months Ended

Sep. 30, 2016

Equity [Abstract]

Changes in Accumulated Other Comprehensive Income (Loss) by Component

The following is a reconciliation of changes in accumulated other comprehensive loss by component for the periods presented:

	Gains and Losses on Cash Flow Hedges			Defined Benefit Pension Plans			Cumulative Foreign Currency Translation Adjustment			Total
Accumulated Other Comprehensive Loss by Component,    January 1, 2016	$	(140	)	$	(5,807	)	$	(57,885	)	$	(63,832	)
Net current-period Other Comprehensive Income (Loss)		—			134			(1,000	)		(866	)
Accumulated Other Comprehensive Loss by Component,    September 30, 2016	$	(140	)	$	(5,673	)	$	(58,885	)	$	(64,698	)

	Gains and Losses on Cash Flow Hedges			Defined Benefit Pension Plans			Cumulative Foreign Currency Translation Adjustment			Total
Accumulated Other Comprehensive Income (Loss) by    Component, January 1, 2015	$	143		$	(4,818	)	$	(36,740	)	$	(41,415	)
Cumulative losses transferred from Lamiflex		—			—			(410	)		(410	)
Net current-period Other Comprehensive Loss		(283	)		—			(16,242	)		(16,525	)
Accumulated Other Comprehensive Loss by Component,    September 30, 2015	$	(140	)	$	(4,818	)	$	(53,392	)	$	(58,350	)

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Net Income per Share (Tables)

9 Months Ended

Sep. 30, 2016

Earnings Per Share [Abstract]

Reconciliation of Basic to Diluted Net Income per Share

The following is a reconciliation of basic to diluted net income per share:

	Quarter Ended				Year to Date Ended
	September 30, 2016		September 30, 2015		September 30, 2016		September 30, 2015
Net income attributable to Altra Industrial Motion Corp.	$	5,313	$	10,221	$	23,472	$	29,299
Shares used in net income per common share - basic		25,726		26,145		25,684		26,140
Dilutive effect of the equity premium on Convertible Notes    at the average price of common stock		295		-		123		38
Incremental shares of unvested restricted common stock		-		-		6		6
Shares used in net income per common share - diluted		26,021		26,145		25,813		26,184
Earnings per share:
Basic net income attributable to Altra Industrial    Motion Corp.	$	0.21	$	0.39	$	0.91	$	1.12
Diluted net income attributable to Altra Industrial    Motion Corp.	$	0.20	$	0.39	$	0.91	$	1.12

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Inventories (Tables)

9 Months Ended

Sep. 30, 2016

Inventory Disclosure [Abstract]

Summary of Inventories

Inventories at September 30, 2016 and December 31, 2015 consisted of the following:

	September 30, 2016		December 31, 2015
Raw materials	$	35,758	$	34,169
Work in process		11,915		12,864
Finished goods		73,770		74,123
	$	121,443	$	121,156

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Goodwill and Intangible Assets (Tables)

9 Months Ended

Sep. 30, 2016

Goodwill And Intangible Assets Disclosure [Abstract]

Changes in Goodwill

Changes in goodwill from January 1, through September 30, 2016 were as follows:

	Couplings, Clutches & Brakes		Electromagnetic Clutches & Brakes		Gearing		Total
Net goodwill balance January 1, 2016	$	25,290	$	24,661	$	47,358	$	97,309
Impact of changes in foreign currency and other		136		29		301		466
Net goodwill balance September 30, 2016	$	25,426	$	24,690	$	47,659	$	97,775

Schedule of Definite-Lived Intangible Assets

Other intangible assets as of September 30, 2016 and December 31, 2015 consisted of the following:

	September 30, 2016						December 31, 2015
	Cost		Accumulated Amortization		Net		Cost		Accumulated Amortization		Net
Other intangible assets
Intangible assets not subject to amortization:
Tradenames and trademarks	$	39,305	$	—	$	39,305	$	39,625	$	—	$	39,625
Intangible assets subject to amortization:
Customer relationships		113,309		62,744	$	50,565		112,408		56,677		55,731
Product technology and patents		6,111		5,473	$	638		6,049		5,336		713
Total intangible assets	$	158,725	$	68,217	$	90,508	$	158,082	$	62,013	$	96,069

Schedule of Indefinite-Lived Intangible Assets

Other intangible assets as of September 30, 2016 and December 31, 2015 consisted of the following:

	September 30, 2016						December 31, 2015
	Cost		Accumulated Amortization		Net		Cost		Accumulated Amortization		Net
Other intangible assets
Intangible assets not subject to amortization:
Tradenames and trademarks	$	39,305	$	—	$	39,305	$	39,625	$	—	$	39,625
Intangible assets subject to amortization:
Customer relationships		113,309		62,744	$	50,565		112,408		56,677		55,731
Product technology and patents		6,111		5,473	$	638		6,049		5,336		713
Total intangible assets	$	158,725	$	68,217	$	90,508	$	158,082	$	62,013	$	96,069

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Warranty Costs (Tables)

9 Months Ended

Sep. 30, 2016

Guarantees [Abstract]

Changes in Carrying Amount of Accrued Product Warranty Costs

Changes in the carrying amount of accrued product warranty costs for each of the year-to-date periods ended September 30, 2016 and September 30, 2015 are as follows:  

	September 30, 2016			September 30, 2015
Balance at beginning of period	$	9,468		$	7,792
Accrued current period warranty expense		1,732			3,641
Payments and adjustments		(2,700	)		(1,760	)
Balance at end of period	$	8,500		$	9,673

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Debt (Tables)

9 Months Ended

Sep. 30, 2016

Debt Disclosure [Abstract]

Outstanding Debt Obligations

Outstanding debt obligations at September 30, 2016 and December 31, 2015 were as follows.

	September 30, 2016			December 31, 2015
Debt:
Revolving Credit Facility	$	117,509		$	145,152
Convertible Notes		85,000			85,000
Mortgages		13,339			10,333
Equipment and working capital notes		—			2,832
Capital leases		398			500
Total debt		216,246			243,817
Less: debt discount, net of accretion		(6,092	)		(9,062	)
Total debt, net of unaccreted discount	$	210,154		$	234,755
Less current portion of long-term debt		(400	)		(3,187	)
Total long-term debt, net of unaccreted discount	$	209,754		$	231,568

Carrying Amount of Debt

The carrying amount of the principal amount of the liability component, the unamortized discount, and the net carrying amount are as follows.  

	Year to Date Ended
	September 30, 2016		December 31, 2015
Principal amount of debt	$	85,000	$	85,000
Unamortized discount		6,092		9,062
Carrying value of debt	$	78,908	$	75,938

Interest Expense Associated with Convertible Notes

Interest expense associated with the Convertible Notes consists of the following components.

	Quarter Ended
	September 30, 2016		September 30, 2015
Contractual coupon rate of interest	$	584	$	586
Accretion of Convertible Notes discount and amortization of    deferred financing costs		1,097		840
Interest expense for the convertible notes	$	1,681	$	1,426

	Year to Date Ended
	September 30, 2016		September 30, 2015
Contractual coupon rate of interest	$	1,753	$	1,753
Accretion of Convertible Notes discount and amortization of    deferred financing costs		3,237		2,740
Interest expense for the convertible notes	$	4,990	$	4,493

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Stockholders' Equity (Tables)

9 Months Ended

Sep. 30, 2016

Stockholders Equity Note [Abstract]

Company's Restricted Stock Grants

The following table sets forth the activity of the Company’s restricted stock and performance share grants in the year to date period ended September 30, 2016:

	Shares			Weighted-average grant date fair value
Shares unvested January 1, 2016		161,010		$	28.62
Shares granted		170,926			22.84
Shares for which restrictions lapsed		(131,002	)		27.90
Shares unvested September 30, 2016		200,934		$	24.67

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Restructuring, Asset Impairment, and Transition Expenses (Tables)

9 Months Ended

Sep. 30, 2016

Restructuring And Related Activities [Abstract]

Summary of Total Restructuring Expense

The following table details restructuring charges incurred by segment for the periods presented.

	Quarter Ended				Year to Date Period Ended
	September 30, 2016		September 30, 2015		September 30, 2016		September 30, 2015
Couplings, Clutches & Brakes	$	3,022	$	103	$	4,425	$	741
Electromagnetic Clutches & Brakes		169		7		1,276		1,373
Gearing		68		541		84		2,880
Corporate		138		—		806		—
Total	$	3,397	$	651	$	6,591	$	4,994

Reconciliation of Accrued Restructuring Costs

The following is a reconciliation of the accrued restructuring costs between January 1, 2016 and September 30, 2016:

	All Plans
Balance at January 1, 2016	$	2,211
Restructuring expense incurred		6,591
Non-cash loss on impairment of fixed assets		(706	)
Cash payments		(6,206	)
Balance at September 30, 2016	$	1,890

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Segments, Concentrations and Geographic Information (Tables)

9 Months Ended

Sep. 30, 2016

Segment Reporting [Abstract]

Reconciliation of Revenue from Segments to Consolidated

Segment financial information and a reconciliation of segment results to consolidated results follows:

	Quarters Ended September 30,						Year to date periods Ended September 30,
	2016			2015			2016			2015
Net Sales:
Couplings, Clutches & Brakes	$	77,446		$	85,760		$	231,225		$	265,225
Electromagnetic Clutches & Brakes		50,680			50,393			165,083			166,279
Gearing		47,023			48,783			145,038			147,599
Inter-segment eliminations		(2,017	)		(1,883	)		(5,087	)		(6,079	)
Net sales	$	173,132		$	183,053		$	536,259		$	573,024
Income from operations:
Segment earnings:
Couplings, Clutches & Brakes	$	6,596		$	8,910		$	20,441		$	29,672
Electromagnetic Clutches & Brakes		6,589			4,771			20,120			16,293
Gearing		5,650			6,197			17,280			17,022
Restructuring		(3,397	)		(651	)		(6,591	)		(4,994	)
Corporate expenses (1)		(5,069	)		(2,567	)		(9,729	)		(7,967	)
Income from operations	$	10,369		$	16,660		$	41,521		$	50,026
Other non-operating (income) expense:
Net interest expense	$	2,815		$	2,924		$	8,615		$	8,858
Other non-operating  expense (income), net		45			685			(438	)		606
		2,860			3,609			8,177			9,464
Income before income taxes		7,509			13,051			33,344			40,562
Provision for income taxes		2,196			2,830			9,872			11,326
Net income	$	5,313		$	10,221		$	23,472		$	29,236

(1) Certain expenses are maintained at the corporate level and not allocated to the segments. These include various administrative expenses related to corporate headquarters, depreciation on capitalized software costs, non-capitalizable software implementation costs and acquisition related expenses.

Reconciliation of Assets from Segment to Consolidated

Selected information by segment (continued)

	Quarter Ended				Year to Date Period Ended
	September 30, 2016		September 30, 2015		September 30, 2016		September 30, 2015
Depreciation and amortization:
Couplings, Clutches & Brakes	$	4,028	$	3,926	$	11,485	$	11,922
Electromagnetic Clutches & Brakes		1,176		1,195		3,501		3,481
Gearing		1,862		1,613		5,261		4,970
Corporate		791		803		2,372		2,296
Total depreciation and amortization	$	7,857	$	7,537	$	22,619	$	22,669
	September 30, 2016		December 31, 2015
Total assets:
Couplings, Clutches & Brakes	$	329,621	$	312,117
Electromagnetic Clutches & Brakes		129,576		125,887
Gearing		133,483		150,860
Corporate (2)		27,778		43,468
Total assets	$	620,458	$	632,332

(1) Corporate assets are primarily cash and cash equivalents, tax related asset accounts, certain capitalized software costs, property, plant and equipment and deferred financing costs.

Revenue from External Customers by Geographic Areas

Net sales to third parties by geographic region are as follows:

	Net Sales
	Quarter Ended				Year to Date Period Ended
	September 30, 2016		September 30, 2015		September 30, 2016		September 30, 2015
North America (primarily U.S.)	$	99,995	$	108,959	$	316,957	$	350,753
Europe		54,344		52,757		165,694		164,829
Asia and other		18,793		21,337		53,608		57,442
Total	$	173,132	$	183,053	$	536,259	$	573,024

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Organization and Nature of Operations - Additional Information (Detail)	9 Months Ended
	Sep. 30, 2016 product country
Organization Consolidation And Presentation Of Financial Statements [Abstract]
Number of product lines (more than) | product	42
Number of countries in which the company has production facilities | country	12

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Fair Value of Financial Instruments - Additional Information (Detail) - USD ($) $ in Millions	Sep. 30, 2016	Dec. 31, 2015
Fair Value, Inputs, Level 1 [Member] | Money Market Funds [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash and cash equivalents	$ 0.3	$ 0.3
Convertible Notes [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Interest rate on notes (as a percent)	2.75%	2.75%
Carrying amount of financial instruments	$ 85.0	$ 85.0
Estimated fair value of financial instruments	$ 101.6	$ 91.7

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(Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward]
Accumulated other comprehensive income (loss) by component, beginning balance			$ (63,832)	$ (41,415)
Cumulative losses transferred from Lamiflex				(410)
Net current-period Other Comprehensive Income (Loss)	$ 104	$ (4,538)	(866)	(16,525)
Accumulated other comprehensive income (loss) by component, ending balance	(64,698)	(58,350)	(64,698)	(58,350)
Gains and Losses on Cash Flow Hedges [Member]
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward]
Accumulated other comprehensive income (loss) by component, beginning balance			(140)	143
Cumulative losses transferred from Lamiflex				0
Net current-period Other Comprehensive Income (Loss)			0	(283)
Accumulated other comprehensive income (loss) by component, ending balance	(140)	(140)	(140)	(140)
Defined Benefit Pension Plans [Member]
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward]
Accumulated other comprehensive income (loss) by component, beginning balance			(5,807)	(4,818)
Cumulative losses transferred from Lamiflex				0
Net current-period Other Comprehensive Income (Loss)			134	0
Accumulated other comprehensive income (loss) by component, ending balance	(5,673)	(4,818)	(5,673)	(4,818)
Cumulative Foreign Currency Translation Adjustment [Member]
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward]
Accumulated other comprehensive income (loss) by component, beginning balance			(57,885)	(36,740)
Cumulative losses transferred from Lamiflex				(410)
Net current-period Other Comprehensive Income (Loss)			(1,000)	(16,242)
Accumulated other comprehensive income (loss) by component, ending balance	$ (58,885)	$ (53,392)	$ (58,885)	$ (53,392)

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Net Income per Share - Reconciliation of Basic to Diluted Net Income per Share (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Earnings Per Share [Abstract]
Net income attributable to Altra Industrial Motion Corp.	$ 5,313	$ 10,221	$ 23,472	$ 29,299
Shares used in net income per common share - basic (in shares)	25,726	26,145	25,684	26,140
Dilutive effect of the equity premium on Convertible Notes at the average price of common stock (in shares)	295	0	123	38
Incremental shares of unvested restricted common stock (in shares)	0	0	6	6
Shares used in net income per common share - diluted (in shares)	26,021	26,145	25,813	26,184
Earnings per share:
Basic net income attributable to Altra Industrial Motion Corp. (in usd per share)	$ 0.21	$ 0.39	$ 0.91	$ 1.12
Diluted net income attributable to Altra Industrial Motion Corp. (in usd per share)	$ 0.20	$ 0.39	$ 0.91	$ 1.12

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Inventories - Summary of Inventories (Detail) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Inventory Disclosure [Abstract]
Raw materials	$ 35,758	$ 34,169
Work in process	11,915	12,864
Finished goods	73,770	74,123
Inventories, net	$ 121,443	$ 121,156

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Goodwill and Intangible Assets - Changes in Goodwill (Detail) $ in Thousands	9 Months Ended
	Sep. 30, 2016 USD ($)
Goodwill [Roll Forward]
Net goodwill, beginning balance	$ 97,309
Impact of changes in foreign currency and other	466
Net goodwill, ending balance	97,775
Couplings, Clutches and Brakes [Member]
Goodwill [Roll Forward]
Net goodwill, beginning balance	25,290
Impact of changes in foreign currency and other	136
Net goodwill, ending balance	25,426
Electromagnetic Clutches and Brakes [Member]
Goodwill [Roll Forward]
Net goodwill, beginning balance	24,661
Impact of changes in foreign currency and other	29
Net goodwill, ending balance	24,690
Gearing [Member]
Goodwill [Roll Forward]
Net goodwill, beginning balance	47,358
Impact of changes in foreign currency and other	301
Net goodwill, ending balance	$ 47,659

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Goodwill and Intangible Assets - Other Intangible Assets (Detail) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Schedule Of Finite And Indefinite Lived Intangible Assets [Line Items]
Total intangible assets, accumulated amortization	$ 68,217	$ 62,013
Total intangible assets, cost	158,725	158,082
Total intangible assets, net	90,508	96,069
Customer Relationships [Member]
Schedule Of Finite And Indefinite Lived Intangible Assets [Line Items]
Intangible assets subject to amortization, cost	113,309	112,408
Total intangible assets, accumulated amortization	62,744	56,677
Intangible assets subject to amortization, net	50,565	55,731
Product Technology and Patents [Member]
Schedule Of Finite And Indefinite Lived Intangible Assets [Line Items]
Intangible assets subject to amortization, cost	6,111	6,049
Total intangible assets, accumulated amortization	5,473	5,336
Intangible assets subject to amortization, net	638	713
Tradenames and Trademarks [Member]
Schedule Of Finite And Indefinite Lived Intangible Assets [Line Items]
Intangible assets not subject to amortization, cost	$ 39,305	$ 39,625

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Goodwill and Intangible Assets - Additional Information (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Goodwill And Intangible Assets [Line Items]
Amortization expense	$ 2,100	$ 2,100	$ 6,384	$ 6,437
Estimated Amortization Expense for Intangible Assets [Member]
Goodwill And Intangible Assets [Line Items]
Remainder 2016	2,000		2,000
Year 2017	8,300		8,300
Year 2018	8,300		8,300
Year 2019	8,300		8,300
Year 2020	8,300		8,300
Thereafter	$ 16,100		$ 16,100

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Warranty Costs - Additional Information (Detail)	9 Months Ended
	Sep. 30, 2016
Minimum [Member]
Guarantor Obligations [Line Items]
Product warranty period	3 months
Maximum [Member]
Guarantor Obligations [Line Items]
Product warranty period	2 years

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Warranty Costs - Changes in Carrying Amount of Accrued Product Warranty Costs (Detail) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Movement in Liabilities for Guarantees on Long-Duration Contracts, Guaranteed Benefit Liability, Gross [Roll Forward]
Balance at beginning of period	$ 9,468	$ 7,792
Accrued current period warranty expense	1,732	3,641
Payments and adjustments	(2,700)	(1,760)
Balance at end of period	$ 8,500	$ 9,673

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Debt - Outstanding Debt Obligations (Detail) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Debt Instrument [Line Items]
Total debt	$ 216,246	$ 243,817
Less: debt discount, net of accretion	(6,092)	(9,062)
Total debt, net of unaccreted discount	210,154	234,755
Less current portion of long-term debt	(400)	(3,187)
Total long-term debt, net of unaccreted discount	209,754	231,568
Revolving Credit Facility [Member]
Debt Instrument [Line Items]
Total debt	117,509	145,152
Convertible Notes [Member]
Debt Instrument [Line Items]
Total debt	85,000	85,000
Mortgages [Member]
Debt Instrument [Line Items]
Total debt	13,339	10,333
Equipment and Working Capital Notes [Member]
Debt Instrument [Line Items]
Total debt		2,832
Capital Leases [Member]
Debt Instrument [Line Items]
Total debt	$ 398	$ 500

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Debt - Additional Information (Detail)				1 Months Ended	9 Months Ended
	Dec. 31, 2015 USD ($)	Oct. 22, 2015 USD ($)	Sep. 01, 2011 USD ($)	Mar. 31, 2011 USD ($) d $ / shares shares	Sep. 30, 2016 USD ($) d $ / shares	Sep. 30, 2016 EUR (€) d	Sep. 30, 2016 EUR (€)	Dec. 31, 2015 EUR (€)	Dec. 06, 2013 USD ($)	Dec. 06, 2013 EUR (€)
Debt Instrument [Line Items]
Borrowings under overdraft agreements	$ 0				$ 0
Line of Credit [Member] | Term Loan [Member]
Debt Instrument [Line Items]
Outstanding on revolving credit facility									$ 94,000,000
Line of Credit [Member] | Additional Term Loan [Member]
Debt Instrument [Line Items]
Availability under credit facility agreement | €										€ 50,000,000
Convertible Debt [Member]
Debt Instrument [Line Items]
Debt instrument, maturity date				Mar. 01, 2031
Coupon interest rate			2.75%		2.75%		2.75%
Proceeds from the offering			$ 81,300,000
Adjustment of shares (in shares) | shares				36.0985
Principal amount of notes				$ 1,000
Conversion price per share (in usd per share) | $ / shares					$ 25.70
Percentage of sale price of common stock				130.00%	130.00%	130.00%
Number of trading days | d					20	20
Number of consecutive trading days				30 days	30 days	30 days
Number of business day period				5 days
Number of consecutive trading days in measurement period				10 days
Percentage of measurement period				97.00%
Percentage of convertible notes redeemable				100.00%
Convertible notes redeemable period one				Mar. 01, 2018
Convertible notes redeemable period two				Mar. 01, 2021
Convertible notes redeemable period three				Mar. 01, 2026
Conversion price redemption exceed				130.00%
Principal amount of debt	85,000,000			$ 85,000,000	$ 85,000,000
Debt component in note payable				60,500,000
Equity component in note payable				$ 24,500,000
Discount rate for debt component				8.25%
Debt issuance cost				$ 3,700,000
Adjustments to additional paid-in capital of convertible debt				1,000,000
Debt issuance cost, amortized				$ 2,700,000
Effective interest rate of Senior Secured Notes					8.50%		8.50%
Convertible Debt [Member] | Initial Conversion Price [Member]
Debt Instrument [Line Items]
Conversion price per share (in usd per share) | $ / shares				$ 27.70
Convertible Debt [Member] | Minimum [Member]
Debt Instrument [Line Items]
Number of trading days | d				20
Mortgages [Member] | Heidelberg Germany [Member]
Debt Instrument [Line Items]
Interest rate					1.79%	1.79%
New mortgage amount	1,700,000				$ 1,500,000		€ 1,300,000	€ 1,500,000
Mortgages [Member] | Esslingen Germany [Member]
Debt Instrument [Line Items]
Construction loan	6,800,000				$ 6,700,000		6,000,000	6,000,000
Mortgage interest rate					2.50%	2.50%
Monthly installments					$ 100,000	€ 100,000
Mortgages [Member] | Angers France [Member]
Debt Instrument [Line Items]
Interest rate					1.85%	1.85%
Construction loan	2,200,000				$ 2,200,000		2,000,000	€ 2,000,000
Equipment And Working Capital Notes [Member] | Zlate Moravce, Slovakia [Member]
Debt Instrument [Line Items]
Interest rate					1.95%	1.95%
Available to borrow loan amount					$ 3,400,000		€ 3,000,000
Capital Leases [Member]
Debt Instrument [Line Items]
Principal amount of debt	$ 500,000				400,000
Prior Revolving Credit Facility [Member] | Line of Credit [Member] | Revolving Credit Facility [Member]
Debt Instrument [Line Items]
Availability under credit facility agreement									$ 200,000,000
2015 Credit Agreement [Member] | Line of Credit [Member] | Revolving Credit Facility [Member]
Debt Instrument [Line Items]
Availability under credit facility agreement		$ 350,000,000
Outstanding on revolving credit facility					117,500,000
Additional expansion amount		$ 150,000,000
Amount available under credit facility					228,400,000
2015 Credit Agreement [Member] | Line of Credit [Member] | Revolving Credit Facility [Member] | Eurodollar Loan [Member]
Debt Instrument [Line Items]
Applicable margins for loans	1.50%
2015 Credit Agreement [Member] | Line of Credit [Member] | Revolving Credit Facility [Member] | Minimum [Member] | Eurodollar Loan [Member]
Debt Instrument [Line Items]
Applicable margins for loans		1.25%
2015 Credit Agreement [Member] | Line of Credit [Member] | Revolving Credit Facility [Member] | Minimum [Member] | ABR Based Loans [Member]
Debt Instrument [Line Items]
Applicable margins for loans		0.25%
2015 Credit Agreement [Member] | Line of Credit [Member] | Revolving Credit Facility [Member] | Maximum [Member] | Eurodollar Loan [Member]
Debt Instrument [Line Items]
Applicable margins for loans		2.00%
2015 Credit Agreement [Member] | Line of Credit [Member] | Revolving Credit Facility [Member] | Maximum [Member] | ABR Based Loans [Member]
Debt Instrument [Line Items]
Applicable margins for loans		1.00%
2015 Credit Agreement [Member] | Line of Credit [Member] | Letter of Credit [Member]
Debt Instrument [Line Items]
Letters of credit outstanding	$ 7,000,000				4,100,000
2015 Credit Agreement [Member] | Domestic Line of Credit [Member] | Revolving Credit Facility [Member]
Debt Instrument [Line Items]
Outstanding on revolving credit facility					$ 109,200,000
Interest rate					2.00%	2.00%
2015 Credit Agreement [Member] | Foreign Line of Credit [Member] | Revolving Credit Facility [Member]
Debt Instrument [Line Items]
Outstanding on revolving credit facility					$ 8,300,000
Interest rate					1.50%	1.50%
Term Loans [Member] | Line of Credit [Member] | Term Loan [Member]
Debt Instrument [Line Items]
Write-off of deferred financing costs		$ 500,000

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Debt - Carrying Amount of Debt (Detail) - USD ($)	Sep. 30, 2016	Dec. 31, 2015	Mar. 31, 2011
Debt Instrument [Line Items]
Carrying value of debt	$ 209,754,000	$ 231,568,000
Convertible Debt [Member]
Debt Instrument [Line Items]
Principal amount of debt	85,000,000	85,000,000	$ 85,000,000
Unamortized discount	6,092,000	9,062,000
Carrying value of debt	$ 78,908,000	$ 75,938,000

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Debt - Interest Expense Associated with Convertible Notes (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Debt Disclosure [Abstract]
Contractual coupon rate of interest	$ 584	$ 586	$ 1,753	$ 1,753
Accretion of Convertible Notes discount and amortization of deferred financing costs	1,097	840	3,237	2,740
Interest expense for the convertible notes	$ 1,681	$ 1,426	$ 4,990	$ 4,493

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Stockholders' Equity - Additional Information (Detail) - USD ($)		3 Months Ended		9 Months Ended		12 Months Ended
	Oct. 19, 2016	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015	Dec. 31, 2014	May 31, 2014
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Compensation expense				$ 3,400,000	$ 3,200,000
Unrecognized compensation cost		$ 4,900,000		$ 4,900,000
Weighted average remaining period				3 years
Fair market value of the shares				$ 3,700,000
Stock repurchase program, authorized amount							$ 50,000,000
Repurchases of common stock (in shares)		5,461
Treasury stock acquired, average cost per share (in usd per share)		$ 27.45
Stock repurchase program, remaining authorized repurchase amount		$ 10,500,000		$ 10,500,000
Cash dividend declared (in usd per share)		$ 0.15	$ 0.15	$ 0.45	$ 0.42
Subsequent Event [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock repurchase program, expiration period	Dec. 31, 2019
Cash dividend declared (in usd per share)	$ 0.15
Subsequent Event [Member] | Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock repurchase program, authorized amount	$ 30,000,000
Restricted Stock [Member] | 2004 Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares subject to outstanding awards (in shares)						750,576
Restricted Stock [Member] | 2014 Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares of common stock available for delivery pursuant to the grant of awards (in shares)						750,000
Restricted shares for vesting period						5 years

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Stockholders' Equity - Company's Unvested Restricted Stock Grants (Detail)	9 Months Ended
	Sep. 30, 2016 $ / shares shares
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward]
Shares unvested, beginning balance (in shares) | shares	161,010
Shares granted (in shares) | shares	170,926
Shares for which restrictions lapsed (in shares) | shares	(131,002)
Shares unvested, ending balance (in shares) | shares	200,934
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract]
Weighted-average grant date fair value, beginning balance (in usd per share) | $ / shares	$ 28.62
Weighted-average grant date fair value, shares granted (in usd per share) | $ / shares	22.84
Weighted-average grant date fair value, shares for which restrictions lapsed (in usd per share) | $ / shares	27.90
Weighted-average grant date fair value, ending balance (in usd per share) | $ / shares	$ 24.67

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Restructuring, Asset Impairment, and Transition Expenses - Summary of Total Restructuring Expense (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Restructuring Cost and Reserve [Line Items]
Restructuring costs	$ 3,397	$ 651	$ 6,591	$ 4,994
Minimum [Member]
Restructuring Cost and Reserve [Line Items]
Expected restructuring cost remaining	7,000		7,000
Maximum [Member]
Restructuring Cost and Reserve [Line Items]
Expected restructuring cost remaining	9,000		9,000
Severance [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring costs			2,000
Consolidation costs [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring costs			700
Moving and relocation [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring costs			2,400
Building impairments [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring costs			700
Travel-related and other restructuring costs [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring costs			800
Couplings, Clutches and Brakes [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring costs	3,022	103	4,425	741
Electromagnetic Clutches and Brakes [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring costs	169	7	1,276	1,373
Gearing [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring costs	68	541	84	2,880
Corporate [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring costs	$ 138	$ 0	$ 806	$ 0

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Restructuring, Asset Impairment, and Transition Expenses - Reconciliation of Accrued Restructuring Costs (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Restructuring Reserve [Roll Forward]
Beginning Balance			$ 2,211
Restructuring expense incurred	$ 3,397	$ 651	6,591	$ 4,994
Non-cash loss on impairment of fixed assets			(706)
Cash payments			(6,206)
Ending Balance	$ 1,890		$ 1,890

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Segments, Concentrations and Geographic Information (Details) $ in Thousands		3 Months Ended		9 Months Ended
		Sep. 30, 2016 USD ($) customer	Sep. 30, 2015 USD ($) customer	Sep. 30, 2016 USD ($) segment	Sep. 30, 2015 USD ($)	Dec. 31, 2015 USD ($)
Revenues from External Customers and Long-Lived Assets [Line Items]
Number of business segments | segment				3
Net sales		$ 173,132	$ 183,053	$ 536,259	$ 573,024
Income from operations		10,369	16,660	41,521	50,026
Restructuring		(3,397)	(651)	(6,591)	(4,994)
Net interest expense		2,815	2,924	8,615	8,858
Other non-operating expense (income), net		45	685	(438)	606
Total other non-operating expense, net		2,860	3,609	8,177	9,464
Income before income taxes		7,509	13,051	33,344	40,562
Provision for income taxes		2,196	2,830	9,872	11,326
Net income		5,313	10,221	23,472	29,236
Total depreciation and amortization		7,857	$ 7,537	22,619	22,669
Total assets		$ 620,458		620,458		$ 632,332
Sales Revenue, Net [Member] | Customer Concentration Risk [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Number of major customers | customer		0	0
Couplings, Clutches and Brakes [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Restructuring		$ (3,022)	$ (103)	(4,425)	(741)
Electromagnetic Clutches and Brakes [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Restructuring		(169)	(7)	(1,276)	(1,373)
Gearing [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Restructuring		(68)	$ (541)	(84)	(2,880)
Gearing [Member] | Sales Revenue, Net [Member] | Customer Concentration Risk [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Number of major customers | customer			1
Concentration risk (as percent)			10.00%
Corporate [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Income from operations	[1]	(5,069)	$ (2,567)	(9,729)	(7,967)
Restructuring		(138)	0	(806)	0
Total depreciation and amortization		791	803	2,372	2,296
Total assets	[2]	27,778		27,778		43,468
Operating Segments [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Restructuring		(3,397)	(651)	(6,591)	(4,994)
Operating Segments [Member] | North America (primarily U.S.) [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Net sales		99,995	108,959	316,957	350,753
Operating Segments [Member] | Europe [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Net sales		54,344	52,757	165,694	164,829
Operating Segments [Member] | Asia And Other [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Net sales		18,793	21,337	53,608	57,442
Operating Segments [Member] | Couplings, Clutches and Brakes [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Net sales		77,446	85,760	231,225	265,225
Income from operations		6,596	8,910	20,441	29,672
Total depreciation and amortization		4,028	3,926	11,485	11,922
Total assets		329,621		329,621		312,117
Operating Segments [Member] | Electromagnetic Clutches and Brakes [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Net sales		50,680	50,393	165,083	166,279
Income from operations		6,589	4,771	20,120	16,293
Total depreciation and amortization		1,176	1,195	3,501	3,481
Total assets		129,576		129,576		125,887
Operating Segments [Member] | Gearing [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Net sales		47,023	48,783	145,038	147,599
Income from operations		5,650	6,197	17,280	17,022
Total depreciation and amortization		1,862	1,613	5,261	4,970
Total assets		133,483		133,483		$ 150,860
Intersegment Eliminations [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Net sales		$ (2,017)	$ (1,883)	$ (5,087)	$ (6,079)

[1] Certain expenses are maintained at the corporate level and not allocated to the segments. These include various administrative expenses related to corporate headquarters, depreciation on capitalized software costs, non-capitalizable software implementation costs and acquisition related expenses.

[2] Corporate assets are primarily cash and cash equivalents, tax related asset accounts, certain capitalized software costs, property, plant and equipment and deferred financing costs.

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Commitments and Contingencies (Details) - USD ($) $ in Millions	Sep. 30, 2016	Dec. 31, 2015
Commitments And Contingencies Disclosure [Abstract]
Loss Contingency Accrual	$ 0	$ 0

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Subsequent Events (Details) $ / shares in Units, € in Millions				3 Months Ended		9 Months Ended
	Oct. 21, 2016 USD ($)	Oct. 21, 2016 EUR (€)	Oct. 19, 2016 USD ($) $ / shares	Sep. 30, 2016 $ / shares	Sep. 30, 2015 $ / shares	Sep. 30, 2016 $ / shares	Sep. 30, 2015 $ / shares	May 31, 2014 USD ($)
Subsequent Event [Line Items]
Cash dividend declared | $ / shares				$ 0.15	$ 0.15	$ 0.45	$ 0.42
Stock repurchase program, authorized amount								$ 50,000,000
Subsequent Event [Member]
Subsequent Event [Line Items]
Cash dividend declared | $ / shares			$ 0.15
Dividend declaration date			Oct. 19, 2016
Dividend payable date			Jan. 04, 2017
Dividend record date			Dec. 19, 2016
Stock repurchase program, expiration period			Dec. 31, 2019
Subsequent Event [Member] | Line of Credit [Member] | Revolving Credit Facility [Member]
Subsequent Event [Line Items]
Increase in amount under credit facility agreement	$ 75,000,000
Increased borrowing capacity under credit facility agreement	425,000,000
Additional expansion amount	150,000,000
Subsequent Event [Member] | Multicurrency Line of Credit [Member] | Revolving Credit Facility [Member]
Subsequent Event [Line Items]
Increased borrowing capacity under credit facility agreement	$ 250,000,000
Subsequent Event [Member] | Stromag Acquisition [Member]
Subsequent Event [Line Items]
Business acquisition cost, debt totaling | €		€ 14
Business acquisition, cash consideration | €		€ 184
Number of business days following satisfaction of employee consultation process requirements for parties to French Agreement to execute and deliver Agreed Form Sale and Purchase Agreement	2 days	2 days
Subsequent Event [Member] | Maximum [Member]
Subsequent Event [Line Items]
Stock repurchase program, authorized amount			$ 30,000,000