Business and Organization

The Spin-Off and Rebranding

On January 29, 2015, the Company's former parent, The Manitowoc Company, Inc. ("MTW"), announced plans to create two independent, public companies to separately operate its two businesses: its crane business and its foodservice business. To effect the separation, MTW first undertook an internal reorganization, following which MTW held the crane business and Manitowoc Foodservice, Inc. ("MFS") held the foodservice business. Then on March 4, 2016, MTW distributed all the MFS common stock to MTW's shareholders on a pro rata basis, and MFS became an independent, publicly-traded company (the "Distribution"). In this Annual Report on Form 10-K/A, "Spin-Off" refers to both the above described internal reorganization and the Distribution, collectively.

On March 3, 2017, MFS filed a Certificate of Amendment to its Amended and Restated Certificate of Incorporation to effect a change of the Company’s name from "Manitowoc Foodservice, Inc." to "Welbilt, Inc." effective March 3, 2017 (the "Name Change"). In connection with the Name Change, the Company also amended and restated its bylaws, by substituting “Welbilt, Inc.” for “Manitowoc Foodservice, Inc.” to launch the Company's rebranding of its logo and its brand identity to Welbilt. The change was the final part of the Company's strategic repositioning after the Spin-Off. To meet its future growth objectives, the Company will focus on further developing its portfolio of 12 award-winning brands under the new corporate name.

On March 6, 2017, shares of the Company commenced trading under the Company's new name, Welbilt, Inc., and a new New York Stock Exchange ticker symbol, “WBT.”

In these consolidated financial statements, unless the context otherwise requires:

•

"Welbilt" and the "Company" refer to Welbilt, Inc. and its consolidated subsidiaries, after giving effect to the Spin-Off, or, in the case of information as of dates or for periods prior to its separation from MTW, the combined entities of the Foodservice business, and certain other assets and liabilities that were historically held at the MTW corporate level, but were specifically identifiable and attributable to the Foodservice business; and


•	"MTW" refers to The Manitowoc Company, Inc. and its consolidated subsidiaries, other than, for all periods following the Spin-Off, Welbilt.

Description of the Business

The Company is one of the world’s leading commercial foodservice equipment companies. It designs and manufactures a complementary portfolio of hot and cold foodservice equipment products integrated under one operating company and is supported by a growing aftermarket parts and repair service business. Its capabilities span refrigeration, ice-making, cooking, holding, food-preparation and beverage-dispensing technologies, which allow it to equip entire commercial kitchens and serve the world’s growing demand for food prepared away from home. The Company's suite of products is used by commercial and institutional foodservice operators including full-service restaurants, quick-service restaurant chains, hotels, caterers, supermarkets, convenience stores, business and industrial customers, hospitals, schools and other institutions. The Company's products and aftermarket parts and service support are recognized by its customers and channel partners for their quality, reliability and durability that enable profitable growth for Welbilt end customers by improving their menus, enhancing operations and reducing costs.

The Company operates in three regional segments, the Americas (includes U.S., Canada and Latin America), EMEA (markets in Europe, including Russia and the Commonwealth of Independent States, Middle East and Africa) and APAC (principally comprised of markets in China, Australia, Japan, Philippines, South Korea, Singapore, Indonesia, Taiwan, Hong Kong,Thailand, Malaysia, and New Zealand).

Restatement of Previously Issued Consolidated Financial Statements

During the third quarter of 2018, the Company identified errors in previously issued financial statements related to the tax basis of a foreign subsidiary and incorrect tax amortization of the intangible assets held by the same entity. These errors impacted the tax determinations of certain intercompany distributions between foreign subsidiaries, thereby resulting in an understatement of U.S. tax liabilities. In addition, the Company discovered certain intercompany transactions were not recorded on a timely basis. While these intercompany transactions had no impact to the Company’s consolidated earnings before income taxes, they did result in an incorrect recognition of income tax expense or benefit recognized in each applicable jurisdiction, thereby resulting in an understatement of U.S. tax liabilities. The impact of these income tax errors, along with other prior period income tax errors previously corrected for as out-of-period adjustments in the period of identification, resulted in a $5.4 million net understatement of the Company's previously recognized income tax expense in 2016.

As a result of these income tax errors, which materially misstated the previously issued 2016 financial statements, the consolidated financial statements of the Company as of and for the year ended December 31, 2016 have been restated. In addition, there were certain other prior period errors, including but not limited to the following:


•	$2.7 million understatement of the loss incurred on early extinguishment of debt in 2016, which was initially identified and corrected for as an out-of-period correction in 2017;


•	$2.9 million of net tax errors that primarily originated prior to 2016 and would have increased net parent company investment prior to the Spin-Off, which were identified and initially corrected for as an out-of-period correction in 2016; and

•

In 2016, subsequent to the initial accounting for the Spin-Off, the Company incorrectly reduced the carrying value of deferred tax liabilities through a credit to retained earnings of $7.2 million. In 2017, the Company adjusted for this error through an out-of-period adjustment to additional paid-in capital, which then resulted in a misclassification between cumulative retained earnings and additional paid-in capital.

Each of these errors were previously determined to be immaterial, individually and in the aggregate, and were corrected for and disclosed as out-of-period adjustments in the period of identification. These and other immaterial errors have been corrected for in this restatement.

Revision of Previously Issued Consolidated Financial Statements

The income tax and other prior period errors, including those noted above, also impacted the previously issued 2017 and 2015 financial statements but did not result in such financial statements being materially misstated. However, in order to correctly reflect the errors in the appropriate period, management has revised the 2017 and 2015 previously issued financial statements in this Form 10-K/A.

The effects of correcting the errors in the 2017 revision and the 2016 restatement on the line items within the Company's consolidated balance sheets as of December 31, 2017 and 2016 are as follows:



	December 31, 2017									December 31, 2016
(in millions)	As Reported			Adjustment			As Revised			As Reported			Adjustment			As Restated
Accrued expenses and other liabilities	$	161.7		$	7.8		$	169.5		$	174.5		$	3.1		$	177.6
Total current liabilities	290.1			7.8			297.9			313.1			3.1			316.2
Long-term debt and capital leases	1,232.2			—			1,232.2			1,278.7			2.6			1,281.3
Deferred income taxes ⁽¹⁾	92.3			(1.0		)	91.3			137.8			7.2			145.0
Total non-current liabilities	1,439.9			(1.0		)	1,438.9			1,499.5			9.8			1,509.3
Additional paid-in capital (deficit)	(63.3		)	8.6			(54.7		)	(72.0		)	1.4			(70.6		)
Retained earnings	204.5			(15.4		)	189.1			70.5			(14.3		)	56.2
Total equity (deficit)	110.4			(6.8		)	103.6			(43.5		)	(12.9		)	(56.4		)

⁽¹⁾ In 2017, the income tax error related to a valuation allowance.

The effects of correcting the errors in the restatement and revision on the respective line items within the Company's consolidated statements of operations for the years ended December 31, 2017, 2016 and 2015 are as follows:



	Year Ended December 31, 2017
(in millions, except per share data)	As Reported			Adjustment			As Revised
Loss on early extinguishment of debt	$	4.4		$	(2.7	)	$	1.7
Other expense (income) — net	9.0			0.1			9.1
Earnings before income taxes	118.8			2.6			121.4
Income taxes	(15.2		)	3.7			(11.5		)
Net earnings	134.0			(1.1		)	132.9

Per share data
Earnings per share — Basic	$	0.96		$	—		$	0.96
Earnings per share — Diluted	$	0.95		$	(0.01	)	$	0.94



	Year Ended December 31, 2016
(in millions, except per share data)	As Reported		Adjustment			As Restated
Net sales	$	1,456.6	$	(0.5	)	$	1,456.1
Cost of sales	923.8		(1.5		)	922.3
Gross profit	532.8		1.0			533.8
Selling, general and administrative expenses	290.1		1.0			291.1
Loss on early extinguishment of debt	—		2.7			2.7
Other expense (income) — net	9.1		(0.1		)	9.0
Earnings before income taxes	104.8		(2.6		)	102.2
Income taxes	25.3		5.4			30.7
Net earnings	79.5		(8.0		)	71.5

Per share data
Earnings per share — Basic	$	0.58	$	(0.06	)	$	0.52
Earnings per share — Diluted	$	0.57	$	(0.06	)	$	0.51



	Year Ended December 31, 2015
(in millions, except per share data)	As Reported		Adjustment			As Revised
Income taxes	$	39.3	$	1.0		$	40.3
Net earnings	157.1		(1.0		)	156.1

Per share data
Earnings per share — Basic	$	1.15	$	(0.01	)	$	1.14
Earnings per share — Diluted	$	1.15	$	(0.01	)	$	1.14

The effects of correcting the errors in the restatement and revision on the respective line items within the Company's consolidated statements of comprehensive income for the years ended December 31, 2017, 2016 and 2015 are as follows:



	Year Ended December 31, 2017
(in millions)	As Reported		Adjustment			As Revised
Net earnings	$	134.0	$	(1.1	)	$	132.9
Comprehensive income	145.4		(1.1		)	144.3



	Year Ended December 31, 2016
(in millions)	As Reported		Adjustment			As Restated
Net earnings	$	79.5	$	(8.0	)	$	71.5
Comprehensive income	80.6		(8.0		)	72.6



	Year Ended December 31, 2015
(in millions)	As Reported		Adjustment			As Revised
Net earnings	$	157.1	$	(1.0	)	$	156.1
Comprehensive income	133.3		(1.0		)	132.3

The effects of correcting the errors in the restatement and revision on the respective line items within the Company’s consolidated statements of equity for the years ended December 31, 2017, 2016 and 2015 are as follows:



(in millions)	As Reported		Adjustment			As Revised
Balance at December 31, 2014
Net Parent Company Investment	$	1,272.1	$	3.9		$	1,276.0
Total Equity	1,251.4		3.9			1,255.3
Net earnings	157.1		(1.0		)	156.1
Total Equity balance at December 31, 2015	1,208.7		2.9			1,211.6



(in millions)	As Reported			Adjustment			As Restated / Revised
Balance at December 31, 2015
Net Parent Company Investment (As Revised)	$	1,253.2		$	2.9		$	1,256.1
Total Equity (As Revised)	1,208.7			2.9			1,211.6
Net earnings (As Restated)	79.5			(8.0		)	71.5
Adjustments in connection with the Spin-Off (As Restated)	7.7			(7.8		)	(0.1		)
Total Equity balance at December 31, 2016 (As Restated)	(43.5		)	(12.9		)	(56.4		)



(in millions)	As Reported			Adjustment			As Restated / Revised
Balance at December 31, 2016
Additional Paid-In Capital (Deficit) (As Restated)	$	(72.0	)	$	1.4		$	(70.6	)
Retained Earnings (As Restated)	70.5			(14.3		)	56.2
Total Equity (Deficit) (As Restated)	(43.5		)	(12.9		)	(56.4		)
Net earnings (As Revised)	134.0			(1.1		)	132.9
Total Equity balance at December 31, 2017 (As Revised)	110.4			(6.8		)	103.6



(in millions)	As Reported			Adjustment			As Revised
Balance at December 31, 2017
Additional Paid-In Capital (Deficit)	$	(63.3	)	$	8.6		$	(54.7	)
Retained Earnings	204.5			(15.4		)	189.1

The effects of correcting the errors in the restatement and revision on the respective line items within the consolidated statements of cash flows for the years ended December 31, 2017, 2016 and 2015 are as follows:



	Year Ended December 31, 2017
(in millions)	As Reported			Adjustment			As Revised
Net earnings	$	134.0		$	(1.1	)	$	132.9
Amortization of debt issuance costs	5.4			0.1			5.5
Loss on early extinguishment of debt	4.4			(2.7		)	1.7
Deferred income taxes	(63.3		)	(1.0		)	(64.3		)
Other current and long-term liabilities	1.6			4.7			6.3



	Year Ended December 31, 2016
(in millions)	As Reported			Adjustment			As Restated
Net earnings	$	79.5		$	(8.0	)	$	71.5
Amortization of debt issuance costs	4.8			(0.1		)	4.7
Loss on early extinguishment of debt	—			2.7			2.7
Deferred income taxes	(9.9		)	2.3			(7.6		)
Other current and long-term liabilities	27.8			1.6			29.4
Net cash provided by operating activities	125.8			(1.5		)	124.3
Net transactions with MTW	(6.1		)	1.5			(4.6		)
Net cash used in financing activities	(82.7		)	1.5			(81.2		)



	Year Ended December 31, 2015
(in millions)	As Reported			Adjustment			As Revised
Net earnings	$	157.1		$	(1.0	)	$	156.1
Deferred income taxes	(30.0		)	1.0			(29.0		)

All relevant footnotes to the consolidated financial statements in this Form 10-K/A have also been restated or revised to reflect the items discussed above. In addition, the impact of such errors on the 2017 and 2016 unaudited quarterly financial statements is included in Note 23, "Quarterly Financial Data (Unaudited)."