TENNANT CO

16. Commitments and Contingencies

In the ordinary course of business, we may become liable with respect to pending and threatened litigation, tax, environmental and other matters. Legal costs associated with such matters are expensed as incurred.

Oxygenator Water Techs vs. Tennant Company

On November 25, 2024, the Company received an adverse jury verdict in an intellectual property damages dispute in the United States District Court for the District of Minnesota. In the dispute, Oxygenator Water Technologies, Inc. (OWT) alleges that between 2015 and 2023 Tennant Company infringed certain of OWT’s patents through the Company’s manufacture and sale of certain component parts in ecH2O and nanoclean system options included on commercial floor scrubbers. A jury ruled against the Company and awarded $9.8 million, plus prejudgment interest of $4.7 million, in favor of OWT. The Company strongly disagrees with the verdict and is exploring all available options, including seeking to overturn the verdict and the resulting judgment through an appeals process. However, based on the jury verdict, the Company has recorded an accrued expense in selling and administrative expense in the Company's Consolidated Statements of Income and a current liability in the Company's Consolidated Balance Sheets for the total amount of $14.5 million. As the litigation process is not predictable and can lead to unexpected results, it is possible that the Company's exposure to loss could change after the issuance of these financials.

The ruling does not impact the Company's ability to sell any of its products and is not expected to affect the Company's long-term business objectives.

Other Matters

In addition to the above matter, the Company is involved in various other claims and litigation incidental to its business. Although the outcome of these matters cannot be determined with certainty, we do not expect that the final outcome will have a material effect on the Company's consolidated results of operations or financial position.