Item 8. Financial Statements and Supplementary Data

Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Directors of Generac Holdings Inc.

Waukesha, Wisconsin

Opinion o****n the Financial Statements

We have audited the accompanying consolidated balance sheets of Generac Holdings Inc. and subsidiaries (the “Company”) as of December 31, 2017 and 2016, the related consolidated statements of comprehensive income, stockholders’ equity and cash flows for each of the two years in the period ended December 31, 2017, and the related notes, collectively referred to as the “financial statements”. In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2017 and 2016, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2017, in conformity with accounting principles generally accepted in the United States of America.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company’s internal control over financial reporting as of December 31, 2017, based on criteria established in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 26, 2018 expressed an unqualified opinion on the Company’s internal control over financial reporting.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ Deloitte & Touche LLP

Milwaukee, WI

February 26, 2018

We have served as the Company’s auditor since 2016.

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of Generac Holdings Inc.

Waukesha, Wisconsin

We have audited the accompanying consolidated statements of comprehensive income, stockholders’ equity and cash flows of Generac Holdings Inc. (the Company) for the year ended December 31, 2015. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated results of operations and cash flows of Generac Holdings Inc. for the year ended December 31, 2015, in conformity with U.S. generally accepted accounting principles.

/s/ Ernst & Young LLP

Milwaukee, WI

February 26, 2016, (except for Note 6, Segment Reporting, and Note 2, New Accounting Pronouncements, as to which the date is February 24, 2017)

Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Directors of Generac Holdings Inc.

Waukesha, Wisconsin

Opinion on Internal Control over Financial Reporting

We have audited the internal control over financial reporting of Generac Holdings Inc. and its subsidiaries (the "Company") as of December 31, 2017, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2017, based on the criteria established in Internal Control — Integrated Framework (2013) issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2017, of the Company and our report dated February 26, 2018 expressed an unqualified opinion on those financial statements.

Basis for Opinion

The Company's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Cont****rol over Financial Reporting

A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Deloitte & Touche LLP

Milwaukee, WI

February 26, 2018

Generac Holdings Inc.
Consolidated Balance Sheets
(U.S. Dollars in Thousands, Except Share and Per Share Data_)_

		December 31,****
		2017				2016
Asset****s
Current assets:
Cash and cash equivalents		$	138,472			$	67,272
Accounts receivable, less allowance for doubtful accounts of $4,805 and $5,642 at December 31, 2017 and 2016, respectively			280,002				241,857
Inventories			380,341				349,731
Prepaid expenses and other assets			19,741				24,649
Total current assets			818,556				683,509
Property and equipment, net			230,380				212,793
Customer lists, net			41,064				45,312
Patents, net			39,617				48,061
Other intangible assets, net			2,401				2,925
Tradenames, net			152,683				158,874
Goodwill			721,523				704,640
Deferred income taxes			3,238				3,337
Other assets			10,502				2,233
Total assets		$	2,019,964			$	1,861,684
Liabilities and stockholders’ equit****y
Current liabilities:
Short-term borrowings		$	20,602			$	31,198
Accounts payable			233,639				181,519
Accrued wages and employee benefits			27,992				21,189
Other accrued liabilities			105,067				93,068
Current portion of long-term borrowings and capital lease obligations			1,572				14,965
Total current liabilities			388,872				341,939
Long-term borrowings and capital lease obligations			906,548				1,006,758
Deferred income taxes			43,789				17,278
Other long-term liabilities			76,995				61,459
Total liabilities			1,416,204				1,427,434
Redeemable noncontrolling interest			43,929				33,138
Stockholders’ equity:
Common stock, par value $0.01, 500,000,000 shares authorized, 70,820,173 and 70,261,481 shares issued at December 31, 2017 and 2016, respectively			708				702
Additional paid-in capital			459,816				449,049
Treasury stock, at cost, 8,448,874 and 7,564,874 shares at December 31, 2017 and 2016, respectively			(294,005	)			(262,402	)
Excess purchase price over predecessor basis			(202,116	)			(202,116	)
Retained earnings			616,347				456,052
Accumulated other comprehensive loss			(21,198	)			(40,163	)
Stockholders’ equity attributable to Generac Holdings Inc.			559,552				401,122
Noncontrolling interests			279				(10	)
Total stockholders’ equity			559,831				401,112
Total liabilities and stockholders’ equity		$	2,019,964			$	1,861,684

See notes to consolidated financial statements_._

Generac Holdings Inc.
Consolidated Statements of Comprehensive Income
(U.S. Dollars in Thousands, Except Share and Per Share Data_)_

		Year Ended December 31,****
		2017****				2016****				2015****
Net sales		$	1,672,445			$	1,444,453			$	1,317,299
Costs of goods sold			1,090,328				930,347				857,349
Gross profit			582,117				514,106				459,950
Operating expenses:
Selling and service			171,755				164,607				130,242
Research and development			42,925				37,229				32,922
General and administrative			87,512				74,700				52,947
Amortization of intangibles			28,861				32,953				23,591
Tradename and goodwill impairment			–				–				40,687
Total operating expenses			331,053				309,489				280,389
Income from operations			251,064				204,617				179,561
Other (expense) income:
Interest expense			(42,667	)			(44,568	)			(42,843	)
Investment income			298				44				123
Loss on extinguishment of debt			–				(574	)			(4,795	)
Loss on change in contractual interest rate			–				(2,957	)			(2,381	)
Costs related to acquisition			(777	)			(1,082	)			(1,195	)
Other, net			(3,230	)			902				(5,487	)
Total other expense, net			(46,376	)			(48,235	)			(56,578	)
Income before provision for income taxes			204,688				156,382				122,983
Provision for income taxes			43,553				57,570				45,236
Net income			161,135				98,812				77,747
Net income attributable to noncontrolling interests			1,749				24				-
Net income attributable to Generac Holdings Inc.		$	159,386			$	98,788			$	77,747
Net income attributable to common shareholders per common share - basic:		$	2.58			$	1.51			$	1.14
Weighted average common shares outstanding - basic:			62,040,704				64,905,793				68,096,051
Net income attributable to common shareholders per common share - diluted:		$	2.56			$	1.50			$	1.12
Weighted average common shares outstanding - diluted:			62,642,872				65,382,774				69,200,297
Other comprehensive income (loss):
Foreign currency translation adjustment		$	15,191			$	(18,545	)		$	(7,624	)
Net unrealized gain (loss) on derivatives			3,712				535				(965	)
Pension liability adjustment			62				322				1,881
Other comprehensive income (loss)			18,965				(17,688	)			(6,708	)
Total comprehensive income			180,100				81,124				71,039
Comprehensive income (loss) attributable to noncontrolling interests			5,549				(973	)			–
Comprehensive income attributable to Generac Holdings Inc.		$	174,551			$	82,097			$	71,039

See notes to consolidated financial statements_._

Generac Holdings Inc.
Consolidated Statements of Stockholders' Equity
(U.S. Dollars in Thousands, Except Share Data_)_

		Generac Holdings Inc.****
																						Excess**** Purchase Price								Accumulated****
										Additional****												Over								Other****				Total****
		Common Stock****								Paid-In****				Treasury Stock								Predecessor				Retained****				Comprehensive****				Stockholders'****				Noncontrolling
		Shares****				Amount****				Capital****				Shares****				Amount****				Basis****				Earnings****				Income (Loss)****				Equity****				Interest****				Total****
Balance at December 31, 201****4			69,122,271			$	691			$	434,906				(198,312	)		$	(8,341	)		$	(202,116	)		$	280,426			$	(15,767	)		$	489,799			$	-			$	489,799
Unrealized loss on interest rate swaps, net of tax of $(609)			–				–				–				–				–				–				–				(965	)			(965	)			–				(965	)
Foreign currency translation adjustment			–				–				–				–				–				–				–				(7,624	)			(7,624	)			–				(7,624	)
Common stock issued under equity incentive plans, net of shares withheld for employee taxes and strike price			460,398				5				(9,626	)			–				–				–				–				–				(9,621	)			–				(9,621	)
Net share settlement of restricted stock awards			–				–				–				(65,763	)			(3,233	)			–				–				–				(3,233	)			–				(3,233	)
Stock repurchases			–				–				–				(3,303,500	)			(99,942	)			–				–				–				(99,942	)			–				(99,942	)
Excess tax benefits from equity awards			–				–				9,559				–				–				–				–				–				9,559				–				9,559
Share-based compensation			–				–				8,241				–				–				–				–				–				8,241				–				8,241
Dividends declared			–				–				29				–				–				–								–				29				–				29
Pension liability adjustment, net of tax of $1,176			–				–				–				–				–				–				–				1,881				1,881				–				1,881
Net income			–				–				–				–				–				–				77,747				–				77,747				–				77,747
Balance at December 31, 201****5			69,582,669			$	696			$	443,109				(3,567,575	)		$	(111,516	)		$	(202,116	)		$	358,173			$	(22,475	)		$	465,871			$	-			$	465,871
Acquisition of business			–				–				–				–				–				–				–				–				–				53				53
Unrealized gain on interest rate swaps, net of tax of $341			–				–				–				–				–				–				–				535				535				–				535
Foreign currency translation adjustment			–				–				–				–				–				–				–				(18,545	)			(18,545	)			13				(18,532	)
Common stock issued under equity incentive plans, net of shares withheld for employee taxes and strike price			678,812				6				(11,473	)			–				–				–				–				–				(11,467	)			–				(11,467	)
Net share settlement of restricted stock awards			–				–				–				(28,593	)			(949	)			–				–				–				(949	)			–				(949	)
Stock repurchases			–				–				–				(3,968,706	)			(149,937	)			–				–				–				(149,937	)			–				(149,937	)
Excess tax benefits from equity awards			–				–				7,920				–				–				–				–				–				7,920				–				7,920
Share-based compensation			–				–				9,493				–				–				–				–				–				9,493				–				9,493
Pension liability adjustment, net of tax of $207			–				–				–				–				–				–				–				322				322				–				322
Redemption value adjustment			–				–				–				–				–				–				(909	)			–				(909	)			–				(909	)
Net income			–				–				–				–				–				–				98,788				–				98,788				(76	)			98,712
Balance at December 31, 201****6			70,261,481			$	702			$	449,049				(7,564,874	)		$	(262,402	)		$	(202,116	)		$	456,052			$	(40,163	)		$	401,122			$	(10	)		$	401,112
Change in noncontrolling interest share			–				–				(2,124	)			–				–				–				–				–				(2,124	)			184				(1,940	)
Unrealized gain on interest rate swaps, net of tax of $2,384			–				–				–				–				–				–				–				3,712				3,712				–				3,712
Foreign currency translation adjustment			–				–				–				–				–				–				–				15,191				15,191				(14	)			15,177
Common stock issued under equity incentive plans, net of shares withheld for employee taxes and strike price			558,692				6				2,686				–				–				–				–				–				2,692				–				2,692
Net share settlement of restricted stock awards			–				–				–				(39,500	)			(1,591	)			–				–				–				(1,591	)			–				(1,591	)
Stock repurchases			–				–				–				(844,500	)			(30,012	)			–				–				–				(30,012	)			–				(30,012	)
Share-based compensation			–				–				10,205				–				–				–				–				–				10,205				–				10,205
Pension liability adjustment, net of tax of $21			–				–				–				–				–				–				–				62				62				–				62
Redemption value adjustment			–				–				–				–				–				–				909				–				909				–				909
Net income			–				–				–				–				–				–				159,386				–				159,386				119				159,505
Balance at December 31, 201****7			70,820,173			$	708			$	459,816				(8,448,874	)		$	(294,005	)		$	(202,116	)		$	616,347			$	(21,198	)		$	559,552			$	279			$	559,831

See notes to consolidated financial statements_._

Generac Holdings Inc.
Consolidated Statements of Cash Flows
(U.S. Dollars in Thousands_)_

		Year Ended December 31,****
		2017****				2016				2015
Operating activitie****s
Net income		$	161,135			$	98,812			$	77,747
Adjustment to reconcile net income to net cash provided by operating activities:
Depreciation			23,127				21,465				16,742
Amortization of intangible assets			28,861				32,953				23,591
Amortization of original issue discount and deferred financing costs			3,516				3,940				5,429
Tradename and goodwill impairment			–				–				40,687
Loss on extinguishment of debt			–				574				4,795
Loss on change in contractual interest rate			–				2,957				2,381
Deferred income taxes			21,439				39,347				26,955
Share-based compensation expense			10,205				9,493				8,241
Other			410				127				540
Net changes in operating assets and liabilities, net of acquisitions:
Accounts receivable			(29,771	)			(9,082	)			9,610
Inventories			(16,278	)			15,514				9,084
Other assets			(14,783	)			406				5,063
Accounts payable			42,788				32,908				(27,771	)
Accrued wages and employee benefits			6,105				5,196				(5,361	)
Other accrued liabilities			27,514				6,719				445
Excess tax benefits from equity awards			(3,152	)			(7,920	)			(9,559	)
Net cash provided by operating activities			261,116				253,409				188,619
Investing activitie****s
Proceeds from sale of property and equipment			82				1,360				105
Expenditures for property and equipment			(33,261	)			(30,467	)			(30,651	)
Acquisition of business, net of cash acquired			1,257				(61,386	)			(73,782	)
Deposit paid related to acquisition			–				(15,329	)			–
Net cash used in investing activities			(31,922	)			(105,822	)			(104,328	)
Financing activitie****s
Proceeds from short-term borrowings			101,991				28,712				26,384
Proceeds from long-term borrowings			3,069				–				100,000
Repayments of short-term borrowings			(114,874	)			(27,755	)			(23,149	)
Repayments of long-term borrowings and capital lease obligations			(117,475	)			(37,627	)			(150,826	)
Stock repurchases			(30,012	)			(149,937	)			(99,942	)
Payment of debt issuance costs			(3,901	)			(4,557	)			(2,117	)
Cash dividends paid			–				(76	)			(1,436	)
Taxes paid related to equity awards			(5,892	)			(14,008	)			(12,956	)
Proceeds from the exercise of stock options			6,951				1,623				–
Excess tax benefits from equity awards			–				7,920				9,559
Net cash used in financing activities			(160,143	)			(195,705	)			(154,483	)
Effect of exchange rate changes on cash and cash equivalents			2,149				(467	)			(3,712	)
Net increase (decrease) in cash and cash equivalents			71,200				(48,585	)			(73,904	)
Cash and cash equivalents at beginning of period			67,272				115,857				189,761
Cash and cash equivalents at end of period		$	138,472			$	67,272			$	115,857
Supplemental disclosure of cash flow informatio****n
Cash paid during the perio****d
Interest		$	41,105			$	42,456			$	39,524
Income taxes			23,836				8,889				6,087

See notes to consolidated financial statements_._

Generac Holdings Inc. Notes to Consolidated Financial Statements

Years Ended December 31, 2017, 2016, and 201****5

_(_U.S. Dollars in Thousands, Except Share and Per Share Data)

1.	Description of Business

Founded in 1959, Generac Holdings Inc. (the Company) is a leading global designer and manufacturer of a wide range of power generation equipment and other engine powered products serving the residential, light-commercial and industrial markets. Generac’s power products are available globally through a broad network of independent dealers, distributors, retailers, wholesalers and equipment rental companies, as well as sold direct to certain end user customers.

Over the years, the Company has executed a number of acquisitions that support its strategic plan (refer to Item 1 in this Annual Report on Form 10-K for discussion of our Powering Ahead strategic plan). A summary of recent acquisitions include the following:

	●	In August 2013, the Company acquired the equity of Tower Light SRL and its wholly-owned subsidiaries (Tower Light). Headquartered outside Milan, Italy, Tower Light is a leading developer and supplier of mobile light towers throughout the world.

	●	In November 2013, the Company purchased the assets of Baldor Electric Company’s generator division (Baldor Generators). Baldor Generators offers a complete line of power generation equipment throughout North America with power output up to 2.5MW, which expanded the Company’s commercial and industrial product lines.

	●	In September 2014, the Company acquired the equity of Pramac America LLC (Powermate), resulting in the ownership of the Powermate trade name and the right to license the DeWalt brand name for certain residential engine powered tools. This acquisition expanded Generac’s residential product portfolio in the portable generator category.

	●	In October 2014, the Company acquired MAC, Inc. (MAC). MAC is a leading manufacturer of premium-grade commercial and industrial mobile heaters for the United States and Canadian markets. The acquisition expanded the Company’s portfolio of mobile power products and provides increased access to the oil & gas market.

	●	In August 2015, the Company acquired Country Home Products and its subsidiaries (CHP). CHP is a leading manufacturer of high-quality, innovative, professional-grade engine powered equipment used in a wide variety of property maintenance applications, which are primarily sold in North America under the DR® Power Equipment brand. The acquisition provided an expanded product lineup and additional scale to the Company’s residential engine powered products.

	●	In March 2016, the Company acquired a majority ownership interest in PR Industrial S.r.l and its subsidiaries (Pramac). Headquartered in Siena, Italy, Pramac is a leading global manufacturer of stationary, mobile and portable generators primarily sold under the Pramac® brand. Pramac products are sold in over 150 countries through a broad distribution network.

	●	In January 2017, the Company acquired Motortech GmbH (Motortech), headquartered in Celle, Germany. Motortech is a leading manufacturer of gaseous-engine control systems and accessories, which are sold primarily to European gas-engine manufacturers and to aftermarket customers. While the Motortech acquisition was completed in January 2017, it was funded in the fourth quarter of 2016.

2.	Significant Accounting Policies

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its subsidiaries that are consolidated in conformity with U.S. GAAP. All intercompany amounts and transactions have been eliminated in consolidation.

Cash and Cash Equivalents

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

Concentration of Credit Risk

The Company maintains the majority of its domestic cash in one commercial bank in multiple operating and investment accounts. Balances on deposit are insured by the Federal Deposit Insurance Corporation (FDIC) up to specified limits. Balances in excess of FDIC limits are uninsured.

One customer accounted for approximately 7% and 9% of accounts receivable at December 31, 2017 and 2016, respectively. No one customer accounted for greater than 6%, 7% and 7%, of net sales during the years ended December 31, 2017, 2016, or 2015, respectively.

Accounts Receivable

Receivables are recorded at their face value amount less an allowance for doubtful accounts. The Company estimates and records an allowance for doubtful accounts based on specific identification and historical experience. The Company writes off uncollectible accounts against the allowance for doubtful accounts after all collection efforts have been exhausted. Sales are generally made on an unsecured basis.

Inventories

Inventories are stated at the lower of cost or market, with cost determined generally using the first-in, first-out method.

Property and Equipment

Property and equipment are recorded at cost and are being depreciated using the straight-line method over the estimated useful lives of the assets, which are summarized below (in years). Costs of leasehold improvements are amortized over the lesser of the term of the lease (including renewal option periods) or the estimated useful lives of the improvements.

Land improvements	8	–	20
Buildings and improvements	10	–	40
Machinery and equipment	3	–	15
Dies and tools	3	–	10
Vehicles	3	–	6
Office equipment and systems	3	–	15
Leasehold improvements	2	–	20

Total depreciation expense was $23,127, $21,465, and $16,742 for the years ended December 31, 2017, 2016, and 2015, respectively.

Goodwill and Other Indefinite-Lived Intangible Assets

Goodwill represents the excess of the purchase price over fair value of identifiable net assets acquired from business acquisitions. Goodwill is not amortized, but is reviewed for impairment on an annual basis and between annual tests if indicators of impairment are present. The Company evaluates goodwill for impairment annually as of October 31 or more frequently when an event occurs or circumstances change that indicates the carrying value may not be recoverable. The Company has the option to assess goodwill for impairment by performing either a qualitative assessment or quantitative test. The qualitative assessment determines whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If the Company determines that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then the quantitative test is not required to be performed. If the Company determines that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, the Company is required to perform the quantitative test. In the quantitative test, the calculated fair value of the reporting unit is compared to its book value including goodwill. If the fair value of the reporting unit is in excess of its book value, the related goodwill is not impaired. If the fair value of the reporting unit is less than its book value, an impairment loss is recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit.

Other indefinite-lived intangible assets consist of certain tradenames. The Company tests the carrying value of these tradenames annually as of October 31 or more frequently when an event occurs or circumstances change that indicates the carrying value may not be recoverable by comparing the assets’ fair value to its carrying value. Fair value is measured using a relief-from-royalty approach, which assumes the fair value of the tradename is the discounted cash flows of the amount that would be paid had the Company not owned the tradename and instead licensed the tradename from another company.

The Company performed the required annual impairment tests for goodwill and other indefinite-lived intangible assets for the fiscal years 201__7, 2016 and 2015, and found no impairment following the 2017 and 2016 tests. There were no reporting units with a carrying value at-risk of exceeding fair value as of the October 31, 2017 impairment test date.

After performing the impairment tests for fiscal year 2015, the Company determined that the fair value of the Ottomotores reporting unit was less than its carrying value, resulting in a non-cash goodwill impairment charge in the fourth quarter of 2015 of $4,611 to write-down the balance of the Ottomotores goodwill. The decrease in fair value of the Ottomotores reporting unit was due to several factors in the second half of 2015: the continued challenges of the Latin American economies, devaluation of the Peso against the U.S. Dollar, the slow development of Mexican energy reform as a result of decreasing oil prices; combining to cause 2015 results to fall short of prior expectations and future forecasts to decrease. The fair value was determined using a discounted cash flow analysis, which utilized key financial assumptions including the sales growth factors discussed above, a 3% terminal growth rate and a 15.7% discount rate.

In the fourth quarter of 2015, the Company’s Board of Directors approved a plan to strategically transition and consolidate certain of the Company’s brands acquired in acquisitions to the Generac® tradename. This brand strategy change resulted in a reclassification to a two year remaining useful life for the impacted tradenames, causing the fair value to be less than the carrying value using the relief-from-royalty approach in a discounted cash flow analysis. As such, a $36,076 non-cash impairment charge was recorded to write-down the impacted tradenames to net realizable value.

Other than the impairment charges discussed above, the Company found no other impairment when performing the required annual impairment tests for goodwill and other indefinite-lived intangible assets for fiscal year 2015. There can be no assurance that future impairment tests will not result in a charge to earnings.

Impairment of Long-Lived Assets

The Company periodically evaluates the carrying value of long-lived assets (excluding goodwill and indefinite-lived tradenames). Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. If the sum of the expected future undiscounted cash flows is less than the carrying amount of an asset, a loss is recognized for the difference between the fair value and carrying value of the asset.

Debt Issuance Costs

Debt discounts and direct costs incurred in connection with the issuance of long-term debt are deferred and recorded as a reduction of outstanding debt and amortized to interest expense using the effective interest method over the terms of the related credit agreements. $3,516, $3,939, and $5,429 of deferred financing costs and original issue discount were amortized to interest expense during fiscal years 2017, 2016 and 2015, respectively. Excluding the impact of any future long-term debt issuances or prepayments, estimated amortization to interest expense for the next five years is as follows: 2018 - $4,798; 2019 - $4,982; 2020 - $4,936; 2021 - $4,931; 2022 - $5,099.

Income Taxes

The Company is a C Corporation and therefore accounts for income taxes pursuant to the liability method. Accordingly, the current or deferred tax consequences of a transaction are measured by applying the provision of enacted tax laws to determine the amount of taxes payable currently or in future years. Deferred income taxes are provided for temporary differences between the income tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. In assessing the realizability of deferred tax assets, the Company considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the years in which those temporary differences become deductible. The Company considers taxable income in prior carryback years, the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies, as appropriate, in making this assessment.

Revenue Recognition

Sales, net of estimated returns and allowances, are recognized upon shipment of product to the customer, which is generally when title passes, the Company has no further obligations, and the customer is required to pay subject to agreed upon payment terms. The Company, at the request of certain customers, will warehouse inventory billed to the customer but not delivered. Unless all revenue recognition criteria have been met, the Company does not recognize revenue on these transactions until the customers take possession of the product. In these cases, the funds collected on product warehoused for these customers are recorded as a customer advance until the customer takes possession of the product and the Company’s obligation to deliver the goods is completed. Customer advances are included in accrued liabilities in the consolidated balance sheets.

The Company provides for certain estimated sales programs, discounts and incentive expenses which are recognized as a reduction of sales.

Shipping and Handling Costs

Shipping and handling costs billed to customers are included in net sales, and the related costs are included in cost of goods sold in the consolidated statements of comprehensive income.

Advertising and Co-Op Advertising

Expenditures for advertising, included in selling and service expenses in the consolidated statements of comprehensive income, are expensed as incurred. Total expenditures for advertising were $45,926, $45,488, and $39,258 for the years ended December 31, 2017, 2016, and 2015, respectively.

Research and Development

The Company expenses research and development costs as incurred. Total expenditures incurred for research and development were $42,925, $37,229, and $32,922 for the years ended December 31, 2017, 2016 and 2015, respectively.

Foreign Currency Translation and Transactions

Balance sheet amounts for non-U.S. Dollar functional currency businesses are translated into U.S. Dollars at the rates of exchange in effect at the end of the fiscal year. Income and expenses incurred in a foreign currency are translated at the average rates of exchange in effect during the year. The related translation adjustments are made directly to accumulated other comprehensive loss, a component of stockholders’ equity, in the consolidated balance sheets. Gains and losses from foreign currency transactions are recognized as incurred in the consolidated statements of comprehensive income.

Fair Value of Financial Instruments

ASC 820-10, Fair Value Measurement_,_ defines fair value, establishes a consistent framework for measuring fair value, and expands disclosure for each major asset and liability category measured at fair value on either a recurring basis or nonrecurring basis. ASC 820-10 clarifies that fair value is an exit price, representing the amount that would be received in the sale of an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, the pronouncement establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows: (Level 1) observable inputs such as quoted prices in active markets; (Level 2) inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and (Level 3) unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.

The Company believes the carrying amount of its financial instruments (cash and cash equivalents, accounts receivable, accounts payable, accrued liabilities, short-term borrowings and ABL facility borrowings), excluding Term Loan borrowings, approximates the fair value of these instruments based upon their short-term nature. The fair value of Term Loan borrowings, which have an aggregate carrying value of $902,959, was approximately $903,500 (Level 2) at December 31, 2017, as calculated based on independent valuations whose inputs and significant value drivers are observable.

For the fair value of the assets and liabilities measured on a recurring basis, refer to the fair value table in Note 4, “Derivative Instruments and Hedging Activities,” to the consolidated financial statements. The fair value of all derivative contracts is classified as Level 2. The valuation techniques used to measure the fair value of derivative contracts, all of which have counterparties with high credit ratings, were based on quoted market prices or model driven valuations using significant inputs derived from or corroborated by observable market data. The fair value of derivative contracts considers the Company’s credit risk in accordance with ASC 820-10.

Use of Estimates

The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Derivative Instruments and Hedging Activities

The Company records all derivatives in accordance with ASC 815, Derivatives and Hedging, which requires derivative instruments be reported on the consolidated balance sheets at fair value and establishes criteria for designation and effectiveness of hedging relationships. The Company is exposed to market risk such as changes in commodity prices, foreign currencies and interest rates. The Company does not hold or issue derivative financial instruments for trading purposes.

Share-Based Compensation

Share-based compensation expense, including stock options and restricted stock awards, is generally recognized on a straight-line basis over the vesting period based on the fair value of awards which are expected to vest. The fair value of all share-based awards is estimated on the date of grant.

New Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers. This guidance is the culmination of the FASB’s joint project with the International Accounting Standards Board to clarify the principles for recognizing revenue. The core principal of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance provides a five-step process that entities should follow in order to achieve that core principal. ASU 2014-09, as amended by ASU 2015-14, Revenue from Contracts with Customers (Topic 606): D__eferral of the Effective Date, ASU 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations, ASU 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensin__g, ASU 2016-12, Revenue from Contracts with Customers (Topic 606): _Narrow-_Scope Improvements and Practical Expedients, and ASU 2016-20, Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers, becomes effective for the Company in 2018. The guidance can be applied either on a full retrospective basis or on a modified retrospective basis in which the cumulative effect of initially applying the standard is recognized at the date of initial application. The Company has completed its assessment of the impacts the standard will have on its financial statements, and determined that the adoption does not have a material impact. In all material respects, the Company has identified a similar amount of performance obligations under the new guidance as compared with deliverables previously identified. As a result, the timing of revenue recognition will generally remain the same. The Company adopted the standard January 1, 2018 and will use the full retrospective method.

In February 2016, the FASB issued ASU 2016-02, Leases. This guidance is being issued to increase transparency and comparability among organizations by requiring the recognition of lease assets and lease liabilities on the balance sheet and by disclosing key information about leasing arrangements. The guidance should be applied using a modified retrospective approach and is effective for the Company in 2019, with early adoption permitted. The Company is currently assessing the impact the adoption of this guidance will have on the Company’s results of operations and financial position.

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments. This guidance is being issued to decrease diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. This guidance should be applied on a retrospective basis and is effective for the Company in 2018, with early adoption permitted. The Company does not believe that the adoption of this guidance will have a significant impact on the presentation of the statement of cash flows.

In January 2017, the FASB issued ASU 2017-04, Intangibles – Goodwill and Other: Simplifying the Test for Goodwill Impairment. This guidance was issued to simplify the subsequent measurement of goodwill by eliminating Step 2 of the goodwill impairment test. Under the new guidance, the recognition of a goodwill impairment charge is calculated based on the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. This guidance should be applied on a prospective basis and is effective for the Company in 2020. The Company has early adopted this standard, which did not have a significant impact on its consolidated financial statements.

In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging – Targeted Improvements to Accounting for Hedging Activities. This guidance was issued to improve the financial reporting of hedging relationships to better portray the economic results of an entity’s risk management activities in its financial statements, and to make certain targeted improvements to simplify the application of the hedge accounting guidance. For existing hedges, this guidance should be applied using a cumulative effect adjustment, while the presentation and disclosure guidance should be adopted on a prospective basis. The standard is effective for the Company in 2019, with early adoption permitted. The Company is currently assessing the impact the adoption of this guidance will have on the Company’s results of operations and financial position.

In the first quarter of 2017, the Company adopted ASU 2016-09, Compensation – Stock Compensation: Improvements to Employee Share-Based Payment Accounting. The primary impact of adoption is the prospective recognition of excess tax benefits or deficiencies within the provision for income taxes on the consolidated statement of comprehensive income rather than within additional paid-in capital on the consolidated balance sheet. Further, the Company has elected to continue to estimate forfeitures expected to occur to determine the amount of stock compensation expense recognized each period. The Company also elected to apply the presentation requirements for cash flows related to excess tax benefits or deficiencies prospectively. The presentation requirements for cash flows related to employee taxes paid in exchange for withheld shares had no impact to any period presented on the consolidated statements of cash flows as such cash flows have historically been presented as a financing activity. There were no cumulative effect adjustments made to equity as of the beginning of the fiscal period, as those provisions of ASU 2016-09 were not applicable or had no impact to the Company.

There are several other new accounting pronouncements issued by the FASB. Each of these pronouncements, as applicable, has been or will be adopted by the Company. Management does not believe any of these accounting pronouncements has had or will have a material impact on the Company’s consolidated financial statements.

3.	Acquisitions

Acquisition of Pramac

On March 1, 2016, the Company acquired a 65% ownership interest in Pramac for a purchase price, net of cash acquired, of _$60,_250. Headquartered in Siena, Italy, Pramac is a leading global manufacturer of stationary, mobile and portable generators primarily sold under the Pramac® brand. Pramac products are sold in over 150 countries through a broad distribution network. The acquisition purchase price was funded solely through cash on hand.

The 35% noncontrolling interest in Pramac had an acquisition date fair value of $34,253, and was recorded as a redeemable noncontrolling interest in the consolidated balance sheet, as the noncontrolling interest holder has within its control the right to require the Company to redeem its interest in Pramac. The noncontrolling interest holder has a put option to sell their interests to the Company any time within five years from the date of acquisition. The put option price is either (i) a fixed amount if voluntarily exercised within the first two years after the acquisition, or (ii) based on a multiple of earnings, subject to the terms of the acquisition. Additionally, the Company holds a call option that it may redeem commencing five years from the date of acquisition, or earlier upon the occurrence of certain circumstances. The call option price is based on a multiple of earnings that is subject to the terms of the acquisition. Both the put and call option only provide for the complete transfer of the noncontrolling interest, with no partial transfers of interest permitted.

The redeemable noncontrolling interest is recorded at the greater of the initial fair value, increased or decreased for the noncontrolling interests’ share of comprehensive net income (loss), or the estimated redemption value, with any adjustment to the redemption value impacting retained earnings, but not net income. However, the redemption value adjustments are reflected in the earnings per share calculation, as detailed in Note 12, “Earnings Per Share,” to the consolidated financial statements. The following table presents the changes in the redeemable noncontrolling interest:

		Year Ended December 31,****
		2017****				2016****
Balance at beginning of period		$	33,138			$	-
Noncontrolling interest of Pramac			1,540	(1)			34,253
Net income			1,631				100
Foreign currency translation			8,529				(2,124	)
Redemption value adjustment			(909	)			909
Balance at end of period		$	43,929			$	33,138

	(1)	Represents the additional noncontrolling interest of Pramac resulting from a common control transaction between the Generac Mobile Products S.r.l. and Pramac UK Limited legal entities.

The Company finalized the Pramac purchase price allocation during the first quarter of 2017, based upon its estimates of the fair value of the acquired assets and assumed liabilities. The final purchase price allocation as of the balance sheet date was as follows:

		March 1, 2016****
Accounts receivable		$	50,716
Inventories			39,889
Property and equipment			19,138
Intangible assets			34,471
Goodwill			46,775
Other assets			7,698
Total assets acquired			198,687
Short-term borrowings			21,741
Accounts payable			40,270
Long-term debt and capital lease obligations (including current portion)			18,599
Other liabilities			23,521
Redeemable noncontrolling interest			34,253
Noncontrolling interest			53
Net assets acquired		$	60,250

The goodwill ascribed to this acquisition is not deductible for tax purposes. The accompanying consolidated financial statements include the results of Pramac from the date of acquisition through December 31, 2017.

Acquisition of CHP

On August 1, 2015, the Company acquired CHP for a purchase price, net of cash acquired, of $74,570. Headquartered in Vergennes, Vermont, CHP is a leading manufacturer of high-quality, innovative, professional-grade engine powered equipment used in a wide variety of property maintenance applications, with sales primarily in North America. The acquisition purchase price was funded solely through cash on hand.

The Company finalized the CHP purchase price allocation during the fourth quarter of 2015 based upon its estimates of the fair value of the acquired assets and assumed liabilities. As a result, the Company recorded approximately $75,174 of intangible assets, including approximately $36,284 of goodwill, as of the acquisition date. The goodwill ascribed to this acquisition is not deductible for tax purposes. In addition, the Company assumed $12,000 of debt along with this acquisition. The accompanying consolidated financial statements include the results of CHP from the date of acquisition through December 31, 2017.

Pro Forma Information

The following unaudited pro forma information of the Company gives effect to these acquisitions as though the transactions had occurred on January 1, 2015. Consolidated net sales on a pro forma basis for the years ended December 31, 2016 and 2015 were $1,473,799 and $1,566,459, respectively. The pro forma impact of these acquisitions on net income and earnings per share for both the years ended December 31, 2016 and 2015 is not significant due to amortization related to acquired intangible assets and the fair value step-up of inventory in purchase accounting. This unaudited pro forma information is presented for informational purposes only and is not necessarily indicative of the results of operations that actually would have been achieved had the acquisitions been consummated on January 1, 2015.

4.	Derivative Instruments and Hedging Activities

Commodities

The Company is exposed to price fluctuations in commodities it uses as raw materials; primarily steel, copper and aluminum; and periodically utilizes commodity derivatives to mitigate the impact of these potential price fluctuations on its financial results and its economic well-being. These derivatives typically have maturities of less than eighteen months. At both December 31, 2017 and 2016, the Company had one commodity contract outstanding, covering the purchases of copper.

Because these contracts do not qualify for hedge accounting, the related gains and losses are recorded in cost of goods sold in the Company’s consolidated statements of comprehensive income. Net pre-tax gains (losses) recognized were $377, $739 and $(1,909) for the years ended December 31, 2017, 2016, and 2015, respectively.

Foreign Currencies

The Company is exposed to foreign currency exchange risk as a result of transactions denominated in currencies other than the U.S. Dollar. The Company periodically utilizes foreign currency forward purchase and sales contracts to manage the volatility associated with certain foreign currency purchases and sales in the normal course of business. Contracts typically have maturities of twelve months or less. As of December 31, 2017 and 2016, the Company had twenty-eight and thirty-eight foreign currency contracts outstanding, respectively.

Because these contracts do not qualify for hedge accounting, the related gains and losses are recorded in other, net in the Company’s consolidated statements of comprehensive income. Net pre-tax gains (losses) recognized for the years ended December 31, 2017, 2016 and 2015 were $697, $(385) and $(624), respectively.

Interest Rate Swaps

In October 2013, the Company entered into two interest rate swap agreements; in May 2014, the Company entered into one interest rate swap agreement; and in 2017, the Company entered into twenty additional interest rate swap agreements. The Company formally documented all relationships between interest rate hedging instruments and the related hedged items, as well as its risk-management objectives and strategies for undertaking these hedge transactions. These interest rate swap agreements qualify as cash flow hedges, and accordingly, the effective portions of the gains or losses are reported as a component of accumulated other comprehensive loss (AOCL) in the consolidated balance sheets. The amount of gains (losses) recognized for the years ended December 31, 2017, 2016 and 2015 were $3,712, $535 and $(965), respectively. The cash flows of the swaps are recognized as adjustments to interest expense each period. The ineffective portions of the derivatives’ changes in fair value, if any, are immediately recognized in earnings.

Fair Value

The following table presents the fair value of the Company’s derivatives:

		December 31, 2017				December 31, 2016****
Commodity contracts		$	107			$	623
Foreign currency contracts			167				(150	)
Interest rate swaps			4,356				(1,739	)

The fair value of the commodity and foreign currency contracts are included in prepaid expenses and other assets, and the fair value of the interest rate swaps are included in other assets in the consolidated balance sheet as of December 31, 2017. The fair value of the commodity contract is included in other assets, the fair value of the foreign currency contracts are included in other accrued liabilities, and the fair value of the interest rate swaps are included in other long-term liabilities in the consolidated balance sheet as of December 31, 2016. Excluding the impact of credit risk, the fair value of the derivative contracts as of December 31, 2017 and 2016 is an asset of $4,703 and a liability of $1,295, respectively, which represents the amount the Company would receive or need to pay to exit the agreements on those dates.

5.	Accumulated Other Comprehensive Loss

The following presents a tabular disclosure of changes in AOCL during the years ended December 31, 2017 and 2016, net of tax:

		Foreign Currency Translation Adjustments****				Defined Benefit Pension Plan****					Unrealized Gain (Loss) on Cash Flow Hedges****				Total****
Beginning Balance – January 1, 2017		$	(28,047	)		$	(11,040	)			$	(1,076	)		$	(40,163	)
Other comprehensive income (loss) before reclassifications			15,191				(591	)	(1)			3,712	(2)			18,312
Amounts reclassified from AOCL			-				653		(3)			-				653
Net current-period other comprehensive income			15,191				62					3,712				18,965
Ending Balance – December 31, 2017		$	(12,856	)		$	(10,978	)			$	2,636			$	(21,198	)

		Foreign Currency Translation Adjustments****				Defined Benefit Pension Plan****					Unrealized Gain (Loss) on Cash Flow Hedges****				Total****
Beginning Balance – January 1, 2016		$	(9,502	)		$	(11,362	)			$	(1,611	)		$	(22,475	)
Other comprehensive income (loss) before reclassifications			(18,545	)			(273	)	(4)			535	(5)			(18,283	)
Amounts reclassified from AOCL			-				595		(6)			-				595
Net current-period other comprehensive income (loss)			(18,545	)			322					535				(17,688	)
Ending Balance – December 31, 2016		$	(28,047	)		$	(11,040	)			$	(1,076	)		$	(40,163	)

	(1)	Represents unrecognized actuarial losses of $(800), net of tax benefit of $209, included in the computation of net periodic pension cost for the year ended December 31, 2017. Refer to Note 14, “Benefit Plans,” to the consolidated financial statements for additional information.

	(2)	Represents unrealized gains of $6,096, net of tax effect of $(2,384) for the year ended December 31, 2017.

	(3)	Represents actuarial losses of $883, net of tax effect of $(230), amortized to net periodic pension cost for the year ended December 31, 2017. Refer to Note 14, “Benefit Plans,” to the consolidated financial statements for additional information.

	(4)	Represents unrecognized actuarial losses of $(412), net of tax benefit of $139, included in the computation of net periodic pension cost for the year ended December 31, 2016. Refer to Note 14, “Benefit Plans,” to the consolidated financial statements for additional information.

	(5)	Represents unrealized gains of $876, net of tax effect of $(341) for the year ended December 31, 2016.

	(6)	Represents actuarial losses of $941, net of tax effect of $(346), amortized to net periodic pension cost for the year ended December 31, 2016. Refer to Note 14, “Benefit Plans,” to the consolidated financial statements for additional information.

6.	Segment Reporting

The Company has two reportable segments for financial reporting purposes – Domestic and International. The Domestic segment includes the legacy Generac business and the impact of acquisitions that are based in the United States, all of which have revenues that are substantially derived from the U.S. and Canada. The International segment includes the Ottomotores, Tower Light, Pramac and Motortech acquisitions, all of which have revenues that are substantially derived from outside of the U.S and Canada. Both reportable segments design and manufacture a wide range of power generation equipment and other engine powered products. The Company has multiple operating segments, which it aggregates into the two reportable segments, based on materially similar economic characteristics, products, production processes, classes of customers and distribution methods. All segment information has been retrospectively applied to all periods presented to reflect the current reportable segment structure.

		Net Sales****
		Year Ended December 31,****
Reportable Segment****s		2017****				2016****				2015****
Domestic		$	1,296,578			$	1,173,559			$	1,204,589
International			375,867				270,894				112,710
Total		$	1,672,445			$	1,444,453			$	1,317,299

The Company's product offerings consist primarily of power generation equipment and other engine powered products geared for varying end customer uses. Residential products and commercial & industrial products are each a similar class of products based on similar power output and end customer. The breakout of net sales by product class between residential, commercial & industrial, and other products is as follows:

		Net Sales****
		Year Ended December 31,****
Product Classe****s		2017****				2016****				2015****
Residential products		$	870,410			$	772,436			$	673,764
Commercial & industrial products			685,052				557,532				548,440
Other			116,983				114,485				95,095
Total		$	1,672,445			$	1,444,453			$	1,317,299

Management evaluates the performance of its segments based primarily on Adjusted EBITDA before noncontrolling interests, which is reconciled to Income before provision for income taxes below. The computation of Adjusted EBITDA is based on the definition that is contained in the Company’s credit agreements.

		Adjusted EBITDA****
		Year Ended December 31,****
		2017****				2016****				2015****
Domestic		$	290,720			$	261,428			$	254,882
International			27,010				16,959				15,934
Total adjusted EBITDA		$	317,730			$	278,387			$	270,816
Interest expense			(42,667	)			(44,568	)			(42,843	)
Depreciation and amortization			(51,988	)			(54,418	)			(40,333	)
Non-cash write-down and other adjustments (1)			(2,923	)			(357	)			(3,892	)
Non-cash share-based compensation expense (2)			(10,205	)			(9,493	)			(8,241	)
Tradename and goodwill impairment (3)			-				-				(40,687	)
Loss on extinguishment of debt (4)			-				(574	)			(4,795	)
Gain (loss) on change in contractual interest rate (5)			-				(2,957	)			(2,381	)
Transaction costs and credit facility fees (6)			(2,145	)			(2,442	)			(2,249	)
Business optimization expenses (7)			(2,912	)			(7,316	)			(1,947	)
Other			(202	)			120				(465	)
Income before provision for income taxes		$	204,688			$	156,382			$	122,983

	(1)	Includes gains/losses on disposal of assets, unrealized mark-to-market adjustments on commodity contracts, and certain foreign currency and purchase accounting related adjustments.

	(2)	Represents share-based compensation expense to account for stock options, restricted stock and other stock awards over their respective vesting periods.

	(3)	Represents the 2015 impairment of certain tradenames due to a change in brand strategy to transition and consolidate various brands to the Generac® tradename ($36,076) and the impairment of goodwill related to the Ottomotores reporting unit ($4,611).

	(4)	Represents the write-off of original issue discount and capitalized debt issuance costs due to voluntary debt prepayments.

	(5)	For the year ended December 31, 2016, represents a non-cash loss relating to the continued 25 basis point increase in borrowing costs as a result of the credit agreement leverage ratio remaining above 3.0 times based on projections at that time. For the year ended December 31, 2015, represents a non-cash loss relating to a 25 basis point increase in borrowing costs as a result of the credit agreement leverage ratio rising above 3.0 times and expected to remain above 3.0 times based on projections at that time. Following the May 2017 Term Loan amendment, which removed the pricing grid based on leverage ratio achieved, gains or losses on changes in contractual interest rate will no longer be recorded in the statements of comprehensive income. Refer to Note 10, “Credit Agreements,” to the consolidated financial statements in Item 8 of this Annual Report on Form 10-K for further information on the gains and losses on changes in the contractual interest rate.

	(6)	Represents transaction costs incurred directly in connection with any investment, as defined in our credit agreement; equity issuance, debt issuance or refinancing; together with certain fees relating to our senior secured credit facilities.

	(7)	Represents charges relating to business optimization and restructuring costs.

The following tables summarize additional financial information by reportable segment:

		Assets****
		Year Ended December 31,****
		2017****				2016****				2015****
Domestic		$	1,606,606			$	1,521,665			$	1,605,043
International			413,358				340,019				173,592
Total		$	2,019,964			$	1,861,684			$	1,778,635

		Depreciation and Amortization****
		Year Ended December 31,****
		2017****				2016****				2015****
Domestic		$	37,962			$	42,346			$	35,327
International			14,026				12,072				5,006
Total		$	51,988			$	54,418			$	40,333

		Capital Expenditures****
		Year Ended December 31,****
		2017****				2016****				2015****
Domestic		$	29,258			$	26,936			$	29,368
International			4,003				3,531				1,283
Total		$	33,261			$	30,467			$	30,651

The Company’s sales in the United States represent approximately 74%, 77%, and 85% of total sales for the years ended December 31, 2017, 2016 and 2015, respectively. Approximately 85% and 87% of the Company’s identifiable long-lived assets are located in the United States as of December 31, 2017 and 2016, respectively.

7.	Balance Sheet Details

Inventories consist of the following:

		December 31,
		2017****				2016****
Raw material		$	242,239			$	218,911
Work-in-process			2,544				2,950
Finished goods			135,558				127,870
Total		$	380,341			$	349,731

As of December 31, 2017 and 2016, inventories totaling $6,245 and $10,598, respectively, were on consignment at customer locations.

Property and equipment consists of the following:

		December 31,
		2017****				2016****
Land and improvements		$	13,118			$	12,079
Buildings and improvements			132,072				122,747
Machinery and equipment			90,487				81,687
Dies and tools			24,504				23,269
Vehicles			1,878				1,474
Office equipment and systems			73,254				66,929
Leasehold improvements			2,436				2,319
Construction in progress			18,799				8,654
Gross property and equipment			356,548				319,158
Accumulated depreciation			(126,168	)			(106,365	)
Total		$	230,380			$	212,793

8.	Goodwill and Intangible Assets

The changes in the carrying amount of goodwill by reportable segment for the years ended December 31, 2017 and 2016 are as follows:

		Domestic****				International****				Total
Balance at December 31, 2015		$	621,451			$	48,268			$	669,719
Acquisitions of businesses, net			-				46,202				46,202
Foreign currency translation			-				(11,281	)			(11,281	)
Balance at December 31, 2016			621,451				83,189				704,640
Acquisitions of businesses, net			-				5,271				5,271
Foreign currency translation			-				11,612				11,612
Balance at December 31, 2017		$	621,451			$	100,072			$	721,523

The details of the gross goodwill applicable to each reportable segment at December 31, 2017 and 2016 are as follows:

		Year Ended December 31, 2017****												Year Ended December 31, 2016****
		Gross				Accumulated Impairment				Net				Gross				Accumulated Impairment				Net
Domestic		$	1,124,644			$	(503,193	)		$	621,451			$	1,124,644			$	(503,193	)		$	621,451
International			104,683				(4,611	)			100,072				87,800				(4,611	)			83,189
Total		$	1,229,327			$	(507,804	)		$	721,523			$	1,212,444			$	(507,804	)		$	704,640

Refer to Note 3, “Acquisitions,” to the consolidated financial statements for further information regarding the Company’s acquisitions and Note 2, “Significant Accounting Policies – Goodwill and Other Indefinite-Lived Intangible Assets,” to the consolidated financial statements for further information regarding the Company’s 2015 goodwill impairment charge.

The following table summarizes intangible assets by major category as of December 31, 2017 and 2016:

		Weighted Average				December 31, 2017****												December 31, 2016****
		Amortization Years				Gross				Accumulated Amortization				Net Book Value				Gross				Accumulated Amortization				Net Book Value
Finite-lived intangible assets:
Tradenames			9			$	52,784			$	(28,422	)		$	24,362			$	50,742			$	(20,189	)		$	30,553
Customer lists			10				340,138				(299,074	)			41,064				333,935				(288,623	)			45,312
Patents			14				131,137				(91,520	)			39,617				130,099				(82,038	)			48,061
Unpatented technology			15				13,169				(11,915	)			1,254				13,169				(11,771	)			1,398
Software			-				1,046				(1,046	)			-				1,046				(1,046	)			-
Non-compete/other			8				2,684				(1,537	)			1,147				2,513				(986	)			1,527
Total finite-lived intangible assets						$	540,958			$	(433,514	)		$	107,444			$	531,504			$	(404,653	)		$	126,851
Indefinite-lived tradenames							128,321				-				128,321				128,321				-				128,321
Total intangible assets						$	669,279			$	(433,514	)		$	235,765			$	659,825			$	(404,653	)		$	255,172

Refer to Note 2, “Significant Accounting Policies – Goodwill and Other Indefinite-Lived Intangible Assets,” to the consolidated financial statements for further information regarding the Company’s 2015 brand strategy change and resulting tradename impairment charge, which was netted against the gross intangible asset balance at December 31, 2017 and 2016.

Amortization of intangible assets was $28,861, $32,953 and $23,591 in 2017, 2016 and 2015, respectively. Excluding the impact of any future acquisitions, the Company estimates amortization expense for the next five years will be as follows: 2018 - $20,566; 2019 - $18,828; 2020 - $18,737; 2021 - $16,927; 2022 - $9,671.

9.	Product Warranty Obligations

The Company records a liability for product warranty obligations at the time of sale to a customer based upon historical warranty experience. The Company also records a liability for specific warranty matters when they become known and are reasonably estimable. Additionally, the Company sells extended warranty coverage for certain products. The sales of extended warranties are recorded as deferred revenue, which is recognized over the life of the contracts following the standard warranty period.

The following is a tabular reconciliation of the product warranty liability, excluding the deferred revenue related to our extended warranty coverage:

		Year Ended December 31,****
		2017****				2016****				2015****
Balance at beginning of period		$	31,695			$	30,197			$	30,909
Product warranty reserve assumed in acquisition			43				840				351
Payments			(18,861	)			(18,691	)			(21,686	)
Provision for warranty issued			21,347				19,148				20,823
Changes in estimates for pre-existing warranties			1,198				201				(200	)
Balance at end of period		$	35,422			$	31,695			$	30,197

The following is a tabular reconciliation of the deferred revenue related to extended warranty coverage:

		Year Ended December 31,****
		2017****				2016****				2015****
Balance at beginning of period		$	31,080			$	28,961			$	27,193
Deferred revenue contracts assumed in acquisition			-				-				291
Deferred revenue contracts issued (1)			27,107				7,733				5,978
Amortization of deferred revenue contracts			(7,246	)			(5,614	)			(4,501	)
Balance at end of period		$	50,941			$	31,080			$	28,961

	(1)	The increase in deferred revenue contracts issued during 2017 was largely due to the launch of a post-sale extended warranty program.

Product warranty obligations and extended warranty related deferred revenues are included in the balance sheets as follows:

		December 31,
		2017****				2016****
Product warranty liability
Current portion - other accrued liabilities		$	20,576			$	20,763
Long-term portion - other long-term liabilities			14,846				10,932
Total		$	35,422			$	31,695
Deferred revenue related to extended warranties
Current portion - other accrued liabilities		$	10,002			$	6,728
Long-term portion - other long-term liabilities			40,939				24,352
Total		$	50,941			$	31,080

10.	Credit Agreements

Short-term borrowings are included in the consolidated balance sheets as follows:

		December 31,
		2017****				2016****
ABL facility		$	-			$	-
Other lines of credit			20,602				31,198
Total		$	20,602			$	31,198

Long-term borrowings are included in the consolidated balance sheets as follows:

		December 31,
		2017****				2016****
Term loan		$	929,000			$	929,000
Original issue discount and deferred financing costs			(26,937	)			(26,677	)
ABL facility			-				100,000
Capital lease obligation			4,690				4,647
Other			1,367				14,753
Total			908,120				1,021,723
Less: current portion of debt			936				14,399
Less: current portion of capital lease obligation			636				566
Total		$	906,548			$	1,006,758

Maturities of long-term borrowings (before considering original issue discount and deferred financing costs) outstanding at December 31, 2017, are as follows:

2018		$	1,572
2019			1,078
2020			599
2021			614
After 2021			931,194
Total		$	935,057

The Company’s credit agreements originally provided for a $1,200,000 term loan B credit facility (Term Loan) and currently include a $300,000 uncommitted incremental term loan facility. In November 2016, the Company amended its Term Loan to extend the maturity date from May 31, 2020 to May 31, 2023. The Term Loan is guaranteed by all of the Company’s wholly-owned domestic restricted subsidiaries, and is secured by associated collateral agreements which pledge a first priority lien on virtually all of the Company’s assets, including fixed assets and intangibles, other than all cash, trade accounts receivable, inventory, and other current assets and proceeds thereof, which are secured by a second priority lien. The Term Loan initially bore interest at rates based upon either a base rate plus an applicable margin of 1.75% or adjusted LIBOR rate plus an applicable margin of 2.75%, subject to a LIBOR floor of 0.75%. Beginning in the second quarter of 2014, and measured each quarterly period thereafter, the applicable margin related to base rate loans was reduced to 1.50% and the applicable margin related to LIBOR rate loans is reduced to 2.50%, in each case, if the Company’s net debt leverage ratio, as defined in the Term Loan, falls below 3.00 to 1.00 for that measurement period.

Because the Company’s net debt leverage ratio was above 3.00 to 1.00 on July 1, 2015, it realized a 25 basis point increase in borrowing costs in the third quarter of 2015. As a result, the Company recorded a cumulative catch-up loss of $2,381 in the third quarter of 2015, which represented the additional cash interest expected to be paid while the net debt leverage ratio was expected to be above 3.00 to 1.00 using current forecasts at that time. The loss was recorded against original issue discount and deferred financing costs on long-term borrowings in the consolidated balance sheets and as a loss on change in contractual interest rate in the consolidated statement of comprehensive income.

As the Company’s net debt leverage ratio continued to be above 3.00 to 1.00 on July 1, 2016, the Company recorded a cumulative catch-up loss of $2,957 in the third quarter of 2016, which represented the additional cash interest expected to be paid while the net debt leverage ratio was expected to be above 3.00 to 1.00 using current forecasts at that time. The loss was recorded against original issue discount and deferred financing costs on long-term borrowings in the consolidated balance sheets and as a loss on change in contractual interest rate in the consolidated statement of comprehensive income.

In May 2015, the Company amended certain provisions and covenants of the Term Loan. In connection with this amendment and in accordance with ASC 470-50, Debt Modifications and Extinguishments, the Company capitalized $1,528 of fees paid to creditors as deferred financing costs on long-term borrowings and expensed $49 of transaction fees in the second quarter of 2015.

In November 2016, the Company amended its Term Loan to extend the maturity date from May 31, 2020 to May 31, 2023. In connection with this amendment and in accordance with ASC 470-50, the Company capitalized $4,242 of fees paid to creditors as original issue discount and deferred financing costs on long-term borrowings and expensed $315 of transaction fees in the fourth quarter of 2016.

In May 2017, the Company amended its Term Loan, modifying the pricing of the facility by reducing the applicable margin rates to base rate plus a fixed applicable margin of 1.25% or adjusted LIBOR rate plus a fixed applicable margin of 2.25%. Further, the amendment removed the pricing grid that would reduce the applicable margin if a net debt leverage ratio of 3.00 to 1.00 was achieved. As a result, the Company does not anticipate any future catch-up gains or losses resulting from changes in contractual interest rates to be recorded in the statements of comprehensive income. The amended Term Loan pricing is still subject to the 0.75% LIBOR floor. In connection with this amendment and in accordance with ASC 470-50, the Company capitalized $1,432 of fees paid to creditors as deferred financing costs on long-term borrowings and expensed $85 of transaction fees in the second quarter of 2017.

In December 2017, the Company amended its Term Loan, which further reduced the applicable margin rates to base rate plus a fixed applicable margin of 1.00% or adjusted LIBOR rate plus a fixed applicable margin of 2.00%. Additionally, the amendment eliminated the Excess Cash Flow payment requirement for 2017, and will eliminate future requirements if the Company’s secured leverage ratio is maintained below 3.75 to 1.00 times. In connection with this amendment and in accordance with ASC 470-50, the Company capitalized $2,346 of fees paid to creditors as original issue discount and deferred financing costs on long-term borrowings and expensed $38 of transaction fees in the fourth quarter of 2017.

As of December 31, 2017, the Company's secured leverage ratio was 2.50 to 1.00 times, and the Company was in compliance with all covenants of the Term Loan. There are no financial maintenance covenants on the Term Loan.

The Company’s credit agreements also originally provided for a $150,000 senior secured ABL revolving credit facility (ABL Facility). The maturity date of the ABL Facility originally was May 31, 2018. Borrowings under the ABL Facility are guaranteed by all of the Company’s wholly-owned domestic restricted subsidiaries, and are secured by associated collateral agreements which pledge a first priority lien on all cash, trade accounts receivable, inventory, and other current assets and proceeds thereof, and a second priority lien on all other assets, including fixed assets and intangibles of the Company and certain domestic subsidiaries. ABL Facility borrowings initially bore interest at rates based upon either a base rate plus an applicable margin of 1.00% or adjusted LIBOR rate plus an applicable margin of 2.00%, in each case, subject to adjustments based upon average availability under the ABL Facility.

In May 2015, the Company amended its ABL Facility (Amended ABL Facility). The amendment (i) increased the ABL Facility from $150,000 to $250,000, (ii) extended the maturity date from May 31, 2018 to _May 29, 2020, (_iii) increased the uncommitted incremental facility from $50,000 to $100,000, (iv) reduced the interest rate spread by 50 basis points and (v) reduced the unused line fee by 12.5 basis points across all tiers. Additionally, the amendment relaxes certain restrictions on the Company’s ability to, among other things, (i) make additional investments and acquisitions (including foreign acquisitions), (ii) make restricted payments and (iii) incur additional secured and unsecured debt (including foreign subsidiary debt). In connection with this amendment and in accordance with ASC 470-50, the Company capitalized $540 of new debt issuance costs in 2015.

In May 2015, the Company borrowed $100,000 under the Amended ABL Facility, the proceeds of which were used as a voluntary prepayment towards the Term Loan. In the fourth quarter of 2017, the Company repaid the entire outstanding Amended ABL Facility balance. As of December 31, 2017, the Company had $249,650 of availability under the Amended ABL Facility, net of outstanding letters of credit.

In March and May 2015, the Company made voluntary prepayments of the Term Loan of $50,000 and $100,000, respectively, which were applied to the Excess Cash Flow payment requirement in the Term Loan. As a result of the prepayments, the Company wrote off $4,795 of original issue discount and capitalized debt issuance costs during the year ended December 31, 2015 as a loss on extinguishment of debt in the consolidated statement of comprehensive income. Similarly, in November 2016, the Company made a voluntary prepayment of $25,000, which resulted in a $574 write-off of original issue discount and capitalized debt issuance costs during the year ended December 31, 2016 as a loss on extinguishment of debt.

As of December 31, 201__7 and December 31, 2016, short-term borrowings consisted primarily of borrowings by our foreign subsidiaries on local lines of credit, which totaled $20,602 and $31,198, respectively.

11.	Stock Repurchase Program

In August 2015, the Company’s Board of Directors approved a $200,000 stock repurchase program, which the Company completed in the third quarter of 2016. In October 2016, the Company’s Board of Directors approved an additional $250,000 stock repurchase program. Under the second program, the Company may repurchase up to $250,000 of its common stock over the 24 months following the date of approval. The Company may repurchase its common stock from time to time, in amounts and at prices the Company deems appropriate, subject to market conditions and other considerations. The repurchase may be executed using open market purchases, privately negotiated agreements or other transactions. The actual timing, number and value of shares repurchased under the program will be determined by management at its discretion and will depend on a number of factors, including the market price of the Company’s common stock and general market and economic conditions, applicable legal requirements, and compliance with the terms of the Company’s outstanding indebtedness. The repurchases may be funded with cash on hand, available borrowings or proceeds from potential debt or other capital markets sources. The stock repurchase program may be suspended or discontinued at any time without prior notice. During the years ended December 31, 2017, 2016 and 2015, the Company repurchased 844,500, 3,968,706 and 3,303,500 shares of its common stock, respectively, for $30,012, $149,937 and $99,942, respectively, all funded with cash on hand.

12.	Earnings Per Share

Basic earnings per share is calculated by dividing net income attributable to the common shareholders of the Company by the weighted average number of common shares outstanding during the period, exclusive of restricted shares. Except where the result would be anti-dilutive, diluted earnings per share is calculated by assuming the vesting of unvested restricted stock and the exercise of stock options. The following table reconciles the numerator and the denominator used to calculate basic and diluted earnings per share:

		Year Ended December 31,
		2017****				2016****				2015****
Numerato****r
Net income attributable to Generac Holdings Inc.		$	159,386			$	98,788			$	77,747
Redeemable noncontrolling interest redemption value adjustment			909				(909	)			-
Net income attributable to common shareholders		$	160,295			$	97,879			$	77,747
Denominato****r
Weighted average shares, basic			62,040,704				64,905,793				68,096,051
Dilutive effect of stock compensation awards (1)			602,168				476,981				1,104,246
Diluted shares			62,642,872				65,382,774				69,200,297
Net income attributable to common shareholders per share
Basic		$	2.58			$	1.51			$	1.14
Diluted		$	2.56			$	1.50			$	1.12

	(1)	Excludes approximately 147,400, 15,800 and 161,400 stock options for the years ended December 31, 2017, 2016 and 2015, respectively, as the impact of such awards was anti-dilutive. Excludes approximately 1,000 shares of restricted stock for the year ended December 31, 2015, as the impact of such awards was anti-dilutive.

13.	Income Taxes

The Company’s provision for income taxes consists of the following:

		Year Ended December 31,
		2017****				2016****				2015****
Current:
Federal		$	15,753			$	11,717			$	13,614
State			1,775				2,047				1,966
Foreign			4,585				4,460				3,588
			22,113				18,224				19,168
Deferred:
Federal			17,737				41,264				31,869
State			4,026				3,029				1,387
Foreign			(2,777	)			(5,585	)			(7,326	)
			18,986				38,708				25,930
Change in valuation allowance			2,454				638				138
Provision for income taxes		$	43,553			$	57,570			$	45,236

The Company files U.S federal, U.S. state and foreign jurisdiction tax returns that are subject to examination up to the expiration of the statute of limitations. We believe the tax positions taken on our returns would be sustained upon an exam, or where a position is uncertain, adequate reserves have been recorded. As of December 31, 2017 the Company is no longer subject to income tax examinations for United States federal income taxes for the tax years prior to 2_014._ Due to the carryforward of net operating losses, and research and development credits, the Company's Wisconsin state income tax returns for tax years 2007 through 2016 remain open. In addition, the Company is subject to audit by various foreign taxing jurisdictions for the tax years 2012 through 2016.

The Company is currently under examination in multiple jurisdictions and is working to address all matters. While the Company does not believe any material taxes or penalties are due, there is a possibility that the ultimate tax outcome of an examination may result in differences from what was recorded. Such differences may affect the provision for income taxes in the period in which the determination is made, and could impact the Company’s financial results.

On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act makes broad and complex changes to the U.S. tax code, including, but not limited to, reducing the U.S. federal corporate tax rate from 35% to 21%, requiring companies to pay a one-time transition tax on certain unrepatriated earnings of foreign subsidiaries, eliminating certain deductions, introducing new tax regimes, changing how foreign earnings are subject to U.S. tax, and enhancing and extending through 2026 the option to claim accelerated depreciation deductions on qualified property.

The SEC staff issued SAB 118, which provides guidance on accounting for the tax effects of the Tax Act. SAB 118 provides a measurement period that should not extend beyond one year from the Tax Act enactment date for companies to complete the accounting under ASC 740. In accordance with SAB 118, a company must reflect the income tax effects of those aspects of the Tax Act for which the accounting under ASC 740 is complete. To the extent that a company’s accounting for certain income tax effects of the Tax Act is incomplete but it is able to determine a reasonable estimate, it must record a provisional estimate in the financial statements. If a company cannot determine a provisional estimate to be included in the financial statements, it should continue to apply ASC 740 on the basis of the provisions of the tax laws that were in effect immediately before the enactment of the Tax Act.

The Company's accounting for the following elements of the Tax Act is incomplete. However, reasonable estimates of certain effects were able to be made and, therefore, provisional adjustments were recorded as follows:

Reduction of US federal corporate tax rate: The Tax Act reduces the federal corporate tax rate to 21%, effective January 1, 2018. For certain of the Company's deferred tax liabilities (DTLs), a provisional decrease of $28,434 was recorded to reflect our DTLs at thelower corporate tax rate, with a corresponding net adjustment to deferred income tax benefit of $28,434 for the year ended December 31, 2017. While a reasonable estimate of the impact of the reduction in the corporate tax rate was made, it may be affected by other analyses related to the Tax Act, including, but not limited to, the calculation of deemed repatriation of deferred foreign income and the state tax effect of adjustments made to federal temporary differences.

Deemed Repatriation Transition Tax: The Deemed Repatriation Transition Tax (Transition Tax) is a tax on previously untaxed accumulated and current earnings and profits (E&P) of certain of the Company’s foreign subsidiaries. To determine the amount of the Transition Tax, the amount of post-1986 E&P of relevant subsidiaries, as well as the amount of non-U.S. income taxes paid on such earnings must be determined, in addition to other factors. The Company made a reasonable estimate of the Transition Tax and has concluded the amount was not material.

Cost recovery: While the Company has not yet completed all of the computations necessary or completed an inventory of our 2017 expenditures that qualify for immediate expensing, a provisional benefit of $700 was recorded based on our current intent to fully expense all qualifying expenditures. This resulted in a decrease of approximately $1,750 to current income tax payable and a corresponding increase in DTLs of approximately $1,050 (after considering the effects of the reduction in income tax rates).

As the Company completes its analysis of the Tax Act; collects and prepares necessary data; and interprets any additional guidance issued by the U.S. Treasury Department, the IRS, and other standard-setting bodies; adjustments to the provisional amounts may be recorded.

Global intangible low taxed income (GILTI): Because of the complexity of the new GILTI tax rules, the Company is continuing to evaluate this provision of the Tax Act and the application of ASC 740. Under U.S. GAAP, the Company is allowed to make an accounting policy choice of either (1) treating taxes due on future U.S. inclusions in taxable income related to GILTI as a current-period expense when incurred (the “period cost method”) or (2) factoring such amounts into a company’s measurement of its deferred taxes (the “deferred method”). The selection of an accounting policy with respect to the new GILTI tax rules will depend, in part, on analyzing the Company's global income to determine whether it is expected to have future U.S. inclusions in taxable income related to GILTI and, if so, what the impact is expected to be. Because whether the Company expects to have future U.S. inclusions in taxable income related to GILTI depends not only on the current structure and estimated future results of global operations but also on the intent and ability to modify the structure and/or the business; the Company is n_ot_ yet able to reasonably estimate the effect of this provision of the Tax Act. Therefore, no adjustments related to potential GILTI tax have been made in the financial statements and no policy decision regarding whether to record deferred taxes on GILTI has been made.

Significant components of deferred tax assets and liabilities are as follows:

		December 31,
		2017****				2016****
Deferred tax assets:
Accrued expenses		$	15,138			$	22,758
Deferred revenue			8,060				10,645
Inventories			7,933				10,159
Pension obligations			3,795				7,512
Stock-based compensation			5,522				7,291
Operating loss and credit carryforwards			23,771				20,927
Other			1,064				2,822
Valuation allowance			(6,817	)			(4,362	)
Total deferred tax assets			58,466				77,752
Deferred tax liabilitites:
Goodwill and intangible assets			70,556				58,133
Depreciation			22,563				25,194
Debt refinancing costs			5,189				7,193
Prepaid expenses			709				1,173
Total deferred tax liabilities			99,017				91,693
Net deferred tax liabilities		$	(40,551	)		$	(13,941	)

As of December 31, 201__7 and 2016, deferred tax assets of $3,238 and $3,337, and deferred tax liabilities of $43,789 and $17,278, respectively, were reflected on the consolidated balance sheets.

One of the Company's subsidiaries, Generac Brazil, has generated net operating losses for multiple years. The realizability of the deferred tax assets associated with these net operating losses is uncertain, therefore a valuation allowance has been recorded since Generac Brazil's acquisition on December 8, 2012 and continued through December 31, 2017.

In addition, the Company recorded a valuation allowance in the opening balance sheet and as of December 31, 2017 and 2016 related to the Pramac acquisition. The valuation allowance represents a reserve for deferred tax assets, including loss carryforwards, of certain Pramac subsidiaries, for which utilization is uncertain.

At December 31, 201__7, the Company had state research and development tax credit carryforwards, and state manufacturing tax credit carryforwards of approximately $13,089 and $4,618, respectively, which expire between 2018 and 2032. A valuation allowance of $1,171 has been established against deferred tax assets for these carryforwards.

Changes in the Company’s gross liability for unrecognized tax benefits, excluding interest and penalties, were as follows:

		December 31,
		2017****				2016****
Unrecognized tax benefit, beginning of period		$	7,943			$	7,239
Increase in unrecognized tax benefit for positions taken in current period			251				704
Statute of limitation expirations			(1,072	)			-
Unrecognized tax benefit, end of period		$	7,122			$	7,943

The unrecognized tax benefit as of December 31, 2017 and 2016, if recognized, would impact the effective tax rate.

As of December 31, 2017, 2016 and 2015, total accrued interest of approximately $131, $272 and $174, respectively, and accrued penalties of approximately $220, $425 and $363, respectively, associated with net unrecognized tax benefits are included in the Company’s consolidated balance sheets. Interest and penalties are recorded as a component of income tax expense.

The Company does not expect a significant increase or decrease to the total amounts of unrecognized tax benefits related to continuing operations during the fiscal year ending December 31, 2018.

The Tax Act includes a mandatory one-time tax on accumulated earnings of foreign subsidiaries, and as a result, all previously unremitted earnings for which no U.S. deferred tax liability had been accrued have now been subject to U.S. tax. Notwithstanding the U.S. taxation of these amounts, the Company intends to continue to invest these earnings, as well as the capital in these subsidiaries, indefinitely outside of the U.S. and do not expect to incur any significant, additional taxes related to such amounts.

A reconciliation of the statutory tax rates and the effective tax rates for the years ended December 31, 2017, 2016 and 2015 are as follows:

		Year Ended December 31,
		2017****				2016****				2015****
U.S. statutory rate			35.0	%			35.0	%			35.0	%
State taxes			4.1				4.1				4.1
Research and development credits			(1.4	)			(1.0	)			(2.3	)
Share-based compensation (1)			(1.4	)			-				-
Tax Act impact			(13.9	)			-				-
Other			(1.1	)			(1.3	)			-
Effective tax rate			21.3	%			36.8	%			36.8	%

	(1)	With the adoption of ASU 2016-09 in the first quarter of 2017, excess tax benefits from equity awards are reflected within the provision for income taxes rather than within the consolidated balance sheet. For further information on the Company’s adoption of ASU 2016-09, refer to Note 2, “Significant Accounting Policies – New Accounting Pronouncements” to the consolidated financial statements.

14.	Benefit Plans

Medical and Dental Plan

The Company maintains medical and dental benefit plans covering its full-time domestic employees and their dependents. Certain plans are partially or fully self-funded under which participant claims are obligations of the plan. These plans are funded through employer and employee contributions at a level sufficient to pay for the benefits provided by the plan. The Company’s contributions to the plans were $14,992, $15,019, and $14,352 for the years ended December 31, 2017, 2016, and 2015, respectively.

The Company’s foreign subsidiaries participate in government sponsored medical benefit plans. In certain cases, the Company purchases supplemental medical coverage for certain employees at these foreign locations. The expenses related to these plans are not material to the Company’s consolidated financial statements.

Savings Plan

The Company maintains a defined-contribution 401(k) savings plan for eligible domestic employees. Under the plan, employees may defer receipt of a portion of their eligible compensation. The Company amended the 401(k) savings plans effective January 1, 2009, to add Company matching and non-elective contributions. The Company may contribute a matching contribution of 50% of the first 6% of eligible compensation of employees. The Company may also contribute a non-elective contribution for eligible employees employed on December 31, 2008. Both Company matching contributions and non-elective contributions are subject to vesting. Forfeitures may be applied against plan expenses and company contributions. The Company recognized $3,600, $3,400 and $3,000 of expense related to these plans in 2017, 2016 and 2015, respectively.

Pension Plans

The Company has frozen noncontributory salaried and hourly pension plans (Pension Plans) covering certain domestic employees. The Pension Plans were frozen effective December 31, 2008. The benefits under the salaried plan are based upon years of service and the participants’ defined final average monthly compensation. The benefits under the hourly plan are based on a unit amount at the date of termination multiplied by the participant’s years of credited service. The Company’s funding policy for the Pension Plans is to contribute amounts at least equal to the minimum annual amount required by applicable regulations.

The Company uses a December 31 measurement date for the Pension Plans. The accumulated benefit obligation, reconciliation of the changes in projected benefit obligation, changes in plan assets and the funded status of the Pension Plans are as follows:

		Year Ended December 31,
		2017****				2016****
Accumulated benefit obligation at end of period		$	72,631			$	65,956
Change in projected benefit obligation
Projected benefit obligation at beginning of period		$	65,956			$	63,894
Interest cost			2,688				2,747
Net actuarial loss			6,170				1,363
Benefits paid			(2,183	)			(2,048	)
Projected benefit obligation at end of period		$	72,631			$	65,956
Change in plan assets
Fair value of plan assets at beginning of period		$	46,488			$	43,985
Actual return on plan assets			8,382				3,820
Company contributions			5,327				731
Benefits paid			(2,183	)			(2,048	)
Fair value of plan assets at end of period		$	58,014			$	46,488
Funded status: accrued pension liability included in other long-term liabilities		$	(14,617	)		$	(19,468	)
Amounts recognized in accumulated other comprehensive loss
Net actuarial loss, net of tax		$	(10,978	)		$	(11,040	)

The actuarial loss for the Pension Plans that was amortized from AOCL into net periodic (benefit) cost during 2017 is $883. The amount in AOCL as of December 31, 2017 that is expected to be recognized as a component of net periodic pension expense during the next fiscal year is $802.

The components of net periodic pension cost are as follows:

		Year Ended December 31,****
		2017****				2016****				2015****
Interest cost		$	2,688			$	2,747			$	2,681
Expected return on plan assets			(3,011	)			(2,868	)			(3,041	)
Amortization of net loss			883				941				1,228
Net periodic pension cost		$	560			$	820			$	868

Weighted-average assumptions used to determine the benefit obligations are as follows:

		December 31,
		2017****				2016****
Discount rate – salaried pension plan			3.60	%			4.14	%
Discount rate – hourly pension plan			3.62	%			4.16	%
Rate of compensation increase (1)			n/a				n/a

	(1)	No compensation increase was assumed as the plans were frozen effective December 31, 2008.

Weighted-average assumptions used to determine net periodic pension cost are as follows:

		Year Ended December 31,
		2017****				2016****				2015****
Discount rate			4.14	%			4.39	%			3.99	%
Expected long-term rate of return on plan assets			6.58	%			6.62	%			6.75	%
Rate of compensation increase (1)			n/a				n/a				n/a

	(1)	No compensation increase was assumed as the plans were frozen effective December 31, 2008.

To determine the long-term rate of return assumption for the plans' assets, the Company studies historical markets and preserves the long-term historical relationships between equities and fixed-income securities consistent with the widely accepted capital market principle that assets with higher volatility generate a greater return over the long run. The Company evaluates current market factors such as inflation and interest rates before it determines long-term capital market assumptions and reviews peer data and historical returns to check for reasonableness and appropriateness.

The Pension Plans’ weighted-average asset allocation at December 31, 2017 and 2016, by asset category, is as follows:

		Target Allocation						December 31, 2017****								December 31, 2016****
Asset Category		Minimum			Maximum			Dollars				%				Dollars				%
Fixed Income		15.0	%		25.0	%		$	10,637				18	%		$	7,812				17	%
Domestic equity		36.5	%		61.5	%			25,151				43	%			19,615				42	%
International equity		17.0	%		25.0	%			16,093				28	%			13,466				29	%
Real estate		7.0	%		15.0	%			6,133				11	%			5,595				12	%
Total								$	58,014				100	%		$	46,488				100	%

The fair values of the Pension Plans’ assets at December 31, 2017 are as follows:

		Total				Quoted Prices in Active Markets for Identical Asset**** (Level 1)****				Significant Observable Inputs**** (Level 2)****				Significant Unobservable Inputs**** (Level 3)****
Mutual funds		$	48,314			$	48,314			$	–			$	–
Other investments			9,700				–				–				9,700
Total		$	58,014			$	48,314			$	–			$	9,700

The fair values of the Pension Plans' assets at December 31, 2016 are as follows:

		Total				Quoted Prices in Active Markets for Identical Asset**** (Level 1)****				Significant Observable Inputs (Level 2)****				Significant Unobservable Inputs**** (Level 3)****
Mutual funds		$	37,860			$	37,860			$	–			$	–
Other investments			8,628				–				–				8,628
Total		$	46,488			$	37,860			$	–			$	8,628

A reconciliation of beginning and ending balances for Level 3 assets for the years ended December 31, 2017 and 2016 is as follows:

		Year Ended December 31,
		2017****				2016****
Balance at beginning of period		$	8,628			$	3,675
Purchases			-				4,400
Realized gains			1,072				553
Balance at end of period		$	9,700			$	8,628

Mutual Funds – This category includes investments in mutual funds that encompass both equity and fixed income securities that are designed to provide a diverse portfolio. The plans' mutual funds are designed to track exchange indices, and invest in diverse industries. Some mutual funds are classified as regulated investment companies. Investment managers have the ability to shift investments from value to growth strategies, from small to large capitalization funds, and from U.S. to international investments. These investments are valued at the closing price reported on the active market on which the individual securities are traded. These investments are classified within Level 1 of the fair value hierarchy.

Other Investments – This category includes investments in limited partnerships and are valued at estimated fair value, as determined with the assistance of each respective limited partnership, based on the net asset value of the investment as of the balance sheet date, which is subject to judgment, and therefore is classified within Level 3 of the fair value hierarchy.

The Company’s target allocation for equity securities and real estate is generally between 65% - 85%, with the remainder allocated primarily to fixed income (bonds). The Company regularly reviews its actual asset allocation and periodically rebalances its investments to the targeted allocation when considered appropriate.

At a minimum, the Company expects to make estimated contributions of $319 to the Pension Plans in 2018.

The following benefit payments are expected to be paid from the Pension Plans:

2018			$	2,445
2019				2,502
2020				2,622
2021				2,760
2022				2,932
2023 – 2027				16,989

Certain of the Company’s foreign subsidiaries participate in local statutory defined benefit or other post-employment benefit plans. These plans provide benefits that are generally based on years of credited service and a percentage of the employee’s eligible compensation earned throughout the applicable service period. Liabilities recorded under these plans are included in accrued wages and employee benefits in the Company’s consolidated balance sheets and are not material.

15.	Share Plans

The Company adopted an equity incentive plan (Plan) on February 10, 2010 in connection with its initial public offering. The Plan, as amended, allows for granting of up to 9.1 million share-based awards to executives, directors and employees. Awards available for grant under the Plan include stock options, stock appreciation rights, restricted stock, other share-based awards and performance-based compensation awards. Total share-based compensation expense related to the Plan, net of estimated forfeitures, was $10,205, $9,493 and $8,241 for the years ended December 31, 2017, 2016 and 2015, respectively, which is recorded in operating expenses in the consolidated statements of comprehensive income.

Stock Options - Stock options granted in 2017 have an exercise price between $40.12 per share and $48.98 per share; stock options granted in 2016 have an exercise price between $33.23 per share and $35.37 per share, and the stock options granted in 2015 have an exercise price between $28.36 per share and $49.70 per share. Stock options vest in equal installments over four years, subject to the grantee’s continued employment or service and expire ten years after the date of grant.

Stock option exercises can be net-share settled such that the Company withholds shares with value equivalent to the exercise price of the stock option awards plus the employees’ minimum statutory obligation for the applicable income and other employment taxes. Total shares withheld were 9,033, 473,743 and 272,296 in 2017, 2016 and 2015, respectively, and were based on the value of the stock on the exercise dates. The net-share settlement has the effect of share repurchases by the Company as they reduce the number of shares that would have otherwise been issued.

Employees can also utilize a cashless for cash exercise of stock options, such that all exercised shares will be sold in the market immediately. Cash equivalent to the exercise price of the awards plus the employees’ minimum statutory tax obligations is remitted to the Company, with the remaining cash being transferred to the employee. Total proceeds from the cashless for cash exercise of stock options were $6,951 and $1,623 in 2017 and 2016, respectively, and are reflected as a financing activity in the consolidated statement of cash flows.

Total payments made by the Company for the employees’ tax obligations to the taxing authorities were $4,301, $13,056 and $9,768 in 2017, 2016 and 2015, respectively, and are reflected as a financing activity within the consolidated statements of cash flows.

The grant-date fair value of each option grant is estimated using the Black-Scholes-Merton option pricing model. The fair value is then amortized on a straight-line basis over the requisite service period of the awards, which is generally the vesting period. Use of a valuation model requires management to make certain assumptions with respect to selected model inputs. Expected volatility is calculated based on an analysis of historic and implied volatility measures for a set of peer companies. The average expected life is based on the contractual term of the option using the simplified method. The risk-free interest rate is based on U.S. Treasury zero-coupon issues with a remaining term equal to the expected life assumed at the date of grant. The compensation expense recognized is net of estimated forfeitures. Forfeitures are estimated based on actual share option forfeiture history. The weighted-average assumptions used in the Black-Scholes-Merton option pricing model for 2017, 2016 and 2015 are as follows:

		2017****				2016****				2015****
Weighted average grant date fair value		$	16.84			$	13.77			$	19.07
Assumptions:
Expected stock price volatility			40	%			41	%			41	%
Risk free interest rate			1.92	%			1.31	%			1.72	%
Expected annual dividend per share		$	-			$	-			$	-
Expected life of options (years)			6.25				6.25				6.25

The Company periodically evaluates its forfeiture rates and updates the rates it uses in the determination of its share-based compensation expense. The impact of the change to the forfeiture rates on shares-based compensation expense was not material for the years ended December 31, 2017, 2016 and 2015.

A summary of the Company’s stock option activity and related information for the years ended December 31, 2017, 2016 and 2015 is as follows:

		Number of Options****				Weighted- Average Exercise Price****				Weighted- Average Remaining Contractual Term (in years)****				Aggregate Intrinsic Value ($ in thousands)****
Outstanding as of December 31, 2014			2,542,139			$	9.94				8.5			$	96,518
Granted			287,165				45.18
Exercised			(604,088	)			3.79
Expired			(6,409	)			50.11
Forfeited			(90,793	)			37.27
Outstanding as of December 31, 2015			2,128,014				15.15				7.7			$	40,271
Granted			398,313				33.24
Exercised			(995,469	)			2.89
Forfeited			(47,894	)			37.41
Outstanding as of December 31, 2016			1,482,964				27.49				7.5			$	23,840
Granted			346,421				40.13
Exercised			(287,375	)			10.58
Forfeited			(69,880	)			41.12
Outstanding as of December 31, 2017			1,472,130				33.11				7.3			$	25,281
Exercisable as of December 31, 2017			720,730				26.76				6.1			$	17,239

As of December 31, 201__7, there was $8,552 of total unrecognized compensation cost, net of expected forfeitures, related to unvested options. The cost is expected to be recognized over the remaining service period, having a weighted-average period of 2.5 years. Total share-based compensation cost related to the stock options for 2017, 2016 and 2015 was $4,503, $4,366 and $4,198, respectively, which is recorded in operating expenses in the consolidated statements of comprehensive income.

Restricted Stock – Restricted stock awards vest in equal installments over three years, subject to the grantee’s continued employment or service. Certain restricted stock awards also include performance shares, which were awarded in the years 2014 through 2017. The number of performance shares that can be earned are contingent upon Company performance measures over a three-year period. Performance measures are based on a weighting of revenue growth and EBITDA margin, from which grantees may earn from 0% to 200% of their target performance share award. The performance period for the 2015 awards covers the years 2015 through 2017, the performance period for the 2016 awards covers the years 2016 through 2018, and the performance period for the 2017 awards covers the years 2017 through 2019. The Company estimates the number of performance shares that will vest based on projected financial performance. The fair market value of the restricted awards at the time of the grant is amortized to expense over the period of vesting. The fair value of restricted awards is determined based on the market value of the Company's shares on the grant date. The compensation expense recognized for restricted share awards is net of estimated forfeitures.

Restricted stock vesting is net-share settled such that, upon vesting, the Company withholds shares with value equivalent to the employees’ minimum statutory obligation for the applicable income and other employment taxes, and then pays the cash to the taxing authorities on behalf of the employees. In effect, the Company repurchases these shares and classifies as treasury stock. Total shares withheld were 39,500, 28,593 and 65,763 in 2017, 2016 and 2015, respectively, and were based on the value of the stock on the vesting dates. Total payments made by the Company for the employees’ tax obligations to the taxing authorities were $1,591, $952 and $3,233 in 2017, 2016 and 2015, respectively, and are reflected as a financing activity within the consolidated statements of cash flows.

A summary of the Company's restricted stock activity for the years ended December 31, 2017, 2016 and 2015 is as follows:

		Shares****				Weighted- Average Grant- Date Fair Value****
Non-vested as of December 31, 2014			267,284			$	38.72
Granted			193,117				41.31
Vested			(183,362	)			32.56
Forfeited			(33,999	)			47.77
Non-vested as of December 31, 2015			243,040				44.16
Granted			232,295				33.56
Vested			(95,858	)			41.93
Forfeited			(18,074	)			38.30
Non-vested as of December 31, 2016			361,403				38.18
Granted			211,769				39.91
Vested			(133,796	)			40.60
Forfeited			(47,100	)			42.48
Non-vested as of December 31, 2017			392,276				37.77

As of December 31, 2017, there was $7,702 of unrecognized compensation cost, net of expected forfeitures, related to non-vested restricted stock awards. That cost is expected to be recognized over the remaining service period, having a weighted-average period of 1.7 years. Total share-based compensation cost related to the restricted stock for 2017, 2016 and 2015 was $5,702, $5,127 and $4,043, respectively, which is recorded in operating expenses in the consolidated statements of comprehensive income.

During 201__7, 2016 and 2015, 34,095, 19,326 and 16,260 shares, respectively, of stock were granted to certain members of the Company’s Board of Directors as a component of their compensation for their service on the Board, of which 22,762, 19,326 and 16,260 shares, respectively, were fully vested. Total share-based compensation cost for these share grants in 2017, 2016 and 2015 was $1,133, $670 and $615, respectively, which is recorded in operating expenses in the consolidated statements of comprehensive income.

16.	Commitments and Contingencies

The Company leases certain manufacturing and office facilities, machinery and computer equipment, automobiles and warehouse space under operating leases. The approximate aggregate minimum rental commitments at December 31, 2017, are as follows:

2018		$	9,497
2019			7,786
2020			7,496
2021			6,647
2022			6,633
After 2022			5,865
Total		$	43,924

Total rent expense for the years ended December 31, 2017, 2016 and 2015, was approximately $10,845, $9,146, and $4,796, respectively.

The Company has an arrangement with a finance company to provide floor plan financing for certain dealers. The Company receives payment from the finance company after shipment of product to the dealer. The Company participates in the cost of dealer financing up to certain limits and has agreed to repurchase products repossessed by the finance company, but does not indemnify the finance company for any credit losses they incur. The amount financed by dealers which remained outstanding under this arrangement at December 31, 2017 and 2016 was approximately $36,500 and $33,900, respectively.

In the normal course of business, the Company is named as a defendant in various lawsuits in which claims are asserted against the Company. In the opinion of management, the liabilities, if any, which may result from such lawsuits are not expected to have a material adverse effect on the financial position, results of operations, or cash flows of the Company.

17.	Quarterly Financial Information (Unaudited)

		Quarters Ended 2017****
		Q1****				Q2****				Q3****				Q4****
Net sales		$	331,814			$	395,376			$	457,253			$	488,002
Gross profit			110,486				134,460				157,469				179,702
Operating income			31,845				52,287				72,859				94,073
Net income attributable to Generac Holdings Inc.			12,842				25,660				39,709				81,175
Net income attributable to common shareholders per common share - basic:		$	0.22			$	0.42			$	0.64			$	1.31
Net income attributable to common shareholders per common share - diluted:		$	0.21			$	0.41			$	0.64			$	1.30

		Quarters Ended 2016****
		Q1****				Q2****				Q3****				Q4****
Net sales		$	286,535			$	367,376			$	373,121			$	417,421
Gross profit			98,060				124,147				137,772				154,127
Operating income			26,964				44,082				56,340				77,231
Net income attributable to Generac Holdings Inc.			10,208				20,888				26,183				41,509
Net income attributable to common shareholders per common share - basic:		$	0.15			$	0.32			$	0.41			$	0.64
Net income attributable to common shareholders per common share - diluted:		$	0.15			$	0.31			$	0.40			$	0.64

18.	Valuation and Qualifying Accounts

For the years ended December 31, 2017, 2016 and 2015:

		Balance at Beginning of Year****				Additions Charged to Earnings****				Charges to Reserve, Net (1)****				Reserves Established for Acquisitions****				Balance at End of Year****
Year ended December 31, 2017
Allowance for doubtful accounts		$	5,642			$	346			$	(1,842	)		$	659			$	4,805
Reserves for inventory			13,031				6,164				(4,036	)			828				15,987
Valuation of deferred tax assets			4,362				2,455				-				-				6,817
Year ended December 31, 2016
Allowance for doubtful accounts		$	2,494			$	1,654			$	(1,110	)		$	2,604			$	5,642
Reserves for inventory			10,582				5,359				(5,357	)			2,447				13,031
Valuation of deferred tax assets			1,523				638				-				2,201				4,362
Year ended December 31, 2015
Allowance for doubtful accounts		$	2,275			$	481			$	(325	)		$	63			$	2,494
Reserves for inventory			9,387				3,739				(3,158	)			614				10,582
Valuation of deferred tax assets			1,385				138				-				-				1,523

	(1)	Deductions from the allowance for doubtful accounts equal accounts receivable written off, less recoveries, against the allowance. Deductions from the reserves for inventory excess and obsolete items equal inventory written off against the reserve as items were disposed of.

19.	Subsequent Events

On February 13, 2018, the Company signed a purchase agreement to acquire Selmec Equipos Industriales, S.A. de C.V. (Selmec), which is headquartered in Mexico City, Mexico. Selmec, which has approximately 300 employees, is a designer and manufacturer of industrial generators ranging from 10 kW to 2,750 kW. Selmec offers a market-leading service platform and specialized engineering capabilities, together with robust integration, project management and remote monitoring services.