UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996
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OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commission File Number 1-11978
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The Manitowoc Company, Inc.
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(Exact name of registrant as specified in its charter)
Wisconsin 39-0448110
------------------------------- --------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
500 So. 16th Street, Manitowoc, Wisconsin 54220
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(Address of principal executive offices) (Zip Code)
(414) 684-4410
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(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year, if changed since
last report.)
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the Registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90
days.
Yes ( X ) No ( )
The number of shares outstanding of the Registrant's common
stock, $.01 par value, as of March 31, 1996, the most recent
practicable date, was 7,674,468.
PART I. FINANCIAL INFORMATION
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Item 1. Financial Statements
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<TABLE>
<CAPTION>
THE MANITOWOC COMPANY, INC.
Consolidated Statements of Earnings
For the Three Months Ended 1996 and 1995
(Unaudited)
(In thousands, except per-share and average shares data)
March 31, 1996 March 31, 1995
------------------ ------------------
<S> <C> <C>
Net Sales $ 114,099 $ 69,101
Costs And Expenses:
Cost of goods sold 85,462 53,182
Engineering, selling and
administrative expenses 19,433 12,900
--------- --------
Total 104,895 66,082
Earnings From Operations 9,204 3,019
Other Income (Expense):
Interest expense (2,462) (223)
Interest and dividend income 51 16
Other income 67 17
--------- --------
Total (2,344) (190)
--------- --------
Earnings Before Taxes
On Income 6,860 2,829
Provision For Taxes On Income 2,746 1,061
--------- --------
Net Earnings $ 4,114 $ 1,768
--------- --------
Net Earnings Per Share $ .54 $ .23
Dividends Per Share $ .25 $ .25
Average Shares Outstanding 7,674,468 7,674,475
<FN>
See accompanying notes which are an integral part of these statements.
</TABLE>
<TABLE>
<CAPTION>
THE MANITOWOC COMPANY, INC.
Consolidated Balance Sheets
As of March 31, 1996 and December 31, 1995
(Unaudited)
(In thousands, except share data)
-ASSETS-
March 31, 1996 Dec. 31, 1995
--------------- -------------
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 12,578 $ 15,077
Marketable securities 1,574 1,558
Accounts receivable 57,767 51,011
Inventories 57,889 52,928
Prepaid expenses and other 3,549 3,451
Future income tax benefits 11,120 11,120
--------- ---------
Total current assets 144,477 135,145
Intangibles assets-net 91,640 92,433
Other assets 9,184 9,663
Property, plant and equipment:
At cost 189,331 188,755
Less accumulated depreciation (102,678) (101,081)
--------- ---------
Property, plant and equipment-net 86,653 87,674
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TOTAL $ 331,954 $ 324,915
--------- ---------
-LIABILITIES AND STOCKHOLDERS' EQUITY-
Current Liabilities:
Accounts payable and accrued expenses $ 62,566 $ 66,028
Current portion of long-term debt 10,089 10,089
Short term borrowings 21,200 26,807
Income taxes payable 3,076 1,503
Product warranties 7,019 6,496
--------- ---------
Total current liabilities 103,950 110,923
Non-Current Liabilities:
Long-term debt, less current portion 113,680 101,180
Product warranties 4,166 4,199
Postretirement health benefits obligations 19,323 19,190
Other 7,123 7,762
--------- ---------
Total non-current liabilities 144,292 132,331
--------- ---------
Stockholders' Equity:
Common stock (10,887,847 shares issued
at both dates) 109 109
Additional paid-in capital 31,115 31,115
Cumulative foreign currency translation
adjustments (623) (479)
Retained earnings 134,613 132,418
Treasury stock at cost (3,213,379 shares
at both dates) (81,502) (81,502)
--------- ---------
Total stockholders' equity 83,712 81,661
--------- ---------
TOTAL $ 331,954 $ 324,915
--------- ---------
<FN>
See accompanying notes which are an integral part of these statements.
</TABLE>
<TABLE>
<CAPTION>
THE MANITOWOC COMPANY, INC.
Consolidated Statement of Cash Flows
For the Three Months Ended March 31, 1996 and 1995
(In thousands)
(Unaudited)
March 31, 1996 March 31, 1995
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<S> <C> <C>
Cash Flows From Operations:
Net earnings $ 4,114 $ 1,768
Non-cash adjustments to income:
Depreciation and amortization 2,765 1,439
Deferred financing fees 75 --
Deferred income taxes -- (432)
Changes in operating assets & liabilities:
Accounts receivable (6,756) (15,081)
Inventories (4,961) (5,126)
Other current assets (99) 76
Current liabilities (1,391) 2,191
Non-current liabilities (540) 282
Non-current assets 478 302
---------- ----------
Net cash used for operations (6,315) (14,581)
Cash Flows From Investing:
Purchase/sale of temporary
investments - net (16) 84
Proceeds from sale of property, plant,
and equipment 253 --
Capital expenditures (1,292) (3,476)
---------- ----------
Net cash used for investing (1,055) (3,392)
Cash Flows From Financing:
Dividends paid (1,919) (1,919)
Proceeds from long-term borrowings-net 12,500 --
Change in short-term borrowings-net (5,607) 22,301
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Net cash provided by financing 4,974 20,382
Effect of exchange rate changes on cash (103) 114
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Net decrease (increase) in cash
and cash equivalents (2,499) 2,523
Balance at beginning of year 15,077 4,118
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Balance at end of period $ 12,578 $ 6,641
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Supplemental cash flow information:
Interest paid $ 1,291 $ 219
Income taxes paid 330 1,088
<FN>
See accompanying notes which are an integral part of these statements.
</TABLE>
THE MANITOWOC COMPANY, INC.
Notes to Unaudited Consolidated Financial Statements
For the Three Months Ended March 31, 1996 and March 31, 1995
(Unaudited)
Note 1.
In the opinion of management, the accompanying unaudited
condensed financial statements contain all adjustments,
representing normal recurring accruals, necessary to present
fairly the results of operations for the quarters ended
March 31, 1996 and 1995, the financial position at March 31,
1995 and the changes in the cash flows for the quarters
ended March 31, 1996 and 1995. The interim results are not
necessarily indicative of results for a full year and do not
contain information included in the Company's annual
consolidated financial statements and notes for the year
ended December 31, 1995.
Note 2.
<TABLE>
<CAPTION>
The components of inventory at March 31, 1996 and December
31, 1995 are summarized as follows (dollars in thousands):
March 31, 1996 December31, 1995
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<S> <C> <C>
Components:
Raw materials $ 25,201 $ 22,809
Work-in-process 23,064 18,868
Finished goods 30,372 31,711
--------- --------
Total inventories at FIFO costs 78,637 73,388
Excess of FIFO costs
over LIFO value (20,748) (20,460)
--------- --------
Total inventories $ 57,889 $ 52,928
</TABLE>
Inventory is carried at lower of cost or market using the
first-in, first-out (FIFO) method for 61% and 60% of total
inventory for March 31, 1996 and December 31, 1995,
respectively. The remainder of the inventory is costed
using the last-in, first-out (LIFO) method.
Note 3.
On September 8, 1992, the Board of Directors authorized the
Company to repurchase up to 1.5 million shares of its common
stock. In addition, on January 11, 1994 and February 1,
1994, the Board of Directors authorized the repurchase of an
additional 500,000 and 1,000,000 shares, respectively. Such
repurchases will be in open market or privately negotiated
purchases, as the Company may determine from time to time.
As of March 31, 1996, a total of 2,646,379 shares were
purchased pursuant to these authorizations.
Note 4.
The United States Environmental Protection Agency ("EPA")
has identified the company as a potentially responsible
party ("PRP") under the Comprehensive Environmental
Response Compensation and Liability Act ("CERCLA"), liable
for the costs associated with investigating and cleaning up
contamination at the Lemberger Landfill Superfund Site (the
Site) near Manitowoc, Wisconsin.
Eleven of the potentially responsible parties have formed a
group (the Lemberger Site Remediation Group, or LSRG) and
have successfully negotiated with the EPA and the Wisconsin
Department of Natural Resources to settle the potential
liability at the Site and fund the cleanup. Approximately
150 PRP's have been identified as having shipped substances
to the Site.
Recent estimates indicate that the total cost to clean up
the Site could be as high as $30 million; however, the
ultimate remediation methods and appropriate allocation of
costs for the Site are not yet final.
Although liability is joint and several, the company's
percentage share of liability is estimated to be 5% of the
total cleanup costs, but could increase to 15% if no
participation agreements are made between the LSRG and any
other PRP's.
In connection with this matter, the company expensed $0.2
million, $1.6 million, and $0.5 million for the year ended
December 31, 1995, and fiscal years 1994 and 1993,
respectively, for its estimated portion of the cleanup
costs. There were no expenses incurred during the
transition period ended December 31, 1994 and the first
quarter ended March 31, 1996.
As of March 31, 1996, 30 product related lawsuits were
pending. Of these, two occurred between 1985 and 1990 when
the Company was completely self-insured. The remaining
lawsuits occurred subsequent to June 1, 1990, at which time
the Company has insurance coverages ranging from a $5.5
million self-insured retention with a $10.0 million limit on
the insurer's contribution in 1990, to the current $1.0
million self-insured retention and $16.0 million limit on
the insurer's contribution.
Product liability reserves at March 31, 1996 are $5.9
million; $2.2 million reserved specifically for the 30 cases
referenced above, and $3.7 million for incurred but not
reported claims. These reserves were estimated using
actuarial methods. The highest current reserve for a non-
insured claim is $.2 million, and $1.0 million for an
insured claim. Based on the Company's experience in
defending itself against product liability claims,
management believes the current reserves are adequate for
estimated settlements on aggregate self-insured claims.
It is reasonably possible that the estimates for
environmental remediation and product liability costs may
change in the near future based upon new information which
may arise.
The company is also involved in various other legal actions
arising in the normal course of business. After taking into
consideration legal counsel's evaluation of such actions, in
the opinion of management, ultimate resolution is not
expected to have a material adverse effect on the
consolidated financial statements.
Note 5.
In the transition period ended December 31, 1994, resulting
from the Company's change in fiscal years, the Company's
decision to the consolidate the large-crane manufacturing to
a single site resulted in a $14 million charge to earnings
in the cranes and related products segment. The charge
included a $9.4 million write-down of the facility being
abandoned and estimated holding costs of $4.6 million while
the plant is being marketed. It is reasonably possible that
the estimate for future holding costs of the facility may
change in the future.
The assets currently held for sale include land and
improvements, buildings, and certain machinery and equipment
at the "Peninsula facility" located in Manitowoc,
Wisconsin. The current carrying value of these assets,
determined through independent appraisals, is approximately
$3 million and is included in intangibles and other. The
future holding costs, included in accounts payable and
accrued expenses and in other non-current liabilities,
consist primarily of utilities, security, maintenance,
property taxes, insurance, and demolition costs for various
buildings. Future holding costs also include estimates for
various environmental studies on the Peninsula location. To
date, $1.3 million has been paid and charged against these
reserves, including $.7 million incurred during the first
quarter ended March 31, 1996.
Note 6. On December 1, 1995, the Company completed the purchase of
the outstanding common stock of The Shannon Group, Inc.
("Shannon"). Shannon is a manufacturer of commercial
refrigerators, freezers and related products, ranging from
small under-counter units to 300,000 square foot
refrigerated warehouses. Among its wide range of products,
Shannon is best known for its foamed-in-place walk-in
refrigeration units, wood rail walk-in units, refrigerated
food-prep tables, reach-in refrigerator/freezers and modular
refrigeration systems.
The aggregate consideration paid by the Company for Shannon
was $127.0 million, which is net of cash acquired of $.7
million, and which includes an amount due to a seller of
$19.8 million which was paid in January, 1996, direct
acquisition costs of $2.7 million, and other assumed
liabilities of $1.3 million. The transaction was financed
through credit facilities provided under a Credit Agreement
dated December 1, 1995.
The purchase price paid to the Shannon stockholders is
subject to post-closing adjustments based upon levels of
working capital and 1995 gross profit as defined in the
Stock Purchase Agreement . The amount of the working
capital adjustment is not yet known. No earnout payment is
anticipated based upon the gross profit results of Shannon
for the specified period.
The acquisition has been recorded using the purchase method
of accounting. The cost of the acquisition has been
allocated on the basis of the estimated fair value of the
assets acquired and the liabilities assumed. The
preliminary estimate of the excess of the cost over the fair
value of net assets acquired is $88.3 million, and is being
amortized over 32 years. The results of operations since
the date of acquisition are included in the Consolidated
Statements of Earnings.
Note 7. Certain reclassifications have been made to the financial
statements of prior years to conform to the presentation for
1996.
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Results of Operations for the Quarters Ended March 31, 1996
and March 31, 1995
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<TABLE>
<CAPTION>
Net sales and earnings from operations by business segment for the
quarter ended March 31, 1996 and 1995 are shown below (in thousands):
March 31, 1996 March 31, 1995
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<S> <C> <C>
NET SALES:
Foodservice products $ 52,600 $ 24,889
Cranes and related products 50,134 36,891
Marine 11,365 7,321
--------- --------
Total $114,099 $ 69,101
EARNINGS (LOSS) FROM OPERATIONS:
Foodservice products 7,004 4,738
Cranes and related products 3,553 (1,577)
Marine 1,185 1,419
General corporate expense (1,788) (1,561)
Amortization (750) --
--------- --------
Total $ 9,204 $ 3,019
</TABLE>
For the quarter ended March 31, 1996, consolidated net sales were
$114.1 million, up 65% from $69.1 million in the comparable quarter a
year ago. Net earnings and earnings per share more than doubled those
of the prior first quarter -- $4.1 million and 54 cents per share,
compared with net earnings of $1.8 million and 23 cents per share.
The increases were the result of improved sales and earnings by the
cranes and related products segment and the recent acquisition of The
Shannon Group, Inc.
Sales for the foodservice products segment were $52.6 million for the
first quarter of 1996 compared to $24.9 million for the same period
last year. The addition of Shannon's sales accounted for the
increase, as sales of ice machines and reach-in refrigerators by
Manitowoc Equipment Works were essentially flat compared with the
first quarter last year.
The foodservice segment did benefit from Manitowoc's ice-machine price
increase effective earlier this year which contributed to the higher
operating earnings, $7.0 million for the quarter ended March 31, 1996
versus $4.7 million for the same period last year. However, operating
earnings did not keep pace with the gain in sales because the
operating margin on Shannon's products are lower than Manitowoc's ice-
machine operating margins.
Cranes and related products sales for the first quarter increased 36%
over the same three-month period in 1995. Crane segment operating
earnings also rose strongly, climbing to $3.6 million, compared with a
loss of $1.6 million in the first quarter last year.
The improvement in crane operating earnings for the year-over-year
quarters was due to increased shipments of large cranes (especially
the model 888) and to the continuing improvement at Manitex.
Incoming orders for large cranes in the first quarter nearly equaled
increased shipments. The backlog of unfilled orders for the crane
segment as a whole totaled $87.9 million as of March 31, up from the
fourth quarter of 1995 because of an increase in the orders for boom
trucks produced at Manitex.
Sales for the Marine segment were 55% above those of the same quarter
last year because of record activity at the repair yards during the
winter lay-up season and from a barge construction project.
Marine operating earnings decreased slightly to $1.2 million from $1.4
million for the first quarter of 1995. The decline was due to a
changing work mix and the fact there were fewer dry dockings performed
at the Toledo yard this year than last.
Financial Condition at March 31, 1996
- -----------------------------------------
The Company's financial condition remains strong. Cash and marketable
securities of $14.2 million and future cash flows from operations are
adequate to meet the Company's liquidity requirements for the
foreseeable future, including payments for long-term debt, line of
credit, costs associated with the plant consolidation, and capital
expenditures.
This Management's Discussion and Analysis, as well as certain other
parts of this Report on Form 10-Q, contain forward looking statements
that involve a number of risks and uncertainties. Such statements are
based on management's current expectations. The company cautions that
such statements are further qualified by important factors that could
cause actual results to differ materially from those in the forward
looking statements.
PART II. OTHER INFORMATION
-----------------------------------------------------
Item 6. Exhibits and Reports on Form 8-K
------------------------------------------
a) Exhibits: See exhibit index following the signatures on this
Report, which is incorporated herein by reference.
b) Reports on Form 8-K: During the first quarter ended March 31,
1996, Amendment No. 1 to the Form 8-K dated as of December 1, 1995
was filed to provide the following historical financial statements
of The Shannon Group, Inc. as well as the following pro forma
statements of the Company reflecting the acquisition of The Shannon
Group, Inc. pursuant to paragraphs (a)(4) and (b)(2) of Item 7 of
Form 8-K:
1. Audited consolidated financial statements of The Shannon
Group, Inc. and Subsidiary:
Report of Independent Accountants
Consolidated Balance Sheets as of December 31, 1994 and 1993
Consolidated Statements of Operations for the Years Ended
December 31, 1994, 1993 and 1992
Consolidated Statements of Changes in Shareholders' Equity
for the Years Ended December 31, 1994, 1993 and 1992
Consolidated Statements of Cash Flows for the Years Ended
December 31, 1994, 1993 and 1992
Notes to Consolidated Financial Statements
2. Unaudited interim consolidated financial statements of The
Shannon Group, Inc. and Subsidiary:
Consolidated Condensed Statements of Operations for the
Three and Nine Months Ended September 30, 1995 and 1994
Consolidated Condensed Balance Sheet at September 30, 1995
Consolidated Condensed Statements of Cash Flows for the Nine
Months Ended September 30, 1995 and 1994
Notes to Unaudited Interim Financial Data
3. Unaudited pro forma consolidated condensed financial
statements of The Manitowoc Company, Inc.:
Introduction
Pro Forma Consolidated Condensed Statements of Operations
for the Year Ended December 31, 1994
Pro Forma Consolidated Condensed Balance Sheet as of
September 30, 1995
Pro Forma Consolidated Condensed Statement of Operations for
the Nine Months Ended September 30, 1995
Notes to Pro Forma Consolidated Condensed Financial
Statements
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
THE MANITOWOC COMPANY, INC.
(Registrant)
/s/ Fred M. Butler
------------------------
Fred M. Butler
Chief Executive Officer
/s/ Robert R. Friedl
------------------------
Robert R. Friedl
Chief Financial Officer
/s/ E. Dean Flynn
------------------------
E. Dean Flynn
Secretary
April 22, 1996
THE MANITOWOC COMPANY, INC.
EXHIBIT INDEX
TO FORM 10-Q
FOR QUARTERLY PERIOD ENDED
MARCH 31, 1996
Exhibit Filed
No Description Herewith
- ------- ----------- --------
27 Financial Data Schedule X
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 12578
<SECURITIES> 1574
<RECEIVABLES> 59840
<ALLOWANCES> 2073
<INVENTORY> 57889
<CURRENT-ASSETS> 144477
<PP&E> 189331
<DEPRECIATION> 102678
<TOTAL-ASSETS> 331954
<CURRENT-LIABILITIES> 103950
<BONDS> 0
0
0
<COMMON> 109
<OTHER-SE> 83603
<TOTAL-LIABILITY-AND-EQUITY> 331954
<SALES> 114099
<TOTAL-REVENUES> 114099
<CGS> 85462
<TOTAL-COSTS> 104895
<OTHER-EXPENSES> 2344
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2462
<INCOME-PRETAX> 6860
<INCOME-TAX> 2746
<INCOME-CONTINUING> 4114
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4114
<EPS-PRIMARY> .54
<EPS-DILUTED> .54
</TABLE>
