UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1996
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to ________
Commission File Number 1-11978
THE MANITOWOC COMPANY, INC.
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(Exact name of registrant as specified in its charter)
Wisconsin 39-0448110
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
500 South 16th Street, Manitowoc, Wisconsin 54220
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(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: (414) 684-4410
Securities Registered Pursuant to Section 12(b) of the Act:
Common Stock, $.01 Par Value New York Stock Exchange
(Title of Each Class)(Name of Each Exchange on Which Registered)
Common Stock Purchase Rights
Securities Registered Pursuant to Section 12(g) of the Act:
-1-
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 [ ]
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein, and
will not be contained, to the best of registrant's knowledge, in
definitive proxy or information statements incorporated by reference
in Part III of this Form 10-K or any amendment to this Form 10-K. [X]
The Aggregate Market Value on February 28, 1997, of the
registrant's Common Stock held by non-affiliates of the registrant was
$376,646,979, based on the $33.88 per share average of high and low
sale prices on that date.
The number of shares outstanding of the registrant's Common Stock
as of February 28, 1997, the most recent practicable date, was
11,511,357.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of registrant's Annual Report to Shareholders for the
period ended December 31, 1996 (the "1996 Annual Report"), are
incorporated by reference into Parts I and II of this report.
Portions of the registrant's Proxy Statement for the Annual Meeting of
Shareholders dated April 1, 1997 (the "1997 Proxy Statement"), are
incorporated by reference in Part III of this report.
See Index to Exhibits.
PART I
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Item 1. Business
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GENERAL
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The Manitowoc Company, Inc. (the "Company" or "Manitowoc"), a
Wisconsin corporation, is a diversified, capital goods manufacturer
headquartered in Manitowoc, Wisconsin. Founded in 1902, the Company
is principally engaged in: a) the design and manufacture of commercial
ice machines and refrigeration products for the foodservice, lodging,
convenience store and healthcare markets; (b) the design and
manufacture of cranes and related products which are used by the
energy, construction, mining and other industries; and (c) marine
vessel repair. The Company currently operates a large-crane
manufacturing facility and an ice machine and reach-in
refrigerator/freezer manufacturing facility in Manitowoc, Wisconsin;
seven refrigeration products facilities located in Tennessee and
Wisconsin; ship repair yards in Sturgeon Bay, Wisconsin and Toledo and
Cleveland, Ohio; a crane re-manufacturing facility in Bauxite,
Arkansas; a crane replacement parts manufacturing facility in
Punxsutawney, Pennsylvania and Pompano Beach, Florida; and a boom
truck crane operation in Georgetown, Texas.
-2-
For information relating to the Company's lines of business and
industry segments, see "Management's Discussion and Analysis of
Results of Operations and Financial Condition", "Eleven-Year
Financial Summary and Business Segment Information", "Summary of
Significant Accounting Policies -- Research and Development" and Note
14 to Consolidated Financial Statements on pages 18-21, 22-23, 28 and
33, respectively, of the 1996 Annual Report, which are incorporated
herein by reference.
On August 9, 1994, the Board of Directors changed the Company's
fiscal year from the Saturday nearest to June 30 of each calendar year
to December 31 of each calendar year. Such change in fiscal years
resulted in a transition period from July 3, 1994 through December 31,
1994. For further information concerning the transition period see
"Summary of Significant Accounting Policies--Fiscal Year" on page 28 of
the 1996 Annual Report, which is incorporated herein by reference.
PRODUCTS AND SERVICES
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Foodservice
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The Foodservice Products business segment designs, manufactures,
and markets commercial ice cube machines, ice storage bins, ice cube
dispensers, and related accessories including water filtration
systems, as well as reach-in and walk-in refrigerators and freezers.
Serving the needs of foodservice, lodging, convenience store, and
healthcare operations worldwide, the Company has captured a leading
percentage of the commercial ice cube machine, reach-in and walk-in
refrigerator market.
Several models of automatic ice cube making and dispensing
machines are designed, manufactured and marketed by Manitowoc
Equipment Works. Offering daily production capacities from 160 to
1,890 pounds, Manitowoc ice machines are complemented by storage bins
with capacities from 220 to 760 pounds; countertop ice and beverage
dispensers with capacities to 160 pounds; floor-standing ice
dispensers with capacities to 180 pounds; and optional accessories
such as water filters and ice baggers. The reach-in refrigerators and
freezers are available in one, two or three-door models that provide
gross storage capacities of 23.1, 47.8 and 73.7 cubic feet,
respectively.
Effective December 1, 1995, the Company completed the purchase 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. Shannon supplies walk-in
refrigerator/freezers to many of the leading restaurant and grocery
chains in the United States. See Note 9 to Consolidated Financial
Statements on page 31 of the 1996 Annual Report, which is incorporated
herein by reference.
The acquisition of The Shannon Group, Inc. has made Foodservice
equipment the Company's largest business segment. Prior to the
acquisition, Foodservice represented 35% of the Company's total sales.
In calendar 1996, Shannon and Manitowoc Equipment Works account for
48% of the Company's sales and 54% of the segment operating earnings.
-3-
During 1996, Manitowoc Equipment Works introduced the new
J-Series 1300 and 1800 ice-cube machines that feature a single
evaporator rather than two that were used in earlier models. This
improves reliability, simplifies maintenance, and reduces operating
cost. All new J-Series models feature HFC refrigerants and our
patented self-cleaning system, which cleans and sanitizes our ice
machines at a flip of a switch. An automated self-cleaning system is
also available as an option.
In fiscal 1993, the foodservice products group introduced a new
line of ice machines that use an environmentally enlightened
refrigerant. The "B-Series" includes ten models which are
complemented by seven ice storage bins. For added customer
convenience, the "B" models also feature standard self-cleaning and
optional automatic-cleaning systems that improve reliability while
simplifying maintenance.
The Company also introduced in 1993 the industry's first reach-in
cooler that uses an environmentally enlightened refrigerant. In
addition, our Foodservice group received a U.S. patent covering the
drop-in refrigeration units for its reach-in cabinets.
During 1995, Manitowoc Equipment Works was certified as meeting
ISO-9001 quality standards - the highest international rating for
quality management systems.
The Company completed arrangements with a joint-venture partner,
Hangzhou Household Electric Appliance Industrial Corporation, to
produce ice machines in China during calendar 1995. The joint-venture
factory has begun production of the Company's new model I-25 ice
machine. The I-25 produces 30 pounds of ice per day. It was
developed to meet the needs of customers in overseas markets that do
not require the 160 to 1,890 pound daily outputs of the standard ice
making models.
The Foodservice Products business segment sales are made from the
Company's inventory and sold worldwide through independent wholesale
distributors, chain accounts, and government agencies. The
distribution network now extends to 80 distributors in 70 countries
within Western Europe, the Far East, the Middle East, the Near East,
Latin America, North America, the Carribbean, and Africa. A new
distribution facility in Rotterdam, Holland has enabled the Company to
increase sales of ice and refrigerated foodservice equipment in
Europe.
Since sales are made from the Company's inventory, orders are
generally filled within 24 to 48 hours. The backlog for unfilled
orders for Foodservice Products at December 31, 1996 and 1995 were not
significant.
Cranes and Related Products
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The Company designs and manufactures a diversified line of
crawler, truck, fixed-base mounted, and hydraulically-powered cranes,
which are sold under the "Manitowoc", "Manitex", and "West-
Manitowoc, Inc." names for use by the energy, construction, mining,
pulp and paper, and other industries. Many of the Company's customers
purchase one crane together with several options to permit use of the
crane in various lifting applications and other operations. Various
crane models combined with available options have lifting capacities
ranging from approximately 10 to 1,500 U.S. tons and excavating
capacities ranging from 3 to 15 cubic yards.
-4-
The Company has developed a line of hydraulically-driven,
electronically-controlled M-Series crawler cranes. M-Series cranes
are easier to transport, operate and maintain, as well as being more
productive in a number of applications. Six models, along with
various attachments, have been introduced to-date with lifting
capacities ranging from 65 to 1,500 U.S. tons.
In July 1995, the Company's large-crane operation completed a
plant consolidation to a single site within Manitowoc, Wisconsin in
order to streamline the manufacturing process. The consolidation has
reduced production costs, shortened the cycle from order to shipment,
and has made it easier to respond to shifts in market demand.
During 1995, Manitowoc Engineering introduced the Model-888.
The 888 is a lattice boom crawler crane with a lifting capacity of 230
U.S. tons. Because of its innovative design, the 888 will self-
assemble and be ready to work on a jobsite in as little as one hour.
Other cranes of similar size and configuration take many more hours to
assemble before they can be put to work.
During 1996, Manitowoc introduced two innovative attachments for
its highly successful Model 888. The 888 RINGER is a 45-foot diameter
attachment that boosts the 888's nominal capacity to 660 U.S. tons.
For long-reach applications, the 888 can also be rigged with a
luffing-jib attachment that delivers a 105,500-pound maximum capacity
and allows the 888 to operate with a maximum combination of 370 feet
of boom and luffing jib. The new Model-777 liftcrane, somewhat
smaller than the 888, is set to be introduced in 1997.
The Company also performs machining, fabricating and assembly
subcontract work utilizing its crane manufacturing facilities. The
Company also has a remanufacturing facility in Bauxite, Arkansas which
buys older cranes for remanufacture and rebuilds and sells the
finished units through the distribution channels mentioned below.
Customer owned cranes are also remanufactured at this facility.
In fiscal 1994, the Company launched a completely new business
unit - West-Manitowoc. Its prime target is the smaller, independent
contractors and rental-fleet customers who need smaller, less
complicated, easily transportable, and more versatile cranes that meet
the needs of a broad range of users.
To serve this growing market, West-Manitowoc has developed a new
line of value-priced cranes with those characteristics. The first of
these, the 90-ton lifting capacity Model-222 crane, formerly known as
the West-100, has successfully captured a large portion of the rental
market for self-erecting cranes. During 1997, West-Manitowoc will
introduce the 222EX, a self-erecting crawler crane that will serve the
specialized needs of bridge and foundation contractors. West will
further broaden its product line by introducing the Model-111, a 65-
ton crawler crane designed to serve the varied demands of the general
construction market.
As West-Manitowoc introduces additional models in the 50 to 130-
ton range, Manitowoc Engineering will phase out production of small M-
Series models and concentrate solely on high-end cranes for customers
with specialized needs.
In February 1994, the Company acquired the assets of Femco
Machine Co. Femco Machine Co. is a manufacturer of parts for cranes,
draglines, and other heavy equipment. Femco is located in
Punxsutawney, Pennsylvania and Pompano Beach, Florida.
-5-
Femco and Manitowoc Re-Manufacturing together form the
Aftermarket Group. These companies rebuild and remanufacture used
cranes, both Manitowoc and non-Manitowoc units, for owners who want to
add value to their existing cranes. Femco's existing South Florida
operation is ideally positioned to serve the large Latin American
market where used cranes are the order of the day.
In February, 1996, the Company announced the sale of Orley Meyer,
the Wisconsin-based unit which produced overhead cranes of up to 50-
ton capacity. Although Orley Meyer was a profitable and well-run
operation, its product line was outside the Company's core business
interests.
The Company's cranes and related products are sold throughout
North America and foreign countries by independent distributors, and
by Company- owned sales subsidiaries located in Mokena, Illinois; and
Northampton, England. In July, 1996, the Company sold its sales
subsidiary in Benicia, California. During calendar 1995, the Company
sold its sales subsidiaries in Long Island City, New York; LaMirada,
California; Seattle, Washington; and Chur, Switzerland. In fiscal
1993, the Company sold two previously owned sales subsidiaries located
in Davie, Florida and Charlotte, North Carolina.
Distributors generally do not carry inventories of new cranes,
except for the smaller truck cranes. Most distributors maintain
service facilities and inventories of replacement parts. Company
employed service representatives usually assist customers in the
initial set-up of new cranes.
The Company does not generally provide financing for either its
independent distributors or their customers; however, dealers
frequently assist customers in arranging financing and may accept used
cranes as partial payment on the sale of new cranes.
See Note 14 to Consolidated Financial Statements on page 33 of
the 1996 Annual Report with respect to export sales, which is
incorporated herein by reference. Such sales are usually made to the
Company's foreign subsidiaries or independent distributors, in
addition to sales made to domestic customers for foreign delivery.
Foreign sales are made on Letter of Credit or similar terms.
The year-end backlog of crane products includes orders which have
been placed on a production schedule, and those orders which the
Company has accepted and which are expected to be shipped and billed
during the next fiscal year. The backlog of unfilled orders for
cranes and related products at December 31, 1996 approximates $136.0
million, as compared with $85.8 million a year earlier. The increase
is primarily due to the continued positive customer acceptance of the
Company's Model-888 crane, initial orders for the new Model-777 crane,
one M-1200 RINGER, and four 888 RINGERs.
Marine
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The Company had been a shipbuilder since its inception in 1902.
For almost seven decades, all shipbuilding operations were conducted
in Manitowoc, Wisconsin. Two adjoining shipyards in Sturgeon Bay,
Wisconsin, were acquired in 1968 and 1970, and all shipbuilding
activities were transferred to those facilities.
-6-
In January, 1992, the Company acquired substantially all the
assets of Merce Industries, Inc. Merce Industries, Inc. operated the
ship repair facility owned by the Port Authority of Toledo, Ohio, and
similar operations in Cleveland, Ohio. Included with the acquisition
was the assumption of a lease agreement with the Port Authority for
the ship repair facilities.
The Marine Group (made up of BSC, Toledo Shiprepair Co., and
Cleveland Shiprepair Co.) dry-docks and services commercial vessels of
all sizes, including 1,000-foot super carriers, the largest vessels
sailing the Great Lakes. The Marine Group's capabilities include
planned and emergency maintenance, vessel inspections, five-year
surveys, conversions, repowering, and retrofitting plus repair service
for hulls, turbines, boilers, propulsion systems and cargo systems.
To reduce seasonality, the Marine Group has begun to perform non-
marine industrial repair during the summer months.
In July, 1996, Bay Shipbuilding Co. (BSC), a division in the
Company's Marine Group, completed construction of a self-unloading
cement barge for a Great Lakes customer. BSC intends to pursue these
types of projects with other Great Lakes customers.
The year-end backlog for the marine segment includes repair and
maintenance work presently scheduled at the shipyard which will be
completed in the next fiscal year. At December 31, 1996 the backlog
approximates $5.9 million, compared to $21.2 million one year ago.
The 1995 backlog included construction of the self-unloading cement
barge.
Raw Materials and Supplies
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The primary raw material used by the Company is structural and
rolled steel, which is purchased from various domestic sources. The
Company also purchases engines and electrical equipment and other
semi- and fully-processed materials. It is the policy of the Company
to maintain, wherever possible, alternate sources of supply for its
important materials and parts. The Company maintains inventories of
steel and other purchased material.
Patents, Trademarks, Licenses
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The Company owns a number of United States and foreign patents
pertaining to the crane and foodservice products, and has presently
pending applications for patents in the United States and foreign
countries. In addition, the Company has various registered and
unregistered trademarks and licenses which are of material importance
to the Company's business.
Seasonality
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Typically, the second calendar quarter represents the Company's
best quarter in all of the business segments. Since the summer brings
along warmer weather, there is an increase in the use of ice machines.
As a result, distributors are building inventories for the increased
demand. In the cranes and related products segment, summer also
represents the main construction season. Customers require new
machines, parts, and service prior to such season. With respect to the
Marine segment, the Great Lakes shipping industry's sailing season is
normally May through November. Thus, barring any emergency
groundings, the majority of repair and maintenance work is performed
during the winter months. Accordingly, the work is typically
completed during the second calendar quarter of the year.
-7-
Competition
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All of the Company's products are sold in highly competitive
markets. Competition is at all levels, including price, service and
product performance.
Within the ice machine division, there are several manufacturers
with whom the Company competes. The primary competitors include
Scotsman Industries (tradename Scotsman and Crystal Tips), Prospect
Heights, Illinois; Welbilt Company (tradename Ice-O-Matic), New Hyde
Park, New York; and Hoshizaki American, Inc. (tradename Hoshizaki),
Peachtree City, Georgia. The Company is the leading, low-cost,
producer of ice machines in North America.
The list of competitors for the refrigeration products line
include Beverage Air, Spartanburg, South Carolina; The Delfield
Company, Mt. Pleasant, Michigan; Traulsen & Company, Inc., College
Point, New York; True Food Service Company, O'Fallon, Missouri;
Hobart, Inc., Troy, Ohio; Elliot-Williams Co., Inc., Indianapolis,
Indiana; Hussman Corporation, Bridgeton, Missouri; ThermoKool, Laurel,
Mississippi; Masterbilt, New Albany, Mississippi; W. A. Brown,
Salisbury, Nebraska; and American Panel, Ocala, Florida. The Company
is one of the leading producers of small undercounter refrigeration
units and large refrigerated warehouses as well as a supplier of walk-
in refrigerator/freezers to many of the leading restaurant and grocery
chains in the United States.
With respect to crawler cranes, there are numerous domestic and
foreign manufacturers of cranes with whom the Company competes,
including American Crane Corporation, Wilmington, North Carolina; Link
Belt Construction Equipment Co., a subsidiary of Sumitomo Corporation,
Tokyo, Japan; Kobelco, Kobe Steel, Ltd., Tokyo, Japan; Mannesmann
Demag Baumaschinen, Zweibrucken, West Germany; Liebherr-Werk Ehingen
GMBH, Ehingen, West Germany; and Hitachi Construction Machinery Co.,
Ltd., Tokyo, Japan. Within the market the Company serves, lattice
boom crawler cranes with lifting capacities greater than 125 tons,
Manitowoc is a world leader of this equipment.
The competitors within the boom truck crane market include
Simon-R.O. Corp., Olathe, Kansas; National Crane, Waverly, Nebraska;
and JLG, McConnellsburg, Pennsylvania. The Company believes that its
current output of boom truck cranes ranks second among its
competitors.
In the ship repair operation, the Company is one of three
operational shipyards on the Great Lakes capable of drydocking and
servicing 1000 foot Great Lakes bulk carriers; the others are Erie
Marine Enterprises, Erie, Pennsylvania, and Port Weller Dry Docks, St.
Catherines, Ontario, Canada. There are two other shipyards on the
Great Lakes, Fraser Shipyards, Inc., Superior, Wisconsin, and H.
Hansen Industries, Toledo, Ohio, with whom the Company competes for
drydocking and servicing smaller Great Lakes vessels. The Company
also competes with many smaller firms which perform top side repair
work during the winter lay-up period. In addition, there are
shipyards on the East, West and Gulf Coasts capable of converting and
reconstructing vessels of sizes that can enter the Great Lakes through
the St. Lawrence Seaway and the Wellen Canal. There are also
shipyards on the inland rivers capable of servicing smaller,
specialized vessels which the Company is capable of servicing.
-8-
Employee Relations
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The Company employs approximately 2,900 persons, of whom about
540 are salaried. The number of employees is consistent with the
prior year.
The Company has labor agreements with 20 union locals. There
have been no work stoppages during the three years ended December 31,
1996.
Item 2. PROPERTIES
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Owned
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The Company owns Foodservice manufacturing facilities located in
Manitowoc, Wisconsin; River Falls, Wisconsin; Mason City, Iowa;
Parsons, Tennessee; and Scotts Hill, Tennessee.
Manitowoc Equipment Works' production of ice machines and reach-
in coolers are housed in a recently expanded 368,000 square foot
facility in Manitowoc, Wisconsin. The 128,000 square foot addition
was completed during 1995 and permitted both ice machines and reach-
ins to be manufactured in the same facility.
The acquisition of The Shannon Group, Inc. included four
manufacturing facilities located in Parsons, Tennessee; River Falls,
Wisconsin; Mason City, Iowa and Scotts Hill, Tennessee. The Parsons
and River Falls facilities have approximately 212,000 and 133,000
square feet of manufacturing and office space, respectively. The
Mason City and Scotts Hill plants each have about 40,000 square feet
of manufacturing space. In 1996, the Company closed the Mason City
facility and consolidated the manufacturing with the leased facility
in Greeneville, Tennessee. The Mason City plant is currently held for
sale.
Cranes and related products are manufactured at plant locations
in Manitowoc, Wisconsin; Georgetown, Texas; Bauxite, Arkansas; and
Punxsutawney, Pennsylvania. During 1995, the crane operations in
Manitowoc completed a move from the original plant located in the
central city to the existing South Works facility. South Works'
construction was completed in 1978 and is comprised of approximately
265,000 square feet of manufacturing and office space located on 76
acres. The original plant, which includes approximately 600,000
square feet of manufacturing and office space, is currently being held
for sale.
The Punxsutawney operations consist of three manufacturing and
office facilities operated as Femco Machine Co. These facilities have
approximately 71,000 square feet and are located on approximately 34
acres. A similar facility in nearby Hawthorn, Pennsylvania was sold
in November, 1995.
In 1993, the boomtruck crane operations were moved to Georgetown,
Texas. The Company purchased an existing manufacturing and office
facility totaling approximately 175,000 square feet. Previously, this
operation consisted of manufacturing and office facilities located in
McAllen, Texas, and a fabrication plant located in Reynosa, Mexico.
In June, 1987, the Company purchased an existing 20,000 square
foot facility in Bauxite, Arkansas, for the remanufacturing of used
cranes. This facility began operations in fiscal 1988.
-9-
The Company's shipyard in Sturgeon Bay, Wisconsin, consists of
approximately 55 acres of waterfront property. Four of those acres,
which connect two operating areas of the shipyard, are leased under a
long term ground lease. There is approximately 295,000 square feet of
enclosed manufacturing and office space. Facilities at the shipyard
include a 140 by 1,158 foot graving dock, the largest on the Great
Lakes. In addition, there is a 250 foot graving dock, and a 600 foot
floating drydock.
Additional properties consist primarily of a crane sales office
and warehouse facility located in Northampton, England. Sales offices
in Long Island City, New York and Seattle, Washington were sold during
the fourth quarter of 1995.
Leased
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The Company leases three manufacturing facilities for the
foodservice division including 90,000 square feet in Selmer,
Tennessee; 50,000 square feet in Greeneville, Tennessee and 38,500
square feet in Bethel Springs, Tennessee. The Company also leases
approximately 11,000 square feet of office space for The Shannon
Group, Inc. in Brentwood, Tennessee. In addition, the Company leases
sales offices and warehouse facilities for cranes and related products
in Big Bend, Wisconsin; and Mokena, Illinois. Facilities are also
leased in Pompano Beach, Florida for parts manufacturing and crane re-
manufacturing. Furthermore, the Company leases the shipyard
facilities at Toledo and Cleveland, Ohio for the marine segment.
These facilities include waterfront land, buildings, and 800-foot and
550-foot graving docks.
Item 3. LEGAL PROCEEDINGS
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The information required by this item is incorporated by
reference from Note 11 to Consolidated Financial Statements on Page
32 of the 1996 Annual Report.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
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No matters were submitted to security holders for a vote during
the fourth quarter of the Company's fiscal year ended December 31,
1996.
-10-
Executive Officers of the Registrant
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Each of the following officers of the Company has been elected to a
one-year term by the Board of Directors. The information presented is
as of February 28, 1997.
Principal
Position With Position
Name Age The Registrant Held Since
- ---------- ----- -------------- ------------
Fred M. Butler 61 President & CEO 1990
Robert R. Friedl 42 Senior Vice 1996
President & CFO
Thomas G. Musial 45 Vice President 1995
-Human Resources
Philip D. Keener 45 Treasurer 1990
E. Dean Flynn 54 Secretary 1993
Terry D. Growcock 51 President and 1996
General Manager
Jeffry D. Bust 43 President and 1996
General Manager
Bruce C. Shaw 62 President and 1996
General Manager
Fred M. Butler, 61, president and chief executive officer of The
Manitowoc Company, Inc. since 1990. Previously senior vice-president
and chief operating officer (1989); and manager of administration
(1988). Prior to joining Manitowoc, Mr. Butler served Guy F. Atkinson
Co., and its subsidiaries, for 29 years in numerous managerial and
executive positions.
Robert R. Friedl, 42, senior vice president and chief financial
officer since 1996. Previously, vice president and chief financial
officer (1992),vice president of finance (1990), and assistant treasurer
(1988). Prior to joining Manitowoc, Mr. Friedl served as chief financial
officer with Coradian Corp.; was co-founder, vice president of finance,
and treasurer of Telecom North, Inc.; and tax manager for Nankin, Schnoll
& Co., S.C.
Thomas G. Musial, 45, vice president human resources since 1995.
Previously, manager of human resources (1987) and personnel/industrial
relations specialist (1976).
Philip D. Keener, 45, treasurer since 1990. Prior to joining
Manitowoc, Mr. Keener served as assistant treasurer of Farley
Industries, Inc., and in various financial capacities at Northwest
Industries, Inc.
E. Dean Flynn, 54, secretary since 1993. Previously, assistant
corporate secretary (1987) manager of corporate insurance (1990); and
legal assistant (1985). Formerly served the Wabco division of Dresser
Industries, Inc., in numerous managerial positions for 23 years,
departing as manager of legal affairs in 1985.
-11-
Terry D. Growcock, 51, president and general manager of Manitowoc Ice,
Inc. since 1996. Previously, executive vice president and general
manager of Manitowoc Equipment Works (1994). Prior to joining
Manitowoc Ice Inc., Mr. Growcock served as vice president and general
manager with Robertshaw Automotive; and vice president and general
manager with Paragon Electric.
Jeffry D. Bust, 43, president and general manager of Manitowoc Cranes,
Inc. since 1996. Previously executive vice president and general
manager (1994). Prior to joining Manitowoc Cranes, Inc., Mr. Bust
served as senior vice president and general manager with Mining and
Equipment Division of Harnischfeger Corp.
Bruce C. Shaw, 62, president and general manager of Bay Shipbuilding
Co., and executive vice president of Manitowoc Marine Group, Inc.
since 1996. Previously, executive vice president and general manager
(1992), vice president and assistant general manager (1987), director
of operations (1984), assistant operations manager (1977), and manager
planning (1974) with Bay Shipbuilding Co.
PART II
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Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
-------------------------------------------------
The information required by this item is incorporated by reference
from "Quarterly Common Stock Price Range", "Eleven-Year Financial
Summary and Business Segment Information," "Supplemental Quarterly
Financial Information (Unaudited)", and "Investor Information" on
pages 1, 22-23, 34 and 37, respectively, of the 1996 Annual Report.
Item 6. SELECTED FINANCIAL DATA
--------------------------
The information required by this item is incorporated by reference
from "Eleven-Year Financial Summary and Business Segment Information"
on pages 22-23 of the 1996 Annual Report.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
---------------------------------------------------
The information required by this item is incorporated by reference
from "Management's Discussion and Analysis of Results of Operations
and Financial Condition" on pages 18-21 of the 1996 Annual Report.
-12-
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
----------------------------------------------
The financial statements required by this item are incorporated by
reference from pages 24-33 of the 1996 Annual Report. Supplementary
financial information is incorporated by reference from "Supplemental
Quarterly Financial Information (Unaudited)" on page 34 of the 1996
Annual Report. See also the reports of the former independent public
accountants included as part of Item 14 of this report and
incorporated herein by reference.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
--------------------------------------------------
None.
PART III
----------
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
---------------------------------------------------
The information required by this item is incorporated by reference
from "Compliance with Section 16(a) of the Exchange Act" on page 4 of
the 1997 Proxy Statement and from Election of Directors" on pages 4-
5 of the 1997 Proxy Statement. See also "Executive Officers of the
Registrant" in Part I hereof, which is incorporated herein by
reference.
Item 11. EXECUTIVE COMPENSATION
---------------------------
The information required by this item is incorporated by reference
from "Compensation of Directors", "Executive Compensation",
"Contingent Employment Agreements", and "Supplemental Retirement
Agreements" on pages 6-10 and 15 of the 1997 Proxy Statement.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
--------------------------------------------------
The information required by this item is incorporated by reference
from "Ownership of Securities" on pages 2-4 of the 1997 Proxy
Statement.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
------------------------------------------------
None.
-13-
PART IV
---------
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS
ON FORM 8-K
----------------------------------------------------
(a) Documents filed as part of this Report.
(1) Financial Statements:
The following Consolidated Financial Statements are filed as
part of this report under Item 8, "Financial Statements and
Supplementary Data":
Report of Independent Public Accountants on fiscal years
ended December 31, 1996 and December 31, 1995, and transition
period ended December 31, 1994 Financial Statements
Report of Former Independent Public Accountants on fiscal
year ended July 2, 1994 Financial Statements
Consolidated Statements of Earnings for the periods ended
December 31, 1996, December 31, 1995, December 31, 1994, and
July 2, 1994.
Consolidated Balance Sheets as of December 31, 1996 and
December 31, 1995.
Consolidated Statements of Cash Flows for the periods ended
December 31, 1996, December 31, 1995, December 31, 1994 and
July 2, 1994.
Consolidated Statements of Stockholders' Equity for the
periods ended December 31, 1996, December 31, 1995, December
31, 1994, and July 2, 1994.
Summary of Significant Accounting Policies.
Notes to Consolidated Financial Statements.
-14-
(2) Financial Statement Schedules:
Financial Statement Schedules for the year ended December 31,
1996 and December 31, 1995, transition period ended December
31, 1994, and fiscal year ended July 2, 1994.
Schedule Description Filed Herewith
----------- -------------- -----------------
II Valuation and Qualifying
Accounts X
Report of Independent Public
Accountants on fiscal year
ended December 31, 1996,
December 31, 1995, and
transition period ended
December 31, 1994 Financial
Statement Schedules X
Report of Former Independent
Public Accountants on fiscal
year ended July 2, 1994
Financial Statement Schedules X
All other financial statement schedules not listed have been
omitted since the required information is included in the
consolidated financial statements or the notes thereto, or is not
applicable or required under rules of Regulation S-X.
(b) Reports on Form 8-K:
A report on Form 8-K, dated as of February 19, 1997, was filed on
March 4, 1997, stating that the Board of Directors of The Manitowoc
Company, Inc. decided to discontinue its common stock repurchase
program, effective immediately.
(c) Exhibits:
See Index to Exhibits immediately following the signature page of
this report, which is incorporated herein by reference.
-15-
REPORT OF FORMER INDEPENDENT PUBLIC ACCOUNTANTS
To The Manitowoc Company, Inc.:
We have audited the consolidated balance sheet of The Manitowoc
Company, Inc. (a Wisconsin corporation) as of July 2, 1994, and the
related statement of earnings, stockholders' equity and cash flow for
the fiscal year then ended. 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 generally accepted auditing
standards. 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 financial position of The
Manitowoc Company, Inc. as of July 2, 1994, and the results of its
operations and its cash flows for the year then ended in conformity
with generally accepted accounting principles.
Milwaukee, Wisconsin /s/ Arthur Andersen LLP
July 28, 1994 ----------------------------------
ARTHUR ANDERSEN LLP
-16-
REPORT OF INDEPENDENT ACCOUNTANTS
Board of Directors and Stockholders
The Manitowoc Company, Inc. and Subsidiaries
Our report on the consolidated financial statements of The Manitowoc
Company, Inc. and Subsidiaries has been incorporated by reference in
the Form 10-K from page 34 of the 1996 Annual Report of The Manitowoc
Company, Inc. In connection with our audits of such financial
statements, we have also audited the related consolidated financial
statement schedule listed in the index on page 19 of this Form 10-K.
In our opinion, the consolidated financial statement schedule referred
to above, when considered in relation to the basic consolidated
financial statements taken as a whole, presents fairly, in all
material respects, the information required to be included therein.
Milwaukee, Wisconsin /s/ Coopers & Lybrand L.L.P.
February 5, 1997 ----------------------------
COOPERS & LYBRAND L.L.P.
-17-
REPORT OF FORMER INDEPENDENT PUBLIC ACCOUNTANTS
ON SUPPLEMENTARY SCHEDULES
We have audited in accordance with generally accepted auditing
standards, the financial statements included in The Manitowoc Company,
Inc.'s annual report to shareholders incorporated by reference in this
Form 10-K, and have issued our report thereon dated July 28, 1994.
Our audit was made for the purpose of forming an opinion on those
statements taken as a whole. The schedule listed in Item 14(a)(2) is
the responsibility of the Company's management and is presented for
purposes of complying with the Securities and Exchange Commission's
rules and are not part of the basic financial statements. These
schedules have been subjected to the auditing procedures applied in
the audit of the basic financial statements and, in our opinion,
fairly state in all material respects the financial data required to
be set forth therein in relation to the basic financial statements
taken as a whole.
ARTHUR ANDERSEN LLP
Milwaukee, Wisconsin /s/ Arthur Andersen LLP
July 28, 1994. ---------------------------
ARTHUR ANDERSEN LLP
-18-
<TABLE>
<CAPTION>
THE MANITOWOC COMPANY, INC.
AND SUBSIDIARIES
SCHEDULE II: VALUATION AND QUALIFYING ACCOUNTS
FOR THE FISCAL YEAR ENDED, JULY 2, 1994, TRANSITION PERIOD ENDED DECEMBER 31, 1994,
CALENDAR YEARS ENDED DECEMBER 31, 1995 AND DECEMBER 31, 1996
BALANCE AT CHARGED TO BALANCE AT
BEGINNING COSTS AND END OF
DESCRIPTION OF PERIOD EXPENSES DEDUCTIONS (1) PERIOD
----------------- ---------- ----------- ------------ -----------
<S> <C> <C> <C> <C>
YEAR ENDED JULY 2, 1994:
Allowance for doubtful accounts $ 807,202 $ 702,079 $ (732,536) $ 776,745
PERIOD ENDED DECEMBER 31, 1994:
Allowance for doubtful accounts $ 776,745 $ 419,442 $ -- $1,196,317
YEAR ENDED DECEMBER 31, 1995:
Allowance for doubtful accounts $1,196,317 $ 283,843 $ (114,804) $1,365,356
YEAR ENDED DECEMBER 31, 1996:
Allowance for doubtful accounts $1,365,356 $ 322,837 $ (711,986) $ 976,207
<FN>
(1) Deductions represent bad debts written-off, net of recoveries.
</FN>
</TABLE>
-19-
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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:
Dated: March 31, 1997
THE MANITOWOC COMPANY, INC.
By: /s/ Fred M. Butler
-----------------------------------
Fred M. Butler
President & Chief Executive Officer
By: /s/ Robert R. Friedl
-----------------------------------
Robert R. Friedl
Senior Vice President and
Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of
1934, this Report has been signed below by the following persons
constituting a majority of the Board of Directors on behalf of the
registrant and in the capacities and on the dates indicated:
/s/ Fred M. Butler March 31, 1997
- ----------------------------------------
Fred M. Butler, President & CEO, Director
/s/ Robert R. Friedl March 31, 1997
- ----------------------------------------
Robert R. Friedl, Senior Vice President & CFO
/s/ Gilbert F. Rankin, Jr. March 31, 1997
- ----------------------------------------
Gilbert F. Rankin, Jr., Director
/s/ George T. McCoy March 31, 1997
- ----------------------------------------
George T. McCoy, Director
/s/ Guido R. Rahr, Jr. March 31, 1997
- ----------------------------------------
Guido R. Rahr, Jr., Director
March 31, 1997
- ----------------------------------------
James P. McCann, Director
March 31, 1997
- ----------------------------------------
Dean H. Anderson, Director
March 31, 1997
- ----------------------------------------
Robert S. Throop, Director
-20-
THE MANITOWOC COMPANY, INC.
ANNUAL REPORT ON FORM 10-K
FOR THE CALENDAR YEAR ENDED DECEMBER 31, 1996
INDEX TO EXHIBITS
Filed
Exhibit No. Description Herewith
- ----------- ----------- --------
2.1 (a) * Stock Purchase Agreement dated as of
October 24, 1995, for the acquisition of
The Shannon Group, Inc. by The Manitowoc
Company, Inc. (filed as Exhibit 2 to the
Company's Report on Form 8-K, dated as
of October 25, 1995 and incorporated
herein by reference).
2.1 (b) * First Amendment to Stock Purchase
Agreement, dated as of December 1, 1995,
for the acquisition of The Shannon
Group, Inc. by The Manitowoc Company,
Inc. (filed as Exhibit 2.2 to the
Company's Report on Form 8-K, dated as
of December 1, 1995 and incorporated
herein by reference).
3.1 Amended and Restated Articles of
Incorporation as amended on November 5,
1984 (filed as Exhibit 3(a) to the
Company's Annual Report on Form 10-K for
the fiscal year ended June 29, 1985 and
incorporated herein by reference).
3.2 Restated By-Laws (as amended through May
22, 1995) including amendment to Article
II changing the date of the annual
meeting (filed as Exhibit 3.2 to the
Company's Quarterly Report on Form 10-Q
for the quarter ended June 30, 1995 and
incorporated herein by reference).
4.1 Rights Agreement dated August 5, 1996
between the Registrant and First Chicago
Trust Company of New York (filed as
Exhibit 4 to the Company's current
Report on Form 8-K filed on August 5,
1996 and incorporated herein by
reference).
4.2(a) Credit Agreement, dated as of December
1, 1995, among The Manitowoc Company,
Inc., as Borrower, certain subsidiaries
from time to time parties thereto, as
Guarantors, the several Lenders, and
NationsBank, N.A., as Agent (filed as
Exhibit 4.1 to the Company's Report on
Form 8-K dated as of December 1, 1995
and incorporated herein by reference).
4.2(b) First amendment to Credit Agreement,
dated as of September 30, 1996 (filed as
Exhibit 4 to the Company's Quarterly
Report on Form 10-Q for the quarter-
ended September 30, 1996 and
incorporated herein by reference).
4.3 Security and Pledge Agreement, dated as
of December 1, 1995, among The Manitowoc
Company, Inc., certain of its
subsidiaries and NationsBank, N.A.
(filed as Exhibit 4.2 to the Company's
Report on Form 8-K dated as of December
1, 1995 and incorporated herein by
reference).
4.4 Articles III, V, and VIII of the Amended
and Restated Articles of Incorporation
(see Exhibit 3.1 above).
10.1(a) ** The Manitowoc Company, Inc. Deferred
Compensation Plan effective August 20,
1993 (the "Deferred Compensation Plan")
(filed as Exhibit 4.1 to the Company's
Registration Statement on Form S-8 filed
June 23, 1993 (Registration No. 33-
65316) and incorporated herein by
reference).
10.1(b) ** Amendment to Deferred Compensation Plan
adopted by the Board of Directors on
February 18, 1997. X
10.2 ** The Manitowoc Company, Inc. Management
Incentive Compensation Plan (Economic
Value Added (EVA) Bonus Plan) effective
July 4, 1993, and as amended February
18, 1997. X
10.3 ** Form of Contingent Employment Agreement
between the Company and Messrs. Butler,
Flynn, Friedl, Keener, Musial, Bust,
Growcock and Shaw and certain other
employees of the Company (filed as
Exhibit 10(c)to the Company's Annual
Report on Form 10-K for the fiscal year
ended July 1, 1989 and incorporated
herein by reference).
10.4 ** Form of Indemnity Agreement between the
Company and each of the directors,
executive officers and certain other
employees of the Company (filed as
Exhibit 10(d) to the Company's Annual
Report on Form 10-K for the fiscal year
ended July 1, 1989 and incorporated
herein by reference).
10.5 ** Supplemental Retirement Agreement
between Fred M. Butler and the Company
dated March 15, 1993 (filed as Exhibit
10(e) to the Company's Annual Report on
Form 10-K for the fiscal year ended July
3, 1993 and incorporated herein by
reference).
10.6(a) ** Supplemental Retirement Agreement
between Robert K. Silva and the Company
dated January 2, 1995 (filed as Exhibit
10 to the Company's Report on Form 10-Q
for the transition period ended December
31, 1994 and incorporated herein by
reference).
10.6(b) ** Restatement to clarify Mr. Silva's
Supplemental Retirement Agreement
dated March 31, 1997. X
10.7 * The Manitowoc Company, Inc. 1995 Stock
Plan (filed as Appendix A to the
Company's Proxy Statement dated April 2,
1996 for its 1996 Annual Meeting of
Stockholders and incorporated herein by
reference).
13 Portions of the 1996 Annual Report to
Shareholders of The Manitowoc Company,
Inc. incorporated by reference into this
Report on Form 10-K. X
21 Subsidiaries of The Manitowoc Company,
Inc. X
23.1 Consent of Coopers & Lybrand L.L.P., the
Company's Independent Public Accountants. X
23.2 Consent of Arthur Andersen LLP the
Company's Former Independent Public Accountants. X
27 Financial Data Schedule. X
* Pursuant to Item 601(b)(2) of Regulation S-K, the Registrant
agrees to furnish to the Securities and Exchange Commission upon
request a copy of any unfiled exhibits or schedules to such
document.
** Management contracts and executive compensation plans and
arrangements required to be filed as exhibits pursuant to Item
14(c) of Form 10-K.
-22-
EXIHIBIT 10.1(b)
1996 10-K
THE MANITOWOC COMPANY, INC.
DEFERRED COMPENSATION PLAN
SECTION 1. PURPOSE AND EFFECTIVE DATE
1.1 The purpose of The Manitowoc Company, Inc. Deferred
Compensation Plan (the "Plan") is to promote the best interests of The
Manitowoc Company, Inc. (the "Company") and its subsidiaries and
affiliates and the stockholders of the Company by (1) attracting and
retaining well-qualified persons for service as nonemployee directors
of the Company and promoting identity of interest between directors
and stockholders of the Company; and (2) attracting and retaining key
management employees possessing a strong interest in the successful
operation of The Manitowoc Company, Inc. and its subsidiaries and
affiliates (collectively referred to herein as the "Employer") and
encouraging their continued loyalty, service, and counsel to the
Employer.
It is intended that the Plan will allow participants to elect
voluntarily to defer and convert, in the case of nonemployee
directors, all or a portion of their retainer and meeting fees for
services as a director and, in the case of key employees, a portion of
their compensation, into Manitowoc Stock and other investments for
payment upon retirement, death, disability, or designated distribution
date.
1.2 The effective date of the Plan is June 30, 1993. The
Plan was amended and restated on May 7, 1996, to permit participation
by key employees of subsidiaries adopting the Plan and on February 18,
1997, to conform to Rule 16b-3.
SECTION 2. DEFINITIONS
The following terms have the following meanings unless the
context clearly indicates otherwise:
2.1 "Administrator" means a committee of the Board composed
of not less than two directors, each of whom shall qualify as a "Non-
Employee Director" within the meaning of Rule 16b-3, or such other
committee or officer of the Company designated by the Board.
2.2 "Agreement" means the written agreement entered into
between the Employer and a Participant, whereby the Participant agrees
to defer a portion of his Compensation pursuant to the provisions of
the Plan and the Employer agrees to make benefit payments in
accordance with the terms of the Plan and such Agreement. An
Agreement may be the "Initial Agreement" applicable to a Participant
or a "Modified Agreement" (in form approved by the Administrator),
properly completed and signed.
2.3 "Beneficiary" means the person or entity designated by
the Participant to be the beneficiary of the Deferred Compensation
Account of the Participant. If a valid designation of Beneficiary is
not in effect at the time of the death of a Participant, the estate of
the Participant is deemed to be the sole Beneficiary of such Account.
If a Participant dies before receiving full distribution of his
Account, any remaining distributions shall be made to the Beneficiary.
If a Beneficiary dies while entitled to receive distributions from
the Plan, any remaining payments shall be paid to the estate of the
Beneficiary. Beneficiary designations shall be in writing, filed with
the Administrator, and in such form as the Administrator may prescribe
for this purpose.
2.4 "Board" means the Board of Directors of the Company.
2.5 "Change of Control" means the first to occur of the
following:
(a) The acquisition by any person or entity, or group
thereof acting in concert, of beneficial ownership
of securities of the Company which, together with
securities previously owned, confer upon the
holder the voting power, on all matters brought to
a vote of stockholders, of thirty percent (30%) or
more of all the then outstanding shares of the
Company.
(b) The sale, assignment or transfer of assets (or
earning power) of the Company or any subsidiary or
subsidiaries, in a transaction or series of
transactions, to a twenty percent (20%)
stockholder (as herein defined) or any affiliate
of a twenty percent (20%) stockholder, if the
aggregate market value thereof exceeds fifty
percent (50%) of the aggregate book value,
determined by the Company in accordance with
generally accepted accounting principles, of all
the assets (or earning power) of the Company
determined on a consolidated basis before such
transaction or the first of such transactions,
unless the Board approved such transaction or
transactions before the date on which the twenty
percent (20%) stockholder became a twenty percent
(20%) stockholder. For
(c) purposes of this definition of Change of Control,
a twenty percent (20%) stockholder means any
person, entity, or group of persons and/or
entities acting in concert, who or which, together
with his, its or their affiliates and associates,
is the beneficial owner of securities of the
Company which confer upon the holder the voting
power, on all matters brought to a vote of
stockholders, of twenty percent (20%) or more of
all the then outstanding shares of the Company.
(d) The merger or consolidation of the Company (or of
one or more subsidiaries of the Company, in a
transaction or series of transactions, if the
aggregate book value of the assets thereof exceeds
fifty percent (50%) of the aggregate book value of
all the assets of the Company determined on a
consolidated basis before such transaction or the
first of such transactions), with or into a twenty
percent (20%) stockholder or any affiliate of a
twenty percent (20%) stockholder, unless the Board
approved such merger or consolidation before the
date on which the twenty percent (20%) stockholder
first became a twenty percent (20%) stockholder.
(e) The dissolution of the Company, unless the Board
approved such dissolution before the date on which
the twenty percent (20%) stockholder first became
a twenty percent (20%) stockholder.
(f) Change in the composition of the Board after which
a majority of the members thereof are not
continuing directors. Continuing director, for
this purpose, means (i) any member of the Board
while such person is a member of the Board, who is
not an acquiring person, or an affiliate or
associate of an acquiring person, or a
representative of an acquiring person or of any
such affiliate or associate, and was a member of
the Board prior to July 4, 1993, or (ii) any
person who subsequently becomes a member of the
Board, who is not an acquiring person, or an
affiliate or associate of an acquiring person, or
a representative of an acquiring person or of any
such affiliate or associate, if such person's
nomination for election or election to the Board
is recommended or approved by a majority of the
continuing directors. As used herein, affiliate
and associate shall have the respective meanings
ascribed to such terms in Rule 12b-2 under the
Exchange Act.
(g) The commencement (within the meaning of Rule 14d-2
of the General Rules and Regulations under the
Exchange Act) of a tender or exchange offer which,
if successful, would result in a change of control
of the Company.
(h) A determination by the Board, in view of then
current circumstances or impending events, that a
change of control of the Company has occurred or
is imminent, which determination shall be made for
the specific purpose of triggering the operative
provisions of the Company's contingent employment
agreements.
2.6 "Company" means The Manitowoc Company, Inc., a
Wisconsin corporation, or any successor corporation.
2.7 "Code" means the Internal Revenue Code of 1986, as
interpreted by regulations and rulings issued pursuant thereto, all as
amended and in effect from time to time.
2.8 "Compensation" means (i) for nonemployee director
Participants, the Retainer Fee and (ii) for key employee Participants,
"Compensation" has the same meaning as the term "eligible
compensation," as defined in The Manitowoc Company, Inc. RSVP Profit
Sharing Plan (the "RSVP Plan") and incorporated herein by this
reference, without regard to the dollar limits applied to that
definition by Code Section 401(a)(17), and without regard to whether
such Participants are eligible to participate in the RSVP Plan.
2.9 "Date" means the date an Initial Agreement, a Modified
Agreement, an Investment Election Change Form, a Transfer Election
Form, or an Extraordinary Distribution Request Form is received by the
Administrator.
2.10 "Deferred Compensation Account," "Account," or
"Subaccount" means the accounts maintained on the books of the
Employer for each Participant.
2.11 "Disability" means disability as set forth in Section
22(e)(3) of the Code.
2.12 Distribution Date" means the date designated by a
Participant in accordance with Section 6 for the commencement of
payment of amounts credited to his Account.
2.13 "Employer" means the Company and each subsidiary and
affiliate of the Company which adopts this Plan.
2.14 "Employer Contribution" means the amount of
contribution which may be made each year on behalf of key employee
Participants, as described in Section 7.
2.15 "Exchange Act" means the Securities Exchange Act of
1934, as amended from time to time.
2.16 "Extraordinary Distribution Request Form" means the
Plan form (in the form approved by the Administrator) properly
completed and signed by a Participant (or a Beneficiary after the
Participant's death) who wishes to request an extraordinary
distribution of amounts credited to his Account.
2.17 "Investment Election Change Form" means the Plan form
(in the form approved by the Administrator) properly completed and
signed by a Participant who wishes to change his investment election
prospectively as to new deposits to his Account.
2.18 "Manitowoc Stock" means the common stock, $.01 par
value, of the Company.
2.19 "Participant" means any nonemployee member of the Board
and any key employee of an Employer who has executed an Agreement.
Key employee status for a Plan Year is determined as of the last day
of the immediately preceding Plan Year, or, as to newly-hired
employees in their first year of employment, at time of hire based on
current base rate of pay. Key employees, for all Plan purposes,
include only elected officers of the Company and other highly
compensated employees of an Employer who have Compensation in a Plan
Year equal to or greater than the indexed amount described in Code
Section 414(q)(1)(c). A Participant who ceases to be a nonemployee
director or a key employee shall cease making deferrals as of the
first day of the Plan Year following such loss of eligibility, but
shall remain an inactive Participant until all amounts due such person
under the Plan have been distributed in full.
2.20 "Plan Year" means the fiscal year of the Company.
2.21 "Retainer Fee" means those fees paid by the Company to
nonemployee directors for services rendered on the Board or any
committee of the Board, including attendance fees and fees for serving
as committee chair. Any Retainer Fee payable for services during a
month is deemed to accrue to the nonemployee director on the first day
of such month for Plan purposes.
2.22 "Rule 16b-3" means Rule 16b-3 of the General Rules and
Regulations under the Exchange Act as promulgated by the Securities
Exchange Commission or its successor, as amended and in effect from
time to time.
2.23 "Transfer Election Form" means a valid transfer
election form (in the form approved by the Administrator) properly
completed and signed by a Participant who wishes to transfer funds
from one investment Subaccount to another.
SECTION 3. AGREEMENTS AND ELECTIONS TO DEFER
3.1 Each nonemployee director and key employee as of
July 3, 1993 is initially eligible to defer Compensation accruing on
and after August 1, 1993, provided such Participant's Initial
Agreement Date is before that date. Thereafter, such persons shall be
eligible to commence deferrals only on the first day of any subsequent
Plan Year provided their Initial Agreement Date is before such date.
3.2 Each new nonemployee director and new key employee, on
and after July 4, 1993, shall be entitled to defer Compensation
accruing on and after the first day of the month following his Initial
Agreement Date, provided such Initial Agreement Date is not more than
thirty (30) days after the Date such person initially becomes eligible
under the Plan. Thereafter, such persons shall be eligible to
commence deferrals only as of the first day of any subsequent Plan
Year provided their Initial Agreement Date is before such date.
3.3 A Participant has no further right to defer
Compensation under the Plan after termination of service to the
Company as a nonemployee director, or after termination of employment
in the case of all other Participants, or, if earlier, upon receipt of
written notice from the Administrator of revocation of an employee's
status as a key employee. Such revocations by the Administrator are
effective only upon the first day of the Plan Year following the date
that the employee is provided such written notice. If a Participant
terminates service with the Employer and subsequently returns to
service, he shall be treated as a new employee (or director if
applicable) for all Plan purposes.
3.4 A nonemployee director Participant may make a deferral
election with respect to all or part of his Compensation, in
increments of five percent (5%). A key employee Participant may make
separate deferral elections, in whole percentages, with respect to
regular pay and incentive bonuses. Deferral elections shall not
exceed forty percent (40%) of regular pay for any Plan Year and
deferral elections with regard to incentive bonuses are not subject to
a percentage maximum; provided, however, that the maximum amount of
Compensation of a key employee Participant for any Plan Year which may
be considered for purposes of determining the Employer contribution
authorized by Section 7.1 shall not exceed twenty-five percent (25%)
for any Plan Year. Deferral elections remain in effect from year to
year until modified or revoked in accordance with Plan rules.
3.5 Each Participant shall designate on his Initial
Agreement the following information:
a) the percentage of Compensation to be deferred;
b) the Subaccounts to which the deferred amounts are to be
allocated;
c) the Distribution Date;
d) whether distributions are to be in a lump sum, in
installments, or a combination thereof; and;
e) the Participant's Beneficiaries.
Persons subject to Section 16 of the Exchange Act shall be afforded a
further opportunity to determine in advance whether applicable
withholding requirements on amounts distributed from Subaccount A are
to be satisfied by an Employer through withholding of shares of
Manitowoc Stock or whether the Participant will provide cash from
other sources for this purpose.
3.6 A Participant may increase the deferral amount
specified in his Initial Agreement by completing and executing a
Modified Agreement and submitting it to the Administrator. Such
Modified Agreement shall be effective with respect to Compensation
accruing on and after the first day of the Plan Year beginning after
the Date of the Modified Agreement.
3.7 A Participant may reduce, or completely revoke, his
deferral election by completing and executing a Modified Agreement and
submitting it to the Administrator. Such Modified Agreement shall be
effective with respect to Compensation accruing on and after the first
day of the Plan Year beginning after the Date of the Modified
Agreement; provided, however, that the effective date of such an
election shall be the first day of the month following the Date of the
Modified Agreement if the Participant establishes to the Administrator
that the reason for the reduction/revocation election is an
unanticipated event or events beyond the control of the Participant
that would result in severe financial hardship to the Participant if
the reduction/revocation is not permitted. In the event that the
Administrator allows a Participant to reduce or cease making deferral
contributions under the Plan other than on the first day of a Plan
Year, the Participant shall forfeit any Employer Contributions to
which his Account would otherwise be entitled for the Plan Year in
which such reduction or revocation occurred.
3.8 A Participant shall be permitted at any time to modify
his Beneficiary election by completing and executing a revised
Beneficiary designation and submitting it to the Administrator.
SECTION 4. INVESTMENT DIRECTIONS
4.1 In connection with his Initial Agreement and
thereafter, from time to time as determined by the Participant (or a
Beneficiary after the Participant's death), each Participant shall
provide written investment directions indicating the portion of such
Participant's deferred amount, including for key employees any
Employer contribution, that is to be allocated to Subaccount A or
Subaccount B (as such terms are hereinafter defined in Section 6.5) of
the Participant's Account. Any apportionment of newly deposited funds
to Subaccounts shall be in ten percent (10%) increments.
4.2 An investment direction contained in an Initial
Agreement and any Investment Election Change Form shall become
effective on the first day of the month following the Initial
Agreement Date or the Investment Election Change Date.
4.3 Subject to the restrictions in Section 4.4, below, a
Participant (or a Beneficiary after the Participant's death) may
transfer to one or more different Subaccounts all or a part (not less
than ten percent (10%)) of the amounts credited to a Subaccount by
completing and executing a Transfer Election Form and submitting it to
the Administrator. Such transfers among Subaccounts shall become
effective on the first day of the calendar month following the
Transfer Election Date.
4.4 A Participant who is subject to Section 16 of the
Exchange Act may make transfers of existing Account balances into or
out of Subaccount A only if the transfer is effected pursuant to an
election made at least six (6) months after the date of the
Participant's most recent opposite-way election making a transfer of
existing Account balances out of or into Subaccount A or existing
account balances out of or into the Company stock account under the
RSVP Plan or any other Company plan.
SECTION 5. DISTRIBUTIONS.
5.1 Each Participant shall designate on his Initial
Agreement one of the following dates as a Distribution Date with
respect to amounts credited to his Account thereafter.
a) the first day of the calendar month following the date of the
Participant's death.
b) the first day of the calendar month following the date of the
Participant's Disability.
c) the first day of the calendar month following the date of
termination of the Participant's service as a member of the
Board if the Participant is a nonemployee director; or, if the
Participant is an employee of an Employer, the first day of
the calendar month following the date of termination of the
Participant's employment with the Employer.
d) the first day of a calendar month specified by the
Participant.
e) the earliest to occur of a, b, c, or d, or any combination of
such options.
5.2 A Participant shall direct on his Initial Agreement
whether distributions from his Account, or separately as to each
Subaccount, are to be made in (i) a lump sum or (ii) no more than one-
hundred eighty (180) monthly, sixty (60) quarterly, or fifteen (15)
annual installments. Each installment shall be determined by dividing
the Account (or Subaccount, if applicable) balance by the number of
remaining installments. If a Participant receives a distribution on
an installment basis, amounts remaining in his Account (or Subaccount,
if applicable) before payment in full is completed shall continue to
accrue earnings and incur losses in accordance with the terms of the
Plan. Except as provided in Section 5.3, all distributions shall be
made to the Participant.
5.3 If the Distribution Date is the first day of the month
following the Participant's death or a fixed date which in fact occurs
after the Participant's death or if at the time of death the
Participant was receiving distributions in installments, the balance
remaining in the Participant's Account shall be payable to his
Beneficiary. Upon the death of a Beneficiary who is receiving
distributions in installments, the balance remaining in the Account of
the Beneficiary shall be payable to the estate of the Beneficiary.
5.4 All distributions to Beneficiaries shall be in a lump
sum except when the Distribution Date is the first day of the month
following the Participant's death and the Agreement specifies
installment payments to the Beneficiary.
5.5 All distributions from Subaccount A shall be made in
shares of Manitowoc Stock except that cash shall be distributed in
lieu of fractional shares. Distributions from any other Subaccount
shall be paid in cash. Unless a Participant has specified different
distribution methods as to separate Subaccounts, or in the case of
extraordinary distributions as described below, distributions will be
deemed to be made from each Subaccount pro rata.
5.6 A Participant may modify his election as to
Distribution Date and distribution form (to Participant and/or
Beneficiary) with respect to Compensation accruing in subsequent Plan
Years by completing and executing a Modified Agreement and submitting
it to the Administrator. A Participant may make similar modifications
and/or specify the maximum dollar amount to be distributed to the
Participant during any calendar year commencing prior to the
Participant's termination of employment with an Employer, with respect
to the Participant's accumulated Account, by completing and executing
a Modified Agreement and submitting it to the Administrator by no
later than the close of the calendar year preceding the calendar year
in which distributions to the Participant hereunder would otherwise
commence. No more than one modification under each of the two
preceding sentences shall be permitted unless the Administrator
determines that a greater number of modifications shall be made
uniformly available to all Participants on a prospective only basis.
5.7 Notwithstanding the foregoing, a Participant (or
Beneficiary after the death of the Participant) may request an
extraordinary distribution of all or part of the amount credited to
his Account because of hardship. A distribution shall be deemed to be
because of hardship if such distribution is necessary due to
unanticipated events beyond the control of the Participant that would
result in severe financial hardship to the Participant if the
extraordinary distribution is not permitted.
5.8 A request for an extraordinary distribution shall be
made by completing and executing an Extraordinary Distribution Request
Form and submitting it to the Administrator. All extraordinary
distributions shall be subject to approval by the Board.
5.9 The Extraordinary Distribution Request Form shall
indicate.
(a) the amount to be distributed from the Account;
(b) the Subaccount(s) from which the distribution is to be made;
(c) the hardship requiring the distribution.
The amount of any extraordinary distribution shall not exceed the
amount determined by the Board to be required to meet the hardship.
5.10 An extraordinary distribution shall be made with
respect to amounts credited to all Subaccounts on the first day of the
calendar month next following approval of the extraordinary
distribution request by the Board.
5.11 Notwithstanding the foregoing, the Administrator may
adopt any additional rules and modify existing Plan rules and
procedures, as necessary, to assure compliance with the insider
trading liability rules under Section 16 of the Exchange Act, as
amended and revised, and as in effect from time to time.
5.12 Any remaining balance in a Participant's Account shall
be distributed in a single lump sum amount to the Participant, or his
Beneficiary if applicable, upon the occurrence of a Change in Control
of the Company. Such distribution shall occur not later than thirty
(30) days following the date on which the Change in Control of the
Company occurred and shall include the accelerated distribution of any
installment payments otherwise to be paid.
SECTION 6. ACCOUNTS AND SUBACCOUNTS.
6.1 The Employer shall establish an Account, with one or
more Subaccounts, on its books for each Participant as specified by
the Participant in his Agreement and shall credit to each such
Subaccount any amounts deferred to such Subaccount by the Participant
under the Plan, including for key employees any Employer Contribution
allocable to the Account. Such credits for deferred Compensation are
to be made within a reasonable time (not to exceed thirty (30) days)
following the time that the deferred Compensation, but for the
Participant's deferral election, would otherwise have been paid or
made available to the Participant. The credits for Employer
Contributions, if any, shall be made as provided in Section 7. The
Employer shall deduct amounts it is required to withhold on the
deferred Compensation at the time it is credited to a Participant's
Account, under any state, federal, or local law for payroll or other
taxes or charges, from the Participant's Compensation which is not
deferred, to the maximum extent possible, before reducing the amount
of the Participant's deferrals.
6.2 The Accounts of Participants in the Plan are
immediately vested and nonforfeitable.
6.3 Subaccounts established for Participants shall be
deemed to be fully invested at all times in the investment option
assigned to the Subaccount, as such designations may be revised from
time to time in accordance with Section 6.4, below. The Employer
shall separately account for credited amounts as units of the
designated investment vehicle having the value attributable to units
of the investment option at all times, taking into account
reinvestment of all dividends pertaining to such investment, but
without adjustment for any income tax consequences attributable to
deemed Employer ownership of such investments.
6.4 The Administrator shall provide to each Participant,
not less frequently than semiannually, a statement with respect to
each of his Subaccounts in such form as the Administrator determines
to be appropriate, setting forth credited amounts added during the
reporting period, any units of each investment option attributable to
each Subaccount and their current value, amounts distributed from each
Subaccount to the Participant since the last report, the current
balance to the credit of such Participant in each Subaccount, and
other appropriate information.
6.5 The Subaccounts available under the Plan are as set
forth below.
Subaccount A. A bookkeeping account whose value shall be based
on investments in Manitowoc Stock.
Subaccount B. A bookkeeping account whose value shall be based
on investments in the Fidelity Investments Balanced Fund Mutual
Fund.
The Administrator shall, from time to time, review the investment
options available under the Plan and may, on a prospective basis,
eliminate, modify, or otherwise change such investment options,
provided, however, that no fewer than two (2) investment options shall
at all times be made available under the Plan including Manitowoc
Stock and one balanced mutual fund.
SECTION 7. EMPLOYER CONTRIBUTIONS.
7.1 The Employer shall credit to the Accounts of key
employee Participants, in accordance with their investment directions
on file with the Plan, an Employer Contribution equal to the amount of
deferred compensation of a key employee for a Plan Year multiplied by
the rate, determined as a percentage of eligible compensation, of
fixed and variable profit sharing contributions plus one percent (1%)
that the Participant has received from his Employer for the Plan Year
under the RSVP Plan, subject to the restrictions of Section 3.7 and
Section 3.4. If the Participant is not a participant in the RSVP
Plan, the amount of Employer contribution made on behalf of the
Participant shall be determined in a similar manner but with regard to
the qualified defined contribution retirement program in which the
Participant does participate, as determined by the Administrator.
7.2 Such Employer Contribution shall be credited to the
Account of the eligible Participant within a reasonable time (not to
exceed thirty (30) days) following the time the Employer deposits its
contributions to the RSVP Plan.
SECTION 8. MANITOWOC STOCK.
8.1 The amount of Manitowoc Stock which may be allocated to
Participants' Accounts under the Plan is determined by the amount of
Compensation deferred under the Plan and the investment directions
provided by Participants. In the event of any merger, share exchange,
reorganization, consolidation, recapitalization, stock dividend, stock
split or other change in corporate structure affecting Manitowoc
Stock, appropriate adjustments shall be made to the units credited to
Subaccount A for each Participant, except that any such adjustments to
units credited to Subaccount A for each Participant subject to Section
16 shall be only such as is necessary to maintain the proportionate
interest of such Participant and preserve, without exceeding, the
value reflected by such Participant's Subaccount A.
8.2 Plan record keeping pertaining to Manitowoc Stock shall
be based on the fair market value of Manitowoc Stock. Fair market
value per share of Manitowoc Stock on any given date is defined for
Plan purposes as the value, as determined by the Administrator, at
which shares were traded on that date in representative trades
reported in the principal consolidated transaction reporting system
with respect to securities listed or admitted to trading on The New
York Stock Exchange on such date or, if no Manitowoc Stock is traded
on such date, the most recent date on which Manitowoc Stock was
traded.
8.3 Participants shall have no rights as a stockholder
pertaining to Manitowoc Stock units credited to their Plan Accounts.
No Manitowoc Stock unit nor any right or interest of a Participant
under the Plan in any Manitowoc Stock unit may be assigned,
encumbered, or transferred, except by will or the laws of descent and
distribution. The rights of a Participant hereunder with respect to
any Manitowoc Stock unit are exercisable during the Participant's
lifetime only by him or his guardian or legal representative.
8.4 Any shares of Manitowoc Stock distributed to
Participants under the Plan shall be subject to such stock transfer
orders and other restrictions as the Administrator may deem advisable
under the rules, regulations and other requirements of the Company,
any stock exchange upon which Manitowoc Stock is then listed and any
applicable Federal, state or foreign securities law, and the
Administrator may cause a legend or legends to be put on any such
certificates to make appropriate reference to such restrictions.
SECTION 9. GENERAL PROVISIONS.
9.1 The Administrator shall administer and interpret the
Plan, and supervise preparation of Agreements, forms, and any
amendments thereto. Interpretation of the Plan shall be within the
sole discretion of the Administrator and shall be final and binding
upon each Participant and Beneficiary. The Administrator may adopt
and modify rules and regulations relating to the Plan as it deems
necessary or advisable for the administration of the Plan. If the
Administrator shall also be a Participant or Beneficiary, any
determinations affecting such person's participation in the Plan which
would otherwise be made by the Administrator shall be made by the
Board or its delegate for this purpose. If at any time the
Administrator is not composed of at least two "Non-Employee Directors"
within the meaning of Rule 16b-3, then all determinations affecting
participation by persons subject to Section 16 of the Exchange Act
shall be made by the Board. Headings are given to the sections of the
Plan solely as a convenience to facilitate reference. The reference
to any statute, regulation, or other provision of law shall be
construed to refer to any amendment to or successor of such provision
of law. With regard to persons subject to Section 16 of the Exchange
Act, transactions under the Plan are intended to comply with all
applicable conditions of Rule 16b-3 or its successor under the
Exchange Act. The Plan shall be construed so that transactions under
the Plan will be exempt from Section 16 of the Exchange Act pursuant
to regulations and interpretations issued from time to time by the
Securities and Exchange Commission.
9.2 The right of the Participant or his Beneficiary to
receive a distribution hereunder shall be an unsecured claim against
the general assets of the Company or any Employer and neither the
Participant nor any Beneficiary shall have any rights in or against
any amount credited to his Account or any other specific assets of the
Company or any Employer. The right of a Participant or Beneficiary to
the payment of benefits under this Plan shall not be assigned,
encumbered, or transferred, except by will or the laws of descent and
distribution. The rights of a Participant hereunder are exercisable
during the Participant's lifetime only by him or his guardian or legal
representative.
9.3 This Plan is unfunded and is maintained by Employers
primarily for the purpose of providing deferred compensation for
nonemployee directors of the Company and a select group of management
and highly compensated employees. Nothing contained in this Plan and
no action taken pursuant to its terms shall create or be construed to
create a trust of any kind, or a fiduciary relationship between the
Company or any Employer and any Participant or Beneficiary, or any
other person. The Employers may authorize the creation of one or more
trusts or other arrangements to assist the Employers in meeting the
obligations created under the Plan. Any liability to any person with
respect to the Plan shall be based solely upon any contractual
obligations that may be created pursuant to the Plan. No obligation
of an Employer hereunder shall be deemed to be secured by any pledge
of, or other encumbrance on, any property of the Company or any
Employer..
9.4 No later than the date as of which an amount first
becomes includible in the gross income of the Participant for Federal
income tax purposes with respect to any participation under the Plan,
the Participant shall pay to the Employer, or make arrangements
satisfactory to the Employer regarding the payment of, any Federal,
state, local or foreign taxes of any kind required by law to be
withheld with respect to such amount.
9.5 There shall be no time limit on the duration of the
Plan. The Board may, at any time, amend or terminate the Plan without
the consent of the Participants or Beneficiaries, provided, however,
that no amendment or termination may reduce any Account balance
accrued on behalf of a Participant based on deferrals already made, or
divest any Participant of rights to which he would have been entitled
if the Plan had been terminated immediately prior to the effective
date of such amendment. This Section shall not, however, restrict the
right of the Board to cause all Accounts to be distributed in the
event of Plan termination, provided all Participants and Beneficiaries
are treated in a uniform and nondiscriminatory manner in such event.
In addition, no amendment may become effective until stockholder
approval is obtained if the amendment (i) except as expressly provided
in the Plan, materially increases the aggregate number of shares of
Manitowoc Stock that may be allocated in a Plan Year, (ii) materially
increases the benefits accruing to Participants under the Plan or
(iii) materially modifies the eligibility requirements for
participation in the Plan.
9.6 The Plan will become effective on July 4, 1993, subject
to approval by a majority of the votes cast at a duly held meeting of
the Company's stockholders at which a quorum representing a majority
of all outstanding voting stock is, either in person or by proxy,
present.
9.7 Costs of establishing and administering the Plan will
be paid by the Employers in such proportion as determined by the
Treasurer.
9.8 Compensation and Employer Contributions credited to an
Account hereunder shall not be considered "compensation" for the
purpose of computing benefits under any qualified retirement plan
maintained by an Employer, but shall be considered compensation for
welfare benefit plans, such as life and disability insurance programs
sponsored by the Employers.
9.9 If any of the provisions of the Plan shall be held to
be invalid, or shall be determined to be inconsistent with the purpose
of the Plan, the remainder of the Plan shall not be affected thereby.
9.10 This Plan shall be binding upon and inure to the
benefit of the Company and each Employer, their successors and assigns
and the Participants and their heirs, executors, administrators, and
legal representatives.
9.11 This plan shall be construed in accordance with and
governed by the law of the State of Wisconsin to the extent not
preempted by federal law.
3.
EXHIBIT 10.2
1996 10-K
MANAGEMENT INCENTIVE COMPENSATION PLAN
Economic Value Added (EVA) Bonus Plan
As Amended February 18, 1997
ARTICLE I
Statement of Purpose
--------------------
1.1 The purpose of the Plan is to provide a system of incentive
compensation which will promote the maximization of
shareholder value over the long term. In order to align
management incentives with shareholder interests, incentive
compensation will reward the creation of value. This Plan
will tie incentive compensation to Economic Value Added
("EVA") and, thereby, reward management for creating value
and penalize management for destroying value.
1.2 EVA is the performance measure of value creation. EVA
reflects the benefits and costs of capital employment.
Managers create value when they employ capital in an endeavor
that generates a return that exceeds the cost of the capital
employed. Managers destroy value when they employ capital in
an endeavor that generates a return that is less than the
cost of capital employed. By imputing the cost of capital
upon the operating profits generated by a business group, EVA
measures the total value created (or destroyed) by
management.
EVA = (Net Operating Profit After Tax - Capital Charge)
1.3 Each Plan Participant is placed in a classification. Each
classification has a prescribed target bonus. The bonus
earned in any one year is the result of multiplying the
Actual Bonus Percentage times the Participant's base pay.
Bonuses that fall within a pre-specified range will be fully
paid out. Positive and negative bonuses falling outside this
range are banked forward in the Participant's Bonus Bank,
with one-third of the net positive balance paid out each year
in cash.
ARTICLE II
Definition of EVA and the Components of EVA
-------------------------------------------
Unless the context provides a different meaning, the
following terms shall have the following meanings.
2.1 "Participating Group" means a business division or group of
business divisions which are uniquely identified for the
purpose of calculating EVA and EVA based bonus awards. Some
Participants' awards may be a mixture of two different
Participating Groups.
For the purpose of this plan, the Participating Groups are listed
on Exhibit C.
2.2 "Capital" means the net investment employed in the operations
of each Participating Group. The components of Capital are
as follows:
Gross Accounts Receivable (including trade A/R
from another Manitowoc unit)
Plus: FIFO Inventory
Plus: Other Current Assets
Less: Non-Interest Bearing Current Liabilities
(NIBCL's - See Note 1)
Plus: Net PP&E
Plus: Other Operating Assets
Plus: Capitalized Research & Development
Plus: Goodwill acquired after July 3, 1993
Plus: Accumulated Amortization on Goodwill acquired
after July 3, 1993
Plus (Less): Special Items (one-time)
--------------------------------------
Equals: Capital
Notes: (1) NIBCL's include trade A/P to another Manitowoc
unit, but do not include the contingent liability
associated with Bonus Banks.
2.3 Each component of Capital will be measured by computing an
average balance based on the ending monthly balance for the
twelve months of the Fiscal Year.
2.4 "Cost of Capital" or "C*" means the weighted average of the
after tax cost of debt and equity for the year in question.
The Cost of Capital will be reviewed annually and revised if
it has changed significantly. Calculations will be carried
to one decimal point.
The cost of capital for the initial year is 12.6%. See
Exhibit A. In subsequent plan years the methodology for the
calculation of the Cost of Capital will be:
a) Cost of Equity = Risk Free Rate + (Beta x Market Risk
Premium)
b) Debt Cost of Capital = Debt Yield x (1 - Tax Rate)
c) The weighted average of the Cost of Equity and the Debt
Cost of Capital is determined by reference to the actual debt
to capital ratio where the Risk Free Rate is the average
daily closing yield rate on 30 year U.S. Government Bonds for
the month of October immediately preceding the Plan Year, the
BETA is determined by reference to the most recently
available Value Line report on the Company closest to, but
before October 31, the Market Risk Premium is 6%, the Debt
Yield is the weighted average yield on the Company's long
term obligations for the trailing 12 month period ending
October 31 of the year immediately preceding the Plan Year,
and the tax rate is 39% for U.S. Companies, and the full
statutory rate of the country where a foreign division or
subsidiary is based.
d) Short-term debt is to be treated as long-term for
purposes of computing the cost of capital.
2.5 "Capital Charge" means the deemed opportunity cost of
employing Capital in the business of each Participating
Group. The Capital Charge is computed as follows:
Capital Charge = Capital x Cost of Capital (C*)
2.6 "Net Operating Profit After Tax" or "NOPAT"
"NOPAT" means the after tax cash earnings attributable to the
capital employed in the Participating Group for the year in
question. The components of NOPAT are as follows:
Operating Earnings
Plus: Increase (Decrease) in Capitalized R & D (See
Note 1)
Plus: Increase (Decrease) in Bad Debt Reserve
Plus: Increase (Decrease) in Inventory Reserves
Plus: Amortization of Goodwill acquired after July 3,
1993
Less: Other Expense (Excluding interest on debt)
Plus: Other Income (Excluding investment income)
Equals: Net Operating Profit Before Tax
Less: Taxes (See Note 2)
-----------------------------
Equals: Net Operating Profit After Tax
2.7 "Economic Value Added" or "EVA" means the NOPAT that remains
after subtracting the Capital Charge, expressed as follows:
NOPAT
Less: Capital Charge
------------------------
Equals: EVA
EVA may be positive or negative.
ARTICLE III
Definition and Computation of Target Bonus Value
------------------------------------------------
3.1 "Actual EVA" means the EVA as calculated for each
Participating Group for the year in question.
3.2 "Target EVA" means the level of EVA that is expected in order
for the Participating Group to receive the Target Bonus
Value.
The Target EVA for the first year is set at the expected EVA for
the year prior to the first year of the plan after adjusting
for inventory write-offs, Manitex relocation, FAS 106 and 109
and the $5 million product liability settlement (except for
$1.2 million). After the first year, the Base-Line EVA is
revised according to the following formula:
(Last Year's Actual EVA + Last Year's Target EVA) Expected
Target EVA = ------------------------------------------------- + Improvement
2 in EVA
"Expected Improvement in EVA" means the constant EVA improvement
that is added to shift the target up each year. This is
determined by the expected growth in EVA per year.
See Exhibit B for the Expected Improvement for each Participating Group.
3.3 "Target Bonus Value" means the "Target Bonus Percentage"
times a Participant's base pay.
3.4 "Target Bonus Percentage" is determined by a Participant's
classification as shown on Exhibit B.
3.5 "Actual Bonus Value" means the bonus earned * by a
Participant and is computed as the Actual Bonus Percentage
times a Participant's base pay.
3.6 "Actual Bonus Percentage" is determined by multiplying the
Target Bonus Percentage by the Bonus Performance Value.
3.7 "Bonus Performance Value" means the difference between the
Actual EVA and the Target EVA divided by the Leverage Factor
plus 1.0.
[Actual EVA - Target EVA]
--------------------------
Bonus Performance Value = [ Leverage Factor ] + 1
3.8 "Leverage Factor" is the negative (positive) deviation from
Target EVA necessary before a zero (two times Target) bonus
is earned. See Exhibit C for the Leverage Factor of each
Participating Group.
3.9 A Participant's classification is determined by each business
unit manager. They shall generally be direct reports and are
subject to approval by the CEO and the Compensation Committee
of the Board of Directors.
*Note: A portion of the Actual Bonus Value may be placed in the
Participants' Bonus Bank. See Article IV for details on the
Bonus Bank.
ARTICLE IV
Description of Bonus Banks
--------------------------
4.1 Establishment of a Bonus Bank. To encourage a long-term
commitment by Participants to the Company, a portion of
exceptional bonuses (amounts above Target and negative
bonuses) shall be credited to "at risk" deferred accounts
("Bonus Banks"), with the level of payout contingent on
sustained high performance and improvements and continued
employment as provided herein.
4.2 Although a Bonus Bank may, as a result of negative EVA, have
a deficit, no Plan Participant shall be required, at any
time, to reimburse his/her Bonus Bank.
4.3 "Bonus Bank" means, with respect to each Participant, a
bookkeeping record of an account to which amounts are
credited, or debited as the case may be, from time to time
under the Plan and from which bonus payments to such
Participant are debited.
4.4 "Bank Balance" means, with respect to each Participant, a
bookkeeping record of the net balance of the amounts credited
to and debited against such Participant's Bonus Bank. A
Participant's Bank Balance shall initially be equal to zero.
4.5 Payout Rule: If the Bank Balance entering the Plan Year is
zero or positive, then
1) Pay any positive bonus earned up to the "Target
Bonus Value",
2) Add any unpaid portion of the bonus earned
(including negative bonuses) to the Bonus
Bank,
3) Pay out 1/3 of any Positive Bank Balance
4) Carry the remaining Bank Balance forward to the next
year.
If the Bank Balance entering the Plan Year is negative, then
1) Pay 1/3 of the positive bonus earned up to the
"Target Bonus Value",
2) Add any unpaid portion of the bonus earned
(including negative bonuses) to the Bonus
Bank,
3) Pay out 1/3 of any Positive Bank Balance,
4) Carry the remaining Bank Balance forward to the next
year.
4.6 A Participant may elect to withdraw, in cash, all or a
portion of the Bank Balance. The amount available for such
withdrawal is the lesser of the ending Bank Balance of the
applicable year or the Bank Balance at the end of the third
prior year.
ARTICLE V
Plan Participation, Transfers and Terminations
----------------------------------------------
5.1 Participant Group. The Committee will have sole discretion
in determining who shall participate in the EVA Bonus Plan.
Employees designated for Plan participation by the Committee
shall be management or highly compensated employees.
5.2 Transfers. A Participant who transfers his employment from
one Participating Unit of the Company to another shall retain
his Bonus Bank and will be eligible to receive future EVA
Plan Awards in accordance with the provisions of the EVA
Plan. Any positive Bonus Bank balance would payout in full
as soon as is practical.
5.3 Retirement or Disability. A Participant who terminates
employment with the Company, at or after age fifty-five, for
any reason ("retirement"), or suffers a "disability," as such
term is defined in the Company's long-term disability
benefits program, while in the Company's employ shall be
eligible to receive the balance of their Bonus Bank. In the
case of retirement, the Participant will receive their
balance over three years subject to reduction if the Actual
Bonus Value is negative in any of the three years subsequent
to the year of retirement. In the case of disability while
in the Company's employ, the Participant will receive their
balance as soon as practical after qualifying for benefit
payments under the Company's long-term disability benefits
program.
5.4 Involuntary Termination Without Cause or Death. A
Participant who is Terminated without cause or who dies shall
receive any positive Bonus Bank balance. Such payments will
be made as soon as is practical.
5.5 Voluntary Termination. In the event that a Participant
voluntarily terminates employment with the Company, the right
of the Participant to their Bonus Bank shall be forfeited
unless a different determination is made by the Committee.
5.6 Involuntary Termination for Cause. In the event of
termination of employment for cause, the right of the
Participant to the Bonus Bank shall be determined by the
Committee.
"Cause" shall mean:
(i) any act or acts of the Participant constituting a
felony under the laws of the United States, any
state thereof or any foreign jurisdiction;
(ii) any material breach by the Participant of any
employment agreement with the Company or the
policies of the Company or the willful and
persistent (after written notice to the
Participant) failure or refusal of the Participant
to comply with any lawful directives of the Board;
(iii)a course of conduct amounting to gross
neglect, willful misconduct or dishonesty; or
(iv) any misappropriation of material property of the
Company by the Participant or any misappropriation
of a corporate or business opportunity of the
Company by the Participant.
5.7 Breach of Agreement. Notwithstanding any other provision of
the Plan or any other agreement, in the event that a
Participant shall breach any non-competition agreement with
the Company or breach any agreement with respect to the post-
employment conduct of such Participant, the Bonus Bank held
by such Participant shall be forfeited.
5.8 No Guarantee. Participation in the Plan provides no
guarantee that a payment under the Plan will be paid.
Selection as a Participant is no guarantee that payments
under the plan will be paid or that selection as a
Participant will be made in the subsequent Calendar Year.
ARTICLE VI
General Provisions.
-------------------
6.1 Withholding of Taxes. The Company shall have the right to
withhold the amount of taxes, which in the determination of
the Company, are required to be withheld under law with
respect to any amount due or paid under the Plan.
6.2 Expenses. All expenses and costs in connection with the
adoption and administration of the plan shall be borne by the
Company.
6.3 No prior Right or Offer. Except and until expressly granted
pursuant to the Plan, nothing in the Plan shall be deemed to
give any employee any contractual or other right to
participate in the benefits of the Plan.
6.4 Claims for Benefits. In the event a Participant (a
"claimant") desires to make a claim with respect to any of
the benefits provided hereunder, the claimant shall submit
evidence satisfactory to the Committee of facts establishing
his entitlement to a payment under the Plan. Any claim with
respect to any of the benefits provided under the Plan shall
be made in writing within ninety (90) days of the event which
the claimant asserts entitles him to benefits. Failure by
the claimant to submit his claim within such ninety (90) day
period shall bar the claimant from any claim for benefits
under the Plan.
6.5 In the event that a claim which is made by a claimant is
wholly or partially denied, the claimant will receive from
the Committee a written explanation of the reason for denial
and the claimant or his duly authorized representative may
appeal the denial of the claim to the Committee at any time
within ninety (90) days after the receipt by the claimant of
written notice from the Committee of the denial of the claim.
In connection therewith, the claimant or his duly authorized
representative may request a review of the denied claim; may
review pertinent documents; and may submit issues and
comments in writing. Upon receipt of an appeal, the
Committee shall make a decision with respect to the appeal
and, not later than sixty (60) days after receipt of a
request for review, shall furnish the claimant with a
decision on review in writing, including the specific reasons
for the decision written in a manner calculated to be
understood by the claimant, as well as specific reference to
the pertinent provisions of the Plan upon which the decision
is based. In reaching its decision, the Committee shall have
complete discretionary authority to determine all questions
arising in the interpretation and administration of the Plan,
and to construe the terms of the Plan, including any doubtful
or disputed terms and the eligibility of a Participant for
benefits.
6.6 Action Taken in Good Faith; Indemnification. The Committee
may employ attorneys, consultants, accountants or other
persons and the Company's directors and officers shall be
entitled to rely upon the advice, opinions or valuations of
any such persons. All actions taken and all interpretations
and determinations made by the Committee in good faith shall
be final and binding upon all employees who have received
awards, the Company and all other interested parties. No
member of the Committee, nor any officer, director, employee
or representative of the Company, or any of its affiliates
acting on behalf of or in conjunction with the Committee,
shall be personally liable for any action, determination, or
interpretation, whether of commission or omission, taken or
made with respect to the Plan, except in circumstances
involving actual bad faith or willful misconduct. In
addition to such other rights of indemnification as they may
have as members of the Board, as members of the Committee or
as officers or employees of the Company, all members of the
Committee and any officer, employee or representative of the
Company or any of its subsidiaries acting on their behalf
shall be fully indemnified and protected by the Company with
respect to any such action, determination or interpretation
against the reasonable expenses, including attorneys' fees
actually and necessarily incurred, in connection with the
defense of any civil or criminal action, suit or proceeding,
or in connection with any appeal therein, to which they or
any of them may be a party by reason of any action taken or
failure to act under or in connection with the Plan or an
award granted thereunder, and against all amounts paid by
them in settlement thereof (provided such settlement is
approved by independent legal counsel selected by Company )
or paid by them in satisfaction of a judgment in any action,
suit or proceeding, except in relation to matters as to which
it shall be adjudged in such action, suit or proceeding that
such person claiming indemnification shall in writing offer
the Company the opportunity, at its own expense, to handle
and defend the same. Expenses (including attorneys' fees)
incurred in defending a civil or criminal action, suit or
proceeding shall be paid by the Company in advance of the
final disposition of such action, suit or proceeding if such
person claiming indemnification is entitled to be indemnified
as provided in this Section.
6.7 Rights Personal to Employee. Any rights provided to an
employee under the Plan shall be personal to such employee,
shall not be transferable (except by will or pursuant to the
laws of descent or distribution), and shall be exercisable,
during his lifetime, only by such employee.
6.8 Upon termination of the Plan or suspension for a period of
more than 90 days, the Bank Balance of each Participant shall
be distributed as soon as practicable but in no event later
than 90 days from such event. The Committee, in its sole
discretion, may accelerate distribution of the Bank Balance,
in whole or in part, at any time without penalty.
6.9 Non-Allocation of Award. In the event of a suspension of the
Plan in any Plan Year, as provided herein at Article VIII,
Section 8, the Current Bonus for the subject Plan year shall
be deemed forfeited and no portion thereof shall be allocated
to Participants. Any such forfeiture shall not affect the
calculation of EVA in any subsequent year.
ARTICLE VII
Limitations
-----------
7.1 No Continued Employment. Nothing contained herein shall
provide any employee with any right to continued employment
or in any way abridge the rights of the Company and its
Participating Units to determine the terms and conditions of
employment and whether to terminate employment of any
employee.
7.2 No Vested Rights. Except as otherwise provided herein, no
employee or other person shall have any claim of right
(legal, equitable, or otherwise)to any award, allocation, or
distribution or any right, title, or vested interest in any
amounts in his Bonus Bank and no officer or employee of the
Company or any Participating Group or any other person shall
have any authority to make representations or agreements to
the contrary. No interest conferred herein to a Participant
shall be assignable or subject to claim by a Participant's
creditors. The right of the Participant to receive a
distribution hereunder shall be an unsecured claim against
the general assets of the Company and the Participant shall
have no rights in or against any specific assets of the
Company as the result of participation hereunder.
7.3 Not Part of Other Benefits. The benefits provided in this
plan shall not be deemed a part of any other benefit provided
by the Company to its employees. The Company assumes no
obligation to plan Participants except as specified herein.
This is a complete statement, along with the Schedules and
Appendices attached hereto, of the terms and conditions of
the plan.
7.4 Other Plans. Nothing contained herein shall limit the
Company or the Compensation Committee's power to grant
bonuses to employees of the Company, whether or not
Participants in this plan.
7.5 Limitations. Neither the establishment of the plan or the
grant of an award hereunder shall be deemed to constitute an
express or implied contract of employment for any period of
time or in any way abridge the rights of the Company to
determine the terms and conditions of employment or to
terminate the employment of any employee with or without
cause at any time.
7.6 Unfunded Plan. This Plan is unfunded and is maintained by
the Company in part to provide deferred compensation to a
select group of management and highly compensated employees.
Nothing herein shall create or be construed to create a
trust of any kind, or a fiduciary relationship between the
Company and any Participant.
ARTICLE VIII
Authority
---------
8.1 Compensation Committee Authority. Except as otherwise
expressly provided herein, full power and authority to
interpret and administer this plan shall be vested in the
Compensation Committee. The Compensation Committee may from
time to time make such decisions and adopt such rules and
regulations for implementing the Plan as it deems appropriate
for any Participant under the Plan. Any decision taken by
the Compensation Committee arising out of or in connection
with the construction, ad ministration, interpretation and
effect of the Plan shall be final, conclusive and binding
upon all Partici pants and any person claiming under or
through them.
8.2 Board of Directors Authority. The Board shall be ultimately
responsible for administration of the plan. References made
herein to the "Compensation Committee" assume that the Board
of Directors has created a Compensation Committee to
administer the Plan. In the event a Compensation Committee
is not so designated, the Board shall administer the Plan.
The Board or its Compensation Committee, as appropriate,
shall work with the CEO of the Company in all aspects of the
administration of the Plan.
ARTICLE IX
Notice
------
9.1 Any notice to be given pursuant to the provisions of the Plan
shall be in writing and directed to the appropriate recipient
thereof at his business address or office location.
ARTICLE X
Effective Date
--------------
10.1 This Plan shall be effective as of July 4, 1993.
ARTICLE XI
Amendments
----------
11.1 This Plan may be amended, suspended or terminated at any time
at the sole discretion of the Board upon the recommendation
of the Compensation Committee. Provided, however, that no
such change in the Plan shall be effective to eliminate or
diminish the distribution of any Award that has been
allocated to the Bank of a Participant prior to the date of
such amendment, suspension or termination. Notice of any
such amendment, suspension or termination shall be given
promptly to each Participant.
ARTICLE XII
Applicable Law
--------------
12.1 This Plan shall be construed in accordance with the
provisions of the laws of the State of Wisconsin.
Exhibit A
Calculation of the Cost of Capital
Inputs Variables:
- ----------------
Risk Free Rate = Average Daily closing yield on U.S. Government
30 Yr. Bonds (for the month of October preceding the Plan
Year).
Market Risk Premium = 6.0% (Fixed)
Beta = 0.80 % (Value Line)
Debt/Capital Ratio = Debt as a % of Capital (computed using the
monthly average debt/capital ratio for the trailing 12
month period ending October 31 of the year preceding the
Plan Year)
b = Cost of Debt Capital (Weighted Average Yield on the
Company's Long Term Debt Obligations).
Marginal Tax Rate = 39.0% (Historical Average). However, for
exceptions see 2.4(C)
Calculations:
- ------------
y = Cost of Equity Capital
= Risk Free Rate + (Beta x Market Risk Premium)
Weighted Average Cost of Capital = [Cost of Equity Capital x (1
- Debt/Capital Ratio)] + [Cost of Debt x (Debt/Capital
Ratio) x (1 - Marginal Tax Rate)]
c* = [y x (1 - Debt/Capital)] + [b x (Debt/Capital) x (1 -
Marginal Tax Rate)]
EXHIBIT B
Participant Target Bonus
Classification Percentage
- ----------- ------------
I 60 %
II 50 %
III 35 %
IV 30 %
V 25 %
VI 20 %
VII 15 %
VIII 10 %
IX 7 %
X 5 %
XI 2 %
EXHIBIT C
Expected
Participation Improvement Leverage
Groups in EVA Factor
- --------------- -------------- -----------
Manitowoc Equipment Works 500,000 2,000,000
* The Shannon Group 500,000 2,000,000
* Foodservice Group
(The Shannon Group &
Manitowoc Equipment Works) 1,000,000 4,000,000
Manitowoc Engineering Co. 1,000,000 3,000,000
Femco 400,000 600,000
* Re-Manufacturing 50,000 150,000
Manitowoc Europe Ltd. 75,000 225,000
North Central Crane 40,000 120,000
* Manitowoc Engineering Co.
Group, (Manitowoc 1,500,000 4,000,000
Engineering, Manitowoc
Europe Ltd., North Central
Crane, Re-Manufacturing, and
Femco)
West Manitowoc 200,000 350,000
Manitex 500,000 1,000,000
Marine 150,000 750,000
Corporate 1,000,000 7,000,000
EXHIBIT 10.6(b)
1996 10-K
SUPPLEMENTAL RETIREMENT AGREEMENT
-----------------------------------
THIS AGREEMENT, made and entered into as of this 31st day of March,
1996, but effective as of the 2nd day of January, 1995, by and between
The Manitowoc Company, Inc., a Wisconsin corporation (the "Company")
and Robert K. Silva ("Executive").
R E C I T A L S:
-----------------
A. Executive is employed by the Company as its Executive Vice
President and Chief Operating Officer;
B. The Company desires to have the benefit of Executive's
continued loyalty, service and counsel until his retirement; and
C. The parties are entering into this Agreement to provide
Executive with an added incentive to remain with the Company until
completion of FY 1996.
NOW, THEREFORE, for good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereby
agree as follows:
1. Definitions. As used in this Agreement, the following terms
shall have the meanings assigned to them:
(a) "Cause" in connection with the termination by the Company of
the employment of Executive means Executive's persistent
failure to follow the Company's written directives and
policies, or insubordination, willful malfeasance, gross
negligence or acts of dishonesty by Executive.
(b) "Normal Retirement" means the termination of Executive's
employment with the Company for any reason (including by
reason of death), if such termination occurs on or after the
attainment by Executive of age 68.
(c) "Change in Control of the Company" shall have the same meaning
as the phrase "change in control of the Company" in the
Contingent Employment Agreement between the Company and
Executive dated as of December 29, 1988.
(d) "Full Monthly Benefit" means one-twelfth of $125,000.
(e) "Reduced Monthly Benefit" means the Full Monthly Benefit,
reduced by two percent (2%) for each full month by which
Executive's employment with the Company terminates prior to
his attainment of age 68; provided, however, that if the
Company terminates Executive's employment for other than
Cause prior to attainment of age 68, but on or after a
Change in Control of the Company, the Reduced Monthly
Benefit shall be equal to 70% of the Full Monthly Benefit.
(f) "Early Retirement" means the voluntary termination of
Executive's employment with the Company, if such termination
occurs prior to the attainment by Executive of age 68 and
prior to a Change in Control of the Company.
2. Normal Retirement. Upon Normal Retirement, Executive shall be
paid the Full Monthly Benefit, in the form provided in Section 6
hereof.
3. Early Retirement. Upon Early Retirement, Executive will be
paid the Reduced Monthly Benefit, in the form provided in Section 6
hereof.
4. Termination of Employment Prior to Age 68. Upon the death of
Executive prior to his attainment of age 68, or upon termination by
the Company of Executive's employment for other than Cause prior to
his attainment of age 68, Executive shall be paid the Reduced Monthly
Benefit, in the form provided in Section 6 hereof.
5. Change in Control. Upon termination by the Company of
Executive's employment for other than Cause prior to his attainment of
age 68 but on or after a Change in Control, Executive shall be paid
the Reduced Monthly Benefit, in the form provided in Section 6 hereof.
6. Form of Benefit Payments. The Full Monthly Benefit or the
Reduced Monthly Benefit, as applicable, shall be payable to Executive
pursuant to Section 2, 3, 4, or 5 hereof in the form of a joint and
100% survivor annuity, such that the Full Monthly Benefit or Reduced
Monthly Benefit, as applicable, will be payable to Executive during
his lifetime, and upon Executive's death to his spouse for her
lifetime if she survives him, commencing on the first day of the first
full calendar month following Executive's termination of employment
and on the first day of each succeeding calendar month. No actuarial
reduction shall be made to the Full Monthly Benefit or Reduced Monthly
Benefit by virtue of the joint and 100% survivor feature.
7. Rabbi Trust. At any time after there has occurred an event
which entitles Executive to begin to receive payments pursuant to the
joint and 100% survivor annuity referred to in Section 6, Executive
may require the Company to establish a so-called "rabbi trust" for the
purpose of providing additional assurance to Executive that the
Company's obligations hereunder will be met. Such trust shall be
established within thirty (30) days following written notice from
Executive that he desires to have such trust established. The trustee
of such rabbi trust shall be a bank or trust company located in the
United States. The trust agreement creating such trust shall contain
terms which are customarily associated with such trusts, including
terms to ensure that the Company is treated as the grantor of the
trust for federal income tax purposes. Contemporaneously with the
establishment of such trust, the Company will deposit with the trustee
of such trust an amount equal to the present value of the joint and
100% survivor annuity referred to in Section 6.
8. Actuarial Calculations. Hewitt Associates (or if it is unable
or declines to act, such other nationally recognized benefits
consulting firm as Company may designate) shall calculate the Full
Monthly Benefit or Reduced Monthly Benefit, as applicable and the
present value of such annuity in connection with the establishment of
the rabbi trust referred to in Section 7, and such calculations shall
be binding and conclusive on the parties. In calculating the
foregoing amounts, Hewitt Associates or other benefits consulting firm
shall use an 8% annual interest rate, the 1983 Group Annuity Mortality
Table and such other actuarial assumptions as may be necessary in the
sole discretion of Hewitt Associates or such other benefits consulting
firm.
9. Unfunded Plan. Nothing contained in this Agreement and no
action taken pursuant to its terms shall create or be construed to
create a trust of any kind or any fiduciary relationship between the
Company and Executive or any other person. This Agreement and the
benefits payable hereunder shall at all times be unfunded, and the
rights of Executive or any other person to any payments hereunder
shall be those of an unsecured creditor.
10. Non-alienation. The right of Executive or any other
person to the payment of amounts under this Agreement shall not be
assignable or transferable or subject to any sale, mortgage, lien,
pledge, hypothecation, anticipation, garnishment, attachment,
execution or levy of any kind, whether by operation of law or
otherwise.
11. No Guarantee of Employment. Nothing contained in this
Agreement shall be construed as conferring upon Executive the right to
continue in the employment of the Company.
12. Effect on Other Plans. Unless otherwise required by law,
amounts payable to Executive hereunder shall not constitute
"compensation" for the purpose of computing benefits under any
retirement plans or welfare benefit plans which may be maintained by
the Company for the benefit of Executive, except that Executive shall
not be eligible to participate in the Company Profit Sharing Plan.
13. Limitation on Liability. No member of the Board of
Directors of the Company or any Committee thereof, and no officer,
employee or agent of the Company, shall be liable to Executive or
other person for any action taken or omitted in connection with this
Agreement, unless attributable to such individual's fraud, willful
misconduct or gross negligence.
14. Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the Company and its successors and
assigns, and Executive and his beneficiaries, heirs and legal
representatives.
15. Severability. If any of the provisions of this Agreement
shall be held to be invalid, or shall be determined to be inconsistent
with the purpose of this Agreement, the remainder of this Agreement
shall not be affected thereby.
16. Governing Law. This Agreement shall be construed in
accordance with and governed by the internal laws by the State of
Wisconsin.
17. Complete Agreement. This Agreement constitutes the
complete agreement between the Company and Executive concerning its
subject matter, and may be amended only by a written instrument signed
by each of them. Nothing contained herein affects in any way the
Contingent Employment Agreement between Executive and the Company
dated as of December 29, 1988, which remains in full force and effect.
18. Withholding. The Company shall have the right to deduct
from any payments hereunder any taxes required by law to be withheld.
19. Effectiveness. This Agreement shall not become effective
until it is approved by the Board of Directors of the Company,
notwithstanding the earlier execution by the Company and Executive.
IN WITNESS WHEREOF, the Company and Executive have executed this
Agreement as of the date first written above.
THE MANITOWOC COMPANY, INC.
By: /s/ Fred M. Butler
-----------------------
Fred M. Butler
President & CEO
/s/ Robert K. Silva
-----------------------
Robert K. Silva
EXHIBIT 13
1996 10-K
PORTIONS OF THE 1996 ANNUAL REPORT TO SHAREHOLDERS
OF THE MANITOWOC COMPANY, INC. INCORPORATED
BY REFERENCE
<TABLE>
<CAPTION>
QUARTERLY COMMON STOCK PRICE RANGE
Year Ended Year Ended Transition Period Ended Year Ended
December 31, 1996 December 31, 1995 December 31, 1994 July 2, 1994
------------------ ------------------ ----------------- -----------------
High Low Close High Low Close High Low Close High Low Close
---- ---- ----- ---- ---- ----- ---- ---- ----- ---- --- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1st Quarter $33.25 $27.75 $31.50 $25.00 $21.00 $24.88 $27.00 $24.00 $27.00 $33.25 $30.38 $31.50
2nd Quarter 38.00 31.75 35.88 28.88 24.88 28.88 26.88 21.50 21.63 33.13 31.00 32.25
3rd Quarter 35.75 23.50 32.13 30.00 26.88 29.63 -- -- -- 32.38 27.75 27.75
4th Quarter 43.88 31.50 40.50 30.63 28.13 30.63 -- -- -- 28.25 24.88 25.13
<FN>
- ----------------------------------------------------------------------
The company's common stock is traded on the New York Stock Exchange.
The share prices shown above are not adjusted for the three-for-two stock
split.
</FN>
</TABLE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
Business Description
- --------------------
The Manitowoc Company and its divisions and subsidiaries are market
leaders in their domestic and international businesses. The Foodservice
Equipment Group is one of the largest suppliers of ice cube machines and
walk-in refrigerators/freezers in North America, serving restaurants,
hotels and other institutions. The Cranes and Related Products Group has
a leading market share in lattice-boom crawler cranes (over 150-ton
capacity) in the world, serving heavy-construction crane-rental and
cargo-handling customers. The Marine Group is the leading provider of
ship repair, maintenance and conversion services on the U.S. Great Lakes.
Additional information on these business segments can be found on pages 6
through 17.
Note on Forward-Looking Statements
- -----------------------------------
This report includes forward-looking statements based on management's
current expectations. Reference is made in particular to the decription
of the Company's plans and objectives for future operations, assumptions
underlying such plans and objectives and other forward-looking statements
in this Report. Such forward-looking statements generally are
identifiable by words such as "believes," "intends," "estimates,"
"expects" and similar expressions.
These statements involve a number of risks and uncertainties and
must be qualified by factors that could cause results to be materially
different from what is presented here. This includes the following
factors for each business: Foodservice Equipment - demographic changes
affecting the number of women in the workforce, general population
growth, and household income; serving large restaurant chains as they
expand their global operations; specialty foodservice market growth; and
the demand for equipment for small kiosk-type locations. Cranes and
Related Products - market acceptance of innovative products; cyclicality
in the construction industry; growth in the world market for heavy
cranes; demand for used equipment in developing countries. Marine -
shipping volume fluctuations based on performance of the steel industry;
five-year drydocking schedule; reducing seasonality through non-marine
repair work.
Long-Term Financial Goals
- -------------------------
Manitowoc has established and will work to achieve these goals by the
year 2000: Each business segment must be economic value-added (EVA)
accretive each year. Expand in international markets to generate sales
of $200 million and manufacturing of $75 million outside the United
States. Generate 80% of sales from new products/models acquired or
introduced after 1996. Have all manufacturing operations ISO-certified.
Achieve $800 million in revenues.
Market Conditions/North America
- -------------------------------
North American economic conditions for all three of Manitowoc's
businesses improved again in 1996.
Foodservice Equipment continues to benefit from a number of trends:
growth in the restaurant industry, particularly among high-volume chains;
expansion of fast-food franchises into non-traditional locations, such as
automotive service stations; growth in healthcare facilities; and the
continued recovery of the hotel and lodging industry. These factors
resulted in higher foodservice equipment demand in nearly all North
American markets in 1996. We expect this market will remain fairly
constant into 1997.
Cranes and Related Products improved in 1996 from the anemic market
of earlier years. This business should continue to grow over the next
several years because of the following: increased construction spending
in the United States; the necessary rebuilding of America's infrastructure
(although government funding remains limited); and an aging high-capacity
liftcrane fleet that is becoming technically obsolete.
The 1996 Marine market benefited from near-record levels of shipping
tonnage; the general economic strength of heavy industry and
manufacturing sectors; and the aging of the Great Lakes fleet, which
requires more maintenance and repair. Demand was good at all three ship-
repair facilities: Toledo and Cleveland, Ohio, and Sturgeon Bay,
Wisconsin, during 1996.
Market Conditions/International
- ------------------------------
Manitowoc's international sales increased 11% over 1995 levels, now
reaching about 14% of total revenues.
Foodservice Equipment demand for refrigeration products is strongest
in the Pacific Rim. Orders for refrigeration and ice-making equipment
from hotel and restaurant chains are expected to be robust through the
end of the decade. Manitowoc's strategic alliance and partnership with
Hangzhou Household Electric Appliances in China is expected to help the
company add to its international presence in this part of the world. In
addition, the distribution center in Rotterdam, Holland, nearly tripled
its European ice machine sales in 1996 versus 1995.
Cranes and Related Products continued to see low levels of demand
from European countries in 1996. In addition, the Asian market remained
cost-competitive. Although it saw a 7.1% sales decrease in 1996,
Manitowoc's Aftermarket Group, which refurbishes cranes and sells them
into less-developed countries, helped generate replacement orders for new
cranes in North America.
Marine repair and maintenance revenue is primarily domestic. The
potential of serving Canadian Great Lakes vessels is improving because of
the North American Free Trade Agreement, and U.S. shipyards becoming more
cost-effective in competing with their Canadian counterparts.
Results of Operations
- ---------------------
On August 9, 1994, the board of directors changed the company's fiscal
year-end to December 31 from the Saturday nearest June 30. This resulted
in a transition period from July 3, 1994 through December 31, 1994.
This table summarizes the relationship between components of operations
as a percent of net sales, for the periods indicated.
<TABLE>
<CAPTION>
Transition
Year Year Period Fiscal Year
Ended Ended Ended Ended
Dec. 31, Dec. 31, Dec. 31, July 2,
Percent of Net Sales 1996 1995 1994 1994
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales 100.0 100.0 100.0 100.0
- -------------------------------------------------------------------------------
Cost of sales 73.1 75.9 74.7 75.3
- -------------------------------------------------------------------------------
Gross profit 26.9 24.1 25.3 24.7
- -------------------------------------------------------------------------------
Engineering, selling &
administrative expenses 16.5 16.7 20.8 17.0
- -------------------------------------------------------------------------------
Plant relocation costs 0.2 -- 11.3 --
- -------------------------------------------------------------------------------
Operating income (loss) 10.2 7.4 (6.8) 7.7
- -------------------------------------------------------------------------------
Interest and other (1.7) 0.0 0.1 0.5
- -------------------------------------------------------------------------------
Earnings (loss) before taxes 8.5 7.4 (6.7) 8.2
- -------------------------------------------------------------------------------
Income taxes (benefit) 3.4 2.7 (2.6) 3.1
- -------------------------------------------------------------------------------
Net earnings (loss) 5.1 4.7 (4.1) 5.1
- -------------------------------------------------------------------------------
</TABLE>
Net Sales
- ---------
Consolidated net sales for 1996 rose 59.8% to $500.5 million from $313.1
million in 1995. This resulted from a 112.9% increase in Foodservice
Equipment sales, a 24.0% rise in Crane sales, and 61.5% higher Marine
sales. This strong performance resulted from (in order of decreasing
relative contribution): (1) a full year's performance by The Shannon
Group, Inc., acquired in December 1995; (2) positive market reception of
new and recently introduced crane models; (3) the sale of a self-
unloading barge built for Lafarge Cement Corporation during the Marine
group's off-peak season; (4) significantly higher sales of crane parts;
and (5) record winter fleet activity at our ship-repair facilities.
For 1995, net sales increased 13.7% to $313.1 million compared with
$275.4 million for fiscal 1994. Higher sales were seen at all divisions:
Foodservice Equipment sales up 22.2%, Cranes sales up 8.7%, and Marine
sales up 13.5%. The sales improvement for 1995 came from: (1) higher
domestic and international demand for ice machines; (2) continued strong
sales in boom trucks resulting in higher shipments from Manitex; (3) the
Shannon acquisition; (4) growth in crane parts and refurbishing markets;
(5) the start-up of production and shipping of West-Manitowoc crawler
crane; and (6) greater demand for marine repair and scheduled maintenance
on Great Lakes vessels.
For the 1994 transition period, net sales totaled $123.9 million,
down 3.8% from the first half of fiscal 1994. A 10% increase in
Foodservice Equipment sales, due to favorable market conditions, was
offset by a 10% decline in Crane sales and a 13% drop in Marine sales.
Lower Crane sales resulted from a soft market for heavy-lift cranes. In
addition, fewer drydockings and lower volumes of emergency repair work
reduced Marine revenues.
Gross Margins
- -------------
The 1996 gross margin increased to 26.9%. The gross margin was
24.1% in 1995, 25.3% for the transition period, and 24.7% in fiscal 1994.
The biggest contributor to the strong 1996 gross margin resulted from the
consolidation and improvements at Manitowoc Engineering, which have
increased productivity and reduced overhead costs. The 1995 gross margin
was negatively affected by a $2.8 million investment to consolidate and
upgrade the large-crane facility.
Engineering, Selling and Administrative Expenses
- ------------------------------------------------
In 1996, the engineering, selling and administrative expenses
increased to $82.6 million, up from $52.3 million in 1995, primarily
because of the Shannon acquisition. However, on a percentage of net
sales basis, these expenses were in line with the recent past. In fiscal
1994, these expenses were $46.8 million, or 17.0% of net sales.
Plant Relocation Costs
- ----------------------
As part of improving its EVA, Manitowoc has, since 1992, been
reviewing its operations and consolidating underperforming assets. In
1996, the company took a $1.2 million charge to close its Tonka (Mason
City, IA) and Kolpak (Bethel Springs, TN) walk-in refrigerator plants.
The Iowa plant was consolidated with an expanded Greeneville, TN
facility. Prior to this, in the 1994 transition period, Manitowoc
consolidated its large-crane manufacturing to one site. This resulted in
a $14 million charge, including a $9.4 million facility write-down.
Operating Earnings
- ------------------
Each segment contributed to the 119.8% increase in operating
earnings, to $50.9 million in 1996 from $23.2 million in 1995. In 1995,
operating earnings improved from a $8.5 million loss in the 1994
transition period and were up 9.8% from $21.1 million in fiscal 1994.
Income Taxes
- ------------
The effective income tax rate for 1996 was 39.7% versus 37.0% in
1995, a 39.0% rate in the transition period, and 37.8% in fiscal 1994.
The higher 1996 rate resulted from non-deductible goodwill associated
with the Shannon acquisition. The 1995 rate was lower than fiscal 1994
due to utilization of foreign tax credits.
Net Earnings
- ------------
In 1996, net earnings increased 76.0% to a record $25.6 million, or
$2.23 per share, compared with the prior year's $14.6 million, or $1.27
per share. The net loss for the 1994 transition period was $5.1 million,
equal to 44 cents per share, and for fiscal 1994, net earnings were $14.0
million, or $1.07 per share. Without the plant consolidation charge, the
1994 transition period would have had earnings of $3.5 million, or 30
cents per share. All per-share figures reflect the July 1996 three-
for-two stock split. As a result, the average shares outstanding for each
period are: 1996 - 11.5 million, 1995 - 11.5 million, 1994 transition period
- - 11.6 million, fiscal 1994 - 13.1 million. The reduction in shares
outstanding between 1995 and 1994 was attributable to share repurchases
by the company.
Foodservice Equipment
- ---------------------
Manitowoc's largest segment generated 48.4% of total sales in 1996.
Foodservice revenues increased 112.9% to $242.3 million for the latest
year, compared with $113.8 million in 1995, and $93.2 million in fiscal
1994. The primary reason for higher 1996 sales was the December 1995
acquisition of The Shannon Group, a leading manufacturer of commercial
refrigeration equipment. While Shannon's 1996 sales were down slightly
compared with 1995, the acquisition was responsible for nearly all of the
Foodservice revenue increase. Foodservice Equipment sales should
continue to expand, driven by growth in small kiosk locations, industry
movement from single location restaurants to chain operations, and the
expansion of chains into less-developed markets outside the United States.
Foodservice operating earnings grew 49.5% in 1996 to $34.0 million
from 1995's $22.7 million. Fiscal 1994 saw $21.6 million in operating
earnings. This segment generated 54.2% of total operating earnings in
1996. This was down from 75.9% in 1995, when Crane segment operating
earnings were lower than normal.
Operating margins for Foodservice were 14.0% in 1996, 20.0% in 1995,
and 23.2% in fiscal 1994. The difference between 1996 and 1995 resulted
from the acquisition of The Shannon Group, whose margins are historically
lower. The decline between 1995 and fiscal 1994 margins also was caused
by the traditionally lower margins of the Shannon product line (acquired
in December 1995).
Cranes and Related Products
- ---------------------------
Sales from this business contributed 42.1% of Manitowoc's total 1996
revenues. Net Crane sales reached $210.6 million in 1996, up 24.0% from
the previous year. Sales were $169.9 million in 1995 and $156.3 million
in fiscal 1994. The improvement in 1996 came primarily from orders for
new products introduced during the last four years. These products
accounted for 98% of the order backlog at year-end 1996. The difference
between 1995 and fiscal 1994 sales came from increases in Manitex boom-
truck sales, the benefits of the 1993 Femco acquisition, and higher West-
Manitowoc sales. These advances were partially offset by a 25% drop in
large crawler crane shipments.
The Aftermarket Group has two operations: Femco and Manitowoc Re-
Manufacturing. Femco did well in 1996, with revenues from industrial
press repair and scrapyard business. However, flat crane parts sales and
lower sales from Manitowoc Re-Manufacturing resulted in a slight
reduction to total 1996 Aftermarket Group sales.
Backlogs for all crane products at year-end were: 1996 - $136.0
million, 1995 - $85.8 million, fiscal 1994 - $26.9 million. The 1996
backlog includes one M-1200 RINGER, four 888 RINGERs, and a single
customer order for 20 Model 777 crawler cranes.
Operating earnings for the Crane segment increased seven-fold over
1995 levels and contributed 36.0% of the company's total segment
operating earnings. Operating earnings were $22.6 million in 1996, $3.2
million in 1995, and $2.3 million in fiscal 1994. Operating margins for
the last three years were: 1996 - 10.7%, 1995 - 1.9%, and fiscal 1994 -
1.5%. The 1996 figure reflects higher sales across all crane businesses
and improved operating efficiencies resulting from earlier restructurings
and plant consolidations.
Marine Group
- ------------
In 1996, Marine segment sales of $47.6 million grew 61.5% over 1995's
$29.5 million, also up from fiscal 1994's $26.0 million. Marine revenues
contributed 9.5% of Manitowoc's 1996 net sales. The major reasons for
the improved performance were higher levels of winter repair and
maintenance, and construction of a self-unloading cement barge for a
Great Lakes customer.
Operating earnings in this business increased 54.0% in 1996,
reaching $6.2 million, compared with $4.0 million in 1995, and higher
than fiscal 1994's $2.4 million. Marine contributed 9.9% of total
company operating segment earnings during 1996. The 1996 operating
margin, at 13.0% was down slightly from 13.7% in 1995 (and higher than
9.4% in fiscal 1994) due to the traditionally lower margins on new
construction versus repair work.
Liquidity and Capital Resources
- -------------------------------
Cash flows from operations for 1996 were $64.5 million, compared with
1995's $16.4 million and $37.0 million in fiscal 1994. The increase
reflects net earnings gains and a significant reduction in working
capital. The primary uses of cash for the latest year were $50.5
million in debt payments, $8.4 million in capital expenditures and $7.7
million in dividend payments. At the end of 1996, long-term debt of
$76.5 million, versus $101.2 million at the end of 1995. Estimated
capital expenditures for 1997 are in the $11 - 12 million range.
Cash and marketable securities were $16.0 million at the end of
1996, compared with $16.6 million for 1995 and $30.1 million for fiscal
1994. On September 8, 1992, the board of directors authorized management
to repurchase up to 1.5 million shares of its common stock. In addition,
on January 11, 1994, and February 1, 1994, the board authorized the
repurchase of an additional 500,000 shares and 1,000,000 shares,
respectively. As of December 31, 1996, a total of 2,646,379 treasury
shares were purchased as a result of these authorizations. On February 19,
1997, the board discontinued this stock repurchase program.
On December 1, 1995, the company purchased the outstanding common
stock of The Shannon Group, Inc. The aggregate consideration paid by
Manitowoc was $127.3 million, which is net of cash acquired of $651,000.
The purchase price included $19.8 million due to the seller and paid in
January 1996, direct acquisition costs of $2.7 million, $1.3 million in
other assumed liabilities, and a post-closing working capital adjustment
of $300,000. The transaction was financed through credit facilities
provided under the Credit Agreement dated December 1, 1995.
On December 31, 1996, and July 2, 1994, there were no short-term
borrowings, compared with $26.8 million at December 31, 1995.
Inventories stood at $44.0 million at the end of 1996 compared with
$52.9 million at year-end 1995. Working capital declined to $17.6
million from $24.2 million.
The company expects current cash reserves and future cash flows from
operations will be adequate to meet its liquidity requirements for the
foreseeable future. This includes payments on long-term debt, line of
credit and anticipated capital expenditures.
Contingencies
- -------------
The United States Environmental Protection Agency (EPA) 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 the
contamination at the Lemberger Landfill Superfund Site near Manitowoc,
Wisconsin.
Approximately 150 PRP's have been identified as having shipped
substances to the site. Eleven of the PRP's have formed the Lemberger
Site Remediation Group (LSRG) and have successfully negotiated with the
EPA and Wisconsin Department of Natural Resources to settle the potential
liability at the site and fund the cleanup.
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 share of
liability is estimated to be 11% of the total cleanup costs.
In connection with this matter, the company expensed $0.2 million in
1996, $0.2 million in 1995, and $1.6 million in fiscal 1994 for its
estimated portion of the cleanup costs. There were no expenses during
the transition period ended December 31, 1994.
<TABLE>
<CAPTION>
Eleven-Year Financial Summary & Business Segment Information
(Thousands of dollars, except shares and per share data)
Transition
Pro Forma Period FISCAL YEARS
Calendar Calendar Calendar Calendar ----------------------------
1996 1995 1994 (2) 1994 (2) 1994 1993
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET SALES
Foodservice $242,317 $113,814 $ 97,321 $ 44,996 $ 93,171 $ 81,424
Cranes & related products 210,564 169,866 148,355 70,958 156,253 178,630
Marine 47,584 29,469 24,782 7,952 25,956 18,504
- -----------------------------------------------------------------------------------------------------------------------------------
Total $500,465 $313,149 $270,458 $123,906 $275,380 $278,558
- -----------------------------------------------------------------------------------------------------------------------------------
Gross margin $134,641 $ 75,470 $ 66,769 $ 31,302 $ 67,924 $ 55,785
- -----------------------------------------------------------------------------------------------------------------------------------
EARNINGS (LOSS) FROM OPERATIONS
Foodservice $ 33,989 $ 22,729 $ 22,286 $ 9,426 $ 21,637 $ 18,311
Cranes & related products 22,582 3,179 17 870 2,275 (1,961)
Marine 6,197 4,024 516 (799) 2,447 593
General corporate (7,678) (6,530) (6,832) (3,981) (5,274) (5,296)
Amortization (3,000) (250) -- -- -- --
Plant relocation costs (1,200) -- (14,000) (14,000) -- (3,300)
- -----------------------------------------------------------------------------------------------------------------------------------
Total 50,890 23,152 1,987 (8,484) 21,085 8,347
- -----------------------------------------------------------------------------------------------------------------------------------
Other income (expense) - net (8,384) (32) 768 169 1,494 582
- -----------------------------------------------------------------------------------------------------------------------------------
Earnings (loss) before
taxes on income 42,506 23,120 2,755 (8,315) 22,579 8,929
Accounting changes -- -- -- -- -- (10,214)
Provision (benefit) for
taxes on income 16,863 8,551 960 (3,243) 8,536 2,612
- -----------------------------------------------------------------------------------------------------------------------------------
Net earnings (loss) $ 25,643 $ 14,569 $ 1,795 $ (5,072) $ 14,043 $ (3,897)
- -----------------------------------------------------------------------------------------------------------------------------------
OTHER FINANCIAL INFORMATION
Cash from operations $ 64,514 $ 16,367 $ 13,821 $ (330) $ 36,995 $ 62,700
- -----------------------------------------------------------------------------------------------------------------------------------
Invested capital
(monthly averages):
Foodservice $ 68,556 $ 32,696 $ 24,734 $ 21,979 $ 25,662 $ 26,503
Cranes & related products 73,246 85,082 80,619 81,800 86,288 112,120
Marine 7,335 9,579 12,691 11,201 13,953 17,497
General corporate 94,166 12,409 4,248 4,818 4,052 2,581
- -----------------------------------------------------------------------------------------------------------------------------------
Total $243,303 $139,766 $122,292 $119,798 $129,955 $158,701
- ----------------------------------------------------------------------------------------------------------------------------------
IDENTIFIABLE ASSETS
Foodservice $ 90,937 $ 90,126 $ 27,828 $ 27,828 $ 31,460 $ 29,526
Cranes & related products 88,174 109,118 88,068 88,068 93,823 105,750
Marine 10,648 11,369 13,233 13,233 16,726 16,720
General corporate 127,951 114,302 30,336 30,336 43,839 56,015
- -----------------------------------------------------------------------------------------------------------------------------------
Total $317,710 $324,915 $159,465 $159,465 $185,848 $208,011
- -----------------------------------------------------------------------------------------------------------------------------------
LONG-TERM OBLIGATION
Long-term debt $ 76,501 $101,180 $ -- $ -- $ -- $ --
- -----------------------------------------------------------------------------------------------------------------------------------
DEPRECIATION
Foodservice $ 3,377 $ 1,606 $ 1,364 $ 703 $ 1,320 $ 1,187
Cranes & related products 4,260 4,162 4,639 2,288 4,211 3,875
Marine 600 608 658 316 681 756
General corporate 81 80 91 46 61 44
- -----------------------------------------------------------------------------------------------------------------------------------
Total $ 8,318 $ 6,456 $ 6,752 $ 3,353 $ 6,273 $ 5,862
- -----------------------------------------------------------------------------------------------------------------------------------
CAPITAL EXPENDITURES
Foodservice $ 5,110 $ 4,568 $ 4,929 $ 3,011 $ 2,300 $ 2,152
Cranes & related products 2,816 14,252 4,214 528 3,120 8,648
Marine 343 383 145 109 (492) (463)
General corporate (1) 127 6 419 82 414 (39)
- -----------------------------------------------------------------------------------------------------------------------------------
Total $ 8,396 $ 19,209 $ 9,707 $ 3,730 $ 5,342 $ 10,298
- -----------------------------------------------------------------------------------------------------------------------------------
PER SHARE (3)
Net earnings (loss) $ 2.23 $ 1.27 $ .15 $ (.44) $ 1.07 $ (.27)
Dividends .67 .67 .67 .33 .67 .67
Stockholders' equity 8.72 7.09 6.52 6.52 7.74 8.71
- -----------------------------------------------------------------------------------------------------------------------------------
Average shares outstanding 11,511,357 11,511,707 12,151,538 11,617,832 13,104,891 14,639,081
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
FISCAL YEARS
--------------------------------------------------------------------------------------------------
1992 1991 1990 1989 1988 1987
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET SALES
Foodservice $ 74,175 $ 73,944 $ 74,612 $ 74,431 $ 72,986 $ 72,501
Cranes & related products 155,743 147,554 117,464 102,430 81,593 46,571
Marine 16,471 14,689 33,752 23,735 17,710 103,995
- -----------------------------------------------------------------------------------------------------------------------------------
Total $246,389 $236,187 $225,828 $200,596 $172,289 $223,067
- -----------------------------------------------------------------------------------------------------------------------------------
Gross margin $ 54,443 $ 58,062 $ 54,366 $ 50,860 $ 37,033 $ 29,921
- -----------------------------------------------------------------------------------------------------------------------------------
EARNINGS (LOSS) FROM OPERATIONS
Foodservice $ 17,585 $ 17,364 $ 19,387 $ 18,468 $ 17,203 $ 17,910
Cranes & related products (850) 7,602 5,490 3,454 (1,974) 4,532
Marine 278 (973) 6,497 3,416 (15,921) (9,693)
General corporate (6,545) (5,734) (6,094) (5,623) (4,744) (3,628)
Amortization -- -- -- -- -- --
Plant relocation costs -- -- -- -- -- --
- -----------------------------------------------------------------------------------------------------------------------------------
Total 10,468 18,259 25,280 19,715 (5,436) 9,121
- -----------------------------------------------------------------------------------------------------------------------------------
Other income (expense) - net 1,104 2,233 5,077 4,527 4,187 7,510
- -----------------------------------------------------------------------------------------------------------------------------------
Earnings (loss) before taxes
on income 11,572 20,492 30,357 24,242 (1,249) 16,631
Accounting changes -- -- -- -- -- --
Provision (benefit) for taxes
on income 3,315 5,060 9,327 7,344 (1,341) 4,868
- -----------------------------------------------------------------------------------------------------------------------------------
Net earnings (loss) $ 8,257 $ 15,432 $ 21,030 $ 16,898 $ 92 $ 11,763
- -----------------------------------------------------------------------------------------------------------------------------------
OTHER FINANCIAL INFORMATION
Cash from operations $ 28,250 $ 6,472 $ 14,210 $ (5,278) $ 3,658 $(33,833)
- -----------------------------------------------------------------------------------------------------------------------------------
Invested capital
(monthly averages):
Foodservice $ 23,555 $ 25,099 $ 19,018 $ 22,859 $ 21,940 $ 16,427
Cranes & related products 137,839 133,777 118,097 99,147 76,335 77,382
Marine 16,879 14,621 16,206 28,600 18,894 26,122
General corporate 2,025 3,051 6,314 7,656 14,151 4,227
- -----------------------------------------------------------------------------------------------------------------------------------
Total $180,298 $176,548 $159,635 $158,262 $131,320 $124,158
- -----------------------------------------------------------------------------------------------------------------------------------
IDENTIFIABLE ASSETS
Foodservice $ 25,608 $ 28,019 $ 24,168 $ 26,074 $ 27,449 $ 33,486
Cranes & related products 138,416 136,995 115,804 96,623 75,217 61,306
Marine 19,253 18,009 22,683 32,451 24,049 41,366
General corporate 41,829 35,983 50,143 61,966 82,374 94,628
- -----------------------------------------------------------------------------------------------------------------------------------
Total $225,106 $219,006 $212,798 $217,114 $209,089 $230,786
- -----------------------------------------------------------------------------------------------------------------------------------
LONG-TERM OBLIGATION
Long-term debt -- -- -- -- -- --
- -----------------------------------------------------------------------------------------------------------------------------------
DEPRECIATION
Foodservice $ 1,090 $ 812 $ 657 $ 771 $ 785 $ 817
Cranes & related products 4,053 3,691 2,895 2,953 3,000 2,972
Marine 785 792 748 465 2,362 2,600
General corporate 196 234 431 380 327 303
- -----------------------------------------------------------------------------------------------------------------------------------
Total $ 6,124 $ 5,529 $ 4,731 $ 4,569 $ 6,474 $ 6,692
- -----------------------------------------------------------------------------------------------------------------------------------
CAPITAL EXPENDITURES
Foodservice $ 1,099 $ 2,797 $ 748 $ (169) $ 229 $ 201
Cranes & related products 4,047 6,347 3,130 2,225 2,264 2,580
Marine 500 113 197 108 1 112
General corporate (1) (508) (2,955) 70 586 317 86
- -----------------------------------------------------------------------------------------------------------------------------------
Total $ 5,138 $ 6,302 $ 4,145 $ 2,750 $ 2,811 $ 2,979
- -----------------------------------------------------------------------------------------------------------------------------------
PER SHARE (3)
Net earnings (loss) $ .53 $ 1.00 $ 1.36 $ 1.09 $ .01 $ .72
Dividends .67 .67 1.33 .53 .53 .53
Stockholders' equity 10.69 10.80 10.44 10.42 9.91 10.47
- -----------------------------------------------------------------------------------------------------------------------------------
Average shares outstanding 15,481,271 15,481,491 15,481,874 15,502,599 15,945,156 16,305,536
- -----------------------------------------------------------------------------------------------------------------------------------
<FN>
(1) During 1991, certain assets were transferred from general corporate
to the cranes and related products segment.
(2) The company changed its year-end to December 31, effective with the
period ended December 31, 1994 (transition period). The prior fiscal
year-end ended on the Saturday nearest to June 30. The Pro Forma
information related to the calendar year ended December 31, 1994 is a
compilation of the calendar quarterly data for 1994 and is unaudited.
(3) Per share data and average shares outstanding have been adjusted to
reflect the three-for-two stock split which occurred in 1996. See Note 7
of notes to the consolidated financial statements.
</FN>
</TABLE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF EARNINGS
(Thousands of dollars, except per share and average shares data)
For The Periods Ended
--------------------------------------------------------------------------
Transition
Dec. 31, Dec. 31, Dec. 31, July 2,
1996 1995 1994 1994
------- -------- ----------- -----------
<S> <C> <C> <C> <C>
EARNINGS
Net Sales $500,465 $313,149 $123,906 $275,380
Costs and expenses:
Cost of sales 365,824 237,679 92,604 207,456
Engineering, selling, and
administrative expenses 82,551 52,318 25,786 46,839
Plant relocation costs 1,200 -- 14,000 --
--------- --------- --------- ---------
Total costs and expenses 449,575 289,997 132,390 254,295
--------- --------- --------- ---------
Earnings (loss) from operations 50,890 23,152 (8,484) 21,085
Interest expense (9,097) (1,865) (187) (263)
Interest and dividend income 394 47 333 1,697
Other 319 1,786 23 60
--------- --------- --------- ---------
Earnings (loss) before taxes
on income 42,506 23,120 (8,315) 22,579
Provision (benefit) for
taxes on income 16,863 8,551 (3,243) 8,536
--------- --------- --------- ---------
Net earnings (loss) $ 25,643 $ 14,569 $ ( 5,072) $ 14,043
--------- --------- --------- ---------
PER SHARE DATA
Net earnings (loss) $ 2.23 $ 1.27 $ (.44) $ 1.07
--------- --------- --------- ---------
AVERAGE SHARES OUTSTANDING 11,511,357 11,511,707 11,617,832 13,104,891
--------- --------- --------- ---------
<FN>
The accompanying summary of significant accounting policies and notes to
the consolidated financial statements are an integral part of these
financial statements.
</FN>
</TABLE>
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEETS
(Thousands of dollars, except shares data)
As of December 31
------------------------------------
1996 1995
---- ----
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 14,364 $ 15,077
Marketable securities 1,657 1,558
Accounts receivable, less
allowances of $976 and $1,365 53,876 51,011
Inventories 43,978 52,928
Prepaid expenses and other 1,281 3,451
Future income tax benefits 12,719 11,120
-------- --------
Total current assets 127,875 135,145
-------- --------
Intangible assets - net 92,200 92,433
Property, plant and equipment - net 84,703 87,674
Other assets 12,932 9,663
-------- --------
Total assets $317,710 $324,915
-------- --------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current portion of long-term debt $ 11,064 $ 10,089
Accounts payable and accrued expenses 90,967 67,531
Short-term borrowings 0 26,807
Product warranties 8,271 6,496
-------- --------
Total current liabilities 110,302 110,923
-------- --------
NON-CURRENT LIABILITIES
Long-term debt, less current portion 76,501 101,180
Product warranties 4,914 4,199
Postretirement health benefits obligation 19,455 19,190
Other liabilities 6,209 7,762
-------- --------
Total non-current liabilities 107,079 132,331
-------- --------
Commitments and contingencies -- --
-------- --------
STOCKHOLDERS' EQUITY
Common stock (16,331,770 and 10,887,847
shares issued) 163 109
Additional paid-in capital 31,061 31,115
Cumulative foreign currency
translation adjustments 220 (479)
Retained earnings 150,387 132,418
Treasury stock, at cost (81,502) (81,502)
-------- --------
Total stockholders' equity 100,329 81,661
-------- --------
Total liabilities and stockholders' equity $317,710 $324,915
-------- --------
<FN>
The accompanying summary of significant accounting policies and notes to
the consolidated financial statements are an integral part of these
financial statements.
</FN>
</TABLE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Thousands of dollars)
For The Periods Ended
--------------------------------------------------------------------------
Transition
Dec. 31, Dec. 31, Dec. 31, July 2,
1996 1995 1994 1994
------- ------- --------- ---------
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATIONS
Net earnings (loss) $ 25,643 $ 14,569 $ (5,072) $ 14,043
Adjustments to reconcile
net cash from operations:
Depreciation 8,318 6,456 3,353 6,273
Amortization 3,300 345 73 128
Deferred income taxes (4,383) (815) (6,219) (2,976)
Plant relocation costs 1,200 -- 14,000 --
(Gain) loss on sale of property,
plant, and equipment 259 (1,964) -- --
Changes in operating assets and
liabilities excluding effects
of business acquisitions:
Accounts receivable (2,865) (843) 13,089 9,352
Inventories 8,950 (5,913) (5,553) 6,438
Other current assets 909 999 74 3,592
Current liabilities 23,432 4,015 (14,373) 1,723
Non-current liabilities (573) (1,052) (387) (1,285)
Non-current assets 324 570 685 (293)
--------- --------- --------- --------
Net cash provided by
(used in) operations 64,514 16,367 (330) 36,995
--------- --------- --------- --------
CASH FLOWS FROM INVESTING
Sale (purchase) of
marketable securities - net (99) 10,487 2,963 (3,520)
Capital expenditures (8,396) (19,209) (3,730) (5,342)
Business acquisitions -
net of cash acquired (300) (105,944) -- (10,685)
Proceeds from sale of property,
plant, and equipment 1,443 5,656 -- --
--------- --------- --------- ---------
Net cash used for investing (7,352) (109,010) (767) (19,547)
--------- --------- --------- ---------
CASH FLOWS FROM FINANCING
Dividends paid (7,674) (7,674) (3,838) (8,688)
Proceeds from long-term borrowings 15,000 110,000 -- --
Payments on long-term borrowings (38,704) -- -- --
Proceeds (payments) from short-term
borrowings - net (26,807) 3,001 3,999 --
Treasury stock purchases -- -- (10,114) (31,091)
Debt acquisition costs -- (1,687) -- --
--------- --------- --------- ---------
Net cash provided by
(used for) financing (58,185) 103,640 (9,953) (39,779)
--------- --------- --------- ---------
Effect of exchange rate
changes on cash 310 (38) 74 77
--------- --------- --------- ---------
Net change in cash and
cash equivalents (713) 10,959 (10,976) (22,254)
--------- --------- --------- ---------
Balance at beginning of year 15,077 4,118 15,094 37,348
--------- --------- --------- ---------
Balance at end of year $ 14,364 $ 15,077 $ 4,118 $ 15,094
--------- --------- --------- ---------
SUPPLEMENTAL CASH FLOW INFORMATION
Interest paid $ 8,215 $ 1,163 $ 157 $ 192
--------- --------- --------- ---------
Income taxes paid $ 19,319 $ 7,929 $ 6,901 $ 6,895
--------- --------- --------- ---------
<FN>
The accompanying summary of significant accounting policies and notes to
the consolidated financial statements are an integral part of these
financial statements.
</FN>
</TABLE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Thousands of dollars, except shares and per share data)
For The Periods Ended
------------------------------------------------------------------------------
Transition
Dec. 31, Dec. 31, Dec. 31, July 2,
1996 1995 1994 1994
--------- -------- ----------- --------
<S> <C> <C> <C> <C>
COMMON STOCK - SHARES OUTSTANDING
Balance at beginning of period 7,674,468 7,674,475 8,082,847 9,146,501
Treasury stock purchases -- (7) (408,372) (1,063,654)
Three-for-two stock split 3,836,889 -- -- --
-------- -------- -------- --------
Balance at end of period 11,511,357 7,674,468 7,674,475 8,082,847
-------- -------- -------- --------
COMMON STOCK -- PAR VALUE
Balance at beginning of period $ 109 $ 109 $ 109 $ 109
Three-for-two stock split 54 -- -- --
-------- -------- -------- --------
Balance at end of period $ 163 $ 109 $ 109 $ 109
-------- -------- -------- --------
ADDITIONAL PAID-IN CAPITAL
Balance at beginning of period $ 31,115 $ 31,115 $ 31,115 $ 31,115
Three-for-two stock split (54) -- -- --
-------- -------- -------- --------
Balance at end of period $ 31,061 $ 31,115 $ 31,115 $ 31,115
-------- -------- -------- --------
CUMULATIVE FOREIGN CURRENCY
TRANSLATION ADJUSTMENTS
Balance at beginning of period $ (479) $ (188) $ (410) $ (569)
Foreign currency
translation adjustment 699 (291) 222 159
-------- -------- -------- --------
Balance at end of period $ 220 $ (479) $ (188) $ (410)
-------- -------- -------- --------
RETAINED EARNINGS
Balance at beginning of period $132,418 $125,523 $134,433 $129,078
Net earnings (loss) 25,643 14,569 (5,072) 14,043
Cash dividends * (7,674) (7,674) (3,838) (8,688)
-------- -------- -------- --------
Balance at end of period $150,387 $132,418 $125,523 $134,433
-------- -------- -------- --------
TREASURY STOCK
Balance at beginning of period $(81,502) $(81,502) $(71,388) $(40,297)
Treasury stock purchases -- -- (10,114) (31,091)
-------- -------- -------- --------
Balance at end of period $(81,502) $(81,502) $(81,502) $(71,388)
-------- -------- -------- --------
<FN>
* Cash dividends per share after giving effect to the three-for-two
stock split, were $.67 per share in all periods except the transition
period in which the dividend was $.33 per share.
The accompanying summary of significant accounting policies and notes to
the consolidated financial statements are an integral part of these
financial statements.
</FN>
</TABLE>
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Thousands of dollars, except per share data)
- ---------------------------------------------
BASIS OF PRESENTATION
- ---------------------
The financial statements of The Manitowoc Company, Inc. ("the company")
have been prepared in accordance with generally accepted accounting
principles, which require management to make estimates and assumptions
that affect the reported amounts of assets, liabilities, revenues and
expenses for the periods presented. They also affect the disclosures of
contingencies. Actual results could differ from those estimates.
PRINCIPLES OF CONSOLIDATION
- ---------------------------
The consolidated financial statements include the accounts of the company
and its wholly owned domestic and non-U.S. subsidiaries. Significant
intercompany balances and transactions have been eliminated.
FISCAL YEAR
- -----------
The company changed its fiscal year from a fiscal year ending on the
Saturday nearest June 30 to a fiscal year ending on December 31,
effective for the period ending December 31, 1994. The Consolidated
Statement of Earnings, the Consolidated Statement of Cash Flows, and the
Consolidated Statement of Stockholders' Equity for the period from July
3, 1994 to December 31, 1994 (Transition Period) are also presented in
the financial statements.
INVENTORIES
- -----------
Inventories are stated at the lower of cost or market as described in
Note 3. Advance payments from customers are netted against inventories
to the extent of related accumulated costs. Advance payments netted
against inventories at December 31, 1996 and 1995 were $8,552 and $5,985,
respectively. Advance payments received in excess of related costs on
uncompleted contracts are classified as accrued expenses.
REVENUE RECOGNITION
- -------------------
Revenues and expenses in all business segments are generally recognized
upon shipment or completion of service provided. However, revenues and
costs on contracts for long-term projects are recognized on the
percentage-of-completion method, commencing when work has progressed to a
state where estimates are reasonably accurate. These estimates are
reviewed and revised periodically throughout the lives of the contracts,
and adjustments to income resulting from such revisions are recorded in
the accounting period in which the revisions are made. Estimated losses
on such contracts are recognized in full when they are identified.
FOREIGN CURRENCY TRANSLATION
- ----------------------------
The financial statements of the company's non-U.S. subsidiaries are
translated using the current exchange rate for assets and liabilities and
the weighted average exchange rate for the year for income statement
items. Resulting translation adjustments are recorded directly to a
separate component of stockholders' equity.
PROPERTY, PLANT AND EQUIPMENT
- -----------------------------
Property, plant and equipment is depreciated over the estimated useful
lives of the assets using the straight-line depreciation method for all
property acquired after June 29, 1991. Property acquired prior to June
30, 1991, is depreciated using the sum-of-the-years-digits method.
Property, plant and equipment is depreciated over the following estimated
useful lives:
Years
-----
Buildings 40
Drydocks and dock fronts 15-27
Machinery, equipment and tooling 4-15
INTANGIBLE ASSETS
- -----------------
Intangible assets consist primarily of costs in excess of net assets of
businesses acquired (See Note 9). Intangible assets are amortized using
the straight-line method over their estimated beneficial lives, not to
exceed 40 years. Subsequent to an acquisition, the company continually
evaluates whether later events and circumstances have occurred that
indicate the remaining estimated useful life of intangibles may warrant
revision or that the remaining balance of intangibles may not be
recoverable. When factors indicate that intangibles should be evaluated
for possible impairment, the company uses an estimate of the related
business' discounted net cash flows over the remaining life of the
intangibles in measuring whether the intangibles are recoverable.
Intangible assets at December 31, 1996 and 1995 of $92,200 and $92,433,
respectively, are net of accumulated amortization of $3,550 and $1,939
respectively.
FAIR VALUE OF FINANCIAL INSTRUMENTS
- -----------------------------------
The carrying amounts reported in the consolidated balance sheets for cash
and cash equivalents, accounts receivable, accounts payable and short-
term borrowings approximate fair value due to the immediate short-term
maturity of these financial instruments. The carrying amount reported
for long-term debt approximates fair value since the underlying
instrument bears interest at a variable rate that reprices frequently.
The fair value of interest rate swaps is the amount at which they could
be settled, based on estimates obtained from financial institutions.
INCOME TAXES
- ------------
The company utilizes the liability method to recognize deferred tax
assets and liabilities for the expected future income tax consequences of
events that have been recognized in the company's financial statements.
Under this method, deferred tax assets and liabilities are determined
based on the temporary differences between financial statement carrying
amounts and the tax basis of assets and liabilities using enacted tax
rates in effect in the years in which the temporary differences are
expected to reverse.
POSTRETIREMENT BENEFITS OTHER THAN PENSIONS
- -------------------------------------------
The expected cost of postretirement health care benefits is recorded
during the years that the employees render service.
RESEARCH AND DEVELOPMENT
- ------------------------
Research and development costs are charged to expense as incurred and
amount to $3,502 in 1996, $3,110 in 1995, $1,323 for the transition
period ended December 31, 1994, and, $2,439, in fiscal year 1994.
WARRANTIES
- ----------
Estimated warranty costs are provided at the time of sale of the
warranted products, based on historic experience for the relevant
product.
NET EARNINGS PER COMMON SHARE
- -----------------------------
Net earnings per common share is based on weighted average shares
outstanding during each year.
The company is required to adopt Statement of Financial Accounting
Standard (SFAS) No. 128, "Earnings Per Share," in 1997. SFAS 128
specifies the computation, presentation, and disclosure requirements for
earnings per share. The adoption of this statement will result in the
presentation by the company of basic and diluted earnings per share, as
defined by the statement, and is not expected to have a material impact
on the earnings per share reported in the financial statements. Upon
adoption of this statement, all prior-period earnings per share amounts
will be restated to conform to the provisions of SFAS 128.
CASH EQUIVALENTS
- ----------------
All short-term investments purchased with an original maturity of three
months or less are considered cash equivalents.
RECLASSIFICATIONS
- -----------------
Certain reclassifications have been made to the financial statements of
prior periods to conform to the presentation for 1996.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Thousands of dollars, except shares and per share data)
1.
______________________________________________________________________
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment is summarized at December 31 as follows:
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Land $ 3,489 $ 2,883
Buildings 59,606 46,194
Drydocks and dock fronts 21,743 21,743
Machinery, equipment and tooling 102,512 114,800
Construction in progress 2,033 3,135
--------- --------
Total cost 189,383 188,755
Less accumulated depreciation (104,680) (101,081)
--------- --------
Property, plant and equipment - net $ 84,703 $ 87,674
--------- --------
</TABLE>
2.
_________________________________________________________________________
MARKETABLE SECURITIES
Marketable securities at December 31, 1996 and 1995 include $1.7 million
and $1.6 million, respectively, of securities which are available for
sale. For these investments, the difference between fair market value
and cost was not material for both years.
3.
_____________________________________________________________________
INVENTORIES
The components of inventories are summarized at December 31 as follows:
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Components:
Raw materials $ 20,153 $ 22,809
Work-in-process 19,447 18,868
Finished goods 25,725 31,711
---------- ---------
Total inventories at FIFO cost 65,325 73,388
Excess of FIFO cost over LIFO value (21,347) (20,460)
---------- ---------
Total inventories $ 43,978 $ 52,928
---------- ---------
</TABLE>
Inventories are carried at the lower of cost or market using the first-
in, first-out (FIFO) method for 56% and 60% of total inventory for 1996
and 1995, respectively. The remainder of the inventories are costed
using the last-in, first-out (LIFO) method.
Inventory quantity reductions during fiscal 1994 resulted in lower cost
of goods sold computed under the LIFO method due to lower costs
prevailing in prior periods. The increase in net earnings for fiscal
1994 due to such inventory reductions was $1,726.
4.
_________________________________________________________________________
ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable and accrued expenses are summarized at December 31 as
follows:
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Trade accounts payable $ 31,215 $ 29,221
Customer progress payments 9,857 924
Profit sharing 14,748 7,857
Product liability 6,744 6,188
Income taxes payable 2,836 1,503
Miscellaneous accrued expenses 25,567 21,838
--------- --------
Total $ 90,967 $ 67,531
--------- --------
</TABLE>
5.
_______________________________________________________________________________
DEBT
Long-term debt at December 31, consists of the following:
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Term loan payable $ 86,365 $ 110,000
Capital lease obligations 1,200 1,269
-------- ---------
87,565 111,269
Less current portion 11,064 10,089
-------- ---------
$ 76,501 $ 101,180
======== =========
</TABLE>
The company entered into a Credit Agreement (Agreement) on December 1,
1995 with a group of banks to fund the purchase of The Shannon Group,
Inc. (See Note 9). The Agreement, which was amended in 1996, provides
for maximum borrowings of $95 million under a term loan and a maximum of
$85 million in revolving loans. There are no borrowings under the
revolving loan portion of the Agreement at December 31, 1996.
The Agreement includes covenants which require the maintenance of various
debt and net worth ratios, and limits the amount of capital expenditures.
Annual commitment fees during 1996 were .1875% on the unused portion of
the available credit. Borrowings under the Agreement bear interest at a
rate equal to the sum of a base rate, or LIBOR rate (London Interbank
Offered Rate), at the option of the company, plus an applicable
percentage, as defined. The base rate is equal to the greater of the
Federal Funds rate in effect on such day plus .5% or the prime rate in
effect on such day. The interest rate for the term and revolving loans
at December 31, 1996 was 6.38%. Payments of principal and interest for
the term loan are due quarterly through December 31, 2001. Borrowings
under the Agreement are collateralized by receivables and inventories of
the company and substantially all of the common stock of its
subsidiaries.
The company has entered into interest rate swap agreements, which expires
in December, 2000, to reduce the impact of changes in interest rates on
its floating rate long-term debt. At December 31, 1996, the company had
outstanding three interest rate swap agreements with financial
institutions, having a total notional principal amount of $87.5 million.
The effect of these agreements on the company's interest rates during
1996 was not significant. Interest expense has been adjusted for the net
receivable or payable under these agreements. The fair value of these
interest rate swap agreements is $980 at December 31, 1996. The company
is exposed to credit loss in the event of non-performance by the
financial institutions. However, management does not anticipate such
non-performance.
In January 1997, the company reduced the notional principal amount of its
interest rate swaps by $44.3 million. The notional principal amounts of
the remaining interest rate swaps will be reduced as mandatory principal
payments reduce the amount of the company's outstanding loan payable.
Capital lease obligations relate to the company's obligations on three
property leases for industrial property located in the State of
Tennessee. These obligations are due in monthly or annual installments
including principal and interest at rates varying from 5% to 18.3%.
These obligations mature at various dates through 2012.
The aggregate scheduled maturities of long-term debt and capital lease
obligations in subsequent years are as follows:
1997 $ 11,064
1998 15,009
1999 18,949
2000 18,953
2001 22,893
Thereafter 697
---------
$ 87,565
=========
At December 31, 1995, short-term borrowings included $19,807 due to the
seller of The Shannon Group, Inc. and $7,000 which was outstanding under
the revolving loan portion of the Agreement. The company repaid these
borrowings during 1996.
6.
______________________________________________________________________
INCOME TAXES
Components of earnings before income taxes are as follows:
<TABLE>
<CAPTION>
Transition
Period
Dec. 31, Dec. 31, Dec. 31, July 2,
1996 1995 1994 1994
-------- --------- -------- --------
<S> <C> <C> <C> <C>
Earnings before income taxes:
Domestic $ 41,702 $ 22,273 $ (8,861) $ 22,089
Foreign 804 847 546 490
-------- -------- -------- --------
TOTAL $ 42,506 $ 23,120 $ (8,315) $ 22,579
-------- -------- -------- --------
</TABLE>
The provision (benefit) for taxes on income is as follows:
<TABLE>
<CAPTION>
Transition
Period
Dec. 31, Dec. 31, Dec. 31, July 2,
1996 1995 1994 1994
-------- --------- ------- --------
<S> <C> <C> <C> <C>
Current:
Federal $ 17,743 $ 8,093 $ 1,972 $ 9,138
State 3,190 1,105 716 2,358
Foreign 313 168 288 16
-------- -------- -------- --------
Total current 21,246 9,366 2,976 11,512
-------- -------- -------- --------
Deferred:
Federal and state (4,383) (815) (6,036) (3,120)
Foreign -- -- (183) 144
-------- -------- -------- --------
Total deferred (4,383) (815) (6,219) (2,976)
-------- -------- -------- --------
Provision (benefit) for taxes on income $ 16,863 $8,551 $ (3,243) $ 8,536
======== ======== ======== ========
</TABLE>
Federal income taxes at statutory rates and the provision (benefit) for
income taxes as reported are reconciled as follows:
<TABLE>
<CAPTION> Transition
Period
Dec. 31, Dec. 31, Dec. 31, July 2,
1996 1995 1994 1994
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Federal income tax at statutory rate $ 14,877 $ 8,092 $ (2,910) $ 7,903
State income taxes, net of federal
income tax benefit 2,019 1,137 (420) 1,140
Investment tax credit -- -- (699) (96)
Non-deductible goodwill amortization 713 -- -- --
Tax-exempt FSC income (564) (373) (236) (515)
Adjustments to prior years' income
tax accruals (360) (132) 884 --
Other 178 (173) 138 104
-------- -------- -------- --------
Provision (benefit) for taxes on income $ 16,863 $ 8,551 $ (3,243) $ 8,536
======== ======== ======== ========
</TABLE>
The deferred income tax accounts reflect the impact of temporary
differences between the basis of assets and liabilities for financial
reporting purposes and their related basis as measured by income tax
regulations. A summary of the deferred income tax accounts at December
31 is as follows:
<TABLE>
<CAPTION>
1996 1995
-------- ---------
<S> <C> <C>
Current deferred tax assets:
Inventories $ 826 $ 485
Accounts receivable 392 692
Product warranty reserves 3,021 2,252
Product liability reserves 2,679 2,413
Environmental reserves 311 238
Customer profit sharing reserves 497 527
Other employee related benefits
and allowances 3,453 2,706
Other 1,540 1,807
-------- --------
Future income tax benefits, current $ 12,719 $ 11,120
======== ========
Non-current deferred tax assets (liabilities):
Property, plant and equipment $ (8,271) $(10,340)
Postretirement benefits
other than pensions 7,791 7,581
Deferred employee benefits 1,239 --
Severance benefits 1,097 1,014
Product warranty reserves 1,248 1,412
Environmental reserves 502 740
Net operating loss carryforwards 2,004 2,419
-------- --------
Net future income tax
benefits, non-current $ 5,610 $ 2,826
======== ========
</TABLE>
The company does not provide for taxes which would be payable if
undistributed earnings of foreign subsidiaries or its foreign affiliate
were remitted because the company either considers these earnings to be
invested for an indefinite period or anticipates that when such earnings
are distributed, the U.S. income taxes payable would be substantially
offset by foreign tax credits.
7.
_________________________________________________________________________
STOCKHOLDERS' EQUITY
Authorized capitalization consists of 35,000,000 shares of $.01 par value
common stock and 3,500,000 shares of $.01 par value preferred stock.
None of the preferred shares have been issued. Pursuant to a Rights
Agreement dated August 5, 1996, each common share carries with it a Right
to purchase additional stock. The Rights are not currently exercisable
and cannot be separated from the shares unless certain specified events
occur, including the acquisition of 20% or more of the common stock by a
person or group, or the commencement of a tender offer for 20% or more of
the common stock. In the event a person or group actually acquires 20%
or more of the common stock, or if the company is merged with an
acquiring person, each Right permits the holder to purchase one share of
common stock for $100. The Rights expire on September 18, 2006 and may
be redeemed by the company for $.01 per Right (in cash or stock) under
certain circumstances.
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. As of December 31, 1996, a total of 2,646,379 treasury
shares were purchased pursuant to these authorizations. On February 19,
1997, the board of directors discontinued this stock repurchase program.
On June 14, 1996, the company`s board of directors authorized a three-
for-two stock split in the form of a 50-percent stock dividend payable on
July 2, 1996 to shareholders of record on June 25, 1996. A total of
3,836,889 shares were issued in connection with the split and fractional
shares were paid in cash. All references in the financial statements to
average number of common shares outstanding and related earnings per
share amounts, market prices per share of common stock, and stock option
plan data have been restated to reflect the split.
8.
______________________________________________________________________
STOCK OPTIONS
Effective May 22, 1995, the company's board of directors approved The
Manitowoc Company, Inc. Stock Plan (the "Plan") which provides for the
granting of stock options as an incentive to certain key employees.
Under the Plan, stock options to acquire up to 1,125,000 shares of common
stock, in the aggregate, may be granted under a time-vesting formula at
an exercise price equal to the market price of the common stock at the
date of grant. The options become exercisable in equal 25% increments
beginning on the second anniversary of the grant date over a four year
period and expire ten years subsequent to the grant date. Stock option
transactions are summarized as follows:
<TABLE>
<CAPTION>
1996 1995
------------------------ ------------------------
Weighted- Weighted-
Average Average
Exercise Exercise
Shares Price Shares Price
------- --------- ------- ----------
<S> <C> <C> <C> <C>
Options outstanding,
beginning of year 64,050 $17.50 -- $ --
Options granted 79,350 $22.33 64,050 $17.50
------- -------
Options outstanding,
end of year 143,400 $20.17 64,050 $17.50
======= =======
</TABLE>
The outstanding stock options at December 31, 1996 have a range of
exercise prices between $17.50 and $22.33 per option and have a weighted
average contractual life of approximately 9.2 years. None of the options
are currently exercisable. The weighted average fair value at date of
grant for options granted during 1996 and 1995 was $7.03 and $4.89 per
option, respectively. The fair value of options at date of grant was
estimated using the Black-Scholes option pricing model with the following
weighted average assumptions:
1996 1995
---- ----
Expected life (years) 7 7
Risk-free interest rate 6.8 % 6.6 %
Expected volatility 25.4 % 26.5 %
Expected dividend yield 2.4 % 3.8 %
The company applies Accounting Principles Board Opinion No. 25, under
which no compensation cost has been recognized in the statements of
operations. Had compensation cost been determined under an alternative
method suggested by Statement of Financial Accounting Standards No. 123,
"Accounting for Stock-Based Compensation", the effect on 1996 and 1995
net income and earnings per share would not have been significant.
9.
_________________________________________________________________________
ACQUISITIONS
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 $127,320
which is net of cash acquired of $651, and includes an amount due to a
seller of $19,807 paid in January, 1996, direct acquisition costs of
$2,671, other assumed liabilities of $1,269 and a post-closing working
capital adjustment of $300. The transaction was financed through credit
facilities provided under the Credit Agreement dated December 1, 1995
(See Note 5).
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 excess of the cost over the fair value of net assets
acquired of $91,384 is being amortized over 32 years. The results of
operations of Shannon subsequent to the date of acquisition are included
in the Consolidated Statements of Earnings for the years ended December
31, 1996 and 1995.
The following unaudited information presents on a pro forma basis, the
acquisition as if it had occurred at the beginning of the period
indicated:
<TABLE>
<CAPTION>
Transition
Year Ended Period
Dec. 31, Dec. 31,
1995 1994
-------- ---------
<S> <C> <C>
Net sales $436,114 $186,230
-------- --------
Net earnings (loss) $ 14,983 $ (4,155)
-------- --------
Net earnings (loss) per common share $ 1.30 $ (.36)
-------- --------
</TABLE>
During fiscal 1994, the company acquired the assets of Femco Machine Co.
for $10,685 in cash. Femco is a manufacturer of parts for cranes,
draglines, and other heavy equipment. The acquisition was recorded
using the purchase method of accounting. The excess of the cost over
the fair value of net assets acquired of $1,849 is being amortized over
25 years.
Femco's results of operations subsequent to the date of acquisition are
included in the Consolidated Statements of Earnings. Pro forma results
of operations are not presented as the amounts do not significantly
differ from historical results of the company.
10.
________________________________________________________________________
PLANT CONSOLIDATION
During the fourth quarter of 1996, the company's decision to consolidate
and close walk-in refrigeration plants located in Iowa and Tennessee
resulted in a $1.2 million charge to earnings in the Foodservice
segment. The charge includes a write-down to the estimated net
realizable values of the assets being abandoned and takes into
consideration future holding costs and costs related to the sale of the
properties.
In the transition period ended December 31, 1994, the company's decision
to consolidate its 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
facility 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 other assets. 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 potential
environmental liabilities on the Peninsula location. During the years
ended December 31, 1996 and 1995, $1,063 and $641 was paid and charged
against these reserves, respectively.
During 1995, additional costs related to the plant consolidation of $2.8
million were expensed as incurred and include items such as moving and
relocation, engineering, and severance. No additional costs are
expected to be incurred related to these items.
11.
________________________________________________________________________
CONTINGENCIES
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.
Approximately 150 PRP's have been identified as having shipped
substances to the Site. 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.
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 11% of the total cleanup costs.
In connection with this matter, the company expensed $0.2 million in
1996, $0.2 million in 1995, and $1.6 million in fiscal year 1994, for
its estimated portion of the cleanup costs. There were no expenses
incurred during the transition period ended December 31, 1994.
The company is required to adopt the AICPA Statement of Position
("SOP") No. 96-1, "Environmental Remediation Liabilities", in 1997.
The adoption of this SOP is not expected to have a material effect on
the financial statements.
As of December 31, 1996, 35 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 December 31, 1996 are $6.7 million; $2.6
million reserved specifically for the 35 cases referenced above, and
$4.1 million for incurred but not reported claims. These reserves were
estimated using actuarial methods. The highest current reserve for a
non-insured claim is $0.2 million, and $0.6 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. Presently, there is no
reliable means to estimate the amount of any such potential changes.
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.
12.
________________________________________________________________________
RETIREMENT AND HEALTH CARE PLANS
The company provides retirement benefits through noncontributory
deferred profit sharing plans covering substantially all employees.
Company contributions to the plans are based upon formulas contained in
such plans. The company also has a defined contribution plan in which
the company matches 25% of participant contributions up to a maximum of
5% of a participant's compensation. Total costs incurred were $8,810 in
1996, $4,657 in 1995, $2,165 for the transition period, and $4,981 for
fiscal 1994.
The company maintained an employee benefit trust through which group
health benefits were funded. The costs of group health benefits was
$4,351 in 1995, $2,505 in the transition period, and $4,790 in fiscal
1994. The company terminated this trust at the end of 1995. The
current and future benefit obligations of the trust were assumed by the
company at the date of termination. Subsequent to the termination, the
company maintains the plan as a self-funded employee health plan which
provides for the same coverage and terms. Total costs of the group
health benefits were $4,554 in 1996.
The company also provides certain health care benefits for eligible
retired employees. Substantially all of the company's domestic
employees hired before January 1, 1990, may become eligible for these
benefits if they reach a normal retirement age while working for the
company and satisfy certain years of service requirements.
The components of the periodic postretirement health benefit cost are as
follows:
<TABLE>
<CAPTION>
Transition
Period
Dec. 31, Dec. 31, Dec. 31, July 2,
1996 1995 1994 1994
------ ------- ------ ------
<S> <C> <C> <C> <C>
Service cost - benefits earned
during the year $ 260 $ 323 $ 147 $ 230
Interest cost on accumulated
postretirement health
benefit obligation 1,044 1,393 694 1,279
Amortization of actuarial gain (136) -- -- --
------ ------ ------ -------
Net periodic postretirement
health benefit cost $1,168 $1,716 $ 841 $1,509
------ ------ ------ -------
</TABLE>
The components of the accumulated periodic postretirement health benefit
obligation at December 31, 1996 and 1995 are as follows:
<TABLE>
<CAPTION>
1996 1995
------- ---------
<S> <C> <C>
Retirees $ 8,325 $ 10,920
Active participants 6,497 7,952
Unrecognized gain 4,633 318
-------- --------
Accumulated postretirement
health benefit obligation $ 19,455 $ 19,190
-------- --------
</TABLE>
The health care cost trend rate assumed in the determination of the
accumulated postretirement benefit obligation is 8.0% in 1996, decreases
1.0% per year to 5.0% for 1999, and remains at that level thereafter.
Increasing the assumed medical trend rates by one percentage point in
each year would increase the accumulated postretirement health benefit
obligation by $1,971 at December 31, 1996 and the aggregate of the
service and interest cost components of net periodic postretirement
health benefit cost by $208 for 1996.
The discount rate used in determining the accumulated postretirement
health benefit obligation for 1996 is 7.50% compounded annually, 7.25%
compounded annually for 1995, and 8.0% compounded annually for all other
periods. The plan is unfunded.
It is reasonably possible that the estimate for future retirement and
health care costs may change in the near future based upon changes in the
health care environment or changes in interest rates which may arise.
13.
_________________________________________________________________________
LEASES
The company leases various property, plant and equipment. Terms of the
leases vary, but generally require the company to pay property taxes,
insurance premiums, and maintenance costs associated with the leased
property. Rental expense attributable to operating leases, was $4,474 in
1996, $7,232 in 1995, $3,724 in the transition period, and $7,816 in
1994. Total minimum rental obligations under noncancelable operating
leases, as of December 31, 1996, aggregated $19,018 and were payable as
follows:
1997 $2,717 2000 $ 1,257
1998 $2,210 2001 $ 1,117
1999 $1,555 Thereafter $10,162
14.
_________________________________________________________________________
BUSINESS INFORMATION
The company's business units, which consist of Foodservice Equipment
("Foodservice"), Cranes and Related Products ("Cranes"), and Marine
Operations ("Marine"), operate in both domestic and international
markets.
Foodservice products consist primarily of commercial ice cube machines,
dispensers, and related accessories, as well as commercial refrigerators
and freezers. Foodservice distributes its products primarily in the
United States. Foodservice products serve the lodging, restaurant,
healthcare, and convenience store markets which are impacted by
demographic changes and business cycles.
Cranes' products consist primarily of crawler and truck-mounted lattice
boom and hydraulic cranes and excavators which serve the construction,
energy, and mining industries. Cranes distributes its products
worldwide, primarily in the U.S., Southeast Asia, Middle East and Europe.
Cranes' operations are tied most closely to energy and infrastructure
projects throughout the world.
Marine provides ship-repair services to foreign and domestic vessels
operating on the Great Lakes. Marine serves the Great Lakes maritime
market consisting of both U.S. and Canadian fleets, inland waterway
operators, and oceangoing vessels that transit the Great Lakes and St.
Lawrence Seaway.
Information concerning the company's operations in various businesses is
presented on page 22. Export sales were approximately $68 million in
1996, $61 million in 1995, $31 million during the transition period, and
$57 million in 1994. Foreign sales, operating losses, and identifiable
assets for 1996 are $11.8 million, $0.1 million, and $14.3 million,
respectively.
MANAGEMENT'S REPORT ON CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------
Company management is responsible for the integrity of this annual
report's consolidated financial statements. Those statements were
prepared in accordance with generally accepted accounting principles.
Where necessary, amounts are based on judgments and estimates by
management. All financial information in this report matches the
financial statements.
The company maintains an internal accounting system designed to provide
reasonable assurance that assets are safeguarded and that books and
records reflect only authorized transactions.
To further safeguard assets, the company has established an Audit
Committee composed of directors who are neither officers nor employees of
the company. The Audit Committee is responsible for reviewing the
company's financial reports and accounting practices. The Audit
Committee meets periodically with the company's independent accountants.
The company's independent accountants provide an objective examination of
the company's financial statements. They evaluate the company's system
of internal controls and perform tests and other procedures necessary to
express an opinion on the fairness of the presentation of the
consolidated financial statements.
/s/ Fred M. Butler
---------------------------------
Fred M. Butler
President & Chief Executive Officer
/s/ Robert R. Friedl
---------------------------------------
Robert R. Friedl
Senior Vice President & Chief Financial Officer
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
- ----------------------------------------
To The Stockholders
The Manitowoc Company, Inc.
We have audited the accompanying consolidated balance sheets of The
Manitowoc Company, Inc. and Subsidiaries as of December 31, 1996 and 1995
and the related consolidated statements of earnings, stockholders'
equity, and cash flows for the years ended December 31, 1996 and 1995 and
the period from July 3, 1994 to December 31, 1994. 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. The consolidated financial statements of The
Manitowoc Company, Inc. and Subsidiaries as of July 2, 1994 were audited
by other auditors whose report, dated July 28, 1994 expressed an
unqualified opinion on those statements.
We conducted our audits in accordance with generally accepted auditing
standards. 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 consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial
position of The Manitowoc Company, Inc. and Subsidiaries as of December
31, 1996 and 1995, and the consolidated results of their operations and
their cash flows for the years ended December 31, 1996 and 1995, and the
period from July 3, 1994 to December 31, 1994, in conformity with
generally accepted accounting principles.
/s/ Coopers & Lybrand L.L.P.
-----------------------------
COOPERS & LYBRAND L.L.P.
Milwaukee, Wisconsin
February 5, 1997, except as to certain information in Note 7, for which
the date is February 19, 1997.
<TABLE>
<CAPTION>
SUPPLEMENTAL QUARTERLY FINANCIAL INFORMATION
(Unaudited)
The table below presents quarterly data for calendar years ended December 31, 1996 and 1995
(Thousands of dollars, except per share data)
1996 1995
--------------------------------------------- ------------------------------------------
First Second Third Fourth First Second Third Fourth
------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net sales $114,099 $139,219 $132,042 $115,105 $69,101 $82,287 $80,088 $ 81,673
Gross margin 28,637 37,891 36,778 31,335 15,919 21,204 18,011 20,336
Net earnings 4,114 8,798 8,534 4,197 1,768 5,386 3,590 3,825
Per common share:*
Net earnings .36 .76 .74 .36 .15 .47 .31 .33
Dividends .17 .17 .17 .17 .17 .17 .17 .17
<FN>
* Per share data adjusted to reflect three-for-two stock split.
</FN>
</TABLE>
GLOSSARY
- --------
Industry Terms
- --------------
BOOM TRUCK: A flatbed truck chassis equipped with a hydraulic crane. A
boom truck is different than a truck crane in that it can haul up to
several thousand pounds of payload on its cargo deck.
CRAWLER CRANE: Usually refers to lattice-boom cranes that are mounted on
crawlers rather than a truck chassis. This method of mounting
significantly reduces ground bearing pressures and enables the crane to
pick-and-carry any rated load.
FIVE-YEAR SURVEY: Ship inspection and maintenance that must be performed
every five years to satisfy various maritime requirements of the U.S.
Coast Guard and other regulatory agencies.
GRAVING DOCK: An in-ground concrete structure in which ships can be
constructed or repaired. Because a graving dock is equipped with pumps
and watertight gates, it can be flooded so ships can float in, then be
pumped dry so crews can work on those portions of the ship that are
normally underwater.
HFC: An abbreviation for hydrofluorocarbon, the new enviornmentally
friendly refrigerant that is replacing the ozone-depleting CFC refrigerants
previously used in many types of refrigeration and cooling equipment.
KIOSK: A non-traditional restaurant.
LATTICE BOOM: A fabricated structure usually consisting of four chords
and tubular lacings. Lattice booms are typically lighter in weight than
similar-length telescopic booms. In addition, lattice booms generally
provide higher lifting capacities than telescopic booms in most
situations.
LUFFING JIB: A fabricated structure similar to, but smaller than, a
lattice boom. Mounted at the tip of a lattice boom, luffing jibs can
readily adjust their angles of operation, a capability that is not
possible with conventional fixed-jib attachments.
REACH-IN: A capital goods item typically found in restaurant and
convenience-store applications to store foodservice ingredients at
safekeeping temperatures prior to preparation, or for refrigerated
storage of various beverage and food items for retail sale.
RINGER: Manitowoc's patented heavy-lift attachment that dramatically
improves the reach, capacity, and lift dynamics of the basic crane to
which it is mounted.
SELF-UNLOADING VESSEL: Refers to the fleet of vessels operating on the
Great Lakes that are equipped with cargo-hold conveyors and cargo
discharge booms that enable these vessels to offload their bulk cargoes,
such as iron ore, coal, or cement, without requiring dockside assist
equipment.
TELESCOPIC BOOM: A boom, composed of several overlapping sections, which
can be extended or retracted like a telescope.
TUG/BARGE: A new form of Great Lakes bulk cargo transportation that
consists of a non-powered notch barge pushed by a high-horse power diesel
tug.
WALK-IN: A large, custom-built, refrigerated structure often found in
restaurants that can be equipped with cooling or freezing systems for
long-term storage of foodservice items prior to preparation.
Financial Terms
- ---------------
BACKLOG: Firm, unfilled orders. An indicator of future sales.
BOOK VALUE: Another term for shareholder equity, most often shown on a
per-share basis.
CASH FLOW: Funds generated by a company to operate the business, make
capital investments, repay debt, pay dividends, repurchase stock, and
make acquisitions.
COST OF CAPITAL: A weighted average of the after-tax cost of equity and
borrowed funds used to invest in operating capital for business.
CURRENT RATIO: Current assets divided by current liabilities, an
indicator of liquidity.
ECONOMIC VALUE ADDED: Measures the economic profit after a capital
charge is subtracted from an after-tax operating profit. A company adds
value when it earns more than the cost of capital.
OUTSOURCING: Contracting with an outside supplier to take over a
function that had been performed within the company.
PRODUCT MIX: A company that sells more than one product can have its
amount of sales vary from year to year, even when the overall number of
units sold remains the same. This occurs when multiple products have
different sales values, when a greater number of units with higher sales
values are sold in comparison to lower-priced units.
STOCK REPURCHASE PLAN: A systematic approach in which a company
repurchases its stock. The result of this action increases the percent
of ownership each remaining shareholder has in the company.
INVESTOR INFORMATION
- --------------------
Independent Public Accountants
- ------------------------------
Coopers & Lybrand L.L.P.
411 East Wisconsin Avenue
Milwaukee, WI 53202
Stock Transfer Agent and Registrar
- --------------------------------
First Chicago Trust Company of New York
P. O. Box 2500
Jersey City, NJ 07303-2500
ANNUAL MEETING - The annual meeting of Manitowoc shareholders will be
held at 9:00 a.m., CDT, on Tuesday, May 6, 1997, on the third floor of
the company's corporate offices at 500 South 16th Street, Manitowoc, WI.
We encourage shareholders to participate in this meeting in person or by
proxy.
STOCK LISTING - Manitowoc's common stock is traded on the New York
Stock Exchange and is identified by the ticker symbol MTW. Current
trading volume, share price, dividends, and related information can be
found in the financial section of most daily newspapers.
Quarterly common stock price information for our three most recent
fiscal years can be found on page 1 of this annual report.
MANITOWOC SHAREHOLDERS - Although the majority of Manitowoc
shareholders reside in Wisconsin, other shareholders reside throughout
the United States, Canada, Mexico, and several overseas locations.
On December 31, 1996, 11,511,357 shares of Manitowoc common stock were
outstanding. At such date, there were 2,362 shareholders of record.
FORM 10-K REPORT - Each year, Manitowoc files its Annual Report on Form
10-K with the Securities and Exchange Commission. Most of the financial
information contained in that report is included in the Annual Report to
Shareholders.
A copy of Form 10-K, as filed with the Securities and Exchange
Commission for 1996, may be obtained by any shareholder, without charge,
upon written request to:
E. Dean Flynn
Secretary
The Manitowoc Company, Inc.
P. O. Box 66
Manitowoc, WI 54221-0066
DIVIDENDS - Common stock dividends are usually considered in
conjunction with quarterly meetings of Manitowoc's board of directors.
DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN - The Dividend
Reinvestment and Stock Purchase Plan provides a convenient method to
acquire additional shares of Manitowoc stock through the investment of
quarterly dividends. Shareholders may also purchase shares by investing
cash as often as once a month in varying amounts from $10 up to a maximum
of $60,000 each calendar year.
Participation is voluntary and all fees associated with stock purchases
under these plans are paid for by Manitowoc.
To receive an information booklet and enrollment form, please contact
our stock transfer agent and registrar, First Chicago Trust Company of New
York.
EXHIBIT 13 - APPENDIX A
Cross Reference or
Graph No. Description of Graph Narrative Discussion
- --------- -------------------- ---------------------
1 Bar Graph of Consolidated Graph shows consolidated net
Net Sales for fiscal years sales of $246 million, $279
1992-1994 and calendar years million and $275 million for
1995 and 1996. fiscal 1992, 1993 and 1994 and
$313 million and $500 million
for calendar 1995 and 1996.
2 Bar Graph of Consolidated Graph shows consolidated gross
Gross Margins for fiscal years margins of $54 million, $56
1992-1994 and calendar years million, $68 million, $75
1995 and 1996. million and $135 million for
fiscal 1992, 1993 and 1994 and
calendar 1995 and 1996.
3 Bar Graph of Consolidated Graph shows consolidated
Operating Earnings for fiscal operating earnings of $10
years 1992-1994 and calendar million, $8 million, $21
years 1995 and 1996. million, $23 million and
$51 million for fiscal 1992,
1993 and 1994 and calendar
1995 and 1996.
4 Bar Graph of Consolidated Graph shows consolidated net
Net Earnings for fiscal years earnings of $8 million for
1992-1994 and calendar years fiscal 1992, a net loss of $4
1995 and 1996. million for fiscal 1993, and
net earnings of $14 million,
$15 million and $26 million for
fiscal 1994 and calendar 1995
and 1996, respectively.
5 Bar Graph of Consolidated Free Graph shows consolidated free
Cash Flow for fiscal years cash flows of $28 million, $63
1992-1994 and calendar years million, $37 million, $16
1995 and 1996. million and $65 million for
fiscal 1992, 1993 and 1994 and
calendar 1995 and 1996.
6 Bar Graph of Invested Graph shows invested capital of
Capital for fiscal years $180 million, $159 million,
1992-1994 and calendar years $130 million, $140 million and
1995 and 1996. $243 million for fiscal 1992,
1993 and 1994 and calendar 1995
and 1996.
7 Bar Graph of Consolidated Graph shows international
International Shipments for shipments of $41 million, $65
fiscal years 1992-1994 and million, $57 million, $61
calendar years 1995 and 1996. million and $68 million for
fiscal 1992, 1993 and 1994 and
calendar 1995 and 1996.
8 Bar Graph of Average Shares Graph shows average shares
Outstanding for fiscal years outstanding of 15.5 million
1992-1994 and calendar years for fiscal year 1992,
1995 and 1996. 14.6 million for fiscal 1993,
13.1 million for fiscal 1994
and 11.5 million for calendar
1995 and 1996.
EXHIBIT 21
1996 10-K
LIST OF SUBSIDIARIES
JURISDICTION
SUBSIDIARY OF INCORPORATION
_________________________________________________________________
Femco Machine Co. Nevada
Kolpak Manufacturing Company Wisconsin
Manitex, Inc. Texas
Manitowoc Engineering, Inc. Nevada
Manitowoc Equipment Works PTE, Ltd. Singapore
Manitowoc Equipment Works, Inc. Nevada
Manitowoc Europe Holdings, Ltd. England
Manitowoc Europe Limited England
Manitowoc International Sales Corp. Barbados
Manitowoc Korea Company, Ltd. Korea
Manitowoc Nevada, Inc. Nevada
Manitowoc Re-Manufacturing, Inc. Wisconsin
Manitowoc Western Company, Inc. Wisconsin
North Central Crane & Excavator Sales Corp. Nevada
The Shannon Group, Inc. Delaware
West Manitowoc, Inc. Wisconsin
subs96
EXHIBIT 23.1
1996 10-K
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration
statements of The Manitowoc Company, Inc. on Forms S-8 (File Nos. 33-
48665 and 33-65316) of our reports dated February 5, 1997 on our
audit of the consolidated financial statements and financial
statement schedule of The Manitowoc Company, Inc. and Subsidiaries as
of December 31, 1996 and 1995, and for the years ended December 31,
1996 and 1995, and the period from July 3, 1994 to December 31, 1994,
which reports are incorporated by reference and included,
respectively, in this Annual Report on Form 10-K.
Milwaukee, Wisconsin /s/ Coopers & Lybrand L.L.P.
March 31, 1997 ----------------------------
COOPERS & LYBRAND L.L.P.
consent
EXHIBIT 23.2
1996 10-K
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation of our reports included in this Form 10-K,
into the Company's previously filed Registration Statement
Nos. 33-48665 and 33-65316.
Milwaukee, Wisconsin /s/ Arthur Andersen LLP
March 21, 1997 -------------------------
ARTHUR ANDERSEN LLP
con-aa
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 14364
<SECURITIES> 1657
<RECEIVABLES> 54852
<ALLOWANCES> 976
<INVENTORY> 43978
<CURRENT-ASSETS> 127875
<PP&E> 189383
<DEPRECIATION> 104680
<TOTAL-ASSETS> 317710
<CURRENT-LIABILITIES> 110302
<BONDS> 0
0
0
<COMMON> 163
<OTHER-SE> 100166
<TOTAL-LIABILITY-AND-EQUITY> 317710
<SALES> 500465
<TOTAL-REVENUES> 500465
<CGS> 365824
<TOTAL-COSTS> 449575
<OTHER-EXPENSES> (319)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 9097
<INCOME-PRETAX> 42506
<INCOME-TAX> 16863
<INCOME-CONTINUING> 25643
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 25643
<EPS-PRIMARY> 2.23
<EPS-DILUTED> 2.23
</TABLE>
