SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended
September 29, 1996
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 1-10182
-------
Scotsman Industries, Inc.
--------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 36-3635892
----------------------- -------------------------------------
(State of Incorporation) (I.R.S. Employer Identification No.)
775 Corporate Woods Parkway, Vernon Hills, Illinois 60061
----------------------------------------------------------
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (847) 215-4500
--------------
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 _____
At November 1, 1996 there were 10,505,813 shares of registrant's
---------------- ----------
common stock outstanding.<PAGE>
<PAGE> 2
SCOTSMAN INDUSTRIES, INC.
-------------------------
FORM 10-Q
---------
September 29, 1996
------------------
INDEX
-----
PART I--FINANCIAL INFORMATION:
Item 1. FINANCIAL STATEMENTS-
HISTORICAL-
Condensed Statement of Income
Condensed Balance Sheet
Condensed Statement of Cash Flows
Notes to Condensed Financial Statements
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
PART II--OTHER INFORMATION:
Item 1. LEGAL PROCEEDINGS
Item 5. OTHER EVENTS
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
SIGNATURE
<PAGE> 3
PART I--FINANCIAL INFORMATION
ITEM 1. Financial Statements
-----------------------------
<TABLE>
<CAPTION>
SCOTSMAN INDUSTRIES, INC.
CONDENSED STATEMENT OF INCOME
(Unaudited)
(In thousands, except per-share amount)
For the Three
Months Ended
---------------------------
Sept. 29, Oct. 1,
1996 1995
------ ------
<S> <C> <C>
Net sales $ 92,764 $87,075
Cost of sales 66,558 63,348
------- ------
Gross profit $ 26,206 $23,727
Selling and administrative expenses 14,195 13,079
------- ------
Income from operations $ 12,011 $10,648
Interest expense, net 1,322 1,639
------- ------
Income before income taxes $ 10,689 $ 9,009
Income taxes 4,906 4,099
------- ------
Net income $ 5,783 $ 4,910
Preferred stock dividends 251 310
------- ------
Net income available
to common shareholders $ 5,532 $ 4,600
======= ======
Net income per share (i):
Primary $ 0.58 $ 0.50
======= ======
Fully diluted $ 0.54 $ 0.46
======= ======
</TABLE>
<PAGE> 4
PART I--FINANCIAL INFORMATION
ITEM 1. Financial Statements
-----------------------------
CONDENSED STATEMENT OF INCOME - continued
-----------------------------
(i) PRIMARY:
Primary earnings per common share are computed by dividing net
income available to common shareholders by the weighted average
number of common shares and common stock equivalents outstanding
during each period: 9,474,377 and 9,129,549 for the three months
ended September 29, 1996, and October 1, 1995, respectively. The
computation includes the dilutive impact of common stock options
outstanding.
FULLY DILUTED:
The calculation of fully-diluted net income per share is based on
net income before preferred stock dividends. The number of
shares assumes the conversion of the convertible preferred stock
from April 29, 1994, the date of issue, and also includes the
dilutive impact, as if issuance had occurred on April 29, 1994,
the acquisition date of The Delfield Company ("Delfield") and
Whitlenge Drink Equipment Limited ("Whitlenge"), of contingent
shares which were distributed to the sellers of Delfield and
Whitlenge in March 1995 based on those businesses having achieved
a specified combined level of earnings during fiscal year 1994.
The total number of shares used in the fully-diluted calculation
for the three months ended September 29, 1996, and October 1,
1995, were 10,730,902 and 10,654,786, respectively.
See notes to unaudited condensed financial statements.
<PAGE> 5
PART I--FINANCIAL INFORMATION
ITEM 1. Financial Statements
-----------------------------
<TABLE>
<CAPTION>
SCOTSMAN INDUSTRIES, INC.
CONDENSED STATEMENT OF INCOME
(Unaudited)
(In thousands, except per-share amount)
For the Nine
Months Ended
---------------------------
Sept. 29, Oct. 1,
1996 1995
------ ------
<S> <C> <C>
Net sales $282,720 $253,512
Cost of sales 202,250 183,693
------- -------
Gross profit $ 80,470 $ 69,819
Selling and administrative expenses 45,072 39,929
------- -------
Income from operations $ 35,398 $ 29,890
Interest expense, net 4,159 4,960
------- -------
Income before income taxes $ 31,239 $ 24,930
Income taxes 14,772 11,461
------- -------
Net income $ 16,467 $ 13,469
Preferred stock dividends 813 930
------- -------
Net income available
to common shareholders $ 15,654 $ 12,539
======= =======
Net income per share (i):
Primary $ 1.68 $ 1.40
======= =======
Fully diluted $ 1.54 $ 1.26
======= =======
</TABLE>
<PAGE> 6
PART I--FINANCIAL INFORMATION
ITEM 1. Financial Statements
-----------------------------
CONDENSED STATEMENT OF INCOME - continued
-----------------------------
(i) PRIMARY:
Primary earnings per common share are computed by dividing
net income available to common shareholders by the weighted
average number of common shares and common stock equivalents
outstanding during each period: 9,310,155 and 8,940,992 for
the nine months ended September 29, 1996, and October 1,
1995, respectively. The computation includes the dilutive
impact of common stock options outstanding.
FULLY DILUTED:
The calculation of fully-diluted net income per share is
based on net income before preferred stock dividends. The
number of shares assumes the conversion of the convertible
preferred stock from April 29, 1994, the date of issue, and
also includes the dilutive impact, as if issuance had
occurred on April 29, 1994, the acquisition date of The
Delfield Company ("Delfield") and Whitlenge Drink Equipment
Limited ("Whitlenge"), of contingent shares which were
distributed to the sellers of Delfield and Whitlenge in
March 1995 based on those businesses having achieved a
specified combined level of earnings during fiscal year
1994. The total number of shares used in the fully-diluted
calculation for the nine months ended September 29, 1996,
and October 1, 1995, were 10,726,127 and 10,649,648,
respectively.
See notes to unaudited condensed financial statements.
<PAGE> 7
<TABLE>
<CAPTION>
SCOTSMAN INDUSTRIES, INC.
CONDENSED BALANCE SHEET
(In thousands)
Sept. 29, Dec. 31,
A S S E T S 1996 1995
----------- --------- --------
(unaudited)
CURRENT ASSETS:
<S> <S> <S>
Cash and temporary cash investments $ 16,035 $ 15,808
Trade accounts receivable, net of
reserves of $3,290 and $2,960 71,632 54,500
Inventories 50,791 52,251
Deferred income taxes 5,276 5,690
Other current assets 3,780 3,093
------- --------
Total current assets $147,514 $131,342
PROPERTIES AND EQUIPMENT, net of
accumulated depreciation of $42,940
and $39,531 46,891 46,373
GOODWILL, net 95,123 94,732
OTHER NONCURRENT ASSETS 4,501 3,496
-------- --------
$294,029 $275,943
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES:
Short-term debt and current maturities
of long-term debt and capitalized
lease obligations $ 388 $ 13,037
Trade accounts payable 28,562 24,174
Accrued income taxes 8,849 4,491
Accrued expenses 36,872 34,812
-------- --------
Total current liabilities $ 74,671 $ 76,514
LONG-TERM DEBT AND CAPITALIZED LEASE
OBLIGATIONS 77,537 74,719
DEFERRED INCOME TAXES 4,319 3,814
OTHER NONCURRENT LIABILITIES 8,987 8,577
-------- --------
Total liabilities $165,514 $163,624
======== ========
<PAGE> 8
SHAREHOLDERS' EQUITY:
Common stock, $.10 par value $ 945 $ 915
Preferred stock, $1.00 par value 1,625 2,000
Additional paid in capital 71,107 70,514
Retained earnings 60,198 45,232
Deferred compensation and
unrecognized pension cost (118) (88)
Foreign currency translation adjustments (3,900) (4,911)
Less: Common stock held in treasury (1,342) (1,343)
-------- ------
Total Shareholders' Equity $128,515 $112,319
-------- --------
$294,029 $275,943
======== ========
</TABLE>
See notes to unaudited condensed financial statements.
<PAGE> 9
<TABLE>
<CAPTION>
SCOTSMAN INDUSTRIES, INC.
CONDENSED STATEMENT OF CASH FLOWS
(Unaudited)
(In Thousands)
For the Nine
Months Ended
----------------------
Sept. 29, Oct. 1,
1996 1995
--------- --------
<S> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES:
Net income $ 16,467 $ 13,469
Adjustments to reconcile net income to
net cash provided by operating activities-
Depreciation and amortization 6,473 5,580
Change in assets and liabilities-
Trade accounts receivable (16,278) (15,860)
Inventories 1,739 1,637
Trade accounts payable and other
liabilities 10,243 4,352
Other, net 685 2,016
-------- --------
Net cash provided by
operating activities $ 19,329 $ 11,194
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in properties and equipment $ (4,840) $ (4,829)
Proceeds from disposal of property,
plant and equipment 180 93
Investment in joint ventures (2,423) -
Acquisition of Hartek (991) -
-------- --------
Net cash used in investing activities $ (8,074) $ (4,736)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments under long-term debt
and capitalized lease obligations $(13,153) $(18,224)
Issuance of long-term debt 16,075 17,806
Dividends paid to shareholders (1,551) (1,584)
Short-term debt, net (12,489) (2,386)
Net cash used in
financing activities $(11,118) $ (4,388)
--------- --------
Effect of exchange rate changes on cash
and temporary cash investments 90 (371)
NET INCREASE IN CASH AND TEMPORARY CASH
INVESTMENTS $ 227 $ 1,699
<PAGE> 10
SCOTSMAN INDUSTRIES, INC.
CONDENSED STATEMENT OF CASH FLOWS-CONTINUED
(Unaudited)
(In Thousands)
For the Nine
Months Ended
------------------------
Sept. 29, Oct. 1,
1996 1995
--------- --------
CASH AND TEMPORARY CASH INVESTMENTS, beginning
of period 15,808 9,770
CASH AND TEMPORARY CASH INVESTMENTS, -------- --------
end of period $ 16,035 $ 11,469
======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $ 4,739 $ 4,180
======== ========
Income taxes $ 10,018 $ 8,408
======== ========
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND
FINANCING ACTIVITIES:
Investment in properties and equipment through
issuance of capitalized lease obligations $ (42) $ (64)
======== ========
Issuance of common stock for acquisition $ - $(12,089)
======== ========
</TABLE>
See notes to unaudited condensed financial statements.
<PAGE> 11
SCOTSMAN INDUSTRIES, INC.
-------------------------
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
-------------------------------------------------
(1) BASIS OF PRESENTATION:
-------------------------
The condensed consolidated financial statements include the accounts
of Scotsman Industries, Inc. and its consolidated subsidiaries (the
"Company").
All accounting policies used in the preparation of the quarterly
condensed financial statements are consistent with the accounting
policies described in the notes to financial statements for the year
ended December 31, 1995, appearing in the Company's 1995 Annual Report
to Shareholders ("Annual Report"). In the opinion of management, the
interim financial statements reflect all adjustments consisting only
of recurring items which are necessary for a fair presentation of the
Company's financial position, results of operations and cash flows for
the interim periods presented. The results for such interim periods
are not necessarily indicative of results for the full year. These
financial statements should be read in conjunction with the
consolidated financial statements and the accompanying notes to
consolidated financial statements included in the aforementioned
Annual Report.
(2) INVENTORIES:
---------------
Inventories consisted of the following (in thousands):
Sept. 29, December 31,
1996 1995
------- --------
Finished goods $21,037 $21,604
Work-in-process 10,021 8,023
Raw materials 19,733 22,624
------ ------
Total inventories $50,791 $52,251
====== ======
<PAGE> 12
(3) ACQUISITION OF HARTEK:
--------------------------
The Company's Scotsman Group Inc. subsidiary acquired on December 31,
1995, the stock of Hartek Beverage Handling GmbH and the stock of
Hartek Awagem Vertriebsges. m.b.H., a beverage dispensing manufacturer
and a small distributor of Hartek and other products located in
Radevormwald, Germany and Vienna, Austria, respectively (collectively,
"Hartek"). Hartek had 1995 annual sales of approximately $24 million.
The method of accounting used for the combination was the purchase
method. The results of Hartek have been included in the income
statements for the Company as of the date of acquisition, December 31,
1995. Hartek was acquired for $5.8 million which included acquisition
costs. No shares of stock were or will be issued as a result of this
acquisition. The cash outlay to the seller was offset by cash on the
books of Hartek at closing of $3.3 million. Preliminary goodwill of
$2.9 million has been recorded and will be finalized within 12 months
of the acquisition. The amount of goodwill from this acquisition is
being amortized for book purposes over 40 years using the straight-
line method. Under the terms of the agreement governing the purchase
of Hartek, the Company is required to pay to the seller 75 percent of
the actual amount of any tax saving realized by Hartek in respect of
each of its financial years ended on December 31, 1996, 1997 and 1998
through the use of the amount of any tax loss carry forward available
to Hartek as of December 31, 1995, in reduction of taxable profits for
those financial years 1996 through 1998. This additional
consideration is not to exceed an amount of 2.2 million deutsche marks
or, as of September 29, 1996, approximately $1.4 million. In
addition, at the date of acquisition, Scotsman also assumed Hartek
debt of approximately $6.4 million.
Pro forma third quarter and September year-to-date 1995 unaudited
sales for the Company, as if Hartek were acquired on the first day of
fiscal year 1995, would have been $93 million and $274 million,
respectively. Pro forma information relating to net income and
earnings per share has not been presented as the pro forma impact of
those numbers on the Company's results was not material. Pro forma
information includes assumptions and estimates and is not necessarily
indicative of the results of operations of the Company as they may be
in the future or as they might have been had the transaction occurred
as discussed above.
<PAGE> 13
SCOTSMAN INDUSTRIES, INC.
------------------------
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
-------------------------------------------------
Results of Operations
---------------------
The Company reported record third-quarter sales and earnings in 1996.
Net sales for the third quarter of 1996 were $92.8 million, up $5.7
million or 7 percent from sales for the third quarter of 1995. Third
quarter 1996 results include sales of $5.9 million from Hartek, which
was acquired on December 31, 1995. Net income for the third quarter
of 1996 was $5.8 million, up $0.9 million or 18 percent compared to
the third quarter of 1995. The impact of changes in foreign exchange
rates did not have a significant impact on the comparison of the
results of operations between the third quarter of 1996 and the third
quarter of 1995.
The Company also reported record results for the nine months ended
September 29, 1996. Net sales for the first nine months of 1996 were
$282.7 million, up $29.2 million or 12 percent from sales for the
first nine months of 1995. Results for the first nine months of 1996
include sales of $20.1 million from Hartek, which was acquired on
December 31, 1995. Net income for the first nine months of 1996 was
$16.5 million, up $3.0 million or 22 percent compared to the same
period of 1995. The impact of changes in foreign exchange rates did
not have a significant impact on the comparison of the results of
operations between the first nine months of 1996 and the first nine
months of 1995.
During the third quarter, the Company began seeing an anticipated
slowdown from the recent rapid rates of sales growth in the Company's
European businesses and the Company expects similar market conditions
will exist for the balance of 1996. The Company's sales in both the
U.S. and Europe were also affected somewhat by unseasonably cool, wet
weather. The Company's sales in the fourth quarter are expected to be
favorably influenced by the initiation of a major new program with
Boston Market at one of Scotsman's domestic subsidiaries, The Delfield
Company ("Delfield"). Delfield has been named the supplier of serving
counters to Boston Market for all their new stores and for their
recently announced store redesign and renovation project to improve
customer throughput time. For a description of certain risks and
uncertainties relating to the forward-looking statements included in
the first and third sentences of this paragraph, see the "Cautionary
Statements" included in Exhibit 99 to this Quarterly Report on Form
10-Q.
<PAGE> 14
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
-------------------------------------------------
Results of Operations - continued
---------------------
Scotsman's worldwide ice machine sales, representing approximately
half of the Company's sales for both the third quarter and the first
nine months of 1996, were flat in U.S. dollars for the quarter and
were up more than 7 percent year-to-date, respectively, compared with
the same periods in 1995. Ice machine sales from the Company's
European operations were up 13 percent in U.S. dollars for the third
quarter of 1996 and were up 21 percent for the first nine months of
1996 when compared to the same periods in 1995.
Third quarter 1996 worldwide sales of beverage dispensing equipment,
representing approximately one fifth of the Company's sales for the
quarter and year-to-date period, were up 53 percent in U.S. dollars
compared to the third quarter of 1995. Sales for the first nine
months of 1996 of beverage dispensing equipment were up 78 percent in
U.S. dollars compared to prior year. These increases were primarily
attributable to the inclusion of the results of the Hartek
acquisition. They also reflect strong international sales from the
Company's U.K.-based Whitlenge Drink Equipment, Ltd. Sales of
beverage equipment in the U.S. were down from the prior year for both
the quarter and the year-to-date period due to reduced purchases of
fountain dispensing equipment by a major soft drink firm.
Worldwide sales of food preparation and storage equipment were flat
for the quarter compared to the prior year. For the year-to-date
period ended September 1996, worldwide sales of food preparation and
storage equipment in U.S. dollars were down 4 percent when compared to
the first nine months of 1995. Food preparation and storage equipment
represented slightly more than one fourth of the Company's sales in
the third quarter and the year-to-date period ended September 1996.
Third quarter results reflect gains from the Company's continuing
efforts to improve productivity and leverage the Company's combined
resources to reduce manufacturing and purchased materials costs.
Price increases obtained earlier in the year for certain products also
contributed to the Company's year-over-year improvement in both net
operating margin and net income margin. The Company's net operating
margin increased to 12.9 percent versus 12.2 percent in the prior
year, and the Company's net income as a percentage of sales was 6.2
percent, up from the 5.6 percent earned in the third quarter of 1995.
Improvements were also achieved for the Company's year-to-date
margins.
Selling and administrative expenses increased by $1.1 million for the
third quarter and $5.1 million for the nine months ended September
1996 when compared to the same periods in 1995. The increases in both
the quarter and the year-to-date period were primarily attributable to
the inclusion of selling and administrative expenses of the newly-
acquired Hartek business.
<PAGE> 15
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
-------------------------------------------------
Results of Operations - continued
---------------------
Interest expense, net, decreased by $0.3 million in the third quarter
of 1996 and by $0.8 million for the 1996 year-to-date period when
compared to the same periods in 1995. The decreases were primarily
the result of lower domestic long-term borrowings.
The Company's overall effective tax rate was higher for both the third
quarter (46 percent versus 45 percent) and first nine months of 1996
(47 percent versus 46 percent) compared with the same periods of the
prior year. The higher rate for both the quarter and first nine months
of the year was primarily attributable to a greater percentage of
earnings from higher taxed foreign operations.
<PAGE> 16
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
-------------------------------------------------
Financial Condition
-------------------
Cash and temporary cash investments increased by $0.2 million from
year end 1995 to September 29, 1996, reflecting slightly higher
domestic cash balances. Accounts receivable increased by $16.3
million from December of 1995, primarily resulting from the sales
increase when comparing the third quarter of 1996 to the fourth
quarter of 1995. Inventory decreased by $1.7 million which was due
primarily to lower foreign inventory balances. Trade accounts payable
increased by $3.9 million when compared to December of 1995 which
reflects increased seasonal activity. The changes in accounts
receivable, inventory and accounts payable from December 1995 have all
been presented excluding the impact of foreign exchange on those
categories.
During the third quarter, the Company invested approximately $0.4
million to increase its stake in its China joint venture with Shenyang
Xinle Precision Machinery Company from 40 percent to 60 percent. The
China joint venture is engaged in ice machine production for the
domestic China market and is presently developing its sales,
distribution and service networks.
During the third quarter, the Company also invested approximately $2
million to acquire a 50 percent interest in a joint venture with Aztec
Development Limited in the U.K. to manufacture and sell a state-of-
the-art beverage dispensing valve that has demonstrated the ability to
enhance fountain soft drink quality and consistency while reducing
service requirements in the U.K. market. Future applications of this
valve are targeted for the much larger North American market.
Shareholders' equity increased by $16.2 million from December of 1995
primarily due to income for the first nine months of 1996 and
accumulated translation adjustments, partially offset by the impact of
dividends.
Short-term debt of $6.4 million assumed in the acquisition of Hartek
was replaced in the first quarter of 1996 with lower cost long-term
debt. The debt-to-capital ratio at September 29, 1996, was 38 percent
compared with 44 percent at December 31, 1995.
<PAGE> 17
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
-------------------------------------------------
Financial Condition - continued
-------------------
On September 11, 1996, the Company announced that it would redeem all
of the outstanding shares of Scotsman's Series A $0.62 Cumulative
Convertible Preferred Stock. At the time of the announcement, there
were 1,625,303 of Series A preferred shares outstanding. In October
1996, prior to redemption, all of the holders of the Series A
preferred shares elected to convert their shares to Scotsman common
stock, and 1,239,611 additional shares of Scotsman common stock were
issued pursuant to such conversions. The conversion of these
outstanding preferred shares has no effect on the Company's fully-
diluted earnings per share and will save the Company approximately
$0.9 million in after-tax cash flow annually based on the difference
in dividends paid on common and the Series A preferred shares.
Primary earnings per share on a pro forma basis for the third quarter
of 1996 and the nine months ended September 29, 1996, as if all Series
A preferred shares had been converted to Scotsman common stock as of
the first day of both of those periods, would have been $0.54 and
$1.54, respectively.
On February 15, 1996, May 16, 1996, and August 15, 1996, the Company's
Board of Directors declared a dividend of 2 1/2 cents per share
payable to common shareholders of record on March 29, 1996, June 28,
1996, and September 30, 1996, respectively.
<PAGE> 18
PART II. OTHER INFORMATION
---------------------------
Item 1. Legal Proceedings
The Manitowoc Company, Inc. ("Manitowoc") has advised
the Company that Manitowoc has filed a lawsuit against
the Company. The lawsuit, entitled THE MANITOWOC
COMPANY, INC. V. SCOTSMAN INDUSTRIES, INC., No. 96-C-
5981, was filed on September 17, 1996 in the United
States District Court for the Northern District of
Illinois. In its complaint, Manitowoc alleges that the
CM[3] ice machine, a cuber machine introduced by the
Company in the first quarter of 1996, infringes two
patents owned by Manitowoc relating to a cleaning
feature on an ice machine. The Complaint seeks an
unspecified amount of compensatory damages, treble
damages for willful infringement, prejudgment interest
and attorneys' fees, and also a preliminary and/or
permanent injunction from further alleged acts of
infringement.
The Company has advised Manitowoc that it does not
believe the cleaning feature on its CM[3] machine
infringes either of Manitowoc's patents. The Company
also has informed Manitowoc that it has taken steps to
initiate a design change to the cleaning feature on its
CM[3] machine in the interests of attempting to avoid
litigation over these two patents and over a third
patent which Manitowoc claims the United States Patent
and Trademark Office plans to issue to Manitowoc
shortly.
Although Manitowoc has filed the lawsuit, it has not
yet served the complaint upon the Company. The Company
does not believe it has infringed Manitowoc's patents,
and intends to vigorously defend the lawsuit if
Manitowoc elects to proceed. While no assurances can
be given, the Company does not believe this lawsuit
will have a material adverse effect on the financial
condition of the Company or its results of operations.
Item 5. Other Events
The Company is filing certain "Cautionary Statements"
for the purpose of establishing a readily available
document which may be referenced pursuant to the "safe
harbor" provisions of the Private Securities Litigation
Reform Act of 1995. Such Cautionary Statements are
attached as Exhibit 99 and incorporated herein by
reference.
<PAGE> 19
Item 6. Exhibits and Reports
on Form 8-K
--------------------
(a) Exhibits
Exhibit 27 Article 5 Financial Data Schedule
for the Period Ended September 29,
1996.
Exhibit 99 Cautionary Statements
(b) The Registrant filed no reports on Form 8-K during
the quarterly period ended September 29, 1996.
<PAGE> 20
SIGNATURE
---------
Pursuant to the requirements of the Securities and Exchange
Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
SCOTSMAN INDUSTRIES, INC.
------------------------
Date: November 11, 1996 By:/s/ Donald D. Holmes
---------------- -----------------------
Donald D. Holmes
Vice President-Finance
and Secretary
<PAGE> 21
EXHIBIT INDEX
Number Description Page Number
------ ----------- -----------
27 Article 5 Financial Data Schedule 22
for the Period Ended September 29,
1996.
99 Cautionary Statements 23
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> This schedule contains summary financial
information extracted from Scotsman
Industries, Inc. Condensed Balance Sheet
(Unaudited) as of Sept. 29, 1996 and Scotsman
Industries, Inc. Condensed Statement of
Income (Unaudited) for the Nine Months Ended
Sept. 29, 1996 and is qualified in its
entirety by reference to such financial
statements.
<MULTIPLIER> 1000
<S> <C>
<FISCAL-YEAR-END> DEC-29-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-29-1996
<PERIOD-TYPE> 9-MOS
<CASH> 16,035
<SECURITIES> 0
<RECEIVABLES> 71,632
<ALLOWANCES> 3,290
<INVENTORY> 50,791
<CURRENT-ASSETS> 147,514
<PP&E> 46,891
<DEPRECIATION> 42,940
<TOTAL-ASSETS> 294,029
<CURRENT-LIABILITIES> 74,671
<BONDS> 77,537
<COMMON> 945
0
1,625
<OTHER-SE> 125,945
<TOTAL-LIABILITY-AND-EQUITY> 294,029
<SALES> 282,720
<TOTAL-REVENUES> 282,720
<CGS> 202,250
<TOTAL-COSTS> 202,250
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,159
<INCOME-PRETAX> 31,239
<INCOME-TAX> 14,772
<INCOME-CONTINUING> 16,467
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 16,467
<EPS-PRIMARY> 1.68
<EPS-DILUTED> 1.54
</TABLE>
Exhibit 99
SCOTSMAN INDUSTRIES, INC.
CAUTIONARY STATEMENTS
Information provided by the Company from time to time, either orally
or in writing, may contain certain "forward looking" information, as
that term is defined in the Private Securities Litigation Reform Act
of 1995 (the "Act"). Consistent with the Act, such forward-looking
information may include information relating to such matters as sales,
income, earnings per share, return on equity, capital expenditures,
dividends, capital structure, cash flow, debt to capitalization
ratios, internal growth rates, future economic performance,
management's plans and objectives for future operations, or the
assumptions relating to, or underlying, any such forward-looking
information. The cautionary statements set forth below are being made
pursuant to the provisions of the Act and with the intention of
obtaining the benefits of the "safe harbor" provisions of the Act.
The Company cautions investors that any forward-looking statements
made by the Company are not guarantees of future performance and that
actual results may differ materially from those expressed in, or
implied by, the forward-looking statements as a result of various
factors, including but not limited to the following:
1. The Company's performance should be expected to be affected by
the strength or weakness of the various economies in which the
Company markets its products, primarily in the United States and
Western Europe, but also in the Far East. The relative strength
or weakness of these economies may affect the rate at which new
hotels, restaurants, fast food outlets or other facilities with a
need for the Company's products are built, and the rate at which
other potential commercial customers replace or upgrade ice
machines, beverage dispensing systems, and food preparation and
storage equipment already in use, thus affecting the demand for
the Company's products.
2. Sales of a significant proportion of the Company's products can
be negatively impacted by abnormal weather conditions during
different seasons and quarters of the year.
3. Underutilization of the Company's facilities may occur as a
result of failure to meet anticipated sales volumes. Such
underutilization, which results in excess capacity costs, may
significantly affect the Company's operating results.
4. The Company's ability to realize operating profits is dependent
on its ability to timely manufacture, source and deliver products
which may be sold for a profit. Labor difficulties, delays in
delivery or increased prices of raw materials and purchased
components, scheduling and transportation difficulties,
management dislocations and delays in development and manufacture
of new products can negatively affect operating profits.
<PAGE> 24
5. The Company's results of operations can be negatively impacted by
product liability or other lawsuits and/or by warranty claims or
other returns of goods.
6. The Company manufactures some of its products in the United
Kingdom, Italy and Germany and sells its products throughout
Western Europe and the Middle and Far East. Currency
devaluations and unfavorable changes in foreign country monetary
and tax policies and other changes in the regulatory climate in
foreign countries could materially affect the Company's
profitability and the Company's plans to grow its international
businesses.
7. Although no single customer accounts for more than 10% of the
Company's consolidated net sales, the volume of sales of the
Company's drink dispensing equipment and food preparation and
storage equipment may be affected, from time to time, by changes
in the buying patterns of certain large customers as a result of
internal cost-control measures adopted by such customers, changes
in the strategic plans of such customers, or other factors.
8. The Company's products and manufacturing processes are subject to
various environmental, health and safety regulations and
standards. Such regulations and standards, from time to time,
may require significant changes in products or manufacturing
methods. The Company believes that environmental, health and
safety matters will not have a material effect on its business or
financial condition. However, legal and regulatory requirements
in this area are increasing, and there can be no assurance that
significant costs and liabilities will not be incurred as a
result of currently unidentified or future problems or new
regulatory developments.
