| Restatement of Previously Issued Financial Statements | 2. Restatement of Previously issued financial statements The Company has restated its quarterly Consolidated Statements of Operations, Statement of Comprehensive Income (Loss) and the Statements of Cash Flows for the three and nine months ended September 30, 2016. In addition, the Company has restated the Balance Sheets for the periods ended December 31, 2016. See the Company’s restated 10-K/A for the restated balance sheet as of December 31, 2016. Background As previously described in the Company’s Current Report on Form 8-K filed on November 6, 2017, in 2016 the Company sold 39 cranes for total sales revenues of approximately $15 million to a single broker customer in a series of transactions (the “Transactions”) that were each structured as a customary “bill and hold” arrangement. The revenue for the Transactions was originally recognized in 2016. Ten of these units that were sold for an aggregate value of approximately $3 million were returned during 2016 (and were subsequently sold to other customers), such that for 2016, a net of 29 cranes were sold for approximately $12 million. In addition, the Company made various payments that were expensed in 2016 and 2017 to the broker and its wholly-owned subsidiary. Furthermore, the debt taken on by the Broker customer to purchase the cranes was affectively guaranteed by the Company pursuant to certain related agreements. In connection with its review of its financial results for the quarter ended September 30, 2017, the Company became aware that the prior accounting treatment for the Transactions was not correct. Specifically, the Company has concluded that the relationship with the Broker and its wholly-owned subsidiary qualified as a Variable Interest Entity (“VIE”) and should therefore have resulted in a different accounting treatment. The Company has concluded that the revenue recognition criteria for 2016 sales were not met and payments to the Broker were not expenses of the Company. In addition, disclosures were incomplete. Description of the Restatement related to SVW The following describes the impact of corrections that affect the three and nine months ended September 30, 2016. Information concerning 2016 impact is discussed in the Company’s amended 10-K/A for the year ended December 31, 2016. Effect of Recording Sales to Third Party Recognizing sales when SVW related inventory was sold to third parties. (Statement of Operations – Column C) Effect of Recording Crane Rentals Income on the rental of SVW related inventory to third parties has been recorded as revenues for the corresponding. (Statement of Operations – Column C) Effect of Treating Funds Sent to SVW’s Wholly-Owned Subsidiary as Advances During the three and nine months ended September 30, 2016 there were no payments that the Company had originally classified as expenses paid to SVW’s wholly-owned subsidiary. Given SVW’s treatment as a VIE these payments have been reclassified as intercompany advances. (Statement of Operations – Column D) Recording of Payments Made by SVW to Lenders This includes the impact of payments made in connection with the aforementioned SVW debt. (Statement of Operations – Column E) Cumulative Income Tax Effect This includes the impact on the income taxes for the quarter and nine months ended September 30, 2016 related to the discontinued operations and SVW restatements discussed above. (Statement of Operations – Column F) Description of the Restatement not related to SVW Other The Company disclosed a partial residual value guarantee to support a customer’s financing of equipment purchased from the Company that was previously not disclosed (see Note 15). A residual value guarantee involves a guarantee that a piece of equipment will have a minimum fair market value at a future date if certain conditions are met by the customer. The Company has issued partially residual guarantees that have maximum exposure of approximately $1.6 million. The Company, however, does not have any reason to believe that any exposure from such a guarantee is either probable or estimable at this time, as such no liability has been recorded. This includes minor rounding and reclassification adjustments not included in previous categories. (Statement of Operations – Column G) Effect of Reclassifying ASV to Discontinued Operations For the three and nine months ended September 30, 2016, the Company owned a 51% interest in ASV Holdings, Ins., which was formerly known as A.S.V., LLC (“ASV Holdings”). On May 11, 2017, in anticipation of an initial public offering, ASV Holdings converted from an LLC to a C-Corporation and the Company’s 51% interest was converted to 4,080,000 common shares of ASV Holdings. On May 17, 2017, in connection within its initial public offering, ASV Holdings sold 1,800,000 of its own shares and the Company sold 2,000,000 shares of ASV Holdings common stock. The Company held a 21.2% interest in ASV Holdings, but no longer has a controlling interest in ASV holdings. ASV Holdings was deconsolidated during the quarter ended June 30, 2017 and is recorded as an equity investment starting with quarter ended June 30, 2017. Since this 10-Q/A is being filed after the above described events, prior period financial statements included in this 10-Q/A have been restated to reflect ASV Holdings as a discontinued operation. (Statement of Operations - Column B) Additional entries not related to SVW Adjustments were made to: reverse a sale transaction, adjust a deferred gain, increase an inventory reserve and to record additional rent expense and other corrections and reclassifications not related to SVW. These adjustments were identified in prior periods but were immaterial for recording at that time. As the Company has identified the restatement adjustments for recording in prior periods, management made the determination that it would also record these previously passed adjustments as part of the restatement of the financial statements. (Statement of Operations – Column G, Statement of Cash Flows – Column K) See the Company’s Amended Annual Report for the year ended December 31, 2016 for the table that shows the impact that the restatement had on the Company’s Balance Sheet for the year ended December 31, 2016. The following tables reflect adjustments (restatements) to correct errors identified in connection with the Company’s review of its financial results for the quarters ended September 30, 2016.
Consolidated Statement of Operations
For the three months ended September 30, 2016
(in thousands, except for share data)
(unaudited)
A
B
C
D
E
F
G
H
As Previously Reported on Form 10-Q
Effect of Reclassifying Entities into Discontinued Operations
Reversal of Sales to SVW
Effect of Treating Funds Sent to SVW as Advances
Recording Payments Made by SVW to Lenders
Cumulative Income Tax Effect
Other
As Restated
Net revenues
$
74,131
$
(34,506
)
$
(495
)
$
—
$
—
$
—
$
1
$
39,131
Cost of sales
62,476
(29,512
)
(142
)
—
—
—
(233
)
32,589
Gross profit
11,655
(4,994
)
(353
)
—
—
—
234
6,542
Operating expenses
—
Research and development costs
1,238
(513
)
—
—
—
—
725
Selling, general and administrative expenses
11,378
(2,403
)
—
—
—
—
10
8,985
Total operating expenses
12,616
(2,916
)
—
—
—
—
10
9,710
Operating (loss) income
(961
)
(2,078
)
(353
)
—
—
—
224
(3,168
)
Other income (expense)
Interest income (expense)
(2,667
)
1,399
—
—
(116
)
—
—
(1,384
)
Interest expense related to write off of debt issuance costs
—
—
—
—
—
—
—
—
Foreign currency transaction loss
(103
)
22
—
—
—
—
(1
)
(82
)
Other income
2
278
—
—
—
—
1
281
Total other income (expense)
(2,768
)
1,699
—
—
(116
)
—
—
(1,185
)
(Loss) income before income taxes and loss in non- marketable equity interest from continuing operations
(3,729
)
(379
)
(353
)
—
(116
)
—
224
(4,353
)
Income tax (benefit) expense from continuing operations
(3,813
)
543
—
—
—
2,579
—
(691
)
Loss in non-marketable equity interest, net of taxes
(5,673
)
—
—
—
—
—
—
(5,673
)
Net (loss) income from continuing operations
(5,589
)
(922
)
(353
)
—
(116
)
(2,579
)
224
(9,335
)
Discontinued operations:
Income (loss) from operations of discontinued operations
(9,987
)
379
—
—
—
—
—
(9,608
)
Income tax expense
4,688
(543
)
—
—
—
—
—
4,145
(Loss) income on discontinued operations
(14,675
)
922
—
—
—
—
—
(13,753
)
Net (loss) income
(20,264
)
—
(353
)
—
(116
)
(2,579
)
224
(23,088
)
Net loss (income) attributable to noncontrolling interest
(294
)
—
—
—
—
—
—
(294
)
Net (loss) income attributable to shareholders of Manitex International, Inc.
$
(20,558
)
$
—
$
(353
)
$
—
$
(116
)
$
(2,579
)
$
224
$
(23,382
)
Earnings (loss) Per Share
Basic
(Loss) earnings from continuing operations attributable to shareholders of Manitex International, Inc.
$
(0.36
)
$
(0.58
)
Loss from discontinued operations attributable to shareholders of Manitex International, Inc.
$
(0.91
)
$
(0.87
)
(Loss) earnings attributable to shareholders of Manitex International, Inc.
$
(1.27
)
$
(1.45
)
Diluted
—
(Loss) earnings from continuing operations attributable to shareholders of Manitex International, Inc.
$
(0.36
)
$
(0.58
)
Loss from discontinued operations attributable to shareholders of Manitex International, Inc.
$
(0.91
)
$
(0.87
)
(Loss) earnings attributable to shareholders of Manitex International, Inc.
$
(1.27
)
$
(1.45
)
Weighted average common shares outstanding
Basic
16,127,346
16,127,346
Diluted
16,127,346
16,127,346
Consolidated Statement of Operations
For the nine months ended September 30, 2016
(in thousands, except for share data)
(unaudited)
A
B
C
D
E
F
G
H
As Previously Reported on Form 10-Q
Effect of Reclassifying Entities into Discontinued Operations
Reversal of Sales to SVW
Effect of Treating Funds Sent to SVW as Advances
Recording Payments Made by SVW to Lenders
Cumulative Income Tax Effect
Other
As Restated
Net revenues
$
272,769
$
(127,541
)
$
(13,123
)
$
—
$
—
$
—
$
1
$
132,106
Cost of sales
225,824
(106,796
)
(10,388
)
—
—
—
18
108,658
Gross profit
46,945
(20,745
)
(2,735
)
—
—
—
(17
)
23,448
Operating expenses
Research and development costs
4,091
(1,888
)
—
—
—
—
—
2,203
Selling, general and administrative expenses
38,574
(11,111
)
—
—
—
—
10
27,473
Total operating expenses
42,665
(12,999
)
—
—
—
—
10
29,676
Operating (loss) income
4,280
(7,746
)
(2,735
)
—
—
—
(27
)
(6,228
)
Other income (expense)
Interest income (expense)
(9,407
)
4,865
—
—
(116
)
—
—
(4,658
)
Interest expense related to write off of debt issuance costs
(1,439
)
—
—
—
—
—
—
(1,439
)
Foreign currency transaction loss
(580
)
(410
)
—
—
—
—
(1
)
(991
)
Other income (loss)
2,834
(1,952
)
—
—
—
—
1
883
Total other income (expense)
(8,592
)
2,503
—
—
(116
)
—
—
(6,205
)
(Loss) income before income taxes and loss in non- marketable equity interest from continuing operations
(4,312
)
(5,243
)
(2,735
)
—
(116
)
—
(27
)
(12,433
)
Income tax (benefit) expense from continuing operations
(4,421
)
3,428
—
—
—
34
1
(958
)
Loss in non-marketable equity interest, net of taxes
(5,752
)
—
—
—
—
—
—
(5,752
)
Net (loss) income from continuing operations
(5,643
)
(8,671
)
(2,735
)
—
(116
)
(34
)
(28
)
(17,227
)
Discontinued operations:
Income (loss) from operations of discontinued operations
(9,987
)
5,242
—
—
—
—
—
(4,745
)
Income tax expense
4,688
(3,429
)
—
—
—
—
—
1,259
(Loss) income on discontinued operations
(14,675
)
8,671
—
—
—
—
—
(6,004
)
Net (loss) income
(20,318
)
—
(2,735
)
—
(116
)
(34
)
(28
)
(23,231
)
Net loss (income) attributable to noncontrolling interest
(566
)
—
—
—
—
—
—
(566
)
Net (loss) income attributable to shareholders of Manitex International, Inc.
$
(20,884
)
$
—
$
(2,735
)
$
—
$
(116
)
$
(34
)
$
(28
)
$
(23,797
)
Earnings (loss) Per Share
Basic
(Loss) earnings from continuing operations attributable to shareholders of Manitex International, Inc.
$
(0.38
)
$
(1.07
)
Loss from discontinued operations attributable to shareholders of Manitex International, Inc.
$
(0.91
)
$
(0.41
)
(Loss) earnings attributable to shareholders of Manitex International, Inc.
$
(1.29
)
$
(1.48
)
Diluted
—
(Loss) earnings from continuing operations attributable to shareholders of Manitex International, Inc.
$
(0.38
)
$
(1.07
)
Loss from discontinued operations attributable to shareholders of Manitex International, Inc.
$
(0.91
)
$
(0.41
)
(Loss) earnings attributable to shareholders of Manitex International, Inc.
$
(1.29
)
$
(1.48
)
Weighted average common shares outstanding
Basic
16,119,578
16,119,578
Diluted
16,119,578
16,119,578
Consolidated Statement of Cash Flows
For the nine months ended September 30, 2016
(in thousands)
(unaudited)
I
J
K
L
M
As Previously Reported on Form 10-Q
Impact of SVW Related Corrections (1)
Income Tax Impact
Other Corrections and Reclasifications Including Discontinued Operations
As Restated
Cash flows from operating activities:
Net (loss) income
(20,318
)
(2,851
)
(35
)
(27
)
(23,231
)
Adjustments to reconcile net income to cash (used) provide by for operating activities:
—
Depreciation and amortization
8,886
—
—
(3,575
)
5,311
Loss (gain) on sale of discontinued operations
9,050
—
—
(1,760
)
7,290
Changes in allowances for doubtful accounts
117
—
—
(115
)
2
Loss (gain) on disposal of assets
(2,236
)
—
—
2,223
(13
)
Changes in inventory reserves
920
—
—
(350
)
570
Deferred income taxes
(193
)
—
—
3
(190
)
Amortization of deferred financing cost
2,333
—
—
(430
)
1,903
Revaluation of contingent acquisition liability
(915
)
—
—
—
(915
)
Write down of goodwill
275
—
—
—
275
Amortization of debt discount
405
—
—
(1
)
404
Change in value of interest rate swaps
(778
)
—
—
—
(778
)
Loss in non-marketable equity interest
-
—
—
—
—
Share-based compensation
900
—
—
—
900
Deferred gain on sale and lease back
(124
)
—
—
(17
)
(141
)
Reserves for uncertain tax provisions
48
—
—
(16
)
32
(Earnings) loss from equity investment
5,752
—
—
—
5,752
Changes in operating assets and liabilities:
—
—
—
(Increase) decrease in accounts receivable
(11,622
)
1,844
—
8,589
(1,189
)
(Increase) decrease in inventory
(4,410
)
(10,387
)
—
7,314
(7,483
)
(Increase) decrease in prepaid expenses
884
(143
)
35
203
979
(Increase) decrease in other assets
194
—
—
—
194
Increase (decrease) in accounts payable
(5,270
)
—
—
(241
)
(5,511
)
Increase (decrease) in accrued expense
(3,111
)
—
—
400
(2,711
)
Increase (decrease) in other current liabilities
2,379
—
—
(2,744
)
(365
)
Increase (decrease) in other long-term liabilities
(251
)
—
—
1
(250
)
Discontinued operations - cash provided by (used) for operating activities
1,509
—
—
(8,407
)
(6,898
)
Net cash (used) for provided by operating activities
(15,576
)
(11,537
)
—
1,050
(26,063
)
Cash flows from investing activities:
Acquisition of businesses, net of cash acquired
—
—
—
—
—
Sale of intellectual property
2,205
—
—
—
Proceeds from the sale of fixed assets
187
—
—
—
187
Purchase of property and equipment
(1,611
)
—
—
665
(946
)
Investment in intangibles other than goodwill
(103
)
—
—
—
(103
)
Proceeds from the sale of discontinued operations
14,000
—
—
—
14,000
Discontinued operations - cash used for investing activities
157
—
—
1,531
1,688
Net cash provided by for investing activities
14,835
—
—
2,196
14,826
Cash flows from financing activities:
Borrowings—2014 term loan
—
—
—
—
—
Repayment of 2014 term loan
—
—
—
—
—
Net proceeds from stock offering
—
—
—
—
—
New borrowings—convertible notes
—
—
—
—
—
Payments on revolving term credit facilities
(10,709
)
—
—
(2,978
)
(13,687
)
Net borrowings (repayments) on working capital facilities
13,255
—
—
(6,074
)
7,181
Investment received from noncontrolling interest
2,450
—
—
(2,450
)
—
New borrowings—except 2014 term loan
757
12,204
—
—
12,961
Note payments
(10,980
)
(335
)
—
6,046
(5,269
)
Bank fees and cost related to new financing
(981
)
(332
)
—
107
(1,206
)
Shares repurchased for income tax withholding on share-based compensation
(55
)
—
—
—
(55
)
Proceeds from stock offering
—
—
—
—
Proceeds from sale and leaseback
4,080
—
—
—
4,080
Excess tax benefits related to vesting of restricted stock
—
—
—
—
—
Proceeds from capital leases
—
—
—
—
—
Payments on capital lease obligations
(417
)
—
—
—
(417
)
Discontinued operations - cash used for financing activities
(919
)
—
—
5,341
4,422
Net cash (used) for provided by financing activities
(3,519
)
11,537
—
(8
)
8,010
Net (decrease) increase in cash and cash equivalents
(4,260
)
—
—
3,238
(3,227
)
Effect of exchange rate changes on cash
1,701
—
—
(342
)
1,359
Cash and cash equivalents at the beginning of the year
8,578
—
—
(2,660
)
5,918
Cash and cash equivalents at end of period
$
6,019
$
—
$
—
$
236
$
4,050 |
