UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended January 1, 1994
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OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commission File Number 0-6645
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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)
700 E. Magnolia Avenue, Suite B, Manitowoc, Wisconsin 54220
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(Address of principal executive offices) (Zip Code)
(414) 684-4410
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(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last
report.)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes ( X ) No ( )
The NUMBER OF SHARES OUTSTANDING of the Registrant's common stock, $.01
par value, as of February 5, 1994, the most recent practicable date, was
8,548,947.
PART I. FINANCIAL INFORMATION
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Item 1. Financial Statements
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THE MANITOWOC COMPANY, INC.
Consolidated Statement of Earnings
For the 13 and 26 Weeks Ended January 1, 1994 and December 26, 1992
(Unaudited)
(In thousands, except per-share data)
13 Weeks Ended 26 Weeks Ended
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January 1, December 26, January 1, December 26,
1994 1992 1994 1992
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Net Sales $67,772 $ 53,292 $128,828 $115,117
Costs And Expenses:
Cost of goods sold 52,091 44,283 96,371 89,799
Engineering, selling and
administrative expenses 11,101 10,750 21,843 21,347
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Total 63,192 55,033 118,214 111,146
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Earnings (Loss) From Operations 4,580 (1,741) 10,614 3,971
Other Income (Expense):
Interest and dividend income 489 367 945 744
Other income (expense) (88) (135) (50) (313)
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Total 401 232 895 431
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Earnings (loss) before taxes on
income and cumulative effect
of accounting changes 4,981 (1,509) 11,509 4,402
Provision For Taxes On Income 1,893 (585) 4,333 1,475
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Earnings(loss) before cumulative
effect of accounting changes 3,088 (924) 7,176 2,927
Cumulative effect of changes in
accounting for postretirement
medical benefits& income taxes 0 (10,214)
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Net Earnings (Loss) 3,088 (924) 7,176 (7,287)
Net Earnings (Loss) Per Share:
Before cumulative effect of
accounting changes $.35 $(.07) $.79 $.30
Accounting changes (.04) (1.03)
Net earnings (loss) $.35 $(.11) $.79 $(.73)
Dividends Per Share $.25 $ .25 $.50 $.50
Average Shares Outstanding 8,938,955 9,698,178 9,032,641 9,985,230
See accompanying notes which are an integral part of these statements.
THE MANITOWOC COMPANY, INC.
Consolidated Balance Sheet
January 1, 1994 and July 3, 1993
(In thousands, except per-share data)
-ASSETS-
(Unaudited) (Audited)
January 1, 1994 July 3, 1993
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Current Assets:
Cash and cash equivalents $ 27,675 $ 37,348
Marketable securities 28,010 11,488
Accounts receivable 34,505 49,623
Inventories 29,443 34,200
Prepaid expenses and other 2,027 6,501
Future income tax benefits 8,841 8,841
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Total current assets 130,501 148,001
Intangibles and Other-Net 2,679 3,030
Property, Plant and Equipment:
At cost 169,469 168,095
Less accumulated depreciation (113,488) (111,115)
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Property, plant and equipment-net 55,981 56,980
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TOTAL $189,161 $208,011
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-LIABILITIES AND STOCKHOLDERS' EQUITY-
Current Liabilities:
Accounts payable and accrued expenses $41,643 $52,884
Income taxes payable (339) 128
Product warranties 4,860 5,393
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Total current liabilities 46,164 58,405
Non-Current Liabilities:
Deferred Income 5,548 5,765
Product warranties 2,712 2,712
Deferred income taxes 2,501 2,357
Deferred employee expenses 17,624 17,177
Other 2,180 2,159
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Total non-current liabilities 30,565 30,170
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Stockholders' Equity:
Common stock (10,887,847 shares issued) 109 109
Additional paid-in capital 31,115 31,115
Cumulative foreign currency translation
adjustments (761) (569)
Retained earnings 131,745 129,078
Treasury stock at cost (2,041,274 and
1,741,346 shares) (49,776) (40,297)
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Total stockholders' equity 112,432 119,436
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TOTAL $189,161 $208,011
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See accompanying notes which are an integral part of these statements.
THE MANITOWOC COMPANY, INC.
Consolidated Statement of Cash Flows
For the 26 Weeks Ended January 1, 1994 and December 26, 1992
(In thousands, except per-share data)
(Unaudited)
January 1, 1994 December 26, 1992
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Cash Flows From Operations:
Net Earnings (Loss) $ 7,176 $(7,287)
Non-cash adjustments to income:
Cumulative effect of accounting changes 10,214
Depreciation and amortization 2,910 2,897
Deferred income taxes 145 (238)
Changes in operating assets and liabilities:
Accounts receivable 15,117 27,334
Inventory 4,757 4,898
Other current assets 4,474 138
Current liabilities (12,298) (9,211)
Non-current liabilities 467 2,325
Deferred income (216) (60)
Non-current assets 312 228
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Net cash provided by operations 22,844 31,238
Cash Flows From Investing:
Purchase of temporary investments - net (16,522) (1,295)
Capital expenditures (1,938) (3,387)
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Net cash used for investing (18,460) (4,682)
Cash Flows From Financing:
Dividends paid (4,510) (5,000)
Purchase of Treasury Stock (9,479) (15,063)
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Net cash used for financing (13,989) (20,063)
Effect of exchange rate changes on cash (68) (495)
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Net increase (decrease) in cash and
cash equivalents (9,673) 5,998
Balance at beginning of year 37,348 31,906
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Balance at end of period $ 27,675 $ 37,904
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THE MANITOWOC COMPANY, INC.
Notes to Unaudited Consolidated Financial Statements
For the 13 and 26 Weeks Ended January 1, 1994 and December 26, 1992
(Unaudited)
Note 1.
In the opinion of management, the accompanying unaudited condensed
financial statements contain all adjustments, representing normal
recurring accruals, necessary to present fairly the results of
operations for the thirteen and twenty-six weeks ending January 1,
1994 and December 26, 1992, the financial position at January 1,
1994 and the changes in the cash flows for the twenty-six weeks
ended January 1, 1994 and December 26, 1992. The interim results
are not necessarily indicative of results for a full year and do
not contain information included in the Company's annual
consolidated financial statements and notes.
Note 2.
Cash paid for interest in the first twenty-six weeks of fiscal 1994
and 1993 was $80,924 and $69,642, respectively. Cash paid for
income taxes in the first twenty-six weeks of fiscal 1994 and 1993
was $4,906,362 and $4,418,717, respectively.
Note 3.
The components of inventory at January 1, 1994 and July 3, 1993 are
summarized as follows (in thousands):
January 1, 1994 July 3, 1993
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Components:
Raw materials $ 11,002 $ 12,512
Work-in-process 17,062 19,262
Finished goods 23,854 24,887
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Total inventories 51,918 56,661
Excess of current costs
over LIFO value (22,475) (22,461)
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Total inventories $ 29,443 $ 34,200
Inventory is carried at lower of cost or market using the first-in,
first-out (FIFO) method for 41% and 47% of total inventory for
January 1, 1994 and July 3, 1993, respectively. The remainder of
the inventory is costed using the last-in, first-out (LIFO) method.
At January 1, 1994 and July 3, 1993, the FIFO cost of finished
goods held for lease was $709 and $937, respectively. The cost of
this inventory is amortized to cost of sales as a percentage of
lease revenues.
Note 4.
On September 8, 1992, the Board of Directors authorized the Company
to repurchase up to 1.5 million shares of its common stock. As of
January 1, 1994, a total of 1,474,274 shares were purchased
pursuant to this authorization. Subsequent to January 1, the
remaining 25,726 shares have been repurchased. In addition, on
January 11, 1994 and February 2, 1994, the Board of Directors
authorized the repurchase of an additional 500,000 and 1,000,000
shares, respectively. Such repurchases will be in open market or
privately negotiated purchases, as the Company may determine from
time to time.
Note 5.
The United States Environmental Protection Agency ("EPA") has
identified the Company as a potentially responsible party ("PRP")
under the Comprehensive Environmental Response Compensation and
Liability Act ("CERCLA"), liable for the costs associated with
investigating and cleaning up contamination at the Lemberger
Landfill Superfund Site ("the Site") near Manitowoc, Wisconsin.
Eleven of the potentially responsible parties have formed a group
(the Lemberger Site Remediation Group, or "LSRG") and have
successfully negotiated with the EPA and Wisconsin Department of
Natural Resources to settle the potential liability at the Site and
fund the cleanup. Approximately 150 PRP's have been identifed as
having shipped hazardous substances to the Site.
Recent estimates indicate that the total cost to clean up the Site
could be as high as $25 million, however, the ultimate remediation
methods and appropriate allocation of costs for the Site are not
yet final.
Although liability is joint and several, the Company's percentage
share of liability is estimated to be 5% of the total cleanup
costs, but could increase to 15% if no participation agreements are
made between the LSRG and any other PRP's.
In connection with this matter, the Company expensed $1.4 million
in prior years, for its estimated portion of the cleanup costs. In
addition, the Company has notified its insurance carrier requesting
reimbursement of incurred and future costs at the Site. While the
settlement of this claim is uncertain, previous court rulings in
Wisconsin have required insurers to pay similar costs. Any
recoveries from the insurance carrier will be recognized when
received.
The Company is 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.
As of January 1, 1994, 40 product related lawsuits were pending.
Of these, sixteen 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.
Product liability reserves at January 1, 1994 are $5.3 million;
$3.0 million reserved specifically for the 40 cases referenced
above, and $2.3 million for incurred but not reported claims.
These reserves were estimated using actuarial methods. The highest
current reserve for a non-insured claim is $.4 million, and $.3
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.
Note 6.
Certain relcassifications have been made to the financial
statements of prior years to conform to the presentation for fiscal
1994.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Financial Condition at January 1, 1994
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The Company's financial condition remains strong and has not changed
materially during the past quarter. Cash and marketable securities of $55.7
million are adequate to meet the Company's liquidity requirements, including
the stock repurchases authorized by the Board of Directors.
Results of Operations for the 13 Weeks Ended January 1, 1994 and December 26,
1992
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Net sales and earnings from operations by business segment for the 13 and 26
weeks ended January 1, 1994 and December 26, 1992 are shown below (in
thousands):
13 Weeks Ended 26 Weeks Ended
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January 1, December 26, January 1, December 26,
1994 1992 1994 1992
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NET SALES:
Cranes and related products $46,897 $34,688 $78,856 $72,371
Foodservice products 16,078 15,856 40,846 36,267
Marine 4,797 2,748 9,126 6,479
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Total $67,772 $53,292 $128,828 $115,117
EARNINGS (LOSS) FROM OPERATIONS:
Cranes and related products 2,069 (2,588) 3,128 $(327)
Foodservice products 2,793 2,724 8,777 7,598
Marine 935 (777) 1,132 (914)
General corporate expense (1,217) (1,100) (2,423) (2,386)
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Total $4,580 $(1,741) $10,614 $3,971
For the thirteen weeks ended January 1, 1994, consolidated sales increased
27.2% over the same period a year ago with all three business segments
recording gains. Net earnings also compared favorably to last year with the
Company reporting earnings of $3.1 million, or 35 cents per share compared to
a loss of $757,000, or 6 cents per share, restated to a net loss of $924,000,
or 11 cents per share. This loss resulted from a $4 million, or 26 cents per
share loss on the disposal of obsolete and slow-moving crane parts inventory.
The restatement was the result of adopting SFAS 106 and SFAS 109 in the third
quarter of last year. The effect of these changes in accounting treatment
were applied retroactively to results for that year, and first and second
quarter F93 results were restated to reflect the required adjustments.
For the twenty-six week period ended January 1, 1994, consolidated sales
increased 11.9% compared to the same period one year ago. Net earnings for
the six month period were $7.2 million, or 79 cents per share, up from $3.3
million, or 33 cents per share, for the same period last year. Because of
the previously mentioned change in accounting standards, the 1993 figures
were later restated to a loss of $7.3 million, or 73 cents per share.
Cranes and Related products showed improved sales and earnings for the second
quarter compared to the same period one year ago. Sales increased 35.2% over
last year and earnings rose to $2.1 million compared with a loss of $2.6
million during the second quarter of fiscal 1993. Sales of larger crawler
cranes, including the first two M-1200's, a 1,450-ton lifting capacity
machine, and production and shipping improvements accounted for the increase
in earnings. Unit sales in the large crawler crane unit were up 68% and
operating margins advanced to 8.5% this quarter, compared to 5% a year ago.
For the quarter, both sales and earnings for Foodservice products increased
slightly over the same period last year. Sales increased 1.3% and earnings
reached $2.8 million, compared to $2.7 million last year. The increase
continues to show the popularity of the B-model ice machine introduced last
year.
As a result of a strong first quarter, year-to-date sales and earnings in the
Foodservice segment remain well above last year's results. Sales have
increased 12.6% and earnings increased 15.5% to $8.7 million from a restated
$7.6 million last year.
Second quarter sales in the Marine segment surged to $4.8 million, a 75%
increase over the $2.7 million recorded during the second quarter last year.
Earnings for the quarter stood at $0.9 million compared to a restated loss of
$0.8 million during the same period last year. The increases were the result
of an unexpected hull repair project and a overall upswing in the cycle of
scheduled survey and maintenance work that must be performed on U.S. vessels
to comply with U.S. Maritime Law.
Year-to-date sales and earnings also remain well ahead of last year for the
Marine segment. Sales have increased 40.9% and earnings are $1.1 million
compared to a restated $0.9 million loss last year.
PART II. OTHER INFORMATION
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Item 6. Exhibits and Reports on form 8-K
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(a) Exhibits: None
(b) Reports on Form 8-K: None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf of the
undersigned thereunto duly authorized.
THE MANITOWOC COMPANY, INC.
(Registrant)
/s/ Fred M. Butler
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Fred M. Butler
Chief Executive Officer
/s/ Robert R. Friedl
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Robert R. Friedl
Chief Financial Officer
/s/ E. Dean Flynn
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E. Dean Flynn
Secretary
February 14, 1994