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 April 2, 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 May 7, 1994, the most recent practicable date, was
8,290,847.
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 39 Weeks Ended April 2, 1994 and March 27, 1993
(Unaudited)
(In thousands, except per-share data)
13 Weeks Ended 39 Weeks Ended
----------------------- ----------------------
April 2, March 27, April 2, March 27,
1994 1993 1994 1993
-------- -------- -------- --------
Net Sales $ 60,606 $ 62,868 $189,434 $177,985
Costs And Expenses:
Cost of goods sold 46,201 57,625 142,572 147,424
Engineering, selling and
administrative expenses 12,187 13,953 34,030 35,300
-------- -------- -------- --------
Total 58,388 71,578 176,602 182,724
-------- -------- -------- --------
Earnings (Loss) From Operations 2,218 (8,710) 12,832 (4,739)
Other Income (Expense):
Interest and dividend income 476 294 1,421 993
Other income (expense) (119) 29 (169) (240)
-------- -------- -------- --------
Total 357 323 1,252 753
-------- -------- -------- --------
Earnings (loss) before taxes on
income and cumulative effect
of accounting changes 2,575 (8,387) 14,084 (3,986)
Provision For Taxes On Income 975 (3,617) 5,308 (2,141)
-------- -------- -------- --------
Earnings(loss)before cumulative
effect of accounting changes 1,600 (4,770) 8,776 (1,845)
Cumulative effect of changes in
accounting for postretirement
medical benefits&income taxes 0 0 0 (10,214)
-------- -------- -------- --------
Net Earnings (Loss) 1,600 (4,770) 8,776 (12,059)
Net Earnings (Loss) Per Share:
Before cumulative effect of
accounting changes $.19 $(.49) $.99 $(.19)
Accounting changes 0 0 0 (1.03)
Net earnings (loss) $.19 $(.49) $.99 $(1.22)
Dividends Per Share $.25 $ .25 $.75 $.75
Average Shares Outstanding 8,601,517 9,642,094 8,888,933 9,870,851
See accompanying notes which are an integral part of these statements.
THE MANITOWOC COMPANY, INC.
Consolidated Balance Sheet
April 2, 1994 and July 3, 1993
(In thousands, except per-share data)
-ASSETS-
(Unaudited) (Audited)
April 2, 1994 July 3, 1993
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Current Assets:
Cash and cash equivalents $6,685 $ 37,348
Marketable securities 22,659 11,488
Accounts receivable 33,947 49,623
Inventories 41,425 34,200
Prepaid expenses and other 1,688 6,501
Future income tax benefits 8,841 8,841
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Total current assets 115,245 148,001
Intangibles and Other-Net 4,000 3,030
Property, Plant and Equipment:
At cost 178,111 168,095
Less accumulated depreciation (115,029) (111,115)
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Property, plant and equipment-net 63,082 56,980
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TOTAL $182,327 $208,011
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-LIABILITIES AND STOCKHOLDERS' EQUITY-
Current Liabilities:
Accounts payable and accrued expenses $ 47,266 $52,884
Income taxes payable (332) 128
Product warranties 4,668 5,393
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Total current liabilities 51,602 58,405
Non-Current Liabilities:
Deferred Income 5,284 5,765
Product warranties 2,712 2,712
Deferred income taxes 2,511 2,357
Deferred employee expenses 17,677 17,177
Other 2,437 2,159
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Total non-current liabilities 30,621 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 (793) (569)
Retained earnings 131,217 129,078
Treasury stock at cost (2,428,900 and
1,741,346 shares) (61,544) (40,297)
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Total stockholders' equity 100,104 119,436
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TOTAL $182,327 $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 39 Weeks Ended April 2, 1994 and March 27, 1993
(In thousands, except per-share data)
(Unaudited)
April 2, 1994 March 27, 1993
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Cash Flows From Operations:
Net Earnings (Loss) $ 8,776 $(12,059)
Non-cash adjustments to income:
Cumulative effect of accounting changes 0 10,214
Depreciation and amortization 4,514 4,382
Deferred income taxes 155 (225)
Changes in operating assets and liabilities
excluding effects from purchase of
Femco Machine Co.:
Accounts receivable 17,994 18,423
Inventory (3,747) 10,296
Other current assets 4,861 (2,543)
Current liabilities (10,353) 3,844
Non-current liabilities 237 2,111
Deferred income (481) (164)
Non-current assets 353 325
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Net cash provided by operations 22,309 34,605
Cash Flows From Investing:
Purchase of Femco Machine-net ofcash acquired (10,685)
Purchase of temporary investments - net (11,171) (4,383)
Capital expenditures (3,142) (7,793)
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Net cash used for investing (24,998) (12,176)
Cash Flows From Financing:
Dividends paid (6,637) (7,404)
Treasury stock purchases (21,247) (17,051)
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Net cash used for financing (27,884) (24,455)
Effect of exchange rate changes on cash (90) (936)
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Net increase (decrease) in cash and
cash equivalents (30,663) (2,962)
Balance at beginning of year 37,348 31,906
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Balance at end of period $ 6,685 $ 28,944
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THE MANITOWOC COMPANY, INC.
Notes to Unaudited Consolidated Financial Statements
For the 13 and 39 Weeks Ended April 2, 1994 and March 27, 1993
(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
thirty-nine weeks ending April 2, 1994 and March 27, 1993,
the financial position at April 2, 1994 and the changes in
the cash flows for the thirty-nine weeks ended April 2, 1994
and March 27, 1993. 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 thirty-nine weeks of
fiscal 1994 and 1993 was $122,538 and $100,110,
respectively. Cash paid for income taxes in the first
thirty-nine weeks of fiscal 1994 and 1993 was $5,078,281 and
$5,280,725, respectively.
Note 3.
The components of inventory at April 2, 1994 and July 3,
1993 are summarized as follows (in thousands):
April 2, 1994 July 3, 1993
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Components:
Raw materials $ 11,291 $ 12,512
Work-in-process 25,237 19,262
Finished goods 27,791 24,887
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Total inventories 64,319 56,661
Excess of current costs
over LIFO value (22,894) (22,461)
-------- --------
Total inventories $ 41,425 $ 34,200
Inventory is carried at lower of cost or market using the
first-in, first-out (FIFO) method for 46% and 47% of total
inventory for April 2, 1994 and July 3, 1993, respectively.
The remainder of the inventory is costed using the last-in,
first-out (LIFO) method.
At April 2, 1994 and July 3, 1993, the FIFO cost of finished
goods held for lease was $311 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. 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.
As of April 2, 1994, a total of 1,861,900 shares were
purchased pursuant to these authorizations.
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 April 2, 1994, 37 product related lawsuits were
pending. Of these, fourteen 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 April 2, 1994 are $5.8
million; $4.1 million reserved specifically for the 37 cases
referenced above, and $1.7 million for incurred but not
reported claims. These reserves were estimated using
actuarial methods. The highest current reserve for a non-
insured claim is $.4 million, and $.9 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.
During the quarter, the Company acquired, for approximately
$10.7 million in cash, the assets of Femco Machine Company.
Femco Machine Company is a manufacturer of parts for cranes,
draglines, and other heavy equipment. The acquisition will
be accounted for under the purchase method of accounting.
The preliminary estimate of the excess of the cost over the
fair value of net assets acquired is $1.4 million, which
will be amortized over twenty-five years.
Note 7.
Certain reclassifications 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 April 2, 1994
- - --------------------------------------
The Company's financial condition remains strong and has not changed
materially during the past quarter. Cash and marketable securities of
$29 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 and 39 Weeks Ended April 2, 1994 and
March 27, 1993
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Net sales and earnings from operations by business segment for the 13
and 39 weeks ended April 2, 1994 and March 27, 1993 are shown below
(in thousands):
13 Weeks Ended 39 Weeks Ended
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April 2, March 27, April 2, March 27,
1994 1993 1994 1993
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NET SALES:
Cranes and related products $34,611 $41,991 $113,467 $114,362
Foodservice products 20,957 18,065 61,803 54,332
Marine 5,038 2,812 14,164 9,291
------- ------- ------- -------
Total $60,606 $62,868 $189,434 $177,985
EARNINGS (LOSS) FROM OPERATIONS:
Cranes and related products (1,305) (7,089) 1,823 $ (7,416)
Foodservice products 4,720 3,769 13,497 11,367
Marine 366 (639) 1,498 (1,553)
General corporate expense (1,563) (1,451) (3,986) (3,837)
Plant relocation expenses 0 (3,300) 0 (3,300)
------- ------- ------- ------
Total $ 2,218 $(8,710) $ 12,832 $ (4,739)
For the thirteen weeks ended April 2, 1994, consolidated sales
decreased 3.6% over the same period a year ago. Net earnings
increased for the quarter to $1.6 million, or 19 cents per share,
compared to a loss of $4.8 million, or 49 cents per share. Last
year's third quarter loss was a result of a $5.7 million inventory
write-down, a $4.3 million charge for a product liability settlement,
and $3.3 million to relocate the Manitex boom truck crane and pedestal
crane operation.
For the thirty-nine week period ended April 2, 1994, consolidated
sales increased 6.4% over the same period one year ago. Net earnings
for this period were $8.8 million, or 99 cents per share compared to a
loss of $12.1 million, or $1.22 per share. In addition to the
previously mentioned charges, last year's loss includes an after tax
charge of $10.2 million, or $1.03 per share from the implementation of
SFAS 106 and 109.
Sales for Cranes and Related Products decreased 17.6% for the third
quarter compared to a year ago. The downturn in sales was attributed
to declines in the price of oil which has caused customers to delay
orders for large cranes. Sales decreased despite the acquisition of
Femco Machine Company during the third quarter.
The Crane segment reported a $1.3 million loss compared to a $7.1
million loss for the quarter last year. Profits from large crane
sales, re-manufacturing and the recent Femco acquisition were not
enough to offset losses at Manitex and company owned dealers and
higher than expected product development work for crawler cranes of
less than 10-ton capacity.
The Foodservice segment continued to out perform last year's sales and
earnings figures. Third quarter sales and earnings increased 16.0%
and 25.2%, respectively, compared to the same period a year ago. This
segment has benefited from brisk sales of its new, self-cleaning "B"
model ice machine.
The Marine segment also showed improved third quarter results compared
to last year. Sales for the thirteen week period increased 79.2% over
the same period last year. Earnings for the year were $1.5 million
compared to a $1.6 million loss last year. The improvement was the
result of two five-year surveys conducted during the third quarter and
an increase in winter repair work compared to previous years.
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
May 11, 1994