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 March 31, 1995
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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 1-11978
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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 April 30, 1995, the most recent
practicable date, was 7,674,475.
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 Quarters Ended March 31, 1995 and April 2, 1994
(Unaudited)
(In thousands, except per-share and average shares data)
March 31, 1995 April 2, 1994
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Net Sales $ 69,101 $ 60,606
Costs And Expenses:
Cost of goods sold 53,182 46,201
Engineering, selling and
administrative expenses 12,900 12,187
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Total 66,082 58,388
Earnings From Operations 3,019 2,218
Other Income (Expense):
Interest and dividend income 16 476
Other income (expense) (206) (119)
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Total (190) 357
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Earnings before taxes
on income 2,829 2,575
Provision For Taxes On Income 1,061 975
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Net Earnings $ 1,768 $ 1,600
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Net Earnings Per Share $ .23 $ .19
Dividends Per Share $ .25 $ .25
Average Shares Outstanding 7,674,475 8,601,517
<FN>
See accompanying notes which are an integral part of these statements.
THE MANITOWOC COMPANY, INC.
Consolidated Balance Sheet
March 31, 1995 and December 31, 1994
(Unaudited)
(In thousands, except share data)
-ASSETS-
March 31, 1995 Dec. 31, 1994
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Current Assets:
Cash and cash equivalents $ 6,641 $ 4,118
Marketable securities 11,961 12,045
Accounts receivable 44,581 29,500
Inventories 41,919 36,793
Prepaid expenses and other 2,806 2,882
Future income tax benefits 11,055 11,200
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Total current assets 118,963 96,538
Intangibles and other-net 11,409 11,636
Property, plant and equipment:
At cost 154,656 151,345
Less accumulated depreciation (101,323) (100,061)
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Property, plant and equipment-net 53,333 51,284
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TOTAL $ 183,705 $ 159,458
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-LIABILITIES AND STOCKHOLDERS' EQUITY-
Current Liabilities:
Accounts payable and accrued expenses $ 46,629 $ 43,864
Short term borrowings 26,300 3,999
Income taxes payable (302) 0
Product warranties 5,344 5,502
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Total current liabilities 77,971 53,365
Non-Current Liabilities:
Product warranties 2,944 2,944
Deferred income taxes 78 692
Deferred employee expenses 18,368 18,190
Deferred income 1,885 2,936
Other 7,429 6,274
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Total non-current liabilities 30,704 31,036
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Stockholders' Equity:
Common stock (10,887,847 shares
issued at both dates) 109 109
Additional paid-in capital 31,115 31,115
Cumulative foreign currency translation
adjustments (65) (188)
Retained earnings 125,373 125,523
Treasury stock at cost (3,213,372 shares
at both dates) (81,502) (81,502)
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Total stockholders' equity 75,030 75,057
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TOTAL $ 183,705 $ 159,458
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<FN>
See accompanying notes which are an integral part of these statements.
THE MANITOWOC COMPANY, INC.
Consolidated Statement of Cash Flows
For the Quarters Ended March 31, 1995 and April 2, 1994
(In thousands)
(Unaudited)
March 31, 1995 April 2, 1994
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Cash Flows From Operations:
Net earnings $ 1,768 $ 1,600
Non-cash adjustments to income:
Depreciation and amortization 1,439 1,604
Deferred income taxes (432) 10
Changes in operating assets and liabilities:
Accounts receivable (15,081) 2,877
Inventory (5,126) (8,504)
Other current assets 76 386
Current liabilities 2,191 1,944
Non-current liabilities 1,333 (230)
Deferred income (1,051) (264)
Non-current assets 302 42
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Net cash used for operations (14,581) (535)
Cash Flows From Investing:
Purchase of Femco Machine-net of
cash acquired -- (10,685)
Sale of temporary investments - net 84 5,351
Capital expenditures (3,476) (1,205)
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Net cash used for investing (3,392) (6,539)
Cash Flows From Financing:
Dividends paid (1,919) (2,127)
Proceeds from revolving line of credit-net 22,301 --
Treasury stock purchases 0 (11,768)
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Net cash provided by(used for) financing 20,382 (13,895)
Effect of exchange rate changes on cash 114 (21)
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Net increase (decrease) in cash
and cash equivalents 2,523 (20,990)
Balance at beginning of year 4,118 27,675
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Balance at end of period $ 6,641 $ 6,685
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Supplemental cash flow information:
Interest paid $ 219 $ 42
Income taxes paid 1,088 172
<FN>
See accompanying notes which are an integral part of these statements.
THE MANITOWOC COMPANY, INC.
Notes to Unaudited Consolidated Financial Statements
For the Quarters Ended March 31, 1995 and April 2, 1994
(Unaudited)
Note 1.
In August 1994, the Board of Directors approved a change in
the Company's fiscal year-end to December 31. 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 quarters ended March 31, 1995
and April 2, 1994, the financial position at March 31, 1995
and the changes in the cash flows for the quarters ended
March 31, 1995 and April 2, 1994. 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 for the year
ended July 2, 1994.
Note 2.
The components of inventory at March 31, 1995 and December
31, 1994 are summarized as follows (dollars in thousands):
March 31, 1995 December 31, 1995
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Components:
Raw materials $ 11,100 $ 13,150
Work-in-process 21,347 14,659
Finished goods 29,461 28,758
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Total inventories at FIFO costs 61,908 56,567
Excess of FIFO costs
over LIFO value (19,989) (19,774)
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Total inventories $ 41,919 $ 36,793
Inventory is carried at lower of cost or market using the
first-in, first-out (FIFO) method for 55% and 50% of total
inventory for March 31, 1995 and December 31, 1994,
respectively. The remainder of the inventory is costed
using the last-in, first-out (LIFO) method.
At March 31, 1995 and December 31, 1994, the FIFO cost of
finished goods held for lease was $506 and $940,
respectively. The cost of this inventory is amortized to
cost of sales as a percentage of lease revenues.
Note 3.
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. Such
repurchases will be in open market or privately negotiated
purchases, as the Company may determine from time to time.
As of March 31, 1995, a total of 2,646,372 shares were
purchased pursuant to these authorizations.
Note 4.
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 identified as having shipped 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 $3.0 million in prior years for its estimated
portion of the cleanup costs.
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 March 31, 1995, 44 product related lawsuits were
pending. Of these, eight 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 March 31, 1995 are $7.7
million; $4.3 million reserved specifically for the 44 cases
referenced above, and $3.4 million for incurred but not
reported claims. These reserves were estimated using
actuarial methods. The highest current reserve for a non-
insured claim is $.7 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 5.
During the quarter ended December 31, 1994, the Company's
decision to accelerate the consolidation of large-crane
manufacturing to a single site resulted in a $14 million
charge to earnings in the cranes and related products
segment in such quarter. The charge includes a $9.4 million
write-down of the facility being abandoned and estimated
holding costs of $4.6 million while the plant is being
marketed.
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 intangibles and other. 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
various environmental studies on the Peninsula location.
During the quarter, there were no material amounts paid and
charged against these reserves.
Additional costs will be expensed as incurred and include
items such as moving and relocation, engineering, and
severance. The bulk of these additional costs, expected to
range between $2.5 - $3.5 million, will be incurred in the
second and third quarters of calendar 1995.
Note 6.
In December, 1994, the Company adopted Statement of
Financial Accounting Standard No. 115 ``Accounting for
Certain Investments in Debt and Equity Securities''. The
effect of adopting this new standard was not material.
Marketable securities include $8.0 million of investments in
treasury bills which will be held to maturity and $4.0
million of equity securities, which are available for sale.
For both types of investments, the difference between fair
market value and cost was not material. The treasury bills
mature at various dates beginning in September, 1995,
through December, 1995.
Note 7.
Certain reclassifications have been made to the financial
statements of prior years to conform to the presentation for
1995.
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Results of Operations for the Quarters Ended March 31, 1995 and
April 2, 1994
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Net sales and earnings from operations by business segment for the
quarter ended March 31, 1995 and the comparable period ended April 2,
1994 are shown below (in thousands):
March 31, 1995 April 2, 1994
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NET SALES:
Cranes and related products $ 36,891 $ 34,611
Foodservice products 24,889 20,957
Marine 7,321 5,038
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Total $ 69,101 $ 60,606
EARNINGS (LOSS) FROM OPERATIONS:
Cranes and related products (1,577) (1,305)
Foodservice products 4,738 4,720
Marine 1,419 366
General corporate expense (1,561) (1,563)
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Total $ 3,019 $ 2,218
For the quarter ended March 31, 1995, consolidated sales increased 14%
over the comparable period a year ago. Net earnings for the quarter
were $1.8 million, or 23 cents per share compared to $1.6 million, or
19 cents per share in the first quarter of 1994. Each of the
Company's three business segments contributed to the increase in
sales; however, it was the Marine segment's higher operating earnings
which helped push the quarter earnings ahead of last year.
Sales for Cranes and Related Products increased 7% for the first
quarter compared to the quarter ended April 2, 1994. All of the
businesses in this segment, except MEC, the large crane manufacturing
company, contributed to the increase. However, most of the increase
in these other businesses was offset by the drop in sales at MEC.
This was due to the soft world market in 1994 for large cranes. As a
result, the operating loss for the quarter in cranes and related
products was $1.6 million compared to a loss of $1.3 million last
year.
The future of our large crane manufacturing company, and therefore the
crane segment, is buoyed by a $73 million backlog, well above the $19
million backlog reported at December 31, 1994.
The backlog has ballooned primarily because of the positive customer
acceptance of the Company's just-introduced model 888 crane. A
contract from a single customer for thirty of the new units was
received in February, 1995. The order is valued at $25-30 million.
Sales for the Foodservice segment increased 19% in the first quarter
but operating earnings were held to the same level as in the first
quarter of 1994. Contributing to the lower earnings were higher raw
material and purchased component prices, a shift in product mix to
smaller units, and costs associated with plant consolidation and
production line moves made to increase manufacturing efficiency.
The Marine segment sales and operating earnings rose 45% and 288%,
respectively, over the comparable period last year. The higher Marine
operating earnings were due to an improved work mix, including an
increase in higher margined docking work, and lower overhead costs.
During the most recent quarter, the Company had net borrowings of
$22.3 million. This brings to $26.3 million the total of short-term
borrowings in the last six months. The poor performance of the Crane
segment during the last two quarters and the seasonal drain in this
quarter in all three business segments made the borrowing necessary.
The Company opted to draw on its credit line rather than sell
marketable securities (primarily U.S. government bonds) at what would
have been a loss in the current market.
Financial Condition at March 31, 1995
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The Company's financial condition remains strong. Cash and marketable
securities of $18.6 million are adequate to meet the Company's
liquidity requirements for the foreseeable future, including payments
on the line of credit, costs associated with the plant consolidation,
and the stock repurchases authorized by the Board of Directors.
PART II. OTHER INFORMATION
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Item 6. Exhibits and Reports on Form 8-K
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(a) Exhibits: See exhibit index following the signatures on
this Report, which is incorporated herein by reference.
(b) Reports on Form 8-K: During the quarter ended March
31, 1995 a report on Form 8-K dated January 31, 1995
was filed to report that the Company engaged the
accounting firm of Coopers & Lybrand L.L.P. as
independent auditors to audit the Company's financial
statements for the fiscal year ended December 31, 1995,
replacing the firm of Arthur Andersen LLP, which was
dismissed by the Company on January 31, 1995.
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
by 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 9, 1995
THE MANITOWOC COMPANY, INC.
EXHIBIT INDEX
TO FORM 10-Q
FOR QUARTERLY PERIOD ENDED
MARCH 31, 1995
Exhibit Filed
No Description Herewith
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27 Financial Data Schedule X