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 June 30, 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 July 31, 1995, the most recent
practicable date, was 7,674,468.
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 Three and Six Months Ended June 30, 1995 and July 2, 1994
(Unaudited)
(In thousands, except per-share and average shares data)
QUARTER ENDED YEAR-TO-DATE
June 30, 1995 July 2, 1994 June 30, 1995 July 2, 1994
------------- ------------ -------------- ------------
Net Sales $ 82,287 $ 85,946 $ 151,388 $ 146,552
Costs And Expenses:
Cost of goods sold 61,083 64,884 114,265 111,085
Engineering, selling and
administrative expenses 12,099 12,809 24,999 24,996
------- ------- ------- -------
Total 73,182 77,693 139,264 136,081
Earnings From Operations 9,105 8,253 12,124 10,471
Other Income (Expense):
Interest & dividend income 31 287 47 763
Other income (expense) (519) (45) (725) (164)
------- ------- ------- -------
Total (488) 242 (678) 599
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Earnings Before Taxes
On Income 8,617 8,495 11,446 11,070
Provision For Taxes On Income 3,231 3,228 4,292 4,203
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Net Earnings $ 5,386 $ 5,267 $ 7,154 $ 6,867
------- ------- ------- -------
Net Earnings Per Share $ .70 $ .64 $ .93 $ .83
Dividends Per Share $ .25 $ .25 $ .50 $ .50
Average Shares Outstanding 7,674,473 8,273,561 7,674,474 8,439,774
<FN>
See accompanying notes which are an integral part of these statements.
THE MANITOWOC COMPANY, INC.
Consolidated Balance Sheet
June 30, 1995 and December 31, 1994
(Unaudited)
(In thousands, except share data)
-ASSETS-
June 30, 1995 Dec. 31, 1994
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Current Assets:
Cash and cash equivalents $ 6,977 $ 4,118
Marketable securities 9,880 12,045
Accounts receivable 41,849 29,500
Inventories 43,850 36,793
Prepaid expenses and other 1,323 2,882
Future income tax benefits 11,055 11,200
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Total current assets 114,934 96,538
Intangibles and other-net 11,396 11,636
Property, plant and equipment:
At cost 162,075 151,345
Less accumulated depreciation (100,835) (100,061)
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Property, plant and equipment-net 61,240 51,284
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TOTAL $ 187,570 $ 159,458
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-LIABILITIES AND STOCKHOLDERS' EQUITY-
Current Liabilities:
Accounts payable and accrued expenses $ 51,612 $ 43,864
Short term borrowings 19,400 3,999
Income taxes payable 2,925 0
Product warranties 5,314 5,502
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Total current liabilities 79,251 53,365
Non-Current Liabilities:
Product warranties 2,944 2,944
Deferred income taxes 0 692
Deferred employee expenses 18,547 18,190
Deferred income 1,015 2,936
Other 7,454 6,274
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Total non-current liabilities 29,960 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 (203) (188)
Retained earnings 128,840 125,523
Treasury stock at cost(3,213,379
and 3,213,372 shares) (81,502) (81,502)
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Total stockholders' equity 78,359 75,057
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TOTAL $ 187,570 $ 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 Six Months Ended June 30, 1995 and July 2, 1994
(In thousands)
(Unaudited)
June 30, 1995 July 2, 1994
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Cash Flows From Operations:
Net earnings $ 7,154 $ 6,867
Non-cash adjustments to income:
Depreciation and amortization 3,090 3,491
Deferred income taxes (510) (1,191)
Changes in operating assets & liabilities:
Accounts receivable (12,349) (5,765)
Inventory (7,057) 1,681
Other current assets 1,559 (2,812)
Current liabilities 10,350 14,021
Non-current liabilities 1,537 202
Deferred income (1,921) (1,738)
Non-current assets 227 (605)
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Net cash provided by operations 2,080 14,151
Cash Flows From Investing:
Purchase of Femco Machine-net of
cash acquired -- (10,685)
Sale of temporary investments - net 2,165 13,002
Capital expenditures (13,005) (3,405)
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Net cash used for investing (10,840) (1,088)
Cash Flows From Financing:
Dividends paid (3,837) (4,178)
Proceeds from revolving line
of credit-net 15,401 0
Treasury stock purchases 0 (21,612)
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Net cash provided by (used for) financing 11,564 (25,790)
Effect of exchange rate changes on cash 55 146
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Net increase (decrease) in cash
and cash equivalents 2,859 (12,581)
Balance at beginning of year 4,118 27,675
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Balance at end of period $ 6,977 $ 15,094
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Supplemental cash flow information:
Interest paid $ 694 $ 111
Income taxes paid 2,066 1,989
<FN>
See accompanying notes which are an integral part of these statements.
THE MANITOWOC COMPANY, INC.
Notes to Unaudited Consolidated Financial Statements
For the Six Months Ended June 30, 1995 and July 2, 1994
(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 six months ended
June 30, 1995 and July 2, 1994, the financial position at
June 30, 1995 and the changes in the cash flows for the six
months ended June 30, 1995 and July 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.
In August, 1994, the Board of Directors approved a change in
the company's fiscal year-end to December 31. The second
quarter and year-to-date information for 1994 has not been
recast from the original presentations, as management does
not feel that recasting would be cost-justified since
comparability would not be enhanced.
Note 2.
The components of inventory at June 30, 1995 and December
31, 1994 are summarized as follows (dollars in thousands):
June 30, 1995 Dec. 31, 1994
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Components:
Raw materials $ 14,406 $ 13,150
Work-in-process 20,066 14,659
Finished goods 29,615 28,758
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Total inventories at FIFO costs 64,087 56,567
Excess of FIFO costs
over LIFO value (20,237) (19,774)
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Total inventories $ 43,850 $ 36,793
Inventory is carried at lower of cost or market using the
first-in, first-out (FIFO) method for 53% and 50% of total
inventory for June 30, 1995 and December 31, 1994,
respectively. The remainder of the inventory is costed
using the last-in, first-out (LIFO) method.
At June 30, 1995 and December 31, 1994, the FIFO cost of
finished goods held for lease was $499 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 June 30, 1995, a total of 2,646,379 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 June 30, 1995, 40 product related lawsuits were
pending. Of these, five 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 June 30, 1995 are $7.4
million; $3.6 million reserved specifically for the 40 cases
referenced above, and $3.8 million for incurred but not
reported claims. These reserves were estimated using
actuarial methods. The highest current reserve for a non-
insured claim is $.3 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 are expensed as incurred and include items
such as moving and relocation, engineering, and severance.
During the quarter and six months ended June 30, 1995, $1.8
million and $.2 million, respectively, were expensed in
relation to these costs. The remaining costs, approximately
$.5 - $1.5 million, will be incurred in the third quarter of
calendar 1995. As a result, total costs are expected to
range between $2.5 - $3.5 million.
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 $6.0 million of investments in
treasury bills which will be held to maturity and $3.0
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 Six Months Ended June 30, 1995 and
July 2, 1994
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Net sales and earnings from operations by business segment for the
quarter and six months ended June 30, 1995 and the comparable periods
ended July 2, 1994 are shown below (in thousands):
QUARTER ENDED YEAR-TO-DATE
June 30, 1995 July 2, 1994 June 30, 1995 July 2, 1994
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NET SALES:
Cranes & related products $ 37,395 $ 42,786 $ 74,286 $ 77,397
Foodservice products 30,625 31,368 55,514 52,325
Marine 14,267 11,792 21,588 16,830
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Total $ 82,287 $ 85,946 $ 151,388 $ 146,552
EARNINGS(LOSS) FROM OPERATIONS:
Cranes & related products (297) 452 (1,874) (853)
Foodservice product 7,349 8,140 12,087 12,860
Marine 3,655 949 5,074 1,315
General corporate expense (1,602) (1,288) (3,163) (2,851)
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Total $ 9,105 $ 8,253 $ 12,124 $ 10,471
For the quarter ended June 30, 1995, net earnings increased to $5.4
million, or 70 cents per share, compared to $5.2 million, or 64 cents
per share for the second quarter of 1994, despite a 4% decrease in net
sales for the period. The improved operating earnings were due to an
exceptionally strong quarter for the Marine segment, where operating
earnings nearly quadrupled those of the comparable three months last
year.
For the six months ended June 30, 1995, net earnings were $7.2
million, equal to 93 cents per share, on sales totaling $151.4
million, compared with net earnings of $6.9 million, equal to 83 cents
per share, on sales of $146.6 million for the first half of 1994.
The second quarter resulted in $297,000 operating loss for the Crane
segment. This loss included $1.8 million in costs associated with the
large crane unit's plant consolidation that is now largely completed.
Greatly improved performance from the smaller crane units helped to
offset the costs associated with this move.
Sales for Cranes and Related Products decreased 13% for the second
quarter compared to the same period in 1994. This drop in sales for
the large crane unit continues to offset increases in sales for the
other businesses in this segment. Year-to-date sales have decreased
4% compared to the first six months of last year.
The crane backlog of unfinished orders stands at $96 million. With
the move to a consolidated and more-efficient facility, the focus
switches to ramping up crane production to full capacity which should
be achieved by the fourth quarter.
The longer-term outlook for the crane business is much improved. The
market reception of the new model 888 has been very positive. As a
result, 1995 production capacity is essentially sold out and a
substantial number of orders are booked for 1996 delivery.
Earlier in the quarter, the company announced the formation of the
Lattice Crane Group. This new group, which includes Manitowoc
Engineering Co., West-Manitowoc, Inc., Femco Machine Company and
Manitowoc Re-Manufacturing, will coordinate the marketing efforts of
these businesses and improve the frequency and consistency of
communication between Manitowoc and its crane-dealer network.
Although each of these businesses will operate independently, the
Lattice Crane Group will have single leadership and common objectives.
By working together, the Lattice Crane Group will rely on centralized
marketing programs that leverage the strengths of each business to
better serve the needs of our customers throughout North America and
abroad. As a result, the company expects to improve overall market
position and strengthen the crane-dealer network around the world.
The Foodservice segment's sales and operating earnings decreased 2%
and 10%, respectively, for the second quarter of 1995 as compared to
the comparable three months last year. Sales for the second quarter
for 1994 were especially strong for the ice-machine business as
dealers began to restock lower than average first quarter inventories
in response to an improved economic outlook. Margins for the segment
have been lowered due to higher raw material prices (particularly
copper) and a marketing decision to hold selling prices from 1992
through 1995. Manufacturing efficiencies gained from a newly
consolidated manufacturing facility and the implementation of specific
cost-reduction programs should bring margins back to 1994 levels by
early 1996. Year-to-date sales have increased 6% over the first six
months of last year, while operating earnings have fallen by 6%.
Sales and operating earnings for the Marine segment increased 21% and
285%, respectively, over the same quarter last year. Unexpected ship
casualty repair work at the company's Sturgeon Bay yard and increased
repair work at the Toledo facility contributed to the increases.
Year-to-date sales and operating earnings also remain well ahead of
last year.
Marine bookings remain brisk and earnings should continue to show
improvement from those of last year, but will not match the strong
gains in the first and second quarters this year.
Financial Condition at June 30, 1995
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The Company's financial condition remains strong. Cash and marketable
securities of $16.9 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.
During the quarter, the company reduced short-term borrowings from
$26.3 million to $19.4 million.
Capital expenditures during the first half of the current year totaled
$13 million, compared with capital investments of $3.4 million during
the first six months of last year. The increase is due to the large-
crane plant consolidation and expansion of the foodservice facility.
Capital expenditures for calendar 1995 are expected to reach $18 - $20
million.
Increases in accounts receivable and inventories from year-end levels
are due primarily to normal seasonal factors in all of the company's
three business segments.
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: 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
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 K. Silva
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Robert K. Silva
Chief Operating 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
August 8, 1995
THE MANITOWOC COMPANY, INC.
EXHIBIT INDEX
TO FORM 10-Q
FOR QUARTERLY PERIOD ENDED
June 30, 1995
Exhibit Filed
No Description Herewith
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3.2 Restated By-Laws (as amended through
May 22, 1995) including amendment to
Article II changing the date of
the annual meeting X
10.1 The Manitowoc Company, Inc. Management
Incentive Compensation Plan, as
amended May 22, 1995 X
10.2 The Manitowoc Company, Inc. 1995
Stock Plan (subject to shareholder
approval at the 1996 annual meeting) X
27 Financial Data Schedule X