UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 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 September 30, 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 Third Quarter of Calendar Years 1995 and 1994
(Unaudited)
(In thousands, except per-share and average shares data)
QUARTER ENDED YEAR-TO-DATE
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
1995 1994 1995 1994
----------- ---------- ---------- ---------
Net Sales $ 80,088 $ 66,039 $231,476 $212,591
Costs And Expenses:
Cost of goods sold 62,077 47,719 176,343 158,804
Engineering, selling and
administrative expenses 12,635 12,231 37,633 37,227
-------- ------- -------- --------
Total 74,712 59,950 213,976 196,031
Earnings From Operations 5,376 6,089 17,500 16,560
Other Income (Expense):
Interest & dividend income (43) 206 4 969
Other income (expense) 362 (66) (363) (230)
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Total 319 140 (359) 739
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Earnings Before Taxes
On Income 5,695 6,229 17,141 17,299
Provision For Taxes On Income 2,105 2,429 6,397 6,632
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Net Earnings $ 3,590 $ 3,800 $ 10,744 $ 10,667
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Net Earnings Per Share $ .47 $ .49 $ 1.40 $ 1.32
Dividends Per Share $ .25 $ .25 $ .75 $ .75
Average Shares Outstanding 7,674,468 7,816,570 7,674,472 8,238,000
<FN>
See accompanying notes which are an integral part of these statements.
THE MANITOWOC COMPANY, INC.
Consolidated Balance Sheet
September 30, 1995 and December 31, 1994
(Unaudited)
(In thousands, except share data)
-ASSETS-
Sept. 30, 1995 Dec. 31, 1994
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Current Assets:
Cash and cash equivalents $ 10,943 $ 4,118
Marketable securities 3,179 12,045
Accounts receivable 42,212 29,500
Inventories 38,778 36,793
Prepaid expenses and other 1,417 2,882
Future income tax benefits 10,913 11,200
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Total current assets 107,442 96,538
Intangibles and other-net 13,267 11,636
Property, plant and equipment:
At cost 161,582 151,345
Less accumulated depreciation (100,272) (100,061)
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Property, plant and equipment-net 61,310 51,284
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TOTAL $ 182,019 $ 159,458
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-LIABILITIES AND STOCKHOLDERS' EQUITY-
Current Liabilities:
Accounts payable and accrued expenses $ 50,564 $ 43,864
Short term borrowings 13,700 3,999
Income taxes payable 2,676 0
Product warranties 5,388 5,502
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Total current liabilities 72,328 53,365
Non-Current Liabilities:
Product warranties 2,944 2,944
Deferred income taxes 0 692
Deferred employee expenses 18,725 18,190
Deferred income 737 2,936
Other 7,359 6,274
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Total non-current liabilities 29,765 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 (308) (188)
Retained earnings 130,512 125,523
Treasury stock at cost
(3,213,379 and 3,213,372 shares) (81,502) (81,502)
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Total stockholders' equity 79,926 75,057
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TOTAL $ 182,019 $ 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 Nine Months Ended September 30, 1995 and 1994
(In thousands)
(Unaudited)
Sept. 30, 1995 Sept. 30, 1994
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Cash Flows From Operations:
Net earnings $ 10,744 $ 10,667
Non-cash adjustments to income:
Depreciation and amortization 4,729 5,274
Deferred income taxes (1,857) (1,157)
Changes in operating assets and liabilities:
Accounts receivable (12,712) 2,280
Inventory (1,985) 940
Other current assets 1,465 (2,719)
Current liabilities 9,049 5,643
Non-current liabilities 1,620 (115)
Deferred income (2,199) (2,312)
Non-current asset (234) (312)
Gain on sale of fixed assets (987) 0
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Net cash provided by operations 7,633 18,189
Cash Flows From Investing:
Purchase of Femco Machine -
net of cash acquired 0 (10,685)
Sale of temporary investments - net 8,866 8,305
Proceeds from sale of fixed assets 3,702 1,550
Capital expenditures (17,375) (7,527)
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Net cash used for investing (4,807) (8,357)
Cash Flows From Financing:
Dividends paid (5,756) (6,098)
Proceeds from revolving line of credit-net 9,701 6,000
Treasury stock purchases 0 (31,726)
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Net cash provided by (used for) financing 3,945 (31,824)
Effect of exchange rate changes on cash 54 252
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Net increase (decrease) in cash
and cash equivalents 6,825 (21,740)
Balance at beginning of year 4,118 27,675
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Balance at end of period $ 10,943 $ 5,935
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Supplemental cash flow information:
Interest paid $ 992 $ 181
Income taxes paid 4,823 6,779
<FN>
See accompanying notes which are an integral part of these statements.
THE MANITOWOC COMPANY, INC.
Notes to Unaudited Consolidated Financial Statements
For the Nine Months Ended September 30, 1995 and 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 nine months ended
September 30, 1995 and September 30, 1994, the financial
position at September 30, 1995 and the changes in the cash
flows for the nine months ended September 30, 1995 and
September 30, 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 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 September 30, 1995 and
December 31, 1994 are summarized as follows (dollars in
thousands):
Sept. 30, 1995 Dec. 31, 1994
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Components:
Raw materials $ 15,881 $ 13,150
Work-in-process 16,493 14,659
Finished goods 26,811 28,758
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Total inventories at FIFO costs 59,185 56,567
Excess of FIFO costs
over LIFO value (20,407) (19,774)
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Total inventories $ 38,778 $ 36,793
Inventory is carried at the lower of cost or market using
the first-in, first-out (FIFO) method for 55% and 50% of
total inventory for September 30, 1995 and December 31,
1994, respectively. The remainder of the inventory is
costed using the last-in, first-out (LIFO) method.
At September 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 September 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 $30 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 September 30, 1995, 39 product related lawsuits were
pending. Of these, three occurred between 1985 and 1990
when the Company was completely self-insured. The remaining
lawsuits occurred subsequent to June 1, 1990, during which
time the Company had 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 on
the insurer's contribution.
Product liability reserves at September 30, 1995 are $7.0
million; $3.7 million reserved specifically for the 39 cases
referenced above, and $3.3 million for incurred but not
reported claims. These reserves were estimated using
actuarial methods. The highest current reserve for a non-
insured claim is $.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 included 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 and nine months ended September 30, 1995,
$.1 million was paid and charged against these reserves.
Additional costs were expensed as incurred and include items
such as moving and relocation, engineering, and severance.
During the quarter ended September 30, 1995, $.8 million was
expensed in relation to these costs, resulting in total
costs of $2.8 million for the nine month period. No
additional costs are expected to be incurred related to
these items.
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 $3.0 million of equity
securities, which are available for sale. For these
investments, the difference between fair market value and
cost was not material.
Note 7. The Company signed an agreement on October 25, 1996 to
acquire 100 percent ownership of The Shannon Group, Inc., a
privately held manufacturer of commercial refrigerators,
freezers, and related products with 1995 sales expected to
be between $125-140 million.
A definitive agreement was signed following negotiations
that were resumed after the Company's letter of intent to
purchase the firm had terminated without agreement on
October 10. The transaction is subject to certain
conditions, but has been approved by the Company's Board of
Directors.
The roughly $126-million purchase will be financed through
pre-arranged, favorable-rate bank debt. The agreement calls
for an earnout payment, after closing, of up to $7 million,
based on Shannon's 1995 earnings. The closing is expected
to be completed by early to mid-December of this year.
Shannon is headquartered in Brentwood, Tennessee, near
Nashville. It has nine manufacturing facilities, located in
Tennessee, Wisconsin, and Iowa, and about 1,200 employees.
With its respected and recognized Kolpak, Polar-Pak, McCall,
and Tonka brands, Shannon offers a broad line of commercial
refrigeration products ranging from small undercounter units
to 300,000 sq. ft. self-contained refrigerated warehouses.
Its customers include many of the major quick-service and
family restaurant chains and grocery chains in the nation.
Note 8. 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 Nine Months Ended September 30, 1995 and
September 30, 1994
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Net sales and earnings from operations by business segment for the
quarter and nine months ended September 30, 1995 and 1994 are shown
below (in thousands):
QUARTER ENDED YEAR-TO-DATE
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
1995 1994 1995 1994
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NET SALES:
Cranes & related products $ 45,787 $ 35,986 $ 120,073 $ 113,383
Foodservice products 29,781 26,907 85,295 79,232
Marine 4,520 3,146 26,108 19,976
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Total $ 80,088 $ 66,039 $ 231,476 $ 212,591
EARNINGS(LOSS) FROM OPERATIONS:
Cranes and related products 829 1,923 (1,045) 1,070
Foodservice product 6,771 6,356 18,858 19,216
Marine (347) (544) 4,727 771
General corporate expense (1,877) (1,646) (5,040) (4,497)
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Total $ 5,376 $ 6,089 $ 17,500 $ 16,560
For the quarter ended September 30, 1995, net earnings totaled $3.6
million, equal to 47 cents per share, on sales of $80 million. This
compares with net earnings of $3.8 million, or 49 cents per share, on
sales of $66 million in the corresponding period of 1994.
For the nine months ended September 30, 1995 net earnings were $10.7
million, and $1.40 per share, compared with $10.7 million and $1.32
per share in 1994. Net sales for the same period totaled $231 million
in the first nine months of this year, compared with $213 million in
the year before.
Sales for the quarter were up in all three business segments, and the
large-crane unit posted an operating profit for the first time since
last year despite an $800,000 charge for moving costs associated with
its recent facility consolidation and higher costs due to production
disruptions during the move. A less profitable sales mix also
affected large-crane operating earnings for the quarter. The other
crane companies that make up the balance of the crane segment continue
to show improved results. These companies include Manitex, West-
Manitowoc, Orley Meyer, the Aftermarket group, and the company-owned
sales outlets. Sales for cranes and related products have increased
27% for the third quarter while year-to-date sales are up 6%.
At $90 million, the crane backlog remains near its all-time high, and
shipments are now beginning to be made from that backlog of orders.
Crane segment sales and earnings for the fourth quarter are expected
to be the strongest since the second quarter of calendar 1993 when
sales were $64.3 million and operating earnings were $5.5 million.
The Foodservice segment posted increases in both sales and operating
earnings, 10% and 7%, respectively, for the third quarter ended
September 30, 1995, as a result of strong sales of ice machines and
growth in reach-in refrigerator/freezers for the commercial market.
Year-to-date earnings are still slightly behind 1994 earnings despite
an 8% increase in sales due to the lower margins caused by increased
raw material costs and a self-imposed price freeze from 1992 through
1995. Margins are expected to return to 1994 levels by early 1996 as
specific cost reduction programs are implemented.
The Marine segment revenues increased 44% from the year-earlier
quarter due to increased ship-repair services as fleet utilization on
the Great Lakes remains high. Because of the seasonal nature of
shipping on the Lakes, this business normally loses money in the last
half of each calendar year. While this pattern held true in the
quarter just ended, the operating loss was less than in the same
period last year. Year-to-date sales and operating earnings remain
well ahead of last year.
Financial Condition at September 30, 1995
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The Company's financial condition remains strong. Cash and marketable
securities of $14 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
$19.4 million to $13.7 million.
Capital expenditures, without reduction for dispositions, for the nine
months were $17.4 million and are expected to total between $18-20
million for the year. This investment is well above normal for the
company and due primarily to the expansion of the ice-machine
manufacturing facility and the capitalized costs in consolidating the
manufacture of large cranes into a single, modern facility.
Fixed asset dispositions included the sale of an industrial park in
Northampton, England, in the third quarter. This sale increased other
income by $600,000.
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
September 30, 1995, a report on Form 8-K dated
September 1, 1995 was filed stating that the Company
had entered into a letter of intent to acquire 100%
ownership of The Shannon Group, Inc., a privately held
manufacturer of commercial, refrigerators, freezers,
and related products.
After the third quarter end, a second report on Form 8-K
dated October 11, 1995 was filed indicating that as a
result of an inability of the parties to agree on
certain terms of a definitive purchase agreement, the
letter of intent for the purchase by the Company of The
Shannon Group, Inc. was terminated by its terms.
In addition, a third report on Form 8-K dated October
25, 1995 was filed stating that on October 24, 1995 the
Company entered into a definitive agreement to acquire
100 percent ownership of The Shannon Group, Inc.
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
November 3, 1995
THE MANITOWOC COMPANY, INC.
EXHIBIT INDEX
TO FORM 10-Q
FOR QUARTERLY PERIOD ENDED
September 30, 1995
Exhibit Filed
No Description Herewith
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27 Financial Data Schedule X