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, 1996
--------------------
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
------------- ---------------
Commission File Number 1-11978
----------
The Manitowoc Company, Inc.
----------------------------------------------------------
(Exact name of registrant as specified in its charter)
Wisconsin 39-0448110
--------------------------------- --------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
500 So. 16th Street, Manitowoc, Wisconsin 54220
------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(414) 684-4410
------------------------------------------------------------
(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, 1996, the most recent practicable date, was
11,511,357.
PART I. FINANCIAL INFORMATION
--------------------------------------
Item 1. Financial Statements
- -----------------------------
THE MANITOWOC COMPANY, INC.
Consolidated Statements of Earnings
For the Quarter and Six Months Ended June 30, 1996 and 1995
(Unaudited)
(In thousands, except per-share and average shares data)
QUARTER ENDED YEAR-TO-DATE
June 30, June 30, June 30, June 30,
1996 1995 1996 1995
-------- -------- -------- --------
Net Sales $ 139,219 $ 82,287 $ 253,318 $ 151,388
Costs And Expenses:
Cost of goods sold 101,328 61,083 186,790 114,265
Engineering, selling and
administrative expenses 20,839 12,099 40,272 24,999
-------- -------- -------- --------
Total 122,167 73,182 227,062 139,264
Earnings From Operations 17,052 9,105 26,256 12,124
Other Income (Expense):
Interest expense (2,557) (496) (5,019) (719)
Interest & dividend income 67 31 118 47
Other income (expense) 98 (23) 165 (6)
-------- -------- --------- --------
Total (2,392) (488) (4,736) (678)
-------- -------- --------- --------
Earnings Before Taxes
On Income 14,660 8,617 21,520 11,446
Provision For Taxes On Income 5,862 3,231 8,608 4,292
-------- -------- -------- --------
Net Earnings $ 8,798 $ 5,386 $ 12,912 $ 71,54
-------- -------- -------- --------
Net Earnings Per Share $ .76 $ .47 $ 1.12 $ .62
Dividends Per Share $ .16 $ .16 $ .33 $ .33
Average Shares Outstanding 11,511,357 11,511,357 11,511,357 11,511,357
<FN>
See accompanying notes which are an integral part of these statements.
THE MANITOWOC COMPANY, INC.
Consolidated Balance Sheets
As of June 30, 1996 and December 31, 1995
(Unaudited)
(In thousands, except share data)
-ASSETS-
June 30, 1996 Dec. 31, 1995
------------- ------------
Current Assets:
Cash and cash equivalents $ 18,546 $ 15,077
Marketable securities 1,607 1,558
Accounts receivable 55,760 51,011
Inventories 48,934 52,928
Prepaid expenses and other 1,681 3,451
Future income tax benefits 11,120 11,120
-------- ---------
Total current assets 137,648 135,145
Intangible assets 90,773 92,433
Other assets 10,101 9,663
Property, plant and equipment:
At cost 189,843 188,755
Less accumulated depreciation (103,872) (101,081)
--------- ---------
Property, plant and equipment-net 85,971 87,674
--------- ---------
TOTAL $ 324,493 $ 324,915
--------- ---------
-LIABILITIES AND STOCKHOLDERS' EQUITY-
Current Liabilities:
Accounts payable and accrued expenses $ 70,830 $ 66,028
Current portion of long-term debt 12,589 10,089
Short term borrowings 0 26,807
Income taxes payable 3,770 1,503
Product warranties 8,272 6,496
--------- ---------
Total current liabilities 95,461 110,923
Non-Current Liabilities:
Long-term debt less current portion 108,634 101,180
Product warranties 3,428 4,199
Post-retirement health benefits obligations 19,387 19,190
Other 6,856 7,762
--------- ---------
Total non-current liabilities 138,305 132,331
--------- ---------
Stockholders' Equity:
Common stock (16,331,770 and 10,887,847
shares issued) 163 109
Additional paid-in capital 31,061 31,115
Cumulative foreign currency translation
adjustments (488) (479)
Retained earnings 141,493 132,418
Treasury stock at cost (4,820,413
and 3,213,379 shares) (81,502) (81,502)
--------- ---------
Total stockholders' equity 90,727 81,661
--------- ---------
TOTAL $ 324,493 $ 324,915
--------- ---------
<FN>
See accompanying notes which are an integral part of these statements.
THE MANITOWOC COMPANY, INC.
Consolidated Statements of Cash Flows
For the Six Months Ended June 30, 1996 and 1995
(In thousands)
(Unaudited)
June 30, 1996 June 30, 1995
------------- ------------
Cash Flows From Operations:
Net earnings $ 12,912 $ 7,154
Non-cash adjustments to income:
Depreciation and amortization 5,616 3,090
Deferred financing fees 150 --
Deferred income taxes -- (510)
(Gain) loss on sale of fixed assets 57 --
Changes in operating assets and liabilities:
Accounts receivable (4,749) (12,349)
Inventories 3,994 (7,057)
Other current assets 1,770 1,559
Current liabilities 8,841 10,350
Non-current liabilities (1,021) 1,537
Deferred income (460) (1,921)
Non-current assets (438) 227
--------- ---------
Net cash provided by operations 26,672 2,080
Cash Flows From Investing:
Purchase of temporary investments (49) 2,165
Proceeds from sale of property,
plant, and equipment 1,001 --
Capital expenditures (3,461) (13,005)
--------- ---------
Net cash used for investing (2,509) (10,840)
Cash Flows From Financing:
Dividends paid (3,837) (3,837)
Proceeds from long-term borrowings 15,000 --
Payments on long-term borrowings (5,046) --
Change in short-term borrowings - net (26,807) 15,401
--------- ---------
Net cash provided by
(used for) financing (20,690) 11,564
Effect of exchange rate changes on cash (4) 55
--------- ---------
Net increase in cash
and cash equivalents 3,469 2,859
Balance at beginning of year 15,077 4,118
--------- ---------
Balance at end of period $ 18,546 $ 6,977
--------- ---------
Supplemental cash flow information:
Interest paid $ 2,526 $ 694
Income taxes paid 5,081 2,066
<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, 1996 and 1995
(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 quarter and six months ended June 30, 1996 and
1995, the financial position at June 30, 1996 and the changes in the
cash flows for the six months ended June 30, 1996 and 1995. 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
December 31, 1995.
Note 2.
The components of inventory at June 30, 1996 and December 31, 1995
are summarized as follows (dollars in thousands):
June 30, December 31,
1996 1995
----------- ---------
Components:
Raw materials $ 27,130 $ 22,809
Work-in-process 15,031 18,868
Finished goods 27,707 31,711
--------- ---------
Total inventories at FIFO costs 69,868 73,388
Excess of FIFO costs
over LIFO value (20,934) (20,460)
--------- ---------
Total inventories $ 48,934 $ 52,928
Inventory is carried at lower of cost or market using the first-in,
first-out (FIFO) method for 62% and 60% of total inventory for June
30, 1996 and December 31, 1995, respectively. The remainder of the
inventory is costed using the last-in, first-out (LIFO) method.
Note 3.
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 11% of the total cleanup
costs.
In connection with this matter, the Company expensed $0.2 million,
$1.6 million, $0.5 million, and $.9 million for the year ended
December 31, 1995, and fiscal years 1994, 1993, and 1992
respectively, for its estimated portion of the cleanup costs. There
were no expenses incurred during the six months ended June 30, 1996.
As of June 30, 1996, 35 product related lawsuits were pending. Of
these, two 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 on the
insurer's contribution.
Product liability reserves at June 30, 1996 are $6.4 million; $3.1
million reserved specifically for the 37 cases referenced above, and
$3.3 million for incurred but not reported claims. These reserves
were estimated using actuarial methods. 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.
It is reasonably possible that the estimates for environmental
remediation and product liability costs may change in the near
future based upon new information which may arise.
The company is also 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.
Note 4.
In the transition period ended December 31, 1994, resulting from
the Company's change in fiscal years, the Company's decision to
consolidate the large-crane manufacturing to a single site
resulted in a $14 million charge to earnings in the cranes and
related products segment. 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. It is
reasonably possible that the estimate for future holding costs of
the facility may change in the future.
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. To date, $1.5 million has been
paid and charged against these reserves, including $.2 million and
$.9 million during the second quarter and six months ended June
30, 1996, respectively.
Note 5.
On December 1, 1995, the Company completed the purchase of the
outstanding common stock of The Shannon Group, Inc. ("Shannon").
Shannon is a manufacturer of commercial refrigerators, freezers
and related products, ranging from small under-counter units to
300,000 square foot refrigerated warehouses. Among its wide range
of products, Shannon is best known for its foamed-in-place walk-in
refrigeration units, wood rail walk-in units, refrigerated food-prep
tables, reach-in refrigerator/freezers and modular refrigeration
systems.
The aggregate consideration paid by the Company for Shannon was
$127.0 million, which is net of cash acquired of $.7 million, and
which includes an amount due to a seller of $19.8 million which
was paid in January, 1996, direct acquisition costs of $2.7
million, and other assumed liabilities of $1.3 million. The
transaction was financed through credit facilities provided under
a Credit Agreement dated December 1, 1995.
The acquisition has been recorded using the purchase method of
accounting. The cost of the acquisition has been allocated on the
basis of the estimated fair value of the assets acquired and the
liabilities assumed. The preliminary estimate of the excess of
the cost over the fair value of net assets acquired is $88.3
million, and is being amortized over 32 years. The results of
operations since the date of acquisition are included in the
Consolidated Statements of Earnings.
Note 6.
On June 14, 1996, the company announced a three-for-two stock
split in the form of a 50-percent stock dividend which was
effective July 2 to shareholders of record on June 25. Adjusting
for the split, the company now has 11.5 million shares
outstanding. As a result of the stock split, all earnings and
dividend per share amounts and average shares outstanding,
appearing herein, have been retroactively adjusted to give effect
of the stock split.
Note 7.
Certain reclassifications have been made to the financial
statements of prior years to conform to the presentation for 1996.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations for the Quarter and Six Months Ended June 30, 1996
and 1995.
- --------------------------------------------------------------------------
Net sales and earnings from operations by business segment for the quarter
and six months ended June 30, 1996 and 1995 are shown below (in thousands):
QUARTER ENDED YEAR-TO-DATE
June 30, June 30, June 30, June 30,
1996 1995 1996 1995
-------- -------- -------- --------
NET SALES:
Foodservice products $ 67,526 $ 30,625 $ 120,126 $ 55,514
Cranes & related products 52,368 37,395 102,502 74,286
Marine 19,325 14,267 30,690 21,588
--------- ------- --------- --------
Total $ 139,219 $ 82,287 $ 253,318 $ 151,388
EARNINGS (LOSS) FROM OPERATIONS:
Foodservice products 11,260 7,349 18,264 12,087
Cranes & related products 4,850 (297) 8,403 (1,874)
Marine 3,616 3,655 4,801 5,074
General corporate expense (1,924) (1,602) (3,712) (3,163)
Amortization (750) 0 (1,500) 0
--------- ------- -------- -------
Total $ 17,052 $ 9,105 $ 26,256 $ 12,124
Net sales for the quarter ended June 30, 1996, were $139.2 million, up 69
percent compared with the second quarter of 1995. Operating earnings nearly
doubled to $17.1 million, while net earnings grew to $8.8 million, or 76 cents
per share, a 63 percent increase from the $5.4 million, and 47 cents per share,
earned in the second quarter of 1995.
For the first six months of 1996, net sales totaled $253.3 million, up 67
percent from $151.4 million in the first half of last year. Net earnings rose
80 percent from those of the first six months in 1995. Net earnings for the
1996 period were $12.9 million, equal to $1.12 per share, compared with $7.2
million, and 62 cents per share, for 1995. The improvements continue to be
sparked by strong sales and a sharp turnaround in operating earnings by the
crane segment.
Sales and operating earnings for the foodservice products segment were $67.5
million and $11.3 million, respectively, for the second quarter of 1996,
compared to $30.6 million and $7.3 million for 1995. The gain in sales was due
largely to the addition of refrigeration equipment sales by the Kolpak, Tonka
and McCall units. Comparable ice machine and reach-in sales by Manitowoc
Equipment Works (MEW) were 11% higher than those of the second quarter in 1995.
Year to date sales and earnings were $120.1 million and $18.3 million,
respectively.
Cranes and related products sales for the second quarter increased 40% over the
same period last year. Operating earnings were $4.9 million and $8.4 million
for the second quarter and first six months of 1996, respectively, compared to
losses of $.3 million and $1.9 million for the same periods last year. Manitex
continues to see improved earnings and West-Manitowoc contributed its first
profitable quarter. Orders for cranes and related products continue to be
strong from both domestic and international sources. As of June 30, 1996, the
backlog of unfilled orders stood at $91.3 million, despite an increased level
of shipments.
Second quarter sales in the Marine segment rose to $19.3 million, a 35%
increase over the $14.3 million recorded during the second quarter last year.
The increase was due to a busy winter repair season and the ongoing
construction of a new self-unloading cement barge. Earnings for the quarter
stood at $3.6 million compared earnings of $3.7 million during the same period
last year. Marine operating margin was down slightly, due to a shift in repair
and service mix.
Management expects continued gains in the second half of 1996. However, the
level of improvement will probably not equal that of the first half, due to the
lower level of profitability expected in the fourth quarter. Last year's
fourth quarter included shipment of an M-1200 RINGER that added significantly
to the crane segment's sales and operating margin.
The company continues to generate strong positive cash flow. At the end of the
quarter, the company had no borrowings under its revolving credit lines.
Indebtedness under the six-year term loan facility stood at $121 million,
including the current portion. During the quarter, the total indebtedness
decreased by $24 million.
Financial Condition at June 30, 1996
- --------------------------------------
The Company's financial condition remains strong. Cash and marketable
securities of $20 million and future cash flows from operations are adequate to
meet the Company's liquidity requirements for the foreseeable future, including
payments for long-term debt, costs associated with the plant consolidation, and
capital expenditures.
This Management's Discussion and Analysis, as well as certain other parts of
this Report on Form 10-Q, contain forward looking statements that involve a
number of risks and uncertainties. Such statements are based on management's
current expectations. The company cautions that such statements are further
qualified by important factors that could cause actual results to differ
materially from those in the forward looking statements.
PART II. OTHER INFORMATION
----------------------------------------
Item 4. Submission of Matters to a Vote of Security Holders
-----------------------------------------------------
At the annual meeting of the Company's shareholders on May 7, 1996, pursuant to
Proposal 1, management's nominees named below were elected as directors, of the
class whose term expires in 1999, by the indicated votes cast for and withheld
with respect to each nominee. Of the 6,930,690 shares of Common Stock which
were represented at the meeting, at least 90.3% of the shares voting were voted
for the election of each of management's nominees, as follows:
Name of Nominee For Withheld
- --------------- ---- ---------
Dean H. Anderson 6,860,128 70,562
James P. McCann 6,875,166 55,524
Robert S. Throop 6,875,791 54,899
There were no abstentions or broker non-votes with respect to the election of
directors. In addition to the directors elected at the meeting, the Company's
continuing directors are Gilbert F. Rankin, Fred M. Butler, George T. McCoy,
and Guido R. Rahr, Jr.
In addition, shareholders voted to approve two other proposals. Under Proposal
2, shareholders approved the Company's 1995 Stock Plan. Under Proposal 3,
shareholders approved an amendment to increase by 100,000 the number of shares
that may be issued under the Company's Deferred Compensation Plan. The votes
on those two proposals were as follows:
Broker
Proposal For Against Abstain Non-Votes
- -------- ---- ------- -------- ---------
#2 (1995 Stock Plan) 4,442,234 1,826,753 172,431 489,272
#3 (Number of Shares) 6,106,593 208,740 126,085 489,272
Further information concerning the matters voted upon at the 1996 Annual
Meeting of Shareholders is contained in the Company's proxy statement dated
April 27, 1996 with respect to the 1996 annual meeting.
Item 6. Exhibits and Reports on Form 8-K
--------------------------------------
(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 second quarter ended June 30, 1996, a
report on Form 8-K dated as of June 14, 1996 was filed stating that the
Board of Directors of The Manitowoc Company, Inc. declared a three-for-two
stock split of the company's common shares in the form of a 50 percent
stock dividend.
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
------------------------
Fred M. Butler
Chief Executive Officer
/s/ Robert R. Friedl
-------------------------
Robert R. Friedl
Chief Financial Officer
/s/ E. Dean Flynn
------------------------
E. Dean Flynn
Secretary
August 13, 1996
THE MANITOWOC COMPANY, INC.
EXHIBIT INDEX
TO FORM 10-Q
FOR QUARTERLY PERIOD ENDED
June 30, 1996
Exhibit Filed
No Description Herewith
- ------- ----------- --------
10 The Manitowoc Company, Inc. Management
Incentive Compensation Plan, as
amended May 7, 1996 X
27 Financial Data Schedule X