UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The following unaudited pro forma condensed financial statements are based
on our historical financial statements and the historical financial statements
of Potain and should be read in conjunction with the historical financial
statements included in this offering memorandum.
The pro forma financial statements reflect the following:
. the acquisition of Potain;
. the issuance of (Euro)175.0 million (approximately U.S. $164.3 million
computed at the noon buying rate on December 29, 2000) of senior
subordinated notes in this offering;
. borrowings of $387.7 million under our new senior credit facility; and
. the prepayment of outstanding borrowings under our existing revolving
credit facility and our existing senior notes due 2010.
Pro forma adjustments to historical financial statements include
adjustments that we deem appropriate, reflecting items of recurring
significance and which are factually supported based on currently available
information. We assumed that the acquisition of Potain and related financing
transactions, including the issuance of the notes, occurred on January 1, 2000
for purposes of preparing the pro forma condensed consolidated statement of
earnings and on December 31, 2000 for purposes of preparing the condensed
consolidated balance sheet. The pro forma financial statements may not be
indicative of what actual results would have been, nor do the pro forma
financial statements purport to present our condensed consolidated financial
results for future periods.
The unaudited pro forma condensed consolidated financial data has been
derived from the historical consolidated financial statements of Manitowoc and
Potain. The pro forma adjustments, as described in the notes that follow, are
based upon available information and upon certain assumptions that management
believes are reasonable. You should read this information in conjunction with
the financial statements of Manitowoc and Potain included elsewhere in this
offering memorandum. The unaudited pro forma condensed consolidated financial
statements are included for comparative purposes only and do not purport to be
indicative of the results of Manitowoc in the future or what the financial
position and results of operations would have been had Manitowoc acquired
Potain on the dates described above.
Amounts in U.S. dollars have been translated from euro at the rate of
(Euro)1.00 to $0.94, the noon buying rate on December 29, 2000, in the
unaudited pro forma condensed consolidated balance sheet and at the rate of
(Euro)1.00 to $0.92, the average noon buying rate on the last business day of
each month during 2000, in the unaudited pro forma condensed consolidated
statement of earnings.
1
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF EARNINGS
(In thousands, except per share data and ratios)
Year Ended December 31, 2000
-----------------------------------------------
Manitowoc Potain(1) Pro Forma Pro
Historical Historical Adjustments Forma
---------- ---------- ----------- ----------
Net sales...................... $873,272 $259,962 $ -- $1,133,234
Costs and expenses:
Cost of sales................ 637,538 184,697 -- 822,235
Engineering, selling and
administrative expenses..... 114,901 45,672 -- 160,573
Amortization................. 8,181 2,335 4,518 (2) 15,034
-------- -------- -------- ----------
Total costs and expenses... 760,620 232,704 4,518 997,842
Earnings from operations....... 112,652 27,258 (4,518) 135,392
Interest expense............... (14,508) (192) (35,008)(3) (49,708)
Other (expense) income, net.... (2,024) (472) (305)(4) (2,801)
-------- -------- -------- ----------
Earnings before income taxes... 96,120 26,594 (39,831) 82,883
Provision for taxes on income.. 35,852 10,750 (12,620)(5) 33,982
-------- -------- -------- ----------
Net earnings(6)................ $ 60,268 $ 15,844 $(27,211) $ 48,901
======== ======== ======== ==========
Per Share Data:
Earnings per share--basic...... $ 2.42 $ 1.96
======== ==========
Weighted average shares
outstanding--basic............ 24,891 24,891
======== ==========
Earnings per share--diluted.... $ 2.40 $ 1.95
======== ==========
Weighted average shares
outstanding--diluted.......... 25,123 25,123
======== ==========
Other financial data:
Depreciation................... $ 9,872 $ 11,940 $ 21,812
Amortization................... 8,181 2,335 15,034
EBITDA(7)...................... 130,705 41,533 172,238
Capital expenditures(8)........ 13,415 30,309 43,724
Ratio of EBITDA to interest
expense....................... 9.0x 216.3x 3.5x
Ratio of earnings to fixed
charges(9).................... 4.8x 9.7x 2.2x
The accompanying notes are an integral part of these pro forma consolidated
financial statements.
2
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF EARNINGS
The following adjustments have been made to the historical condensed
consolidated historical statements of earnings of Manitowoc and Potain to
compute the unaudited pro forma amounts.
(1) The table below sets out the adjustments necessary to convert the
Potain historical statement of earnings from French GAAP to U.S. GAAP. The
Potain historical financial information and U.S. GAAP adjustments have been
derived from the Potain consolidated financial statements included
elsewhere in this offering memorandum.
Potain U.S. GAAP Potain
French GAAP Adjustments U.S. GAAP
----------- ----------- ---------
Net sales.............................. $264,016 $(4,054) $259,962
Costs and expenses:
Cost of sales........................ 188,210 (3,513) 184,697
Engineering, selling and
administrative...................... 44,847 825 45,672
Amortization......................... 2,168 167 2,335
-------- ------- --------
Total costs and expenses........... 235,225 (2,521) 232,704
Earnings from operations............... 28,791 (1,533) 27,258
Interest (expense) income--net......... 799 (991) (192)
Other (expense) income--net............ (541) 69 (472)
-------- ------- --------
Earnings before income taxes........... 29,049 (2,455) 26,594
Provision for taxes on income.......... 10,634 116 10,750
-------- ------- --------
Net income............................. $ 18,415 $(2,571) $ 15,844
======== ======= ========
(2) To adjust amortization based on the increase in goodwill in
connection with the Potain acquisition. Goodwill is being amortized over
forty years.
(3) To adjust interest expense to reflect the issuance of debt in
connection with the acquisition of Potain and the repayment of existing
debt:
Pro forma
Interest Interest
Instrument Amount Rate Expense
---------- -------- -------- ---------
Senior credit facility:
Revolving credit facility..................... $ 37,700 7.35% $ 2,771
Term loan A................................... 200,000 7.35 14,700
Term loan B................................... 150,000 7.85 11,775
--------
Total....................................... 387,700
Senior subordinated notes....................... 164,300 10.50 17,252
Miscellaneous................................... 19,532 Various 1,023
Amortization of financing costs................. -- -- 2,187
-------- -------
$571,532 $49,708
======== =======
The revolving credit facility, which provides for maximum borrowings of
$125.0 million, has a 0.375% commitment fee on the unused balance (see Note
(4) below).
The above interest amounts related to the revolving credit facility and
term loans assume a LIBOR rate of 5.1%. A 0.125% increase or decrease in
the assumed average interest rate would change the pro forma interest
expense for the year ended December 31, 2000 by approximately $485,000.
(4) To record the commitment fee related to the assumed unused balance of
the new revolving credit facility which provides for maximum borrowings of
$125.0 million.
3
(5) To adjust the provision for taxes on income to an effective income
tax rate of 41%.
(6) Upon consummation of this offering, we will recognize an
extraordinary loss ($2.1 million, net of tax effects) related to the early
extinguishment of our existing debt which will be paid from proceeds from
the financing.
(7) EBITDA consists of earnings from operations plus depreciation and
amortization. We have presented EBITDA information solely as a supplemental
disclosure because management believes that it is generally accepted as
providing useful information regarding a company's ability to service
and/or incur debt. EBITDA should not be construed as an alternative to
earnings from operations as determined in accordance with generally
accepted accounting principles as an indicator of our operating
performance, or as an alternative to cash flows from operating activities
as determined in accordance with generally accepted accounting principles
as a measure of liquidity. We have significant uses of cash flows,
including capital expenditures and debt principal repayments that are not
reflected in EBITDA. It should also be noted that not all companies that
report EBITDA information calculate EBITDA in the same manner as we do.
(8) Potain capital expenditures of $30.3 million represent additions to
gross fixed assets, which include intangible assets; goodwill; property,
plant and equipment; financial assets and investments accounted for by the
equity method. Approximately $20.5 million of these capital expenditures
represent investment in Potain's crane rental fleet, including an $8.1
million one-time conversion of certain sales contracts for capital leases
in reconciliation to U.S. GAAP. Management estimates that the portion of
pro forma capital expenditures related to additions to property, plant and
equipment (excluding the crane rental fleet) was approximately $23.2
million.
(9) For purposes of computing the ratio of earnings to fixed charges,
earnings consist of earnings from operations before income taxes and fixed
charges, excluding capitalized interest. Fixed charges consist of interest
expensed and capitalized, amortization of debt issuance costs and the
interest component of rent expense.
4
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(In thousands)
December 31, 2000
------------------------------------------------
Manitowoc Potain(1) Pro Forma
Historical Historical Adjustments Pro Forma
---------- ---------- ----------- ----------
ASSETS
Current Assets:
Cash and cash equivalents... $ 13,983 $ 11,009 $ (11,009)(2) $ 13,983
Accounts receivable--net.... 88,231 111,419 -- 199,650
Inventories................. 91,178 56,466 -- 147,644
Other current assets........ 9,523 -- -- 9,523
Future income tax benefits.. 20,592 -- -- 20,592
--------- -------- --------- ----------
Total current assets...... 223,507 178,894 (11,009) 391,392
--------- -------- --------- ----------
Intangible assets--net........ 308,073 9,096 196,523 (3) 513,692
Property, plant and
equipment--net............... 99,940 74,269 -- 174,209
Deferred income taxes......... -- 4,713 (4,713)(2) --
Deferred financing costs...... 678 -- 14,522 (4) 15,200
Other non-current assets...... 10,332 2,614 -- 12,946
--------- -------- --------- ----------
Total assets.............. $ 642,530 $269,586 $ 195,323 $1,107,439
========= ======== ========= ==========
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current Liabilities:
Accounts payable and accrued
expenses................... $ 144,713 $ 79,315 $ (1,260)(5) $ 222,768
Short-term borrowings....... 81,000 8,620 (82,009)(6) 7,611
Current portion of long-term
debt....................... 270 -- 31,125 (6) 31,395
Product warranties.......... 13,507 3,557 -- 17,064
Other current liabilities... -- 16,819 -- 16,819
--------- -------- --------- ----------
Total current
liabilities.............. 239,490 108,311 (52,144) 295,657
--------- -------- --------- ----------
Non-Current Liabilities:
Long-term debt, less current
portion.................... 137,668 13,297 (139,314)(6) 11,651
Senior subordinated notes... -- -- 164,300 (6) 164,300
Senior credit facility...... -- -- 356,575 (6) 356,575
Postretirement benefit
obligation................. 20,341 2,767 -- 23,108
Deferred income taxes....... -- 6,228 (6,228)(2) --
Other non-current
liabilities................ 11,262 13,235 -- 24,497
--------- -------- --------- ----------
Total non-current
liabilities.............. 169,271 35,527 375,333 580,131
--------- -------- --------- ----------
Minority interest............. -- 87 (87)(2) --
Stockholders' Equity:
Common stock................ 367 12,830 (12,830)(2) 367
Additional paid-in capital.. 31,602 11,745 (11,745)(2) 31,602
Accumulated other
comprehensive loss......... (2,569) (806) 806 (2) (2,569)
Retained earnings........... 334,433 101,892 (101,892)(2) 332,315
(2,118)(5)
Treasury stock.............. (130,064) -- -- (130,064)
--------- -------- --------- ----------
Total stockholders'
equity................... 233,769 125,661 (127,779) 231,651
--------- -------- --------- ----------
Total liabilities and
stockholders' equity..... $ 642,530 $269,586 $ 195,323 $1,107,439
========= ======== ========= ==========
The accompanying notes are an integral part of these pro forma consolidated
financial statements.
5
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
The following adjustments have been made to the condensed consolidated
historical balance sheets of Manitowoc and Potain to compute the unaudited pro
forma condensed consolidated balance sheet.
(1) The table below sets out the adjustments necessary to convert the
Potain historical balance sheet from French GAAP to U.S. GAAP. The Potain
historical financial information and U.S. GAAP adjustments have been
derived from the Potain consolidated financial statements included
elsewhere in this offering memorandum.
Potain Potain
French U.S. GAAP U.S.
GAAP Adjustments GAAP
-------- ----------- --------
Assets
Current Assets:
Cash and cash equivalents.................... $ 15,639 $(4,630) $ 11,009
Accounts receivable--net..................... 111,419 -- 111,419
Inventories.................................. 56,466 -- 56,466
Other current assets......................... -- -- --
Future income tax benefits................... -- -- --
-------- ------- --------
Total current assets....................... 183,524 (4,630) 178,894
Intangible assets--net......................... 9,266 (170) 9,096
Property, plant and equipment--net............. 58,676 15,593 74,269
Deferred income taxes.......................... 2,018 2,695 4,713
Deferred financing costs....................... -- -- --
Other non-current assets....................... 3,003 (389) 2,614
-------- ------- --------
Total assets............................... $256,487 $13,099 $269,586
======== ======= ========
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable and accrued expenses........ $ 79,252 $ 63 $ 79,315
Short-term borrowings........................ 8,620 -- 8,620
Current portion of long-term debt............ -- -- --
Product warranties........................... 3,445 112 3,557
Other current liabilities.................... 10,294 6,525 16,819
-------- ------- --------
Total current liabilities.................. 101,611 6,700 108,311
Non-current Liabilities:
Long-term debt, less current portion......... 13,297 -- 13,297
Senior subordinated notes.................... -- -- --
Senior credit facility....................... -- -- --
Post retirement benefit obligation........... 4,690 (1,923) 2,767
Deferred income taxes........................ 5,981 247 6,228
Other non-current liabilities................ -- 13,235 13,235
-------- ------- --------
Total non-current liabilities.............. 23,968 11,559 35,527
Minority interest.............................. 87 -- 87
Stockholders' Equity:
Common stock................................. 12,830 -- 12,830
Additional paid-in capital................... 11,745 -- 11,745
Accumulated other comprehensive loss......... (806) -- (806)
Retained earnings............................ 107,052 (5,160) 101,892
Treasury stock............................... -- -- --
-------- ------- --------
Total stockholders' equity................. 130,821 (5,160) 125,661
-------- ------- --------
Total liabilities and stockholders'
equity.................................... $256,487 $13,099 $269,586
======== ======= ========
6
(2) Represents the elimination of Potain historical amounts related to
cash, deferred income taxes, minority interest, and stockholders' equity.
(3) To record goodwill of $196.5 million in connection with the Potain
acquisition. The purchase price of $312.7 million includes the amount to be
paid to Group Legris Industries SA (seller) of $307.7 million plus
estimated direct acquisition costs of $5.0 million. In addition, the seller
will be paid the cash balance of Potain at December 31, 2000 of $11.0
million. The purchase price is subject to an adjustment for the net
earnings of Potain from January 1, 2001, to the closing date.
The excess of the purchase consideration over the net assets acquired
(goodwill) is required to be applied to write-up assets to their fair
market value. No appraisals of assets have yet to be performed and all of
the excess of purchase consideration over the net assets to be acquired is
being recorded as goodwill. Subsequent valuation analyses could potentially
change the purchase price allocation. Goodwill is being amortized over
forty years for purposes of the unaudited pro forma condensed consolidated
statement of earnings.
(4) Reflects estimated new debt issuance costs of approximately $15,200
that will be incurred as a result of the acquisition of Potain and related
debt financing, net of a write-off of $678 of unamortized debt issuance
costs related to existing debt which is paid with the proceeds of the
financing. The deferred financing fees are being amortized over the term of
the related debt, which ranges from 6 to 10 years.
(5) To record the effects of the extraordinary loss related to the early
extinguishment of the existing Manitowoc debt as follows:
Prepayment penalty............................................... $ 2,700
Write-off of deferred financing costs............................ 678
-------
3,378
Less-income tax benefit.......................................... (1,260)
-------
Retained earnings adjustment..................................... $ 2,118
=======
(6) The pro forma adjustments required to record the financing portion of
the transactions are as follows:
Payment of short-term borrowings:
Manitowoc................................................... $ (81,000)
Potain...................................................... (1,009)
---------
$ (82,009)
=========
Payment of long-term borrowings:
Manitowoc revolving credit facility......................... $ (59,319)
Manitowoc senior notes due 2010............................. (75,000)
Potain debt................................................. (4,995)
---------
Total..................................................... $(139,314)
=========
Proceeds from senior subordinated notes....................... $ 164,300
=========
Proceeds from senior credit facility:
Revolving credit facility................................... $ 37,700
Term loan A................................................. 200,000
Term loan B................................................. 150,000
---------
387,700
Current portion............................................. (31,125)
---------
Total..................................................... $ 356,575
=========
7