SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
______________________
Date of Report: May 9, 2001
(Date of earliest event reported)
The Manitowoc Company, Inc.
(Exact name of registrant as specified in its charter)
Wisconsin 1-11978 39-0448110
----------------- ----------------- ----------------
(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification No.)
incorporation)
500 South 16th Street, Manitowoc, Wisconsin 54221-0066
-----------------------------------------------------------
(Address of principal executive offices including zip code)
(920) 684-4410
-------------------------------
(Registrant's telephone number)
INFORMATION TO BE INCLUDED IN THE REPORT
Item 2. Acquisition or Disposition of Assets
On May 9, 2001, The Manitowoc Company, Inc. ("Manitowoc") acquired
from Legris Industries SA ("Legris") all of the outstanding capital stock of
Potain SA ("Potain"), pursuant to a Share Purchase Agreement, dated May 9, 2001,
among Manitowoc, Manitowoc France SAS and Legris (the "Acquisition"). The total
purchase price for the Acquisition was approximately FRF 2.3 billion
(approximately U.S. $307.1 million, based upon exchange rates as of May 7,
2001), plus a post-closing adjustment for Potain's net income from January 1,
2001 through the closing date. The purchase price paid by Manitowoc was
determined on the basis of arm's length negotiations between the parties. There
is no material relationship between Legris and Manitowoc or any of its
affiliates, directors or officers or any of their associates.
Potain is a leading designer, manufacturer and supplier of tower
cranes for the building and construction industry. Manitowoc intends to operate
the business of Potain at its present locations and to conduct the business of
Potain in substantially the same manner as it had been conducted prior to the
Acquisition.
The Acquisition was financed by a new $475.0 million senior credit
facility (the "Senior Credit Facility") syndicated by Bankers Trust Company, as
agent, and the issuance of (euro) 175.0 million of Manitowoc's 10 3/8% Senior
Subordinated Notes due 2011. The Senior Credit Facility is comprised of a $125.0
million revolving credit facility, under which Manitowoc borrowed $40.0 million
at the closing of the Acquisition, and term loans aggregating $350.0 million.
Item 7. Financial Statements and Exhibits
(a) Financial Statements of Business Acquired.
-----------------------------------------
The financial statements of Potain SA are included as follows:
(i) Report of Independent Auditors.
(ii) Consolidated Statements of Income for the Years Ended December
31, 2000 and 1999.
(iii) Consolidated Balance Sheets as of December 31, 2000 and 1999.
(iv) Consolidated Statements of Cash Flow for the Years Ended December
31, 2000 and 1999.
(v) Notes to Consolidated Financial Statements.
1
(b) Pro Forma Financial Information.
-------------------------------
(i) Unaudited Pro Forma Condensed Consolidated Statement of Earnings
for the Year Ended December 31, 2000.
(ii) Notes to Unaudited Pro Forma Condensed Consolidated Statement of
Earnings.
(iii) Unaudited Pro Forma Condensed Consolidated Balance Sheet as of
December 31, 2000.
(iv) Notes to Unaudited Pro Forma Condensed Consolidated Balance Sheet.
(c) Exhibits.
--------
See the Exhibit Index following the Signature page of this
report, which is incorporated herein by reference.
2
POTAIN SA
REPORT OF INDEPENDENT AUDITORS
To the Board of Directors of Potain SA
We have audited the accompanying consolidated balance sheets of Potain Group
as of December 31, 2000 and 1999, and the related consolidated statements of
income and cash flows for the years then ended, which have been prepared on the
basis of accounting principles generally accepted in France. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position
of Potain Group at December 31, 2000 and 1999, and the consolidated results of
its operations and its cash flows for the years then ended in conformity with
accounting principles generally accepted in France which differ in certain
respects from those generally accepted in the United States (see Note IV to the
financial statements).
Ernst & Young Audit
Daniel Mary-Dauphin
April 19, 2001
F-1
POTAIN SA
CONSOLIDATED STATEMENTS OF INCOME
December 31, 2000 and 1999
Note 12/31/2000 12/31/1999
---- ---------- ----------
(in thousands Euros)
Operating revenues
Sales...................... 1 286,974 239,644
Other operating revenues... 2 33,018 29,870
Operating expenses
Raw material, supplies and
services.................. (185,935) (160,748)
Payroll expenses........... 3 (69,276) (64,204)
Other operating expenses... 4 (32,504) (30,119)
-------- --------
Current operating income... 32,277 14,443
======== ========
Non recurring operating
income (expenses)......... 5 (553) (343)
-------- --------
Operating income........... 31,724 14,100
-------- --------
Interest expense, net...... 6 868 (1,408)
Amortization of goodwill,
net....................... (429) (391)
Other income and (expense),
net....................... 7 (564) 0
-------- --------
Income before taxes........ 31,599 12,301
======== ========
Income taxes, current and
deferred.................. 8 (11,559) (4,433)
-------- --------
Net income before minority
interests of fully
consolidated entities..... 20,040 7,868
======== ========
Minority interests......... 14 24 1,592
Results of entities
accounted for by the
equity method............. 0 (4)
-------- --------
Net income................. 20,016 6,272
======== ========
Number of shares at
December 31............... 909,945 909,945
Net income per share (in
euros).................... 22.0 6.9
F-2
POTAIN SA
CONSOLIDATED BALANCE SHEETS
December 31, 2000 and 1999
Note 12/31/2000 12/31/1999
---- ---------- ----------
(in thousands Euros)
ASSETS
Intangible assets.................................... 7,241 6,850
Goodwill............................................. 2,616 2,075
Property, plant and equipment........................ 62,421 59,902
Financial assets..................................... 3,197 3,941
------- -------
Total Fixed Assets............................... 9 75,475 72,768
======= =======
Inventories.......................................... 10 60,070 48,722
Accounts receivable.................................. 11 81,743 76,577
Other receivables.................................... 36,788 9,977
Cash................................................. 12 16,637 14,949
------- -------
Total Current Assets............................. 195,238 150,225
======= =======
Deferred tax assets.................................. 13 2,147 7,546
------- -------
Total Assets..................................... 272,860 230,539
======= =======
LIABILITIES
Share capital........................................ 13,649 13,649
Additional paid-in capital........................... 12,495 12,495
Retained earnings.................................... 93,869 84,833
Net income for the year.............................. 20,016 6,272
Translation adjustment............................... (857) 834
------- -------
Shareholders' Equity............................... 139,172 118,083
======= =======
Minority interests................................... 93 5,624
------- -------
Shareholders' Equity & Minority Interests.......... 14 139,265 123,707
======= =======
Reserves for losses and contingencies.............. 15 12,535 7,260
Borrowings........................................... 16 23,316 12,940
Accounts payable..................................... 17 84,311 70,843
Other liabilities.................................... 7,070 8,522
------- -------
Total Liabilities................................ 114,697 92,305
======= =======
Deferred tax liabilities............................. 13 6,363 7,267
------- -------
Total Liabilities & Shareholders' Equity......... 272,860 230,539
======= =======
F-3
POTAIN SA
CONSOLIDATED STATEMENTS OF CASH FLOW
December 31, 2000 and 1999
Note 12/31/00 12/31/99
---- -------- --------
(in thousands Euros)
Cash Flows from Operations.............................. 18 31,088 19,648
Change in working capital............................... (5,160) 1,748
Cash Flows from Operating Activities.................... 25,928 21,396
(Increase)/decrease in fixed assets (excluding rented
equipment)........................................... (8,035) (6,309)
(Increase)/decrease in rented equipment............... (5,495) (4,927)
Investing activities.................................. 4,722 227
------ -------
Total Cash Used in Investing Activities............. (8,808) (11,009)
====== =======
Financing Activities.................................... (489) (17)
Exchange rate fluctuation............................. (679) (514)
(Increase) Decrease in Net Indebtedness................. 15,952 9,856
F-4
POTAIN SA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 2000 AND 1999
I--KEY EVENTS
1--Purchase of the minority interests of Zhangjiagang Potain
An agreement was negotiated in 1999 and finalized in early 2000 under which
Potain acquired the minority interest in its joint venture in China. All items
affecting earnings, including planned restructuring expense, appear in 1999
financial statements.
2--Acquisition of the Liftlux business
The group created Liftlux Potain GmbH as of July 1st, 2000, in connection
with the acquisition of the Liftlux assets. This company was included in the
consolidation in 2000.
3--Application of the new French regulation for the consolidated financial
statements
Potain group accounting principles were changed in 2000 in order to include
the effects of the new R99-02 regulation. The effective application of this
new regulation induced:
. the full consolidation of B.P.G.R. S.A.R.L., previously accounted for by
the equity method,
. the full consolidation of Solum Grundstuck Vermietung GmbH and Axiome de
Re, entities being considered as controlled by Potain SA, previously not
included in consolidation,
. the accounting for part of pensions and similar benefits for France and
Portugal employees, which were previously considered as fully covered by
the insurance premiums paid and expensed when paid,
. the accounting for deferred tax (a) considering deferred tax assets on
all existing tax losses, (b) considering deferred tax on a purchase
accounting and (c) netting the deferred tax assets and liabilities
positions of each subsidiary, with (d) adequate valuation allowance when
necessary of the net assets.
As a consequence of the above modifications, the movements in equity
between December 31, 1999 and December 31, 2000 include:
. the first consolidation of Axiome de Re, increasing net equity by an
amount of 676 K(Euro)
. the partial accounting for the first year of pensions and similar
benefits, increasing net equity by 390 K(Euro)
The income statement of year 2000 is impacted by the December 31, 1999
effect of the new deferred tax accounting method. It represents a deferred tax
benefit of K(Euro).547.
II--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
1--General principles
The consolidated financial statements as of December 31, 2000 are prepared
in accordance with accounting principles generally accepted in France, as
stated in the R99-02 regulation issued by the "Comite de Reglementation
Comptable", the regulatory authority for accounting in France, and comply
with:
. the Law dated January 3, 1985
. the ministerial decree dated February 17, 1986
. methodology of the C.R.C. (June 22, 1999 decision enacting the 99.02
regulation of the C.R.C.)
F-5
POTAIN SA
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
2--Consolidation principles
The consolidated financial statements include the financial statements of
all significant companies directly or indirectly controlled by Potain SA. All
companies included in the scope of consolidation are fully consolidated, with
the exception of B.P.G.R. in 1999, which was consolidated by the equity
method. The financial year of all consolidated companies ends on December 31.
A full list of consolidated companies appears in Note 21 to consolidated
financial statements.
A full list of non-consolidated entities is presented in Note 6 hereafter.
3--Foreign currency translation
The financial statements of foreign subsidiaries are translated into euros
at year-end exchange rates for their assets and liabilities and at weighted
average exchange rates for the year for their income statement. Resulting
translation adjustments are recorded to shareholders' equity.
4--Intangible assets & goodwill
Internally generated goodwill, start-up costs and research and development
costs are expensed as incurred.
Significant software costs are amortized using the straight-line method
over the estimated useful life of the software, which may not exceed three
years.
Patents, trademarks and licenses are amortized over 20 years.
Goodwill on first consolidation consists of costs in excess of net assets
of acquired businesses. It is amortized on a straight-line basis over 15
years.
5--Property, plant and equipment
Property, plant and equipment are stated at historical acquisition or
production cost. Maintenance and repair costs, other than those intended to
extend the life of an asset, are expensed when incurred. Leased equipment is
recorded as an asset when the terms of the lease are those of a capital lease.
Depreciation is calculated on a straight-line basis over the following
estimated useful lives:
Buildings and improvements................................. 20 to 25 years
Machinery and equipment.................................... 5 to 10 years
Leased cranes.............................................. 6 to 8 years
Others..................................................... 3 to 10 years
6--Financial assets
Financial assets mainly include investments in non-consolidated entities
and housing contribution loans.
The housing contribution loans are non-interest bearing loans over 20
years. They are recorded at discounted value, assuming a 2% interest rate per
year.
Subsidiaries with low materiality (less than 0.6 million (Euro) sales or
total balance sheet) are not included in the consolidation.
F-6
POTAIN SA
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Investments in non-consolidated companies are stated at cost and written
down when economic value falls below cost.
The list of non-consolidated entities as of December 31, 2000 is as follows:
Net
share
Non-consolidated entities % ownership value Equity
------------------------- ----------- -------- --------
Potain Ireland.............................. 51,0% 0 KEUR 10
Potain Inc (Philippines).................... 70,0% KEUR 249 KEUR 698
Potain Pty (Australia)...................... 100,0% KEUR 2 KEUR 596
SCI Les Aulnettes (France).................. 100,0% KEUR 155 KEUR 20
7--Inventories and work in progress
Inventories of all group companies are stated at lower of cost or market.
Cost is defined as acquisition or production cost and is computed using the
weighted average cost method. Production costs include direct and indirect
production costs and an allocation of overheads assuming normal levels of
activity. Intercompany margins are eliminated. Intercompany goods in transit
are included both in inventories and purchases of the receiving company.
Allowances to write down inventories to their net realizable value and for
surplus inventories are recorded in the year in which they become known.
8--Receivables
Receivables are stated at their nominal value and provisions are recorded
when appropriate to cover any risk of non-recovery.
9--Other accounts receivables and other liabilities
The Potain group is owned by Legris Industries. In connection therewith, the
management of excess cash or cash requirements is done at Legris level through
a cash pooling agreement. The cash lended to the cash pooling is recorded as
other accounts receivable respectively for 4,159 K(Euro) and 28,539 k(Euro) as
of December 31, 1999 and 2000. The cash borrowed from the cash pooling is
recorded as other liabilities respectively for 3,842 K(Euro) and 3,582 k(Euro)
as of December 31, 1999 and 2000.
10--Social contributions
Potain SA benefits since 1997 from the "De Robien" social law, which enables
the company to pay reduced social contributions over the seven-year period
ending June 30, 2003, provided that Potain SA keeps a minimum headcount level.
Related benefits are recorded on the respective years and represented
respectively (Euro)2,871 and (Euro)2,865 for 1999 and 2000.
11--Transactions in foreign currencies
Monetary assets and liabilities denominated in foreign currencies that are
not hedged are translated at year-end exchange rates. Hedged foreign currency
transactions are translated at the hedging rate. Differences arising from
translation, together with gains and losses realized on transactions carried
out during the year, are included in income statement. The potential
differences arising from fair value of the hedging positions related to the
backlog orders are considered as off-balance sheet commitments.
F-7
POTAIN SA
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
12--Taxation
Tax charged to earnings corresponds to the tax due from each taxable
consolidated entity after correction of deferred taxes. The company uses the
deferral method to recognize deferred tax assets and liabilities for the
expected future income tax consequences of events that have been recognized in
the company's financial statements. Under this method, deferred tax assets and
liabilities are determined based on the temporary differences between financial
statements carrying amounts and the tax basis of assets and liabilities.
The deferred tax liability on the restatement of the "Foreign Investment
reserve" is recorded at its discounted value assuming a 5% rate.
Where taxable entities show a loss, the deferred tax assets recorded for
loss carry forwards were limited until December 31, 1999 to the losses over two
financial years. This is no longer applicable beginning in 2000, under the new
enacted 99-02 French GAAP. Deferred tax assets on loss carry forwards and
deemed deferred depreciation are fully depreciated if their application to
future earnings is uncertain.
13--Pensions and similar benefits
Commitments to employees relating to retirement, or seniority bonuses, or
other deferred benefits, are partly accrued for since 2000 in accordance with
generally accepted accounting principles in France. The overall impact of this
change of method on shareholders' equity on the opening balance sheet is not
significant, amounting to (Euro)0.39 million, and does not require the
presentation of pro forma accounts.
The accrual recorded in the consolidated financial statements, K(Euro)4,989,
does not take into account the preferred method for computation of the full
commitment. The schedule below shows the assumptions used for valuation of the
liability:
Assumptions As computed under IAS 19
----------- ------------------------
Retirement age...................... 60 for executive and 63 for employees
Type of departure................... Voluntary
Discount rate....................... 4.9% (incl. inflation)
Inflation rate...................... 2%
Social contributions................ 47%
Salary increase..................... Depends on age & category
Turnover............................ Depends on age & category
Commitment.......................... K(Euro) 9,123
Out of the K(Euro)9,123, K(Euro)1,073 were paid to an external insurance
company.
F-8
POTAIN SA
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
III--NOTES TO FINANCIAL STATEMENTS
(in thousands Euros)
1--SALES
By business 2000 1999
----------- ------- -------
Cranes.................................................... 286,974 239,644
------- -------
Total................................................... 286,974 239,644
======= =======
By geographic area 2000 1999
------------------ ------- -------
France.................................................... 83,021 70,097
Europe (excl France and Eastern Europe)................... 159,812 138,283
Asia--Pacific............................................. 16,485 11,864
America................................................... 13,260 8,322
Near and middle East...................................... 5,236 4,210
Africa.................................................... 4,130 2,190
Eastern Europe............................................ 5,028 4,680
------- -------
Total................................................... 286,974 239,644
======= =======
2--OTHER OPERATING REVENUES
2000 1999
------- -------
Change in inventory....................................... 1,113 4,652
Capitalized production.................................... 14,476 10,589
Operating subsidies....................................... 103 151
Reversals of accruals, expense transfers.................. 4,327 5,097
Other revenues (1)........................................ 13,000 9,392
------- -------
Total................................................... 33,018 29,870
======= =======
- --------
(1)including sale of capitalized rented cranes 11,277 8,015
3--PAYROLL EXPENSES
2000 1999
------- -------
Wages and salaries...................................... (52,938) (48,190)
Social security contributions........................... (16,338) (16,014)
------- -------
Total................................................. (69,276) (64,204)
======= =======
Headcounts average 2000 12/31/00 12/31/99
---------- ------------ -------- --------
Cranes.................................. 2,464 2,285 2,558
----- ------- -------
Total................................. 2,464 2,285 2,558
===== ======= =======
- --------
(1)out of which Potain China headcounts: 397 231 616
4--OTHER OPERATING EXPENSES
2000 1999
-------- --------
Total................................. (32,504) (30,119)
======= =======
- --------
(1)out of which, net book value of sold
rented cranes (7,058) (6,353)
F-9
POTAIN SA
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
5--NON RECURRING OPERATING INCOME (EXPENSES)
2000 1999
------- ------
Non recurring operating expenses....................... (5,166) (5,545)
Non recurring operating income......................... 4,613 5,202
Non recurring operating items.......................... (553) (343)
6--INTEREST EXPENSE, NET
2000 1999
------- ------
Interest expense, net of interest income............... (514) (1,303)
Net gains on disposal of short term investments........ 7 0
Subtotal............................................. (507) (1,303)
Foreign exchange gains (losses)........................ 716 (325)
Amortizations and provisions........................... (404) (212)
Reversal of reserves and expense transfers............. 152 222
Other financial income (expense)....................... 912 210
------- ------
Subtotal............................................. 1,375 (105)
======= ======
Interest expense, net.............................. 868 (1,408)
7--OTHER INCOME AND (EXPENSE) NET
2000 1999
------- ------
Non operating expenses................................. (2,664) 0
Non operating income................................... 2,100 0
------- ------
Non operating items.................................. (564) 0
======= ======
8--INCOME TAXES
8a--Detail
2000 1999
------- ------
Current income tax..................................... (11,221) (5,380)
Deferred income tax.................................... (338) 947
------- ------
Total................................................ (11,559) (4,433)
======= ======
The total income tax charge can be analyzed as follows:
Tax on operating income.............................. (11,559) (4,433)
Decrease/(increase) in tax linked to non operating
items...............................................
------- ------
Total.............................................. (11,559) (4,433)
======= ======
F-10
POTAIN SA
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
8b--Tax rationalization
2000
-------
Income before income taxes................................... 31,559
Corporate income tax rate.................................... 36.3%
Theoretical tax charge....................................... (11,456)
Impact of permanent differences
--Potain China net loss.................................... (671)
--Goodwill amortization.................................... (161)
--Tax credit on previously not recognized tax losses....... 1,658
--Changes in income tax rate............................... (144)
--Change in consolidation principles....................... (1,175)
--Other.................................................... 390
-------
Effective tax charge......................................... (11,559)
=======
9--FIXED ASSETS
9a--Fixed assets, at cost and net
2000 1999
-------- --------
At cost:
Intangible assets..................................... 12,403 10,204
Goodwill.............................................. 6,686 5,716
Property, plant & equipment........................... 159,846 153,509
Financial assets...................................... 3,774 3,070
Investments accounted for by the equity method........ 0 1,194
-------- --------
Total fixed assets at cost.......................... 182,709 173,693
======== ========
Amortization/depreciation
Intangible assets..................................... (5,163) (3,353)
Goodwill.............................................. (4,070) (3,641)
Property, plant & equipment........................... (97,424) (93,607)
Financial assets...................................... (577) (323)
Investments accounted for by the equity method........ 0 0
-------- --------
Total fixed assets depreciation/amortization........ (107,234) (100,925)
======== ========
Net book value
Intangible assets..................................... 7,241 6,850
Goodwill.............................................. 2,616 2,075
Property, plant & equipment........................... 62,421 59,902
Financial assets...................................... 3,197 2,747
Investments accounted for by the equity method........ 0 1,194
-------- --------
Fixed assets, net................................... 75,475 72,768
======== ========
9b--Movements in fixed assets
Gross Dep. Net
------- -------- -------
Value as of December 31, 1999................. 173,693 (100,925) 72,768
Acquisitions.................................. 26,037 (13,189) 12,848
Disposals..................................... (24,300) 7,091 (17,209)
Other......................................... 7,279 (211) 7,068
------- -------- -------
Value as of December 31, 2000............... 182,709 (107,234) 75,475
======= ======== =======
F-11
POTAIN SA
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
9c--Assets acquired under capital leases
2000 1999
------ ------
At cost................................................... 12,861 10,879
Depreciation.............................................. (5,546) (5,115)
Net assets acquired under capital lease................... 7,315 5,764
------ ------
Obligations under capital lease........................... 6,298 6,269
------ ------
9d--Goodwill
Goodwill at December 31, 1999.................................. 2,075
Exchange rate difference on amortization
Acquisitions................................................... 970
Amortization................................................... (429)
----- ---
Goodwill at December 31, 2000.................................. 2,616
===== ===
Goodwill breakdown by companies
12/31/99 Net book
Gross value Accumulated Depreciation Translat. value
at 12/31/00 amortization For the year adjustment at 12/31/00
----------- ------------ ------------ ---------- -----------
Potain Industria Spa.... 5,716 (3,641) (391) 1,684
Liftux Potain........... 970 (38) 932
----- ------ ---- --- -----
Total................. 6,686 (3,641) (429) 0 2,616
===== ====== ==== === =====
10--INVENTORIES
2000 1999
------ ------
Raw materials and other supplies.......................... 23,166 15,642
Work in Process........................................... 21,338 16,879
Semi-finished and finished goods.......................... 12,167 14,491
Resale goods.............................................. 8,414 6,230
Inventories--gross value.................................. 65,085 53,242
Provision for decline in value............................ (5,015) (4,520)
------ ------
Inventories--net book value............................. 60,070 48,722
====== ======
11--ACCOUNTS RECEIVABLES
2000 1999
------ ------
Prepayments............................................. 211 397
Accounts receivables from customers..................... 82,966(1) 79,109
Other receivables....................................... 2,392 907
Gross trade accounts receivable......................... 85,569 80,413
Provision for depreciation.............................. (3,826) (3,836)
------ ------
Net trade accounts receivables........................ 81,743 76,577
====== ======
- --------
(1) out of which receivables over 1 year : 0.5 Me
F-12
POTAIN SA
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
12--CASH AND SHORT-TERM INVESTMENTS
2000 1999
------ -----
Short term investments at cost........................... 11,544 0
Depreciation............................................. 0 0
Short-term investment, net............................... 11,544 0
Cash..................................................... 5,093 14,949
Other.................................................... 0 0
Cash..................................................... 5,093 14,949
------ ------
Total.................................................. 16,637 14,949
====== ======
13--DEFERRED TAXES BALANCE AT YEAR-END
13a--Movements in deferred tax balances
2000 1999
------ ------
Net opening deferred tax assets/liabilities.............. 279 (705)
Net deferred taxes....................................... (338) 947
Impact of deferred taxes on pensions & similar benefits.. (222)
Impact of changes in consolidation area (3,979)
Other changes............................................ 44 37
------ ------
Net closing deferred tax assets/liabilities............ (4,216) 279
====== ======
13b--Deferred tax analysis by sources of deferred tax
(Presented before netting by company)
2000
------------------------
Gross Dep. Net
------- ------ -------
Deferred tax assets arising from
--Book to tax adjustments..................... 2,730 0 2,730
--Restatements of local books................. 3,942 (694) 3,248
--Tax losses and tax credits.................. 6,201 (5,276) 925
12,873 (5,970) 6,903
Deferred tax liabilities arising from
--Book to tax adjustments..................... (5,556) 0 (5,556)
--Restatements of local books................. (5,563) 0 (5,563)
(11,119) 0 (11,119)
------- ------ -------
Total net................................... 1,754 (5,970) (4,216)
======= ====== =======
F-13
POTAIN SA
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
14--SHAREHOLDERS' EQUITY
Capital and Retained Net
premiums earnings Income Other Total
----------- -------- ------ ----- -------
Shareholders' equity at
December 31, 1999............. 115,843 7,864 123,707
Dividend distribution........ (497) (497)
Capital increase.............
Capital reduction............
Net income for the year........ 20,040 20,040
Translation adjustment....... 472 472
Acquisition of Potain China
minority interests.......... (5,550) (5,550)
Other........................ 1,092 7,367 (7,367) 1,092
------- ----- ------ --- -------
Shareholders' equity at
December 31, 2000............. 111,857 7,367 20,040 0 139,264
======= ===== ====== === =======
Number of shares
1999......................... 909,945
2000......................... 909,945
15--RESERVE FOR LOSSES AND CONTINGENCIES
2000 1999
------ -----
Reserve for contingencies
Claims and litigations....................................... 520 438
Warranty costs(1)............................................ 2,582 2,440
Technical updates(2)......................................... 1,083 475
Technical and industrial risks............................... 518 517
Miscellaneous................................................ 860 433
Total...................................................... 5,563 4,303
Reserve for losses
Pensions and other benefits(3)............................... 4,989 624
Restructuring................................................ 1,006 1,719
Initial assembly costs....................................... 121 171
Miscellaneous................................................ 857 433
Total........................................................ 6,972 2,957
------ -----
Total...................................................... 12,535 7,260
====== =====
___________
(1) Contractual warranty on sold cranes
(2) Covers the estimated cost of parts replacement initiated by the group
(3) Change in accounting method for pensions and similar benefits accruals
Corresponding value at December 31, 1999: 4,2 millions Euros
F-14
POTAIN SA
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
16--BORROWINGS
2000 1999
------ ------
16a--Breakdown by nature
Bank borrowings......................................... 16,831 6,542
Subordinated debts...................................... 0 65
Other................................................... 5,486 6,333
------ ------
Total................................................. 23,317 12,940
====== ======
16b--Breakdown by maturity
Less than 1 year........................................ 9,170 5,362
From 1 to 5 years....................................... 8,215 4,427
More than 5 years....................................... 5,931 3,151
------ ------
Total*................................................ 23,316 12,940
====== ======
*of which obligations under capital lease............... 6,298 6,269
16c--Financial instruments
As of December 31, 2000, there is no interest rate hedging.
17--ACCOUNTS PAYABLE
2000 1999
------ ------
Prepayments received.................................... 1,509 1,276
Trade accounts payable.................................. 51,543 46,086
Tax and social contributions payable.................... 20,273 18,113
Debt related to fixed assets............................ 299 676
Corporate income tax payable............................ 7,358 3,431
Other liabilities....................................... 3,328 1,262
------ ------
Total accounts payable................................ 84,311 70,843
====== ======
18--CASH FLOWS FROM OPERATIONS
2000 1999
------ ------
Consolidated net income................................. 20,039 7,864
Income from companies accounted for by the equity
method................................................. 0
Depreciation, amortization and operating provisions..... 18,032 16,489
Reversals of operating provisions....................... (4,326) (4,988)
Allowance for financial provisions...................... 404 212
Reversals of financial provisions....................... (152) (222)
Allowance for non recurring provisions.................. 179 1,004
Reversals of exceptional provisions..................... (3,918) (246)
Gains on disposal of fixed assets....................... 58 (408)
Amortization of goodwill, net........................... 429 381
Net movement in deferred taxes.......................... 338 (947)
------ ------
Total cash flows from operations...................... 31,088 19,648
====== ======
F-15
POTAIN SA
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
19--IMPACT OF CHANGES IN CONSOLIDATION SCOPE
2000
-------
Fixed assets............................................ 6,897
Current assets*......................................... 19,711
Deferred tax assets.....................................
-------
Total assets.......................................... 26,608
=======
Equity.................................................. 7,646
Reserves................................................ 5,990
Liabilities*............................................ 8,993
Deferred tax liabilities................................ 3,979
-------
Total liabilities..................................... 26,608
=======
*of which, net borrowings............................... (10,984)
20--OFF-BALANCE SHEET COMMITMENTS
2000 1999
------- ------
Given commitments
Guaranties given to banks (incl. Discounted bills)...... 11,217 14,244
Future lease payments................................... 0 0
Buy-back commitments.................................... 14,253 11,682
Other................................................... 0 0
------- ------
Total................................................. 25,470 25,926
======= ======
Received commitments
Discounted bills........................................ 1,358 631
Discounted bills secured by collateral/Sabatini law,
Italy(1)............................................... 2,616 2,709
Backlog orders received................................. 52,537 55,796
Buy-back commitments.................................... 14,253 11,682
Other(2)................................................ 11,766 13,643
------- ------
Total................................................. 82,530 84,461
======= ======
Debts secured by collateral
Mortgages and pledges................................... 0 0
Obligations under capital lease......................... 6,298 6,269
------- ------
Total................................................. 6,298 6,269
======= ======
__________
(1) guaranted by pledge on material
(2) export guarantees, other guarantees, equipment lodged as
collateral for payment guarantees given, excluding
discounted bills
F-16
POTAIN SA
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
21--CONSOLIDATION AREA
% %
ownership ownership
at at
Entities City Country 31/12/2000 31/12/1999
- -------- ------------- ------------------ ---------- ----------
Potain.................. Ecully France Mother Mother
B.P.G.R................. Ecully France 100.00% 100.00%
Sam Sologat............. Bretigny France 99.80% 99.80%
Sci Les Sthenes du
Plateau................ Ecully France 100.00% 100.00%
Cadillon GmbH........... Moerfelden Allemagne 100.00% 100.00%
Potain GmbH............. Moerfelden Allemagne 100.00% 100.00%
Potain Technik Gmbh..... Arneburg Allemagne 100.00% 100.00%
Potain Belgium.......... Malines Belgique 100.00% 100.00%
Potain UK............... West-Drayton Grande-Bretagne 100.00% 100.00%
Potain Hungaria......... Budapest Hongrie 100.00% 100.00%
Potain Industrie Spa.... Niellatanaro Italie 99.98% 99.98%
Potain Spa.............. Parabiago Italie 99.97% 99.97%
Potain Italia........... Cuggiono Italie 99.97% 99.97%
Potain International.... Cuggiono Italie 99.97% 99.97%
Potain Polska........... Varsovie Pologne 100.00% 100.00%
Noe Pereira............. Fanzeres Portugal 99.64% 99.64%
Potain Portugal......... Ermesinde Portugal 99.56% 99.56%
Potain S.R.O............ Netvorice Republique tcheque 100.00% 100.00%
Potain Corporation...... Miami Etats-Unis 100.00% 100.00%
Potain Ltda............. Sao-Paulo Bresil 99.91% 99.91%
Zhangjiagang Potain..... Zhangjiagang Chine 100.00% 62.77%
Potain Pte Ltd.......... Singapour Singapour 100.00% 100.00%
Liftlux Potain Gmbh..... DILLINGEN Allemagne 100.00%
Solum................... Dusseldorf Allemagne 100.00%
Axiome de Re............ Senningerberg Luxembourg 100.00%
F-17
POTAIN SA
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
IV--PROFIT AND LOSS PRESENTATION
Under French accounting principles, profit and loss statement can be
presented either by nature or by destination. Below is a presentation of
profit and loss statement by destination under French GAAP.
(in thousands Euros) 12/31/2000 (12/31/1999
- -------------------- ---------- -----------
Sales.................................................. 286,974 239,644
Cost of sales.......................................... (206,503) (182,032)
Gross profit........................................... 80,471 57,612
Engineering, selling & administrative expenses......... (48,747) (43,512)
Operating profit....................................... 31,724 14,100
Interest expense, net.................................. 868 (1,408)
Goodwill amortization.................................. (429) (391)
Other income and (expense), net........................ (564) 0
Income before taxes.................................... 31,599 12,301
Income tax............................................. (11,559) (4,433)
Net income before minority interests of fully
consolidated entities................................. 20,040 7,868
Minority interests..................................... 24 1,592
Results of entities accounted for by the equity
method................................................ 0 (4)
Net income............................................. 20,016 6,272
The cost of sales includes the following:
. logistic expenses such as inventory warehousing and transportation costs,
. manufacturing costs including direct and indirect standard costs,
variances with actual costs and allowances for inventory depreciation,
. margin on sale of capitalized cranes.
Engineering, selling & administrative expenses include all operating
expenses not included in cost of sales.
V--COMPARISON BETWEEN FRENCH AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING
PRINCIPLES
The Group's consolidated financial statements are prepared in accordance
with accounting principles generally accepted in France ("French GAAP") which
differ in certain respects from accounting principles generally accepted in
the United States ("U.S. GAAP"). The significant differences applicable to the
Group are summarized below.
Revenue recognition on sales with guaranteed buyback commitments
Under French GAAP, revenue related to sales with guaranteed buyback
commitments are recognized and a liability is established at the time of sale
for the difference, if any, between the amount of the buyback commitment and
the estimated fair value of the equipment at the foreseeable buyback
commitment date.
Under U.S. GAAP, revenue related to such sales is recorded in accordance
with EITF 95-1, "Revenue Recognition on Sales with Guaranteed Minimum Resale
Value" which states that a manufacturer is precluded from recognizing a sale
of equipment if the manufacturer guarantees the resale value of the equipment
to the
F-18
POTAIN SA
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
purchaser. Rather, the manufacturer should account for the transaction as a
lease, using the principles of lease accounting in Statement 13.
Revenue recognition on sales with guarantees
The Company enters into sales agreements with financing companies who in
turn lease equipment to third parties. Under some of these agreements, the
Company has guaranteed the third party lease payments to the financing
companies. Under other such agreements, the Company has agreed to absorb a
portion of the losses resulting from default by the third parties.
Under French GAAP, revenue related to such transactions is recorded upon
delivery of the equipment and a liability, if necessary, is established for any
anticipated future losses related to the guarantees. The guarantees are
considered to be off-balance sheet commitments.
Under U.S. GAAP, revenue related to such transactions in which the Company
retains substantial risks of ownership in the property is recorded as if the
transaction was a lease.
Deferred taxation
For French GAAP purposes, on January 1, 2000, the Group adopted French
accounting standard 99-02 which addresses the accounting for income taxes. This
new rule is effective from January 1, 2000. This standard is similar to U.S.
GAAP in that deferred taxes are computed for all temporary differences between
the tax and book bases of assets and liabilities. Deferred tax assets are
recognized to the extent their realization is more likely than not. The main
difference between this standard and U.S. GAAP is that long-term deferred tax
liabilities are discounted. For U.S. GAAP purposes, deferred taxes are computed
for all temporary differences between the tax and book bases of assets and
liabilities. Deferred tax assets are recognized to the extent their realization
is more likely than not.
Consolidation and tax provisions
Under French GAAP, prior to the issuance of accounting standard 99-02,
companies were not required to consolidate majority-owned subsidiaries which
operated in a different business activity. Therefore, Axiome, a wholly-owned
subsidiary was not consolidated in 1998 and 1999 as a result of which
provisions recorded to obtain certain tax benefits were not reversed for
consolidation purposes under French GAAP. Starting from January 1, 2000, the
application of accounting standard 99-02 requires that all majority-owned
subsidiaries for which a company has control be consolidated and as a
consequence, such provisions have been reversed.
Under U.S. GAAP, all majority-owned subsidiaries for which a company has
control are consolidated and as a consequence, provisions recorded to obtain
certain tax benefits are reversed all over the periods presented with the
related deferred tax effect.
Pensions and retirement indemnities
Under French GAAP, companies have the option of recording pension
liabilities in full in the balance sheet, partially in the balance sheet and
partially as an off balance sheet commitment, or entirely as an off balance
sheet commitment. Under U.S. GAAP, pensions are accounted for in accordance
with Statement of Financial Accounting Standards No. 87, "Employers' Accounting
for Pensions" (FAS 87). Under FAS 87, pension assets or liabilities are
recorded in the balance sheet for the difference between the projected benefit
obligation and the fair value of any plan assets. Annual pension costs are
recorded in the income statement.
F-19
POTAIN SA
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
IBNR Reserves
For French GAAP purposes, liabilities for amounts due related to deductibles
for insurance claims are recorded when the invoices are received from the
insuror.
For U.S. GAAP purposes, such liabilities are recorded when they are
incurred. Therefore, an estimate of claims incurred but not yet reported (IBNR)
is calculated by an actuary and the estimated amount is recorded in the balance
sheet.
Foreign currency hedges
Under French GAAP, gains and losses on foreign currency hedges can be
deferred until the hedged transaction actually occurs.
Under U.S. GAAP, hedging of foreign currency transactions with forward
exchange contracts is only permissible for transactions which are firm
commitments. Some of the Group's foreign currency contracts hedge forecasted or
budgeted transactions which do not meet the definition of a firm commitment.
Gains and losses on these contracts cannot be deferred but must be recognized
in net income.
Restructuring costs
For French GAAP purposes, the Group recorded a restructuring reserve for
Potain China in December 1999 because it was considered that management had
approved the plan and communicated the plan and related benefits to be received
to the employees affected by the plan. However, the plan was not officially
approved by the Board and other regulatory authorities until January 2000.
For U.S. GAAP purposes, restructuring costs are recognized when the
following have occurred: management approves and commits the company to the
restructuring plan; the benefit arrangement for any employees to be terminated
has been communicated to employees in sufficient detail to enable them to
determine the type and amount of benefits they will receive if terminated; the
plan of termination specifically identifies the number of employees to be
terminated, their job classifications or functions and their locations; and the
period of time to complete the plan indicates that changes to the plan are not
likely. It was considered for U.S. GAAP purposes that Potain China was not
committed to the plan until January 2000.
Impairment of assets
Under French GAAP, there are no specific rules specifying impairment
criteria and how impairment should be measured.
Under U.S. GAAP, long-lived assets and certain identifiable intangibles to
be held and used are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. If the sum of the estimated future cash flows expected to result
from the asset and its eventual disposition is less than the carrying value of
the asset, an impairment loss is recognized.
Non-interest bearing notes receivable
Under French GAAP, non-interest bearing notes receivable are recorded at the
amounts stipulated in the agreements. No consideration is given to the impact
of imputed interest.
Under U.S. GAAP, non-interest bearing notes receivable exchanged for
property, goods or services are recorded at their present value by discounting
all future payments on the notes using an imputed rate of interest. Premiums
are amortized into income over the life of the notes.
F-20
POTAIN SA
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Rental agreement
The Group has a lease agreement for 20 years and for which the lease
payments are not uniform throughout the term of the lease.
For French GAAP purposes, payments under operating leases are recorded as
rent expense for the amounts incurred according to the lease agreement.
Under U.S. GAAP, the total expense to be incurred under the lease is
amortized uniformly on a straight-line basis over the term of the lease.
The following is a summary of the significant adjustments to net income and
shareholders' equity which would be required if U.S. GAAP were to be applied
instead of French GAAP:
Shareholders' Shareholders' Adoption Shareholders'
Equity Net Equity Net of Equity
December 31, income December 31, income Standard December 31,
In thousands of Euros 1998 1999 1999 2000 99-02 2000
- --------------------- ------------- ------- ------------- ------- -------- -------------
Amount in accordance
with French GAAP....... 111,005 6,272 118,083 20,016 1,106 139,172
Revenue recognition..... (1,746) (897) (2,643) (1,790) (4,433)
Deferred taxation....... 1,428 (994) 434 (697) (263)
Consolidation........... 811 (95) 716 (716)
Pensions & retirement
indemnities............ (2,266) (184) (2,450) 183 (612) (2,879)
IBNR reserve............ (115) 2 (113) (6) (119)
Foreign currency hedge.. (82) (82) 82
Restructuring--China.... 902 902 (902)
Impairment of assets.... (181) (181)
Non-interest bearing
notes receivable....... (412) (15) (427) 13 (414)
Rental agreement........ (67) (67)
Tax effect of the above
adjustments............ 1,731 342 2,073 572 222 2,867
Amount in accordance
with U.S. GAAP......... 110,435 5,261 116,493 17,224 0 133,683
Number of shares........ 909,945 909,945
Net income per share
U.S. GAAP (Euros)...... 5.77 18.93
VI--SUPPLEMENTAL CASH FLOW INFORMATION
December 31
-------------------------
(in thousands Euros) 2000 1999 1998
-------------------- ------- ------- -------
Cash......................................... 16,637 14,949 6,838
Borrowings................................... (23,316) (12,940) (15,693)
Amounts due from affiliates (included in
other receivables).......................... 28,538 4,158 3,388
Amounts due to affiliates (included in other
liabilities)................................ (3,582) (3,842) (2,064)
------- ------- -------
Net indebtedness............................. 18,277 2,325 (7,531)
F-21
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 as part of this Current Report on Form 8-K.
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;
. borrowings of $387.7 million under Manitowoc's new senior credit facility;
and
. the prepayment of outstanding borrowings under Manitowoc's existing
revolving credit facility and Manitowoc's existing senior notes due 2010.
Pro forma adjustments to historical financial statements include adjustments
that Manitowoc deems appropriate, reflecting items of recurring significance and
which are factually supported based on currently available information.
Manitowoc assumed that the acquisition of Potain and related financing
transactions, including the issuance of the senior subordinated 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 Manitowoc's condensed
consolidated financial results for future periods.
The unaudited pro forma condensed consolidated financial data have 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. This information should be read in conjunction with the
financial statements of Manitowoc and Potain included elsewhere in this Current
Report on Form 8-K. 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.
P-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) (34,802)(3) (49,502)
Other (expense) income, net.... (2,024) (472) (305)(4) (2,801)
-------- -------- -------- ----------
Earnings before income taxes... 96,120 26,594 (39,625) 83,089
Provision for taxes on income.. 35,852 10,750 (12,536)(5) 34,066
-------- -------- -------- ----------
Net earnings(6)................ $ 60,268 $ 15,844 $(27,089) $ 49,023
======== ======== ======== ==========
Per Share Data:
Earnings per share--basic...... $ 2.42 $ 1.97
======== ==========
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).................... 6.5x 37.7x 2.6x
The accompanying notes are an integral part of these pro forma consolidated
financial statements.
P-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 Current Report on Form 8-K.
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 7.350% $ 2,771
Term loan A................................... 200,000 7.350 14,700
Term loan B................................... 150,000 7.850 11,775
--------
Total....................................... 387,700
Senior subordinated notes....................... 164,300 10.375 17,046
Miscellaneous................................... 19,532 Various 1,023
Amortization of financing costs................. -- -- 2,187
-------- -------
$571,532 $49,502
======== =======
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.
P-3
(5) To adjust the provision for taxes on income to an effective income
tax rate of 41%.
(6) Manitowoc recognized an extraordinary loss ($2.1 million, net of income
tax effects) related to the early extinguishment of our existing debt which
was paid from proceeds from the financing.
(7) EBITDA consists of earnings from operations plus depreciation and
amortization. Manitowoc has 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 Manitowoc's 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. Manitowoc has 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 Manitowoc does.
(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.
P-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.
P-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 Current Report on Form 8-K.
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
======== ======= ========
P-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
=========
P-7
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 hereunto duly authorized.
THE MANITOWOC COMPANY, INC.
Date: May 11, 2001 /s/ Maurice D. Jones
------------------------------------------------
Maurice D. Jones, General Counsel and Secretary
3
THE MANITOWOC COMPANY, INC.
EXHIBIT INDEX
TO
FORM 8-K CURRENT REPORT
DATED AS OF MAY 9, 2001
Exhibit
Number Description
2 Share Purchase Agreement, dated May 9, 2001, among The Manitowoc
Company, Inc., Manitowoc France SAS and Legris Industries SA.
Schedules and exhibits to the Share Purchase Agreement have not
been filed herewith. The Company agrees to furnish a copy of any
omitted schedule or exhibit to the Commission upon request.
4.1 Credit Agreement, dated May 9, 2001, among The Manitowoc Company,
Inc., the lenders party thereto and Bankers Trust Company, as
Agent.
4.2 Indenture, dated May 9, 2001, among The Manitowoc Company, Inc.,
the Guarantors named therein and The Bank of New York, as
Trustee.
23 Consent of Ernst & Young Audit.
99 Press Release of The Manitowoc Company, Inc., dated May 9, 2001.