-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Jh+okdcjDZgo7j1zzxMD06Vs//Z9pY2N4Rf8oZV72KkcB6w1L9ZOs7cyKjRrnrOT CZNDE1P2glBwBXnMyEexUA== 0000061986-97-000011.txt : 19970502 0000061986-97-000011.hdr.sgml : 19970502 ACCESSION NUMBER: 0000061986-97-000011 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970501 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: MANITOWOC CO INC CENTRAL INDEX KEY: 0000061986 STANDARD INDUSTRIAL CLASSIFICATION: CONSTRUCTION MACHINERY & EQUIP [3531] IRS NUMBER: 390448110 STATE OF INCORPORATION: WI FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-11978 FILM NUMBER: 97592842 BUSINESS ADDRESS: STREET 1: 500 S 16TH ST STREET 2: STE B CITY: MANITOWOC STATE: WI ZIP: 54221 BUSINESS PHONE: 4146846621 10-Q 1 1Q 97 10Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1997 ---------------- 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 March 31, 1997, 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 First Quarter of Calendar Years 1997 and 1996 (Unaudited) (In thousands, except per-share and average shares data) March 31, 1997 March 31, 1996 -------------- ------------- Net Sales $ 116,041 $ 114,099 Costs And Expenses: Cost of goods sold 84,033 85,462 Engineering, selling and administrative expenses 20,707 19,433 --------- -------- Total 104,740 104,895 Earnings From Operations 11,301 9,204 Other Income (Expense): Interest expense (1,124) (2,462) Interest and dividend income 68 51 Other income 37 67 --------- -------- Total (1,019) (2,344) --------- -------- Earnings Before Taxes On Income 10,282 6,860 Provision For Taxes On Income 3,804 2,746 --------- -------- Net Earnings $ 6,478 $ 4,114 --------- -------- Net Earnings Per Share $ .56 $ .36 Dividends Per Share $ .17 $ .17 Average Shares Outstanding 11,511,357 11,511,357 See accompanying notes which are an integral part of these statements.
THE MANITOWOC COMPANY, INC. Consolidated Balance Sheets As of March 31, 1997 and December 31, 1996 (Unaudited) (In thousands, except share data) -ASSETS- March 31, December 31, 1997 1996 --------- ---------- Current Assets: Cash and cash equivalents $ 8,492 $ 14,364 Marketable securities 1,668 1,657 Accounts receivable 56,280 53,876 Inventories 53,349 43,978 Prepaid expenses and other 1,096 1,281 Future income tax benefits 12,719 12,719 --------- --------- Total current assets 133,604 127,875 Intangibles assets-net 91,345 92,200 Other assets 12,942 12,932 Property, plant and equipment: At cost 192,517 189,383 Less accumulated depreciation (106,663) (104,680) --------- --------- Property, plant and equipment-net 85,854 84,703 --------- --------- TOTAL $323,745 $ 317,710 --------- --------- -LIABILITIES AND STOCKHOLDERS' EQUITY- Current Liabilities: Accounts payable and accrued expenses $ 83,804 $ 90,967 Current portion of long-term debt 12,048 11,064 Short term borrowings 11,500 0 Product warranties 9,171 8,271 --------- --------- Total current liabilities 116,523 110,302 Non-Current Liabilities: Long-term debt, less current portion 72,758 76,501 Product warranties 4,837 4,914 Postretirement health benefits obligations 19,552 19,455 Other 5,404 6,209 --------- --------- Total non-current liabilities 102,551 107,079 --------- --------- Stockholders' Equity: Common stock (16,331,770 shares issued at both dates) 163 163 Additional paid-in capital 31,061 31,061 Cumulative foreign currency translation adjustments 3 220 Retained earnings 154,946 150,387 Treasury stock at cost (4,820,413 shares at both dates) (81,502) (81,502) --------- --------- Total stockholders' equity 104,671 100,329 --------- --------- TOTAL $323,745 $317,710 --------- --------- See accompanying notes which are an integral part of these statements.
THE MANITOWOC COMPANY, INC. Consolidated Statement of Cash Flows For the Three Months Ended March 31, 1997 and 1996 (In thousands) (Unaudited) March 31, March 31, 1997 1996 -------- ---------- Cash Flows From Operations: Net earnings $ 6,478 $ 4,114 Non-cash adjustments to income: Depreciation and amortization 2,793 2,765 Deferred financing fees 75 75 Loss on sale of fixed assets 31 -- Changes in operating assets and liabilities: Accounts receivable (2,404) (6,756) Inventories (9,371) (4,961) Other current assets 185 (99) Current liabilities (6,494) (1,391) Non-current liabilities (707) (540) Non-current assets (10) 478 -------- -------- Net cash used for operations (9,424) (6,315) Cash Flows From Investing: Purchase of temporary investments - net (11) (16) Proceeds from sale of property, plant, and equipment 0 253 Capital expenditures (3,213) (1,292) -------- -------- Net cash used for investing (3,224) (1,055) Cash Flows From Financing: Dividends paid (1,919) (1,919) Proceeds from long-term borrowings-net 0 15,000 Payments on long-term borrowings (2,759) (2,500) Change in short-term borrowings-net 11,500 (5,607) -------- -------- Net cash provided by financing 6,822 4,974 Effect of exchange rate changes on cash (46) (103) -------- -------- Net decrease in cash and cash equivalents (5,872) (2,499) Balance at beginning of year 14,364 15,077 -------- -------- Balance at end of period $ 8,492 $ 12,578 -------- -------- Supplemental cash flow information: Interest paid $ 1,904 $ 1,291 Income taxes paid $ 663 $ 330 See accompanying notes which are an integral part of these statements.
THE MANITOWOC COMPANY, INC. Notes to Unaudited Consolidated Financial Statements For the Three Months Ended March 31, 1997 and March 31, 1996 (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 quarters ended March 31, 1997 and 1996, the financial position at March 31, 1997 and the changes in the cash flows for the quarters ended March 31, 1997 and 1996. 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, 1996. Note 2.
The components of inventory at March 31, 1997 and December 31, 1996 are summarized as follows (dollars in thousands): March 31, December 31, 1997 1996 -------- ---------- Components: Raw materials $ 20,641 $ 20,153 Work-in-process 24,582 19,447 Finished goods 29,796 25,725 --------- -------- Total inventories at FIFO costs 75,019 65,325 Excess of FIFO costs over LIFO value (21,670) (21,347) --------- -------- Total inventories $ 53,349 $ 43,978
Inventory is carried at lower of cost or market using the first- in, first-out (FIFO) method for 56% of total inventory at March 31, 1997 and December 31, 1996. 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. Approximately 150 PRP's have been identified as having shipped substances to the Site. 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 the Wisconsin Department of Natural Resources to settle the potential liability at the Site and fund the cleanup. 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. There were no expenses incurred during the transition period ended December 31, 1994 and the first quarter ended March 31, 1997 and 1996. The company adopted the AICPA Statement of Position (SOP) No. 96-1, "Environmental Remediation Liabilities" in the first quarter of 1997. This SOP requires the company to accrue for losses associated with environmental remediation obligations when such losses are probable and reasonably estimable. Such accruals are adjusted as information develops or circumstances change. Costs of future expenditures for environmental remediation obligations are not discounted to their present value. The adoption of this SOP did not have a significant effect on the financial statements. As of March 31, 1997, 26 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 March 31, 1997 are $6.7 million; $2.1 million reserved specifically for the 26 cases referenced above, and $4.6 million for incurred but not reported claims. These reserves were estimated using actuarial methods. The highest current reserve for a non-insured claim is $0.3 million, and $0.6 million for an insured claim. Based on the company's experience in defending itself against product liability claims, management believes the current reserves are adequate for estimated settlements on aggregate self-insured claims. 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. Presently, there is no reliable means to estimate the amount of any such potential changes. 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. During the fourth quarter of 1996, the company's decision to consolidate and close walk-in refrigeration plants located in Iowa and Tennessee resulted in a $1.2 million charge to earnings in the Foodservice segment. The charge includes a write-down to the estimated net realizable values of the assets being abandoned and takes into consideration future holding costs and costs related to the sale of the properties. During the first quarter of 1997, nothing was charged against the reserve. In the transition period ended December 31, 1994, the company's decision to consolidate its 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 facility 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 other assets. 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 potential environmental liabilities on the Peninsula location. During the years ended December 31, 1996 and 1995, $1.1 million and $.6 million was paid and charged against these reserves, respectively. For the first quarter of 1997 and 1996, $.1 million and $.7 million, respectively, was charged against the reserve. Note 5. On June 14, 1996, the company`s board of directors authorized a three-for-two stock split in the form of a 50-percent stock dividend payable on July 2, 1996 to shareholders of record on June 25, 1996. A total of 3,836,889 shares were issued in connection with the split and fractional shares were paid in cash. All references in the financial statements to average number of common shares outstanding and related earnings per share amounts, market prices per share of common stock, and stock option plan data have been restated to reflect the split. Note 6. Certain reclassifications have been made to the financial statements of prior years to conform to the presentation for 1997. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations for the Quarters Ended March 31, 1997 and March 31, 1996 - -----------------------------------------------------------
Net sales and earnings from operations by business segment for the quarter ended March 31, 1997 and 1996 are shown below (in thousands): March 31, 1997 March 31, 1996 ------------- ------------- NET SALES: Foodservice products $ 52,509 $ 52,600 Cranes and related products 56,343 50,134 Marine 7,189 11,365 --------- -------- Total $ 116,041 $114,099 EARNINGS (LOSS) FROM OPERATIONS: Foodservice products 6,176 7,004 Cranes and related products 6,937 3,553 Marine 1,027 1,185 General corporate expense (2,059) (1,788) Amortization (780) (750) --------- -------- Total $ 11,301 $ 9,204
First quarter net earnings were $6.5 million, or 56 cents per share, up 57% from the prior-year quarter when the company earned $4.1 million, or 36 cents per share. Sales for the quarter were $116.0 million, compared with $114.1 million in the same period last year. The strong earnings improvement was driven by higher sales and higher operating margins in the crane business in addition to lower interest expense and a lower tax rate. Foodservice Equipment sales were $52.5 million for the quarter, showing little change over the first quarter of 1996. Operating earnings dropped 12% to $6.2 million, from $7.0 million in 1996. A significant reason for the lower margins is the costs associated with the new Nevada plant and the consolidation of the Iowa and Tennessee facilities. First quarter sales for the Crane segment were $56.3 million, compared to $50.1 million for 1996. Crane segment operating earnings were $6.9 million, nearly double those of the first quarter last year. Most of the improvement came from continuing productivity gains and higher margins on the new products at the large-crane unit, which produces heavy-lift lattice-boom models used primarily in crane rental and heavy construction applications. The crane backlog of unfinished orders climbed to approximately $145 million at the end of the quarter, as compared to $136 million at December 31, 1996. A majority of sales are being generated from products introduced during the last three to four years. The backlog of boom trucks at Manitex and of new West-Manitowoc cranes are both showing strong gains. Marine segment sales were $7.2 million, off 37% from the first quarter last year when the company was in the midst of a major barge construction project. Operating profits were $1.0 million, a decline of only 13%, however, because of a change in product mix to a greater percentage of higher margin services. Interest expense was significantly lower than in the first quarter last year because of an aggressive early repayment of debt during the last half of 1996. Bottom-line results also benefited from a tax rate of 37%, compared with a 40% rate for the same three months of last year. Management anticipates the company will continue to benefit from lower state income taxes throughout 1997. Financial Condition at March 31, 1997 - -------------------------------------- The Company's financial condition remains strong. Cash and marketable securities of $10.2 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, line of credit, costs associated with the plant opening and consolidations, and anticipated capital expenditures. This report on Form 10-Q includes forward-looking statements based on management's current expectations. Reference is made in particular to the description of the Company's plans and objectives for future operations, assumptions underlying such plans and objectives and other forward-looking statements in this report. Such forward-looking statements generally are identifiable by words such as "believes," "intends," "estimates," "expects" and similar expressions. These statements involve a number of risks and uncertainties and must be qualified by factors that could cause results to be materially different from what is presented here. This includes the following factors for each business: Foodservice Equipment - demographic changes affecting the number of women in the workforce, general population growth, and household income; serving large restaurant chains as they expand their global operations; specialty foodservice market growth; and the demand for equipment for small kiosk-type locations. Cranes and Related Products - market acceptance of innovative products; cyclicality in the construction industry; growth in the world market for heavy cranes; demand for used equipment in developing countries. Marine - shipping volume fluctuations based on performance of the steel industry; five-year drydocking schedule; reducing seasonality through non-marine repair work. PART II. OTHER INFORMATION ------------------------------------ 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: A report on Form 8-K, dated as of February 19, 1997, was filed on March 4, 1997, stating that the Board of Directors of The Manitowoc Company, Inc. decided to discontinue its common stock repurchase program, effective immediately. 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 President and Chief Executive Officer /s/ Robert R. Friedl ------------------------------- Robert R. Friedl Senior Vice President and Chief Financial Officer /s/ E. Dean Flynn ------------------------------- E. Dean Flynn Secretary April 28, 1997 THE MANITOWOC COMPANY, INC. EXHIBIT INDEX TO FORM 10-Q FOR QUARTERLY PERIOD ENDED MARCH 31, 1997 Exhibit Filed No Description Herewith - ------- ----------- -------- 27 Financial Data Schedule X EX-27 2 FDS 1ST QUARTER 1997
5 1000 3-MOS DEC-31-1997 MAR-31-1997 8492 1668 57261 981 53349 133604 192517 106663 323745 116523 0 0 0 163 104508 323745 116041 116041 84033 104740 (105) 0 1124 10282 3804 6478 0 0 0 6478 .56 .56
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