-----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, GKhW6VJNxjxw8aR7dzjE4umnGSuzLjyGvWmZ6OboO9ewFt62waOm1a533Vtj9YVY 7f/KRhqllXwv41mXetD+tw== 0000061986-97-000023.txt : 19971024 0000061986-97-000023.hdr.sgml : 19971024 ACCESSION NUMBER: 0000061986-97-000023 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971023 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: SEC FILE NUMBER: 001-11978 FILM NUMBER: 97699522 BUSINESS ADDRESS: STREET 1: 500 S 16TH ST STREET 2: STE B CITY: MANITOWOC STATE: WI ZIP: 54221 BUSINESS PHONE: 4146846621 10-Q 1 3Q 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 September 30, 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 South 16th Street, Manitowoc, Wisconsin 54220 -------------------------------------------------------- (Address of principal executive offices) (Zip Code) (920) 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 September 30, 1997, the most recent practicable date, was 17,267,035. PART I. FINANCIAL INFORMATION -------------------------------- 1. Financial Statements - -------------------------
THE MANITOWOC COMPANY, INC. Consolidated Statements of Earnings For the Quarter and Nine Months Ended Calendar Years 1997 and 1996 (Unaudited) (In thousands, except per-share and average shares data) QUARTER ENDED YEAR-TO-DATE Sept. 30, Sept. 30, Sept. 30, Sept. 30, 1997 1996 1997 1996 --------- -------- --------- --------- Net Sales $133,935 $132,042 $394,961 $385,360 Costs And Expenses: Cost of goods sold 96,581 95,264 283,770 282,054 Engineering, selling and administrative expenses 20,826 20,652 62,641 60,924 ------ ------ ------ ------ Total 117,407 115,916 346,411 342,978 Earnings From Operations 16,528 16,126 48,550 42,382 Other Income (Expense): Interest Expense (1,512) (2,294) (4,244) (7,313) Interest and dividend income 145 240 226 358 Other income (expense) (49) 152 (202) 317 ------- ------ ------- ------- Total (1,416) (1,902) (4,220) (6,638) ------- ------ ------- ------- Earnings Before Taxes On Income 15,112 14,224 44,330 35,744 Provision For Taxes On Income 5,591 5,690 16,402 14,298 ------- ------- ------- -------- Net Earnings $ 9,521 $ 8,534 $ 27,928 $ 21,446 ------- ------- ------- -------- Net Earnings Per Share $ .55 $ .49 $1.62 $1.24 Dividends Per Share $ .11 $ .11 $ .33 $ .33 Average Shares Outstanding 17,267,035 17,267,035 17,267,035 17,267,035 See accompanying notes which are an integral part of these statements.
THE MANITOWOC COMPANY, INC. Consolidated Balance Sheets As of September 30, 1997 and December 31, 1996 (In thousands, except share data) - ASSETS - Unaudited Audited Sept. 30, Dec. 31, 1997 1996 --------- --------- Current Assets: Cash and cash equivalents $ 13,144 $ 14,364 Marketable securities 1,811 1,657 Accounts receivable 55,294 53,876 Inventories 56,617 43,978 Prepaid expenses and other 1,209 1,281 Future income tax benefits 11,954 12,719 -------- -------- Total current assets 140,029 127,875 Intangible assets - net 89,635 92,200 Other assets 13,641 12,932 Property, plant and equipment: At cost 198,003 189,383 Less accumulated depreciation (110,503) (104,680) -------- -------- Property, plant and equipment-net 87,500 84,703 -------- -------- TOTAL $330,805 $317,710 -------- -------- -LIABILITIES AND STOCKHOLDERS' EQUITY- Current Liabilities: Accounts payable and accrued expenses $ 89,523 $ 90,967 Current portion of long-term debt 14,016 11,064 Short term borrowings 0 0 Product Warranties 10,427 8,271 -------- -------- Total current liabilities 113,966 110,302 Non-current Liabilities: Long-term debt less current portion 65,248 76,501 Product warranties 4,287 4,914 Post-retirement health benefits obligations 19,889 19,455 Other 5,223 6,209 ------- -------- Total non-current liabilities 94,647 107,079 -------- -------- Stockholders' Equity: Common stock (24,497,655 and 16,331,770 shares issued) 245 163 Additional paid-in capital 30,979 31,061 Cumulative foreign currency translation adjustments (66) 220 Retained earnings 172,536 150,387 Treasury stock at cost (7,230,620 and 4,820,413 shares) (81,502) (81,502) -------- -------- Total stockholders' equity 122,192 100,329 -------- -------- TOTAL $330,805 $317,710 -------- -------- See accompanying notes which are an integral part of these statements.
THE MANITOWOC COMPANY, INC. Consolidated Statements of Cash Flows For the Nine Months Ended September 30, 1997 and 1996 (In thousands) (Unaudited) Sept. 30, Sept. 30, 1997 1996 ---------- ---------- Cash Flows From Operations: Net earnings $ 27,928 $ 21,446 Non-cash adjustments to income: Depreciation and amortization 8,363 8,431 Deferred financing fees 225 225 Deferred income taxes 63 (3,726) Gain (loss) on sale of fixed assets 157 (31) Changes in operating assets and liabilities: Accounts receivable (1,418) (4,284) Inventories (12,639) 8,662 Other current assets 72 2,024 Current liabilities (83) 18,296 Non-current liabilities (986) (599) Deferred income 434 (528) Non-current asset (59) (324) ------- ------- Net cash provided by operations 22,057 49,592 Cash Flows From Investing: Purchase of temporary investments - net (154) (82) Proceeds from sale of property, plant, and equipment 70 1,343 Capital expenditures (9,047) (5,558) ------- ------- Net cash used for investing (9,131) (4,297) Cash Flows From Financing: Dividends paid (5,780) (5,756) Proceeds from long-term borrowings 0 15,000 Payments on long-term borrowings (8,301) (15,049) Change in short-term borrowings - net 0 (26,807) ------- ------- Net cash used for financing (14,081) (32,612) Effect of exchange rate changes on cash (65) 52 ------- ------- Net increase (decrease) in cash and cash equivalents (1,220) 12,735 Balance at beginning of year 14,364 15,077 ------- ------- Balance at end of period $ 13,144 $ 27,812 ------- ------- Supplemental cash flow information: Interest paid $ 4,969 $ 5,975 Income taxes paid $ 17,029 $ 11,594 See accompanying notes which are an integral part of these statements. THE MANITOWOC COMPANY, INC. Notes to Unaudited Consolidated Financial Statements For the Nine Months Ended September 30, 1997 and 1996 (Unaudited) Note 1. In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments, representing normal recurring accruals, necessary to present fairly the results of operations for the quarter and nine months ended September 30, 1997 and 1996, the financial position at September 30, 1997 and the changes in the cash flows for the nine months ended September 30, 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 September 30, 1997 and December 31, 1996 are summarized as follows (dollars in thousands): September 30, December 31, 1997 1996 ----------- ----------- Components: Raw materials $ 23,314 $ 20,153 Work-in-process 20,396 19,447 Finished goods 34,924 25,725 -------- -------- Total inventories at FIFO costs 78,634 65,325 Excess of FIFO costs over LIFO value (22,017) (21,347) --------- -------- Total inventories $ 56,617 $ 43,978
Inventory is carried at lower of cost or market using the first-in, first-out (FIFO) method for 64% and 60% of total inventory at September 30, 1997 and December 31, 1996, respectively. The remainder of the inventory is costed using the last-in, first-out (LIFO) method. Note 3. The United States Environmental Protection Agency ("EPA") has identified the company as a potentially responsible party ("PRP") under the Comprehensive Environmental Response Compensation and Liability Act ("CERCLA"), liable for the costs associated with investigating and cleaning up contamination at the Lemberger Landfill Superfund Site (the "Site") near Manitowoc, Wisconsin. 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 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. To date, the company has expensed $3.4 million in connection with this matter. The Company expensed $.1 million during the nine months ended September 30, 1997, $.2 million for the year ended December 31, 1996, and an additional $.2 million in 1995. There were no expenses incurred for the nine months ended September 30, 1996. Remediation work at the Site has been completed, with only long-term pumping and treating of ground water and Site maintenance remaining. 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 company's financial statements. As of September 30, 1997, 31 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, since which time the company had insurance coverages ranging from a $5.5 million self-insured retention with a $10.0 million limit on the insurer's contribution in 1990, to the current $1.0 million self-insured retention and $16.0 million limit on the insurer's contribution. Product liability reserves at September 30, 1997 are $7.2 million; $3.4 million reserved specifically for the 31 cases referenced above, and $3.8 million for incurred but not reported claims. These reserves were estimated using actuarial methods. The highest current reserve for a non- insured claim is $.4 million, and $.4 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 and self-insured retentions on 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 third quarter and first nine months of 1997, $50,000, and $100,000 was charged against the reserve, respectively. 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, and the assets mentioned above, determined through independent appraisals, is approximately $3.8 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. These reserves 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 third quarter and first nine months of 1997, $59,000 and $100,000, respectively, was charged against the reserve. Note 5. On May 19, 1997, the company`s board of directors authorized a 3-for-2 stock split of the company's common stock in the form of a 50-percent stock dividend payable on June 30, 1997 to shareholders of record on June 2, 1997. As a result of the stock split, a total of 5,755,678 shares of the company's common stock were issued. All references in the financial statements to average number of common shares outstanding and related earnings per share amounts have been restated to reflect the split. The company also split its common stock on a 3-for-2 basis on July 2, 1996. Note 6. On October 1, the company announced the signing of an agreement to acquire the assets of SerVend International to further expand the size and scope of it's foodservice business. SerVend is one of the world's largest manufacturers of ice/beverage dispensers and dispensing valves for the soft-drink industry. The purchase is expected to be completed by October 31 and will dilute fourth-quarter earnings for the company by three to five cents per share, after tax. However, SerVend is expected to add five cents per share to 1998 earnings. Note 7. 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 Quarter and Nine Months Ended September 30, 1997 and 1996. - --------------------------------------------------------------
Net sales and earnings from operations by business segment for the quarter and nine months ended September 30, 1997 and 1996 are shown below (in thousands): QUARTER ENDED YEAR-TO-DATE Sept. 30, Sept. 30, Sept. 30, Sept. 30, 1997 1996 1997 1996 -------- -------- --------- -------- NET SALES: Foodservice products $ 67,099 $ 67,194 $185,549 $187,320 Cranes & related products 60,292 53,997 180,501 156,499 Marine 6,544 10,851 28,911 41,541 -------- ------ -------- -------- Total $133,935 $132,042 $394,961 $385,360 EARNINGS (LOSS) FROM OPERATIONS: Foodservice products $ 11,905 $ 10,904 $ 29,518 $ 29,168 Cranes & related products 6,892 6,506 23,322 14,909 Marine 544 1,369 4,451 6,170 General corporate expense (2,033) (1,903) (6,401) (5,615) Amortization (780) (750) (2,340) (2,250) ------- ------ ------- ------- Total $ 16,528 $ 16,126 $ 48,550 $ 42,382
Net earnings for the three months ended September 30, 1997, were $9.5 million, or 55 cents per share, compared with earnings of $8.5 million, equal to 49 cents per share in the same three months last year. It was the eighth consecutive quarter in which the company has had improved year-over-year quarterly earnings. Net sales for the period totaled $134 million, up from $132 million in the same quarter of 1996. For the nine months, net earnings totaled $27.9 million, or $1.62 per share, on sales of $395 million. In the same period of 1996, the company earned $21.4 million, or $1.24 per share, on sales of $385 million. Sales and operating earnings for the foodservice products segment were $67.1 million and $11.9 million, respectively, for the third quarter of 1997, compared to $67.2 million and $10.9 million for 1996. The higher margin resulted primarily from lower material costs and steps taken to enhance the profitability of the Shannon companies that were acquired in late 1995. Year to date sales and earnings were $185.5 million and $29.5 million, respectively. Manitowoc Ice recently introduced its new "Q-Model" line of ice machines at a trade show in early September. The full line will be available to dealers beginning in the spring of 1998. The new models set an industry standard for aesthetic design and incorporate plastic and stainless steel components for added durability and corrosion resistance. In addition, all "Q" Models use environmentally friendly refrigerants. Cranes and related products sales for the third quarter increased 12% over the same period last year, while year to date sales rose 15%. Operating earnings were $6.9 million and $23.3 million for the third quarter and first nine months of 1997, respectively, compared to $.6.5 million and $14.9 million for the same periods last year. The backlog of unfilled crane orders remains strong at $148 million, up from $145 million at this time last year, in spite of an increase in shipments. Earnings for the marine segment fell sharply from an exceptionally strong quarter last year when Manitowoc Marine Group completed a major contract for construction of a self-unloading cement barge that was shipped during the third quarter. The ship conversion project that is now underway at the Sturgeon Bay yard is not only smaller in size, but will be completed later in the year so that most of it's contribution will be realized in the fourth quarter of 1997. Interest expense for the quarter and year-to-date continue to decline in line with lower debt. At the end of the quarter, the company had no outstanding revolving debt. Total debt stood at $79 million, including the current portion, compared with $111 million a year earlier. The year-to-date tax rate for 1997 is 37%, compared with 40% in 1996. Financial Condition at September 30, 1997 - -------------------------------------------- The Company's financial condition remains strong. Cash and marketable securities of $14.9 million and future cash flows from operations are adequate to meet the Company's liquidity requirements for the foreseeable future, including payments for long-term debt, costs associated with the plant consolidation, and capital expenditures. This 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: Subsequent to the third quarter ended September 30, a report on Form 8-K dated as of October 1, 1997 was filed stating that the Company issued a press release announcing that it entered into an agreement to acquire the operations and assets of SerVend International, a privately held manufacturer of ice/beverage dispensers and dispensing valves. 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 October 22, 1996 THE MANITOWOC COMPANY, INC. EXHIBIT INDEX TO FORM 10-Q FOR QUARTERLY PERIOD ENDED September 30, 1997 Exhibit Filed No Description Herewith - ---------- --------------- -------- 27 Financial Data Schedule X EX-27 2 FDS 3RD QUARTER 1997
5 1000 9-MOS DEC-31-1997 SEP-30-1997 13144 1811 56434 1140 56617 140029 198003 110503 330805 113966 0 0 0 245 121947 330805 394961 394961 283770 346411 202 0 4244 44330 16402 27928 0 0 0 27928 1.62 1.62
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