8-K 1 d8k.txt FORM 8-K 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.