UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
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[X] |
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities |
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[ ] |
Transition Report Pursuant to Section 13 or 15(d) of the Securities |
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Commission File Number
1-11978
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Wisconsin |
39-0448110 |
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(State or other jurisdiction |
(I.R.S. Employer |
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500 S. 16th Street, |
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(Address of principal executive offices) |
(Zip Code) |
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 June 30, 2002, the most recent practicable date, was 24,161,783.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
THE MANITOWOC COMPANY, INC.
|
Three Months Ended |
Six Months Ended |
|||||||||
|
2002 |
2001 |
2002 |
2001 |
|||||||
|
Net sales |
$ |
346,205 |
$ |
298,234 |
$ |
647,550 |
$ |
527,585 |
||
|
Costs and expenses: |
||||||||||
|
Cost of sales |
255,575 |
218,460 |
486,935 |
391,781 |
||||||
|
Engineering, selling and administrative expenses |
45,630 |
37,619 |
90,403 |
71,305 |
||||||
|
Amortization expense |
465 |
3,152 |
1,052 |
5,467 |
||||||
|
Plant consolidation costs |
-- |
-- |
3,900 |
-- |
||||||
|
Total costs and expenses |
301,670 |
259,231 |
582,290 |
468,553 |
||||||
|
Earnings from operations |
44,535 |
39,003 |
65,260 |
59,032 |
||||||
|
Other expense: |
||||||||||
|
Interest expense |
(11,351 |
) |
(8,844 |
) |
(21,978 |
) |
(12,940 |
) |
||
|
Other income (expense), net |
(265 |
) |
(425 |
) |
440 |
(540 |
) |
|||
|
Total other expense |
(11,616 |
) |
(9,269 |
) |
(21,538 |
) |
(13,480 |
) |
||
|
Earnings before taxes on income |
32,919 |
29,734 |
43,722 |
45,552 |
||||||
|
Provision for taxes on income |
12,838 |
11,799 |
17,051 |
17,747 |
||||||
|
Net earnings before extraordinary loss and cumulative effect of |
||||||||||
|
accounting change |
20,081 |
17,935 |
26,671 |
27,805 |
||||||
|
Extraordinary loss on debt extinguishment, net of income taxes |
|
|
|
|
|
|
||||
|
Cumulative effect of accounting change, net of income taxes |
|
|
|
|
|
|||||
|
Net earnings (loss) |
$ |
20,081 |
$ |
14,611 |
$ |
(10,129 |
) $ |
24,481 |
||
|
Basic earnings per share: |
||||||||||
|
Net earnings before extraordinary loss and cumulative effect |
|
|
|
|
|
|
|
|
||
|
Extraordinary loss on debt extinguishment, net of income taxes |
-- |
(0.14 |
) |
-- |
(0.14 |
) |
||||
|
Cumulative effect of accounting change, net of income taxes |
-- |
-- |
(1.51 |
) |
-- |
|||||
|
Net earnings (loss) |
$ |
0.83 |
$ |
0.60 |
$ |
(0.42 |
) $ |
1.01 |
||
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|
||||||||||
|
Diluted earnings per share: |
||||||||||
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Net earnings before extraordinary loss and cumulative effect |
|
|
|
|
|
|
|
|
||
|
Extraordinary loss on debt extinguishment, net of income taxes |
-- |
(0.13 |
) |
-- |
(0.13 |
) |
||||
|
Cumulative effect of accounting change, net of income taxes |
-- |
-- |
(1.49 |
) |
-- |
|||||
|
Net earnings (loss) |
$ |
0.81 |
$ |
0.60 |
$ |
(0.42 |
) $ |
1.00 |
||
|
Weighted average shares outstanding - basic |
24,319,218 |
24,269,153 |
24,301,538 |
24,265,752 |
||||||
|
Weighted average shares outstanding - diluted |
24,892,423 |
24,562,957 |
24,835,171 |
24,550,046 |
||||||
See accompanying notes which are an integral part of these statements.
THE MANITOWOC COMPANY, INC.
|
|
June 30, (Unaudited) |
December 31, |
|||
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Current Assets: |
|||||
|
Cash and cash equivalents |
$ |
24,236 |
$ |
23,581 |
|
|
Marketable securities |
2,198 |
2,151 |
|||
|
Accounts receivable - net |
222,449 |
141,211 |
|||
|
Inventories - net |
145,857 |
123,056 |
|||
|
Deferred income taxes |
35,439 |
28,346 |
|||
|
Other current assets |
17,863 |
12,745 |
|||
|
Total current assets |
448,042 |
331,090 |
|||
|
Goodwill - net |
369,770 |
507,739 |
|||
|
Other intangible assets - net |
83,248 |
-- |
|||
|
Property, plant and equipment - net |
201,050 |
175,384 |
|||
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Other non-current assets |
77,862 |
66,599 |
|||
|
|
|
|
|
|
|
|
Liabilities and Stockholders' Equity |
|||||
|
Current Liabilities: |
|||||
|
Accounts payable and accrued expenses |
$ |
315,299 |
$ |
236,131 |
|
|
Current portion of long-term debt |
29,309 |
31,087 |
|||
|
Short-term borrowings |
37,200 |
10,961 |
|||
|
Product warranties |
18,155 |
17,982 |
|||
|
Total current liabilities |
399,963 |
296,161 |
|||
|
Non-Current Liabilities: |
|||||
|
Long-term debt, less current portion |
451,918 |
446,522 |
|||
|
Postretirement health and other benefit obligations |
24,227 |
23,071 |
|||
|
Other non-current liabilities |
51,669 |
51,263 |
|||
|
Total non-current liabilities |
527,814 |
520,856 |
|||
|
|
|||||
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Stockholders' Equity: |
|||||
|
Common stock (36,746,482 shares issued) |
367 |
367 |
|||
|
Additional paid-in capital |
33,063 |
31,670 |
|||
|
Accumulated other comprehensive loss |
(13,554 |
) |
(3,937 |
) |
|
|
Unearned compensation |
(810 |
) |
-- |
||
|
Retained earnings |
362,494 |
372,623 |
|||
|
Treasury stock, at cost |
|||||
|
(12,672,695 and 12,693,397 shares, respectively) |
(129,365 |
) |
(136,928 |
) |
|
|
Total stockholders' equity |
252,195 |
263,795 |
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|
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See accompanying notes which are an integral part of these statements.
THE MANITOWOC COMPANY, INC.
|
Six Months Ended |
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|
2002 |
2001 |
|||||
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Cash Flows from Operations: |
||||||
|
Net earnings (loss) |
$ |
(10,129 |
) $ |
24,481 |
||
|
Adjustments to reconcile net earnings (loss) to |
||||||
|
Depreciation |
12,132 |
6,582 |
||||
|
Amortization of intangible assets |
1,052 |
5,467 |
||||
|
Amortization of deferred financing fees |
1,920 |
566 |
||||
|
Deferred income taxes |
436 |
-- |
||||
|
Plant relocation costs |
3,900 |
-- |
||||
|
Cumulative effect of accounting change, net of income taxes |
36,800 |
-- |
||||
|
Extraordinary loss on early extinguishment of debt, net of income |
|
|
||||
|
(Gain) loss on sale of property, plant and equipment |
(1,225 |
) |
34 |
|||
|
Changes in operating assets and liabilities, excluding effects of |
||||||
|
business acquisitions: |
||||||
|
Accounts receivable |
(81,238 |
) |
(7,946 |
) |
||
|
Inventories |
(23,300 |
) |
359 |
|||
|
Other current assets |
(8,058 |
) |
(3,879 |
) |
||
|
Non-current assets |
5,088 |
(11,069 |
) |
|||
|
Current liabilities |
67,920 |
22,263 |
||||
|
Non-current liabilities |
(3,531 |
) |
2,468 |
|||
|
Net cash provided by operations |
1,767 |
42,650 |
||||
|
Cash Flows from Investing: |
||||||
|
Business acquisitions - net of cash acquired |
(7,388 |
) |
(282,317 |
) |
||
|
Capital expenditures |
(13,075 |
) |
(7,907 |
) |
||
|
Proceeds from sale of property, plant and equipment |
7,015 |
330 |
||||
|
Purchase of marketable securities |
(47 |
) |
(54 |
) |
||
|
Net cash used for investing |
(13,495 |
) |
(289,948 |
) |
||
|
Cash Flows from Financing: |
||||||
|
Proceeds from long-term debt |
-- |
345,116 |
||||
|
Proceeds from senior subordinated notes |
-- |
156,118 |
||||
|
Payments on long-term debt |
(16,719 |
) |
(135,629 |
) |
||
|
Proceeds (payments) from revolver borrowings - net |
26,239 |
(80,125 |
) |
|||
|
Debt acquisitions costs |
-- |
(20,153 |
) |
|||
|
Dividends paid |
-- |
(1,791 |
) |
|||
|
Exercises of stock options |
1,976 |
130 |
||||
|
Net cash provided by financing |
11,496 |
263,666 |
||||
|
Effect of exchange rate changes on cash |
887 |
(111 |
) |
|||
|
Net increase in cash and cash equivalents |
655 |
16,257 |
||||
|
Balance at beginning of period |
23,581 |
13,983 |
||||
|
Balance at end of period |
$ |
24,236 |
$ |
30,240 |
||
See accompanying notes which are an integral part of these statements.
THE MANITOWOC COMPANY, INC.
|
Three Months Ended |
Six Months Ended |
|||||||||
|
2002 |
2001 |
2002 |
2001 |
|||||||
|
Net earnings (loss) |
$ |
20,081 |
$ |
14,611 |
$ |
(10,129 |
) $ |
24,481 |
||
|
Other comprehensive income (loss): |
||||||||||
|
Derivative instrument fair market value |
|
|
|
|
|
|
||||
|
Foreign currency translation adjustments |
(9,866 |
) |
(5,862 |
) |
(9,987 |
) |
(5,533 |
) |
||
|
Total other comprehensive income (loss) |
(10,092 |
) |
(5,862 |
) |
(9,617 |
) |
(5,744 |
) |
||
|
Comprehensive income (loss) |
$ |
9,989 |
$ |
8,749 |
$ |
(19,746 |
) $ |
18,737 |
||
See accompanying notes which are an integral part of these statements.
THE MANITOWOC COMPANY, INC.
1. Accounting Policies
|
Six Months Ended |
||
|
Net sales |
$ |
628,085 |
|
Earnings before income taxes |
$ |
34,738 |
|
Net earnings |
$ |
15,633 |
|
Basic earnings per share |
$ |
0.64 |
|
Diluted earnings per share |
$ |
0.64 |
3. Inventories
|
June 30, |
December 31, |
||||
|
Components: |
|||||
|
Raw materials |
$ |
51,768 |
$ |
44,302 |
|
|
Work-in-process |
48,211 |
35,517 |
|||
|
Finished goods |
65,208 |
62,798 |
|||
|
Total inventories at FIFO costs |
165,187 |
142,617 |
|||
|
Excess of FIFO costs over LIFO value |
(19,330 |
) |
(19,561 |
) |
|
|
Total inventories |
$ |
145,857 |
$ |
123,056 |
Inventory is carried at lower of cost or market using the first-in, first-out (FIFO) method for 77% and 79% of total inventory at June 30, 2002 and December 31, 2001, respectively. The remainder of the inventory is costed using the last-in, first-out (LIFO) method.
4. Stockholders' Equity
Effective January 1, 2002, the company amended its deferred compensation plan to provide plan participants the ability to direct deferrals and company matching contributions into two separate investment programs, Program A and Program B. The investment assets in Programs A and B are held in two separate Rabbi Trusts. Program A invests solely in the company's stock; dividends paid on the company's stock are automatically reinvested; and all distributions must be made in company stock. Program B offers a variety of investment options but does not include company stock as an investment option. All distributions from Program B must be made in cash. Participants cannot transfer assets between programs. As a result of this amendment, the company reclassified approximately $7 million from other non-current liabilities to a contra equity account offsetting the balance of treasury stock.
5. Contingencies and Significant Estimates
The company has been identified as a potentially responsible party under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) in connection with the Lemberger Landfill Superfund Site near Manitowoc, Wisconsin. Approximately 150 potentially responsible parties have been identified as having shipped hazardous materials to this site. Eleven of those, including the company, have formed the Lemberger Site Remediation Group and have successfully negotiated with the United States Environmental Protection Agency and the Wisconsin Department of Natural Resources to fund the cleanup and settle their potential liability at this site. Recent estimates indicate that the total costs to clean up this site are approximately $30 million. However the ultimate allocations of cost for this site are not yet final. Although liability is joint and several, the company's share of liability is estimated to be 11% of the total costs. Prior to December 31, 1996, the company accrued $3.3 million in c
onnection with this matter. The amounts the company has spent each year from 1999 through 2001 to comply with its portion of the cleanup costs have not been material. Remediation work at the site has been substantially completed, with only long-term pumping and treating of groundwater and site maintenance remaining. The company's remaining estimated liability for this matter, included in other current and non current liabilities at June 30, 2002, is $0.9 million. Based on the size of the company's current allocation of liability at this site, the existence of other viable potentially responsible parties and current reserves, the company does not believe that any liability imposed in connection with this site will have a material adverse effect on its financial condition, results of operations or cash flows.
At certain of the company's other facilities, the company has identified potential contaminants in soil and groundwater. The ultimate cost of any remediation required will depend upon the results of future investigation. Based upon available information, the company does not believe that these costs will be material. However, the company can give no assurance that this will be the case.
The company believes that it has obtained and is in substantial compliance with those material environmental permits and approvals necessary to conduct its various businesses. Based on the facts presently known, the company does not expect environmental compliance costs to have a material adverse effect on its financial condition, results of operations or cash flows.
As of June 30, 2002, various product-related lawsuits were pending. To the extent permitted under applicable law, all of these are insured with self-insurance retentions of $0.1 million for Potain crane accidents; $1.0 million for all other crane accidents; $1.0 million for Foodservice accidents occurring during 1990 to 1996; and $0.1 million for Foodservice accidents occurring during 1997 to present. The insurer's annual contribution is limited to $50.0 million.
Product liability reserves included in accounts payable and accrued expenses at June 30, 2002 were $14.3 million; $7.3 million reserved specifically for the cases referenced above, and $7.0 million for claims incurred but not reported which were estimated using actuarial methods. As of June 30, 2002, the highest current reserve for an insured claim is $0.4 million. 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 insured claims. Any recoveries from insurance carriers are dependent upon the legal sufficiency of claims and the solvency of insurance carriers.
At June 30, 2002 and December 31, 2001, the company had reserved $25.3 million and $24.8 million, respectively, for warranty claims included in product warranties and other non-current liabilities in the Consolidated Balance Sheet. Certain warranty and other related claims involve matters in dispute that ultimately are resolved by negotiation, arbitration or litigation. Infrequently, a material warranty issue can arise which is beyond the scope of the company's historical experience.
It is reasonably possible that the estimates for environmental remediation, product liability and warranty costs may change in the near future based upon new information that may arise or matters that are beyond the scope of the company's historical experience. Presently, there are no reliable methods 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, including numerous lawsuits involving asbestos-related claims in which we are one of numerous defendants. After taking into consideration legal counsel's evaluation of such actions, and the liabilities accrued with respect to such matters, in the opinion of management, ultimate resolution is not expected to have a material adverse effect on the consolidated financial statements of the company.
6. Earnings Per Share
The following is a reconciliation of the earnings and average shares outstanding used to compute basic and diluted earnings per share.
|
Three Months Ended |
Six Months Ended |
|||||||||||
|
2002 |
2001 |
2002 |
2001 |
|||||||||
|
Earnings: |
||||||||||||
|
Net earnings before extraordinary loss and cumulative |
||||||||||||
|
effect of accounting change |
$ |
20,081 |
$ |
17,935 |
$ |
26,671 |
$ |
27,805 |
||||
|
Extraordinary loss from debt extinguishment, net of income taxes |
-- |
|
(3,324 |
) |
-- |
|
(3,324 |
) |
||||
|
Cumulative effect of accounting change, net of income taxes |
-- |
-- |
(36,800 |
) |
-- |
|||||||
|
Net earnings (loss) |
$ |
20,081 |
$ |
14,611 |
$ |
(10,129 |
) |
$ |
24,481 |
|||
|
Basic weighted average common shares outstanding |
24,319,218 |
24,269,153 |
24,301,538 |
24,265,752 |
||||||||
|
Effect of dilutive securities - stock options |
573,205 |
293,804 |
533,633 |
284,294 |
||||||||
|
Diluted weighted average common shares outstanding |
24,892,423 |
24,562,957 |
24,835,171 |
24,550,046 |
||||||||
|
Basic earnings per share: |
||||||||||||
|
Net earnings before extraordinary loss and cumulative |
||||||||||||
|
effect of accounting change |
$ |
0.83 |
$ |
0.74 |
$ |
1.10 |
$ |
1.15 |
||||
|
Extraordinary loss on debt extinguishment, net of income taxes |
-- |
|
(0.14 |
) |
-- |
|
(0.14 |
) |
||||
|
Cumulative effect of accounting changes, net of income taxes |
-- |
|
-- |
|
(1.51 |
) |
-- |
|||||
|
Net earnings (loss) |
$ |
0.83 |
$ |
0.60 |
$ |
(0.42 |
) |
$ |
1.01 |
|||
|
Diluted earnings per share: |
||||||||||||
|
Net earnings before extraordinary loss and cumulative |
||||||||||||
|
effect of accounting change |
$ |
0.81 |
$ |
0.73 |
$ |
1.07 |
$ |
1.13 |
||||
|
Extraordinary loss on debt extinguishment, net of income taxes |
-- |
|
(0.13 |
) |
-- |
|
(0.13 |
) |
||||
|
Cumulative effect of accounting changes, net of income taxes |
-- |
|
-- |
|
(1.49 |
) |
-- |
|||||
|
Net earnings (loss) |
$ |
0.81 |
$ |
0.60 |
$ |
(0.42 |
) |
$ |
1.00 |
|||
7. Extraordinary Loss
The following sets forth a reconciliation of net income and earnings per share information for the three and six months ended June 30, 2002 and 2001 adjusted for the non-amortization provisions of SFAS No. 142.
The changes in the carrying amount of goodwill by reportable segment for the year ended December 31, 2001 and the six months ended June 30, 2002, were as follows:
During the first quarter of 2002 a portion of the excess of the cost over fair value of the net assets acquired in the Potain acquisition was allocated to specific other intangible assets. Based upon a third party appraisal report, the allocation was as follows: $53.0 million to trademarks and tradenames with an indefinite life; $17.5 million to patents with a 15-year life; $8.8 million to engineering drawings with a 15-year life; and $5.0 million to an in-place distribution network with an indefinite life. The remainder of the excess of the cost over fair value for this acquisition was allocated to goodwill. The gross carrying amount and accumulated amortization of the company's intangible assets other than goodwill, all as a result of the Potain acquisition, were as follows as of June 30, 2002:
Amortization expense recorded for the other intangible assets for the three months and six months ended June 30, 2002 was $0.5 million and $1.1 million, respectively. Estimated amortization expense for the five succeeding years is approximately $2.0 million per year.
10. Plant Consolidation Costs
11. Subsidiary Guarantors
The Manitowoc Company, Inc.
Condensed Consolidating Statement of Earnings
For the Three Months Ended June 30, 2002
(In thousands)
|
|
Non-Guarantor |
|
|||||||||||||
|
Parent |
Subsidiaries |
Subsidiaries |
Eliminations |
Consolidated |
|||||||||||
|
Net sales |
$ |
-- |
$ |
254,720 |
$ |
91,485 |
$ |
-- |
$ |
346,205 |
|||||
|
Costs and expenses: |
|||||||||||||||
|
Cost of sales |
-- |
185,564 |
70,011 |
-- |
255,575 |
||||||||||
|
Engineering, selling and administrative |
3,660 |
31,197 |
10,773 |
-- |
45,630 |
||||||||||
|
Amortization expense |
-- |
-- |
465 |
-- |
465 |
||||||||||
|
Plant consolidation costs |
-- |
-- |
-- |
- |
-- |
||||||||||
|
Total costs and expenses |
3,660 |
216,761 |
81,249 |
- |
301,670 |
||||||||||
|
Earnings (loss) from operations |
(3,660 |
) |
37,959 |
10,236 |
-- |
44,535 |
|||||||||
|
Other income (expense): |
|||||||||||||||
|
Interest expense |
(10,153 |
) |
(578 |
) |
(620 |
) |
-- |
(11,351 |
) |
||||||
|
Management fee income (expense) |
3,804 |
(3,804 |
) |
-- |
-- |
-- |
|||||||||
|
Other income (expense), net |
(225 |
) |
(14 |
) |
(26 |
) |
-- |
(265 |
) |
||||||
|
Total other income (expense) |
(6,574 |
) |
(4,396 |
) |
(646 |
) |
-- |
(11,616 |
) |
||||||
|
Earnings before taxes on income and equity in earnings of subsidiaries |
|
|
|
|
|
|
|||||||||
|
Provision (benefit) for taxes on income |
(3,248 |
) |
12,218 |
3,868 |
-- |
12,838 |
|||||||||
|
Equity in earnings of subsidiaries |
27,067 |
-- |
-- |
(27,067 |
) |
-- |
|||||||||
|
Net earnings before extraordinary loss and cumulative effect of accounting change |
|
|
|
|
|
|
|||||||||
|
Extraordinary loss |
-- |
-- |
-- |
-- |
-- |
||||||||||
|
Cumulative effect of accounting change |
-- |
-- |
-- |
-- |
-- |
||||||||||
|
Net earnings (loss) |
$ |
20,081 |
$ |
21,345 |
$ |
5,722 |
$ |
(27,067 |
) |
$ |
20,081 |
The Manitowoc Company, Inc.
Condensed Consolidating Statement of Earnings
For the Three Months Ended June 30, 2001
(In thousands)
|
|
Non-Guarantor |
|
|||||||||||||
|
Parent |
Subsidiaries |
Subsidiaries |
Eliminations |
Consolidated |
|||||||||||
|
Net sales |
$ |
-- |
$ |
244,161 |
$ |
54,073 |
$ |
-- |
$ |
298,234 |
|||||
|
Costs and expenses: |
|||||||||||||||
|
Cost of sales |
-- |
177,127 |
41,333 |
-- |
218,460 |
||||||||||
|
Engineering, selling and administrative |
3,017 |
28,137 |
6,465 |
-- |
37,619 |
||||||||||
|
Amortization expense |
91 |
2,362 |
699 |
-- |
3,152 |
||||||||||
|
Plant consolidation costs |
-- |
-- |
-- |
- |
-- |
||||||||||
|
Total costs and expenses |
3,108 |
207,626 |
48,497 |
- |
259,231 |
||||||||||
|
Earnings (loss) from operations |
(3,108 |
) |
36,535 |
5,576 |
-- |
39,003 |
|||||||||
|
Other income (expense): |
|||||||||||||||
|
Interest expense |
(8,280 |
) |
(564 |
) |
-- |
-- |
(8,844 |
) |
|||||||
|
Management fee income (expense) |
4,338 |
(4,338 |
) |
-- |
-- |
-- |
|||||||||
|
Other income (expense), net |
(208 |
) |
585 |
(802 |
) |
-- |
(425 |
) |
|||||||
|
Total other income (expense) |
(4,150 |
) |
(4,317 |
) |
(802 |
) |
-- |
(9,269 |
) |
||||||
|
Earnings before taxes on income and equity in earnings of subsidiaries |
|
|
|
|
|
|
|||||||||
|
Provision (benefit) for taxes on income |
(2,761 |
) |
11,945 |
2,615 |
-- |
11,799 |
|||||||||
|
Equity in earnings of subsidiaries |
22,432 |
-- |
-- |
(22,432 |
) |
-- |
|||||||||
|
Net earnings before extraordinary loss and cumulative effect of accounting change |
|
|
|
|
|
|
|||||||||
|
Extraordinary loss |
(3,324 |
) |
-- |
-- |
-- |
(3,324 |
) |
||||||||
|
Cumulative effect of accounting change |
-- |
-- |
-- |
-- |
-- |
||||||||||
|
Net earnings (loss) |
$ |
14,611 |
$ |
20,273 |
$ |
2,159 |
$ |
(22,432 |
) |
$ |
14,611 |
The Manitowoc Company, Inc.
Condensed Consolidating Statement of Earnings
For the Six Months Ended June 30, 2002
(In thousands)
|
|
Non-Guarantor |
|
|||||||||||||
|
Parent |
Subsidiaries |
Subsidiaries |
Eliminations |
Consolidated |
|||||||||||
|
Net sales |
$ |
-- |
$ |
480,509 |
$ |
167,041 |
$ |
-- |
$ |
647,550 |
|||||
|
Costs and expenses: |
|||||||||||||||
|
Cost of sales |
-- |
356,544 |
130,391 |
-- |
486,935 |
||||||||||
|
Engineering, selling and administrative |
7,205 |
60,981 |
22,217 |
-- |
90,403 |
||||||||||
|
Amortization expense |
-- |
-- |
1,052 |
-- |
1,052 |
||||||||||
|
Plant consolidation costs |
-- |
3,900 |
-- |
-- |
3,900 |
||||||||||
|
Total costs and expenses |
7,205 |
421,425 |
153,660 |
-- |
582,290 |
||||||||||
|
Earnings (loss) from operations |
(7,205 |
) |
59,084 |
13,381 |
-- |
65,260 |
|||||||||
|
Other income (expense): |
|||||||||||||||
|
Interest expense |
(19,654 |
) |
(998 |
) |
(1,326 |
) |
-- |
(21,978 |
) |
||||||
|
Management fee income (expense) |
7,657 |
(8,332 |
) |
675 |
-- |
- |
|||||||||
|
Other income (expense), net |
(539 |
) |
(60 |
) |
1,039 |
-- |
440 |
||||||||
|
Total other income (expense) |
12,536 |
) |
(9,390 |
) |
388 |
-- |
(21,538 |
) |
|||||||
|
Earnings before taxes on income and equity in earnings of subsidiaries |
|
|
|
|
|
|
|||||||||
|
Provision (benefit) for taxes on income |
(7,419 |
) |
18,676 |
5,794 |
-- |
17,051 |
|||||||||
|
Equity in earnings of subsidiaries |
38,993 |
-- |
-- |
(38,993 |
) |
-- |
|||||||||
|
Net earnings before extraordinary loss and cumulative effect of accounting change |
|
|
|
|
|
|
|||||||||
|
Extraordinary loss |
-- |
-- |
-- |
-- |
-- |
||||||||||
|
Cumulative effect of accounting change |
(36,800) |
(36,800 |
) |
-- |
36,800 |
(36,800 |
) |
||||||||
|
Net earnings (loss) |
$ |
(10,129) |
$ |
(5,782 |
) |
$ |
7,975 |
$ |
(2,193 |
) |
$ |
(10,129 |
) |
The Manitowoc Company, Inc.
Condensed Consolidating Statement of Earnings
For the Six Months Ended June 30, 2001
(In thousands)
|
|
Non-Guarantor |
|
|||||||||||||
|
Parent |
Subsidiaries |
Subsidiaries |
Eliminations |
Consolidated |
|||||||||||
|
Net sales |
$ |
-- |
$ |
469,878 |
$ |
57,707 |
$ |
-- |
$ |
527,585 |
|||||
|
Costs and expenses: |
|||||||||||||||
|
Cost of sales |
-- |
347,725 |
44,056 |
-- |
391,781 |
||||||||||
|
Engineering, selling and administrative |
6,146 |
57,988 |
7,171 |
-- |
71,305 |
||||||||||
|
Amortization expense |
294 |
4,459 |
714 |
-- |
5,467 |
||||||||||
|
Total costs and expenses |
6,440 |
410,172 |
51,941 |
-- |
468,553 |
||||||||||
|
Earnings (loss) from operations |
(6,440 |
) |
59,706 |
5,766 |
-- |
59,032 |
|||||||||
|
Other income (expense): |
|||||||||||||||
|
Interest expense |
(11,792 |
) |
(1,148 |
) |
-- |
-- |
(12,940 |
) |
|||||||
|
Management fee income (expense) |
6,823 |
(6,823 |
) |
-- |
-- |
-- |
|||||||||
|
Other expense - net |
(384 |
) |
(114 |
) |
(42 |
) |
-- |
(540 |
) |
||||||
|
Total other income (expense) |
(5,353 |
) |
(8,085 |
) |
(42 |
) |
-- |
(13,480 |
) |
||||||
|
Earnings before taxes on income, equity |
|
|
|
|
|
|
|||||||||
|
Provision (benefit) for taxes on income |
(4,467 |
) |
19,554 |
2,660 |
-- |
17,747 |
|||||||||
|
Equity in earnings of subsidiaries, |
|
|
|
|
|
|
|||||||||
|
Net earnings before extraordinary loss and cumulative effect of accounting change |
|
|
|
|
|
|
|||||||||
|
Extraordinary loss |
(3,324 |
) |
-- |
-- |
-- |
(3,324 |
) |
||||||||
|
Cumulative effect of accounting change |
-- |
-- |
-- |
-- |
-- |
||||||||||
|
Net earnings (loss) |
$ |
24,481 |
$ |
32,067 |
$ |
3,064 |
$ |
(35,131 |
) |
$ |
24,481 |
The Manitowoc Company, Inc.
Condensed Consolidating Balance Sheet
as of June 30, 2002
(In thousands)
|
Non- |
|||||||||||
|
Guarantor |
Guarantor |
||||||||||
|
Parent |
Subsidiaries |
Subsidiaries |
Eliminations |
Consolidated |
|||||||
|
Assets |
|||||||||||
|
Current Assets: |
|||||||||||
|
Cash and cash equivalents |
$ |
4,013 |
$ |
4,166 |
$ |
16,057 |
$ |
-- |
$ |
24,236 |
|
|
Marketable securities |
2,198 |
-- |
-- |
-- |
2,198 |
||||||
|
Accounts receivable - net |
9 |
132,615 |
89,825 |
-- |
222,449 |
||||||
|
Inventories - net |
-- |
81,379 |
64,478 |
-- |
145,857 |
||||||
|
Deferred income taxes |
18,873 |
-- |
16,566 |
-- |
35,439 |
||||||
|
Other current assets |
227 |
16,829 |
807 |
-- |
17,863 |
||||||
|
Total current assets |
25,320 |
234,989 |
187,733 |
-- |
448,042 |
||||||
|
Goodwill - net |
1,194 |
249,469 |
119,107 |
-- |
369,770 |
||||||
|
Other intangible assets - net |
-- |
-- |
83,248 |
-- |
83,248 |
||||||
|
Property, plant and equipment - net |
7,746 |
99,226 |
94,078 |
-- |
201,050 |
||||||
|
Other non-current assets |
26,929 |
40,774 |
10,159 |
-- |
77,862 |
||||||
|
Equity in affiliates |
973,601 |
-- |
-- |
(973,601 |
) |
-- |
|||||
|
Total assets |
$ |
1,034,790 |
$ |
624,458 |
$ |
494,325 |
$ |
(973,601 |
) $ |
1,179,972 |
|
|
Liabilities and Stockholders' Equity |
|||||||||||
|
Current Liabilities: |
|||||||||||
|
Accounts payable and accrued expenses |
$ |
30,956 |
$ |
164,544 |
$ |
119,799 |
$ |
-- |
$ |
315,299 |
|
|
Current portion of long-term debt |
24,558 |
-- |
4,751 |
-- |
29,309 |
||||||
|
Short-term borrowings |
30,300 |
-- |
6,900 |
-- |
37,200 |
||||||
|
Product warranties |
-- |
13,586 |
4,569 |
-- |
18,155 |
||||||
|
Total current liabilities |
85,814 |
178,130 |
136,019 |
-- |
399,963 |
||||||
|
Non-Current Liabilities: |
|||||||||||
|
Long-term debt, less current portion |
439,075 |
-- |
12,843 |
-- |
451,918 |
||||||
|
Postretirement health and other |
|
|
|
|
|
||||||
|
Intercompany payable/(receivable) - net |
241,330 |
(239,058 |
) |
(2,272 |
) |
-- |
-- |
||||
|
Other non-current liabilities |
15,367 |
5,009 |
31,293 |
-- |
51,669 |
||||||
|
Total non-current liabilities |
696,782 |
(214,518 |
) |
45,550 |
-- |
527,814 |
|||||
|
Stockholders' Equity |
252,194 |
660,846 |
312,756 |
(973,601 |
) |
252,195 |
|||||
|
Total liabilities and |
|
1,034,790 |
|
|
|
|
|
(973,601 |
|
|
The Manitowoc Company, Inc.
Condensed Consolidating Balance Sheet
as of December 31, 2001
(In thousands)
|
Non- |
|||||||||||
|
Subsidiary |
Guarantor |
||||||||||
|
Parent |
Guarantors |
Subsidiaries |
Eliminations |
Consolidated |
|||||||
|
Assets |
|||||||||||
|
Current Assets: |
|||||||||||
|
Cash and cash equivalents |
$ |
4,456 |
$ |
141 |
$ |
18,984 |
$ |
-- |
$ |
23,581 |
|
|
Marketable securities |
2,151 |
- |
- |
-- |
2,151 |
||||||
|
Accounts receivable - net |
43 |
67,159 |
74,009 |
-- |
141,211 |
||||||
|
Inventories - net |
- |
67,005 |
56,051 |
-- |
123,056 |
||||||
|
Deferred income taxes |
18,873 |
- |
9,473 |
- |
28,346 |
||||||
|
Other current assets |
203 |
10,271 |
2,271 |
-- |
12,745 |
||||||
|
Total current assets |
25,726 |
144,576 |
160,788 |
-- |
331,090 |
||||||
|
Goodwill - net |
1,194 |
300,445 |
206,100 |
-- |
507,739 |
||||||
|
Other intangible assets - net |
-- |
-- |
-- |
-- |
-- |
||||||
|
Property, plant and equipment - net |
5,038 |
98,634 |
71,712 |
-- |
175,384 |
||||||
|
Other non-current assets |
25,081 |
26,417 |
15,101 |
-- |
66,599 |
||||||
|
Equity in affiliates |
943,466 |
- |
- |
(943,466 |
) |
- |
|||||
|
Total assets |
$ |
1,000,505 |
$ |
570,072 |
$ |
453,701 |
$ |
(943,466 |
) $ |
1,080,812 |
|
|
Liabilities and Stockholders' Equity |
|||||||||||
|
Current Liabilities: |
|||||||||||
|
Accounts payable and accrued expenses |
$ |
18,853 |
$ |
126,447 |
$ |
90,831 |
$ |
-- |
$ |
236,131 |
|
|
Current portion of long-term debt |
24,558 |
- |
6,529 |
-- |
31,087 |
||||||
|
Short-term borrowings |
5,900 |
- |
5,061 |
-- |
10,961 |
||||||
|
Product warranties |
- |
13,575 |
4,407 |
- |
17,982 |
||||||
|
Total current liabilities |
49,311 |
140,022 |
106,828 |
- |
296,161 |
||||||
|
Non-Current Liabilities: |
|||||||||||
|
Long-term debt, less current portion |
435,165 |
- |
11,357 |
- |
446,522 |
||||||
Postretirement health and other benefit obligations |
1,003 |
19,129 |
2,939 |
- |
23,071 |
||||||
|
Intercompany payable/(receivable) - net |
231,140 |
(238,568 |
) |
7,428 |
- |
- |
|||||
|
Other non-current liabilities |
20,091 |
5,068 |
26,104 |
- |
51,263 |
||||||
|
Total non-current liabilities |
687,399 |
(214,371 |
) |
47,828 |
- |
520,856 |
|||||
|
Stockholders' Equity |
263,795 |
644,421 |
299,045 |
(943,466 |
) |
263,795 |
|||||
|
Total liabilities and |
|
1,000,505 |
|
570,072 |
|
453,701 |
|
(943,466 |
|
1,080,812 |
The Manitowoc Company, Inc.
Condensed Consolidating Statement of Cash Flows
For the Six Months Ended June 30, 2002
(In thousands)
|
Non- |
||||||||||||
|
Guarantor |
Guarantor |
|||||||||||
|
Parent |
Subsidiaries |
Subsidiaries |
Consolidated |
|||||||||
|
Net cash provided by (used in) operations |
$ |
(27,523 |
) |
$ |
6,769 |
$ |
22,521 |
$ |
1,767 |
|||
|
Cash Flows from Investing: |
||||||||||||
|
Business acquisitions - net of cash acquired |
-- |
-- |
(7,388 |
) |
(7,388 |
) |
||||||
|
Capital expenditures |
(2,958 |
) |
(3,256 |
) |
(6,861 |
) |
(13,075 |
) |
||||
|
Proceeds from sale of property, plant, and equipment |
-- |
512 |
6,503 |
7,015 |
||||||||
|
Purchase of marketable securities |
(47 |
) |
-- |
-- |
(47 |
) |
||||||
|
Intercompany investments |
20,136 |
-- |
(20,136 |
) |
-- |
|||||||
|
Net cash provided by (used for) investing |
17,131 |
(2,744 |
) |
(27,882 |
) |
(13,495 |
) |
|||||
|
Cash Flows from Financing: |
||||||||||||
|
Payments on long-term debt |
(16,427 |
) |
-- |
(292 |
) |
(16,719 |
) |
|||||
|
Payments proceeds from revolver borrowings - net |
24,400 |
-- |
1,839 |
26,239 |
||||||||
|
Exercise of stock options |
1,976 |
-- |
-- |
1,976 |
||||||||
|
Net cash provided by (used for) financing |
9,949 |
-- |
1,547 |
11,496 |
||||||||
|
Effect of exchange rate changes on cash |
-- |
-- |
887 |
887 |
||||||||
|
Net increase (decrease) in cash and cash equivalents |
(443 |
) |
4,025 |
(2,927 |
) |
655 |
||||||
|
Balance at beginning of period |
4,456 |
141 |
18,984 |
23,581 |
||||||||
|
Balance at end of period |
$ |
4,013 |
$ |
4,166 |
$ |
16,057 |
$ |
24,236 |
The Manitowoc Company, Inc.
Condensed Consolidating Statement of Cash Flows
For the Six Months Ended June 30, 2001
(In thousands)
|
Non- |
||||||||||||
|
Guarantor |
Guarantor |
|||||||||||
|
Parent |
Subsidiaries |
Subsidiaries |
Consolidated |
|||||||||
|
Net cash provided by (used in) operations |
$ |
31,978 |
$ |
(2,063 |
) |
$ |
12,735 |
$ |
42,650 |
|||
|
Cash Flows from Investing: |
||||||||||||
|
Business acquisitions - net of cash acquired |
-- |
(1,853 |
) |
(280,464 |
) |
(282,317 |
) |
|||||
|
Capital expenditures |
(721 |
) |
(7,485 |
) |
299 |
(7,907 |
) |
|||||
|
Proceeds from sale of property, plant, and equipment |
-- |
330 |
-- |
330 |
||||||||
|
Purchase of marketable securities |
(54 |
) |
-- |
-- |
(54 |
) |
||||||
|
Intercompany investments |
(282,900 |
) |
-- |
282,900 |
-- |
|||||||
|
Net cash provided by (used for) investing |
(283,675 |
) |
(9,008 |
) |
2,735 |
(289,948 |
) |
|||||
|
Cash Flows from Financing: |
||||||||||||
|
Proceeds from long-term debt |
345,116 |
-- |
-- |
345,116 |
||||||||
|
Proceeds from senior subordinated notes |
156,118 |
-- |
-- |
156,118 |
||||||||
|
Payments on long-term debt |
(134,343 |
) |
-- |
(1,286 |
) |
(135,629 |
) |
|||||
|
Payments proceeds from revolver borrowings - net |
(80,125 |
) |
-- |
-- |
(80,125 |
) |
||||||
|
Debt issuance costs |
(20,153 |
) |
-- |
-- |
(20,153 |
) |
||||||
|
Dividends paid |
(1,791 |
) |
-- |
-- |
(1,791 |
) |
||||||
|
Exercise of stock options |
130 |
-- |
-- |
130 |
||||||||
|
Net cash provided by (used for) financing |
264,952 |
-- |
(1,286 |
) |
263,666 |
|||||||
|
Effect of exchange rate changes on cash |
-- |
-- |
(111 |
) |
(111 |
) |
||||||
|
Net increase (decrease) in cash and cash equivalents |
13,255 |
(11,071 |
) |
14,073 |
16,257 |
|||||||
|
Balance at beginning of period |
3,279 |
4,740 |
5,964 |
13,983 |
||||||||
|
Balance at end of period |
$ |
16,534 |
$ |
(6,331 |
) |
$ |
20,037 |
$ |
30,240 |
12. Business Segments
The company determines its segments based upon the internal organization that is used by management to make operating decisions and assess performance. Based upon this approach, the company has three reportable segments: Cranes and Related Products (Cranes), Foodservice Equipment (Foodservice), and Marine.
Information about reportable segments and a reconciliation of total segment sales and profits to the consolidated totals for the three and six months ending June 30, 2002 and 2001 are summarized in Item 2, "Management's Discussion and Analysis of Financial Condition and Results of Operations," to this report on Form 10-Q. As of June 30, 2002 and December 31, 2001, the total assets by segment were as follows:
|
June 30, 2002 |
December 31, 2001 |
|||
|
Cranes |
$ |
648,769 |
$ |
577,920 |
|
Foodservice |
373,539 |
368,363 |
||
|
Marine |
96,395 |
77,291 |
||
|
General corporate |
61,269 |
57,238 |
||
|
Total |
$ |
1,179,972 |
$ |
1,080,812 |
13. Senior Subordinated Notes Due 2012
On August 8, 2002 the company completed the sale in a private offering of $175 million of 10 1/2% senior subordinated notes due 2012. The senior subordinated notes are unsecured obligations of the company ranking subordinate in right of payment to all senior debt of the company, are pari passu with the company's senior subordinated euro notes and are fully and unconditionally, jointly and severally guaranteed by certain of the company's domestic subsidiaries. Interest on the senior subordinated notes is payable semiannually in February and August each year, commencing February 1, 2003. These notes can be redeemed by the company in whole or in part for a premium on or after August 1, 2007. In addition, the company may redeem for a premium at any time prior to August 1, 2005, up to 35% of the face amount of the senior subordinated notes with the proceeds of one or more equity offerings. The company used the net proceeds from the sale of these notes to refinance outstanding indebtedness of Grove, the ac
quisition of which the company also completed on August 8, 2002 (see Note 2).
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations for the Three and Six Months Ended June 30, 2002 and 2001
Analysis of Net Sales
The following table presents net sales by business segment (in thousands):
|
Three Months Ended |
Six Months Ended |
||||||||
|
2002 |
2001 |
2002 |
2001 |
||||||
|
Net sales: |
|||||||||
|
Cranes and related products |
$ |
160,062 |
$ |
133,147 |
$ |
307,758 |
$ |
217,404 |
|
|
Foodservice products |
134,077 |
116,453 |
236,853 |
217,699 |
|||||
|
Marine |
52,066 |
48,634 |
102,939 |
92,482 |
|||||
|
Total |
$ |
346,205 |
$ |
298,234 |
$ |
647,550 |
$ |
527,585 |
|
Consolidated net sales for the second quarter of 2002 increased 16.1% to $346.2 million, from $298.2 million for the same period in 2001. The impact of the May 2001 acquisition of Potain, increased sales by Diversified Refrigeration, Inc. (DRI), the company's private-label residential refrigerator business unit, and the continued strength of the Marine business accounted for the increase in net sales. For the first six months of 2002, net sales increased 22.7% to $647.6 million, from $527.6 million in 2001. Excluding Potain's sales for April 2002, consolidated net sales for the second quarter 2002 increased 7.4% versus the second quarter of 2001. Excluding Potain's sales from January 1 through April 30, 2002 consolidated net sales for the six months ended June 30, 2002 increased 5.2% versus the six months ended June 30, 2001.
Net sales from the Crane segment in the second quarter of 2002 increased 20.2% to $160.1 million versus the first quarter of last year. For the six months of 2002, net sales increased 41.6% to $307.8 million. Excluding the additional sales of Potain as discussed above, the Crane segments sales for both the three and six months ended June 30, 2002 were relatively flat, with an increase in sales of approximately 1% for the three months and a decrease in sales of approximately 1% for the six months ended June 30, 2002. Demand for our high-capacity cranes remains active and was highlighted by the order and shipment of a 1,000-ton capacity Model 21000 in the month of June 2002. The Crane segment backlog stood at $81.7 million at quarter end compared to $81.5 million at March 31, 2002 and $64.5 million at December 31, 2001.
Net sales for the Foodservice segment increased 15.1% to $134.1 million in the second quarter of 2002 versus the second quarter of 2001. For the first six months of 2002, net sales have increased 8.8% to $236.9 million. Excluding the results from DRI, sales for the second quarter of 2002 increased approximately 2%, while year-to-date sales remained relatively flat. Sales at DRI increased in the first six months of 2002 versus the same period last year due to the 2002 introduction of several new production models.
For the second quarter and first six months of 2002, net revenue for the Marine segment increased 7.1% and 11.3%, respectively. The activity in new construction projects has helped to offset the continued weakness in the ship-repair business. During the first six months of 2002, 85.0% of the Marine segment's total revenues were from contract work, compared to 75.5% for the same period in 2001. The Marine segment is actively pursuing a number of shipbuilding opportunities that include homeland defense and security initiatives, OPA '90 compliance, and an active dredging market.
Analysis of Operating Earnings
The following table presents operating income by business segment (in thousands):
|
Three Months Ended |
Six Months Ended |
||||||||||
|
2002 |
2001 |
2002 |
2001 |
||||||||
|
Earnings (loss) from operations: |
|||||||||||
|
Cranes and related products |
$ |
21,562 |
$ |
17,963 |
$ |
35,017 |
$ |
29,326 |
|||
|
Foodservice products |
21,153 |
21,354 |
30,528 |
30,895 |
|||||||
|
Marine |
5,945 |
5,855 |
11,872 |
10,423 |
|||||||
|
General corporate expense |
(3,660 |
) |
(3,017 |
) |
(7,205 |
) |
(6,145 |
) |
|||
|
Amortization expense |
(465 |
) |
(3,152 |
) |
(1,052 |
) |
(5,467 |
) |
|||
|
Foodservice plant consolidation costs |
-- |
-- |
(3,900 |
) |
-- |
||||||
|
Total |
$ |
44,535 |
$ |
39,003 |
$ |
65,260 |
$ |
59,032 |
|||
Liquidity and Capital Resources
Acquisitions
On March 18, 2002, the company executed a definitive agreement to acquire Grove Investors, Inc (Grove). Grove is a leading provider of mobile hydraulic cranes, truck mounted cranes and aerial work platforms for the global market. Grove's products are used in a wide variety of applications by commercial and residential building contractors as well as by industrial, municipal and military end users. Grove's products are marketed to independent equipment rental companies and directly to end users under the brand names Grove Crane, Grove Manlift and National Crane. In the fiscal year ended September 29, 2001, Grove reported revenues of approximately $718 million.
On July 31, 2002 the Grove shareholders approved the acquisition of Grove by the company and on August 8, 2002 the company completed the acquisition of Grove. In exchange for the outstanding shares of Grove common stock, the company issued approximately 2.2 million shares of Manitowoc common stock with an average market price of $32.34 per share as defined in the merger agreement. In addition, the company assumed or refinanced approximately $199.1 million of Grove debt.
In connection with the acquisition, the company and Grove submitted pre-merger notification and report forms to the Federal Trade Commission and the Antitrust Division of the United States Department of Justice on March 27, 2002. In response to concerns raised by the Department of Justice regarding a potential reduction in competition in the United States boom truck market that could result from the acquisition, the company and Grove reached an agreement with the Department of Justice that, following the completion of the Grove acquisition, the company will divest of either Manitowoc Boom Trucks or National Crane (Grove's boom truck business). Based on a preliminary analysis, the company intends to pursue the disposition of Manitowoc Boom Trucks. The company does not anticipate that the divestiture of either operation will have a material effect on its financial condition or the results of its operations.
On April 8, 2002 the company purchased the remaining 50% interest in its joint venture Fabbrica Apparecchiature per la Produzione del Ghiaccio Srl, a manufacturer of ice machines based in Italy. The aggregate consideration paid by the company for the remaining interest was $3.4 million and resulted in $1.7 million of goodwill.
On May 9, 2001 the company acquired all of the outstanding capital stock of Potain SAS (Potain). Potain is a leading designer, manufacturer and supplier of tower cranes for the building and construction industry. The aggregate consideration paid was $425.2 million, which includes $307.1 million paid in cash, direct acquisition costs of $4.1 million ($0.4 million incurred during 2002), assumed liabilities of $138.8 million, the payment of a post-closing purchase price adjustment of $3.6 million in February 2002, and is less cash acquired of $28.4 million.
During the second quarter of 2002, the company finalized the purchase accounting for the Potain acquisition resulting in a reduction in goodwill of approximately $8.9 million. The primary purchase accounting adjustments recorded during 2002 were to adjust the book value of property, plant and equipment acquired to fair market value based on a third party appraisal report and to record a liability associated with certain restructuring and integration activities.
Recent Accounting Pronouncements
In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated with Exit or Disposal Activities" which nullifies EITF Issue No. 94-3, "Liability Recognition for Certain Employee Termination Benefits and other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring)." The principle difference in accounting under SFAS No. 146 is that a liability for the cost associated with an exit or disposal activity cannot be recognized until the liability has been incurred. Under EITF 94-3, an exit cost liability could be recognized at the date of any entity's commitment to an exit plan. SFAS No. 146 is effective for exit or disposal activities initiated after December 31, 2002 with early application encouraged. We do not expect SFAS No. 146 to have a material effect on our consolidated financial position or cash flows.
In April 2002, the FASB issued SFAS No. 145, "Rescission of FAS Nos. 4, 44, and 64, Amendment of FAS 13 and Technical Corrections as of April 2002" which mainly addresses the accounting and disclosure related to early extinguishment of debt transactions as well as several other technical corrections. SFAS No. 145 is effective for the company beginning January 1, 2003, with early application encouraged. The company does not expect SFAS No. 145 to have a material effect on its consolidated financial statements.
In August 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets," which supersedes SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of," and the accounting and reporting provisions of Accounting Principles Board Opinion No. 30 related to the disposal of a segment of a business. We adopted the new rules under SFAS No. 144 on January 1, 2002, which did not have an impact on our consolidated financial statements.
In August 2001, the FASB issued SFAS No. 143, "Accounting for Obligations Associated with the Retirement of Long-Lived Assets." The provisions of SFAS No. 143 establishes accounting standards for the recognition and measurement of an asset retirement obligation. This statement is effective for us January 1, 2003 and is not expected to have a material effect on our consolidated financial statements.
Euro Conversion
Effective January 1, 2002, the euro became the official currency of certain participating countries and their national currencies are being phased out over various periods during the first half of 2002. As a part of this process, we have evaluated and we believe we have completed the modification of our information systems or have converted to recent releases of system software, where necessary, to accommodate the euro conversion. Our costs to accommodate the euro conversion were not material. While uncertainties regarding any future impacts of the euro conversion on our businesses exist, we have not experienced and do not expect to experience a material impact on our operations, cash flows or financial condition as a result of the conversion to the euro.
PART II. OTHER INFORMATION
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/ Terry D. Growcock |
|
Terry D. Growcock |
|
President and Chief Executive Officer |
|
/s/ Carl Laurino |
|
Carl Laurino |
|
Treasurer and Interim Chief Financial Officer |
|
/s/ Maurice D. Jones |
|
Maurice D. Jones |
|
General Counsel and Secretary |
August 13, 2002
THE MANITOWOC COMPANY, INC.
|
|
|
Filed |
|
4.1 |
Indenture, dated August 8, 2002, by and among the Registrant, the Guarantors named therein and the Initial Purchasers named therein |
[Incorporated by reference from Form 8-K dated August 8, 2002] |
|
4.2 |
Registration Rights Agreement, dated August 8, 2002, by and among the Registrant, the Guarantors named therein and the Initial Purchasers named therein |
[Incorporated by reference from Form 8-K dated August 8, 2002] |
|
4.3 |
Purchase Agreement, dated August 2, 2002, by and among the Registrant, the Guarantors named therein and the Initial Purchasers named therein |
[Incorporated by reference from Form 8-K dated August 8, 2002] |
|
10.1 |
Deferred Compensation Plan, amended as of March 31, 2002 |
X |
|
99.1 |
Certification of CEO pursuant to 18 U.S.C. Section 1350 |
X |
|
99.2 |
Certification of CFO pursuant to 18 U.S.C. Section 1350 |
X |
* Pursuant to Item 601(b)(2) of Regulation S-K, the Registrant agrees to furnish to the Securities and Exchange Commission upon request a copy of any unfiled exhibits or schedules to such document.