10-K
Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549
 
FORM 10-K
 
ý
Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
For the fiscal year ended December 31, 2015
 
or
 
o
Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
For the transition period from              to             
 
Commission File Number
1-11978
 
  
The Manitowoc Company, Inc.
(Exact name of registrant as specified in its charter)
 
Wisconsin
 
39-0448110
(State or other jurisdiction
 
(I.R.S. Employer
of incorporation)
 
Identification Number)
 
 
 
2400 South 44th Street,
 
 
Manitowoc, Wisconsin
 
54221-0066
(Address of principal executive offices)
 
(Zip Code)
 
(920) 684-4410
(Registrant’s telephone number, including area code)
 
Securities Registered Pursuant to Section 12(b) of the Act:
 
Title of each class
 
Name of each exchange on which registered
Common Stock, $.01 Par Value
 
New York Stock Exchange
Common Stock Purchase Rights
 
 
 
Securities Registered Pursuant to Section 12(g) of the Act: None
 
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ý No o
 
Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes o  No ý
 
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 ý  No o
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes ý  No o
 
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  o
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company.  See the definitions of “large accelerated filer, accelerated filer, and smaller reporting company” in Rule 12b-2 of the Exchange Act.
 
Large accelerated filer x
 
Accelerated filer o
Non-accelerated filer o
 (Do not check if a smaller reporting company)
 
Smaller reporting company o
 
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o  No ý
 
The Aggregate Market Value on June 30, 2015, of the registrant’s Common Stock held by non-affiliates of the registrant was approximately $2.6 billion based on the closing per share price of $19.60 on that date.
 
The number of shares outstanding of the registrant’s Common Stock as of January 30, 2016, the most recent practicable date, was 136,837,154.
 
DOCUMENTS INCORPORATED BY REFERENCE
 
Portions of the registrant’s Proxy Statement, to be prepared and filed for the 2016 Annual Meeting of Shareholders, dated March 18th, 2016 (the “2016 Proxy Statement”), are incorporated by reference in Part III of this report.
 
See Index to Exhibits immediately following the signature page of this report, which is incorporated herein by reference.



Table of Contents

THE MANITOWOC COMPANY, INC.
Index to Annual Report on Form 10-K
For the Year Ended December 31, 2015
 
 
 
PAGE
 
 
 
 
PART I
 
 
 
 
 
 
 
 
 
PART II
 
 
 
 
 
 
 
 
PART III
 
 
 
 
 
 
 
 
PART IV
 
 
 
 


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PART I
Item 1.  BUSINESS
GENERAL
The Manitowoc Company, Inc. (referred to as the company, MTW, Manitowoc, we, our, and us) was founded in 1902. We are a multi-industry, capital goods manufacturer operating in two principal markets: Cranes and Related Products (Crane) and Foodservice Equipment (Foodservice). Crane is recognized as one of the world’s leading providers of engineered lifting equipment for the global construction industry, including lattice-boom cranes, tower cranes, mobile telescopic cranes, and boom trucks. Foodservice is one of the world’s leading innovators and manufacturers of commercial foodservice equipment serving the ice, beverage, refrigeration, food-preparation, holding and cooking needs of restaurants, convenience stores, hotels, healthcare, and institutional applications. We have over a 110-year tradition of providing high-quality, customer-focused products and support services to our markets.  For the year ended December 31, 2015, we had net sales of approximately $3.4 billion.
On February 11, 2016, Manitowoc announced that its Board of Directors approved the separation of the company’s Crane and Foodservice businesses into two independent, publicly-traded companies. The company currently anticipates effecting the separation through a tax-free spin-off (the “Spin-Off”) of the Foodservice business by a distribution of all of the common stock of Manitowoc's subsidiary Manitowoc Foodservice, Inc. ("MFS") and expects the Spin-Off to be completed on March 4, 2016, as previously announced. MFS has filed a Registration Statement on Form 10, registering its shares under the Securities Exchange Act of 1934, as amended, which Registration Statement was declared effective on February 11, 2016. After the Spin-Off, company operations will consist only of the Crane business and the company will not have any remaining interest in the Foodservices business. However, information related to the Foodservice business is provided in this report because it was part of the company in 2015 and remains part of the company until the Spin-Off occurs.
Our Crane business is one of the world’s leading providers of engineered lifting equipment for the global construction industry. We design, manufacture, market, and support one of the comprehensive product lines of mobile telescopic cranes, tower cranes, lattice-boom crawler cranes, and boom trucks.  Our Crane products are principally marketed under the Manitowoc, Grove, Potain, National Crane, and Shuttlelift brand names. We serve a wide variety of customers, including dealers, rental companies, contractors, and government entities, across the petrochemical and industrial, commercial, power and utilities, infrastructure, and residential end markets. Additionally, our Manitowoc Crane Care offering leverages Manitowoc Cranes’ installed base of approximately 140,000 cranes to provide aftermarket parts and services to enable our customers to manage their fleets most effectively and improve their return on investment. Due to the ongoing and predictable maintenance needed by cranes, as well as the high cost of crane downtime, Crane Care provides us with an attractive stream of recurring revenue.
Our Foodservice business is one of the world’s leading commercial foodservice equipment companies. We design, manufacture and service an integrated portfolio of hot and cold category products, and have a long track record of innovation. We have one of the industry’s broadest portfolios of products and are recognized by our customers and channel partners for the quality, reliability, and durability of our products. Our capabilities span refrigeration, ice-making, cooking, holding, food-preparation, and beverage-dispensing technologies, which allow us to equip entire commercial kitchens and serve the world’s growing demand for food prepared away from home. We supply foodservice equipment to commercial and institutional foodservice operators such as full-service restaurants, quick-service restaurant chains, hotels, caterers, supermarkets, convenience stores, business and industry, hospitals, schools and other institutions.  Our Foodservice products, services and solutions are marketed through a worldwide network of over three thousand dealers and distributors under well-established and recognized brands, including Cleveland, Convotherm, Dean, Delfield, Fabristeel, Frymaster, Garland, Inducs, Kolpak, Koolaire, Lincoln, Manitowoc Beverage Systems, Manitowoc Ice, Merco, Merrychef, Moorwood Vulcan, Multiplex, RDI Systems, Servend, TRUpour, U.S. Range, and Welbilt. All of our products are supported by KitchenCare, our aftermarket repair and parts service business. Manitowoc Foodservice’s scale and expertise enable it to serve a global customer base in continually evolving foodservice markets.
On December 7, 2015, we announced the completion of the sale of Kysor Panel Systems, a manufacturer of wood frame and high-density rail panel systems for walk-in freezers and coolers for the retail and convenience-store markets and part of the Foodservice Business, to an affiliate of D Cubed Group LLC. The sale price for the transaction was approximately $85 million, with cash proceeds received of approximately $78 million. In December 2015, we used the proceeds from the sale to reduce outstanding debt under the existing revolving credit facility. This divestiture does not qualify for discontinued operations; therefore the results of the business are included the operating results from continuing operations.
During the first quarter of 2014, the company sold its 50% interest in Manitowoc Dong Yue Heavy Machinery Co., Ltd. (“Manitowoc Dong Yue” or the “joint venture”), which produces mobile and truck-mounted hydraulic cranes in China, to its

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joint venture partner, Tai’an Taishan Heavy Industry Investment Co., Ltd., for a nominal amount. Consequently, the joint venture has been classified as discontinued operations in the company’s financial statements. See Note 5, “Discontinued Operations,” for further details concerning this transaction.
During the first quarter of 2013, the company sold its warewashing equipment business, which operated under the brand name Jackson, to Hoshizaki USA Holdings, Inc. for approximately $39.2 million, including post-closing adjustments. Net proceeds were used to reduce ratably the then-outstanding balances of Term Loans A and B. This business has been classified as discontinued operations in the company's financial statements.
We are a Wisconsin corporation, and our principal executive offices are located at 2400 South 44th Street, Manitowoc, Wisconsin 54220.


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FINANCIAL INFORMATION ABOUT BUSINESS SEGMENTS
The following is financial information about the Crane and Foodservice segments for the years ended December 31, 2015, 2014 and 2013.  The accounting policies of the segments are the same as those described in the summary of significant accounting policies of the Notes to the Consolidated Financial Statements included in Part II, Item 8 of this Form 10-K, except that certain expenses are not allocated to the segments.  These unallocated expenses are corporate overhead, stock-based compensation expense, amortization expense of intangible assets with definite lives, goodwill impairment, intangible asset impairment, asset impairment expense, restructuring expense, and other non-operating expenses.  The company evaluates segment performance based upon profit and loss before the aforementioned expenses.  Amounts are shown in millions of dollars. After the Spin-Off, the company will not have any remaining interest in the Foodservice business.
(in millions)
2015
 
2014
 
2013
Net sales from continuing operations:
 

 
 

 
 

Crane
$
1,865.7

 
$
2,305.2

 
$
2,506.3

Foodservice
1,570.1

 
1,581.3

 
1,541.8

Total
$
3,435.8

 
$
3,886.5

 
$
4,048.1

 
 
 
 
 
 
Operating earnings from continuing operations:
 

 
 

 
 

Crane
$
64.3

 
$
163.9

 
$
218.8

Foodservice
239.7

 
234.0

 
250.3

Corporate
(58.4
)
 
(53.4
)
 
(64.9
)
Asset impairment expense
(24.4
)
 
(1.1
)
 

Amortization expense
(34.4
)
 
(35.1
)
 
(35.3
)
Restructuring expense
(14.0
)
 
(9.0
)
 
(4.8
)
Separation expense
(39.4
)
 

 

Other (expense) income
(0.9
)
 
(0.5
)
 
0.3

Total
$
132.5

 
$
298.8

 
$
364.4

 
 
 
 
 
 
Capital expenditures:
 

 
 

 
 

Crane
$
54.1

 
$
57.3

 
$
69.3

Foodservice
13.2

 
25.3

 
33.6

Corporate
0.8

 
2.2

 
7.8

Total
$
68.1

 
$
84.8

 
$
110.7

 
 
 
 
 
 
Total depreciation:
 

 
 

 
 

Crane
$
49.4

 
$
45.7

 
$
46.9

Foodservice
19.6

 
21.2

 
20.1

Corporate
0.9

 
1.5

 
1.5

Total
$
69.9

 
$
68.4

 
$
68.5

 
 
 
 
 
 
Total assets:
 

 
 

 
 

Crane
$
1,606.3

 
$
1,742.3

 
$
1,900.4

Foodservice
1,792.7

 
1,902.0

 
1,904.3

Corporate
49.9

 
172.3

 
171.9

Total
$
3,448.9

 
$
3,816.6

 
$
3,976.6



PRODUCTS AND SERVICES
We currently sell our products categorized in the following business segments:

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Business Segment
 
Percentage of
2015 Net Sales
 
Key Products
 
Key Brands
Cranes and Related Products
 
54%
 
Lattice-boom Cranes: which include crawler and truck mounted lattice-boom cranes, and crawler crane attachments; Tower Cranes: which include top-slewing, luffing jib, topless, and self-erecting tower cranes; Mobile Telescopic Cranes: which include rough-terrain, all-terrain, truck-mounted and industrial cranes; Boom Trucks: which include telescopic boom trucks; and Parts and Service: which include replacement parts, product services and crane rebuilding and remanufacturing services.
 
Manitowoc
Potain
Grove
National Crane
Shuttlelift
Manitowoc Crane Care
Foodservice Equipment
 
46%
 
Primary cooking and warming equipment; ice-cube machines, ice flaker machines and storage bins; refrigerator and freezer equipment; beverage dispensers and related products; serving, warming and storage equipment; and aftermarket parts and service solutions.

 
Cleveland
Convotherm
Dean
Delfield
Fabristeel
Frymaster
Garland
Inducs
KitchenCare
Koolaire
Kolpak
Lincoln
Manitowoc Beverage Systems
Manitowoc Ice
Merco
Merrychef
Moorwood Vulcan
Multiplex
RDI Systems
Servend
TRUpour
U.S. Range
Welbilt
Cranes and Related Products

Our Crane segment designs, manufactures and distributes a diversified line of crawler-mounted lattice-boom cranes, which we sell under the Manitowoc brand name. Our Crane segment also designs and manufactures a diversified line of top-slewing and self-erecting tower cranes, which we sell under the Potain brand name. We design and manufacture mobile telescopic cranes, which we sell under the Grove and Shuttlelift brand names, and a comprehensive line of hydraulically powered telescopic boom trucks, which we sell under the National Crane brand name. We also provide crane product parts and services, and crane rebuilding, remanufacturing, and training services, which are delivered under the Manitowoc Crane Care brand name. In some cases our products are manufactured for us or distributed for us under strategic alliances. Our crane products are used in a wide variety of applications throughout the world, including energy production/distribution and utilities, petrochemical and industrial projects, infrastructure applications, such as road, bridge and airport construction, plus commercial and residential construction. Many of our customers purchase one or more cranes together with several attachments to permit use of the crane in a broader range of lifting applications and other operations. Our largest crane model combined with available options has a lifting capacity up to 2,500 U.S. tons.

Lattice-boom cranes. Under the Manitowoc brand name we design, manufacture and distribute lattice-boom crawler cranes. Lattice-boom cranes consist of a lattice-boom, which is a fabricated, high-strength steel structure that has four chords and tubular lacings, mounted on a base which is either crawler or truck mounted. Lattice-boom cranes weigh less and provide higher lifting capacities than a mobile telescopic crane of similar boom length. The lattice-boom cranes are the only category of crane that can pick and move simultaneously with a full-rated load. The lattice-boom sections, together with the crane base, are transported to and erected at a project site.

We currently offer models of lattice-boom cranes with lifting capacities up to 2,500 U.S. tons, which are used to lift material and equipment in a wide variety of applications and end markets, including heavy construction, bridge and highway, duty cycle and infrastructure and energy-related projects. These cranes are also used by the value-added crane rental industry, which serves all of the above end markets.


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Lattice-boom crawler cranes may be classified according to their lift capacity — low capacity and high capacity. Low-capacity crawler cranes with 150 U.S. ton capacity or less are often utilized for general construction and duty-cycle applications. High-capacity crawler cranes with greater than 150 U.S. ton capacity are used to lift materials in a wide variety of applications and are often used in heavy construction, energy-related, stadium construction, petrochemical work, and dockside applications. We offer ten low-capacity models and nine high-capacity models.

In 2014, we introduced the Variable Position Counterweight (VPC) system. The VPC system automatically positions the counterweight, which is suspended above the ground, to fit a required lift by automatically positioning the counterweight based on changes in boom angle and lifted load. This results in reduced ground preparation, lower ground-bearing pressure and less counterweights needed for a lift, all without sacrificing capacity. With the VPC system, customers will not have to buy, transport or install as much counterweight as compared with traditional configurations, and the counterweight boxes are designed to be used across multiple crane platforms. The enhanced crane capacities and reduced mobilization time on job sites means customers may save significant amounts of time and money.

We also offer our lattice-boom crawler crane customers various attachments that provide our cranes with greater capacity in terms of height, movement and lifting. Our principal attachments are: MAX-ER™ attachments, luffing jibs, and RINGER™ attachments. The MAX-ER™ is a trailing counterweight, heavy-lift attachment that dramatically improves the reach, capacity and lift dynamics of the basic crane to which it is mounted. It can be transferred between cranes of the same model for maximum economy and occupies less space than competitive heavy-lift systems. A luffing jib is a fabricated structure similar to, but smaller than, a lattice-boom. Mounted at the tip of a lattice-boom, a luffing jib easily adjusts its angle of operation permitting one crane with a luffing jib to make lifts at additional locations on the project site. It can be transferred between cranes of the same model to maximize utilization. A RINGER™ attachment is a high-capacity lift attachment that distributes load reactions over a large area to minimize ground-bearing pressure. It can also be more economical than transporting and setting up a larger crane.

Tower cranes. Under the Potain brand name, we design and manufacture tower cranes utilized primarily in the energy, building and construction industries. Tower cranes offer the ability to lift and distribute material at the point of use more quickly and accurately than other types of lifting machinery without utilizing substantial square footage on the ground. Tower cranes include a stationary vertical mast and a horizontal jib with a counterweight, which is placed near the vertical mast. A cable runs through a trolley which is mounted on the jib, enabling the load to move along the jib. The jib rotates 360 degrees, thus increasing the crane’s work area. Unless using a remote control device, operators occupy a cabin, located where the jib and mast meet, which provides superior visibility above the worksite. We offer a complete line of tower crane products, including top slewing, luffing jib, topless, self-erecting, and special cranes for dams, harbors and other large building projects. Top-slewing cranes are the most traditional form of tower cranes. Self-erecting cranes are bottom-slewing cranes which have a counterweight located at the bottom of the mast and are able to be erected, used and dismantled on job sites without assist cranes.

Top-slewing tower cranes have a tower and multi-sectioned horizontal jib. These cranes rotate from the top of their mast and can increase in height with the project. Top-slewing cranes are transported in separate pieces and assembled at the construction site in one to three days depending on the height. We offer 23 models of top-slewing tower cranes with maximum jib lengths of 80 meters and lifting capabilities ranging between 3 and 80 metric tons. These cranes are generally sold to medium to large energy, building and construction groups, as well as to rental companies.

Topless tower cranes are a type of top-slewing crane and, unlike all others, have no cathead or jib tie-bars on the top of the mast. The cranes are utilized primarily when overhead height is constrained or in situations where several cranes are installed close together. We currently offer 19 models of topless tower cranes with maximum jib lengths of 75 meters and lifting capabilities ranging between 1.1 and 16 metric tons.

Luffing jib tower cranes, which are a type of top-slewing crane, have an angled rather than horizontal jib. Unlike other tower cranes which have a trolley that controls the lateral movement of the load, luffing jib cranes move their load by changing the angle of the jib. The cranes are utilized primarily in urban areas where space is constrained or in situations where several cranes are installed close together. We currently offer 11 models of luffing jib tower cranes with maximum jib lengths of 60 meters and lifting capabilities ranging between 1.6 and 32 metric tons.

Self-erecting tower cranes are mounted on axles or transported on a trailer. The lower segment of the range (Igo cranes up to Igo50) unfolds in four sections, two for the mast and two for the jib. The smallest of our models unfolds in less than eight minutes; larger models erect in a few hours. Self-erecting cranes rotate from the bottom of their mast. We offer 20 models of self-erecting cranes with maximum jib lengths of 50 meters and lifting capacities ranging between .65 and 8 metric tons, which are utilized primarily in low to medium rise construction and residential applications.

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Mobile telescopic cranes. Under the Grove brand name we design and manufacture 34 models of mobile telescopic cranes utilized primarily in industrial, commercial and construction applications, as well as in maintenance applications to lift and move material at job sites. Mobile telescopic cranes consist of a telescopic boom mounted on a wheeled carrier. Mobile telescopic cranes are similar to lattice-boom cranes in that they are designed to lift heavy loads using a mobile carrier as a platform, enabling the crane to move on and around a job site without typically having to re-erect the crane for each particular job. Additionally, many mobile telescopic cranes have the ability to drive between sites, and some are permitted on public roadways. We currently offer the following four types of mobile telescopic cranes capable of reaching tip heights of up to 446 feet with lifting capacities up to 550 U.S. tons: rough-terrain, all-terrain, truck-mounted, and industrial.

Rough-terrain cranes are designed to lift materials and equipment on rough or uneven terrain. These cranes cannot be driven on public roadways, and, accordingly, must be transported by truck to a work site. We produce, under the Grove brand name, 10 models of rough-terrain cranes capable of tip heights of up to 312 feet and maximum load capacities of up to 150 U.S. tons.

All-terrain cranes are versatile cranes designed to lift materials and equipment on rough or uneven terrain and yet are highly maneuverable and capable of highway speeds. We produce, under the Grove brand name, 14 models of all-terrain cranes capable of tip heights of up to 449 feet and maximum load capacities of up to 550 U.S. tons.

Truck-mounted cranes are designed to provide simple set-up and long reach high capacity booms and are capable of traveling from site to site at highway speeds. These cranes are suitable for urban and suburban uses. We produce, under the Grove brand name, three models of truck mounted cranes capable of tip heights of up to 237 feet and maximum load capacities of up to 110 U.S. tons.

Industrial cranes are designed primarily for plant maintenance, storage yard and material handling jobs. We manufacture, under the Grove and Shuttlelift brand names, eight models of industrial cranes. We produce industrial cranes with up to 25 U.S. ton capacity and tip heights of up to 86 feet.

Boom trucks. We offer our hydraulic boom truck products under the National Crane product line. A boom truck is a hydraulically powered telescopic crane mounted on a conventional truck chassis. Telescopic boom trucks are used primarily for lifting material on a job site and are mostly deployed by end users in the North American market. We currently offer, under the National Crane brand name, 22 models of telescoping boom trucks. The largest capacity cranes of this type are capable of reaching maximum heights of 205 feet and have lifting capacity up to 60 U.S. tons.
Backlog. The year-end backlog of crane products includes accepted orders that have been placed on a production schedule that we expect to be shipped and billed primarily during the next year. Manitowoc’s backlog of unfilled orders for the Crane segment at December 31, 2015, 2014 and 2013 was $513.0 million, $738.0 million and $574.0 million, respectively. Our backlog at the end of 2015 decreased from the end of 2014 due in part to lower customer demand for mobile hydraulic products, driven by declining oil prices and the associated impact across energy-related end markets.  Additionally, our Crawler crane backlog shrunk as our production of the new VPC enabled units were shipped during the year, many of which had been in backlog since 2014 when the new technology was unveiled at ConExpo.
Foodservice Equipment
As noted above, after the Spin-Off, the company will not have any remaining interest in the Foodservice business. However, information is provided in this report related to the Foodservice business because it was part of the company in 2015 and remains part of the company until the Spin-Off occurs.

Our Foodservice business designs, manufactures and sells primary cooking and warming equipment; ice-cube machines, ice flaker machines and storage bins; refrigerator and freezer equipment; beverage dispensers and related products; serving, warming and storage equipment; and aftermarket parts and service solutions. Our suite of products is used by commercial and institutional foodservice operators such as full service restaurants, quick-service restaurant (QSR) chains, hotels, caterers, supermarkets, convenience stores, business and industry, hospitals, schools and other institutions. We have a presence throughout the world’s most significant markets in the following product groups:

Primary cooking and warming equipment. We design, manufacture and sell a broad array of ranges, griddles, grills, combi ovens, convection ovens, conveyor ovens, induction cookers, broilers, tilt fry pans/kettles/skillets, braising pans, cheese melters/salamanders, cook stations, table top and countertop cooking/frying systems, fryers, steam jacketed kettles, and steamers. We sell traditional ovens, combi ovens, convection ovens, conveyor ovens, rapid-cooking ovens, range and grill products under the Convotherm, Garland, Lincoln, Merrychef, U.S. Range, and other brand names. Fryers and frying systems

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are marketed under the Frymaster and Dean brand names, while steam equipment is manufactured and sold under the Cleveland brand.

Ice-cube machines, ice flaker machines, and storage bins. We design, manufacture and sell ice machines under the Manitowoc and Koolaire brand names. Our ice machines make ice in cube, nugget and flake form. The ice-cube machines are available either as self-contained units, which make and store ice, or as modular units, which make ice, but do not store it.

Walk-in refrigerator and freezer equipment. We design, manufacture and sell commercial upright and undercounter refrigerators and freezers, blast freezers, blast chillers and cook-chill systems under the Delfield brand name. We manufacture modular and fully assembled walk-in refrigerators, coolers and freezers, and prefabricated cooler and freezer panels for use in the construction of refrigerated storage rooms and environmental systems under the Kolpak brand name. We also design and manufacture customized refrigeration systems under the RDI Systems brand name.

Beverage dispensers and related products. We produce beverage dispensers, blended ice machines, ice/beverage dispensers, beer coolers, post-mix dispensing valves, backroom equipment and support system components and related equipment for use by quick-service restaurant chains, convenience stores, bottling operations, movie theaters, and the soft-drink industry. Our beverage and related products are sold under the Servend, Multiplex, TRUpour, and Manitowoc Beverage Systems brand names.

Serving and storage equipment. We design, manufacture and sell a range of cafeteria/buffet equipment stations, bins, boxes, warming cabinets, display and deli cases, insulated and refrigerated salad/food bars, and warmers. Our equipment stations, cases, food bars and food serving lines are marketed under the Delfield and other brand names.

Aftermarket parts and service solutions. We provide parts and aftermarket service as well as a wide variety of solutions under the KitchenCare brand name.

The end-customer base for the Foodservice segment is comprised of a wide variety of foodservice providers, including large multinational and regional chain restaurants, convenience stores and retail stores; chain and independent casual and family dining restaurants; independent restaurants and caterers; lodging, resort, leisure and convention facilities; healthcare facilities; schools and universities; large business and industrial customers; and many other foodservice outlets. We serve some of the largest and most widely recognized multinational and regional businesses in the foodservice and hospitality industries. We do not typically have long-term contracts with our customers; however, large chains frequently authorize specific foodservice equipment manufacturers as approved vendors for particular products, and thereafter, sales are made locally or regionally to end customers via kitchen equipment suppliers, dealers or distributors. Many large quick-service restaurant chains refurbish or open a large number of outlets, or implement menu changes requiring investment in new equipment, over a short period of time. When this occurs, these customers often choose a small number of manufacturers whose approved products may or must be purchased by restaurant operators. We work closely with our customers to develop the products they need and to become approved vendors for these products.

Our end-customers often need equipment upgrades that enable them to improve productivity and food safety, reduce labor costs, respond to enhanced hygiene, environmental and menu requirements or reduce energy consumption. These changes often require customized cooking and cooling and freezing equipment. In addition, many restaurants seek to differentiate their products by changing their menu and format. We believe that product development is important to our success because a supplier’s ability to provide customized or innovative foodservice equipment is a primary factor when customers are making their purchasing decisions. Our significant investment in new product research and development positions us to uniquely serve our global customer base.

The Manitowoc Foodservice Education and Technology Centers (“ETC”) in New Port Richey, Florida and Hangzhou, China contain computer-assisted design platforms, a model shop for on-site development of prototypes, a laboratory for product testing, and various display areas for new products. Our test kitchens, flexible demonstration areas, and culinary teams enable us to demonstrate a wide range of equipment in realistic operating environments, and also support a wide range of menu ideation, food development and sensory testing with our customers and food partners. We also use the ETCs to provide training for our customers, marketing representatives, service providers, industry consultants, dealers and distributors.

Backlog. The backlog for unfilled orders for our Foodservice segment at December 31, 2015, 2014 and 2013 was not significant because orders are generally filled shortly after receiving the customer order.


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Raw Materials and Supplies
The primary raw materials that we use are structural and rolled steel, aluminum, and copper, which are purchased from various domestic and international sources. We also purchase engines and electrical equipment and other semi- and fully-processed materials. Our policy is to maintain, wherever possible, alternate sources of supply for our important materials and parts. We maintain inventories of steel and other purchased material. We have been successful in our goal to maintain alternative sources of raw materials and supplies, and therefore are not dependent on a single source for any particular raw material or supply.
Patents, Trademarks, and Licenses
We hold numerous patents pertaining to our Crane and Foodservice products, and have presently pending applications for additional patents in the United States and foreign countries. In addition, we have various registered and unregistered trademarks and licenses that are of material importance to our business and we believe our ownership of this intellectual property is adequately protected in customary fashions under applicable laws.  No single patent, trademark or license is critical to our overall business.
Seasonality
On a consolidated basis, the second and fourth quarters generally have represented the best quarters for our financial results. Crane's best quarters are historically the second and fourth quarters, while Foodservice's best quarters historically have been the second and third quarters. More recently, the traditional seasonality the our Crane and Foodservice segments has been slightly muted due to more diversified product and geographic end markets.  In our Crane segment, the northern hemisphere summer represents the main construction season.  Customers require new machines, parts, and service during that season.  Since the summer brings warmer weather, there is also an increase in the use and replacement of ice machines, as well as new construction and remodeling within the foodservice industry.  As a result, distributors typically. build inventories during the second quarter to prepare for increased demand.

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Competition
We sell all of our products in highly competitive industries. We compete in each of our industries based on product design, quality of products and aftermarket support services, product performance, maintenance costs, energy and resource saving, other contributions to sustainability, and price. Some of our competitors may have greater financial, marketing, manufacturing or distribution resources than we do. We believe that we benefit from the following competitive advantages: strong brand names, which create customer loyalty and facilitate strong resale values, a reputation for quality products and aftermarket support and solution services, an established network of global distributors and customer relationships, broad product line offerings in the markets we serve, and a commitment to engineering design and product innovation. However, we cannot be certain that our products and services will continue to compete successfully or that we will be able to retain our customer base or improve or maintain our profit margins on sales to our customers. The following table sets forth our primary competitors in each of our business segments: 
Business Segment
 
Products
 
Primary Competitors
Cranes and Related Products
 
Lattice-boom Cranes
 
Hitachi Sumitomo; Kobelco; Liebherr; Sumitomo/Link-Belt; Terex; XCMG; Zoomlion; and Sany
 
 
 
 
 
 
 
Tower Cranes
 
Comansa; Terex Comedil/Peiner; Liebherr; FM Gru; Jaso; Raimondi; Viccario; Saez; Benezzato; Cattaneo; Zoomlion; Yongmao; and Wolffkran
 
 
 
 
 
 
 
Mobile Telescopic Cranes
 
Liebherr; Link-Belt; Terex; Tadano; XCMG; Kato; Locatelli; Broderson; Sany; and Zoomlion
 
 
 
 
 
 
 
Boom Trucks
 
Terex; Manitex; Altec; Elliott; and Tadano
 
 
 
 
 
Foodservice Equipment
 
Ice-Cube Machines, Ice Flaker Machines and Storage Bins
 
Aucma; Brema; Follett; Hoshizaki; Ice-O-Matic; Scotsman; and Vogt
 
 
 
 
 
 
 
Beverage Dispensers and Related Products
 
Automatic Bar Controls; Celli; Cornelius; Hoshizaki/Lancer Corporation; Taylor; and Vin Service
 
 
 
 
 
 
 
Walk-in Refrigerator and Freezer Equipment
 
American Panel; Arctic; Bally; Beverage Air; Hoshizaki; ICS; Master-Bilt; Nor-Lake; Thermo-Kool; Traulsen; True Foodservice; and TurboAir
 
 
 
 
 
 
 
Primary Cooking Equipment
 
Ali Group; Dover Industries; Duke; Electrolux; Henny Penny; ITW; Middleby; Rational; and Taylor
 
 
 
 
 
 
 
Serving, Warming and Storage Equipment
 
Alto Shaam; Cambro; Duke; Hatco; ITW; Middleby; Standex; and Vollrath
 

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Engineering, Research and Development
We believe our extensive engineering, research and development capabilities have been key drivers of our success. We engage in research and development activities at dedicated locations within both of our segments. We have a staff of in-house engineers and technicians on three continents, supplemented with external engineering resources, who are responsible for improving existing products and developing new products. We incurred research and development costs of $83.6 million in 2015, $87.4 million in 2014 and $86.4 million in 2013. In 2015, approximately $ 57.6 million of these costs related to the Crane business, and $26 million to Foodservice.
Our team of engineers focuses on developing innovative, high performance, low maintenance products that are intended to create significant brand loyalty among customers. Design engineers work closely with our manufacturing and marketing staff, enabling us to identify changing end-user requirements, implement new technologies and effectively introduce product innovations. Close, carefully managed relationships with dealers, distributors and end users help us identify their needs, not only for products, but for the service and support that are critical to their profitable operations. As part of our ongoing commitment to provide superior products, we intend to continue our efforts to design products that meet evolving customer demands and reduce the period from product conception to product introduction.
Employee Relations
As of December 31, 2015, we employed approximately 11,000 people and had labor agreements with 13 local unions in North America. A large majority of our European employees belong to European trade unions. We have three trade unions in China and one trade union in India.  During 2015, three of our union contracts expired and were successfully renegotiated without incident. During 2016, six of our union contracts will expire.
Geographic Areas
Net sales from continuing operations and long-lived asset information by geographic area as of and for the years ended December 31 are included below.  Long-lived assets are defined as property, plant and equipment-net, goodwill, other intangible assets-net and other non-current assets, excluding deferred tax assets.
 
Net Sales
 
Long-Lived Assets
(in millions)
2015
 
2014
 
2013
 
2015
 
2014
United States
$
1,851.2

 
$
1,977.4

 
$
1,978.0

 
$
1,768.0

 
$
1,880.8

Other North America
179.1

 
238.3

 
292.1

 
12.4

 
12.4

Europe
626.5

 
821.2

 
937.6

 
423.6

 
478.9

Asia
324.5

 
377.6

 
364.5

 
172.9

 
189.7

Middle East
221.1

 
223.2

 
174.2

 
1.5

 
1.5

Central and South America
75.9

 
106.9

 
166.9

 
11.8

 
30.0

Africa
82.4

 
56.7

 
30.0

 

 

South Pacific and Caribbean
8.6

 
13.3

 
12.6

 
3.8

 
4.0

Australia
66.5

 
71.9

 
92.2

 
2.9

 
3.0

Total
$
3,435.8

 
$
3,886.5

 
$
4,048.1

 
$
2,396.9

 
$
2,600.3

Available Information
We make available, free of charge at our internet site (www.manitowoc.com), our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, our proxy statements and any amendments to those reports, as soon as reasonably practicable after we electronically file such material with, or furnish it to, the Securities and Exchange Commission (SEC). Our SEC reports can be accessed through the investor relations section of our website. Although some documents available on our website are filed with the SEC, the information generally found on our website is not part of this or any other report we file with or furnish to the SEC.
The public may read and copy any materials that we file with the SEC at the SEC’s Public Reference Room located at 100 F Street NE, Washington, DC 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC also maintains electronic versions of our reports on its website at www.sec.gov.


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Item 1A. RISK FACTORS
The following are risk factors identified by management that if any events contemplated by the following risks actually occur, then our business, financial condition or results of operations could be materially adversely affected. 
RISKS RELATING TO OUR PROPOSED SEPARATION OF OUR CRANES AND FOODSERVICE BUSINESSES BY SPIN-OFF

The proposed separation of our cranes business and foodservice business is contingent upon the satisfaction of a number of conditions, has required and may continue to require significant time and attention of our management, and may have a material adverse effect on us whether or not it is completed.

On January 29, 2015, we disclosed that our board of directors approved a plan to pursue a separation of our cranes business and foodservice business into two independent, publicly-traded companies through a Spin-Off. The proposed separation is subject to customary conditions, including, but not limited to, the receipt of legal opinions concerning the tax-free nature of the transaction and final approval by our board of directors. In addition, unanticipated developments or changes in the macroeconomic environment, credit markets and equity markets, as well as other market conditions, may impact the plan to effect the proposed Spin-Off. For these and other reasons, we may not complete the Spin-Off as expected during the first quarter of 2016, or at all.

Whether or not we complete the Spin-Off, our ongoing businesses may be adversely affected and we may be subject to certain risks and consequences as a result of pursuing the Spin-Off, including, among others, the following:

execution of the proposed Spin-Off will require significant time and attention from management, which may distract management from the operation of our businesses and the execution of other initiatives that may have been beneficial to us;
our employees may be distracted due to uncertainty about their future roles with each of the separate companies pending the completion of the Spin-Off;
we will be required to pay significant costs and expenses relating to the Spin-Off, such as legal, accounting and other professional fees, whether or not it is completed; and
we may experience negative reactions from the financial markets if we fail to complete the Spin-Off or fail to complete it on a timely basis.

Any of these factors could have a material adverse effect on our business, financial condition, results of operations, cash flows or the price of our common stock.

We may be unable to achieve some or all of the benefits that we expect to achieve from the Spin-Off.

Although we believe that separating our Foodservice business from our Crane business by means of the Spin-Off will provide financial, operational, managerial and other benefits to us and our shareholders, the Spin-Off may not provide such results on the scope or scale we anticipate, and we may not realize any or all of the intended benefits. In addition, we will incur one-time costs and ongoing costs in connection with, or as a result of, the Spin-Off, including costs of operating as independent, publicly-traded companies that the two businesses will no longer be able to share. Those costs may exceed our estimates or could negate some of the benefits we expect to realize. If we do not realize the intended benefits of the Spin-Off or if our costs exceed our estimates, the company could suffer a material adverse effect on its business, financial condition, results of operations and cash flows.

If the Spin-Off of is completed, the trading price of our common stock will decline.
We expect the trading price of our common stock immediately following the Spin-Off, which will only represent the value of our cranes business, to be significantly lower than immediately prior to the Spin-Off because the trading price for our common stock will no longer reflect the value of our foodservice business.

Following the Spin-Off, the aggregate value of your common stock of (a) the company and (b) MFS may be less than the aggregate value at which the company's common stock might have traded had the Spin-Off not occurred.
The common stock of (a) the company and (b) the MFS that you may hold following the Spin-Off may collectively trade at an aggregate value less than the value at which the company's common stock might have traded had the Spin-Off not occurred due to, among other factors, the expected or actual future performance of either the company or MFS as a separate, independent company and the future shareholder base and market for the company's common stock and the shares of MFS.

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There could be significant liability if the Spin-Off is determined to be a taxable transaction.

A condition to the Spin-Off is our receipt of an opinion from our legal counsel substantially to the effect that the Spin-Off and certain related transactions will qualify as tax-free to us and our shareholders under Section 355, 368 and related provisions of the Internal Revenue Code of 1986, as amended (the “Tax Code”), except to the extent of any cash our shareholders receive in lieu of fractional shares of the common stock of MFS. Any such opinion is not binding on the IRS. Accordingly, the IRS may reach conclusions with respect to the Spin-Off that are different from the conclusions reached in the opinion. The opinion will rely on certain facts, assumptions, representations and undertakings made by us regarding the past and future conduct of the cranes and foodservice businesses and other matters, which, if incomplete, incorrect or not satisfied, could alter the conclusions of the party giving such opinion.
If the Spin-Off and certain related transactions are ultimately determined to be taxable, the Spin-Off could be treated as a taxable dividend to our shareholders for U.S. federal income tax purposes, and our shareholders could incur significant federal income tax liabilities. In addition, we would recognize a taxable gain to the extent that the fair market value of our common stock exceeds our tax basis in such stock on the date of the Spin-Off. Moreover, while in some instances, based upon agreements we expect to enter into governing the Spin-Off, MFS will be required to indemnify us for certain taxes related to the Spin-Off, such agreements are not binding on the IRS and, as a legal matter, we are jointly and severally liable for any U.S. federal consolidated income taxes (and certain state and local income taxes) imposed on us or MFS for the taxable year of the Spin-Off and for prior taxable years.

After the Spin-Off, certain of our directors and officers may have actual or potential conflicts of interest because of their equity ownership of MFS and relationships with the directors and officers of MFS.

Certain of the persons we expect to be our executive officers and directors following the Spin-Off will have professional relationships with persons will be the executive officers, directors or employees of MFS following the Spin-Off. In addition, because of their ownership of our common stock, following the Spin-Off, certain of our directors and executive officers will own common stock in the foodservice, and the individual holdings may be significant for some of these individuals compared to their total assets. These relationships and financial interests may create, or may create the appearance of, conflicts of interest when these directors and officers are faced with decisions that could have different implications for the company and MFS. For example, potential conflicts of interest could arise in connection with the resolution of any dispute that may arise between MFS and the company regarding the terms of the agreements governing the Spin-Off and the relationship thereafter between the companies.

Potential liabilities may arise under fraudulent conveyance and transfer laws and legal capital requirements, which could have an adverse effect on our financial condition and our results of operations.

In the event that, following the Spin-Off, any entity involved in the Spin-Off fails to pay its creditors or enters insolvency proceedings, the transactions related to the Spin-Off may be challenged under U.S. federal, U.S. state and foreign fraudulent conveyance and transfer laws, as well as legal capital requirements governing distributions and similar transactions. If a court were to determine under these laws that, (a) at the time of the Spin-Off, the entity in question (1) was insolvent; (2) was rendered insolvent by reason of the Spin-Off; (3) had remaining assets constituting unreasonably small capital; (4) intended to incur, or believed it would incur, debts beyond its ability to pay such debts as they matured; or (b) the transaction in question failed to satisfy applicable legal capital requirements, the court could determine that the Spin-Off was voidable, in whole or in part. Subject to various defenses, the court could then require us or other recipients of value in connection with the Spin-Off (potentially including our shareholders as recipients of shares of the common stock of MFS in connection with the Spin-Off), as the case may be, to turn over value to other entities involved in the Spin-Off and contemplated transactions for the benefit of unpaid creditors. The measure of insolvency and applicable legal capital requirements will vary depending upon the jurisdiction whose law is being applied.

RISKS RELATING TO OUR BUSINESS

Sales of our products are cyclical and/or are otherwise sensitive to volatile or variable factors. A downturn or weakness in overall economic activity or fluctuations in those other factors can have a material adverse effect on us.

Historically, sales of products that we manufacture and sell have been subject to cyclical variations caused by changes in general economic conditions and other factors. In particular, the demand for our Crane products is cyclical and is impacted by the strength of the economy generally, the availability of financing and other factors, including crude oil prices, that may have

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an effect on the level of construction activity on an international, national or regional basis. During periods of expansion in construction activity, we generally have benefited from increased demand for our products. Conversely, during recessionary periods, we have been adversely affected by reduced demand for our products. In addition, the strength of the economy generally may affect the rates of expansion, consolidation, renovation and equipment replacement within the restaurant, lodging, convenience store and healthcare industries, which may affect the performance of our Foodservice segment. Furthermore, any future economic recession may impact leveraged companies, such as Manitowoc, more than competing companies with less leverage and may have a material adverse effect on our financial condition, results of operations and cash flows.

Products in our Crane segment also depend in part on federal, state, local and foreign governmental spending and appropriations, including infrastructure, security and defense outlays. Reductions in governmental spending can reduce demand for our products, which in turn can affect our performance. Weather conditions can substantially affect our Foodservice segment, as relatively cool summer weather and cooler-than-normal weather in hot climates tend to decrease sales of ice and beverage dispensers. Our sales depend in part upon our customers’ replacement or repair cycles. Adverse economic conditions may cause customers to forego or postpone new purchases in favor of repairing existing machinery.

If we are unable to sufficiently adjust to market conditions, among other potential adverse effects on our financial condition, results of operations and cash flows, we could fail to deliver on planned results, fall short of analyst and investor expectations, incur high fixed costs, and/or fail to benefit from higher than expected customer demand resulting in loss of market share.

Our operational results are dependent on how well we can scale our manufacturing capacity and resources to the level of our customers’ demand.

We operate in industries that require manufacturers to make highly efficient use of manufacturing capacity. Insufficient or excess capacity threatens our ability to generate competitive profit margins and may expose us to liabilities related to contract commitments. Adapting or modifying our capacity is difficult, as modifications take substantial time to execute and, in some cases, may require regulatory approval. Additionally, delivering product during process or facility modifications requires special coordination. The cost and resources required to adapt our capacity, such as through facility acquisitions, facility closings, or process moves between facilities, may negate any planned cost reductions or may result in costly delays, product quality issues or material shortages, all of which could adversely affect our operational results and our reputation with our customers.

Price increases in some materials and sources of supply could affect our profitability.

We use large amounts of steel, stainless steel, aluminum, copper and electronic controls, among other items, in the manufacture of our products. Occasionally, market prices of some of our key raw materials increase significantly. If in the future we are not able to reduce product costs in other areas or pass raw material price increases on to our customers, our margins could be adversely affected. In addition, because we maintain limited raw material and component inventories, even brief unanticipated delays in delivery by suppliers - including those due to capacity constraints, labor disputes, impaired financial condition of suppliers, weather emergencies or other natural disasters - may impair our ability to satisfy our customers and could adversely affect our financial performance.

To better manage our exposures to certain commodity price fluctuations, we regularly hedge our commodity exposures through financial markets. Through this hedging program we fix the future price for a portion of these commodities utilized in the production of our products. To the extent that our hedging is not successful in fixing commodity prices that are favorable in comparison to market prices at the time of purchase, we would experience a negative impact on our profit margins compared to the margins we would have realized if these price commitments were not in place, which may adversely affect our results of operations, financial condition and cash flows in future periods.

Our success depends on our ability to attract and retain key personnel.

Our success depends to a large extent upon our ability to attract and retain key executives, managers and skilled personnel. The loss of the services of one or more of these key employees could have an adverse effect, at least in the short to medium term, on significant aspects of our business, including strategic planning and product development. Generally, our key employees are not bound by employment or non-competition agreements, and we cannot be sure that we will be able to retain our key officers and employees and the risks may increase as a result of or following the Spin-Off. If certain subject-matter experts or employees with specialized skills move to employment elsewhere, we will incur significant costs in hiring, training, developing and retaining their replacements.


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Because we participate in industries that are highly competitive, our net sales and profits could decline as we respond to competition.

We sell most of our products in highly competitive industries. We compete in each of those industries based on product design, quality of products, quality and responsiveness of product support services, product performance, maintenance costs and price. Some of our competitors may have greater financial, marketing, manufacturing and distribution resources than we do. We cannot be certain that our products and services will continue to compete successfully with those of our competitors or that we will be able to retain our customer base or improve or maintain our profit margins on sales to our customers, any of which could materially and adversely affect our financial condition, results of operations and cash flows.

If we do not develop new and innovative products or if customers in our markets do not accept them, our results would be negatively affected.

Our products must be kept current to meet our customers’ needs. To remain competitive, we therefore must develop new and innovative products on an on-going basis, and we invest significantly in the research and development of new products. If we do not successfully develop innovative products, it may be difficult to differentiate our products from our competitors’ products and satisfy regulatory requirements, and our sales and results would suffer.

If we do not meet customers’ product quality and reliability standards/expectations, we may experience increased or unexpected product warranty claims and other adverse consequences to our business.

Product quality and reliability are significant factors influencing customers' decisions to purchase our products. Inability to maintain the high quality of our products relative to the perceived or actual quality of similar products offered by competitors could result in the loss of market share, loss of revenue, reduced profitability, an increase in warranty costs and/or damage to our reputation.

Product quality and reliability are determined in part by factors that are not entirely within our control. We depend on our suppliers for parts and components that meet our standards. If our suppliers fail to meet those standards, we may not be able to deliver the quality of products that our customers expect, which may impair revenue and our reputation and lead to higher warranty costs.

We provide our customers a warranty covering workmanship, and in some cases materials, on products we manufacture. Our warranty generally provides that products will be free from defects for periods ranging from 12 months to 60 months with certain equipment having longer term warranties. If a product fails to comply with the warranty, we may be obligated, at our expense, to correct any defect by repairing or replacing the defective product. Although we maintain warranty reserves in an amount based primarily on the number of units shipped and on historical and anticipated warranty claims, there can be no assurance that future warranty claims will follow historical patterns or that we can accurately anticipate the level of future warranty claims. An increase in the rate of warranty claims or the occurrence of unexpected warranty claims could materially and adversely affect our financial condition, results of operations and cash flows.

Some of our customers rely on financing with third parties to purchase our products, and we may incur expenses associated with our assistance to customers in securing third party financing.

A portion of our sales is financed by third-party finance companies on behalf of our customers. The availability of financing from third parties is affected by general economic conditions, the creditworthiness of our customers and the estimated residual value of our equipment. In certain transactions we provide residual value guarantees and buyback commitments to our customers or the third-party financial institutions. Deterioration in the credit quality of our customers or the overall health of the banking industry could negatively impact our customer’s ability to obtain the resources needed to make purchases of our equipment or their ability to obtain third-party financing. In addition, if the actual value of the equipment for which we have provided a residual value guaranty declines below the amount of our guaranty, we may incur additional costs, which may negatively impact our financial condition, results of operations and cash flows.

We have significant manufacturing and sales of our products outside of the United States, which may present additional risks to our business.

For the years ended December 31, 2015, 2014 and 2013, approximately 46%, 50% and 51%, respectively, of our net sales were attributable to products sold outside of the United States. Expanding the company’s international sales is part of our growth strategy. International operations generally are subject to various risks, including political, military, religious and economic

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instability, local labor market conditions, the imposition of foreign tariffs, the impact of foreign government regulations, the effects of income and withholding tax, governmental expropriation, and differences in business practices. We may incur increased costs and experience delays or disruptions in product deliveries and payments in connection with our international sales, manufacturing and the integration of new facilities that could cause loss of revenue or increased cost. Unfavorable changes in the political, regulatory and business climate and currency devaluations of various foreign jurisdictions could have a material adverse effect on our financial condition, results of operations and cash flows.

Our results of operations may be negatively impacted by product liability lawsuits.

Our business exposes us to potential product liability risks that are inherent in the design, manufacture, sale and use of our products, especially our crane products. Certain of our businesses also have experienced claims relating to past asbestos exposure. Neither we nor our affiliates have to date incurred material costs related to these asbestos claims. We vigorously defend ourselves against current claims and intend to do so against future claims. However, a substantial increase in the number of claims that are made against us or the amounts of any judgments or settlements could materially and adversely affect our reputation and our financial condition, results of operations and cash flows.

If we fail to protect our intellectual property rights or maintain our rights to use licensed intellectual property, our business could be adversely affected.

Our patents, trademarks and licenses are important in the operation of our businesses. Although we intend to protect our intellectual property rights vigorously, we cannot be certain that we will be successful in doing so. Third parties may assert or prosecute infringement claims against us in connection with the services and products that we offer, and we may or may not be able to successfully defend these claims. Litigation, either to enforce our intellectual property rights or to defend against claimed infringement of the rights of others, could result in substantial costs and in a diversion of our resources. In addition, if a third party would prevail in an infringement claim against us, then we would likely need to obtain a license from the third party on commercial terms, which would likely increase our costs. Our failure to maintain or obtain necessary licenses or an adverse outcome in any litigation relating to patent infringement or other intellectual property matters could have a material adverse effect on our financial condition, results of operations and cash flows.

Our operations and profitability could suffer if we experience problems with labor relations.
As of December 31, 2015, we employed approximately 11,000 people and had labor agreements with 13 local unions in North America. A large majority of our European employees belong to European trade unions. We have three trade unions in China and one trade union in India. During 2015, three of our union contracts expired and were successfully renegotiated without incident. In 2016, six union contracts will expire. Any significant labor relations issues could have an adverse effect our operations, reputation, results of operations and financial condition.
Our leverage may impair our operations and financial condition.

As of December 31, 2015, our total consolidated debt was $1,413.6 million as compared to consolidated debt of $1,523.5 million as of December 31, 2014, including the value of related interest rate hedging instruments. If the Spin-Off is completed, on March 4, 2016, as currently planned, we expect to incur substantial indebtedness in connection with the Spin-Off, including $260 million in aggregate principal amount of 12.75% senior secured second lien notes due 2021 and as much as $225 million in borrowings under a new asset-based credit facility, as well as capital leases and other debt. We also expect to enter into a securitization facility pursuant to which we can securities our trade receivables. If the Spin-Off is completed, we plan to use the proceeds from these new debt facilities, together with the proceeds of a cash dividend paid by MFS to us, to repay or otherwise terminate our currently existing debt facilities.

The combined nature of our enterprise, including both the cranes and foodservice businesses, has historically enabled us to assist with working capital requirements on a short-term basis and provided other financial support functions. After the Spin-Off, we will not be able to rely on MFS’s earnings, assets or cash flows, and we will be responsible for servicing our own debt, obtaining and maintaining sufficient working capital and paying dividends.

In addition, our debt could have important consequences, including increasing our vulnerability to general adverse economic and industry conditions; requiring a substantial portion of our cash flows from operations be used for the payment of interest rather than to fund working capital, capital expenditures, acquisitions and general corporate requirements; limiting our ability to obtain additional financing; and limiting our flexibility in planning for, or reacting to, changes in our business and the industries in which we operate.


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The agreements governing our debt include covenants that restrict, among other matters, our ability to incur additional debt; pay dividends on or repurchase our equity; make investments; and consolidate, merge or transfer all or substantially all of our assets. Certain of our debt facilities require or will require us to maintain specified financial ratios and satisfy certain financial condition tests. Our ability to comply with these covenants may be affected by events beyond our control, including prevailing economic, financial and industry conditions. These covenants may also require that we take disadvantageous actions, including reducing spending on marketing, advertising and new product innovation, reducing future financing for working capital, capital expenditures and general corporate purposes, selling assets or dedicating an unsustainable level of cash flow from operations to the payment of principal and interest on our indebtedness. Our substantial leverage could also put us at a disadvantage compared to our competitors that are less leveraged. We cannot be certain that we will meet any future financial tests or that the lenders will waive any failure to meet those tests. See additional discussion in Notes 13, “Debt,” and 27, “Subsequent Events,” to our Consolidated Financial Statements.

If we default under our debt agreements, our lenders could elect to declare all amounts outstanding under our debt agreements to be immediately due and payable and could proceed against any collateral securing the debt. Under those circumstances, in the absence of readily-available refinancing on favorable terms, we might elect or be compelled to enter bankruptcy proceedings, in which case our shareholders could lose the entire value of their investment in our common stock.

An inability to successfully manage the implementation of a global enterprise resource planning (ERP) system in our Crane segment could adversely affect our operating results.

We are in the process of implementing a new global ERP system in the Crane segment. This system will replace many of our existing operating and financial systems. Such an implementation is a major undertaking both financially and from a management and personnel perspective. Should the system not be implemented successfully and within budget, or if the system does not perform in a satisfactory manner, it could be disruptive and adversely affect our operations and results of operations, including the ability of the company to report accurate and timely financial results.

We are exposed to the risks of changes in interest rates and foreign currency fluctuations.

We expect to incur in the future indebtedness that accrues interest at a variable rate, including a new asset-based credit facility. Increases in interest rates will reduce our operating cash flows and could hinder our ability to fund our operations, capital expenditures, acquisitions or dividends. In such cases we may seek to reduce our exposure to fluctuations in interest rates, but hedging our exposure carries the risk that we may forego the benefits we would otherwise experience if interest rates were to change in our favor. Developing an effective strategy for dealing with movements in interest rates is complex, and no strategy is guaranteed to completely insulate us from the risks associated with such fluctuations.

Additionally, some of our operations are or will be conducted by subsidiaries in foreign countries. The results of the operations and the financial position of these subsidiaries will be reported in the relevant foreign currencies and then translated into U.S. dollars at the applicable exchange rates for inclusion in our consolidated financial statements, which are stated in U.S. dollars. The exchange rates between many of these currencies and the U.S. dollar have fluctuated significantly in recent years and may continue to fluctuate significantly in the future. Such fluctuations may have a material effect on our results of operations and financial position and may significantly affect the comparability of our results between financial periods.

We also incur currency transaction risk whenever one of our operating subsidiaries enters into a transaction using a different currency than its functional currency. We attempt to reduce currency transaction risk whenever one of our operating subsidiaries enters into a material transaction using a different currency than its functional currency by:

matching cash flows and payments in the same currency;
direct foreign currency borrowing; and
entering into foreign exchange contracts for hedging purposes.

However, we may not be able to hedge this risk completely or at an acceptable cost, which may adversely affect our results of operations, financial condition and cash flows in future periods.

Changes to tax laws or exposure to additional tax liabilities may have a negative impact on our operating results.

Tax policy reform continues to be a topic of discussion in the United States. A significant change to the tax system in the United States, including changes to the taxation of international income, could have a material adverse effect upon our results of operations. We regularly undergo tax audits in various jurisdictions in which we operate. Although we believe that our tax estimates are reasonable and that we prepare our tax filings in accordance with all applicable tax laws, the final determination

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with respect to any tax audits, and any related litigation, could be materially different from our estimates or from our historical income tax provisions and accruals. The results of an audit or litigation could have a material adverse effect on operating results and/or cash flows in the periods for which that determination is made. In addition, future period earnings may be adversely impacted by litigation costs, settlements, penalties, and/or interest assessments.

Our business and/or reputation could be negatively affected as a result of actions of activist shareholders, and such activism could impact the trading value of our securities.

Certain of our shareholders have publicly or privately expressed views with respect to the operation of our business, our business strategy, corporate governance considerations or other matters that may not be fully aligned with our own. Responding to actions by activist shareholders can be costly and time-consuming, disrupt our operations and divert the attention of management and our employees. Perceived uncertainties as to our future direction may result in the loss of potential business opportunities, damage to our reputation, and may make it more difficult to attract and retain qualified directors, personnel and business partners. These actions could also cause our stock price to experience periods of volatility.
Activist shareholders have made, and may in the future make, strategic proposals, suggestions, or requests for changes concerning the operation of our business, our business strategy, corporate governance considerations, or other matters. We cannot predict, and no assurances can be given, as to the outcome or timing of any consequences arising from these actions, and any such consequences may impact the value of our securities.

Environmental liabilities that may arise in the future could be material to us.

Our operations, facilities and properties are subject to extensive and evolving laws and regulations pertaining to air emissions, wastewater discharges, the handling and disposal of solid and hazardous materials and wastes, the remediation of contamination, and otherwise relating to health, safety and the protection of the environment. As a result, we are involved from time to time in administrative or legal proceedings relating to environmental and health and safety matters, and have in the past and will continue to incur capital costs and other expenditures relating to such matters.

We cannot be certain that identification of presently unidentified environmental conditions, more vigorous enforcement by regulatory authorities, or other unanticipated events will not arise in the future and give rise to additional environmental liabilities, compliance costs and/or penalties that could be material. Further, environmental laws and regulations are constantly evolving and it is impossible to predict accurately the effect they may have upon our financial condition, results of operations or cash flows.

Security breaches and other disruptions could compromise our information and expose us to liability, which would cause our business and reputation to suffer.

In the ordinary course of our business, we collect and store sensitive data, including our proprietary business information and that of our customers, suppliers and business partners, as well as personally identifiable information of our customers and employees, in our internal and external data centers, cloud services, and on our networks. The secure processing, maintenance and transmission of this information is critical to our operations and business strategy. Despite our security measures, our information technology and infrastructure, and that of our partners, may be vulnerable to malicious attacks or breached due to employee error, malfeasance or other disruptions, including as a result of rollouts of new systems. Any such breach or operational failure would compromise our networks and/or that of our partners and the information stored there could be accessed, publicly disclosed, lost or stolen. Any such access, disclosure or other loss of information could result in legal claims or proceedings and/or regulatory penalties, disrupt our operations, damage our reputation, and/or cause a loss of confidence in our products and services, which could adversely affect our business.

Our inability to recover from natural or man-made disasters could adversely affect our business.

Our business and financial results may be affected by certain events that we cannot anticipate or that are beyond our control, such as natural or manmade disasters, national emergencies, significant labor strikes, work stoppages, political unrest, war or terrorist activities that could curtail production at our facilities and cause delayed deliveries and canceled orders. In addition, we purchase components and raw materials and information technology and other services from numerous suppliers, and, even if our facilities were not directly affected by such events, we could be affected by interruptions at such suppliers. Such suppliers may be less likely than our own facilities to be able to quickly recover from such events and may be subject to additional risks such as financial problems that limit their ability to conduct their operations. We cannot assure you that we will have insurance to adequately compensate us for any of these events.


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Our international sales and operations are subject to applicable laws relating to trade, export controls and foreign corrupt practices, the violation of which could adversely affect our operations.

We must comply with all applicable international trade, customs, export controls and economic sanctions laws and regulations of the United States and other countries.  We are also subject to the Foreign Corrupt Practices Act and other anti-bribery laws that generally bar bribes or unreasonable gifts to foreign governments or officials.  Changes in trade sanctions laws may restrict our business practices, including cessation of business activities in sanctioned countries or with sanctioned entities, and may result in modifications to compliance programs.  Violation of these laws or regulations could result in sanctions or fines and could have a material adverse effect on our financial condition, results of operations and cash flows.

Compliance with regulations related to conflict minerals may force us to incur additional expenses and affect the manufacturing and sale of our products.

In recent years, governments in both the U.S. and Europe have implemented or proposed regulations governing the use of certain minerals, including tin, tantalum, tungsten and gold (“conflict minerals”). In the U.S., SEC rules require disclosures related to the use of conflict minerals that are necessary to the functionality or production of a product manufactured, or contracted to be manufactured, by an SEC-reporting company, that are sourced from the Democratic Republic of the Congo and other countries in central Africa. In the European Union, proposed regulations would require similar disclosures, and may encompass other geographic regions outside of central Africa. 

These disclosure requirements could affect the sourcing and availability of some of the minerals used in the manufacture of our products.  Our supply chain is complex, and if we are not able to conclusively verify the origins for all conflict minerals used in our products or that our products are “conflict free,” we may face reputational challenges with our customers or investors.  Furthermore, we may also encounter challenges to satisfy customers who require that our products be certified as “conflict free,” which could place us at a competitive disadvantage if we are unable to do so. Additionally, as there may be only a limited number of suppliers offering “conflict free” metals, we cannot be sure that we will be able to obtain necessary metals from such suppliers in sufficient quantities or at competitive prices.  Finally, because European regulations have not yet been finalized, it is difficult for us to determine whether and how we will establish a compliance program. For all of these reasons, we could incur significant costs related to the compliance process, and face equally significant costs in satisfying the disclosure requirements.




Item 1B.  UNRESOLVED STAFF COMMENTS
The company has received no written comments regarding its periodic or current reports from the staff of the Securities and Exchange Commission (SEC) that were issued 180 days or more preceding the end of our fiscal year 2015 that remain unresolved.

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Item 2.  PROPERTIES
The following table outlines the principal facilities the company owns or leases as of December 31, 2015.
Facility Location
 
Type of Facility
 
Approximate
Square Footage
 
Owned/Leased
Corporate
 
 
 
 
 
 
Manitowoc, Wisconsin
 
Corporate Headquarters
 
34,000
 
Owned
Manitowoc, Wisconsin
 
Office
 
5,000
 
Leased
Manitowoc, Wisconsin
 
Hangar Ground Lease
 
31,320
 
Leased
Cranes and Related Products
 
 
 
 
 
 
Americas
 
 
 
 
 
 
Bauxite, Arkansas
 
Manufacturing/Repair
 
36,000
 
Owned
Shady Grove, Pennsylvania
 
Manufacturing/Office
 
1,330,000
 
Owned
Manitowoc, Wisconsin
 
Manufacturing/Office
 
570,000
 
Owned
Manitowoc, Wisconsin (1)
 
Office
 
17,175
 
Leased
Manitowoc, Wisconsin
 
Land
 
250,200
 
Leased
Port Washington, Wisconsin
 
Manufacturing
 
81,029
 
Owned
Passo Fundo, Brazil
 
Manufacturing/Office
 
300,000
 
Owned
Quincy, Pennsylvania
 
Manufacturing
 
21,000
 
Owned
EMEA
 
 
 
 
 
 
Wilhelmshaven, Germany
 
Manufacturing/Office and Storage
 
410,000
 
Owned/Leased
Presov, Slovak Republic
 
Manufacturing/Office
 
295,300
 
Owned
Fanzeres, Portugal
 
Manufacturing
 
362,891
 
Owned
Baltar, Portugal
 
Manufacturing/Office
 
241,876
 
Owned
Niella Tanaro, Italy
 
Manufacturing
 
370,016
 
Owned
Langenfeld, Germany
 
Office/Storage and Field Testing
 
80,300
 
Leased
Moulins, France
 
Manufacturing/Office
 
355,000
 
Owned
Charlieu, France
 
Manufacturing/Office
 
323,000
 
Owned
Dardilly, France
 
Office
 
82,000
 
Leased
Vitrolles, France
 
Office
 
16,000
 
Owned
Dry, France
 
Office
 
93,100
 
Leased
Buckingham, United Kingdom
 
Office/Storage
 
78,000
 
Leased
Lusigny, France
 
Crane Testing Site
 
10,000
 
Owned
Saint Pierre de Chandieu, France
 
Warehouse/Office
 
434,565
 
Leased
Saint Ouen l’Aumone, France
 
Office
 
7,800
 
Leased
Dubai, United Arab Emirates
 
Office/Workshop
 
10,000
 
Leased
APAC
 
 
 
 
 
 
Zhangjiagang, China
 
Manufacturing
 
800,000
 
Owned
Pune, India
 
Manufacturing
 
190,000
 
Leased
Shirwal, India
 
Land
 
1,560,700
 
Owned
Singapore (1)
 
Office/Storage
 
54,000
 
Leased
Sydney, Australia (1)
 
Office/Storage/Workshop
 
61,000
 
Leased


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Foodservice Equipment*
Americas
 
 
 
 
 
 
New Port Richey, Florida (2)
 
Corporate Headquarters
 
42,000
 
Owned
Manitowoc, Wisconsin (2)
 
Manufacturing/Office
 
376,000
 
Owned
Parsons, Tennessee (1)
 
Manufacturing
 
120,000
 
Owned
Sellersburg, Indiana (2)
 
Manufacturing/Office
 
146,000
 
Owned
Tijuana, Mexico (1)
 
Manufacturing
 
111,000
 
Leased
Shreveport, Louisiana (1), (2)
 
Manufacturing/Office
 
539,000
 
Owned
Mt. Pleasant, Michigan (2)
 
Manufacturing/Office
 
345,000
 
Owned
Baltimore, Maryland
 
Manufacturing/Office
 
16,000
 
Leased
Cleveland, Ohio (1), (2)
 
Manufacturing/Office/Warehouse
 
391,000
 
Owned/Leased
Covington, Tennessee (1)
 
Manufacturing/Office/Warehouse
 
386,000
 
Owned/Leased
Concord, Ontario, Canada
 
Manufacturing/Office
 
116,000
 
Leased
Mississauga, Ontario, Canada (1), (2)
 
Manufacturing/Office/Warehouse
 
186,000
 
Leased
Monterrey, Mexico
 
Manufacturing/Office
 
303,750
 
Leased
EMEA
 
 
 
 
 
 
Guildford, United Kingdom (2)
 
Office
 
35,000
 
Leased
Eglfing, Germany (2)
 
Manufacturing/Office/Warehouse
 
130,000
 
Leased
Herisau, Switzerland (2)
 
Manufacturing/Office
 
26,974
 
Leased
Halesowen, United Kingdom (2)
 
Manufacturing/Office
 
86,000
 
Leased
Sheffield, United Kingdom
 
Manufacturing/Office
 
100,000
 
Leased
APAC
 
 
 
 
 
 
Foshan, China (2)
 
Manufacturing/Office/Warehouse
 
125,000
 
Leased
Shangahi, China (2)
 
Manufacturing/Office
 
29,000
 
Leased
Prachinburi, Thailand (2)
 
Manufacturing/Office/Warehouse
 
438,608
 
Owned
Singapore
 
Manufacturing/Office
 
93,300
 
Owned/Leased
Hangzhou, China (2)
 
Manufacturing/Office
 
260,000
 
Owned/Leased
Samutprakarn, Thailand
 
Office
 
4,305
 
Leased
 
*
As noted above, after the Spin-Off, the Foodservice business will no longer be part of the company, and the properties identified as being in Foodservice segment will no longer be owned, leased or operated by the company.
(1)    There are multiple separate facilities within these locations.
(2)    Serves also as a research and development center.
In addition, the company leases sales office and warehouse space for the Crane segment in Breda, The Netherlands; Begles, France; Dole, France; Nantes, France; Toulouse, France; Nice, France; Lainate, Italy; Lagenfeld, Germany; Warsaw, Poland; Melbourne, Australia; Brisbane, Australia; Beijing, China; Chengdu, China; Guangzhou, China; Shanghai, China; Dubai, UAE; Makati City, Philippines; Cavite, Philippines; Ahmedabad, India; Chennai, India; Hyderabad, India; Gurgaon, India; Kolkatta, India; Moscow, Russia; Jeffersonville, Indiana; Manitowoc, Wisconsin; Monterrey, Mexico; Sao Paulo, Brazil; Recife, Brazil; Santiago, Chile; Johannesburg, South Africa; Ellis Ras, South Africa; Rio de Janeiro, Brazil; and Vitoria, Brazil. The company leases office and/or warehouse space for the Foodservice segment in Manitowoc, Wisconsin; Irwindale, California; Odessa, Florida; Tampa, Florida; Fort Wayne, Indiana; Jeffersonville, Indiana; Herborn, Germany; Kuala Lumpur, Malaysia; Selangor, Malaysia; Barcelona, Spain; Naucalpan de Juarez, Mexico; Gurgaon, Mumbai and Bangalore, India; as well as Mexico City, Mexico. 
See Note 23, “Leases,” to the Consolidated Financial Statements included in Part II, Item 8 of this Form 10-K for additional information regarding leases.

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Item 3.  LEGAL PROCEEDINGS
Our global operations are governed by laws addressing the protection of the environment and employee safety and health.  Under various circumstances, these laws impose civil and criminal penalties and fines, as well as injunctive and remedial relief, for noncompliance.  They also may require remediation at sites where company related substances have been released into the environment.
We have expended substantial resources globally, both financial and managerial, to comply with the applicable laws and regulations, and to protect the environment and our workers.  We believe we are in substantial compliance with such laws and regulations and we maintain procedures designed to foster and ensure compliance.  However, we have been and may in the future be subject to formal or informal enforcement actions or proceedings regarding noncompliance with such laws or regulations, whether or not determined to be ultimately responsible in the normal course of business.  Historically, these actions have been resolved in various ways with the regulatory authorities without material commitments or penalties to the company.
For information concerning other contingencies and uncertainties, see Note 19, “Contingencies and Significant Estimates,” to the Consolidated Financial Statements included in Part II, Item 8 of this Form 10-K.
Item 4.  MINE SAFETY DISCLOSURE
Not Applicable.


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EXECUTIVE OFFICERS OF THE REGISTRANT
Each of the following officers of the company has been elected by the Board of Directors. This section also sets forth certain information about the individuals who are expected to serve as our officers following the Spin-Off if the Spin-Off is completed as planned on March 4, 2016.  The information presented below is as of February 29, 2016.
Name
 
Age
 
Position With The Registrant
 
Principal
Position Held
Since
Kenneth W. Krueger
 
59
 
Chairman, President, and Interim Chief Executive Officer
 
2015
 
 
 
 
 
 
 
Barry L. Pennypacker
 
54
 
President and Chief Executive Officer of Manitowoc Cranes
 
2015
 
 
 
 
 
 
 
Carl J. Laurino
 
54
 
Senior Vice President and Chief Financial Officer
 
2004
 
 
 
 
 
 
 
Thomas G. Musial
 
64
 
Senior Vice President of Human Resources and Administration
 
2000
 
 
 
 
 
 
 
Maurice D. Jones
 
56
 
Senior Vice President, General Counsel and Secretary
 
2004
 
 
 
 
 
 
 
Josef Matosevic
 
44
 
Senior Vice President and Chief Operating Officer
 
2015
 
 
 
 
 
 
 
Hubertus M. Muehlhaeuser
 
46
 
President and Chief Executive Officer
 
2015
 
 
 
 
 
 
 
Therese C. Houlahan
 
38
 
Treasurer
 
2014
 
 
 
 
 
 
 
Larry J. Weyers
 
53
 
Executive Vice president of Manitowoc Cranes
 
2015
Kenneth W. Krueger was named chairman, president, and interim chief executive officer in 2015. Prior to assuming this role, Mr. Krueger served on Manitowoc’s Board of Directors since 2004. Prior to joining Manitowoc, Mr. Krueger was the chief operating officer of Bucyrus International, Inc., a global leader in mining equipment manufacturing headquartered in South Milwaukee, Wisconsin. Other executive leadership roles previously held by Mr. Krueger include senior vice president and chief financial officer for A.O. Smith Corporation, and vice president-finance and planning for the Hydraulics, Semiconductor Equipment, and Specialty Controls Group of Eaton Corporation. Mr. Krueger will resign from the offices listed above as of the completion of the Spin-Off.
Barry L. Pennypacker was appointed to the positions of president and chief executive officer of the company’s cranes business in December 2015 and, under the terms of an offer letter between Mr. Pennypacker and the company, Mr. Pennypacker will become the company’s president and chief executive officer following the Spin-Off. Mr. Pennypacker has served, since 2013, as founder, president and chief executive officer of Quantum Lean LLC, a privately held manufacturer and supplier of precision components. He previously served as president and chief executive officer, as well as a director, of Gardner Denver, Inc., a manufacturer and marketer of engineered industrial machinery and related parts and services, from 2008 until 2012. Prior to joining Gardner Denver, Inc. in 2008, Mr. Pennypacker served in positions with increasing responsibility at Westinghouse Air Brake Technologies Corporation, a worldwide provider of technology-based equipment and services for the rail industry, from 1999 until 2008, with his last position being vice president-group executive. He previously served as director, Worldwide Operations, Stanley Fastening Systems, an operating unit of The Stanley Works, a worldwide producer of tools and security products, and held a number of senior management positions with increasing responsibility with Danaher Corporation, a manufacturer and marketer of professional, medical, industrial and commercial products and services.
Carl J. Laurino was named senior vice president and chief financial officer in 2004.  He had served as treasurer since 2001.  Mr. Laurino joined the company in 2000 as assistant treasurer and served in that capacity until his promotion to treasurer.  Previously, Mr. Laurino spent 15 years in the commercial banking industry with Firstar Bank (n/k/a US Bank), Norwest Bank (n/k/a Wells Fargo), and Associated Bank. 
Thomas G. Musial has been senior vice president of human resources and administration since 2000.  Previously, he was vice president of human resources and administration (1995), manager of human resources (1987), and personnel/industrial relations specialist (1976).

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Maurice D. Jones has been general counsel and secretary since 1999 and was elected vice president in 2002 and a senior vice president in 2004.  Prior to joining the company, Mr. Jones was a shareholder in the law firm of Davis and Kuelthau, S.C., and served as legal counsel for Banta Corporation. Once the Spin-Off is complete, Mr. Jones will resign from his position with the company and will serve as senior vice president, general counsel and secretary of MFS.
Mr. Matosevic was promoted to Senior Vice President of Global Operational Excellence for Manitowoc ParentCo in 2014 after serving as the Executive Vice President - Global Operations and Purchasing for Manitowoc Cranes since early 2012. Prior to joining Manitowoc ParentCo, Mr. Matosevic served in various executive positions with Oshkosh Corporation (NYSE: OSK), a designer, manufacturer and marketer of a broad range of specialty vehicles and vehicle bodies, from 2008-2012, including as that company’s Executive Vice President, Global Manufacturing Operations from 2010-2012, with responsibilities for the defense segment, global operating systems and lean deployment. He previously served as Vice President of Global Operations from 2005 to 2007 and Chief Operating Officer from 2007 to 2008 at Wynnchurch Capital/Android Industries, a sub-assembler and sequencer of complex modules for automotive original equipment manufacturers. Mr. Matosevic has over 20 years of global operating and business experience, with skills and experience in Lean Six Sigma practices, automation, and supply chain development.

Mr. Muehlhaeuser was appointed President and Chief Executive Officer of Manitowoc Foodservice effective July 28, 2015. Prior to his appointment, he had served as Chairman and Managing Partner of Karl-H. Muehlhaeuser GmbH & Co KG, a leader in the development, production, distribution and service of rail-bound and trackless tunneling and mining equipment as well as machinery solutions for concrete and chemical applications, since 2013. He previously served as Senior Vice President and General Manager, Europe/Africa/Middle East for AGCO Corporation (NYSE: AGCO) (“AGCO”), a leading manufacturer and distributor of agricultural equipment and related replacement parts, in 2012. Prior thereto, Mr. Muehlhaeuser was Senior Vice President - Strategy & Integration and General Manager, Eastern Europe/ Asia at AGCO from 2009 to 2011. From 2005 to 2011, Mr. Muehlhaeuser served as Senior Vice President - Strategy & Integration at AGCO, and from 2007 to 2011 he also served as General Manager - Engines. Prior to joining AGCO in 2005, he led the Global Strategy and
Organization Practice at Arthur D. Little, Ltd., an international management consulting firm, was a member of the firm’s Global Management Team and was the firm’s Managing Director, Switzerland. Mr. Muehlhaeuser is Chairman of the Board of Muehlhaeuser Holding Ltd. (Switzerland) and Chairman of the Board of FASTER S.p.A. (Italy). Mr. Muehlhaeuser studied Business Administration at the European Business Schools in Oestrich Winkel and London, as well as the Universidad Argentina de la Empresa, and holds a Master of Business Administration degree from EBS University of Business and Law.

Therese C. Houlahan was named treasurer of the company in March 2014. Previously she served as treasurer of Kaydon Corporation, a diversified manufacturer, in Michigan. Prior to that she held progressive leadership positions at Alberto Culver Company and Hayes Lemmerz International, Inc., as well as at the Comptroller of the Currency.

Larry J. Weyers was appointed as executive vice president of the cranes business in December 2015, following the appointment of Mr. Pennypacker as president and chief executive officer of the cranes business. Prior to that, Mr. Weyers was named senior vice president of the company and president of the cranes business in January 2015.  Mr. Weyers previously served as executive vice president of Cranes America from 2007 to 2014. He has held various other executive management positions with the company’s Crane segment since joining the company in 1998, including executive vice president of Crane Care from 2004 to 2007. Prior to joining the company, Mr. Weyers was General Manager Sales and Marketing for Woods Equipment Company (IL) and held various positions in Kubata Tractor Corporation (CA). Following the Spin-Off, Mr. Weyers is expected to serve as our senior vice president and chief commercial officer.

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PART II
Item 5.  MARKET FOR REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The companys common stock is traded on the New York Stock Exchange under the symbol MTW. (Assuming the Spin-Off occurs, Manitowoc Foodservice, Inc., the spun-off Foodservice business, is expected to trade on the New York Stock Exchange under the symbol MFS.) At December 31, 2015, the approximate number of record shareholders of common stock was 1,975.
The amount and timing of the annual dividend are determined by the Board of Directors at its regular meetings each year, subject to limitations within the company’s Senior Credit Facility described below.  In each of the years ended December 31, 2015, December 31, 2014 and December 31, 2013, the company paid an annual dividend of $0.08 per share in the fourth quarter. The board has not yet determined what its dividend policy will after the Spin-Off; the policy will be dependent on applicable factors at the time of such determination.
The high and low sales prices of the common stock were as follows for 2015, 2014 and 2013
Year Ended
2015
 
2014
 
2013
December 31
High
 
Low
 
Close
 
High
 
Low
 
Close
 
High
 
Low
 
Close
1st Quarter
$
22.91

 
$
17.30

 
$
21.56

 
$
32.80

 
$
22.68

 
$
31.45

 
$
21.35

 
$
15.90

 
$
20.56

2nd Quarter
22.67

 
18.79

 
19.60

 
33.46

 
26.87

 
32.86

 
21.50

 
16.18

 
17.91

3rd Quarter
19.83

 
14.47

 
14.93

 
33.50

 
23.42

 
23.45

 
21.87

 
17.93

 
19.56

4th Quarter
17.68

 
13.86

 
15.35

 
23.36

 
16.24

 
22.10

 
23.68

 
18.12

 
23.32

As noted above, after the Spin-Off, we expect the trading price of our common stock to decline because it will only then represent the value of our Cranes business and no longer represent the value of the Foodservice business. The value of company shares and shares of the separate Foodservice company may not together equal the value of company shares prior to the Spin-Off. See "Risk Factors" above. Under our Senior Credit Facility, we are limited on the amount of dividends we may pay in any one year.  The amount of dividend payments is restricted based on our consolidated total leverage ratio as defined in the credit agreement and is limited along with other restricted payments in aggregate.  If the consolidated total leverage ratio is less than 3.50 to 1.00, total restricted payments are not limited in any given year.  If the consolidated total leverage ratio is less than 4.25 to 1.00 but greater than or equal to 3.50 to 1.00, restricted payments may not exceed $50.0 million per year.  If the consolidated total leverage ratio is less than 5.00 to 1.00 but greater than or equal to 4.25 to 1.00, restricted payments may not exceed $40.0 million per year.  Lastly, if the consolidated total leverage ratio is greater than or equal to 5.00 to 1.00, total restricted payments are limited to $30.0 million per year.





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Total Return to Shareholders
(Includes reinvestment of dividends)
 
Annual Return Percentages
 
Years Ending December 31,
 
2011
 
2012
 
2013
 
2014
 
2015
The Manitowoc Company, Inc.
(29.39
)%
 
71.53
%
 
49.30
%
 
(4.86
)%
 
(30.21
)%
S&P 500 Index
2.11
 %
 
16.00
%
 
32.39
%
 
13.69
 %
 
1.38
 %
S&P 600 Industrial Machinery
(2.67
)%
 
20.56
%
 
38.22
%
 
1.36
 %
 
(17.22
)%
 
 
Indexed Returns
 
Years Ending December 31,
 
2010
 
2011
 
2012
 
2013
 
2014
 
2015
The Manitowoc Company, Inc.
100.00

 
70.61

 
121.11

 
180.82

 
172.04

 
120.06

S&P 500 Index
100.00

 
102.11

 
118.45

 
156.82

 
178.29

 
180.75

S&P 600 Industrial Machinery
100.00

 
97.33

 
117.34

 
162.19

 
164.40

 
136.08


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Table of Contents

Item 6.  SELECTED FINANCIAL DATA
The following selected historical financial data have been derived from the Consolidated Financial Statements of The Manitowoc Company, Inc. The data should be read in conjunction with these financial statements and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Results of the Manitowoc Dong Yue business, the Jackson business, and the Kysor/Warren business in the years presented have been classified as discontinued operations to exclude those results from continuing operations. In addition, the earnings (loss) from discontinued operations include the impact of adjustments to certain retained liabilities for operations sold or closed in periods prior to those presented. For businesses acquired during the time periods presented, results are included in the table from their acquisition date. Amounts are in millions except share and per share data.
 
2015
 
2014
 
2013
 
2012
 
2011
Net Sales
 

 
 

 
 

 
 

 
 

Cranes and Related Products
$
1,865.7

 
$
2,305.2

 
$
2,506.3

 
$
2,427.1

 
$
2,134.7

Foodservice Equipment
1,570.1

 
1,581.3

 
1,541.8

 
1,486.2

 
1,454.6

Total
3,435.8

 
3,886.5

 
4,048.1

 
3,913.3

 
3,589.3

Gross Profit
833.2

 
980.5

 
1,021.8

 
943.0

 
832.9

Earnings from Operations
 

 
 

 
 

 
 

 
 

Cranes and Related Products
64.3

 
163.9

 
218.8

 
170.5

 
118.8

Foodservice Equipment
239.7

 
234.0

 
250.3

 
238.6

 
214.4

Corporate
(58.4
)
 
(53.4
)
 
(64.9
)
 
(63.7
)
 
(61.3
)
Asset impairment expense
(24.4
)
 
(1.1
)
 

 

 

Amortization expense
(34.4
)
 
(35.1
)
 
(35.3
)
 
(36.5
)
 
(37.4
)
Restructuring expense
(14.0
)
 
(9.0
)
 
(4.8
)
 
(9.5
)
 
(5.5
)
Separation expense
(39.4
)
 

 

 

 

Other (expense) income
(0.9
)
 
(0.5
)
 
0.3

 
(2.5
)
 
0.5

Total
132.5

 
298.8

 
364.4

 
296.9

 
229.5

Interest expense
(97.0
)
 
(94.0
)
 
(128.4
)
 
(135.6
)
 
(145.4
)
Amortization of deferred financing fees
(4.2
)
 
(4.4
)
 
(7.0
)
 
(8.2
)
 
(10.4
)
Loss on debt extinguishment
(0.2
)
 
(25.5
)
 
(3.0
)
 
(6.3
)
 
(29.7
)
Other income (expense) - net
25.5

 
(5.5
)
 
(0.8
)
 
0.1

 
2.3

Earnings from continuing operations before income taxes
56.6

 
169.4

 
225.2

 
146.9

 
46.3

(Benefit) provision for taxes on income
(6.7
)
 
8.6

 
36.1

 
38.0

 
13.6

Earnings from continuing operations
63.3

 
160.8

 
189.1

 
108.9

 
32.7

Discontinued operations:
 

 
 

 
 

 
 

 
 

Earnings (loss) from discontinued operations, net of income taxes
0.2

 
(1.4
)
 
(18.8
)
 
(16.3
)
 
(15.8
)
Loss on sale of discontinued operations, net of income taxes

 
(11.0
)
 
(2.7
)
 

 
(34.6
)
Net earnings (loss)
63.5

 
148.4

 
167.6

 
92.6

 
(17.7
)
Less: Net earnings (loss) attributable to noncontrolling interest, net of tax

 
3.9

 
25.8

 
(9.1
)
 
(6.5
)
Net earnings (loss) attributable to Manitowoc
$
63.5

 
$
144.5

 
$
141.8

 
$
101.7

 
$
(11.2
)
Amounts attributable to the Manitowoc common shareholders:
 

 
 

 
 

 
 

 
 

Earnings from continuing operations
$
63.3

 
$
156.5

 
$
154.8

 
$
109.7

 
$
33.0

Earnings (loss) from discontinued operations, net of income taxes
0.2

 
(1.0
)
 
(10.3
)
 
(8.0
)
 
(9.6
)
Loss on sale of discontinued operations, net of income taxes

 
(11.0
)
 
(2.7
)
 

 
(34.6
)
Net earnings (loss) attributable to Manitowoc
$
63.5

 
$
144.5

 
$
141.8

 
$
101.7

 
$
(11.2
)

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Table of Contents

Cash Flows
 

 
 

 
 

 
 

 
 

Cash flow from operations
$
98.0

 
$
98.3

 
$
323.1

 
$
162.4

 
$
17.1

Identifiable Assets
 

 
 

 
 

 
 

 
 

Cranes and Related Products
$
1,606.3

 
$
1,742.3

 
$
1,900.4

 
$
1,903.3

 
$
1,760.8

Foodservice Equipment
1,792.7

 
1,902.0

 
1,904.3

 
1,956.8

 
2,192.6

Corporate
49.9

 
172.3

 
171.9

 
197.2

 
69.2

Total
$
3,448.9

 
$
3,816.6

 
3,976.6

 
4,057.3

 
$
4,022.6

Long-term Obligations
$
1,413.6

 
$
1,523.5

 
1,526.8

 
1,801.0

 
$
1,866.4

Depreciation
 

 
 

 
 

 
 

 
 

Cranes and Related Products
$
49.4

 
$
45.7

 
$
46.9

 
$
43.5

 
$
52.9

Foodservice Equipment
19.6

 
21.2

 
20.1

 
22.3

 
24.5

Corporate
0.9

 
1.5

 
1.5

 
2.3

 
2.8

Total
$
69.9

 
$
68.4

 
68.5

 
68.1

 
$
80.2

Capital Expenditures
 

 
 

 
 

 
 

 
 

Cranes and Related Products
$
54.1

 
$
57.3

 
$
69.3

 
$
52.7

 
$
52.0

Foodservice Equipment
13.2

 
25.3

 
33.6

 
17.4

 
11.9

Corporate
0.8

 
2.2

 
7.8

 
2.8

 
0.7

Total
$
68.1

 
$
84.8

 
$
110.7

 
$
72.9

 
$
64.6

Per Share
 

 
 

 
 

 
 

 
 

Basic earnings (loss) per common share:
 

 
 

 
 

 
 

 
 

Earnings from continuing operations attributable to Manitowoc common shareholders
$
0.47

 
$
1.16

 
$
1.16

 
$
0.83

 
$
0.25

Loss from discontinued operations attributable to Manitowoc common shareholders

 
(0.01
)
 
(0.08
)
 
(0.06
)
 
(0.07
)
Loss on sale of discontinued operations, net of income taxes

 
(0.08
)
 
(0.02
)
 

 
(0.27
)
Earnings (loss) per share attributable to Manitowoc common shareholders
$
0.47

 
$
1.07

 
$
1.07

 
$
0.77

 
$
(0.09
)
Diluted earnings (loss) per common share:
 

 
 

 
 

 
 
 
 
Earnings from continuing operations attributable to Manitowoc common shareholders
$
0.46

 
$
1.14

 
$
1.14

 
$
0.82

 
$
0.25

Loss from discontinued operations attributable to Manitowoc common shareholders

 
(0.01
)
 
(0.08
)
 
(0.06
)
 
(0.07
)
Loss on sale of discontinued operations, net of income taxes

 
(0.08
)
 
(0.02
)
 

 
(0.26
)
Earnings (loss) per share attributable to Manitowoc common shareholders
$
0.46

 
$
1.05

 
$
1.05

 
$
0.76

 
$
(0.08
)
Avg Shares Outstanding
 
 
 
 
 
 
 
 
 
Basic
136,036,192

 
134,934,892

 
132,894,179

 
131,447,895

 
130,481,436

Diluted
137,433,815

 
137,351,309

 
135,330,193

 
133,317,050

 
133,377,109

 
Notes to the table above:
(1)
Discontinued operations represent the results of operations and gain or loss on sale of Kysor/Warren, Jackson and our Chinese joint venture, Manitowoc Dong Yue, which qualified for discontinued operations treatment.
(2)
We acquired Inducs, AG in the fourth quarter of 2013.
(3)
Cash dividends for each year from 2011 through 2015 were $0.08 per share.

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Table of Contents

Item 7.   MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with the consolidated financial statements and related notes appearing in Part II, Item 8 of the Annual Report on Form 10-K.
Overview The Manitowoc Company, Inc. is a multi-industry, capital goods manufacturer in two principal markets: Cranes and Related Products (Crane) and Foodservice Equipment (Foodservice).  Crane is recognized as one of the world’s leading providers of lifting equipment for the global construction industry, including lattice-boom cranes, tower cranes, mobile telescopic cranes, and boom trucks.  Foodservice is one of the worlds leading innovators and manufacturers of commercial foodservice equipment serving the ice, beverage, refrigeration, food preparation, and cooking needs of restaurants, convenience stores, hotels, healthcare, and institutional applications.
On January 29, 2015, Manitowoc announced that its Board of Directors has approved a plan to pursue a separation of the company’s Crane and Foodservice businesses into two independent, publicly-traded companies. The company currently anticipates effecting the separation through a tax-free spin-off (the “Spin-Off”) of the Foodservice business and expects the Spin-Off to be completed on March 4, 2016. Subsequent to the separation, the historical results of our Foodservice business will be presented as discontinued operations.
During the fourth quarter of 2015, Manitowoc disposed of a non-material foodservice subsidiary, Kysor Panel Systems. This divestiture does not qualify for discontinued operations, and therefore the results of the business are included in operating results from continuing operations.
During the first quarter of 2014, the company sold its 50% interest in Manitowoc Dong Yue Heavy Machinery Co., Ltd. (“Manitowoc Dong Yue” or the “joint venture”), which produces mobile and truck-mounted hydraulic cranes in China, to its joint venture partner, Tai’an Taishan Heavy Industry Investment Co., Ltd., for a nominal amount. Consequently, the joint venture has been classified as discontinued operations in the company’s financial statements. See Note 5, “Discontinued Operations,” for further details of this transaction.
During the first quarter of 2013, the company sold its warewashing equipment business, which operated under the brand name Jackson, to Hoshizaki USA Holdings, Inc. for approximately $39.2 million, including post-closing adjustments. Net proceeds were used to reduce ratably the then-outstanding balances of Term Loans A and B. This business has been classified as discontinued operations in the company's financial statements.
The following discussion and analysis covers key drivers behind our results for 2013 through 2015 and is broken down into three major sections.  First, we provide an overview of our results of operations for the years 2013 through 2015 on a consolidated basis and by business segment.  Next we discuss our market conditions, liquidity and capital resources, off-balance sheet arrangements, and obligations and commitments.  Finally, we provide a discussion of risk management techniques, contingent liability issues, critical accounting policies, impacts of future accounting changes, and cautionary statements.
All dollar amounts, except per share amounts, are in millions of dollars throughout the tables included in this Management’s Discussion and Analysis of Financial Conditions and Results of Operations unless otherwise indicated. 

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Table of Contents

Results of Consolidated Operations
Millions of dollars
2015
 
2014
 
2013
Operations
 

 
 

 
 

Net sales
$
3,435.8

 
$
3,886.5

 
$
4,048.1

Cost of sales
2,602.6

 
2,906.0

 
3,026.3

Gross Profit
833.2

 
980.5

 
1,021.8

Operating expenses:
 

 
 

 
 

Engineering, selling and administrative expenses
587.6

 
636.0

 
617.6

Asset impairment expense
24.4

 
1.1

 

Amortization expense
34.4

 
35.1

 
35.3

Restructuring expense
14.0

 
9.0

 
4.8

Separation expense
39.4

 

 

Other expenses (income)
0.9

 
0.5

 
(0.3
)
Total operating expenses
700.7

 
681.7

 
657.4

Operating earnings from continuing operations
132.5

 
298.8

 
364.4

Other (expenses) income:
 

 
 

 
 

Interest expense
(97.0
)
 
(94.0
)
 
(128.4
)
Amortization of deferred financing fees
(4.2
)
 
(4.4
)
 
(7.0
)
Loss on debt extinguishment
(0.2
)
 
(25.5
)
 
(3.0
)
Other income (expense) - net
25.5

 
(5.5
)
 
(0.8
)
Total other expenses
(75.9
)
 
(129.4
)
 
(139.2
)
Earnings from continuing operations before taxes on earnings
56.6

 
169.4

 
225.2

(Benefit) provision for taxes on earnings
(6.7
)
 
8.6

 
36.1

Earnings from continuing operations
63.3

 
160.8

 
189.1

Discontinued operations:
 

 
 

 
 

Earnings (loss) from discontinued operations, net of income taxes
0.2

 
(1.4
)
 
(18.8
)
Loss on sale of discontinued operations, net of income taxes

 
(11.0
)
 
(2.7
)
Net earnings
63.5

 
148.4

 
167.6

Less: Net earnings attributable to noncontrolling interest, net of tax

 
3.9

 
25.8

Net earnings attributable to Manitowoc
$
63.5

 
$
144.5

 
$
141.8

Amounts attributable to the Manitowoc common shareholders:
 

 
 

 
 

Earnings from continuing operations
$
63.3

 
$
156.5

 
$
154.8

Earnings (loss) from discontinued operations, net of income taxes
0.2

 
(1.0
)
 
(10.3
)
Loss on sale of discontinued operations, net of income taxes

 
(11.0
)
 
(2.7
)
Net earnings attributable to Manitowoc
$
63.5

 
$
144.5

 
$
141.8

 
Year Ended December 31, 2015 Compared to 2014
Net Sales
(in millions)
 
2015
 
2014
 
Change
  Net Sales
 
$
3,435.8

 
$
3,886.5

 
(11.6
)%
Consolidated net sales decreased 11.6% in 2015 to $3.4 billion from $3.9 billion in 2014.  The decrease in net sales was driven by the year-over-year decrease in the Crane segment and the modest decrease in the Foodservice segment.  Crane segment sales decreased 19.1% for the year ended December 31, 2015 compared to 2014.  The overall decrease in the Crane segment was primarily due to weaker demand in the Americas region for rough terrain and boom truck cranes as well as a negative foreign exchange impact.  Foodservice segment sales decreased 0.7% for the year ended December 31, 2015 compared to 2014.  Foodservice segment sales decreased in the EMEA region primarily due to foreign currency impact and the benefit in 2014 from a new product rollout to a major customer. Consolidated net sales were unfavorably impacted by approximately $203.0 million from foreign currency volatility in relation to the U.S. Dollar for the year ended December 31, 2015 compared with the

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year ended December 31, 2014.  Further analysis of the changes in sales by segment is presented in the “Sales and Operating Earnings by Segment” section below.
Gross Profit
(in millions)
 
2015
 
2014
 
Change
Gross Profit
 
$
833.2

 
$
980.5

 
(15.0
)%
Gross Margin
 
24.3
%
 
25.2
%
 
 
Gross profit for the year ended December 31, 2015 decreased by 15.0% to $833.2 million compared to $980.5 million for the year ended December 31, 2014. The decrease in consolidated gross profit was attributable primarily to the decrease in Crane segment gross profit due to the decrease in sales volume discussed above and unfavorable manufacturing absorption given the lower sales volumes, partially offset by manufacturing cost reduction initiatives.  Gross profit for the Foodservice segment decreased modestly, primarily due to lower margins as a result of start-up cost for KitchenCare. Gross margin decreased in 2015 to 24.3% from 25.2% in 2014.  The decrease in gross margin was primarily due to unfavorable manufacturing absorption on lower volumes in the Crane segment.
Engineering, Selling and Administrative Expenses
(in millions)
 
2015
 
2014
 
Change
Engineering, selling and administrative expenses
 
$
587.6

 
$
636.0

 
(7.6
)%
Engineering, selling and administrative (ES&A) expenses for the year ended December 31, 2015 decreased $48.4 million to $587.6 million compared to $636.0 million for the year ended December 31, 2014.  Crane segment ES&A expenses decreased $41.7 million, or 13.6%, for the year ended December 31, 2015 compared to the same period in 2014.  This decrease was driven primarily by foreign currency exchange rates and decreases in wages and benefits due to headcount reductions and cost controls. Foodservice segment ES&A expenses decreased $11.8 million, or 4.3%, for the year ended December 31, 2015 compared to 2014.  This decrease was primarily driven by headcount reductions during the fourth quarter of 2014 and first quarter of 2015. Corporate ES&A increased $5.0 million, or 9.4%, for the year ended December 31, 2015 compared to the same period in 2014. This increase was primarily due to increases in wages and benefits and employee health insurance cost.
Asset Impairment Expense
(in millions)
 
2015
 
2014
 
Change
Asset impairment expense
 
$
24.4

 
$
1.1

 
*
* Measure not meaningful
Asset impairment expense for the year ended December 31, 2015 was $24.4 million compared to $1.1 million for the year ended December 31, 2014.  The impairment recorded in 2015 resulted from the write-down of $15.4 million on Cranes facilities in Brazil, which is currently shut down indefinitely, and Slovakia, which is now classified as held for sale. The amount also included the write-down of $9.0 million related to the Foodservice facility in Cleveland that is in the process of being shuttered. The expenses in 2014 related to the write-down to fair value of the land, building, and building improvements for a Foodservice segment facility that was previously held for sale.
Amortization Expense
(in millions)
 
2015
 
2014
 
Change
Amortization expense
 
$
34.4

 
$
35.1

 
(2.0
)%
Amortization expense for the year ended December 31, 2015 was $34.4 million compared to $35.1 million for 2014.  See further detail related to intangible assets at Note 11, “Goodwill and Other Intangible Assets.”
Restructuring Expense
(in millions)
 
2015
 
2014
 
Change
Restructuring expense
 
$
14.0

 
$
9.0

 
55.6
%


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Table of Contents

Restructuring expenses for the year ended December 31, 2015 totaled $14.0 million compared to $9.0 million in 2014.  Crane segment restructuring expenses totaled $5.6 million, Foodservice segment restructuring expenses totaled $4.6 million, and Corporate restructuring expenses totaled $3.8 million. Crane segment expenses related to restructuring plans to reduce the cost structure of crane operations through site closings, consolidations, and reductions in workforce across the globe.  Foodservice segment restructuring expenses related to reductions in workforce across the globe and the closure of the Cleveland facility. Corporate restructuring expenses related to cost rationalization of the enterprise cost structure through headcount reductions in conjunction with the Spin-Off. See further detail at Note 21, “Restructuring.”
Separation Expense
(in millions)
 
2015
 
2014
 
Change
Separation expense
 
$
39.4

 
$

 
*
* Measure not meaningful
Separation expenses for the year ended December 31, 2015 totaled $39.4 million, consisting primarily of professional and consulting fees. There were no separation expenses for the year ended December 31, 2014.
Interest Expense & Amortization of Deferred Financing Fees
(in millions)
 
2015
 
2014
 
Change
Interest expense
 
$
97.0

 
$
94.0

 
3.2
 %
Amortization of deferred financing fees
 
$
4.2

 
$
4.4

 
(4.5
)%
Interest expense for the year ended December 31, 2015 totaled $97.0 million versus $94.0 million for the year ended December 31, 2014.  The increase in interest expense of $3.0 million for the year ended December 31, 2015 compared to the prior year was a result of artificially lower 2014 interest expense due to accelerated amortization of the swap monetization gain of $8.3 million resulting from the redemption of the 2018 Notes, which was presented as a reduction to interest expense for 2014. Amortization expense for deferred financing fees was $4.2 million for the year ended December 31, 2015 as compared to $4.4 million in 2014.  The decrease in amortization expense for deferred financing fees of $0.2 million was related to the lower balance of deferred financing fees as a result of the redemption of the 2018 Notes in 2014 and the company's debt reduction efforts. See further detail at Note 13, “Debt.”
Loss on Debt Extinguishment
(in millions)
 
2015
 
2014
 
Change
Loss on debt extinguishment
 
$
0.2

 
$
25.5

 
*
* Measure not meaningful
Loss on debt extinguishment for the year ended December 31, 2015 totaled $0.2 million, compared to $25.5 million in 2014.  The loss on debt extinguishment in 2015 related to the accelerated paydown of Term Loan B associated with our New Senior Credit Facility. Loss on debt extinguishment in 2014 consisted of $23.3 million related to the February 2014 redemption of the 2018 Notes, of which $19.0 million related to the redemption premium and $4.3 million related to the write-off of deferred financing fees. A $2.0 million loss related to the write-off of deferred financing fees as a result of the Senior Credit Facility refinancing, and $0.2 million loss related to the accelerated paydown of Term Loan B associated with our New Senior Credit Facility.
Other Income (Expense) - Net
(in millions)
 
2015
 
2014
 
Change
Other income (expense) - net
 
$
25.5

 
$
(5.5
)
 
*
* Measure not meaningful
Other income (expense) - net for the year ended December 31, 2015 was $25.5 million compared to other income (expense) - net of $(5.5) million for the prior year.  In 2015, other income (expense) - net consists of $9.9 million for the gain on sale of Kysor Panel Systems, $5.4 million for the gain on sale of an investment property, $4.9 million for the gain on acquisition of a previously held equity interest in Welbilt Thailand, and the remainder due primarily to foreign exchange gains for 2015. Other expense, net primarily consists of foreign exchanges losses in 2014.
Income Taxes

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Table of Contents

(in millions)
 
2015
 
2014
 
Change
Effective annual tax rate
 
(11.8
)%
 
5.1
%
 
 
Provision for taxes on earnings
 
$
(6.7
)
 
$
8.6

 
*
* Measure not meaningful
The effective tax rate for the year ended December 31, 2015 was negative 11.8% compared to the effective tax rate of 5.1% for the year ended December 31, 2014.  The 2015 tax provision benefited by $17.8 million related to the divestiture of the Kysor Panel Systems business resulting in a favorable impact to the effective tax rate. The benefit was primarily due to the write-off of $13.8 million of the unamortized deferred tax liability that was recorded in purchase accounting and as a result of the utilization of the capital loss carryforward to offset the tax gain. The 2015 effective tax rate was also impacted by nondeductible costs associated with the Spin-Off of the Foodservice business.
The 2015 and 2014 effective tax rates were favorably impacted by income earned in jurisdictions where the statutory tax rates were less than 35%. See further detail at Note 15, "Income Taxes."
Earnings (Loss) from Discontinued Operations
(in millions)
 
2015
 
2014
 
Change
Earnings (loss) from discontinued operations
 
$
0.2

 
$
(1.4
)
 
*
* Measure not meaningful
The results from discontinued operations were a gain of $0.2 million and a loss of $1.4 million, net of income taxes, for the years ended December 31, 2015 and 2014, respectively.  The activity from discontinued operations in 2015 and 2014 relate primarily to administrative costs and releases of accruals from various businesses disposed of in prior years. See additional discussion at Note 5, “Discontinued Operations.”
Loss on Sale of Discontinued Operations
(in millions)
 
2015
 
2014
 
Change
Loss on sale of discontinued operations
 
$

 
$
11.0

 
*
* Measure not meaningful
Loss on sale of discontinued operations was $11.0 million for the year ended December 31, 2014. This was attributable to the sale of Manitowoc Dong Yue for a loss of $9.9 million in the first quarter of 2014 and the settlement of a pension obligation related to a previously disposed entity for a loss of $1.1 million in the third quarter of 2014. There were no losses on sale of discontinued operations for the year ended December 31, 2015. See additional discussion at Note 5, “Discontinued Operations.”
Net Earnings Attributable to Noncontrolling Interest
(in millions)
 
2015
 
2014
 
Change
Net earnings attributable to noncontrolling interest
 
$

 
$
3.9

 
*
* Measure not meaningful
For the year ended December 31, 2014, net earnings attributable to a noncontrolling interest of $3.9 million attributable to the minority partner in connection with Manitowoc Dong Yue. This was primarily due to loan forgiveness resulting in income of $35.6 million by the joint venture partner shown as part of net earnings attributable to noncontrolling interest, net of income taxes, which effectively reduced net earnings attributable to Manitowoc shareholders. There were no net earnings attributable to a noncontrolling interest for the year ended December 31, 2015. See Note 5, “Discontinued Operations,” for further details on this transaction.
Year Ended December 31, 2014 Compared to 2013
Net Sales
(in millions)
 
2014
 
2013
 
Change
  Net Sales
 
$
3,886.5

 
$
4,048.1

 
(4.0
)%

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Table of Contents

Consolidated net sales decreased 4.0% in 2014 to $3.9 billion from $4.0 billion in 2013.  The decrease in net sales was driven by the year-over-year decrease in the Crane segment, partially offset by the modest year-over-year increase in the Foodservice segment. Crane segment sales decreased 8.0% for the year ended December 31, 2014 compared to 2013. The overall decrease in the Crane segment was primarily due to weaker demand in the Americas region for rough terrain and boom truck cranes. Foodservice segment sales increased 2.6% for the year ended December 31, 2014 compared to 2013. Foodservice segment sales increased in the Americas region across both cold-side and hot-side brands from the prior year due to volume increases primarily driven by new product roll outs. Consolidated net sales were unfavorably impacted by approximately $0.2 million from foreign currency volatility in relation to the U.S. Dollar for the year ended December 31, 2014 compared with the year ended December 31, 2013. Further analysis of the changes in sales by segment is presented in the "Sales and Operating Earnings by Segment" section below.
Gross Profit
(in millions)
 
2014
 
2013
 
Change
Gross Profit
 
$
980.5

 
$
1,021.8

 
(4.0
)%
Gross Margin
 
25.2
%
 
25.2
%
 
 
Gross profit for the year ended December 31, 2014 decreased 4.0% to $980.5 million compared to $1,021.8 million for the year ended December 31, 2013. The decrease in consolidated gross profit was attributable primarily to the decrease in Crane segment gross profit due to the decrease in sales volume discussed above and unfavorable absorption given the lower sales volumes, partially offset by manufacturing cost reduction initiatives. Gross profit for the Foodservice segment decreased modestly, primarily due to unfavorable product mix, higher discounts and rebates, and higher warranty costs, partially offset by manufacturing cost reduction initiatives. Gross margin in 2014 remained consistent to 2013 at 25.2%.
Engineering, Selling and Administrative Expenses
(in millions)
 
2014
 
2013
 
Change
Engineering, selling and administrative expenses
 
$
636.0

 
$
617.6

 
3.0
%
ES&A expenses for the year ended December 31, 2014 increased $18.4 million to $636.0 million compared to $617.6 million for the year ended December 31, 2013.  Crane segment ES&A increased $16.3 million, or 5.6%, for the year ended December 31, 2014 compared to the same period in 2013.  This increase was driven by increased levels of engineering and product development costs and an increase in enterprise resource planning system implementation costs. Foodservice ES&A expenses increased $13.6 million, or 5.2%, for the year ended December 31, 2014 compared to 2013. This increase was primarily driven by non-recurring legal settlements benefiting fiscal 2013 and an increase in sales commissions and marketing costs. Corporate ES&A decreased $11.5 million, or 17.7%, for the year ended December 31, 2014 compared to the same period in 2013. This decrease was primarily due to decreases in employee health expense, short-term incentive compensation, and stock-based compensation.
Asset Impairment Expense
(in millions)
 
2014
 
2013
 
Change
Asset impairment expense
 
$
1.1

 
$

 
*
* Measure not meaningful
Asset impairment expense for the year ended December 31, 2014 was $1.1 million; there was not any impairment expense for the year ended December 31, 2013.  This relates to the write-down to fair value of the land, building, and building improvements for a Foodservice segment facility which was held for sale.
Amortization Expense
(in millions)
 
2014
 
2013
 
Change
Amortization expense
 
$
35.1

 
$
35.3

 
(0.6
)%
Amortization expense for the year ended December 31, 2014 was $35.1 million compared to $35.3 million for 2013.  See further detail related to intangible assets at Note 11, “Goodwill and Other Intangible Assets.”
Restructuring Expense

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Table of Contents

(in millions)
 
2014
 
2013
 
Change
Restructuring expense
 
$
9.0

 
$
4.8

 
87.5
%
Restructuring expenses for the year ended December 31, 2014 totaled $9.0 million compared to $4.8 million in 2013.  Crane segment restructuring expenses totaled $6.6 million and Foodservice restructuring expenses totaled $2.4 million. Crane segment expenses related to restructuring plans to reduce the cost structure of crane operations through site closings, consolidations, and reductions in workforce across the globe. Foodservice segment restructuring expenses related primarily to employee termination benefits due to the movement of certain Ice manufacturing activities from Manitowoc, Wisconsin, to Monterrey, Mexico. See further detail at Note 21, “Restructuring.”
Interest Expense & Amortization of Deferred Financing Fees
(in millions)
 
2014
 
2013
 
Change
Interest expense
 
$
94.0

 
$
128.4

 
(26.8
)%
Amortization of deferred financing fees
 
$
4.4

 
$
7.0

 
(37.1
)%
Interest expense for the year ended December 31, 2014 totaled $94.0 million versus $128.4 million for the year ended December 31, 2013.  The decrease in interest expense of $34.4 million for the year ended December 31, 2014 compared to the prior year was a result of the company’s refinancing of its Senior Credit Facility during the first quarter of 2014, as well as its debt reduction efforts and accelerated amortization of the swap monetization gain of $8.3 million resulting from the redemption of the 2018 Notes, which was presented as a reduction to interes