MANITOWOC CO INC, 10-Q filed on 11/3/2015
Quarterly Report
Document and Entity Information
9 Months Ended
Sep. 30, 2015
Document and entity information
 
Entity Registrant Name
MANITOWOC CO INC 
Entity Central Index Key
0000061986 
Document Type
10-Q 
Document Period End Date
Sep. 30, 2015 
Amendment Flag
false 
Current Fiscal Year End Date
--12-31 
Entity Current Reporting Status
Yes 
Entity Filer Category
Large Accelerated Filer 
Entity Common Stock, Shares Outstanding
136,589,611 
Document Fiscal Year Focus
2015 
Document Fiscal Period Focus
Q3 
Condensed Consolidated Statements of Operations (USD $)
In Millions, except Share data, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2015
Sep. 30, 2014
Sep. 30, 2015
Sep. 30, 2014
Operations
 
 
 
 
Net sales
$ 863.5 
$ 986.3 
$ 2,501.0 
$ 2,849.1 
Costs and expenses:
 
 
 
 
Cost of sales
657.8 
742.4 
1,890.3 
2,108.7 
Engineering, selling and administrative expenses
144.4 
152.1 
447.7 
478.9 
Amortization expense
8.6 
8.8 
25.8 
26.4 
Restructuring expense
0.4 
1.7 
1.6 
4.7 
Separation expense
10.0 
19.8 
Other operating expense
0.1 
0.5 
0.1 
Total operating costs and expenses
821.3 
905.0 
2,385.7 
2,618.8 
Earnings from operations
42.2 
81.3 
115.3 
230.3 
Other income (expense):
 
 
 
 
Interest expense
(24.3)
(24.7)
(72.3)
(69.1)
Amortization of deferred financing fees
(1.1)
(1.0)
(3.2)
(3.3)
Loss on debt extinguishment
(25.3)
Other (expense) income - net
(1.0)
0.7 
4.4 
(1.6)
Total other expense
(26.4)
(25.0)
(71.1)
(99.3)
Earnings from continuing operations before taxes on income
15.8 
56.3 
44.2 
131.0 
Provision (benefit) for taxes on income
11.1 
(18.1)
24.6 
3.7 
Earnings from continuing operations
4.7 
74.4 
19.6 
127.3 
Discontinued operations:
 
 
 
 
Earnings (loss) from discontinued operations, net of income taxes of $0.0, $(0.1), $0.0 and $(0.4), respectively
0.1 
(0.2)
0.1 
(1.5)
Loss on sale of discontinued operations, net of income taxes of $0.0, $(0.6), $0.0 and $(0.6), respectively
(1.1)
(11.0)
Net earnings
4.8 
73.1 
19.7 
114.8 
Less: Net earnings attributable to noncontrolling interest, net of income taxes
(3.9)
Net earnings attributable to Manitowoc
4.8 
73.1 
19.7 
110.9 
Amounts attributable to the Manitowoc common shareholders:
 
 
 
 
Earnings from continuing operations
4.7 
74.4 
19.6 
123.0 
Earnings (loss) from discontinued operations, net of income taxes
0.1 
(0.2)
0.1 
(1.1)
Loss on sale of discontinued operations, net of income taxes
(1.1)
(11.0)
Net earnings attributable to Manitowoc
$ 4.8 
$ 73.1 
$ 19.7 
$ 110.9 
Basic earnings (loss) per common share:
 
 
 
 
Earnings from continuing operations attributable to Manitowoc common shareholders
$ 0.03 
$ 0.55 
$ 0.14 
$ 0.91 
Loss from discontinued operations attributable to Manitowoc common shareholders
$ 0.00 
$ 0.00 
$ 0.00 
$ (0.01)
Loss on sale of discontinued operations, net of income taxes
$ 0.00 
$ (0.01)
$ 0.00 
$ (0.08)
Earnings per share attributable to Manitowoc common shareholders
$ 0.04 
$ 0.54 
$ 0.14 
$ 0.82 
Diluted earnings (loss) per common share:
 
 
 
 
Earnings from continuing operations attributable to Manitowoc common shareholders
$ 0.03 
$ 0.54 
$ 0.14 
$ 0.89 
Loss from discontinued operations attributable to Manitowoc common shareholders
$ 0.00 
$ 0.00 
$ 0.00 
$ (0.01)
Loss on sale of discontinued operations, net of income taxes
$ 0.00 
$ (0.01)
$ 0.00 
$ (0.08)
Earnings per share attributable to Manitowoc common shareholders
$ 0.03 
$ 0.53 
$ 0.14 
$ 0.81 
Weighted average shares outstanding — basic
136,164,053 
135,222,411 
135,983,603 
134,803,784 
Weighted average shares outstanding — diluted
137,408,104 
137,597,804 
137,331,454 
137,606,011 
Consolidated Statements of Operations (Parenthetical) (USD $)
In Millions, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2015
Sep. 30, 2014
Sep. 30, 2015
Sep. 30, 2014
Income Statement [Abstract]
 
 
 
 
Loss from discontinued operations, income taxes
$ 0 
$ (0.1)
$ 0 
$ (0.4)
Loss on sale of discontinued operations, income taxes
$ 0 
$ (0.6)
$ 0 
$ (0.6)
Condensed Consolidated Statements of Comprehensive Income (Loss) (USD $)
In Millions, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2015
Sep. 30, 2014
Sep. 30, 2015
Sep. 30, 2014
Statement of Comprehensive Income [Abstract]
 
 
 
 
Net earnings
$ 4.8 
$ 73.1 
$ 19.7 
$ 114.8 
Other comprehensive income (loss), net of tax
 
 
 
 
Unrealized loss on derivatives, net of income tax benefit of $(0.2), $(1.1), $(0.4) and $(2.2), respectively
(0.3)
(2.1)
(0.1)
(4.1)
Employee pension and postretirement benefits, net of income tax provision of $0.5, $0.3, $1.5 and $0.8, respectively
1.4 
0.7 
4.2 
2.3 
Foreign currency translation adjustments
(18.5)
(48.2)
(72.7)
(46.8)
Net current period other comprehensive income (loss)
(17.4)
(49.6)
(68.6)
(48.6)
Comprehensive (loss) income
(12.6)
23.5 
(48.9)
66.2 
Comprehensive income attributable to noncontrolling interest
3.9 
Comprehensive (loss) income attributable to Manitowoc
$ (12.6)
$ 23.5 
$ (48.9)
$ 62.3 
Condensed Consolidated Statements of Comprehensive Income (Loss) (Parenthetical) (USD $)
In Millions, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2015
Sep. 30, 2014
Sep. 30, 2015
Sep. 30, 2014
Statement of Comprehensive Income [Abstract]
 
 
 
 
Derivative instrument fair market value adjustment, net of income taxes of
$ (0.2)
$ (1.1)
$ (0.4)
$ (2.2)
Employee pension and post retirement benefits, net of income taxes of
$ 0.5 
$ 0.3 
$ 1.5 
$ 0.8 
Condensed Consolidated Balance Sheets (USD $)
In Millions, unless otherwise specified
Sep. 30, 2015
Dec. 31, 2014
Current Assets:
 
 
Cash and cash equivalents
$ 75.2 
$ 68.0 
Restricted cash
20.1 
23.7 
Accounts receivable, less allowances of $19.0 and $19.4, respectively
259.0 
227.4 
Inventories — net
717.9 
644.5 
Deferred income taxes
67.4 
71.3 
Other current assets
129.5 
144.6 
Current assets of discontinued operation
8.1 
6.6 
Total current assets
1,277.2 
1,186.1 
Property, plant and equipment — net
551.8 
591.0 
Goodwill
1,155.5 
1,198.1 
Other intangible assets — net
646.3 
714.7 
Other non-current assets
109.8 
126.2 
Disposal Group, Including Discontinued Operation, Assets, Noncurrent
64.2 
0.5 
Long-term assets of discontinued operation
 
Total assets
3,804.8 
3,816.6 
Current Liabilities:
 
 
Accounts payable and accrued expenses
720.7 
807.4 
Current portion of long-term debt and short-term borrowings
63.2 
80.3 
Product warranties
72.8 
77.7 
Customer advances
27.3 
21.3 
Product liabilities
26.8 
24.6 
Current liabilities of discontinued operation
20.2 
Total current liabilities
931.0 
1,011.3 
Non-Current Liabilities:
 
 
Long-term debt
1,575.3 
1,443.2 
Deferred income taxes
180.8 
186.2 
Pension obligations
137.6 
141.0 
Postretirement health and other benefit obligations
50.5 
53.1 
Long-term deferred revenue
35.7 
37.9 
Other non-current liabilities
103.3 
119.8 
Long-term liabilities of discontinued operation
0.7 
Total non-current liabilities
2,083.9 
1,981.2 
Commitments and Contingencies (Note 14)
   
   
Total Equity:
 
 
Common stock (300,000,000 shares authorized, 163,175,928 shares issued, 136,589,611 and 135,543,869 shares outstanding, respectively)
1.4 
1.4 
Additional paid-in capital
552.6 
539.7 
Accumulated other comprehensive loss
(199.1)
(130.5)
Retained earnings
506.6 
486.9 
Treasury stock, at cost (26,586,317 and 27,632,059 shares, respectively)
(71.6)
(73.4)
Total Manitowoc stockholders’ equity
789.9 
824.1 
Noncontrolling interest
 
Total equity
789.9 
824.1 
Total liabilities and equity
$ 3,804.8 
$ 3,816.6 
Condensed Consolidated Balance Sheets (Parenthetical) (USD $)
In Millions, except Share data, unless otherwise specified
Sep. 30, 2015
Dec. 31, 2014
Statement of Financial Position [Abstract]
 
 
Accounts Receivable, allowances (in dollars)
$ 19.0 
$ 19.4 
Common stock, shares authorized
300,000,000 
300,000,000 
Common stock, shares issued
163,175,928 
163,175,928 
Common stock, shares outstanding
136,589,611 
135,543,869 
Treasury stock, shares
26,586,317 
27,632,059 
Condensed Consolidated Statements of Cash Flows (USD $)
In Millions, unless otherwise specified
9 Months Ended
Sep. 30, 2015
Sep. 30, 2014
Cash Flows From Operations
 
 
Net earnings
$ 19.7 
$ 114.8 
Adjustments to reconcile net earnings to cash used for operating activities of continuing operations:
 
 
Discontinued operations, net of income taxes
(0.1)
1.5 
Depreciation
51.4 
50.7 
Amortization of intangible assets
25.8 
26.4 
Amortization of deferred financing fees
3.2 
3.3 
Deferred income taxes
4.1 
(14.3)
Loss on early debt extinguishment
6.2 
(Gain) loss on sale of property, plant and equipment
0.2 
(3.1)
Loss on sale of discontinued operations
11.0 
Other
8.9 
0.7 
Changes in operating assets and liabilities, excluding effects of business acquisitions and divestitures:
 
 
Accounts receivable
(43.5)
(56.3)
Inventories
(111.1)
(134.7)
Other assets
3.5 
(14.7)
Accounts payable
(49.4)
(26.6)
Accrued expenses and other liabilities
13.3 
(97.1)
Net cash used for operating activities of continuing operations
(74.0)
(132.2)
Net cash provided by (used for) operating activities of discontinued operations
0.1 
(7.2)
Net cash used for operating activities
(73.9)
(139.4)
Cash Flows from Investing:
 
 
Capital expenditures
(41.5)
(57.9)
Proceeds from sale of property, plant and equipment
6.3 
8.8 
Restricted cash
2.6 
(12.8)
Net cash used for investing activities
(32.6)
(61.9)
Cash Flows from Financing:
 
 
Proceeds from revolving credit facility
169.0 
204.0 
Payments on long-term debt
(48.0)
(600.0)
Proceeds from long-term debt
2.1 
620.9 
Payments on notes financing
(10.0)
(14.8)
Debt issuance costs
(5.0)
Proceeds from Stock Options Including Excess Tax Benefit
4.0 
25.2 
Net cash provided by financing activities of continuing operations
117.1 
230.3 
Net cash used for financing activities of discontinued operations
(7.2)
Net cash provided by financing activities
117.1 
223.1 
Effect of exchange rate changes on cash
(3.4)
(1.9)
Net increase in cash and cash equivalents
7.2 
19.9 
Balance at beginning of period
68.0 
54.9 
Balance at end of period
$ 75.2 
$ 74.8 
Accounting Policies
Accounting Policies
Accounting Policies
In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments necessary for a fair statement of the results of operations and comprehensive income for the three and nine months ended September 30, 2015 and 2014, the cash flows for the same nine-month periods, and the financial position at September 30, 2015 and December 31, 2014, and except as otherwise discussed such adjustments consist of only those of a normal recurring nature.  The interim results are not necessarily indicative of results for a full year and do not contain information included in the company’s annual consolidated financial statements and notes for the year ended December 31, 2014.  Certain information and footnote disclosures, normally included in financial statements prepared in accordance with generally accepted accounting principles, have been condensed or omitted pursuant to SEC rules and regulations dealing with interim financial statements.  However, the company believes that the disclosures made in the condensed consolidated financial statements included herein are adequate to make the information presented not misleading. It is suggested that these financial statements be read in conjunction with the financial statements and the notes thereto included in the company’s latest annual report on Form 10-K.
Certain prior period amounts have been reclassified to conform to the current period presentation. All dollar amounts, except share and per share amounts, are in millions of dollars throughout the tables included in these notes unless otherwise indicated.
Discontinued Operations
Discontinued Operations
Discontinued Operations
During the fourth quarter of 2013, the company agreed to sell its 50% interest in Manitowoc Dong Yue Heavy Machinery Co., Ltd. (“Manitowoc Dong Yue” or the “joint venture”), a consolidated entity, which produced 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 a discontinued operation in the company's financial statements. The transaction subsequently closed January, 2014. The transaction resulted in a $9.9 million loss on sale, net of tax during the first quarter of 2014.
Upon closing of the transaction in the first quarter of 2014, the company also paid an additional $7.2 million to Manitowoc Dong Yue for a portion of debt the joint venture had outstanding with third parties. After this payment, Manitowoc Dong Yue had approximately $17.3 million of third party debt outstanding under a loan agreement entered into during the first quarter of 2014 that the company has fully guaranteed. The loan is fully secured by Manitowoc Dong Yue’s fixed assets as well as finished goods inventory. Manitowoc Dong Yue is repaying the loan over a four-year period, with the last payment due on December 31, 2017. Prior to the closing of the transaction in 2014, the company provided an additional $8.6 million of loans to Manitowoc Dong Yue. The company agreed to forgive the additional loans and accrued interest owed by Manitowoc Dong Yue to the company and its affiliates, and the forgiveness resulted in income of $4.3 million to the joint venture partner shown as part of net earnings attributable to noncontrolling interest, net of income taxes, which effectively increased net loss attributable to Manitowoc shareholders for the quarter ended March 31, 2014.
The following selected financial data of the Manitowoc Dong Yue business for the three and nine months ended September 30, 2015 and 2014 is presented for informational purposes only and does not necessarily reflect what the results of operations would have been had the business operated as a stand-alone entity. There was no general corporate expense allocated to discontinued operations for this business during the periods presented.
 
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
(in millions)
 
2015
 
2014
 
2015
 
2014
Net sales
 
$

 
$

 
$

 
$
0.3

 
 
 
 
 
 
 
 
 
Pretax loss from discontinued operation
 
$

 
$

 
$

 
$
(0.8
)
Provision for taxes on earnings
 

 

 

 

Net loss from discontinued operation
 
$

 
$

 
$

 
$
(0.8
)
 
The following selected financial data of various other businesses disposed of prior to 2014, consisting primarily of administrative costs, for the three and nine months ended September 30, 2015 and 2014, is presented for informational purposes only and does not necessarily reflect what the results of operations would have been had the businesses operated as stand-alone entities.  There was no general corporate expense or interest expense allocated to discontinued operations for these businesses during the periods presented.
During the third quarter of 2014, the company settled a pension obligation related to a previously disposed entity which resulted in a $1.1 million loss on sale, net of income tax benefit of $0.6 million, during the period.
 
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
(in millions)
 
2015
 
2014
 
2015
 
2014
Net sales
 
$

 
$

 
$

 
$

 
 
 
 
 
 
 
 
 
Pretax earnings (loss) from discontinued operations
 
$
0.1

 
$
(0.3
)
 
$
0.1

 
$
(1.1
)
Benefit for taxes on earnings
 

 
(0.1
)
 

 
(0.4
)
Net earnings (loss) from discontinued operations
 
$
0.1

 
$
(0.2
)
 
$
0.1

 
$
(0.7
)
Disposals (Notes)
Disposal not discontinued operation [Text Block]
Disposals
During the third quarter of 2015, the company's board of directors approved a plan to hold for sale a non-material Foodservice segment subsidiary. In accordance with ASC Topic 360, “Property, Plant, and Equipment,” the assets and liabilities of this business have been classified as held for sale on the Condensed Consolidated Balance Sheet as of September 30, 2015.
Fair Value of Financial Instruments
Fair Value of Financial Instruments
Fair Value of Financial Instruments
The following tables set forth the company’s financial assets and liabilities that were accounted for at fair value on a recurring basis as of September 30, 2015 and December 31, 2014 by level within the fair value hierarchy.  Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.
 
Fair Value as of September 30, 2015
(in millions)
Level 1
 
Level 2
 
Level 3
 
Total
Current Assets:
 

 
 

 
 

 
 

Foreign currency exchange contracts
$

 
$
0.4

 
$

 
$
0.4

Total current assets at fair value
$

 
$
0.4

 
$

 
$
0.4

Non-current Assets:
 
 
 
 
 
 
 
Commodity contracts

 
0.1

 

 
0.1

Total non-current assets at fair value
$

 
$
0.1

 
$

 
$
0.1

Current Liabilities:
 

 
 

 
 

 
 

Foreign currency exchange contracts
$

 
$
2.7

 
$

 
$
2.7

Commodity contracts

 
3.8

 

 
3.8

   Interest rate swap contracts: Float-to-fixed

 
2.2

 

 
2.2

Total current liabilities at fair value
$

 
$
8.7

 
$

 
$
8.7

Non-current Liabilities:
 
 
 
 
 
 
 
Commodity contracts
$

 
$
0.7

 
$

 
$
0.7

Interest rate swap contracts: Float-to-fixed

 
1.9

 

 
1.9

Total non-current liabilities at fair value
$

 
$
2.6

 
$

 
$
2.6

 
Fair Value as of December 31, 2014
(in millions)
Level 1
 
Level 2
 
Level 3
 
Total
Current Assets:
 

 
 

 
 

 
 

Foreign currency exchange contracts
$

 
$
2.1

 
$

 
$
2.1

Total current assets at fair value
$

 
$
2.1

 
$

 
$
2.1

Non-Current Assets:
 
 
 
 
 
 
 
Interest rate swap contracts: Float-to-fixed
$

 
$
0.8

 
$

 
$
0.8

Total non-current assets at fair value
$

 
$
0.8

 
$

 
$
0.8

Current Liabilities:
 

 
 

 
 

 
 

Foreign currency exchange contracts
$

 
$
7.9

 
$

 
$
7.9

Commodity contracts

 
1.0

 

 
1.0

Interest rate swap contracts: Float-to-fixed

 
2.3

 

 
2.3

Total current liabilities at fair value
$

 
$
11.2

 
$

 
$
11.2

Non-current Liabilities:
 

 
 

 
 

 
 

Commodity contracts:
$

 
$
0.4

 
$

 
$
0.4

Interest rate swap contracts: Fixed-to-float

 
4.3

 

 
4.3

Total non-current liabilities at fair value
$

 
$
4.7

 
$

 
$
4.7


The fair value of the company’s 8.50% Senior Notes due 2020 was approximately $627.6 million and $651.6 million as of September 30, 2015 and December 31, 2014, respectively. The fair value of the company’s 5.875% Senior Notes due 2022 was approximately $307.6 million and $309.1 million as of September 30, 2015 and December 31, 2014, respectively. The fair values of the company’s Term Loans under its Senior Credit Facility were as follows as of September 30, 2015 and December 31, 2014:  Term Loan A — $315.3 million and $327.8 million, respectively; and Term Loan B — $166.8 million and $165.0 million, respectively.  See Note 9, “Debt,” for a description of the debt instruments and their related carrying values.
ASC Topic 820-10, “Fair Value Measurement,” defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC Topic 820-10 classifies the inputs used to measure fair value into the following hierarchy:
Level 1
Unadjusted quoted prices in active markets for identical assets or liabilities
 
 
Level 2
Unadjusted quoted prices in active markets for similar assets or liabilities, or
 
 
 
Unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or
 
 
 
Inputs other than quoted prices that are observable for the asset or liability
 
 
Level 3
Unobservable inputs for the asset or liability
The company endeavors to utilize the best available information in measuring fair value. Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.  The company estimates the fair value of its Term Loans and Senior Notes based on quoted market prices of the instruments; because these markets are typically thinly traded, the assets and liabilities are classified as Level 2 within the valuation hierarchy.  The carrying values of cash and cash equivalents, accounts receivable, accounts payable, deferred purchase price notes on receivables sold (see Note 10, “Accounts Receivable Securitization”) and short-term variable debt, including any amounts outstanding under the company’s revolving credit facility, approximate fair value, without being discounted as of September 30, 2015 and December 31, 2014, due to the short-term nature of these instruments.
As a result of its global operating and financing activities, the company is exposed to market risks from changes in interest rates, foreign currency exchange rates, and commodity prices, which may adversely affect the company’s operating results and financial position. When deemed appropriate, the company minimizes these risks through the use of derivative financial instruments. Derivative financial instruments are used to manage risk and are not used for trading or other speculative purposes, and the company does not use leveraged derivative financial instruments. The foreign currency exchange, commodity, and interest rate contracts are valued through an independent valuation source that uses an industry standard data provider, with resulting valuations periodically validated through third-party or counterparty quotes. As such, these derivative instruments are classified within Level 2.
Derivative Financial Instruments
Derivative Financial Instruments
Derivative Financial Instruments
The company’s risk management objective is to ensure that business exposures to risks that have been identified and measured and are capable of being controlled are minimized or managed using what it believes to be the most effective and efficient methods to manage, eliminate, reduce, or transfer such exposures.  Operating decisions consider associated risks and transactions are structured to minimize or manage risk whenever possible.
Use of derivative instruments is consistent with the overall business and risk management objectives of the company.  Derivative instruments may be used to manage business risk within limits specified by the company’s risk policy and to manage exposures that have been identified through the risk identification and measurement process, provided that they clearly qualify as “hedging” activities as defined in the risk policy.  Use of derivative instruments is not automatic, nor is it necessarily the only response to managing pertinent business risk.  Use is permitted only after the risks that have been identified are determined to exceed defined tolerance levels and are considered to be unavoidable.
The primary risks managed by the company by using derivative instruments are interest rate risk, commodity price risk and foreign currency exchange risk.  Interest rate swaps are used to manage interest rate or fair value risk.  Swap contracts on various commodities are used to manage the price risk associated with forecasted purchases of materials used in the company’s manufacturing processes.  The company also enters into various foreign currency derivative instruments to manage foreign currency risk associated with the company’s projected foreign currency denominated purchases, sales, and receivable and payable balances.
ASC Topic 815-10, “Derivatives and Hedging,” requires companies to recognize all derivative instruments as either assets or liabilities at fair value in the statement of financial position.  In accordance with ASC Topic 815-10, the company designates commodity swaps, foreign currency exchange contracts, and float-to-fixed interest rate derivative contracts as cash flow hedges of forecasted purchases of commodities and purchases and sales currencies, and of variable rate interest payments.  Also in accordance with ASC Topic 815-10, the company designates fixed-to-float interest rate swaps as fair market value hedges of fixed rate debt, which synthetically swap the company’s fixed rate debt to floating rate debt.
For derivative instruments that are designated and qualify as cash flow hedges, the effective portion of the gain or loss on the derivative is reported as a component of other comprehensive income (loss) and is reclassified into earnings in the same period or periods during which the hedged transaction affects earnings.  Gains and losses on the derivative instruments representing either hedge ineffectiveness or hedge components excluded from the assessment of effectiveness are recognized in current earnings.  In the next twelve months the company estimates that $5.1 million of unrealized losses net of tax related to commodity price and currency exchange rate hedging will be reclassified from other comprehensive income into earnings.  Foreign currency and commodity hedging is generally completed prospectively on a rolling basis for between twelve and twenty-four months, respectively, depending on the type of risk being hedged.
The risk management objective for the company’s fair market value interest rate hedges is to effectively change the amount of the underlying debt equal to the notional value of the hedges from a fixed to a floating interest rate based on the benchmark one-month LIBOR rate.  These swaps include an embedded call feature to match the terms of the call schedule embedded in the Senior Notes. Changes in the fair value of the interest rate swaps are expected to offset changes in the fair value of the debt due to changes in the one-month LIBOR benchmark interest rate.
As of September 30, 2015 and December 31, 2014, the company had the following outstanding commodity and foreign currency exchange contracts that were intended to hedge forecasted transactions:
 
 
Units Hedged
 
 
 
Commodity
 
September 30, 2015
 
December 31, 2014
 
Unit
Type
Aluminum
 
1,510

 
1,657

 
MT
Cash Flow
Copper
 
583

 
820

 
MT
Cash Flow
Natural Gas
 
298,703

 
347,608

 
MMBtu
Cash Flow
Steel
 
20,388

 
14,665

 
Tons
Cash Flow
 
 
 
Units Hedged
 
 
Short Currency
 
September 30, 2015
 
December 31, 2014
 
Type
Canadian Dollar
 
1,783,060

 
7,984,824

 
Cash Flow
European Euro
 
14,152,038

 
89,006,695

 
Cash Flow
South Korean Won
 
2,194,846,685

 
1,964,906,996

 
Cash Flow
Singapore Dollar
 
3,000,000

 
3,900,000

 
Cash Flow
United States Dollar
 
8,456,551

 
29,228,731

 
Cash Flow
British Pound
 
1,657,607

 

 
Cash Flow
Japanese Yen
 
592,670,800

 

 
Cash Flow
Mexican Peso
 
46,263,689

 
52,674,387

 
Cash Flow

As of both September 30, 2015 and December 31, 2014, the company had outstanding $175.0 million notional amount of float-to-fixed interest rate swaps outstanding related to Term Loan A under the Senior Credit Facility that were designated as cash flow hedges. As a result, $175.0 million of Term Loan A was hedged at an interest rate of 1.635%, plus the applicable spread based on the Consolidated Total Leverage Ratio of the company as defined under the Senior Credit Facility.
As of September 30, 2015, the company had no outstanding fixed-to-float interest rate swaps related to the Senior Notes due 2020 and 2022. As of December 31, 2014 the company had $75.0 million and $125.0 million notional amount of fixed-to-float interest rate swaps outstanding related to the Senior Notes due 2020 and 2022, respectively, which were designated as fair value hedges.
See Note 9, “Debt,” for a description of the debt instruments.
For derivative instruments that are not designated as hedging instruments under ASC Topic 815-10, the gains or losses on the derivatives are recognized in current earnings within Other (expense) income, net in the Condensed Consolidated Statements of Operations.  As of September 30, 2015 and December 31, 2014, the company had the following outstanding foreign currency exchange contracts that were not designated as hedging instruments:
 
 
Units Hedged
 
 
 
 
Short Currency
 
September 30,
2015
 
December 31, 2014
 
Recognized Location
 
Purpose
Euro
 
10,902,051

 
73,302,332

 
Other income, net
 
Accounts Payable and Receivable Settlement
United States Dollar
 
25,728,169

 
18,244,912

 
Other income, net
 
Accounts Payable and Receivable Settlement
Australian Dollar
 

 
2,482,430

 
Other income, net
 
Accounts Payable and Receivable Settlement
Canadian Dollar
 

 
2,516

 
Other income, net
 
Accounts Payable and Receivable Settlement
Mexican Peso
 
2,288,431

 
3,151,000

 
Other income, net
 
Accounts Payable and Receivable Settlement
British Pound Sterling
 
89,878

 

 
Other income, net
 
Accounts Payable and Receivable Settlement

The fair value of outstanding derivative contracts recorded as assets in the accompanying Condensed Consolidated Balance Sheets as of September 30, 2015 and December 31, 2014 was as follows:
 
 
 
 
ASSET DERIVATIVES
 
 
 
 
September 30, 2015
 
December 31, 2014
(in millions)
 
Balance Sheet Location
 
Fair Value
Derivatives designated as hedging instruments
 
 
 
 

 
 

Foreign exchange contracts
 
Other current assets
 
$
0.3

 
$

Commodity contracts
 
Other non-current assets
 
0.1

 

Interest rate swap contracts: Float-to-fixed
 
Other non-current assets
 

 
0.8

Total derivatives designated as hedging instruments
 
 
 
$
0.4

 
$
0.8

 
 
 
 
ASSET DERIVATIVES
 
 
 
 
September 30, 2015
 
December 31, 2014
(in millions)
 
Balance Sheet Location
 
Fair Value
Derivatives NOT designated as hedging instruments
 
 
 
 

 
 

Foreign exchange contracts
 
Other current assets
 
$
0.1

 
$
2.1

Total derivatives NOT designated as hedging instruments
 
 
 
$
0.1

 
$
2.1

 
 
 
 
 
 
 
Total asset derivatives
 
 
 
$
0.5

 
$
2.9


The fair value of outstanding derivative contracts recorded as liabilities in the accompanying Condensed Consolidated Balance Sheets as of September 30, 2015 and December 31, 2014 was as follows:
 
 
 
 
LIABILITY DERIVATIVES
 
 
 
 
September 30, 2015
 
December 31, 2014
(in millions)
 
Balance Sheet Location
 
Fair Value
Derivatives designated as hedging instruments
 
 
 
 

 
 

Foreign exchange contracts
 
Accounts payable and accrued expenses
 
$
2.5

 
$
6.6

Commodity contracts
 
Accounts payable and accrued expenses
 
3.8

 
1.0

Interest rate swap contracts: Float-to-fixed
 
Accounts payable and accrued expenses
 
2.2

 
2.3

Commodity contracts
 
Other non-current liabilities
 
0.7

 
0.4

Interest rate swap contracts: Float-to-fixed
 
Other non-current liabilities
 
1.9

 

Interest rate swap contracts: Fixed-to-float
 
Other non-current liabilities
 

 
4.3

Total derivatives designated as hedging instruments
 
 
 
$
11.1

 
$
14.6

 
 
 
 
LIABILITY DERIVATIVES
 
 
 
 
September 30, 2015
 
December 31, 2014
(in millions)
 
Balance Sheet Location
 
Fair Value
Derivatives NOT designated as hedging instruments
 
 
 
 

 
 

Foreign exchange contracts
 
Accounts payable and accrued expenses
 
$
0.2

 
$
1.3

Total derivatives NOT designated as hedging instruments
 
 
 
$
0.2

 
$
1.3

 
 
 
 
 
 
 
Total liability derivatives
 
 
 
$
11.3

 
$
15.9


The effect of derivative instruments on the Condensed Consolidated Statements of Operations for the three months ended September 30, 2015 and September 30, 2014 for gains or losses initially recognized in Other Comprehensive Income (OCI) in the Condensed Consolidated Balance Sheets was as follows: 
 
 
Amount of Gain or (Loss) on Derivative
Recognized in OCI (Effective Portion,
net of tax)
 
Location of Gain or (Loss)
Reclassified from
Accumulated OCI into Income
(Effective Portion)
 
Amount of Gain or (Loss) Reclassified
from Accumulated OCI into Income
(Effective Portion)
Derivatives in Cash Flow Hedging
Relationships (in millions)
 
September 30,
2015
 
September 30,
2014
 
 
September 30,
2015
 
September 30,
2014
Foreign exchange contracts
 
$
0.9

 
$
(2.7
)
 
Cost of sales
 
$
(2.9
)
 
$
(0.6
)
Commodity contracts
 
(0.7
)
 
(0.3
)
 
Cost of sales
 
(1.1
)
 

Interest rate swap contracts: Float-to-fixed
 
(1.0
)
 
0.9

 
Interest expense
 
(0.6
)
 
(0.7
)
Total
 
$
(0.8
)
 
$
(2.1
)
 
 
 
$
(4.6
)
 
$
(1.3
)
Derivatives
 
Location of Gain or (Loss)
on Derivative Recognized in
Income (Ineffective Portion
and Amount Excluded from Effectiveness Testing)
 
Amount of Gain or (Loss) on Derivative Recognized in
Income (Ineffective Portion and Amount Excluded
from
Effectiveness Testing)
Relationships (in millions)
 
 
September 30, 2015
 
September 30, 2014
Commodity contracts
 
Cost of sales
 
$
(0.1
)
 
$
(0.1
)
Total
 
 
 
$
(0.1
)
 
$
(0.1
)
Derivatives Not Designated as
 
Location of Gain or (Loss)
Recognized on Derivative in Income
 
Amount of Gain or (Loss) on Derivative Recognized in
Income
Hedging Instruments (in millions)
 
 
September 30, 2015
 
September 30, 2014
Foreign exchange contracts
 
Other income
 
$
(0.6
)
 
$
1.0

Total
 
 
 
$
(0.6
)
 
$
1.0


The effect of derivative instruments on the Condensed Consolidated Statements of Operations for the nine months ended September 30, 2015 and September 30, 2014 for gains or losses initially recognized in Other Comprehensive Income (OCI) in the Condensed Consolidated Balance Sheets was as follows:
 
 
Amount of Gain or (Loss) on Derivative
Recognized in OCI (Effective Portion,
net of tax)
 
Location of Gain or (Loss)
Reclassified from
Accumulated OCI into Income
(Effective Portion)
 
Amount of Gain or (Loss) Reclassified
from Accumulated OCI into Income
(Effective Portion)
Derivatives in Cash Flow Hedging
Relationships (in millions)
 
September 30,
2015
 
September 30,
2014
 
 
September 30,
2015
 
September 30,
2014
Foreign exchange contracts
 
$
2.8

 
$
(3.8
)
 
Cost of sales
 
$
(10.0
)
 
$

Commodity contracts
 
(1.9
)
 
(0.1
)
 
Cost of sales
 
(2.5
)
 
(0.2
)
Interest rate swaps contracts: Float-to-fixed
 
(1.6
)
 
(0.2
)
 
Interest expense
 
(1.9
)
 
(1.1
)
Total
 
$
(0.7
)
 
$
(4.1
)
 
 
 
$
(14.4
)
 
$
(1.3
)
Derivatives
 
Location of Gain or (Loss)
on Derivative Recognized in
Income (Ineffective Portion
and Amount Excluded from Effectiveness Testing)
 
Amount of Gain or (Loss) on Derivative Recognized in
Income (Ineffective Portion and Amount Excluded
from
Effectiveness Testing)
Relationships (in millions)
 
 
September 30, 2015
 
September 30, 2014
Commodity contracts
 
Cost of sales
 
$
(0.2
)
 
$
(0.1
)
Total
 
 
 
$
(0.2
)
 
$
(0.1
)
Derivatives Not Designated as
 
Location of Gain or (Loss)
Recognized on Derivative in Income
 
Amount of Gain or (Loss) on Derivative Recognized in
Income
Hedging Instruments (in millions)
 
 
September 30, 2015
 
September 30, 2014
Foreign exchange contracts
 
Other income
 
$
(0.9
)
 
$
0.6

Total
 
 
 
$
(0.9
)
 
$
0.6


The effect of fair market value designated derivative instruments on the Condensed Consolidated Statements of Operations for the three months ended September 30, 2015 and September 30, 2014 for gains or losses recognized through income was as follows:
Derivatives Designated as Fair Market Value
 
Location of Gain or (Loss)
on Derivative Recognized in Income
 
Amount of Gain or (Loss) on Derivative Recognized in
Income
Instruments under ASC 815 (in millions)
 
 
September 30, 2015
 
September 30, 2014
Interest rate swap contracts: Fixed-to-float
 
Interest expense
 
$
2.0

 
$
(0.5
)
Total
 
 
 
$
2.0

 
$
(0.5
)

The effect of fair market value designated derivative instruments on the Condensed Consolidated Statements of Operations for the nine months ended September 30, 2015 and September 30, 2014 for gains or losses recognized through income was as follows:
Derivatives Designated as Fair Market Value
 
Location of Gain or (Loss)
on Derivative Recognized in Income
 
Amount of Gain or (Loss) on Derivative Recognized in
Income
Instruments under ASC 815 (in millions)
 
 
September 30, 2015
 
September 30, 2014
Interest rate swap contracts: Fixed-to-float
 
Interest expense
 
$
4.3

 
$
6.9

Total
 
 
 
$
4.3

 
$
6.9

Inventories
Inventories
Inventories
The components of inventories as of September 30, 2015 and December 31, 2014 are summarized as follows:
(in millions)
 
September 30,
2015
 
December 31,
2014
Inventories — gross:
 
 

 
 

Raw materials
 
$
240.9

 
$
226.2

Work-in-process
 
167.5

 
103.7

Finished goods
 
418.5

 
414.8

Total inventories — gross
 
826.9

 
744.7

Excess and obsolete inventory reserve
 
(69.0
)
 
(64.0
)
Net inventories at FIFO cost
 
757.9

 
680.7

Excess of FIFO costs over LIFO value
 
(40.0
)
 
(36.2
)
Inventories — net
 
$
717.9

 
$
644.5

Goodwill and Other Intangible Assets Goodwill and Other Intangible Assets (Notes)
Goodwill and Intangible Assets Disclosure [Text Block]
Goodwill and Other Intangible Assets
The changes in the carrying amount of goodwill by reportable segment for the year ended December 31, 2014 and the nine months ended September 30, 2015 are as follows:
(in millions)
 
Crane
 
Foodservice
 
Total
Gross balance as of January 1, 2014
 
$
345.1

 
$
1,389.2

 
$
1,734.3

Accumulated asset impairments
 

 
(515.7
)
 
(515.7
)
Net balance as of January 1, 2014
 
345.1

 
873.5

 
1,218.6

Foreign currency impact
 
(19.8
)
 
(0.7
)
 
(20.5
)
Gross balance as of December 31, 2014
 
$
325.3

 
$
1,388.5

 
$
1,713.8

Accumulated asset impairments
 

 
(515.7
)
 
(515.7
)
Net balance as of December 31, 2014
 
$
325.3

 
$
872.8

 
$
1,198.1

Foreign currency impact
 
(14.3
)
 
(0.4
)
 
(14.7
)
Reclass to held for sale
 

 
(27.9
)
 
(27.9
)
Gross balance as of September 30, 2015
 
$
311.0

 
$
1,360.2

 
$
1,671.2

Accumulated asset impairments
 

 
(515.7
)
 
(515.7
)
Net balance as of September 30, 2015
 
$
311.0

 
$
844.5

 
$
1,155.5


The company accounts for goodwill and other intangible assets under the guidance of ASC Topic 350, “Intangibles — Goodwill and Other.” The company performs an annual impairment review at June 30 of every year or more frequently if events or changes in circumstances indicate that the asset might be impaired. The company performs impairment reviews for its reporting units, which are Cranes, Foodservice Americas; Foodservice Europe, Middle East, and Africa; and Foodservice Asia, using a fair-value method based on the present value of future cash flows, which involves management’s judgments and assumptions about the amounts of those cash flows and the discount rates used. The estimated fair value is then compared with the carrying amount of the reporting unit, including recorded goodwill. Goodwill is then subject to risk of write-down to the extent that the carrying amount exceeds the estimated fair value.
As of June 30, 2015, the company performed its annual impairment analysis relative to goodwill and indefinite-lived intangible assets, and based on those results, no impairment was indicated. The company continually monitors market conditions and determines if any additional interim reviews of goodwill, other intangibles or long-lived assets are warranted. In the event the company determines that assets are impaired in the future, the company would recognize a non-cash impairment charge, which could have a material adverse effect on the company’s Condensed Consolidated Balance Sheet and Results of Operations.
The gross carrying amount, accumulated amortization and net book value of the company’s intangible assets other than goodwill at September 30, 2015 and December 31, 2014 are as follows:
 
 
September 30, 2015
 
December 31, 2014
(in millions)
 
Gross
Carrying
Amount
 
Accumulated
Amortization
 
Net
Book
Value
 
Gross
Carrying
Amount
 
Accumulated
Amortization
 
Net
Book
Value
Trademarks and tradenames
 
$
267.7

 
$

 
$
267.7

 
$
300.0

 
$

 
$
300.0

Customer relationships
 
425.6

 
(152.2
)
 
273.4

 
425.7

 
(136.0
)
 
289.7

Patents
 
31.1

 
(28.1
)
 
3.0

 
32.7

 
(28.3
)
 
4.4

Engineering drawings
 
10.4

 
(9.4
)
 
1.0

 
11.0

 
(9.3
)
 
1.7

Distribution network
 
18.6

 

 
18.6

 
19.7

 

 
19.7

Other intangibles
 
144.3

 
(61.7
)
 
82.6

 
170.9

 
(71.7
)
 
99.2

Total
 
$
897.7

 
$
(251.4
)
 
$
646.3

 
$
960.0

 
$
(245.3
)
 
$
714.7


Amortization expense for the three months ended September 30, 2015 and 2014 was $8.6 million and $8.8 million, respectively.
Amortization expense for the nine months ended September 30, 2015 and 2014 was $25.8 million and $26.4 million, respectively.
Accounts Payable and Accrued Expenses
Accounts Payable and Accrued Expenses
Accounts Payable and Accrued Expenses
Accounts payable and accrued expenses at September 30, 2015 and December 31, 2014 are summarized as follows:
(in millions)
 
September 30,
2015
 
December 31,
2014
Trade accounts payable
 
$
379.7

 
$
457.5

Interest payable
 
29.9

 
12.5

Employee related expenses
 
93.8

 
90.3

Restructuring expenses
 
16.2

 
20.3

Profit sharing and incentives
 
5.6

 
6.8

Accrued rebates
 
47.6

 
52.8

Deferred revenue - current
 
17.7

 
21.6

Income taxes payable
 
14.3

 
16.2

Miscellaneous accrued expenses
 
115.9

 
129.4

Total
 
$
720.7

 
$
807.4

Debt
Debt
Debt
Outstanding debt at September 30, 2015 and December 31, 2014 is summarized as follows:
(in millions)
 
September 30, 2015
 
December 31, 2014
Revolving credit facility
 
$
169.0

 
$

Term loan A
 
319.4

 
336.9

Term loan B
 
168.5

 
168.5

Senior notes due 2020
 
613.7

 
614.8

Senior notes due 2022
 
299.2

 
296.9

Other
 
68.7

 
106.4

Total debt
 
1,638.5

 
1,523.5

Less current portion and short-term borrowings
 
(63.2
)
 
(80.3
)
Long-term debt
 
$
1,575.3

 
$
1,443.2


On January 3, 2014, the company entered into a $1,050.0 million Third Amended and Restated Credit Agreement (as amended, the “Senior Credit Facility”) with JPMorgan Chase Bank, N.A., as Administrative Agent, Deutsche Bank Securities Inc., Bank of America, N.A., Wells Fargo Bank, National Association, and SunTrust Bank as Syndication Agents, and The Bank of Tokyo-Mitsubishi UFJ, Ltd., BMO Harris Bank N.A. and Rabobank Nederland, New York Branch as Documentation Agents. The Senior Credit Facility, which replaced the Prior Senior Credit Facility (as defined below), includes three different loan facilities. The first is a revolving facility in the amount of $500.0 million, with a term of five years. The second facility is a Term Loan A in the aggregate amount of $350.0 million, with a term of five years. The third facility is a Term Loan B in the amount of $200.0 million, with a term of seven years.
Entry into the Senior Credit Facility resulted in a loss on debt extinguishment of $2.0 million related to the write-off of deferred financing fees in the first quarter of 2014.
On February 20, 2015, the company entered into Amendment No. 2 to the Third Amended and Restated Credit Agreement which reflects changes to the definition of Adjusted EBITDA under the agreement, retroactive to December 31, 2014. The company defines Adjusted EBITDA as earnings before interest, taxes, depreciation, and amortization, plus certain items such as pro-forma acquisition results and the addback of extraordinary or non-recurring non-cash charges or benefits, certain restructuring and recapitalization charges (limited to $50.0 million during any period of twelve consecutive months), stock-based compensation and pension and post-retirement expenses that are adjustments per the credit agreement definition.
The Senior Credit Facility contains financial covenants including (a) a Consolidated Interest Coverage Ratio, which measures the ratio of (i) Adjusted EBITDA, as defined in the credit agreement to (ii) consolidated cash interest expense, each for the most recent four fiscal quarters, and (b) a Consolidated Senior Secured Leverage Ratio, which measures the ratio of (i) consolidated senior secured indebtedness to (ii) consolidated EBITDA for the most recent four fiscal quarters.  The current covenant levels of the financial covenants under the Senior Credit Facility are as set forth below:
Fiscal Quarter Ending
 
Consolidated
Senior Secured
Leverage Ratio
(less than)
 
Consolidated Interest
Coverage Ratio
(greater than)
September 30, 2015
 
3.25:1.00
 
2.75:1.00
December 31, 2015
 
3.25:1.00
 
2.75:1.00
March 31, 2016 and thereafter
 
3.00:1.00
 
3.00:1.00

The Senior Credit Facility includes customary representations and warranties and events of default and customary covenants, including without limitation (i) a requirement that the company prepay the term loan facilities from the net proceeds of asset sales, casualty losses, equity offerings, and new indebtedness for borrowed money, and from a portion of its excess cash flow, subject to certain exceptions; and (ii) limitations on indebtedness, capital expenditures, restricted payments, and acquisitions.
The Senior Credit Facility replaced the company’s prior $1,250.0 million Second Amended and Restated Credit Agreement (the “Prior Senior Credit Facility”), which was entered into on May 13, 2011. The Prior Senior Credit Facility included three different loan facilities.  The first was a revolving facility in the amount of $500.0 million, with a term of five years.  The second facility was an amortizing Term Loan A facility in the aggregate amount of $350.0 million with a term of five years.  The third facility was an amortizing Term Loan B facility in the amount of $400.0 million with a term of 6.5 years.
As of September 30, 2015, the company had the following two series of Senior Notes outstanding (collectively the “Senior Notes”):
5.875% Senior Notes due 2022 (the “2022 Notes”); original principal amount: $300.0 million
8.50% Senior Notes due 2020 (the “2020 Notes”); original principal amount: $600.0 million
Interest on the 2022 Notes is payable semiannually in April and October of each year; interest on the 2020 Notes is payable semiannually in May and November of each year.
Each series of Senior Notes is an unsecured senior obligation ranking subordinate to all existing senior secured indebtedness and equal to all existing senior unsecured obligations.  Each series of Senior Notes is guaranteed by certain of the company’s 100% owned domestic subsidiaries; these subsidiaries also guaranty the company’s obligations under the Senior Credit Facility.  Each series of Senior Notes contains affirmative and negative covenants that limit, among other things, the company’s ability to redeem or repurchase its debt, incur additional debt, make acquisitions, merge with other entities, pay dividends or distributions, repurchase capital stock, and create or become subject to liens.  Each series of Senior Notes also includes customary events of default. If an event of default occurs and is continuing with respect to the Senior Notes, then the trustee or the holders of at least 25% of the principal amount of the outstanding Senior Notes may declare the principal and accrued interest on all of the Senior Notes to be due and payable immediately. In addition, in the case of an event of default arising from certain events of bankruptcy, all unpaid principal of, and premium, if any, and accrued and unpaid interest on all outstanding Senior Notes will become due and payable immediately.
The company may redeem the 2022 Notes in whole or in part for a premium at any time on or after October 15, 2017. The following would be the principal and premium paid by the company, expressed as percentages of the principal amount thereof, if it redeems the 2022 Notes during the 12-month period commencing on October 15 of the year set forth below:
Year
Percentage
2017
102.938
%
2018
101.958
%
2019
100.979
%
2020 and thereafter
100.000
%

In addition, at any time prior to October 15, 2015, the company is permitted to, at its option, use the net cash proceeds of one or more public equity offerings to redeem up to 35% of the 2022 Notes at a redemption price of 105.875%, plus accrued but unpaid interest, if any, to the date of redemption; provided that (1) at least 65% of the principal amount of the 2022 Notes outstanding remains outstanding immediately after any such redemption; and (2) the company makes such redemptions not more than 90 days after the consummation of any such public offering. Further, the company is required to offer to repurchase the 2022 Notes for cash at a price of 101% of the aggregate principal amount of the 2022 Notes, plus accrued and unpaid interest, if any, upon the occurrence of a change of control triggering event.
The company may redeem the 2020 Notes in whole or in part for a premium at any time on or after November 1, 2015.  The following would be the principal and the premium paid by the company, expressed as a percentage of the principal amount, if it redeems the 2020 Notes during the twelve-month period commencing on November 1 of the year set forth below: 
Year
Percentage
2015
104.250
%
2016
102.833
%
2017
101.417
%
2018 and thereafter
100.000
%

On February 18, 2014 the Company redeemed its 9.50% Senior Notes due 2018 (the “2018 Notes”) for $419.0 million, or 104.750% expressed as a percentage of the principal amount. The redemption resulted in a loss on debt extinguishment of $23.3 million during the first quarter of 2014 and consisted of $19.0 million related to the redemption premium and $4.3 million related to the write-off of deferred financing fees. Previously monetized derivative assets related to fixed-to-float interest rate swaps were treated as an increase to the debt balance of the 2018 Notes and were being amortized to interest expense over the life of the original swap. As a result of the redemption, the remaining monetization balance of $8.3 million was amortized as a reduction to interest expense during the first quarter of 2014.
As of September 30, 2015, the company had outstanding $68.7 million of other indebtedness that has a weighted-average interest rate of approximately 5.71%.  This debt includes outstanding line of credit balances and capital lease obligations in its Americas, Asia-Pacific and European regions.
As of September 30, 2015, the company had outstanding $175.0 million notional amount of float-to-fixed interest rate swaps related to Term Loan A of the Senior Credit Facility. The interest rate swaps fix the interest related to $175.0 million notional amount of Term Loan A at a rate of 1.635%, plus the applicable spread based on the Consolidated Total Leverage Ratio of the company as defined under the Senior Credit Facility. The unhedged portions of Term Loans A and B continue to bear interest according to the terms of the Senior Credit Facility. Including interest rate swaps as of September 30, 2015, the weighted average interest rates for the Term Loan A and the Term Loan B loans were 3.15% and 3.00%, respectively. Excluding interest rate swaps, the interest rates on Term Loan A and Term Loan B were 2.50% and 3.00% respectively, at September 30, 2015.
As of September 30, 2015, the company had $169.0 million of borrowings outstanding under the revolving facility.  During the quarter ended September 30, 2015, the highest daily borrowing was $367.0 million and the average borrowing was $338.5 million, while the average interest rate was 2.69% per annum.  The interest rate fluctuates based upon LIBOR or a Prime rate plus a spread, which is based upon the Consolidated Total Leverage Ratio of the company.  As of September 30, 2015, the spreads for LIBOR and Prime borrowings were 2.25% and 1.25%, respectively, given the company’s effective Consolidated Total Leverage Ratio for this period.
In April 2015, the company monetized the derivative liability related to $75.0 million notional amount of its fixed-to-float interest rate swaps related to the 2020 Notes and $45.0 million notional amount of its fixed-to-float interest rate swaps related to the 2022 Notes. The loss on the monetization of these swaps of $0.7 million was treated as a decrease to the debt balances for the 2020 Notes and 2022 Notes, and is being amortized against interest expense over the life of the original swaps.
In September 2015, the company monetized the derivative liability related to $80.0 million notional of its fixed-to-float interest rate swaps related to the 2022 Notes. The loss on monetization of these swaps of $0.5 million was treated as a decrease to the debt balances for the 2020 Notes and 2022 Notes, and is being amortized against interest expense over the life of the original swaps.
As of September 30, 2015, the company had no interest rate swaps outstanding related to its Senior Notes.
The balance sheet values of the Senior Notes as of September 30, 2015 and December 31, 2014 are not equal to the face value of the Senior Notes due to the fact that the monetized value and the fair market value of the fixed-to-float interest rate hedges on these Senior Notes are included in the applicable balance sheet values (see Note 5, “Derivative Financial Instruments” for more information).
As of September 30, 2015, the company was in compliance with all affirmative and negative covenants in its debt instruments inclusive of the financial covenants pertaining to the Senior Credit Facility, the 2020 Notes, and the 2022 Notes.  Based upon the company's current plans and outlook, management believes the company will be able to comply with these covenants during the subsequent twelve months. As of September 30, 2015, the company's Consolidated Senior Secured Leverage Ratio was 2.60:1, while the maximum ratio is 3.25:1, and the Consolidated Interest Coverage Ratio was 3.65:1, above the minimum ratio of 2.75:1.
Accounts Receivable Securitization
Accounts Receivable Securitization
Accounts Receivable Securitization
The company maintains an accounts receivable securitization program with a commitment size of $185.0 million, whereby transactions under the program are accounted for as sales in accordance with ASC Topic 860, “Transfers and Servicing.”  Sales of trade receivables under the program are reflected as a reduction of accounts receivable in the accompanying Condensed Consolidated Balance Sheets and the proceeds received, including collections on the deferred purchase price notes, are included in cash flows from operating activities in the accompanying Condensed Consolidated Statements of Cash Flows.  The company deems the interest rate risk related to the deferred purchase price notes to be de minimis, primarily due to the short average collection cycle of the related receivables (i.e., less than 60 days) as noted below.
On August 31, 2015, the company completed changes to its accounts receivable securitization program. Among other actions, the company entered into an amendment (the “First Amendment”) to the Fifth Amended and Restated Receivables Purchase Agreement (the “Receivables Purchase Agreement”), dated as of December 15, 2014, among Manitowoc Funding, LLC (“U.S. Seller”) and Manitowoc Cayman Islands Funding Ltd. (“Cayman Seller”), as sellers, the company, Garland Commercial Ranges Limited (“Garland”), Convotherm Elektrogeräte GmbH (“Convotherm”), Manitowoc Deutschland GmbH (“Manitowoc Deutschland”), Manitowoc Foodservice UK Limited (“Foodservice UK”), Manitowoc Foodservice Asia Pacific Private Limited (“Foodservice Asia”) and the other persons from time to time party thereto, as servicers, and Wells Fargo Bank, N.A. (the “Purchaser”), as purchaser and agent. As a result, (i) Foodservice Asia was added as an originator and as a servicer under the facility; and (ii) the company’s domestic foodservice business originators were effectively released from their obligations under the related purchase and sale agreement and will now sell their accounts receivable to the Cayman Seller (prior to these changes, these receivables were sold to the U.S. Seller; the accounts receivable of certain of the company’s cranes businesses will continue to be sold to the U.S. Seller).
Trade accounts receivables sold to a third-party financial institution (“Purchaser”) and being serviced by the company totaled $152.8 million as of September 30, 2015 and $172.8 million at December 31, 2014
Due to an average collection cycle of less than 60 days for such accounts receivable as well as the company’s collection history, the fair value of the company’s deferred purchase price notes approximates book value.  The fair value of the deferred purchase price notes recorded as of September 30, 2015 and December 31, 2014 was $123.7 million and $50.9 million, respectively, and is included in accounts receivable in the accompanying Condensed Consolidated Balance Sheets.
The accounts receivable securitization program also contains customary affirmative and negative covenants. Among other restrictions, these covenants require the company to meet specified financial tests, which include a consolidated interest coverage ratio and a consolidated senior secured leverage ratio that are the same as the covenant ratios required under the Senior Credit Facility.  As of September 30, 2015, the company was in compliance with all affirmative and negative covenants inclusive of the financial covenants pertaining to the accounts receivable securitization program.  Based on the company's current plans and outlook, management believes the company will be able to comply with these covenants during the subsequent twelve months.
Income Taxes
Income Taxes
Income Taxes
For the nine months ended September 30, 2015, the company recorded income tax expense of $24.6 million, compared to income tax expense of $3.7 million for the nine months ended September 30, 2014. The increase in the company’s tax expense for the nine months ended September 30, 2015 relative to the prior year relates primarily to an election made by the company with the Internal Revenue Service in the third quarter of 2014 to treat Enodis Holdings Ltd., the company’s UK holding company, as a partnership for U.S. federal income tax purposes. As a result of this status change, the company recorded a $25.6 million capital loss tax benefit. The tax expense increase is also attributable to one-time tax costs caused by the company’s spin off of the Foodservice business. The company’s effective tax rate varies from the U.S. federal statutory rate of 35% due to results of foreign operations that are subject to income taxes at different statutory rates.
The company will continue to periodically evaluate its valuation allowance requirements in light of changing facts and circumstances, and may adjust its deferred tax asset valuation allowances accordingly. It is reasonably possible that the company will either add to, or reverse a portion of its existing deferred tax asset valuation allowances in the future. Such changes in the deferred tax asset valuation allowances will be reflected in the current operations through the company’s income tax provision, and could have a material effect on operating results.

In the second quarter of 2015, management determined that it was more likely than not that deferred tax assets of $4.2 million related to its Brazilian crane manufacturing operations would not be realized and recorded a valuation allowance.
The company’s unrecognized tax benefits, excluding interest and penalties, were $33.8 million as of September 30, 2015, and $33.3 million as of December 31, 2014. During the next twelve months, it is reasonably possible that $3.4 million of the unrecognized tax benefits, if recognized, would affect the annual effective tax rate.
The company regularly assesses the likelihood of an adverse outcome resulting from examinations to determine the adequacy of its tax reserves.  As of September 30, 2015, the company believes that it is more likely than not that the tax positions it has taken will be sustained upon the resolution of its audits resulting in no material impact on its consolidated financial position and the results of operations and cash flows.  However, the final determination with respect to any tax audits, and any related litigation, could be materially different from the company’s estimates and/or from its historical income tax provisions and accruals and could have a material 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.
Earnings Per Share
Earnings Per Share
Earnings Per Share
The following is a reconciliation of the average shares outstanding used to compute basic and diluted earnings per share. 
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
2015
 
2014
 
2015
 
2014
Basic weighted average common shares outstanding
136,164,053

 
135,222,411

 
135,983,603

 
134,803,784

Effect of dilutive securities
1,244,051

 
2,375,393

 
1,347,851

 
2,802,227

Diluted weighted average common shares outstanding
137,408,104

 
137,597,804

 
137,331,454

 
137,606,011


For the three months ended September 30, 2015 and September 30, 2014, 3.4 million and 1.2 million, respectively, of common shares issuable upon the exercise of stock options were anti-dilutive and were excluded from the calculation of diluted shares. For the nine months ended September 30, 2015 and September 30, 2014, 2.9 million and 1.2 million, respectively, of common shares issuable upon the exercise of stock options were anti-dilutive and were excluded from the calculation of diluted shares.
No dividends were paid during each of the nine months ended September 30, 2015 and September 30, 2014.
Stockholders' Equity
Stockholders' Equity
Stockholders’ Equity
The following is a roll forward of retained earnings and noncontrolling interest for the nine months ended September 30, 2015 and 2014:
(in millions)
 
Retained Earnings
 
Noncontrolling
Interest
Balance at December 31, 2014
 
$
486.9

 
$

Net earnings
 
19.7

 

Balance at September 30, 2015
 
$
506.6

 
$

(in millions)
 
Retained Earnings
 
Noncontrolling
Interest
Balance at December 31, 2013
 
$
353.2

 
$
6.8

Net earnings
 
110.9

 
3.9

Noncontrolling interest deconsolidation as a result of sale
 

 
(10.7
)
Balance at September 30, 2014
 
$
464.1

 
$


Authorized capitalization consists of 300 million shares of $0.01 par value common stock and 3.5 million shares of $0.01 par value preferred stock.  None of the preferred shares have been issued.
Currently, the company has authorization to purchase up to 10 million shares of common stock at management’s discretion.  The company previously purchased approximately 7.6 million shares at a cost of $49.8 million pursuant to this authorization; however, the company has not purchased any shares of its common stock under this authorization since 2006.
Reconciliations for the changes in accumulated other comprehensive income (loss), net of tax, by component for the three and nine months ended September 30, 2015 and 2014 are as follows:
(in millions)
 
Gains and Losses on Cash Flow Hedges
 
Pension & Postretirement
 
Foreign Currency Translation
 
Total
Balance at December 31, 2014
 
$
(6.3
)
 
$
(95.0
)
 
$
(29.2
)
 
$
(130.5
)
Other comprehensive loss before reclassifications
 
(6.9
)
 

 
(62.8
)
 
(69.7
)
Amounts reclassified from accumulated other comprehensive income (loss)
 
2.8

 
1.4

 

 
4.2

Net current period other comprehensive (loss) income
 
(4.1
)
 
1.4

 
(62.8
)
 
(65.5
)
Balance at March 31, 2015
 
$
(10.4
)
 
$
(93.6
)
 
$
(92.0
)
 
$
(196.0
)
Other comprehensive income before reclassifications
 
1.0

 

 
8.6

 
9.6

Amounts reclassified from accumulated other comprehensive income (loss)
 
3.3

 
1.4

 

 
4.7

Net current period other comprehensive income
 
4.3

 
1.4

 
8.6

 
14.3

Balance at June 30, 2015
 
$
(6.1
)
 
$
(92.2
)
 
$
(83.4
)
 
$
(181.7
)
Other comprehensive income (loss) before reclassifications
 
3.2

 

 
(18.5
)
 
(21.7
)
Amounts reclassified from accumulated other comprehensive income
 
2.9

 
1.4

 

 
4.3

Net current period other comprehensive (loss) income
 
(0.3
)
 
1.4

 
(18.5
)
 
(17.4
)
Balance at September 30, 2015
 
$
(6.4
)
 
$
(90.8
)
 
$
(101.9
)
 
$
(199.1
)
(in millions)
 
Gains and Losses on Cash Flow Hedges
 
Pension & Postretirement
 
Foreign Currency items
 
Total
Balance at December 31, 2013
 
$
1.0

 
$
(62.7
)
 
$
54.8

 
$
(6.9
)
Other comprehensive (loss) income before reclassifications
 
(0.9
)
 

 
3.4

 
2.5

Amounts reclassified from accumulated other comprehensive income (loss)
 
(0.2
)
 
0.8

 

 
0.6

Net current period other comprehensive (loss) income
 
(1.1
)
 
0.8

 
3.4

 
3.1

Balance at March 31, 2014
 
$
(0.1
)
 
$
(61.9
)
 
$
58.2

 
$
(3.8
)
Other comprehensive loss before reclassifications
 
(1.1
)
 

 
(2.0
)
 
(3.1
)
Amounts reclassified from accumulated other comprehensive income (loss)
 
0.2

 
0.8

 

 
1.0

Net current period other comprehensive (loss) income
 
(0.9
)
 
0.8

 
(2.0
)
 
(2.1
)
Balance at June 30, 2014
 
$
(1.0
)
 
$
(61.1
)
 
$
56.2

 
$
(5.9
)
Other comprehensive loss before reclassifications
 
(2.9
)
 

 
(48.2
)
 
(51.1
)
Amounts reclassified from accumulated other comprehensive income
 
0.8

 
0.7

 

 
1.5

Net current period other comprehensive (loss) income
 
(2.1
)
 
0.7

 
(48.2
)
 
(49.6
)
Balance at September 30, 2014
 
$
(3.1
)
 
$
(60.4
)
 
$
8.0

 
$
(55.5
)

The following is a reconciliation of the reclassifications out of accumulated other comprehensive income (loss), net of tax, for the three and nine months ended September 30, 2015:
 
 
Three Months Ended
September 30, 2015
 
Nine Months Ended
September 30, 2015
 
 
(in millions)
 
Amount Reclassified from Accumulated Other Comprehensive Income (Loss)
 
Amount Reclassified from Accumulated Other Comprehensive Income (Loss)
 
Recognized Location
Gains and losses on cash flow hedges
 
 
 
 
 
 
  Foreign exchange contracts
 
$
(2.9
)
 
$
(10.0
)
 
Cost of sales
  Commodity contracts
 
(1.1
)
 
(2.5
)
 
Cost of sales
  Interest rate swap contracts: Float-to-fixed
 
(0.6
)
 
(1.9
)
 
Interest Expense
 
 
(4.6
)
 
(14.4
)
 
Total before tax
 
 
1.7

 
5.4

 
Tax expense
 
 
$
(2.9
)
 
$
(9.0
)
 
Net of tax
Amortization of pension and postretirement items
 
 
 
 
 
 
  Actuarial losses
 
(1.9
)
 
(5.8
)
(a)
 
 
 
(1.9
)
 
(5.8
)
 
Total before tax
 
 
0.5

 
1.5

 
Tax benefit
 
 
$
(1.4
)
 
$
(4.3
)
 
Net of Tax
 
 
 
 
 
 
 
Total reclassifications for the period
 
$
(4.3
)
 
$
(13.3
)
 
Net of Tax
 
 
 
 
 
 
 
(a) These accumulated other comprehensive income (loss) components are included in the computation of net periodic pension cost (see Note 17, “Employee Benefit Plans,” for further details).

The following is a reconciliation of the reclassifications out of accumulated other comprehensive income (loss), net of tax, for the three and nine months ended September 30, 2014:
 
 
Three Months Ended
September 30, 2014
 
Nine Months Ended
September 30, 2014
 
 
(in millions)
 
Amount Reclassified from Accumulated Other Comprehensive Income (Loss)
 
Amount Reclassified from Accumulated Other Comprehensive Income (Loss)