MANITOWOC CO INC, 10-K filed on 2/28/2013
Annual Report
Document and Entity Information (USD $)
12 Months Ended
Dec. 31, 2012
Jan. 31, 2013
Jun. 29, 2012
Document and entity information
 
 
 
Entity Registrant Name
MANITOWOC CO INC 
 
 
Entity Central Index Key
0000061986 
 
 
Document Type
10-K 
 
 
Document Period End Date
Dec. 31, 2012 
 
 
Amendment Flag
false 
 
 
Current Fiscal Year End Date
--12-31 
 
 
Entity Well-known Seasoned Issuer
Yes 
 
 
Entity Voluntary Filers
No 
 
 
Entity Current Reporting Status
Yes 
 
 
Entity Filer Category
Large Accelerated Filer 
 
 
Entity Public Float
 
 
$ 1,534,300,000 
Entity Common Stock, Shares Outstanding
 
132,781,078 
 
Document Fiscal Year Focus
2012 
 
 
Document Fiscal Period Focus
FY 
 
 
Consolidated Statements of Operations (USD $)
In Millions, except Per Share data, unless otherwise specified
12 Months Ended
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2010
Operations
 
 
 
Net sales
$ 3,927.0 
$ 3,619.2 
$ 3,111.5 
Costs and expenses:
 
 
 
Cost of sales
2,992.6 
2,792.5 
2,352.1 
Engineering, selling and administrative expenses
603.5 
565.4 
508.9 
Amortization expense
37.1 
37.9 
37.4 
Restructuring expense
9.5 
5.5 
3.8 
Other expenses (income)
2.5 
(0.5)
2.3 
Cost of sales
3,645.2 
3,400.8 
2,904.5 
Operating earnings from continuing operations
281.8 
218.4 
207.0 
Other income (expenses):
 
 
 
Interest expense
(137.1)
(146.7)
(175.0)
Amortization of deferred financing fees
(8.2)
(10.4)
(22.0)
Loss on debt extinguishment
(6.3)
(29.7)
(44.0)
Other income (expense)-net
0.1 
2.3 
(9.0)
Total other expenses
(151.5)
(184.5)
(250.0)
Earnings (loss) from continuing operations before taxes on earnings
130.3 
33.9 
(43.0)
Provision for taxes on earnings
38.0 
13.6 
26.2 
Earnings (loss) from continuing operations
92.3 
20.3 
(69.2)
Discontinued operations:
 
 
 
Earnings (loss) from discontinued operations, net of income taxes of $0.2, ($2.6) and $1.7, respectively
0.3 
(3.4)
(8.1)
Loss on sale of discontinued operations, net of income taxes of $0.0, $29.9 and $0.0, respectively
(34.6)
Net earnings (loss)
92.6 
(17.7)
(77.3)
Less: Net loss attributable to noncontrolling interest, net of tax
(9.1)
(6.5)
(2.7)
Net earnings (loss) attributable to Manitowoc
101.7 
(11.2)
(74.6)
Amounts attributable to the Manitowoc common shareholders:
 
 
 
Earnings (loss) from continuing operations
101.4 
26.8 
(66.5)
Loss from discontinued operations, net of income taxes
0.3 
(3.4)
(8.1)
Loss on sale of discontinued operations, net of income taxes
(34.6)
Net earnings (loss) attributable to Manitowoc
$ 101.7 
$ (11.2)
$ (74.6)
Basic earnings (loss) per common share:
 
 
 
Earnings (loss) from continuing operations attributable to Manitowoc common shareholders
$ 0.77 
$ 0.21 
$ (0.51)
Earnings (loss) from discontinued operations attributable to Manitowoc common shareholders
$ 0.00 
$ (0.03)
$ (0.06)
Loss on sale of discontinued operations, net of income taxes
$ 0.00 
$ (0.27)
$ 0.00 
Earnings (loss) per share attributable to Manitowoc common shareholders
$ 0.76 
$ (0.08)
$ (0.57)
Diluted earnings (loss) per common share:
 
 
 
Earnings (loss) from continuing operations attributable to Manitowoc common shareholders
$ 0.76 
$ 0.20 
$ (0.51)
Loss from discontinued operations attributable to Manitowoc common shareholders
$ 0.00 
$ (0.03)
$ (0.06)
Loss on sale of discontinued operations, net of income taxes
$ 0.00 
$ (0.26)
$ 0.00 
Earnings (loss) per share attributable to Manitowoc common shareholders
$ 0.77 
$ (0.09)
$ (0.57)
Consolidated Statements of Operations (Parenthetical) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2010
Income Statement [Abstract]
 
 
 
Earnings (loss) from discontinued operations, income taxes
$ 0.2 
$ (2.6)
$ 1.7 
Loss on sale of discontinued operations, income taxes
$ 0 
$ 29.9 
$ 0 
Consolidated Statements of Comprehensive Income (Loss) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2010
Net earnings (loss)
$ 92.6 
$ (17.7)
$ (77.3)
Other comprehensive income (loss), net of tax
 
 
 
Foreign currency translation adjustments
8.3 
(10.9)
(33.4)
Derivative instrument fair market value adjustment, net of income taxes of $2.6, $2.2, and $(3.3), respectively.
5.2 
4.0 
(6.1)
Employee pension and postretirement benefits, net of income taxes of $(0.5), $(9.7), and $(6.7), respectively.
(18.1)
(18.0)
(12.4)
Total other comprehensive loss, net of tax
(4.6)
(24.9)
(51.9)
Comprehensive income (loss)
88.0 
(42.6)
(129.2)
Comprehensive loss attributable to noncontrolling interest
(9.1)
(6.5)
(2.7)
Comprehensive income (loss) attributable to Manitowoc
$ 97.1 
$ (36.1)
$ (126.5)
Consolidated Statements of Comprehensive Income (Loss) (Parenthetical) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2010
Statement of Other Comprehensive Income [Abstract]
 
 
 
Derivative instrument fair market value adjustment, net of income taxes of
$ 2.6 
$ 2.2 
$ (3.3)
Employee pension and post retirement benefits, net of income taxes of
$ (0.5)
$ (9.7)
$ (6.7)
Consolidated Balance Sheets (USD $)
In Millions, unless otherwise specified
Dec. 31, 2012
Dec. 31, 2011
Current Assets:
 
 
Cash and cash equivalents
$ 73.4 
$ 68.6 
Marketable securities
2.7 
2.7 
Restricted cash
10.6 
7.2 
Accounts receivable, less allowances of $13.5 and $12.8, respectively
332.7 
294.5 
Inventories — net
707.6 
662.3 
Deferred income taxes
89.0 
116.7 
Other current assets
105.2 
77.8 
Current assets of discontinued operation
6.8 
7.1 
Total current assets
1,328.0 
1,236.9 
Property, plant and equipment — net
556.1 
564.5 
Goodwill
1,210.7 
1,208.0 
Other intangible assets — net
796.4 
831.6 
Other non-current assets
130.3 
144.5 
Long-term assets of discontinued operation
35.8 
37.1 
Total assets
4,057.3 
4,022.6 
Current Liabilities:
 
 
Accounts payable and accrued expenses
912.9 
864.2 
Short-term borrowings
92.8 
79.1 
Product warranties
82.1 
93.1 
Customer advances
24.2 
35.1 
Product liabilities
27.9 
26.8 
Current liabilities of discontinued operation
6.0 
5.2 
Total current liabilities
1,145.9 
1,103.5 
Non-Current Liabilities:
 
 
Long-term debt
1,732.0 
1,810.9 
Deferred income taxes
223.0 
258.2 
Pension obligations
114.3 
90.6 
Postretirement health and other benefit obligations
53.4 
59.8 
Long-term deferred revenue
37.7 
34.2 
Other non-current liabilities
161.1 
175.6 
Long-term liabilities of discontinued operation
8.6 
8.7 
Total non-current liabilities
2,330.1 
2,438.0 
Commitments and contingencies (Note 17)
   
   
Total Equity:
 
 
Common stock (300,000,000 shares authorized, 163,175,928 shares issued, 132,769,478 and 131,884,765 shares outstanding, respectively)
1.4 
1.4 
Additional paid-in capital
486.9 
466.6 
Accumulated other comprehensive income (loss)
(29.4)
(24.8)
Retained earnings
222.1 
131.0 
Treasury stock, at cost (30,406,450 and 31,291,163 shares, respectively)
(80.7)
(83.2)
Total Manitowoc stockholders’ equity
600.3 
491.0 
Noncontrolling interest
(19.0)
(9.9)
Total equity
581.3 
481.1 
Total liabilities and equity
$ 4,057.3 
$ 4,022.6 
Consolidated Balance Sheets (Parenthetical) (USD $)
In Millions, except Share data, unless otherwise specified
Dec. 31, 2012
Dec. 31, 2011
Statement of Financial Position [Abstract]
 
 
Accounts Receivable, allowances (in dollars)
$ 13.5 
$ 12.8 
Common stock, shares authorized
300,000,000 
300,000,000 
Common stock, shares issued
163,175,928 
163,175,928 
Common stock, shares outstanding
132,769,478 
131,884,765 
Treasury stock, shares
30,406,450 
31,291,163 
Consolidated Statements of Cash Flows (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2010
Cash Flows From Operations
 
 
 
Net earnings (loss)
$ 92.6 
$ (17.7)
$ (77.3)
Adjustments to reconcile net earnings to cash provided by operating activities of continuing operations:
 
 
 
Discontinued operations, net of income taxes
(0.3)
3.4 
8.1 
Depreciation
69.5 
81.5 
86.5 
Amortization of intangible assets
37.1 
37.9 
37.4 
Amortization of deferred financing fees
8.2 
10.4 
22.0 
Deferred income taxes
(8.5)
24.5 
25.4 
Loss on early extinguishment of debt
6.3 
29.7 
44.0 
Loss (gain) on sale of property, plant and equipment
3.0 
(2.2)
(3.3)
Loss on sale of discontinued operations
34.6 
Other
16.4 
13.7 
8.4 
Changes in operating assets and liabilities, excluding the effects of business acquisitions or dispositions:
 
 
 
Accounts receivable
(35.6)
(98.2)
17.9 
Inventories
(41.0)
(111.9)
0.8 
Other assets
(1.9)
(1.2)
29.8 
Accounts payable
25.7 
98.6 
46.2 
Accrued expenses and other liabilities
(12.4)
(70.6)
(43.4)
Net cash provided by operating activities of continuing operations
159.1 
32.5 
202.5 
Net cash provided by (used for) operating activities of discontinued operations
3.2 
(16.9)
6.8 
Net cash provided by operating activities
162.3 
15.6 
209.3 
Cash Flows From Investing
 
 
 
Capital expenditures
(72.9)
(64.8)
(35.9)
Proceeds from sale of property, plant and equipment
0.9 
17.5 
23.2 
Restricted cash
(3.3)
2.2 
(3.0)
Business acquisitions, net of cash acquired
(4.8)
Proceeds from sale of business
143.6 
Net cash (used for) provided by investing activities of continuing operations
(75.3)
98.5 
(20.5)
Net cash used for investing activities of discontinued operations
(0.2)
(0.1)
(4.4)
Net cash (used for) provided by investing activities
(75.5)
98.4 
(24.9)
Cash Flows From Financing
 
 
 
Proceeds from (payments on) revolving credit facility-net
34.4 
(24.2)
24.2 
Derivative, Cash Received on Hedge
14.8 
21.5 
Payments on long-term debt
(495.4)
(960.3)
(1,250.8)
Proceeds from long-term debt
383.3 
845.0 
1,063.0 
Proceeds from securitization
101.0 
(Payments on) proceeds from notes financing - net
(10.4)
14.8 
(4.1)
Debt issuance costs
(5.7)
(14.7)
(27.0)
Dividends paid
(10.6)
(10.6)
(10.6)
Exercises of stock options including windfall tax benefits
6.4 
2.6 
0.9 
Net cash used for financing activities
(83.2)
(125.9)
(204.4)
Effect of exchange rate changes on cash
1.2 
(3.2)
Net increase (decrease) in cash and cash equivalents
4.8 
(15.1)
(20.0)
Balance at beginning of year
68.6 
83.7 
103.7 
Balance at end of year
73.4 
68.6 
83.7 
Supplemental Cash Flow Information
 
 
 
Interest paid
137.7 
154.1 
159.3 
Income taxes paid (refunded)
18.8 
24.2 
(40.4)
Parent
 
 
 
Cash Flows From Operations
 
 
 
Net earnings (loss)
101.7 
(11.2)
(74.6)
Adjustments to reconcile net earnings to cash provided by operating activities of continuing operations:
 
 
 
Discontinued operations, net of income taxes
Amortization of intangible assets
Amortization of deferred financing fees
8.2 
10.4 
22.0 
Loss on early extinguishment of debt
6.3 
29.7 
44.0 
Loss on sale of discontinued operations
Changes in operating assets and liabilities, excluding the effects of business acquisitions or dispositions:
 
 
 
Net cash provided by operating activities of continuing operations
(22.8)
(59.8)
(28.1)
Net cash provided by (used for) operating activities of discontinued operations
Net cash provided by operating activities
(22.8)
(59.8)
(28.1)
Cash Flows From Investing
 
 
 
Capital expenditures
(1.4)
(0.4)
(0.9)
Proceeds from sale of property, plant and equipment
0.5 
Restricted cash
1.0 
2.0 
(3.3)
Business acquisitions, net of cash acquired
 
 
Proceeds from sale of business
 
 
Net cash (used for) provided by investing activities of continuing operations
131.0 
218.3 
193.6 
Net cash used for investing activities of discontinued operations
Net cash (used for) provided by investing activities
131.0 
218.3 
193.6 
Cash Flows From Financing
 
 
 
Proceeds from (payments on) revolving credit facility-net
34.4 
(24.2)
24.2 
Derivative, Cash Received on Hedge
14.8 
21.5 
 
Payments on long-term debt
(439.7)
(884.1)
(1,165.7)
Proceeds from long-term debt
300.0 
750.0 
1,000.0 
Proceeds from securitization
 
 
(Payments on) proceeds from notes financing - net
Debt issuance costs
(5.7)
(14.7)
(27.0)
Dividends paid
(10.6)
(10.6)
(10.6)
Net cash used for financing activities
(100.4)
(159.6)
(178.2)
Effect of exchange rate changes on cash
Net increase (decrease) in cash and cash equivalents
7.8 
(1.1)
(12.7)
Balance at beginning of year
4.2 
5.3 
18.0 
Balance at end of year
12.0 
4.2 
5.3 
Guarantor Subsidiaries
 
 
 
Cash Flows From Operations
 
 
 
Net earnings (loss)
153.5 
46.9 
83.8 
Adjustments to reconcile net earnings to cash provided by operating activities of continuing operations:
 
 
 
Discontinued operations, net of income taxes
0.9 
1.5 
0.8 
Amortization of intangible assets
29.9 
29.9 
29.7 
Amortization of deferred financing fees
Loss on early extinguishment of debt
Loss on sale of discontinued operations
34.6 
Changes in operating assets and liabilities, excluding the effects of business acquisitions or dispositions:
 
 
 
Net cash provided by operating activities of continuing operations
167.4 
70.5 
124.0 
Net cash provided by (used for) operating activities of discontinued operations
(0.9)
(1.5)
(0.8)
Net cash provided by operating activities
166.5 
69.0 
123.2 
Cash Flows From Investing
 
 
 
Capital expenditures
(36.5)
(23.4)
(16.2)
Proceeds from sale of property, plant and equipment
0.1 
1.1 
Restricted cash
Business acquisitions, net of cash acquired
 
 
(4.8)
Proceeds from sale of business
 
143.6 
 
Net cash (used for) provided by investing activities of continuing operations
(211.9)
(44.2)
(56.1)
Net cash used for investing activities of discontinued operations
Net cash (used for) provided by investing activities
(211.9)
(44.2)
(56.1)
Cash Flows From Financing
 
 
 
Proceeds from (payments on) revolving credit facility-net
Derivative, Cash Received on Hedge
 
Payments on long-term debt
(0.7)
(0.7)
(20.7)
Proceeds from long-term debt
10.0 
Proceeds from securitization
 
 
101.0 
(Payments on) proceeds from notes financing - net
(2.1)
(2.6)
(3.2)
Debt issuance costs
Dividends paid
Net cash used for financing activities
40.9 
(36.0)
(54.4)
Effect of exchange rate changes on cash
Net increase (decrease) in cash and cash equivalents
(4.5)
(11.2)
12.7 
Balance at beginning of year
8.5 
19.7 
7.0 
Balance at end of year
4.0 
8.5 
19.7 
Non-Guarantor Subsidiaries
 
 
 
Cash Flows From Operations
 
 
 
Net earnings (loss)
40.6 
49.4 
(29.7)
Adjustments to reconcile net earnings to cash provided by operating activities of continuing operations:
 
 
 
Discontinued operations, net of income taxes
(1.2)
1.9 
7.3 
Amortization of intangible assets
7.2 
8.0 
7.7 
Amortization of deferred financing fees
Loss on early extinguishment of debt
Loss on sale of discontinued operations
Changes in operating assets and liabilities, excluding the effects of business acquisitions or dispositions:
 
 
 
Net cash provided by operating activities of continuing operations
14.5 
21.8 
106.6 
Net cash provided by (used for) operating activities of discontinued operations
4.1 
(15.4)
7.6 
Net cash provided by operating activities
18.6 
6.4 
114.2 
Cash Flows From Investing
 
 
 
Capital expenditures
(35.0)
(41.0)
(18.8)
Proceeds from sale of property, plant and equipment
0.9 
17.4 
21.6 
Restricted cash
(4.3)
0.2 
0.3 
Business acquisitions, net of cash acquired
 
 
Proceeds from sale of business
 
 
Net cash (used for) provided by investing activities of continuing operations
(43.2)
(54.1)
(46.8)
Net cash used for investing activities of discontinued operations
(0.2)
(0.1)
(4.4)
Net cash (used for) provided by investing activities
(43.4)
(54.2)
(51.2)
Cash Flows From Financing
 
 
 
Proceeds from (payments on) revolving credit facility-net
Derivative, Cash Received on Hedge
 
Payments on long-term debt
(55.0)
(75.5)
(64.4)
Proceeds from long-term debt
83.3 
95.0 
53.0 
Proceeds from securitization
 
 
(Payments on) proceeds from notes financing - net
(8.3)
17.4 
(0.9)
Debt issuance costs
Dividends paid
Net cash used for financing activities
25.1 
48.2 
(83.0)
Effect of exchange rate changes on cash
1.2 
(3.2)
Net increase (decrease) in cash and cash equivalents
1.5 
(2.8)
(20.0)
Balance at beginning of year
55.9 
58.7 
78.7 
Balance at end of year
57.4 
55.9 
58.7 
Eliminations
 
 
 
Cash Flows From Operations
 
 
 
Net earnings (loss)
(203.2)
(102.8)
(56.8)
Adjustments to reconcile net earnings to cash provided by operating activities of continuing operations:
 
 
 
Discontinued operations, net of income taxes
Amortization of intangible assets
Amortization of deferred financing fees
Loss on early extinguishment of debt
Loss on sale of discontinued operations
Changes in operating assets and liabilities, excluding the effects of business acquisitions or dispositions:
 
 
 
Net cash provided by operating activities of continuing operations
Net cash provided by (used for) operating activities of discontinued operations
Net cash provided by operating activities
Cash Flows From Investing
 
 
 
Capital expenditures
Proceeds from sale of property, plant and equipment
Restricted cash
Business acquisitions, net of cash acquired
 
 
Proceeds from sale of business
 
 
Net cash (used for) provided by investing activities of continuing operations
48.8 
(21.5)
(111.2)
Net cash used for investing activities of discontinued operations
Net cash (used for) provided by investing activities
48.8 
(21.5)
(111.2)
Cash Flows From Financing
 
 
 
Proceeds from (payments on) revolving credit facility-net
Derivative, Cash Received on Hedge
 
Payments on long-term debt
Proceeds from long-term debt
Proceeds from securitization
 
 
(Payments on) proceeds from notes financing - net
Debt issuance costs
Dividends paid
Net cash used for financing activities
(48.8)
21.5 
111.2 
Effect of exchange rate changes on cash
Net increase (decrease) in cash and cash equivalents
Balance at beginning of year
Balance at end of year
$ 0 
$ 0 
$ 0 
Consolidated Statements of Equity (USD $)
In Millions, except Share data, unless otherwise specified
Total
Equity attributable to Manitowoc shareholders
Common Stock
Additional Paid-in Capital
Accumulated Other Comprehensive Income (Loss)
Retained Earnings
Treasury Stock
Noncontrolling Interest
Balance at beginning of year at Dec. 31, 2009
 
 
$ 1.4 
$ 442.3 
$ 52.0 
$ 238.0 
$ (86.3)
$ (0.7)
Balance (in shares) at Dec. 31, 2009
 
 
130,708,124 
 
 
 
 
 
Increase (Decrease) in Stockholders' Equity
 
 
 
 
 
 
 
 
Stock options exercised (in shares)
 
 
166,718 
 
 
 
 
 
Stock options exercised and issuance of other stock awards
 
 
 
(0.7)
 
 
1.6 
 
Restricted stock expense
 
 
 
2.6 
 
 
 
 
Restricted stock expense (in shares)
 
 
513,630 
 
 
 
 
 
Windfall tax benefit on stock options exercised
 
 
 
(0.2)
 
 
 
 
Performance shares
 
 
 
 
 
 
 
Stock option expense
 
 
 
6.6 
 
 
 
 
Other comprehensive loss
(51.9)
 
 
 
(51.9)
 
 
 
Net earnings (loss)
(77.3)
 
 
 
 
(74.6)
 
 
Cash dividends
 
 
 
 
 
(10.6)
 
 
Comprehensive loss attributable to noncontrolling interest
2.7 
 
 
 
 
 
 
(2.7)
Balance at end of year at Dec. 31, 2010
516.8 
520.2 
1.4 
450.6 
0.1 
152.8 
(84.7)
(3.4)
Balance (in shares) at Dec. 31, 2010
 
 
131,388,472 
 
 
 
 
 
Increase (Decrease) in Stockholders' Equity
 
 
 
 
 
 
 
 
Stock options exercised (in shares)
 
 
244,923 
 
 
 
 
 
Stock options exercised and issuance of other stock awards
 
 
 
0.2 
 
 
1.5 
 
Restricted stock expense
 
 
 
4.0 
 
 
 
 
Restricted stock expense (in shares)
 
 
251,370 
 
 
 
 
 
Windfall tax benefit on stock options exercised
 
 
 
0.8 
 
 
 
 
Performance shares
 
 
 
4.1 
 
 
 
 
Stock option expense
 
 
 
6.9 
 
 
 
 
Other comprehensive loss
(24.9)
 
 
 
(24.9)
 
 
 
Net earnings (loss)
(17.7)
 
 
 
 
(11.2)
 
 
Cash dividends
 
 
 
 
 
(10.6)
 
 
Comprehensive loss attributable to noncontrolling interest
6.5 
 
 
 
 
 
 
(6.5)
Balance at end of year at Dec. 31, 2011
481.1 
491.0 
1.4 
466.6 
(24.8)
131.0 
(83.2)
(9.9)
Balance (in shares) at Dec. 31, 2011
 
 
131,884,765 
 
 
 
 
 
Increase (Decrease) in Stockholders' Equity
 
 
 
 
 
 
 
 
Stock options exercised (in shares)
 
 
699,913 
 
 
 
 
 
Stock options exercised and issuance of other stock awards
 
 
 
2.0 
 
 
2.5 
 
Restricted stock expense
 
 
 
4.5 
 
 
 
 
Restricted stock expense (in shares)
 
 
184,800 
 
 
 
 
 
Windfall tax benefit on stock options exercised
 
 
 
1.9 
 
 
 
 
Performance shares
 
 
 
5.2 
 
 
 
 
Stock option expense
 
 
 
6.7 
 
 
 
 
Other comprehensive loss
(4.6)
 
 
 
(4.6)
 
 
 
Net earnings (loss)
92.6 
 
 
 
 
101.7 
 
 
Cash dividends
 
 
 
 
 
(10.6)
 
 
Comprehensive loss attributable to noncontrolling interest
9.1 
 
 
 
 
 
 
(9.1)
Balance at end of year at Dec. 31, 2012
$ 581.3 
$ 600.3 
$ 1.4 
$ 486.9 
$ (29.4)
$ 222.1 
$ (80.7)
$ (19.0)
Balance (in shares) at Dec. 31, 2012
 
 
132,769,478 
 
 
 
 
 
Company and Basis of Presentation
Company and Basis of Presentation
Company and Basis of Presentation
Company 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, 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.
Our Crane business is a global provider of engineered lift solutions, offering one of the broadest product lines of lifting equipment in our industry.  We design, manufacture, market, and support a comprehensive line of lattice boom crawler cranes, mobile telescopic cranes, tower cranes, and boom trucks.  Our Crane products are principally marketed under the Manitowoc, Grove, Potain, National, Shuttlelift, Dongyue, and Crane Care brand names and are used in a wide variety of applications, including energy and utilities, petrochemical and industrial projects, infrastructure development such as road, bridge and airport construction, and commercial and high-rise residential construction.
Our Foodservice business is among the world’s leading designers and manufacturers of commercial foodservice equipment.  Our Foodservice capabilities span refrigeration, ice-making, cooking, food-preparation, and beverage-dispensing technologies, and allow us to be able to equip entire commercial kitchens and serve the world’s growing demand for food prepared away from home.  Our Foodservice products are marketed under the Manitowoc, Garland, U.S. Range, Convotherm, Cleveland, Lincoln, Merrychef, Frymaster, Delfield, Kolpak, Kysor Panel, Servend, Multiplex, and Manitowoc Beverage System brand names.
During the fourth quarter of 2012, the company decided to divest its warewashing equipment business, which operated under the brand name Jackson, and classified this business as discontinued operations in the company's financial statements. Jackson designs, manufactures and sells warewashing equipment, offering a full range of undercounter dishwashers, door-type dishwashers, conveyor, pot washing, and flight-type dishwashers. On January 28, 2013, the company sold the Jackson warewashing equipment business to Hoshizaki USA Holdings, Inc. for approximately $38.5 million. Net proceeds were used to reduce ratably the then-outstanding balances of Term Loan A and B.
On December 15, 2010, the company reached a definitive agreement to divest of its Kysor/Warren and Kysor/Warren de Mexico businesses to Lennox International for approximately $145 million.  The transaction subsequently closed on January 14, 2011 and the net proceeds were used to pay down outstanding debt.  The results of these operations have been classified as discontinued operations.
Basis of Presentation The consolidated financial statements include the accounts of The Manitowoc Company, Inc. and its wholly and majority-owned subsidiaries.  All significant intercompany balances and transactions have been eliminated.  The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from these estimates.  Certain prior period amounts have been reclassified to conform to the current period presentation. The results of the Jackson business have been classified as discontinued operations in all periods presented.
Revision of prior period financial statements During the third quarter of 2012, the company identified errors related to its deferred tax and goodwill accounts that originated in connection with certain acquisitions five to eleven years ago, resulting in an increase to deferred tax assets, goodwill, and deferred tax liabilities in the amounts of $4.0 million, $64.9 million, and $50.9 million at December 31, 2011, respectively, and a cumulative overstatement of income tax expense of $18.0 million through December 31, 2011. During the fourth quarter of 2012, the company also identified a classification error between goodwill and accumulated other comprehensive income accounts with respect to pensions and postretirement health and other benefits in relation to a certain acquisition completed in 2008, amounting to $8.6 million at December 31, 2011. The company had previously identified an error related to the overstatement of inventory and understatement of cost of goods sold in the amount of $2.9 million for the year ended December 31, 2011 that had been corrected as an out-of-period adjustment in the second quarter of 2012. As the company adjusted the 2011 financial statements for the errors listed above, the company also made the adjustment for this inventory item in 2011. The company does not believe these errors to be material individually or in the aggregate to the company's results of operations, financial position, or cash flows for any of the company's previously filed annual or quarterly financial statements. Accordingly, the Consolidated Statement of Operations for the years ended December 31, 2011 and 2010 and the Consolidated Balance Sheet as of December 31, 2011, included herein have been revised to correct these errors. In addition, the quarterly information for 2012 and 2011 has been revised. See Note 24, "Quarterly Financial Data (Unaudited)" for further discussion of the quarterly revisions. The impacts of these revisions are as follows:
(in millions)
 
As of December 31, 2011
Consolidated Balance Sheets:
 
As Reported
 
As Revised*
Inventories - net
 
$
668.7

 
$
665.8

Other non-current assets
 
140.6

 
144.6

Goodwill
 
1,164.8

 
1,221.1

Accounts payable and accrued expenses
 
869.8

 
868.7

Deferred income taxes (non-current liability)
 
215.8

 
266.7

Total equity
 
$
473.5

 
$
481.1

 
 
For the years ended December 31,
(in millions, except per share data)
 
2011
 
2010
Consolidated Statements of Operations:
 
As Reported
 
As Revised*
 
As Reported
 
As Revised*
Cost of sales
 
$
2,813.9

 
$
2,816.8

 
$

 
$

Earnings from continuing operations before taxes on earnings
 
37.4

 
34.5

 

 

Provision for taxes on earnings
 
15.9

 
13.7

 
30.9

 
26.0

Earnings (loss) from continuing operations
 
21.5

 
20.8

 
(74.6
)
 
(69.7
)
Net loss
 
(17.0
)
 
(17.7
)
 
(82.2
)
 
(77.3
)
Net loss attributable to Manitowoc
 
$
(10.5
)
 
$
(11.2
)
 
$
(79.5
)
 
$
(74.6
)
Basic earnings (loss) per share from continuing operations
 
$

 
$

 
$
(0.55
)
 
$
(0.51
)
Diluted earnings (loss) per share from continuing operations
 
0.21

 
0.20

 
(0.55
)
 
(0.51
)
Basic loss per share
 
(0.08
)
 
(0.09
)
 
(0.61
)
 
(0.57
)
Diluted earnings (loss) per share
 
$

 
$

 
$
(0.61
)
 
$
(0.57
)
* The "As Revised" figures noted above have not been adjusted for the results of the Jackson business, which has been classified as discontinued operations for all periods presented. See further detail at Note 4, "Discontinued Operations."
Summary of Significant Accounting Policies
Summary of Significant Accounting Policies
Summary of Significant Accounting Policies
Cash Equivalents, Restricted Cash and Marketable Securities All short-term investments purchased with an original maturity of three months or less are considered cash equivalents.  Marketable securities at December 31, 2012 and 2011 are recorded at fair value and include securities which are considered “available for sale.”  The difference between fair market value and cost of these investments was not significant for either year.  Restricted cash represents cash in escrow funds related to the security for an indemnity agreement for our casualty insurance provider as well as funds held in escrow to support certain international cash pooling programs.
Inventories Inventories are valued at the lower of cost or market value.  Approximately 88% and 89% of the company’s inventories at December 31, 2012 and 2011, respectively, were valued using the first-in, first-out (FIFO) method.  The remaining inventories were valued using the last-in, first-out (LIFO) method.  If the FIFO inventory valuation method had been used exclusively, inventories would have increased by $36.6 million and $31.4 million at December 31, 2012 and 2011, respectively.  Finished goods and work-in-process inventories include material, labor and manufacturing overhead costs.
Goodwill and Other Intangible Assets The company accounts for its goodwill and other intangible assets under the guidance of ASC Topic 350-10, “Intangibles — Goodwill and Other.” Under ASC Topic 350-10, goodwill is not amortized, but it is tested for impairment annually, or more frequently, as events dictate. See additional discussion of impairment testing under “Impairment of Long-Lived Assets,” below. The company’s other intangible assets with indefinite lives, including trademarks and tradenames and in-place distributor networks, are not amortized, but are also tested for impairment annually, or more frequently, as events dictate. The company’s other intangible assets subject to amortization are tested for impairment whenever events or changes in circumstances indicate that their carrying values may not be recoverable. Other intangible assets are amortized over the following estimated useful lives:
 
Useful lives
Patents
10-20 years
Engineering drawings
15 years
Customer relationships
10-20 years

Property, Plant and Equipment Property, plant and equipment are stated at cost.  Expenditures for maintenance, repairs and minor renewals are charged against earnings as incurred.  Expenditures for major renewals and improvements that substantially extend the capacity or useful life of an asset are capitalized and are then depreciated.  The cost and accumulated depreciation for property, plant and equipment sold, retired, or otherwise disposed of are relieved from the accounts, and resulting gains or losses are reflected in earnings.  Property, plant and equipment are depreciated over the estimated useful lives of the assets using the straight-line depreciation method for financial reporting and on accelerated methods for income tax purposes. 
Property, plant and equipment are depreciated over the following estimated useful lives:
 
Years
Building and improvements
2 - 40
Machinery, equipment and tooling
2 - 20
Furniture and fixtures
3 - 15
Computer hardware and software
2 - 7

Property, plant and equipment also include cranes accounted for as operating leases.  Equipment accounted for as operating leases includes equipment leased directly to the customer and equipment for which the company has assisted in the financing arrangement whereby it has guaranteed more than insignificant residual value or made a buyback commitment.  Equipment that is leased directly to the customer is accounted for as an operating lease with the related assets capitalized and depreciated over their estimated economic life.  Equipment involved in a financing arrangement is depreciated over the life of the underlying arrangement so that the net book value at the end of the period equals the buyback amount or the residual value amount.  The amount of rental equipment included in property, plant and equipment amounted to $58.9 million and $76.2 million, net of accumulated depreciation, at December 31, 2012 and 2011, respectively.
Impairment of Long-Lived Assets The company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the assets' carrying amount may not be recoverable.  The company conducts its long-lived asset impairment analyses in accordance with ASC Topic 360-10-5.  ASC Topic 360-10-5 requires the company to group assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities and to evaluate the asset group against the sum of the undiscounted future cash flows.
For property, plant and equipment and other long-lived assets, other than goodwill and other indefinite lived intangible assets, the company performs undiscounted operating cash flow analyses to determine impairments.  If an impairment is determined to exist, any related impairment loss is calculated based upon comparison of the fair value to the net book value of the assets.  Impairment losses on assets held for sale are based on the estimated proceeds to be received, less costs to sell.
Each year, in its second quarter, the company tests for impairment of goodwill according to a two-step approach.  In the first step, the company estimates the fair values of its reporting units using the present value of future cash flows approach, subject to a comparison for reasonableness to its market capitalization at the date of valuation.  If the carrying amount exceeds the fair value, the second step of the goodwill impairment test is performed to measure the amount of the impairment loss, if any.  In the second step, the implied fair value of the goodwill is estimated as the fair value of the reporting unit used in the first step less the fair values of all other net tangible and intangible assets of the reporting unit.  If the carrying amount of the goodwill exceeds its implied fair market value, an impairment loss is recognized in an amount equal to that excess, not to exceed the carrying amount of the goodwill.  In addition, goodwill of a reporting unit is tested for impairment between annual tests if an event occurs or circumstances change that would more-likely-than-not reduce the fair value of a reporting unit below its carrying value.  For other indefinite lived intangible assets, the impairment test consists of a comparison of the fair value of the intangible assets to their carrying amount.  See Note 9, “Goodwill and Other Intangible Assets” for further details on our impairment assessments.
Warranties Estimated warranty costs are recorded in cost of sales at the time of sale of the warranted products based on historical warranty experience for the related product or estimates of projected costs due to specific warranty issues on new products.  These estimates are reviewed periodically and are adjusted based on changes in facts, circumstances or actual experience.
Environmental Liabilities The company accrues for losses associated with environmental remediation obligations when such losses are probable and reasonably estimable.  Such accruals are adjusted as information develops or circumstances change.  Costs of long-term expenditures for environmental remediation obligations are discounted to their present value when the timing of cash flows are estimable.
Product Liabilities The company records product liability reserves for its self-insured portion of any pending or threatened product liability actions.  The reserve is based upon two estimates.  First, the company tracks the population of all outstanding pending and threatened product liability cases to determine an appropriate case reserve for each based upon the company’s best judgment and the advice of legal counsel.  These estimates are continually evaluated and adjusted based upon changes to facts and circumstances surrounding the case.  Second, the company determines the amount of additional reserve required to cover incurred but not reported product liability issues and to account for possible adverse development of the established case reserves (collectively referred to as IBNR).  This analysis is performed at least twice annually. 
Foreign Currency Translation The financial statements of the company’s non-U.S. subsidiaries are translated using the current exchange rate for assets and liabilities and the average exchange rate for the year for income and expense items.  Resulting translation adjustments are recorded to Accumulated Other Comprehensive Income (AOCI) as a component of Manitowoc stockholders’ equity.
Derivative Financial Instruments and Hedging Activities The company has written policies and procedures that place all financial instruments under the direction of corporate treasury and restrict all derivative transactions to those intended for hedging purposes.  The use of financial instruments for trading purposes is strictly prohibited.  The company uses financial instruments to manage the market risk from changes in foreign exchange rates, commodities and interest rates.  The company follows the guidance in accordance with ASC Topic 815-10, “Derivatives and Hedging.”  The fair values of all derivatives are recorded in the Consolidated Balance Sheets.  The change in a derivative’s fair value is recorded each period in current earnings or AOCI depending on whether the derivative is designated and qualifies as part of a hedge transaction and if so, the type of hedge transaction.
During 2012, 2011 and 2010, minimal amounts were recognized in earnings due to ineffectiveness of certain commodity hedges.  The amount reported as derivative instrument fair market value adjustment in the AOCI account within the Consolidated Statements of Comprehensive Income (Loss) represents the net gain (loss) on foreign exchange currency exchange contracts and commodity contracts designated as cash flow hedges, net of income taxes.
Cash Flow Hedges The company selectively hedges anticipated transactions that are subject to foreign exchange exposure, commodity price exposure, or variable interest rate exposure, primarily using foreign currency exchange contracts, commodity contracts, and interest rate swaps, respectively.  These instruments are designated as cash flow hedges in accordance with ASC Topic 815-10 and are recorded in the Consolidated Balance Sheets at fair value.  The effective portion of the contracts’ gains or losses due to changes in fair value are initially recorded as a component of AOCI and are subsequently reclassified into earnings when the hedged transactions, typically sales and costs related to sales and interest expense, occur and affect earnings.  These contracts are highly effective in hedging the variability in future cash attributable to changes in currency exchange rates, commodity prices, or interest rates.
Fair Value Hedges The company periodically enters into interest rate swaps designated as a hedge of the fair value of a portion of its fixed rate debt.  These hedges effectively result in changing a portion of its fixed rate debt to variable interest rate debt.  Both the swaps and the debt are recorded in the Consolidated Balance Sheets at fair value.  The change in fair value of the swaps should exactly offset the change in fair value of the hedged debt, with no net impact to earnings.  Interest expense of the hedged debt is recorded at the variable rate in earnings.  See Note 11, “Debt” for further discussion of fair value hedges.
The company selectively hedges cash inflows and outflows that are subject to foreign currency exposure from the date of transaction to the related payment date.  The hedges for these foreign currency accounts receivable and accounts payable are recorded in the Consolidated Balance Sheets at fair value.  Gains or losses due to changes in fair value are recorded as an adjustment to earnings in the Consolidated Statements of Operations.
Stock-Based Compensation At December 31, 2012, the company has five stock-based compensation plans, which are described more fully in Note 16, “Stock-Based Compensation.”  The company recognizes expense for all stock-based compensation with graded vesting on a straight-line basis over the vesting period of the entire award.  The company recognized $4.5 million, $4.0 million and $2.6 million of compensation expense related to restricted stock during the years ended December 31, 2012, 2011 and 2010, respectively. In addition to the compensation expense related to restricted stock, the company recognized $6.7 million, $6.9 million and $6.6 million of compensation expense related to stock options during the years ended December 31, 2012, 2011and 2010, respectively.  The company also recognized $5.2 million and $4.1 million of compensation expense associated with performance shares in 2012 and 2011, respectively.
Revenue Recognition Revenue is generally recognized and earned when all the following criteria are satisfied with regard to a specific transaction: persuasive evidence of a sales arrangement exists; the price is fixed or determinable; collectability of cash is reasonably assured; and delivery has occurred or services have been rendered.  Shipping and handling fees are reflected in net sales and shipping and handling costs are reflected in cost of sales in the Consolidated Statements of Operations.
The company enters into transactions with customers that provide for residual value guarantees and buyback commitments on certain crane transactions.  The company records transactions which it provides significant residual value guarantees and any buyback commitments as operating leases.  Net revenues in connection with the initial transactions are recorded as deferred revenue and are amortized to income on a straight-line basis over a period equal to that of the customer’s third party financing agreement.  See Note 18, “Guarantees.”
The company also leases cranes to customers under operating lease terms.  Revenue from operating leases is recognized ratably over the term of the lease, and leased cranes are depreciated over their estimated useful lives.
Research and Development Research and development costs are charged to expense as incurred and amounted to $87.7 million, $80.6 million and $72.2 million for the years ended December 31, 2012, 2011 and 2010, respectively.  Research and development costs include salaries, materials, contractor fees and other administrative costs. 
Income Taxes The company utilizes the liability method to recognize deferred tax assets and liabilities for the expected future income tax consequences of events that have been recognized in the company’s financial statements. Under this method, deferred tax assets and liabilities are determined based on the temporary difference between financial statement carrying amounts and the tax basis of assets and liabilities using enacted tax rates in effect in the years in which the temporary differences are expected to reverse. Valuation allowances are provided for deferred tax assets where it is considered more-likely-than-not that the company will not realize the benefit of such assets. The company evaluates its uncertain tax positions as new information becomes available. Tax benefits are recognized to the extent a position is more-likely-than-not to be sustained upon examination by the taxing authority.
Earnings Per Share Basic earnings per share is computed by dividing net earnings attributable to Manitowoc by the weighted average number of common shares outstanding during each year or period. Diluted earnings per share is computed similar to basic earnings per share except that the weighted average shares outstanding is increased to include shares of restricted stock, performance shares and the number of additional shares that would have been outstanding if stock options were exercised and the proceeds from such exercise were used to acquire shares of common stock at the average market price during the year or period.
Comprehensive Income (Loss) Comprehensive income (loss) includes, in addition to net earnings, other items that are reported as direct adjustments to Manitowoc stockholders’ equity.  Currently, these items are foreign currency translation adjustments, employee postretirement benefit adjustments and the change in fair value of certain derivative instruments.
Concentration of Credit Risk Credit extended to customers through trade accounts receivable potentially subjects the company to risk.  This risk is limited due to the large number of customers and their dispersion across various industries and many geographical areas.  However, a significant amount of the company’s receivables are with distributors and contractors in the construction industry, large companies in the foodservice and beverage industry, customers servicing the U.S. steel industry, and government agencies.  The company currently does not foresee a significant credit risk associated with these individual groups of receivables, but continues to monitor the exposure, if any.
Recent accounting changes and pronouncements In February 2013, the FASB issued ASU No. 2013-02, Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income. This update adds new disclosure requirements for items reclassified out of accumulated other comprehensive income. The updated standard is prospectively effective for the company's annual and interim periods beginning after December 15, 2012. The adoption of this new ASU is not expected to impact the company's consolidated financial statements.
In July 2012, the FASB issued ASU 2012-02 which provides an entity the option to first assess qualitative factors to determine whether it is necessary to perform the current two-step test for indefinite-lived intangible asset impairment.  If an entity believes, as a result of its qualitative assessment, that it is more-likely-than-not that the fair value of a reporting unit is less than its carrying amount, the quantitative impairment test is required.  Otherwise, no further testing is required. The revised standard is effective for the company's annual and interim indefinite-lived intangible asset impairment tests performed for interim periods beginning after September 15, 2012.  The adoption of this ASU did not have a material impact on the company's consolidated financial statements.
In September 2011, the FASB issued ASU 2011-08 which provides an entity the option to first assess qualitative factors to determine whether it is necessary to perform the current two-step test for goodwill impairment.  If an entity believes, as a result of its qualitative assessment, that it is more-likely-than-not that the fair value of a reporting unit is less than its carrying amount, the quantitative impairment test is required.  Otherwise, no further testing is required. The revised standard is effective for the company's annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011.  The adoption of this ASU did not impact the company's consolidated financial statements.
In June 2011 and December 2011, the FASB issued an update to ASC Topic No. 220, “Presentation of Comprehensive Income,” which eliminates the option to present other comprehensive income and its components in the statement of shareholders’ equity. The company can elect to present the items of net income and other comprehensive income in a single continuous statement of comprehensive income or in two separate, but consecutive, statements. Under either method the statement would need to be presented with equal prominence as the other primary financial statements. The amended guidance, which must be applied retroactively, is effective for fiscal years, and interim periods within those years, beginning after December 15, 2011, and has been incorporated into these financial statements.
Acquisitions
Acquisitions
Acquisitions
On March 1, 2010, the company acquired 100% of the issued and to be issued shares of Appliance Scientific, Inc. (ASI).  ASI is a leader in accelerated cooking technologies.  Allocation of the purchase price resulted in $5.0 million of goodwill, $18.2 million of intangible assets and an estimated liability for future earnouts of $1.8 million.  In accordance with guidance primarily codified in ASC Topic 805, “Business Combinations,” any future adjustment to the estimated earnout liability would be recognized in the earnings of that period.  The results of ASI have been included in the Foodservice segment since the date of acquisition.
Discontinued Operations
Discontinued Operations
Discontinued Operations
During the fourth quarter of 2012, the company decided to divest its warewashing equipment business, which operated under the brand name Jackson, and classified this business as discontinued operations in the company's financial statements. Jackson designs, manufactures and sells warewashing equipment, offering a full range of undercounter dishwashers, door-type dishwashers, conveyor, pot washing, and flight-type dishwashers. On January 28, 2013, the company sold the Jackson warewashing equipment business to Hoshizaki USA Holdings, Inc. for approximately $38.5 million. Net proceeds were used to reduce ratably the then-outstanding balances of Term Loan A and B.
The following selected financial data of the Jackson business for the years ended December 31, 2012, 2011 and 2010 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 or interest expense allocated to discontinued operations for this business during the periods presented. 
(in millions)
 
2012
 
2011
 
2010
Net sales
 
$
32.6

 
$
32.7

 
$
30.2

 
 
 
 
 
 
 
Pretax earnings (loss) from discontinued operation
 
$
1.7

 
$
0.6

 
$
(0.8
)
Provision (benefit) for taxes on earnings
 
0.7

 
0.1

 
(0.3
)
Net earnings (loss) from discontinued operation
 
$
1.0

 
$
0.5

 
$
(0.5
)

On December 15, 2010, the company announced that a definitive agreement had been reached to divest its Kysor/Warren and Kysor/Warren de Mexico (collectively “Kysor/Warren”) businesses, which manufacture frozen, medium temperature and heated display merchandisers, mechanical refrigeration systems and remote mechanical and electrical houses to Lennox International for approximately $145 million, including a preliminary working capital adjustment.  The transaction subsequently closed on January 14, 2011, resulting in a $34.6 million loss on sale, primarily consisting of $29.9 million of income tax expense, and the net proceeds were used to pay down outstanding debt.  On July 1, 2011, the company made a payment to Lennox International of $2.4 million as the final working capital adjustment under the sale agreement.  The results of these operations have been classified as discontinued operations. 
The following selected financial data of the Kysor/Warren businesses for the years ended December 31, 2012, 2011 and 2010 is presented for informational purposes only and does not necessarily reflect what the results of operations would have been had the businesses operated as a stand-alone entity.  There was no general corporate expense or interest expense allocated to discontinued operations for this business during the periods presented. 
(in millions)
 
2012
 
2011
 
2010
Net sales
 
$

 
$
6.5

 
$
216.4

 
 
 
 
 
 
 
Pretax loss from discontinued operation
 
$
(0.8
)
 
$
(5.4
)
 
$
(4.6
)
Provision (benefit) for taxes on earnings
 
(0.3
)
 
(2.2
)
 
2.2

Net loss from discontinued operation
 
$
(0.5
)
 
$
(3.2
)
 
$
(6.8
)

In addition to the Enodis ice and related businesses, the company has classified various businesses disposed of prior to 2009 as discontinued in compliance with ASC Topic 360-10, “Property, Plant, and Equipment.”
The following selected financial data of various businesses disposed of prior to 2010, primarily consisting of administrative costs, for the years ended December 31, 2012, 2011 and 2010 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. 
(in millions)
 
2012
 
2011
 
2010
Net sales
 
$

 
$

 
$

 
 
 
 
 
 
 
Pretax loss from discontinued operation
 
$
(0.4
)
 
$
(1.2
)
 
$
(1.0
)
Provision (benefit) for taxes on earnings
 
(0.2
)
 
(0.5
)
 
(0.2
)
Net loss from discontinued operation
 
$
(0.2
)
 
$
(0.7
)
 
$
(0.8
)
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 December 31, 2012 and 2011 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 December 31, 2012
(in millions)
 
Level 1
 
Level 2
 
Level 3
 
Total
Current Assets:
 
 

 
 

 
 

 
 

Foreign currency exchange contracts
 
$

 
$
2.9

 
$

 
$
2.9

Marketable securities
 
2.7

 

 

 
2.7

Total Current assets at fair value
 
$
2.7

 
$
2.9

 
$

 
$
5.6

 
 
 
 
 
 
 
 
 
Current Liabilities:
 
 

 
 

 
 

 
 

Foreign currency exchange contracts
 
$

 
$
0.9

 
$

 
$
0.9

Commodity contracts
 

 
0.8

 

 
0.8

Interest rate swap contracts
 

 
0.3

 

 
0.3

Total Current liabilities at fair value
 
$

 
$
2.0

 
$

 
$
2.0

 
 
 
 
 
 
 
 
 
Non-current Liabilities:
 
 

 
 

 
 

 
 

Interest rate swap contracts
 
$

 
$
1.1

 
$

 
$
1.1

Total Non-current liabilities at fair value
 
$

 
$
1.1

 
$

 
$
1.1

 
 
Fair Value as of December 31, 2011
(in millions)
 
Level 1
 
Level 2
 
Level 3
 
Total
Current Assets:
 
 

 
 

 
 

 
 

Foreign currency exchange contracts
 
$

 
$
0.8

 
$

 
$
0.8

Marketable securities
 
2.7

 

 

 
2.7

Total Current assets at fair value
 
$
2.7

 
$
0.8

 
$

 
$
3.5

 
 
 
 
 
 
 
 
 
Non-current Assets:
 
 
 
 
 
 
 
 
Interest rate swap contracts
 
$

 
$
0.5

 
$

 
$
0.5

Interest rate cap contracts
 

 
0.3

 

 
0.3

Total Non-current assets at fair value
 
$

 
$
0.8

 
$

 
$
0.8

 
 
 
 
 
 
 
 
 
Current Liabilities:
 
 

 
 

 
 

 
 

Foreign currency exchange contracts
 
$

 
$
6.7

 
$

 
$
6.7

Commodity contracts
 

 
2.4

 

 
2.4

Total Current liabilities at fair value
 
$

 
$
9.1

 
$

 
$
9.1

 
 
 
 
 
 
 
 
 
Non-current Liabilities:
 
 

 
 

 
 

 
 

Interest rate swap contracts
 
$

 
$
9.5

 
$

 
$
9.5

Total Non-current liabilities at fair value
 
$

 
$
9.5

 
$

 
$
9.5


The company’s 2013 Notes were redeemed in the fourth quarter of 2012 and had a fair value of approximately $146.6 million for the year ended December 31, 2011.  The fair value of the company’s 2018 Notes was approximately $447.5 million and $434.0 million as of December 31, 2012 and 2011, respectively.  The fair value of the company’s 2020 Notes was approximately $675.0 million and $634.9 million as of December 31, 2012 and 2011, respectively.  The fair value of the company's 2022 Notes was approximately $307.5 million as of December 31, 2012. The fair values of the company’s term loans under the Senior Credit Facility are as follows as of December 31, 2012 and 2011, respectively:  Term Loan A — $296.0 million and $318.6 million and Term Loan B — $81.4 million and $324.1 million as of December 31, 2012 and 2011, respectively.  See Note 11, “Debt” for a description of the debt instruments and their related carrying values.
ASC Topic 820-10 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 fair value of its Term Loans and Senior Notes based on quoted market prices of the instruments; though these markets are typically thinly traded, the liabilities are therefore 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 12, "Accounts Receivable Securitization") and short-term variable debt, including any amounts outstanding under our revolving credit facility, approximate fair value, without being discounted as of December 31, 2012 and December 31, 2011 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 our 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, interest rate, and commodity contracts are valued using broker quotations. 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 using the most effective and efficient methods to eliminate, reduce, or transfer such exposures.  Operating decisions consider these associated risks and structure transactions to avoid these risks 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 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 swap or cap instruments are entered into to help manage interest rate or fair value risk.  Swap contracts on various commodities are entered into to help manage the price risk associated with forecasted purchases of materials used in the company’s manufacturing process.  The company also enters into various foreign currency derivative instruments to help manage foreign currency risk associated with the company’s projected purchases and sales and foreign currency denominated receivable and payable balances.
ASC Topic 815-10 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 interest rate derivative contracts as cash flow hedges of forecasted purchases of commodities and currencies, and fixed or 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 swaps 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 and 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 $0.9 million of unrealized losses, net of tax, related to interest rate, commodity price and currency 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 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 one-month U.S. 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 swap are expected to offset changes in the fair value of the debt due to changes in the one-month U.S. LIBOR rate.
As of December 31, 2012, the company had the following outstanding commodity and currency forward contracts that were entered into as hedge forecasted transactions:
Commodity
 
Units Hedged
 
 
 
Type
Aluminum
 
1,382
 
MT
 
Cash Flow
Copper
 
515
 
MT
 
Cash Flow
Natural Gas
 
158,670
 
MMBtu
 
Cash Flow
Steel
 
10,041
 
Short Tons
 
Cash Flow
Short Currency
 
Units Hedged
 
Type
Canadian Dollar
 
9,351,126
 
Cash Flow
European Euro
 
66,389,190
 
Cash Flow
South Korean Won
 
2,595,874,455
 
Cash Flow
Singapore Dollar
 
4,800,000
 
Cash Flow
United States Dollar
 
2,398,273
 
Cash Flow
Chinese Renminbi
 
187,640,472
 
Cash Flow

As of June 30, 2011, the company offset, dedesignated, and wrote-off all of its previous float-to-fixed interest rate swaps against Term Loans A and B interest due to the amendment of its original Senior Credit Facility (See Note 11, "Debt," for a description of the Senior Credit Facility).  As of December 31, 2012, the company had outstanding $225.0 million notional amount of 3.00% LIBOR caps related to the term loan portion of the Senior Credit Facility which effectively cap the company’s future interest rate exposure for the notional value of its variable term debt at a one-month LIBOR rate of 3.00%. The company paid various bank partners $0.7 million in option premium to purchase the protection on Term Loans A and B and is amortizing the related derivative asset to interest expense over the life of the cap protection.  The caps were designated as a hedge so any change in value of the derivative is booked to other comprehensive income.  The remaining unhedged portions of Term Loans A and B continue to bear interest according to the terms of the Senior Credit Facility.
The company is also party to various fixed-to-float interest rate swaps designated as fair market value hedges of its 2018, 2020, and 2022 Notes.  At December 31, 2011, $200.0 million and $300.0 million of the 2018 and 2020 Notes, respectively, were swapped to floating rate interest. The company monetized the derivative asset related to its fixed-to-float interest rate swaps due in 2018 and 2020 and received $21.5 million in the third quarter of 2011. The gain was treated as an increase to the debt balances for the 2018 and 2020 Notes and will be amortized against interest expense over the life of the original swap. Later in 2011, the company subsequently entered into new interest rate swaps due in 2018 and 2020.
In the third quarter of 2012, the company further monetized the derivative asset related to its fixed-to-float interest rate swaps related to its 2018 and 2020 Notes and received $14.8 million in the quarter. Consistent with prior year monetization, the company treated the gain as an increase to the debt balances for each of the 2018 and 2020 notes, which will be amortized against interest expense over the life of the original swaps.
In the fourth quarter of 2012, the company purchased and designated new fixed-to-float swaps as fair market value hedges of the 2022 Notes.  At December 31, 2012, $100.0 million of the 2022 Notes were swapped to floating rate interest.  Including the floating rate swaps, the 2022 Notes have an all-in interest rate of 5.353%.
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 Cost of Sales or Other income, net in the Condensed Consolidated Statement of Operations. As of December 31, 2012, the company had the following outstanding currency forward contracts that were not designated as hedging instruments:
Short Currency
 
Units Hedged
 
Recognized Location
 
Purpose
Euro
 
24,540,841
 
Other income, net
 
Accounts payable and receivable settlement
United States Dollar
 
6,432,000
 
Other income, net
 
Accounts payable and receivable settlement
Pound Sterling
 
11,100,000
 
Other income, net
 
Accounts payable and receivable settlement

The fair value of outstanding derivative contracts recorded as assets in the accompanying Consolidated Balance Sheet as of December 31, 2012 was as follows:
 
ASSET DERIVATIVES
(in millions)
Balance Sheet Location
Fair Value
Derivatives designated as hedging instruments
 
 

Foreign exchange contracts
Other current assets
$
2.6

Total derivatives designated as hedging instruments
 
$
2.6

 
 
ASSET DERIVATIVES
(in millions)
Balance Sheet Location
Fair Value
Derivatives NOT designated as hedging instruments
 
 

Foreign exchange contracts
Other current assets
$
0.3

Total derivatives NOT designated as hedging instruments
 
$
0.3

 
 
 

Total asset derivatives
 
$
2.9


The fair value of outstanding derivative contracts recorded as liabilities in the accompanying Consolidated Balance Sheet as of December 31, 2012 was as follows:
 
LIABILITY DERIVATIVES
(in millions)
Balance Sheet Location
Fair Value
Derivatives designated as hedging instruments
 
 

Foreign exchange contracts
Accounts payable and accrued expenses
$
0.4

Interest rate swap contracts: Fixed-to-float
Other non-current liabilities
1.1

Commodity contracts
Accounts payable and accrued expenses
0.8

Total derivatives designated as hedging instruments
 
$
2.3

 
LIABILITY DERIVATIVES
(in millions)
Balance Sheet Location
Fair Value
Derivatives NOT designated as hedging instruments
 
 

Foreign exchange contracts
Accounts payable and accrued expenses
$
0.5

Interest rate swap contracts: Float-to-fixed
Accounts payable and accrued expenses
0.3

Total derivatives NOT designated as hedging instruments
 
$
0.8

 
 
 

Total liability derivatives
 
$
3.1


The effect of derivative instruments on the Consolidated Statement of Operations for the twelve months ended December 31, 2012 and gains or losses initially recognized in Other Comprehensive Income (OCI) in the Consolidated Balance Sheet was as follows: 
Derivatives in Cash Flow Hedging
Relationships (in millions)
 
Amount of Gain or
(Loss) Recognized in
OCI on Derivative
(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)
Foreign exchange contracts
 
$
4.2

 
Cost of sales
 
$
(7.3
)
Interest rate swap & cap contracts
 
(0.2
)
 
Interest expense
 
0.1

Commodity contracts
 
1.0

 
Cost of sales
 
(2.7
)
Total
 
$
5.0

 
 
 
$
(9.9
)

Derivatives Relationships (in millions)
Location of Gain or (Loss)
Recognized in Income on
Derivative (Ineffective Portion
and Amount Excluded from
Effectiveness Testing)
Amount of Gain or (Loss)
Recognized in Income on
Derivative (Ineffective Portion
and Amount Excluded from
Effectiveness Testing)
Commodity contracts
Cost of sales
$

Total
 
$

Derivatives Not Designated as
Hedging Instruments (in millions)
Location of Gain or (Loss)
Recognized in Income on
Derivative
Amount of Gain or (Loss)
Recognized in Income on
Derivative
Foreign exchange contracts
Other income
$
1.2

Interest rate swap contracts
Other income
9.3

Total
 
$
10.5

 
Derivatives Designated as Fair
Market Value Instruments under
ASC 815 (in millions)
Location of Gain or (Loss)
Recognized in Income on
Derivative
Amount of Gain or (Loss)
Recognized in Income on
Derivative
Interest rate swap contracts
Interest expense
$
(1.7
)
Total
 
$
(1.7
)
 
As of December 31, 2011, the company had the following outstanding interest rate, commodity and currency forward contracts that were entered into as hedge forecasted transactions:
Commodity
 
Units Hedged
 
 
 
Type
Aluminum
 
1,254
 
MT
 
Cash Flow
Copper
 
684
 
MT
 
Cash Flow
Natural Gas
 
346,902
 
MMBtu
 
Cash Flow
Steel
 
8,231
 
Short Tons
 
Cash Flow
Short Currency
 
Units Hedged
 
Type
Canadian Dollar
 
25,083,644
 
Cash Flow
European Euro
 
67,565,453
 
Cash Flow
South Korean Won
 
3,224,015,436
 
Cash Flow
Singapore Dollar
 
4,800,000
 
Cash Flow
United States Dollar
 
5,538,777
 
Cash Flow
Chinese Renminbi
 
111,177,800
 
Cash Flow

As of December 31, 2011, the designated fair market value hedges of receive-fixed/pay-float swaps of the 2018 Notes and 2020 Notes were $200.0 million and $300.0 million, respectively. Including the floating rate swaps, the 2018 and 2020 Notes had all-in interest rates of 8.88% and 7.66%, respectively.
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 Cost of Sales or Other income, net.
Short Currency
 
Units Hedged
 
Recognized Location
 
Purpose
Euro
 
33,150,213
 
Other income, net
 
Accounts Payable and Receivable Settlement
United States Dollar
 
6,000,000
 
Other income, net
 
Accounts Payable and Receivable Settlement
Australian Dollar
 
7,569,912
 
Other income, net
 
Accounts Payable and Receivable Settlement

The fair value of outstanding derivative contracts recorded as assets in the accompanying Consolidated Balance Sheet as of December 31, 2011 was as follows:
 
ASSET DERIVATIVES
(in millions)
Balance Sheet Location
Fair Value
Derivatives designated as hedging instruments
 
 

Foreign Exchange Contracts
Other current assets
$
0.6

Interest rate swap contracts: Fixed-to-float
Other non-current assets
0.5

Interest rate cap contracts
Other non-current assets
0.3

Total derivatives designated as hedging instruments
 
$
1.4

 
ASSET DERIVATIVES
 (in millions)
Balance Sheet Location
Fair Value
Derivatives NOT designated as hedging instruments
 
 

Foreign Exchange Contracts
Other current assets
$
0.1

Total derivatives NOT designated as hedging instruments
 
$
0.1

 
 
 

Total asset derivatives
 
$
1.5


The fair value of outstanding derivative contracts recorded as liabilities in the accompanying Consolidated Balance Sheet as of December 31, 2011 was as follows:
 
LIABILITIES DERIVATIVES
 (in millions)
Balance Sheet Location
 
Fair Value
Derivatives designated as hedging instruments
 
 
 

Foreign Exchange Contracts
Accounts payable and accrued expenses
 
$
5.2

Commodity Contracts
Accounts payable and accrued expenses
 
2.5

Total derivatives designated as hedging instruments
 
 
$
7.7

 
 
LIABILITY DERIVATIVES
(in millions)
Balance Sheet Location
Fair Value
Derivatives NOT designated as hedging instruments
 
 

Foreign Exchange Contracts
Accounts payable and accrued expenses
$
1.6

Interest Rate Swap Contracts: Float-to-Fixed
Accounts payable and accrued expenses
9.5

Total derivatives NOT designated as hedging instruments
 
$
11.1

 
 
 

Total liability derivatives
 
$
18.8


The effect of derivative instruments on the Consolidated Statement of Operations for the twelve months ended December 31, 2011 and gains or losses initially recognized in Other Comprehensive Income (OCI) in the Consolidated Balance Sheet was as follows: 
Derivatives in Cash Flow Hedging
Relationships (in millions)
 
Amount of Gain or
(Loss) Recognized in
OCI on Derivative
(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)
Foreign Exchange Contracts
 
$
(3.7
)
 
Cost of sales
 
$
2.5

Interest Rate Swap & Cap Contracts
 
1.3

 
Interest expense
 
(5.3
)
Commodity Contracts
 
(2.1
)
 
Cost of sales
 
(0.3
)
Total
 
$
(4.5
)
 
 
 
$
(3.1
)
Derivatives in Fair Value Hedging
Relationships (in millions)
 
Location of Gain or (Loss)
Recognized in Income on
Derivative (Ineffective Portion
and Amount Excluded from
Effectiveness Testing)
 
Amount of Gain or (Loss)
Recognized in Income on
Derivative (Ineffective
Portion and Amount
Excluded from Effectiveness
Testing)
Commodity Contracts
 
Cost of sales
 
$
(0.1
)
Total
 
 
 
$
(0.1
)
Derivatives Not Designated as Hedging
Instruments (in millions)
 
Location of Gain or (Loss)
recognized in Income on
Derivative
 
Amount of Gain or (Loss)
Recognized in Income on
Derivative
Foreign Exchange Contracts
 
Other income
 
$
(2.0
)
Interest Rate Swap Contracts
 
Other income
 
4.8

Total
 
 
 
$
2.8


Derivatives Designated as Fair
Market Value Instruments under
ASC 815 (in millions)
Location of Gain or (Loss)
Recognized in Income on
Derivative
Amount of Gain or (Loss)
Recognized in Income on
Derivative
Interest rate swap contracts
Interest expense
$
22.3

Total
 
$
22.3

 
The effect of derivative instruments on the Consolidated Statement of Operations for the twelve months ended December 31, 2010 and gains or losses initially recognized in Other Comprehensive Income (OCI) in the Consolidated Balance Sheet was as follows: 
Derivatives in Cash Flow Hedging
Relationships (in millions)
 
Amount of Gain or
(Loss) Recognized in
OCI on Derivative
(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)
Foreign Exchange Contracts
 
$
0.2

 
Cost of sales
 
$
(4.0
)
Interest Rate Swap & Cap Contracts
 
(6.7
)
 
Interest expense
 
(10.4
)
Commodity contracts
 
(0.4
)
 
Cost of sales
 
1.1

Total
 
$
(6.9
)
 
 
 
$
(13.3
)
Derivatives in Fair Value Hedging
Relationships (in millions)
 
Location of Gain or (Loss)
Recognized in Income on
Derivative (Ineffective Portion
and Amount Excluded from
Effectiveness Testing)
 
Amount of Gain or (Loss)
Recognized in Income on
Derivative (Ineffective
Portion and Amount
Excluded from Effectiveness
Testing)
Interest Rate Swap Contracts
 
Interest Expense
 
$
(21.8
)
Total
 
 
 
$
(21.8
)
Derivatives Not Designated as Hedging
Instruments (in millions)
 
Location of Gain or (Loss)
recognized in Income on
Derivative
 
Amount of Gain or (Loss)
Recognized in Income on
Derivative
Foreign Exchange Contracts
 
Other income
 
$
0.5

Total
 
 
 
$
0.5

Inventories
Inventories
Inventories
The components of inventories at December 31, 2012 and December 31, 2011 are summarized as follows:
(in millions)
 
2012
 
2011
Inventories — gross:
 
 

 
 

Raw materials
 
$
231.1

 
$
244.2

Work-in-process
 
149.7

 
167.7

Finished goods
 
437.6

 
356.6

Total inventories — gross
 
818.4

 
768.5

Excess and obsolete inventory reserve
 
(74.2
)
 
(74.8
)
Net inventories at FIFO cost