UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549
  
FORM 10-Q
 
(Mark One)
☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934	
For the quarterly period ended September 30, 2019
OR
☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934	
For the transition period from          to
Commission File Number: 1-11978
 
The Manitowoc Company, Inc.
(Exact Name of Registrant as Specified in its Charter)

Wisconsin	 	39-0448110	
(State or other jurisdiction	 	(I.R.S. Employer	
of incorporation or organization)	 	Identification Number)	
 
11270 West Park Place
Suite 1000	 	 	
Milwaukee, Wisconsin	 	53224	
(Address of principal executive offices)	 	(Zip Code)	
Registrant’s telephone number, including area code: (414) 760-4600
 
Securities registered pursuant to Section 12(b) of the Act:
Title of each class	 	Trading
Symbol(s)	 	Name of each exchange on which registered	
Common Stock, $.01 Par Value	 	MTW	 	New York Stock Exchange	

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No  ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
 
Large accelerated filer	 	☒	  	Accelerated filer	 	☐	
Non-accelerated filer	 	☐ 	  	Smaller reporting company	 	☐	
Emerging growth company	 	☐	 	 	 	 	
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☒
As of September 30, 2019, the registrant had 35,349,046 shares of common stock, $.01 par value per share, outstanding.
1

PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
THE MANITOWOC COMPANY, INC.
Condensed Consolidated Statements of Operations
For the three and nine months ended September 30, 2019 and 2018
(Unaudited)
($ in millions, except per-share and average shares data)
 
 	 	Three Months Ended
September 30,	 	 	Nine Months Ended
September 30,	 	
 	 	2019	 	 	2018	 	 	2019	 	 	2018	 	
Net sales	 	$	448.0	 	 	$	450.1	 	 	$	1,370.7	 	 	$	1,331.5	 	
Cost of sales	 	 	359.6	 	 	 	370.1	 	 	 	1,106.9	 	 	 	1,092.6	 	
Gross profit	 	 	88.4	 	 	 	80.0	 	 	 	263.8	 	 	 	238.9	 	
Operating costs and expenses:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Engineering, selling and administrative expenses	 	 	54.8	 	 	 	62.1	 	 	 	164.7	 	 	 	184.6	 	
Asset impairment expense	 	 	—	 	 	 	—	 	 	 	—	 	 	 	0.4	 	
Amortization of intangible assets	 	 	—	 	 	 	—	 	 	 	0.2	 	 	 	0.2	 	
Restructuring expense	 	 	1.1	 	 	 	1.0	 	 	 	8.3	 	 	 	11.0	 	
Total operating costs and expenses	 	 	55.9	 	 	 	63.1	 	 	 	173.2	 	 	 	196.2	 	
Operating income	 	 	32.5	 	 	 	16.9	 	 	 	90.6	 	 	 	42.7	 	
Other income (expense):	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Interest expense	 	 	(7.2	)	 	 	(9.9	)	 	 	(25.6	)	 	 	(29.3	)	
Amortization of deferred financing fees	 	 	(0.4	)	 	 	(0.5	)	 	 	(1.2	)	 	 	(1.4	)	
Loss on debt extinguishment	 	 	—	 	 	 	—	 	 	 	(25.0	)	 	 	—	 	
Other income (expense) - net	 	 	(3.7	)	 	 	(5.7	)	 	 	8.8	 	 	 	(8.6	)	
Total other expense	 	 	(11.3	)	 	 	(16.1	)	 	 	(43.0	)	 	 	(39.3	)	
Income from continuing operations before income taxes	 	 	21.2	 	 	 	0.8	 	 	 	47.6	 	 	 	3.4	 	
Provision (benefit) for income taxes	 	 	3.1	 	 	 	(10.7	)	 	 	10.3	 	 	 	(8.0	)	
Income from continuing operations	 	 	18.1	 	 	 	11.5	 	 	 	37.3	 	 	 	11.4	 	
Discontinued operations:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Loss from discontinued operations, net of income taxes of $0.0,
   $0.0, $0.0 and $0.0, respectively	 	 	—	 	 	 	—	 	 	 	—	 	 	 	(0.2	)	
Net income	 	$	18.1	 	 	$	11.5	 	 	$	37.3	 	 	$	11.2	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Per Share Data	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Basic income (loss) per common share:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Income from continuing operations	 	$	0.51	 	 	$	0.32	 	 	$	1.05	 	 	$	0.33	 	
Loss from discontinued operations, net of income taxes	 	 	—	 	 	 	—	 	 	 	—	 	 	 	(0.01	)	
Basic income per common share	 	$	0.51	 	 	$	0.32	 	 	$	1.05	 	 	$	0.32	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Diluted income (loss) per common share:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Income from continuing operations	 	$	0.51	 	 	$	0.32	 	 	$	1.05	 	 	$	0.32	 	
Loss from discontinued operations, net of income taxes	 	 	—	 	 	 	—	 	 	 	—	 	 	 	(0.01	)	
Diluted income per common share	 	$	0.51	 	 	$	0.32	 	 	$	1.05	 	 	$	0.31	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Weighted average shares outstanding - basic	 	 	35,348,597	 	 	 	35,564,946	 	 	 	35,527,971	 	 	 	35,488,271	 	
Weighted average shares outstanding - diluted	 	 	35,458,956	 	 	 	35,928,327	 	 	 	35,686,831	 	 	 	35,935,093	 	
 
The accompanying notes are an integral part to these Condensed Consolidated Financial Statements.
 
2

THE MANITOWOC COMPANY, INC.
Condensed Consolidated Statements of Comprehensive Income (Loss)
For the three and nine months ended September 30, 2019 and 2018
(Unaudited)
($ in millions)
 
 	 	Three Months Ended
September 30,	 	 	Nine Months Ended
September 30,	 	
 	 	2019	 	 	2018	 	 	2019	 	 	2018	 	
Net income	 	$	18.1	 	 	$	11.5	 	 	$	37.3	 	 	$	11.2	 	
Other comprehensive income (loss), net of income tax	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Unrealized income (expense) on derivatives, net of income
   tax provision of $0.0, $0.0, $0.0 and $0.0, respectively	 	 	(1.3	)	 	 	1.3	 	 	 	(0.6	)	 	 	(2.0	)	
Employee pension and postretirement benefits, net of
   income tax benefit of $0.0, $0.8, $0.0 and
   $0.8, respectively	 	 	0.4	 	 	 	4.2	 	 	 	1.4	 	 	 	5.6	 	
Foreign currency translation adjustments	 	 	(13.9	)	 	 	(7.1	)	 	 	(15.2	)	 	 	(22.5	)	
Total other comprehensive loss, net of income tax	 	 	(14.8	)	 	 	(1.6	)	 	 	(14.4	)	 	 	(18.9	)	
Comprehensive income (loss)	 	$	3.3	 	 	$	9.9	 	 	$	22.9	 	 	$	(7.7	)	
 
The accompanying notes are an integral part to these Condensed Consolidated Financial Statements.
3

THE MANITOWOC COMPANY, INC.
Condensed Consolidated Balance Sheets
As of September 30, 2019 and December 31, 2018
(Unaudited)
($ in millions, except share data)
 
 	 	September 30,
2019	 	 	December 31,
2018	 		
Assets	 	 	 	 	 	 	 	 		
Current Assets:	 	 	 	 	 	 	 	 		
Cash and cash equivalents	 	$	67.5	 	 	$	140.3	 		
Accounts receivable, less allowances of $9.8 and $10.3, respectively	 	 	225.3	 	 	 	171.8	 		
Inventories — net	 	 	521.9	 	 	 	453.1	 		
Notes receivable — net	 	 	16.6	 	 	 	19.4	 		
Other current assets	 	 	32.7	 	 	 	58.3	 		
Total current assets	 	 	864.0	 	 	 	842.9	 		
 	 	 	 	 	 	 	 	 		
Property, plant and equipment — net	 	 	278.9	 	 	 	288.9	 		
Operating lease right-of-use assets	 	 	42.5	 	 	 	—	 		
Goodwill	 	 	231.5	 	 	 	232.8	 		
Other intangible assets — net	 	 	114.6	 	 	 	118.1	 		
Other long-term assets	 	 	59.2	 	 	 	59.2	 		
Total assets	 	$	1,590.7	 	 	$	1,541.9	 		
Liabilities and Stockholders' Equity	 	 	 	 	 	 	 	 		
Current Liabilities:	 	 	 	 	 	 	 	 		
Accounts payable and accrued expenses	 	$	372.5	 	 	$	425.2	 		
Short-term borrowings and current portion of long-term debt	 	 	4.3	 	 	 	6.4	 		
Product warranties	 	 	41.4	 	 	 	39.1	 		
Customer advances	 	 	9.7	 	 	 	9.6	 		
Other liabilities	 	 	24.1	 	 	 	16.3	 		
Total current liabilities	 	 	452.0	 	 	 	496.6	 		
Non-Current Liabilities:	 	 	 	 	 	 	 	 		
Long-term debt	 	 	309.1	 	 	 	266.7	 		
Operating lease liabilities	 	 	32.5	 	 	 	—	 		
Deferred income taxes	 	 	2.0	 	 	 	5.7	 		
Pension obligations	 	 	80.3	 	 	 	85.7	 		
Postretirement health and other benefit obligations	 	 	17.8	 	 	 	18.3	 		
Long-term deferred revenue	 	 	29.9	 	 	 	25.2	 		
Other non-current liabilities	 	 	42.0	 	 	 	42.4	 		
Total non-current liabilities	 	 	513.6	 	 	 	444.0	 		
Commitments and contingencies (Note 16)	 	 	 	 	 	 	 	 		
Stockholders' Equity:	 	 	 	 	 	 	 	 		
Preferred stock (authorized 3,500,000 shares of $.01 par value; none outstanding)	 	 	—	 	 	 	—	 		
Common stock (75,000,000 shares authorized, 40,793,983 shares issued, 35,349,046
   and 35,588,833 shares outstanding, respectively)	 	 	0.4	 	 	 	0.4	 		
Additional paid-in capital	 	 	591.0	 	 	 	584.8	 		
Accumulated other comprehensive loss	 	 	(131.0	)	 	 	(116.6	)		
Retained earnings	 	 	226.9	 	 	 	189.6	 		
Treasury stock, at cost (5,444,937 and 5,205,150 shares, respectively)	 	 	(62.2	)	 	 	(56.9	)		
Total stockholders' equity	 	 	625.1	 	 	 	601.3	 		
Total liabilities and stockholders' equity	 	$	1,590.7	 	 	$	1,541.9	 		
 
The accompanying notes are an integral part to these Condensed Consolidated Financial Statements.
 
4

THE MANITOWOC COMPANY, INC.
Condensed Consolidated Statements of Cash Flows
For the nine months ended September 30, 2019 and 2018
(Unaudited)
($ in millions)
 
 	 	Nine Months Ended
September 30,	 	
 	 	2019	 	 	2018	 	
Cash Flows from Operating Activities:	 	 	 	 	 	 	 	 	
Net income	 	$	37.3	 	 	$	11.2	 	
Adjustments to reconcile net income to cash used for operating activities:	 	 	 	 	 	 	 	 	
Asset impairment expense	 	 	—	 	 	 	0.4	 	
Depreciation	 	 	26.3	 	 	 	27.2	 	
Amortization of intangible assets	 	 	0.2	 	 	 	0.2	 	
Amortization of deferred financing fees	 	 	1.2	 	 	 	1.4	 	
Loss on debt extinguishment	 	 	25.0	 	 	 	—	 	
Gain on sale of property, plant and equipment	 	 	(3.5	)	 	 	(1.7	)	
Other	 	 	8.7	 	 	 	7.6	 	
Changes in operating assets and liabilities:	 	 	 	 	 	 	 	 	
Accounts receivable	 	 	(184.2	)	 	 	(386.3	)	
Inventories	 	 	(87.4	)	 	 	(106.3	)	
Notes receivable	 	 	(0.5	)	 	 	18.0	 	
Other assets	 	 	14.8	 	 	 	6.1	 	
Accounts payable	 	 	(37.4	)	 	 	44.8	 	
Accrued expenses and other liabilities	 	 	1.6	 	 	 	(43.1	)	
Net cash used for operating activities	 	 	(197.9	)	 	 	(420.5	)	
 	 	 	 	 	 	 	 	 	
Cash Flows from Investing Activities:	 	 	 	 	 	 	 	 	
Capital expenditures	 	 	(22.4	)	 	 	(21.4	)	
Proceeds from sale of fixed assets	 	 	17.2	 	 	 	12.2	 	
Cash receipts on sold accounts receivable	 	 	126.3	 	 	 	401.3	 	
Net cash provided by investing activities	 	 	121.1	 	 	 	392.1	 	
 	 	 	 	 	 	 	 	 	
Cash Flows from Financing Activities:	 	 	 	 	 	 	 	 	
Proceeds from revolving credit facility	 	 	131.4	 	 	 	—	 	
Payments on revolving credit facility	 	 	(131.4	)	 	 	—	 	
Payments on long-term debt	 	 	(276.6	)	 	 	(4.6	)	
Proceeds from long-term debt	 	 	300.0	 	 	 	—	 	
Other debt - net	 	 	(2.8	)	 	 	—	 	
Debt issuance costs	 	 	(8.3	)	 	 	—	 	
Exercises of stock options	 	 	0.2	 	 	 	2.5	 	
Common stock repurchases	 	 	(7.4	)	 	 	—	 	
Net cash provided by (used for) financing activities	 	 	5.1	 	 	 	(2.1	)	
 	 	 	 	 	 	 	 	 	
Effect of exchange rate changes on cash and cash equivalents	 	 	(1.1	)	 	 	(1.9	)	
 	 	 	 	 	 	 	 	 	
Net decrease in cash and cash equivalents	 	 	(72.8	)	 	 	(32.4	)	
Cash and cash equivalents at beginning of period	 	 	140.3	 	 	 	123.0	 	
Cash and cash equivalents at end of period	 	$	67.5	 	 	$	90.6	 	
 
The accompanying notes are an integral part to these Condensed Consolidated Financial Statements.

 
 
5

THE MANITOWOC COMPANY, INC.
Condensed Consolidated Statements of Equity
As of September 30, 2019 and December 31, 2018
(Unaudited)
($ in millions, except share data)
 
 	 	September 30,
2019	 	 	December 31,
2018	 	
Common Stock - Shares Outstanding	 	 	 	 	 	 	 	 	
Balance at beginning of period	 	 	35,588,833	 	 	 	35,273,864	 	
Stock options exercised	 	 	36,479	 	 	 	95,019	 	
Restricted stock, net	 	 	141,916	 	 	 	165,404	 	
Performance shares issued	 	 	54,860	 	 	 	54,546	 	
Common stock repurchases	 	 	(473,042	)	 	 	—	 	
Balance at end of period	 	 	35,349,046	 	 	 	35,588,833	 	
Common Stock - Par Value	 	 	 	 	 	 	 	 	
Balance at beginning of period	 	$	0.4	 	 	$	0.4	 	
Balance at end of period	 	$	0.4	 	 	$	0.4	 	
Additional Paid-in Capital	 	 	 	 	 	 	 	 	
Balance at beginning of period	 	$	584.8	 	 	$	577.6	 	
Stock options exercised and issuance of other stock awards	 	 	(2.1	)	 	 	(1.0	)	
Stock-based compensation	 	 	8.3	 	 	 	8.2	 	
Balance at end of period	 	$	591.0	 	 	$	584.8	 	
Accumulated Other Comprehensive Loss	 	 	 	 	 	 	 	 	
Balance at beginning of period	 	$	(116.6	)	 	$	(97.4	)	
Other comprehensive loss	 	 	(14.4	)	 	 	(19.2	)	
Balance at end of period	 	$	(131.0	)	 	$	(116.6	)	
Retained Earnings	 	 	 	 	 	 	 	 	
Balance at beginning of period	 	$	189.6	 	 	$	256.7	 	
Net income (loss)	 	 	37.3	 	 	 	(67.1	)	
Balance at end of period	 	$	226.9	 	 	$	189.6	 	
Treasury Stock	 	 	 	 	 	 	 	 	
Balance at beginning of period	 	$	(56.9	)	 	$	(59.8	)	
Stock options exercised and issuance of other stock awards	 	 	2.1	 	 	 	2.9	 	
Common stock repurchases	 	 	(7.4	)	 	 	—	 	
Balance at end of period	 	$	(62.2	)	 	$	(56.9	)	
Total equity	 	$	625.1	 	 	$	601.3	 	
 
The accompanying notes are an integral part to these Condensed Consolidated Financial Statements.
 
6

THE MANITOWOC COMPANY, INC.
Notes to Unaudited Condensed Consolidated Financial Statements
For the three and nine months ended September 30, 2019 and 2018
1.  Accounting Policies and Basis of Presentation
The Manitowoc Company, Inc. (“Manitowoc,” “MTW” or the “Company”) was founded in 1902 and has over a 116-year tradition of providing high-quality, customer-focused products and support services to its markets.  Manitowoc is one of the world's leading providers of engineered lifting solutions. Manitowoc, through its wholly-owned subsidiaries, designs, manufactures, markets, and supports comprehensive product lines of mobile telescopic cranes, tower cranes, lattice-boom crawler cranes, and boom trucks under the Grove, Manitowoc, National Crane, Potain, Shuttlelift and Manitowoc Crane Care brand names.
The Company has three reportable segments, the Americas segment, Europe and Africa (“EURAF”) segment and Middle East and Asia Pacific (“MEAP”) segment. The segments were identified using the “management approach,” which designates the internal organization that is used by management for making operating decisions and assessing performance. Refer to Note 14, “Segments” for additional information.
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, 2019 and 2018, the cash flows for the same nine-month periods and the financial position and equity at September 30, 2019 and December 31, 2018, 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, 2018. 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 Securities and Exchange Commission 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.
During the fourth quarter of 2018, the Company identified an adjustment to the Condensed Consolidated Statement of Cash Flows for the nine months ended September 30, 2018. The adjustment related to the treatment of cash receipts on sold accounts receivable, whereby the Company had overstated cash flows provided by investing activities and overstated cash flows used for operating activities by approximately $20.6 million. This adjustment has been reflected in the prior period Condensed Consolidated Statement of Cash Flows in this filing. For the three and nine months ended September 30, 2019, the Company recorded a favorable pre-tax adjustment due to an over-accrual related to prior years of $2.0 million, $1.3 million after income tax, primarily impacting cost of sales in the Condensed Consolidated Statement of Operations. In evaluating whether the Company’s previously issued consolidated financial statements were materially misstated, the Company considered the guidance in Accounting Standards Codification (“ASC”) Topic 250, “Accounting Changes and Error Corrections” and ASC Topic 250-10-S99-1, “Assessing Materiality.” The Company determined that these adjustments were not material to the Company’s prior period consolidated financial statements and therefore, amending the previously filed report was not required.
Certain prior period amounts have been reclassified to conform to the current period presentation. All amounts, except per share and share amounts, are in millions of dollars throughout the tables in these notes unless otherwise indicated.
2. Revenues
 
The Company records deferred revenues when cash payments are received or due in advance of performance, including amounts which are refundable. The table below shows the change in the customer advances balance for the three and nine months ended September 30, 2019 and 2018.
 
7

 	 	Three Months Ended
September 30,	 	 	Nine Months Ended
September 30,	 	
 	 	2019	 	 	2018	 	 	2019	 	 	2018	 	
Balance at beginning of period	 	$	10.6	 	 	$	15.3	 	 	$	9.6	 	 	$	12.7	 	
Cash received or due in advance of satisfying
   performance obligation	 	 	25.4	 	 	 	14.9	 	 	 	75.6	 	 	 	71.7	 	
Revenue recognized	 	 	(26.1	)	 	 	(18.1	)	 	 	(75.5	)	 	 	(71.7	)	
Currency translation	 	 	(0.2	)	 	 	(0.3	)	 	 	—	 	 	 	(0.9	)	
Balance at end of period	 	$	9.7	 	 	$	11.8	 	 	$	9.7	 	 	$	11.8	 	
 
Disaggregation of the Company’s revenue sources are disclosed in Note 14, “Segments.”
3.  Inventories
The components of inventories as of September 30, 2019 and December 31, 2018 are summarized as follows:
 
 	 	September 30,
2019	 	 	December 31,
2018	 	
Raw materials	 	$	176.2	 	 	$	159.2	 	
Work-in-process	 	 	141.2	 	 	 	112.0	 	
Finished goods	 	 	262.1	 	 	 	238.0	 	
Total inventories	 	 	579.5	 	 	 	509.2	 	
Excess and obsolete inventory reserve	 	 	(57.6	)	 	 	(56.1	)	
Inventories — net	 	$	521.9	 	 	$	453.1	 	
 
4.  Notes Receivable
The Company has notes receivable balances that are classified as current or long-term based on the timing of amounts due. Long-term notes receivable are included within other long-term assets on the Condensed Consolidated Balance Sheets. Current and long-term notes receivable balances primarily relate to the Company’s captive finance entity in China. The Company also has a long-term note receivable balance related to the 2014 sale of Manitowoc Dong Yue. During the third quarter of 2018, the Company wrote down the note with Manitowoc Dong Yue to the anticipated collection amount based on current expectations. The entire balance of the Manitowoc Dong Yue note is included in long-term notes receivable in the Condensed Consolidated Balance Sheets as of September 30, 2019 and December 31, 2018. As of September 30, 2019, the Company had current and long-term notes receivable in the amount of $16.6 million and $20.6 million, respectively. As of December 31, 2018, the Company had current and long-term notes receivable in the amount of $19.4 million and $17.0 million, respectively.
 
5.  Property, Plant and Equipment
The components of property, plant and equipment at September 30, 2019 and December 31, 2018 are summarized as follows:
 
 	 	September 30,
2019	 	 	December 31,
2018	 	
Land	 	$	23.5	 	 	$	24.1	 	
Building and improvements	 	 	192.9	 	 	 	195.3	 	
Machinery, equipment and tooling	 	 	267.0	 	 	 	269.4	 	
Furniture and fixtures	 	 	16.5	 	 	 	16.4	 	
Computer hardware and software	 	 	119.0	 	 	 	117.1	 	
Rental cranes	 	 	77.4	 	 	 	84.0	 	
Construction in progress	 	 	7.0	 	 	 	9.6	 	
Total cost	 	 	703.3	 	 	 	715.9	 	
Less accumulated depreciation	 	 	(424.4	)	 	 	(427.0	)	
Property, plant and equipment — net	 	$	278.9	 	 	$	288.9	 	
 
Property, plant and equipment are depreciated over the asset’s estimated useful lives using the straight-line depreciation method for financial reporting and accelerated methods for income tax purposes.
 
Assets Held for Sale
8

 
The Company had classified $12.9 million as assets held for sale within other current assets on the Condensed Consolidated Balance Sheets as of December 31, 2018 related to the Manitowoc, Wisconsin manufacturing buildings and land. In 2019, the Company sold the manufacturing buildings and land previously classified as assets held for sale, which resulted in a $3.5 million gain recorded within other income (expense) – net on the Condensed Consolidated Statements of Operations in the three and nine months ended September 30, 2019.

6.  Goodwill and Other Intangible Assets
The Company performs an annual impairment review of goodwill and indefinitely lived intangibles during the fourth quarter, or more frequently if events or changes in circumstances indicate that the asset might be impaired. There have been no impairment indicators since the fourth quarter of 2018; therefore, no impairment review has occurred during the nine months ended September 30, 2019.
The changes in the carrying amount of goodwill for the year ended December 31, 2018 and the nine months ended September 30, 2019 are summarized as follows:
 
 	 	Americas	 	 	EURAF	 	 	MEAP	 	 	Consolidated	 	
Balance as of January 1, 2018	 	$	166.5	 	 	$	85.9	 	 	$	68.9	 	 	$	321.3	 	
Foreign currency impact	 	 	—	 	 	 	(3.7	)	 	 	(2.6	)	 	 	(6.3	)	
Goodwill impairment - October 31, 2018	 	 	—	 	 	 	(82.2	)	 	 	—	 	 	 	(82.2	)	
Balance as of December 31, 2018	 	 	166.5	 	 	 	—	 	 	 	66.3	 	 	 	232.8	 	
Foreign currency impact	 	 	—	 	 	 	—	 	 	 	(1.3	)	 	 	(1.3	)	
Balance as of September 30, 2019	 	$	166.5	 	 	$	—	 	 	$	65.0	 	 	$	231.5	 	
Other intangible assets with definite lives are amortized over their estimated useful lives.
The gross carrying amount, accumulated amortization and net book value of the Company’s intangible assets other than goodwill at September 30, 2019 and December 31, 2018 are summarized as follows:
 
 	 	September 30, 2019	 	 	December 31, 2018	 	
 	 	Gross
Carrying
Amount	 	 	Accumulated
Amortization	 	 	Net
Book
Value	 	 	Gross
Carrying
Amount	 	 	Accumulated
Amortization	 	 	Net
Book
Value	 	
Trademarks and tradenames	 	$	93.9	 	 	$	—	 	 	$	93.9	 	 	$	96.7	 	 	$	—	 	 	$	96.7	 	
Customer relationships	 	 	10.1	 	 	 	(8.4	)	 	 	1.7	 	 	 	10.1	 	 	 	(8.4	)	 	 	1.7	 	
Patents	 	 	29.0	 	 	 	(28.2	)	 	 	0.8	 	 	 	29.8	 	 	 	(29.0	)	 	 	0.8	 	
Distribution network	 	 	18.3	 	 	 	—	 	 	 	18.3	 	 	 	18.9	 	 	 	—	 	 	 	18.9	 	
Total	 	$	161.5	 	 	$	(46.9	)	 	$	114.6	 	 	$	166.0	 	 	$	(47.9	)	 	$	118.1	 	
 
Amortization expense for the three months ended September 30, 2019 and 2018 was zero. Amortization expense for the nine months ended September 30, 2019 and 2018 was $0.2 million.
Definite lived intangible assets and long-lived assets are subject to impairment testing whenever events or circumstances indicate that the carrying value of the assets may not be recoverable.
7.  Accounts Payable and Accrued Expenses
Accounts payable and accrued expenses at September 30, 2019 and December 31, 2018 are summarized as follows:
 
 	 	September 30, 2019	 	 	December 31, 2018	 	
Trade accounts payable	 	$	202.4	 	 	$	249.2	 	
Employee-related expenses	 	 	53.9	 	 	 	59.5	 	
Accrued vacation	 	 	20.9	 	 	 	24.3	 	
Miscellaneous accrued expenses	 	 	95.3	 	 	 	92.2	 	
Total	 	$	372.5	 	 	$	425.2	 	
 
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8.  Debt
Outstanding debt at September 30, 2019 and December 31, 2018 is summarized as follows:
 
 	 	September 30, 2019	 	 	December 31, 2018	 	
Senior secured asset based revolving credit facility	 	$	—	 	 	$	—	 	
Senior secured second lien notes due 2021	 	 	—	 	 	 	254.2	 	
Senior secured second lien notes due 2026	 	 	300.0	 	 	 	—	 	
Other	 	 	18.1	 	 	 	21.2	 	
Deferred financing costs	 	 	(4.7	)	 	 	(2.3	)	
Total debt	 	 	313.4	 	 	 	273.1	 	
Short-term borrowings and current portion of long-term
   debt	 	 	(4.3	)	 	 	(6.4	)	
Long-term debt	 	$	309.1	 	 	$	266.7	 	
 
On March 25, 2019, the Company and certain of its subsidiaries entered into an indenture with U.S. Bank National Association as trustee and notes collateral agent, pursuant to which the Company issued $300.0 million aggregate principal amount senior secured second lien notes due on April 1, 2026 with an annual coupon rate of 9.000% (the “2026 Notes”). Interest on the 2026 Notes is payable in cash semi-annually in arrears on April 1 and October 1 of each year. The 2026 Notes are fully and unconditionally guaranteed on a senior secured second lien basis, jointly and severally, by each of the Company’s existing and future domestic subsidiaries that is either a guarantor or a borrower under the ABL Revolving Credit Facility (as defined below) or that guarantees certain other debt of the Company or a guarantor. The 2026 Notes and the related guarantees are secured on a second-priority basis, subject to certain exceptions and permitted liens, by pledges of capital stock and other equity interests and other security interests in substantially all of the personal property and fee-owned real property of the Company and of the guarantors that secure obligations under the ABL Revolving Credit Facility. The 2026 Notes were sold pursuant to exemptions from registration under the Securities Act of 1933.
 
Additionally, on March 25, 2019, the Company and certain subsidiaries of the Company (the “Loan Parties”) entered into a credit agreement (the “ABL Credit Agreement”) with JP Morgan Chase Bank, N.A as administrative and collateral agent, and certain financial institutions party thereto as lenders, providing for a senior secured asset-based revolving credit facility (the “ABL Revolving Credit Facility”) of up to $275.0 million. The borrowing capacity under the ABL Revolving Credit Facility is based on the value of inventory, accounts receivable and fixed assets of the Loan Parties. The Loan Parties’ obligations under the ABL Revolving Credit Facility are secured on a first-priority bases, subject to certain exceptions and permitted liens, by substantially all of the personal property and fee-owned real property of the Loan Parties. The liens securing the ABL Revolving Credit Facility are senior in priority to the second-priority liens securing the obligations under the 2026 Notes and the related guarantees. The ABL Revolving Credit Facility has a term of 5 years and includes a $75.0 million letter of credit sub-facility, $10.0 million of which is available to the Company’s German subsidiary that is a borrower under the ABL Revolving Credit Facility.
 
The Company used the initial extension of credit under the ABL Revolving Credit Facility, together with the net proceeds from the offering of the 2026 Notes, to (i) redeem all of the Company’s $260.0 million in outstanding 12.750% Senior Secured Second Lien Notes due 2021 (the “Prior 2021 Notes”); (ii) repay all obligations outstanding, and terminate all commitments, under (x) the Company’s previous $225.0 million ABL Revolving Credit Facility (“Prior ABL Facility”) and (y) $75.0 million AR Securitization Facility; and (iii) pay related fees and expenses, including $16.6 million of call premium on the Prior 2021 Notes, $5.0 million of closing costs and $4.6 million of accrued interest.
 
During the nine months ended September 30, 2019, the Company recorded a $25.0 million charge in the Condensed Consolidated Statement of Operations associated with the Company’s refinancing of the ABL Revolving Credit Facility and 2026 Notes. The charge is composed of $16.6 million of call premium on the Prior 2021 Notes, $5.3 million of unamortized discount on the Prior 2021 Notes and $3.1 million of unamortized debt issuance costs.
As of September 30, 2019, the Company had other indebtedness outstanding of $18.1 million that had a weighted-average interest rate of approximately 5.17%. This debt includes balances on local credit lines and other financing arrangements.
 
The Company had no borrowings on the ABL Revolving Credit Facility as of September 30, 2019 and no borrowings on the Prior ABL Facility as of December 31, 2018. During the quarter ended September 30, 2019, the highest daily borrowing under the ABL Revolving Credit Facility was $27.5 million and the average amount borrowed was $9.5 million, while the average annual interest rate was 4.52%. The interest rate spread of the ABL Revolving Credit Facility fluctuates based on excess
10

availability. As of September 30, 2019, the spreads for London Interbank Offered Rate and prime rate borrowings were 1.25% and 0.25%, respectively, with excess availability of approximately $249.8 million, which represents revolver borrowing capacity of $253.8 million less U.S. letters of credit outstanding of $4.0 million.
Both the ABL Revolving Credit Facility and the 2026 Notes include customary covenants which include, without limitation, restrictions on the Company’s ability and the ability of the Company’s restricted subsidiaries to incur, assume or guarantee additional debt or issue certain preferred shares, pay dividends on or make other distributions in respect of the Company’s capital stock or make other restricted payments, make certain investments, sell or transfer certain assets, create liens on certain assets to secure debt, consolidate, merge, sell, or otherwise dispose of all or substantially all of the Company’s assets, enter into certain transactions with affiliates and designate the Company’s subsidiaries as unrestricted. Both the ABL Revolving Credit Facility and the 2026 Notes also include customary events of default.
Additionally, the ABL Revolving Credit Facility contains a covenant requiring the Company to maintain a minimum fixed charge coverage ratio under certain circumstances set forth in the ABL Credit Agreement.
As of September 30, 2019, the Company was in compliance with all affirmative and negative covenants in its debt instruments, inclusive of the financial covenants pertaining to the ABL Revolving Credit Facility and 2026 Notes. 
9.  Accounts Receivable Securitization and Other Factoring Arrangements
The Company had maintained a Receivables Purchase Agreement (“RPA”) among Manitowoc Funding, LLC (“MTW Funding”), as Seller, The Manitowoc Company, Inc., as Servicer, and Wells Fargo Bank, N.A., as Purchaser and as Agent, with a commitment size of $75.0 million. Under the RPA (and the related Purchase and Sale Agreements referenced in the RPA), the Company’s domestic trade accounts receivable were sold to MTW Funding which, in turn, sold, conveyed, transferred and assigned to a third-party financial institution (“Purchaser”), all of MTW Funding’s rights, title and interest in a pool of receivables to the Purchaser. Transactions under the program are accounted for as sales in accordance with ASC Topic 860, “Transfers and Servicing.” This program was terminated on March 25, 2019.
Trade accounts receivable sold to the Purchaser and being serviced by the Company totaled zero and $149.0 million for the three and nine months ended September 30, 2019, respectively. Trade receivables sold to the Purchaser and being serviced by the Company totaled $219.2 million and $603.5 million for the three and nine months ended September 30, 2018, respectively. Cash proceeds received from customers related to the receivables previously sold for the three and nine months ended September 30, 2019 were zero and $182.8 million, respectively. Cash proceeds received from customers related to the receivables previously sold for the three and nine months ended September 30, 2018 were $231.0 million and $573.9 million, respectively.
Sales of trade receivables under the program reflected as a reduction of accounts receivable in the accompanying Condensed Consolidated Balance Sheets were zero and $75.0 million as of September 30, 2019 and December 31, 2018, respectively. The proceeds received from the sale of trade receivables under the program were included in cash flows from operating activities; whereas cash collections related to the deferred purchase price were classified as cash flows from investing activities in the accompanying Condensed Consolidated Statements of Cash Flows. The Company deemed the interest rate risk related to the deferred purchase price notes to be de minimis, primarily because the average collection cycle of the related receivables is less than 60 days; and as such, 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, 2019 and December 31, 2018 was zero and $71.5 million, respectively, and is included in accounts receivable in the accompanying Condensed Consolidated Balance Sheets. For the nine months ended September 30, 2019 and 2018 non-cash investing activities related to the increase in the deferred purchase price was zero and $413.0 million, respectively.
The Company has two non-U.S. accounts receivable financing programs. Under these financing programs, the Company sold receivables and received cash of €26.5million for the three months ended September 30, 2019. During the nine months ended September 30, 2019, the Company sold receivables and received cash of €88.7 million. The maximum availability under these programs is €45 million.
10.  Income Taxes
For the three months ended September 30, 2019 and 2018, the Company recorded a provision (benefit) for income taxes of $3.1 million and $(10.7) million, respectively. For the nine months ended September 30, 2019 and 2018, the Company recorded a provision (benefit) for income taxes of $10.3 million and $(8.0) million, respectively. The increase in the Company’s provision for income taxes for the three months ended September 30, 2019 relative to the prior year relates primarily to the discrete tax benefit of $12.3 million from the partial release of the valuation allowance in the U.K. recorded during 2018. The increase in
11

the Company’s provision for income taxes for the nine months ended September 30, 2019 relative to the prior year relates primarily to discrete tax benefits of $17.8 million recorded during 2018 of which $12.3 million relates to the partial release of the valuation allowance in the U.K. and $5.2 million relates to a release of reserves due to statute of limitation lapses.
The Company will continue to evaluate its valuation allowance requirements on an ongoing basis 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 Company’s income tax provision (benefit) and could have a material effect on financial results.
The Company’s unrecognized tax benefits, excluding interest and penalties, were $11.9 million and $12.8 million as of September 30, 2019 and December 31, 2018, respectively. 
11.  Income (Loss) Per Share Attributable to Manitowoc Common Shareholders
Basic income per common share is computed as net income divided by the basic weighted average common shares outstanding of 35.3 million shares and 35.5 million shares for the three and nine months ended September 30, 2019, respectively, and 35.6 million and 35.5 million shares for the three and nine months ended September 30, 2018, respectively. The calculation of diluted income per common share includes the effect of any dilutive equity incentive instruments. The Company uses the treasury stock method to calculate the effect of outstanding dilutive equity incentive instruments, which requires the Company to compute total proceeds as the sum of the amount the employee must pay upon exercise of the award and the amount of unearned stock-based compensation costs attributable to future services.
Equity incentive instruments for which the total employee proceeds from exercise exceed the average fair value of the same equity incentive instrument over the period have an anti-dilutive effect on income per common share during periods with net income, and accordingly, the Company excludes the shares from the diluted earnings per share calculation. Anti-dilutive equity instruments of approximately 1,528,910 and 448,595 common shares were excluded from the computation of diluted net income per common share for the three months ended September 30, 2019 and 2018, respectively. Anti-dilutive equity instruments of approximately 1,544,379 and 389,567 common shares were excluded from the computation of diluted net income per common share for the nine months ended September 30, 2019 and 2018, respectively.
The following is a reconciliation of the average shares outstanding used to compute basic and diluted income per common share:
 
 	 	Three Months Ended
September 30,	 	 	Nine Months Ended
September 30,	 	
 	 	2019	 	 	2018	 	 	2019	 	 	2018	 	
Basic weighted average common shares outstanding	 	 	35,348,597	 	 	 	35,564,946	 	 	 	35,527,971	 	 	 	35,488,271	 	
Effect of dilutive securities	 	 	110,359	 	 	 	363,381	 	 	 	158,860	 	 	 	446,822	 	
Diluted weighted average common shares outstanding	 	 	35,458,956	 	 	 	35,928,327	 	 	 	35,686,831	 	 	 	35,935,093	 	
 
No cash dividends were paid during the three and nine months ended September 30, 2019 and 2018.

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12.  Stockholders’ Equity
 
Authorized capital consists of 75 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.
As of September 30, 2019, the Company has authorization to purchase up to $30.0 million of the Company’s common stock at management’s discretion. During the three and nine months ended September 30, 2019, the Company purchased zero and $7.4 million, respectively, of the Company’s common stock under this authorization.
A reconciliation of the changes in accumulated other comprehensive income (loss), net of tax, by component for the three months ended September 30, 2019 and 2018 are summarized as follows:
 
 	 	Gains and Losses on
Cash Flow Hedges	 	 	Pension &
Postretirement	 	 	Foreign Currency
Translation	 	 	Total	 	
Balance at June 30, 2018	 	$	(3.2	)	 	$	(43.7	)	 	$	(67.8	)	 	$	(114.7	)	
Other comprehensive loss before
   reclassifications	 	 	(1.2	)	 	 	(0.2	)	 	 	(7.1	)	 	 	(8.5	)	
Amounts reclassified from accumulated other
   comprehensive loss	 	 	2.5	 	 	 	4.4	 	 	 	—	 	 	 	6.9	 	
Net other comprehensive income (loss)	 	 	1.3	 	 	 	4.2	 	 	 	(7.1	)	 	 	(1.6	)	
Balance at September 30, 2018	 	$	(1.9	)	 	$	(39.5	)	 	$	(74.9	)	 	$	(116.3	)	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Balance at June 30, 2019	 	$	0.4	 	 	$	(35.2	)	 	$	(81.4	)	 	$	(116.2	)	
Other comprehensive loss before
   reclassifications	 	 	(2.2	)	 	 	—	 	 	 	(13.9	)	 	 	(16.1	)	
Amounts reclassified from accumulated other
   comprehensive loss	 	 	0.9	 	 	 	0.4	 	 	 	—	 	 	 	1.3	 	
Net other comprehensive income (loss)	 	 	(1.3	)	 	 	0.4	 	 	 	(13.9	)	 	 	(14.8	)	
Balance at September 30, 2019	 	$	(0.9	)	 	$	(34.8	)	 	$	(95.3	)	 	$	(131.0	)	
 
A reconciliation of the changes in accumulated other comprehensive income (loss), net of tax, by component for the nine months ended September 30, 2019 and 2018 are summarized as follows:
 
 	 	Gains and Losses on
Cash Flow Hedges	 	 	Pension &
Postretirement	 	 	Foreign Currency
Translation	 	 	Total	 	
Balance at December 31, 2017	 	$	0.1	 	 	$	(45.1	)	 	$	(52.4	)	 	$	(97.4	)	
Other comprehensive loss before
   reclassifications	 	 	(4.8	)	 	 	(0.2	)	 	 	(22.5	)	 	 	(27.5	)	
Amounts reclassified from accumulated
   other comprehensive loss	 	 	2.8	 	 	 	5.8	 	 	 	—	 	 	 	8.6	 	
Net other comprehensive income (loss)	 	 	(2.0	)	 	 	5.6	 	 	 	(22.5	)	 	 	(18.9	)	
Balance at September 30, 2018	 	$	(1.9	)	 	$	(39.5	)	 	$	(74.9	)	 	$	(116.3	)	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Balance at December 31, 2018	 	 	(0.3	)	 	 	(36.2	)	 	 	(80.1	)	 	 	(116.6	)	
Other comprehensive income (loss) before
   reclassifications	 	 	(3.0	)	 	 	0.2	 	 	 	(15.2	)	 	 	(18.0	)	
Amounts reclassified from accumulated other
   comprehensive loss	 	 	2.4	 	 	 	1.2	 	 	 	—	 	 	 	3.6	 	
Net other comprehensive income (loss)	 	 	(0.6	)	 	 	1.4	 	 	 	(15.2	)	 	 	(14.4	)	
Balance at September 30, 2019	 	$	(0.9	)	 	$	(34.8	)	 	$	(95.3	)	 	$	(131.0	)	
 
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A reconciliation of the reclassifications from accumulated other comprehensive loss, net of tax, for the three and nine months ended September 30, 2019 and 2018 are summarized as follows:
 
 	 	Amount Reclassified from Accumulated Other Comprehensive Loss	 	 	 	 	
 	 	Three Months Ended
September 30,	 	 	Nine Months Ended
September 30,	 	 	 	 	
 	 	2019	 	 	2018	 	 	2019	 	 	2018	 	 	 	Recognized
Location	
Losses on cash flow hedges	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Foreign currency contracts	 	$	(0.9	)	 	$	(2.5	)	 	$	(2.4	)	 	$	(2.8	)	 	 	Cost of sales	
Total before income taxes	 	 	(0.9	)	 	 	(2.5	)	 	 	(2.4	)	 	 	(2.8	)	 	 	 	
Income tax provision	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	 	
Total, net of income taxes	 	$	(0.9	)	 	$	(2.5	)	 	$	(2.4	)	 	$	(2.8	)	 	 	 	
Amortization of pension and
   postretirement items	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Actuarial losses	 	$	(1.1	)	 	$	(1.4	)	 	$	(3.3	)	 	$	(4.2	)	(a)	 	Other income (expense) - net	
Amortization of prior service cost	 	 	0.7	 	 	 	0.7	 	 	 	2.1	 	 	 	2.1	 	(a)	 	Other income (expense) - net	
Pension settlement charge	 	 	—	 	 	 	(4.5	)	 	 	—	 	 	 	(4.5	)	(a)	 	Other income (expense) - net	
Total before income taxes	 	 	(0.4	)	 	 	(5.2	)	 	 	(1.2	)	 	 	(6.6	)	 	 	 	
Income tax benefit	 	 	—	 	 	 	0.8	 	 	 	—	 	 	 	0.8	 	 	 	 	
Total, net of income taxes	 	$	(0.4	)	 	$	(4.4	)	 	$	(1.2	)	 	$	(5.8	)	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total reclassifications for the period,
   net of income taxes	 	$	(1.3	)	 	$	(6.9	)	 	$	(3.6	)	 	$	(8.6	)	 	 	 	

 	(a)	These accumulated other comprehensive loss components are components of net periodic pension cost (see Note 18, “Employee Benefit Plans,” for further details).	
13.  Stock-Based Compensation
Long-term incentive compensation awards may be granted to certain eligible employees or non-employee directors. A detailed description of the awards granted prior to 2019 is included in the Company’s 2018 Annual Report on Form 10-K.  The total number of shares of the Company’s common stock available for awards under the 2013 Plan is 7,477,395 shares. The total number of shares of the Company’s common stock still available for issuance as of September 30, 2019 is 4,990,354 shares.
Stock-based compensation expense was $2.2 million and $1.9 million for the three months ended September 30, 2019 and 2018, respectively. Stock-based compensation expense was $8.3 million and $6.0 million for the nine months ended September 30, 2019 and 2018, respectively. The Company recognizes stock-based compensation expense over the award’s vesting period.
No options to acquire shares of common stock were granted to employees during the three months ended September 30, 2019. Options to acquire 210,243 shares of common stock were granted to employees during the nine months ended September 30, 2019. The options granted in 2019 become exercisable in three annual increments over a three-year period beginning on the first anniversary of the grant date and expire 10 years subsequent to the grant date. 
During the three months ended September 30, 2019 zero restricted stock units (“RSUs”) were issued to employees. A total of 178,371 RSUs were issued by the Company to employees during the nine months ended September 30, 2019. The RSUs granted to employees in 2019 vest in three annual increments over a three-year period beginning on the first anniversary of the grant date.
No performance shares were issued during the three months ended September 30, 2019. A total of 228,037 performance shares were issued during the nine months ended September 30, 2019. Performance shares are earned based on the extent to which performance goals are met over the applicable performance period.  The performance goals and the applicable performance period vary for each grant year. The performance goals for the performance shares granted in 2019 are based 50% on total shareholder return relative to peers during the three-year performance period and 50% on Adjusted EBITDA percentage from
14

continuing operations in 2021. Depending on the foregoing factors, the number of shares earned could range from zero to two times the amount of performance shares outstanding.
The Company did not issue any equity grants to directors during the three months ended September 30, 2019. A total of 50,673 equity grants were issued to directors during the nine months ended September 30, 2019. The 2019 equity grants vested immediately upon the grant date.
14. Segments
The Company reports segment information based on the “management” approach. The management approach designates the internal reporting used by the Chief Executive Officer, who is also the Company’s Chief Operating Decision Maker (“CODM”), for making decisions about the allocation of resources and assessing performance as the source of the Company’s reportable operating segments.
The Company has three reportable segments: Americas, EURAF, and MEAP. The Americas operating segment includes the North America and South America continents. The EURAF operating segment includes the Europe and Africa continents, excluding the Middle East region. The MEAP operating segment includes the Asia and Australia continents and the Middle East region.
The CODM evaluates the performance of the Company’s reportable segments based on net sales and operating income. Segment net sales are recognized in the geographic region the product is sold. Operating income for each segment includes net sales to third parties within the respective region, cost of sales directly attributable to the segment, and operating expenses directly attributable to the segment. Manufacturing variances generated within each reportable segment are maintained in each segment’s operating income. Operating income for each segment excludes other income and expense and certain expenses managed outside the reportable operating segments. Costs excluded from segment operating income include various corporate expenses such as stock-based compensation expense, income taxes, non-recurring charges and other separately managed general and administrative costs. The Company does not include intercompany sales between segments for management reporting purposes.
The following table shows information by reportable segment for the three and nine months ended September 30, 2019 and 2018:
 	 	Three Months Ended
September 30,	 	 	Nine Months Ended
September 30,	 	
 	 	2019	 	 	2018	 	 	2019	 	 	2018	 	
Net Sales	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Americas	 	$	251.0	 	 	$	224.1	 	 	$	721.7	 	 	$	614.3	 	
EURAF	 	 	139.2	 	 	 	152.9	 	 	 	476.0	 	 	 	498.3	 	
MEAP	 	 	57.8	 	 	 	73.1	 	 	 	173.0	 	 	 	218.9	 	
Total	 	$	448.0	 	 	$	450.1	 	 	$	1,370.7	 	 	$	1,331.5	 	
Segment Operating Income	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Americas	 	$	34.5	 	 	$	17.8	 	 	$	85.4	 	 	$	35.2	 	
EURAF	 	 	1.9	 	 	 	1.6	 	 	 	7.0	 	 	 	13.1	 	
MEAP	 	 	5.9	 	 	 	6.2	 	 	 	18.3	 	 	 	24.8	 	
Total	 	$	42.3	 	 	$	25.6	 	 	$	110.7	 	 	$	73.1	 	
Depreciation	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Americas	 	$	3.7	 	 	$	3.5	 	 	$	10.8	 	 	$	10.6	 	
EURAF	 	 	3.9	 	 	 	3.8	 	 	 	11.3	 	 	 	11.4	 	
MEAP	 	 	0.5	 	 	 	0.9	 	 	 	1.9	 	 	 	2.9	 	
Corporate	 	 	0.8	 	 	 	0.8	 	 	 	2.3	 	 	 	2.3	 	
Total	 	$	8.9	 	 	$	9.0	 	 	$	26.3	 	 	$	27.2	 	
Capital Expenditures	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Americas	 	$	5.3	 	 	$	2.4	 	 	$	11.3	 	 	$	7.3	 	
EURAF	 	 	6.2	 	 	 	2.1	 	 	 	8.6	 	 	 	9.1	 	
MEAP	 	 	1.2	 	 	 	0.9	 	 	 	2.5	 	 	 	2.6	 	
Corporate	 	 	—	 	 	 	0.8	 	 	 	—	 	 	 	2.4	 	
Total	 	$	12.7	 	 	$	6.2	 	 	$	22.4	 	 	$	21.4	 	
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A reconciliation of the Company’s segment operating income to operating income in the Condensed Consolidated Statement of Operations for the three and nine months ended September 30, 2019 and 2018 are summarized as follows:
 
 	 	Three Months Ended
September 30,	 	 	Nine Months Ended
September 30,	 	
 	 	2019	 	 	2018	 	 	2019	 	 	2018	 	
Segment operating income	 	$	42.3	 	 	$	25.6	 	 	$	110.7	 	 	$	73.1	 	
Unallocated corporate expenses	 	 	(9.8	)	 	 	(8.3	)	 	 	(20.0	)	 	 	(26.5	)	
Unallocated restructuring expense	 	 	—	 	 	 	(0.4	)	 	 	(0.1	)	 	 	(3.9	)	
Total operating income	 	$	32.5	 	 	$	16.9	 	 	$	90.6	 	 	$	42.7	 	
 
Net sales by geographic area for the three and nine months ended September 30, 2019 and 2018 are summarized as follows:
 
 	 	Three Months Ended
September 30,	 	 	Nine Months Ended
September 30,	 	
 	 	2019	 	 	2018	 	 	2019	 	 	2018	 	
United States	 	$	226.6	 	 	$	208.5	 	 	$	644.3	 	 	$	556.3	 	
Europe	 	 	134.8	 	 	 	147.6	 	 	 	458.0	 	 	 	486.6	 	
Other	 	 	86.6	 	 	 	94.0	 	 	 	268.4	 	 	 	288.6	 	
Total	 	$	448.0	 	 	$	450.1	 	 	$	1,370.7	 	 	$	1,331.5	 	

Net sales by product for the three and nine months ended September 30, 2019 and 2018 are summarized as follows:
 
 	 	Three Months Ended
September 30,	 	 	Nine Months Ended
September 30,	 	
 	 	2019	 	 	2018	 	 	2019	 	 	2018	 	
Cranes	 	$	365.4	 	 	$	362.3	 	 	$	1,116.9	 	 	$	1,079.0	 	
Aftermarket parts and other*	 	 	82.6	 	 	 	87.8	 	 	 	253.8	 	 	 	252.5	 	
Total net sales	 	$	448.0	 	 	$	450.1	 	 	$	1,370.7	 	 	$	1,331.5	 	
*Other revenue consists of revenue related to CraneCare services such as training and
   field service work.
15.  Fair Value of Financial Instruments
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 following table sets forth the Company’s financial assets and liabilities that were accounted for at fair value as of September 30, 2019 and December 31, 2018, 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, 2019	 	
 	 	Level 1	 	 	Level 2	 	 	Level 3	 	 	Total	 	
Current Liabilities:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Foreign currency exchange contracts	 	$	—	 	 	$	2.4	 	 	$	—	 	 	$	2.4	 	
 
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 	 	Fair Value as of December 31, 2018	 	
 	 	Level 1	 	 	Level 2	 	 	Level 3	 	 	Total	 	
Current Assets:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Foreign currency exchange contracts	 	$	—	 	 	$	0.1	 	 	$	—	 	 	$	0.1	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Current Liabilities:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Foreign currency exchange contracts	 	$	—	 	 	$	1.8	 	 	$	—	 	 	$	1.8	 	
 
The fair value of the Company's 2026 Notes was approximately $295.7 million as of September 30, 2019. See Note 8, “Debt,” for a description of the debt instruments and their related carrying values.
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 2026 Notes based on quoted market prices; because these markets are typically actively traded, the liabilities are classified as Level 1 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 9, “Accounts Receivable Securitization”) and short-term variable debt, including any amounts outstanding under the ABL Revolving Credit Facility, approximate fair value, without being discounted as of September 30, 2019 and December 31, 2018, 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 attempts to minimize 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. 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. See Note 21, “Derivative Financial Instruments” for additional information.
16.  Commitments and Contingencies
The Company is involved in various legal actions arising out of the normal course of business, which, taking into account the liabilities accrued and legal counsel’s evaluation of such actions, in the opinion of management, the ultimate resolution, individually and in the aggregate, is not expected to have a material adverse effect on the Company’s financial condition, results of operations or cash flows.
It is reasonably possible that the estimates for warranty costs, product liability, environmental remediation, asbestos-related claims and other various legal matters may change based upon new information that may arise or matters that are beyond the scope of the Company’s historical experience. Presently, there are no reliable methods to estimate the amount of any such potential changes.
 
Product liability reserves, recorded within other liabilities in the Condensed Consolidated Balance Sheets, as of September 30, 2019 and December 31, 2018 were $13.8 million and $16.3 million, respectively. These reserves were estimated using a combination of actual case reserves and actuarial methods. Based on the Company’s experience in defending product liability claims, management believes the current reserves are adequate for estimated case resolutions on aggregate self-insured claims and insured claims. Any recoveries from insurance carriers are dependent upon the legal sufficiency of claims and solvency of insurance carriers.
During the nine months ended September 30, 2019, the Company settled a legal matter resulting in a net $24.4 million gain recorded in the second quarter of 2019. The Company recorded this settlement by recognizing income of $15.5 million in other income (expense) - net and a benefit of $8.9 million in engineering, selling and administrative expenses in the Condensed Consolidated Statements of Operations.  
17.  Guarantees
The Company periodically enters into transactions with customers that provide for buyback commitments. The Company evaluates each agreement at inception to determine if the customer has a significant economic incentive to exercise the buyback option. If it is determined that the customer has a significant economic incentive to exercise that right, the revenue is deferred and the agreement is accounted for as a lease in accordance with Topic 842 – “Leases,” (“Topic 842”). If it is determined that the customer does not have a significant economic incentive to exercise that right, then revenue is recognized when control of
17

the product is transferred to the customer. The deferred revenue included in other current and non-current liabilities as of September 30, 2019 and December 31, 2018 was $37.7 million and $34.4 million, respectively.  The total amount of buyback commitments and other guarantees given by the Company and outstanding as of September 30, 2019 and December 31, 2018 was $27.9 million and $30.9 million, respectively.  These amounts are not reduced for amounts the Company would recover from the repossession and subsequent resale of the cranes.  The buyback commitments expire at various times through 2025.
As of September 30, 2019 and December 31, 2018, the Company had reserved $39.5 million and $38.5 million, respectively, for warranty claims included in product warranties as well as other non-current liabilities in the Condensed Consolidated Balance Sheets. In the normal course of business, the Company provides its customers a warranty covering workmanship, and in some cases materials, on products manufactured by the Company. Such warranties generally provide that products will be free from defects for periods ranging from 12 to 60 months. If a product fails to comply with the Company’s warranty, the Company may be obligated, at its expense, to correct any defect by repairing or replacing such defective products. The Company provides for an estimate of costs that may be incurred under its warranty at the time product revenue is recognized. These costs primarily include labor and materials, as necessary, associated with repair or replacement. The primary factors that affect the Company’s warranty liability include the number of units shipped and historical and anticipated warranty claims. As these factors are impacted by actual experience and future expectations, the Company assesses the adequacy of its recorded warranty liability and adjusts the amounts as necessary.
Below is a table summarizing the warranty activity for the three and nine months ended September 30, 2019 and 2018:
 
 	 	Three Months Ended
September 30,	 	 	Nine Months Ended
September 30,	 	
 	 	2019	 	 	2018	 	 	2019	 	 	2018	 	
Balance at beginning of period	 	$	40.3	 	 	$	35.9	 	 	$	38.5	 	 	$	35.2	 	
Accruals for warranties issued during the
   period	 	 	8.0	 	 	 	7.6	 	 	 	24.5	 	 	 	20.0	 	
Settlements made (in cash or in kind) during
   the period	 	 	(8.2	)	 	 	(7.8	)	 	 	(22.8	)	 	 	(19.1	)	
Currency translation	 	 	(0.6	)	 	 	(0.1	)	 	 	(0.7	)	 	 	(0.5	)	
Balance at end of period	 	$	39.5	 	 	$	35.6	 	 	$	39.5	 	 	$	35.6	 	
 
18.  Employee Benefit Plans
The Company provides certain pension, health care and death benefits to eligible retirees and their dependents. The funding mechanism for such benefits varies based on the country where the retiree resides and receives benefits.  Eligibility for pension coverage is based on retirement qualifications. Healthcare benefits may be subject to deductibles, co-payments and other limitations. The Company reserves the right to modify benefits unless prohibited by local laws or regulations.
On September 20, 2018, the Manitowoc U.S. Pension Plan (“U.S. Pension Plans”) entered into a definitive agreement with an insurance company to purchase a group annuity contract to transfer $18.6 million of the Company’s outstanding pension benefit obligations related to certain U.S. retirees and beneficiaries. The transaction closed on September 27, 2018. As a result of the transaction, the insurance company was required to pay and administer the retirement benefits owed to the 622 retirees and beneficiaries of the U.S. Pension Plan starting on December 1, 2018. In connection with this transaction, in the three and nine months ended September 30, 2018, the Company recognized a non-cash pension settlement charge of $4.5 million in other income (expense) - net in the Condensed Consolidated Statement of Operations primarily related to the accelerated recognition of actuarial losses included in accumulated other comprehensive loss for the U.S. Pension Plans.  
18

The components of periodic benefit costs for the three and nine months ended September 30, 2019 and September 30, 2018 are summarized as follows:
 
 	 	Three Months Ended September 30, 2019	 	 	Three Months Ended September 30, 2018	 	
 	 	 	 	 	 	 	 	 	 	Postretirement	 	 	 	 	 	 	 	 	 	 	Postretirement	 	
 	 	U.S.	 	 	Non-U.S.	 	 	Health and	 	 	U.S.	 	 	Non-U.S.	 	 	Health and	 	
 	 	Pension	 	 	Pension	 	 	Other	 	 	Pension	 	 	Pension	 	 	Other	 	
 	 	Plans	 	 	Plans	 	 	Plans	 	 	Plans	 	 	Plans	 	 	Plans	 	
Service cost - benefits earned during the period	 	$	—	 	 	$	0.5	 	 	$	0.1	 	 	$	—	 	 	$	0.5	 	 	$	0.1	 	
Interest cost of projected benefit obligations	 	 	1.3	 	 	 	0.5	 	 	 	0.1	 	 	 	1.3	 	 	 	0.5	 	 	 	0.2	 	
Expected return on plan assets	 	 	(1.1	)	 	 	(0.3	)	 	 	—	 	 	 	(1.5	)	 	 	(0.4	)	 	 	—	 	
Amortization of prior service cost	 	 	—	 	 	 	—	 	 	 	(0.7	)	 	 	—	 	 	 	—	 	 	 	(0.7	)	
Amortization of actuarial net loss	 	 	0.8	 	 	 	0.3	 	 	 	—	 	 	 	0.8	 	 	 	0.4	 	 	 	0.2	 	
Pension settlement charge	 	 	—	 	 	 	—	 	 	 	—	 	 	 	4.5	 	 	 	—	 	 	 	—	 	
Net periodic benefit costs	 	$	1.0	 	 	$	1.0	 	 	$	(0.5	)	 	$	5.1	 	 	$	1.0	 	 	$	(0.2	)	
 
 	 	Nine Months Ended September 30, 2019	 	 	Nine Months Ended September 30, 2018	 	
 	 	 	 	 	 	 	 	 	 	Postretirement	 	 	 	 	 	 	 	 	 	 	Postretirement	 	
 	 	U.S.	 	 	Non-U.S.	 	 	Health and	 	 	U.S.	 	 	Non-U.S.	 	 	Health and	 	
 	 	Pension	 	 	Pension	 	 	Other	 	 	Pension	 	 	Pension	 	 	Other	 	
 	 	Plans	 	 	Plans	 	 	Plans	 	 	Plans	 	 	Plans	 	 	Plans	 	
Service cost - benefits earned during the period	 	$	—	 	 	$	1.5	 	 	$	0.3	 	 	$	—	 	 	$	1.5	 	 	$	0.3	 	
Interest cost of projected benefit obligations	 	 	3.9	 	 	 	1.5	 	 	 	0.5	 	 	 	3.9	 	 	 	1.5	 	 	 	0.6	 	
Expected return on plan assets	 	 	(3.3	)	 	 	(0.9	)	 	 	—	 	 	 	(4.5	)	 	 	(1.2	)	 	 	—	 	
Amortization of prior service cost	 	 	—	 	 	 	—	 	 	 	(2.1	)	 	 	—	 	 	 	—	 	 	 	(2.1	)	
Amortization of actuarial net loss	 	 	2.4	 	 	 	0.9	 	 	 	—	 	 	 	2.4	 	 	 	1.2	 	 	 	0.6	 	
Pension settlement charge	 	 	—	 	 	 	—	 	 	 	—	 	 	 	4.5	 	 	 	—	 	 	 	—	 	
Net periodic benefit costs	 	$	3.0	 	 	$	3.0	 	 	$	(1.3	)	 	$	6.3	 	 	$	3.0	 	 	$	(0.6	)	
 
The components of net periodic benefit cost other than the service cost component are included in other income (expense) - net in the Condensed Consolidated Statement of Operations.
19.  Restructuring
During the three months ended September 30, 2019 and 2018, the Company incurred $1.1 million and $1.0 million of restructuring expense, respectively. During the nine months ended September 30, 2019 and 2018, the Company incurred $8.3 million and $11.0 million of restructuring expense, respectively. The expense for the three months ended September 30, 2019 related primarily to costs associated with headcount reductions in Europe. Expenses for the nine months ended September 30, 2019 related primarily to headcount reductions in India, Europe and North America. Expenses for the three and nine months ended September 30, 2018 related primarily to the Corporate office relocation from Manitowoc, WI to Milwaukee, WI, the departure of an executive officer, training of skilled labor as a result of the transfer of crawler crane production to Shady Grove, PA and headcount reductions in Europe.
The following is a rollforward of the Company's restructuring accrual for the three and nine months ended September 30, 2019 and 2018:
 	 	Three Months Ended
September 30,	 	 	Nine Months Ended
September 30,	 	
 	 	2019	 	 	2018	 	 	2019	 	 	2018	 	
Balance at beginning of period	 	$	3.1	 	 	$	4.4	 	 	$	3.1	 	 	$	5.6	 	
Restructuring expenses	 	 	1.1	 	 	 	1.0	 	 	 	8.3	 	 	 	11.0	 	
Use of reserve	 	 	(1.9	)	 	 	(2.0	)	 	 	(9.1	)	 	 	(12.7	)	
Reserve reclassification	 	 	—	 	 	 	—	 	 	 	—	 	 	 	(0.3	)	
Currency translation	 	 	(0.1	)	 	 	—	 	 	 	(0.1	)	 	 	(0.2	)	
Balance at end of period	 	$	2.2	 	 	$	3.4	 	 	$	2.2	 	 	$	3.4	 	

19

20.  Leases
As of January 1, 2019, the Company adopted Topic 842 and elected to use the modified prospective approach, which does not require a retrospective restatement of prior years. The adoption of Topic 842 resulted in no cumulative catch-up to retained earnings. As part of the adoption, the Company applied the package of practical expedients which does not require the Company to reassess the lease classification for any expired or existing leases upon adoption of Topic 842.
The Company has operating leases for offices, warehouses, land for storage of cranes, vehicles, information technology equipment, and manufacturing equipment. The remaining lease terms are up to 24 years, some of which include options to extend the lease term for up to 10 years, and some which include options to terminate the lease within 1 year. Certain leases include one or more options to renew; the exercise of lease renewal options is at the Company’s discretion. The Company includes renewal option periods in the lease term for determining the right-of-use asset and lease liability when it is determined that the option is reasonably certain to be exercised. The Company’s financing leases have an immaterial impact on the condensed consolidated financial statements.
The components of lease expense for the three and nine months ended September 30, 2019 are summarized as follows:
 
 	 	Three Months Ended September 30, 2019	 	 	Nine Months Ended September 30, 2019	 	
Operating lease cost	 	$	3.3	 	 	$	10.9	 	
Variable lease cost*	 	 	0.3	 	 	 	1.1	 	
Total lease cost	 	$	3.6	 	 	$	12.0	 	
   *Includes short-term leases, which are immaterial.	 	 	 	 	 	 	 	 	
 
Supplemental balance sheet information related to leases as of September 30, 2019 are summarized as follows:
 
Operating lease right-of-use assets	 	$	42.5	 	
 	 	 	 	 	
Other liabilities	 	$	10.1	 	
Operating lease liabilities	 	 	32.5	 	
Total operating lease liabilities	 	$	42.6	 	
 
Cash paid for operating leases included in operating cash flows was $20.5 million for the nine months ended September 30, 2019.
 
As of September 30, 2019, the Company’s operating leases had a weighted-average remaining lease term of 6.9 years and a weighted-average discount rate of 5.05%. Topic 842 requires a lessee to discount its unpaid lease obligations using the interest rate implicit in the lease, or if not readily determinable, the incremental borrowing rate. Generally, the Company uses its incremental borrowing rate as the implicit rate cannot be determined. The Company’s incremental borrowing rate for a lease is the rate of interest the Company would have to pay on a collateralized basis to borrow an amount equal to the lease payments under similar terms in the same location.
 
Maturities of operating lease liabilities as of September 30, 2019 are summarized as follows:
 
Year	 	 	 	 	
2019	 	$	3.1	 	
2020	 	 	9.6	 	
2021	 	 	7.3	 	
2022	 	 	4.6	 	
2023	 	 	16.0	 	
Thereafter	 	 	63.0	 	
Total lease payments	 	 	103.6	 	
Less: imputed interest	 	 	(61.0	)	
Present value of lease liabilities	 	$	42.6	 	

20

21.  Derivative Financial Instruments
 
The Company’s risk management objective is to ensure that business exposures to risks are minimized using the most effective and efficient methods to eliminate, reduce, or transfer such exposures.  Operating decisions consider these associated risks and, whenever possible, transactions are structured to avoid or mitigate these risks.
 
From time to time, the Company enters into forward currency exchange contracts (“FX forward contracts”) to manage the exposure on forecasted transactions denominated in non-functional currencies and to manage the risk of transaction gains and losses associated with assets/ liabilities in currencies other than the functional currency of certain subsidiaries. Certain of these FX forward contracts are designated as cash flow hedges. To the extent these derivatives are effective in offsetting the variability of the hedged cash flows, changes in the derivatives’ fair value are included in accumulated other comprehensive loss. These changes in fair value are reclassified into earnings as a component of cost of sales, as applicable, when the forecasted transaction impacts earnings. In addition, if the forecasted transaction is no longer probable, the cumulative change in the derivatives’ fair value is recorded as a component of Other income (expense) – net in the period in which the transaction is no longer considered probable of occurring.
 
The Company had FX forward contracts with an aggregate notional amount of $78.3 million and $76.8 million outstanding as of September 30, 2019 and December 31, 2018, respectively. The aggregate notional amount outstanding as of September 30, 2019 is scheduled to mature within one year. The FX forward contracts outstanding are being used to hedge Euro purchases in the United States. As of September 30, 2019 and December 31, 2018, the net fair value of these contracts was a current liability of $2.4 million and $1.7 million, respectively.  The unrealized losses, net of tax, recorded in accumulated other comprehensive loss were $1.1 million and $0.4 million as of September 30, 2019 and December 31, 2018, respectively.  The Company anticipates reclassifying the unrealized losses as of September 30, 2019 to cost of sales over the next 12 months.
 
The following table provides the amount of gain or losses recorded in the Condensed Consolidated Statement of Operations for foreign currency exchange contracts for the three and nine months ended September 30, 2019 and 2018.
 
 	 	 	 	Three Months Ended
September 30,	 	 	Nine Months Ended
September 30,	 	
 	 	Recognized Location	 	2019	 	 	2018	 	 	2019	 	 	2018	 	
Designated	 	Cost of sales	 	$	0.9	 	 	$	2.6	 	 	$	2.4	 	 	$	2.9	 	
Non-Designated	 	Other income (expense), net	 	$	(0.3	)	 	$	2.2	 	 	$	1.9	 	 	$	2.2	 	

22.  Recent Accounting Changes and Pronouncements
In August 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2018-15 “Intangibles – Goodwill and Other – Internal-use Software (Subtopic 250-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract.” The amendments in this ASU align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The standard is effective for annual periods beginning after December 15, 2019. The Company is evaluating the impact the adoption this ASU will have on its condensed consolidated financial statements.
In June 2018, the FASB issued ASU No. 2018-07 “Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-based Payment Accounting,” which aligns the accounting for nonemployee share-based payments with employee share-based payments under Topic 718. The Company adopted this ASU as of January 1, 2019. The adoption of the ASU did not have a material impact on the Company’s condensed consolidated financial statements.
 
In February 2018, the FASB issued ASU No. 2018-02 “Income Statement-Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. This new standard permits an entity to reclassify to retained earnings the tax effects stranded in accumulated other comprehensive income (loss) as a result of U.S. tax reform. The Company adopted this ASU as of January 1, 2019 and chose not to reclassify the stranded tax effects related to the U.S. tax reform change in the federal corporate tax rate from accumulated other comprehensive income (loss) to retained earnings. The Company has elected the portfolio approach to release stranded income tax effects in accumulated other comprehensive income (loss).
 
In August 2017, the FASB issued ASU No. 2017-12 “Targeted Improvements to Accounting for Hedging Activities,” which amends ASC 815, “Derivatives and Hedging.” The purpose of this ASU is to better align a company’s risk management
21

activities and financial reporting for hedging relationships, simplify the hedge accounting requirements, and improve the disclosures of hedging arrangements. The Company adopted this ASU as of January 1, 2019. The adoption of this ASU did not have a material impact on the Company’s condensed consolidated financial statements.
In March 2017, the FASB issued ASU No. 2017-08 “Receivables - Nonrefundable Fees and Other Costs (Subtopic 310-20):  Premium Amortization on Purchased Callable Debt Securities,” to shorten the amortization period for the premium to the earliest call date instead of the contractual life of the instrument. The Company adopted this ASU as of January 1, 2019. The adoption of the ASU did not have a material impact on the Company’s condensed consolidated financial statements.
In June 2016, the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses,” which requires the Company to measure all expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions and reasonable supportable forecasts. The new guidance is applicable to financial assets measured at amortized cost, net investments in leases and certain off-balance sheet credit exposures. The standard is effective for annual periods beginning after December 15, 2019. The Company is evaluating the impact the adoption this ASU will have on its condensed consolidated financial statements.
In February 2016, the FASB issued ASU 2016-02 - “Leases, (Topic 842),” which is intended to improve financial reporting on leasing transactions. This was further clarified with technical corrections issued within ASU 2018-10 and ASU 2018-11. This standard requires a lessee to record on the balance sheet the assets and liabilities for the rights and obligations created by lease terms of more than 12 months. The Company adopted this ASU as of January 1, 2019. The adoption of this ASU did not have a material impact on the Company’s Condensed Consolidated Statement of Operations and Condensed Consolidated Statement of Cash Flows. The updated disclosures are included in Note 20, “Leases.”
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Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2018, including the financial statements, accompanying notes and Management’s Discussion and Analysis of Financial Condition and Results of Operations therein, and the interim condensed consolidated financial statements and accompanying notes included in this Quarterly Report on Form 10-Q.
Cautionary Statements Regarding Forward-Looking Information
All of the statements in this Quarterly Report on Form 10-Q, other than historical facts, are forward-looking statements, including, without limitation, the statements made in the “Management's Discussion and Analysis of Financial Condition and Results of Operations.” As a general matter, forward-looking statements are those focused upon anticipated events or trends, expectations and beliefs relating to matters that are not historical in nature. The words “could,” “should,” “feel,” “anticipate,” “aim,” “preliminary,” “expect,” “believer,” “estimate,” “intend,” “intent,” “plan,” “will,” “foresee,” “project,” “forecast,” or the negative thereof or variations thereon, and similar expressions identify forward-looking statements.
The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for these forward-looking statements. In order to comply with the terms of the safe harbor, the Company notes that forward-looking statements are subject to known and unknown risks, uncertainties and other factors relating to the Company's operations and business environment, all of which are difficult to predict and many of which are beyond the control of the Company. These known and unknown risks, uncertainties and other factors could cause actual results to differ materially from those matters expressed in, anticipated by or implied by such forward-looking statements. These risks, uncertainties and other factors include, but are not limited to:
 	•	changes in economic or industry conditions generally or in the markets served by Manitowoc;	
 	•	unanticipated changes in customer demand, including changes in global demand for high-capacity lifting equipment, changes in demand for lifting equipment in emerging economies, and changes in demand for used lifting equipment;	
 	•	unanticipated changes in revenues, margins, costs, and capital expenditures;	
 	•	the ability to increase operational efficiencies across Manitowoc’s businesses and to capitalize on those efficiencies;  	
 	•	the ability to significantly improve profitability;	
 	•	the risks associated with growth or contraction;	
 	•	changes in raw material and commodity prices;	
 	•	impairment of goodwill and/or intangible assets;	
 	•	foreign currency fluctuation and its impact on reported results and hedges in place with Manitowoc;	
 	•	the ability to focus on customers, new technologies, and innovation;  	
 	•	uncertainties associated with new product introductions, the successful development and market acceptance of new and innovative products that drive growth;	
 	•	actions of competitors;	
 	•	potential delays or failures to implement specific initiatives within the Company’s restructuring program;	
 	•	issues relating to the ability to timely and effectively execute on manufacturing strategies, including issues relating to plant closings, new plant start-ups, and/or consolidations of existing facilities and operations, and the ability to achieve the expected benefits from such actions, as well as general efficiencies and capacity utilization of our facilities;	
 	•	the ability to complete and appropriately integrate restructurings, consolidations, acquisitions, divestitures, strategic alliances, joint ventures, and other strategic alternatives;	
 	•	realization of anticipated earnings enhancements, cost savings, strategic options and other synergies, and the anticipated timing to realize those savings, synergies, and options;	
 	•	the ability to capitalize on key strategic opportunities and the ability to implement Manitowoc’s long-term initiatives;	
 	•	the ability to generate cash and manage working capital consistent with Manitowoc’s stated goals;	
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 	•	geographic factors and political and economic conditions and risks;	
 	•	global expansion of customers;	
 	•	changes in laws throughout the world;	
 	•	the ability to focus and capitalize on product quality and reliability;	
 	•	unexpected issues associated with the quality of materials, components and products sourced from third parties and the ability to successfully resolve those issues;	
 	•	unexpected issues associated with the availability and viability of suppliers;	
 	•	the ability to convert orders and order activity into sales and the timing of those sales;	
 	•	the ability to sell products through distributors and other third parties;	
 	•	the Company’s ability to attract and retain qualified personnel;	
 	•	the ability of Manitowoc's customers to receive financing;	
 	•	failure to comply with regulatory requirements related to the products the Company sells;	
 	•	risks associated with manufacturing or design defects;	
 	•	issues related to workforce reductions and potential subsequent rehiring;	
 	•	risks associated with data security and technological systems and protections;	
 	•	the inability to defend against potential infringement claims on intellectual property rights;	
 	•	the ability to direct resources to those areas that will deliver the highest returns;	
 	•	work stoppages, labor negotiations, labor rates, and temporary labor costs;	
 	•	risks associated with high financing leverage;	
 	•	unanticipated issues affecting the effective tax rate for the year;	
 	•	natural disasters and other weather events disrupting commerce in one or more regions of the world;	
 	•	government approval and funding of projects and the effect of government-related issues or developments;	
 	•	the replacement cycle of technologically obsolete cranes;	
 	•	unanticipated changes in the capital and financial markets;	
 	•	acts of terrorism;	
 	•	risks related to actions of activist shareholders; and	
 	•	other risk factors detailed in Manitowoc's 2018 Annual Report on Form 10-K, as such may be amended or supplemented in Manitowoc’s subsequently filed Quarterly Reports on 10-Q (including this report), and its other filings with the United States Securities and Exchange Commission.	
These statements reflect the current views and assumptions of management with respect to future events. Except to the extent required by the federal securities laws, the Company does not undertake, and hereby disclaims, any duty to update these forward-looking statements, even though its situation and circumstances may change in the future. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date of this report. The inclusion of any statement in this report does not constitute an admission by the Company or any other person that the events or circumstances described in such statement are material.

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Results of Operations
 
Performance during the Three Months Ended September 30, 2019 Compared with the Three Months Ended September 30, 2018
 
Net Sales, Orders and Backlog
Consolidated net sales for the three months ended September 30, 2019 decreased 0.5% to $448.0 million from $450.1 million in the same period in 2018. Consolidated net sales were unfavorably impacted by $8.7 million from changes in foreign currency exchange rates.
Orders for the three months ended September 30, 2019 decreased 23.0% to $352.8 million from $458.1 million for the same period in 2018. The decrease in orders was primarily attributable to the Americas segment. Orders were unfavorably impacted by $5.8 million due to changes in foreign currency exchange rates.
As of September 30, 2019, total backlog was $466.5 million, a 33.4% decrease from the September 30, 2018 backlog of $700.2 million. Backlog was unfavorably impacted by $11.0 million due to changes in foreign currency exchange rates.
 
Gross Profit
 
Gross profit for the three months ended September 30, 2019 was $88.4 million, an increase of $8.4 million compared to $80.0 million for the three months ended September 30, 2018. This increase was mainly due to favorable price realization. This was partially offset by $1.9 million of unfavorable changes in foreign currency exchange rates.
 
Primarily as a result of favorable price realization, gross profit percentage increased in the three months ended September 30, 2019 to 19.7% from 17.8% in the same period in 2018.
 
Engineering, Selling and Administrative Expenses
 
Engineering, selling and administrative expenses decreased 11.8% to $54.8 million for the three months ended September 30, 2019 compared to $62.1 million for the three months ended September 30, 2018.  The decrease was primarily due to a $3.6 million loss from a long-term note receivable resulting from the 2014 divestiture of the Company’s Chinese joint venture recorded in 2018, $1.3 million from favorable changes in foreign currency exchange rates and ongoing discretionary cost reductions.
 
Restructuring Expense
During the three months ended September 30, 2019 and 2018, the Company incurred $1.1 million and $1.0 million of restructuring expense, respectively. Restructuring expense for the three months ended September 30, 2019 related primarily to headcount reductions in Europe. Restructuring expense for the three months ended September 30, 2018 related primarily to expenses associated with the Corporate office relocation from Manitowoc, WI to Milwaukee, WI, training of skilled labor as a result of the transfer of crawler crane production to Shady Grove, PA and headcount reductions in Europe.
Interest Expense
Interest expense was $7.2 million during the three months ended September 30, 2019 and $9.9 million during the three months ended September 30, 2018. This decrease was primarily due to a reduction of the average effective interest rate from 11.7% for the three months ended September 30, 2018 to 9.0% for the three months ended September 30, 2019. The decrease in the average effective interest rate was primarily due to the refinancing of the Company’s debt that occurred in the first quarter of 2019.
 
Refer to Note 8, “Debt” for additional information.
 
Other Expense- Net
Other expense - net was $3.7 million during the three months ended September 30, 2019 and $5.7 million during the three months ended September 30, 2018. This reduction was primarily due to a $3.5 million gain on the sale of the Company’s Manitowoc, WI manufacturing facility during the current quarter and $4.5 million of pension settlement charges that were recorded in 2018. This was partially offset by $7.1 million of foreign currency transaction losses compared to the three months ended September 30, 2018.
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Provision (Benefit) for Income Taxes
 
For the three months ended September 30, 2019 and 2018, the Company recorded a provision (benefit) for income taxes of $3.1 million and $(10.7) million, respectively. The increase in the Company’s provision for the three months ended September 30, 2019 compared to the prior year primarily relates to $12.3 million of discrete tax benefits recorded during 2018 from the partial release of the valuation allowance in the U.K.
 
Performance during the Nine Months Ended September 30, 2019 Compared with the Nine Months Ended September 30, 2018
 
Net Sales
Consolidated net sales for the nine months ended September 30, 2019 increased 2.9% to $1,370.7 million from $1,331.5 million for the same period in 2018. This increase was primarily attributable to higher crane shipments in the Americas segment, partially offset by lower shipments in the MEAP segment. Consolidated net sales were unfavorably impacted by $38.7 million from changes in foreign currency exchange rates.
 
Gross Profit
 
Gross profit for the nine months ended September 30, 2019 was $263.8 million, an increase of $24.9 million compared to $238.9 million for the same period in 2018. This increase was mainly due to the increase in sales volume discussed above, favorable price realization, improved aftermarket margins and favorable mix. Gross profit was unfavorably impacted by $9.2 million from changes in foreign currency exchange rates.
 
As a result of favorable price realization, aftermarket margins and favorable mix, gross profit percentage increased in the nine months ended September 30, 2019 to 19.2% from 17.9% in the same period in 2018.
 
Engineering, Selling and Administrative Expenses
 
Engineering, selling and administrative expenses decreased 10.8% to $164.7 million for the nine months ended September 30, 2019 compared to $184.6 million for the same period in 2018. The decrease was primarily due to the settlement of a legal matter which included a $8.9 million recovery of legal fees expensed in previous periods, $5.9 million from favorable changes in foreign currency exchange rates, a $3.6 million loss from a long-term note receivable resulting from the 2014 divestiture of the Company’s Chinese joint venture recorded in 2018 and ongoing discretionary cost reductions.
 
Restructuring Expense
During the nine months ended September 30, 2019 and 2018, the Company recorded $8.3 million and $11.0 million of restructuring expense, respectively. Restructuring expense for the nine months ended September 30, 2019 related primarily to headcount reductions in India, Europe and North America. Restructuring expense for the nine months ended September 30, 2018 related primarily to the departure of an executive officer, training of skilled labor as a result of the transfer of crawler crane production to Shady Grove, PA and headcount reductions in Europe.
Interest Expense
Interest expense was $25.6 million during the nine months ended September 30, 2019 and $29.3 million during the nine months ended September 30, 2018. This decrease was primarily due to a reduction of the average effective interest rate from 12.0% for the nine months ended September 30, 2018 to 10.4% for the nine months ended September 30, 2019. The decrease in the average effective interest rate was primarily due to the refinancing of the Company’s debt that occurred in the first quarter of 2019
 
Refer to Note 8, “Debt” for additional information.

 
 
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Loss on Debt Extinguishment
During the nine months ended September 30, 2019, the Company recorded a $25.0 million charge associated with the Company’s refinancing of the Prior ABL Facility and Prior 2021 Notes. The charge is composed of $16.6 million of call premium on the Prior 2021 Notes, $5.3 million of unamortized discount on the Prior 2021 Notes and $3.1 million of unamortized debt issuance costs.
Refer to Note 8, “Debt” for additional information.
 
Other Income (Expense)- Net
Other income (expense) - net was $8.8 million in the nine months ended September 30, 2019 and $(8.6) million for the same period in 2018. This improvement was primarily due to a $15.5 million benefit related to a settlement of a legal matter, $4.5 million of pension settlement charges that were recorded in 2018 and a $3.5 million gain on the sale of the Company’s Manitowoc, Wisconsin manufacturing facility during the current period. This was partially offset by $4.8 million of foreign currency transaction losses compared to the nine months ended September 30, 2018.
 
Provision (Benefit) for Income Taxes
 
For the nine months ended September 30, 2019 and 2018, the Company recorded a provision (benefit) for income taxes of $10.3 million and $(8.0) million, respectively. The increase in the Company’s provision for the nine months ended September 30, 2019 compared to the prior year primarily relates to $17.8 million of discrete tax benefits recorded during 2018 of which $12.3 million relates to the partial release of the valuation allowance in the U.K. and $5.2 million relates to a release of a reserve due to statute of limitation lapses.
 
Segment Operating Performance
 
The Company manages its business primarily on a geographic basis. The Company’s reportable operating segments consist of the Americas, EURAF, and MEAP. Further information regarding the Company’s reportable segments can be found in Note 14, “Segments,” to the Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q.
 
 	 	Three Months Ended
September 30,	 	 	 	 	 	 	 	 	 	 	Nine Months Ended
September 30,	 	 	 	 	 	 	 	 	 	
 	 	2019	 	 	2018	 	 	Dollar Change	 	 	Percentage Change	 	 	2019	 	 	2018	 	 	Dollar Change	 	 	Percentage Change	 	
Net Sales	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Americas	 	$	251.0	 	 	$	224.1	 	 	$	26.9	 	 	 	12.0	%	 	$	721.7	 	 	$	614.3	 	 	$	107.4	 	 	 	17.5	%	
EURAF	 	 	139.2	 	 	 	152.9	 	 	 	(13.7	)	 	 	(9.0	)%	 	 	476.0	 	 	 	498.3	 	 	 	(22.3	)	 	 	(4.5	)%	
MEAP	 	 	57.8	 	 	 	73.1	 	 	 	(15.3	)	 	 	(20.9	)%	 	 	173.0	 	 	 	218.9	 	 	 	(45.9	)	 	 	(21.0	)%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Segment Operating Income	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Americas	 	$	34.5	 	 	$	17.8	 	 	$	16.7	 	 	 	93.8	%	 	$	85.4	 	 	$	35.2	 	 	$	50.2	 	 	 	(142.6	)%	
EURAF	 	 	1.9	 	 	 	1.6	 	 	 	0.3	 	 	 	18.8	%	 	 	7.0	 	 	 	13.1	 	 	 	(6.1	)	 	 	(46.6	)%	
MEAP	 	 	5.9	 	 	 	6.2	 	 	 	(0.3	)	 	 	(4.8	)%	 	 	18.3	 	 	 	24.8	 	 	 	(6.5	)	 	 	(26.2	)%	
 
Americas
 
Americas net sales increased 12.0% for the three months ended September 30, 2019 to $251.0 million from $224.1 million for the three months ended September 30, 2018. The increase was primarily due to the expansion of customers’ rental fleets.
 
Americas operating income increased $16.7 million for the three months ended September 30, 2019 to $34.5 million from $17.8 million for the three months ended September 30, 2018. The increase was primarily due to increased volume on crane shipments and price realization.
 
Americas net sales increased 17.5% for the nine months ended September 30, 2019 to $721.7 million from $614.3 million for the nine months ended September 30, 2018. The increase was primarily due to the expansion of customers’ rental fleet.
 
Americas operating income increased $50.2 million for the nine months ended September 30, 2019 to $85.4 million from $35.2 million for the nine months ended September 30, 2018. The increase was primarily due to increased volume on crane shipments, improved aftermarket margins, favorable mix and price realization.
27

 
EURAF
 
EURAF net sales decreased 9.0% for the three months ended September 30, 2019 to $139.2 million from $152.9 million for the three months ended September 30, 2018. The decrease was primarily due to lower crane shipments to the commercial construction end market and $6.2 million from unfavorable changes in foreign currency exchange rates.
 
EURAF operating income increased $0.3 million for the three months ended September 30, 2019 to $1.9 million from $1.6 million for the three months ended September 30, 2018. The increase was primarily due to a $2.0 million favorable adjustment related to prior periods, partially offset by reduced sales volume and $0.5 million of unfavorable changes in foreign currency exchange rates.
 
EURAF net sales decreased 4.5% for the nine months ended September 30, 2019 to $476.0 million from $498.3 million for the nine months ended September 30, 2018. The decrease was primarily due to $30.2 million of unfavorable changes in foreign currency exchange rates. This was partially offset by higher crane shipments to the commercial construction end market.
 
EURAF operating income decreased $6.1 million for the nine months ended September 30, 2019 to $7.0 million from $13.1 million for the nine months ended September 30, 2018. The decrease was primarily due to reduced sales volume, higher restructuring expenses and $2.8 million from unfavorable changes in foreign currency exchange rates. This was partially offset by a $2.0 million favorable adjustment related to prior periods.
 
MEAP
 
MEAP net sales decreased 20.9% for the three months ended September 30, 2019 to $57.8 million from $73.1 million for the three months ended September 30, 2018. The decrease was primarily due to lower shipments of cranes for the energy end market. MEAP net sales were also unfavorably impacted by approximately $2.3 million from changes in foreign currency exchange rates.
 
MEAP operating income decreased $0.3 million for the three months ended September 30, 2019 to $5.9 million from $6.2 million for the three months ended September 30, 2018. The decrease was primarily due to lower shipments as discussed above offset by a $3.6 million loss from a long-term note receivable resulting from the 2014 divestiture of the Company’s Chinese joint venture recorded in 2018.
 
MEAP net sales decreased 21.0% for the nine months ended September 30, 2019 to $173.0 million from $218.9 million for the nine months ended September 30, 2018. The decrease was primarily due to lower shipments of cranes for the energy end market. MEAP net sales were also unfavorably impacted by approximately $8.3 million from changes in foreign currency exchange rates.
 
MEAP operating income decreased $6.5 million for the nine months ended September 30, 2019 to $18.3 million from $24.8 million for the nine months ended September 30, 2018. The decrease was primarily due to lower net sales as discussed above and higher restructuring expenses. This was partially offset by lower engineering, selling and administrative expenses as a result of a $3.6 million loss from a long-term note receivable resulting from the 2014 divestiture of the Company’s Chinese joint venture recorded in 2018.  
 
Financial Condition
For the Nine Months Ending September 30, 2019
Cash and cash equivalents totaled $67.5 million as of September 30, 2019, a decrease of $72.8 million from $140.3 million as of December 31, 2018. The decrease for the nine months ended September 30, 2019 was primarily due to the termination of the accounts receivable securitization program, investments in working capital and property, plant and equipment, payment of debt issuance costs and repurchases of the Company’s common stock. This was partially offset by cash received from the settlement of a legal matter and proceeds from the sale of property, plant and equipment.
Cash flows used for operating activities for the nine months ended September 30, 2019 were $197.9 million and were primarily driven by trade receivables sold to the Company’s prior securitization program resulting in $126.3 million of cash flows being reported in cash provided by investing activities, $75.0 million of purchases of accounts receivable previously sold to the prior accounts receivable securitization program and net investments in working capital. This was primarily offset by $24.4 million of net cash received from the settlement of a legal matter.

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Cash flows provided by investing activities were $121.1 million for the nine months ended September 30, 2019 and consisted of $126.3 million of cash collections on accounts receivable sold to the prior accounts receivable securitization program and proceeds from sales of property, plant and equipment of $17.2 million. This was partially offset by capital expenditures of $22.4 million.
Cash flows provided by financing activities were $5.1 million for the nine months ended September 30, 2019 and consisted of $300.0 million of proceeds from long-term debt and $131.4 million of proceeds from the ABL Revolving Credit Facility. This was partially offset by payments of $276.6 million to terminate the Prior 2021 Notes, $131.4 million of payments on the ABL Revolving Credit Facility, $8.3 million of debt issuance costs on the ABL Revolving Credit Facility and 2026 Notes and $7.4 million from the repurchase of common stock.
 
For the Nine Months Ending September 30, 2018
Cash and cash equivalents totaled $90.6 million as of September 30, 2018, a decrease of $32.4 million from the December 31, 2017 balance of $123.0 million. The decrease for the nine months ended September 30, 2018 was primarily due to investments in working capital and property, plant and equipment, semi-annual interest paid on the 2021 Notes and non-recurring payments made to former executives under the Company’s Supplemental Executive Retirement Plan. This was partially offset by proceeds from the sale of property, plant and equipment and cash received from the exercise of stock options.
Cash flows used for operating activities for the nine months ending September 30, 2018 were $420.5 million and were primarily driven by trade receivables sold to the Company’s prior securitization program resulting in $401.3 million of cash flows being reported in cash provided by investing activities, increased inventories and accrued expenses since December 31, 2017 and payments of incentive compensation earned in the prior year. 
Cash flows provided by investing activities were $392.1 million for the nine months ended September 30, 2018 and consisted of $401.3 million of cash collections on accounts receivable sold to the Company’s securitization program and proceeds from sales of property, plant and equipment of $12.2 million, which was primarily related to the sale of the corporate headquarters in Manitowoc, WI during the first quarter of 2018. This was partially offset by capital expenditures of $21.4 million.
Cash flows used for financing activities were $2.1 million for the nine months ended September 30, 2018 and consisted of $4.6 million of payments on long-term debt partially offset by $2.5 million of cash from exercises of stock options.
Liquidity and Capital Resources
Outstanding debt as of September 30, 2019 and December 31, 2018 is summarized as follows:
 
 	 	September 30, 2019	 	 	December 31, 2018	 	
Senior secured asset based revolving credit facility	 	$	—	 	 	$	—	 	
Senior secured second lien notes due 2021	 	 	—	 	 	 	254.2	 	
Senior secured second lien notes due 2026	 	 	300.0	 	 	 	—	 	
Other debt	 	 	18.1	 	 	 	21.2	 	
Deferred financing costs	 	 	(4.7	)	 	 	(2.3	)	
Total debt	 	 	313.4	 	 	 	273.1	 	
Short-term borrowings and current portion of long-term
   debt	 	 	(4.3	)	 	 	(6.4	)	
Long-term debt	 	$	309.1	 	 	$	266.7	 	
 
See additional discussion of the credit facilities and Senior Notes in Note 8, “Debt,” to the Condensed Consolidated Financial Statements.
29

The Company’s liquidity position as of September 30, 2019 and December 31, 2018 is summarized as follows:
 
 	 	September 30, 2019	 	 	December 31, 2018	 	
Cash and cash equivalents	 	$	67.5	 	 	$	140.3	 	
Revolver borrowing capacity	 	 	253.8	 	 	 	107.8	 	
Other debt availability	 	 	37.1	 	 	 	38.9	 	
Less: Borrowings on revolver	 	 	—	 	 	 	—	 	
Less: Borrowings on other debt	 	 	—	 	 	 	—	 	
Less: Outstanding letters of credit	 	 	(4.0	)	 	 	(11.3	)	
Total liquidity	 	$	354.4	 	 	$	275.7	 	
 
The Company believes its liquidity and expected cash flows from operations should be sufficient to meet expected working capital, capital expenditure and other general ongoing operational needs in the foreseeable future.
 
With the enactment of U.S. tax reform, the Company believes that its offshore cash can be accessed in a more tax efficient manner. During the prior year, the Company updated its assertion that foreign earnings are permanently reinvested such that jurisdictions where cash can be tax efficiently repatriated are no longer permanently reinvested. These earnings, if repatriated to the U.S., would not result in material tax expense. However, the Company does record deferred tax liabilities related to non-U.S. withholding taxes on these unremitted earnings that are not considered permanently invested.
Both the ABL Revolving Credit Facility and 2026 Notes include customary covenants and events of default. Refer to Note 8, “Debt,” to the Condensed Consolidated Financial Statements for additional discussions of covenants for the ABL Revolving Credit Facility and 2026 Notes. Based upon management’s current plans and outlook, the Company believes it will be able to comply with these covenants during the subsequent twelve months.

30

Non-GAAP Measures
The Company uses EBITDA, Adjusted EBITDA and Adjusted operating income, which are financial measures that are not prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”), as additional metrics to evaluate the Company’s performance. The Company defines EBITDA as net income (loss) before interest, income taxes, depreciation and amortization. The Company defines Adjusted EBITDA as EBITDA plus the addback of certain restructuring and other charges. The Company defines Adjusted operating income as Adjusted EBITDA excluding the addback of depreciation. The Company believes these non-GAAP measures provide important supplemental information to readers regarding business trends that can be used in evaluating its results of operations because these financial measures provide a consistent method of comparing financial performance and are commonly used by investors to assess performance. These non-GAAP financial measures should be considered together with, and are not substitutes for, the GAAP financial information provided herein.
The reconciliation of GAAP net income to EBITDA, and further to Adjusted EBITDA and to Adjusted operating income for the three and nine months ended September 30, 2019 and 2018 is summarized as follows:
 
 	Three Months Ended
September 30,	 	 	Nine Months Ended
September 30,	 	 	Trailing Twelve	 	
 	2019	 	 	2018	 	 	2019	 	 	2018	 	 	Months	 	
Income (loss) from continuing operations	$	18.1	 	 	$	11.5	 	 	$	37.3	 	 	$	11.4	 	 	$	(41.0	)	
Interest expense and amortization of deferred
   financing fees	 	7.6	 	 	 	10.4	 	 	 	26.8	 	 	 	30.7	 	 	 	37.0	 	
Provision (benefit) for income taxes	 	3.1	 	 	 	(10.7	)	 	 	10.3	 	 	 	(8.0	)	 	 	13.5	 	
Depreciation expense	 	8.9	 	 	 	9.0	 	 	 	26.3	 	 	 	27.2	 	 	 	35.2	 	
Amortization of intangible assets	 	—	 	 	 	—	 	 	 	0.2	 	 	 	0.2	 	 	 	0.3	 	
EBITDA	 	37.7	 	 	 	20.2	 	 	 	100.9	 	 	 	61.5	 	 	 	45.0	 	
Restructuring expense	 	1.1	 	 	 	1.0	 	 	 	8.3	 	 	 	11.0	 	 	 	10.2	 	
Asset impairment expense	 	—	 	 	 	—	 	 	 	—	 	 	 	0.4	 	 	 	82.2	 	
Other non-recurring charges (1)	 	0.3	 	 	 	3.6	 	 	 	0.3	 	 	 	3.6	 	 	 	0.3	 	
Loss on debt extinguishment	 	—	 	 	 	—	 	 	 	25.0	 	 	 	—	 	 	 	25.0	 	
Other (income) expense - net (2)	 	3.7	 	 	 	5.7	 	 	 	(8.8	)	 	 	8.6	 	 	 	(5.9	)	
Adjusted EBITDA	 	42.8	 	 	 	30.5	 	 	 	125.7	 	 	 	85.1	 	 	 	156.8	 	
Depreciation expense	 	(8.9	)	 	 	(9.0	)	 	 	(26.3	)	 	 	(27.2	)	 	 	(35.2	)	
Adjusted operating income	 	33.9	 	 	 	21.5	 	 	 	99.4	 	 	 	57.9	 	 	 	121.6	 	
Restructuring expense	 	(1.1	)	 	 	(1.0	)	 	 	(8.3	)	 	 	(11.0	)	 	 	(10.2	)	
Asset impairment expense	 	—	 	 	 	—	 	 	 	—	 	 	 	(0.4	)	 	 	(82.2	)	
Other non-recurring charges	 	(0.3	)	 	 	(3.6	)	 	 	(0.3	)	 	 	(3.6	)	 	 	(0.3	)	
Amortization of intangible assets	 	—	 	 	 	—	 	 	 	(0.2	)	 	 	(0.2	)	 	 	(0.3	)	
Operating income	$	32.5	 	 	$	16.9	 	 	$	90.6	 	 	$	42.7	 	 	$	28.6	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Adjusted EBITDA margin percentage	 	9.6	%	 	 	6.8	%	 	 	9.2	%	 	 	6.4	%	 	 	8.3	%	
Adjusted operating income margin percentage	 	7.6	%	 	 	4.8	%	 	 	7.3	%	 	 	4.3	%	 	 	6.4	%	
 
(1)	Other non-recurring charges primarily includes a loss from a long-term note receivable resulting from the 2014 divestiture of the Company’s Chinese joint venture and other charges included in engineering, selling and administrative expenses in the Condensed Consolidated Statement of Operations.  	
 
(2)	Other (income) expense - net includes the settlement of a legal matter, foreign currency transaction gains (losses), other components of net periodic pension costs and other miscellaneous items.	

31

The Company uses adjusted operating cash flows and adjusted free cash flows, which are financial measures that are not prepared in accordance with GAAP, as additional metrics to evaluate the Company’s performance. Adjusted operating cash flows is defined as cash flows provided by (used for) operating activities plus cash receipts on sold accounts receivable and other one-time items. Adjusted free cash flows is defined as adjusted operating cash flows less capital expenditures. Adjusted operating cash flows and adjusted free cash flows for the three and nine months ended September 30, 2019 and 2018 are summarized as follows:
 
 	 	Three Months Ended
September 30,	 	 	Nine Months Ended
September 30,	 	
 	 	2019	 	 	2018	 	 	2019	 	 	2018	 	
Net cash provided by (used for) operating
   activities:	 	$	37.6	 	 	$	(152.2	)	 	$	(197.9	)	 	$	(420.5	)	
Cash receipts on sold accounts receivable	 	 	—	 	 	 	163.3	 	 	 	126.3	 	 	 	401.3	 	
Net payments (borrowings) on accounts
   receivable securitization program	 	 	—	 	 	 	(3.2	)	 	 	75.0	 	 	 	(19.6	)	
Adjusted operating cash flows:	 	 	37.6	 	 	 	7.9	 	 	 	3.4	 	 	 	(38.8	)	
Capital expenditures	 	 	(12.7	)	 	 	(6.2	)	 	 	(22.4	)	 	 	(21.4	)	
Adjusted free cash flows:	 	$	24.9	 	 	$	1.7	 	 	$	(19.0	)	 	$	(60.2	)	
Critical Accounting Policies
The Company's critical accounting policies have not materially changed since the 2018 Form 10-K was filed. Refer to the Critical Accounting Policies in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in the Annual Report on Form 10-K for the year ended December 31, 2018 for information about the Company’s policies, methodology and assumptions related to critical accounting policies.
Item 3.  Quantitative and Qualitative Disclosure about Market Risk
The Company’s market risk disclosures have not materially changed since the 2018 Form 10-K was filed.  The Company’s quantitative and qualitative disclosures about market risk are incorporated by reference from Part II, Item 7A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2018.
Item 4.  Controls and Procedures
Disclosure Controls and Procedures:  The Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, have evaluated the effectiveness of the Company’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (“Exchange Act”)) as of the end of the period covered by this report. Based on such evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, the Company’s disclosure controls and procedures are effective in recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act, and that such information is accumulated and communicated to the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely discussions regarding required disclosure.
Changes in Internal Control Over Financial Reporting:  The Company's management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f). During the period covered by this report, the Company made changes to its internal control structure as related to the adoption of ASC 842 – “Leases,” which resulted in enhanced controls to comply with the new standard. Except as stated above, during the period covered by this report there were no changes in the Company’s internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, its internal control over financial reporting.
 
32

PART II.  OTHER INFORMATION
Item 1A.  Risk Factors
The Company’s risk factors disclosures have not materially changed since the 2018 Form 10-K was filed. The Company’s risk factors are incorporated by reference from Part I, Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2018.
Item 6.  Exhibits
 
Exhibit No.	 	Description	 	Filed/Furnished
Herewith	 	
 	 	 	 	 	 	
31	 	Rule 13a - 14(a)/15d - 14(a) Certifications	 	X	(1)	
 	 	 	 	 	 	
32.1	 	Certification of CEO pursuant to 18 U.S.C. Section 1350	 	X	(2)	
 	 	 	 	 	 	
32.2	 	Certification of CFO pursuant to 18 U.S.C. Section 1350	 	X	(2)	
 	 	 	 	 	 	
101.INS

101.SCH
 
101.CAL
 
101.DEF
 
101.LAB
 
101.PRE	 	Inline XBRL Instance Document – The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
 
Inline XBRL Taxonomy Extension Schema Document
 
Inline XBRL Taxonomy Extension Calculation Linkbase Document
 
Inline XBRL Taxonomy Extension Definition Linkbase Document
 
Inline XBRL Taxonomy Extension Labels Linkbase Document
 
Inline XBRL Taxonomy Extension Presentation Linkbase Document	 	X

X
 
X
 
X
 
X
 
X	(1)

(1)
 
(1)
 
(1)
 
(1)
 
(1)	
 	 	 	 	 	 	
104	 	Cover Page Interactive Data File (embedded within the Inline XBRL document)	 	X	(1)	

(1)	Filed Herewith	
(2)	Furnished Herewith	
 
33

SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
Date:  November 8, 2019	The Manitowoc Company, Inc.	
 	(Registrant)	

 	/s/ Barry L. Pennypacker	
 	Barry L. Pennypacker	
 	President and Chief Executive Officer	
 	(Principle Executive Officer)	
 	 	
 	/s/ David J. Antoniuk	
 	David J. Antoniuk	
 	Senior Vice President and Chief Financial Officer	
 	(Principle Financial Officer)	
 	 	
 	/s/ Brian P. Regan	
 	Brian P. Regan	
 	Vice President and Corporate Controller
(Principle Accounting Officer)	

 
34

Exhibit 31
Certification of Principal Executive Officer
I, Barry Pennypacker, certify that:
1.	I have reviewed this Quarterly Report on Form 10-Q of The Manitowoc Company, Inc.;	
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;	
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;	
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:	
 	(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;	
 	(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;	
 	(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and	
 	(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and	
5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):	
 	(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and	
 	(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.	
Date: November 8, 2019

/s/ Barry L. Pennypacker	
Barry L. Pennypacker	
President and Chief Executive Officer	

 
Certification of Principal Financial Officer
I, David J. Antoniuk, certify that:
1.	I have reviewed this Quarterly Report on Form 10-Q of The Manitowoc Company, Inc.;	
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;	
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;	
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:	
 	(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;	
 	(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;	
 	(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and	
 	(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and	
5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):	
 	(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and	
 	(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.  	
Date: November 8, 2019

/s/ David J. Antoniuk	
David J. Antoniuk	
Senior Vice President and Chief Financial Officer	

 
Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of The Manitowoc Company, Inc. (the “Company”) on Form 10-Q for the quarter ended September 30, 2019, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Barry L. Pennypacker, President and Chief Executive Officer of the Company, certify, pursuant to 18. U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:
 	(1)	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and	
 	(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the company as of the date and for the periods expressed in the Report.	

/s/ Barry L. Pennypacker	
Barry L. Pennypacker	
President and Chief Executive Officer	
November 8, 2019	
A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to The Manitowoc Company, Inc. and will be retained by The Manitowoc Company, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

 
9Exhibit 32.2
CERTIFICATION PURSUANT TO
18 U.S.C SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of The Manitowoc Company, Inc. (the “Company”) on Form 10-Q for the quarter ended September 30, 2019, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, David J. Antoniuk, Senior Vice President and Chief Financial Officer of the Company, certify, pursuant to 18. U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:
 	(1)	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and	
 	(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the company as of the date and for the periods expressed in the Report.	

/s/ David J. Antoniuk	
David J. Antoniuk	
Senior Vice President and Chief Financial Officer	
November 8, 2019	
A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to The Manitowoc Company, Inc. and will be retained by The Manitowoc Company, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.