The Manitowoc Company, Inc. 2007 Annual Report the Manitowoc Company, Inc

The Manitowoc Company, Inc. Company, Manitowoc The Report Annual 2007 Making ItMaking Real

The Manitowoc Company, Inc. 2007 Annual Report The Manitowoc Company, Inc. Company, The Manitowoc 44th Street South 2400 66 Box P.O. WI 54221-0066Manitowoc, Contents Corporate Headquarters Corporate Governance Guidelines, Code of Conduct & Investor Information Manitowoc’s About the Cover Making It The Manitowoc Company, Inc. Code of Ethics One of 16 new crane products introduced in Real in 2400 South 44th Street The Manitowoc Company’s corporate governance guidelines, committee Strategic P.O. Box 66 charters, code of conduct, and code of ethics are posted in the investor 2007, a Grove GTK1100 works at a nuclear Cranes – page 12 Manitowoc, WI 54221-0066 relations section of our Web site: www.manitowoc.com. This information may Imperatives power plant in Germany. Innovative products With global brands Telephone: 920-684-4410 also be obtained by any shareholder, without charge, upon written request to like the GTK1100 have helped Manitowoc and the most extensive Telefax: 920-652-9778 Maurice D. Jones, Senior Vice President, General Counsel & Secretary, at the company’s address indicated at left. Growth expand its markets around the world and service network in the Independent Registered Public Accounting Firm Global market leadership in the Crane and achieve record sales and earnings. industry, Manitowoc’s Crane PricewaterhouseCoopers LLP Dividends Manitowoc has paid continuous dividends, without interruption, since 1971. Foodservice businesses. Marine business segment is a world leader 100 East Wisconsin Avenue Suite 1800 The amount and timing of any dividend will be determined by the board of will be a leader in its niche. Financial Highlights – page 1 in lifting solutions. Milwaukee, WI 53202 directors. Stock Transfer Agent Dividend Reinvestment & Stock Purchase Plan Innovation Letter to Shareholders – page 2 Computershare Trust Company, N.A. Computershare sponsors and administers a Dividend Reinvestment and Continuous development of new and innova- Chairman Terry Growcock and President Stock Purchase Plan for The Manitowoc Company’s common stock. Under First Class, Registered & Certifi ed Mail: Making It Real in Marine – page 17 this plan, shareholders may also purchase shares by investing cash, as tive products, processes, and services that and CEO Glen Tellock review Manitowoc’s P.O. Box 43102 often as once a month, in varying amounts from $10 up to a maximum of enhance our customers’ businesses and 2007 performance and its progress toward Providence, RI 02940-5068 achieving its seven strategic imperatives. $120,000 each calendar year. Participation is voluntary. the value of our brands. Overnight or Other Delivery: To receive an information booklet and enrollment form, please contact 250 Royall Street our stock transfer agent, Computershare. Customer Focus Canton, MA 02021-1011 Manitowoc also participates in the Low-Cost Stock Ownership Plan as Fully integrated global company that is a Telephone: offered and administered by Better Investing, formerly known as the National Association of Investors Corporation. flexible business partner. 1-866-641-4263 1-800-952-9245 (Hearing impaired in US) Investor Inquiries 1-781-575-4592 (Hearing impaired outside US) Security analysts, portfolio managers, individual investors, and media Excellence in Operations professionals seeking information about Manitowoc are encouraged to visit & – page 4 Web site: Drive world-class performance in our manu- www.computershare.com/investor our Web site, or contact the following individuals: facturing and business practices. Q A Glen Tellock, Manitowoc’s new President Annual Meeting Analysts & Portfolio Managers: The annual meeting of Manitowoc Company shareholders will be held at Carl J. Laurino People and Organizational and CEO, answers some of the questions Manitowoc has become the shipbuilder of Senior Vice President & Chief Financial Offi cer asked by shareholders, employees, and 9:00 a.m., CDT, Tuesday, May 6, 2008, at the Holiday Inn, 4601 Calumet Development choice for complex, mid-sized government Avenue, Manitowoc, WI. We encourage our shareholders to participate in Telephone: 920-652-1720 Attract, engage, and develop top talent and investment analysts. and commercial vessels. this meeting either in person or by proxy. Telefax: 920-652-9775 structure the organization to lead and man- Stock Listing & Related Information Media Inquiries: age the global business. Manitowoc at a Glance – page 6 Making It Real in Foodservice – page 18 Manitowoc’s common stock is traded on the New York Stock Exchange and Steven C. Khail is identifi ed by the ticker symbol MTW. Current trading volume, share price, Director of Investor Relations & Corporate Communications Cranes Marine Telephone: 920-652-1713 Aftermarket Services 81% 8% dividends, and related information can be found in the fi nancial section of most daily newspapers. Telefax: 920-652-9775 All products will be enhanced with superior Quarterly common stock price information for our three most recent General Inquiries: aftermarket service and support. fi scal years can be found on page 15 of our Form 10-K, which is part of this Joan Risch annual report. Shares of Manitowoc’s common stock have been publicly Shareholder Relations Value Creation traded since 1971. Telephone: 920-652-1731 Telefax: 920-652-9775 Generate year-over-year improvement in Foodservice Manitowoc Shareholders 11% Economic Value-Added. On December 31, 2007, there were 129,880,734 shares of Manitowoc Quarterly Earnings An overview of our businesses and their common stock outstanding. On that date, there were 2,520 shareholders Manitowoc is planning to announce its quarterly earnings for calendar 2008 markets, competitive advantages, and of record. according to the following schedule: Innovation extends our leadership through- 1st Quarter − April 28, 2008 prospects for the future. Form 10-K Report out the “cold side” of the commercial Each year, Manitowoc fi les its Annual Report on Form 10-K with the 2nd Quarter − July 28, 2008 foodservice equipment industry. Securities and Exchange Commission. Most of the fi nancial information 3rd Quarter − October 28, 2008 Making It Real – page 8 contained in that report is included in this Annual Report to Shareholders. 4th Quarter − To be announced Building Real Value – page 22 A copy of Form 10-K, as fi led with the Securities and Exchange Join MTW on the Internet Commission for 2007, may be obtained by any shareholder, without charge, CFO Carl Laurino offers an overview of Manitowoc provides a variety of information about its businesses, products, upon written request to: and markets at its Web site address: www.manitowoc.com. our 2007 fi nancial performance and key Maurice D. Jones Equal Opportunity fi nancial measurements. Senior Vice President, General Counsel & Secretary Manitowoc believes that a diverse workforce is required to compete The Manitowoc Company, Inc. successfully in today’s global marketplace. The company provides equal P.O. Box 66 Introduction to the 10-K and employment opportunities in its global operations without regard to race, Manitowoc, WI 54221-0066 10-K Contents Listing – page 24 color, age, gender, religion, national origin, or physical disability. CEO Certifi cation to the New York Stock Exchange During 2007, the chief executive offi cer of the company timely submitted Glossary of Terms – page 26 to the New York Stock Exchange the CEO certifi cation required by Section 12(a) of the NYSE corporate governance listing standards. The certifi cation Investor Information – IBC was not qualifi ed in any way. Additionally, the company’s principal executive Manitowoc’s greatest strength is its people. offi cer and principal fi nancial offi cer have timely submitted the certifi cations We are doing more than ever to attract the required by Section 302 of the Sarbanes-Oxley Act as exhibits to the best people and develop, retain, and inspire company’s annual report on Form 10-K. them—across our worldwide operations.

This report is printed on recycled and recyclable paper using soy-based ink. Financial Highlights 1

$601.8 % Change 07

06 $374.7

$190.6 7.5% 05 5.7% 45.6% 5.7%

2006 2006 21.5% 18.5% 25.7%

$158.6 04

$144.1 03

$ 241.4 -82.1% $ 8.6 9.9% $ 67.6 $ 3.3 77.0% 74.6% $ 398.9 $ 69.0 22.7% 19.3% $ 294.1 -19.0% $ 1.36 (—) $ 1.36 $ 1.33 (—) $ 1.32 2,531 $ 116.9 -0.4% $2,219.5 125,571,532 29.2% 77.1% $ 774.5 1.5% 74.3% $ 302.4 66.0% 9,500 10.5% $2,933.3 36.5% $ 166.5 100.3%

$157.5 02 8.3% EBITDA ($ Millions) Since 2002, earnings before interest, taxes, taxes, earnings before interest, Since 2002, and amortization have increased depreciation, tability driven by increased proﬁ by 282%, across all three business segments and value- adding investments. 2007 11.6% 24.7% 23.8% 0.02 0.02 14.6% 2,520 10,500 $2,868.7 $ 9.5 $ 5.8 $ $ 2.68 $ 82.3 $ 2.70 $ 2.62 $ 2.64 $1,349.9 $ 119.6 $ 489.5 $ 238.2 $ 207.0 $4,005.0 $ 43.3 $ 501.9 $ $ 333.6

127,489,416

07 $333.6

06 $166.5

$59.1 05

04 $38.1

$8.6 03

02 $39.0

Earnings from Continuing Operations ($ Millions)

Earnings from continuing operations grew by 100% introductionted from the in 2007 as Manitowoc beneﬁ strong growth across all of nearly 50 new products, and continued improvements in key crane markets, its operations.

07 $4,005

06 $2,933

$2,254 05

$1,845 04

$1,468 03

02 $1,253 Net Sales ($ Millions) Return on assets Return on equity Return on invested capital Return on invested capital Debt reduction Debt Depreciation paid Dividends Capital expenditures expenditures Capital Amortization of intangible assets Property, plant and equipment, net equipment, plant and Property, Gain (loss) from discontinued operations, net of income taxes operations, Gain (loss) from discontinued Net earnings Diluted Earnings per Share Earnings from continuing operations net of income taxes Gain (loss) from discontinued operations, Net earnings Other Information Net cash provided by operating activities Earnings from continuing operations Earnings from continuing Basic Earnings per Share Financial Position Financial Position EVA assets Total Debt to capitalization equity Stockholders’ shares outstanding (diluted) Average Earnings from continuing operations Earnings from Number of shareholders Net sales Net Millions of dollars, except employee, shareholder, shareholder, employee, except of dollars, Millions data and return per share, shares, debt-to-capitalization, Year For the 31 Ended December Years For the from continuing operations Operating earnings a percentage of sales continuing operations as Earnings from (approximate) Number of employees For the 13th consecutive year, Manitowoc For the 13th consecutive year, Net sales increased reported record revenues. 37% to $4.0 billion in 2007. 2 Letter to Shareholders our thirteenthconsecutiveyearofrecord revenues. Foodservice andMarineoperations,weachieved segment, supportedbystrongcontributionsfromour Led bytheexceptionalperformanceofourCrane Our 105thyearwasthebestinourhistory. our customers’needs. achieving thesix—nowseven—strategic Our confidenceisbasedonoursuccessat even betterinthemonthsandyearsahead. to $2.64perdilutedshare. than $4billion. Netearningsgrew100% In 2007, oursalesgrewby37%tomore Dear FellowShareholders: only enhanceourcapacity, butbetterserve businessesthatnot Crane andFoodservice continue topursueacquisitionsinour locatednearby.factory In2008, wewill adds tothecapacityofexistingPotain Europe, whileanewfacilityinPortugal site fortowercranesdeliveredtoEastern the ﬁ nal manufacturingandassembly facturing facilityinSlovakiahasbecome tower craneindustry. A newcranemanu- and madeusamarketleaderinIndia’s our positionintheindustrialcranemarket ing businesses. Acquisitions strengthened acquisitions andtheexpansionofourexist- international markets. times higher, withover50% comingfrom United States. Today, oursalesarefour 5% ofoursalesoriginatedoutsidethe totaled lessthan$1billionand global growth. As lateas1999, oursales Our numberoneobjectiveisprofitable Imperative #1:Growth our performanceandprospects. global company. And theycontinuetodrive They havehelpedtotransformusintoa imperatives thatwefirstsetoutin2006. The goodnewsisthatweexpecttodo In 2007, wecontinuedtogrowthrough

Imperative #2:Innovation Imperative #3:CustomerFocus products in2008. We plantointroduceapproximately50new both ourcustomersandussucceedmore. are designed, engineered, andbuilttohelp range ofourproductsisdiverse, butall ships. As theseexamplessuggest, the world’s mostadvancednavalcombat choices toconsumers, andoneofthe beverage dispensersthatoffermore entirely newtypeofcrane, newiceand products during2007. They includean approach, weintroducednearly50new size ofourmarkets competitors’, buildsourbrands, expandsthe Innovation distinguishesourproductsfrom or introducedwithinthepastﬁ ve years. of ourrevenuesfromproductsacquired It haslongbeenourgoaltogenerate80% improve delivery speed. improve delivery customers managetheirinventories, and streamlineordering,our history—will help Cranes—the largestsysteminvestments in businessandinitiatedin at ourFoodservice resource planningsystemsbeingfinalized ucts fasterthaneverbefore. The enterprise facilities intheUS, willhelpusdeliverprod- coupled withtheexpansionofourcrane New craneplantsinEuropeandIndia, business acrossthe Asia/Pacific region. supporting thegrowthofourFoodservice tomers. OuricemachineplantinChinais our plantsandpeopleclosetocus- order throughlife-cycleproductsupport. pointfromtheinitial atevery faster service their projects, weareworkingtoprovide get theirproductstomarket, orcomplete reduce thetimeittakestomakedecisions, their needforspeed. As customersseekto thing wedo. Today, thatoftenmeansmeeting ways wearefocusingoncustomersinevery- Customer-driven innovationisjustoneofthe Following our “voice ofthecustomer” To reachthatgoal, wecontinuedtoput — and ourshareofeach. enhanced quality, andincreasedprofits. schedules,months hasshorteneddelivery our Marinebusinessoverthepast18 to boosttheirperformance. Forexample, ourbusinesses consolidate orre-engineer our operations, andwe’veneverhesitatedto Sigma training. We’re continuouslyimproving oradvancedSix ever completedintroductory operations, andin2007morepeoplethan Six Sigmaqualityprocessesintoallofour exceptional growth. quality, andoutstandingqualitybrings resources tocontinuouslyimproveour equation. Ourgrowthhasprovidedthe Quality andgrowtharepartofthesame Operations Imperative #4:Excellencein is zero. course, that’s stillonetoomany. Ourgoal one lost-timeaccidentduringtheyear. Of businessincurredonly and ourFoodservice injuries declinedbynearly15%in2007, mance inthatkeymetric, too. Lost-time safety, andwehaveimprovedourperfor- values includeastrongcommitmentto and sharedvaluesaroundtheworld. Those We areworkingtobuildacommonculture on page8, detailsourrecentprogress. worldwide organization. levelacrossour the bestpeopleatevery that weattract, develop, retain, andinspire To continueoursuccess, wemustensure the pastsixyearswe’vedoubledinsize. Manitowoc isagrowthcompany. Over Organizational Development Imperative #5:People and Since 2002, wehavebeenbuilding “Making ItReal,” thereportthatbegins Imperative #6: Aftermarket Support having served the company since 1991, Earnings per Share While we have always taken care of our most recently as president of our Crane (In Dollars) customers, the success of our Crane Care segment and, prior to that, as chief business shows just how important our financial officer. aftermarket product support services can Eric Etchart, formerly executive vice $2.64 be to our customers and their success. president of the Asia/Pacific region, replaced Launched just five years ago, Crane Glen as the president of the Crane segment. Care has grown at double-digit rates and We also made a number of other execu- improved both our customer satisfaction tive appointments across our Crane and scores and our profitability. The recent Foodservice businesses.

opening of new Crane Care contact cen- A smooth transition of leadership shows $1.32 ters in Germany and China helps to ensure something about the way we work— that the sun never sets on our service. with clear strategies, careful planning, no Crane Care also serves as a model for surprises, and an absolute commitment to

the development of similar offerings by doing what we say we’ll do. $0.53 $0.03 -$0.20 our Foodservice business. We will continue our progress. While $0.36 the US economy may be entering a period

of slowing growth, we expect to continue 02 03 04 05 06 07 to move forward. With half of our sales Manitowoc’s earnings per share con- coming from outside North America, we tinued its impressive trend in 2007. have become a global company and are For the full year, diluted EPS totaled no longer dependent on any single region $2.64, a 100% improvement over the for our growth. results posted in 2006. We expect Crane segment sales to grow at double-digit rates, as infrastructure development projects in Brazil, Russia, India, China, and other countries add to the demand for cranes. According to a study EVA conducted by Platts, an energy informa- ($ Millions) tion specialist, $25 trillion will be spent on energy projects through 2030. Foodservice sales are expected to grow $207.0 faster than the industry as a whole—in the Glen E. Tellock Terry D. Growcock mid single-digit range. A projected slowdown in the US market will be offset by the intro- Imperative #7: Value Creation duction of innovative products that reduce We believe that if you offer innovative, customers’ costs and by the growth of

high-quality products to growing markets, global markets. $116.9 work efficiently, develop and maintain an We anticipate that our Marine business outstanding workforce, and take care of your will benefit from its improved operations customers, you’ll create real value. In 2007, as well as from increased demand for gas $15.6 all three of our businesses contributed to our and oil field service vessels, homeland $12.6 profitable growth, adding a total of $207 mil- security initiatives, and long-term govern- -$22.6 -$4.6 lion to our economic value. Another milestone ment contracts. in 2007 was our selection to the S&P 500 Across our businesses, we have proven 02 03 04 05 06 07 Index of leading industrial companies. This our ability to set ambitious goals—and achievement reflects Manitowoc’s ability to make them real. We would like to thank our Manitowoc’s commitment to generat- create real value. shareholders, customers, suppliers, and ing shareholder value was reflected employees for everything they did to help in the 77% gain in EVA which the Moving Ahead make 2007 our best year ever. With their company generated in 2007. Rising Focusing on our core strategies has brought continued support, we are ready to extend $90 million above 2006’s results, us tremendous success. We will remain fo- that winning performance—in 2008 and Manitowoc’s 2007 EVA totaled an cused on our time-proven strategies as we beyond. Together, our best is yet to come. impressive $207.0 million. progress through a time of transition for our management team. Early last year, Mike Kachmer was named president of our Foodservice seg- Terry D. Growcock ment, replacing Tim Kraus, who retired after Chairman of the Board 18 years of outstanding service. In May, our board elected Glen Tellock as president and chief executive officer, while I will remain chairman. Glen is well Glen E. Tellock known to members of the Manitowoc family, President & Chief Executive Ofﬁ cer

95414_Narr.indd 3 3/7/08 10:08:59 AM Glen E. Tellock became Manitowoc’s seventh president and CEO in May 2007, after serving as president of Manitowoc’s Crane segment since 2002. Recently, he & answered some of the most frequently asked questions Q A about the company, its strategies, and its future plans. Before you became CEO, you What’s new with you in charge? What are Manitowoc’s Q served as president of Manitowoc’s Q Q greatest opportunities? Crane segment. Prior to that, you served as Manitowoc’s chief ﬁ nancial ofﬁ cer. Over Strategically, nothing is new. From To continue leveraging the global your 17-year career with Manitowoc, what A a managerial standpoint, Terry and A footprint we now have in cranes. has your experience taught you about the I are different people. Terry comes from a We see demand for cranes remaining strong company? sales/marketing and foodservice back- through at least the end of the decade, and ground, while my background is primarily much longer in the fast-growing emerging If you put the right strategies in place accounting and finance. When I joined the markets. There’s no doubt in my mind that A along with the right people in the company, Manitowoc was at a key cross- the Potain and Grove acquisitions were right place, you have a strong formula for road. It needed to grow. I credit Fred Butler the right decisions, even though the global success. This enables you to create a bias with having the vision to put Manitowoc crane industry was heading toward a cyclical for action. Crisply executing those strategies on a path of disciplined strategic growth. trough at that time. Taking what we learned will enable you to withstand many of the Similarly, Terry continued that vision and with those acquisitions, we can leverage that difficulties and challenges that you’re likely added an element of velocity that has seen experience and follow a similar discipline to to face in business. At the end of the day, our revenues grow nine-fold and our earn- not only grow our Foodservice segment, but trust those people that you’ve put into a ings grow 11-fold. My challenge will be to to expand the geographic diversity and prod- position to make decisions. Then, support take our businesses to the next level. You’ve uct breadth in Cranes by pursuing adjacent their decisions. But always make sure you seen what’s been done to grow Cranes. market opportunities. Our ability to remain are close enough to your business to realize flexible and identify growth opportunities An Interview with Glen Tellock Glen with An Interview Now, we’d like to use a similar blueprint when adjustments might be needed to your to globalize Foodservice, while optimizing despite economic uncertainty will be key tactics or strategies. our shipyards across the commercial and factors in our future success. government sectors of the shipbuilding business. Do you see any changes in Mani- What are the greatest challenges To do this, I will build on three of Terry’s towoc’s strategic imperatives? that Manitowoc faces as it moves Q core philosophies: No surprises, do what Q forward? you say you’re going to do, and know Absolutely not. I’ve been with Mani- your costs. To that, I’ll add three of my towoc since 1991 and have been First, we must have the right people A fundamental beliefs: full disclosure, bad involved with our strategic planning process to implement our long-term strate- news first, and have fun. I want to bring an A for virtually all of that time. My views are gies. Second, we must take advantage of energetic perspective to our global markets. totally aligned with the strategic imperatives the many opportunities that lie ahead of that have been developed. While I might us. Third, we must continue to manage tweak and fine-tune the imperatives as time Would a downturn in the US the increasing complexities of a global evolves and circumstances dictate, their Q economy cause a shift in business. Fourth, we must make certain basic thrust will not be altered. your strategies? we are allocating the right resources to the right initiatives. Finally, we must have a flex- Good strategies don’t depend on ible business model that can readily adapt A external market fluctuations. Many to the macro-economic factors that could of our strategies bake in the assumption impact our global businesses. that the US market and other mature markets in the world will experience eventual downturns, which we believe can be offset through operational excellence and by pursuing the opportunities within various emerging economies. As we’ve proven with the Potain and Grove acquisitions, you can make some of your best moves in a downward-trending market.

4 Why invest in Manitowoc? Which mentors helped you in “Our ability to remain Q Q your career? What would you tell a fellow employee are the secrets of a flexible and identify Because of our reputation for successful career at Manitowoc? A execution across all the facets of growth opportunities our business. While we have a penchant for I can’t say that I’ve had a specific strategic growth, we do so without taking A mentor, rather what I’ve tried to despite economic un- unreasonable risks. We have a solid track do throughout my professional career is record of financial performance and have pick and choose the attributes of people been very successful in creating share- that I thought were good leaders and then certainty will be key holder value. Manitowoc enjoys leadership emulate those practices in my daily work. positions in many of the markets that we The advice that I’d like to share with my factors in our future serve. All of our businesses are committed fellow employees is to be passionate about to new product development and aftermar- what you do. Perform your job to the best of success.” ket support. We will continue to employ your abilities. Observe what your supervisor these strategies going forward. or manager does, and see what you can do to make his or her job easier. Always make ethical decisions, never compromise your 2007 was Manitowoc’s 13th con- integrity. Don’t be afraid to make a mistake, Q secutive year of revenue growth. but always learn from your actions. Now that you’re a $4-billion company, Our employees are the core of our how do you sustain that momentum? business. What they say really matters in my opinion. To that end, we should support Through a continued focus on both their goals and aspirations. I want our em- A internal and external growth. We ployees to be engaged, to be successful, will achieve our growth imperative by de- and to enjoy what they are doing. Their veloping new products, by making comple- contributions are vital to our success. mentary acquisitions, and by focusing on opportunities that adjacent markets offer. While our strategic imperatives will What gets you excited about Glen E. Tellock guide our ongoing efforts, we will always Q working at Manitowoc? President & Chief Executive Officer be mindful that creating shareholder value is our primary objective. Being part of an organization that A thrives on finding better ways to meet our customers’ needs. Look at the What are your priorities for 2008? breadth of our innovation – the GTK1100, Q the FlexTower, and the Littoral Combat Ship. Those three products couldn’t be more At the top of my list is to continue different, yet they all come from Manitowoc. A improving our overall safety record That’s exciting. throughout the world. Until we have zero accidents, I won’t be satisfied. In Cranes, the top priority is bringing our capacity expansion initiatives online in a timely and cost-effective manner. In Foodservice, to continue developing the new ice, beverage, and refrigeration products that our customers need, as well as expanding the international opportunities for this segment. In Marine, we must deliver the Littoral Combat Ship, successfully execute our current slate of contracts, and pursue new projects that will add to a solid backlog of work for 2010 and beyond.

5 6 Manitowoc at a Glance Marinette MarineCorporation Bay ShipbuildingCo. Brand Names Segment Marine Koolaire, Flomatic, Kyees, RDI Harford-Duracool, McCall, McCann’s, Manitowoc, Servend, Multiplex, Kolpak, Brand Names Crane Segment Crane and thesupportservicesthatkeepitallworking. the shipsthatmovecommerceandculturesforward; isfy thehungersandthirstsincountlesslocations; landscapes; thefoodserviceproductsthathelpsat- building thecranesthatshapeandreshapeentire Formorethanacentury, Manitowochasbeen Shuttlelift, YardBoss, ManitowocCraneCare Manitowoc, Potain, Grove, NationalCrane, Names Brand Foodservice Segment Foodservice

St. LawrenceSeawayandtheGreatLakes. operators; oceangoingvesselsthattransitthe dian-fl agged GreatLakesfl eets; inlandwaterway research, anddredgingoperations;USCana- utmr & Markets & Customers of freshwaterandsaltwatervessels. spection, maintenance, conversion, andrepair patrol boats, anddredges. includein- Services tug/barges, vessels, military icebreakers, ferries, bulk carriers, double-hulltankbarges, integrated vessels ofallvarieties, includingself-unloading for commercial, government, military, andresearch Products &Services service. bottling anddispensing;commercialice tutional, andsupermarketoperators;soft-drink hospitality, healthcare, conveniencestore, insti- Customers&Markets distribution services. tion systems;backroombeverageequipmentand plates; compressorracksandmodularrefrigera- beverage dispensingvalves;castaluminumcold undercounters andfoodpreptables;post-mix reach-in refrigeratorsandfreezers;refrigerated systems; walk-inrefrigeratorsandfreezers; ers; long-drawsoftdrinkandbeerdispensing fl akers, andstoragebins;ice/beveragedispens- Products &Services and crane-rentalapplications. duty-cycle, dockside, dredging, material-handling, infrastructure,vices; utilityservices; industrial, energy explorationandproduction;oilfi eld ser- in heavyconstruction;commercial Markets & Customers ing/remanufacturing services. training, technicalservices, andcranerebuild- includingreplacementparts,service engineering, telescopic confi gurations; aftermarketpartsand confi gurations; boomtrucksinarticulatedand terrain, all-terrain, truck-mounted, andindustrial confi gurations; mobiletelescopiccranesinrough- top-slewing, luffi ng jib, topless, andself-erecting attachments;towercranesin complementary in crawlerandtruck-mountedconfi gurations, plus Products &Services New construction services Newconstructionservices Ice-cube machines, ice Lattice-boom cranes Lattice-boomcranes Foodservice, lodging, Contractors specializing Contractorsspecializing Government, military, • Facilities includeone ofthelargestgravingdocks • Conveniently locatedfacilitiesontheupperand • Operates thebest-equippedfacilitieswith • Adept atallphasesofshipbuildingandship Key Advantages • True global reach with 120 distributors distributors 120 with reach global True • America North in operations Manufacturing • ice-cube in leader industry the as Recognized • commer- of producer demand-fl ow low-cost, A • machine ice-cube of share domestic US Largest • equipment, cold-focused of offering Broadest • for equipment cold-focused in leader market A • Key Advantages evaluating andguidingitsbusinessunits. oriented. The companywillapplythisfocusin all relatedelementswillgenerallybeproduct marketing, manufacturing, supportservices, and focused productsandsupportservices. Research, efforts willcontinuetobehigh-quality, customer- Corporate Purpose its shareholders. to continuouslyimproveeconomicvaluefor Corporate Mission over with leader innovation product Worldwide • contact fi ve includes support product Unrivaled • value-added to due values resale Exceptional • world the in cranes of base installed Largest • service including base manufacturing Global industry. • crane the in brands Best-recognized • rough- cranes, tower in leader market global A • Key Advantages

repair forfreshwaterandsaltwatervessels. and automatedblast/primelines. facilities equippedwithautomatedpanellines center; plusexpansivefabricationandassembly on theGreatLakes;anin-houseengineering lower lakes. Lakes shipyard. most-experienced workforceofanyUSGreat serving 90countries. serving tors andfreezers. cial ice-cubemachinesandwalk-inrefrigera- industry.the foodservice and Asia. machine technologyandinnovation. consecutive years. “Best inClass” inthesecategoriesforseven and walk-inrefrigerator/freezermarkets;voted renovation opportunities. which isprimarilydrivenbyreplacementand 150 patentsand500trademarks. and truck-mountedcranes. market leaderinNorth America forboomtrucks cranes; aleadingplayerinall-terrain terrain cranes, andhigh-capacitylattice-boom centers and over 250 service centers.centers andover250service ponents. engineering designsandhigh-qualitycom- provides strongaftermarketopportunities. operations onﬁ ve continents.

Manitowoc’s missionis The centerpiece of our The centerpieceofour Corporate Proﬁ le Manitowoc is a leading dispensing valves, cast aluminum cold plates, and Business Segment Business Segment manufacturer of tower cranes, mobile telescopic commercial refrigeration equipment for the food- Revenues 2007 Operating Earnings 2007 cranes, and high-capacity lattice-boom crawler service, lodging, convenience store, health care, (Percent) (Percent) cranes for heavy construction, commercial con- beverage, and bottling industries. Manitowoc is struction, energy, infrastructure, duty-cycle, and also a leading provider of shipbuilding, ship repair, Cranes Marine Cranes Marine 81% 8% 84% 5% crane-rental applications. It is also America’s and conversion services for government, military, leading producer of boom trucks. Additionally, and commercial vessels operating on and off the Manitowoc is a leading manufacturer of ice US Great Lakes. machines, ice/beverage dispensers, soft-drink

Foodservice Foodservice 11% 11%

Industry Outlook • The Association of Equipment Manufacturers Crane Segment Crane Segment • According to Global Insights, worldwide con- (AEM) expects that construction equipment Net Sales Operating Earnings struction spending is projected to reach $6.2 sales in 2008 will grow 2.8% in the US and ($ Millions) ($ Millions) trillion in 2008. Continued robust construction 8.0% globally. AEM also projects that sales growth, which is expected to achieve a CAGR of lifting equipment will grow by 5.2% in $3,246 of 9.3% between the period of 2006 to 2016, the US and 11.9% globally. $470.5 should reach $13.0 trillion by 2016. • FMI Corporation expects that the total US • Worldwide construction spending in 2008 construction put-in-place will grow 5.8% will be concentrated in 10 nations: the United in 2008, led by growth in the transportation, States, China, Japan, the United Kingdom, health care, public safety, and ofﬁ ce segments. $2,235

Spain, France, Germany, India, Brazil, and $280.6

Venezuela. Manitowoc Cranes has at least $1,629 one product line in each of these regions $1,248

(with the exception of Japan) with a market $963 $55.6 $57.0 $674 share greater than 25%. $115.5 $24.4 02 03 04 05 06 07 02 03 04 05 06 07

Industry Outlook tinued high levels of concept updating and facil- Foodservice Segment Foodservice Segment • According to the National Restaurant Association ity renovations by domestic chain restaurants; Net Sales Operating Earnings (NRA), restaurant industry sales are projected to and continued growth in disposable incomes in ($ Millions) ($ Millions) reach a record $558 billion in 2008, up nearly the US and other economies. 4% over 2007. In 2010, the restaurant industry • Restaurateurs are implementing more environ- $438 $61.3

is expected to operate more than 1 million units mentally friendly efforts to conserve energy and $415 $400 $56.2 $55.7 $54.9 $377 $375 and post sales of $577 billion. cut costs. More than half of all operators and $53.3 $369

• Based on US Census and Technomic data, ap- 76% of casual dining restaurants updated or $50.3 proximately 57% of today’s food dollar is spent purchased energy-saving equipment in the past on foodservice purchases. Approximately 44% two years. Nearly one in three casual- and ﬁ ne- of all adults are restaurant patrons on a typical dining operators say they will devote an even day, and adults purchase an average of 5.8 larger share of their budget to green initiatives meals or snacks per week from restaurants, ac- in 2008. cording to the National Restaurant Association. • More than 60% of restaurant operators plan to • Annual foodservice equipment and supply in- purchase new walk-in or reach-in refrigeration dustry sales are forecast to exceed $10.8 billion equipment in 2008, according to Reed Business

in 2008, according to Foodservice Equipment Information research. Approximately 50% plan 02 03 04 05 06 07 02 03 04 05 06 07 Reports magazine. Key drivers of equipment purchases of new ice-making equipment in growth include chain restaurants launching 2008, according to the same report. or expanding their international presence; con-

Industry Outlook • Non-traditional “off-lakes” markets, which re- Marine Segment Marine Segment • The Oil Pollution Act of 1990 requires that all quire vessels for dredging, offshore rig supply, Net Sales Operating Earnings vessels hauling petroleum and refi ned petro- LPG hauling, and specialty applications, are ($ Millions) ($ Millions) leum products in US waters must be double- continuing to grow. hull compliant by 2015. • The US and Canadian-fl agged fl eets continue $321 • Continued development of the “21st Century to age, which creates ongoing opportunities $26.1

Navy” will provide new construction opportuni- for dry docking, inspection, maintenance, and $283 ties throughout the next decade. repair services. $20.8 $16.5

• Homeland security needs could result in a $226 $219

series of new vessels for the US Coast Guard. $204 $11.3 $137 $4.5 ($9.2) 02 03 04 05 06 07 02 03 04 05 06 07

7 “In the past 10 years, Manitowoc’s revenues have grown more than nine-fold, while it has added 61 new manufacturing and service facilities and launched hundreds of new products and services. Fifteen acquisitions have expanded its markets and its market leadership, transforming Manitowoc into a global Thomas G. Musial

Making It Real Making Senior Vice President – enterprise. Over that same span, it has created Human Resources & Administration more than $454 million in economic value. “Behind Manitowoc’s extraordinary success are clear and consistent strategies, strong and growing markets, and, most of all, people. The people of Manitowoc have continuously worked to improve our quality and increase our value. They have earned their company a reputation for innovation—and strong ties with customers. They have built our businesses and our brands. And they have helped to build a better world. “We understand the value of people. So we work to attract and retain the best people—and inspire their best efforts— everywhere we do business around the world. Our goal is to be an employer of choice. Together, we’re making it real.”

Manitowoc’s Global Presence Manitowoc is over 10,000 people strong, at work in more than 20 countries. We’re united by our values, our systems, and our opportunities.

Crane Segment Foodservice Segment Marine Segment 8 A Global Workforce

James, Welder, Tang, Electrical Fitter, Federico, Team Leader-Assembly, Manitowoc, Wisconsin Zhangjiagang, China Niella Tanaro, Italy I’m passionate about my Our core values of integrity, commitment, and passion for excellence (see page 11) guide all “ of our decisions. They are translated into all of the languages that our employees use and work. It makes me proud into all of our actions, from hiring and training to setting our strategic objectives. The result is a company that people are proud to work for—and with—one that turns their actions to know I help build cranes into growth. that can be found all over We work as one company. Around the world, all of our operations are built to the same standards of quality and productivity. Our human resources activities, like our businesses, the world.” ~James are organized around our regional markets and our customers. New human resources software and a new multi-lingual global employee Web site ensure that everyone can share the same information and goals. And we share the same opportunities. Job openings across our three businesses will soon be posted at all of our worldwide operations. Management development, safety, and other training programs are uniform, with a single standard of excellence. At every level, people are encouraged—and prepared—to take the next step forward.

Leaders

Paula, Purchasing Manager, Khristian, Quality Assurance Crane Care, Jason, Manufacturing Manager, Manitowoc, Wisconsin Zhangjiagang, China Sturgeon Bay, Wisconsin As we have grown, we have expanded our pool of management talent through acquisitions, “Manitowoc is a very pro- recruiting, and developing our high potential employees. Each year, 15 people take part in an advanced, year-long, cross-functional program that prepares high-level leaders to be- gressive company. It changes come effective global business strategists. Our leadership development program introduces the fundamentals of leadership to more than 100 people each year. And a company-wide with the needs of our custom- team leadership program provides practical training for supervisors and team leaders workers, and invests in us so we ing on the factory floor. Since 2004, more than 300 people have attended one or more of our leadership pro- can grow our talents and grams—and helped to make us number one. our careers.” ~Jason

9 10 Making It Real (continued) “ I’m very happytoworkinsuchasafeandefﬁ cient work- by nearly15%. Moreimprovements areontheway. and safetycommittees. Ourefforts arepayingoff. In2007, rates wereducedlost-timeinjury that involvesemployeesdirectlyinjobsafetyanalysis, incidentinvestigations, inspections, lost-time accidentsandworkercompensationcosts. We arebuildingasafety-mindedculture introduced in2006implementsbestpracticesintoourbusinesseswiththe goalofreducing andoffthejob.At Manitowoc, safetyisapriority—on The safetymanagementsystem Zhangjiagang, China Kan, Welder, to keepourskills up-to-date.”~ ing environment.Manitowoc givesuscontinuoustraining ment opportunities. prepare ouremployeesforcareeradvance- introduce innovativeproductsquickly, and tices acrossouroperations, developand our programshelpusapplybestprac- and otherskilledtradespeople. Together, apprenticeship programstotrainwelders tion withlocalcolleges, wealsosponsor and performancefeedback. Incoopera- quality andsafetytocommunicationskills training sessionsforsubjectsrangingfrom products, andpeople. In2007, weoffered to improvedperformance—forbusinesses, We believethatcontinuouslearningleads Building Skills Wilhelmshaven, Germany Anja, HumanResourcesAssistant, The GoalisZero

“ to becomeabettercraftsman.”~ me istakingprideinmyworkandconstantlystriving to buildingthebestproductsinindustry. Quality to Quality inmyworkisimportantbecauseI’mcommitted A QualityOrganization Shady Grove, Pennsylvania Harold, Welder, Manitowoc, Wisconsin Amy, CertifiedCuberAssembler, serve ourcustomers. serve costs, andinventories, whileimprovingquality, employeeinvolvement, andourabilityto practice leanmanufacturing, whichaimstoeliminatewastebyreducingmaterialhandling, product, service, andprocessproblems. SixSigmatrainingsupportsworldwideeffortsto received SixSigmatrainingtoenablethemidentify—andeliminate—therootcausesof ductivity, ourcustomers. andabilitytoserve Morethan750Manitowocemployeeshave Since 2001, wehaveusedSixSigmapracticestocontinuouslyimproveourquality, pro- Kan

Manitowoc, Wisconsin Allison &Chad, Web DevelopmentTeam, Manitowoc, Wisconsin Dan, Fabricator Apprentice, people to new globalrecruitingcampaigninspires competition forthebesttalent. Manitowoc’s We’re preparedtowinthegrowingglobal than 2,400peoplein2007. with us: worldwide, Manitowoc hiredmore standing talent. And peoplewanttowork programs provideadditionalsources of out- colleges, trade schools, andinternship with us. Long-standing relationshipswith Attracting NewTalent Dan BUILD SOMETHINGREAL

Talking and Listening Our Values Our core values guide our decisions and actions. They are the foundation for the success of Manitowoc’s people, our teams, our business units, and the company as a whole.

Integrity means that what we say is what we do. It governs every aspect of our work, helps to assure that we always do the right things, and are honest and forthright in all of our dealings with others—inside and outside the company.

Our Commitment to Stakeholders Nicolas, Customer Technical Advisor, Don, Payroll Analyst, Decines, France Manitowoc, Wisconsin governs the way we do business with each other and with the shareholders, Good communications improves morale, fosters teamwork, and keeps us pulling in the suppliers, and communities we serve same direction. We start at the beginning. A new Web site, accessible in three languages, around the world. This commitment advertises every job at every global site, allows prospective employees to track their applica- requires us to deliver quality products, tions, and provides information about everything from benefits to strategies. Employees of respect work/life balance, treat others newly acquired companies immediately become part of the family and are quickly introduced with respect, hold ourselves and our to our values, practices, and goals. The leaders of our businesses regularly report to employ- stakeholders accountable for our ees about new projects, their businesses’ performance, and other issues, while our employee actions, foster an environment of ef- magazine, soon to appear in five languages, features the people, products, programs, and fective communication, and maintain actions that power our growth. A new employee engagement survey will enable us to mea- a safe work environment. sure our continued progress. “ I’ve been with Manitowoc for over 40 years – it’s a place Our Passion for Excellence captures the importance we place on continu- where everyone has a voice in making this a great place ous improvement to our products and to work.” ~Don people. To achieve the excellence we strive for, we drive innovation, demonstrate effective leadership, Building Communities embrace change, and collaborate with each other.

Susan, Executive Secretary, The Relay for Life Team in Parsons, Tennes- Jan, Director of HR Administration, see, raised over $10,000 for the American Manitowoc, Wisconsin Cancer Society. Manitowoc makes the world a better place. Its products and services help to build both businesses and communities and provide people with higher standards of living. And Manitowoc people do their part. We encourage employees to be active members of their communities and we support their efforts through contributions to not-for-profit organizations, including cultural institutions, the United Way, and college scholarships. “ I am very proud to be involved in my community. At The Manitowoc Company, the spirit of good citizenship starts right at the top.” ~Susan

11 Manitowoc Cranes has achieved four consecutive years of record growth. Three of the lifting industry’s leading brands serve customers in markets around the world. Innovative, high-value products and services coupled with industry-leading production will keep us moving forward.

Real Growth Sales of cranes to new and emerging In our traditional markets of North America markets have grown to more than $1 billion and Western Europe, infrastructure im- and continue to climb. Our products play a provements such as new roads, bridges, vital role in building national economies— high-rise commercial construction, and and the projects that are powering their de- energy projects continue to create strong velopment. Virtually all major energy proj- demand for our lifting solutions. We are ects require sophisticated lifting equipment. meeting this demand by expanding all We can deliver and support that equipment three of our North American large crane anywhere in the world—even in remote production facilities. We also have expanded areas.

Making It Real in Cranes It Real Making our rough-terrain crane facility in Niella, Italy, and opened a new plant in Baltar, Real Opportunities Portugal, to boost production of tower As China’s economy continues to grow, we cranes for the Western European market. are benefiting from our 20 years of pres- Additionally, we have begun producing all- ence in that market and from our position terrain cranes in Niella and are expanding as the first foreign manufacturer to produce our capacity for large all-terrain cranes at cranes there. Production of tower cranes as our Germany facility. well as components for crawler cranes at the state-of-the-art, 800,000 square-foot Winning An innovative tele- manufacturing facility we opened in 2006 scopic mast on the continues to exceed expectations. To keep award-winning pace with the demand, we have expanded Potain Igo T-70 the size of our workforce at the facility allows variable to more than 700 people, including local working heights up design, engineering, service, and training to 70 feet—making teams. this crane an ideal Manufacturing products in key markets alternative to tele- around the world brings us closer to handlers. customers, reduces shipping costs, improves deliveries, and helps to provide a hedge against fluctuations in currencies and market cyclicality. We are now gaining these advantages in India, which is on its way to becoming one of the world’s largest economies. In July 2007, we announced the acquisition of Shirke Construction, which had served as Potain’s India-based manufacturer and distributor since 1982. In addition to a new 190,000 square-foot tower crane production facility, we gained the skills of its 350-person workforce.

12 Eric Etchart, President, Manitowoc Cranes

Larry Weyers, Philippe Cohet, Executive Executive Vice President, Vice President, Manitowoc Cranes Manitowoc Cranes The Americas EMEA

Gilles Martin, Larry Bryce, Executive Executive Vice President, Vice President, Manitowoc Cranes Manitowoc Asia/Paciﬁ c Crane Care ▲ Designed for Customers Manitowoc’s newest crawler crane, the 220 US-ton capacity Model 14000, is an all-hydraulic crane featuring EPIC™ electronic controls and FACT® self- erecting technology. Ideal for contractor and rental fleets, the 14000 can be equipped with multiple boom and luffing jib combinations that provide up to 363 feet of reach.

13 14 Cranes (continued) to 80metersofhorizontalreach. vides a60metric-toncapacityandup at a75-meterheight, theMD2200pro- Centre constructionproject. Working dominates theMelbourneConvention erected inAustralia, aPotain MD2200 Believed tobethelargesttowercraneever On Top DownUnder We also are making ourselves at home The innovations include the award- in Eastern Europe. The conversion of an winning GTK1100, the biggest break- existing factory into a new crane manu- through in the crane industry in more than facturing facility in the Slovak Republic a decade. Combining the best of our tower, has reduced shipping costs and delivery crawler, and mobile crane technologies schedules. We are performing final manu- in an entirely new type of crane, the GTK facturing and assembly of Potain tower can be transported on just five trucks, cranes at the site for customers in Russia, compared to 20 to 25 trucks for traditional Boom Times the Commonwealth of Independent States, cranes with similar lifting capacities, and National Crane expanded its market lead- and other markets. can be erected in one quarter of the time ing line of boom trucks in 2007 with the required by conventional cranes. introduction of the Model 900H. Providing Manitowoc’s new Model 14000, a 220 a maximum capacity of 27 US tons, the US-ton capacity crawler crane, replaces National 900H also features patented the Model 4100W, the best-selling crane CANbus electronics, multi-position in Manitowoc’s history. The Model 14000 H-style outriggers, a four-section boom, improves on its earlier counterpart by and a maximum tip height of 158 feet. using FACT self-erect technology to reduce the time required for assembly—a key benefit for contractors and crane rental fleet operators. New Grove cranes include the RT540, which is being manufactured in both the US and Italy. Grove’s new TM500E truck crane features two separate engines for highway transport and crane operation to reduce fuel costs. Potain’s growing line of topless tower cranes, including the MDT268, helps owners and users work in tight spaces and set the cranes up more quickly. The new IGO T-70 self-erecting tower crane features a telescopic lattice mast that allows users to achieve hook heights of over 70 feet. The Best in the Field We’re pursuing other opportunities, too. Twice as Strong Manitowoc Crane A new sales and service center in Dubai, Real Support The newly acquired Shuttlelift Carrydeck Care is the world’s UAE, will serve 20 countries throughout the We are innovating in both our products and crane line, combined with Grove’s Yard- most comprehen- Middle East. We also have added new sales our services. Offering more than 250 loca- Boss products, extends Grove’s leadership sive service and and service personnel in Latin America, tions, $90 million in parts inventories, and of the industrial crane market. support program in and have introduced National Crane boom over 1,000 technicians around the world, the lifting industry. trucks into Brazil. our Crane Care business is the industry’s Five contact centers, strategically located largest and most comprehensive product parts warehouses, Real Advantages support network—and another source of and a network of While our markets are growing fast, our profitable growth. more than 1,000 crane sales are growing even faster thanks service technicians to high-value products and services. In stand ready to serve 2007, we introduced 16 new products, all Manitowoc custom- aimed at making our cranes safer, faster to ers anywhere they transport and erect, more reliable, easier do business around to operate, and more cost effective. the globe.

15 16 Cranes (continued) controls. nomics andelectronic including superiorergo- on Grove’s GMK4100B, the keyfeaturesfound of development ofmany research guidedthe “Voice ofthecustomer” Designed byListening in our global network—helps usprovide in ourglobalnetwork—helps fifth center inZhangjiagang, China—the cal assistance. Ournewcustomercontact ready accesstoparts, service, andtechni- that areofferedinmultiplelanguages. tors oncustomers’sitesthroughclasses mobile trainingunitsandcomputersimula- tenance atoneofourtrainingcentersorin master craneoperation, repair, andmain- Each yearwehelpthousandsofpeople our comprehensivepackageofservices. purchase ofneworusedequipment. it easierforcustomerstofinancethe make growing slateoffinancialservices of ownership, rightfromthestart. Our highest up-timeandthelowesttotalcost On thejob, customerscancounton Training isanotheressentialelementin The goalistooffercustomersthe assure highresalevalues. extend thelifeofManitowocproductsand remanufacturing, andexchangeprograms investments. CraneCare’s EnCORErepair, our customersgetthemostfromtheircrane locally sourcedmaterialsandcomponents. procurement, andpromotestheuseof ing networklowerscosts, streamlines delivering higherquality. Ourglobalsourc- working toproducemorewithless, while our shareoftheEuropeanmarket. liveries, reducedbacklogs, andincreased plants intheUSandItalyhasimprovedde- ing rough-terraincraneproductionbetween enabled ustobeginproductionfaster. Shar- scratch, reduceddevelopmentcostsand Slovakian facility, ratherthanbuildingfrom ued toworkmoreefficiently. Redevelopinga As wehaveexpanded, wealsohavecontin- Real ProgressandResults their cranesandrelatedrecordsfiles. companies andothercustomersmaintain maintenance services, helpingcranerental week. We alsohavebeguntoprovidefleet in theworld, 24hoursaday, sevendaysa ties, tocustomersanywhere andservice multi-lingual assistanceonparts, warran- Across ourglobaloperations, weare Throughout theownershipcycle, wehelp 47 meters. height of154feet, or deliver amaximumtip a two-sectionjibthat four-section boomand and RT540CE featurea 35 metrictons, theRT540 Rated at40UStonsand of reachandcapacity. an idealcombination certified RT540CE provide and theEuropeanUnion- Italy, Grove’s newRT540 Built inboththeUSand World Leader or more, in2008. operations, weexpecttogrowby20%, Care, andthefurtherimprovementofour tion, thecontinueddevelopmentofCrane With strongdemand, newproductinnova- increased bynearlytwopercentagepoints. during 2007, whileoperatingmargins results. Cranesalesgrewby$1billion best useofourcombinedstrengths. ize ourglobaloperations, andmakethe computer systemtosupportandstandard- has beguntoimplementanew, centralized prise ResourcePlanningsystemteam— Cranesegment’sProject One—the Enter- have beenreducedby16%. our craneoperations, lost-timeinjuries belts” inSixSigmapractices, andacross employees havereceivedtheir “green safety. Morethan200Cranesegment improve suchfundamentalsasqualityand reduce waste. We alsohavecontinuedto principles, whichincreaseefficiency, and are continuingtoapplyleanmanufacturing for improvementacrossouroperations, we Using ourShadyGrovefacilityasthemodel And wewillcontinuetoproducereal We willcontinue to makerealprogress. Manitowoc Marine has improved its efﬁ ciency, Making It Real in Marine shortened delivery times, increased sales, and won new contracts from government and commercial customers. We’ll continue to move full speed ahead.

Real Performance Real Speed Bob Herre, President, With a skilled, experienced workforce and We perform just as well for our govern- Manitowoc Marine modern production facilities, Manitowoc ment customers. The revolutionary Littoral has become the shipbuilder of choice for Combat Ship we are now completing for complex, mid-sized government and com- the US Navy set a record for the shortest mercial projects. time between contract award and ship Much of the success we are enjoying launch. As we have worked our way up Photo to come today stems from continuous process the learning curve, we also have reduced improvements throughout the yards. We the time required to build the hundreds concentrated our commercial shipbuild- of modules that form the Improved Naval ing in our Sturgeon Bay facility, while our Lighterage System (INLS). We have been equally responsive in providing maintenance and repair services Richard Patrick O’Hern, for virtually all of the US-flagged vessels McCreary, Vice President, in the Great Lakes fleet. With their vessels Vice President, Bay Shipbuild- operating near 100% capacity, owners are Marinette ing Co. turning to us to upgrade and automate Marine operating systems and meet new en- Corporation gine emissions standards. Inside our operations, we are profit- ing from being part of a growing global organization. Joint global purchasing programs with our Crane and Foodservice businesses have reduced the cost of key commodities. We also are benefiting from Manitowoc’s leadership development and Building Freedom Marinette facility focused on complex com- other training programs. Drawing upon Marinette Marine is mercial orders and government projects. its expertise in safety helped us achieve completing FREEDOM, Six Sigma programs and new technology another year of record safety performance the nation’s ﬁ rst streamlined production and reduced costs. in 2007. Littoral Combat Ship. This 377-foot surface And both facilities, along with our Cleveland Proven performance will help us con- combatant is an agile, yard, which provides ship repair services tinue to win additional business. Tank high-speed vessel on the lower Great Lakes, improved their barges, bulk barges, and the growing designed to operate performance. demand for vessels to support offshore oil in shallow coastal All our shipyards are winning the re- drilling operations have created a strong waters. spect of their customers—and repeat backlog for commercial vessels that orders—by completing projects on or stretches into 2010. We also have orders ahead of schedule. Our Sturgeon Bay ship- for up to 250 rapid response vessels yard completed a double-hull tank barge (RB-Ms) for the Coast Guard, and we are 1 6 /2 months ahead of schedule, freeing well positioned to win additional govern- space to take on other projects. Combining ment contracts that extend 10 to 15 years our strengths, we into the future. With our history of quality delivered another workmanship and on-time performance, double-hull tank we are on the bidding list for nearly barge that joins to a every 200- to 500-foot project. 6,000-horsepower And, we’re ready to deliver. tug built by our Marinette facility. ▲ Protecting Our Environment Manitowoc is a leading builder of double-hulled tank barges that comply with the Oil Pollution Act of 1990.

17 As our customers know, the foodservice industry is challenging and competitive. Wherever they do business, our products, systems, and services can help them succeed—and help us do the same.

Real Innovation Real Benefits Innovation is the key. In an industry that is The benefits are real. First introduced in facing a time of reduced capital spending, 2003, our S-Series ice machines enjoy we are increasing our sales with products substantial energy savings over our compe- that deliver the benefits our customers are tition, and Manitowoc has more than twice looking for today. the number of models certified to meet Two of the most important industry stringent Energy Star and California Energy trends are going healthy and going green. Commission (CEC) standards than any other We are intently focused on both. Launched competitor. Our new 1470C and 1870C in 2007, our new FlexTower™ self-service ice machines are the first products in beverage dispensers offer consumers the the industry that meet CEC Tier 3 energy- choices they are looking for—up to 16 efficiency standards. Our walk-in coolers non-carbonated beverages, including juices, and freezers also meet CEC codes for insu- sports drinks, teas, and spring water. Early lation, with more than 100 models qualifying in 2008, we expanded the line with the in- for Energy Star approval. dustry’s first dispenser that offers either Large foodservice companies in particu- cubed or crushed ice. lar want to show that they are committed to protecting the environment. We can Saving Marked with a help. Manitowoc Ice offers more than 120 new EnergyMizer models of ice machines that meet or exceed Making It Real in Foodservice It Real Making logo, Manitowoc’s Tier 2 and Tier 3 criteria for efficient water wide range of ice consumption. We also have pioneered the machines, walk-ins, use of environmentally friendly insulation and reach-ins meet materials and manufacturing processes. California Energy All ice makers and bins, including those Commission energy made at our facility in China, will incorporate effi ciency standards. environmentally friendly insulating foam that Manitowoc Ice leads is free of the volatile organic compounds the industry with over 200 certifi ed, that contribute to global warming. energy-effi cient We are delivering more of the benefits models. our customers are looking for. For example, by designing products with a smaller footprint, we are helping the nation’s 145,000 convenience stores make the most profitable use of their floor and counter space. New products also use less energy and QuietQube® ice machines disperse heat and help to protect the environment. With en- noise away from busy foodservice areas. ergy costs consuming a larger share of a Manitowoc Beverage Systems has intro- restaurant’s operating budget, we are add- duced a new storage system that will ing value—and encouraging customers to accommodate more than twice as many upgrade their equipment—by offering the boxes of flavor syrup in the same amount industry’s widest range of energy-efficient of space as conventional systems. products. To highlight their performance to Innovation also helps us enter new owners and consumers, all are now identi- markets. Introduced in 2006, our award- fied with our new EnergyMizer™ logo. winning SN-12 and SN-20 ice and water dispensers helped us quickly gain a strong position in the health care market that we are now expanding with other products. We also have continued to expand our line of residential ice machines.

18 Mike Kachmer, President, Manitowoc Foodservice

Dean Landeche, Dan Brandl, Vice President Vice President Marketing, Engineering & Manitowoc Service, Foodservice Manitowoc Foodservice ▲ Consumers’ Choice The new MDH 402 ice and beverage dispenser offers consumers more choices in a smaller amount of space. Consumers have a choice of either cubed or crushed ice and up to 20 flavors of carbonated drinks, all from a single machine.

19 20 Foodservice (continued) and dinersorwaitstaff. for bothkitchenpersonnel kitchen, allowingaccess dining areasfromthe wall thatseparatesthe are ofteninstalledina pass-through refrigerators McCall Refrigeration’s Easy toWork With Real Improvement Our new Enterprise Resource Planning As we have continued to grow, we also system, which we will finish implementing have continued to improve our productiv- in 2008, will help us take the next step Today’s Tastes ity, quality, and service. Our application of forward. For the first time, we will be able Responding to changing tastes, the flow manufacturing, which allows multiple to accept orders for any of our products at new FlexTower beverage dispenser products to be produced on the same any of our business units and bill purchas- offers up to 16 fl avors of non-carbonated beverages, including teas, line, improves fill rates and delivery times, ers with a single invoice, improving our spring water, and sports drinks, in reduces inventory, and helps rationalize ability to cross-sell our products and to a compact footprint. production. We’re controlling costs by serve national and global accounts. With 120 distributors in 90 countries and a growing slate of manufacturing facilities, we are well equipped to succeed in international markets. Our 222,000 square-foot plant in China has given us a leading share of the ice machine market in the Asia/Pacific region, which is growing at double-digit rates. We are partnering with restaurant chains that are expanding throughout the region, and we’re working to develop closer ties with all of our customers. Our first annual Asia distributor conference hosted business partners from 19 countries. Innovative products, efficient operations, Chilling Performance and strong ties with customers helped Kolpak walk-in coolers and freezers all three of our foodservice product lines offer restaurant operators and food- increase revenues, earnings, and margins. service managers the features they Operating earnings for the year exceeded need to maintain profi table opera- Seven in a Row constantly analyzing the supply chain for $61 million, an increase of 9%, which tions, including energy-effi cient Based on its annual savings opportunities and by using hedging solidly outpaced the overall industry. refrigeration systems that provide readers’ poll, Food- to stabilize commodity costs. We plan to do even better in 2008. We’ll quick-cooling capability for food service Equipment & More than ever, we are organized around continue to roll out new products, while a safety. Supplies magazine our customers. Following the approach that newly created advanced engineering group named Manitowoc has been used by our Crane segment, we focuses on longer term initiatives such ice machines and have adopted a regional structure that will as developing alternative refrigerants and Kolpak walk-ins “Best in Class” for bring all of our brands closer to all of our new control mechanisms. We also intend the seventh con- markets around the world. to bolster our service. Using Crane Care as secutive year. We’re linking our operations in other a model, we will expand our programs to ways as well. A newly created engineering include such activities as coordinating the group will help ensure that all of our designs installation of our products and providing are efficient to produce and work together preventive maintenance services. At the seamlessly. same time, we will use the tools taught in our Six Sigma training programs to further improve our operations. And, we will continue to hunt for acquisitions that complement our existing product lines or help us enter new segments of the foodservice industry. Fast on the Draw Designed for quick-service restaurants, Quick Draw is a portion- controlled, rapid-dispensing soda unit that has garnered tremendous demand throughout the fast-food industry.

21 Manitowoc is in a period of exceptional growth. We are investing to meet the demands of today’s markets, while also preparing for the future.

The demand for our crane products and changes in circumstances, and limits our the growing profitability of the business exposure to currency risks and the risk of support our new investments. But we also downturns in any single market. realize that the market will not continue to We will continue to apply the cash we grow indefinitely. If our traditional markets generate to achieve the greatest returns. of North America, Europe, and Japan follow When conditions warrant it, we will make the 10-year cycle they have followed previ- additional investments in organic growth. ously, we will enjoy strong sales in those We also will pursue acquisitions in both areas until sometime around 2010. We the Crane and Foodservice segments. We believe the strength in demand projected in continually explore opportunities that will the emerging markets will mute the effect bring us new products, end markets, or of waning demand in the traditional mar- geographic regions. Our approach is highly kets, but not offset it. This expectation has discriminating, and all potential acquisitions shaped the way we have added capacity in must meet a number of criteria, including Carl J. Laurino Although all three of our the current strong demand environment. adding to our earnings per share within Senior Vice segments grew during Because our primary goal is to build two years, and adding to our economic President 2007, by far the greatest Economic Value-Added, or EVA®, we focus value within three years. & Chief Financial share of our revenues— on achieving the greatest return on invest- As our performance and investments Ofﬁ cer more than 80%—came ed capital. For that reason, we have always show, we are working to produce solid from our Crane segment. Demand for our been cautious about adding to our fixed long-term returns, across all three of our crane products was strong in virtually every costs with new infrastructure investments. businesses. Our success can be measured geographic area around the world, and en- Our goal is to balance our ability to meet in our EVA, which increased 77% in 2007 ergy and infrastructure projects are in the strong demand today with the ability to on top of a record performance in 2006. “sweet spot” of our product lines. continue to operate efficiently at a time We expect to continue our progress in 2008 Our crane production backlog has in- of more modest market demand. and increase EVA by more than 50%. We creased with demand. At the end of 2007, We are achieving that balance by in- are achieving our strategic objective of it totaled $2.9 billion, up 88% from the pre- vesting wisely. We have not just added to building real value.

Financial Review/Building Real Value Real Review/Building Financial vious year. To answer our customers’ needs our capacity, but also have worked to get we have invested in new capacity and con- the most from our current operations. We tinued to implement our ERP systems. In have eliminated production bottlenecks to fact, our capital spending increased more improve throughput; ongoing Six Sigma than we expected—to $120 million—as we initiatives have continued to reduce rework completed several crane expansion projects and waste. Global sourcing programs that ahead of schedule. leverage the scale of our operations ensure adequate supplies of key materials and help to lower costs. When we have built new capacity, we have built it efficiently. Our redevelopment of a manufacturing plant in Slovakia, for example, saved both time and money compared to a greenfield development. Opening new plants in foreign markets puts us close to customers, allows us to adapt quickly to

22 Manitowoc EVA Correlation to Market Value Sales by Region 2000 ($ Millions) EVA Market Value (Percent) $240 $7,000 The Americas Asia/Pacific 200 6,000 94% 3% 160 5,000 120 4,000 80 3,000 40 2,000 0 1,000 Europe, -40 0 Middle East and Africa EVA 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 MV 3% There is a strong correlation between Manitowoc’s period. However, those same investments began EVA and its market valuation. The investments to generate positive returns in 2004 and 2005. Sales by Region 2007 (Percent) made in the Crane segment during 2001 and Additional investments in 2006 and 2007 not 2002, combined with a downturn in the North only continued to expand our global footprint, The Americas Asia/Pacific American crane market, reduced our EVA per- but helped drive our EVA and market value to 53% 10% formance and market capitalization during that record levels in 2007.

Debt-to-Capitalization Comparison ($ Millions) (Percent) Europe, $800 80% Middle East 64.9% 69.3% 66.5% and Africa $700 70% 52.9% 37% $600 48.4% 60% 46.6% 50.4% $666 47.6% As Manitowoc has transformed itself into

$500 44.7% $592 50%

32.5% $584 a global company, it has diversified and

$400 $489 40% $493 25.7% increased its revenue streams, reduced $300 14.6% 30% its reliance on any single geographic $200 20% market, and gained new opportunities $268 $219 $100 10% to increase profitability while lowering $231 $139 $131 $112 $88 its cost of business. 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Manitowoc is well-positioned to fund acquisitions historically helped Manitowoc to delever quickly and pursue its strategic objectives. The compa- following each of its major acquisitions. Sources of Cash 2001– 2007 ny’s strong cash generation characteristics have (Percent) Other Sales of Fixed 6% Assets Cumulative Cash Flow vs. Cumulative Net Earnings 4% ($ Millions) Cash Flow Earnings Stock $1,111.1 07 Issuances $733.5 10% $872.9 06 $399.9 $578.8 Borrowings Cash from 05 $233.3 38% Operations $472.0 42% 04 $174.2 $415.1 03 $136.1 Uses of Cash 2001– 2007 $264.2 (Percent) 02 $127.5 $169.7 01 Other Dividends $88.5 4% 2% By managing its capital efficiently, Manitowoc has cash flow from operations into earnings. In 2007, consistently converted a high percentage of its this conversion rate was an impressive 143%. Debt Paydown 49%

Capital Acquisitions Expenditures 28% 17%

Over the past seven years, cash from operations and borrowings collectively provided 80% of Manitowoc’s sources of cash. Correspondingly, Manitowoc used 49% of its cash for debt paydown, 28% to make acquisitions, and 17% for capital expenditures.

23 24 Welcome to Our Form 10-K 10-K Contents qiyadCmrhnieIcm 38 34 Equity andComprehensiveIncome 36 Consolidated StatementsofStockholders’ 37 33 Consolidated StatementsofCashFlows Consolidated BalanceSheets 35 Consolidated StatementsofOperations Accounting Firm 19 Report ofIndependentRegisteredPublic 32 Data Supplementary Financial Statementsand 14 Risk Market Disclosures About 17 Quantitative andQualitative Results ofOperations Analysis ofFinancialConditionand 13 Management’s Discussionand 13 8 12 Selected FinancialData 1 Common Equity Market forRegistrant’s Vote ofSecurityHolders Submission ofMatterstoa Legal Proceedings Properties Owned Risk Factors Business Our and financialresults. We performance, management, company anditsoperations, information aboutour holders withcomprehensive mitted toprovidingshare- At Manitowoc, wearecom- its management. confident inManitowocand want shareholderstofeel value ofthecompany. We and howwearebuildingthe formance, therisksweface, factors thatdriveourper- want investorstoknowthe uiesSget 60 55 Business Segments Leases 60 Employee Benefi 51 t Plans 55 48 51 52 Restructuring andPlantConsolidation Guarantees 55 Contingencies andSignifi 54 cant Estimates Stock-Based Compensation 46 Stockholders’ Equity Earnings PerShare 48 Income Taxes Accounts ReceivableSecuritization Debt 46 Accrued Expenses 45 Accounts Payableand 45 44 39 Goodwill andOtherIntangible Assets Property, PlantandEquipment Inventories 45 Discontinued Operations Acquisitions 43 Accounting Policies 39 ofSignifiSummary cant Company andBasisofPresentation Statements 39 Notes toConsolidatedFinancial 10-K andtheproxystate- tions. ReadingtheForm audited financialpresenta- with preparingtwoseparate and expenseassociated mation andreducethetime have exactlythesameinfor- assure thatallshareholders By doingso, wehelpto Commission withthisreport. the SecuritiesandExchange the Form10-Krequiredby we haveincludedacopyof plete informationpossible, To providethemostcom- eae rnatos 70 Schedules 71 Exhibits andFinancialStatement 70 70 70 Principal Accounting FeesandServices 70 Related Transactions 70 Certain Relationshipsand Owners andManagement Security OwnershipofCertainBenefi cial 69 69 Executive Compensation of theRegistrant Directors andExecutiveOffi cers Other Information Controls andProcedures 61 Financial Disclosure Accountants on Accounting and 69 Changes InandDisagreementwith Quarterly FinancialData(Unaudited) Senior NotesDue2013 Subordinated NotesDue2012and GuarantorsofSenior Subsidiary years. progress overthepastfive readers toeasilytrackour number ofchartsthatallow We alsohaveincludeda or outsideofourindustries. it tootherbusinessesinside performance andcompare tion neededtoevaluateour ment providestheinforma- Gross Profit International Shipments Cash Gap Return on Invested Capital ($ Millions) ($ Millions) (Days) (Percent) 112.2 23.8% $2,057 $911.6 100.1 18.4% 79.9 $647.3 $1,398 68.3 65.5 58.7 $1,076 $421.9 $863 9.0% $375.7 8.1% $668 $316.7 $311.4 7.0% 5.3% $444 02 03 04 05 06 07 02 03 04 05 06 07 02 03 04 05 06 07 02 03 04 05 06 07 For the 14th consecutive year, Manitowoc’s In 2007, Manitowoc generated 52% Manitowoc’s cash gap, which is a mea- The benefi ts of two strategic crane gross profi t reached record levels. In 2007, of its revenues outside of the United sure tracking working capital effi ciency, acquisitions, coupled with robust global gross profi t increased by more than $264 States. This level of global performance has consistently improved in each of demand for our Crane products, helped million over 2006, to $911.6 million. was driven by acquisitions, the success the past fi ve years. boost Manitowoc’s return on invested of capacity expansion initiatives, and our capital to 23.8% in 2007. ability to serve customers in multiple emerging market economies.

SG&A as a Percent of Sales Capital Expenditures Research & Development Sales per Employee (Percent) ($ Millions) ($ Millions) ($ Thousands) $36.1 16.6% $119.6 $383.0 15.0% $31.2 14.4% $308.8 12.5% $26.0 $281.8 11.6% $242.8 $21.2 10.0% $67.6 $17.4 $190.7 $54.9 $160.7 $43.2 $9.7 $32.3 $31.7 02 03 04 05 06 07 02 03 04 05 06 07 02 03 04 05 06 07 02 03 04 05 06 07 Record revenue and efﬁ ciencies gained Manitowoc’s capital expenditures grew Innovative products increase sales, ex- Manitowoc’s efﬁ cient operations and by cross-selling our products in new to $119.6 million in 2007, primarily to pand markets, and boost market shares. adoption of Lean Manufacturing and markets have reduced this metric to support its capacity expansion initiatives In 2007, Manitowoc invested $36.1 Six Sigma methodologies have gener- the lowest level in more than a decade. for the Crane segment as well as sup- million in research and development, ated continued improvement in sales SG&A decreased by 160 basis points to porting the ongoing development and which resulted in 16 new crane products per employee, which now stands at 10.0% in 2007. deployment of ERP systems in Cranes and 30 new foodservice products. $383,000 per employee. and Foodservice. The company expects that capital expenditures in 2008 will total approximately $120 million.

25 26 Selected Glossary Terms Financial Terms outstanding. plus inventorydayslessaccountspayable equal toaccountsreceivabledayssalesoutstanding Cash Gap make acquisitions. repay debt,paydividends,repurchasestock,and operate thebusiness,makecapitalinvestments, Cash Flow of shares. multiplying thestockpricetimesnumber a company’soutstandingstockcalculatedby Capitalization equipment. physical assetsincludingproperty,plant,and Capital Expenditure most oftenshownonaper-sharebasis. Book Value future sales. Backlog I normally areunderwater. dry socrewscanworkonthosepartsofashipthat It isfl ooded soshipscanfl oat in;thenitispumped dock isequippedwithpumpsandwatertightgates. in whichshipscanbebuiltorrepaired.Agraving Graving Dock a compact, countertopunit. upto16non-carbonatedbeveragesfrom can serve FlexTower waters. of crudeoilandrefi ned petroleumproductsinUS OPA-90 regulationstoassurethesafetransport powered vesseldesignedandbuilttocomplywith Double-hull TankBarge crane topick-and-carryvirtuallyanyratedload. reduces ground-bearingpressuresandenablesthe truck chassis.Thismethodofmountingsignifi cantly cranes thataremountedoncrawlersratherthana Crawler Crane cargo deck. up toseveralthousandpoundsofpayloadonits truck differsfromacranebecauseitcanhaul mounted toacommercialtruckchassis.Aboom Boom Truck tug. barge thatispushedbyahigh-horsepowerdiesel transportation thatcombinesanon-powerednotch Articulated Tug/Barge enhance performance,mobility,androadability. ATs usuallyfeaturemultiplesteeringaxlesto travel athighwayspeedfromprojecttoproject. telescopic crane,alsoknownasanAT,thatcan All-terrain Crane ndustry Terms —Firm, unfi—Firm, lled orders.Anindicatorof —A working capital measure that is workingcapitalmeasurethatis —A —Funds generated by a company to generatedbyacompanyto —Funds —An innovativebeveragedispenserthat —An —Another term for shareholder equity, termforshareholderequity, —Another —A hydraulictelescopiccrane —A —The total market value of totalmarketvalueof —The —An in-groundconcretestructure —An —Usually referstolattice-boom —Usually —A high-capacity,hydraulic —A —Funds used to purchase usedtopurchase —Funds —A formofbulk-cargo —A —A twin-hulled,non- —A evaluate acquisitionopportunities. making, toincentivizemanagement,and to evaluateitsperformance,drivedecision- the capitalcharge.Manitowocusesthismeasure cases, after-taxoperatingprofi ts) andsubtracting culated bytakingoperatingprofi ts (andincertain depleting valueforitsshareholders.EVAiscal- measure todetermineifacompanyiscreatingor EVA less thanorequaltobasicearningspershare. stock options.Dilutedearningspersharearealways exercise ofallpotentiallydilutivesecuritiessuchas shares outstanding,includingtheassumptionof stockholders (netincome)bytheweightedaverage dividing thereportedearningsavailabletocommon Earnings perShare(diluted) shares outstanding. stockholders (netincome)bytheweightedaverage dividing thereportedearningsavailabletocommon Earnings perShare(basic) the ratiooflong-termdebttototalcapitalization. Debt toCap liabilities, anindicatorofliquidity. Current Ratio tax costofequityandborrowedfunds. Cost ofCapital at highwayspeed. confi gurations, rough-terraincranescannottravel its outriggers.Becauseoftheirsizeandchassis to pick-and-carryloadswithoutneedingdeploy mounted onoversizedtiresandhasthecapability telescopic crane,alsoknownasanRT,thatis Rough-terrain Crane restaurantapplications. quick-service carbonated beveragedispenserthat'sidealfor Quick Draw double-hull tonnageby2015. waters mustbeconvertedorreplacedbynew crude oilorrefi ned petroleumproductsinUS 1990, whichmandatesthatvesselstransporting OPA-90 (coastal water)deployment. capabilities inamid-sizedhullformforlittoral vessels thatprovideshigh-speed,multi-mission Littoral CombatShip to theintendedlocation,indesiredcondition. delivered intherightamounts,atcorrecttime, The productsofaleanenterprisearecreatedand Lean systemsarecustomerfocusedanddriven. that donotaddvaluetoaproductorservice. focused oneliminatinganyitemsorprocedures Lean Manufacturing booms ofsimilarlengths. provide higherliftingcapacitiesthantelescopic lacings. Latticeboomstypicallyweighlessand structure thatusuallyhasfourchordsandtubular Lattice Boom stores. restaurants, movietheatres,andconvenience self-service applicationssuchasquick-service appliance thatdispensesiceandsoftdrinksfor Ice/Beverage Dispenser ® (EconomicValue-Added) —An acronymfortheOilPollution Act of —An —An indicatoroffi—An nancial leverage; —Current assets divided by current assetsdividedbycurrent —Current —A fast-fi—A ll, portion-controlled —A weightedaverageoftheafter- —A —A fabricated,high-strengthsteel —A —A processphilosophy —A —A dual-axle,hydraulic —A —A newclassofnaval —A —A foodservice —A —Calculated by by —Calculated —Calculated by by —Calculated —A fi—A nancial appreciation. cludes anydividendsorinterestaswellprice Total Return its assets. an indicatorofhoweffi ciently thecompanyemploys after-tax operatingprofi t dividedbyinvestedcapital, Return onInvestedCapital earned ontheshareholder’sinvestment. holders’ equity,ameasurementoftheamount Return onEquity relative toitstotalassets. assets, anindicatorofhowprofi table acompanyis Return onAssets viously performedwithinthecompany. to provideaserviceorfunctionthathadbeenpre- Outsourcing Tower Crane hydraulic ormechanicalmeans. extended orretractedtoadesiredlength,using sisting ofmultipletelescopicsectionsthatare Telescopic Boom improving theprocesstosustainimprovements. reduce thenumberofdefectswhilecontrollingand steps, thenidentifi es therootcausesofproblemsto customer requirementsintoaseriesofprocess a systematicstatisticalmethodthatbreaksdown on productandserviceexcellence.SixSigmais Six Sigma equipment. or limestone,withoutrequiringdocksideassist to offl oad theirbulkcargoes,suchasironore,coal, discharge booms.Thisequipmentenablesvessels equipped withcargo-holdconveyorsandlattice of shipsoperatingontheGreatLakesthatare Self-unloading Vessel preparation. longer termstorageoffoodserviceitemspriorto be equippedwithcoolingorfreezingsystemsfor structure, frequentlyusedinrestaurants,thatcan Walk-in construction, high-rise,andinfrastructureprojects. fi gurations andarecommonlyusedoncommercial available intop-slewingandself-erectingcon- fi xed-length horizontaljib.Towercranesare that featureavariable-lengthverticalmastand —A large,foamed-in-place,refrigerated —Contracting with an outside supplier withanoutsidesupplier —Contracting —Return on an investment that in- onaninvestmentthatin- —Return —A disciplinedmethodologyfocused —Refers tothecategoryofcranes —Net earnings divided by stock- earningsdividedbystock- —Net —Net earnings divided by total earningsdividedbytotal —Net —A box-sectionboom,con- —Refers tothefl eet —A measurement of measurementof —A Merrill Corp - The Manitowoc Company_ Inc. 10-K-A Print Version | jcarlso | 10-Apr-08 11:06 | 08-10279-2.aa | Sequence: 1 CHKSUM Content: 10219 Layout: 3193 Graphics: 59296 CLEAN

United States Securities and Exchange Commission Washington, D.C. 20549 FORM 10-K Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the fiscal year ended December 31, 2007 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 of incorporation) (I.R.S. Employer Identification Number) 2400 South 44th Street, Manitowoc, Wisconsin 54221-0066 (Address of principal executive offices) (Zip Code) (920) 684-4410 (Registrant’s telephone number, including area code)

Securities Registered Pursuant to Section 12(b) of the Act:

(Title of Each Class) Common Stock Purchase Rights Name of Each Exchange on Which Registered Common Stock, $.01 Par Value New York Stock Exchange

Securities Registered Pursuant to Section 12(g) of the Act: Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the securities Act. Yes No Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Act. Yes No 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 if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. Large accelerated filer Accelerated filer Non-accelerated filer Smaller reporting company (Do not check if a smaller reporting company) Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No The Aggregate Market Value on June 29, 2007, of the registrant’s Common Stock held by non-affiliates of the registrant was $5,041,962,259 based on the closing per share price of $40.19 on that date. The number of shares outstanding of the registrant’s Common Stock as of January 31, 2008, the most recent practicable date, was 129,864,334. DOCUMENTS INCORPORATED BY REFERENCE Portions of the registrant’s Proxy Statement, to be prepared and filed for the annual Meeting of Shareholders, dated March 26, 2008 (the “2008 Proxy Statement”), are incorporated by reference in Part III of this report. See Index to Exhibits immediately following the signature page of this report, which is incorporated herein by reference.

JOB: 08-10279-2 CYCLE#;BL#: 1; 0 TRIM: 8.5" x 11" COMPOSITE COLORS: Black, ~note-color 2 GRAPHICS: box.eps, check box.eps, manitowoc_k_logo.eps V1.5 Merrill Corp - The Manitowoc Company_ Inc. 10-K-A Print Version | jcarlso | 10-Apr-08 11:06 | 08-10279-2.ba | Sequence: 1 CHKSUM Content: 33128 Layout: 14480 Graphics: No Graphics CLEAN

since 1982. On January 3, 2007, we acquired the Carrydeck PART I line of mobile industrial cranes from Marine Travelift, Inc. of Sturgeon Bay, Wisconsin. The acquisition of the carrydeck ITEM 1. BUSINESS line adds six new models to the company’s product offering General of mobile industrial cranes. Founded in 1902, we are a diversified industrial manufac- Our Foodservice business is a leading broad-line manufacturer in three principal markets: Cranes and Related Prod- turer of “cold side” commercial foodservice products. We ucts (Crane); Foodservice Equipment (Foodservice) and design, manufacture and market full product lines of ice Marine. We have over a 100-year tradition of providing high- making machines, walk-in and reach-in refrigerators and quality, customer-focused products and support services to freezers, fountain beverage delivery systems and other food- our markets worldwide. For the year ended December 31, service refrigeration products for the lodging, restaurant, 2007 we had net sales of approximately $4.0 billion. healthcare, convenience store, soft-drink bottling, and insti- Our Crane business is a global provider of engineered lift tutional foodservice markets. Our Foodservice products are solutions, offering one of the broadest lines of lifting equip- marketed under the Manitowoc, SerVend, Multiplex, Kolpak, ment in our industry. We design, manufacture, market, and Harford-Duracool, McCall, McCann’s, Koolaire, Flomatic, support a comprehensive line of crawler cranes, mobile tele- Kyees, RDI, and other brand names. scopic cranes, tower cranes, and boom trucks. Our Crane Our Marine segment provides new construction (commer- products are marketed under the Manitowoc, Grove, Potain, cial/government), ship repair and maintenance services for National, and Crane CARE brand names and are used in a freshwater and saltwater vessels from two shipyards and wide variety of applications, including energy, petrochemical one top-side repair yard on the U.S. Great Lakes. Our Marine and industrial projects, infrastructure development such as segment serves the Great Lakes maritime market consisting road, bridge and airport construction, commercial and high- of U.S. and Canadian fleets, inland waterway operators, and rise residential construction, mining and dredging. ocean going vessels that transit the Great Lakes and St. On July 19, 2007, we acquired Shirke Construction Equip- Lawrence Seaways. ments Pvt. Ltd (Shirke). Headquartered in Pune, India, Shirke Our principal executive offices are located at 2400 South is a market leader in the Indian tower crane industry and has 44th Street, Manitowoc, Wisconsin 54220. been Potain’s Indian manufacturing partner and distributor

The Manitowoc Company, Inc. — 2007 Form 10-K 1

JOB: 08-10279-2 CYCLE#;BL#: 1; 0 TRIM: 8.5" x 11" COMPOSITE COLORS: Black, PANTONE Process Blue U, ~note-color 2 GRAPHICS: none V1.5 Merrill Corp - The Manitowoc Company_ Inc. 10-K-A Print Version | jcarlso | 10-Apr-08 11:06 | 08-10279-2.ba | Sequence: 2 CHKSUM Content: 19934 Layout: 61054 Graphics: No Graphics CLEAN

Financial Information About Business Segments overhead, amortization expense of intangible assets with The following is financial information about the Crane, definite lives, interest expense, and income tax expense. The Foodservice and Marine segments for the years ended company evaluates segment performance based upon profit December 31, 2007, 2006 and 2005. The accounting policies and loss before the aforementioned expenses. Restructuring of the segments are the same as those described in the costs separately identified in the Consolidated Statements of summary of significant accounting policies of the Notes to Operations are included as reductions to the respective the Consolidated Financial Statements included in Item 8 of segment’s operating earnings for each year below. Amounts this Form 10-K, except that certain expenses are not allocated are shown in millions of dollars. to the segments. These unallocated expenses are corporate

2007 2006 2005 Net sales from continuing operations: Crane $3,245.7 $2,235.4 $1,628.7 Foodservice 438.3 415.4 399.6 Marine 321.0 282.5 225.8 Total $4,005.0 $2,933.3 $2,254.1 Operating earnings (loss) from continuing operations: Crane $ 470.5 $ 280.6 $ 115.5 Foodservice 61.3 56.2 54.9 Marine 26.1 11.3 (9.2) Corporate (48.2) (42.4) (24.8) Amortization expense (5.8) (3.3) (3.1) Gain on sale of parts line 3.3—— Pension settlements (5.3) — — Operating earnings from continuing operations $ 501.9 $ 302.4 $ 133.3 Capital expenditures: Crane $ 103.7 $ 51.3 $ 32.9 Foodservice 3.7 10.9 16.9 Marine 6.8 3.1 4.1 Corporate 5.4 2.3 1.0 Total $ 119.6 $ 67.6 $ 54.9 Total assets: Crane $1,958.1 $1,572.4 $1,224.7 Foodservice 341.5 340.1 313.2 Marine 123.1 120.9 123.3 Corporate 446.0 186.1 300.6 Total $2,868.7 $2,219.5 $1,961.8

2 The Manitowoc Company, Inc. — 2007 Form 10-K

JOB: 08-10279-2 CYCLE#;BL#: 1; 0 TRIM: 8.5" x 11" COMPOSITE COLORS: Black, PANTONE Process Blue U, ~note-color 2 GRAPHICS: none V1.5 Merrill Corp - The Manitowoc Company_ Inc. 10-K-A Print Version | jcarlso | 10-Apr-08 11:06 | 08-10279-2.ba | Sequence: 3 CHKSUM Content: 52745 Layout: 3389 Graphics: No Graphics CLEAN

Products and Services We sell our products categorized in the following business segments:

Percentage of Business Segment 2007 Net Sales Key Products Key Brands Cranes and Related 81% Lattice-boom Cranes: which include crawler and truck mounted lattice- Manitowoc Products boom cranes, and crawler crane attachments; Tower Cranes: which include Potain top slewing luffing jib, topless, and self-erecting tower cranes; Mobile Grove Telescopic Cranes: including rough terrain, all-terrain, truck mounted and National industrial cranes; Boom Trucks: which include telescopic and articulated Crane Care boom trucks; Parts and Service: which include replacement parts, product services, crane rebuilding and remanufacturing services.

Foodservice Equipment 11% Ice-cube machines, ice flakers, and storage bins; ice/beverage dispensers; Manitowoc long-draw soft-drink and beer dispensing systems; walk-in refrigerators and Servend freezers; reach-in refrigerators and freezers; refrigerated under-counters Multiplex and food prep tables; post-mix beverage dispensing valves; cast aluminum Kolpak cold plates; carbonator tanks; compressor racks and modular refrigeration Harford-Duracool systems; backroom beverage equipment distribution McCall McCann’s Koolaire Flomatic Kyees RDI Marine 8% New construction services for commercial, government, and military vessels of all varieties, including research vessels, ice breakers, ferries, patrol boats, self-unloading bulk carriers, double-hull tank barges, articulated tug/barges (AT/B units) and dredges; military vessels; inspection, maintenance and repair of freshwater and saltwater vessels.

Cranes and Related Products base which is either crawler or truck mounted. Lattice- Our Crane segment designs, manufactures and distributes a boom cranes weigh less and provide higher lifting diversified line of crawler and truck mounted lattice-boom capacities than a telescopic boom of similar length. The cranes, which we sell under the “Manitowoc” name. Our lattice-boom cranes are the only category of crane that can Crane segment also designs and manufactures a diversified pick and move simultaneously. The lattice-boom sections, line of top slewing and self erecting tower cranes, which we together with the crane base, are transported to and sell under the “Potain” name. We design and manufacture erected at a project site. mobile telescopic cranes which we sell under the “Grove” We currently offer models of lattice-boom cranes with lift- name and design and manufacture a comprehensive line of ing capacities up to 1,433 U.S. tons, which are used to lift hydraulically powered telescopic and articulated boom trucks, material and equipment in a wide variety of applications and which we sell under the “National Crane” brand name. We end markets, including heavy construction, bridge and high- also provide crane product parts and services, and crane way, duty cycle and infrastructure and energy related proj- rebuilding and remanufacturing services which are delivered ects. These cranes are also used by the crane rental under the “Crane CARE” brand name. In some cases our industry, which serves all of the above end markets. products are manufactured for us or distributed for us under Lattice-boom crawler cranes may be classified according strategic alliances. Our crane products are used in a wide vari- to their lift capacity — low capacity and high capacity. Low ety of applications throughout the world, including energy and capacity crawler cranes with 150-U.S. ton capacity or less utilities, petrochemical and industrial projects, infrastructure are often utilized for general construction and duty cycle development such as road, bridge and airport construction, applications. High capacity crawler cranes with greater than commercial and high-rise residential construction, mining and 150-ton capacity are utilized to lift materials in a wide variety dredging. Many of our customers purchase one or more of applications and are often utilized in heavy construction, crane(s) together with several attachments to permit use of energy-related, stadium construction, petrochemical work, the crane in a broader range of lifting applications and other and dockside applications. We offer six low-capacity models operations. Our largest crane model combined with available and eight high-capacity models. options has a lifting capacity up to 1,433 U.S. tons. We also offer our lattice-boom crawler crane customers various attachments that provide our cranes with greater capac- Lattice-boom Cranes. Under the Manitowoc brand ity in terms of height, movement and lifting. Our principal name we design, manufacture and distribute lattice-boom attachments are: MAX-ER™ attachment, luffing jibs, and crawler cranes. Lattice-boom cranes consist of a lattice- RINGER™ attachments. The MAX-ER is a trailing, counter- boom, which is a fabricated, high-strength steel structure weight, heavy-lift attachment that dramatically improves the that has four chords and tubular lacings, mounted on a reach, capacity and lift dynamics of the basic crane to which it

The Manitowoc Company, Inc. — 2007 Form 10-K 3

JOB: 08-10279-2 CYCLE#;BL#: 1; 0 TRIM: 8.5" x 11" COMPOSITE COLORS: Black, PANTONE Process Blue U, ~note-color 2 GRAPHICS: none V1.5 Merrill Corp - The Manitowoc Company_ Inc. 10-K-A Print Version | jcarlso | 10-Apr-08 11:06 | 08-10279-2.ba | Sequence: 4 CHKSUM Content: 1601 Layout: 61988 Graphics: No Graphics CLEAN

is mounted. It can be transferred between cranes of the same Self-erecting tower cranes are mounted on axles or trans- model for maximum economy and occupies less space than ported on a trailer. The lower segment of the range (Igo competitive heavy-lift systems. A luffing jib is a fabricated cranes up to Igo36) unfolds in four sections, two for the structure similar to, but smaller than, a lattice-boom. Mounted tower and two for the jib. The smallest of our models unfolds at the tip of a lattice-boom, a luffing jib easily adjusts its angle in less than 8 minutes; larger models erect in a few hours. of operation permitting one crane with a luffing jib to make Self erecting cranes rotate from the bottom of their mast. We lifts at additional locations on the project site. It can be trans- offer 25 models of self erecting cranes with maximum jib ferred between cranes of the same model to maximize utiliza- lengths of 50 meters and lifting capacities ranging between tion. A RINGER attachment is a high-capacity lift attachment 10 and 120 meter-tons which are utilized primarily in low to that distributes load reactions over a large area to minimize medium rise construction and residential applications. ground-bearing pressure. It can also be more economical than transporting and setting up a larger crane. Mobile Telescopic Cranes. Under the Grove brand name we design and manufacture 35 models of mobile telescopic Tower Cranes. Under the Potain brand name we design and cranes utilized primarily in industrial, commercial and con- manufacture tower cranes utilized primarily in the building struction applications, as well as in maintenance applica- and construction industry. Tower cranes offer the ability to tions to lift and move material at job sites. Mobile telescopic lift and distribute material at the point of use more quickly cranes consist of a telescopic boom mounted on a wheeled and accurately than other types of lifting machinery without carrier. Mobile telescopic cranes are similar to lattice-boom utilizing substantial square footage on the ground. Tower cranes in that they are designed to lift heavy loads using a cranes include a stationary vertical tower and a horizontal jib mobile carrier as a platform, enabling the crane to move on with a counterweight, which is placed near the vertical and around a job site without typically having to re-erect the tower. A cable runs through a trolley which is on the jib, crane for each particular job. Additionally, many mobile tele- enabling the load to move along the jib. The jib rotates 360 scopic cranes have the ability to drive between sites, and degrees, thus increasing the crane’s work area. Unless some are permitted on public roadways. We currently offer using a remote control device, operators occupy a cabin, the following four types of mobile telescopic cranes capable located where the jib and tower meet, which provides supe- of reaching tip heights of 427 feet with lifting capacities up rior visibility above the worksite. We offer a complete line of to 550 tons: (i) rough terrain, (ii) all-terrain, (iii) truck tower crane products, including top slewing, luffing jib, top- mounted, and (iv) industrial. less, self-erecting, and special cranes for dams, harbors and Rough terrain cranes are designed to lift materials and other large building projects. Top slewing cranes are the most equipment on rough or uneven terrain. These cranes cannot traditional form of tower cranes. Self-erecting cranes are bot- be driven on public roadways, and, accordingly, must be tom slewing cranes which have counterweight located at the transported by truck to a work site. We produce, under the bottom of the tower and are able to be erected, used and dis- Grove brand name, 10 models of rough terrain cranes capa- mantled on job sites without assist cranes. ble of tip heights of up to 279 feet and maximum load Top slewing tower cranes have a tower and multi-sectioned capacities of up to 130 U.S. tons. horizontal jib. These cranes rotate from the top of their mast All-terrain cranes are versatile cranes designed to lift and can increase in height with the project. Top slewing cranes materials and equipment on rough or uneven terrain and yet are transported in separate pieces and assembled at the con- are highly maneuverable and capable of highway speeds. struction site in one to three days depending on the height. We produce, under the Grove brand name, 14 models of all- We offer 37 models of top slewing tower cranes with maxi- terrain cranes capable of tip heights of up to 427 feet and mum jib lengths of 85 meters and lifting capabilities ranging maximum load capacities of up to 550 tons. between 40 and 3,600 meter-tons. These cranes are generally Truck mounted cranes are designed to provide simple set- sold to medium to large building and construction groups, as up and long reach high capacity booms and are capable of well as rental companies. traveling from site to site at highway speeds. These cranes Topless tower cranes are a type of top slewing crane and, are suitable for urban and suburban uses. We produce, unlike all others, have no cathead or jib tie-bars on the top of under the Grove brand name, 4 models of truck mounted the mast. The cranes are utilized primarily when overhead cranes capable of tip heights of up to 237 feet and maxi- height is constrained or in situations where several cranes are mum load capacities of up to 90 U.S. tons. installed close together. We currently offer 7 models of top- Industrial cranes are designed primarily for plant mainte- less tower cranes with maximum jib lengths of 75 meters and nance, storage yard and material handling jobs. We distrib- lifting capabilities ranging between 90 and 300 meter-tons. ute, under the Grove brand name, 8 models of industrial Luffing jib tower cranes, which are a type of top slewing cranes capable of tip heights of up to 92 feet and maximum crane, have an angled rather than horizontal jib. Unlike other load capacities of up to 22 tons. tower cranes which have a trolley that controls the lateral movement of the load, luffing jib cranes move their load by High Reach Telescopic Hydraulic Cranes. We launched a changing the angle of the jib. The cranes are utilized prima- new crane concept in 2007 for heavy lifts that require a high rily in urban areas where space is constrained or in situa- reach, but with minimal ground space and greatly reduced tions where several cranes are installed close together. We erection time. The GTK 1100 is a high reach telescopic currently offer 7 models of luffing jib tower cranes with max- hydraulic crane that can lift a 77 ton load up to 394 feet, only imum jib lengths of 60 meters and lifting capabilities ranging requires about six hours to erect and is based on a combina- between 90 and 600 meter-tons. tion of mobile crane and tower crane technology.

4 The Manitowoc Company, Inc. — 2007 Form 10-K

JOB: 08-10279-2 CYCLE#;BL#: 1; 0 TRIM: 8.5" x 11" COMPOSITE COLORS: Black, PANTONE Process Blue U, ~note-color 2 GRAPHICS: none V1.5 Merrill Corp - The Manitowoc Company_ Inc. 10-K-A Print Version | jcarlso | 10-Apr-08 11:06 | 08-10279-2.ba | Sequence: 5 CHKSUM Content: 18638 Layout: 34583 Graphics: No Graphics CLEAN

Boom Trucks. We offer our hydraulic and articulated boom non-CVD units and produce more ice in a smaller footprint. truck products under the National Crane product line. A These QuietQube machines are ideally suited for use in new boom truck is a hydraulically powered telescopic crane or restaurants, which often feature more open designs, and for articulated crane mounted on a truck chassis. Telescopic use with the self-service beverage systems increasingly boom trucks are used primarily for lifting material on a job found in quick service restaurants and convenience stores. site, while articulated boom trucks are utilized primarily to Our ice machines are sold throughout North America, load and unload truck beds at a job site. We currently offer, Europe and Asia. under the National Crane brand name 15 models of tele- scoping cranes and 8 models of articulating cranes. The Walk-in Refrigerators and Freezers. We manufacture under largest capacity cranes of these types are capable of reach- the brand names Kolpak and Harford-Duracool. Products ing maximum heights of 176 feet and have lifting capacity include modular and fully assembled walk-in refrigerators, up to 40 U.S. tons. coolers and freezers for restaurants, institutions, commis- saries and convenience stores. Walk-in refrigerators and Backlog. The year-end backlog of crane products includes freezers are large, insulated storage spaces fitted with refrig- accepted orders that have been placed on a production eration systems. Most walk-ins are custom-made from mod- schedule that we expect to be shipped and billed during the ular insulated panels constructed with steel or aluminum next year. Manitowoc’s backlog of unfilled orders for the exteriors and foamed-in-place urethane insulation. Refrigera- Crane segment at December 31, 2007 was $2,877.2 million, tor/blower units are installed in order to maintain an even as compared with $1,534.3 million at December 31, 2006. temperature throughout the refrigerated space. Walk-ins come in many models with various types of doors, interior Foodservice Equipment shelving, and viewing windows. We also produce a com- Our Foodservice segment designs, manufactures and mar- plete line of express or pre-assembled walk-ins. kets ice-cube and flaker machines and storage bins; walk-in refrigerators and freezers; reach-in refrigerators and freez- Reach-in Refrigerators and Freezers. Reach-in refrigerators ers; refrigerated undercounter and food preparation tables; and freezers are typically constructed from stainless steel ice/beverage dispensers; post-mix beverage dispensing and have a thick layer of insulation in the walls, doors and valves; cast aluminum cold plates; carbonator tanks; long- floor. The cabinets have one to three doors, made of either draw beer dispensing systems; compressor racks and mod- glass or steel, and come in a variety of sizes with storage ular refrigeration systems; and backroom beverage capabilities up to 72 cubic feet. Although reach-ins resemble equipment distribution services. Products are sold under the household refrigerators, commercial versions utilize few brand names Manitowoc, SerVend, Multiplex, Kolpak, plastic parts, incorporate larger compressor units and do not Harford-Duracool, McCall, McCann’s, Koolaire, Flomatic, usually combine refrigerator and freezer compartments in the Kyees, RDI, and other brand names. same unit. These design features stem from the heavy duty usage needs of most reach-ins by customers. For example, Ice-Cube Machines, Ice Flaker Machines and Storage Bins. in contrast to the typical household refrigerator, commercial Ice machines are classified as either self-contained or modu- reach-ins may be opened and closed hundreds of times per lar machines and can be further classified by size, capacity day, placing mechanical strain on the structure and greatly and the type of ice they produce. There are two basic types increasing the cooling load on the refrigeration system. of ice made by ice machines: cubes and flakes. Machines We market these products under our McCall, Kolpak, and that make ice cubes, the most popular type of machine, are Koolaire brand names. We offer over 100 self-contained used by the foodservice industry for drinks, ice displays and upright and under-counter refrigeration equipment units, salad bars. Flake ice is used to a great extent in processing including a full line of reach-ins and refrigerated food prepara- applications, such as keeping meats and seafood fresh, as tion equipment for restaurants, institutions and commis- well as in medical facilities for use in ice packs. saries. We also manufacture custom-built units for select We manufacture 26 models of ice machines under the national chain restaurants. Manitowoc brand name, serving the foodservice, convenience store, healthcare, restaurant and lodging markets. Our Beverage Dispensers and Other Products. We produce ice machines make ice in cube and flake form, and range in beverage dispensers, ice/beverage dispensers, post-mix daily production capacities from 45 to over 2000 pounds. dispensing valves and cast aluminum cold plates and related The ice-cube machines are either self-contained units, which equipment for use by quick service restaurants, convenience make and store ice, or modular units, which make, but do stores, bottling operations, movie theaters, and the soft- not store ice. We offer the world’s only commercial ice mak- drink industry. Ice/beverage dispensers include traditional ing machines with patented cleaning and sanitizing technol- combination ice/beverage dispensers, drop-in dispensers ogy. This feature eliminates the downtime and labor costs and electric countertop units. Dispensing systems are manu- associated with periodic cleaning of the water distribution factured for the dispensing of soda, juice, water, beer and system. All units feature patented technology with environ- other specialty drinks. Soda systems include remote sys- mentally friendly hydrofluorocarbon refrigerants and foam tems that produce cold carbonated water and chill incoming insulation. We also manufacture the patented QuietQube water and syrup prior to delivery to dispensing towers. Beer ice-cube machines, which feature CVD, or cool vapor systems offer technically advanced remote beer delivery defrost, technology, operate heat-free, are 75% quieter than systems which are superior by design, allow increased

The Manitowoc Company, Inc. — 2007 Form 10-K 5

JOB: 08-10279-2 CYCLE#;BL#: 1; 0 TRIM: 8.5" x 11" COMPOSITE COLORS: Black, PANTONE Process Blue U, ~note-color 2 GRAPHICS: none V1.5 Merrill Corp - The Manitowoc Company_ Inc. 10-K-A Print Version | jcarlso | 10-Apr-08 11:06 | 08-10279-2.ba | Sequence: 6 CHKSUM Content: 35691 Layout: 31724 Graphics: No Graphics CLEAN

yields, provide better under-bar space utilization and allow Cleveland, Ohio. Cleveland Shiprepair Company specializes multiple stations to operate from one central unit. in all types of voyage and topside marine repair. We are also a systems integrator with nationwide distribution of beverage dispensing and backroom equipment and Backlog. The year-end backlog for our Marine segment support system components. MBS serves the needs of major includes new project work to be completed over a series of beverage and bottler customers, restaurants, convenience years and repair and maintenance work presently scheduled stores and other outlets and provides our customers with one which will be completed in the next year. At December 31, point of contact for their beverage dispenser and backroom 2007, the backlog for our Marine segment approximated equipment needs. It operates throughout the United States, $333.1 million, compared to $421.6 million one year ago. with distribution facilities in California and Virginia. The backlog is primarily made up of new vessel construction Our subsidiary McCann’s Engineering & Mfg. Co. projects and does not include options for additional vessels, (McCann’s) is engaged in the design, manufacture and sale yet to be awarded. of beverage dispensing equipment primarily used in fast food restaurants, stadiums, cafeterias and convenience Raw Materials and Supplies stores. McCann’s primary products are backroom beverage The primary raw materials that we use are structural and equipment such as carbonators, water boosters and racks. rolled steel, aluminum, and copper, which is purchased from McCann’s also produces accessory components for bever- various domestic and international sources. We also pur- age dispensers including specialty valves, stands and other chase engines and electrical equipment and other semi- and stainless steel components. fully-processed materials. Our policy is to maintain, wherever possible, alternate sources of supply for our important Backlog. The backlog for unfilled orders for our Foodservice materials and parts. We maintain inventories of steel and segment at December 31, 2007 and 2006 was not significant other purchased material. We have been successful in our because orders are generally filled within 24 to 48 hours. goal to maintain alternative sources of raw materials and supplies, and therefore are not dependent on a single Marine source for any particular raw material or supply. We operate two shipyards located in Marinette, Wisconsin and Sturgeon Bay, Wisconsin; and one top-side repair yard Patents, Trademarks, and Licenses located in Cleveland, Ohio. We hold numerous patents pertaining to our crane and foodservice products, and have presently pending applications Marinette, Wisconsin. Marinette Marine Corporation for additional patents in the United States and foreign coun- (Marinette) was founded along the Menominee River in tries. In addition, we have various registered and unregis- Marinette, Wisconsin in 1942 to meet America’s growing tered trademarks and licenses that are of material need for naval construction. Since its first contract to build importance to our business and believe our ownership of five wooden barges, Marinette has built more than 1,300 this intellectual property is adequately protected in custom- vessels. Marinette is a full service shipyard with in-house ary fashions under applicable law. No single patent, trade- capabilities to design and construct the most complex mili- mark or license is critical to our overall business. tary and commercial vessels. The Marinette facility has 300,000 square feet of heated indoor production area, Seasonality 53,000 square feet of secure indoor warehouse and receiv- Typically, the second and third quarters represent our best ing area, a 4,500 long ton certified ship launch ways and a quarters for our consolidated financial results. In our Crane 1,600 ton ship transport system. These features of the segment, summer represents the main construction sea- Marinette facility allow the vessels to be constructed and son. Customers require new machines, parts, and service outfitted completely indoors. When ready for launching, during that season. Since the summer brings warmer they are moved outdoors. Typically, vessels are significantly weather, there is also an increase in the use and replace- material and labor complete when launched which allows ment of ice machines, as well as new construction and for high quality of finished product and greater manufactur- remodeling within the foodservice industry. As a result, dis- ing efficiency. tributors build inventories during the second quarter for the increased demand. More recently, due to the strengthening Sturgeon Bay, Wisconsin. Located in Sturgeon Bay, Wis- end markets for our Crane segment, the traditional season- consin, Bay Shipbuilding Co. (Sturgeon Bay) is an industry ality has been slightly muted due to strong cyclical demand, leader in the construction of Oil Pollution Act (OPA) ‘90 as well as more diversified product and geographic end double-hulled tank vessels, articulated tug and barge (AT/B) markets. In our Marine segment, the Great Lakes shipping units, dredges, and dredging support equipment, along with industry’s sailing season is normally April through Decem- bulk cargo self unloading solutions. This shipyard specializes ber. Thus, barring any emergency groundings, the majority in large ship construction projects and repair work. Our Stur- of repair and maintenance work is performed during the geon Bay shipyard consists of approximately 55 acres of winter months and the work is typically completed during waterfront property, approximately 295,000 square feet of the first and second quarter of the year. As a result our enclosed manufacturing and office space, a 140-foot by overall increase in new construction project work in our 1,158-foot graving dock, a 250-foot graving dock, and a 600- Marine segment, the seasonality of our traditional repair foot, 7,000-ton, floating dry-dock. and maintenance work is less extreme as new construction projects are performed throughout the year.

6 The Manitowoc Company, Inc. — 2007 Form 10-K

JOB: 08-10279-2 CYCLE#;BL#: 1; 0 TRIM: 8.5" x 11" COMPOSITE COLORS: Black, PANTONE Process Blue U, ~note-color 2 GRAPHICS: none V1.5 Merrill Corp - The Manitowoc Company_ Inc. 10-K-A Print Version | jcarlso | 10-Apr-08 11:06 | 08-10279-2.ba | Sequence: 7 CHKSUM Content: 2461 Layout: 47930 Graphics: No Graphics CLEAN

Competition network of global distributors and customer relationships, We sell all of our products in highly competitive industries. broad product line offerings in the markets we serve, and a We compete in each of our industries based on product commitment to engineering design and product innova- design, quality of products and aftermarket support serv- tion. However, we cannot be certain that our products and ices, product performance, maintenance costs, and price. services will continue to compete successfully or that we Some of our competitors may have greater financial, mar- will be able to retain our customer base or improve or keting, manufacturing or distribution resources than we do. maintain our profit margins on sales to our customers. The We believe that we benefit from the following competitive following table sets forth our primary competitors in each advantages: a strong brand name, a reputation for quality of our business segments: products and aftermarket support services, an established

Business Segment Products Primary Competitors Cranes and Related Products Lattice-boom Crawler Cranes Hitachi Sumitomo; Kobelco; Liebherr; Sumitomo/Link-Belt; Terex; XCMG; Fushun; Zoomlion; and Sany Tower Cranes Comansa; Terex Comedil/Peiner; Liebherr; FM Gru; Jaso; Raimondi; Viccario; Saez; Benezzato; Cattaneo; Sichuan Construction Machinery; Shenyang; Zoomlion; Jianglu; and Yongmao Mobile Telescopic Cranes Liebherr; Link-Belt; Terex; Changjiang; Tadano; XCMG; Kato; and Zoomlion Boom Trucks Terex; Manitex; Altec; Elliott; Tadano; Fassi; Palfinger; Furukawa; and Hiab Foodservice Equipment Ice Machines Hoshizaki; Scotsman; Follet; Ice-O-Matic; Brema; Aucma; and Vogt Ice/Beverage Dispensers Automatic Bar Controls; Celli; Cornelius; Enodis; Hoshizaki/Lancer Corporation; and Vin Service Walk-in Refrigerators/Freezers American Panel; ICS; Nor-Lake; Master-Bilt; Thermo-Kool; W.A. Brown; Bally; and Arctic Reach-in Refrigerators/Freezers Beverage Air; Delfield; Traulsen; True Foodservice; TurboAir; and Masterbilt Marine Ship Repair and Construction Atlantic Marine; Bender Shipbuilding & Repair; Bollinger-Lockport & Larose; Fraser Shipyards; VT Halter Marine; and Port Weller Drydocks

Engineering, Research and Development Employee Relations Our extensive engineering, research and development capabili- We employ approximately 10,460 persons and have labor ties have been key drivers of our success. We engage in agreements with 12 union locals in North America. In addi- research and development activities at all of our significant tion, a large majority of our European employees belong to manufacturing facilities. We have a staff of engineers and European trade unions. There were no work stoppages technicians on three continents who are responsible for during 2007, 2006 or 2005. improving existing products and developing new products. In 2007, a new 3-year labor contract was signed at our We incurred research and development expenditures of Marinette Marine facility. This contract will expire on $36.1 million in 2007, $31.2 million in 2006 and $26.0 mil- March 7, 2010. At our Manitowoc Crane facility, a contract lion in 2005. extension was signed in 2007 by the machinist union at the Our team of engineers focuses on developing innovative, Manitowoc Crane facility. The contract extension expires high performance, low maintenance products that are on October 31, 2011. intended to create significant brand loyalty among customers. Design engineers work closely with our manufac- Available Information turing and marketing staff, enabling us to identify changing We make available, free of charge at our internet site end-user requirements, implement new technologies and (www.manitowoc.com), our annual report on Form 10-K, effectively introduce product innovations. Close, carefully quarterly reports on Form 10-Q, current reports on Form 8-K, managed relationships with dealers, distributors and end our proxy statement and any amendments to those users help us identify their needs, not only for products, reports, as soon as reasonably practicable after we elec- but for the service and support that is critical to their prof- tronically file such material with, or furnish it to, the itable operations. As part of our ongoing commitment to Securities and Exchange Commission (SEC). Our SEC provide superior products, we intend to continue our reports can be accessed through the investor relations efforts to design products that meet evolving customer section of our website. Although some documents avail- demands and reduce the period from product conception able on our website are filed with the SEC, the informa- to product introduction. tion generally found on our website is not part of this or any other report we file with or furnish to the SEC.

The Manitowoc Company, Inc. — 2007 Form 10-K 7

JOB: 08-10279-2 CYCLE#;BL#: 1; 0 TRIM: 8.5" x 11" COMPOSITE COLORS: Black, PANTONE Process Blue U, ~note-color 2 GRAPHICS: none V1.5 Merrill Corp - The Manitowoc Company_ Inc. 10-K-A Print Version | jcarlso | 10-Apr-08 11:06 | 08-10279-2.ba | Sequence: 8 CHKSUM Content: 59175 Layout: 64566 Graphics: No Graphics CLEAN

The public may read and copy any materials that we file Geographic Areas with the SEC at the SEC’s Public Reference Room located at Net sales from continuing operations and long-lived asset 100 F Street NE, Washington, DC 20549. The public may information by geographic area as of and for the years obtain information on the operation of the Public Reference ended December 31 are as follows: Room by calling the SEC at 1-800-SEC-0330. The SEC also maintains electronic versions of our reports on its website at www.sec.gov.

Net Sales Long-Lived Assets 2007 2006 2005 2007 2006 United States $1,948.4 $1,535.1 $1,177.7 $ 676.9 $ 594.5 Other North America 114.1 80.5 38.7 — — Europe 1,215.0 817.0 679.4 483.5 424.3 Asia 299.5 170.4 118.2 118.7 43.7 Middle East 183.0 167.8 112.9 1.7 1.3 Central and South America 61.9 54.0 34.8 0.4 — Africa 64.2 50.6 37.3 — — South Pacific and Caribbean 16.0 5.0 8.0 5.6 5.8 Australia 102.9 52.9 47.1 6.3 7.2 Total $4,005.0 $2,933.3 $2,254.1 $1,293.1 $1,076.8

ITEM 1A. RISK FACTORS Weather conditions can substantially affect our Foodser- The following are risk factors identified by management that vice segment, as relatively cool summer weather and cooler- if any events contemplated by the following risks actually than-normal weather in hot climates tend to decrease sales occur, then our business, financial condition or results of of ice and beverage dispensers. In addition, weather condi- operations could be materially adversely affected. tions can affect our Marine segment. A mild winter can keep the fleet sailing longer through the winter repair season thus Some of our business segments are cyclical or are deferring repair activity for Marine. otherwise sensitive to volatile or variable factors. A Our sales depend in part upon our customers’ replace- downturn or weakness in overall economic activity or ment or repair cycles. Adverse economic conditions may fluctuations in those other factors can have a material cause customers to forego or postpone new purchases in adverse effect on us. favor of repairing existing machinery. Historically, sales of products that we manufacture and sell have been subject to cyclical variations caused by changes in A substantial portion of our growth has come general economic conditions and other factors. In particular, through acquisitions. We may not be able to identify the demand for our crane products is cyclical and is impacted or complete future acquisitions, which could by the strength of the economy generally, interest rates and adversely affect our future growth. other factors that may have an effect on the level of construc- Our growth strategy historically has been based in part upon tion activity on an international, national or regional basis. Dur- acquisitions. Our successful growth through acquisitions ing periods of expansion in construction activity, we generally depends upon our ability to identify and successfully negoti- have benefited from increased demand for our products. Con- ate suitable acquisitions, obtain financing for future acquisi- versely, during recessionary periods, we have been adversely tions on satisfactory terms or otherwise complete affected by reduced demand for our products. In addition, the acquisitions in the future. In addition, our level of indebted- strength of the economy generally may affect the rates of ness may increase in the future if we finance other acquisi- expansion, consolidation, renovation and equipment replace- tions with debt. This would cause us to incur additional ment within the restaurant, lodging, convenience store and interest expense and could increase our vulnerability to gen- healthcare industries, which may affect the performance of eral adverse economic and industry conditions and limit our our Foodservice segment. Furthermore, an economic reces- ability to service our debt or obtain additional financing. We sion may impact leveraged companies, as Manitowoc has cannot assure that future acquisitions will not have a mate- been at times, more than competing companies with less rial adverse effect on our financial condition, results of oper- leverage and may have a material adverse effect on our finan- ations and cash flows. cial condition, results of operations and cash flows. Products in our Crane and Marine segments depend in Our future success depends on our ability to part on federal, state, local and foreign governmental effectively integrate acquired companies and spending and appropriations, including infrastructure, secu- manage growth. rity and defense outlays. Reductions in governmental Our growth has placed, and will continue to place, signifi- spending can affect demand for our products, which in turn cant demands on our management and operational and can affect our performance. financial resources. We have made three significant acquisitions since November 2000. Future acquisitions will require

8 The Manitowoc Company, Inc. — 2007 Form 10-K

JOB: 08-10279-2 CYCLE#;BL#: 1; 0 TRIM: 8.5" x 11" COMPOSITE COLORS: Black, PANTONE Process Blue U, ~note-color 2 GRAPHICS: none V1.5 Merrill Corp - The Manitowoc Company_ Inc. 10-K-A Print Version | jcarlso | 10-Apr-08 11:06 | 08-10279-2.ba | Sequence: 9 CHKSUM Content: 53247 Layout: 56439 Graphics: No Graphics CLEAN

integration of the acquired companies’ sales and marketing, Price increases in some materials and sources of distribution, manufacturing, engineering, purchasing, finance supply could affect our profitability. and administrative organizations. Experience has taught us We use large amounts of steel, stainless steel, aluminum, that the successful integration of acquired businesses copper and electronic controls among other items in the requires substantial attention from our senior management manufacture of our products. Recently, market prices of and the management of the acquired companies, which some of our key raw materials have increased significantly. In tends to reduce the time that they have to manage the particular, we have experienced significant increases in steel, ongoing business. While we believe we have successfully aluminum, foam, and copper prices in recent periods, which integrated our acquisitions to date, we cannot be assured have increased our expenses. If we are not able to reduce that we will be able to integrate any future acquisitions suc- product cost in other areas or pass future raw material price cessfully, that these acquired companies will operate prof- increases on to our customers, our margins could be itably or that the intended beneficial effect from these adversely affected. In addition, because we maintain limited acquisitions will be realized. Our financial condition, results raw material and component inventories, even brief unantici- of operations and cash flows could be materially and pated delays in delivery by suppliers — including those due adversely affected if we do not successfully integrate any to capacity constraints, labor disputes, impaired financial future companies that we may acquire or if we do not man- condition of suppliers, weather emergencies or other natural age our growth effectively. disasters — may impair our ability to satisfy our customers and could adversely affect our financial performance. Because we participate in industries that are intensely competitive, our net sales and profits could We increasingly manufacture and sell our products decline as we respond to competition. outside of the United States, which may present We sell most of our products in highly competitive indus- additional risks to our business. tries. We compete in each of those industries based on For the years ended December 31, 2007, 2006, and 2005, product design, quality of products, quality and responsive- approximately 51.3%, 47.8% and 46.8%, respectively, of our ness of product support services, product performance, net sales were attributable to products sold outside of the maintenance costs and price. Some of our competitors may United States. Expanding international sales is part of our have greater financial, marketing, manufacturing and distri- growth strategy. We have several manufacturing facilities bution resources than we do. We cannot be certain that our located in Europe and Asia and during 2007 constructed two products and services will continue to compete successfully new facilities in Europe and in 2005 constructed two new with those of our competitors or that we will be able to facilities in Asia. International operations generally are sub- retain our customer base or improve or maintain our profit ject to various risks, including political, military, religious and margins on sales to our customers, all of which could mate- economic instability, local labor market conditions, the impo- rially and adversely affect our financial condition, results of sition of foreign tariffs, the impact of foreign government operations and cash flows. regulations, the effects of income and withholding tax, governmental expropriation, and differences in business prac- If we fail to develop new and innovative products or tices. We may incur increased costs and experience delays if customers in our markets do not accept them, our or disruptions in product deliveries and payments in connec- results would be negatively affected. tion with international manufacturing and the transfer to the Our products, especially those in the Crane and Foodservice new facilities and sales that could cause loss of revenue. segments, must be kept current to meet our customers’ Unfavorable changes in the political, regulatory and business needs. To remain competitive, we therefore must develop climate and currency devaluations of various foreign jurisdic- new and innovative products on an on-going basis. If we fail tions could have a material adverse effect on our financial to make innovations, or the market does not accept our new condition, results of operations and cash flows. products, our sales and results would suffer. We invest significantly in the research and development of We depend on our key personnel and the loss of new products. These expenditures do not always result in these personnel could have an adverse affect on our products that will be accepted by the market. To the extent business. they do not, whether as a function of the product or the Our success depends to a large extent upon the continued business cycle, we will have increased expenses without services of our key executives, managers and skilled person- significant sales to benefit us. Failure to develop successful nel. Generally, these employees are not bound by employ- new products may also cause potential customers to ment or non-competition agreements, and we cannot assure choose to purchase used cranes or other equipment, or you that we will be able to retain our key officers and competitors’ products, rather than invest in new products employees. We could be seriously harmed by the loss of key manufactured by us. In our Marine segment, we must some- personnel if it were to occur in the future. times perform engineering services either at no cost or for limited margins, or build prototypes for little or no margin, in Our operations and profitability could suffer if we competing for contracts without any assurance that we will experience labor relations problems. be awarded a contract for production models which would We employ approximately 10,460 people and have labor allow us to achieve an appropriate return on our investment. agreements with 12 union locals in North America. In addition, a large majority of our European employees belong to

The Manitowoc Company, Inc. — 2007 Form 10-K 9

JOB: 08-10279-2 CYCLE#;BL#: 1; 0 TRIM: 8.5" x 11" COMPOSITE COLORS: Black, PANTONE Process Blue U, ~note-color 2 GRAPHICS: none V1.5 Merrill Corp - The Manitowoc Company_ Inc. 10-K-A Print Version | jcarlso | 10-Apr-08 11:06 | 08-10279-2.ba | Sequence: 10 CHKSUM Content: 54931 Layout: 45794 Graphics: No Graphics CLEAN

European trade unions. These collective bargaining or simi- Strategic divestitures could negatively affect our lar agreements expire at various times in each of the next results. several years. We believe that we have satisfactory relations We regularly review our business units and evaluate them with our unions and, therefore, anticipate reaching new against our core business strategies. As part of that agreements on satisfactory terms as the existing agree- process, we regularly consider the divestiture of non-core ments expire. However, we may not be able to reach new and non-strategic operations or facilities. Depending upon agreements without a work stoppage or strike and any new the circumstances and terms, the divestiture of a profitable agreements that are reached may not be reached on terms operation or facility could negatively affect our earnings. satisfactory to us. A prolonged work stoppage or strike at any one of our manufacturing facilities could have a material Environmental liabilities that may arise in the future adverse effect on our financial condition, results of opera- could be material to us. tions and cash flows. Our operations, facilities and properties are subject to extensive and evolving laws and regulations pertaining to air emis- If we fail to protect our intellectual property rights or sions, wastewater discharges, the handling and disposal of maintain our rights to use licensed intellectual solid and hazardous materials and wastes, the remediation property, our business could be adversely affected. of contamination, and otherwise relating to health, safety Our patents, trademarks and licenses are important in the and the protection of the environment. As a result, we are operation of our businesses. Although we intend to protect involved from time to time in administrative or legal pro- our intellectual property rights vigorously, we cannot be cer- ceedings relating to environmental and health and safety tain that we will be successful in doing so. Third parties may matters, and have in the past and will continue to incur capi- assert or prosecute infringement claims against us in con- tal costs and other expenditures relating to such matters. nection with the services and products that we offer, and we Based on current information, we believe that any costs may or may not be able to successfully defend these claims. we may incur relating to environmental matters will not be Litigation, either to enforce our intellectual property rights or material, although we can give no assurances. We also can- to defend against claimed infringement of the rights of oth- not be certain that identification of presently unidentified ers, could result in substantial costs and in a diversion of our environmental conditions, more vigorous enforcement by resources. In addition, if a third party would prevail in an regulatory authorities, or other unanticipated events will not infringement claim against us, then we would likely need to arise in the future and give rise to additional environmental obtain a license from the third party on commercial terms, liabilities, compliance costs and/or penalties which could be which would likely increase our costs. Our failure to maintain material. Further, environmental laws and regulations are or obtain necessary licenses or an adverse outcome in any constantly evolving and it is impossible to predict accurately litigation relating to patent infringement or other intellectual the effect they may have upon our financial condition, property matters could have a material adverse effect on our results of operations or cash flows. financial condition, results of operations and cash flows. We are exposed to the risk of foreign currency Our results of operations may be negatively fluctuations. impacted by product liability lawsuits. Some of our operations are or will be conducted by sub- Our business exposes us to potential product liability risks sidiaries in foreign countries. The results of the operations that are inherent in the design, manufacture, sales and use and the financial position of these subsidiaries will be of our products, especially our crane products. Certain of reported in the relevant foreign currencies and then trans- our businesses also have experienced claims relating to past lated into US dollars at the applicable exchange rates for asbestos exposure. Neither we nor our affiliates have to inclusion in our consolidated financial statements, which are date incurred material costs related to these asbestos stated in US dollars. The exchange rates between many of claims. We vigorously defend ourselves, however, a sub- these currencies and the US dollar have fluctuated signifi- stantial increase in the number of claims that are made cantly in recent years and may fluctuate significantly in the against us or the amounts of any judgments or settlements future. Such fluctuations may have a material effect on our could, however, materially and adversely affect our reputa- results of operations and financial position and may signifi- tion and our financial condition, results of operations and cantly affect the comparability of our results between finan- cash flows. cial periods. In addition, we incur currency transaction risk whenever Some of our products are built under fixed-price one of our operating subsidiaries enters into a transaction agreements; cost overruns therefore can hurt our using a different currency than its functional currency. We results. attempt to reduce currency transaction risk whenever one of Some of our work, particularly in the Marine segment, is our operating subsidiaries enters into a transaction using a done under agreements on a fixed-price basis. If we do not different currency than its functional currency by: accurately estimate our costs, we may incur a loss under • matching cash flows and payments in the same currency; these contracts. Even if the agreements have provisions • direct foreign currency borrowing; and which allow reimbursement for cost overruns, we may not • entering into foreign exchange contracts for hedging be able to recoup excess expenses. purposes.

10 The Manitowoc Company, Inc. — 2007 Form 10-K

JOB: 08-10279-2 CYCLE#;BL#: 1; 0 TRIM: 8.5" x 11" COMPOSITE COLORS: Black, PANTONE Process Blue U, ~note-color 2, ~note-color 3 GRAPHICS: none V1.5 Merrill Corp - The Manitowoc Company_ Inc. 10-K-A Print Version | jcarlso | 10-Apr-08 11:06 | 08-10279-2.ba | Sequence: 11 CHKSUM Content: 15151 Layout: 30487 Graphics: No Graphics CLEAN

However, we may not be able to hedge this risk com- The agreements governing our debt include covenants pletely or at an acceptable cost, which may adversely affect that restrict, among other things, our ability to incur addi- our results of operations, financial condition and cash flows tional debt; pay dividends on or repurchase our equity; in future periods. make investments; and consolidate, merge or transfer all or substantially all of our assets. In addition, our senior credit Increased or unexpected product warranty claims facility requires us to maintain specified financial ratios and could adversely affect us. satisfy certain financial condition tests. Our ability to comply We provide our customers a warranty covering workman- with these covenants may be affected by events beyond our ship, and in some cases materials, on products we manufac- control, including prevailing economic, financial and industry ture. Our warranty generally provides that products will be conditions. These covenants may also require that we take free from defects for periods ranging from 12 months to 60 action to reduce our debt or to act in a manner contrary to months. If a product fails to comply with the warranty, we our business objectives. We cannot be certain that we will may be obligated, at our expense, to correct any defect by meet any future financial tests or that the lenders will waive repairing or replacing the defective product. Although we any failure to meet those tests. maintain warranty reserves in an amount based primarily on If we default under our debt agreements, our lenders the number of units shipped and on historical and antici- could elect to declare all amounts outstanding under our pated warranty claims, there can be no assurance that debt agreements to be immediately due and payable and future warranty claims will follow historical patterns or that could proceed against any collateral securing the debt. we can accurately anticipate the level of future warranty Under those circumstances, in the absence of readily-avail- claims. An increase in the rate of warranty claims or the able refinancing on favorable terms, we might elect or be occurrence of unexpected warranty claims could materially compelled to enter bankruptcy proceedings, in which case and adversely affect our financial condition, results of opera- our shareholders could lose the entire value of their invest- tions and cash flows. ment in our common stock.

Some of our customers rely on financing with third The company is in the process of implementing parties to purchase our products, and we may incur global ERP systems in its Foodservice and Crane expenses associated with our assistance to segments. customers in securing third party financing. The company is in the process of implementing a new We rely principally on sales of our products to generate global ERP system in its Foodservice segment and a sepa- cash from operations. A portion of our sales is financed by rate global ERP system in the Crane segment. These sys- third-party finance companies on behalf of our customers. tems will replace many of the company’s existing operating The availability of financing by third parties is affected by and financial systems. Such implementations are a major general economic conditions, the credit worthiness of our undertaking both financially and from a management and customers and the estimated residual value of our equip- personnel perspective. Should the systems not be implement. In certain transactions we provide residual value mented successfully and within budget or if the systems do guarantees and buyback commitments to our customers or not perform in a satisfactory manner, it could be disruptive the third party financial institutions. Deterioration in the and or adversely affect the operations and results of opera- credit quality of our customers could negatively impact their tions of the company, including the ability of the company to ability to obtain the resources needed to make purchases of report accurate and timely financial results. our equipment or their ability to obtain third-party financing. In addition, if the actual value of the equipment for which Our inability to recover from natural or man made we have provided a residual value guaranty declines below disaster could adversely affect out business. the amount of our guaranty, we may incur additional costs, Our business and financial results may be affected by certain which may negatively impact our financial condition, results events that we cannot anticipate or that are beyond our con- of operations and cash flows. trol, such as natural or man-made disasters, national emergencies, significant labor strikes, work stoppages, political Our leverage may impair our operations and financial unrest, war or terrorist activities that could curtail production condition. at our facilities and cause delayed deliveries and canceled As of December 31, 2007, our total consolidated debt was orders. In addition, we purchase components and raw mate- $230.6 million. Although this level is significantly down from rials and information technology and other services from recent peaks, our debt could have important consequences, numerous suppliers, and, even if our facilities are not directly including increasing our vulnerability to general adverse eco- affected by such events, we could be affected by interrup- nomic and industry conditions; requiring a substantial portions at such suppliers. Such suppliers may be less likely tion of our cash flows from operations be used for the than our own facilities to be able to quickly recover from payment of interest rather than to fund working capital, capi- such events and may be subject to additional risks such as tal expenditures, acquisitions and general corporate require- financial problems that limit their ability to conduct their oper- ments; limiting our ability to obtain additional financing; and ations. We cannot assure you that we will have insurance to limiting our flexibility in planning for, or reacting to, changes adequately compensate us for any of these events. in our business and the industries in which we operate.

The Manitowoc Company, Inc. — 2007 Form 10-K 11

JOB: 08-10279-2 CYCLE#;BL#: 1; 0 TRIM: 8.5" x 11" COMPOSITE COLORS: Black, PANTONE Process Blue U, ~note-color 2 GRAPHICS: none V1.5 Merrill Corp - The Manitowoc Company_ Inc. 10-K-A Print Version | jcarlso | 10-Apr-08 11:06 | 08-10279-2.ba | Sequence: 12 CHKSUM Content: 17013 Layout: 36988 Graphics: No Graphics CLEAN

ITEM 2. PROPERTIES OWNED The following table outlines the principal facilities we own or lease as of December 31, 2007: Approximate Facility Location Type of Facility Square Footage Owned/Leased Cranes and Related Products Europe/Asia Wilhelmshaven, Germany Manufacturing/Office and Storage 410,000 Owned/Leased Moulins, France Manufacturing/Office 355,000 Owned/Leased Charlieu, France Manufacturing/Office 323,000 Owned/Leased Presov, Slovak Republic Manufacturing/Office 295,300 Owned Zhangjiagang, China Manufacturing 800,000 Owned Fanzeres, Portugal Manufacturing 183,000 Leased Baltar, Portugal Manufacturing 68,900 Owned Pune, India Manufacturing 190,000 Leased La Clayette, France Manufacturing/Office 161,000 Owned/Leased Niella Tanaro, Italy Manufacturing 262,467 Owned Ecully, France Office 85,000 Owned Alfena, Portugal Office 84,000 Owned Langenfeld, Germany Office/Storage and Field Testing 80,300 Leased Osny, France Office/Storage/Repair 43,000 Owned Decines, France Office/Storage 47,500 Leased Vaux-en-Velin, France Office/Workshop 17,000 Owned Naia, Portugal Manufacturing 17,000 Owned Vitrolles, France Office 16,000 Owned Sunderland, United Kingdom Office/Storage 14,000 Leased Lusigny, France Crane Testing Site 10,000 Owned Baudemont, France Office 8,000 Owned Singapore Office/Storage 49,000 Leased Lisbon, Portugal Office 6,500 Owned Accra, Ghana Office 4,265 Leased Alger, Algeria Office 278 Leased Sydney, Australia Office/Storage 43,000 Leased Dubai Office/Workshop 10,000 Leased United States Shady Grove, Pennsylvania Manufacturing/Office 1,214,300 Owned Manitowoc, Wisconsin Manufacturing/Office 472,000 Owned Quincy, Pennsylvania Manufacturing 36,000 Owned Bauxite, Arkansas Manufacturing/Office 22,000 Owned Port Washington, Wisconsin Manufacturing 49,000 Owned

Foodservice Equipment Europe/Asia Hangzhou, China Manufacturing/Office 260,000 Owned/Leased United States and Mexico Manitowoc, Wisconsin Manufacturing/Office 376,000 Owned Parsons, Tennessee(1) Manufacturing 214,000 Owned Sellersburg, Indiana Manufacturing/Office 140,000 Owned La Mirada, California Manufacturing/Office 77,000 Leased Aberdeen, Maryland Manufacturing/Office 67,000 Owned Los Angeles, California Manufacturing/Office 90,000 Leased Los Angeles, California Manufacturing 29,000 Leased Manitowoc, Wisconsin Office 13,000 Leased Tijuana, Mexico Manufacturing 30,000 Leased

12 The Manitowoc Company, Inc. — 2007 Form 10-K

JOB: 08-10279-2 CYCLE#;BL#: 1; 0 TRIM: 8.5" x 11" COMPOSITE COLORS: Black, PANTONE Process Blue U, ~note-color 2 GRAPHICS: none V1.5 Merrill Corp - The Manitowoc Company_ Inc. 10-K-A Print Version | jcarlso | 10-Apr-08 11:06 | 08-10279-2.ba | Sequence: 13 CHKSUM Content: 37251 Layout: 24444 Graphics: No Graphics CLEAN

Approximate Facility Location Type of Facility Square Footage Owned/Leased Marine Marinette, Wisconsin Shipyard 450,000 Owned Sturgeon Bay, Wisconsin Shipyard 220,000 Owned/Leased Cleveland, Ohio Marine Repair and Storage 8,000 Leased

Corporate Manitowoc, Wisconsin Office 34,000 Owned Manitowoc, Wisconsin Hangar Ground Lease 31,320 Leased

(1) There are three separate locations within Parsons, Tennessee.

In addition, we lease sales office and warehouse space civil and criminal penalties and fines, as well as injunctive for our Crane segment in Breda, The Netherlands; Begles, and remedial relief, for noncompliance. They also may France; Lille, France; Nantes, France; Toulouse, France; require remediation at sites where company related sub- Nice, France; Orleans, France; Persans, France; Parabiago, stances have been released into the environment. Italy; Meath, Ireland; Munich, Germany; Budapest, Hungary; We have expended substantial resources globally, both Warsaw, Poland; Melbourne, Australia; Beijing, China; Xi’an, financial and managerial, to comply with the applicable laws China; Dubai, UAE; Makati City, Philippines; Seoul, Korea; and regulations, and to protect the environment and our Moscow, Russia; the Czech Republic; Manitowoc, Wiscon- workers. We believe we are in substantial compliance with sin; Shanghai, China; Monterrey, Mexico; Sao Paulo, Brazil; such laws and regulations and we maintain procedures and Reno, Nevada. We lease office and warehouse space designed to foster and ensure compliance. However, we for our Foodservice segment in Salem, Virginia; Irwindale, have been and may in the future be subject to formal or California; and Ecully, France. We also own sales offices and informal enforcement actions or proceedings regarding non- warehouse facilities for our Crane segment in Northhamp- compliance with such laws or regulations, whether or not ton, England, Dole, France and Rouen, France. determined to be ultimately responsible in the normal See Note 19 “Leases” to the Consolidated Financial State- course of business. Historically, these actions have been ments included in Item 8 of this Form 10-K for additional resolved in various ways with the regulatory authorities with- information regarding leases. out material commitments or penalties to the company. For information concerning other contingencies and ITEM 3. LEGAL PROCEEDINGS uncertainties, see Note 15, “Contingencies and Significant Our global operations are governed by laws addressing the Estimates” to the Consolidated Financial Statements protection of the environment and employee safety and included in Item 8 of this Form 10-K. health. Under various circumstances, these laws impose

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS No matters were submitted to security holders for a vote during the fourth quarter of our fiscal year ended December 31, 2007. Executive Officers of the Registrant Each of the following officers of the company has been elected by the Board of Directors. The information presented is as of February 29, 2008. Principal Position Name Age Position With The Registrant Held Since Terry D. Growcock 62 Chairman of the Board of Directors 2002

Glen E. Tellock 47 President and Chief Executive Officer 2007

Carl J. Laurino 46 Senior Vice President and Chief Financial Officer 2004

Thomas G. Musial 56 Senior Vice President of Human Resources and Administration 2000

Maurice D. Jones 48 Senior Vice President, General Counsel and Secretary 2004

Dean J. Nolden 39 Vice President of Finance and Assistant Treasurer 2005

Eric Etchart 51 Senior Vice President of the Company and President Crane Segment 2007

Michael J. Kachmer 49 Senior Vice President of the Company and President Foodservice Segment 2007

Robert P. Herre 55 Senior Vice President of the Company and President Marine Segment 2005

The Manitowoc Company, Inc. — 2007 Form 10-K 13

JOB: 08-10279-2 CYCLE#;BL#: 1; 0 TRIM: 8.5" x 11" COMPOSITE COLORS: Black, PANTONE Process Blue U, ~note-color 2 GRAPHICS: none V1.5 Merrill Corp - The Manitowoc Company_ Inc. 10-K-A Print Version | jcarlso | 10-Apr-08 11:06 | 08-10279-2.ba | Sequence: 14 CHKSUM Content: 41869 Layout: 29681 Graphics: No Graphics CLEAN

Terry D. Growcock has served as chairman of the board of Manitowoc Crane segment in May 2007. Mr. Etchart pre- since October 2002. Since 1998, Mr. Growcock had served viously served as executive vice president of Manitowoc as the company’s president and chief executive officer until Crane segment for the Asia/Pacific region since 2002. Prior May, 2007. He has also been a director since 1998. to joining the company, Mr. Etchart served as managing Mr. Growcock joined the company in 1994 as executive vice director in the Asia/Pacific region for Potain S.A.; as manag- president and general manager of Manitowoc Ice. In ing director in Italy for Potain S.P.A.; and as vice president of March 1995, he was appointed president of Manitowoc international sales and marketing for PPM. Foodservice Group and served in that capacity until his pro- Michael J. Kachmer joined the company in February of motion to president and chief executive officer in 1998. Prior 2007 as senior vice president of The Manitowoc Company, to joining the company, Mr. Growcock served in numerous Inc. and president and general manager of the Manitowoc management and executive positions with Siebe plc and Foodservice segment. Prior to joining the company, United Technologies Corporation. Currently, Mr. Growcock Mr. Kachmer held executive positions for Culligan also serves as a director of Harris Corporation and Bemis International Company since 2000 and most recently served Manufacturing Company, Vice Chairman of Wisconsin Manu- as the chief operating officer. In addition, Mr. Kachmer has factures and Commerce, and director of the National Associ- held executive and operational roles in a number of global ation of Manufactures. manufacturing companies, including Ball Corporation and Glen E. Tellock was named the company’s president and Firestone Tire & Rubber. chief executive officer in May 2007. He had served as the Robert P. Herre joined the company in February of 2005 as senior vice president of The Manitowoc Company, Inc. and senior vice president of The Manitowoc Company, Inc. and president and general manager of Manitowoc Crane seg- president and general manager of Manitowoc Marine segment since 2002. Previously, he served as the Company’s ment. Prior to joining the company, Mr. Herre served as senior vice president and chief financial officer (1999), vice executive vice president and head of operations for Trinity president of finance and treasurer (1998), corporate con- Industries, Inc., joining that company in 2003. From 1991 to troller (1992) and director of accounting (1991). Prior to join- 2003 Mr. Herre held numerous positions within American ing the company, Mr. Tellock served as financial planning Commercial Lines, LLC, including president and chief manager with the Denver Post Corporation, and as audit operating officer Jeffboat, vice president maintenance and manager for Ernst & Whinney. vessel management American Commercial Barge Line, vice Carl J. Laurino was named senior vice president and president and general manager American Commercial chief financial officer in May 2004. He had served as Terminals, vice president, employee relations Jeffboat and Treasurer since May 2001. Mr. Laurino joined the company vice president, engineering. in January 2000 as assistant treasurer and served in that capacity until his promotion to treasurer. Previously, Mr. ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY Laurino spent 15 years in the commercial banking industry AND RELATED STOCKHOLDER MATTERS with Firstar Bank (n/k/a US Bank), Norwest Bank (n/k/a The Company’s common stock is traded on the New York Wells Fargo), and Associated Bank. During that period, Stock Exchange under the symbol MTW. At December 31, Mr. Laurino held numerous positions of increasing respon- 2007, the approximate number of record shareholders of sibility including commercial loan officer with Norwest common stock was 2,520. The amount and timing of the Bank, Vice President — Business Banking with Associated annual dividend is determined by the board of directors at Bank and Vice President and Commercial Banking Manager regular times each year. At its February 2005 meeting, the with Firstar. board of directors approved the return to a quarterly divi- Thomas G. Musial has been senior vice president of dend payment beginning with the first quarter of 2005. human resources and administration since 2000. Previously, Quarterly dividends in the amount of $0.018 per share were he was vice president of human resources and administra- paid in March, June, September and December of 2006 and tion (1995), manager of human resources (1987), and per- 2005 and in March and June of 2007. sonnel/industrial relations specialist (1976). At its July 2007 meeting, the board of directors approved Maurice D. Jones has been general counsel and secretary a pre-split quarterly dividend of $0.04 per share of common since 1999 and was elected vice president in 2002 and a stock ($0.02 per share of common stock post-split) payable senior vice president in 2004. Prior to joining the company, on September 10, 2007, to shareholders of record on Mr. Jones was a shareholder in the law firm of Davis and August 31, 2007. Quarterly dividends in the amount of $0.02 Kuelthau, S.C., and served as legal counsel for Banta per share were paid in September and December of 2007. Corporation. On July 26, 2007, the board of directors authorized a two- Dean J. Nolden was named vice president of finance and for-one split of the company’s common stock. Record hold- assistant treasurer in May 2005. Mr. Nolden joined the com- ers of Manitowoc’s common stock at the close of business pany in November 1998 as corporate controller and served on August 31, 2007 received on September 10, 2007 one in that capacity until his promotion to Vice President Finance additional share of common stock for every share of Mani- and Controller in May 2004. Prior to joining the company, towoc common stock they owned as of August 31, 2007. Mr. Nolden spent eight years in public accounting in the Manitowoc shares outstanding at the close of business on audit practice of PricewaterhouseCoopers LLP. He left that August 31, 2007 totaled 62,787,642. The company’s com- firm in 1998 as an audit manager. mon stock began trading at its post-split price at the begin- Eric Etchart was named senior vice president of The ning of trading on September 11, 2007. Manitowoc Company, Inc. and president and general manager

14 The Manitowoc Company, Inc. — 2007 Form 10-K

JOB: 08-10279-2 CYCLE#;BL#: 1; 0 TRIM: 8.5" x 11" COMPOSITE COLORS: Black, ~note-color 2 GRAPHICS: none V1.5 Merrill Corp - The Manitowoc Company_ Inc. 10-K-A Print Version | jcarlso | 10-Apr-08 11:06 | 08-10279-2.ba | Sequence: 15 CHKSUM Content: 47151 Layout: 34660 Graphics: No Graphics CLEAN

The high and low sales prices of the common stock were as follows for 2007, 2006 and 2005 (amounts have been adjusted for the two-for-one stock split discussed above):

Year Ended 2007 2006 2005 December 31 High Low Close High Low Close High Low Close 1st Quarter $32.64 $25.67 $31.77 $23.85 $12.41 $22.79 $10.65 $ 8.58 $10.10 2nd Quarter 42.20 31.45 40.19 28.02 17.00 22.25 10.66 8.99 10.26 3rd Quarter 44.96 32.96 44.28 23.58 17.33 22.40 12.70 10.29 12.57 4th Quarter 51.49 37.50 48.83 31.33 22.31 29.72 13.50 11.38 12.56

Under our current bank credit agreement, we are limited than 2.00 to 1.00, dividend payments, in addition to other on the amount of dividends we may pay out in any one year. restricted payments as defined, can not exceed $50.0 mil- The amount of dividend payments is restricted based on our lion. If the consolidated senior leverage ratio is greater than consolidated senior leverage ratio as defined in the credit 2.00 to 1.00, but less than 3.00 to 1.00, these payments can agreement. If the consolidated senior leverage ratio is less not exceed $25.0 million.

The Manitowoc Company, Inc. — 2007 Form 10-K 15

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Comparison of cumulative five-year total return

$900 $800 $700 $600 $500 $400 $300 $200 $100 $0 2002 2003 2004 2005 2006 2007

The Manitowoc Company, Inc. S&P 500 Index S&P 600 Industrial Machinery

Total Return to Shareholders (Includes reinvestment of dividends)

Annual Return Percentages Years Ending December 31, 2003 2004 2005 2006 2007 The Manitowoc Company, Inc. 23.62% 21.58% 34.24% 137.37% 64.65% S&P 500 Index 28.68% 10.88% 4.91% 15.79% 5.49% S&P 600 Industrial Machinery 36.18% 28.39% 9.20% 20.77% 12.18%

Indexed Returns Years Ending December 31, 2002 2003 2004 2005 2006 2007 The Manitowoc Company, Inc. 100.00 123.62 150.30 201.75 478.89 788.51 S&P 500 Index 100.00 128.68 142.69 149.70 173.34 182.86 S&P 600 Industrial Machinery 100.00 136.18 174.84 190.93 230.59 258.68

16 The Manitowoc Company, Inc. — 2007 Form 10-K

JOB: 08-10279-2 CYCLE#;BL#: 1; 0 TRIM: 8.5" x 11" COMPOSITE COLORS: Black, PANTONE Process Blue U, ~note-color 2 GRAPHICS: 10279-2_perf_line.eps V1.5 Merrill Corp - The Manitowoc Company_ Inc. 10-K-A Print Version | jcarlso | 10-Apr-08 11:06 | 08-10279-2.ba | Sequence: 17 CHKSUM Content: 6402 Layout: 23449 Graphics: No Graphics CLEAN

ITEM 6. SELECTED FINANCIAL DATA North Central Crane & Excavator Sales Corporation, and the The following selected historical financial data have been Aerial Work Platform businesses, which were either sold or derived from the Consolidated Financial Statements of The closed during 2005, 2004, 2003 or 2002 and are reported in Manitowoc Company, Inc. The data should be read in con- discontinued operations in the accompanying Consolidated junction with these financial statements and “Manage- Financial Statements. For businesses acquired during the ment’s Discussion and Analysis of Financial Condition and time periods presented, results are included in the table Results of Operations.” The information presented reflects from their acquisition date. Amounts are in millions except all business units other than DRI, Toledo Ship Repair, Mani- share and per share data. towoc Boom Trucks, Inc., Femco Machine Company, Inc.,

2007 2006 2005 2004 2003 2002 Net Sales Cranes and Related Products $ 3,245.7 $ 2,235.4 $ 1,628.7 $ 1,248.5 $ 962.8 $ 674.1 Foodservice Equipment 438.3 415.4 399.6 377.2 368.6 374.8 Marine 321.0 282.5 225.8 219.2 136.7 204.2 Total 4,005.0 2,933.3 2,254.1 1,844.9 1,468.1 1,253.1 Gross Profit 911.6 647.3 421.9 375.7 316.7 311.4 Earnings (Loss) from Operations Cranes and Related Products 470.5 280.6 115.5 57.0 24.4 55.6 Foodservice Equipment 61.3 56.2 54.9 55.7 53.3 50.3 Marine 26.1 11.3 (9.2) 16.5 4.5 20.8 Corporate (48.2) (42.4) (24.8) (21.2) (19.2) (15.1) Amortization expense (5.8) (3.3) (3.1) (3.1) (2.9) (2.0) Gain on sales of parts line 3.3 — — — — — Pension settlements (5.3) — — — — — Curtailment gain — — — — 12.9 — Total 501.9 302.4 133.3 104.9 73.0 109.6 Interest Expense (36.3) (46.3) (53.8) (56.0) (55.7) (50.6) Loss on debt extinguishment (12.5) (14.4) (9.1) (1.0) (7.3) — Other income (expense) — net 9.9 3.2 3.5 (0.9) 0.5 1.9 Earnings from continuing operations before income taxes 463.0 244.9 73.9 47.0 10.5 60.9 Provision for taxes on income 129.4 78.4 14.8 8.9 1.9 21.9 Earnings from continuing operations 333.6 166.5 59.1 38.1 8.6 39.0 Discontinued operations: Earnings (loss) from discontinued operations, net of income taxes 3.1 (0.3) 0.9 (0.2) 7.0 2.8 Gain (loss) on sale or closure of discontinued operations, net of income taxes — — 5.8 1.2 (12.0) (25.5) Cumulative effect of accounting change, net of income taxes — — — — — (36.8) Net earnings (loss) $ 336.7 $ 166.2 $ 65.8 $ 39.1 $ 3.6 $ (20.5) Cash Flows Cash flow from operations $ 238.2 $ 294.1 $ 106.7 $ 57.0 $ 150.9 $ 94.5 Identifiable Assets Cranes and Related Products $ 1,958.1 $ 1,572.4 $ 1,224.7 $ 1,279.7 $ 1,151.8 $ 1,046.3 Foodservice Equipment 341.5 340.1 313.2 302.9 290.6 320.8 Marine 123.1 120.9 123.3 110.3 91.5 94.0 Corporate 446.0 186.1 300.6 235.2 126.3 139.5 Total $ 2,868.7 $ 2,219.5 $ 1,961.8 $ 1,928.1 $ 1,660.2 $ 1,600.6 Long-term Obligations $ 272.0 $ 264.3 $ 474.0 $ 512.2 $ 567.1 $ 623.5 Depreciation Cranes and Related Products $ 70.4 $ 58.4 $ 51.8 $ 42.9 $ 36.8 $ 24.2 Foodservice Equipment 8.0 7.2 6.1 4.9 5.9 6.5 Marine 2.1 1.6 1.0 0.9 0.9 1.0 Corporate 1.8 1.8 1.5 1.4 1.1 0.7 Total $ 82.3 $ 69.0 $ 60.4 $ 50.1 $ 44.7 $ 32.4 Capital Expenditures Cranes and Related Products 103.7 51.3 32.9 24.2 25.0 19.1 Foodservice Equipment 3.7 10.9 16.9 11.8 4.7 3.5 Marine 6.8 3.1 4.1 4.3 0.7 1.4 Corporate 5.4 2.3 1.0 2.9 1.3 8.3 Total $ 119.6 $ 67.6 $ 54.9 $ 43.2 $ 31.7 $ 32.3 Per Share Basic earnings (loss) per share: Earnings from continuing operations $ 2.68 $ 1.36 $ 0.49 $ 0.35 $ 0.08 $ 0.39 Earnings (loss) from discontinued operations, net of income taxes 0.02 — 0.01 — 0.07 0.03 Gain (loss) on sale or closure of discontinued operations, net of income taxes — — 0.05 0.01 (0.11) (0.25) Cumulative effect of accounting change, net of income taxes — — — — — (0.37) Net earnings (loss) $ 2.70 $ 1.36 $ 0.55 $ 0.36 $ 0.03 $ (0.20)

The Manitowoc Company, Inc. — 2007 Form 10-K 17

JOB: 08-10279-2 CYCLE#;BL#: 1; 0 TRIM: 8.5" x 11" COMPOSITE COLORS: Black, PANTONE Process Blue U, ~note-color 2 GRAPHICS: none V1.5 Merrill Corp - The Manitowoc Company_ Inc. 10-K-A Print Version | jcarlso | 10-Apr-08 11:06 | 08-10279-2.ba | Sequence: 18 CHKSUM Content: 27248 Layout: 3810 Graphics: No Graphics CLEAN

2007 2006 2005 2004 2003 2002 Diluted earnings (loss) per share: Earnings from continuing operations $ 2.62 $ 1.33 $ 0.48 $ 0.35 $ 0.08 $ 0.38 Earnings (loss) from discontinued operations, net of income taxes 0.02 — 0.01 — 0.07 0.03 Gain (loss) on sale or closure of discontinued operations, net of income taxes — — 0.05 0.01 (0.11) (0.25) Cumulative effect of accounting change, net of income taxes — — — — — (0.36) Net earnings (loss) $ 2.64 $ 1.32 $ 0.53 $ 0.36 $ 0.03 $ (0.20) Avg Shares Outstanding Basic 124,667,931 122,449,148 120,586,420 107,602,520 106,301,800 100,770,248 Diluted 127,489,416 125,571,532 123,052,068 109,508,720 106,811,408 103,127,204

(1) Effective January 1, 2002, we adopted Statement of Financial Accounting Standard (SFAS) No. 142, “Goodwill and Other Intangible Assets.” As a result, the company no longer amortizes its goodwill and certain other intangible assets with indefinite lives. In addition, the company recorded a $36.8 million charge related to impairment of goodwill upon the adoption of SFAS No. 142. (2) Discontinued operations represent the results of operations and gain or loss on sale or closure of DRI, Toledo Ship Repair, Manitowoc Boom Trucks, Inc., Femco Machine Company, Inc., North Central Crane & Excavator Sales Corporation, and the Aerial Work Platform businesses, which were either sold or closed during 2005, 2004, 2003 or 2002. (3) On July 26, 2007, the board of directors authorized a two-for-one split of the company’s common stock. Record holders of Manitowoc’s common stock at the close of business on August 31, 2007 received on September 10, 2007 one additional share of common stock for every share of Manitowoc common stock they owned as of August 31, 2007. Manitowoc shares outstanding at the close of business on August 31, 2007 totaled 62,787,642. The company’s common stock began trading at its post-split price at the beginning of trading on September 11, 2007. Per share, share and stock option amounts within this Annual Report on Form 10-K for all periods presented have been adjusted to reflect the stock split. (4) We acquired two businesses during 2007, two businesses during 2006, two businesses during 2002, and one business during 2001. (5) Cash dividends per share for 2002 through 2007 were as follows: $0.07 (2002 through 2006) and $0.075 (2007).

18 The Manitowoc Company, Inc. — 2007 Form 10-K

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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS serve, with the goal to continuously improve economic value OF FINANCIAL CONDITION AND RESULTS OF for our shareholders. OPERATIONS The following discussion and analysis covers key drivers behind our results for 2005 through 2007 and is broken The following discussion and analysis should be read in down into three major sections. First, we provide an conjunction with the consolidated financial statements and overview of our results of operations for the years 2005 related notes appearing in Item 8 of the Annual Report on through 2007 on a consolidated basis and by business seg- Form 10-K. ment. Next we discuss our market conditions, liquidity and capital resources, off balance sheet arrangements, and obli- Overview The Manitowoc Company, Inc. (referred to as the gations and commitments. Finally, we provide a discussion company, MTW, we, our, and us) is a leading, diversified, of risk management techniques, contingent liability issues, multi-industry manufacturer of engineered capital goods and critical accounting policies, impacts of future accounting support services for selected market segments, which today changes, and cautionary statements. include Cranes and Related Products (Crane), Foodservice All dollar amounts, except per share amounts, are in mil- Equipment (Foodservice), and Marine. The centerpiece of lions of dollars throughout the tables included in this Man- our effort is and will continue to be to provide customer- agement’s Discussion and Analysis of Financial Conditions focused, quality products and services to the markets we and Results of Operations unless otherwise indicated.

Results of Consolidated Operations

2007 2006 2005 Net sales $4,005.0 $2,933.3 $2,254.1 Costs and expenses: Cost of sales 3,093.4 2,286.0 1,832.2 Engineering, selling and administrative expenses 401.9 341.6 282.3 Amortization expenses 5.8 3.3 3.1 Gain on sale of parts line (3.3) — — Pension settlements 5.3 — — Plant consolidation and restructuring costs — — 3.2 Total costs and expenses 3,503.1 2,630.9 2,120.8 Operating earnings from continuing operations 501.9 302.4 133.3 Other expenses: Interest expense (36.3) (46.3) (53.8) Loss on debt extinguishment (12.5) (14.4) (9.1) Other income (expense) — net 9.9 3.2 3.5 Total other expenses (38.9) (57.5) (59.4) Earnings from continuing operations before taxes on income 463.0 244.9 73.9 Provision for taxes on income 129.4 78.4 14.8 Earnings from continuing operations 333.6 166.5 59.1 Discontinued operations Earnings (loss) from discontinued operations, net of income taxes 3.1 (0.3) 0.9 Gain on sale or closure of discontinued operations, net of income taxes — — 5.8 Net earnings $ 336.7 $ 166.2 $ 65.8

During the third quarter of 2005, we decided to close Monogram Refrigeration, LLC, a wholly-owned subsidiary Toledo Ship Repair Company (Toledo Ship Repair), a division of the General Electric Company. We have reported the of the company’s wholly-owned subsidiary, Manitowoc results of these operations as discontinued and have Marine Group, LLC. Located in Toledo, Ohio, Toledo Ship restated prior year amounts in accordance with Statement Repair performed ship repair and industrial repair services. of Financial Accounting Standards (SFAS) No. 144, In addition, during the third quarter of 2005, we decided “Accounting for the Impairment of Long-Lived Assets.” Prior we would divest of our wholly-owned subsidiary, Diversified year amounts throughout this Management Discussion and Refrigeration LLC (f/k/a Diversified Refrigeration, Inc.) (DRI). Analysis of Financial Condition and Results of Operations DRI was a private-label contract manufacturing operation. have been restated to reflect the reporting of these operations On December 30, 2005, we completed the sale of DRI to as discontinued.

The Manitowoc Company, Inc. — 2007 Form 10-K 19

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Year Ended December 31, 2007 Compared to 2006 recorded in loss on debt extinguishment in the Consolidated Consolidated net sales increased 36.5% in 2007 to $4.0 bil- Statements of Operations. lion from $2.9 billion in 2006. This increase was the result of The effective tax rate for the year ended December 31, higher year-over-year sales in all three of our business seg- 2007 was 28.0% compared to 32.0% for the year ended ments. Sales in our Crane, Foodservice and Marine seg- December 31. 2006. The lower effective tax rate in 2007 ments increased 45.2%, 5.5% and 13.6%, respectively, for was a result of a foreign tax credit carryforward which was the year ended December 31, 2007 compared to 2006. recognized during the second quarter and an IRS audit set- Changes in currency exchange rates resulted in an increase tlement during the third quarter. In addition, all periods were in sales of $122.8 million or 3.1% for the year ended favorably affected, as compared to the statutory rate, to December 31, 2007 compared to the year ended varying degrees by certain global tax planning initiatives. December 31, 2006. Further analysis of the increases in The earnings from discontinued operations, net of income sales by segment is presented in the Sales and Operating taxes, for the year ended December 31, 2007 primarily Earnings by Segment section below. reflects favorable product liability experience related to our Gross profit increased significantly for the year ended discontinued Manlift business which was sold in 2004. December 31, 2007 to $911.7 million compared to $647.3 million for the year ended December 31, 2006 — an increase Year Ended December 31, 2006 Compared to 2005 of 40.9%. Gross margin increased in 2007 to 22.8% from Consolidated net sales increased 30.1% in 2006 to $2.9 bil- 22.1% in 2006. The increase in consolidated gross profit and lion from $2.3 billion in 2005. This increase was the result of margin was driven by all three segments as a result of higher year-over-year sales in all three of our business seg- higher sales volumes and increased productivity. Crane segments. Sales in our Crane, Foodservice and Marine segment gross profit increased in 2007 to $729.2 million from ments increased 37.2%, 4.0% and 25.1% respectively for $488.7 million in 2006, while gross margin increased to the year ended December 31, 2006 compared to the same 22.5% from 21.9% over the same period. The Foodservice period in 2005. Changes in currency exchange rates resulted segment’s gross profit and gross margin increased from in an increase in sales of $7.3 million or 0.2% for the year $122.7 million and 29.5% in 2006 to $131.6 million and ended December 31, 2006 compared to the year ended 30.0% in 2007, respectively. Marine segment gross profit December 31, 2005. Further analysis of the increases in increased in 2007 to $50.2 million from $36.0 million in sales by segment is presented in the Sales and Operating 2006, while gross margin increased to 15.6% from 12.7% Earnings by Segment section below. over the same period. Gross profit increased significantly for the year ended Engineering, selling and administrative (ES&A) expenses December 31, 2006 to $647.3 million compared to $421.9 for the year ended December 31, 2007 increased approxi- million for the year ended December 31, 2005 — an increase mately $60.3 million to $401.9 million compared to $341.6 of 53.4%. Gross margin increased in 2006 to 22.1% from million for the year ended December 31, 2006. This increase 18.7% in 2005. The increase in consolidated gross profit and was primarily driven by the Crane and Foodservice seg- margin was driven by significantly higher gross margin in the ments and corporate expenses. Crane segment ES&A Crane segment due to increased volume and productivity expense increased due to higher engineering and selling gains. In addition, the Marine segment reported gross profit expenses, increased employee related costs and expenses of $36.0 million for the year ended December 31, 2006 ver- related to the initiation of an ERP implementation project. sus $8.6 million for the year ended December 31, 2005. This Foodservice segment ES&A expenses increased due to was driven by profitability on new construction contracts higher employee and commission costs. Corporate and a strong repair year. Also, 2005 gross profit was expenses increased primarily due to increased employee adversely affected by a $10.2 million reserve during the related costs. ES&A expenses of the Marine segment fourth quarter. For a more detailed discussion of this decreased slightly, primarily as a result of lower bid costs reserve, please see the Marine segment analysis below. The and professional fees. Foodservice segment’s gross profit decreased from 30.7% Interest expense for the year ended December 31, 2007 in 2005 to 29.5% in 2006. This was primarily the result of was $36.2 million versus $46.3 million for the year ended lower sales volumes in our Beverage division, higher mate- December 31, 2006. The decrease resulted from the com- rial costs and costs related to the ERP implementation. 1 pany’s redemption of the 10 ⁄2% senior subordinated notes Engineering, selling and administrative (ES&A) expenses due 2012. This decrease was partially offset by an increase for the year ended December 31, 2006 increased approxi- in the average borrowings outstanding under our revolving mately $59.3 million to $341.6 million compared to $282.3 credit facility and higher accounts receivable securitization million for the year ended December 31, 2005. This increase interest costs. was primarily driven by the Crane and Marine segments and 1 We redeemed our 10 ⁄2% senior subordinated notes due corporate expenses. Crane segment ES&A increases were 2012 in August 2007. Pursuant to the terms of the indenture, due to higher selling expense, increased employee related we paid the note holders 105.25 percent of the principal costs and increased research and development expenses. amount plus accrued and unpaid interest up to the redemp- Marine segment ES&A increases were due to higher engi- tion date. As a result of this redemption, we incurred a neering costs, bidding costs related to potential new con- charge of $12.5 million ($8.6 million net of income taxes) tracts and increased employee related costs. Corporate related to the call premium, the write-off of unamortized ES&A expenses increased primarily due to expensing of debt issuance costs and other expenses. The charge was stock options, costs related to the unrealized acquisitions

20 The Manitowoc Company, Inc. — 2007 Form 10-K

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and employee related costs. ES&A expenses of the Foodser- driven by increased volume of crawler, tower and mobile vice segment increased slightly, primarily as a result of ES&A hydraulic cranes worldwide, and increases in our aftermar- associated with the McCann’s Engineering & Mfg. Co. ket sales and service business, slightly offset by decreased (McCann’s) operations acquisition in 2006. sales of our boom truck cranes in North America due to the Interest expense for the year ended December 31, 2006 softening residential housing construction market. As of was $46.3 million versus $53.8 million for the year ended December 31, 2007, total Crane segment backlog was $2.9 December 31, 2005. The decrease resulted from the com- billion, an 87.5% increase over the December 31, 2006 back- 3 pany’s redemption of the 10 ⁄8% senior subordinated notes log of $1.5 billion and an 8.4% increase over the due 2011 during May of 2006. This decrease was slightly September 30, 2007 backlog of $2.7 billion. offset by an increase in the interest rate of our variable inter- For the year ended December 31, 2007, the Crane seg- est rate outstanding debt balances. ment reported operating earnings of $470.5 million com- 3 During May 2006, we redeemed our 10 ⁄8% senior subordi- pared to $280.6 million for the year ended December 31, nated notes due 2011. Pursuant to the terms of the inden- 2006. Operating earnings of the Crane segment were favor- ture, we paid the note holders 105.188 percent of the ably affected by increased volume across all regions and all principal amount of the notes redeemed plus accrued and but one product line, manufacturing productivity gains, prod- unpaid interest up to the redemption date. As a result of this uct cost takeout initiatives, and price increases where appro- redemption, we incurred a charge of $14.4 million ($9.4 mil- priate. Operating margin for the year ended December 31, lion net of income taxes) related to the call premium ($11.2 2007 was 14.5% versus 12.6% for the year ended Decem- million), write-off of unamortized debt issuance costs ($3.1 ber 31, 2006. Strong factory performance, leveraging of million) and other expenses ($0.1 million). The charge was fixed costs, and appropriate pricing initiatives in all our recorded in loss on debt extinguishment in the Consolidated regions contributed to the gains in profit and margin, some- Statements of Operations. what offset by higher costs of materials. The effective tax rate for the year ended December 31, 2006 was 32.0% compared to 20.0% for the year ended Year Ended December 31, 2006 Compared to 2005 December 31. 2005. Both periods were favorably affected, Net sales from the Crane segment for the year ended as compared to the statutory rate, by certain global tax plan- December 31, 2006 increased 37.3% to $2.2 billion versus ning initiatives. The lower effective tax rate in 2005 was the $1.6 billion for the year ended December 31, 2005. Net sales result of lower earnings, a research and development tax for the year ended December 31, 2006 increased over the credit, and the realization of certain tax benefits that were prior year in all of our major geographic regions. The Crane previously reserved against due to their uncertainty. segment continues to benefit from strong crane end-market The loss from discontinued operations, net of income demand. From a product line standpoint, the sales increase taxes, for the year ended December 31, 2006 reflects the was driven by increased volume of crawler, tower and mobile operating results of our discontinued Toledo Ship Repair hydraulic cranes worldwide, increases in our aftermarket operation. The closure of Toledo Ship Repair was completed sales and service business, and increases in boom truck during the first quarter of 2006 and no further results were sales in North America. As of December 31, 2006, total Crane realized from this operation. segment backlog was $1.5 billion, a 77% increase over the December 31, 2005 backlog of $866.1 million and a 10.4% Sales and Operating Earnings by Segment increase over the September 30, 2006 backlog of $1.4 billion. Operating earnings reported below by segment include the For the year ended December 31, 2006, the Crane seg- impact of reductions due to restructurings and plant consolida- ment reported operating earnings of $280.6 million com- tion costs, whereas these expenses were separately identified pared to $115.5 million for the year ended December 31, in the Results of Consolidated Operations table above. 2005. Operating earnings of the Crane segment were favorably affected by increased volume across all regions and Cranes and Related Products Segment products, productivity gains as a result of consolidation efforts over the past several years, mix of product, and effec- 2007 2006 2005 tive leveraging of engineering, selling and administrative expenses on higher sales volume. Operating margin for the Net sales $3,245.7 $2,235.4 $1,628.7 year ended December 31, 2006 was 12.6% versus 7.1% for Operating earnings $ 470.5 $ 280.6 $ 115.5 the year ended December 31, 2005. Strong factory perform- Operating margin 14.5% 12.6% 7.1% ance, leveraging of fixed costs, and favorable pricing levels in all our regions contributed to the gains in profit and margin. Year Ended December 31, 2007 Compared to 2006 Crane segment net sales for the year ended December 31, Foodservice Equipment Segment 2007 increased 45.2% to $3.2 billion versus $2.2 billion for the year ended December 31, 2006. Net sales for the year 2007 2006 2005 ended December 31, 2007 increased over the prior year in all of our major geographic regions. The Crane segment con- Net sales $438.3 $415.4 $399.6 tinues to benefit from strong crane end-market demand. Operating earnings $ 61.3 $ 56.2 $ 54.9 From a product line standpoint, the sales increase was Operating margin 14.0% 13.5% 13.7%

The Manitowoc Company, Inc. — 2007 Form 10-K 21

JOB: 08-10279-2 CYCLE#;BL#: 1; 0 TRIM: 8.5" x 11" COMPOSITE COLORS: Black, PANTONE Process Blue U, ~note-color 2 GRAPHICS: none V1.5 Merrill Corp - The Manitowoc Company_ Inc. 10-K-A Print Version | jcarlso | 10-Apr-08 11:06 | 08-10279-2.ba | Sequence: 22 CHKSUM Content: 61624 Layout: 9094 Graphics: No Graphics CLEAN

Year Ended December 31, 2007 Compared to 2006 ended December 31, 2006 were also adversely affected by Foodservice segment net sales increased 5.5% to $438.3 the lower sales of our beverage division. McCann’s con- million for the year ended December 31, 2007 versus $415.4 tributed approximately $1.4 million to 2006 operating earn- million for the year ended December 31, 2006. The sales ings of the Company. increase during 2007 was driven by all divisions and the full year results of McCann’s which was acquired on May 26, Marine Segment 2006. The increases were a result of both volume and pric- Prior year sales and operating earnings of the Marine seg- ing increases versus the prior year. In addition, our beverage ment have been restated for the discontinued operation of division benefited from the acquisition of McCann’s, which Toledo Ship Repair (discontinued in the third quarter of 2005). added approximately $20.8 million of sales for the full year ended December 31, 2007 as compared to approximately 2007 2006 2005 $11.4 million of sales for the last half of the year ended Net sales $321.0 $282.5 $225.8 December 31, 2006. Operating earnings (loss) $ 26.1 $ 11.3 $ (9.2) For the year ended December 31, 2007, the Foodservice Operating margin 8.1% 4.0% (4.1)% segment reported operating earnings of $61.3 million compared to $56.2 million for the year ended December 31, 2006. Operating results for 2007 were improved as a result Year Ended December 31, 2007 Compared to 2006 of increased volumes, appropriate pricing initiatives, and Marine segment net revenue increased 13.6% to $321.0 mil- product cost takeouts. These benefits were somewhat off- lion for the year ended December 31, 2007 over net sales for set by material cost increases and higher employee and the year ended December 31, 2006. The increase in revenue commission costs. The McCann’s acquisition benefited 2007 was primarily the result of the construction of the first and operating earnings by $3.7 million compared to 2006 operat- second options of the Improved Navy Lighterage System ing earnings of $1.4 million. (INLS), construction of several commercial articulated tug and barge combination projects and construction of the Lit- Year Ended December 31, 2006 Compared to 2005 toral Combat Ship (LCS) for the U.S. Navy. The Marine segment reported operating earnings of $26.1 Net sales from the Foodservice segment increased 4.0% to million for the year ended December 31, 2007 versus $11.3 $415.4 million for the year ended December 31, 2006 versus million for the year ended December 31, 2006. Results for $399.6 million for the year ended December 31, 2005. The 2007 were positively impacted by continued demand for sales increase during 2006 was driven by our ice and refrig- certain commercial vessels which allowed us to bid on and eration divisions and the acquisition of McCann’s. The successfully complete repeat projects and a strong 2007 increases in our ice and refrigeration divisions were a result winter repair season at our Sturgeon Bay shipyard. of both volume and pricing increases versus the prior year. Additionally, operating margins were favorably impacted by Our beverage division benefited from the acquisition of improved manufacturing performance on longer-term McCann’s, which occurred on May 26, 2006. This acquisition government contracts. added approximately $11.4 million of sales for the year ended December 31, 2006. The benefit of the McCann’s acquisition was offset by reduced sales in our historical bev- Year Ended December 31, 2006 Compared to 2005 erage businesses. The decline in the historical business was Net sales from our Marine segment increased 25.1% to primarily attributed to two major customer equipment $282.5 million for the year ended December 31, 2006 over refresh programs which benefited net sales in 2005 but did net sales for the year ended December 31, 2005. The not recur in 2006. increase in sales was primarily the result of revenue gener- For the year ended December 31, 2006, the Foodservice ated from construction of the first option of the Improved segment reported operating earnings of $56.2 million com- Navy Lighterage System (INLS), construction of several compared to $54.9 million for the year ended December 31, mercial articulated tug and barge combination projects and 2005. The year ended December 31, 2005 was impacted by construction of the Littoral Combat Ship (LCS). Sales for a $3.2 million restructuring charge recorded in connection 2006 also benefited from a very strong winter repair season. with the consolidation of our Kolpak operation located in For 2006, the Marine segment reported operating earnings Wisconsin into our Kolpak operation located in Tennessee. of $11.3 million compared to a loss of $9.2 million for 2005. This action was taken in an effort to streamline our cost The loss in 2005 was primarily the result of a $10.2 million structure. The charge included $1.5 million to write-down reserve recorded during the fourth quarter of 2005. We have the facility and land, which were subsequently sold, to esti- been in negotiations with one of our Marine customers to mated fair market value less cost to sell; $0.7 million related recover certain cost overruns that resulted from change to the write-down of certain equipment; $0.1 million to orders related to a particular contract. During the third quar- write-off excess inventory which was not transferred to ter of 2005, due to the fact that these negotiations were not Tennessee; $0.5 million related to severance and other successful within a timeframe satisfactory to us, we filed a employee related costs; and $0.4 million for other related lawsuit seeking recovery of these cost overruns from the closing costs. Operating results for 2006 were adversely customer. The customer filed a counter suit against us in the affected by approximately $2.8 million due to increased fourth quarter of 2005. During the fourth quarter of 2005, we commodity costs, specifically copper and aluminum. The established a reserve of $10.2 million to reflect the inherent operating results of the Foodservice segment for the year uncertainties in litigation of this type. The $10.2 million

22 The Manitowoc Company, Inc. — 2007 Form 10-K

JOB: 08-10279-2 CYCLE#;BL#: 1; 0 TRIM: 8.5" x 11" COMPOSITE COLORS: Black, PANTONE Process Blue U, ~note-color 2 GRAPHICS: none V1.5 Merrill Corp - The Manitowoc Company_ Inc. 10-K-A Print Version | jcarlso | 10-Apr-08 11:06 | 08-10279-2.ba | Sequence: 23 CHKSUM Content: 40533 Layout: 27037 Graphics: No Graphics CLEAN

reserve is recorded in cost of sales of the Marine segment in Cranes and Related Products — The global Crane market the Consolidated Statements of Operations for the year continued to strengthen in 2007, which benefited most of ended December 31, 2005. Although we have established our regional and product end-markets, including our rough this reserve, we believe we are contractually entitled to these terrain, all-terrain, crawler, and tower crane product families. cost recoveries and we are in current negotiations with this Price increases to recover material cost increases, and man- customer to obtain recovery of amounts owed. ufacturing cost reductions have contributed to the improved The operating results of 2006 benefited from the completion gross margins in the Crane segment. In 2008, we expect to of certain contracts in 2005, which were fixed price contracts. see some additional escalation in product costs and a These were bid and awarded prior to the unprecedented rise weaker currency in the U.S. which we anticipate will again in the costs of steel and other commodities during 2004. Labor be mitigated across the industry with pricing actions and inefficiencies also impacted these projects in prior years. The other cost reduction efforts. Marine segment’s contracts are now better protected against During 2007, based on third party data and company esti- commodity cost increases due to escalation clauses. In addi- mates, we grew global market share in all product families tion, 2006 results were also positively impacted by increased except one. We responded to significant increases in demand for certain commercial vessels which allowed us to demand in Asia by acquiring our distributor and licensee and bid on and successfully complete repeat projects with higher acquiring crane manufacturing capabilities in India. The margins. For 2006, operating margins were negatively Crane segment continues to invest in its manufacturing facil- impacted by the fact that a significant percentage of the ities in an effort to increase production volumes to meet Marine segment results were from a relatively low margin LCS market demand. The improvement in overall market share is contract, which is a first-run military prototype vessel that is partially a reflection of continued significant investment in structured as a cost plus contract. new products. We introduced over a dozen new products in 2007. We will continue to invest in new products and prod- General Corporate Expenses uct support and have over 30 new product programs in process or in our project pipeline. 2007 2006 2005 Looking ahead, we expect sales volumes to continue to increase worldwide as most non-residential global construc- Net sales $4,005.0 $2,933.3 $2,254.1 tion market segments have significant growth prospects Corporate expenses $ 48.2 $ 42.4 $ 24.8 based on third party data. We believe the North American % of Net sales 1.2% 1.4% 1.1% construction equipment market (as it relates to lifting equipment in non-residential applications) is still strong, and we Year Ended December 31, 2007 Compared to 2006 maintain a high order backlog for North American orders. Corporate expenses increased $5.8 million to $48.2 million We expect Asia will continue to grow significantly, driven by in 2007 compared to $42.4 million in 2006. The increase was Chinese and Indian lifting market expansion. We will work to primarily due to higher employee related costs and other grow our market share globally by leveraging the strength of professional expenses. our brand names, product service and support, and by expanding product offerings. Year Ended December 31, 2006 Compared to 2005 In 2008, we plan to continue our development of new Corporate expenses increased $17.6 million to $42.4 million crane models that appeal to construction markets world- in 2006 compared to $24.8 million in 2005. Expensing of wide. One way to achieve this growth is through the contin- stock options, which began during the first quarter of 2006, ued expansion and strategic positioning of our service and increased corporate expenses by $5.7 million in 2006 com- product support infrastructure in emerging markets on all pared to 2005. Also contributing to the increase in corporate continents. Our past acquisitions have given us a broad expenses during 2006 was approximately $2.1 million of product offering and worldwide distribution. We believe legal and accounting expenses related to the unrealized these factors along with new product introductions will help acquisitions. Finally, corporate expenses for the year ended us continue to grow our business in 2008 and beyond. We December 31, 2006 were impacted by higher employee believe that our growth strategy is solid and supported by related costs and other professional expenses. the diversification of our global manufacturing and distribution presence. Market Conditions and Outlook During 2008, we will strive to protect our market shares in a Foodservice Equipment — Our Foodservice segment faces profitable manner, improve our cost structures, and continue a different environment in 2008 from that of the Crane Seg- to invest in new product development. Because of our global ment. This is a largely domestic U.S. business and our key Crane businesses and our continued global growth in our customers are restaurants, convenience stores and the lodg- Foodservice businesses, during 2007 we were affected more ing market. Several customers have revised their capital than ever by non-U.S. world economies. The economies of spending plans in response to lower consumer spending on Europe and Asia, in particular, affect our performance. meals outside the home and general concern over the U.S. Our diversified business model, global presence, and broad economy. Consumers are facing higher energy prices and product offerings proved beneficial to us in 2007 and we uncertain economic outlook. Even in the face of market believe will continue to provide stability to our company into uncertainty, this segment has historically been stable. In the the future. Product line and geographic diversification within past 30 years, restaurant sales have failed to outpace infla- our segments also historically have proved to be beneficial. tion only three times. Foodservice equipment is a stable

The Manitowoc Company, Inc. — 2007 Form 10-K 23

JOB: 08-10279-2 CYCLE#;BL#: 1; 0 TRIM: 8.5" x 11" COMPOSITE COLORS: Black, PANTONE Process Blue U, ~note-color 2 GRAPHICS: none V1.5 Merrill Corp - The Manitowoc Company_ Inc. 10-K-A Print Version | jcarlso | 10-Apr-08 11:06 | 08-10279-2.ba | Sequence: 24 CHKSUM Content: 63564 Layout: 9094 Graphics: No Graphics CLEAN

industry and we have a large base of installed equipment older vessels and the recently awarded Gulf of Mexico deep- that puts us in a strong position for replacement sales. water oil leases will require larger Platform Supply Vessels Approximately 80% of our Foodservice segment sales are (PSV) and Anchor Handling Towing Supply Vessels (AHTS). due to equipment replacement and upgrade which is not Alaskan North Slope drilling is manifesting a demand for dependent on new store construction. Polar Ice-Breaking AHTS vessels, allowing Marine to capital- According to the National Restaurant Association, the top ize on its recent successful USCG ice-breaker construction. two trends for consumers are “going healthy” and “going In addition, the North Sea drilling market has also begun to green” and we believe we are well positioned for both. We show opportunities for US shipbuilders as currency continue to develop products to meet the desire for health- exchange ratios more than offset initial mobilization costs. ier menu items. In addition, foodservice operators have long Marine, in conjunction with a principal commercial cus- recognized our commitment to producing the most energy- tomer, is pioneering a design for a Liquefied Petroleum Gas efficient products in the industry. We have built on the need (LPG) barge that will be capable of lightering LPG ships and for green technology by advancing the use of insulation distributing the gas to smaller ports. This market is in its materials in manufacturing processes that minimize the use infancy, but should hold great potential in the coming years. of volatile compounds and chemicals. This movement is not Marine looks forward to 2008 as another year of contin- only good for the environment, it creates a healthy restau- ued improvement in efficiency, safety, and operating earn- rant. We believe operators and customers are becoming ings. It is well positioned with a strong backlog of more sensitive to the need for products that match a com- commercial work and it is in an excellent position to capital- mitment to conservation. ize on existing and pending government contracts. If industry performance flattens in 2008, we are still confident in our ability for growth because we have been devel- Liquidity and Capital Resources oping new products, serving new markets and leveraging Cash flow from operations during 2007 was $238.2 million our relationships with national and global accounts. compared to $294.1 million in 2006. We applied a portion of this cash flow in 2007 to capital spending, dividends and Marine — The Marine segment exceeded its expectations payment of outstanding debt. We had $366.4 million in cash for 2007, driven by commercial double-hull tank/barge con- and cash equivalents on-hand at December 31, 2007, an struction work (Oil Pollution Act of 1990) and government increase of $190.3 million over 2006. program execution. We delivered one articulating tug and Cash flow provided by operating activities of continuing double-hull barge unit and two double-hulled petroleum operations for the year ended December 31, 2007 totaled barges, and commenced construction on two more double- $238.2 million compared to $294.4 million for the year hull petroleum barges. We operated at a feverish pace in ended December 31, 2006. Cash flow during 2007 was meeting our contractual requirements on the first option of driven by $336.7 million of net earnings, an increase of the Improved Navy Lighterage System (INLS), delivering six $170.5 million over net earnings for 2006. During 2007, Warping Tugs and 13 Causeway Ferries in 2007. Work con- cash flow from operations was negatively impacted by an tinued on the first Littoral Combat Ship (LCS) Freedom, and increase in accounts receivable of $119.0 million and an production commenced on the first boat of the US Coast increase in inventory of $105.2 million. The increase in Guard’s Response Boat-Medium (RB-M) program. Great accounts receivable was driven primarily by an increase in Lakes ship repair activity also excelled, with strong first quar- sales volumes, and the increase in inventory was due to ter winter repair activities driving year-end results. higher order backlog and an increase in sales volumes, both Our Marine segment backlog coming into 2008 should in the Crane segment. Accounts payable, accrued expenses carry us largely through the year and into 2009. We are and other assets and liabilities positively impacted cash scheduled to deliver two double-hull petroleum barges, the flow from operations by $31.9 million. This was driven pri- LCS Freedom, and a number of INLS and RB-M units in marily by payables related to the increase in inventory in the 2008. Repair activity in 2008 should be quite healthy, though Crane segment. perhaps not quite the level it was in 2007 due to the timing The company is party to an accounts receivable securitiza- of the five-year Coast Guard mandated survey and inspection program whereby it sells certain of its domestic trade tion cycle. Bay Shipbuilding has reservations for eight major accounts receivable to a wholly owned, bankruptcy-remote, dockings and surveys in 2008, of which six will be com- special purpose subsidiary which, in turn, sells participating pleted in first quarter. interests in its pool of receivables to a third-party financial Fleet utilization on the Great Lakes remains strong with institution (Purchaser). The Purchaser receives an ownership coal and iron ore leading the way. We expect that our cus- and security interest in the pool of receivables. New receiv- tomers should now be able to justify investment in replace- ables are purchased by the special purpose subsidiary and ment tonnage and in vessel revitalization projects such as participation interests are resold to the Purchaser as collec- re-powerings, conversions and automations. These capital tions reduce previously sold participation interests. The decisions should also be supported by fuel savings from company has retained collection and administrative respon- modern propulsion machinery and increased automation to sibilities on the participation interests sold. The Purchaser improve manning utilization. has no recourse against the company for uncollectible Another sector of the market that should provide future receivables; however, the company’s retained interest in the work for Marine is the re-emerging oil drilling support vessel receivable pool is subordinate to the Purchaser’s interest demand. The U.S. Oil Patch is in need of replacements for and is recorded at fair value. Due to a short average collection

24 The Manitowoc Company, Inc. — 2007 Form 10-K

JOB: 08-10279-2 CYCLE#;BL#: 1; 0 TRIM: 8.5" x 11" COMPOSITE COLORS: Black, PANTONE Process Blue U, ~note-color 2 GRAPHICS: none V1.5 Merrill Corp - The Manitowoc Company_ Inc. 10-K-A Print Version | jcarlso | 10-Apr-08 11:06 | 08-10279-2.ba | Sequence: 25 CHKSUM Content: 41090 Layout: 9407 Graphics: No Graphics CLEAN

cycle of less than 60 days for such accounts receivable and equipment primarily used in fast food restaurants, stadiums, the company’s collection history, the fair value of the com- cafeterias and convenience stores. McCann’s primary prod- pany’s retained interest approximates book value. The ucts are backroom beverage equipment such as carbona- retained interest recorded at December 31, 2007 was $98.8 tors, water boosters and racks. McCann’s also produces million, and is included in accounts receivable in the accom- accessory components for beverage dispensers including panying Consolidated Balance Sheets. specialty valves, stands and other stainless steel compo- The securitization program’s capacity was increased from nents. The cash flow impact of this acquisition is included in $90 million in 2006 to $105 million in the third quarter of business acquisition, net of cash acquired within the cash 2007. The program includes certain domestic trade accounts flow from investing section of the Consolidated Statements receivable from our U.S. Crane and Foodservice businesses. of Cash Flows. Trade accounts receivables sold to the Purchaser and being On January 3, 2006, we acquired certain assets, rights and serviced by the company totaled $100.0 million at properties of ExacTech, Inc., a supplier of fabrication, December 31, 2007, an increase of $10.0 million from the machining, welding and other services to various parties. balance sold to the Purchaser at December 31, 2006. Located in Port Washington, Wisconsin, the operation will We spent a total of $119.6 million during 2007 for capital provide these services to the U.S. based crane manufactur- expenditures. We continue to fund capital expenditures to ing facilities. The cash flow impact of this acquisition is increase production capacity, improve the cost structure of included in business acquisition, net of cash acquired within our business, to invest in new processes, products and the cash flow from investing section of the Consolidated technology, and to maintain high-quality production stan- Statements of Cash Flows. dards. The following table summarizes 2007 capital expendi- On April 3, 2007, we sold all of our aftermarket replace- tures and depreciation by segment. ment parts and rights to manufacture, sell and service aftermarket replacement parts, for all the models of the Grove Capital Manlift aerial work platform product line around the world, Expenditures Depreciation to MinnPar LLC (MinnPar). The cash flow impact of this Cranes and Related Products $103.7 $70.4 divestiture is recorded in gain on sale of parts line in the Consolidated Statements of Cash Flows. Foodservice Equipment 3.7 8.0 Restricted cash represents cash in escrow which replaced Marine 6.8 2.1 outstanding letters of credit related to performance under a Corporate 5.4 1.8 certain Marine contract and security for the indemnity agree- Total $119.6 $82.3 ment for a casualty insurance provider. 1 On August 1, 2007, the company redeemed its 10 ⁄2% sen- In the third quarter of 2007 we reached an agreement with ior subordinated notes due 2012. Pursuant to the terms of Valcovna profilov a.s. for the “brownfield” development of a the indenture, the company paid the note holders 105.25 crane manufacturing facility in Saris, Slovakia. In addition, percent of the principal amount plus accrued and unpaid during the first quarter of 2007 we entered into agreements interest up to the redemption date. As a result of this with a major software and systems supplier and a related redemption, the company incurred a charge of $12.5 million consulting firm to purchase software and consulting serv- related to the call premium, the write-off of unamortized ices to begin design and implementation of an ERP system debt issuance costs and other expenses. We utilized cash in our Crane segment. To date, capital expenditures for this on hand and availability under our revolving credit facility to ERP system total $11.2 million. fund this redemption. On July 19, 2007, the company acquired Shirke Construc- During May 2006, we redeemed our 175 million Euro 3 tion Equipments Pvt. Ltd (Shirke). Headquartered in Pune, ($216.9 million based on May 15, 2006 exchange rates) 10 ⁄8% India, Shirke is a market leader in the Indian tower crane senior subordinated notes due 2011. Pursuant to the terms of industry and has been Potain’s Indian manufacturing partner the indenture, we paid the note holders 105.188 percent of the and distributor since 1982. The cash flow impact of this principal amount of the notes, which included a call premium acquisition is included in business acquisition, net of cash of $11.2 million plus accrued and unpaid interest up to the acquired within the cash flow from investing section of the redemption date. We utilized cash on hand and availability Consolidated Statements of Cash Flows. under our revolving credit facility to fund this redemption. The On January 3, 2007, the company acquired the Carrydeck borrowings drawn on the revolving credit facility to complete line of mobile industrial cranes from Marine Travelift, Inc. of this transaction were fully paid off during 2006. Sturgeon Bay, Wisconsin. The acquisition of the Carrydeck During the years ended December 31, 2007, 2006 and line adds six new models to the company’s product offering 2005, we sold $14.2 million, $14.8 million and $20.5 million, of mobile industrial cranes. The cash flow impact of this respectively, of our long term notes receivable to third party acquisition is included in business acquisitions, net of cash financing companies. We guaranty varying percentages, up acquired within the cash flow from investing section of the to 100%, of collection of the notes to the financing compa- Consolidated Statements of Cash Flows. nies. We have accounted for the sales of the notes as a On May 26, 2006, the company acquired substantially all financing of receivables. The receivables remain on our Con- of the assets and business operated by McCann’s. Head- solidated Balance Sheets, net of payments made, in other quartered in Los Angeles, California, McCann’s is engaged in current and non-current assets, and we have recognized an the design, manufacture and sale of beverage dispensing obligation equal to the net outstanding balance of the notes

The Manitowoc Company, Inc. — 2007 Form 10-K 25

JOB: 08-10279-2 CYCLE#;BL#: 1; 0 TRIM: 8.5" x 11" COMPOSITE COLORS: Black, PANTONE Process Blue U, ~note-color 2 GRAPHICS: none V1.5 Merrill Corp - The Manitowoc Company_ Inc. 10-K-A Print Version | jcarlso | 10-Apr-08 11:06 | 08-10279-2.ba | Sequence: 26 CHKSUM Content: 62147 Layout: 9094 Graphics: No Graphics CLEAN

in other current and non-current liabilities in the Consoli- 2013. Among other restrictions, these covenants require us dated Balance Sheets. The cash flow benefit of these trans- to meet specified financial tests, which include the follow- actions, net of payments made by the customer, is reflected ing: consolidated interest coverage ratio; consolidated total as financing activity in the Consolidated Statements of Cash leverage ratio; and consolidated senior leverage ratio. These Flows. During the years ended December 31, 2007, 2006 covenants also limit, among other things, our ability to and 2005, the customers paid $18.5 million, $30.2 million redeem or repurchase our debt, incur additional debt, make and $6.3 million, respectively, of the notes to the third party acquisitions, merge with other entities, pay dividends or dis- financing companies. As of December 31, 2007, 2006 and tributions, repurchase capital stock, and create or become 2005, the outstanding balance of the notes receivables guar- subject to liens. The revolving credit facility also contains anteed by us was $18.2 million, $22.3 million and $37.4 mil- cross-default provisions whereby certain defaults under any lion, respectively. other debt agreements would result in default under the Our outstanding debt at December 31, 2007 consists of secured revolving credit facility. We were in compliance with 1 $150.0 million of 7 ⁄8% senior notes due 2013 (Senior Notes all covenants as of December 31, 2007, and based upon our due 2013), as well as outstanding amounts under our revolv- current plans and outlook, we believe we will be able to ing credit facility, working capital lines of credit in non-U.S. comply with these covenants during the subsequent 12 locations and capital leases. months of 2008. Our revolving credit facility provides $300 million of initial Our debt position at various times increases our vulnera- borrowing capacity and includes the ability to access an bility to general adverse industry and economic conditions additional $250 million of borrowing capacity during the life and results in a meaningful portion of our cash flow from of the facility under the same terms. Borrowings under the operations being used for payment of interest on our debt. revolving credit facility bear interest at a rate equal to the This could potentially limit our ability to respond to market sum of a base rate or a Eurodollar rate plus an applicable conditions or take advantage of future business opportuni- margin, which is based on our consolidated total leverage ties. Our ability to service our debt is dependent upon many ratio as defined by the credit agreement. The annual com- factors, some of which are not subject to our control, such mitment fee in effect at December 31, 2007 on the unused as general economic, financial, competitive, legislative, and portion of the secured revolving credit facility was 0.15%. As regulatory factors. In addition, our ability to borrow addi- of December 31, 2007, the amount outstanding under the tional funds under the revolving credit facility in the future revolving credit facility was $56.7 million. will depend on our meeting the financial covenants con- The Senior Notes due 2013 are unsecured senior obliga- tained in the credit agreement, even after taking into tions which ranked prior to our senior subordinated notes account such new borrowings. due 2012. Indebtedness under our revolving credit facility The revolving credit facility or other future facilities may be ranks equally with the Senior Notes due 2013, except that it used for funding future acquisitions, seasonal working capi- is secured by substantially all domestic tangible and intangi- tal requirements, capital expenditures, and other investing ble assets of the company and its subsidiaries. Interest on and financing needs. We believe that our available cash, the Senior Notes due 2013 is payable semiannually in revolving credit facility, cash generated from future opera- May and November each year, The Senior Notes due 2013 tions, and access to public debt and equity markets will be can be redeemed by us in whole or in part for a premium on adequate to fund our capital and debt financing require- or after November 1, 2008. ments for the foreseeable future. As of December 31, 2007, we also had outstanding $23.8 Management also considers the following regarding liquid- million of other indebtedness with a weighted-average inter- ity and capital resources to identify trends, demands, com- est rate of 5.5%. This debt includes outstanding bank over- mitments, events and uncertainties that require disclosure: drafts in Asia and Europe, and various capital leases. A. Our revolving credit facility requires us to comply with As of December 31, 2007, we had two fixed-to-floating certain financial ratios and tests to comply with the terms rate swap contracts which effectively converted $50.0 mil- of the agreement. We were in compliance with these lion of our fixed rate Senior Notes due 2013 to variable rate covenants as of December 31, 2006, the latest measure- debt. These contracts are considered to be hedges against ment date. The occurrence of any default of these changes in the fair value of the fixed rate debt obligation. covenants could result in acceleration of any outstanding Accordingly, the interest rate swap contracts are reflected at balances under the revolving credit facility ($56.7 million fair value in our Consolidated Balance Sheets as an asset of outstanding as of December 31, 2007). Further, such $0.1 million as of December 31, 2007. Debt is reflected at an acceleration would constitute an event of default under amount equal to the sum of its carrying value plus an adjust- the indentures governing our Senior Notes due 2013. ment representing the change in fair value of the debt obli- B. Circumstances that could impair our ability to continue gation attributable to the interest rate risk being hedged. The to engage in transactions that have been integral to his- fair value of these contracts, which represents the cost to torical operations or are financially or operationally settle these contracts, approximated a gain of $0.1 million at essential, or that could render that activity commercially December 31, 2007. impracticable, such as the inability to maintain a speci- Our revolving credit facility and Senior Notes due 2013 fied credit rating, level of earnings, earnings per share, contain customary affirmative and negative covenants. In financial ratios, or collateral. We do not believe that the general, the covenants contained in the revolving credit facil- risk factors applicable to our business are reasonably ity are more restrictive than those of the Senior Notes due

26 The Manitowoc Company, Inc. — 2007 Form 10-K

JOB: 08-10279-2 CYCLE#;BL#: 1; 0 TRIM: 8.5" x 11" COMPOSITE COLORS: Black, PANTONE Process Blue U, ~note-color 2 GRAPHICS: none V1.5 Merrill Corp - The Manitowoc Company_ Inc. 10-K-A Print Version | jcarlso | 10-Apr-08 11:06 | 08-10279-2.ba | Sequence: 27 CHKSUM Content: 34493 Layout: 52543 Graphics: No Graphics CLEAN

likely to impair our ability to continue to engage in our OFF-BALANCE SHEET ARRANGEMENTS planned activities at this time. Our disclosures concerning transactions, arrangements and C. Factors specific to us and our markets that we expect to other relationships with unconsolidated entities or other be given significant weight in the determination of our persons that are reasonably likely to materially affect liquid- credit rating or will otherwise affect our ability to raise ity or the availability of or requirements for capital resources short-term and long-term financing. We do not presently are as follows: believe that events covered by the risk factors applicable • We have disclosed in Note 16 to the Consolidated to our business are reasonably likely to materially affect Financial Statements our buyback and residual value our credit ratings or would otherwise adversely affect our guaranty commitments. ability to raise short-term or long-term financing. • We lease various assets under operating leases. The D. We have disclosed information related to certain guaran- future estimated payments under these arrangements tees in Note 16 to our Consolidated Financial Statements. are disclosed in Note 19 to the Consolidated Financial E. Written options on non-financial assets (for example, Statements. real estate puts). We do not have any written options on • We have disclosed our accounts receivable securitiza- non-financial assets. tion arrangement in Note 10 to the Consolidated Finan- cial Statements.

CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS A summary of our significant contractual obligations as of December 31, 2007 is as follows: Total Committed 2008 2009 2010 2011 2012 Thereafter Debt $225.4 $10.6 $ 8.0 $56.7 $ — $ — $150.1 Capital leases 5.2 2.5 0.9 0.7 0.5 0.5 0.1 Operating leases 78.9 24.4 16.8 12.6 7.3 4.4 13.4 Purchase obligations — — — — — — — Total committed $309.5 $37.5 $25.7 $70.0 $7.8 $4.9 $163.6

* - There were no significant purchase obligation commitments at December 31, 2007. * - Table above does not include interest payments. * - FIN 48 tax liabilities totaling $36.7 million, including related interests and penalties, are not included in the table because the timing of their resolution cannot be estimated. See Note 11 to the consolidated financial statements for disclosures surrounding uncertain income tax positions under FIN 48.

At December 31, 2007, we had outstanding letters of During the second quarter of 2007, the company made a credit that totaled $1.9 million. We also had buyback com- $15.1 million pension contribution to its U.K. defined benefit mitments and residual value guarantees outstanding, that if pension plan. The $15.1 million contribution funded the all were satisfied in full at December 31, 2007, the total cash defined benefit plan as well as paid an incentive to certain cost to us would be $128.4 million, this amount is not pensioners to transfer from the defined benefit plan to a reduced for amounts the company would recover from defined contribution plan. As a result of this payment, the repossessing and subsequent resale of collateral. company recorded a charge during the second quarter of We maintain defined benefit pension plans for some of our 2007 of approximately $3.8 million to reflect the incentive operations in the United States and Europe. The company has given to the pensioners and the expenses incurred. established the Retirement Plan Committee (the Committee) During the second quarter of 2007, the company recorded to manage the operations and administration of all benefit a charge of $1.4 million related to a withdraw liability from a plans and related trusts. Our three U.S. pension plans had multiemployer pension plan at its former River Falls, Wiscon- benefit accruals frozen several years ago. Effective January 1, sin facility. During the third quarter of 2005, the company 2007, we merged all U.S. pension plans together. The com- closed its Kolpak operation located in River Falls, Wisconsin pany made a contribution of $27.2 million during the first and consolidated it with its operation in Parsons, Tennessee. quarter of 2007 that fully funded the ongoing pension liability The $1.4 million represents the estimated payment the com- of the U.S. pension plans. The company also changed its pany will make to the multiemployer pension plan for its for- investment policy to more closely align the interest rate sensi- mer union employees at the closed facility. tivity of its pension plan assets with the corresponding liabili- In 2007, cash contributions to all pension plans by us ties. The resulting asset allocation consists of approximately were $46.0 million, and we estimate that our pension plan 10% equities and 90% fixed income securities. This funding contributions will be approximately $4.5 million in 2008. and change in allocation will remove a significant portion of the U.S. pension’s volatility arising from unpredictable Financial Risk Management changes in interest rates and investment return from the We are exposed to market risks from changes in interest equity markets. This decision increased the funded status of rates, commodities, and changes in foreign currency these plans, and minimized unexpected future pension cash exchange rates. To reduce these risks, we selectively use contributions that would result from implementation of the financial instruments and other proactive management tech- provisions of the Pension Protection Act. niques. We have written policies and procedures that place

The Manitowoc Company, Inc. — 2007 Form 10-K 27

JOB: 08-10279-2 CYCLE#;BL#: 1; 0 TRIM: 8.5" x 11" COMPOSITE COLORS: Black, PANTONE Process Blue U, ~note-color 2, ~note-color 3 GRAPHICS: none V1.5 Merrill Corp - The Manitowoc Company_ Inc. 10-K-A Print Version | jcarlso | 10-Apr-08 11:06 | 08-10279-2.ba | Sequence: 28 CHKSUM Content: 28448 Layout: 1481 Graphics: No Graphics CLEAN

financial instruments under the direction of corporate finance during 2007 we entered into certain commodity hedges and restrict all derivative transactions to those intended for that fix the price of certain of our key commodities utilized hedging purposes. The use of financial instruments for trad- in the production of our Foodservice product offerings. At ing purposes or speculation is strictly prohibited. December 31, 2007, $0.5 million (net of tax of $0.3 million) For a more detailed discussion of our accounting policies of unrealized losses remain deferred in other comprehen- and the financial instruments that we use, please refer to sive income and will be realized as a component of cost of Note 2, “Summary of Significant Accounting Policies,” and sales over the next 12 months. Note 9, “Debt,” to the Consolidated Financial Statements. Currency Risk Interest Rate Risk We have manufacturing, sales and distribution facilities In 2007, we used interest rate swaps entered into with third around the world and thus make investments and enter into party financial institutions such that approximately 46% of transactions denominated in various foreign currencies. our debt is fixed and 54% is floating at December 31, 2007. International sales, including those sales that originated out- At December 31, 2007, we had two fixed-to-floating interest side of the United States, were approximately 51% of our rate swaps outstanding. These swap contracts effectively total sales for 2007, with the largest percentage (30%) being convert $50.0 million of our fixed rate Senior Notes to vari- sales into various European countries. able rate debt. Under these swap agreements, we contract Regarding transactional foreign exchange risk, we enter with a counter-party to exchange the difference between a into limited forward exchange contracts to 1) reduce the floating rate and the fixed rate applied to $50.0 million of our impact of changes in foreign currency rates between a bud- Senior Notes. These contracts are considered to be a hedge geted rate and the rate realized at the time we recognize a against changes in the fair value of the fixed-rate obligations. particular purchase or sale transaction and 2) reduce earn- Accordingly, these interest rate swap contracts are reflected ings and cash flow impact on nonfunctional currency at fair value in our Consolidated Balance Sheets at Decem- denominated receivables and payables. Gains and losses ber 31, 2007 as an asset of $0.1 million, and the related debt resulting from hedging instruments either impact our Con- is reflected at an amount equal to the sum of its carrying solidated Statements of Operations in the period of the value plus an adjustment representing the change in fair underlying purchase or sale transaction, or offset the foreign value of the debt obligation attributable to the interest rate exchange gains and losses on the underlying receivables risk being hedged. Changes during any accounting period in and payables being hedged. The maturities of these forward the fair value of the interest rate swap contract, as well as exchange contracts coincide with either the underlying the offsetting changes in the adjusted carrying value of the transaction date or the settlement date of the related cash related portion of fixed-rate debt being hedged, are recog- inflow or outflow. The hedges of anticipated transactions are nized as an adjustment to interest expense in the Consoli- designated as cash flow hedges and the hedges of dated Statements of Operations. The change in the fair accounts receivable and accounts payable are designated as value of the swaps exactly offsets the change in fair value of fair value hedges in accordance with SFAS No. 133, the hedged fixed-rate debt; therefore, there was no net “Accounting for Derivative Instruments and Hedging Activi- impact on earnings from these swaps for the year ended ties.” At December 31, 2007, we had outstanding forward December 31, 2007. A 10% increase or decrease in the exchange contracts hedging anticipated transactions and floating rate we pay under these swap agreements would future settlements of outstanding accounts receivable and not result in a significant change in pre-tax interest expense. accounts payable with an aggregate fair market value of This amount was calculated assuming the year-end $3.1 million. A 10% appreciation or depreciation of the weighted-average rate of the swaps was constant through- underlying functional currency at December 31, 2007 for fair out the year. value hedges would not have a significant impact on our Interest swaps expose us to the risk that the counter- Consolidated Statements of Operations as any gains or party may be unable to pay amounts it owes us under the losses under the foreign exchange contracts hedging swap agreements. To manage this risk we enter into swap accounts receivable or payable balances would be offset by agreements only with financial institutions that have high equal gains or losses on the underlying receivables or credit ratings. payables. A 10% appreciation or depreciation of the underlying functional currency at December 31, 2007 for cash flow Commodity Prices hedges would not have a significant impact on the date of We are exposed to fluctuating market prices for commodi- settlement due to the insignificant amounts of such hedges. ties, including steel, copper, aluminum, and other petro- At December 31, 2007, there was also a significant por- leum-based products. Each of our business segments is tion of our foreign currency translation exposure that was subject to the effect of changing raw material costs caused not hedged due to the company paying off the senior subor- by movements in underlying commodity prices. We have dinated notes due 2011 during 2006. Amounts invested in established programs to manage the negotiations of com- non-U.S. based subsidiaries are translated into U.S. Dollar at modity prices. Some of these programs are centralized the exchange rate in effect at year-end. Results of opera- across business segments, and others are specific to a tions are translated into U.S. dollars at an average exchange business segment or business unit. In addition to the regu- rate for the period. The resulting translation adjustments are lar negotiations of material prices with certain vendors, recorded in stockholders’ equity as cumulative translation

28 The Manitowoc Company, Inc. — 2007 Form 10-K

JOB: 08-10279-2 CYCLE#;BL#: 1; 0 TRIM: 8.5" x 11" COMPOSITE COLORS: Black, PANTONE Process Blue U, ~note-color 2 GRAPHICS: none V1.5 Merrill Corp - The Manitowoc Company_ Inc. 10-K-A Print Version | jcarlso | 10-Apr-08 11:06 | 08-10279-2.ba | Sequence: 29 CHKSUM Content: 54835 Layout: 6205 Graphics: No Graphics CLEAN

adjustments. The translation adjustment recorded in accu- incurred and total estimated costs at the completion of the mulated other comprehensive income at December 31, contract. Recognized revenues that will not be billed under 2007 is $47.4 million. the terms of the contract until a later date are recorded as “recoverable costs and accrued profit on progress com- Environmental, Health, Safety, and Other Matters pleted not billed,” which are included in other current assets Please refer to Item 8, Financial Statements and Supplemen- in the Consolidated Balance Sheets. Likewise, contracts tary Data, Note 15 to the Consolidated Financial Statements where billings to date have exceeded recognized revenues where we have disclosed our Environmental, Health, Safety, are recorded as “amounts billed in excess of sales,” which Contingencies and other Matters. are included in accounts payable and accrued expenses in the Consolidated Balance Sheets. Changes to the original Critical Accounting Policies estimates may be required during the life of the contract and The Consolidated Financial Statements include accounts of such estimates are reviewed when customer change orders the company and all its subsidiaries. The preparation of are placed and on a regular periodic basis. Sales and gross financial statements in conformity with accounting princi- profit are adjusted when known for revisions in estimated ples generally accepted in the United States of America total contract costs and contract values. Claims against cus- requires us to make estimates and assumptions in certain tomers are recognized as revenue when it is probable that circumstances that affect amounts reported in the accompa- the claim will result in additional contract revenue and the nying Consolidated Financial Statements and related foot- amount can be reliably estimated. Estimated losses are notes. In preparing these Consolidated Financial Statements, recorded when identified. The use of the POC method of we have made our best estimates and judgments of certain accounting involves considerable use of estimates in deter- amounts included in the Consolidated Financial Statements mining revenues, costs and profits and in assigning the giving due consideration to materiality. We do not believe amounts to accounting periods. The Company continually there is a great likelihood that materially different amounts evaluates all of the issues related to the assumptions, risks would be reported related to the accounting policies and uncertainties inherent with the application of the POC described below. However, application of these accounting method of accounting. policies involve the exercise of judgment and use of assumptions as to future uncertainties and, as a result, Allowance for Doubtful Accounts — Accounts receivable actual results could differ from these estimates. Although are reduced by an allowance for amounts that may become we have listed a number of accounting policies below which uncollectible in the future. Our estimate for the allowance we believe to be most critical, we also believe that all of our for doubtful accounts related to trade receivables includes accounting policies are important to the reader. Therefore, evaluation of specific accounts where we have information please refer also to the Notes to the Consolidated Financial that the customer may have an inability to meet its financial Statements for more detailed description of these and other obligations together with a general provision for unknown accounting policies of the company. but existing doubtful accounts based on pre-established percentages to specific aging categories which are subject to Revenue Recognition — Revenue is generally recognized change if experience improves or deteriorates. and earned when all the following criteria are satisfied with regard to a specific transaction: persuasive evidence of an Inventories and Related Reserve for Obsolete and Excess arrangement exists, the price is fixed and determinable, col- Inventory — Inventories are valued at the lower of cost or lectibility of cash is reasonably assured, and delivery has market using both the first-in, first-out (FIFO) method and occurred or services have been rendered. We periodically the last-in, first-out (LIFO) method and are reduced by a enter into transactions with customers that provide for resid- reserve for excess and obsolete inventories. The estimated ual value guarantees and buyback commitments. These reserve is based upon specific identification of excess or transactions are recorded as operating leases for all signifi- obsolete inventories together with a general provision based cant residual value guarantees and for all buyback commit- on pre-established percentages applied to specific aging ments. These initial transactions are recorded as deferred categories of inventory. These categories are evaluated revenue and are amortized to income on a straight-line basis based upon historical usage, estimated future usage, and over a period equal to that of the customer’s third-party sales requiring the inventory. These percentages were estab- financing agreement. In addition, we lease cranes to cus- lished based upon historical write-off experience. tomers under operating lease terms. Proceeds received in Goodwill and Other Intangible Assets — We account for connection with these transactions are recognized as rev- goodwill and other intangible assets under the guidance of enue over the term of the lease, and leased cranes are SFAS No. 142, “Goodwill and Other Intangible Assets.” Under depreciated over their estimated useful lives. SFAS No. 142, goodwill is no longer amortized; however, it is Revenue Recognition under Percentage-of-completion tested for impairment annually or more frequently if events or Accounting — Revenue under long-term contracts within changes in circumstances indicate that the asset might be the Marine segment are recognized using the percentage-of- impaired. The Company performs impairment reviews for its completion (POC) method of accounting. Under this reporting units, which have been determined to be: Cranes method, sales and gross profit are recognized as work is Americas; Cranes Europe, Middle East, and Africa; Cranes performed based on the relationship between actual costs Asia; Ice Group; Refrigeration Group; Beverage Group; and

The Manitowoc Company, Inc. — 2007 Form 10-K 29

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Marine Group, using a fair-value method based on the pres- provided by its independent actuaries and other relevant ent value of future cash flows, which involves management’s sources, we believe that our assumptions used are reason- judgments and assumptions. The estimated fair value is then able; however, changes in these assumptions could impact compared with the carrying amount of the reporting unit, the Company’s financial position, results of operations or including recorded goodwill. The Company is subject to cash flows. financial statement risk to the extent that the carrying amount exceeds the estimated fair value. The impairment Product Liability — We are subject in the normal course of testing performed by the Company at June 30, 2007, indi- business to product liability lawsuits. To the extent permit- cated that the estimated fair value of each reporting unit ted under applicable laws, our exposure to losses from exceeded its corresponding carrying amount, including these lawsuits is mitigated by insurance with self-insurance recorded goodwill and, as such, no impairment existed at retention limits. We record product liability reserves for our that time. Other intangible assets with definite lives continue self-insured portion of any pending or threatened product lia- to be amortized over their estimated useful lives. Indefinite bility actions. Our reserve is based upon two estimates. and definite lived intangible assets are also subject to impair- First, we track the population of all outstanding pending and ment testing. A considerable amount of management judg- threatened product liability cases to determine an appropri- ment and assumptions are required in performing the ate case reserve for each based upon our best judgment impairment tests, principally in determining the fair value of and the advice of legal counsel. These estimates are contin- each reporting unit. While the company believes its judg- ually evaluated and adjusted based upon changes to the ments and assumptions were reasonable, different assump- facts and circumstances surrounding the case. Second, we tions could change the estimated fair values and, therefore, obtain a third-party actuarial analysis to determine the impairment charges could be required. amount of additional reserve required to cover incurred but not reported product liability issues and to account for possi- Employee Benefit Plans — We provide a range of benefits ble adverse development of the established case reserve to our employees and retired employees, including pensions (collectively referred to as IBNR). This actuarial analysis is and postretirement health care coverage. Plan assets and performed at least twice annually and our IBNR reserve for obligations are recorded annually based on the company’s product liability is adjusted based upon the results of these measurement date utilizing various actuarial assumptions analyses. We have established a position within the actuari- such as discount rates, expected return on plan assets, ally determined range, which we believe is the best estimate compensation increases, retirement and mortality rates, and of the IBNR liability. health care cost trend rates as of that date. The approach we use to determine the annual assumptions are as follows: Income Taxes — We account for income taxes in accor- • Discount Rate — Our discount rate assumptions are dance with SFAS No. 109, “Accounting for Income Taxes.” based on the interest rate of noncallable high-quality Deferred tax assets and liabilities are recognized for the corporate bonds, with appropriate consideration of our future tax consequences attributable to differences between pension plans’ participants’ demographics and benefit financial statement carrying amounts of existing assets and payment terms. liabilities and their respective tax bases and operating loss • Expected Return on Plan Assets — Our expected return and tax credit carryforwards. Deferred tax assets and liabili- on plan assets assumptions are based on our expecta- ties are measured using enacted tax rates expected to apply tion of the long-term average rate of return on assets in to taxable income in the years in which those temporary dif- the pension funds, which is reflective of the current and ferences are expected to be recovered or settled. We record projected asset mix of the funds and considers the his- a valuation allowance that represents a reserve on deferred torical returns earned on the funds. tax assets for which utilization is uncertain. Management • Compensation increase — Our compensation increase judgment is required in determining our provision for assumptions reflect our long-term actual experience, income taxes, deferred tax assets and liabilities, and the val- the near-term outlook and assumed inflation. uation allowance recorded against our net deferred tax • Retirement and Mortality Rates — Our retirement and assets. The valuation allowance would need to be adjusted mortality rate assumptions are based primarily on actual in the event future taxable income is materially different than plan experience. amounts estimated. Our policy is to remit earnings from for- • Health Care Cost Trend Rates — Our health care cost eign subsidiaries only to the extent any resultant foreign trend rate assumptions are developed based on histori- taxes are creditable in the United States. Accordingly, we do cal cost data, near-term outlook and an assessment of not currently provide for additional United States and foreign likely long-term trends. income taxes which would become payable upon repatriation of undistributed earnings of foreign subsidiaries. Measurements of net periodic benefit cost are based on the assumptions used for the previous year-end measurements Stock Options — The computation of the expense associated of assets and obligations. The Company reviews its actuarial with stock-based compensation requires the use of a valua- assumptions on an annual basis and makes modifications to tion model. We currently use a Black-Scholes option pricing the assumptions when appropriate. As required by U.S. model to calculate the fair value of our stock options and GAAP, the effects of the modifications are recorded currently stock appreciation rights. The Black-Scholes model requires or amortized over future periods. Based on information assumptions regarding the volatility of the company’s stock,

30 The Manitowoc Company, Inc. — 2007 Form 10-K

JOB: 08-10279-2 CYCLE#;BL#: 1; 0 TRIM: 8.5" x 11" COMPOSITE COLORS: Black, PANTONE Process Blue U, ~note-color 2 GRAPHICS: none V1.5 Merrill Corp - The Manitowoc Company_ Inc. 10-K-A Print Version | jcarlso | 10-Apr-08 11:06 | 08-10279-2.ba | Sequence: 31 CHKSUM Content: 33266 Layout: 6205 Graphics: No Graphics CLEAN

the expected life of the stock award and the company’s divi- on or after December 15, 2008. The Company is currently dend ratio. We primarily use historical data to determine the evaluating the impact this statement will have on its finan- assumptions to be used in the Black-Scholes model and have cial position and results of operations. no reason to believe that future data is likely to differ materi- In February 2007, the FASB issued SFAS No. 159, “The Fair ally from historical data. However, changes in the assump- Value Option for Financial Assets and inancial Liabilities — tions to reflect future stock price volatility, future dividend Including an Amendment of FASB Statement No. 115.” payments and future stock award exercise experience could SFAS 159 permits entities to choose to measure many result in a change in the assumptions used to value awards in financial instruments and certain other items at fair value the future and may result in a material change to the fair value that are not currently required to be measured at fair value. calculation of stock-based awards. SFAS 159 permits all entities to choose, at specified election dates, to measure eligible items at fair value (the “fair value Warranties — In the normal course of business we provide option”). A business entity shall report unrealized gains and our customers warranties covering workmanship, and in losses on items for which the fair value option has been some cases materials, on products manufactured by us. elected in earnings at each subsequent reporting date. Such warranties generally provide that products will be free Upfront costs and fees related to items for which the fair from defects for periods ranging from 12 months to 60 value option is elected are recognized in earnings as months. If a product fails to comply with our warranty, we incurred and not deferred. SFAS 159 also establishes pres- may be obligated, at our expense to correct any defect by entation and disclosure requirements designed to facilitate repairing or replacing such defective product. We provide for comparisons between entities that choose different meas- an estimate of costs that may be incurred under our war- urement attributes for similar types of assets and liabilities. ranty at the time product revenue is recognized based on SFAS No. 159 was effective for us on January 1, 2008. The historical warranty experience for the related product or esti- adoption of SFAS No. 159 did not have an impact on our mates of projected losses due to specific warranty issues on Consolidated Financial Statements. new products. These costs primarily include labor and mate- In December 2007, the FASB issued SFAS No. 160, “Non- rials, as necessary associated with repair or replacement. controlling Interests in Consolidated Financial Statements The primary factors that affect our warranty liability include an Amendment of ARB No. 51,” which establishes account- the number of shipped units and historical and anticipated ing and reporting standards for the noncontrolling interest rates or warranty claims. As these factors are impacted by in a subsidiary and for the deconsolidation of a subsidiary. actual experience and future expectations, we assess the SFAS 160 clarifies that a noncontrolling interest in a sub- adequacy of our recorded warranty liability and adjust the sidiary is an ownership interest in the consolidated entity amounts as necessary. that should be reported as equity in the consolidated financial statements. SFAS 160 also requires consolidated net Restructuring Charges — Restructuring charges for exit and income to be reported at amounts that include the amounts disposal activities are recognized when the liability is attributable to both the parent and the noncontrolling inter- incurred. We use the definition of liability found in FASB est. It also requires disclosure, on the face of the consoli- Concept Statement No. 6, “Elements of Financial State- dated statement of income, of the amounts of consolidated ments.” In addition, the liability for the restructuring charge net income attributable to the parent and to the noncontrol- associated with an exit or disposal activity is measured ini- ling interest. SFAS 160 also provides guidance when a sub- tially at its fair value. sidiary is deconsolidated and requires expanded disclosures in the consolidated financial statements that Recent Accounting Changes and Pronouncements clearly identify and distinguish between the interests of the In December 2007, the FASB issued SFAS No. 141(R), “Busi- parent’s owners and the interests of the noncontrolling ness Combinations,” which establishes principles and owners of a subsidiary. SFAS 160 is effective for fiscal requirements for how the acquirer: (a) recognizes and meas- years, and interim periods within those fiscal years, begin- ures in its financial statements the identifiable assets ning on or after December 15, 2008. The Company is cur- acquired, the liabilities assumed, and any noncontrolling rently evaluating the impact this statement will have on its interest in the acquiree; (b) recognizes and measures the financial position and results of operations. goodwill acquired in the business combination or a gain In February 2006, the FASB issued SFAS No. 155, “Account- from a bargain purchase; and (c) determines what informa- ing for Certain Hybrid Financial Instruments an Amendment tion to disclose to enable users of the financial statements of FASB Statement No. 133 and 140.” SFAS No. 155 amends to evaluate the nature and financial effects of the business certain aspects of SFAS No. 133, primarily related to hybrid combination. SFAS 141(R) requires contingent consideration financial instruments and beneficial interests in securitized to be recognized at its fair value on the acquisition date and, financial assets, as well as amends SFAS No. 140, related to for certain arrangements, changes in fair value to be recog- eliminating a restriction on the passive derivative instruments nized in earnings until settled. SFAS 141(R) also requires that a qualifying special-purpose entity (SPE) may hold. acquisition-related transaction and restructuring costs to be SFAS No. 155 was effective for us on January 1, 2007. The expensed rather than treated as part of the cost of the adoption of SFAS No. 155 did not have an impact on our acquisition. SFAS 141(R) applies prospectively to business Consolidated Financial Statements. combinations for which the acquisition date is on or after In March 2006, the FASB issued SFAS No. 156, “Account- the beginning of the first annual reporting period beginning ing for Servicing of Financial Assets an amendment of FASB

The Manitowoc Company, Inc. — 2007 Form 10-K 31

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Statement No. 140.” SFAS No. 156, amends certain aspects segment could cause actual results to be significantly differ- of SFAS No. 140, by requiring that all separately recognized ent from what is presented in this annual report. Those fac- servicing assets and servicing liabilities be initially measured tors include, without limitation, the following: at fair value, if practicable. SFAS No. 156 was effective for us on January 1, 2007. The adoption of SFAS No. 156 did not Crane — market acceptance of new and innovative prod- have an impact on our Consolidated Financial Statements. ucts; cyclicality of the construction industry; the effects of In September 2006, the FASB issued SFAS No. 157, “Fair government spending on construction-related projects Value Measurements.” SFAS 157 defines fair value, establishes throughout the world; changes in world demand for our a framework for measuring fair value in generally accepted crane product offering; the replacement cycle of technologi- accounting principles and establishes a hierarchy that catego- cally obsolete cranes; demand for used equipment; actions rizes and prioritizes the sources to be used to estimate fair of competitors; successful and timely implementation of our value. SFAS 157 also expands financial statement disclosures ERP system; and foreign exchange rate risk. about fair value measurements. On February 12, 2008, the FASB issued FASB Staff Position (FSP) 157-b which delays the Foodservice — market acceptance of new and innovative effective date of SFAS 157 for one year, for all nonfinancial products; weather; consolidations within the restaurant and assets and nonfinancial liabilities, except those that are recog- foodservice equipment industries; global expansion of cus- nized or disclosed at fair value in the financial statements on a tomers; actions of competitors; the commercial ice-cube recurring basis (at least annually). FAS 157 and FSP 157-b are machine replacement cycle in the United States; anticipated effective for financial statements issued for fiscal years begin- refresh/renovation plans by national restaurant accounts; ning after November 15, 2007. We have elected a partial defer- specialty foodservice market growth; future strength of the ral of SFAS 157 under the provisions of FSP 157-b related to beverage industry; and the demand for quickservice restau- the measurement of fair value used when evaluating goodwill, rant and kiosks. other intangible assets and other long-lived assets for impair- Marine — shipping volume fluctuations based on perform- ment and valuing asset retirement obligations and liabilities for ance of the steel industry; weather and water levels on the exit or disposal activities. The impact of partially adopting Great Lakes; trends in government spending on new ves- SFAS 157 effective January 1, 2008 was not material to our sels; five-year survey schedule; the replacement cycle of consolidated financial statements. older marine vessels; growth of existing marine fleets; con- In June 2006, the FASB issued FASB Interpretation (FIN) solidation of the Great Lakes marine industry; frequency of No. 48, “Accounting for Uncertainty in Income Taxes — an casualties on the Great Lakes; the level of construction and interpretation of FASB Statement No. 109.” This interpretation industrial maintenance; government approval and funding of clarifies the accounting for uncertainty in income taxes recog- projects; and ability of our customers to obtain financing. nized in an entity’s financial statements in accordance with SFAS No. 109, “Accounting for Income Taxes.” It prescribes a Corporate (including factors that may affect more than one recognition threshold and measurement attribute for financial of the three segments) — changes in laws and regulations statement disclosure of tax positions taken or expected to be throughout the world; the ability to finance, complete and/or taken on a tax return. FIN No. 48 was effective for us on successfully integrate, restructure and consolidate acquisi- January 1, 2007. Upon the adoption of FIN No. 48, we recog- tions, divestitures, strategic alliances and joint ventures; nized an additional tax liability of $10.8 million and a corre- successful and timely completion of new facilities and facil- sponding reduction in retained earnings recorded as a ity expansions; competitive pricing; availability of certain cumulative effect of accounting change in the Consolidated raw materials; changes in raw materials and commodity Statements of Operations in the first quarter of 2007. prices; changes in domestic and international economic and industry conditions, including steel industry conditions; Cautionary Statements about Forward-Looking availability of local suppliers and skilled labor; changes in the Information interest rate environment; risks associated with growth; for- Statements in this report and in other company communica- eign currency fluctuations; world-wide political risk; geo- tions that are not historical facts are forward-looking state- graphic factors and economic risks; health epidemics; ments, which are based upon our current expectations. pressure of additional financing leverage resulting from These statements involve risks and uncertainties that could acquisitions; success in increasing manufacturing efficien- cause actual results to differ materially from what appears cies and capacities; changes in revenue, margins and costs; within this annual report. work stoppages, labor negotiations and rates; actions of Forward-looking statements include descriptions of plans company competitors; the ability of our customers to obtain and objectives for future operations, and the assumptions financing; and the state of financial and credit markets. behind those plans. The words “anticipates,” “believes,” “intends,” “estimates,” and “expects,” or similar expres- ITEM 7A. QUANTITATIVE AND QUALITATIVE sions, usually identify forward-looking statements. Any and DISCLOSURES ABOUT MARKET RISK all projections of future performance are forward-looking See Liquidity and Capital Resources, and Risk Management statements. in Management’s Discussion and Analysis of Financial Con- In addition to the assumptions, uncertainties, and other dition and Results of Operations for a description of the information referred to specifically in the forward-looking quantitative and qualitative disclosure about market risk. statements, a number of factors relating to each business

32 The Manitowoc Company, Inc. — 2007 Form 10-K

JOB: 08-10279-2 CYCLE#;BL#: 1; 0 TRIM: 8.5" x 11" COMPOSITE COLORS: Black, PANTONE Process Blue U, ~note-color 2 GRAPHICS: none V1.5 Merrill Corp - The Manitowoc Company_ Inc. 10-K-A Print Version | jcarlso | 10-Apr-08 11:07 | 08-10279-2.ca | Sequence: 1 CHKSUM Content: 54591 Layout: 53310 Graphics: No Graphics CLEAN

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Index to Consolidated Financial Statements and Financial Statement Schedule:

Financial Statements:

Report of Independent Registered Public Accounting Firm 34

Consolidated Statements of Operations for the years ended December 31, 2007, 2006 and 2005 35

Consolidated Balance Sheets as of December 31, 2007 and 2006 36

Consolidated Statements of Cash Flows for the years ended December 31, 2007, 2006 and 2005 37

Consolidated Statements of Stockholders’ Equity and Comprehensive Income for the years ended December 31, 2007, 2006 and 2005 38

Notes to Consolidated Financial Statements 39

Financial Statement Schedule:

Schedule II — Valuation and Qualifying Accounts for the three years ended December 31, 2007 72

All other schedules are omitted because they are not applicable or the required information is shown in the financial statements or notes thereto.

The Manitowoc Company, Inc. — 2007 Form 10-K 33

JOB: 08-10279-2 CYCLE#;BL#: 1; 0 TRIM: 8.5" x 11" COMPOSITE COLORS: Black, PANTONE Process Blue U, ~note-color 2 GRAPHICS: none V1.5 Merrill Corp - The Manitowoc Company_ Inc. 10-K-A Print Version | jcarlso | 10-Apr-08 11:07 | 08-10279-2.ca | Sequence: 2 CHKSUM Content: 23553 Layout: 12579 Graphics: No Graphics CLEAN

Report of Independent Registered Public management, and evaluating the overall financial statement Accounting Firm presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal To the Stockholders and Board of Directors of control over financial reporting, assessing the risk that a The Manitowoc Company, Inc.: material weakness exists, and testing and evaluating the design and operating effectiveness of internal control In our opinion, the consolidated financial statements listed based on the assessed risk. Our audits also included per- in the accompanying index present fairly, in all material forming such other procedures as we considered necessary respects, the financial position of The Manitowoc Company, in the circumstances. We believe that our audits provide a Inc. and its subsidiaries at December 31, 2007 and 2006, reasonable basis for our opinions. and the results of their operations and their cash flows for As discussed in Notes 1, 11 and 14 to the consolidated each of the three years in the period ended December 31, financial statements, the Company changed its method of 2007 in conformity with accounting principles generally accounting for uncertain tax benefits in 2007 and stock com- accepted in the United States of America. In addition, in our pensation in 2006. opinion, the financial statement schedule listed in the A company’s internal control over financial reporting is a accompanying index presents fairly, in all material respects, process designed to provide reasonable assurance regard- the information set forth therein when read in conjunction ing the reliability of financial reporting and the preparation of with the related consolidated financial statements. Also in financial statements for external purposes in accordance our opinion, the Company maintained, in all material with generally accepted accounting principles. A company’s respects, effective internal control over financial reporting internal control over financial reporting includes those poli- as of December 31, 2007, based on criteria established in cies and procedures that (i) pertain to the maintenance of Internal Control — Integrated Framework issued by the records that, in reasonable detail, accurately and fairly Committee of Sponsoring Organizations of the Treadway reflect the transactions and dispositions of the assets of the Commission (COSO). The Company’s management is company; (ii) provide reasonable assurance that transactions responsible for these financial statements and financial are recorded as necessary to permit preparation of financial statement schedule, for maintaining effective internal con- statements in accordance with generally accepted account- trol over financial reporting and for its assessment of the ing principles, and that receipts and expenditures of the effectiveness of internal control over financial reporting, company are being made only in accordance with authoriza- included in Management’s Report on Internal Control over tions of management and directors of the company; and Financial Reporting appearing in Item 9A. Our responsibility (iii) provide reasonable assurance regarding prevention or is to express opinions on these financial statements, on the timely detection of unauthorized acquisition, use, or disposi- financial statement schedule, and on the Company’s inter- tion of the company’s assets that could have a material nal control over financial reporting based on our integrated effect on the financial statements. audits. We conducted our audits in accordance with the Because of its inherent limitations, internal control over standards of the Public Company Accounting Oversight financial reporting may not prevent or detect misstatements. Board (United States). Those standards require that we plan Also, projections of any evaluation of effectiveness to future and perform the audits to obtain reasonable assurance periods are subject to the risk that controls may become about whether the financial statements are free of material inadequate because of changes in conditions, or that the misstatement and whether effective internal control over degree of compliance with the policies or procedures may financial reporting was maintained in all material respects. deteriorate. Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and dis- /s/ PricewaterhouseCoopers LLP closures in the financial statements, assessing the account- Milwaukee, Wisconsin ing principles used and significant estimates made by February 29, 2008

34 The Manitowoc Company, Inc. — 2007 Form 10-K

JOB: 08-10279-2 CYCLE#;BL#: 1; 0 TRIM: 8.5" x 11" COMPOSITE COLORS: Black, PANTONE Process Blue U, ~note-color 2 GRAPHICS: none V1.5 Merrill Corp - The Manitowoc Company_ Inc. 10-K-A Print Version | jcarlso | 10-Apr-08 11:07 | 08-10279-2.ca | Sequence: 3 CHKSUM Content: 10050 Layout: 53310 Graphics: No Graphics CLEAN

The Manitowoc Company, Inc. Consolidated Statements of Operations For the years ended December 31, 2007, 2006 and 2005

Millions of dollars, except per share data 2007 2006 2005 Operations Net sales $4,005.0 $2,933.3 $2,254.1 Costs and expenses: Cost of sales 3,093.4 2,286.0 1,832.2 Engineering, selling and administrative expenses 401.9 341.6 282.3 Amortization expense 5.8 3.3 3.1 Gain on sale of parts line (3.3) — — Pension settlements 5.3—— Plant consolidation and restructuring costs — — 3.2 Total costs and expenses 3,503.1 2,630.9 2,120.8 Operating earnings from continuing operations 501.9 302.4 133.3 Other expenses: Interest expense (36.3) (46.3) (53.8) Loss on debt extinguishment (12.5) (14.4) (9.1) Other income (expense) — net 9.9 3.2 3.5 Total other expenses (38.9) (57.5) (59.4) Earnings from continuing operations before taxes on earnings 463.0 244.9 73.9 Provision for taxes on earnings 129.4 78.4 14.8 Earnings from continuing operations 333.6 166.5 59.1 Discontinued operations: Earnings (loss) from discontinued operations, net of income taxes of $(1.8), $0.2 and $(1.2), respectively 3.1 (0.3) 0.9 Gain on sale or closure of discontinued operations, net of income taxes of ($6.4) — — 5.8 Net earnings $ 336.7 $ 166.2 $ 65.8 Per Share Data Basic earnings per share: Earnings from continuing operations $ 2.68 $ 1.36 $ 0.49 Earnings from discontinued operations, net of income taxes 0.02 — 0.01 Gain on sale or closure of discontinued operations, net of income taxes — — 0.05 Net earnings $ 2.70 $ 1.36 $ 0.55 Diluted earnings per share: Earnings from continuing operations $ 2.62 $ 1.33 $ 0.48 Earnings from discontinued operations, net of income taxes 0.02 — 0.01 Gain on sale or closure of discontinued operations, net of income taxes — — 0.05 Net earnings $ 2.64 $ 1.32 $ 0.53

The accompanying notes are an integral part of these financial statements.

The Manitowoc Company, Inc. — 2007 Form 10-K 35

JOB: 08-10279-2 CYCLE#;BL#: 1; 0 TRIM: 8.5" x 11" COMPOSITE COLORS: Black, PANTONE Process Blue U, ~note-color 2 GRAPHICS: none V1.5 Merrill Corp - The Manitowoc Company_ Inc. 10-K-A Print Version | jcarlso | 10-Apr-08 11:07 | 08-10279-2.ca | Sequence: 4 CHKSUM Content: 50331 Layout: 3810 Graphics: No Graphics CLEAN

The Manitowoc Company, Inc. Consolidated Balance Sheets As of December 31, 2007 and 2006

Millions of dollars, except share data 2007 2006 Assets Current Assets: Cash and cash equivalents $ 363.9 $ 173.7 Marketable securities 2.5 2.4 Restricted cash 16.7 15.1 Accounts receivable, less allowances of $27.5 and $27.6, respectively 427.1 285.2 Inventories — net 597.7 492.4 Deferred income taxes 66.1 97.7 Other current assets 101.6 76.2 Total current assets 1,575.6 1,142.7 Property, plant and equipment — net 489.5 398.9 Goodwill 518.8 462.1 Other intangible assets — net 200.6 160.0 Deferred income taxes 27.6 14.3 Other non-current assets 56.6 41.5 Total assets $2,868.7 $2,219.5 Liabilities and Stockholders’ Equity Current Liabilities: Accounts payable and accrued expenses $ 945.5 $ 839.6 Short-term borrowings 13.1 4.1 Product warranties 81.3 59.6 Product liabilities 34.7 32.1 Total current liabilities 1,074.6 935.4 Non-Current Liabilities: Long-term debt, less current portion 217.5 264.3 Pension obligations 22.3 64.5 Postretirement health and other benefit obligations 51.3 59.9 Long-term deferred revenue 60.6 71.6 Other non-current liabilities 92.5 49.3 Total non-current liabilities 444.2 509.6 Commitments and contingencies (Note 15) Stockholders’ Equity: Common stock (300,000,000 and 150,000,000 shares authorized, 163,175,928 and 79,587,964 shares issued, 129,880,734, and 62,121,862 shares outstanding, respectively) respectively) 1.4 0.7 Additional paid-in capital 419.8 231.8 Accumulated other comprehensive income 114.5 48.0 Retained earnings 903.8 587.4 Treasury stock, at cost (33,295,194 and 17,466,102 shares, respectively) (89.6) (93.4) Total stockholders’ equity 1,349.9 774.5 Total liabilities and stockholders’ equity $2,868.7 $2,219.5

The accompanying notes are an integral part of these financial statements.

36 The Manitowoc Company, Inc. — 2007 Form 10-K

JOB: 08-10279-2 CYCLE#;BL#: 1; 0 TRIM: 8.5" x 11" COMPOSITE COLORS: Black, PANTONE Process Blue U, ~note-color 2 GRAPHICS: none V1.5 Merrill Corp - The Manitowoc Company_ Inc. 10-K-A Print Version | jcarlso | 10-Apr-08 11:07 | 08-10279-2.ca | Sequence: 5 CHKSUM Content: 23692 Layout: 21861 Graphics: No Graphics CLEAN

The Manitowoc Company, Inc. Consolidated Statements of Cash Flows For the years ended December 31, 2007, 2006 and 2005

Millions of dollars 2007 2006 2005 Cash Flows From Operations Net earnings $ 336.7 $ 166.2 $ 65.8 Adjustments to reconcile net earnings to cash provided by operating activities of continuing operations: Discontinued operations, net of income taxes (3.1) 0.3 (6.7) Pension settlements 1.3 — — Gain on sales of parts line (3.3) — — Depreciation 82.3 69.0 60.4 Amortization of intangible assets 5.8 3.3 3.1 Amortization of deferred financing fees 1.1 1.4 2.1 Deferred income taxes 4.2 (3.8) 14.0 Plant relocation and restructuring costs — — 3.2 Loss on early extinguishment of debt 2.3 3.1 2.6 Gain on sale of property, plant and equipment (4.3) (2.4) (5.0) Changes in operating assets and liabilities, excluding the effects of business acquisitions or dispositions: Accounts receivable (119.0) (7.5) (24.7) Inventories (105.2) (160.6) (113.5) Other assets (41.4) 14.4 (12.2) Accounts payable and accrued expenses 36.7 106.7 73.2 Other liabilities 44.1 104.3 58.2 Net cash provided by operating activities of continuing operations 238.2 294.4 120.5 Net cash used for operating activities of discontinued operations — (0.3) (13.8) Net cash provided by operating activities 238.2 294.1 106.7 Cash Flows From Investing Capital expenditures (119.6) (67.6) (54.9) Proceeds from sale of property, plant and equipment 9.8 10.3 15.1 Restricted cash (1.6) (15.1) — Business acquisitions, net of cash acquired (79.9) (48.1) — Proceeds from sale of parts product line 4.9 — — Purchase of marketable securities (0.1) (0.1) (0.1) Net cash used for investing activities of continuing operations (186.5) (120.6) (39.9) Net cash provided by investing activities of discontinued operations — — 28.3 Net cash used for investing activities (186.5) (120.6) (11.6) Cash Flows From Financing Net proceeds from issuance of common stock 157.1 — — Payments on long-term debt (113.8) (223.5) (77.1) Proceeds from long-term debt 13.8 — — Proceeds from (payments on) short-term borrowings — net — (13.6) 19.9 Proceeds from (payments on) revolving credit facility — net 56.7 (4.3) 4.3 Proceeds from (payments on) notes financing — net (4.3) (15.4) 14.2 Debt issue costs (0.1) (0.2) (1.8) Dividends paid (9.5) (8.6) (8.4) Exercises of stock options including windfall tax benefits 27.9 30.2 10.8 Net cash provided by (used for) financing activities 127.9 (235.4) (38.1) Effect of exchange rate changes on cash 10.7 6.1 (3.9) Net increase (decrease) in cash and cash equivalents 190.2 (55.8) 53.1 Balance at beginning of year 173.7 229.5 176.4 Balance at end of year $ 363.9 $ 173.7 $ 229.5 Supplemental Cash Flow Information Interest paid $ 41.5 $ 48.3 $ 50.3 Income taxes paid $ 141.8 $ 23.7 $ 12.2

The accompanying notes are an integral part of these financial statements. The Manitowoc Company, Inc. — 2007 Form 10-K 37

JOB: 08-10279-2 CYCLE#;BL#: 1; 0 TRIM: 8.5" x 11" COMPOSITE COLORS: Black, PANTONE Process Blue U, ~note-color 2 GRAPHICS: none V1.5 Merrill Corp - The Manitowoc Company_ Inc. 10-K-A Print Version | jcarlso | 10-Apr-08 11:07 | 08-10279-2.ca | Sequence: 6 CHKSUM Content: 20558 Layout: 40659 Graphics: No Graphics CLEAN

The Manitowoc Company, Inc. Consolidated Statements of Stockholders’ Equity and Comprehensive Income For the years ended December 31, 2007, 2006 and 2005

Millions of dollars, except shares data 2007 2006 2005 Common Stock — Shares Outstanding Balance at beginning of year 62,121,862 30,362,501 29,949,715 Stock options exercised 936,105 1,065,668 432,590 Two-for-one stock split 62,799,852 30,605,986 — Stock swap for stock options exercised (6,385) (10,593) (19,804) Restricted stock 29,300 98,300 — Issuance of common stock 4,000,000 — — Balance at end of year 129,880,734 62,121,862 30,362,501 Common Stock — Par Value Balance at beginning of year $ 0.7 $ 0.4 $ 0.4 Issuance of common stock 0.1—— Two-for-one stock split 0.6 0.3 — Balance at end of year $ 1.4 $ 0.7 $ 0.4 Additional Paid-in Capital Balance at beginning of year $ 231.8 $ 195.9 $ 188.6 Issuance of common stock 156.8 — 0.2 Two-for-one stock split (0.6) (0.3) — Stock options exercised 7.1 9.1 7.1 Restricted stock expense 2.0 1.2 — Windfall tax benefit on stock options exercised 16.5 20.2 — Stock option expense 6.2 5.7 — Balance at end of year $ 419.8 $ 231.8 $ 195.9 Accumulated Other Comprehensive Income Balance at beginning of year $ 48.0 $ 16.6 $ 61.0 Other comprehensive income (loss): Foreign currency translation adjustments 47.4 35.2 (34.4) Derivative instrument fair market adjustment, net of income taxes of $(0.4), $0.9 and $(1.4) (0.7) 1.6 (3.5) Adoption of FAS 158, net of income taxes of $(3.9) — (7.3) — Additional minimum pension liability, net of income taxes of $0.0, $0.9 and $(3.5) — 1.9 (6.5) Employee postretirement benefits, net of income taxes of $10.7 19.8 — — Balance at end of year $ 114.5 $ 48.0 $ 16.6 Retained Earnings Balance at beginning of year $ 587.4 $ 429.8 $ 372.4 Adoption of FIN 48 (10.8) — — Net earnings 336.7 166.2 65.8 Cash dividends (9.5) (8.6) (8.4) Balance at end of year $ 903.8 $ 587.4 $ 429.8 Treasury Stock Balance at beginning of year $ (93.4) $ (99.4) $ (103.6) Stock options exercised 3.8 6.0 3.7 Restricted stock issued — — 0.5 Balance at end of year $ (89.6) $ (93.4) $ (99.4) Comprehensive Income Net earnings $ 336.7 $ 166.2 $ 65.8 Other comprehensive income (loss): Foreign currency translation adjustments 47.4 35.2 (34.4) Derivative instrument fair market adjustment, net of income taxes (0.7) 1.6 (3.5) Additional minimum pension liability, net of income taxes — 1.9 (6.5) Employee postretirement benefits, net of income taxes 19.8 — — Comprehensive income $ 403.2 $ 204.9 $ 21.4 The accompanying notes are an integral part of these financial statements. 38 The Manitowoc Company, Inc. — 2007 Form 10-K

JOB: 08-10279-2 CYCLE#;BL#: 1; 0 TRIM: 8.5" x 11" COMPOSITE COLORS: Black, PANTONE Process Blue U, ~note-color 2 GRAPHICS: none V1.5 Merrill Corp - The Manitowoc Company_ Inc. 10-K-A Print Version | jcarlso | 10-Apr-08 11:07 | 08-10279-2.da | Sequence: 1 CHKSUM Content: 14462 Layout: 57182 Graphics: No Graphics CLEAN

Notes to Consolidated Financial Statements Marketable securities at December 31, 2007 and 2006, include securities which are considered “available for sale.” 1. Company and Basis of Presentation The difference between fair market value and cost of these investments was not significant for either year. Restricted Company The Manitowoc Company, Inc. and its sub- cash represents cash in escrow funds which replaced out- sidiaries (collectively referred to as the “company”) is a standing letters of credit related to performance under a cer- diversified industrial manufacturer of cranes, foodservice tain Marine contract and security for the indemnity equipment and mid-size commercial, research and military agreement for our casualty insurance provider. ships. The company was founded in 1902 and operates in three business segments: Cranes and Related Products Inventories Inventories are valued at the lower of cost or mar- (Crane); Foodservice Equipment (Foodservice); and Marine. ket value. Approximately 88% and 85% of the company’s The Crane business is a global provider of engineered lift inventories at December 31, 2007 and 2006, respectively, were solutions which designs, manufactures and markets a compre- valued using the first-in, first-out (FIFO) method. The remaining hensive line of lattice-boom crawler cranes, mobile telescopic inventories were valued using the last-in, first-out (LIFO) cranes, tower cranes, and boom trucks. The Crane products method. If the FIFO inventory valuation method had been used are marketed under the Manitowoc, Grove, Potain, and exclusively, inventories would have increased by $23.7 million National brand names and are used in a wide variety of appli- and $22.9 million at December 31, 2007 and 2006, respec- cations, including energy, petrochemical and industrial proj- tively. Finished goods and work-in-process inventories include ects, infrastructure development such as road, bridge and material, labor and manufacturing overhead costs. airport construction, commercial and high-rise residential construction, mining and dredging. Our crane-related product sup- Goodwill and Other Intangible Assets The company accounts port services are marketed under the Crane CARE brand name for its goodwill and other intangible assets under Statement of and include maintenance and repair services and parts supply. Financial Accounting Standards (SFAS) No. 142, “Goodwill and The Foodservice business is a broad-line manufacturer of Other Intangible Assets.” Under SFAS No. 142, goodwill is not “cold side” commercial foodservice products. Foodservice amortized, but it is tested for impairment at least annually. The designs, manufactures and markets full product lines of ice company’s other intangible assets with indefinite lives, includ- making machines, walk-in and reach-in refrigerators and ing trademarks and tradenames, and in-place distributor net- freezers, fountain beverage delivery systems and other food- works, are not amortized, but are also tested for impairment at service refrigeration products for the lodging, restaurant, least annually. The company’s other intangible assets subject healthcare, convenience store, soft-drink bottling, and insti- to amortization are tested for impairment at least annually and tutional foodservice markets. Foodservice products are mar- are amortized over the following estimated useful lives: keted under the Manitowoc, SerVend, Multiplex, Kolpak, Harford-Duracool, McCall, McCann’s, Koolaire, Flomatic, Useful lives Kyees, RDI, and other brand names. Patents 10-20 years The Marine business provides new construction, ship Engineering drawings 15 years repair and maintenance services for freshwater and saltwa- Customer relationships 10-20 years ter vessels and oceangoing mid-size commercial, research, and military vessels from three shipyards on the Great Property, Plant and Equipment Property, plant and equip- Lakes. Marine serves the Great Lakes maritime market con- ment is stated at cost. Expenditures for maintenance, repairs sisting of U.S. and Canadian fleets, inland waterway opera- and minor renewals are charged against earnings as tions and ocean going vessels that transit the Great Lakes incurred. Expenditures for major renewals and improvements and St. Lawrence Seaway. that substantially extend the capacity or useful life of an asset are capitalized and amortized by depreciation charges. Basis of Presentation The consolidated financial statements The cost and accumulated depreciation for property, plant include the accounts of The Manitowoc Company, Inc. and and equipment sold, retired, or otherwise disposed of are its wholly and majority-owned subsidiaries. All significant relieved from the accounts, and resulting gains or losses are intercompany balances and transactions have been elimi- reflected in earnings. Property, plant and equipment is depre- nated. The preparation of financial statements in conformity ciated over the estimated useful lives of the assets using the with accounting principles generally accepted in the United straight-line depreciation method for financial reporting and States of America requires management to make estimates on accelerated methods for income tax purposes. and assumptions that affect the reported amounts of assets Property, plant and equipment is depreciated over the fol- and liabilities, disclosure of contingent assets and liabilities lowing estimated useful lives: at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting Years period. Actual results could differ from these estimates. Building and improvements 2-40 Drydocks and dock fronts 15-25 2. Summary of Significant Accounting Policies Machinery, equipment and tooling 2-20 Furniture and fixtures 5-20 Cash Equivalents, Restricted Cash and Marketable Securities Computer hardware and software 2-5 All short-term investments purchased with an original matu- rity of three months or less are considered cash equivalents.

The Manitowoc Company, Inc. — 2007 Form 10-K 39

JOB: 08-10279-2 CYCLE#;BL#: 1; 0 TRIM: 8.5" x 11" COMPOSITE COLORS: Black, PANTONE Process Blue U, ~note-color 2 GRAPHICS: none V1.5 Merrill Corp - The Manitowoc Company_ Inc. 10-K-A Print Version | jcarlso | 10-Apr-08 11:07 | 08-10279-2.da | Sequence: 2 CHKSUM Content: 59184 Layout: 46881 Graphics: No Graphics CLEAN

Property, plant and equipment also include cranes Notes due 2013 was approximately $149.3 million and accounted for as leases. Equipment accounted for as leases $151.2 million at December 31, 2007 and 2006, respectively includes equipment leased directly to the customer and (see Note 9, “Debt” for the related book values of these debt equipment for which the company has assisted in the instruments). The aggregate fair values of interest rate financing arrangement whereby it has guaranteed more than swaps, commodity contracts and foreign currency exchange insignificant residual value or made a buyback commitment. contracts at December 31, 2007 and 2006 were $2.4 million Equipment that is leased directly to the customer is and ($1.1) million, respectively. These fair values are the accounted for as operating leases with the related assets amounts at which they could be settled, based on estimates capitalized and depreciated over their estimated economic obtained from financial institutions. life. Equipment involved in financing arrangements is depreciated over the life of the underlying arrangement so that the Warranties Estimated warranty costs are recorded in cost net book value at the end of the period equals the buyback of sales at the time of sale of the warranted products based amount or the residual value amount. The amount of rental on historical warranty experience for the related product or equipment included in property, plant and equipment estimates of projected costs due to specific warranty issues amounted to $115.3 million and $120.0 million, net of accu- on new products. These estimates are reviewed periodically mulated depreciation, at December 31, 2007 and 2006, and are adjusted based on changes in facts, circumstances respectively. or actual experience.

Impairment of Long-Lived Assets The company reviews Environmental Liabilities The company accrues for losses long-lived assets, including goodwill and other intangible associated with environmental remediation obligations assets, for impairment whenever events or changes in busi- when such losses are probable and reasonably estimable. ness circumstances indicate that the carrying amount of the Such accruals are adjusted as information develops or cir- assets may not be fully recoverable. cumstances change. Costs of long-term expenditures for Each year the company tests for impairment of goodwill environmental remediation obligations are discounted to according to a two-step approach. In the first step, the com- their present value when the timing of cash flows are pany estimates the fair values of its reporting units using the estimable. present value of future cash flows approach, subject to a comparison for reasonableness to its market capitalization at Product Liabilities The company records product liability the date of valuation. If the carrying amount exceeds the fair reserves for its self-insured portion of any pending or threat- value, the second step of the goodwill impairment test is ened product liability actions. The reserve is based upon two performed to measure the amount of the impairment loss, if estimates. First, the company tracks the population of all any. In the second step the implied fair value of the goodwill outstanding pending and threatened product liability cases is estimated as the fair value of the reporting unit used in to determine an appropriate case reserve for each based the first step less the fair values of all other net tangible and upon the company’s best judgment and the advice of legal intangible assets of the reporting unit. If the carrying amount counsel. These estimates are continually evaluated and of the goodwill exceeds its implied fair market value, an adjusted based upon changes to facts and circumstances impairment loss is recognized in an amount equal to that surrounding the case. Second, the company determines the excess, not to exceed the carrying amount of the goodwill. amount of additional reserve required to cover incurred but In addition, goodwill of a reporting unit is tested for impair- not reported product liability issues and to account for possi- ment between annual tests if an event occurs or circum- ble adverse development of the established case reserves stances change that would more likely than not reduce the (collectively referred to as IBNR). This analysis is performed fair value of a reporting unit below its carrying value. For at least twice annually. other intangible assets, the impairment test consists of a Foreign Currency Translation The financial statements of comparison of the fair value of the intangible assets to their the company’s non-U.S. subsidiaries are translated using the carrying amount. current exchange rate for assets and liabilities and the aver- For property, plant and equipment and other long-lived age exchange rate for the year for income and expense assets, other than goodwill and other intangible assets, the items. Resulting translation adjustments are recorded to company performs undiscounted operating cash flow analy- Accumulated Other Comprehensive Income (AOCI) as a ses to determine impairments. If an impairment is deter- component of stockholders’ equity. mined to exist, any related impairment loss is calculated based upon comparison of the fair value to the net book Derivative Financial Instruments and Hedging Activities value of the assets. Impairment losses on assets held for The company has written policies and procedures that place sale are based on the estimated proceeds to be received, all financial instruments under the direction of corporate less costs to sell. treasury and restrict all derivative transactions to those intended for hedging purposes. The use of financial instru- Financial Instruments The carrying amounts reported in the ments for trading purposes is strictly prohibited. The com- Consolidated Balance Sheets for cash and cash equivalents, pany uses financial instruments to manage the market risk accounts receivable, accounts payable, and short-term vari- from changes in foreign exchange rates and interest rates. able rate debt approximated fair value at December 31, 2007 1 The company follows the guidance of Statement of Financial and 2006. The fair value of the company’s 7 ⁄8% Senior

40 The Manitowoc Company, Inc. — 2007 Form 10-K

JOB: 08-10279-2 CYCLE#;BL#: 1; 0 TRIM: 8.5" x 11" COMPOSITE COLORS: Black, PANTONE Process Blue U, ~note-color 2 GRAPHICS: none V1.5 Merrill Corp - The Manitowoc Company_ Inc. 10-K-A Print Version | jcarlso | 10-Apr-08 11:07 | 08-10279-2.da | Sequence: 3 CHKSUM Content: 60870 Layout: 18523 Graphics: No Graphics CLEAN

Accounting Standards (SFAS) No. 133, “Accounting for Deriv- No. 123” (SFAS No. 123(R)), which revised SFAS No. 123, ative Instruments and Hedging Activities,” as amended by “Accounting for Stock-Based Compensation” and super- SFAS No. 137, No. 138, and No. 149. The fair values of all sedes APB Opinion No. 25, “Accounting for Stock Issued to derivatives are recorded in the Consolidated Balance Sheets. Employees.” SFAS No. 123(R) requires all share-based pay- The change in a derivative’s fair value is recorded each ments to employees, including grants of employee stock period in current earnings or Other Comprehensive Income options, to be measured at fair value and expensed in the (OCI) depending on whether the derivative is designated and Consolidated Statements of Operations over the service qualifies as part of a hedge transaction and if so, the type of period (generally the vesting period) of the grant. Upon hedge transaction. adoption, the company transitioned to SFAS No. 123(R) using the modified prospective application, under which Cash Flow Hedge The company selectively hedges antici- compensation expense is only recognized in the Consoli- pated transactions that are subject to foreign exchange dated Statements of Operations beginning with the first exposure or commodity price exposure, primarily using for- period that SFAS No. 123(R) is effective and continuing to eign currency exchange contracts and commodity contracts, be expensed thereafter. The following table illustrates the respectively. These instruments are designated as cash flow effect on net earnings and earnings per share if the com- hedges in accordance with SFAS No. 133 and are recorded pany had applied the fair value recognition provisions of in the Consolidated Balance Sheets at fair value. The effec- SFAS No. 123(R) to stock based employee compensation tive portion of the contracts’ gains or losses due to changes for the year ended December 31, 2005. in fair value are initially recorded as a component of OCI and are subsequently reclassified into earnings when the hedge 2005 transactions, typically sales and costs related to sales, occur Reported net earnings $65.8 and affect earnings. These contracts are highly effective in hedging the variability in future cash flows attributable to Deduct: Total stock-based employee compensation changes in currency exchange rates or commodity prices. expense determined under fair value based For the years ended December 31, 2007, 2006 and 2005, method for all awards, net of income taxes (4.4) no amount was recognized in earnings due to ineffective- Proforma net earnings $61.4 ness of a hedge transaction. As of December 31, 2007, the Earnings (loss) per share company has no floating-to-fixed interest rate swap con- Basic — as reported $0.55 tracts outstanding. The amount reported as derivative instrument fair market value adjustment in the accumulated OCI Basic — pro forma $0.51 account within stockholders’ equity represents the net gain Diluted — as reported $0.53 (loss) on foreign exchange currency exchange contracts and Diluted — pro forma $0.50 commodity contracts designated as cash flow hedges, net of income taxes. In addition to the compensation expense related to stock Fair Value Hedges The company periodically enters into options, the company recognized $2.0 million, $1.2 million interest rate swaps designated as a hedge of the fair value and $0.5 million of compensation expense related to of a portion of its fixed rate debt. These hedges effectively restricted stock during the years ended December 31, 2007, result in changing a portion of its fixed rate debt to variable 2006 and 2005, respectively. interest rate debt. Both the swaps and the hedged portion Revenue Recognition and Long-Term Contracts Revenue is of the debt are recorded in the Consolidated Balance Sheets generally recognized and earned when all the following crite- at fair value. The change in fair value of the swaps exactly ria are satisfied with regard to a specific transaction: persua- offsets the change in fair value of the hedged debt, with no sive evidence of a sales arrangement exists; the price is net impact to earnings. Interest expense of the hedged debt fixed or determinable; collectability of cash is reasonably is recorded at the variable rate in earnings. See Note 9, assured; and delivery has occurred or services have been “Debt” for additional information related to these hedges. rendered. Shipping and handling fees are reflected in net The company selectively hedges cash inflows and out- sales and shipping and handling costs are reflected in cost flows that are subject to foreign currency exposure from the of sales in the Consolidated Statements of Operations. Rev- date of transaction to the related payment date. The hedges enues under long-term contracts within the Marine segment for these foreign currency accounts receivable and accounts are recorded using the percentage-of-completion method of payable are classified as fair value hedges in accordance accounting. Revenue under these fixed-price long-term con- with SFAS No. 133 and are recorded in the Consolidated Bal- tracts are recorded based on the ratio of costs incurred to ance Sheets at fair value. Gains or losses due to changes in estimated total costs at completion, and costs are expensed fair value are recorded as an adjustment to earning in the as incurred. Amounts representing contract change orders, Consolidated Statements of Operations. claims or other items are included in revenue only when Stock-Based Compensation At December 31, 2007, the they can be reliably estimated and realization is probable. company has five stock-based compensation plans, which When adjustments in contract value or estimated costs are are described more fully in Note 14, “Stock Based Compen- determined, any changes from prior estimates are reflected sation.” Effective January 1, 2006, the company adopted in earnings in the current period. Anticipated losses on con- SFAS No. 123 (R), “Share-Based Payment: An Amendment tracts or programs in progress are charged to earnings of Financial Accounting Standards Board Statements when identified.

The Manitowoc Company, Inc. — 2007 Form 10-K 41

JOB: 08-10279-2 CYCLE#;BL#: 1; 0 TRIM: 8.5" x 11" COMPOSITE COLORS: Black, PANTONE Process Blue U, ~note-color 2 GRAPHICS: none V1.5 Merrill Corp - The Manitowoc Company_ Inc. 10-K-A Print Version | jcarlso | 10-Apr-08 11:07 | 08-10279-2.da | Sequence: 4 CHKSUM Content: 40912 Layout: 55750 Graphics: No Graphics CLEAN

Amounts related to long-term contracts accounted for recognized in an entity’s financial statements in accordance according to the percentage-of-completion method included with SFAS No. 109, “Accounting for Income Taxes.” It pre- in the Consolidated Balance Sheets at December 31 were as scribes a recognition threshold and measurement attribute for follows: financial statement disclosure of tax positions taken or expected to be taken on a tax return. FIN No. 48 was effective 2007 2006 for the company on January 1, 2007. Upon the adoption of Amounts billed, included in accounts receivable $10.8 $10.3 FIN No. 48 the Company recognized an additional tax liability Recoverable costs and accrued profit on progress of $10.8 million and a corresponding reduction in retained earnings recorded as cumulative effect of accounting change completed but not billed, included in other in the Consolidated Statements of Operations in the first quar- current assets $38.0 $33.8 ter of 2007. Amounts billed in excess of sales, included in accounts payable and accrued expenses $65.6 $57.2 Earnings Per Share Basic earnings per share is computed by dividing net earnings by the weighted average number of Recoverable costs and accrued profit on progress com- common shares outstanding during each year or period. pleted but not billed related to amounts not billable at the Diluted earnings per share is computed similar to basic earn- balance sheet date. It is anticipated that such amounts will ings per share except that the weighted average shares out- be billed in the first quarter of the subsequent year. Amounts standing is increased to include shares of restricted stock and billed but not paid pursuant to retainage contract provisions, the number of additional shares that would have been out- which are due upon completion of the contracts, were $1.9 standing if stock options were exercised and the proceeds million and $2.4 million as of December 31, 2007 and 2006, from such exercise were used to acquire shares of common respectively, and are included in other current assets in the stock at the average market price during the year or period. Consolidated Balance Sheets. As discussed above, the company enters into transactions Comprehensive Income Comprehensive income includes, with customers that provide for residual value guarantees in addition to net earnings, other items that are reported as and buyback commitments on certain crane transactions. direct adjustments to stockholders’ equity. Currently, these The company records transactions which it provides signifi- items are foreign currency translation adjustments, cant residual value guarantees and any buyback commit- employee postretirement benefit adjustments and the ments as operating leases. Net revenues in connection with change in fair value of certain derivative instruments. the initial transactions are recorded as deferred revenue and are amortized to income on a straight-line basis over a Concentration of Credit Risk Credit extended to customers period equal to that of the customer’s third party financing through trade accounts receivable potentially subjects the agreement. See Note 16, “Guarantees.” company to risk. This risk is limited due to the large number The company also leases cranes to customers under oper- of customers and their dispersion across various industries ating lease terms. Proceeds received in connection with and many geographical areas. However, a significant these transactions are recognized as revenue over the term amount of the company’s receivables are with distributors of the lease, and leased cranes are depreciated over their and contractors in the construction industry, large compa- estimated useful lives. nies in the foodservice and beverage industry, customers servicing the U.S. steel industry, and the U.S. Government. Research and Development Research and development The company currently does not foresee a significant credit costs are charged to expense as incurred and amount to risk associated with these individual groups of receivables. $36.1 million, $31.2 million and $26.0 million, for the years ended December 31, 2007, 2006 and 2005, respectively. Recent accounting changes and pronouncements In Research and development costs include salaries, materials, December 2007, the FASB issued SFAS No. 141(R), “Busi- contractor fees and other administrative costs. ness Combinations,” which establishes principles and requirements for how the acquirer: (a) recognizes and meas- Income Taxes The company utilizes the liability method to ures in its financial statements the identifiable assets recognize deferred tax assets and liabilities for the expected acquired, the liabilities assumed, and any noncontrolling future income tax consequences of events that have been interest in the acquiree; (b) recognizes and measures the recognized in the company’s financial statements. Under goodwill acquired in the business combination or a gain this method, deferred tax assets and liabilities are deter- from a bargain purchase; and (c) determines what informa- mined based on the temporary difference between financial tion to disclose to enable users of the financial statements statement carrying amounts and the tax basis of assets and to evaluate the nature and financial effects of the business liabilities using enacted tax rates in effect in the years in combination. SFAS 141(R) requires contingent consideration which the temporary differences are expected to reverse. to be recognized at its fair value on the acquisition date and, Valuation allowances are provided for deferred tax assets for certain arrangements, changes in fair value to be recog- where it is considered more likely than not that the company nized in earnings until settled. SFAS 141(R) also requires will not realize the benefit of such assets. acquisition-related transaction and restructuring costs to be In June 2006, the FASB issued FASB Interpretation expensed rather than treated as part of the cost of the (FIN) No. 48, “Accounting for Uncertainty in Income Taxes — acquisition. SFAS 141(R) applies prospectively to business an interpretation of FASB Statement No. 109.” This interpreta- combinations for which the acquisition date is on or after tion clarifies the accounting for uncertainty in income taxes the beginning of the first annual reporting period beginning

42 The Manitowoc Company, Inc. — 2007 Form 10-K

JOB: 08-10279-2 CYCLE#;BL#: 1; 0 TRIM: 8.5" x 11" COMPOSITE COLORS: Black, PANTONE Process Blue U, ~note-color 2 GRAPHICS: none V1.5 Merrill Corp - The Manitowoc Company_ Inc. 10-K-A Print Version | jcarlso | 10-Apr-08 11:07 | 08-10279-2.da | Sequence: 5 CHKSUM Content: 46334 Layout: 27037 Graphics: No Graphics CLEAN

on or after December 15, 2008. The Company is currently recognized servicing assets and servicing liabilities be initially evaluating the impact this statement will have on its finan- measured at fair value, if practicable. SFAS No. 156 was cial position and results of operations. effective for the Company on January 1, 2007. The adoption In February 2007, the FASB issued SFAS No. 159, “The Fair of SFAS No. 156 did not have an impact on the Company’s Value Option for Financial Assets and Financial Liabilities — Consolidated Financial Statements. Including an Amendment of FASB Statement No. 115.” In September 2006, the FASB issued SFAS No. 157, “Fair SFAS 159 permits entities to choose to measure many finan- Value Measurements.” SFAS 157 defines fair value, estab- cial instruments and certain other items at fair value that are lishes a framework for measuring fair value in generally not currently required to be measured at fair value. SFAS accepted accounting principles and establishes a hierarchy 159 permits all entities to choose, at specified election that categorizes and prioritizes the sources to be used to dates, to measure eligible items at fair value (the “fair value estimate fair value. SFAS 157 also expands financial state- option”). A business entity shall report unrealized gains and ment disclosures about fair value measurements. On losses on items for which the fair value option has been February 12, 2008, the FASB issued FASB Staff Position elected in earnings at each subsequent reporting date. (FSP) 157-b which delays the effective date of SFAS 157 for Upfront costs and fees related to items for which the fair one year, for all nonfinancial assets and nonfinancial liabili- value option is elected are recognized in earnings as ties, except those that are recognized or disclosed at fair incurred and not deferred. SFAS 159 also establishes pres- value in the financial statements on a recurring basis (at entation and disclosure requirements designed to facilitate least annually). FAS 157 and FSP 157-b are effective for comparisons between entities that choose different meas- financial statements issued for fiscal years beginning after urement attributes for similar types of assets and liabilities. November 15, 2007. The company has elected a partial defer- SFAS No. 159 was effective for the Company on January 1, ral of SFAS 157 under the provisions of FSP 157-b related to 2008. The adoption of SFAS No. 159 did not have an impact the measurement of fair value used when evaluating goodwill, on the Company’s Consolidated Financial Statements. other intangible assets and other long-lived assets for impair- In December 2007, the FASB issued SFAS No. 160, “Non- ment and valuing asset retirement obligations and liabilities controlling Interests in Consolidated Financial Statements an for exit or disposal activities. The impact of partially adopting Amendment of ARB No. 51,” which establishes accounting SFAS 157 effective January 1, 2008 was not material to the and reporting standards for the noncontrolling interest in a Company’s consolidated financial statements. subsidiary and for the deconsolidation of a subsidiary. In June 2006, the FASB issued FASB Interpretation (FIN) SFAS 160 clarifies that a noncontrolling interest in a sub- No. 48, “Accounting for Uncertainty in Income Taxes — an sidiary is an ownership interest in the consolidated entity that interpretation of FASB Statement No. 109.” This interpretation should be reported as equity in the consolidated financial clarifies the accounting for uncertainty in income taxes recog- statements. SFAS 160 also requires consolidated net income nized in an entity’s financial statements in accordance with to be reported at amounts that include the amounts attributa- SFAS No. 109, “Accounting for Income Taxes.” It prescribes a ble to both the parent and the noncontrolling interest. It also recognition threshold and measurement attribute for financial requires disclosure, on the face of the consolidated statement statement disclosure of tax positions taken or expected to be of income, of the amounts of consolidated net income attribut- taken on a tax return. FIN No. 48 was effective for the com- able to the parent and to the noncontrolling interest. SFAS 160 pany on January 1, 2007. Upon the adoption of FIN No. 48, the also provides guidance when a subsidiary is deconsolidated Company recognized an additional tax liability of $10.8 million and requires expanded disclosures in the consolidated finan- and a corresponding reduction in retained earnings recorded cial statements that clearly identify and distinguish between as a cumulative effect of accounting change in the Consoli- the interests of the parent’s owners and the interests of the dated Statements of Operations in the first quarter of 2007. noncontrolling owners of a subsidiary. SFAS 160 is effective for fiscal years, and interim periods within those fiscal years, 3. Acquisitions beginning on or after December 15, 2008. The Company is currently evaluating the impact this statement will have on its On July 19, 2007, the company acquired Shirke Construction financial position and results of operations. Equipments Pvt. Ltd (Shirke) for an aggregate consideration In February 2006, the FASB issued SFAS No. 155, “Account- of $64.5 million including approximately $1.3 million of ing for Certain Hybrid Financial Instruments an Amendment of acquisition costs. Headquartered in Pune, India, Shirke is a FASB Statement No. 133 and 140.” SFAS No. 155 amends cer- market leader in the Indian tower crane industry and has tain aspects of SFAS No. 133, primarily related to hybrid finan- been Potain’s Indian manufacturing partner and distributor cial instruments and beneficial interests in securitized financial since 1982. The aggregate consideration paid for Shirke assets, as well as amends SFAS No. 140, related to eliminating resulted in $33.8 million of goodwill and $30.2 million of a restriction on the passive derivative instruments that a quali- other intangible assets being recognized by the company’s fying special-purpose entity (SPE) may hold. SFAS No. 155 was Crane segment. See further detail related to the goodwill effective for the Company on January 1, 2007. The adoption of and other intangible assets of the Shirke acquisition at SFAS No. 155 did not have an impact on the Company’s Con- Note 7, “Goodwill and Other Intangible Assets.” solidated Financial Statements. On January 3, 2007, the company acquired the Carrydeck In March 2006, the FASB issued SFAS No. 156, “Account- line of mobile industrial cranes from Marine Travelift, Inc. of ing for Servicing of Financial Assets an amendment of Sturgeon Bay, Wisconsin. The acquisition of the Carrydeck FASB Statement No. 140.” SFAS No. 156, amends certain line adds six new models to the company’s product offering aspects of SFAS No. 140, by requiring that all separately of mobile industrial cranes. The aggregate consideration paid

The Manitowoc Company, Inc. — 2007 Form 10-K 43

JOB: 08-10279-2 CYCLE#;BL#: 1; 0 TRIM: 8.5" x 11" COMPOSITE COLORS: Black, PANTONE Process Blue U, ~note-color 2 GRAPHICS: none V1.5 Merrill Corp - The Manitowoc Company_ Inc. 10-K-A Print Version | jcarlso | 10-Apr-08 11:07 | 08-10279-2.da | Sequence: 6 CHKSUM Content: 14673 Layout: 43710 Graphics: No Graphics CLEAN

for the Carrydeck line resulted in $9.2 million of goodwill and The following selected financial data of Toledo Ship Repair $6.5 million of other intangible assets being recognized by the for the years ended December 31, 2006 and 2005 is pre- company’s Crane segment. See further detail related to the sented for informational purposes only and does not neces- goodwill and other intangible assets of the Carrydeck acquisi- sarily reflect what the results of operations would have been tion at Note 7, “Goodwill and Other Intangible Assets.” had the business operated as a stand-alone entity. There On May 26, 2006, the company acquired substantially all were no operating results from Toledo Ship Repair for the of the assets and business operated by McCann’s Engineer- year ended December 31, 2007. There was no general corpo- ing & Mfg. Co. and McCann’s de Mexico S.A. de C.V. rate expense or interest expense allocated to discontinued (McCann’s). Headquartered in Los Angeles, California, and operations for this business during the periods presented. with operations in Tijuana, Mexico, McCann’s is engaged in the design, manufacture and sale of beverage dispensing 2006 2005 equipment primarily used in fast food restaurants, stadiums, Net sales $ — $11.3 cafeterias and convenience stores. McCann’s primary products are backroom beverage equipment such as carbona- Pretax loss from discontinued operation $(0.5) $ (6.7) tors, water boosters and racks. McCann’s also produces Pretax loss on closure — (5.2) accessory components for beverage dispensers including Benefit for taxes on loss (0.2) (4.5) specialty valves, stands and other stainless steel compo- Net loss from discontinued operation $(0.3) $ (7.4) nents. The aggregate consideration paid for the McCann’s acquisition was $37.1 million, including acquisition costs of During the third quarter of 2005, the company decided approximately $0.7 million. The acquisition resulted in that it would divest of its wholly-owned subsidiary Diversi- approximately $14.4 million of goodwill and $14.3 million of fied Refrigeration, LLC, (f/k/a Diversified Refrigeration, Inc.) other intangible assets being recognized by the company’s (DRI). DRI was the company’s private-label Foodservice con- Foodservice segment. See further detail related to the good- tract manufacturing operation. On December 30, 2005, the will and other intangible assets of the McCann’s acquisition company completed the sale of DRI to Monogram Refrigera- at Note 7, “Goodwill and Other Intangible Assets.” tion, LLC, a wholly-owned subsidiary of the General Electric On January 3, 2006, the company acquired certain assets, Company. Net proceeds from the sale of DRI were approxi- rights and properties of ExacTech, Inc., a supplier of fabrica- mately $28.4 million and resulted in a pre-tax gain of $17.6 tion, machining, welding, and other services to various par- million ($9.6 million after tax). This gain is recorded in gain ties. Located in Port Washington, Wisconsin, ExacTech, Inc. on sale or closure of discontinued operations, net of income now provides these services to the company’s U.S. based taxes in the Consolidated Statements of Operations. The crane manufacturing facilities. The aggregate consideration sale of DRI represents a discontinued operation under SFAS paid for the acquisition resulted in approximately $6.5 mil- No. 144. Results of DRI in prior periods have been classified lion of goodwill being recognized by the company’s Crane as discontinued in the Consolidated Financial Statements to segment in the first quarter of 2006. See further detail exclude the results from continuing operations. related to the goodwill of the ExacTech, Inc. acquisition at The following selected financial data of DRI for the year Note 7, “Goodwill and Other Intangible Assets.” ended 2005 is presented for informational purposes only and does not necessarily reflect what the results of opera- 4. Discontinued Operations tions would have been had the business operated as a stand-alone entity. There were no operating results from During the third quarter of 2005, the company decided to DRI for the years ended December 31, 2007 and 2006. close Toledo Ship Repair Company (Toledo Ship Repair), a There was no general corporate expense or interest division of the company’s wholly-owned subsidiary, Mani- expense allocated to discontinued operations for this busi- towoc Marine Group, LLC. Located in Toledo, Ohio, Toledo ness during the periods presented. Ship Repair performed ship repair and industrial repair services. The company recorded a $5.2 million pre-tax ($3.4 mil- 2005 lion after tax) charge for costs related to the closure of the Net sales $91.1 business. This charge included $0.2 million related to severance agreements; $1.0 million for future lease payments; Pretax earnings from discontinued operations $ 6.3 $0.3 million for the write-off of goodwill related to this busi- Pretax gain on sale 17.6 ness; $2.2 million for the write-down of certain assets (pri- Provision for taxes on earnings 9.7 marily property, plant and equipment and inventory) to Net earnings from discontinued operation $14.2 estimated salvage value; and $1.5 million for closing and other related costs. This charge is recorded in gain on sale The earnings from discontinued operations, net of income or closure of discontinued operations, net of income taxes in taxes, for the year ended December 31, 2007 primarily the Consolidated Statements of Operations. The closure of reflects favorable product liability experience related to our Toledo Ship Repair represents a discontinued operation discontinued Manlift business which was sold in 2004. Dur- under SFAS No. 144, “Accounting for the Impairment or Dis- ing the second quarter of 2004, the company completed the posal of Long-Lived Assets.” Results of Toledo Ship Repair in sale of its wholly-owned subsidiary, Delta Manlift SAS (Delta), current and prior periods have been classified as discontin- to JLG Industries, Inc. Headquartered in Tonneins, France, ued in the Consolidated Financial Statements to exclude the Delta manufactured the Toucan brand of vertical mast lifts, a results from continuing operations. line of aerial work platforms distributed throughout Europe

44 The Manitowoc Company, Inc. — 2007 Form 10-K

JOB: 08-10279-2 CYCLE#;BL#: 1; 0 TRIM: 8.5" x 11" COMPOSITE COLORS: Black, PANTONE Process Blue U, ~note-color 2 GRAPHICS: none V1.5 Merrill Corp - The Manitowoc Company_ Inc. 10-K-A Print Version | jcarlso | 10-Apr-08 11:07 | 08-10279-2.da | Sequence: 7 CHKSUM Content: 63949 Layout: 43514 Graphics: No Graphics CLEAN

for use principally in industrial and maintenance operations. classified as discontinued in the Consolidated Financial State- The sale of Delta represents a discontinued operation under ments to exclude the results from continuing operations. SFAS No. 144. Results of Delta in prior periods have been

5. Inventories 6. Property, Plant and Equipment

The components of inventories at December 31 are summa- The components of property, plant and equipment at rized as follows: December 31 are summarized as follows:

2007 2006 2007 2006 Inventories — gross: Land $ 50.9 $ 44.5 Raw materials $254.6 $198.3 Building and improvements 230.9 188.5 Work-in-process 220.9 174.2 Drydocks and dock fronts 19.5 19.9 Finished goods 188.5 187.2 Machinery, equipment and tooling 287.9 256.0 Total 664.0 559.7 Furniture and fixtures 29.8 27.0 Less excess and obsolete inventory reserve (42.6) (44.4) Computer hardware and software 47.3 42.1 Net inventories at FIFO cost 621.4 515.3 Rental cranes 186.4 193.1 Less excess of FIFO costs over LIFO value (23.7) (22.9) Construction in progress 66.3 32.5 Inventories — net $597.7 $492.4 Total cost 919.0 803.6 Less accumulated depreciation (429.5) (404.7) Property, plant and equipment — net $ 489.5 $ 398.9

7. Goodwill and Other Intangible Assets

The changes in carrying amount of goodwill by reportable segment for the years ended December 31, 2007 and 2006, were as follows: Crane Foodservice Marine Total Balance as of January 1, 2006 $196.7 $185.7 $47.2 $429.6 ExacTech, Inc. acquisition 6.5 — — 6.5 McCann’s acquisition — 14.4 — 14.4 Foreign currency impact 11.6 — — 11.6 Balance as of December 31, 2006 214.8 200.1 47.2 462.1 Carrydeck acquisition 9.2 — — 9.2 Shirke acquisition 33.8 — — 33.8 Foreign currency impact 13.7 — — 13.7 Balance as of December 31, 2007 $271.5 $200.1 $47.2 $518.8

As discussed in Note 3, “Acquisitions,” during 2007, the which have an indefinite life, and other intangibles of $10.6 company completed the acquisitions of the Carrydeck line million, which include various intangible assets that are of mobile industrial cranes and Shirke. The acquisition of amortized over 6 months to 6 years, which approximates the Carrydeck line resulted in an increase of $9.2 million of their estimated useful lives. goodwill and $6.5 million of other intangible assets being As discussed in Note 3, during 2006, the company com- recognized by the company’s Crane segment. The other pleted the acquisitions of McCann’s and ExacTech, Inc. The intangible assets consist of trademarks totaling $1.2 million, acquisition of ExacTech, Inc. resulted in an increase of $6.5 which have an indefinite life, customer relationships of $4.2 million of goodwill and no other intangible assets. The million, which have been assigned a 20 year life, and non- acquisition of McCann’s resulted in an increase of $14.4 patented technologies of $1.1 million which have been million of goodwill and $14.3 million of other intangible assigned a 20 year life. The acquisition of Shirke resulted in assets. The other intangible assets consist of trademarks an increase of $33.8 million of goodwill and $30.2 million of totaling $7.0 million, which have an indefinite life, customer other intangible assets being recognized by the company’s relationships of $5.8 million, which have been assigned a Crane segment. The other intangible assets consist of cus- 13 year life, and patents of $1.5 million which have been tomer relationships of $10.5 million, which have been assigned a 10 year life. assigned a 10 year life, trademarks totaling $9.1 million,

The Manitowoc Company, Inc. — 2007 Form 10-K 45

JOB: 08-10279-2 CYCLE#;BL#: 1; 0 TRIM: 8.5" x 11" COMPOSITE COLORS: Black, PANTONE Process Blue U, ~note-color 2 GRAPHICS: none V1.5 Merrill Corp - The Manitowoc Company_ Inc. 10-K-A Print Version | jcarlso | 10-Apr-08 11:07 | 08-10279-2.da | Sequence: 8 CHKSUM Content: 14795 Layout: 44947 Graphics: No Graphics CLEAN

The gross carrying amount and accumulated amortization of the company’s intangible assets other than goodwill were as follows as of December 31, 2007 and 2006. December 31, 2007 December 31, 2006 Gross Net Gross Net Carrying Accumulated Book Carrying Accumulated Book Amount Amortization Value Amount Amortization Value Trademarks and tradenames $120.9 $ — $120.9 $105.1 $ — $105.1 Customer relationships 20.4 (1.4) 19.0 5.8 (0.3) 5.5 Patents 35.2 (12.2) 23.0 31.1 (9.8) 21.3 Engineering drawings 12.0 (5.4) 6.6 12.0 (4.4) 7.6 Distribution network 21.8 — 21.8 20.5 — 20.5 Other intangibles 10.6 (1.3) 9.3 — — — $220.9 $(20.3) $200.6 $174.5 $(14.5) $160.0

Amortization expense recorded for the other intangible respectively. Estimated amortization expense for the five assets for the years ended December 31, 2007, 2006 and years beginning in 2008 is estimated to be approximately 2005 was $5.8 million, $3.3 million and $3.1 million, $6.8 million per year.

8. Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses at December 31 are summarized as follows:

2007 2006 Trade accounts and interest payable $543.3 $439.7 Employee related expenses 95.9 76.3 Income taxes payable 6.7 62.9 Profit sharing and incentives 63.5 54.8 Unremitted cash liability 4.9 11.7 Deferred revenue — current 55.9 48.1 Amounts billed in excess of sales 65.6 57.2 Miscellaneous accrued expenses 109.7 88.9 $945.5 $839.6

9. Debt

Debt at December 31 is summarized as follows:

2007 2006 Revolving credit facility $ 56.7 $ — Senior subordinated notes due 2012 — 113.8 Senior notes due 2013 150.0 150.0 Fair value of interest rate swaps 0.1 (4.5) Other 23.8 9.1 Total debt 230.6 268.4 Less current portion and short-term borrowings (13.1) (4.1) Long-term debt $217.5 $264.3

In June 2005, the company entered into a five-year, $300 fee in effect at December 31, 2007 on the unused portion of million, secured revolving credit facility (Revolving Credit the Revolving Credit Facility was 0.15%. As of December 31, Facility), which replaced the company’s $125 million revolv- 2007, there was $56.7 million outstanding under the Revolv- ing credit facility that was due to expire in May 2006. ing Credit Facility. As of December 31, 2007, the company had Borrowings under the five year, $300 million, Revolving $1.9 million of outstanding letters of credit outstanding Credit Facility bear interest at a rate equal to the sum of a secured by the Revolving Credit Facility. The company had base rate or a Eurodollar rate plus an applicable margin, which $241.4 million of unused availability under the terms of the is based on the company’s consolidated total leverage ratio Revolving Credit Facility as of December 31, 2007. During as defined by the credit agreement. The annual commitment June 2005, the company recorded a charge of $0.8 million

46 The Manitowoc Company, Inc. — 2007 Form 10-K

JOB: 08-10279-2 CYCLE#;BL#: 1; 0 TRIM: 8.5" x 11" COMPOSITE COLORS: Black, PANTONE Process Blue U, ~note-color 2 GRAPHICS: none V1.5 Merrill Corp - The Manitowoc Company_ Inc. 10-K-A Print Version | jcarlso | 10-Apr-08 11:07 | 08-10279-2.da | Sequence: 9 CHKSUM Content: 14131 Layout: 6205 Graphics: No Graphics CLEAN

($0.6 million net of income taxes) for deferred financing costs require us to meet specified financial tests, which include related to the termination of the previous $125 million revolv- the following: consolidated interest coverage ratio; consoli- ing credit facility. dated total leverage ratio; and consolidated senior leverage On August 1, 2007, the company redeemed its $175 mil- ratio. These covenants also limit, among other things, our 1 lion 10 ⁄2% senior subordinated notes due 2012. Pursuant to ability to redeem or repurchase our debt, incur additional the terms of the indenture, the company paid the note debt, make acquisitions, merge with other entities, pay divi- holders 105.25 percent of the principal amount plus dends or distributions, repurchase capital stock, and create accrued and unpaid interest up to the redemption date. As or become subject to liens. The revolving credit facility also a result of this redemption, the company incurred a charge contains cross-default provisions whereby certain defaults of $12.5 million ($8.1 million net of income taxes) related to under any other debt agreements would result in default the call premium, write-off of unamortized debt issuance under the secured revolving credit facility. We were in com- costs and other expenses. The charge was recorded in loss pliance with all covenants as of December 31, 2007, and on debt extinguishment in the Consolidated Statements of based upon our current plans and outlook, we believe we Operations. will be able to comply with these covenants during the sub- On May 15, 2006, the company redeemed its 175 million sequent 12 months. 3 Euro, 10 ⁄8% senior subordinated notes due 2011 for $216.9 As of December 31, 2007, the company had outstanding million (based on May 15, 2006 exchange rates). Pursuant $56.7 million of borrowings under our revolving credit facil- to the terms of the indenture, the company paid the note ity with an interest rate of 4.9%. We also had outstanding holders 105.188 percent of the principal amount of the $23.8 million of other indebtedness with a weighted-aver- notes plus accrued and unpaid interest up to the redemp- age interest rate of 5.5%. This debt includes $7.9 million of tion date. As a result of this redemption, the company outstanding bank overdrafts in China, $6.0 million of out- incurred a charge of $14.4 million ($9.4 million net of standing revolving credit and $4.7 million of bank over- income taxes) related to the call premium ($11.2 million), drafts in Europe, and $5.2 million of capital lease write-off of unamortized debt issuance costs ($3.1 million) obligations in Europe. and other expenses ($0.1 million). The charge was recorded As of December 31, 2007, the company had two fixed-to- in loss on debt extinguishment in the Consolidated State- floating rate swap contracts which effectively converted ments of Operations. $50.0 million of its fixed rate Senior Notes due 2013 to vari- On November 6, 2003, the company completed the sale able rate debt. These contracts are considered to be 1 of $150.0 million of 7 ⁄8% Senior Notes due 2013 (Senior hedges against changes in the fair value of the fixed rate Notes due 2013). The Senior Notes due 2013 are unsecured debt obligation. Accordingly, the interest rate swap con- senior obligations ranking prior to the company’s Senior tracts are reflected at fair value in its Consolidated Balance Subordinated Notes due 2012. Our Revolving Credit Facility Sheets as an asset of $0.1 million as of December 31, 2007. ranks equally with the Senior Notes due 2013, except that it Debt is reflected at an amount equal to the sum of its carry- is secured by substantially all domestic tangible and intangi- ing value plus an adjustment representing the change in fair ble assets of the company and its subsidiaries. The Senior value of the debt obligation attributable to the interest rate Notes due 2013 are fully and unconditionally jointly and sev- risk being hedged. Changes during any accounting period in erally guaranteed by substantially all of the company’s the fair value of the interest rate swap contract, as well as domestic subsidiaries (see Note 21, “Subsidiary Guarantors offsetting changes in the adjusted carrying value of the of Senior Notes due 2013”). Interest on the Senior Notes related portion of fixed-rate debt being hedged, are recog- due 2013 is payable semiannually in May and nized as an adjustment to interest expense in the Consoli- November each year. The Senior Notes due 2013 can be dated Statements of Operations. The change in fair value of redeemed by the company in whole or in part for a premium the swaps exactly offsets the change in fair value of the on or after November 1, 2008. The following is the premium hedged fixed-rate debt; therefore, there was no net impact paid by the company, expressed as a percentage of the prin- on earnings for the year ended December 31, 2007. The fair cipal amount, if it redeems the Senior Notes due 2013 dur- value of these contracts, which represents the cost to set- ing the 12-month period commencing on November 1 of the tle these contracts, approximated a gain of $0.1 million at year set forth below: December 31, 2007. The aggregate scheduled maturities of outstanding debt Year Percentage obligations in subsequent years are as follows: 2008 103.563% 2009 102.375% 2008 $ 13.1 2010 101.188% 2009 8.9 2011 and thereafter 100.000% 2010 57.4 2011 0.5 Our revolving credit facility and Senior Notes due 2013 2012 0.5 contain customary affirmative and negative covenants. In Thereafter 150.2 general, the covenants contained in the revolving credit $230.6 facility are more restrictive than those of the Senior Notes due 2013. Among other restrictions, these covenants

The Manitowoc Company, Inc. — 2007 Form 10-K 47

JOB: 08-10279-2 CYCLE#;BL#: 1; 0 TRIM: 8.5" x 11" COMPOSITE COLORS: Black, ~note-color 2 GRAPHICS: none V1.5 Merrill Corp - The Manitowoc Company_ Inc. 10-K-A Print Version | jcarlso | 10-Apr-08 11:07 | 08-10279-2.da | Sequence: 10 CHKSUM Content: 30628 Layout: 46539 Graphics: No Graphics CLEAN

10. Accounts Receivable Securitization The securitization program includes certain of the company’s domestic U.S. Foodservice and Crane segment’s The Company has entered into an accounts receivable securiti- businesses and the program was amended in the third quar- zation program whereby it sells certain of its domestic trade ter of 2007 to increase the capacity of the program from $90 accounts receivable to a wholly owned, bankruptcy-remote million to $105 million. Trade accounts receivables sold to special purpose subsidiary which, in turn, sells participating the Purchaser and being serviced by the company totaled interests in its pool of receivables to a third-party financial insti- $100.0 million at December 31, 2007. tution (Purchaser). The Purchaser receives an ownership and Sales of trade receivables from the special purpose sub- security interest in the pool of receivables. New receivables are sidiary to the Purchaser totaled $41.0 million for the year purchased by the special purpose subsidiary and participation ended December 31, 2007. Cash collections of trade interests are resold to the Purchaser as collections reduce pre- accounts receivable balances in the total receivable pool viously sold participation interests. The company has retained totaled $1.1 billion for the year ended December 31, 2007. collection and administrative responsibilities on the participa- The accounts receivables securitization program is tion interests sold. The Purchaser has no recourse against the accounted for as a sale in accordance with FASB Statement company for uncollectible receivables; however, the company’s No. 140 “Accounting for Transfers and Servicing of Financial retained interest in the receivable pool is subordinate to the Pur- Assets and Extinguishment of Liabilities — a Replacement chaser and is recorded at fair value. Due to a short average col- of FASB Statement No. 125.” Sales of trade receivables to lection cycle of less than 60 days for such accounts receivable the Purchaser are reflected as a reduction of accounts and due to the company’s collection history, the fair value of receivable in the accompanying Consolidated Balance the company’s retained interest approximates book value. The Sheets and the proceeds received are included in cash flows retained interest recorded at December 31, 2007 is $98.8 mil- from operating activities in the accompanying Consolidated lion and is included in accounts receivable in the accompanying Statements of Cash Flows. Consolidated Balance Sheets.

The table below provides additional information about delinquencies and net credit losses for trade accounts receivable subject to the accounts receivable securitization program.

Balance Outstanding Balance 60 Days or More Net Credit Losses Outstanding Past Due Year Ended December 31, 2007 December 31, 2007 December 31, 2007 Trade accounts receivable subject to securitization program $198.8 $4.4 $ — Trade accounts receivable balance sold 100.0 Retained interest $ 98.8

11. Income Taxes

Income tax expense for continuing operations is summarized below: 2007 2006 2005 Earnings from continuing operations before income taxes: Domestic $214.9 $100.2 $ 2.9 Foreign 248.1 144.7 71.0 Total $463.0 $244.9 $73.9

The provision for taxes on earnings (loss) from continuing operations for the years ended December 31, 2007, 2006 and 2005 are as follows: 2007 2006 2005 Current: Federal $ 71.1 $46.7 $ (5.4) State 11.3 3.7 (1.9) Foreign 42.8 31.8 42.8 Total current 125.2 82.2 35.5 Deferred: Federal and state (0.1) (5.5) 0.2 Foreign 4.3 1.7 (20.9) Total deferred 4.2 (3.8) (20.7) Provision for taxes on earnings $129.4 $78.4 $ 14.8

48 The Manitowoc Company, Inc. — 2007 Form 10-K

JOB: 08-10279-2 CYCLE#;BL#: 1; 0 TRIM: 8.5" x 11" COMPOSITE COLORS: Black, PANTONE Process Blue U, ~note-color 2 GRAPHICS: none V1.5 Merrill Corp - The Manitowoc Company_ Inc. 10-K-A Print Version | jcarlso | 10-Apr-08 11:07 | 08-10279-2.da | Sequence: 11 CHKSUM Content: 12305 Layout: 48762 Graphics: No Graphics CLEAN

The federal statutory income tax rate is reconciled to the company’s effective income tax rate for continuing operations for the years ended December 31, 2007, 2006 and 2005 as follows: 2007 2006 2005 Federal income tax at statutory rate 35.0% 35.0% 35.0% State income provision (benefit) 1.6 1.7 (4.6) Non-deductible book intangible asset amortization 0.1 0.2 0.4 Tax exempt export income — (0.5) (1.5) Federal manufacturing income benefit (0.7) — — Federal tax credits (1.4) — (3.8) Taxes on foreign income which differ from the U.S. statutory rate (6.1) (5.5) (4.3) Adjustments for unrecognized tax benefits (0.9) — — Other items 0.4 1.1 (1.2) Provision for taxes on earnings 28.0% 32.0% 20.0%

The lower effective tax rate in 2007 as compared to 2006 lower effective tax rate in 2005 was the result of lower earn- was a result of a foreign tax credit carryforward which was ings, a research and development tax credit, and the realiza- recognized during the second quarter and an IRS audit set- tion of certain tax benefits that were previously reserved tlement during the third quarter. In addition, all periods were against due to their uncertainty. favorably affected, as compared to the statutory rate, to varying degrees by certain global tax planning initiatives. The

The deferred income tax accounts reflect the impact of temporary differences between the basis of assets and liabilities for financial reporting purposes and their related basis as measured by income tax regulations. A summary of the deferred income tax accounts at December 31 is as follows:

2007 2006 Current deferred assets: Inventories $13.9 $13.2 Accounts receivable 12.1 11.4 Product warranty reserves 17.3 13.6 Product liability reserves 12.1 11.9 Other employee-related benefits and allowances 5.3 23.2 Net operating losses carryforwards, current portion 3.0 2.1 Deferred revenue, current portion — 12.2 Other reserves and allowances 2.4 10.1 Net future income tax benefits, current $66.1 $97.7

Non-current deferred assets (liabilities): Property, plant and equipment $(34.3) $(38.9) Intangible assets (3.4) (1.3) Post retirement benefits other than pensions 20.4 20.0 Deferred employee benefits 8.6 1.1 Severance benefits 0.2 2.2 Product warranty reserves 1.3 1.3 Tax credits 4.5 6.7 Net operating loss carryforwards 17.2 22.8 Deferred revenue 14.8 8.5 Other 2.8 1.6 Total non-current deferred asset 32.1 24.0 Less valuation allowance (4.5) (9.7) Net future tax benefits, non-current $ 27.6 $ 14.3

The Manitowoc Company, Inc. — 2007 Form 10-K 49

JOB: 08-10279-2 CYCLE#;BL#: 1; 0 TRIM: 8.5" x 11" COMPOSITE COLORS: Black, PANTONE Process Blue U, ~note-color 2 GRAPHICS: none V1.5 Merrill Corp - The Manitowoc Company_ Inc. 10-K-A Print Version | jcarlso | 10-Apr-08 11:07 | 08-10279-2.da | Sequence: 12 CHKSUM Content: 23204 Layout: 15451 Graphics: No Graphics CLEAN

The company’s policy is to remit earnings from foreign settling all audit issues raised. As a result of this settlement, subsidiaries only to the extent any underlying foreign the company recognized $2.7 million of additional R&D tax taxes are creditable in the United States. Accordingly, the credit benefit during the third quarter of 2007. In 2006, the company does not currently provide for additional United Wisconsin Department of Revenue (WDOR) began an exami- States and foreign income taxes which would become nation of the company’s Wisconsin income tax returns for payable upon repatriation of undistributed earnings of for- 1997 through 2005 that is anticipated to be completed by the eign subsidiaries. Undistributable earnings from continu- end of 2008. As of December 31, 2007, the WDOR has not for- ing operations on which additional income taxes have not mally issued any assessment report. In August 2007, the Ger- been provided amounted to approximately $359.7 million man tax authorities began an examination of the company’s at December 31, 2007. If all such undistributed earnings German entity’s income and trade tax returns for 2001 through were remitted, an additional provision for income taxes of 2005. Thus far, there have been no significant developments approximately $125.9 million would have been necessary with regard to this German examination. The company adopted the provisions of FASB Interpreta- as of December 31, 2007. tion (FIN) No. 48, “Accounting for Uncertainty in Income As of December 31, 2007, the company has approxi- Taxes — an interpretation of FASB Statement No. 109,” on mately $262.6 million of state net operating loss carryfor- January 1, 2007. As a result of the adoption of FIN 48, the wards, which are available to reduce future state tax company recognized an additional tax liability of $10.8 mil- liabilities. These state net operating loss carryforwards lion for unrecognized tax benefits, including $4.6 million of expire beginning 2008 through 2026. The company also accrued interest and penalties, which was accounted for as has approximately $59.5 million of foreign loss carryfor- a reduction to the January 1, 2007 retained earnings. Imme- wards, which are available to reduce future foreign tax lia- diately prior to adopting FIN No. 48, the company’s total bilities. These foreign loss carryforwards generally have amount of unrecognized tax benefits, including $8.1 million no expiration under current foreign law. The valuation accrued for interest and penalties, was $25.1 million. A rec- allowance represents a reserve for certain foreign loss onciliation of the beginning and ending amount of unrecog- carryforwards for which realization is not “more likely nized tax benefits is as follows: than not.” The company or one of its subsidiaries files income tax Balance at January 1, 2007 $33.5 returns in the U.S. federal jurisdiction, and various state Additions based on tax positions related to the current year 19.5 and foreign jurisdictions. The following table provides the Additions for tax positions of prior years 0.0 open tax years for which the Company could be subject to Reductions for tax positions of prior years (5.1) income tax examination by the tax authorities in its major Reductions based on settlements with taxing authorities (9.6) jurisdictions: Reductions as a result of lapse of the applicable statute of limitations (1.3) Balance at December 31, 2007 $37.0 Jurisdiction Open Years U.S. Federal 2006 — 2007 $36.7 million of the company’s unrecognized tax benefits Wisconsin 1997 — 2007 (including reversal of interest and penalties and state bene- Pennsylvania 2003 — 2007 fits of net federal tax effects) as of December 31, 2007, if France 2003 — 2007 recognized, would affect the effective tax rate. Germany 2001 — 2007 The company recognizes accrued interest and penalties Italy 2003 — 2007 related to unrecognized tax benefits as part of income tax Portugal 2003 — 2007 expense. During the years ended December 31, 2007, 2006, England 2005 — 2007 and 2005, the company accrued ($1.9) million, $0.5 million, Singapore 2001 — 2007 and $1.0 million for the payment of interest and penalties related to uncertain tax liabilities. As of the year ended The Internal Revenue Service (IRS) commenced an examina- December 31, 2007, the Company has accrued interest and tion of the company’s U.S. income tax returns for the 2004 and penalties of $6.2 million. 2005 tax years in the first quarter of 2007. On October 2, 2007, During the next 12 months, the company does not expect the company signed an assessment agreement with the IRS any significant changes in its unrecognized tax benefits.

50 The Manitowoc Company, Inc. — 2007 Form 10-K

JOB: 08-10279-2 CYCLE#;BL#: 1; 0 TRIM: 8.5" x 11" COMPOSITE COLORS: Black, ~note-color 2 GRAPHICS: none V1.5 Merrill Corp - The Manitowoc Company_ Inc. 10-K-A Print Version | jcarlso | 10-Apr-08 11:07 | 08-10279-2.da | Sequence: 13 CHKSUM Content: 54774 Layout: 20672 Graphics: No Graphics CLEAN

12. Earnings Per Share

The following is a reconciliation of the weighted average shares outstanding used to compute basic and diluted earnings per share. 2007 2006 2005 Basic weighted average common shares outstanding 124,667,931 122,449,148 120,586,420 Effect of dilutive securities — stock options and restricted stock 2,821,485 3,122,384 2,465,648 Diluted weighted average common shares outstanding 127,489,416 125,571,532 123,052,068

For the years ended December 31, 2007, 2006 and 2005, one additional share of common stock for every share of 0.0 million, 0.3 million, and 0.2 million, respectively, common Manitowoc common stock they owned as of August 31, shares issuable upon the exercise of stock options, were 2007. Manitowoc shares outstanding at the close of busi- anti-dilutive and were excluded from the calculation of ness on August 31, 2007 totaled 62,787,642. The com- diluted earnings per share. pany’s common stock began trading at its post-split price at the beginning of trading on September 11, 2007. Per 13. Stockholders’ Equity share, share and stock option amounts within this Annual Report on Form 10-K for all periods presented have been Authorized capitalization consists of 300 million shares of adjusted to reflect the stock split. $0.01 par value common stock and 3.5 million shares of The amount and timing of the quarterly dividend is deter- $0.01 par value preferred stock. None of the preferred mined by the board of directors at its regular meetings each shares have been issued. year. In the year ended December 31, 2007, the Company On March 21, 2007, the Board of Directors of the company approved the Rights Agreement between the company paid a quarterly dividend of $0.0175 (adjusted for the stock and Computershare Trust Company, N.A., as Rights Agent split in September of 2007) in cash the first two quarters and declared a dividend distribution of one right (a “Right”) and paid a quarterly dividend of $0.02 in cash in each of the for each outstanding share of Common Stock, par value last two quarters for a cumulative dividend in 2007 of $0.01 per share, of the company (the “Common Stock”), to $0.075 per share. shareholders of record at the close of business on Currently, the company has authorization to purchase up March 30, 2007 (the “Record Date”). In addition to the to 10 million shares (adjusted for the 2006 and 2007 2-for-1 Rights issued as a dividend on the record date, the Board of stock splits) of common stock at management’s discretion. Directors has also determined that one Right will be issued As of December 31, 2007, the company had purchased together with each share of Common Stock issued by the approximately 7.6 million shares (adjusted for the 2006 and company after the Record Date. Generally, each Right, when 2007 2-for-1 stock splits) at a cost of $49.8 million pursuant it becomes exercisable, entitles the registered holder to pur- to this authorization. The company did not purchase any chase from the company one share of Common Stock at a shares of its common stock during 2007, 2006 or 2005. purchase price, in cash, of $110.00 per share ($220.00 per In November 2007, we sold, pursuant to an underwrit- share prior to the September 10, 2007 stock split), subject to ten public offering, approximately 4.0 million shares of our adjustment as set forth in the Rights Agreement (the “Pur- common stock at a price of $39.48 per share to the public. chase Price” or “Exercise Price”). The offering was undertaken to meet anticipated investor As explained in the Rights Agreement, the Rights demand for the company’s common stock in connection become exercisable on the “Distribution Date”, which is with Standard & Poor’s decision to add the company to that date that any of the following occurs: (1) 10 days fol- the S&P 500 Index as of the close of trading on lowing a public announcement that a person or group of November 15. Net cash proceeds from this offering, after affiliated persons (an “Acquiring Person”) has acquired, or deducting underwriting discounts and commissions, were obtained the right to acquire, beneficial ownership of 20% $156.9 million. We used the proceeds for general corpo- or more of the outstanding shares of Common Stock of the rate purposes. Company; or (2) 10 business days following the commence- The components of accumulated other comprehensive ment of a tender offer or exchange offer that would result income as of December 31, 2007 and 2006 are as follows: in a person or group beneficially owning 20% or more of such outstanding shares of Common Stock. The Rights will 2007 2006 expire at the close of business on March 29, 2017, unless Foreign currency translation $116.6 $ 69.2 earlier redeemed or exchanged by the Company as described in the Rights Agreement. Derivative instrument fair market value, On July 26, 2007, the board of directors authorized a net of income taxes 1.4 2.1 two-for-one split of the company’s common stock. Record Employee postretirement benefit adjustments, holders of Manitowoc’s common stock at the close of busi- net of income taxes (3.5) (23.3) ness on August 31, 2007 received on September 10, 2007 $114.5 $ 48.0

The Manitowoc Company, Inc. — 2007 Form 10-K 51

JOB: 08-10279-2 CYCLE#;BL#: 1; 0 TRIM: 8.5" x 11" COMPOSITE COLORS: Black, PANTONE Process Blue U, ~note-color 2 GRAPHICS: none V1.5 Merrill Corp - The Manitowoc Company_ Inc. 10-K-A Print Version | jcarlso | 10-Apr-08 11:07 | 08-10279-2.da | Sequence: 14 CHKSUM Content: 38155 Layout: 22228 Graphics: No Graphics CLEAN

14. Stock Based Compensation determine. Options granted under the plan to date become exercisable in 25% increments beginning on the second Effective January 1, 2006, the company adopted anniversary of the grant date over a four-year period and SFAS No. 123 (R), “Share-Based Payment: An Amendment of expire ten years subsequent to the grant date. Restrictions Financial Accounting Standards Board Statements No. 123” on restricted stock awarded under this plan lapse 100% on (SFAS No. 123(R)), which revised SFAS No. 123, “Accounting the third anniversary of the grant date. There have been no for Stock-Based Compensation” and supersedes APB awards of stock appreciation rights, performance shares or Opinion No. 25, “Accounting for Stock Issued to Employ- performance units. ees.” SFAS No. 123(R) requires all share-based payments The Manitowoc Company, Inc. 1999 Non-Employee Direc- to employees, including grants of employee stock options, tor Stock Option Plan (1995 Stock Plan) provides for the to be measured at fair value and expensed in the Consoli- granting of stock options to non-employee members of the dated Statements of Operations over the service period (generally the vesting period) of the grant. Upon adoption, board of directors. Under this plan, stock options to acquire the company transitioned to SFAS No. 123(R) using the up to 0.7 million shares (adjusted for all stock splits since modified prospective application, under which compensa- the plan’s inception and is subject to further adjustments for tion expense is only recognized in the consolidated state- stock splits, stock dividends and certain other transactions ments of operations beginning with the first period that or events in the future) of common stock, in the aggregate, SFAS No. 123(R) is effective and continuing to be may be granted under a time-vesting formula and at an exer- expensed thereafter. Prior periods’ stock-based compensa- cise price equal to the market price of the common stock at tion expense is still presented on a pro-forma basis. the date of grant. For the 1999 Stock Plan, the options are As a result of the adoption of SFAS No. 123(R), the com- exercisable in 25% increments beginning on the first pany recognized $6.2 million ($4.5 million after taxes) and anniversary of the grant date over a four-year period and $5.7 million ($3.9 million after taxes) of pre tax compensa- expire ten years subsequent to the grant date. During 2004, tion expense associated with stock options for the years this plan was frozen and replaced with the 2004 Director ended December 31, 2007 and 2006, respectively. Stock Plan. The company maintains the following stock plans: The 2004 Non-Employee Director Stock and Awards Plan The Manitowoc Company, Inc. 1995 Stock Plan provides (2004 Stock Plan) was approved by the shareholders of the for the granting of stock options, restricted stock and lim- company during the 2004 annual meeting and it replaces ited stock appreciation rights as an incentive to certain The Manitowoc Company, Inc. 1999 Non-Employee Director employees. Under this plan, stock options to acquire up to Stock Option Plan. Stock-based awards may take the form 10.1 million shares of common stock, in the aggregate, may of stock options, restricted stock, or restricted stock units. be granted under the time-vesting formula at an exercise The total number of shares of the company’s common price equal to the market price of the common stock at the stock originally available for awards under the 2004 Stock close of business or the business day immediately preced- Plan was 0.9 million (adjusted for all stock splits since the ing the date of grant. The options become exercisable in plan’s inception and is subject to further adjustments for 25% increments beginning on the second anniversary of stock splits, stock dividends and certain other transactions the grant date over a four-year period and expire ten years or events in the future). Stock options awarded under the subsequent to the grant date. The restrictions on any plan vest immediately and expire ten years subsequent to restricted shares granted under the plan lapse in one-third the grant date. Restrictions on restricted stock awarded to increments on each anniversary of the grant date. Awards date under the plan lapse on the third anniversary of the are no longer granted under this plan. Awards surrendered award date. under this plan become available for granting under the With the acquisition of Grove, the company inherited the 2003 Incentive Stock and Awards Plan. Grove Investors, Inc. 2001 Stock Incentive Plan. Outstanding The Manitowoc Company, Inc. 2003 Incentive Stock and Grove stock options under the Grove Investors, Inc. 2001 Awards Plan (2003 Stock Plan) provides for both short-term Stock Incentive Plan were converted into options to acquire and long-term incentive awards for employees. Stock-based Manitowoc Stock at the date of acquisition. Under this plan, awards may take the form of stock options, stock apprecia- after the conversion of Grove stock options to Manitowoc tion rights, restricted stock, and performance share or per- stock options, stock options to acquire 0.1 million shares formance unit awards. The total number of shares of the (adjusted for all stock splits since the plan’s inception and is company’s common stock originally available for awards subject to further adjustments for stock splits, stock divi- under the 2003 Stock Plan was 12.0 million shares (adjusted dends and certain other transactions or events in the future) for all stock splits since the plan’s inception) and is subject of common stock of the company were outstanding. These to further adjustments for stock splits, stock dividends and options are fully vested and expire on September 25, 2011. certain other transactions or events in the future. Options No additional options may be granted under the Grove under this plan are exercisable at such times and subject to Investors, Inc. 2001 Stock Incentive Plan. such conditions as the compensation committee should

52 The Manitowoc Company, Inc. — 2007 Form 10-K

JOB: 08-10279-2 CYCLE#;BL#: 1; 0 TRIM: 8.5" x 11" COMPOSITE COLORS: Black, PANTONE Process Blue U, ~note-color 2 GRAPHICS: none V1.5 Merrill Corp - The Manitowoc Company_ Inc. 10-K-A Print Version | jcarlso | 10-Apr-08 11:07 | 08-10279-2.da | Sequence: 15 CHKSUM Content: 26151 Layout: 56149 Graphics: No Graphics CLEAN

A summary of the company’s stock option activity is as follows (in millions, except weighted average exercise price):

Weighted Average Aggregate Shares Exercise Price Intrinsic Value Options outstanding as of January 1, 2006 7.0 $ 7.25 Granted 1.2 22.42 Exercised (2.2) 6.21 Cancelled (0.5) 10.75 Options outstanding as of December 31, 2006 5.5 $11.04 Granted 0.8 30.78 Exercised (1.6) 7.26 Cancelled (0.2) 17.16 Options outstanding as of December 31, 2007 4.5 15.43 $40.6 Options exerciseable as of: January 1, 2006 3.0 $ 6.32 December 31, 2006 1.7 $ 6.71 December 31, 2007 1.6 $ 8.85 $22.3

The outstanding stock options at December 31, 2007 have a by range of exercise prices at December 31, 2007 (in millions, range of exercise prices of $4.23 to $47.84 per option. The except weight average remaining contractual life and following table shows the options outstanding and exercisable weighted average exercise price).

Weighted Average Remaining Outstanding Contractual Weighted Average Exercisable Weighted Average Range of Exercise Price Options Life (Years) Exercise Price Options Exercise Price $4.23–$6.00 0.3 4.6 $ 4.77 0.2 $ 4.78 $6.01–$7.00 0.6 4.3 6.31 0.7 6.31 $7.01–$9.00 0.6 5.4 7.90 0.4 8.09 $9.01–$10.20 0.6 7.3 10.11 0.1 10.14 $10.21–$18.00 0.5 6.8 10.58 0.1 10.34 $18.01–$25.00 0.5 7.8 18.90 — 18.92 $25.01–$27.50 0.6 8.3 26.10 0.1 26.10 $27.51–$29.52 0.7 9.0 29.51 — 29.52 $35.97–$47.84 0.1 9.6 40.11 — 40.11 4.5 6.9 $15.43 1.6 $ 8.85

The company continues to use the Black-Scholes valua- value of each option grant was estimated at the date of tion model to value stock options. The company used its grant using the Black-Scholes option-pricing method with historical stock prices as the basis for its volatility assump- the following assumptions: tion. The assumed risk-free rates were based on ten-year U.S. Treasury rates in effect at the time of grant. The 2007 2006 2005 expected option life represents the period of time that the Expected life (years) 6.0 7.0 7.3 options granted are expected to be outstanding and are Risk-free interest rate 4.4% 4.8% 3.8% based on historical experience. Expected volatility 35.0% 34.0% 32.0% As of December 31, 2007, the company has $13.5 million Expected dividend yield 0.3% 0.6% 0.8% of unrecognized compensation expense which will be recognized over the next five years. For the years ended December 31, 2007, 2006 and 2005 The weighted average fair value of options granted per the total intrinsic value of stock options exercised was $45.9 share during the years ended December 31, 2007, 2006 and million, $46.5 million and $8.9 million, respectively. 2005 was $12.56, $9.60 and $7.57, respectively. The fair

The Manitowoc Company, Inc. — 2007 Form 10-K 53

JOB: 08-10279-2 CYCLE#;BL#: 1; 0 TRIM: 8.5" x 11" COMPOSITE COLORS: Black, PANTONE Process Blue U, ~note-color 2 GRAPHICS: none V1.5 Merrill Corp - The Manitowoc Company_ Inc. 10-K-A Print Version | jcarlso | 10-Apr-08 11:07 | 08-10279-2.da | Sequence: 16 CHKSUM Content: 44816 Layout: 64754 Graphics: No Graphics CLEAN

15. Contingencies and Significant Estimates expect environmental compliance costs to have a material adverse effect on its financial condition, results of operations, The company has been identified as a potentially responsible or cash flows. party under the Comprehensive Environmental Response, As of December 31, 2007, various product-related law- Compensation, and Liability Act (CERLA) in connection with suits were pending. To the extent permitted under applicable the Lemberger Landfill Superfund Site near Manitowoc, Wis- law, all of these are insured with self-insurance retention lev- consin. Approximately 150 potentially responsible parties els. The company’s self-insurance retention levels vary by have been identified as having shipped hazardous materials business, and have fluctuated over the last five years. The to this site. Eleven of those, including the company, have range of the company’s self-insured retention levels is $0.1 formed the Lemberger Site Remediation Group and have suc- million to $3.0 million per occurrence. The high-end of the cessfully negotiated with the United States Environmental company’s self-insurance retention level is a legacy product Protection Agency and the Wisconsin Department of Natural liability insurance program inherited in the Grove acquisition Resources to fund the cleanup and settle their potential liabil- for cranes manufactured in the United States for occur- ity at this site. The estimated remaining cost to complete the rences from January 2000 through October 2002. As of clean up of this site is approximately $8.1 million. Although December 31, 2007, the largest self-insured retention level liability is joint and several, the company’s share of the liabil- currently maintained by the company is $2.0 million per ity is estimated to be 11% of the remaining cost. Remedia- occurrence and applies to product liability claims for cranes tion work at the site has been substantially completed, with manufactured in the United States. only long-term pumping and treating of groundwater and site Product liability reserves in the Consolidated Balance maintenance remaining. The company’s remaining estimated Sheets at December 31, 2007, were $34.7 million; $14.5 mil- liability for this matter, included in accounts payable and lion was reserved specifically for actual cases and $20.2 mil- accrued expenses in the Consolidated Balance Sheets at lion for claims incurred but not reported which were December 31, 2007 and 2006 is $0.9 million. Based on the estimated using actuarial methods. Based on the company’s size of the company’s current allocation of liabilities at this experience in defending product liability claims, manage- site, the existence of other viable potential responsible par- ment believes the current reserves are adequate for esti- ties and current reserve, the company does not believe that mated case resolutions on aggregate self-insured claims any liability imposed in connection with this site will have a and insured claims. Any recoveries from insurance carriers material adverse effect on its financial condition, results of are dependent upon the legal sufficiency of claims and sol- operations, or cash flows. vency of insurance carriers. During the due diligence process for the sale of the com- At December 31, 2007 and 2006, the company had pany’s wholly-owned subsidiary Diversified Refrigeration, reserved $92.1 million and $69.4 million, respectively, for LLC, (f/k/a Diversified Refrigeration, Inc.) (DRI) certain con- warranty claims included in product warranties and other taminants in the soil and ground water associated with the non-current liabilities in the Consolidated Balance Sheets. facility were identified. As part of the sale agreement, the Certain of these warranty and other related claims involve company agreed to be responsible for costs associated with matters in dispute that ultimately are resolved by negotia- further investigation and remediation of the issues identi- tions, arbitration, or litigation. fied. Estimates indicate that the costs to remediate this site It is reasonably possible that the estimates for environ- are approximately $2.0 million. During December 2005, the mental remediation, product liability and warranty costs company recorded a $2.0 million reserve for these esti- may change in the near future based upon new information mated costs. This charge was recorded in discontinued that may arise or matters that are beyond the scope of the operations in the Consolidated Statements of Operations for company’s historical experience. Presently, there are no the year ended December 31, 2005. The company’s remain- reliable methods to estimate the amount of any such ing estimated liability for this matter, included in other potential changes. accounts payable and accrued expenses in the Consolidated The company is involved in numerous lawsuits involving Balances Sheets at December 31, 2007 and 2006 is $1.7 mil- asbestos-related claims in which the company is one of lion and $1.8 million, respectively. Based upon available numerous defendants. After taking into consideration legal information, the company does not expect the ultimate counsel’s evaluation of such actions, the current political costs will have a material adverse effect on its financial con- environment with respect to asbestos related claims, and dition, results of operations, or cash flows. the liabilities accrued with respect to such matters, in the At certain of the company’s other facilities, the company opinion of management, ultimate resolution is not expected has identified potential contaminants in soil and groundwa- to have a material adverse effect on the financial condition, ter. The ultimate cost of any remediation required will results of operations, or cash flows of the company. depend upon the results of future investigation. Based upon The company is also involved in various legal actions aris- available information, the company does not expect the ulti- ing out of the normal course of business, which, taking into mate costs will have a material adverse effect on its financial account the liabilities accrued and legal counsel’s evaluation condition, results of operations, or cash flows. of such actions, in the opinion of management, the ultimate The company believes that it has obtained and is in sub- resolution is not expected to have a material adverse effect stantial compliance with those material environmental permits on the company’s financial condition, results of operations, and approvals necessary to conduct its various businesses. or cash flows. Based on the facts presently known, the company does not The company has been in negotiations with one of its Marine customers to recover certain cost overruns that

54 The Manitowoc Company, Inc. — 2007 Form 10-K

JOB: 08-10279-2 CYCLE#;BL#: 1; 0 TRIM: 8.5" x 11" COMPOSITE COLORS: Black, PANTONE Process Blue U, ~note-color 2 GRAPHICS: none V1.5 Merrill Corp - The Manitowoc Company_ Inc. 10-K-A Print Version | jcarlso | 10-Apr-08 11:07 | 08-10279-2.da | Sequence: 17 CHKSUM Content: 59932 Layout: 58296 Graphics: No Graphics CLEAN

resulted from change orders related to a particular contract. some cases materials, on products manufactured by the During the third quarter of 2005, due to the fact that these company. Such warranty generally provides that products negotiations were not successful within a timeframe satis- will be free from defects for periods ranging from 12 factory to the company, the company filed a lawsuit seeking months to 60 months. If a product fails to comply with the recovery of these cost overruns from the customer. The cus- company’s warranty, the company may be obligated, at its tomer subsequently filed a counter suit against the company expense, to correct any defect by repairing or replacing such in the fourth quarter of 2005. During the fourth quarter of defective products. The company provides for an estimate 2005, the company established a reserve of $10.2 million to of costs that may be incurred under its warranty at the time reflect the inherent uncertainties in litigation of this type. product revenue is recognized. These costs primarily include labor and materials, as necessary, associated with repair or The $10.2 million reserve was recorded in cost of sales of replacement. The primary factors that affect the company’s the Marine segment in the Consolidated Statements of warranty liability include the number of units shipped and Operations for the year ended December 31, 2005. Although historical and anticipated warranty claims. As these factors we have established this reserve, we believe we are contrac- are impacted by actual experience and future expectations, tually entitled to these cost recoveries and we are in current the company assesses the adequacy of its recorded war- negotiations with this customer to obtain recovery of ranty liability and adjusts the amounts as necessary. Below amounts owed. is a table summarizing the warranty activity for the years ended December 31, 2007 and 2006. 16. Guarantees 2007 2006 The company periodically enters into transactions with customers that provide for residual value guarantees and buy- Balance at beginning of period $ 69.4 $ 55.4 back commitments. These transactions are recorded as Accruals for warranties issued during the period 65.6 50.2 operating leases for all significant residual value guarantees Acquisitions — 0.2 and for all buyback commitments. These initial transactions Settlements made (in cash or in kind) are recorded as deferred revenue and are amortized to during the period (45.8) (39.2) income on a straight-line basis over a period equal to that of Currency translation 2.9 2.8 the customer’s third party financing agreement. The Balance at end of period $ 92.1 $ 69.4 deferred revenue included in other current and non-current liabilities at December 31, 2007 and 2006 was $102.4 million and $118.5 million, respectively. The total amount of residual 17. Restructuring and Plant Consolidation value guarantees and buyback commitments given by the During the third quarter of 2005, the company recorded a company and outstanding at December 31, 2007 and 2006 pre-tax restructuring charge of $3.2 million in connection was $128.4 million and $157.1 million, respectively. These with the consolidation of its Kolpak operation located in Wis- amounts are not reduced for amounts the company would consin with its Kolpak operation located in Tennessee. This recover from repossessing and subsequent resale of the action was taken in an effort to streamline the company’s units. The residual value guarantees and buyback commit- cost structure and utilize available capacity. The charge ments expire at various times through 2013. included $1.5 million to write-down the facility and land, During the years ended December 31, 2007 and 2006, the which are held for sale, to estimated fair market value less company sold $14.2 million and $14.9 million, respectively, cost to sell; $0.7 million related to the write-down of certain of its long term notes receivable to third party financing equipment; $0.1 million to write-off excess inventory which companies. The company guarantees some percentage, up will not be transferred to Tennessee; $0.5 million related to to 100%, of collection of the notes to the financing compa- severance and other employee related costs; and $0.4 mil- nies. The company has accounted for the sales of the notes lion for other related closing costs. This charge has been as a financing of receivables. The receivables remain on the included in restructuring and plant consolidation costs in the company’s Consolidated Balance Sheets, net of payments Consolidated Statements of Operations for the year ended made, in other current and non-current assets and the com- December 31, 2005. All of the restructuring reserves have pany has recognized an obligation equal to the net outstand- been utilized by the company. ing balance of the notes in other current and non-current liabilities in the Consolidated Balance Sheets. The cash flow benefit of these transactions, net of payments made by the 18. Employee Benefit Plans customer, are reflected as financing activities in the Consoli- Savings and Investment Plans The company sponsors a dated Statements of Cash Flows. During the years ended defined contribution savings plan that allows substantially all December 31, 2007 and 2006 customers have paid $18.5 domestic employees to contribute a portion of their pre-tax million and $30.2 million, respectively, of the notes to the and/or after-tax income in accordance with plan-specific third party financing companies. As of December 31, 2007 guidelines. Effective January 1, 2007 the plan was revised to and 2006, the outstanding balance of the notes receivables increase the company match to 100% of the participants’ guaranteed by the company was $18.2 million and $22.3 mil- contributions up to 4% from 3% previously, and match an lion, respectively. additional 50% of the participants’ contributions between In the normal course of business, the company provides 4% to a maximum of 8% from 3% to a maximum of 6% its customers a warranty covering workmanship, and in

The Manitowoc Company, Inc. — 2007 Form 10-K 55

JOB: 08-10279-2 CYCLE#;BL#: 1; 0 TRIM: 8.5" x 11" COMPOSITE COLORS: Black, PANTONE Process Blue U, ~note-color 2 GRAPHICS: none V1.5 Merrill Corp - The Manitowoc Company_ Inc. 10-K-A Print Version | jcarlso | 10-Apr-08 11:07 | 08-10279-2.da | Sequence: 18 CHKSUM Content: 50879 Layout: 11124 Graphics: No Graphics CLEAN

previously, of the participants’ compensation. The company service and retirement qualifications. These benefits may also provides retirement benefits through noncontributory be subject to deductibles, co-payment provisions, and other deferred profit sharing plans covering substantially all limitations. The company has reserved the right to modify employees. Company contributions to the plans are based these benefits. upon formulas contained in the plans. Total costs incurred In September 2006, the FASB issued SFAS No. 158, under these plans were $36.1 million, $30.0 million and “Employers’ Accounting for Defined Benefit Pension and $21.0 million for the years ended December 31, 2007, 2006 Other Postretirement Plans, an amendment of FASB State- and 2005, respectively. ments No. 87, 88, 106, and 132(R)”. The company adopted SFAS No. 158 as of December 31, 2006 which resulted in Pension, Postretirement Health and Other Benefit Plans adjustments to total assets, total liabilities, and accumulated The company provides certain pension, health care and other comprehensive income, net of tax of $(11.2) million, death benefits for eligible retirees and their dependents. $3.9 million, and $7.3 million, respectively. The pension benefits are funded, while the health care and death benefits are not funded but are paid as incurred. Eligi- The components of period benefit costs for the years ended bility for coverage is based on meeting certain years of December 31, 2007, 2006 and 2005 are as follows:

U.S. Pension Plans Non-U.S. Pension Plans Postretirement Health and Other 2007 2006 2005 2007 2006 2005 2007 2006 2005 Service cost — benefits earned during the year $ — $ — $ — $2.1 $ 2.1 $1.3 $0.7 $0.9 $0.9 Interest cost of projected benefit obligation 7.0 6.4 6.4 3.6 4.4 3.9 3.3 3.2 3.3 Expected return on assets (7.0) (6.4) (6.4) (3.1) (3.5) (2.9) — — — Amortization of prior service cost —————(0.1) — — — Amortization of actuarial net (gain) loss 0.7 0.8 0.4 — 0.1 — 0.3 0.1 0.1 Settlement gain recognized — — — 0.8 — 0.1 — Special termination benefit — — — 5.3 ————— Net periodic benefit cost $0.7 $0.8 $0.4 $8.7 $ 3.1 $2.3 $4.3 $4.2 $4.3 Weighted average assumptions: Discount rate 5.75% 5.50% 5.75% 4.81% 4.53% 4.75% 5.75% 5.50% 5.75% Expected return on plan assets 5.75% 8.25% 8.25% 5.74% 6.37% 5.25% N/A N/A N/A Rate of compensation increase N/A N/A N/A 3.88% 3.53% 3.50% N/A N/A N/A

The prior service costs are amortized on a straight-line greater of the benefit obligation and the market-related value basis over the average remaining service period of active of assets are amortized over the average remaining service participants. Gains and losses in excess of 10% of the period of active participants.

56 The Manitowoc Company, Inc. — 2007 Form 10-K

JOB: 08-10279-2 CYCLE#;BL#: 1; 0 TRIM: 8.5" x 11" COMPOSITE COLORS: Black, PANTONE Process Blue U, ~note-color 2 GRAPHICS: none V1.5 Merrill Corp - The Manitowoc Company_ Inc. 10-K-A Print Version | jcarlso | 10-Apr-08 11:07 | 08-10279-2.da | Sequence: 19 CHKSUM Content: 16928 Layout: 35846 Graphics: No Graphics CLEAN

The following is a reconciliation of the changes in benefit obligation, the changes in plan assets, and the funded status as of December 31, 2007 and 2006.

Non-U.S. Pension Postretirement Health U.S. Pension Plans Plans and Other 2007 2006 2007 2006 2007 2006 Change in Benefit Obligation Benefit obligation, beginning of year $124.1 $119.2 $100.7 $ 88.5 $ 59.9 $ 60.2 Service cost — — 2.1 2.1 0.7 0.9 Interest cost 7.0 6.4 3.6 4.4 3.3 3.2 Participant contributions — — 0.1 0.1 2.0 1.7 Plan settlements — — (37.7) — — — Special termination benefits — — 5.3 — — — Actuarial loss (gain) (12.5) 3.2 (5.1) (2.1) (9.4) 1.0 Currency translation adjustment — — 3.6 11.0 — — Benefits paid (4.7) (4.7) (8.9) (3.3) (6.3) (7.1) Benefit obligation, end of year 113.9 124.1 63.7 100.7 50.2 59.9 Change in Plan Assets Fair value of plan assets, beginning of year 88.0 79.9 72.4 54.3 — — Actual return on plan assets 8.0 8.5 4.4 4.9 — — Employer contributions 28.0 4.3 19.2 9.6 4.4 5.4 Participant contributions — — 0.1 0.1 1.9 1.7 Plan settlements — — (37.7) — — — Currency translation adjustment — — 1.9 6.8 — — Benefits paid (4.7) (4.7) (8.9) (3.3) (6.3) (7.1) Fair value of plan assets, end of year 119.2 88.0 51.4 72.4 — — Funded status $ 5.3 $ (36.1) $(12.3) $(28.3) $(50.2) $(59.9) Amounts recognized in the Consolidated Balance sheet at December 31 Prepaid benefit cost $ — $ — $ — $ — $ — $ — Pension asset 11.9 — 3.4 — — — Pension obligation (6.6) (36.1) (15.7) (28.3) — — Postretirement health and other benefit obligations — — — — (50.2) (59.9) Net amount recognized $ 5.3 $ (36.1) $(12.3) $(28.3) $(50.2) $(59.9) Weighted-Average Assumptions Discount rate 6.50% 5.75% 5.68% 4.81% 6.50% 5.75% Expected return on plan assets 6.50% 5.75% 6.03% 5.74% N/A N/A

Amounts recognized in accumulated other comprehensive income as of December 31, 2007 and 2006, consist of the following: Postretirement Pensions Health and Other 2007 2006 2007 2006 Net actuarial gain (loss) $(4.8) $(26.1) $0.5 $(8.7) Prior service credit 0.3 0.3 — — Total amount recognized $(4.5) $(25.8) $0.5 $(8.7)

The Manitowoc Company, Inc. — 2007 Form 10-K 57

JOB: 08-10279-2 CYCLE#;BL#: 1; 0 TRIM: 8.5" x 11" COMPOSITE COLORS: Black, PANTONE Process Blue U, ~note-color 2 GRAPHICS: none V1.5 Merrill Corp - The Manitowoc Company_ Inc. 10-K-A Print Version | jcarlso | 10-Apr-08 11:07 | 08-10279-2.da | Sequence: 20 CHKSUM Content: 41619 Layout: 38792 Graphics: No Graphics CLEAN

The amounts in accumulated other comprehensive income benefits was assumed for 2007. The rate was assumed to that are expected to be recognized as components of net peri- decrease gradually to 5.0% for 2014 and remain at that odic benefit cost during the next fiscal year are not significant level thereafter. Assumed health care cost trend rates for the pension and the postretirement health and other plans. have a significant effect on the amounts reported for the For measurement purposes, a 7.0% annual rate of health care plans. A 1% change in assumed health care increase in the per capita cost of covered health care cost trend rates would have the following effects:

1% Increase 1% Decrease Effect on total service and interest cost components of net periodic postretirement health care benefit cost $0.4 $(0.3) Effect on the health care component of the accumulated postretirement benefit obligation $4.1 $(4.2)

It is reasonably possible that the estimate for future retire- merged all U.S. pension plans together and made a contribu- ment and health costs may change in the near future due to tion of $27.2 million that is expected to fully fund the ongo- changes in the health care environment or changes in inter- ing pension liability. The company also changed its est rates that may arise. Presently, there is no reliable means investment policy to more closely align the interest rate sen- to estimate the amount of any such potential changes. sitivity of its pension assets with the corresponding liabili- The weighted-average asset allocations of the U.S. pen- ties. The resulting asset allocation is approximately 10% sion plans at December 31, 2007 and 2006, by asset cate- equities and 90% fixed income. This funding and change in gory are as follows: allocation removed a significant portion of the U.S. pension’s volatility arising from unpredictable changes in interest rates 2007 2006 and the equity markets. This decision will protect the com- Equity 10.0% 60.9% pany’s balance sheet as well as support its goal of minimiz- ing unexpected future pension cash contributions based Fixed income 90.0 31.3 upon the new provisions of the Pension Protection Act and Real estate — — protect our employees’ benefits. Other — 7.8 During the second quarter of 2007, the company made a 100.0% 100.0% $15.1 million pension contribution to its U.K. defined benefit pension plan. The $15.1 million contribution funded the The weighted-average asset allocations of the Non U.S. defined benefit plan as well as paid an incentive to certain pension plans at December 31, 2007 and 2006, by asset cate- pensioners to transfer from the defined benefit plan to a gory are as follows: defined contribution plan. As a result of this payment, the company recorded a charge during the second quarter of 2007 2006 2007 of approximately $3.8 million to reflect the incentive given to the pensioners and expenses incurred. Equity 33.5% 58.6% During the second quarter of 2007, the company recorded Fixed income 63.5 39.2 a charge of $1.4 million related to a withdraw liability from a Real estate 1.0 0.5 multiemployer pension plan at its former River Falls, Wiscon- Other 2.0 1.7 sin facility. During the third quarter of 2005, the company 100.0% 100.0% closed its Kolpak operation located in River Falls, Wisconsin and consolidated it with its operation in Tennessee. The $1.4 The board of directors has established the Retirement million represents the estimated payment the company will Plan Committee (the Committee) to manage the operations make to the multiemployer pension plan for its former union and administration of all benefit plans and related trusts. The employees at the closed facility. Committee is committed to diversification to reduce the risk To develop the expected long-term rate of return on of large losses. On a quarterly basis, the Committee reviews assets assumptions, the company considered the historical progress towards achieving the pension plans’ and individ- returns and future expectations for returns in each asset ual managers’ performance objectives. class, as well as targeted asset allocation percentages The three U.S. pension plans had benefit accruals frozen within the pension portfolio. during 2003. Effective January 1, 2007, the company

58 The Manitowoc Company, Inc. — 2007 Form 10-K

JOB: 08-10279-2 CYCLE#;BL#: 1; 0 TRIM: 8.5" x 11" COMPOSITE COLORS: Black, PANTONE Process Blue U, ~note-color 2 GRAPHICS: none V1.5 Merrill Corp - The Manitowoc Company_ Inc. 10-K-A Print Version | jcarlso | 10-Apr-08 11:07 | 08-10279-2.da | Sequence: 21 CHKSUM Content: 29632 Layout: 41977 Graphics: No Graphics CLEAN

The expected 2008 contributions for the U.S. pension plans are as follows: the minimum contribution for 2008 is $0.6 million; the discretionary contribution is $0 million; and the non-cash contribution is $0. The expected 2008 contributions for the non-U.S. pension plans are as follows: the minimum contribution for 2008 is $3.9 million; the discretionary contribution is $0; and the non-cash contribution is $0. Expected company paid claims for the postretirement health and life plans are $3.9 million for 2008. Projected benefit payments from the plans as of December 31, 2007 are estimated as follows:

Postretirement U.S Pension Non-U.S. Health and Plans Pension Plans Other 2008 $ 4.9 $ 3.0 $ 3.9 2009 5.1 2.8 4.0 2010 5.4 3.3 4.1 2011 5.8 3.3 4.2 2012 6.3 2.8 4.3 2013 — 2017 38.5 21.2 23.8

The fair value of plan assets for which the accumulated benefit obligation is in excess of the plan assets as of December 31, 2007 and 2006 is as follows: U.S Pension Plans Non U.S. Pension Plans 2007 2006 2007 2006 Projected benefit obligation 6.6 124.1 13.9 91.1 Accumulated benefit obligation 6.6 124.1 13.4 87.0 Fair value of plan assets — 88.0 — 62.3

The accumulated benefit obligation for all U.S. pension plans all distributions must be made in company stock. Program B as of December 31, 2007 and 2006 was $6.6 million and offers a variety of investment options but does not include $124.1 million, respectively. The accumulated benefit obliga- company stock as an investment option. All distributions from tion for all non-U.S. pension plans as of December 31, 2007 Program B must be made in cash. Participants cannot transfer and 2006 was $22.3 million and $98.2 million, respectively. assets between programs. The measurement date for all plans is December 31, 2007. Program A is accounted for as a plan which does not per- The company maintains a target benefit plan for certain mit diversification. As a result, the company stock held by executive officers of the company that is unfunded. Expenses Program A is classified in equity in a manner similar to related to the plan in the amount of $3.0 million, $1.9 million accounting for treasury stock. The deferred compensation and $1.4 million were recorded in 2007, 2006 and 2005, obligation is classified as an equity instrument. Changes in respectively. Amounts accrued as of December 31, 2007 and the fair value of the company’s stock and the compensation 2006 related to this plan were $13.4 million and $9.1 million, obligation are not recognized. The asset and obligation for respectively. Program A were both $0.2 million at December 31, 2007 and The company has a deferred compensation plan that $0.5 million at December 31, 2006. These amounts are offset enables certain key employees and non-employee directors in the Consolidated Statements of Stockholders’ Equity and to defer a portion of their compensation or fees on a pre-tax Comprehensive Income. basis. The company matches contributions under this plan at Program B is accounted for as a plan which permits diversifi- a rate equal to an employee’s profit sharing percentage plus cation. As a result, the assets held by Program B are classified one percent. Effective January 1, 2002, the company as an asset in the Consolidated Balance Sheets and changes amended its deferred compensation plan to provide plan par- in the fair value of the assets are recognized in earnings. The ticipants the ability to direct deferrals and company matching deferred compensation obligation is classified as a liability in contributions into two separate investment programs, Pro- the Consolidated Balance Sheets and adjusted, with a charge gram A and Program B. or credit to compensation cost, to reflect changes in the fair The investment assets in Program A and B are held in two value of the obligation. The assets, included in other non-cur- separate Deferred Compensation Plans, which restrict the com- rent assets, and obligation, included in other non-current liabili- pany’s use and access to the funds but which are also subject ties, were both $13.1 million at December 31, 2007 and $11.2 to the claims of the company’s general creditors in rabbi trusts. million at December 31, 2006. The net impact on the Consoli- Program A invests solely in the company’s stock; dividends dated Statements of Operations was $0 for the years ended paid on the company’s stock are automatically reinvested; and December 31, 2007, 2006 and 2005.

The Manitowoc Company, Inc. — 2007 Form 10-K 59

JOB: 08-10279-2 CYCLE#;BL#: 1; 0 TRIM: 8.5" x 11" COMPOSITE COLORS: Black, PANTONE Process Blue U, ~note-color 2 GRAPHICS: none V1.5 Merrill Corp - The Manitowoc Company_ Inc. 10-K-A Print Version | jcarlso | 10-Apr-08 11:07 | 08-10279-2.da | Sequence: 22 CHKSUM Content: 3165 Layout: 12451 Graphics: No Graphics CLEAN

19. Leases high-rise residential construction, mining and dredging. Our crane-related product support services are marketed The Company leases various property, plant and equipment. under the Crane CARE brand name and include mainte- Terms of the leases vary, but generally require the company nance and repair services and parts supply. to pay property taxes, insurance premiums, and mainte- The Foodservice business is a broad-line manufacturer nance costs associated with the leased property. Rental of “cold side” commercial foodservice products. Foodser- expense attributed to operating leases was $28.0 million, vice designs, manufactures and markets full product lines $23.6 million and $21.7 million in 2007, 2006 and 2005, of ice making machines, walk-in and reach-in refrigerators respectively. Future minimum rental obligations under non- and freezers, fountain beverage delivery systems and cancelable operating leases, as of December 31, 2007, are other foodservice refrigeration products for the lodging, payable as follows: restaurant, healthcare, convenience store, soft-drink bottling, and institutional foodservice markets. Foodservice 2008 $ 24.4 products are marketed under the Manitowoc, SerVend, 2009 16.8 Multiplex, Kolpak, Harford-Duracool, McCall, McCann’s, 2010 12.6 Koolaire, Flomatic, Kyees, RDI, and other brand names. The Marine business provides new construction, ship 2011 7.3 repair and maintenance services for freshwater and saltwa- 2012 4.4 ter vessels and oceangoing mid-size commercial, research, Thereafter 13.4 and military vessels from three shipyards on the Great Lakes. Marine serves the Great Lakes maritime market con- 20. Business Segments sisting of US and Canadian fleets, inland waterway operations and ocean going vessels that transit the Great Lakes The company identifies its segments using the “manage- and St. Lawrence Seaway. ment approach,” which designates the internal organization The accounting policies of the segments are the same as that is used by management for making operating decisions those described in the summary of significant accounting and assessing performance as the source of the company’s policies except that certain expenses are not allocated to reportable segments. The company has three reportable the segments. These unallocated expenses are corporate segments: Crane; Foodservice and Marine. The company overhead, amortization expense of intangible assets with has not aggregated individual operating segments within definite lives, interest expense and income tax expense. these reportable segments. The company evaluates segment performance based upon The Crane business is a global provider of engineered lift profit and loss before the aforementioned expenses. Finan- solutions which designs, manufactures and markets a cial information relating to the company’s reportable seg- comprehensive line of lattice-boom crawler cranes, mobile ments for the years ended December 31, 2007, 2006 and telescopic cranes, tower cranes, and boom trucks. The 2005 is as follows. Restructuring costs separately identified Crane products are marketed under the Manitowoc, Grove, in the Consolidated Statements of Operations are included Potain, and National brand names and are used in a wide as reductions to the respective segments operating earn- variety of applications, including energy, petrochemical and ings for each year below. industrial projects, infrastructure development such as road, bridge and airport construction, commercial and

60 The Manitowoc Company, Inc. — 2007 Form 10-K

JOB: 08-10279-2 CYCLE#;BL#: 1; 0 TRIM: 8.5" x 11" COMPOSITE COLORS: Black, PANTONE Process Blue U, ~note-color 2 GRAPHICS: none V1.5 Merrill Corp - The Manitowoc Company_ Inc. 10-K-A Print Version | jcarlso | 10-Apr-08 11:07 | 08-10279-2.da | Sequence: 23 CHKSUM Content: 54046 Layout: 39362 Graphics: No Graphics CLEAN

Net sales from continuing operations and long-lived asset information by geographic area as of and for the years ended December 31 are as follows: Net Sales Long-Lived Assets 2007 2006 2005 2007 2006 United States $1,948.4 $1,535.1 $1,177.7 $ 676.9 $ 594.5 Other North America 114.1 80.5 38.7 — — Europe 1,215.0 817.0 679.4 483.5 424.3 Asia 299.5 170.4 118.2 118.7 43.7 Middle East 183.0 167.8 112.9 1.7 1.3 Central and South America 61.9 54.0 34.8 0.4 — Africa 64.2 50.6 37.3 — — South Pacific and Caribbean 16.0 5.0 8.0 5.6 5.8 Australia 102.9 52.9 47.1 6.3 7.2 Total $4,005.0 $2,933.3 $2,254.1 $1,293.1 $1,076.8

Net sales from continuing operations and long-lived asset information for Europe primarily relates to France, Germany and the United Kingdom.

21. Subsidiary Guarantors of Senior Notes due 2013 The following tables present condensed consolidating financial information for (a) the parent company, The Manitowoc Com- pany, Inc. (Parent); (b) the guarantors of the Senior Notes due 2013, which include substantially all of the domestic wholly owned subsidiaries of the company (Subsidiary Guarantors); and (c) the wholly and partially owned foreign subsidiaries of the company, which do not guarantee the Senior Notes due 2013 (Non-Guarantor Subsidiaries). Separate financial statements of the Subsidiary Guarantors are not presented because the guarantors are fully and unconditionally, jointly and severally liable under the guaran- 1 tees, and 100% owned by the company. On August 1, 2007, the company redeemed its 10 ⁄2% senior subordinated notes due 2012, the guarantors of which are substantially the same as the guarantors of the Senior Notes due 2013.

The Manitowoc Company, Inc. — 2007 Form 10-K 61

JOB: 08-10279-2 CYCLE#;BL#: 1; 0 TRIM: 8.5" x 11" COMPOSITE COLORS: Black, PANTONE Process Blue U, ~note-color 2 GRAPHICS: none V1.5 Merrill Corp - The Manitowoc Company_ Inc. 10-K-A Print Version | jcarlso | 10-Apr-08 11:07 | 08-10279-2.da | Sequence: 24 CHKSUM Content: 45537 Layout: 16915 Graphics: No Graphics CLEAN

Condensed Consolidating Statement of Operations For the year ended December 31, 2007

Non- Parent Guarantor Guarantor Eliminations Total Net sales $ — $2,416.5 $2,091.2 $(502.7) $4,005.0 Costs and expenses: Cost of sales — 1,927.5 1,668.6 (502.7) 3,093.4 Engineering, selling and administrative expenses 47.1 187.3 167.5 — 401.9 Gain on sale of parts line — (3.3) — — (3.3) Pension settlements 1.3 — 4.0 — 5.3 Amortization expense — 1.9 3.9 — 5.8 Curtailment gain ——— —— Equity in (earnings) loss of subsidiaries (303.2) (5.1) — 308.3 — Total costs and expenses (254.8) 2,108.3 1,844.0 (194.4) 3,503.1 Operating earnings (loss) from continuing operations 254.8 308.2 247.2 (308.3) 501.9 Interest expense (22.7) (4.8) (8.8) — (36.3) Management fees 59.5 (60.3) 0.8 —— Loss on debt extinguishment (12.5) — — — (12.5) Other income (expense) — net 70.7 (18.7) (42.1) — 9.9 Total other income (expenses) — net 95.0 (83.8) (50.1) — (38.9) Earnings (loss) from continuing operations before taxes on income (loss) 349.8 224.4 197.1 (308.3) 463.0 Provision (benefit) for taxable income (loss) 13.1 61.7 54.6 — 129.4 Earnings from continuing operations 336.7 162.7 142.5 (308.3) 333.6 Earnings (loss) from discontinued operations, net of income taxes — 2.0 1.1 — 3.1 Loss on sale or closure of discontinued operations, net of income taxes ——— —— Net earnings (loss) $ 336.7 $ 164.7 $ 143.6 $(308.3) $ 336.7

62 The Manitowoc Company, Inc. — 2007 Form 10-K

JOB: 08-10279-2 CYCLE#;BL#: 1; 0 TRIM: 8.5" x 11" COMPOSITE COLORS: Black, ~note-color 2 GRAPHICS: none V1.5 Merrill Corp - The Manitowoc Company_ Inc. 10-K-A Print Version | jcarlso | 10-Apr-08 11:07 | 08-10279-2.da | Sequence: 25 CHKSUM Content: 17320 Layout: 5869 Graphics: No Graphics CLEAN

Condensed Consolidating Statement of Operations For the year ended December 31, 2006

Non- Parent Guarantor Guarantor Eliminations Total Net sales $ — $1,879.4 $1,366.2 $(312.3) $2,933.3 Costs and expenses: Cost of sales — 1,514.2 1,084.1 (312.3) 2,286.0 Engineering, selling and administrative expenses 41.4 166.1 134.1 — 341.6 Amortization expense — 1.5 1.8 — 3.3 Plant consolidation and restructuring costs ——— —— Curtailment gain ——— —— Equity in (earnings) loss of subsidiaries (180.6) 1.5 — 179.1 — Total costs and expenses (139.2) 1,683.3 1,220.0 (133.2) 2,630.9 Operating earnings (loss) from continuing operations 139.2 196.1 146.2 (179.1) 302.4 Interest expense (34.0) (1.3) (11.0) — (46.3) Management fees 39.8 (39.8) — —— Loss on debt extinguishment (14.4) — — — (14.4) Other income (expense) — net 33.6 (21.0) (9.4) — 3.2 Total other income (expenses) — net 25.0 (62.1) (20.4) — (57.5) Earnings (loss) from continuing operations before taxes on income (loss) 164.2 134.0 125.8 (179.1) 244.9 Provision (benefit) for taxable income (loss) (2.0) 43.7 36.7 — 78.4 Earnings from continuing operations 166.2 90.3 89.1 (179.1) 166.5 Earnings (loss) from discontinued operations, net of income taxes — (0.3) — — (0.3) Loss on sale or closure of discontinued operations, net of income taxes ——— —— Net earnings (loss) $ 166.2 $ 90.0 $ 89.1 $(179.1) $ 166.2

The Manitowoc Company, Inc. — 2007 Form 10-K 63

JOB: 08-10279-2 CYCLE#;BL#: 1; 0 TRIM: 8.5" x 11" COMPOSITE COLORS: Black, ~note-color 2 GRAPHICS: none V1.5 Merrill Corp - The Manitowoc Company_ Inc. 10-K-A Print Version | jcarlso | 10-Apr-08 11:07 | 08-10279-2.da | Sequence: 26 CHKSUM Content: 6229 Layout: 3810 Graphics: No Graphics CLEAN

Condensed Consolidating Statement of Operations For the year ended December 31, 2005

Non- Parent Guarantor Guarantor Eliminations Total Net sales $ — $1,419.9 $1,083.7 $(249.5) $2,254.1 Costs and expenses: Cost of sales — 1,192.0 889.7 (249.5) 1,832.2 Engineering, selling and administrative expenses 24.7 141.3 116.3 — 282.3 Amortization expense — 1.0 2.1 — 3.1 Plant consolidation and restructuring costs — 3.2 — — 3.2 Equity in (earnings) loss of subsidiaries (78.2) (1.8) — 80.0 — Total costs and expenses (53.5) 1,335.7 1,008.1 (169.5) 2,120.8 Operating earnings (loss) from continuing operations 53.5 84.2 75.6 (80.0) 133.3 Interest expense (47.5) (2.0) (4.3) — (53.8) Management fees 26.7 (26.7) — —— Loss on debt extinguishment (9.1) — — — (9.1) Other net income (expense) — net 39.5 (23.7) (12.3) — 3.5 Total other income (expense) — net 9.6 (52.4) (16.6) — (59.4) Earnings (loss) from continuing operations before taxes on income (loss) 63.1 31.8 59.0 (80.0) 73.9 Provision (benefit) for taxes on income (loss) (2.7) (1.3) 18.8 — 14.8 Earnings from continuing operations 65.8 33.1 40.2 (80.0) 59.1 Earnings from discontinued operations, net of income taxes — 0.9 — — 0.9 Gain on sale or closure of discontinued operations, net of income taxes — 5.8 — — 5.8 Net earnings $ 65.8 $ 39.8 $ 40.2 $ (80.0) $ 65.8

64 The Manitowoc Company, Inc. — 2007 Form 10-K

JOB: 08-10279-2 CYCLE#;BL#: 1; 0 TRIM: 8.5" x 11" COMPOSITE COLORS: Black, ~note-color 2 GRAPHICS: none V1.5 Merrill Corp - The Manitowoc Company_ Inc. 10-K-A Print Version | jcarlso | 10-Apr-08 11:07 | 08-10279-2.da | Sequence: 27 CHKSUM Content: 7081 Layout: 24606 Graphics: No Graphics CLEAN

Condensed Consolidating Balance Sheet As of December 31, 2007 Non- Parent Guarantor Guarantor Eliminations Total Assets Current assets: Cash and cash equivalents $ 194.9 $ 22.3 $ 146.7 $ — $ 363.9 Marketable securities 2.5 — — — 2.5 Restricted cash 15.5 — 1.2 — 16.7 Account receivable — net 0.5 117.4 309.2 — 427.1 Inventories — net — 208.2 389.5 — 597.7 Deferred income taxes 46.6 — 19.5 — 66.1 Other current assets 0.7 53.3 47.6 — 101.6 Total current assets 260.7 401.2 913.7 — 1,575.6 Property, plant and equipment — net 9.5 199.3 280.7 — 489.5 Goodwill — net — 325.9 192.9 — 518.8 Other intangible assets — 71.6 129.0 — 200.6 Deferred income taxes 25.0 — 2.6 — 27.6 Other non-current assets 38.0 9.8 8.8 — 56.6 Investments in affiliates 948.6 8.4 — (957.0) — Total assets $1,281.8 $1,016.2 $1,527.7 $(957.0) $2,868.7 Liabilities and stockholders’ equity Current liabilities: Accounts payable and accrued expenses $ 32.5 $ 374.8 $ 538.2 $ — $ 945.5 Short-term borrowings —— 13.1 — 13.1 Product warranties — 39.5 41.8 — 81.3 Product liabilities — 30.0 4.7 — 34.7 Total current liabilities 32.5 444.3 597.8 — 1,074.6 Long-term debt 150.1 — 67.4 — 217.5 Pension obligations 6.4 0.6 15.3 — 22.3 Postretirement health and other benefit obligations 50.2 — 1.1 — 51.3 Long-term deferred revenue — 16.6 44.0 — 60.6 Intercompany (354.6) (253.0) 607.6 — — Other non-current liabilities 47.3 16.0 29.2 — 92.5 Total non-current liabilities (100.6) (219.8) 764.6 — 444.2 Stockholders’ equity 1,349.9 791.7 165.3 (957.0) 1,349.9 Total liabilities and stockholders’ equity $1,281.8 $1,016.2 $1,527.7 $(957.0) $2,868.7

The Manitowoc Company, Inc. — 2007 Form 10-K 65

JOB: 08-10279-2 CYCLE#;BL#: 1; 0 TRIM: 8.5" x 11" COMPOSITE COLORS: Black, ~note-color 2 GRAPHICS: none V1.5 Merrill Corp - The Manitowoc Company_ Inc. 10-K-A Print Version | jcarlso | 10-Apr-08 11:07 | 08-10279-2.da | Sequence: 28 CHKSUM Content: 11052 Layout: 3810 Graphics: No Graphics CLEAN

Condensed Consolidating Balance Sheet As of December 31, 2006 Non- Parent Guarantor Guarantor Eliminations Total Assets Current assets: Cash and cash equivalents $ 20.4 $ 22.9 $ 130.4 $ — $ 173.7 Marketable securities 2.4 — — — 2.4 Restricted cash 15.1 — — — 15.1 Account receivable — net 0.3 92.3 192.6 — 285.2 Inventories — net — 203.7 288.7 — 492.4 Deferred income taxes 61.3 — 36.4 — 97.7 Other current assets 0.6 44.8 30.8 — 76.2 Total current assets 100.1 363.7 678.9 — 1,142.7 Property, plant and equipment — net 9.2 162.1 227.6 — 398.9 Goodwill — net — 311.9 150.2 — 462.1 Other intangible assets — 67.0 93.0 — 160.0 Deferred income taxes 15.2 — (0.9) — 14.3 Other non-current assets 23.4 11.7 6.4 — 41.5 Investments in affiliates 623.8 3.4 — (627.2) — Total assets $ 771.7 $919.8 $1,155.2 $(627.2) $2,219.5 Liabilities and stockholders’ equity Current liabilities: Accounts payable and accrued expenses $ 65.4 $335.1 $ 439.1 $ — $ 839.6 Short-term borrowings —— 4.1 — 4.1 Product warranties — 33.1 26.5 — 59.6 Product liabilities — 30.1 2.0 — 32.1 Total current liabilities 65.4 398.3 471.7 — 935.4 Long-term debt 259.3 — 5.0 — 264.3 Pension obligations 29.3 10.9 24.3 — 64.5 Postretirement health and other benefit obligations 59.9 — — — 59.9 Long-term deferred revenue — 9.7 61.9 — 71.6 Intercompany (441.6) (76.7) 518.3 — — Other non-current liabilities 24.8 15.3 9.2 — 49.3 Total non-current liabilities (68.3) (40.8) 618.7 — 509.6 Stockholders’ equity 774.6 562.3 64.8 (627.2) 774.5 Total liabilities and stockholders’ equity $ 771.7 $919.8 $1,155.2 $(627.2) $2,219.5

66 The Manitowoc Company, Inc. — 2007 Form 10-K

JOB: 08-10279-2 CYCLE#;BL#: 1; 0 TRIM: 8.5" x 11" COMPOSITE COLORS: Black, ~note-color 2 GRAPHICS: none V1.5 Merrill Corp - The Manitowoc Company_ Inc. 10-K-A Print Version | jcarlso | 10-Apr-08 11:07 | 08-10279-2.da | Sequence: 29 CHKSUM Content: 44993 Layout: 53310 Graphics: No Graphics CLEAN

Condensed Consolidating Statement of Cash Flows For the year ended December 31, 2007

Parent Guarantor Non-Guarantor Total Net cash provided by operating activities $ 64.2 $ 186.3 $ (12.3) $ 238.2 Cash flows from investing activities: Capital expenditures (2.5) (54.7) (62.4) (119.6) Business acquisition, net of cash acquired — (15.9) (64.0) (79.9) Restricted cash (0.4) — (1.2) (1.6) Proceeds from sale of property, plant and equipment — 0.3 9.5 9.8 Proceeds from sale of parts product line — 4.9 — 4.9 Purchase of marketable securities (0.1) — — (0.1) Intercompany investing 51.6 (118.0) 66.4 — Net cash provided by (used for) investing activities of continuing operations 48.6 (183.4) (51.7) (186.5) Net cash provided by investing activities of discontinued operations —— — — Net cash provided by (used for) investing activities 48.6 (183.4) (51.7) (186.5) Cash flows from financing activities: Proceeds from long-term debt —— 13.8 13.8 Payments on long-term debt (113.8) — — (113.8) Proceeds from (payments) on revolving credit facility —— 56.7 56.7 Proceeds from notes financing — net — (3.4) (0.9) (4.3) Debt issue costs (0.1) — — (0.1) Dividends paid (9.5) — — (9.5) Net proceeds of equity offering 157.1 — — 157.1 Exercise of stock options 28.0 — — 28.0 Net cash used for financing activities 61.7 (3.4) 69.6 127.9 Effect of exchange rate changes on cash —— 10.7 10.7 Net increase in cash and cash equivalents 174.4 (0.5) 16.3 190.2 Balance at beginning of year 20.4 22.9 130.4 173.7 Balance at end of year $ 194.8 $ 22.4 $146.7 $ 363.9

The Manitowoc Company, Inc. — 2007 Form 10-K 67

JOB: 08-10279-2 CYCLE#;BL#: 1; 0 TRIM: 8.5" x 11" COMPOSITE COLORS: Black, ~note-color 2 GRAPHICS: none V1.5 Merrill Corp - The Manitowoc Company_ Inc. 10-K-A Print Version | jcarlso | 10-Apr-08 11:07 | 08-10279-2.da | Sequence: 30 CHKSUM Content: 13302 Layout: 36618 Graphics: No Graphics CLEAN

Condensed Consolidating Statement of Cash Flows For the year ended December 31, 2006

Parent Guarantor Non-Guarantor Total Net cash provided by operating activities $ 26.0 $ 143.1 $125.0 $ 294.1 Cash flows from investing activities: Capital expenditures (1.8) (27.3) (38.5) (67.6) Business acquisition, net of cash acquired — (48.1) — (48.1) Restricted cash (15.1) — — (15.1) Proceeds from sale of property, plant and equipment — 0.7 9.6 10.3 Sale of marketable securities (0.1) — — (0.1) Intercompany investing 71.7 (48.7) (23.0) — Net cash provided by (used for) investing activities of continuing operations 54.7 (123.4) (51.9) (120.6) Net cash provided by investing activities of discontinued operations —— — — Net cash provided by (used for) investing activities 54.7 (123.4) (51.9) (120.6) Cash flows from financing activities: Proceeds from senior notes —— — — Payments on long-term debt (223.5) — — (223.5) Proceeds on short-term borrowings — net —— (13.6) (13.6) Proceeds from (payments) on revolving credit facility (4.3) — — (4.3) Proceeds from notes financing — net — (6.3) (9.1) (15.4) Debt issue costs (0.2) — — (0.2) Dividends paid (8.6) — — (8.6) Exercise of stock options 30.2 — — 30.2 Net cash used for financing activities (206.4) (6.3) (22.7) (235.4) Effect of exchange rate changes on cash —— 6.1 6.1 Net increase in cash and cash equivalents (125.7) 13.4 56.5 (55.8) Balance at beginning of year 146.4 9.7 73.4 229.5 Balance at end of year $ 20.7 $ 23.1 $129.9 $ 173.7

68 The Manitowoc Company, Inc. — 2007 Form 10-K

JOB: 08-10279-2 CYCLE#;BL#: 1; 0 TRIM: 8.5" x 11" COMPOSITE COLORS: Black, ~note-color 2 GRAPHICS: none V1.5 Merrill Corp - The Manitowoc Company_ Inc. 10-K-A Print Version | jcarlso | 10-Apr-08 11:07 | 08-10279-2.da | Sequence: 31 CHKSUM Content: 45056 Layout: 53310 Graphics: No Graphics CLEAN

Condensed Consolidating Statement of Cash Flows For the year ended December 31, 2005

Parent Guarantor Non-Guarantor Total Net cash provided by operating activities $ 2.1 $ 20.0 $ 84.6 $ 106.7 Cash flows from investing activities: Capital expenditures (1.0) (18.6) (35.3) (54.9) Proceeds from sale of property, plant and equipment — 2.3 12.8 15.1 Purchase of marketable securities (0.1) — — (0.1) Intercompany investing 66.0 (31.7) (34.3) — Net cash provided by (used for) investing activities of continuing operations 64.9 (48.0) (56.8) (39.9) Net cash provided by investing activities of discontinued operations — 28.3 — 28.3 Net cash provided by (used for) investing activities 64.9 (19.7) (56.8) (11.6) Cash flows from financing activities: Payments on long-term debt (61.3) — (15.8) (77.1) Proceeds from short-term borrowings — net —— 19.9 19.9 Proceeds from revolving credit facility 4.3 — — 4.3 Proceeds from notes financing — net — 13.9 0.3 14.2 Debt issue costs (1.8) — — (1.8) Dividends paid (8.4) — — (8.4) Exercises of stock options 10.8 — — 10.8 Cash provided by (used for) financing activities (56.4) 13.9 4.4 (38.1) Effect of exchange rate changes on cash —— (3.9) (3.9) Net increase in cash and cash equivalents 10.6 14.2 28.3 53.1 Balance at beginning of year 135.8 (4.5) 45.1 176.4 Balance at end of year $ 146.4 $ 9.7 $ 73.4 $ 229.5

The Manitowoc Company, Inc. — 2007 Form 10-K 69

JOB: 08-10279-2 CYCLE#;BL#: 1; 0 TRIM: 8.5" x 11" COMPOSITE COLORS: Black, ~note-color 2 GRAPHICS: none V1.5 Merrill Corp - The Manitowoc Company_ Inc. 10-K-A Print Version | jcarlso | 10-Apr-08 11:07 | 08-10279-2.da | Sequence: 32 CHKSUM Content: 5322 Layout: 17159 Graphics: No Graphics CLEAN

22. Quarterly Financial Data (Unaudited)

Quarterly financial data for 2007 and 2006 is as follows:

2007 2006 First Second Third Fourth First Second Third Fourth Net sales $862.1 $1,018.6 $1,006.2 $1,118.2 $ 633.0 $ 746.2 $ 779.0 $ 775.2 Gross profit 195.4 240.0 224.8 251.5 135.2 172.0 169.3 170.8 Earnings from continuing operations 64.1 97.5 75.9 96.1 30.0 42.2 50.4 43.9 Discontinued operations: Earnings (loss) from discontinued operations, net of income taxes — — — 3.1 (0.3) — — — Gain (loss) on sale or closure of discontinued operations, net of income taxes — — — — — — — — Net earnings (loss) $ 64.1 $ 97.5 $ 75.9 $ 99.2 $ 29.7 $ 42.2 $ 50.4 $ 43.9 Basic earnings per share: Earnings from continuing operations $ 0.52 $ 0.78 $ 0.61 $ 0.76 $ 0.25 $ 0.34 $ 0.41 $ 0.35 Discontinued operations: Earnings (loss) from discontinued operations, net of income taxes — — — 0.02 (0.01) — — — Gain (loss) on sale or closure of discontinued operations, net of income taxes — — — — — — — — Net earnings $ 0.52 $ 0.78 $ 0.61 $ 0.78 $ 0.24 $ 0.34 $ 0.41 $ 0.35 Diluted earnings per share: Earnings from continuing operations $ 0.51 $ 0.76 $ 0.59 $ 0.74 $ 0.24 $ 0.33 $ 0.40 $ 0.35 Discontinued operations: Earnings (loss) from discontinued operations, net of income taxes — — — 0.02 — — — — Gain (loss) on sale or closure of discontinued operations, net of income taxes — — — — — — — — Net earnings $ 0.51 $ 0.76 $ 0.59 $ 0.76 $ 0.24 $ 0.33 $ 0.40 $ 0.35 Dividends per common share $ 0.02 $ 0.02 $ 0.0175 $ 0.0175 $0.0175 $0.0175 $0.0175 $0.0175

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH and Chief Financial Officer, as appropriate, to allow timely ACCOUNTANTS ON ACCOUNTING AND FINANCIAL discussions regarding required disclosure. DISCLOSURE None. Management’s Report on Internal Control Over Financial Reporting ITEM 9A. CONTROLS AND PROCEDURES The company’s management is responsible for establishing Conclusion Regarding the Effectiveness of Disclosure and maintaining adequate internal control over financial Controls and Procedures reporting, as such term is defined in Exchange Act The company’s management, with the participation of the Rule 13a-15(f). The company’s management, with the partic- company’s Chief Executive Officer and Chief Financial Offi- ipation of the company’s Chief Executive Officer and Chief cer, have evaluated the effectiveness of the company’s dis- Financial Officer, has evaluated the effectiveness of the closure controls and procedures (as such term is defined in company’s internal control over financial reporting based on Rules 13a-15(e) and 15d-15(e) under the Securities Exchange the framework in Internal Control-Integrated Framework Act of 1934, as amended (“the Exchange Act”)) as of the end issued by the Committee of Sponsoring Organizations of the of the period covered by this report. Based on such evalua- Treadway Commission. Based on this evaluation, the com- tion, the company’s Chief Executive Officer and Chief Finan- pany’s management has concluded that, as of Decem- cial Officer have concluded that, as of the end of such ber 31, 2007, the company’s internal control over financial period, the company’s disclosure controls and procedures reporting was effective. are effective in recording, processing, summarizing, and Because of its inherent limitations, internal control over reporting, on a timely basis, information required to be dis- financial reporting may not prevent or detect misstatements. closed by the company in the reports that it files or submits Also, projections of any evaluation of effectiveness to future under the Exchange Act, and that such information is accu- periods are subject to the risk that the controls may become mulated and communicated to the Chief Executive Officer inadequate because of changes in conditions, or that the

70 The Manitowoc Company, Inc. — 2007 Form 10-K

JOB: 08-10279-2 CYCLE#;BL#: 1; 0 TRIM: 8.5" x 11" COMPOSITE COLORS: Black, PANTONE Process Blue U, ~note-color 2 GRAPHICS: none V1.5 Merrill Corp - The Manitowoc Company_ Inc. 10-K-A Print Version | jcarlso | 10-Apr-08 11:07 | 08-10279-2.da | Sequence: 33 CHKSUM Content: 42426 Layout: 6205 Graphics: No Graphics CLEAN

degree of compliance with the policies or procedures may ethics that applies to the company’s principal executive offi- deteriorate. cer, principal financial officer, and controller, which is part of The effectiveness of the company’s internal control over the company’s Global Ethics Policy and other policies financial reporting as of December 31, 2007, has been related to business conduct. audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report ITEM 11. EXECUTIVE COMPENSATION which appears herein. The information required by this item is incorporated by reference from the sections of the 2008 Proxy Statement Changes in Internal Control Over Financial Reporting captioned “Compensation of Directors,” “Executive Com- We made no change in our internal control over financial pensation,” “Report of the Compensation and Benefits reporting during the last fiscal quarter of 2007 that has mate- Committee on Executive Compensation,” and “Contingent rially affected, or is reasonably likely to materially affect, our Employment Agreements.” internal control over financial reporting. ITEM 12. SECURITY OWNERSHIP OF CERTAIN ITEM 9B. OTHER INFORMATION BENEFICIAL OWNERS AND MANAGEMENT None. The information required by this item is incorporated by reference from the sections of the 2008 Proxy Statement cap- ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE tioned “Ownership of Securities” and the subsection REGISTRANT captioned “Equity Compensation Plans.” The information required by this item is incorporated by reference from the sections of the 2008 Proxy Statement cap- ITEM 13. CERTAIN RELATIONSHIPS AND RELATED tioned “Section 16(a) Beneficial Ownership Reporting TRANSACTIONS Compliance,” “Audit Committee” and “Election of Directors.” None. See also “Executive Officers of the Registrant” in Part I hereof, which is incorporated herein by reference. ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES The company has a Global Ethics Policy and other poli- The information required by this item is incorporated by ref- cies relating to business conduct, that pertain to all employ- erence from the section of the 2008 Proxy Statement cap- ees, which can be viewed at the company’s website tioned “Other Information — Independent Public www.manitowoc.com. The company has adopted a code of Accountants.”

The Manitowoc Company, Inc. — 2007 Form 10-K 71

JOB: 08-10279-2 CYCLE#;BL#: 1; 0 TRIM: 8.5" x 11" COMPOSITE COLORS: Black, PANTONE Process Blue U, ~note-color 2 GRAPHICS: none V1.5 Merrill Corp - The Manitowoc Company_ Inc. 10-K-A Print Version | jcarlso | 10-Apr-08 11:07 | 08-10279-2.ea | Sequence: 1 CHKSUM Content: 4602 Layout: 65441 Graphics: No Graphics CLEAN

PART IV ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) Documents filed as part of this Report. (1) Financial Statements: The following Consolidated Financial Statements are filed as part of this report under Item 8, “Financial Statements and Supplementary Date.”

Report of Independent Registered Public Accounting Firm Consolidated Statements of Operations for the years ended December 31, 2007, 2006 and 2005 Consolidated Balance Sheets as of December 31, 2007 and 2006 Consolidated Statements of Cash Flows for the years ended December 31, 2007, 2006 and 2005 Consolidated Statements of Stockholders’ Equity and Comprehensive Income for the years ended December 31, 2007, 2006 and 2005 Notes to Consolidated Financial Statements

(2) Financial Statement Schedules: Financial Statement Schedule for the years ended December 31, 2007, 2006, and 2005

Schedule Description Filed Herewith II Valuation and Qualifying Accounts X

All other financial statement schedules not listed have been omitted since the required information is included in the Consoli- dated Financial Statements or the Notes thereto, or is not applicable or required under rules of Regulation S-X. (b) Exhibits: See Index to Exhibits immediately following the signature page of this report, which is incorporated herein by reference.

THE MANITOWOC COMPANY, INC AND SUBSIDIARIES Schedule II: Valuation and Qualifying Accounts For The Years Ended December 31, 2005, 2006 and 2007 (dollars in millions)

Balance at Impact of Beginning Acquisition Charge to Foreign Balance at of of Costs and Utilization Exchange End of Year Business Expenses of Reserve Rates Year Year End December 31, 2005 Allowance for doubtful accounts $26.3 $ — $ 4.2 $ (5.0) $(1.7) $23.8 Inventory obsolescence reserve $38.1 $ — $ 7.2 $ (6.3) $(2.7) $36.3 Year End December 31, 2006 Allowance for doubtful accounts $23.8 $0.2 $ 6.3 $ (4.0) $ 1.3 $27.6 Inventory obsolescence reserve $36.3 $0.6 $16.8 $(11.3) $ 2.0 $44.4 Year End December 31, 2007 Allowance for doubtful accounts $27.6 $0.1 $ 6.1 $ (7.3) $ 1.0 $27.5 Inventory obsolescence reserve $44.4 $ — $12.1 $(15.6) $ 1.7 $42.6

72 The Manitowoc Company, Inc. — 2007 Form 10-K

JOB: 08-10279-2 CYCLE#;BL#: 1; 0 TRIM: 8.5" x 11" COMPOSITE COLORS: Black, ~note-color 2 GRAPHICS: none V1.5 Merrill Corp - The Manitowoc Company_ Inc. 10-K-A Print Version | jcarlso | 10-Apr-08 11:07 | 08-10279-2.ea | Sequence: 2 CHKSUM Content: 46343 Layout: 153 Graphics: No Graphics CLEAN

SIGNATURES Pursuant to the requirements of Section 13 or 15(d) 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: February 29, 2008

The Manitowoc Company, Inc. (Registrant)

/S/ GLEN E. TELLOCK Glen E. Tellock President and Chief Executive Officer

/S/ CARL J. LAURINO Carl J. Laurino Senior Vice President and Chief Financial Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons constituting a majority of the Board of Directors on behalf of the registrant and in the capacities and on the dates indicated:

/S/ TERRY D. GROWCOCK Terry D. Growcock, Chairman, Director February 29, 2008

/S/ GLEN E. TELLOCK Glen E. Tellock, President and Chief Executive Officer February 29, 2008

/S/ CARL J. LAURINO Carl J. Laurino, Senior Vice President and Chief Financial Officer February 29, 2008

/S/ KEITH D. NOSBUSCH Keith D. Nosbusch, Director February 29, 2008

/S/ DEAN H. ANDERSON Dean H. Anderson, Director February 29, 2008

/S/ ROBERT S. THROOP Robert S. Throop, Director February 29, 2008

/S/ ROBERT C. STIFT Robert C. Stift, Director February 29, 2008

/S/ JAMES L. PACKARD James L. Packard, Director February 29, 2008

/S/ DANIEL W. D UVAL Daniel W. Duval, Director February 29, 2008

/S/ VIRGIS W. C OLBERT Virgis W. Colbert, Director February 29, 2008

/S/ KENNETH W. K RUEGER Kenneth W. Krueger, Director February 29, 2008

The Manitowoc Company, Inc. — 2007 Form 10-K 73

JOB: 08-10279-2 CYCLE#;BL#: 1; 0 TRIM: 8.5" x 11" COMPOSITE COLORS: Black, ~note-color 2 GRAPHICS: none V1.5 Merrill Corp - The Manitowoc Company_ Inc. 10-K-A Print Version | jcarlso | 10-Apr-08 11:07 | 08-10279-2.ea | Sequence: 3 CHKSUM Content: 56976 Layout: 59300 Graphics: No Graphics CLEAN

THE MANITOWOC COMPANY, INC. ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2007 INDEX TO EXHIBITS

Filed/Furnished Exhibit No. Description Herewith 3.1 Amended and Restated Articles of Incorporation, as amended on November 5, 1984, May 5, 1998, and March 31, 2006 filed as Exhibit 3.1 to the company’s Annual Report on Form 10-K for the year ended December 31, 2006 3.2 Restated By-Laws (as amended through May 3, 2005) (filed as Exhibit 3. (ii) to the company’s current report on Form 8-K dated May 3, 2005 and incorporated herein by reference). 4.1 Rights Agreement dated March 21, 2007 between the Registrant and Computershare Trust Company, N.A. (filed as Exhibit 4.1 to the company’s Report on Form 8-K dated as of March 21, 2007 and incorporated herein by reference). 4.2(a)* Indenture, dated August 8, 2002, by and among The Manitowoc Company, Inc., the Guarantors named therein, and BNY Midwest Trust Company, as Trustee (filed as Exhibit 4.1 to the company’s current Report on Form 8-K dated as of August 8, 2002 and incorporated herein by reference). 4.2(b) Indenture, dated as of November 6, 2003, by and between The Manitowoc Company, Inc., the Guarantors named therein, and BNY Midwest Trust Company, as Trustee (filed as Exhibit 4.1 to the company’s current Report on Form 8-K dated as of November 6, 2003 and incorporated herein by reference). 4.4 Articles III, V, and VIII of the Amended and Restated Articles of Incorporation (see Exhibit 3.1 above)

4.5 Amended and Restated Credit Agreement dated as of December 14, 2006 by and among The Manitowoc Company, Inc., X(1) as Borrower, the lenders party thereto, and JP Morgan Chase Bank, N.A., as Agent (filed as Exhibit 4.5 to the company’s Annual Report on Form 10-K for the year ended December 31, 2006 and incorporated herein by reference) as amended on May 31, 2007, with such amendment filed as Exhibit 4.5 to this Annual Report on Form 10-K for the fiscal year ended December 31, 2007. 10.1** The Manitowoc Company, Inc. Deferred Compensation Plan effective August 20, 1993, as amended (filed as Exhibit 10.1 to the company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2003 and incorporated herein by reference). 10.2** The Manitowoc Company, Inc. Management Incentive Compensation Plan (Economic Value Added (EVA) Bonus Plan Effective July 4, 1993, as amended (filed as Exhibit 10.2 to the company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2002 and incorporated herein by reference).

10.2(a)** Short-Term Incentive Plan, Effective January 1, 2005, as amended on February 27, 2007, effective January 1, 2007 and X(1) as further amended on February 15, 2008, effective January 1, 2008 (filed as Exhibit 10.2(a) to this annual report on Form 10-K for the fiscal year ended December 31, 2007 and incorporated herein by reference). 10.3(a)** Form of Contingent Employment Agreement between the company and the following executive officers of the Company: Terry D. Growcock, Glen E. Tellock, Carl J. Laurino, Maurice D. Jones, Thomas G. Musial, and Dean J. Nolden (filed as Exhibit 10(a) to the company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2000 and incorporated herein by reference).

10.3(b)** Form of Contingent Employment Agreement between the company and the following executive officers of the company and certain other employees of the company: Eric P. Etchart, Robert P. Herre, and Michael Kachmer (filed as Exhibit 10(b) to the company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2000 and incorporated herein by reference).

10.4** Form of Indemnity Agreement between the company and each of the directors, executive officers and certain other employees of the company (filed as Exhibit 10(b) to the company’s Annual Report on Form 10-K for the fiscal year ended July 1, 1989 and incorporated herein by reference). 10.5** Supplemental Retirement Agreement between Fred M. Butler and the company dated March 15, 1993 (filed as Exhibit 10(e) to the company’s Annual Report on Form 10-K for the fiscal year ended July 3, 1993 and incorporated herein by reference). 10.6(a)** Supplemental Retirement Agreement between Robert K. Silva and the company dated January 2, 1995 (filed as Exhibit 10 to the company’s Report on Form 10-Q for the transition period ended December 31, 1994 and incorporated herein by reference). 10.6(b)** Restatement to clarify Mr. Silva’s Supplemental Retirement Agreement dated March 31, 1997 (filed as Exhibit 10.6(b) to the company’s Report on Form 10-K for the fiscal year ended December 31, 1996 and incorporated herein by reference).

74 The Manitowoc Company, Inc. — 2007 Form 10-K

JOB: 08-10279-2 CYCLE#;BL#: 1; 0 TRIM: 8.5" x 11" COMPOSITE COLORS: Black, ~note-color 2 GRAPHICS: none V1.5 Merrill Corp - The Manitowoc Company_ Inc. 10-K-A Print Version | jcarlso | 10-Apr-08 11:07 | 08-10279-2.ea | Sequence: 4 CHKSUM Content: 26771 Layout: 1667 Graphics: No Graphics CLEAN

Filed/Furnished Exhibit No. Description Herewith 10.6(c)** Supplemental Retirement Plan dated May 2000, as amended (filed as Exhibit 10.6(c) to the company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2005 and incorporated herein by reference). 10.7(a)** The Manitowoc Company, Inc. 1995 Stock Plan, as amended (filed as Exhibit 10.7(a) to the company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2002 and incorporated herein by reference). 10.7(b)** The Manitowoc Company, Inc. 1999 Non-Employee Director Stock Option Plan, as amended (filed as Exhibit 10.7(b) to the company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2002 and incorporated herein by reference). 10.7(c)** The Manitowoc Company, Inc. 2003 Incentive Stock and Awards Plan, as amended on February 27, 2007 (filed as Exhibit 10.7(c) to the company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2006 and incorporated herein by reference). 10.7(d)** Grove Investors, Inc. 2001 Stock Incentive Plan (filed as Exhibit 99.1 to the company’s Registration Statement on Form S-8, filed on September 13, 2002 (Registration No. 333-99513) and incorporated herein by reference). 10.7(e)** The Manitowoc Company, Inc. 2004 Non-Employee Director Stock and Award Plan, as amended effective May 3, 2006 and February 27, 2007 (filed as Exhibit 10.7(e) to the company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2006 and incorporated herein by reference). 10.8** The Manitowoc Company, Inc. Incentive Stock Option Agreement with Vesting Provisions (filed as Exhibit 10.1 to the company’s Report on Form 8-K dated as of February 25, 2005 and incorporated herein by reference). 10.9** The Manitowoc Company, Inc. Non-Qualified Stock Option Agreement with Vesting Provisions (filed as Exhibit 10.2 to the company’s Report on Form 8-K dated as of February 25, 2005 and incorporated herein by reference). 10.10** The Manitowoc Company, Inc. Award Agreement for Restricted Stock Awards under The Manitowoc Company, Inc. 2003 Incentive Stock and Awards Plan, amended February 27, 2007 (filed as Exhibit 10.10 to the company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2004 and incorporated herein by reference). 10.11** The Manitowoc Company, Inc. Award Agreement for the 2004 Non-employee Director Stock and Awards Plan, as amended effective May 3, 2006 and February 27, 2007 (filed as Exhibit 10.11 to the company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2006 and incorporated herein by reference). 10.12 Amended and Restated Receivable Purchase Agreement among Manitowoc Funding , LLC, as Seller, The Manitowoc X(1) Company, Inc., as Servicer, Hannover Funding Company LLC, as Purchaser, and Norddeutsche Landesbank Girozentrale, as Agent, dated as of December 21, 2006 (filed as Exhibit 10.1 on the company’s Current Report on Form 8-K dated as of December 22, 2006 and incorporated herein by reference) as amended on August 15, 2007 with such amendment filed as Exhibit 10.12 to this Annual Report on Form 10-K for the fiscal year ended December 31, 2007.

11 Statement regarding computation of basic and diluted earnings per share (see Note 12 to the 2007 Consolidated Financial Statements included herein). 12.1 Statement of Computation of Ratio of Earnings to Fixed Charges X(1) 21 Subsidiaries of The Manitowoc Company, Inc. X(1) 23.1 Consent of PricewaterhouseCoopers LLP, the company’s Independent Registered Public Accounting Firm X(1) 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)

(1) Filed Herewith (2) Furnished Herewith * Pursuant to Item 601(b)(2) of Regulation S-K, the Registrant agrees to furnish to the Securities and Exchange Commission upon request a copy of any unfiled exhibits or schedules to such documents. ** Management contracts and executive compensation plans and arrangements required to be filed as exhibits pursuant to Item 15(c) of Form 10-K.

The Manitowoc Company, Inc. — 2007 Form 10-K 75

JOB: 08-10279-2 CYCLE#;BL#: 1; 0 TRIM: 8.5" x 11" COMPOSITE COLORS: Black, ~note-color 2 GRAPHICS: none V1.5 Contents Corporate Headquarters Corporate Governance Guidelines, Code of Conduct & Investor Information Manitowoc’s About the Cover Making It The Manitowoc Company, Inc. Code of Ethics One of 16 new crane products introduced in Real in 2400 South 44th Street The Manitowoc Company’s corporate governance guidelines, committee Strategic P.O. Box 66 charters, code of conduct, and code of ethics are posted in the investor 2007, a Grove GTK1100 works at a nuclear Cranes – page 12 Manitowoc, WI 54221-0066 relations section of our Web site: www.manitowoc.com. This information may Imperatives power plant in Germany. Innovative products With global brands Telephone: 920-684-4410 also be obtained by any shareholder, without charge, upon written request to like the GTK1100 have helped Manitowoc and the most extensive Telefax: 920-652-9778 Maurice D. Jones, Senior Vice President, General Counsel & Secretary, at the company’s address indicated at left. Growth expand its markets around the world and service network in the Independent Registered Public Accounting Firm Global market leadership in the Crane and achieve record sales and earnings. industry, Manitowoc’s Crane PricewaterhouseCoopers LLP Dividends Manitowoc has paid continuous dividends, without interruption, since 1971. Foodservice businesses. Marine business segment is a world leader 100 East Wisconsin Avenue Suite 1800 The amount and timing of any dividend will be determined by the board of will be a leader in its niche. Financial Highlights – page 1 in lifting solutions. Milwaukee, WI 53202 directors. Stock Transfer Agent Dividend Reinvestment & Stock Purchase Plan Innovation Letter to Shareholders – page 2 Computershare Trust Company, N.A. Computershare sponsors and administers a Dividend Reinvestment and Continuous development of new and innova- Chairman Terry Growcock and President Stock Purchase Plan for The Manitowoc Company’s common stock. Under First Class, Registered & Certifi ed Mail: Making It Real in Marine – page 17 this plan, shareholders may also purchase shares by investing cash, as tive products, processes, and services that and CEO Glen Tellock review Manitowoc’s P.O. Box 43102 often as once a month, in varying amounts from $10 up to a maximum of enhance our customers’ businesses and 2007 performance and its progress toward Providence, RI 02940-5068 achieving its seven strategic imperatives. $120,000 each calendar year. Participation is voluntary. the value of our brands. Overnight or Other Delivery: To receive an information booklet and enrollment form, please contact 250 Royall Street our stock transfer agent, Computershare. Customer Focus Canton, MA 02021-1011 Manitowoc also participates in the Low-Cost Stock Ownership Plan as Fully integrated global company that is a Telephone: offered and administered by Better Investing, formerly known as the National Association of Investors Corporation. flexible business partner. 1-866-641-4263 1-800-952-9245 (Hearing impaired in US) Investor Inquiries 1-781-575-4592 (Hearing impaired outside US) Security analysts, portfolio managers, individual investors, and media Excellence in Operations professionals seeking information about Manitowoc are encouraged to visit & – page 4 Web site: Drive world-class performance in our manu- www.computershare.com/investor our Web site, or contact the following individuals: facturing and business practices. Q A Glen Tellock, Manitowoc’s new President Annual Meeting Analysts & Portfolio Managers: The annual meeting of Manitowoc Company shareholders will be held at Carl J. Laurino People and Organizational and CEO, answers some of the questions Manitowoc has become the shipbuilder of Senior Vice President & Chief Financial Offi cer asked by shareholders, employees, and 9:00 a.m., CDT, Tuesday, May 6, 2008, at the Holiday Inn, 4601 Calumet Development choice for complex, mid-sized government Avenue, Manitowoc, WI. We encourage our shareholders to participate in Telephone: 920-652-1720 Attract, engage, and develop top talent and investment analysts. and commercial vessels. this meeting either in person or by proxy. Telefax: 920-652-9775 structure the organization to lead and man- Stock Listing & Related Information Media Inquiries: age the global business. Manitowoc at a Glance – page 6 Making It Real in Foodservice – page 18 Manitowoc’s common stock is traded on the New York Stock Exchange and Steven C. Khail is identifi ed by the ticker symbol MTW. Current trading volume, share price, Director of Investor Relations & Corporate Communications Cranes Marine Telephone: 920-652-1713 Aftermarket Services 81% 8% dividends, and related information can be found in the fi nancial section of most daily newspapers. Telefax: 920-652-9775 All products will be enhanced with superior Quarterly common stock price information for our three most recent General Inquiries: aftermarket service and support. fi scal years can be found on page 15 of our Form 10-K, which is part of this Joan Risch annual report. Shares of Manitowoc’s common stock have been publicly Shareholder Relations Value Creation traded since 1971. Telephone: 920-652-1731 Telefax: 920-652-9775 Generate year-over-year improvement in Foodservice Manitowoc Shareholders 11% Economic Value-Added. On December 31, 2007, there were 129,880,734 shares of Manitowoc Quarterly Earnings An overview of our businesses and their common stock outstanding. On that date, there were 2,520 shareholders Manitowoc is planning to announce its quarterly earnings for calendar 2008 markets, competitive advantages, and of record. according to the following schedule: Innovation extends our leadership through- 1st Quarter − April 28, 2008 prospects for the future. Form 10-K Report out the “cold side” of the commercial Each year, Manitowoc fi les its Annual Report on Form 10-K with the 2nd Quarter − July 28, 2008 foodservice equipment industry. Securities and Exchange Commission. Most of the fi nancial information 3rd Quarter − October 28, 2008 Making It Real – page 8 contained in that report is included in this Annual Report to Shareholders. 4th Quarter − To be announced Building Real Value – page 22 A copy of Form 10-K, as fi led with the Securities and Exchange Join MTW on the Internet Commission for 2007, may be obtained by any shareholder, without charge, CFO Carl Laurino offers an overview of Manitowoc provides a variety of information about its businesses, products, upon written request to: and markets at its Web site address: www.manitowoc.com. our 2007 fi nancial performance and key Maurice D. Jones Equal Opportunity fi nancial measurements. Senior Vice President, General Counsel & Secretary Manitowoc believes that a diverse workforce is required to compete The Manitowoc Company, Inc. successfully in today’s global marketplace. The company provides equal P.O. Box 66 Introduction to the 10-K and employment opportunities in its global operations without regard to race, Manitowoc, WI 54221-0066 10-K Contents Listing – page 24 color, age, gender, religion, national origin, or physical disability. CEO Certifi cation to the New York Stock Exchange During 2007, the chief executive offi cer of the company timely submitted Glossary of Terms – page 26 to the New York Stock Exchange the CEO certifi cation required by Section 12(a) of the NYSE corporate governance listing standards. The certifi cation Investor Information – IBC was not qualifi ed in any way. Additionally, the company’s principal executive Manitowoc’s greatest strength is its people. offi cer and principal fi nancial offi cer have timely submitted the certifi cations We are doing more than ever to attract the required by Section 302 of the Sarbanes-Oxley Act as exhibits to the best people and develop, retain, and inspire company’s annual report on Form 10-K. them—across our worldwide operations.

This report is printed on recycled and recyclable paper using soy-based ink. The Manitowoc Company, Inc. Company, Manitowoc The Report Annual 2007 Making ItMaking Real

The Manitowoc Company, Inc. 2007 Annual Report The Manitowoc Company, Inc. Company, The Manitowoc 44th Street South 2400 66 Box P.O. WI 54221-0066Manitowoc,