Steven C. Khail - Director of Investor Relations & Corporate Communications Glen E. Tellock - Chairman, Chief Executive Officer and President Carl J. Laurino - Chief Financial Officer and Senior Vice President Eric P. Etchart - Senior Vice President and President of The Manitowoc Crane Segment Michael J. Kachmer - Senior Vice President and President of The Foodservice Segment

Robert Wertheimer - Vertical Research Partners, LLC Andy Kaplowitz - Barclays Capital, Research Division Charles D. Brady - BMO Capital Markets U.S. Vance H. Edelson - Morgan Stanley, Research Division Jerry Revich - Goldman Sachs Group Inc., Research Division Seth Weber - RBC Capital Markets, LLC, Research Division Robert F. McCarthy - Robert W. Baird & Co. Incorporated, Research Division Ann P. Duignan - JP Morgan Chase & Co, Research Division Eli S. Lustgarten - Longbow Research LLC Christopher Schon Williams - BB&T Capital Markets, Research Division Ted Grace - Susquehanna Financial Group, LLLP, Research Division

Good day, everyone, and welcome to the Manitowoc Company Third Quarter 2012 Earnings Call. Today's call is being recorded. At this time, for opening remarks and introductions, I'd like to turn the call over to Mr. Khail. Please go ahead.

Good morning, everyone, and thank you for joining Manitowoc's Third Quarter Earnings Conference Call. Participating in today's call will be Glen Tellock, our Chairman and Chief Executive Officer; and Carl Laurino, Senior Vice President and Chief Financial Officer. Glen will open today's call by providing an overview of our quarterly results and business outlook. Carl will then discuss our financial results for the third quarter in greater detail. Following our prepared remarks, we will be joined by Eric Etchart, President of Manitowoc Cranes; and Mike Kachmer, President of Manitowoc Foodservice, for our question-and-answer session. For anyone who is not able to listen to today’s entire call, an archived version of this call will be available later this morning. Please visit the Investor Relations section of our corporate website at www.manitowoc.com to access the replay. Before Glen begins his commentary, I would like to review our Safe Harbor statement. This call is taking place on November 5, 2012. During the course of today's call, forward-looking statements, as defined in the Private Securities Litigation Reform Act of 1995, will be made during each speakers' remarks and during our question-and-answer session. Such statements are based on the company's current assessment of its markets and other factors that affect its business. However, actual results could differ materially from any implied projections due to one or more of the factors explained in Manitowoc's filings with the Securities and Exchange Commission, which are also available on our website. The Manitowoc Company does not undertake any obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or other circumstances. With that, I'll now turn the call over to Glen.

Thanks, Steve, and good morning, everyone. While our third quarter results fell short of our expectations in some key areas, we also had several notable positives despite lingering uncertainty and continued pressure in the global macroeconomic environment. For the quarter, we reported top line growth of 2%, which reflects the constraints of the global business environment, as well as certain supply chain disruptions. We have worked diligently to leverage the competitive advantages of our business segments and are benefiting from the significant investments we have made to upgrade and rationalize our global manufacturing network, implement process improvements and drive continuous product innovation. I think it's important to offer a balanced perspective on both our successes and challenges in the quarter, because we feel good about our results and, more importantly, about the underlying health of our business. Turning to our performance. There are clearly a number of factors impacting the current operating environment that we are not immune to: uncertainty around elections and changing government powers, both domestically and abroad; the ongoing pressure in the euro zone, coupled with slower growth in China and select emerging markets, all of which have impacted spending by customers in both of our segments. Foodservice posted a slight decline in year-over-year sales. The segment, however, continues to maintain healthy and growing margins, which is a testament to our ability to improve operational efficiency and diligently manage our cost structure. Positive sales performance during the quarter was driven by our success in various product categories, including Manitowoc, Frymaster and Delfield. The combination of our diverse product offerings within Foodservice, our ability to leverage existing customer relationships and our global footprint affords us with the opportunities to drive long-term growth in this segment. From a geographic standpoint, we experienced positive growth in select emerging markets during…

Thanks, Glen, and good morning, everyone. We reported net sales for the third quarter of $956 million, which is an increase of 2% from the third quarter of 2011. The year-over-year sales increase was driven primarily by a 5% increase in Crane segment sales, which was offset by a slight decrease in Foodservice. Both segments were negatively impacted by currency, as currency neutral revenue growth was 10% in Cranes, with flat sales in Foodservice for the quarter. GAAP net income for the third quarter was $22.2 million, or $0.17 per share, versus net income of $23.7 million, or $0.18 per share, in the third quarter of 2011. EPS, excluding special items, was the same as GAAP EPS in both quarters. During the third quarter, cash flow provided from operations was $50.9 million versus cash flow from operations of $5 million in the prior year quarter, driven primarily by cash from profitability and reduced working capital needs. We reduced total debt in the third quarter by $39.2 million. We also continue to target at least $150 million in full year debt reduction, which represents debt reduction of approximately $275 million in the fourth quarter. Let me remind you that the fourth quarter is consistently our strongest for cash generation. We expect to reach our full year debt reduction target through cash from profitability, as well as a reduction in working capital. We were pleased with the results of our recently completed $300-million bond offering that was used to pay off our 2013 notes, as well as to further reduce our senior credit facility. This offering, coupled with our debt reduction efforts, enhanced the strength of our balance sheet to support our ongoing strategic initiatives. Turning to our segment results. Foodservice sales in the third quarter of 2012 totaled $401 million, down…

Thanks, Carl. As we look forward to the last quarter of 2012, we expect to see a sequential improvement over the third quarter. We remain confident in our ability to navigate through this increasingly uncertain economic environment and believe we will emerge as an even stronger company when the economy improves. Even in the face of modest growth, we remain focused on positioning the company for improved profitability. As we look into 2013, we'll begin to realize the benefits of the strategic initiatives that we have implemented over the past several years to drive additional margin expansion going forward. This concludes our prepared remarks for today. Tim, we will now begin our question-and-answer session.

[Operator Instructions] And we'll take our first question from Rob Wertheimer with Vertical Research Partners.

Just 2 quick clarification questions. You mentioned the issue in Asia with customer financing. I didn't -- I wanted to ask what kind of business that is and what was the nature of the issue you had. I didn't think you we're doing a lot, so I just wanted to make sure that wasn't something you've expanded.

Right. So, Rob, that was essentially the Crane accounts receivable exposure as we look at it and look at the portfolio, based upon some of the challenges going on in-country. We decided to reserve -- in that case, from the reconciliation that went through, that was about $4 million of the $7.8 million that I referenced. We've obviously been pleased with our portfolio over all, over a great number of years. But as we look at some of the specific circumstances, we're taking a view of taking the reserve, which impacted the quarter.

That's great. That's all in China, I assume? And did you actually have slowdowns from customers? I mean, I know that other OEMs had real issues, and I wouldn't expect that from you, but I'm just curious if your customers were just having cash flow issues themselves or turned stuff back in or what?

Yes. It's just -- it's essentially driven by China. There was just a little bit in one other Asia Pacific country, but almost all of it was completely China.

Okay, great. And I hate to focus on Cranes because Foodservice had a great quarter, but I just wanted to ask about the 4Q revenue guide. It looks fairly aggressive. You did mention some supply chain issues. I don't know how much of that hung up revenues in 3Q that'll flow through into 4Q. I don't know if you can quantify the revenue impact in 3Q from supply chain. Will it be fixed in 4Q? And how confident you feel on the Crane's 4Q revenue guide?

Well, the amount that we didn't get out the door that we expect to benefit the fourth quarter that Glen alluded to in his prepared remarks was roughly $120 million. So that obviously will enhance fourth quarter. And obviously, you saw some of the order activity that -- that also gives us some of the optimism about our results for Cranes in the fourth quarter.

We'll take our next question from Andy Kaplowitz with Barclays.

So if you focus on Crane margins, clearly, we know that you had some unusual circumstances in the quarter, with the sales moving and with the customer financing issues. But if you strip out the customer financing, you're still talking about a little over 5% margins. And it kind of feels like you get better, then you kind of step back a little bit again in margins. So I guess my question is -- I mean, you've had decent price increases, you've had increasing backlog. Are we just stuck sort of in this mediocre type of margin environment? Or can we actually sort of get better from here, given stronger revenue going forward and price increases? You see what I'm getting at?

Yes. I mean, that's certainly a good question, Andy, and I mean, obviously things we talk about internally also. But based just on my comments in closing, saying that even in a modest growth environment, we think there's a lot of room to move the margins in Cranes, and it comes from things like this product verification center, comes from some of the things you're doing in the manufacturing side of the equation. And we have a couple of things in the headwinds this year that are impacting the year-over-year margins, and it's not just the customer finances, things like Project One, which is the ERP implementation. We'll continue to bring new products online. So from an innovation standpoint, we have that. So I think the message we have is, yes, I think you get a little bit frustrated with the quarterly margin, but I think when you look at the full year, you look at some of the things -- the second quarter, you go to what we look at in 2013. Yes, we should expect improvements, and I think you will see improvements in those margins.

So Glen, you feel pretty confident though that next year, with all the things that you're going through this year, can be better? We're not going to have these -- as many fits and starts, assuming the economy is the same as today?

I think you'd have a lot of the uncertainty out of it. I think that's what -- it started in the -- right after the first quarter, I mean. You had -- this is 2 years in a row where you have Europe kind of rear its issues in the middle of the summer. We had to -- this almost feels just like last year, where the first quarter we started out okay, people got a little confident and then the -- you saw what happened in the middle of the summer. And so I think what we like about our quarter, or the way the year is shaping up -- look, we weren't exactly on track after the first quarter in comparison to what some people expected, but we had a good second quarter. So after 6 months, we're all in line, and I think that's what's happening here again, is -- yes, we didn't get where we thought we would get for the third quarter, I'll grant you that, but we still are affirming the earnings guidance for the year on lesser revenues. So I think that's the positives we're taking away from this and all of the things that we're doing, some of the investments that I talked about making, whether it's in Foodservice, in Cranes, those are all going to benefit us in 2013. Now are there unexpected things that always pop up? Yes, of course. We're going to continue to manage the things that we can control and make sure we're flexible enough to adjust to the things we can't control.

That's helpful, Glen. Just one other question. Maybe it's for Eric, I don't know. Like some of the E&Cs we follow have been talking about some delays in their larger energy prospects, especially in LNG, and obviously, we've seen some weakening in the global mining market. So in the crane markets, are you seeing any weakening in some of these major markets? And maybe to the contrary, U.S. housing is obviously picking up, and some of the infrastructure projects in the U.S. that have been stalled for a while look like they could go forward. So maybe any improvement at all there?

Well, I think in -- your question relates specifically on the larger E&C companies and the activity that they have. I think it's still fairly good. I mean, the U.S. market -- the order intake in Q3 has been flat to last year, given the elections, obviously. But I can tell you that the quoting activity that we have seen in the dealership has been extremely high, and the closing activity has not been typically as high as we would see, given the quoting activity. And so it revolves around, again, the elections coming up. But I think the opportunities and pent-up demand coming out of this is fairly strong. So I would say, for the Americas, I think the outlook is pretty, pretty good. And when you look at utilization rates and -- even the rental rates have picked up. And again, a lot of demand from end users is geared towards rental versus purchases, just because of the uncertainty that we have here in Q3, the elections.

And we'll take our next question from Charlie Brady with BMO Capital Markets.

As we look in the Foodservice segment and we look at the margin performance in there, it was pretty good in the quarter, 18%. How much of that -- I mean, can you kind of tease out how much of that really was from the mix in the quarter? And how much are you capturing on a permanent basis that continues to carry quarter-after-quarter?

I was going to say, Charlie, to some extent, I think the mix benefit is reflective of the strength of the brands. When you look at where the strong performers are, they also happen to be good margin performers with good market share. So that's, I think, reflective of some of that opportunity that -- just because it's favorable mix, doesn't mean that it's not going to have some legs to it. The other thing to point out is, you look at the expansion of the margins by 140 basis points, product cost takeout and lean initiatives will probably fully -- $5.25 million roughly in combination. But I don't know, Mike, you want to...

Well, I think, Charlie, it goes even to the question here that Andy had, whether you want to talk about Cranes or Foodservice margins. It's the things that -- you're seeing the benefits of the initiatives that we're putting in place. And whether it's in the strong brands or the ones that you would consider the lesser-margin-type items, I mean, it's improving all the margins. And so again, a lot of initiatives. Some quarters, it's one product that we have a lot of the initiatives in place, and this is what happens. But it's continued, and Mike and his team continue to look at the product portfolio across all of them. So it's not just one single area.

All right. And just in terms of the order you received that's going to start rolling out in Q4, could you quantify that or give some more detail around that?

Mike?

The blended ice roll out?

Yes, yes.

The blended ice rollout is associated with the European markets solely at this time, with a large chain customer. And we're looking at roughly 300 units that will be impacting the fourth quarter. So it's a portion of the overall market opportunity, but certainly not even near to 1/2 the overall opportunity within that sector.

And how long does that rollout occur? Is it just Q4 and it's done, or does it carry into '13?

No, carries into '13. And there's a chance that it goes beyond '13 into '14, depending on the pace of adoption across the various countries.

And we'll take our next question from Vance Edelson with Morgan Stanley.

On the topic of maintaining the profitability guidance despite the revenue guide, you mentioned how some of the margin issues that are hitting you on a year-over-year basis -- we got a look at the big picture in that regard. How many of these issues that impacted third quarter Crane margins are expected to continue or not into the fourth quarter? It sounds like the investments in new product engineering and some of the other items are likely to continue, while maybe the financing -- the reserves in Asia and some of the other items could be alleviated. So specifically, kind of third quarter to fourth quarter, what might improve?

The things that I would point out, Vance, would be the -- Brazil becomes less of a earnings issue as we get into greater and greater levels of production. The ramp-up certainly affected the first 3 quarters of this year. But as we get that factory rolling, it diminishes over time, definitely. To your point, the APAC issue is another one in that category. That should be essentially a one-time issue. Engineering expense, I think from a year-over-year ramp, it probably becomes less over time. And Project One, I think, is in that same category, where it's still there, obviously. It'll -- it won't be fully deployed until we get through 2014. But I think the year-over-year incremental expense becomes less, given that we're in the full ramp up of the project right now.

Okay, that's helpful. And since you have both Crane and the Food presence in China, you've probably got some insight into how the industrial versus the consumer side of the economy is behaving. Could you provide your latest view on when China might improve, if you see any inflection ahead and just your relative sense of optimism for both sides of the business?

Well, I think it's -- I think this year is a good example of what happens. I think if you sat around here and went back to the first quarter, a lot of people thought after the Chinese New Year, business picks back up. And I think that was an expectation that -- an assumption that didn't come to fruition, and you see it still lingering in China. I think as they get through their government transition in 2013, I think it improves. I don't think it's a bellwether that's really going to -- our expectations are great things happen. I just think it's a little bit more of the same that we'll see and will forecast for 2013, but -- I think it improves, but I don't think there's great leaps and bounds that we're going to have in -- certainly in the industrial space. On the foodservice space, I mean, a lot of it comes from just consumer confidence, just like it does anywhere else. What are people spending their money on in China, and what's the level of "feel good" attitude from the consumer there? And as Mike said in -- or I've said in my remarks with respect to Asia, it's the lodging and the part of the industry that is driving some of that growth.

And we'll take our next question from Jerry Revich with Goldman Sachs.

On the Foodservice business, in the press release, you mentioned that there's pressure in Europe outside of the contract win that you were able to deliver. Can you just talk about if there's an opportunity to look at the manufacturing footprint in Europe for that business earlier than probably what you were thinking about, call it, 3 to 6 months ago? How significant is that opportunity?

I'll let Mike give you a little bit more on the specifics. But I think if you went back since the acquisition of Enodis, I think maybe we just don't talk enough about it, but I think you'd be surprised at the number of initiatives that we have gone through already in Europe with that business. So we likely have -- and I think there's certainly other things we have on the docket. But Mike, why don't you address that?

Yes, just to follow up on Glen's comment. We have done a lot since the acquisition of Enodis. It's been a combination of operating companies, the consolidation of some of the factories and some of the consolidation of distribution centers that were historically company-owned. With regard to accelerating footprint changes in Europe, there's not a big opportunity in the near term. We've hunkered down, we're lean over there right now. We don't have many factories in Europe compared to North America. So our efforts right now are on the various lean initiatives that are trying to offset some of the market forces that you described.

Okay. And on the Crane business, I'm wondering if you could just could just frame for us whether the ERP issues are 100% behind you in the facility you mentioned earlier? Is that the biggest area that gives you confidence in the $120 million in sales that didn't go out the door in 3Q coming in 4Q?

Well, it's not -- I don't want you to think that those issues are because of the ERP. Not at all. The ERP implementation that -- we've done it in segments. We started with Portugal. We did it in Brazil. Now we were just pointing it out, it's just really the cost, Jerry, that's impacting the quarter. It's not that driving any of the supply issues. Those were more in the Americas for the most part. And so what we have next in the ERP is -- the go-live has been a very good success. A couple of hiccups, but I think those are behind us and now the next will be in the Americas. But the supply issues aren't ERP-driven.

And can you say a bit more so -- feel like, call it, 6 to 12 months ago, you got through the engineering changes on Tier IV. Can you just provide more color on what's driving the supply issues you saw in the third quarter?

Well, with Tier IV, again I'll let Eric speak to the supply disruption, but I think when you look at Tier IV, you have to remember, that's not over. If we look at probably 2013, I think you're still going to see 40% or 50% of our, our engineering hours are still driven to Tier IV. As you implement at different horsepowers and all the other items into the engines that we have in the timeframe that we were supposed to do it. So again, that is not behind us and will continue to be a challenge as we go into 2013. Supply disruption, Eric, if you want to talk to it?

Yes, Jerry. On the Tier IV, clearly we have 37 new projects scheduled for 2013. So really, it's a big toll on our engineering efforts. It's not only the new engines, it's all the ramification it has on the overall cranes, the weight per axle. So it takes a big toll on our engineering efforts. That supply issue, it's clearly penalizing Shady Grove. I think we should be able to ship most of our products in [indiscernible] in Q3, into Q4. And that should obviously boost our sales in Q4.

And we'll take our next question from Seth Weber with RBC Capital Markets.

There's a lot of puts and takes here with the margin discussion. Can you just talk about what you think would be a good pull-through margin or incremental margin, what you guys would be happy with next year in 2013 in the Crane business? Or how you think about that?

I'd be happy with something a little bit smoother than we've seen this year, given the issues.

Well, back at the last cycle inflection, I think you guys were somewhere in the mid-20% range. Is that a fair number to think about, or still not quite there?

I think that's reasonable at this point. The other thing that's a constraining factor for our margin performance overall, as you know, is the tower crane business being as low as it is, not having the crawlers really come back. But it appears that there's some good things going on, to Eric's point, on some of the high-profile projects. But to this point, we really haven't seen, for that favorable part of the product mix in Cranes, a lot of benefit to date.

Right. But you think that could help 2013?

Yes.

And then I guess a follow-up question. Fourth quarter is typically a pretty good order quarter for the Crane business. Is there any reason why you wouldn't think typical seasonality wouldn't happen this year?

No. I mean, you're exactly right. Typically, you see it in Q4 and the first quarter, and I think that would be our expectation again, especially -- certainly, in North America, you have a lot of the -- we watch the dealer inventory, and they're putting some of their forecasts for 2013 and around the rest of the world. So I mean, our understanding or our forecast would be just exactly that same seasonality. I don't know why it would be any different.

Seth, I want to add up on the order intake. I feel good about our order intake in Q3. I think we are sequentially down from the third quarter, which we -- typically, it's a soft quarter. But if you compare with last year, last year, we were down 19% in the third quarter versus the second quarter. So I feel very good about the order intake we have seen in Q3. Now getting into Q4, of course, America tends to be flat year-over-year because of the elections. I really hope that the pent-up demand after the elections -- and maybe some of the volume depreciation should help in our -- in us, I think a good order intake.

Right. Well, you had a strong fourth quarter 2011 order intake. I mean, do you think you could meet or exceed that number?

Well, I don't know. I mean, it's -- again, who knows? I mean, I think -- I don't think -- whether it's up or down a little bit from what it was last year isn't really going to change some of the reflection of what we look at in 2013. Our initiatives are going to be the same. The focus on margin improvement and the focus on debt reduction are, I mean, they're the 2 main initiatives we have as we focus on 2013. And we're not expecting great revenue bumps for 2013. I think there's going to be certain things, like Mike talked about in Foodservice, where it comes to rollouts, you know that Foodservice typically is -- many of the markets that we serve are GDP-type businesses, and we've always said our goal is to be 2x the GDP of any given country. And then on Cranes, I think we have to go in with the assumption that markets aren't going to give us a big bellwether benefit. So that's what we're focused on. What are we going to do with the cost side of the business? How are you going to improve margins in a fairly -- I would say, unflattering increases in the top line?

But I think, Seth, what we move the needle in terms of the order intake for the fourth quarter, will revolve around the Americas and our dealers and how they will see the retail activity and how confident they see 2013. And it probably will be driven by, again, strong activity in the all-terrains, rough terrains. And we've seen better activity on the small crawlers and the start of better activity on the large crawlers. That -- these are the product lines that will move the needle. I do not expect tower cranes to be really strong in the fourth quarter given what we've seen in the marketplace.

And we'll take our next question from Robert McCarthy with Robert W. Baird. Robert F. McCarthy - Robert W. Baird & Co. Incorporated, Research Division: You've been clear in your commentary about the crawler crane business, that you've seen improved demand for small crawlers, improved quoting for large. First off, can you just explain where is that dividing line? What are we talking about? We're talking about small crawlers?

Small crawlers would be anywhere -- maybe to the order of 250-ton and below. Robert F. McCarthy - Robert W. Baird & Co. Incorporated, Research Division: And this is all product you're making internally? Right?

Yes. For the most part. Robert F. McCarthy - Robert W. Baird & Co. Incorporated, Research Division: All right. And how do you think about the timeline for the improved large crawler quoting activity to turn into actual orders? I mean, are we doing early-stage project assessment? Or are you being presented with quotations for orders to be placed in the near term?

I think it's a little of both, Rob. I would say you have that increased quoting activity. But at the same time, you have a lot of discussions taking place on projects that are being bid for 2013, looking at the availability of what types of crawlers. I can let Eric speak towards more of it, but it is both of what you just asked about and described. Eric, do you have anything to add?

Now the only add up that I would is people do not -- they wait until the last minute to place their orders, Rob. So... Robert F. McCarthy - Robert W. Baird & Co. Incorporated, Research Division: Right. But you have some optimism that we might actually start to see the leading edge of that order activity in the fourth quarter?

Yes. I mean, the quoting activity for large crawlers have been fairly, fairly low in the first part of a year. And it's only late in -- really late in Q3 that we've seen that order activity, or I think the quotations, moving in the right direction. So yes, I think we should see some order intake in Q4. Now is that going to be -- it's only now back to previous levels. We're still very far from previous level, and I don't see that we should see that even in 2013, because you still have a lot of crawlers anyway available in the marketplace, although utilizations of the large crawlers have improved overall. But the headwinds we're going to have in 2013 is on the wind side because you won't have, again, these subsidized. So that kind of activity is going to slow down. I mean, the maintenance will remain, but order activity for new wind farm is unlikely to take place.

I think the combination of what you have, Rob, is you look at the utilization, on the large crawlers, has been -- I mean, very good, given the economic environment, for the most part, over the last 2 years. As Eric mentioned, while the utilizations have been -- the rental rates have been lower, and the rental rates are starting to firm up a bit. So when that happens, you have some demand that's been there, that people haven't replaced some of this equipment over the last 2 years, with our crawlers business being down, as we've talked about the towers and the crawlers. So I think there is a slight expectation that we could have some benefits from there. But I think, again, some of it's going to be is what is the sentiment coming out of the end of this year and into 2013. As we talked about, what are some of the E&C companies going to do with the projects they have on plan? Robert F. McCarthy - Robert W. Baird & Co. Incorporated, Research Division: Sure. If I could follow up, I have a question about -- I mean, really more of a modeling detail, I guess, unallocated corporate expenses. We're running well ahead of last year's level. I believe a quarter ago, there was some talk about the absolute level of spending being lower in the second half than the first half. Don't seem to see that trend in the third quarter numbers. What kind of numbers should we be working with for the full year? And would you characterize it as a somewhat above-trend level of expenses? Or is it the appropriate base to work off for 2013?

Well, I think one of the things that drives the observation that you made, Rob, was the lumpiness that you get from essentially truing up the equity compensation element, which can depend a little bit -- And I think the normalization of that throughout the year drove the expectation that it should be reasonably flat from a corporate expense. And that's -- I think we're sticking with that characterization.

And we'll take our next question from Ann Duignan with JPMorgan. Ann P. Duignan - JP Morgan Chase & Co, Research Division: It's Ann Duignan. Can you speak a little bit about the fundamentals in Foodservice? When we think about the impact of higher food costs that most other customers are going to face, particularly going into 2013, what gives you the confidence that this business will perform at 2x GDP, just given the very dire fundamentals that your customers are going to face going forward?

Well, Ann, I think you have the same dynamics that are in place that have been there for a long time. It's the trends that we watch and the number of meals that are prepared outside the homes. You watch the markets where you have expansion from some of the global or international or regional chains as they continue to invest in markets outside the mature markets that you see. It's the new products. It's technology. It's how do you get things done quicker? How do you get the same quality in less time? It's all the same things that we show over the course of the last 20 or 25 years in the Foodservice business that give us that confidence that this business continues to perform from a top line the way we've seen it happen historically. So I think when you go into 2013, I think you have a lot of things that are behind you, which includes things like the elections in the United States, some of the -- watching what's happened in Europe. Yes, we don't expect great things out of Europe next year, but we do expect in Asia, not just China, but the rest of Asia, there's continued expansion in the regional chains and in the consumer side of the business. But I think all those together give us some confidence. It will perform as it has historically. So Mike, I don't know if you want to add anything to that.

Right. I would say there's 3 additional points, Glen, to build off of what you've just said. I think, number one, there is still a lot of activity with our customers in helping them improve existing menu items or develop new ones, to get people in the stores. Number two, people are absolutely turning to us more than they ever had before, because of the pressures that you cite, to improve their operating costs. And it occurs around energy and labor, primarily. I think the third thing to keep in mind is, despite the overall flat revenue that we depict as an entire Foodservice entity, there's good news behind there. Certain categories have done well. There are areas where we continue to invest in, and we hold hope that those categories we have -- we hold expectations that those categories will continue to flourish in the years ahead. Ann P. Duignan - JP Morgan Chase & Co, Research Division: Okay. That's useful color. I do appreciate it. And then on the Crane incrementals around 25%, I mean, is that really achievable next year, given all of the changes on the Tier IV front and lower-than-normal volumes? I mean, is that really a stretch goal? Or is that confident achievable?

Well, we certainly believe it should be in the 20s, with some of the efficiencies we have in the business, embedded in the business and the expectation that we're not going to have some of the unusuals that we have today. I mean, we've been ramping up on Tier IV for quite a while.

I think there are some other things, Ann, when you look at just some operational metrics that we watch. You look at the warranty from the new products. You look at some of the inefficiencies we have had in the factories as we've had the starts and stops in some of these products. I think many of the improvements that are being made at facility-by-facility. You can see the impact of a lot of the operational improvements that are being made. So yes, I think you look towards the impact of some of the changes or the fits and starts that we've had earlier this year, the second quarter alone, we talked about supplier disruptions. I think we're better at those. The product verification center, I think we're ahead of the game on that, and some of the new products coming out. I think you have the benefit of some of the new products. So all of that together leads us to the confidence that we have in those incremental margins that Carl just talked about. Ann P. Duignan - JP Morgan Chase & Co, Research Division: Okay. And just then finally, one quick one. You noted in the press release that third quarter results fell short of expectations. Where was the biggest disappointment? I'm not sure that you really articulated where the specific disappointments were.

Yes. It's the top line. I... Ann P. Duignan - JP Morgan Chase & Co, Research Division: So the inability to get crane product out the door? Was that the...?

Yes. I -- yes.

And we'll take our next question from Eli Lustgarten with Longbow Securities.

Here's one clarification. With the $120 million shipment delay in the third quarter that you sort of articulated, was all that due to supply chain issues? Or were some of it due to -- were there any postponements or delays or deferrals of orders in the quarter?

No, there weren't -- it wasn't based on customer delays. I would say, when we gave that number, it really was a supply number. Now there -- at the end of any quarter, there's always shipments that are -- go from one quarter to the next, and that's because the customer either is still on the midst of getting their financing or the customer has -- a lot -- you've got to remember, Eli, a lot of our customers have their own trucking companies. They bring their own trucks in, it's the availability of their trucks. So there's always a little bit of that. And so I think, quarter-over-quarter, that's typically a wash for the most part. But this is what we talked about earlier, was simply we weren't happy with the quality of some of the components that we had. So it was really setting those products aside until we got that figured out.

Okay. And looking -- you talk a lot about Tier IV and you have 37 projects next year and a lot of engineering. We have, we're doing interim Tier IV stuff, we have another emissions in 2014, which affects everyone anyways because we continue to tighten up. The question is, one, what's your pricing for the new products versus the old products because of the emissions? How much are your prices up? And two, do we continue this in '14, because you have to roll out further tightening of the emissions issues?

Yes, definitely we continue into the '14. The 37 projects I mentioned are including the final Q4. And in terms of pricing, obviously we -- value is reflected in our pricing, obviously, plus additional price increase that we will have to pass to the market in 2013.

Yes. But I mean, in the interim -- I mean, typically, what we're seeing is double-digit price increases caused by the new emissions schedules, no matter how you implement it. So are we looking at your new prices come out at having 7% to 10% pricing, which is normal? Of course, you...

No, I don't think you're seeing that, Eli. I think what's happening is you're having to come out -- as you make many of these engine changes, because they're so dramatic, and the impact of weight, the impact of size, especially on the cranes that we're talking about, you do other engineering improvements at the same time because some of the customers aren't real fired up about paying for these emission changes. And at the same time, it's only in certain countries. So then you still have the Tier III issue -- Tier III engines that are going to the emerging markets and some other areas, so it's not a broad brush increase in the prices. We're trying to pass on some of that, but it's not -- I wouldn't say it's -- I wouldn't say that pricing sticks 100%.

But we consider this more as a surcharge than a price increase.

But you're basically sort of somewhat behind the curve, trying to get these prices because of the current market? Is that the best way to describe it?

No. I don't know than we would be behind the curve. I mean, we talked about the price increases that we've had earlier in the year. You got to remember, where we were behind the curve was 2011. That's where we didn't -- I mean, that was a competitive environment, where we didn't -- I mean, there were no price increases in the industry. And so at some point in time, it becomes a competitive issue, too. And I think when you look at some of the results of some of our competitors outside of the United States, I mean, some significant losses out of those companies, and I think that's an impact on some of the pricing.

Right. And can we just quickly shift to the food issues? I mean, most of the food equipment symposiums I've been to or have been part of have talked about low-single-digit gains in 2013. And most people are talking -- I think the average forecast for the food equipment industry is 4% next year. Can you maintain or even fully improve profitability from current levels with that kind of top line, industry-wide? Or is the goal basically just to be able to hold profitability in this slow-growth environment?

Yes, we can improve. We're attacking it on multiple fronts. It's margins that are realized through increases in addition that are coupled with the investments we continue to make. And a key part of our strategy is to still pursue scale economies across the business where they're logical, whether it's a manufacturing footprint opportunity, leveraging our strategic material purchases. Again, the short answer is yes, we have opportunities in front of us, even with those growth projections.

And we'll take our next question from Schon Williams with BB&T Capital Markets. Christopher Schon Williams - BB&T Capital Markets, Research Division: Just wanted to maybe follow up on that last question. Can you talk a little bit -- I mean, it sounds like there's a lot of moving pieces within Foodservice, especially within -- in terms of North American restructuring. Can you maybe talk about what the timeline of -- when some of these initiatives are going through? Are we working on them now? I know you announced the closure of the Fort Wayne facility. What timeline are we working with, and when should we expect that activity to really hit the bottom line? Are we -- are you talking about the fourth quarter, we should start to see incremental gains? Is it first half of next year, second half of next year? Just help me with the timing a little bit?

Let me -- I'm going to let Mike talk about the specifics, what he wants to say on the timeline. But you've got to remember, Schon, this -- the acquisition of Enodis happened at the end of 2008. And first of all, you have the integration, and then you have the strategic-type items that we implement. And we're going through the list as we saw the opportunities that we could make from an operational standpoint, and that's why we like the acquisition so much. And I think if you go back and historically look at what the margins were at Enodis, you look at them today, significant improvement has been made on that front and to get to where we're at today. But the things Mike was talking about, we're going to continue to knock these out one at a time in a very logical manner. And you just -- some of it, you're just -- you're constrained by resources and time. But there are a lot of things that are going on. As we talked about -- you mentioned the Fort Wayne, but there's also the new ice machine line, on the low-featured ice machine line that I talked about. You have the opportunities in Latin America. Those all come in over 2013, in addition to the things that we talked about, the beverage plant being consolidated to Tijuana. So other than that, I can -- Mike can probably allude on those a little bit more.

Yes. So I'll touch on the 3 that we've publicized, that Glen briefly mentioned. On the Fort Wayne consolidation, will be completed mostly through the first quarter, but with final shutdown operations occurring in Q2 next year. A lot of activity between now and then, very heavy in Q4 of this year, but all complete by the second quarter of next year. The beverage operations that are being consolidated into an existing Tijuana, Mexico facility will be done by the first quarter of next year. And the Monterrey facility, we expect to have product off late Q2 next year, but that is more of a growth opportunity when we talk about a new ice machine line that's targeted at a market segment that we haven't focused on historically, coupled with the pursuit of Latin American markets that are right now hindered by not having South American operations. Christopher Schon Williams - BB&T Capital Markets, Research Division: That was helpful, guys. And then maybe just drilling in a little bit more on the Foodservice in the quarter. Can you talk about cold versus hot side of the kitchen? I know -- I think the hot side was particularly weak for you last quarter. Do we see those trends continue into Q3? Did it get worse? Can you just talk about the 2?

Yes. I would say that there's even subsets within the general hot and cold category. In our press release, we refer to the continued success of our Frymaster fryer brand. And on the cold side, the Manitowoc Ice brand. On average, the cold side of our business has grown more effectively than the hot, for a variety of dynamics. But really, it's the general market in the U.S. that's associated with our grills and ranges and convection ovens that have been slower just in general. And it's -- we believe it's a market phenomena. Certainly, not a share phenomena on our part. It was a little tempered, less tempered in this past quarter, and we expect it to stabilize moving into Q4 and beyond. Christopher Schon Williams - BB&T Capital Markets, Research Division: And then last question, you did add a risk disclosure in your debt offering with a -- it's a fairly sizable dispute with the IRS. Can you maybe -- just help me think about what I should think about in terms of, I don't know, risk there and kind of what the -- what we could be talking about in a worst-case scenario. I mean, could you ultimately be looking at $100 million-plus payoff to the IRS if you were to lose that dispute?

Well, I think that the disclosure probably needs to speak for itself. I mean, that number is in there, so that certainly does reflect what the worst-case scenario would be. I think as we look at the issue and the practicality, we certainly don't expect that. We don't see that. We feel as though the specific rules that are utilized when you have deductibility of a foreign exchange transaction were observed and, therefore, it is valid. Obviously, the IRS has a different view. And we will continue to, as the disclosure says, seek the administrative remedy in order to essentially get to resolution. And if that is not successful, we're prepared to take other measures. Christopher Schon Williams - BB&T Capital Markets, Research Division: And what is the timeline? Are you meeting with the IRS here in the fourth quarter? Or I mean, could this -- this could essentially be something that drags on for years, is it?

Yes to your latter comment. It could take years.

And we'll take our next question from Ted Grace with Susquehanna Financial Group.

So I just wanted to come back to the Foodservice business and kind of come at Ann's question a little differently. A quarter ago, we talked about improved confidence and acceleration in the back half of this year. It was based on late 2Q patterns we saw into 3Q, the benefits of the rollout, new product introduction and geographic stabilization, especially North America. It doesn't look like it occurred this quarter, and certainly the implied outlook for 4Q is kind of anemic. So can you just walk through what the immediate challenges are? You've talked generally about election uncertainty and economic uncertainty, but was there any -- is there anything more specific, whether it's food cost inflation or other things, that crept up on you this quarter? And just understanding what happened in the near term would be helpful as a starting point.

Just a quick comment from me. And then I think Mike probably is the guy to answer this question. But as we look at the fourth quarter and the revision to our guidance, we certainly don't look at it as anemic based upon what the market dynamics are right now. It's more a function of the lackluster first 3 quarters that we had, as opposed to what we're looking at in the fourth quarter. But I'll turn it over to Mike.

Yes. I mean, I would agree with that, Carl. We've got some great opportunities that are targeted for the fourth quarter, one that was referred to earlier around the blended ice opportunity in Europe. And we we're still having solid success with chain customers in Asia, most notably China. But to answer the question that you pose, the most difficult challenge for us remains Europe. And Europe in this last quarter was worse than we expected going into it, and we're not out of the woods. So we continue to monitor the market very closely. We're very selective about where we're pursuing growth, and we're trying to pursue as many lean initiatives as possible to maintain margins in that sector. But that's our steepest challenge for sure.

And that concludes our question-and-answer session. I'll turn it back to Steve Khail for any closing remarks.

Before we conclude today's call, I'd like to remind everyone that a replay of our third quarter conference call will be available later this morning. You can access the replay by visiting the Investor Relations section of our corporate website at www.manitowoc.com. Thank you, everyone, for joining us today and for your continuing interest in the Manitowoc Company. We look forward to speaking with you again during our fourth quarter conference call. Have a good day.