UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- ------ EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended March 31, 2001
OR
- ------ TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) of the
SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from to
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Commission file number 0-27618
COLUMBUS MCKINNON CORPORATION
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(Exact name of registrant as specified in its charter)
NEW YORK 16-0547600
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
140 JOHN JAMES AUDUBON PARKWAY, AMHERST, N.Y. 14228-1197
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(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (716) 689-5400
Securities registered pursuant to Section 12(b) of the Act:
Name of exchange on
Title of Class which registered
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Common Stock, $0.01 Par Value NASDAQ National Market
Securities pursuant to section 12(g) of the Act: NONE
Indicate by checkmark 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 X No .
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Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K (ss.229.405 of this chapter) 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 [ ].
The aggregate market value of the voting stock held by non-affiliates
of the registrant as of May 31, 2001 was $93,317,505.
The number of shares of common stock outstanding as of May 31, 2001
was: 14,895,172 shares.
DOCUMENTS INCORPORATED BY REFERENCE
-----------------------------------
Portions of the proxy statement for the annual shareholders meeting to
be held August 20, 2001 are incorporated by reference into Part III of this
report.
COLUMBUS McKINNON CORPORATION
2001 Annual Report on Form 10-K
PART I
------
This annual report may include "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995. Such statements
involve known and unknown risks, uncertainties and other factors that could
cause the actual results of the Company to differ materially from the results
expressed or implied by such statements, including general economic and business
conditions, conditions affecting the industries served by the Company and its
subsidiaries, conditions affecting the Company's customers and suppliers,
competitor responses to the Company's products and services, the overall market
acceptance of such products and services, the integration of acquisitions and
other factors disclosed in the Company's periodic reports filed with the
Commission. Consequently such forward looking statements should be regarded as
the Company's current plans, estimates and beliefs. The Company does not
undertake and specifically declines any obligation to publicly release the
results of any revisions to these forward-looking statements that may be made to
reflect any future events or circumstances after the date of such statements or
to reflect the occurrence of anticipated or unanticipated events.
ITEM 1. BUSINESS.
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OVERVIEW
Columbus McKinnon ("Columbus McKinnon" or the "Company"), established in
1875, is a broad-line designer, manufacturer and supplier of sophisticated
material handling products and integrated material handling solutions that are
widely distributed to industrial and consumer markets worldwide. The Company's
material handling products are sold, domestically and internationally,
principally to third party distributors through diverse channels and, to a
lesser extent, directly to manufacturers and other end-users. The Company's
integrated material handling solutions businesses primarily deal directly with
end-users. For the year ended March 31, 2001, the Company generated net sales
and income from operations of approximately $728.0 million and approximately
$70.2 million, respectively.
The Company's Products segment includes a wide variety of electric, lever,
hand and air-powered hoists; hoist trolleys; industrial crane systems, such as
bridge, gantry and jib cranes and light-rail systems; alloy, carbon steel and
kiln chain; closed-die forged attachments, such as hooks, shackles, logging
tools and loadbinders; industrial components, such as mechanical and
electromechanical actuators, mechanical jacks and rotary unions; and
below-the-hook lifters. Through innovative design and manufacturing expertise
developed by the Company and through selective acquisitions, the Company has
established a leading market share in many of its product lines. Columbus
McKinnon believes it has more overhead hoists in use in North America than all
of its competitors combined. The Company's products and customer base are highly
diversified; no single product accounted for more than 1%, and no individual
customer accounted for more than 5%, of net Products segment sales for the year
ended March 31, 2001. For the year ended March 31, 2001, the Company's Products
segment generated net sales and income from operations before amortization of
approximately $478.9 million and approximately $72.5 million, respectively.
As a result of its fiscal 1998 acquisitions of Univeyor A/S ("Univeyor")
and Automatic Systems, Inc ("ASI"), formerly LICO, Inc., the Company also
provides project design, management and implementation of integrated material
handling systems that are designed to meet specific applications of end-users to
increase productivity. These businesses have formed the foundation for the
Company's two Solutions segments, Solutions - Industrial and Solutions -
Automotive. The delivered products of these segments include various types of
conveyor systems as well as operator-controlled manipulators, light-rail
systems, scissor lifts and tire shredders. For the year ended March 31, 2001,
the Company's Solutions - Industrial segment generated net sales and income from
operations before amortization of approximately $68.1 million and approximately
$3.6 million, respectively, and the Company's Solutions - Automotive segment
generated net sales and income from operations before amortization of
approximately $181.0 million and approximately $10.1 million, respectively.
The Company has extended its product lines and penetrated new markets in
recent years through several acquisitions. Over the past six years, the Company
has made fourteen acquisitions which have (i) enhanced the Company's position as
the largest North American manufacturer of overhead hoists, operator-controlled
manipulators and alloy chain, (ii) enabled the Company to broaden its product
and service offerings and (iii) provided the Company with cross-selling
opportunities into other segments of the material handling and lifting industry.
As a result of internal growth and acquisitions, the Company's net sales and
income from operations have increased to approximately $728.0 million and $70.2
million, respectively, for the year ended March 31, 2001 from approximately
$209.8 million and $25.8 million, respectively, in fiscal 1996, representing
compound annual growth rates of approximately 28.2% and 22.2%, respectively.
BUSINESS STRATEGY
The Company's strategic objective is to improve its competitiveness by
further enhancing its position as a leading designer, manufacturer and
distributor of material handling products and solutions, both domestically and
internationally. The Company plans to achieve this objective through the
continued implementation of its multi-tiered strategy, which includes the
following:
FOCUS ON QUALITY, PRODUCTIVITY AND EFFICIENCY - The Company continually
focuses on improving its products, manufacturing methods and general operating
processes, and has recently enhanced these efforts.
o PROCESS AND PRODUCTIVITY IMPROVEMENT - Heightened efforts to improve
operations and increase productivity include the following:
- Implementing lean manufacturing and business process techniques to
facilitate productivity improvement, reduce inventory levels and
free-up floor space
- Reducing overall business and production cycle times from receipt
of order to collection of cash
- Reducing machine set-up times and inventory levels
- Establishing efficient facility layouts
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- Integrating all business functions and facilities into one
seamless enterprise resource planning system known as CMBIS
(Columbus McKinnon Business Information System)
- Continuing to enhance CMBIS to increase productivity and provide
timely information
- Investing in capital equipment that adds economic as well as
customer service value, including productivity enhancing machinery
and integrated engineering systems such as 3-D CAD/CAM systems
- Establishing incentives for all associates to grow revenues,
manage operating costs, and use capital wisely
- Operating in a team environment empowering associates to
contribute to the success of the Company and its customers
o PURCHASING COST SAVINGS - The Columbus McKinnon Purchasing Council is
responsible for Company-wide procurement of most major commodity
groups including steel, motors, bearings and other components. Through
its Purchasing Council, the Company is leveraging the combined buying
power of its diverse operations to source quality components and
services at reduced prices.
o PRODUCT RATIONALIZATION - The Company has recently begun
rationalization of certain product lines that represented similar
offerings across its portfolio of brands. This activity will continue.
o COMPONENT RATIONALIZATION - The Company is achieving significant cost
reductions and increasing product quality by value engineering high
volume components used in multiple products. By value engineering
components to achieve greater standardization, the Company is
improving product manufacturability and enhancing ease of assembly.
o MANUFACTURING RATIONALIZATION - Through the creation of "centers of
excellence", the Company believes consolidated component manufacturing
for multiple products at multiple assembly sites will create
additional efficiencies and quality improvements.
o FACILITY RATIONALIZATION - The Company has recently begun
rationalization and consolidation of certain of its existing
facilities, which will result in significant fixed cost reductions and
improved productivity at the remaining facilities. This activity will
continue.
o ISO 9000 CERTIFICATION - Most of the Company's factories and
distribution centers are ISO 9000 certified. All others either meet the
requirements for certification, or are in process of reaching
compliance.
3
NEW PRODUCT DEVELOPMENT - The Company will expand its efforts to develop
and introduce new material handling products and services to anticipate customer
needs and to enhance its ability to serve its markets. Recent examples include:
o LodeRail - a self standing or ceiling mounted light-rail crane system
o Steerman - heavy machinery-moving dollies and skates for in-plant
machine positioning
o New top-running and underhung end trucks, more cost effective, for the
crane-builder industry
o Bossman Jacks - 50 to 150 ton hydraulic jacks for the mining industry
o Access systems - actuator operated security gate openers
o Pallet trucks - new hand pallet trucks for warehouse and plant use
o A new mini-load crane, a high speed, light weight picking device for
warehouse applications
INCREASE PENETRATION OF INTERNATIONAL MARKETS - The Company maintains a
distributor network in approximately 50 countries and has manufacturing
facilities in Canada, Mexico, Germany, The United Kingdom, Denmark, France and
China. The Company intends to increase international sales and enhance margins
through the implementation of the following initiatives:
o GLOBAL SALES AND MARKETING - The Company's objective is to market and
sell its products into Latin America, Asia and Europe and obtain the
same leading market share that it has achieved in North America. To
execute this strategy, the Company has established sales and service
offices in the major market areas of each region. Efforts have
recently been enhanced in Brazil with the establishment of a sales
office there.
o MEXICAN MANUFACTURING STRATEGY - The Company plans to increase sales
and achieve margin improvements by manufacturing and exporting a
broader array of high quality, low cost products and components from
its facility in Mexico to further penetrate markets in North and South
America. The Company's initial Mexican facility, located near Mexico
City, currently produces hand-powered and electric hoists and chain
for the U.S. and Mexican markets. In addition, the Company recently
established a sales office and staging facility in Monterrey to supply
and service industrial cranes in that marketplace.
o CHINESE MANUFACTURING STRATEGY - Similar to its Mexican initiative,
the Company's Chinese strategy involves capitalizing on China's low
cost operating environment by manufacturing and exporting products to
markets in Asia, Europe and North America. The Company currently
operates two factories in China which produce textile slings, pallet
trucks and ratchet lever hoists for delivery and sale into Europe,
under the Yale brand name. The Company also recently began importing
pallet trucks for distribution into North America under the American
Lifts brand name. In addition, a third Chinese factory is currently
under construction.
4
o WORLDWIDE PARTS DISTRIBUTION - The Company is streamlining its global
supply chain of parts and services to end-users in order to increase
margins and enhance customer service.
LEVERAGE STRONG COMPETITIVE POSITION - The Company's substantial installed
base of products, premier engineering capabilities and close relationships with
diverse distribution channels enable it to increase sales and enhance customer
service by:
o Selling new and acquired products and services to existing customers
and distribution channels
o Selling existing products and services to new customers and
distribution channels, including those served by acquired businesses
- Expand the operations of the Solutions - Industrial segment, which
has a strong foundation in Europe, to further penetrate North
America, Latin America and Asia
- Diversify the revenue stream of the Solutions - Automotive segment
and generate incremental sales from other U.S. and foreign auto
manufacturers, auto parts suppliers and other new industrial
customers
o Standardizing divisional pricing structures for simplification and
administrative ease
o Expanding its strong service-after-sale parts, repair, and product
replacement business by providing additional services such as field
parts stocking and repair capabilities
PENETRATE NEW DISTRIBUTION CHANNELS - The Company is leveraging its
established brand names and leading market position into new distribution
channels to generate incremental sales at attractive margins.
o THE INTERNET AND E-COMMERCE - The Company's web site at
WWW.CMWORKS.COM currently includes comprehensive catalogs of Columbus
McKinnon's hoist and chain products and list prices. In addition, CM
currently sponsors an additional 15 brand-name specific web sites and
has begun a pilot program to sell hand pallet trucks on one of them. A
team led by executive management is developing the Company's
e-commerce strategy and implementation plan, which is being executed
by the Company's department of dedicated internet professionals.
Pursuant to its strategic plan, the Company will expand its web site to
include maintenance manuals, pricing information, advertisements and
customer service information. Ultimately, the web site will
facilitate e-commerce for all of the Company's sales divisions.
o TELESALES - The Company has launched a telesales effort focused on
smaller industrial distributors and users of the Company's industrial
products.
CONTINUE TO IMPLEMENT CRANEMART(TM) STRATEGY - In fiscal 1999, the Company
initiated its CraneMart(TM) strategy to build an integrated North American
network of fully capable Company-owned and independent crane builders. The
5
acquisitions of Abell-Howe Crane, Inc. in August 1998, the merger with GL
International, Inc. in March 1999, and the acquisition of Washington Equipment
Company in April 1999 were the Company's first significant steps in the
implementation of CraneMart(TM).
o CraneMart(TM) participants utilize Columbus McKinnon's products and
parts in their own offerings and receive a full range of services from
the Company including best pricing and products, parts distribution
rights, dedicated technical support and shared resources.
o The Company has formed additional strategic alliances by agreement with
approximately 50 independent participants, in major North American
industrial markets.
o The Company believes that CraneMart(TM) will enhance the Company's
position as a full-service supplier of hoists, cranes and components
and will enable it to expand its product and service offerings to meet
the increasing demands of its end-users including timely parts
availability and service.
SEGMENT INFORMATION
During fiscal 2001 the Company classified its operations into the following
three business segments:
PRODUCTS. The Company's Products segment designs, manufactures and
distributes a broad range of material handling products for various industrial
applications and for consumer use. The Products segment includes a wide variety
of electric, lever, hand and air-powered hoists; hoist trolleys; industrial
crane systems such as bridge, gantry and jib cranes; alloy, carbon steel and
kiln chain; closed-die forged attachments, such as hooks, shackles, logging
tools and loadbinders; industrial components, such as mechanical and
electromechanical actuators, mechanical jacks and rotary unions; and
below-the-hook special purpose lifters. These products are typically
manufactured for stock and are sold through a variety of commercial distributors
and to end-users. The Company also sells these products to the consumer market
through a variety of retailers and wholesalers.
SOLUTIONS - INDUSTRIAL. The Company's Solutions - Industrial segment is
engaged primarily in the design, fabrication and installation of integrated
workstation and facility-wide material handling systems and in the design and
manufacture of operator-controlled manipulators and tire shredders. The products
and services of the Solutions - Industrial segment are highly engineered, are
generally built to order and are primarily sold directly to end-users for
specific applications.
SOLUTIONS - AUTOMOTIVE. The Solutions - Automotive segment is comprised
entirely of the operations of ASI, which was acquired in March 1998. ASI's
primary activity is the conception, design and implementation of complex
material handling systems, and its primary products include overhead and
inverted power-and-free conveyors, as well as state-of-the-art electrified
monorail systems, belt skid conveyors and skillet systems.
Financial information regarding the business segments is presented in Note
17 to the Company's audited consolidated financial statements included elsewhere
herein.
6
PRODUCTS AND SERVICES
PRODUCTS SEGMENT
The Company's Products segment primarily designs, manufactures and
distributes a broad range of material handling, lifting and positioning products
for various applications in industry and for consumer use. These products are
typically manufactured for stock and are sold through a variety of distributors.
In fiscal 2001, net sales of the Products segment were approximately $478.9
million or approximately 65.8% of the Company's net sales, of which
approximately $364.4 million (76%) were domestic and $114.5 million (24%) were
international. The following table sets forth certain sales data for the
products of the Products segment, expressed as a percentage of net sales of this
segment for fiscal 2001:
Hoists............................................ 52.9%
Chain and forged attachments...................... 24.7
Industrial overhead cranes........................ 14.4
Industrial components............................. 8.0
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100 %
HOISTS. The Company manufactures a variety of electric chain hoists,
electric wire rope hoists, hand-operated hoists, lever tools, air balancers, and
air-powered hoists. Load capacities for the Company's hoist product lines range
from one-eighth of a ton to 100 tons. These products are sold under its Budgit,
Chester, CM, Coffing, Shaw-Box, Yale and other recognized trademarks. The
Company's hoists are sold for use in a variety of general industrial
applications, as well as for use in the entertainment, consumer, rental, health
care and other emerging product markets. The Company also supplies hoist
trolleys, driven manually or by electric motors, for the industrial, consumer
and OEM markets.
The Company also offers a line of custom-designed, below-the-hook tooling,
clamps, pallet trucks and textile strappings. Below-the-hook tooling and clamps
are specialized lifting apparatus used in a variety of lifting activities
performed in conjunction with hoist and chain applications. Pallet trucks are
manual devices used for across-the-floor material handling, frequently in
warehouse type settings. Textile strappings are below-the-hook attachments,
frequently used in conjunction with hoists.
CHAIN AND FORGED ATTACHMENTS. The Company manufactures alloy and carbon
steel chain for various industrial and consumer applications. Federal
regulations in the United States require the use of alloy chain, which the
Company first developed, for overhead lifting applications because of its
strength and wear characteristics. A line of the Company's alloy chain is sold
under the Herc-Alloy brand name for use in overhead lifting, pulling and
restraining applications. The Company also sells specialized load chain for use
in hoists, as well as three grades and multiple sizes of carbon steel
welded-link chain for various load securement and other non-overhead lifting
applications. As a result of the acquisition of Lister Bolt & Chain, Ltd. and
Lister Chain & Forge Inc. (collectively, "Lister"), the Company now also
manufactures kiln chain sold primarily to the cement manufacturing market and
anchor and buoy chain sold primarily to the United States and Canadian
governments.
7
The Company also manufactures a complete line of alloy and carbon steel
closed-die forged attachments, including hooks, shackles, hitch pins, master
links and loadbinders. These forged attachments are used in virtually all types
of chain and wire rope rigging applications in a variety of industries,
including transportation, mining, railroad, construction, marine, logging,
petrochemical and agriculture.
In addition, the Company manufactures carbon steel forged and stamped
products, such as loadbinders, logging tools and other securement devices, for
sale to the industrial, consumer and logging markets through industrial
distributors, hardware distributors, mass merchandiser outlets and OEMs.
INDUSTRIAL OVERHEAD CRANES. The Company entered the crane manufacturing
market through the August 1998 acquisition of Abell-Howe, a Chicago-based
regional manufacturer of jib and overhead bridge cranes. The Company's merger
with GL, which included the Gaffey and Larco brands, in March 1999 and its
acquisition of Washington Equipment Company ("WECO") in April 1999 established
the Company as a significant participant in the strategically important crane
building and servicing markets. Crane builders represent a specialized
distribution channel for electric wire rope hoists and other crane components.
The Company also recently established a presence in Monterrey, Mexico to provide
that growing geographic market with its crane systems and service.
INDUSTRIAL COMPONENTS. Through the Duff-Norton division of its Yale
Industrial Products, Inc. ("Yale") subsidiary, the Company designs and
manufactures industrial components such as mechanical and electromechanical
actuators, mechanical jacks and rotary unions for sale domestically and abroad.
Actuators are linear motion devices used in a variety of industries, including
the paper, steel and aerospace industries. Mechanical jacks are heavy duty
lifting devices whose uses include the repair and maintenance of railroad
equipment, locomotives and industrial machinery. Rotary unions are devices that
transfer a liquid or gas from a fixed pipe or hose to a rotating drum, cylinder
or other device. These unions are unique in that they connect a moving or
rotating component of a machine to fixed plumbing without major spillage or
leakage. Rotary unions are used extensively in a variety of industries including
pulp and paper, printing, textile and fabric manufacturing, rubber and plastic.
The December 1998 acquisition of Gautier, a French rotary union and swivel joint
manufacturer, complemented Duff-Norton's product line while expanding its global
reach.
SOLUTIONS - INDUSTRIAL SEGMENT
The Solutions - Industrial segment is engaged primarily in the design,
fabrication and installation of integrated work station and facility-wide
material handling systems and in the manufacture and distribution of
operator-controlled manipulators, scissor lifts and tire shredders. Net sales of
the Solutions - Industrial segment in fiscal 2001 were approximately $68.1
million or approximately 9.3% of the Company's total net sales, of which
approximately $39.2 million (58%) were domestic and approximately $28.9 million
(42%) were international. The following table sets forth certain sales data for
the products and services of the Solutions segments, expressed as a percentage
of net sales of these segments for fiscal 2001:
8
Integrated material handling conveyor systems.............. 51.6%
Manipulators and light-rail systems........................ 21.4
Scissor lifts.............................................. 17.4
Other...................................................... 9.6
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100 %
INTEGRATED MATERIAL HANDLING CONVEYOR SYSTEMS. Conveyors are the most
important component of a material handling system, reflecting their high
functionality for transporting material throughout manufacturing and warehouse
facilities. Univeyor specializes in designing computer-controlled and automated
powered roller conveyors for use in warehouse operations and distribution
systems. The Company's Handling Systems and Conveyors, Inc. subsidiary
specializes in designing, manufacturing and servicing overhead power-and-free
conveyor systems for industrial customers.
MANIPULATORS AND LIGHT-RAIL SYSTEMS. The Company manufactures two lines of
sophisticated operator-controlled manipulators under the names Positech and
Conco. These products are articulated mechanical arms with specialized end
tooling designed to perform lifting, rotating, turning, tilting, reaching and
positioning tasks in a manufacturing process. Utilizing various models and size
configurations, the Company can offer custom-designed hydraulic, pneumatic, and
electric manipulators for a wide variety of applications where the user requires
multi-axial movement in a harsh or repetitive environment. The Company recently
introduced light-rail systems marketed under its various brand names. Light-rail
systems are portable steel overhead beam configurations used at workstations,
from which hoists are frequently suspended.
SCISSOR LIFTS. The American Lifts division of Yale manufactures hydraulic
scissor lift tables and other engineered lifting products. These products
enhance workplace ergonomics and are sold primarily to customers in the
manufacturing, construction, general industrial and air cargo industries.
SOLUTIONS - AUTOMOTIVE SEGMENT
The Solutions - Automotive segment, through ASI, is engaged primarily in
the conception, design and implementation of complex material handling systems
and the design, manufacture and distribution of overhead and inverted
power-and-free conveyors, state-of-the-art electrified monorail systems, belt
skid conveyors and skillet systems. Net sales of the Solutions - Automotive
segment in fiscal 2001 were approximately $181.0 million or approximately 24.9%
of the Company's total net sales, of which approximately $174.0 million (96%)
were domestic and approximately $7.0 million (4%) were international.
OVERHEAD AND INVERTED POWER-AND-FREE CONVEYOR SYSTEMS. ASI's conveyor
systems are used primarily in automotive and agri-business equipment plants for
assembly and paint operations. These conveyor systems deliver products of
various size and weight at moderate speeds to multiple locations within a
manufacturing or assembly plant, and can be coded to provide inventory status,
carrier location and other information.
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ELECTRIFIED MONORAIL SYSTEMS. These fast and efficient material handling
systems can reach 300 feet per minute, and are independently powered with the
ability to move forward and backward. Monorail systems are cleaner, quieter,
more ergonomically correct and require a smaller foot print than traditional
power-and-free systems. Monorail systems are generally used in automotive body
shop and general assembly plant applications.
FIXED SKID, SKILLET AND PALLET CONVEYOR SYSTEMS. These systems are floor
mounted modular conveyors providing high density storage and delivery with
horizontal and vertical travel flexibility. They are often used in harsh
environments for painting and delivery applications and can be supplied in
light-duty belt-driven or heavy duty chain-driven styles.
SPECIALIZED PRODUCTS. ASI produces a full range of high lift and low lift
forks for automotive body transfers between systems, automatic drop sections and
steel mill coil transfer cars.
PARTS FOR ALL PRODUCTS. ASI offers a complete line of spare parts for all
products to meet the maintenance needs of its customers.
SALES AND MARKETING
PRODUCTS SEGMENT
The Company's sales and marketing efforts in support of its Products
segment consist of the following programs:
o FACTORY-DIRECT FIELD SALES AND CUSTOMER SERVICE - The Company sells its
products through its own sales forces and through independent
manufacturing agents worldwide, including more than 140 dedicated
salespersons who sell hoists, chain, forged attachments, cranes,
rotary unions, actuators, jacks, and related material handling
accessories. Sales are further supported by over 250 Company-trained
customer service correspondents and sales application engineers. The
Company compensates its sales directors, regional sales management and
field sales force through a combination of base salary and a
commission plan based on top line sales and a pre-established sales
quota.
o PRODUCT ADVERTISING - The Company promotes its products by advertising
in leading trade journals as well as producing and distributing high
quality information catalogs. The Company supports its product
distribution by running cooperative "pull-through" advertising in over
50 vertical trade magazines and directories targeting theatrical,
international, consumer and crane builder markets. The Company runs
separate advertisements for chain, hoists, forged attachments, scissor
lift tables, actuators, hydraulic jacks, hardware programs, cranes and
light rail systems.
o TRADE SHOW PARTICIPATION - Trade shows are central to the promotion of
the Company's products and, in certain cases, for the actual sale of
its products, particularly to hardware retailers. The Company
participates in more than 40 regional, national and international
trade shows each year. Shows in which the Company participates range
from global events held in Hanover, Germany, Cologne, Germany and
Chicago, Illinois to local "markets" and "open houses" organized by
individual hardware and industrial distributors. The Company also
attends specialty shows for the entertainment, rental and safety
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markets, as well as general purpose industrial and consumer hardware
shows. In fiscal 2001, the Company participated in trade shows in the
US, Canada, France, Mexico, Germany, England, Argentina, Australia,
China, Colombia and Spain.
o INDUSTRY ASSOCIATION MEMBERSHIP AND PARTICIPATION - As a recognized
industry leader, the Company has a long history of work and
participation in a variety of industry associations. Columbus McKinnon
management is directly involved at the officer and director levels of
numerous industry associations including the following: ASMMA
(American Supply and Machinery Manufacturers Association), AWRF
(Associated Wire Rope Fabricators), PTDA (Power Transmission and
Distributors Association), SCA (Specialty Carriers and Riggers
Association), WSTDA (Web Sling and Tie Down Association), MHI
(Material Handling Institute), HMI (Hoist Manufacturers Institute),
CMAA (Crane Manufacturers Association of America), ESTA (Entertainment
Services and Technology Association), NACM (National Association of
Chain Manufacturers), AHMA (American Hardware Manufacturers
Association) and ARA (American Rental Association).
o PRODUCT STANDARDS AND SAFETY TRAINING CLASSES - The Company conducts
on-site training programs worldwide for distributors and end-users to
promote and reinforce the attributes of the Company's products and
their safe use and operation in various material handling
applications.
o WEB SITE - The Company's web site at WWW.CMWORKS.COM currently
includes electronic catalogs of Columbus McKinnon hoist and chain
products and list prices. Potential customers can browse through the
Company's diverse product offering or search for specific products by
name or classification code and obtain technical product
specifications. In addition, CM currently sponsors an additional 15
brand-name specific web sites and has begun a pilot program to sell
hand pallet trucks on one of them. In the near future, the Company
plans to post additional product catalogs, maintenance manuals,
pricing information, advertisements, and customer service information
on its web sites and ultimately perform e-commerce.
SOLUTIONS - INDUSTRIAL SEGMENT
The products and services of the Solutions - Industrial segment are sold
primarily to large corporate end-users, including Federal Express, UPS, United
Biscuits, Lego, Chivas Regal, J.I. Case, John Deere, DuPont, 3M, GTE, Cummins
Engine, Steelcase, Boeing, Saturn, General Electric, Waste Management and other
industrial companies, system integrators and distributors. In the sale of its
integrated material handling conveyor systems, the Company generally acts as a
prime contractor with turnkey responsibility, or as a supplier working closely
with the customer's general contractor. Sales are generated by internal sales
personnel and rely heavily on engineer-to-engineer interactions with the
customer. The process of generating client contract awards for integrated
conveyor systems generally entails receiving a request-for-quotation from
customers and undergoing a competitive bidding process. The Solutions -
Industrial segment also sells manipulators, light-rail systems and scissor lifts
through its internal sales force and through specialized independent
distributors and manufacturers representatives.
11
SOLUTIONS - AUTOMOTIVE SEGMENT
ASI's sales are largely concentrated on the automotive OEM market with
General Motors and Ford representing approximately 75% of total net sales. Other
customers include agricultural equipment OEMs such as John Deere and J.I. Case
and foundry customers such as Griffin Wheel. ASI's sales and marketing effort is
focused on establishing and maintaining relationships with OEM customers that
often involve significant interaction of key engineering and process design
personnel. North American sales and marketing operations are conducted from
ASI's three main offices: Kansas City, MO; Lansing, MI; and Hamilton, Ontario,
Canada. International sales and marketing operations are headquartered in Kansas
City and primarily focus on pursuing international business from existing North
American customers as they establish operations throughout the world. In
addition, ASI has relationships with a number of key suppliers in Europe and
Asia to assist in project sales, engineering support and manufacturing and
installation activity. ASI also participates in CEMA, the Conveyor Equipment
Manufacturing Association.
DISTRIBUTION AND MARKETS
PRODUCTS SEGMENT
The distribution channels for the Products segment include a variety of
commercial distributors, including general distributors, specialty distributors,
service-after-sale distributors and other distributors and end-users. The
Company also sells to the consumer market through one-step and two-step
wholesalers. In addition, the Products segment sells overhead bridge, jib and
gantry cranes, as well as certain forgings and chain assemblies, directly to
end-users.
General Distribution Channels:
o INDUSTRIAL DISTRIBUTORS are traditional mill supply distributors that
serve local or regional industrial markets and sell a variety of
products for MROP applications through their own direct sales force.
o RIGGING SHOPS are distributors who are experts in the rigging,
lifting, positioning and load securement areas of material handling.
Most rigging shops assemble and distribute chain, wire rope and
synthetic slings and distribute off-the-shelf hoists and attachments,
chain slings and other off-the-shelf products.
o CRANE BUILDERS design, build, install and service overhead crane and
light-rail systems for general industry and sell a wide variety of
hoists and lifting attachments. The Company sells electric wire rope
hoists and chain hoists as well as crane components, such as end
trucks, trolleys, drives and electrification systems to crane
builders.
12
Crane End-Users:
o CRANE END-USERS The Company sells overhead bridge, jib and gantry
cranes, parts and service to end-users through the wholly owned crane
builders within the CraneMart(TM) network. The Company's wholly owned
crane builders (Abell-Howe, Gaffey, Larco and WECO) design,
manufacture, install and service a variety of cranes ranging in
capacity from one ton to 100 tons.
Specialty Distribution Channels:
o CATALOG HOUSES market a variety of MROP supplies, including material
handling products, either exclusively through large, nationally
distributed catalogs, or through a combination of catalog and internet
sales and a field sales force. The customer base served by catalog
houses, which traditionally included smaller industrial companies and
consumers, has recently grown to include large industrial accounts and
integrated suppliers. Typically, catalog houses, particularly W.W.
Grainger, Inc., are pursuing e-commerce through their websites.
o MATERIAL HANDLING SPECIALISTS design and assemble systems
incorporating hoists, overhead rail systems, trolleys, lift tables,
manipulators, air balancers, jib arms and other material handling
products to provide end-users with solutions to their material
handling problems.
o ENTERTAINMENT EQUIPMENT DISTRIBUTORS design, supply and install a
variety of material handling equipment for concerts, theaters, ice
shows, sports arenas, convention centers and discos.
Service-After-Sale Distribution Channel:
o SERVICE-AFTER-SALE DISTRIBUTORS include over 11 chain repair service
stations and over 450 hoist parts, product, service and repair
stations. This service network is designed for easy parts and service
access for the Company's large installed base of hoists and related
equipment in North America.
OEM/Government Distribution Channels:
o ORIGINAL EQUIPMENT MANUFACTURERS supply various component parts
directly to other industrial manufacturers as well as private branding
and packaging of traditional Company products for material handling,
lifting, positioning and special purpose applications.
o GOVERNMENT SALES - products are sold directly by the Company and have
expanded with the acquisition of Lister, which manufactures anchor,
buoy and mooring chain for the United States and Canadian Navies and
Coast Guards.
13
Consumer Distribution:
o CONSUMER SALES, consisting primarily of carbon steel chain and
assemblies, forged attachments and hand powered hoists, are made
through five distribution channels: two-step wholesale hardware
distribution (such as Distribution America and Ace Hardware); one-step
distribution (such as Fastenal and Canadian Tire); trucking and
transportation distributors (such as U-Haul and Fruehauf); farm
hardware distributors (such as John Deere and Tractor Supply Company);
and rental outlets (such as Nations Rent and Hertz).
International Distribution:
o The Company distributes virtually all of its products in over 50
countries on six continents through a variety of distribution
channels.
SOLUTIONS SEGMENTS
The products and services of the Solutions segments are sold primarily to
OEMs and end-users. In the sale of its integrated material handling conveyor
systems, the Company generally acts as a prime contractor with turnkey
responsibility for its systems, or a supplier working closely with the
customer's general contractor. Sales are generated by in-house sales personnel,
and generally developed through engineer-to-engineer interactions. Products,
such as manipulators, light-rail systems and scissor lifts are sold by Company
sales employees and specialized independent distributors.
CUSTOMER SERVICE AND TRAINING
PRODUCTS SEGMENT
The Company maintains customer service departments staffed by well-trained
personnel for all of its Products segment sales divisions, and regularly
schedules product and service training schools for all customer service
representatives and field sales personnel. In addition, training schools for
distribution and service station personnel, as well as for end-users, are
scheduled on a regular basis at most of the Company's facilities and in the
field. The Company has more than 450 service stations worldwide that provide
local and regional repair, warranty and general service work for distributors
and end-users. End-user trainees attending various training schools maintained
by the Company include representatives of General Motors, DuPont, 3M, GTE,
Cummins Engine, General Electric and many other large industrial and theatrical
organizations.
The Company also provides, in several languages, a variety of collateral
material in video, cassette, CD-ROM, slide and print format addressing such
relevant material handling topics as the care, use and inspection of chains and
hoists, and overhead lifting and positioning safety. In addition, the Company
sponsors advisory boards made up of representatives of its primary distributors
and service-after-sale network members who are invited to participate in
discussions focused on improving products and service. These boards enable the
Company and its primary distributors to exchange product and market information
relevant to industry trends.
14
SOLUTIONS - INDUSTRIAL SEGMENT
The Solutions - Industrial segment offers a wide range of value-added
services to customers including: an engineering review of the customer's
processes; an engineering solution for identified material handling problems;
project management; and custom design, manufacturing and installation services.
The Company also offers after-sales services including operator training and
maintenance. After-sales services are offered throughout the life of the
equipment or system installed. The typical length of after-sales service varies
depending on customer requirements, with supplemental training courses offered
as needed.
SOLUTIONS - AUTOMOTIVE SEGMENT
The Solutions - Automotive segment utilizes its world-class engineering
capabilities, comprehensive databases and sophisticated CAD systems to design
specific solutions for its customers' needs. The Company prepares detailed
manuals discussing operation, control systems, safety, maintenance and part
specifications for each new installation. ASI also provides on-site training as
well as after sales services throughout the life of the system installed. The
typical length of after-sales service varies depending on customer requirements,
with supplemental training courses offered as needed.
RECENT ACQUISITIONS
Since February 1994, the Company has acquired fourteen operations:
o In April 1999, the Company acquired Washington Equipment Company
(WECO), a manufacturer and servicer of overhead cranes, for
approximately $6.4 million. This acquisition was an additional step by
the Company in furtherance of its CraneMart(R) strategy.
o In March 1999, the Company merged with GL in a pooling of interests
transaction in which shares of, and options to purchase, the Company's
common stock valued at approximately $20.6 million were exchanged for
all outstanding shares and options of GL. GL includes Gaffey and Larco,
full-service designers and builders of industrial overhead bridge,
gantry and jib cranes and related components. This acquisition was the
Company's first major step in the implementation of its CraneMart(R)
strategy.
o In January 1999, the Company acquired Camlok and the Tigrip product
line for aggregate consideration of approximately $10.6 million.
Camlok, located in the United Kingdom, manufactures plate clamps, crane
weighers and related products. The German-based Tigrip produces
standard and specialized plate clamps. These acquisitions positioned
the Company as a market leader for lifting clamps in Europe.
o In December 1998, the Company acquired Gautier, a French manufacturer
of rotary unions and swivel joints, for approximately $2.9 million.
Gautier's product lines are complementary to those of the Company's
Duff-Norton division and provide the Company with additional
cross-selling and cross-branding opportunities.
15
o In August 1998, the Company acquired Abell-Howe, a regional
manufacturer of jib and other overhead cranes for approximately $7.0
million. This acquisition marked the Company's entry into the
complementary crane building product line, creating significant
cross-selling opportunities for its existing hoist products.
o In March 1998, the Company acquired ASI, a designer, manufacturer and
installer of custom conveyors and material handling systems primarily
for the automotive industry, for approximately $155.0 million,
including outstanding borrowings. This acquisition strengthened the
Company's position as a leader in the project design, fabrication and
installation of automated material handling systems and provided the
Company with an established platform for increasing its sales to the
automotive and industrial manufacturing markets.
o In January 1998, the Company acquired Univeyor, which is engaged in the
design and manufacture of automated material handling systems, for
approximately $15.0 million plus assumed liabilities. This transaction
enabled the Company, which previously had designed solutions only for
individual workstations, to offer automated material handling systems,
predominantly using powered roller conveyors, for the entire workplace.
o In December 1996, the Company acquired Lister, a manufacturer of cement
kiln, anchor and buoy chain and mining bolts, for approximately $7.0
million. This transaction complemented the Company's line of chain
products and provided the Company with access to new markets,
particularly in the international marketplace.
o In October 1996, the Company acquired the majority of the outstanding
common equity of Yale Industrial Products, Inc., a manufacturer of a
variety of lifting and positioning products, including hoists and
scissor lifts and industrial components such as actuators, jacks and
rotary unions, for approximately $270.0 million through a cash tender
offer. In January 1997, the Company acquired the remaining common
equity of Yale and effected a merger. This acquisition further
complemented the Company's product line and also provided the Company
with international operations and distribution facilities in Europe,
South Africa and China.
o In November 1995, the Company acquired Lift-Tech International, Inc.
("Lift-Tech"), a manufacturer and distributor of hoists and crane
components, including wire rope and air-powered hoists, for
approximately $63.0 million. Lift-Tech's products complemented the
Company's existing hoist product lines, thereby enabling the Company to
offer a broader product line to the marketplace.
Between February 1994 and October 1995 the Company also acquired (i) the
remaining 51% equity interest in Endor, a Mexican manufacturer of hoists, for
approximately $2.0 million, (ii) certain assets of Cady Lifters, Inc., a
manufacturer of "below the hook" lifters, for approximately $0.8 million, (iii)
the assets of the Conco Division of McGill Industries, Inc., a manufacturer of
manipulators, for approximately $0.8 million and (iv) the assets of
Durbin-Durco, Inc., a manufacturer of load securement equipment and attachments,
for approximately $2.4 million.
16
COMPETITION
Despite recent consolidation, the material handling industry remains highly
fragmented. The Company faces competition from a wide range of regional,
national and international manufacturers across its product and service areas in
both domestic and international markets. In addition, the Company often competes
with individual operating units of larger, highly diversified companies.
The principal competitive factors affecting the market for the products of
the Company's Products segment include performance, functionality, price, brand,
reputation, reliability, customer service and support and product availability.
Other important factors include distributor relationships, territory coverage
and the ability to service the distributor with on-time delivery and repair
services.
The principal competitive factors affecting the market for the products and
services of the Company's Solutions segments include application solutions,
performance and price. The process of generating client contract awards for
these businesses generally entails receiving a request-for-quotation from
end-users and undergoing a competitive bidding process.
Within its Products segment, the Company competes in the sale of hoists
with Mannesman Dematic, Kito-Harrington, Ingersoll-Rand, KCI Konecranes and
Morris Material Handling; in chain with Campbell, Peerless Chain Company and
American Chain and Cable Company; in forged attachments with the Crosby Group
and BTC; in crane building with Mannesman Dematic, KCI Konecranes, Morris
Material Handling and R. Stahl; and in industrial components with Deublin,
Joyce-Dayton and Nook Industries. Within its Solutions segments, the Company
competes in providing industrial solutions with Rapistan Systems, KCI Konecranes
and Jervis B. Webb; and in providing automotive solutions with Rapistan Systems,
Jervis B. Webb, Dearborn Mid-West, Allied UniKing, Fata Automation SpA and
Daifuku.
EMPLOYEES
At March 31, 2001, the Company had 3,942 employees, 3,038 in the United
States, 292 in Canada, 118 in Mexico and 494 in Europe/Asia. Approximately 1,110
of the Company's employees are represented under 12 separate US or Canadian
collective bargaining agreements which terminate at various times between July
2001 and May 2006.
During the past five years, the only interruptions or curtailments of the
Company's business due to labor disputes was a five-day work stoppage at a
Duff-Norton plant in Charlotte, North Carolina in fiscal 1997, prior to its
acquisition by the Company. The Company believes that its relationship with its
employees is good. In support of this relationship, the Company has maintained
an Employee Stock Ownership Plan since 1988 and also uses incentive-based
compensation programs that are linked to the Company's profitability and
increase in shareholder value.
17
BACKLOG
PRODUCTS SEGMENT
The Company's backlog of orders at March 31, 2001 was approximately $44.3
million compared to approximately $52.5 million at March 31, 2000. The Company's
orders for standard products are generally shipped within one week. Orders for
products that are manufactured to customers' specifications are generally
shipped within four to twelve weeks. The Company does not believe that the
amount of its Products segment backlog orders is a reliable indication of its
future sales.
SOLUTIONS - INDUSTRIAL SEGMENT
Revenues from the Company's Solutions - Industrial segment are generally
recognized within one to six months. The Company's backlog of orders at March
31, 2001 was approximately $8.4 million compared to approximately $11.3 million
at March 31, 2000.
SOLUTIONS - AUTOMOTIVE SEGMENT
Revenues from the Company's contracts for automated systems are generally
recognized within 12 to 18 months. The Company's backlog of orders at March 31,
2001 was approximately $110.7 million compared to approximately $85.4 million at
March 31, 2000.
RAW MATERIALS AND COMPONENTS
The principal raw materials used by the Company are structural steel and
processed steel bar, forging bar steel, steel rod and wire, steel pipe and
tubing and tool steel which are available from multiple sources. The Company
purchases most of these raw materials from a limited number of strategic and
preferred suppliers under long-term agreements which are negotiated on a
company-wide basis to take advantage of volume discounts and to protect the
Company from price fluctuations. Although the steel industry is cyclical and
steel prices can be volatile, the Company has not been significantly impacted in
recent years by increases in steel prices.
The Company also purchases components such as motors, bearings and gear
housings and castings. These components are generally available from several
suppliers.
The Company estimates that its total materials cost, including steel
products and components, represented approximately 31% of net sales in fiscal
2001. The Company generally seeks to pass on materials price increases to its
customers, although a lag period often exists. The Company's ability to pass on
these increases is determined by competitive conditions.
ENVIRONMENTAL AND OTHER GOVERNMENTAL REGULATION
Like many manufacturing companies, the Company is subject to various
federal, state and local laws relating to the protection of the environment. To
address the requirements of such laws, the Company has adopted a corporate
environmental protection policy which provides that all facilities owned or
leased by the Company shall, and all employees of the Company have the duty to,
18
comply with all applicable environmental regulatory standards, and the Company
has initiated an environmental auditing program for its facilities to ensure
compliance with such regulatory standards. The Company has also established
managerial responsibilities and internal communication channels for dealing with
environmental compliance issues that may arise in the course of its business.
Because of the complexity and changing nature of environmental regulatory
standards, it is possible that situations will arise from time to time requiring
the Company to incur expenditures in order to ensure environmental regulatory
compliance. However, the Company is not aware of any environmental condition or
any operation at any of its facilities, either individually or in the aggregate,
which would cause expenditures that would result in a material adverse effect on
the Company's results of operations or financial condition and, accordingly, has
not budgeted any material capital expenditures for environmental compliance for
fiscal 2002.
On or about February 1, 2000, the Company received notification from the
U.S. Attorney's Office for the Northern District of Iowa that the U.S. Attorney
intended to file a complaint on behalf of the United States Environmental
Protection Agency ("EPA") against the Company for alleged violations of certain
chromium air emissions standards under the National Emission Standards for
Hazardous Air Pollutants ("NESHAPS") pursuant to the federal Clean Air Act in
connection with the Company's facility located in Laurens, Iowa. On or about
June 21, 2000, the Company agreed informally to a settlement-in-principle with
the U.S. Attorney's Office and EPA, under which the Company agreed to pay a
civil penalty of $60,000 to resolve any and all liabilities in connection with
the matter. The United States District Court for the Northern District of Iowa
entered the Consent Decree settling the litigation on March 14, 2001, and since
then, the Company has paid $60,000 into the U.S. Treasury, thereby consummating
the settlement of the matter. Neither the entry of the Consent Decree nor the
payment should be construed as an admission of any wrong doing by the Company.
The Company has completed the closure of an underground storage tank
("UST") located at its facility in Charlotte, North Carolina. No further
expenditures are anticipated in connection with the UST.
Certain federal and state laws, sometimes referred to as Superfund laws,
require certain companies to remediate sites that are contaminated by hazardous
substances. These laws apply to sites owned or operated by a company, as well as
certain off-site areas for which a company may be jointly and severally liable
with other companies or persons. The required remedial activities are usually
performed in the context of administrative or judicial enforcement proceedings
brought by regulatory authorities. The Company has been involved recently in
three administrative enforcement proceedings in connection with the remediation
of certain facilities, which neither the Company nor any subsidiary of the
Company has ever owned or operated but with regard to which the Company or a
subsidiary of the Company has been identified as one of several potentially
responsible parties ("PRPs"). The Company has cooperated with the regulatory
authorities in connection with these environmental proceedings. From the
perspective of the Company, with the exception of the one environmental
administrative proceeding discussed below, these matters have been, and are
expected to continue to be, minor matters not requiring substantial effort or
expenditure on the part of the Company.
The Company has been identified by the New York State Department of
Environmental Conservation ("NYSDEC"), along with other companies, as a PRP at
the Frontier Chemical Site in Pendleton, New York ("Pendleton Site"), a site
listed on NYSDEC's Registry. From 1958 to 1977, the Pendleton Site had been
19
operated as a commercial waste treatment and disposal facility. The Company sent
waste pickling liquor generated at its facility in Tonawanda, New York to the
Pendleton Site during the period from approximately 1969 to 1977, and the
Company is participating with other PRPs in conducting the remediation of the
Pendleton Site under a consent order with NYSDEC. Construction in connection
with the remediation has been completed and this project is currently in its
operations and maintenance phase. As a result of a negotiated cost allocation
among the participating PRPs, the Company has paid its PRO RATA share of the
remediation construction costs and accrued its share of the ongoing operations
and maintenance costs. As of March 31, 2001, the Company has paid approximately
$1.0 million in remediation and ongoing operations and maintenance costs
associated with the Pendleton Site. The participating PRPs have identified and
commenced a cost recovery action against a number of other parties who sent
hazardous substances to the Pendleton Site. If the currently nonparticipating
parties identified by the participating PRPs pay their PRO RATA shares of the
remediation costs, then the Company's share of total site remediation costs will
decrease. Settlements have been reached with 111 of the 113 defendants in the
cost recovery action, and additional settlements are expected from the remaining
two defendants in the future. The Company believes that the two remaining
defendants are substantial contributors of waste to the Pendleton Site. However,
the Company has not yet received payment in connection with any settlements with
individual defendants in the lawsuit. The Company also has entered into a
settlement agreement with one of its insurance carriers in the amount of
$734,130 in connection with the Pendleton Site and has received payment in full
of the settlement amount.
For all of the currently known environmental matters, the Company has
accrued a total of approximately $820,000 as of March 31, 2001, which, in the
opinion of the Company's management, is sufficient to deal with such matters.
Further, the Company's management believes that the environmental matters known
to, or anticipated by, the Company should not, individually or in the aggregate,
have a material adverse effect on the Company's cash flow, results of operations
or financial condition. However, there can be no assurance that potential
liabilities and expenditures associated with unknown environmental matters,
unanticipated events, or future compliance with environmental laws and
regulations will not have a material adverse effect on the Company.
The Company's operations are also governed by many other laws and
regulations, including those relating to workplace safety and worker health,
principally OSHA and regulations thereunder. The Company believes that it is in
material compliance with these laws and regulations and does not believe that
future compliance with such laws and regulations will have a material adverse
effect on its cash flow, results of operations or financial condition.
20
ITEM 2. PROPERTIES.
- ------- -----------
The Company maintains its corporate headquarters in Amherst, New York. The
principal properties utilized by the Company for its continuous operations
consist of 79 manufacturing, distribution, sales or service facilities, of which
45 are located in the United States, 7 are located in Canada, 4 are located in
Mexico, 16 are located in Europe, 3 are located in Asia, 2 are located in
Africa, and 2 are located in Latin/South America. The following table summarizes
the Company's headquarters and principal manufacturing and distribution
facilities by business segment:
APPROXIMATE FLOOR SPACE
(in thousands of square feet)
OWNED LEASED TOTAL
----- ------ -----
Corporate Headquarters 52,000(1) - 52,000
Products (62 facilities):
United States 1,664,517 610,482 2,274,999
International 362,066 239,375 601,441
Solutions - Industrial (10 facilities):
United States 322,934 24,500 347,434
International 85,500 21,250 106,750
Solutions - Automotive (7 facilities):
United States 81,475 69,700 151,175
International - 1,900 1,900
- -----------------------
(1) Approximately 26,000 square feet is sublet to an unaffiliated party through
June 30, 2003.
The Company believes that its properties have been adequately maintained,
are in generally good condition and are suitable for the Company's business as
presently conducted. The Company believes its existing facilities provide
sufficient production capacity for its present needs and for its anticipated
needs in the foreseeable future. The Company also believes that upon the
expiration of its current leases, it either will be able to secure renewal terms
or enter into leases for alternative locations at market terms.
ITEM 3. LEGAL PROCEEDINGS.
- ------- ------------------
From time to time, the Company is named a defendant in legal actions
arising out of the normal course of business. The Company is not a party to any
pending legal proceeding the resolution of which the management of the Company
believes will have a material adverse effect on the Company's cash flow, results
of operations or financial condition or to any other pending legal proceedings
other than ordinary, routine litigation incidental to its business. The Company
maintains liability insurance against risks arising out of the normal course of
business.
21
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
- ------- ----------------------------------------------------
Not applicable.
22
PART II
-------
ITEM 5. MARKET FOR THE COMPANY'S COMMON STOCK AND RELATED SECURITY HOLDER
- ------- -----------------------------------------------------------------
MATTERS.
--------
The Company's Common Stock is listed on the National Association of
Securities Dealers Automated Quotation System - National Market System
("NASDAQ") under the trading symbol "CMCO". The following table sets forth, for
the fiscal periods indicated, the high and low closing sale prices per share of
the Company's Common Stock as reported by NASDAQ.
FISCAL 2001 FISCAL 2000
----------- -----------
HIGH LOW HIGH LOW
---- --- ---- ---
1st Quarter 15.063 12.875 25.063 23.750
2nd Quarter 15.250 13.547 17.625 17.125
3rd Quarter 13.938 8.750 10.125 9.875
4th Quarter 9.672 7.500 13.500 12.813
As of March 31, 2001, there were 328 holders of record of the Company's
Common Stock. Approximately 2,000 additional shareholders hold shares of the
Company's Common Stock in "street name".
The Company declared total cash dividends of $.28 per share in both fiscal
2001 and 2000.
23
ITEM 6. SELECTED FINANCIAL DATA.
- ------- ------------------------
SELECTED FINANCIAL INFORMATION
The following table sets forth selected consolidated financial information
of the Company for each of the five fiscal years in the period ended March 31,
2001. This information includes (i) the results of operations of Yale since its
acquisition on October 17, 1996, (ii) the results of operations of Lister since
its acquisition on December 19, 1996, (iii) the results of operations of
Univeyor since its acquisition on January 8, 1998, (iv) the results of
operations of ASI since its acquisition on March 31, 1998, (v) the results of
operations of Mechanical Products through its divestiture on August 7, 1998,
(vi) the results of operations of Abell-Howe since its acquisition on August 21,
1998, (vii) the results of operations of Gautier since its acquisition on
December 4, 1998, (viii) the results of operations of Camlok and Tigrip since
their acquisition on January 29, 1999, (ix) the results of operations of GL
since its formation on April 1, 1997, including the restatement of Company data
reported prior to GL's merger with the Company on March 1, 1999, and (x) the
results of operations of WECO since its acquisition on April 29, 1999. This
table should be read in conjunction with the "Management's Discussion and
Analysis of Results of Operations and Financial Condition" and the Consolidated
Financial Statements of the Company, including the notes thereto, included
elsewhere herein.
FISCAL YEARS ENDED MARCH 31,
----------------------------
2001 2000 1999 1998 1997
---- ---- ---- ---- ----
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
STATEMENT OF INCOME DATA:
Net sales............................................. $727,972 $736,254 $735,445 $561,823 $359,424
Cost of products sold................................. 551,381 556,145 542,975 401,669 251,987
----------------------------------------------------
Gross profit.......................................... 176,591 180,109 192,470 160,154 107,437
Selling expenses...................................... 50,436 50,450 52,059 46,578 32,550
General and administrative expenses................... 39,253 44,260 39,850 33,361 24,636
Amortization of intangibles........................... 15,983 16,392 15,479 10,297 5,197
Other charges......................................... 750 965 -- -- --
----------------------------------------------------
Income from operations................................ 70,169 68,042 85,082 69,918 45,054
Interest and debt expense............................. 37,642 34,698 35,923 25,104 11,930
Interest and other income............................. 2,217 1,314 1,565 1,940 1,168
----------------------------------------------------
Income before income taxes, minority interest and
extraordinary charge.................................. 34,744 34,658 50,724 46,754 34,292
Income tax expense.................................... 19,525 17,578 23,288 22,776 15,617
Minority interest..................................... - - - - (323)
Extraordinary charge for early debt extinguishment.... - - - (4,520) (3,198)
----------------------------------------------------
Net income............................................ $ 15,219 $ 17,080 $ 27,436 $ 19,458 $ 15,154
====================================================
Net income per common share - diluted................. $1.06 $1.20 $1.92 $1.35 $1.15
Cash dividend per common share........................ 0.28 0.28 0.28 0.28 0.27
BALANCE SHEET DATA (AT END OF PERIOD):
Total assets.......................................... $747,013 $759,824 $766,911 $788,862 $548,245
Total long-term debt (including current maturities)... 407,046 413,751 423,612 458,577 286,288
Total liabilities..................................... 539,149 556,371 578,237 617,916 398,089
Total shareholders' equity............................ 207,864 203,453 188,674 170,946 150,156
24
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
- ------- -----------------------------------------------------------------
FINANCIAL CONDITION.
--------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
FISCAL YEARS ENDED MARCH 31, 2001, 2000, AND 1999
OVERVIEW
The Company is a broad-line designer, manufacturer, and supplier of
sophisticated material handling products that are widely distributed to
industrial, automotive, and consumer markets worldwide; integrated material
handling solutions for the automotive markets; and integrated material handling
solutions for industrial markets. The Company's material handling products are
sold, domestically and internationally, principally to third party distributors
through diverse distribution channels, and to a lesser extent directly to
manufacturers and other end-users. Distribution channels include general
distributors, specialty distributors, crane end users, service-after-sale
distributors, original equipment manufacturers ("OEMs"), government, consumer
and international. The general distributors are comprised of industrial
distributors, rigging shops and crane builders. Specialty distributors include
catalog houses, material handling specialists and entertainment equipment
riggers. The service-after-sale network includes repair parts distribution
centers, chain service centers, and hoist repair centers. Consumer distribution
channels include mass merchandisers, hardware distributors, trucking and
transportation distributors, farm hardware distributors and rental outlets. The
Company's integrated material handling solutions automotive segment primarily
deals directly with end-users and sales are concentrated, domestically and
internationally (primarily North America) in the automotive industry. The
Company's integrated material handling solutions industrial segment also deals
primarily directly with end-users and sales are concentrated, domestically and
internationally (primarily Europe), in the consumer products, manufacturing,
warehousing, and, to a lesser extent, the steel, construction, automotive, and
other industrial markets.
This section should be read in conjunction with the consolidated financial
statements of the Company included elsewhere herein.
RESULTS OF OPERATIONS
Sales in the Products, Solutions-Industrial and Solutions-Automotive
segments were as follows, in thousands of dollars and with percentage changes
for each segment:
CHANGE CHANGE
FISCAL YEARS ENDED MARCH 31, 2001 VS. 2000 2000 VS. 1999
------------------------------ ------------- -------------
2001 2000 1999 AMOUNT % AMOUNT %
---- ---- ---- ------ - ------ -
(IN THOUSANDS, EXCEPT PERCENTAGES)
Products.................. $ 478,898 $ 511,287 $ 508,313 $(32,389) (6.3) $ 2,974 0.6
Solutions-Industrial...... 68,055 68,559 65,689 (504) (0.7) 2,870 4.4
Solutions-Automotive...... 181,019 156,408 161,443 24,611 15.7 (5,035) (3.1)
------------------------------------------------------------------------------
Consolidated net sales.... $ 727,972 $ 736,254 $ 735,445 $ (8,282) (1.1) $ 809 0.1
==============================================================================
25
Sales fluctuations during the periods were primarily due to changes in the
general economy and the automotive industry. Sales in 2001 of $728.0 million
decreased by $8.3 million or 1.1% from 2000, and sales in 2000 of $736.3 million
increased $0.8 million or 0.1% over 1999. The 6.3% decrease and 0.6% growth in
the Products segment in fiscal 2001 and 2000, respectively are primarily the
result of soft US industrial markets during the entire period, that declined
markedly during the fourth quarter of fiscal 2001. The 0.7% decrease and 4.4%
growth in the Solutions--Industrial segment in fiscal 2001 and 2000,
respectively, are due to the expansion of European operations offset by soft US
industrial markets. The 15.7% increase and 3.1% decline in the
Solutions--Automotive segment in fiscal 2001 and 2000, respectively, are due to
the effects of a major automotive customer's project focus shifting from small
cars to trucks and sport utility vehicles in fiscal 2000 that impacted its plant
modification schedule.
The following table sets forth certain income statement data for the
Company, expressed as a percentage of net sales, for each of the periods
presented:
FISCAL YEARS ENDED MARCH 31,
2001 2000 1999
---- ---- ----
Products Segment sales.................. 65.8% 69.5% 69.1%
Solutions - Industrial Segment sales.... 9.3 9.3 8.9
Solutions - Automotive Segment sales.... 24.9 21.2 22.0
---- ---- ----
Net sales............................... 100.0 100.0 100.0
Cost of products sold................... 75.7 75.5 73.8
---- ---- ----
Gross profit............................ 24.3 24.5 26.2
Selling expenses........................ 6.9 7.0 7.1
General and administrative expenses..... 5.5 6.1 5.4
Amortization of intangibles............. 2.2 2.2 2.1
--- --- ---
Income from operations.................. 9.7 9.2 11.6
Interest and debt expense............... 5.2 4.7 4.9
Interest and other income............... 0.3 0.2 0.2
--- --- ---
Income before income tax expense........ 4.8 4.7 6.9
Income tax expense...................... 2.7 2.4 3.2
--- --- ---
Net income.............................. 2.1% 2.3% 3.7%
=== === ===
The Company's gross profit margins were approximately 24.3%, 24.5%, and
26.2% for 2001, 2000 and 1999, respectively. The decreases in gross profit
margin for fiscal 2001 and 2000 are the result of varying effects among the
Company's segments. The gross profit margin in the Products segment increased
during both fiscal years as a result of the company's cost control efforts and
integration of acquisitions, despite soft industrial markets and increasing
energy costs. There was also a reclassification of certain crane builder
expenses to cost of products sold from general and administrative in fiscal
2001. The Solutions--Industrial segment's gross profit margin decreased in
fiscal 2001 as a result of low volumes in soft US industrial markets, increasing
energy costs, and difficulties encountered at one of the Company's European
facilities, while gross profit margin in fiscal 2000 was stable as a result of
European expansion offset by softness in US industrial markets. The
Solutions--Automotive segment's gross profit margin increased in fiscal 2001 on
stronger volume while a decrease in gross profit margin in fiscal 2000 was
primarily due to cost overruns on three international ASI projects and
competitive pricing pressure.
26
Selling expenses were $50.4 million $50.5 million and $52.1 million in
fiscal 2001, 2000, and 1999, respectively. As a percentage of consolidated net
sales, selling expenses were 6.9%, 7.0%, and 7.1% in fiscal 2001, 2000 and 1999,
respectively. The 2000 improvement reflects cost control efforts as well as a
change in classification of certain ASI expenses to general and administrative.
General and administrative expenses were $40.0 million, $45.2 million, and
$39.9 million in fiscal 2001, 2000 and 1999, respectively. As a percentage of
consolidated net sales, general and administrative expenses were 5.5%, 6.1%, and
5.4% in fiscal 2001, 2000 and 1999, respectively. The 2001 expense reduction is
the result of cost control measures and reclassification of certain crane
builder expenses into cost of products sold, offset by the incurrence of
strategic alternatives evaluation expenses. The 2000 expenses were impacted by
the additions of WECO and Abell-Howe, a change in classification of certain ASI
expenses from selling, and the incurrence of proxy contest related expenses
relative to the August 16, 1999 annual shareholders meeting and annual director
elections.
Amortization of intangibles was $16.0 million, $16.4 million, and $15.5
million in fiscal 2001, 2000 and 1999, respectively. Fiscal 2000 includes
goodwill amortization for the WECO acquisition and a full year from the
Abell-Howe and Camlok/Tigrip acquisitions.
Income from operations increased $2.1 million, or 3.1% in fiscal 2001 and
decreased $17.0 million, or 20.0% in fiscal 2000 compared to 1999. This is based
on income from operations of $70.2 million, $68.0 million, and $85.1 million, or
9.6%, 9.2%, and 11.6% of consolidated net sales in fiscal 2001, 2000, and 1999,
respectively.
Interest and debt expense was $37.6 million, $34.7 million, and $35.9
million in fiscal 2001, 2000 and 1999, respectively. As a percentage of
consolidated net sales, interest and debt expense was 5.2%, 4.7%, and 4.9% in
fiscal 2001, 2000 and 1999, respectively. The fiscal 2001 increase is solely the
result of increased interest rates. The fiscal 2000 decrease was primarily due
to the payment of debt based on strong operating cash flow less funds used to
finance acquisitions offset by increased interest rates.
Interest and other income was $2.2 million, $1.3 million, and $1.6 million
in fiscal 2001, 2000 and 1999, respectively. The fluctuations reflect changes in
the investment return on marketable securities held for settlement of a portion
of the Company's general and products liability claims.
Income taxes as a percentage of income before income taxes were 56.2%,
50.7% and 45.9% in fiscal 2001, 2000 and 1999, respectively. The percentages
reflect the effect of non-deductible goodwill amortization resulting from the
business acquisitions, offset by the effects of favorable tax strategies.
As a result of the above, net income decreased $1.9 million, or 10.9% in
fiscal 2001 and $10.4 million or 37.7% in 2000 compared to net income in 1999.
This is based on net income of $15.2 million, $17.1 million and $27.4 million or
2.1%, 2.3% and 3.7% of consolidated net sales in fiscal 2001, 2000 and 1999,
respectively.
27
RESTRUCTURING COSTS
In conjunction with the continuation of its strategic integration process,
the Company announced on June 4, 2001 that it will be closing a major hoist
manufacturing facility in Forrest City, Arkansas. Cumulative charges including
lease termination and separation costs are expected to lead to an $8.8 million
pretax charge in the first quarter of fiscal 2002. Pretax annual cost savings
associated with the closure are expected to reach $7.25 million per year by
fiscal 2003.
LIQUIDITY AND CAPITAL RESOURCES
On April 29, 1999, the Company acquired all of the outstanding stock of
Washington Equipment Company (WECO) for $6.4 million in cash, financed by the
Company's revolving credit facility.
On March 1, 1999, GL International was merged with and into the Company
through the issuance of 897,114 shares of newly issued Company stock and options
to purchase 154,848 shares of Company stock for all issued and outstanding stock
and options of GL. The fair market value of the stock and options exchanged was
approximately $20.6 million.
On January 29, 1999, the Company acquired all of the outstanding stock of
Camlok and the net assets of the Tigrip product line for $10.6 million in cash,
financed by a German subsidiary revolving credit facility and term note.
On December 4, 1998, the Company acquired all of the outstanding stock of
Gautier for $3 million in cash, financed by the Company's revolving credit
facility.
During October 1998, the Company's ESOP borrowed $7.7 million from the
Company and purchased 479,900 shares of Company common stock on the open market
at an average cost of $16 per share.
On August 21, 1998, the Company acquired the net assets of Abell-Howe for
$7 million in cash, financed by the Company's revolving credit facility.
On August 7, 1998, the Company sold its Mechanical Products division for
$11.5 million, consisting of $9.1 million in cash and a $2.4 million note
receivable.
The Revolving Credit Facility as recently amended provides availability up
to $225 million, due March 31, 2003, against which $202 million was outstanding
at March 31, 2001. The recent amendment also modified certain financial
covenants. Interest is payable at varying Eurodollar rates based on LIBOR plus a
spread determined by the Company's leverage ratio, amounting to 237.5 basis
points at March 31, 2001. The Revolving Credit Facility is secured by all
equipment, inventory, receivables, subsidiary stock (limited to 65% for foreign
subsidiaries) and intellectual property.
28
The senior subordinated 8 1/2% Notes issued on March 31, 1998 amounted to
$199.5 million, net of original issue discount of $0.5 million and are due March
31, 2008. Interest is payable semi-annually based on an effective rate of 8.45%,
considering $1.9 million of proceeds from rate hedging in advance of the
placement. Provisions of the 8 1/2% Notes include, without limitation,
restrictions of liens, indebtedness, asset sales, and dividends and other
restricted payments. Prior to April 1, 2003, the 8 1/2% Notes are redeemable at
the option of the Company, in whole or in part, at the Make-Whole Price (as
defined). On or after April 1, 2003, they are redeemable at prices declining
annually from 108.5% to 100% on and after April 1, 2006. In the event of a
Change of Control (as defined), each holder of the 8 1/2% Notes may require the
Company to repurchase all or a portion of such holder's 8 1/2% Notes at a
purchase price equal to 101% of the principal amount thereof. The 8 1/2% Notes
are not subject to any sinking fund requirements.
The Company believes that its cash on hand, cash flows, and borrowing
capacity under its revolving credit facility will be sufficient to fund its
ongoing operations, budgeted capital expenditures, and business acquisitions for
the next twelve months.
Net cash provided by operating activities was $27.7 million in fiscal 2001,
$36.7 million in 2000, and $57.5 million in 1999. The $9.0 million decrease in
fiscal 2001 compared to fiscal 2000 is the result of an increase in net working
capital components and deferred income taxes. The $20.8 million decrease in
fiscal 2000 compared to 1999 results from decreased net income of $10.3 million
and an increase in net working capital components, primarily accounts
receivable. Operating assets net of liabilities used cash of $16.9 in fiscal
2001, $13.3 million in fiscal 2000, and provided cash of $4.4 million in fiscal
1999.
Net cash used in investing activities was $7.3 million in fiscal 2001
compared to $18.9 million in 2000 and $23.9 million in 1999. The 2001 amount
includes $5.0 million of proceeds from the sale of a portion of land included in
net assets held for sale. The 2000 amount includes the acquisition of WECO for
$6.4 million. The 1999 amount includes the acquisitions of Camlok/Tigrip,
Gautier, and Abell-Howe for $20.0 million, net of cash acquired; it is reduced
by $8.8 million of net proceeds from the Mechanical Products divestiture and
$2.2 million of proceeds from the sale of a portion of land included in net
assets held for sale.
CAPITAL EXPENDITURES
In addition to keeping its current equipment and plants properly
maintained, the Company is committed to replacing, enhancing, and upgrading its
property, plant, and equipment to reduce production costs, increase flexibility
to respond effectively to market fluctuations and changes, meet environmental
requirements, enhance safety, and promote ergonomically correct work stations.
Consolidated capital expenditures for fiscal 2001, 2000 and 1999 were $10.2
million, $8.1 million and $13.0 million, respectively, excluding those capital
assets acquired in conjunction with business acquisitions. The increased
spending in Fiscal 2001 is the result of the decision to purchase property and a
building of a previously leased facility. The lower spending in fiscal 2000
reflects a deferral of certain projects due to soft market conditions.
29
INFLATION AND OTHER MARKET CONDITIONS
The Company's costs are affected by inflation in the U.S. economy, and to a
lesser extent, in foreign economies including those of Europe, Canada, Mexico,
and the Pacific Rim. The Company does not believe that inflation has had a
material effect on results of operations over the periods presented because of
low inflation levels over the periods and because the Company has generally been
able to pass on rising costs through price increases. However, in the future
there can be no assurance that the Company's business will not be affected by
inflation or that it will be able to pass on cost increases.
SEASONALITY AND QUARTERLY RESULTS
Quarterly results may be materially affected by the timing of large
customer orders, by periods of high vacation and holiday concentrations, and by
acquisitions and the magnitude of acquisition costs. Therefore, the operating
results for any particular fiscal quarter are not necessarily indicative of
results for any subsequent fiscal quarter or for the full fiscal year.
EFFECTS OF NEW ACCOUNTING PRONOUNCEMENTS
The Financial Accounting Standards Board (FASB) issued Statement of
Financial Accounting Standards (SFAS) No. 133, "Accounting for Derivative
Instruments and Hedging Activities," in June of 1998. The FASB issued SFAS No.
137 in June of 1999 which defers the effective date of SFAS No. 133 to fiscal
years beginning after June 15, 2000. SFAS No. 133 establishes accounting and
reporting standards for derivatives and hedging activities. It requires that
entities recognize all derivatives as either assets or liabilities in the
statement of financial position and measure those instruments at fair value.
Compliance with this statement would not have a material impact on the Company
at the present time.
During May 2001, the FASB announced that it has completed its deliberations
concerning business combinations and accounting for intangible assets. Two final
statements (one addressing business combinations and one addressing goodwill and
other intangible assets) are expected to be issued in the latter half of July
2001. The new statement on business combinations will require the use of the
purchase method of accounting for all business combinations initiated after June
30, 2001. The statement on goodwill and other intangible assets will require
that existing goodwill or newly acquired goodwill and certain intangible assets
will no longer be amortized, but will need to be tested for impairment. This
statement will be effective for fiscal years beginning after December 15, 2001.
Early adoption is permitted for companies with fiscal years beginning after
March 15, 2001, provided they have not issued their first quarter financial
statements. In all cases the statement must be adopted at the beginning of the
fiscal year. At the present time, the Company has not determined the impact of
adoption, or its expected date of adoption of the new statement addressing
goodwill and other intangible assets.
30
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
This report may include "forward-looking statements" within the meaning of
the Private Securities Litigation Reform Act of 1995. Such statements involve
known and unknown risks, uncertainties and other factors that could cause the
actual results of the Company to differ materially from the results expressed or
implied by such statements, including general economic and business conditions,
conditions affecting the industries served by the Company and its subsidiaries,
conditions affecting the Company's customers and suppliers, competitor responses
to the Company's products and services, the overall market acceptance of such
products and services, the integration of acquisitions and other factors
disclosed in the Company's periodic reports filed with the Commission.
Consequently such forward-looking statements should be regarded as the Company's
current plans, estimates and beliefs. The Company does not undertake and
specifically declines any obligation to publicly release the results of any
revisions to these forward-looking statements that may be made to reflect any
future events or circumstances after the date of such statements or to reflect
the occurrence of anticipated or unanticipated events.
31
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
- -------- ----------------------------------------------------------
Market risk is the potential loss arising from adverse changes in market
rates and prices, such as interest rates. The Company is exposed to various
market risks, including commodity prices for raw materials, foreign currency
exchange rates, and changes in interest rates. The Company may enter into
financial instrument transactions, which attempt to manage and reduce the impact
of such changes. The Company does not enter into derivatives or other financial
instruments for trading or speculative purposes.
The Company's primary commodity risk is related to changes in the price of
steel. The Company controls this risk through negotiating purchase contracts on
a consolidated basis and by attempting to build changes in raw material costs
into the selling prices of its products. The Company has not entered into
financial instrument transactions related to raw material costs.
Approximately 16% of the Company's sales are from manufacturing plants and
sales offices in foreign jurisdictions. The Company manufactures its products in
the United States, Canada, Germany, Denmark, the United Kingdom, Mexico, France
and China and sells its products and solutions in over 50 countries annually.
The Company's results of operations could be affected by such factors as changes
in foreign currency rates or weak economic conditions in foreign markets. The
Company's operating results are exposed to fluctuations between the US dollar
and the Canadian dollar, European currencies, the Mexican peso and the Chinese
renminbi. For example, when the US dollar strengthens against the Canadian
dollar, the value of sales and net income denominated in Canadian dollars
decreases when translated into US dollars for inclusion in the Company's
consolidated results. The Company also is exposed to foreign currency
fluctuations in relation to purchases denominated in foreign currencies. The
Company's foreign currency risk is mitigated since the majority of foreign
operations' sales and the related expense transactions are denominated in the
same currency. In addition, the majority of export sale transactions are
denominated in US dollars. Accordingly, the Company currently has not invested
in derivative instruments such as foreign exchange contracts to hedge foreign
currency transactions.
The Company controls risk related to changes in interest rates through
structuring its debt instruments with a combination of fixed and variable
interest rates and by periodically entering into financial instrument
transactions. At March 31, 2001, the Company does not have any such financial
instruments in place. At March 31, 2001, approximately 50% of the Company's
outstanding debt has fixed interest rates. At that date, the Company has
approximately $205.5 million of variable rate non-current debt and a 1%
fluctuation in interest rates would change future interest expense on that debt
by approximately $2.1 million.
32
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
- ------- --------------------------------------------
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
COLUMBUS MCKINNON CORPORATION
Audited Consolidated Financial Statements as of March 31, 2001:
Report of Independent Auditors................................ F-2
Consolidated Balance Sheets................................... F-3
Consolidated Statements of Income............................. F-4
Consolidated Statements of Shareholders' Equity............... F-5
Consolidated Statements of Cash Flows......................... F-6
Notes to Consolidated Financial Statements.................... F-7
F-1
REPORT OF INDEPENDENT AUDITORS
Board of Directors
Columbus McKinnon Corporation
We have audited the accompanying consolidated balance sheets of Columbus
McKinnon Corporation as of March 31, 2001 and 2000, and the related consolidated
statements of income, shareholders' equity, and cash flows for each of the three
years in the period ended March 31, 2001. Our audits also include the financial
statement schedule listed in the Index at Item 14(a). These financial statements
and schedule are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and
schedule based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, based on our audits, the financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
Columbus McKinnon Corporation at March 31, 2001 and 2000, and the consolidated
results of its operations and its cash flows for each of the three years in the
period ended March 31, 2001, in conformity with accounting principles generally
accepted in the United States. Also, in our opinion, the related financial
statement schedule, when considered in relation to the basic financial
statements taken as a whole, presents fairly in all material respects the
information set forth therein.
/S/ ERNST & YOUNG LLP
Buffalo, New York
June 26, 2001
F-2
COLUMBUS MCKINNON CORPORATION
CONSOLIDATED BALANCE SHEETS
MARCH 31,
2001 2000
-----------------------
(IN THOUSANDS)
ASSETS
Current assets:
Cash and cash equivalents....................................... $ 14,015 $ 7,582
Trade accounts receivable, less allowance for doubtful
accounts ($2,429 and $2,236, respectively).................... 140,234 143,401
Unbilled revenues............................................... 26,813 24,447
Inventories..................................................... 113,218 108,291
Net assets held for sale........................................ 4,270 9,272
Prepaid expenses................................................ 5,655 6,181
-----------------------
Total current assets................................................. 304,205 299,174
Net property, plant, and equipment................................... 85,272 87,297
Goodwill and other intangibles, net.................................. 322,196 339,603
Marketable securities................................................ 22,326 23,193
Deferred taxes on income............................................. 5,696 4,237
Other assets......................................................... 7,318 6,320
-----------------------
Total assets......................................................... $ 747,013 $ 759,824
=======================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Notes payable to banks.......................................... $ 3,012 $ 2,677
Trade accounts payable.......................................... 44,936 49,621
Excess billings................................................. 1,623 4,288
Accrued liabilities............................................. 48,465 51,246
Current portion of long-term debt............................... 3,092 3,493
-----------------------
Total current liabilities............................................ 101,128 111,325
Senior debt, less current portion.................................... 204,326 210,684
Subordinated debt.................................................... 199,628 199,574
Other non-current liabilities........................................ 34,067 34,788
-----------------------
Total liabilities.................................................... 539,149 556,371
Shareholders' equity:
Class A voting common stock; 50,000,000 shares authorized;
14,895,172 and 14,877,405 shares issued....................... 149 149
Additional paid-in capital...................................... 105,418 106,884
Retained earnings............................................... 124,806 113,582
ESOP debt guarantee; 504,794 and 606,559 shares................. (7,527) (8,703)
Unearned restricted stock; 82,670 and 103,120 shares............ (955) (2,843)
Accumulated other comprehensive loss............................ (14,027) (5,616)
-----------------------
Total shareholders' equity........................................... 207,864 203,453
-----------------------
Total liabilities and shareholders' equity........................... $ 747,013 $ 759,824
=======================
See accompanying notes.
F-3
COLUMBUS MCKINNON CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
YEAR ENDED MARCH 31,
2001 2000 1999
-------------------------------------------
(IN THOUSANDS,
EXCEPT PER SHARE DATA)
Net sales...................................... $ 727,972 $ 736,254 $ 735,445
Cost of products sold.......................... 551,381 556,145 542,975
-------------------------------------------
Gross profit................................... 176,591 180,109 192,470
Selling expenses............................... 50,436 50,450 52,059
General and administrative expenses............ 40,003 45,225 39,850
Amortization of intangibles.................... 15,983 16,392 15,479
-------------------------------------------
106,422 112,067 107,388
-------------------------------------------
Income from operations......................... 70,169 68,042 85,082
Interest and debt expense...................... 37,642 34,698 35,923
Interest and other income...................... 2,217 1,314 1,565
-------------------------------------------
Income before income tax expense............... 34,744 34,658 50,724
Income tax expense............................. 19,525 17,578 23,288
-------------------------------------------
Net income..................................... $ 15,219 $ 17,080 $ 27,436
===========================================
Earnings per share - basic................ $ 1.06 $ 1.21 $ 1.94
========================================
Earnings per share - diluted.............. $ 1.06 $ 1.20 $ 1.92
========================================
See accompanying notes.
F-4
COLUMBUS MCKINNON CORPORATION
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
COMMON ADDI- ACCUMULATED
STOCK TIONAL ESOP UNEARNED OTHER TOTAL
($.01 PAID-IN RETAINED DEBT RESTRICTED COMPREHENSIVE SHAREHOLDERS'
PAR VALUE) CAPITAL EARNINGS GUARANTEE STOCK INCOME (LOSS) EQUITY
-------------------------------------------------------------------------------------------
Balance at March 31, 1998.......... $ 146 $ 100,425 $ 76,744 $ (3,203) $ (538) $ (2,628) $ 170,946
Comprehensive income:
Net income 1999.................... - - 27,436 - - - 27,436
Change in foreign currency
translation adjustment........... - - - - - (1,399) (1,399)
Net unrealized gain on investments. - - - - - 714 714
Change in minimum pension
liability adjustment............. - - - - - (53) (53)
---------
Total comprehensive income......... - - - - - - 26,698
Earned 96,610 ESOP shares.......... - 1,108 - 1,020 - - 2,128
Repurchase of 479,900 common shares
by ESOP.......................... - - - (7,682) - - (7,682)
Restricted common stock granted,
19,500 shares net of 1,275
shares canceled.................. - 780 - - (759) - 21
Earned portion of restricted stock. - - - - 288 - 288
Common dividends declared
$0.28 per share.................. - - (3,725) - - - (3,725)
-------------------------------------------------------------------------------------------
Balance at March 31, 1999.......... $ 146 $ 102,313 $ 100,455 $ (9,865) $ (1,009) $ (3,366) $ 188,674
Comprehensive income:
Net income 2000.................... - - 17,080 - - - 17,080
Change in foreign currency
translation adjustment........... - - - - - (3,129) (3,129)
Net unrealized gain on investments. - - - - - 520 520
Change in minimum pension
liability adjustment............. - - - - - 359 359
---------
Total comprehensive income........ - - - - - - 14,830
Earned 101,822 ESOP shares......... - 590 - 1,162 - - 1,752
Restricted common stock granted,
60,700 shares.................... 1 2,871 - - (2,872) - -
Earned portion of restricted stock. - - - - 1,038 - 1,038
Stock options exercised, 153,008
shares........................... 2 1,110 - - - - 1,112
Common dividends declared
$0.28 per share.................. - - (3,953) - - - (3,953)
-------------------------------------------------------------------------------------------
Balance at March 31, 2000.......... $ 149 $ 106,884 $ 113,582 $ (8,703) $ (2,843) $ (5,616) $ 203,453
Comprehensive income:
Net income 2001.................... - - 15,219 - - - 15,219
Change in foreign currency
translation adjustment........... - - - - - (5,039) (5,039)
Net unrealized loss on investments. - - - - - (2,931) (2,931)
Change in minimum pension
liability adjustment............. - - - - - (441) (441)
---------
Total comprehensive income......... - - - - - - 6,808
Earned 101,765 ESOP shares......... - (56) - 1,176 - - 1,120
Earned portion and adjustment of
restricted shares................ - (1,501) - - 1,888 - 387
Stock options exercised, 19,340
shares........................... - 91 - - - - 91
Common dividends declared
$0.28 per share.................. - - (3,995) - - - (3,995)
-------------------------------------------------------------------------------------------
Balance at March 31, 2001.......... $ 149 $ 105,418 $ 124,806 $ (7,527) $ (955) $ (14,027) $ 207,864
===========================================================================================
See accompanying notes.
F-5
COLUMBUS MCKINNON CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEAR ENDED MARCH 31,
2001 2000 1999
-------------------------------------------
(IN THOUSANDS)
OPERATING ACTIVITIES:
Net income.................................................... $ 15,219 $ 17,080 $ 27,436
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization............................ 28,247 28,536 27,256
Deferred income taxes.................................... (46) 3,600 (2,235)
Other.................................................... 1,148 823 624
Changes in operating assets and liabilities
net of effects of businesses purchased:
Trade accounts receivable, unbilled revenues and
excess billings................................... (1,864) (20,081) 37
Inventories......................................... (4,927) 8,659 (865)
Prepaid expenses.................................... 526 (164) 1,952
Other assets........................................ (984) 1,334 (96)
Trade accounts payable.............................. (4,685) (6,329) (5,940)
Accrued and non-current liabilities................. (4,944) 3,263 9,324
-------------------------------------------
Net cash provided by operating activities..................... 27,690 36,721 57,493
-------------------------------------------
INVESTING ACTIVITIES:
Purchase of marketable securities, net........................ (2,064) (3,318) (1,976)
Capital expenditures.......................................... (10,239) (8,102) (12,992)
Proceeds from sale of business................................ - - 8,801
Purchase of businesses, net of cash acquired.................. - (6,430) (19,958)
Net assets held for sale...................................... 5,002 (1,058) 2,182
------------------------------------------
Net cash used in investing activities......................... (7,301) (18,908) (23,943)
------------------------------------------
FINANCING ACTIVITIES:
Proceeds from issuance of common stock, net................... - 3 -
Net payments under revolving line-of-credit agreements........ (2,665) (9,313) (28,194)
Repayment of debt............................................. (3,759) (2,514) (8,179)
Deferred financing costs incurred............................. (687) (997) (1,272)
Dividends paid ............................................... (3,995) (3,953) (3,725)
Repurchase of stock by ESOP................................... - - (7,682)
Change in ESOP debt guarantee................................. 1,176 1,162 1,020
------------------------------------------
Net cash used in financing activities......................... (9,930) (15,612) (48,032)
Effect of exchange rate changes on cash....................... (4,026) (1,486) (1,512)
------------------------------------------
Net change in cash and cash equivalents....................... 6,433 715 (15,994)
Cash and cash equivalents at beginning of year................ 7,582 6,867 22,861
------------------------------------------
Cash and cash equivalents at end of year...................... $ 14,015 $ 7,582 $ 6,867
==========================================
Supplementary cash flows data:
Interest paid............................................ $ 38,077 $ 35,176 $ 27,595
Income taxes paid........................................ $ 20,287 $ 17,614 $ 22,829
See accompanying notes.
F-6
COLUMBUS MCKINNON CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. DESCRIPTION OF BUSINESS AND BUSINESS ACQUISITIONS
Columbus McKinnon Corporation (the Company) is a broad-line designer,
manufacturer and supplier of sophisticated material handling products that are
widely distributed to industrial, automotive, and consumer markets worldwide;
integrated material handling solutions for the automotive markets; and
integrated material handling solutions for industrial markets. The Company's
material handling products are sold, domestically and internationally,
principally to third party distributors through diverse distribution channels,
and to a lesser extent directly to manufacturers and other end-users. The
Company's integrated material handling solutions automotive business primarily
deals with end users and sales are concentrated domestically and internationally
(primarily North America) in the automotive industry. The Company's integrated
material handling solutions industrial businesses also deal primarily with end
users and sales are concentrated, domestically and internationally (primarily
Europe) in the consumer products, manufacturing, warehousing, and, to a lesser
extent, the steel, construction, automotive, and other industrial markets.
During fiscal 2001, approximately 78% of sales were to customers in the United
States.
On April 29, 1999, the Company acquired all of the outstanding stock of
Washington Equipment Company ("WECO"), a regional manufacturer and servicer of
overhead cranes. The total cost of the acquisition, which was accounted for as a
purchase, was approximately $6.4 million and was financed by proceeds from the
Company's revolving debt facility. The consolidated statement of income and the
consolidated statement of cash flows for the year ended March 31, 2000 include
WECO activity since its April 29, 1999 acquisition by the Company.
On March 1, 1999, GL International, Inc. ("GL"), was merged with and into the
Company through the issuance of 897,114 shares of newly issued Company stock and
options to purchase 154,848 shares of Company stock for all issued and
outstanding stock and options of GL. GL is a full-service designer and builder
of industrial overhead bridge and jib cranes and related components. The merger
was accounted for as a pooling of interests and, accordingly, the 1999 and prior
consolidated financial statements have been restated to include the accounts of
GL. The fair market value of the stock and options exchanged was approximately
$20.6 million. In connection with the merger, the Company incurred $560,000 of
merger related costs which were charged to operations during the year ended
March 31, 1999.
On January 29, 1999, the Company acquired all of the outstanding stock of Camlok
Lifting Clamps Limited ("Camlok") and the net assets of the Tigrip product line
("Tigrip") from Schmidt-Krantz & Co. GmbH for $10.6 million in cash. The
acquisition was accounted for as a purchase and was financed through cash, a
revolving credit facility, and a $4 million term note. Camlok manufactures plate
clamps, crane weighers and related products and is based in Chester, England,
while the Tigrip line of standard and specialized plate clamps is produced in
Germany. The consolidated statement of income and the consolidated statement of
cash flows for the year ended March 31, 1999 include Camlok and Tigrip activity
since their January 29, 1999 acquisition by the Company.
F-7
COLUMBUS MCKINNON CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
1. DESCRIPTION OF BUSINESS AND BUSINESS ACQUISITIONS (CONTINUED)
On December 4, 1998, the Company acquired all of the outstanding stock of
Societe D'Exploitation des Raccords Gautier ("Gautier"), a French-based
manufacturer of industrial components. The total cost of the acquisition, which
was accounted for as a purchase, was approximately $3 million in cash,
consisting of $2.4 million financed by proceeds from the Company's revolving
debt facility and the assumption of certain debt. The consolidated statement of
income and the consolidated statement of cash flows for the year ended March 31,
1999 include Gautier activity since its December 4, 1998 acquisition by the
Company.
On August 21, 1998 the Company acquired the net assets of Abell-Howe Crane
division ("Abell-Howe") of Abell-Howe Company, a regional manufacturer of jib,
gantry, and bridge cranes. The total cost of the acquisition, which was
accounted for as a purchase, was approximately $7 million of cash, which was
financed by proceeds from the Company's revolving debt facility. The
consolidated statement of income and the consolidated statement of cash flows
for the year ended March 31, 1999 include Abell-Howe activity since its August
21, 1998 acquisition by the Company.
On August 7, 1998 the Company sold its Mechanical Products division, a producer
of circuit controls and protection devices, for $11.5 million, consisting of
$9.1 million in cash and a $2.4 million note receivable, to Mechanical Products'
senior management team. The selling price approximated the net book value of the
division. The consolidated statement of income and the consolidated statement of
cash flows for the year ended March 31, 1999 include Mechanical Products
activity through its August 7, 1998 sale by the Company.
2. ACCOUNTING PRINCIPLES AND PRACTICES
CASH AND CASH EQUIVALENTS
The Company considers as cash equivalents all highly liquid investments with an
original maturity of three months or less.
CONCENTRATIONS OF LABOR
Approximately 30% of the Company's employees are represented by twelve separate
domestic and Canadian collective bargaining agreements which terminate at
various times between July 31, 2001 and March 31, 2004. Approximately 4% of the
labor force is covered by collective bargaining agreements that will expire
within one year. In addition, the Company hires union production workers for
field installation under its material handling systems contracts.
F-8
COLUMBUS MCKINNON CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2. ACCOUNTING PRINCIPLES AND PRACTICES (CONTINUED)
CONSOLIDATION
These consolidated financial statements include the accounts of the Company and
its domestic and foreign subsidiaries; all significant intercompany accounts and
transactions have been eliminated.
FOREIGN CURRENCY TRANSLATIONS
The Company translates foreign currency financial statements as described in
Financial Accounting Standards (FAS) No. 52. Under this method, all items of
income and expense are translated to US dollars at average exchange rates for
the year. All assets and liabilities are translated to US dollars at the
year-end exchange rate. Gains or losses on translations are recorded in
accumulated other comprehensive income (loss) in the shareholders' equity
section of the balance sheet.
GOODWILL
It is the Company's policy to account for goodwill and other intangible assets
at the lower of amortized cost or fair value based on discounted cash flows, if
indicators of impairment exist. The Company continually evaluates the existence
of goodwill impairment on the basis of whether the goodwill is fully recoverable
from projected, undiscounted net cash flows of the related businesses. Goodwill
is amortized on a straight-line basis over twenty-five years. At March 31, 2001
and 2000 accumulated amortization was $62,239,000 and $46,256,000, respectively.
INVENTORIES
Inventories are valued at the lower of cost or market. Costs of approximately
46% of inventories at March 31, 2001 (48% in 2000) have been determined using
the LIFO (last-in, first-out) method. Costs of other inventories have been
determined using the FIFO (first-in, first-out) or average cost method. FIFO
cost approximates replacement cost.
F-9
COLUMBUS MCKINNON CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2. ACCOUNTING PRINCIPLES AND PRACTICES (CONTINUED)
MARKETABLE SECURITIES
All of the Company's marketable securities, which consist of equity securities
and corporate and governmental obligations, have been classified as
available-for-sale securities and are therefore recorded at their fair values
with the unrealized gains and losses, net of tax, reported in accumulated other
comprehensive income (loss) within shareholders' equity. Estimated fair value is
based on published trading values at the balance sheet dates. The amortized cost
of debt securities is adjusted for amortization of premiums and accretion of
discounts to maturity. The cost of securities sold is based on the specific
identification method. Interest and dividend income are included in interest and
other income on the consolidated statements of income.
The marketable securities are carried as long-term assets since they are
retained for the settlement of a portion of the Company's general liability and
products liability insurance claims filed through CM Insurance Company, Inc., a
wholly owned captive insurance subsidiary.
NET ASSETS HELD FOR SALE
Certain non-operating real estate properties and equipment were acquired as part
of the 1996 acquisition of Yale Industrial Products, Inc. Certain properties
were sold during fiscal 1998 through fiscal 2001 and additional monies were
advanced to further the development of the properties with the remaining assets
held for sale expected to be sold in fiscal 2002. They have been recorded at
their estimated realizable values net of disposal costs, separately reflected on
the consolidated balance sheet and amounting to $4,270,000 and $9,272,000 as of
March 31, 2001 and 2000, respectively.
PROPERTY, PLANT, AND EQUIPMENT
Property, plant, and equipment are stated at cost and depreciated principally
using the straight-line method over their respective estimated useful lives
(buildings and building equipment--15 to 40 years; machinery and equipment--3 to
18 years). When depreciable assets are retired, or otherwise disposed of, the
cost and related accumulated depreciation are removed from the accounts and any
resulting gain or loss is reflected in operating results.
RESEARCH AND DEVELOPMENT
Research and development costs as defined in FAS No. 2, for the years ended
March 31, 2001, 2000 and 1999 were $1,507,000, $1,556,000 and $1,663,000,
respectively.
F-10
COLUMBUS MCKINNON CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2. ACCOUNTING PRINCIPLES AND PRACTICES (CONTINUED)
REVENUE RECOGNITION AND CONCENTRATION OF CREDIT RISK
Sales are recorded when title passes to the customer which is generally at time
of shipment to the customer, except for long-term construction contracts as
described below. The Company performs ongoing credit evaluations of its
customers' financial condition, but generally does not require collateral to
support customer receivables. The credit risk is controlled through credit
approvals, limits and monitoring procedures. The Company established an
allowance for doubtful accounts based upon factors surrounding the credit risk
of specific customers, historical trends and other factors.
ASI and Univeyor recognize contract revenues under the percentage of completion
method, measured by comparing direct costs incurred to total estimated direct
costs. Changes in job performance, job conditions and estimated profitability,
including those arising from final contract settlements, may result in revisions
to costs and income and are recognized in the period in which the revisions are
determined. In the event that a loss is anticipated on an uncompleted contract,
a provision for the estimated loss is made at the time it is determined.
Billings on contracts may precede or lag revenues earned, and such differences
are reported in the balance sheet as current liabilities (excess billings) and
current assets (unbilled revenues), respectively.
As of March 31, 2001, approximately $33 million ($21 million in 2000) of trade
accounts receivable was concentrated in the automotive industry, including
retainages amounting to $5,525,000 ($7,484,000 in 2000). The accounts receivable
included $23,215,000 ($17,861,000 in 2000) due from General Motors Corporation.
This one customer accounted for $108,886,000, $99,097,000, and $96,663,000 or
15%, 13%, and 13% of consolidated net sales which are included within the
Solutions - Automotive segment for the years ended March 31, 2001, 2000, and
1999, respectively.
SHIPPING AND HANDLING COSTS
Shipping and handling costs are a component of cost of goods sold.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying notes.
Actual results could differ from those estimates.
F-11
COLUMBUS MCKINNON CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
3. UNBILLED REVENUES AND EXCESS BILLINGS
MARCH 31,
2001 2000
-----------------------
(IN THOUSANDS)
Costs incurred on uncompleted contracts........ $ 491,373 $ 368,140
Estimated earnings............................. 75,551 64,497
-----------------------
Revenues earned to date........................ 566,924 432,637
Less billings to date.......................... 541,734 412,478
-----------------------
$ 25,190 $ 20,159
=======================
The net amounts above are included in the consolidated balance sheets under the
following captions:
MARCH 31,
2001 2000
-----------------------
(IN THOUSANDS)
Unbilled revenues.............................. $ 26,813 $ 24,447
Excess billings................................ (1,623) (4,288)
-----------------------
$ 25,190 $ 20,159
=======================
4. INVENTORIES
Inventories consisted of the following:
MARCH 31,
2001 2000
-----------------------
(IN THOUSANDS)
At cost--FIFO basis:
Raw materials............................. $ 60,908 $ 57,198
Work-in-process........................... 17,110 20,240
Finished goods............................ 41,850 38,329
-----------------------
119,868 115,767
LIFO cost less than FIFO cost.................. (6,650) (7,476)
-----------------------
Net inventories................................ $ 113,218 $ 108,291
=======================
F-12
COLUMBUS MCKINNON CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
5. MARKETABLE SECURITIES
Marketable securities are retained for the settlement of a portion of the
Company's general liability and products liability insurance claims filed
through CM Insurance Company, Inc. (see Notes 2 and 13). The following is a
summary of available-for-sale securities at March 31, 2001:
GROSS GROSS ESTIMATED
UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
------------------------------------------------
(IN THOUSANDS)
Government securities......... $ 6,265 $ 305 $ - $ 6,570
Equity securities............. 16,226 3,043 3,513 15,756
------------------------------------------------
$ 22,491 $ 3,348 $ 3,513 $ 22,326
================================================
The following is a summary of available-for-sale securities at March 31, 2000:
GROSS GROSS ESTIMATED
UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
------------------------------------------------
(IN THOUSANDS)
Government securities......... $ 7,171 $ 75 $ 53 $ 7,193
U. S. corporate securities.... 1,183 2 35 1,150
------------------------------------------------
Total debt securities.... 8,354 77 88 8,343
Equity securities............. 10,119 5,124 393 14,850
------------------------------------------------
$ 18,473 $ 5,201 $ 481 $ 23,193
================================================
The amortized cost and estimated fair value of debt and equity securities at
March 31, 2001, by contractual maturity, are shown below:
ESTIMATED
FAIR
COST VALUE
-----------------------
(IN THOUSANDS)
Due in one year or less............................... $ 1,564 $ 1,564
Due after three years................................. 4,701 5,006
-----------------------
6,265 6,570
Equity securities..................................... 16,226 15,756
-----------------------
$ 22,491 $ 22,326
=======================
F-13
COLUMBUS MCKINNON CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
5. MARKETABLE SECURITIES (CONTINUED)
Net unrealized gain or loss included in the balance sheet amounted to $165,000
loss at March 31, 2001 and a $4,720,000 gain at March 31, 2000. The amounts, net
of related income taxes of $(66,000) and $1,888,000 at March 31, 2001 and 2000,
respectively, are reflected as a component of accumulated other comprehensive
income (loss) within shareholders' equity.
6. PROPERTY, PLANT, AND EQUIPMENT
Consolidated property, plant, and equipment of the Company consisted of the
following:
MARCH 31,
2001 2000
-----------------------
(IN THOUSANDS)
Land and land improvements................................ $ 6,643 $ 5,032
Buildings................................................. 36,842 33,000
Machinery, equipment, and leasehold improvements.......... 104,588 98,842
Construction in progress.................................. 2,812 3,310
-----------------------
150,885 140,184
Less accumulated depreciation............................. 65,613 52,887
-----------------------
Net property, plant, and equipment........................ $ 85,272 $ 87,297
========================
7. ACCRUED LIABILITIES AND OTHER NON-CURRENT LIABILITIES
Consolidated accrued liabilities of the Company included the following:
MARCH 31,
2001 2000
-----------------------
(IN THOUSANDS)
Accrued payroll........................................... $ 14,195 $ 17,012
Accrued pension cost...................................... 2,579 4,262
Interest payable.......................................... 9,481 9,916
Income taxes payable...................................... 3,331 4,649
Other accrued liabilities................................. 18,879 15,407
-----------------------
$ 48,465 $ 51,246
=======================
F-14
COLUMBUS MCKINNON CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
7. ACCRUED LIABILITIES AND OTHER NON-CURRENT LIABILITIES (CONTINUED)
Consolidated other non-current liabilities of the Company included the
following:
MARCH 31,
2001 2000
-----------------------
(IN THOUSANDS)
Accumulated postretirement benefit obligation....................................... $ 12,640 $ 13,970
Accrued general and product liability costs......................................... 15,388 14,550
Other non-current liabilities....................................................... 6,039 6,268
-----------------------
$ 34,067 $ 34,788
=======================
8. LONG-TERM DEBT
Consolidated long-term debt of the Company consisted of the following:
MARCH 31,
2001 2000
-----------------------
(IN THOUSANDS)
Revolving Credit Facility with availability up to $225 million,
due March 31, 2003, with interest payable at varying Eurodollar
rates based on LIBOR plus a spread determined by the Company's
leverage ratio, amounting to 237.5 basis points at March 31,
2001 (7.76% and 8.02% at March 31, 2001 and 2000)................................ $ 202,000 $ 205,000
Term loan of foreign subsidiary due December 30, 2001, with interest
payable monthly at 4.255%........................................................ 1,870 3,398
Employee Stock Ownership Plan term loans payable in quarterly
installments of $148 through January 2002 and $564 in April 2002
plus interest payable at a Eurodollar rate based on LIBOR plus a
spread determined by the Company's leverage ratio (8.51% and
8.18% at March 31, 2001 and 2000................................................. 1,415 2,008
Industrial Development Revenue Bonds paid in full during Fiscal 2001................ - 986
Other senior debt................................................................... 2,133 2,785
-----------------------
Total senior debt................................................................... 207,418 214,177
8 1/2% Senior Subordinated Notes due March 31, 2008 with interest
payable in semi-annual installments at 8.45% effective rate, recorded
net of unamortized discount of $372 ($426 at March 31, 2000)..................... 199,628 199,574
-----------------------
Total............................................................................... 407,046 413,751
Less current portion................................................................ 3,092 3,493
-----------------------
$ 403,954 $ 410,258
=======================
F-15
COLUMBUS MCKINNON CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
8. LONG-TERM DEBT (CONTINUED)
The Revolving Credit Facility is secured by all equipment, inventory,
receivables, subsidiary stock (limited to 65% for foreign subsidiaries) and
intellectual property. The corresponding credit agreement places certain debt
covenant restrictions on the Company including, but not limited to, maximum
annual cash dividends of $10 million.
The carrying amount of the Company's senior debt instruments approximates the
fair value. The Company's subordinated debt has an approximate fair market value
of $174,000,000 which is less than the carrying cost of $199,628,000.
Provisions of the 8 1/2% Notes include, without limitation, restrictions of
liens, indebtedness, asset sales, and dividends and other restricted payments.
Prior to April 1, 2003, the 8 1/2% Notes are redeemable at the option of the
Company, in whole or in part, at the Make-Whole Price (as defined in the 8 1/2%
Notes agreement). On or after April 1, 2003, they are redeemable at prices
declining annually to 100% on and after April 1, 2006. In the event of a Change
of Control (as defined in the indenture for such notes), each holder of the 8
1/2% Notes may require the Company to repurchase all or a portion of such
holder's 8 1/2% Notes at a purchase price equal to 101% of the principal amount
thereof. The 8 1/2% Notes are guaranteed by certain existing and future domestic
subsidiaries and are not subject to any sinking fund requirements.
The principal payments scheduled to be made as of March 31, 2001 on the above
debt, for the next five annual periods subsequent thereto, are as follows (in
thousands):
2002.......................................... $ 3,092
2003.......................................... 202,856
2004.......................................... 206
2005.......................................... 145
2006.......................................... 106
It is management's intent to refinance the Revolving Credit Facility when
it comes due in fiscal 2003.
As of March 31, 2001, the Company had letters of credit outstanding of $3.6
million.
F-16
COLUMBUS MCKINNON CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
9. RETIREMENT PLANS
The Company provides defined benefit pension plans to certain employees. The
following provides a reconciliation of benefit obligation, plan assets, and
funded status of plans:
MARCH 31,
2001 2000
------------------------
(IN THOUSANDS)
Change in benefit obligation:
Benefit obligation at beginning of year................. $ 71,320 $ 70,621
Service cost............................................ 3,772 4,329
Interest cost........................................... 5,099 4,805
Effect of amendments.................................... - 115
Actuarial gain.......................................... (1,821) (5,359)
Benefits paid........................................... (3,362) (3,191)
------------------------
Benefit obligation at end of year...................... $ 75,008 $ 71,320
========================
Change in plan assets:
Fair value of plan assets at beginning of year.......... $ 73,464 $ 66,276
Actual return on plan assets............................ 1,079 6,984
Employer contribution................................... 5,001 3,395
Benefits paid........................................... (3,362) (3,191)
------------------------
Fair value of plan assets at end of year................ $ 76,182 $ 73,464
========================
Funded Status .......................................... $ 1,174 $ 2,144
Unrecognized transition amount.......................... (28) (57)
Unrecognized actuarial gain............................. (1,872) (5,353)
Unrecognized prior service cost......................... 1,607 1,850
------------------------
Net amount recognized................................... $ 881 $ (1,416)
========================
Amounts recognized in the consolidated balance sheets are as follows:
Intangible asset........................................ $ 1,029 $ 1,158
Accrued liabilities..................................... (2,020) (3,710)
Deferred tax effect of equity charge.................... 749 454
Accumulated other comprehensive income.................. 1,123 682
-----------------------
Net amount recognized................................... $ 881 $ (1,416)
=======================
F-17
COLUMBUS MCKINNON CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
9. RETIREMENT PLANS (CONTINUED)
Net periodic pension cost included the following components:
YEAR ENDED MARCH 31,
2001 2000 1999
-------------------------------------
(IN THOUSANDS)
Service costs--benefits earned during the period.......... $ 3,772 $ 4,329 $ 3,151
Interest cost on projected benefit obligation............. 5,099 4,805 4,489
Expected return on plan assets............................ (6,303) (5,732) (5,124)
Net amortization.......................................... 136 251 167
-------------------------------------
Net periodic pension cost................................. $ 2,704 $ 3,653 $ 2,683
=====================================
The aggregate projected benefit obligation and aggregate fair value of plan
assets for the pension plans with projected benefit obligations in excess of
plan assets were $57,644,000 and $55,546,000, respectively as of March 31, 2001
and $10,992,000 and $8,122,000, respectively as of March 31, 2000.
The aggregate accumulated benefit obligation and aggregate fair value of plan
assets for the pension plans with accumulated benefit obligations in excess of
plan assets were $10,973,000 and $9,363,000, respectively as of March 31, 2001
and $10,237,000 and $8,122,000, respectively as of March 31, 2000.
The unrecognized transition obligation is being amortized on a straight-line
basis over 20 years. Unrecognized gains and losses are amortized on a
straight-line basis over the average remaining service period of active
participants.
The weighted-average discount rate used in determining the actuarial present
value of the projected benefit obligation of all of the defined benefit plans
was 7.5% as of March 31, 2001 and 2000. Future average compensation increases
are assumed to be 4.5% per year as of March 31, 2001 and 2000. The
weighted-average expected long-term rate of return on plan assets used in
determining the expected return on plan assets included in net periodic pension
cost was 8 7/8% for the each of the years ended March 31, 2001, 2000 and 1999.
Plan assets consist of equities, corporate and government securities, and fixed
income annuity contracts.
The Company's funding policy with respect to the defined benefit pension plans
is to contribute annually at least the minimum amount required by the Employee
Retirement Income Security Act of 1974 (ERISA).
The Company also sponsors defined contribution plans covering substantially all
domestic employees. Participants may elect to contribute basic contributions.
Effective April 1, 1998, these plans provide for employer contributions based
primarily on employee participation. The Company recorded a charge for such
contributions of approximately $2,190,000, $1,660,000 and $1,410,000 for the
years ended March 31, 2001, 2000 and 1999, respectively.
F-18
COLUMBUS MCKINNON CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
10. EMPLOYEE STOCK OWNERSHIP PLAN (ESOP)
The AICPA Statement of Position 93-6, "Employers' Accounting for Employee Stock
Ownership Plans" requires that compensation expense for ESOP shares be measured
based on the fair value of those shares when committed to be released to
employees, rather than based on their original cost. Also, dividends on those
ESOP shares that have not been allocated or committed to be released to ESOP
participants are not reflected as a reduction of retained earnings. Rather,
since those dividends are used for debt service, a charge to compensation
expense is recorded. Furthermore, ESOP shares that have not been allocated or
committed to be released are not considered outstanding for purposes of
calculating earnings per share.
The obligation of the ESOP to repay borrowings incurred to purchase shares of
the Company's common stock is guaranteed by the Company; the unpaid balance of
such borrowings, therefore, has been reflected in the accompanying consolidated
balance sheet as a liability. An amount equivalent to the cost of the
collateralized common stock and representing deferred employee benefits has been
recorded as a deduction from shareholders' equity.
Substantially all of the Company's domestic non-union employees are participants
in the ESOP. Contributions to the plan result from the release of collateralized
shares as debt service payments are made. Compensation expense amounting to
$1,120,000, $1,752,000 and $2,128,000 in fiscal 2001, 2000 and 1999,
respectively, is recorded based on the guaranteed release of the ESOP shares at
their fair market value. Dividends on allocated ESOP shares are recorded as a
reduction of retained earnings and are applied toward debt service.
During fiscal 1999, the ESOP borrowed $7,682,000 from the Company and purchased
479,900 shares on the open market at an average cost of $16 per share.
At March 31, 2001 and 2000, 953,851 and 889,555 of ESOP shares, respectively,
were allocated or available to be allocated to participants' accounts. At March
31, 2001 and 2000, 504,794 and 606,559 of ESOP shares were pledged as collateral
to guarantee the ESOP term loans.
The fair market value of unearned ESOP shares at March 31, 2001 amounted to
$3,944,000.
F-19
COLUMBUS MCKINNON CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
11. POSTRETIREMENT BENEFIT OBLIGATION
The Company sponsors defined benefit postretirement health care plans that
provide medical and life insurance coverage to Yale domestic retirees and their
dependents. Prior to the acquisition of Yale, the Company did not sponsor any
postretirement benefit plans. The Company pays the majority of the medical costs
for Yale retirees and their spouses who are under age 65. For retirees and
dependents of retirees who retired prior to January 1, 1989, and are age 65 or
over, the Company contributes 100% toward the American Association of Retired
Persons ("AARP") premium frozen at the 1992 level. For retirees and dependents
of retirees who retired after January 1, 1989, the Company contributes $35 per
month toward the AARP premium. The life insurance plan is noncontributory.
The Company's postretirement health benefit plans are not funded. In accordance
with FAS No. 132 "Employers' Disclosures about Pensions and Other Postretirement
Benefits," the following sets forth a reconciliation of benefit obligations and
the funded status of the plan:
MARCH 31,
2001 2000
-----------------------
(IN THOUSANDS)
Change in benefit obligation:
Benefit obligation at beginning of year......................... $ 11,640 $ 12,412
Service cost.................................................... 80 84
Interest cost................................................... 820 816
Actuarial loss (gain)........................................... 1,509 (170)
Benefits paid................................................... (1,423) (1,502)
-----------------------
Benefit obligation at end of year............................... $ 12,626 $ 11,640
=======================
Funded status .................................................. $ (12,626) $ (11,640)
Unrecognized actuarial loss..................................... 2,407 898
Unrecognized prior service gain................................. (2,421) (3,228)
-----------------------
Net amount recognized in other non-current liabilities.......... $ (12,640) $ (13,970)
=======================
Net periodic postretirement benefit cost included the following:
YEAR ENDED MARCH 31,
2001 2000 1999
-------------------------------------
(IN THOUSANDS)
Service cost--benefits attributed to service during the period..... $ 80 $ 84 $ 257
Interest cost...................................................... 820 816 1,061
Amortization of prior service gain................................. (807) (807) -
-------------------------------------
Net periodic postretirement benefit cost...................... $ 93 $ 93 $ 1,318
=====================================
F-20
COLUMBUS MCKINNON CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
11. POSTRETIREMENT BENEFIT OBLIGATION (CONTINUED)
For measurement purposes, an 8.0% annual rate of increase in the per capita cost
of postretirement medical benefits was assumed at the beginning of the period;
the rate was assumed to decrease 1.0% per year to 5.0% by 2004. The discount
rate used in determining the accumulated postretirement benefit obligation was
7.5% as of March 31, 2001 and 2000.
Assumed medical claims cost trend rates have an effect on the amounts reported
for the health care plans. A one-percentage point change in assumed health care
cost trend rates would have the following effects:
ONE PERCENTAGE ONE PERCENTAGE
POINT INCREASE POINT DECREASE
(IN THOUSANDS)
Effect on total of service and interest cost components.......... $ 50 $ (45)
Effect on postretirement obligation.............................. 589 (536)
12. EARNINGS PER SHARE AND STOCK PLANS
EARNINGS PER SHARE
The Company calculates earnings per share in accordance with Statement of
Financial Accounting Standards No. 128, "Earnings per Share" (FAS No. 128).
Basic earnings per share excludes any dilutive effects of options, warrants, and
convertible securities. Diluted earnings per share includes any dilutive effects
of options, warrants, and convertible securities. The following table sets forth
the computation of basic and diluted earnings per share:
YEAR ENDED MARCH 31,
2001 2000 1999
-------------------------------------
(IN THOUSANDS)
Numerator for basic and diluted earnings per share:
Net income.................................................. $ 15,219 $ 17,080 $ 27,436
=====================================
Denominators:
Weighted-average common stock outstanding--denominator
for basic EPS............................................. 14,316 14,138 14,137
Effect of dilutive employee stock options................... - 83 157
-------------------------------------
Adjusted weighted-average common stock outstanding and
assumed conversions--denominator for diluted EPS.......... 14,316 14,221 14,294
=====================================
The weighted-average common stock outstanding shown above is net of unallocated
ESOP shares (see Note 10).
F-21
COLUMBUS MCKINNON CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
12. EARNINGS PER SHARE AND STOCK PLANS (CONTINUED)
STOCK PLANS
The Company maintains two stock option plans, a Non-Qualified Stock Option Plan
("Non-Qualified Plan") and an Incentive Stock Option Plan ("Incentive Plan").
Under the Non-Qualified Plan, options may be granted to officers and other key
employees of the Company as well as to non-employee directors and advisors.
Options granted under the Non-Qualified Plan become exercisable over a four-year
period at the rate of 25% per year commencing one year from the date of grant at
an exercise price of not less than 100% of the fair market value of the common
stock on the date of grant. Any option granted under this plan may be exercised
not earlier than one year from the date such option is granted. Options granted
under the Incentive Plan become exercisable over a four-year period at the rate
of 25% per year commencing one year from the date of grant at an exercise price
of not less than 100% of the fair market value of the common stock on the date
of grant. Any option granted under this plan may be exercised not earlier than
one year and not later than ten years from the date such option is granted.
In conjunction with the March 1, 1999 merger of GL International, Inc. (see Note
1), outstanding GL options, which were originally issued in fiscal years 1999
and 1998, became fully vested and were converted into options to acquire 154,848
Company shares at prices of $4.34 to $17.36. As of March 31, 2001, all 154,848
options have been exercised.
A summary of option transactions during each of the three fiscal years in the
period ended March 31, 2001 is as follows:
YEAR ENDED MARCH 31,
NUMBER OF SHARES 2001 2000 1999
---------------- -------------------------------------
Outstanding at beginning of year............ 674,750 353,348 354,848
Granted..................................... 32,700 481,410 31,000
Canceled.................................... (16,575) (7,000) (32,500)
Exercised................................... (19,340) (153,008) -
-------------------------------------
Outstanding at end of year.................. 671,535 674,750 353,348
=====================================
Exercisable at end of year.................. 241,285 137,840 247,348
Available for grant at end of year.......... 810,965 827,090 1,301,500
F-22
COLUMBUS MCKINNON CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
12. EARNINGS PER SHARE AND STOCK PLANS (CONTINUED)
Exercise prices for options outstanding as of March 31, 2001, ranged from $9.00
to $29.00. The following table provides certain information with respect to
stock options outstanding at March 31, 2001:
WEIGHTED-AVERAGE
STOCK OPTIONS WEIGHTED-AVERAGE REMAINING CONTRACTUAL
RANGE OF EXERCISE PRICES OUTSTANDING EXERCISE PRICE LIFE
------------------------ ----------------------------------------------------------------
Under $10.00.............. 22,950 $ 9.13 9.8
$10.00 to $20.00.......... 158,100 15.36 5.9
$20.01 to $30.00.......... 490,485 21.26 8.0
----------------------------------------------------------------
671,535 $19.46 7.6
================================================================
The following table provides certain information with respect to stock options
exercisable at March 31, 2001:
STOCK OPTIONS WEIGHTED-AVERAGE
RANGE OF EXERCISE PRICES OUTSTANDING EXERCISE PRICE
------------------------ --------------------------------------
Under $10.00................... - $ -
$10.00 to $20.00............... 150,225 15.50
$20.01 to $30.00............... 91,060 21.89
--------------------------------------
241,825 $ 17.91
======================================
The Company has elected to follow Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees" (APB 25) in accounting for its
employee stock options because, as discussed below, the alternative fair value
accounting provided for under FAS No. 123, "Accounting for Stock-Based
Compensation," requires use of option valuation models that were not developed
for use in valuing employee stock options. Under APB 25, because the exercise
price of the Company's employee stock options equals the market price of the
underlying stock on the grant date and the number of options granted is fixed,
no compensation expense is recognized.
Pro forma information regarding net income and earnings per share is required by
FAS No. 123, and has been determined as if the Company had accounted for its
employee stock options under the fair value method of that Statement. The
Black-Scholes option valuation model was developed for use in estimating the
fair value of traded options which have no vesting restrictions and are fully
transferable. In addition, option valuation models require the input of highly
subjective assumptions including the expected stock price volatility. Because
the Company's employee stock options have characteristics significantly
different from those of traded options, and because changes in the subjective
input assumptions can materially affect the fair value estimate, in management's
opinion, the existing models do not necessarily provide a reliable single
measure of the fair value of its employee stock options.
F-23
COLUMBUS MCKINNON CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
12. EARNINGS PER SHARE AND STOCK PLANS (CONTINUED)
For purposes of pro forma disclosures, the estimated fair value of the options
is amortized to expense over the options' vesting period. The fair value for
issued options was estimated at the date of grant using a Black-Scholes option
pricing model with the following weighted-average assumptions and yielding the
following pro forma results:
YEAR ENDED MARCH 31,
2001 2000 1999
-------------------------------------------
(IN THOUSANDS, EXCEPT FOR ASSUMPTIONS
AND EARNINGS PER SHARE DATA)
Assumptions:
Risk-free interest rate 5.2% 6.1% 5.5%
Dividend yield - Incentive Plan 2.9% 1.35% 0.97%
Dividend yield - GL conversions N/A N/A 1.33%
Volatility factor 0.435 0.352 0.200
Expected life - Incentive Plan 5 years 5 years 4 years
Expected life - GL conversions N/A N/A 1 year
Pro forma results:
Net income $ 14,809 $ 16,099 $ 25,567
Earnings per share, basic 1.03 1.14 1.81
Earnings per share, diluted 1.03 1.13 1.79
The Company maintains a Restricted Stock Plan, under which the Company had no
shares reserved for issuance at March 31, 2001 and 2000. The Company charges
unearned compensation, a component of shareholders' equity, for the market value
of shares, as they are issued. It is then ratably amortized over the restricted
period. Grantees who remain continuously employed with the Company become vested
in their shares five years after the date of the grant. There were 60,700 and
19,500 shares issued during the years ended March 31, 2000 and 1999,
respectively.
13. LOSS CONTINGENCIES
GENERAL AND PRODUCT LIABILITY - $14,663,000 of the accrued general and product
liability costs which are included in other non-current liabilities at March 31,
2001 ($13,118,000 at March 31, 2000) are the actuarial present value of
estimated reserves based on an amount determined from loss reports and
individual cases filed with the Company and an amount, based on experience, for
losses incurred but not reported. The accrual in these consolidated financial
statements was determined by applying a discount factor based on interest rates
customarily used in the insurance industry, between 6.09% and 8.42%, to the
undiscounted reserves of $18,620,000 and $16,866,000 at March 31, 2001 and 2000,
respectively. This liability is funded by investments in marketable securities
(see Notes 2 and 5).
F-24
COLUMBUS MCKINNON CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
14. INCOME TAXES
The following is a reconciliation of the difference between the effective tax
rate and the statutory federal tax rate:
YEAR ENDED MARCH 31,
2001 2000 1999
-------------------------------------
(IN THOUSANDS)
Computed statutory provision............................ $ 12,160 $ 12,121 $ 17,753
State income taxes net of federal benefit............... 1,972 1,974 1,767
Nondeductible goodwill amortization..................... 4,506 4,506 4,540
Foreign taxes greater than statutory provision.......... 931 884 790
Research and development credit......................... (400) (400) (639)
Other................................................... 356 (1,507) (923)
-------------------------------------
Actual tax provision.................................... $ 19,525 $ 17,578 $ 23,288
=====================================
The provision for income tax expense consisted of the following:
YEAR ENDED MARCH 31,
2001 2000 1999
-------------------------------------
(IN THOUSANDS)
Current income tax expense:
Federal taxes...................................... $ 13,214 $ 8,391 $ 18,775
State taxes........................................ 2,745 2,253 2,770
Foreign............................................ 3,612 3,334 3,978
Deferred income tax (benefit) expense:
Domestic........................................... 392 3,380 (2,298)
Foreign............................................ (438) 220 63
-------------------------------------
$ 19,525 $ 17,578 $ 23,288
=====================================
The Company applies the liability method of accounting for income taxes as
required by FAS Statement No. 109, "Accounting for Income Taxes."
The gross composition of the net current deferred tax liability, included in
accrued liabilities within the consolidated balance sheet, is as follows:
MARCH 31,
2001 2000
----------------------
(IN THOUSANDS)
Inventory............................................................. $ (5,935) $ (4,929)
Accrued vacation and incentive costs.................................. 1,867 1,757
Other................................................................. 3,326 2,492
-----------------------
Net current deferred tax liability............................... $ (742) $ (680)
=======================
F-25
COLUMBUS MCKINNON CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
14. INCOME TAXES (CONTINUED)
The gross composition of the net non-current deferred tax asset is as follows:
MARCH 31,
2001 2000
-----------------------
(IN THOUSANDS)
Insurance reserves............................... $ 9,560 $ 10,242
Property, plant, and equipment................... (6,524) (6,514)
Other............................................ 2,660 509
-----------------------
Net non-current deferred tax asset.......... $ 5,696 $ 4,237
=======================
Income before income tax expense includes foreign subsidiary income of
$6,410,000, $7,551,000, and $9,288,000 for the years ended March 31, 2001, 2000,
and 1999 respectively. United States income taxes have not been provided on
certain unremitted earnings of the Company's foreign subsidiaries as such
earnings are considered to be permanently reinvested.
15. RENTAL EXPENSE AND LEASE COMMITMENTS
Rental expense for the years ended March 31, 2001, 2000 and 1999 was $7,676,000,
$6,279,000, and $6,672,000, respectively. The following amounts represent future
minimum payment commitments as of March 31, 2001 under non-cancelable operating
leases extending beyond one year (in thousands):
VEHICLES AND
YEAR ENDED MARCH 31, REAL PROPERTY EQUIPMENT TOTAL
-------------------- ------------- --------- -------
2002..................................... $ 2,143 $ 2,531 $ 4,674
2003..................................... 1,886 1,738 3,624
2004..................................... 1,687 1,299 2,986
2005..................................... 1,555 653 2,208
2006..................................... 1,265 207 1,472
F-26
COLUMBUS MCKINNON CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
16. SUMMARY FINANCIAL INFORMATION
The summary financial information of the parent, domestic subsidiaries (guarantors) and foreign subsidiaries
(nonguarantors) of the 8 1/2% senior subordinated notes follows:
As of and for the year ended March 31, 2001:
DOMESTIC FOREIGN
PARENT SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED
--------------------------------------------------------------------------
(IN THOUSANDS)
AS OF MARCH 31, 2001:
Current assets:
Cash..................................... $ 11,017 $ (1,865) $ 4,863 $ - $ 14,015
Trade accounts receivable and
unbilled revenues...................... 65,932 79,442 21,673 - 167,047
Inventories.............................. 47,012 38,125 29,055 (974) 113,218
Other current assets..................... 5,368 1,369 3,188 - 9,925
--------------------------------------------------------------------------
Total current assets.................. 129,329 117,071 58,779 (974) 304,205
Net property, plant, and equipment............ 34,599 32,722 17,951 - 85,272
Goodwill and other intangibles, net........... 38,992 236,583 46,621 - 322,196
Intercompany balances......................... 168,763 (334,599) (63,864) 229,700 -
Other non-current assets...................... 226,711 161,325 (2,017) (350,679) 35,340
--------------------------------------------------------------------------
Total assets.......................... $ 598,394 $ 213,102 $ 57,470 $ (121,953) $ 747,013
===========================================================================
Current liabilities........................... $ 39,673 $ 39,851 $ 21,966 $ (362) $ 101,128
Long-term debt, less current portion.......... 400,137 2 3,815 - 403,954
Other non-current liabilities................. 15,529 15,804 2,734 - 34,067
--------------------------------------------------------------------------
Total liabilities..................... 455,339 55,657 28,515 (362) 539,149
Shareholders' equity.......................... 143,055 157,445 28,955 (121,591) 207,864
--------------------------------------------------------------------------
Total liabilities and shareholders'
equity........................... $ 598,394 $ 213,102 $ 57,470 $ (121,953) $ 747,013
==========================================================================
FOR THE YEAR ENDED MARCH 31, 2001:
Net sales..................................... $ 252,128 $ 379,477 $ 119,475 $ (23,108) $ 727,972
Cost of products sold......................... 175,181 308,957 90,260 (23,017) 551,381
--------------------------------------------------------------------------
Gross profit.................................. 76,947 70,520 29,215 (91) 176,591
Selling, general and administrative expenses.. 39,800 30,522 20,117 - 90,439
Amortization of intangibles................... 2,011 11,543 2,429 - 15,983
--------------------------------------------------------------------------
41,811 42,065 22,546 - 106,422
--------------------------------------------------------------------------
Income from operations........................ 35,136 28,455 6,669 (91) 70,169
Interest and debt expense..................... 37,019 45 578 - 37,642
Interest and other income..................... 1,621 293 303 - 2,217
--------------------------------------------------------------------------
Income before income tax expense.............. (262) 28,703 6,394 (91) 34,744
Income tax expense............................ 1,729 14,672 3,161 (37) 19,525
--------------------------------------------------------------------------
Net (loss) income............................. $ (1,991) $ 14,031 $ 3,233 $ (54) $ 15,219
==========================================================================
F-27
COLUMBUS MCKINNON CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
16. SUMMARY FINANCIAL INFORMATION (CONTINUED)
DOMESTIC FOREIGN
PARENT SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED
--------------------------------------------------------------------------
(IN THOUSANDS)
FOR THE YEAR ENDED MARCH 31, 2001:
OPERATING ACTIVITIES:
Cash provided by (used in) operating
activities.................................. $ 19,831 $ (123) $ 9,054 $ (1,072) $ 27,690
INVESTING ACTIVITIES:
Purchase of marketable securities, net........ (2,064) - - - (2,064)
Capital expenditures.......................... (4,419) (5,021) (799) - (10,239)
Net assets held for sale...................... - 5,002 - - 5,002
---------------------------------------------------------------------------
Net cash used in investing activities......... (6,483) (19) (799) - (7,301)
FINANCING ACTIVITIES:
Net (payments) borrowings under revolving
line-of-credit agreements................... (3,000) - 335 - (2,665)
Repayment of debt............................. (1,579) (22) (2,158) - (3,759)
Dividends paid................................ (3,995) - (1,072) 1,072 (3,995)
Other......................................... 489 - - - 489
--------------------------------------------------------------------------
Net cash (used in) provided by financing
activities................................. (8,085) (22) (2,895) 1,072 (9,930)
Effect of exchange rate changes on cash....... - - (4,026) - (4,026)
--------------------------------------------------------------------------
Net change in cash and cash equivalents....... 5,263 (164) 1,334 - 6,433
Cash and cash equivalents at
beginning of year.......................... 5,754 (1,701) 3,529 - 7,582
--------------------------------------------------------------------------
Cash and cash equivalents at end of year...... $ 11,017 $ (1,865) $ 4,863 $ - $ 14,015
==========================================================================
As of and for the year ended March 31, 2000:
AS OF MARCH 31, 2000:
Current assets:
Cash..................................... $ 5,754 $ (1,701) $ 3,529 $ - $ 7,582
Trade accounts receivable and
unbilled revenues...................... 67,186 76,325 24,337 - 167,848
Inventories.............................. 47,238 34,552 27,384 (883) 108,291
Other current assets..................... 3,402 7,714 4,337 - 15,453
--------------------------------------------------------------------------
Total current assets.................. 123,580 116,890 59,587 (883) 299,174
Net property, plant, and equipment............ 35,807 32,218 19,272 - 87,297
Goodwill and other intangibles, net........... 41,336 248,121 50,146 - 339,603
Intercompany balances......................... 188,479 (351,292) (66,245) 229,058 -
Other non-current assets...................... 224,823 161,583 (1,977) (350,679) 33,750
--------------------------------------------------------------------------
Total assets.......................... $ 614,025 $ 207,520 $ 60,783 $ (122,504) $ 759,824
==========================================================================
Current liabilities........................... $ 45,663 $ 45,304 $ 21,325 $ (967) $ 111,325
Long-term debt, less current portion.......... 404,269 13 5,976 - 410,258
Other non-current liabilities................. 14,026 18,042 2,720 - 34,788
--------------------------------------------------------------------------
Total liabilities..................... 463,958 63,359 30,021 (967) 556,371
Shareholders' equity.......................... 150,067 144,161 30,762 (121,537) 203,453
--------------------------------------------------------------------------
Total liabilities and shareholders'
equity........................... $ 614,025 $ 207,520 $ 60,783 $ (122,504) $ 759,824
==========================================================================
F-28
COLUMBUS MCKINNON CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
16. SUMMARY FINANCIAL INFORMATION (CONTINUED)
DOMESTIC FOREIGN
PARENT SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED
--------------------------------------------------------------------------
(IN THOUSANDS)
FOR THE YEAR ENDED MARCH 31, 2000:
Net sales..................................... $ 265,163 $ 367,421 $ 126,520 $ (22,850) $ 736,254
Cost of products sold......................... 186,225 300,332 92,514 (22,926) 556,145
--------------------------------------------------------------------------
Gross profit.................................. 78,938 67,089 34,006 76 180,109
Selling, general and administrative expenses.. 41,216 30,876 23,583 - 95,675
Amortization of intangibles...................... 2,148 11,701 2,543 - 16,392
--------------------------------------------------------------------------
43,364 42,577 26,126 - 112,067
--------------------------------------------------------------------------
Income from operations........................ 35,574 24,512 7,880 76 68,042
Interest and debt expense..................... 34,010 44 644 - 34,698
Interest and other income..................... 791 236 287 - 1,314
--------------------------------------------------------------------------
Income before income tax expense.............. 2,355 24,704 7,523 76 34,658
Income tax expense............................ 1,110 12,929 3,569 (30) 17,578
--------------------------------------------------------------------------
Net income.................................... $ 1,245 $ 11,775 $ 3,954 $ 106 $ 17,080
==========================================================================
FOR THE YEAR ENDED MARCH 31, 2000:
OPERATING ACTIVITIES:
Cash provided by (used in) operating
activities.................................. $ 23,591 $ 7,575 $ 7,135 $ (1,580) $ 36,721
INVESTING ACTIVITIES:
Purchase of marketable securities, net........ (3,318) - - - (3,318)
Capital expenditures.......................... (4,660) (2,262) (1,180) - (8,102)
Purchase of businesses, net of cash acquired.. - (6,381) - (49) (6,430)
Net assets held for sale...................... - (1,058) - - (1,058)
--------------------------------------------------------------------------
Net cash used in investing activities......... (7,978) (9,701) (1,180) (49) (18,908)
FINANCING ACTIVITIES:
Proceeds from issuance of common stock........ 3 - - - 3
Net payments under revolving
line-of-credit agreements................... (7,400) - (1,913) - (9,313)
Repayment of debt............................. (1,783) 17 (748) - (2,514)
Dividends paid................................ (3,953) 1 (1,580) 1,580 (3,953)
Other......................................... 165 - - - 165
--------------------------------------------------------------------------
Net cash (used in) provided by financing
activities................................. (12,968) 17 (4,241) 1,580 (15,612)
Effect of exchange rate changes on cash....... - - (1,535) 49 (1,486)
--------------------------------------------------------------------------
Net change in cash and cash equivalents....... 2,645 (2,109) 179 - 715
Cash and cash equivalents at
beginning of year......................... 3,109 408 3,350 - 6,867
--------------------------------------------------------------------------
Cash and cash equivalents at end of year...... $ 5,754 $ (1,701) $ 3,529 $ - $ 7,582
==========================================================================
F-29
COLUMBUS MCKINNON CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
17. BUSINESS SEGMENT INFORMATION
As a result of the way the Company manages the business, its reportable segments
are strategic business units that offer products with different characteristics.
The most defining characteristic is the extent of customized engineering
required on a per-order basis. In addition, the segments serve different
customer bases through differing methods of distribution. The Company has three
reportable segments: material handling products, material handling solutions -
industrial, and material handling solutions - automotive. The Company's material
handling products segment sells hoists, industrial cranes, chain, attachments,
and other material handling products principally to third party distributors
through diverse distribution channels, and to a lesser extent directly to
manufacturers and other end-users. The material handling solutions industrial -
segment sells engineered material handling systems such as conveyors,
manipulators, and lift tables primarily to end-users in the consumer products,
manufacturing, warehousing, and, to a lesser extent, the steel, construction,
automotive, and other industrial markets. The material handling solutions -
automotive segment sells engineered material handling systems, mainly conveyors,
primarily to end-users in the automotive industry. The accounting policies of
the segments are the same as those described in the summary of significant
accounting policies. Intersegment sales are not significant. The Company
evaluates performance based on operating earnings of the respective business
units prior to the effects of amortization.
Segment information as of and for the years ended March 31, 2001, 2000, and
1999, is as follows:
YEAR ENDED MARCH 31, 2001
-------------------------
SOLUTIONS - SOLUTIONS -
PRODUCTS INDUSTRIAL AUTOMOTIVE TOTAL
---------------------------------------------------
(IN THOUSANDS)
Sales to external customers................... $ 478,898 $ 68,055 $ 181,019 $ 727,972
Operating income before amortization.......... 72,491 3,597 10,064 86,152
Depreciation and amortization................. 19,859 2,798 5,590 28,247
Total assets.................................. 487,551 64,835 194,627 747,013
Capital expenditures.......................... 9,889 297 53 10,239
YEAR ENDED MARCH 31, 2000
-------------------------
SOLUTIONS - SOLUTIONS -
PRODUCTS INDUSTRIAL AUTOMOTIVE TOTAL
---------------------------------------------------
(IN THOUSANDS)
Sales to external customers................... $ 511,287 $ 68,559 $ 156,408 $ 736,254
Operating income before amortization.......... 75,371 6,771 2,292 84,434
Depreciation and amortization................. 19,843 3,077 5,616 28,536
Total assets.................................. 505,461 65,994 188,369 759,824
Capital expenditures.......................... 7,805 122 175 8,102
F-30
COLUMBUS MCKINNON CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
17. BUSINESS SEGMENT INFORMATION (CONTINUED)
YEAR ENDED MARCH 31, 1999
-------------------------
SOLUTIONS - SOLUTIONS -
PRODUCTS INDUSTRIAL AUTOMOTIVE TOTAL
---------------------------------------------------
(IN THOUSANDS)
Sales to external customers................... $ 508,313 $ 65,689 $ 161,443 $ 735,445
Operating income before amortization.......... 78,945 6,691 14,925 100,561
Depreciation and amortization................. 18,559 3,045 5,652 27,256
Total assets.................................. 517,774 68,520 180,617 766,911
Capital expenditures.......................... 11,203 1,468 321 12,992
The following provides a reconciliation of operating income before amortization
to consolidated income before income tax expense:
YEAR ENDED MARCH 31,
--------------------
2001 2000 1999
-------------------------------------
(IN THOUSANDS)
Operating income before amortization.......... $ 86,152 $ 84,434 $ 100,561
Amortization of intangibles................... (15,983) (16,392) (15,479)
Interest and debt expense..................... (37,642) (34,698) (35,923)
Interest and other income..................... 2,217 1,314 1,565
-------------------------------------
Income before income tax expense.............. $ 34,744 $ 34,658 $ 50,724
=====================================
Financial information relating to the Company's operations by geographic area is
as follows:
YEAR ENDED MARCH 31,
--------------------
2001 2000 1999
-------------------------------------
(IN THOUSANDS)
NET SALES:
United States................................. $ 611,999 $ 609,734 $ 613,179
Europe........................................ 71,967 71,076 65,000
Canada........................................ 36,635 49,716 51,653
Other......................................... 7,371 5,728 5,613
-------------------------------------
Total......................................... $ 727,972 $ 736,254 $ 735,445
=====================================
YEAR ENDED MARCH 31,
--------------------
2001 2000 1999
-------------------------------------
(IN THOUSANDS)
ASSETS:
United States................................. $ 625,679 $ 632,796 $ 634,720
Europe........................................ 94,908 95,601 100,317
Canada........................................ 21,936 27,130 28,265
Other......................................... 4,490 4,297 3,609
-------------------------------------
Total......................................... $ 747,013 $ 759,824 $ 766,911
=====================================
F-31
COLUMBUS MCKINNON CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
18. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
THREE MONTHS ENDED YEAR ENDED
------------------ ----------
JULY 2, OCTOBER 1, DECEMBER 31, MARCH 31, MARCH 31,
2000 2000 2000 2001 2001
------------------------------------------------------------------
Net sales............................... $ 188,378 $ 188,994 $ 175,078 $ 175,522 $ 727,972
Gross profit............................ 47,214 44,990 39,534 44,853 176,591
Income from operations.................. 20,378 18,680 13,672 17,439 70,169
Net income.............................. 5,946 4,388 1,296 3,589 15,219
Net income per share - basic ........... 0.42 0.31 0.09 0.25 1.06
Net income per share - diluted.......... 0.42 0.31 0.09 0.25 1.06
THREE MONTHS ENDED YEAR ENDED
------------------ ----------
JULY 4, OCTOBER 3, JANUARY 2, MARCH 31, MARCH 31,
1999 1999 2000 2000 2000
------------------------------------------------------------------
Net sales............................... $ 181,601 $ 182,008 $ 174,173 $ 198,472 $ 736,254
Gross profit............................ 47,113 39,732 43,405 49,859 180,109
Income from operations.................. 20,866 11,573 16,176 19,427 68,042
Net income.............................. 6,395 511 3,254 6,920 17,080
Net income per share - basic............ 0.46 0.04 0.23 0.49 1.21
Net income per share - diluted.......... 0.45 0.04 0.23 0.49 1.20
THREE MONTHS ENDED YEAR ENDED
------------------ ----------
JUNE 28, SEPTEMBER 27, DECEMBER 27, MARCH 31, MARCH 31,
1998 1998 1998 1999 1999
------------------------------------------------------------------
Net sales............................... $ 184,616 $ 185,357 $ 186,995 $ 178,477 $ 735,445
Gross profit............................ 47,313 47,042 47,396 50,719 192,470
Income from operations.................. 21,223 20,578 21,402 21,879 85,082
Net income.............................. 6,375 5,923 6,445 8,693 27,436
Net income per share - basic............ 0.44 0.41 0.46 0.62 1.94
Net income per share - diluted......... 0.44 0.41 0.46 0.62 1.92
19. ACCUMULATED OTHER COMPREHENSIVE LOSS
The components of accumulated other comprehensive loss are as follows:
MARCH 31,
2001 2000
------------------------
(IN THOUSANDS)
Net unrealized investment (losses) gains - net of tax.......... $ (99) $ 2,832
Minimum pension liability adjustment - net of tax.............. (1,123) (682)
Foreign currency translation adjustment........................ (12,805) (7,766)
------------------------
Accumulated other comprehensive loss........................... $ (14,027) $ (5,616)
========================
The net tax asset/(liability) associated with items included in accumulated
other comprehensive loss was $815,000 and ($1,433,000) for 2001 and 2000,
respectively.
F-32
COLUMBUS MCKINNON CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
20. EFFECTS OF NEW ACCOUNTING PRONOUNCEMENTS
The Financial Accounting Standards Board (FASB) issued Statement of Financial
Accounting Standards (SFAS) No. 133, "Accounting for Derivative Instruments and
Hedging Activities," in June of 1998. The FASB issued SFAS No. 137 in June of
1999 which defers the effective date of SFAS No. 133 to fiscal years beginning
after June 15, 2000. SFAS No. 133 establishes accounting and reporting standards
for derivatives and hedging activities. It requires that entities recognize all
derivatives as either assets or liabilities in the statement of financial
position and measure those instruments at fair value. Compliance with this
statement would not have a material impact on the Company at the present time.
During May 2001, the FASB announced that it has completed its deliberations
concerning business combinations and accounting for intangible assets. Two final
statements (one addressing business combinations and one addressing goodwill and
other intangible assets) are expected to be issued in the latter half of July
2001. The new statement on business combinations will require the use of the
purchase method of accounting for all business combinations initiated after June
30, 2001. The statement on goodwill and other intangible assets will require
that existing goodwill or newly acquired goodwill and certain intangible assets
will no longer be amortized, but will need to be tested for impairment. This
statement will be effective for fiscal years beginning after December 15, 2001.
Early adoption is permitted for companies with fiscal years beginning after
March 15, 2001, provided they have not issued their first quarter financial
statements. In all cases the statement must be adopted at the beginning of the
fiscal year. At the present time, the Company has not determined the impact of
adoption, or its expected date of adoption of the new statement addressing
goodwill and other intangible assets.
21. SUBSEQUENT EVENT
In conjunction with the continuation of its strategic integration process, the
Company announced on June 4, 2001 that it will be closing a major hoist
manufacturing facility in Forrest City, Arkansas. Cumulative charges including
lease termination and separation costs are expected to lead to an $8.8 million
pretax charge in the first quarter of fiscal 2002. Pretax annual cost savings
associated with the closure are expected to reach $7.25 million per year by
fiscal 2003.
F-33
COLUMBUS MCKINNON CORPORATION
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
MARCH 31, 2001, 2000 AND 1999
DOLLARS IN THOUSANDS
ADDITIONS
---------
BALANCE AT CHARGED TO CHARGED TO BALANCE AT
BEGINNING COSTS AND OTHER END OF
DESCRIPTION OF PERIOD EXPENSES ACCOUNTS DEDUCTIONS PERIOD
----------- --------- -------- --------- ---------- ---------
Year ended March 31, 2001: Deducted from asset accounts:
Allowance for doubtful accounts $ 2,236 $ 1,307 $ - $ 1,114(1) $ 2,429
Slow-moving and obsolete inventory 4,185 1,373 - 1,610(2) 3,948
--------- --------- --------- --------- ---------
Total $ 6,421 $ 2,680 $ - $ 2,724 $ 6,377
========= ========= ========= ========= =========
Reserves on balance sheet:
Accrued general and product liability costs $ 14,550 $ 2,356 $ - $ 1,518(3) $ 15,388
========= ========= ========= ========= =========
Year ended March 31, 2000: Deducted from asset accounts:
Allowance for doubtful accounts $ 2,271 $ 979 $ - $ 1,014(1) $ 2,236
Slow-moving and obsolete inventory 4,295 1,776 112(4) 1,998(2) 4,185
--------- --------- --------- --------- ---------
Total $ 6,566 $ 2,755 $ 112 $ 3,012 $ 6,421
========= ========= ========= ========= =========
Reserves on balance sheet:
Accrued general and product liability costs $ 11,416 $ 3,368 $ - $ 234(3) $ 14,550
========= ========= ========= ========= =========
Year ended March 31, 1999: Deducted from asset accounts:
Allowance for doubtful accounts $ 2,511 $ 743 $ (27)(5) $ 956(1) $ 2,271
Slow-moving and obsolete inventory 4,684 1,884 (592)(5) 1,681(2) 4,295
Reserve against non-current receivable 600 - - 600(6) -
--------- --------- ---------- --------- ---------
Total $ 7,795 $ 2,627 $ (619) $ 3,237 $ 6,566
========= ========= ========== ========= =========
Reserves on balance sheet:
Accrued general and product liability costs $ 11,688 $ 3,265 $ - $ 3,537(3) $ 11,416
========= ========= ========== ========= =========
- --------
(1) Uncollectible accounts written off, net of recoveries
(2) Obsolete inventory disposals
(3) Insurance claims and expenses paid
(4) Reserves at date of acquisition of subsidiaries
(5) Reserves at date of disposal of subsidiary
(6) Receivable deemed to be collectible in its entirety
F-34
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
- ------- ---------------------------------------------------------------
FINANCIAL DISCLOSURES
---------------------
None.
33
PART III
--------
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
- -------- ---------------------------------------------------
The information regarding Directors and Executive Officers of the
Registrant will be included in a Proxy Statement to be filed with the Commission
prior to July 29, 2001.
ITEM 11. EXECUTIVE COMPENSATION
- -------- ----------------------
The information regarding Executive Compensation will be included in a
Proxy Statement to be filed with the Commission prior to July 29, 2001.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
- -------- --------------------------------------------------------------
The information regarding Security Ownership of Certain Beneficial Owners
and Management will be included in a Proxy Statement to be filed with the
Commission prior to July 29, 2001.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
- -------- ----------------------------------------------
The information regarding Certain Relationships and Related Transactions
will be included in a Proxy Statement to be filed with the Commission prior to
July 29, 2001.
PART IV
-------
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
- -------- -----------------------------------------------------------------
(a)(1) FINANCIAL STATEMENTS:
--------------------
The following consolidated financial statements of Columbus McKinnon
Corporation are included in Item 8:
REFERENCE PAGE NO.
--------- --------
Report of Independent Auditors F-2
Consolidated balance sheets - March 31, 2001 and 2000 F-3
Consolidated statements of income - Years ended
March 31, 2001, 2000 and 1999 F-4
Consolidated statements of shareholders' equity - Years ended
March 31, 2001, 2000 and 1999 F-5
Consolidated statements of cash flows - Years ended
March 31, 2001, 2000 and 1999 F-6
Notes to consolidated financial statements F-7 - F-33
34
(a)(2) FINANCIAL STATEMENT SCHEDULE: PAGE NO.
----------------------------- --------
Schedule II - Valuation and qualifying accounts F-34
All other schedules for which provision is made in the applicable
accounting regulation of the Securities and Exchange Commission are
not required under the related instructions or are inapplicable and
therefore have been omitted.
(a)(3) EXHIBITS:
---------
EXHIBIT
NUMBER
- -------
2.1 Agreement and Plan of Merger dated August 24, 1996 among Columbus
McKinnon Corporation, L Acquisition Corporation and Spreckels
Industries, Inc. (known as Yale International, Inc.) (incorporated by
reference to Exhibit (c)(1) to the Company's Tender Offer Statement on
Schedule 14D-1 dated August 30, 1996).
2.2 Offer to Purchase by L Acquisition Corporation dated August 30,
1997, as revised (incorporated by reference to Exhibit (a)(1) to the
Company's Tender Offer Statement on Schedule 14D-1 dated August 30,
1997, as amended by Amendment No. 1 dated September 18, 1996, Amendment
No. 2 dated September 27, 1996, Amendment No. 3 dated October 4, 1996,
Amendment No. 4 dated October 9, 1996 Amendment No. 5 dated October 13,
1996 and Amendment No. 6 dated October 17, 1996).
3.1 Restated Certificate of Incorporation of the Registrant
(incorporated by reference to Exhibit 3.1 to the Company's Registration
Statement No. 33-80687 on Form S-1 dated December 21, 1995).
3.2 Amended By-Laws of the Registrant (incorporated by reference to
Exhibit 3 the Company's Current Report on Form 8-K dated May 17, 1999).
4.1 Specimen Common Share Certificate (incorporated by reference to
Exhibit 4.1 to the Company's Registration Statement No. 33-80687 on
Form S-1 dated December 21, 1995).
4.2 First Amendment and Restatement of Rights Agreement, dated as of
October 1, 1998, between Columbus McKinnon Corporation and American
Stock Transfer & Trust Company, as Rights Agent (incorporated by
reference to Exhibit 4 to the Company's Current Report on Form 8-K
dated October 29, 1998).
4.3 Indenture among Columbus McKinnon Corporation, the guarantors
named on the signature pages thereto and State Street Bank and Trust
Company, N.A., as trustee (incorporated by reference to Exhibit 4.1 to
the Company's Current Report on Form 8-K dated April 9, 1998).
35
4.4 Supplemental Indenture among LICO, Inc., Automatic Systems, Inc.,
LICO Steel, Inc., Columbus McKinnon Corporation, Yale Industrial
Products, Inc., Mechanical Products, Inc., Minitec Corporation and
State Street Bank and Trust Company, N.A., as trustee, dated March 31,
1998 (incorporated by reference to Exhibit 4.3 to the Company's Current
Report on form 8-K dated April 9, 1998).
4.5 A/B Registration Rights Agreement among Columbus McKinnon
Corporation, the guarantors named on the signature pages thereto and
Bear, Stearns & Co., Inc. and Goldman, Sachs & Co., as initial
purchasers (incorporated by reference to Exhibit 4.2 to the Company's
Current Report on Form 8-K dated April 9, 1998).
4.6 Second Supplemental Indenture among Abell-Howe Crane, Inc., LICO,
Inc., Automatic Systems, Inc. LICO Steel, Inc., Columbus McKinnon
Corporation, Yale Industrial Products Inc. and State Street Bank and
Trust Company, N.A., as trustee, dated as of February 12, 1999
(incorporated by reference to Exhibit 4.6 to the Company's Annual
Report on Form 10-K for the fiscal year ended March 31, 1999).
4.7 Third Supplemental Indenture among G.L. International, Inc.,
Gaffey, Inc., Handling Systems and Conveyors, Inc., Larco Material
Handling Inc., Abell-Howe Crane, Inc., LICO, Inc., Automatic Systems,
Inc., LICO Steel, Inc., Columbus McKinnon Corporation, Yale Industrial
Products, Inc. and State Street Bank and Trust Company, N.A., as
trustee, dated as of March 1, 1999 (incorporated by reference to
Exhibit 4.7 to the Company's Annual Report on Form 10-K for the fiscal
year ended March 31, 1999).
4.8 Fourth Supplemental Indenture among Washington Equipment Company,
G.L. International, Inc., Gaffey, Inc., Handling Systems and Conveyors,
Inc., Larco Material Handling Inc., Abell-Howe Crane, Inc., Automatic
Systems, Inc., LICO Steel, Inc., Columbus McKinnon Corporation, Yale
Industrial Products, Inc. and State Street Bank and Trust Company,
N.A., as trustee, dated as of November 1, 1999 (incorporated by
reference to Exhibit 10.2 to the Company's quarterly report on form
10-Q for the quarterly period ended October 3, 1999).
10.1 Amended and Restated Term Loan Agreement by and among Fleet Bank
of New York, Columbus McKinnon Corporation and Kenneth G. McCreadie,
Peter A. Grant and Robert L. Montgomery, Jr., as Trustees under the
Columbus McKinnon Corporation Employee Stock Ownership Trust Agreement,
dated March 31, 1993 (incorporated by reference to Exhibit 10.2 to the
Company's Registration Statement No. 33-80687 on Form S-1 dated
December 21, 1995).
10.2 Amendment No. 1 to Amended and Restated Term Loan Agreement, dated
March 31, 1993, by and among Fleet Bank of New York, Columbus McKinnon
Corporation and Kenneth G. McCreadie, Peter A. Grant and Robert L.
Montgomery, Jr. as trustees under the Columbus McKinnon Corporation
Employee Stock Ownership Trust Agreement, dated October 27, 1994
(incorporated by reference to Exhibit 10.3 to the Company's
Registration Statement No. 33-80687 on Form S-1 dated December 21,
1995).
36
10.3 Amendment No. 2 to Amended and Restated Term Loan Agreement by and
among Fleet Bank, Columbus McKinnon Corporation and Kenneth G.
McCreadie, Peter A. Grant and Robert L. Montgomery, Jr. under the
Columbus McKinnon Corporation Employee Stock Ownership Trust Agreement,
dated November 2, 1995 (incorporated by reference to Exhibit 10.4 to
the Company's Registration Statement No. 33-80687 on Form S-1 dated
December 21, 1995).
10.4 Amendment No. 3 to Amended and Restated Term Loan Agreement by and
among Fleet Bank, Columbus McKinnon Corporation and Karen L. Howard,
Timothy R. Harvey, and Robert L. Montgomery, Jr. as trustees under the
Columbus McKinnon Corporation Employee Stock Ownership Trust Agreement
(incorporated by reference to Exhibit 10.4 to the Company's Annual
Report on Form 10-K for the fiscal year ended March 31, 1999).
10.5 Loan Agreement by and among Columbus McKinnon Corporation
Employee Stock Ownership Trust, Columbus McKinnon Corporation and
Marine Midland Bank, dated October 27, 1994 (incorporated by reference
to Exhibit 10.5 to the Company's Registration Statement No. 33-80687 on
Form S-1 dated December 21, 1995).
10.6 Amended and Restated Term Loan Agreement by and among Columbus
McKinnon Corporation Employee Stock Ownership Trust, Columbus McKinnon
Corporation and Marine Midland Bank, dated August 5, 1996 (incorporated
by reference to Exhibit 10.6 to the Company's Annual Report on Form
10-K for the fiscal year ended March 31, 1999).
10.7 First Amendment to Amended and Restated Term Loan Agreement by and
among Columbus McKinnon Corporation Employee Stock Ownership Trust,
Columbus McKinnon Corporation and Marine Midland Bank, dated October
16, 1996 (incorporated by reference to Exhibit 10.7 to the Company's
Annual Report on Form 10-K for the fiscal year ended March 31, 1999).
10.8 Second Amendment to Amended and Restated Term Loan Agreement by
and among Columbus McKinnon Corporation Employee Stock Ownership Trust,
Columbus McKinnon Corporation and Marine Midland Bank, dated March 31,
1998 (incorporated by reference to Exhibit 10.8 to the Company's Annual
Report on Form 10-K for the fiscal year ended March 31, 1999).
10.9 Third Amendment to Amended and Restated Term Loan Agreement by and
among Columbus McKinnon Corporation Employee Stock Ownership Trust,
Columbus McKinnon Corporation and Marine Midland Bank, dated November
30, 1998 (incorporated by reference to Exhibit 10.9 to the Company's
Annual Report on Form 10-K for the fiscal year ended March 31, 1999).
10.10 Agreement by and among Columbus McKinnon Corporation Employee
Stock Ownership Trust, Columbus McKinnon Corporation and Marine Midland
Bank, dated November 2, 1995 (incorporated by reference to Exhibit 10.6
to the Company's Registration Statement No. 33-80687 on Form S-1 dated
December 21, 1995).
37
10.11 Credit Agreement, dated as of March 31, 1998, among Columbus
McKinnon Corporation, as Borrower, the banks, financial institutions
and other institutional lenders named therein, as Initial Lenders,
Fleet National Bank, as the Initial Issuing Bank, Fleet National Bank,
as the Swing Line Bank, and Fleet National Bank, as the Administrative
Agent (incorporated by reference to Exhibit 10.2 to the Company's
Current Report on Form 8-K dated April 9, 1998).
10.12 First Amendment, dated as of September 23, 1998, to the Credit
Agreement, dated as of March 31, 1998, among Columbus McKinnon
Corporation, as Borrower, the banks, financial institutions and other
institutional lenders named therein, as Initial Lenders, Fleet National
Bank, as the Initial Issuing Bank, Fleet National Bank, as the Swing
Line Bank and Fleet National Bank, as the Administrative Agent
(incorporated by reference to Exhibit 10.1 to the Company's Quarterly
Report on Form 10-Q for the quarterly period ended September 27, 1998).
10.13 Second Amendment, dated as of February 12, 1999, to the Credit
Agreement, dated as of March 31, 1998, among Columbus McKinnon
Corporation, as Borrower, the banks, financial institutions and other
institutional leaders named therein, as Initial Lenders, Fleet National
Bank, as the Initial Issuing Bank, Fleet National Bank, as the Swing
Line Bank and Fleet National Bank, as the Administrative Agent
(incorporated by reference to Exhibit 10.13 to the Company's Annual
Report on Form 10-K for the fiscal year ended March 31, 1999).
10.14 Third Amendment dated as of November 16, 1999, to the Credit
Agreement, dated as of March 31, 1998, among Columbus McKinnon
Corporation, as the Borrower, the banks, financial institutions and
other institutional lenders named therein, as Initial Lenders, Fleet
National Bank, as the Initial Issuing Bank, Fleet National Bank, as the
Swing Line Bank and Fleet National Bank, as the Administrative Agent
(incorporated by reference to Exhibit 10.1 to the Company's Quarterly
Report on Form 10-Q for the quarterly period ended October 3, 1999).
10.15 Fourth Amendment and Waiver, dated as of February 15, 2000, to the
Credit Agreement, dated as of March 31, 1998, among Columbus McKinnon
Corporation, as the Borrower, the banks, financial institutions and
other institutional lenders named therein, as Initial Lenders, Fleet
National Bank, as the Initial Issuing Bank, Fleet National Bank, as the
Swing Line Bank and Fleet National Bank, as the Administrative Agent
(incorporated by reference to Exhibit 10.1 to the Company's Quarterly
Report on Form 10-Q for the quarterly period ended January 2, 2000).
10.16 Fifth Amendment, dated as of September 28, 2000, to the Credit
Agreement, dated as of March 31,1998, among Columbus McKinnon
Corporation, as the Borrower, the banks, financial institutions and
other institutional lenders named therein, as Initial Lenders, Fleet
National Bank, as the Initial Issuing Bank, Fleet National Bank, as the
Swing Line Bank and Fleet National Bank, as the Administrative Agent
(incorporated by reference to Exhibit 10.1 to the Company's Quarterly
Report on Form 10-Q for the quarterly period ended October 1, 2000).
38
10.17 Sixth Amendment, dated as of February 5, 2001, to the Credit
Agreement, dated as of March 31, 1998, among Columbus McKinnon
Corporation, as the Borrower, the banks, financial institutions and
other institutional lenders named therein, as Initial Lenders, Fleet
National Bank, as the Initial Issuing Bank, Fleet National Bank, as the
Swing Line Bank and Fleet National Bank, as the Administrative Agent
(incorporated by reference to Exhibit 10.1 to the Company's Quarterly
Report on Form 10-Q for the quarterly period ended December 31, 2000).
#10.18 Seventh Amendment, dated as of June 26, 2001, to the Credit
Agreement, dated as of March 31, 1998, among Columbus McKinnon
Corporation, as the Borrower, the banks, financial institutions and
other institutional lenders named therein, as Initial Lenders, Fleet
National Bank, as the Initial Issuing Bank, Fleet National Bank, as the
Swing Line Bank and Fleet National Bank, as the Administrative Agent.
*10.19 Columbus McKinnon Corporation Employee Stock Ownership Plan
Restatement Effective April 1, 1989 (incorporated by reference to
Exhibit 10.23 to the Company's Registration Statement No. 33-80687 on
Form S-1 dated December 21, 1995).
*10.20 Amendment No. 1 to the Columbus McKinnon Corporation Employee
Stock Ownership Plan as Amended and Restated as of April 1, 1989, dated
March 2, 1995 (incorporated by reference to Exhibit 10.24 to the
Company's Registration Statement No. 33-80687 on Form S-1 dated
December 21, 1995).
*10.21 Amendment No. 2 to the Columbus McKinnon Corporation Employee
Stock Ownership Plan, dated October 17, 1995 (incorporated by reference
to Exhibit 10.38 to the Company's Annual Report on Form 10-K for the
fiscal year ended March 31, 1997).
*10.22 Amendment No. 3 to the Columbus McKinnon Corporation Employee
Stock Ownership Plan, dated March 27, 1996 (incorporated by reference
to Exhibit 10.39 to the Company's Annual Report on Form 10-K for the
fiscal year ended March 31, 1997).
*10.23 Amendment No. 4 of the Columbus McKinnon Corporation Employee
Stock Ownership Plan as Amended and Restated as of April 1, 1989, dated
September 30, 1996 (incorporated by reference to Exhibit 10.1 to the
Company's Quarterly Report on Form 10-Q for the quarterly period ended
September 30, 1996).
*10.24 Amendment No. 5 to the Columbus McKinnon Corporation Employee
Stock Ownership Plan as Amended and Restated as of April 1, 1989, dated
August 28, 1997 (incorporated by reference to Exhibit 10.37 to the
Company's Annual Report on Form 10-K for the fiscal year ended March
31, 1998).
*10.25 Amendment No. 6 to the Columbus McKinnon Corporation Employee
Stock Ownership Plan as Amended and Restated as of April 1, 1989, dated
June 24, 1998 (incorporated by reference to Exhibit 10.38 to the
Company's Annual Report on Form 10-K for the fiscal year ended March
31, 1998).
39
*10.26 Amendment No. 7 to the Columbus McKinnon Corporation Employee
Stock Ownership Plan as Amended and Restated as of April 1, 1989, dated
April 30, 2000 (incorporated by reference to Exhibit 10.24 to the
Company's Annual Report on Form 10-K for the fiscal year ended March
31, 2000).
*10.27 Columbus McKinnon Corporation Personal Retirement Account Plan
Trust Agreement, dated April 1, 1987 (incorporated by reference to
Exhibit 10.25 to the Company's Registration Statement No. 33-80687 on
Form S-1 dated December 21, 1995).
*10.28 Amendment No. 1 to the Columbus McKinnon Corporation Employee
Stock Ownership Trust Agreement (formerly known as the Columbus
McKinnon Corporation Personal Retirement Account Plan Trust Agreement)
effective November 1, 1988 (incorporated by reference to Exhibit 10.26
to the Company's Registration Statement No. 33-80687 on Form S-1 dated
December 21, 1995).
*10.29 Amended and Restated Columbus McKinnon Corporation Management
EVA(R) Incentive Compensation Plan (incorporated by reference to
Exhibit 10.27 to the Company's Annual Report on Form 10-K for the
fiscal year ended March 31, 2000).
*10.30 Amendment and Restatement of Columbus McKinnon Corporation 1995
Incentive Stock Option Plan (incorporated by reference to Exhibit 10.25
to the Company's Annual Report on Form 10-K for the fiscal year ended
March 31, 1999).
*10.31 Columbus McKinnon Corporation Restricted Stock Plan (incorporated
by reference to Exhibit 10.28 to the Company's Registration Statement
No. 33-80687 on Form S-1 dated December 21, 1995).
*10.32 Amendment and Restatement of Columbus McKinnon Corporation
Non-Qualified Stock Option Plan (incorporated by reference to Exhibit
10.27 to the Company's Annual Report on Form 10-K for the fiscal year
ended March 31, 1999).
*10.33 Columbus McKinnon Corporation Thrift [401(k) Plan] 1989
Restatement Effective January 1, 1998 (incorporated by reference to
Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for the
quarterly period ended December 27, 1998).
*10.34 Amendment No. 1 to the 1998 Plan Restatement of the Columbus
McKinnon Corporation Thrift 401(K) Plan, dated December 10, 1998
(incorporated by reference to Exhibit 10.29 to the Company's Annual
Report on Form 10-K for the fiscal year ended March 31, 1999).
*10.35 Amendment No. 2 to the 1998 Plan Restatement of the Columbus
McKinnon Corporation Thrift 401 (K) Plan, dated June 1, 2000
(incorporated by reference to Exhibit 10.33 to the Company's Annual
Report on Form 10-K for the fiscal year ended March 31, 2000).
40
*10.36 Columbus McKinnon Corporation Thrift [401(k)] Plan Trust Agreement
Restatement Effective August 9, 1994 (incorporated by reference to
Exhibit 10.32 to the Company's Registration Statement No. 33-80687 on
Form S-1 dated December 21, 1995).
*10.37 Columbus McKinnon Corporation Monthly Retirement Benefit Plan
Restatement Effective April 1, 1998 (incorporated by reference to
Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the
quarterly period ended December 27, 1998).
*10.38 Amendment No. 1 to the 1998 Plan Restatement of the Columbus
McKinnon Corporation Monthly Retirement Benefit Plan, dated December
10, 1998 (incorporated by reference to Exhibit 10.32 to the Company's
Annual Report on Form 10-K for the fiscal year ended March 31, 1999).
*10.39 Amendment No. 2 to the 1998 Plan Restatement of the Columbus
McKinnon Corporation Monthly Retirement Benefit Plan, dated May 26,
1999 (incorporated by reference to Exhibit 10.33 to the Company's
Annual Report on Form 10-K for the fiscal year ended March 31, 1999).
*10.40 Columbus McKinnon Corporation Monthly Retirement Benefit Plan
Trust Agreement effective as of April 1, 1987 (incorporated by
reference to Exhibit 10.34 to the Company's Registration Statement No.
33-80687 on Form S-1 dated December 21, 1995).
*10.41 Form of change in Control Agreement as entered into between
Columbus McKinnon Corporation and each of Timothy T. Tevens, Robert L.
Montgomery, Jr., Ned T. Librock, Karen L. Howard, Lois H. Demler,
Timothy R. Harvey, John Hansen and Neal Wixson (incorporated by
reference to Exhibit 10.33 to the Company's Annual Report on Form 10-K
for the fiscal year ended March, 31, 1998).
10.42 Stock Purchase Agreement, dated as of March 11, 1998, among
Columbus McKinnon Corporation and the shareholders of LICO, Inc.
identified on the signature pages thereto (incorporated by reference to
Exhibit 10.1 to the Company's Current Report on Form 8-K dated April 9,
1998).
10.43 Agreement and Plan of Merger, dated as of February 16, 1999,
by and among Columbus McKinnon Corporation, GL International, Inc. and
Larco Industrial Services, Ltd. (incorporated by reference to Exhibit
10.37 to the Company's Annual Report on Form 10-K for the fiscal year
ended March 31, 1999).
10.44 Columbus McKinnon Corporation - GL International Inc. 1997 Stock
Option Plan (incorporated by reference to Exhibit 10.38 to the
Company's Annual Report on Form 10-K for the fiscal year ended March
31, 1999).
10.45 Columbus McKinnon Corporation - Larco Industrial services, Ltd.
1997 Stock Option Plan (incorporated by reference to Exhibit 10.39 to
the Company's Annual Report on Form 10-K for the fiscal year ended
March 31, 1999).
41
*10.46 Form of Stay Agreement as entered into between Columbus McKinnon
Corporation and each of Timothy T. Tevens, Robert L. Montgomery, Jr.,
Ned T. Librock, Karen L. Howard, and Joseph J. Owen (incorporated by
reference to Exhibit 10.44 to the Company's Annual Report on Form 10-K
for the fiscal year ended March 31, 2000).
10.47 Amendment to Form of Stay Agreement as entered into between
Columbus McKinnon Corporation and each of Timothy T. Tevens, Robert L.
Montgomery, Jr., Ned T. Librock, Karen L. Howard, and Joseph J. Owen
(incorporated by reference to Exhibit 10.2 to the Company's Quarterly
Report on Form 10-Q for the quarterly period ended December 31, 2000).
#21.1 Subsidiaries of the Registrant.
#23.1 Consent of Ernst & Young LLP.
#99.1 Form 11-K Columbus McKinnon Corporation Employee Stock Ownership
Plan Annual Report for the year ended March 31, 2001.
* INDICATES A MANAGEMENT CONTRACT OR COMPENSATION PLAN OR ARRANGEMENT.
# FILED HEREWITH
(b) REPORTS ON FORM 8-K:
On February 20, 2001, the Company filed a Current Report on Form 8-K
with respect to a press release issued to announce the completion of
its previously announced review of strategic alternatives to maximize
shareholder value, including a sale or merger of the Company.
On June 4, 2001, the Company filed a Current Report on Form 8-K with
respect to a press release issued to announce a major step in its
facility rationalization program with the closure of its Forrest City,
Arkansas plant.
42
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the registrant has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Buffalo,
State of New York on June 29, 2001.
COLUMBUS McKINNON CORPORATION
By: /S/ TIMOTHY T. TEVENS
-----------------------------
Timothy T. Tevens
President and Chief Executive Officer
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.
SIGNATURE TITLE DATE
--------- ----- ----
/S/ TIMOTHY T. TEVENS President, Chief Executive June 29, 2001
- ------------------------------
Timothy T. Tevens Officer and Director
(Principal Executive Officer)
/S/ ROBERT L. MONTGOMERY, JR. Executive Vice President, June 29, 2001
- ------------------------------
Robert L. Montgomery, Jr. Chief Financial Officer
and Director(Principal
Financial Officer and
Principal Accounting Officer)
/S/ HERBERT P. LADDS, JR. Chairman of the Board June 29, 2001
- ------------------------------
Herbert P. Ladds, Jr. of Directors
/S/ RANDOLPH A. MARKS Director June 29, 2001
- ------------------------------
Randolph A. Marks
/S/ L. DAVID BLACK Director June 29, 2001
- ------------------------------
L. David Black
/S/ CARLOS PASCUAL Director June 29, 2001
- ------------------------------
Carlos Pascual
/S/ RICHARD H. FLEMING Director June 29, 2001
- ------------------------------
Richard H. Fleming
43