NEWS RELEASE
CONTACT:
Robert L. Montgomery, Jr.
Executive Vice President and Chief Financial Officer
Columbus McKinnon Corporation
716-689-5405
COLUMBUS MCKINNON CORPORATION ANNOUNCES SALE OF AUTOMATIC SYSTEMS
-----------------------------------------------------------------
AMHERST, N.Y., May 13, 2002 -- Columbus McKinnon Corporation (Nasdaq: CMCO),
today announced the sale of substantially all of the assets of its subsidiary
Automatic Systems, Inc. (ASI). The purchaser, George K. Baum Capital Partners,
L.P. of Kansas City, Missouri, in conjunction with ASI management, have paid
$20.6 million in cash and provided a 10-year subordinated note for $6.8 million,
for a total purchase price of $27.4 million. The sale did not include ASI's
steel erection subsidiary, LICO Steel. The transaction includes provisions for
additional payments to Columbus McKinnon of up to $10 million over the next two
years based on the financial performance of the purchaser. Columbus McKinnon may
also receive a share of certain designated receivables of up to $2 million.
The cash proceeds of the sale will be used to reduce senior bank debt. Columbus
McKinnon had previously announced on July 24, 2001, that it was evaluating
strategic alternatives for its Solutions-Automotive segment, including a
possible sale of ASI, the principal business unit of this segment.
Timothy T. Tevens, President and Chief Executive Officer commented, "ASI did not
prove to be a good fit for us mainly because of the highly volatile nature of
its business, its significant dependence on the auto industry and its heavy use
of working capital. He added, "Despite the fact that the write-off associated
with this transaction will increase our financial leverage, it furthers our
efforts to reduce debt and interest expense. With this sale and our continued
facility rationalization and implementation of lean manufacturing practices
throughout our operations, we are better positioned to capitalize on a
potentially improving economy."
Columbus McKinnon expects to record a loss on the sale of discontinued
operations of approximately $125 million, which includes $105 million of
goodwill. The loss will be reported in its fiscal fourth quarter of 2002 and ASI
will be classified as a discontinued operation. Columbus McKinnon's financial
results for the 2002 fourth quarter and fiscal year ended on March 31, 2002 will
be announced on May 21, 2002.
As a result of ASI's sale, the Company will not be in compliance with certain
covenants of its bank lending agreements as of March 31, 2002 and is in the
process of negotiating a new bank agreement and credit facility, which it
expects to have in place by June 30, 2002. The Company also indicated that it
had sufficient liquidity to fund its working capital needs until a new bank
agreement is in place.
Mr. Tevens continued, "Our objective is to enhance our financial flexibility. We
continue to focus on improving profitability, and we believe we can maintain our
U.S. market dominance, grow sales and expand our global presence by introducing
innovative material handling products and solutions. For the long term, our goal
is to get our balance sheet to approximately 50% debt and 50% equity."
The Company will hold a conference call on May 21, 2002 to discuss its fiscal
2002 fourth quarter and full year financial results, outlook and strategy for
fiscal 2003, which began on April 1, 2002. Information about the webcast of the
conference call will be released separately.
ABN AMRO Incorporated acted as a financial advisor to Columbus McKinnon in the
transaction.
Columbus McKinnon is a leading US designer and manufacturer of material handling
products, systems and services which efficiently and ergonomically move, lift,
position or secure material. This includes hoists, cranes, chains and forged
attachments. The Company is focused on commercial and industrial applications
that require the safety and quality provided by its superior material handling
design and engineering know-how. Columbus McKinnon is seeking to maintain its
U.S. market dominance and capture greater global market share through new
products, systems and services. Comprehensive information on Columbus McKinnon
is available on its Web site at HTTP://WWW.CMWORKS.COM
This press release contains "forward-looking statements" within the meaning of
the Private Securities Litigation Reform Act of 1995. Such statements include,
but are not limited to, statements concerning future revenue and earnings,
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 Company's ability to renegotiate
its senior debt, and other factors disclosed in the Company's periodic reports
filed with the Securities and Exchange Commission. The Company assumes no
obligation to update the forward-looking information contained in this release.
###