NEWS RELEASE
CONTACT:
Robert L. Montgomery, Jr.
Executive Vice President and Chief Financial Officer
Columbus McKinnon Corporation
716-689-5405
COLUMBUS MCKINNON ANNOUNCES FISCAL 2004 FIRST QUARTER RESULTS
DEBT REDUCED BY $9.1 MILLION TO $305.3 MILLION
AMHERST, N.Y., July 22, 2003 -- Columbus McKinnon Corporation (Nasdaq:
CMCO), a leading designer and manufacturer of material handling products,
today announced its financial results for the fiscal 2004 first quarter,
which ended on June 29, 2003.
Columbus McKinnon's fiscal 2004 first quarter consolidated net sales were
$106.6 million, compared with $113.9 million a year ago, a decrease of 6.4%.
Income from operations after restructuring charges and amortization was $7.3
million for the fiscal 2004 first quarter, compared with $9.5 million in the
fiscal 2003 first quarter. Net income for the first quarter of fiscal 2004
was $0.5 million, or $0.03 per diluted share, compared with net (loss) of
($4.5 million), or ($0.31) per diluted share, (after the cumulative effect
of a change in accounting principle charge of $8.0 million, or ($0.55) per
diluted share, related to adoption of FAS 142) in the fiscal 2003 first
quarter.
Timothy T. Tevens, President and Chief Executive Officer, commented, "We
continue to have a strong market position and generate positive cash flow,
despite the prolonged weakness in industrial markets largely due to low
levels of industrial capacity utilization and capital spending. Over the
last year, our quarterly sales seemed to have stabilized for most of our
businesses and we have maintained a leading market share in our key product
lines. We have taken significant costs out of our business through our Lean
Manufacturing, facility rationalization, and other initiatives so we are
well positioned to benefit from incremental increases in volumes going
forward."
Tevens continued, "We have made significant progress in reducing and
restructuring debt that will substantially improve our future financial
flexibility. Columbus McKinnon's long-term debt at first quarter-end was at
its lowest level in over five years. We anticipate closing today on our
previously announced $115 million offering of 10% senior secured notes which
will reduce annual interest expense by about $3.0 million, and extend the
maturity of a significant portion of our long-term debt by three years. To
generate additional cash for debt reduction, we are also actively marketing
several pieces of property and continue to evaluate the possible sale of
less synergistic businesses."
Results for the first quarter of fiscal 2004 include a $3.3 million pre-tax
gain related to the sale of real estate recorded as other income and
expense, net, and a $1.2 million charge for amending the credit agreements
in June 2003 recorded in interest and debt expense. The fiscal 2004 first
quarter included restructuring charges of $0.8 million, compared with no
restructuring charges in the year-ago quarter. Net cash provided by
operating activities in the fiscal 2004 first quarter includes a $10.6
million cash tax refund related to the May 2002 sale of the ASI business
that was received in late June 2003 and was applied to debt reduction.
Fiscal 2003 first quarter results include a $3.5 million pre-tax gain
included in other income and expense, net related to the sale of a portion
of the equity portfolio of Columbus McKinnon's captive insurance subsidiary.
At June 29, 2003, Columbus McKinnon's funded debt, net of cash, was $305.3
million, a $9.1 million reduction from $314.4 million at March 31, 2003 and
a reduction of $21.3 million from $326.6 million at June 30, 2002. The
Company was in compliance with its senior bank debt covenants at June 29,
2003. Inventory at June 29, 2003 was $75.2 million, a 14.6% decrease from
$88.1 million, a year earlier.
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Tevens concluded, "Columbus McKinnon's strategic focus going forward is on
our core Products business, which makes up over 85% of revenues and
continues to generate gross margins of over 25% even in the current weak
sales environment. While the current sales of our Products business are
below normal levels, this business continues to sell into almost every major
industrial and commercial market and is one where Columbus McKinnon holds a
very strong reputation and competitive position. To further reduce costs and
improve operating results going forward, we are targeting additional debt
reduction from operations of $10 to $20 million during the remainder of
fiscal 2004, not including additional cash we may generate from the
potential sale of real estate and less synergistic businesses. We are also
looking for $6 to $9 million in inventory reductions this year while
continuing to emphasize excellent customer service and on-time deliveries.
We will remain very focused on protecting and expanding Columbus McKinnon's
market share and coverage, while continuing to reduce costs and debt to make
further improvements in our operating results and financial position."
Columbus McKinnon is a leading worldwide designer and manufacturer of
material handling products, systems and services, which efficiently and
ergonomically move, lift, position or secure material. Key products include
hoists, cranes, chain and forged attachments. The Company is focused on
commercial and industrial applications that require the safety and quality
provided by its superior design and engineering know-how. Comprehensive
information on Columbus McKinnon is available on its web site at
HTTP://WWW.CMWORKS.COM .
A teleconference/webcast has been scheduled for July 22, 2003 at 10:00 AM
Eastern Time at which the executive officers of Columbus McKinnon will
discuss the company's financial results and strategy. The webcast will be
accessible at Columbus McKinnon's web site: HTTP://WWW.CMWORKS.COM. It will
also be broadcast over the FirstCall Events web site at: Thomson Financial
Network at: HTTP://WWW.FIRSTCALLEVENTS.COM/SERVICE/AJWZ385378058GF12.HTML .
You must have Windows Media Player or RealPlayer's audio software on your
computer to listen to the call. Both are available for downloading on the
Columbus McKinnon web site and the FirstCall Events web site at no charge.
An audio recording of the call will be available two hours after its
completion and until September 22, 2003 by dialing 1-800-925-0870.
Alternatively, you may access an archive of the call until September 22,
2003 on Columbus McKinnon's web site at:
HTTP://WWW.CMWORKS.COM/WEBCAST/ARCHIVE.ASP. The call will also be archived
on the FirstCall Events web site until September 22, 2003.
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 amend its debt covenants with its lenders, 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.
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COLUMBUS MCKINNON CORPORATION
CONSOLIDATED INCOME STATEMENTS
THREE MONTHS ENDED
-----------------------------------------------
6/29/03 6/30/02
-----------------------------------------------
(IN THOUSANDS, EXCEPT
PER SHARE AND PERCENTAGE DATA)
Net sales $ 106,575 $ 113,891
Cost of products sold 80,677 86,261
-----------------------------------------------
Gross profit 25,898 27,630
Gross profit margin 24.3% 24.3%
Selling, general and administrative expenses 17,689 18,027
Restructuring charges 801 -
-----------------------------------------------
Income from operations before amortization 7,408 9,603
Amortization of intangibles 142 129
-----------------------------------------------
Income from operations 7,266 9,474
Interest and debt expense 9,672 7,277
Other (income) and expense, net (3,094) (3,493)
-----------------------------------------------
Income before income tax 688 5,690
Income tax expense 189 2,191
-----------------------------------------------
Income before cumulative effect of accounting change 499 3,499
Cumulative effect of change in accounting principle - (8,000)
-----------------------------------------------
Net income (loss) $ 499 $ (4,501)
===============================================
Average basic and diluted shares outstanding 14,539 14,478
Basic and diluted income (loss) per share:
Income before cumulative effect of accounting
change $ 0.03 $ 0.24
Cumulative effect of change in accounting principle - (0.55)
-----------------------------------------------
Net income (loss) $ 0.03 $ (0.31)
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COLUMBUS McKINNON CORPORATION
CONSOLIDATED BALANCE SHEETS
(In Thousands)
6/29/03 3/31/03
----------------------------------
ASSETS
Current assets:
Cash and cash equivalents $ 5,226 $ 1,943
Trade accounts receivable 77,965 79,335
Unbilled revenues 9,891 8,861
Inventories 75,248 78,613
Net assets held for sale 1,800 1,800
Prepaid expenses 12,571 10,819
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Total current assets 182,701 181,371
Net property, plant, and equipment 67,087 67,295
Goodwill and other intangibles, net 195,117 195,129
Marketable securities 23,804 21,898
Deferred taxes on income 14,747 15,245
Other assets 1,916 1,668
----------------------------------
Total assets $ 485,372 $ 482,606
==================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Notes payable to banks $ 6,516 $ 2,245
Trade accounts payable 23,421 28,654
Accrued liabilities 45,021 36,540
Restructuring reserve 2,061 2,331
Current portion of long-term debt 4,838 4,981
----------------------------------
Total current liabilities 81,857 74,751
Senior debt, less current portion 99,464 109,355
Subordinated debt 199,747 199,734
Other non-current liabilities 46,288 46,059
----------------------------------
Total liabilities 427,356 429,899
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Shareholders' equity:
Common stock 149 149
Additional paid-in capital 104,283 104,412
Accumulated deficit (26,048) (26,547)
ESOP debt guarantee (5,562) (5,709)
Unearned restricted stock (208) (208)
Accumulated other comprehensive loss (14,598) (19,390)
----------------------------------
Total shareholders' equity 58,016 52,707
----------------------------------
Total liabilities and shareholders' equity $ 485,372 $ 482,606
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COLUMBUS McKINNON CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOW
THREE MONTHS ENDED
-------------------------------------
6/29/03 6/30/02
-------------------------------------
(IN THOUSANDS)
OPERATING ACTIVITIES:
Net income before cumulative effect of accounting change $ 499 $ 3,499
Adjustments to reconcile net income before cumulative effect of accounting
change to net cash provided (used in) operating activities:
Depreciation and amortization 2,735 2,866
Deferred income taxes 498 31
Gain on sale of real estate/investments (3,282) (2,757)
Other 496 575
Changes in operating assets and liabilities:
Trade accounts receivable 2,286 777
Unbilled revenues and excess billings (1,152) 57
Inventories 4,827 (2,156)
Prepaid expenses (1,717) (1,939)
Other assets (66) 68
Trade accounts payable (6,030) (549)
Accrued and non-current liabilities 7,885 (6,614)
-------------------------------------
Net cash provided by (used in) operating activities 6,979 (6,142)
-------------------------------------
INVESTING ACTIVITIES:
Purchase of marketable securities, net (415) (50)
Capital expenditures (1,499) (950)
Proceeds from sale of business - 15,950
Proceeds from net assets held for sale 3,282 1,990
-------------------------------------
Net cash provided by investing activities 1,368 16,940
-------------------------------------
FINANCING ACTIVITIES:
Net borrowings (payments) under revolving line-of-credit agreements 15,424 (21,529)
Repayment of debt (20,689) (334)
Deferred financing costs incurred (205) (852)
Other 147 116
-------------------------------------
Net cash used in financing activities (5,323) (22,599)
EFFECT OF EXCHANGE RATE CHANGES ON CASH 259 510
-------------------------------------
Net cash provided by (used in) continuing operations 3,283 (11,291)
NET CASH PROVIDED BY DISCONTINUED OPERATIONS - 482
-------------------------------------
Net change in cash and cash equivalents 3,283 (10,809)
Cash and cash equivalents at beginning of year 1,943 13,068
-------------------------------------
Cash and cash equivalents at end of period $ 5,226 $ 2,259
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COLUMBUS McKINNON CORPORATION
PRODUCTS SOLUTIONS CONSOLIDATED
--------------------------------------------------------------
(IN THOUSANDS, EXCEPT FOR PERCENTAGES)
Quarter ended 6/29/03
Net sales 91,957 14,618 106,575
Gross profit 23,719 2,179 25,898
Margin 25.8% 14.9% 24.3%
Income from operations before
amortization and restructuring charges 8,148 61 8,209
Margin 8.9% 0.4% 7.7%
Quarter ended 6/30/02
Net sales 97,854 16,037 113,891
Gross profit 24,958 2,672 27,630
Margin 25.5% 16.7% 24.3%
Income from operations before
amortization and restructuring charges 8,960 643 9,603
Margin 9.2% 4.0% 8.4%
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COLUMBUS McKINNON CORPORATION
OTHER CONSOLIDATED INFORMATION
JUNE 29, 2003 JUNE 30, 2002
------------- -------------
Backlog (in millions)
Products segment $ 46.3 $ 42.7
Solutions segment 9.4 18.7
Trade accounts receivable -
days sales outstanding 65.8 67.4
Inventory turns per year (based on
cost of products sold) 4.3x 3.9x
Trade accounts payable -
days payables outstanding 26.1 33.6
Debt to total capitalization percentage 84.3% 80.9%