UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT 1934
For the quarterly period ended June 29, 2003
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934.
For the transition period from to
------------------- --------------------
Commission File Number: 0-27618
COLUMBUS MCKINNON CORPORATION
- -------------------------------------------------------------------------77
(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, NY 14228-1197
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(Address of principal executive offices) (Zip code)
(716) 689-5400
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(Registrant's telephone number, including area code)
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(Former name, former address and former fiscal year, if changed since
last report.)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. : [X] Yes [ ] No
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Securities Exchange Act of 1934): [ ] Yes [ X ] No
The number of shares of common stock outstanding as of July 31, 2003 was:
14,896,172 shares.
FORM 10-Q INDEX
COLUMBUS MCKINNON CORPORATION
JUNE 29, 2003
PAGE #
------
PART I. FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements (Unaudited)
Condensed consolidated balance sheets -
June 29, 2003 and March 31, 2003 2
Condensed consolidated statements of operations
and retained earnings - Three months ended
June 29, 2003 and June 30, 2002 3
Condensed consolidated statements of cash flows -
Three months ended June 29, 2003 and June 30, 2002 4
Condensed consolidated statements of comprehensive
income - Three months ended June 29, 2003
and June 30, 2002 5
Notes to condensed consolidated financial statements -
June 29, 2003 6
Item 2. Management's Discussion and Analysis of Results of
Operations and Financial Condition 14
Item 3. Quantitative and Qualitative Disclosures About Market Risk 19
Item 4. Controls and Procedures 19
PART II. OTHER INFORMATION
Item 1. Legal Proceedings - none. 20
Item 2. Changes in Securities - none. 20
Item 3. Defaults upon Senior Securities - none. 20
Item 4. Submission of Matters to a Vote of Security Holders - none. 20
Item 5. Other Information - none. 20
Item 6. Exhibits and Reports on Form 8-K 20
- 1 -
PART I. FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements (Unaudited)
COLUMBUS MCKINNON CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
JUNE 29, MARCH 31,
2003 2003
---------- ----------
ASSETS: (IN THOUSANDS)
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
---------- ----------
Total current assets 182,701 181,371
Property, plant, and equipment, net 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
---------- ----------
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
========== ==========
SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
- 2 -
COLUMBUS MCKINNON CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
(UNAUDITED)
THREE MONTHS ENDED
------------------
JUNE 29, JUNE 30,
2003 2002
---------- ----------
(IN THOUSANDS, EXCEPT
PER SHARE DATA)
Net sales $ 106,575 $ 113,891
Cost of products sold 80,677 86,261
---------- ----------
Gross profit 25,898 27,630
---------- ----------
Selling expenses 11,922 11,323
General and administrative expenses 5,767 6,704
Restructuring charges 801 -
Amortization of intangibles 142 129
---------- ----------
18,632 18,156
---------- ----------
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 from operations before income tax expense
and cumulative effect of accounting change 688 5,690
Income tax expense 189 2,191
---------- ----------
Income from operations before cumulative effect
of accounting change 499 3,499
Cumulative effect of change in accounting principle - (8,000)
----------- ----------
Net income (loss) 499 (4,501)
Accumulated deficit - beginning of period (26,547) (12,536)
---------- ----------
Accumulated deficit - end of period $ (26,048) $ (17,037)
=========== ==========
Earnings per share data, basic and diluted:
Income from operations before cumulative effect
of accounting change $ 0.03 $ 0.24
Cumulative effect of accounting change - (0.55)
---------- ----------
Net income (loss) $ 0.03 $ (0.31)
========== ==========
SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
- 3 -
COLUMBUS MCKINNON CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
THREE MONTHS ENDED
------------------
JUNE 29, JUNE 30,
2003 2002
---------- ----------
(IN THOUSANDS)
OPERATING ACTIVITIES:
Income from operations before cumulative effect
of accounting change $ 499 $ 3,499
Adjustments to reconcile income from operations to net
cash provided by (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 (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
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 16,602 (21,529)
Repayment of debt (21,867) (334)
Reduction of ESOP debt guarantee 147 116
Other (205) (852)
---------- -----------
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 period 1,943 13,068
---------- ----------
Cash and cash equivalents at end of period $ 5,226 $ 2,259
========== ==========
SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
- 4 -
COLUMBUS MCKINNON CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)
THREE MONTHS ENDED
------------------
JUNE 29, JUNE 30,
2003 2002
---------- ----------
(IN THOUSANDS)
Net income (loss) $ 499 $ (4,501)
---------- ----------
Other comprehensive income, net of tax:
Foreign currency translation adjustments 3,110 5,623
Unrealized gain (loss) on derivatives qualifying as hedges 191 (130)
Unrealized gain (loss) on investments:
Unrealized holding gain (loss) arising during the period 1,278 (989)
Less: reclassification adjustment for loss
(gain) included in net income 213 (2,034)
---------- ----------
1,491 (3,023)
---------- ----------
Total other comprehensive income 4,792 2,470
---------- ----------
Comprehensive income (loss) $ 5,291 $ (2,031)
========== ==========
SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
- 5 -
COLUMBUS MCKINNON CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(TABULAR AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)
JUNE 29, 2003
1. The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles
for interim financial information. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary
for a fair presentation of the financial position of Columbus McKinnon
Corporation (the Company) at June 29, 2003, and the results of its
operations and its cash flows for the three month periods ended June 29,
2003 and June 30, 2002, have been included. Results for the period ended
June 29, 2003 are not necessarily indicative of the results that may be
expected for the year ended March 31, 2004. For further information, refer
to the consolidated financial statements and footnotes thereto included in
the Company's annual report on Form 10-K for the year ended March 31, 2003.
The Company is a leading U.S. designer and manufacturer of material
handling products, systems and services which efficiently and ergonomically
move, lift, position and secure material. Key products include hoists,
cranes, chain and forged attachments. 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 businesses 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.
2. The Company has two stock-based employee compensation plans in effect. The
Company accounts for these plans under the recognition and measurement
principles of Accounting Principles Board Opinion No. 25, "Accounting for
Stock Issued to Employees" (APB 25) and related Interpretations. No
stock-based employee compensation cost is reflected in net income, as all
options granted under these plans had an exercise price equal to the market
value of the underlying common stock on the date of grant and the number of
options granted was fixed. The following table illustrates the effect on
net income and earnings per share if the Company had applied the fair value
recognition of SFAS No. 123 "Accounting for Stock-Based Compensation", to
stock-based employee compensation:
THREE MONTHS ENDED
--------------------------------------
JUNE 29, 2003 JUNE 30, 2002
--------------------------------------
Net income (loss), as reported......................... $ 499 $ (4,501)
Deduct: Total stock based employee compensation
expenses determined under fair value based method
for all awards, net of related tax effects........... (141) (255)
--------------------------------------
Net income (loss), pro forma......................... $ 358 $ (4,756)
======================================
Basic and diluted income (loss) per share:
As reported.......................................... $ 0.03 $ (0.31)
======================================
Pro forma............................................ $ 0.02 $ (0.33)
======================================
- 6 -
3. Inventories consisted of the following:
JUNE 29, MARCH 31,
2003 2003
---------- ----------
At cost - FIFO basis:
Raw materials..................... $ 39,266 $ 42,707
Work-in-process................... 10,399 10,361
Finished goods.................... 33,229 33,072
---------- ----------
82,894 86,140
LIFO cost less than FIFO cost.......... (7,646) (7,527)
---------- ----------
Net inventories ..................... $ 75,248 $ 78,613
========== ==========
An actual valuation of inventory under the LIFO method can be made only at
the end of each year based on the inventory levels and costs at that time.
Accordingly, interim LIFO calculations must necessarily be based on
management's estimates of expected year-end inventory levels and costs.
Because these are subject to many forces beyond management's control,
interim results are subject to the final year-end LIFO inventory valuation.
4. On November 21, 2002, the Company refinanced its credit facilities. The new
arrangement consisted of a Revolving Credit Facility, a Term Loan, and a
Senior Second Secured Term Loan. The Revolving Credit Facility provides
availability up to a maximum of $57 million ($22 million outstanding at
June 29, 2003). Interest is payable at varying Eurodollar rates based on
LIBOR or prime plus a spread determined by the Company's leverage ratio
amounting to 275 or 150 basis points, respectively, at June 29, 2003 (4.00%
or 5.50%). The Revolving Credit Facility is secured by all domestic and
Canadian inventory, receivables, equipment, real property, subsidiary stock
(limited to 65% for foreign subsidiaries) and intellectual property.
The Term Loan requires quarterly payments of $1,179,000, which, with the
effect of the refinancing described below, would result in repayment in
full on October 1, 2005. Interest is payable at varying Eurodollar rates
based on LIBOR plus a spread determined by the Company's leverage ratio
amounting to 325 basis points at June 29, 2003 (4.54%). The Term Loan is
secured by all domestic inventory, receivables, equipment, real property,
subsidiary stock (limited to 65% for foreign subsidiaries) and intellectual
property.
The Senior Second Secured Term loan was repaid in its entirety on July 22,
2003 as outlined below. As a result of the repayment occurring prior to the
first anniversary of the loan, approximately $1.1 million of interest
expense will be reversed in the second quarter of fiscal 2004.
The corresponding credit agreements associated with the Revolving Credit
Facility and the Term Loan place certain debt covenant restrictions on the
Company including certain financial requirements and a restriction on
dividend payments.
The carrying amount of the Company's senior debt instruments approximates
the fair value based on current market rates. At June 29, 2003, the
Company's subordinated debt had an approximate fair market value of
$158,000,000 based on quoted market prices, which is less than the carrying
amount of $199,747,000.
From time to time, the Company manages its debt portfolio by using interest
rate swaps to achieve an overall desired position of fixed and floating
rates. The Company entered into an interest rate swap agreement, which
matured in June 2003. The cash flow hedge was considered effective and the
gain or loss on the change in fair value was reported in other
comprehensive loss, net of tax and amounted to a gain of $191 for the
fiscal 2004 quarter versus a loss of $130 for the fiscal 2003 quarter.
- 7 -
On July 22, 2003, the Company issued $115 million of 10% Senior Secured
Notes (10% Notes) due August 1, 2010. The following table sets forth actual
long-term debt as of June 29, 2003 and as adjusted to give effect to the
use of proceeds from the note offering:
JUNE 29, 2003
--------------------------------
ACTUAL AS ADJUSTED
--------------------------------
Revolving Credit Facility............... $ 22,203 $ 12,203
Term Loan............................... 14,635 10,735
Senior Second Secured Term Loan......... 66,800 -
10% Senior Secured Notes................ - 115,000
Other senior debt....................... 664 664
8 1/2% Senior Subordinated Notes........ 199,747 164,097
--------------------------------
Total long-term debt.................... $ 304,049 $ 302,699
================================
Provisions of the 10% Notes include, without limitation, restrictions on
indebtedness, restricted payments, asset and subsidiary stock sales, liens,
and other restricted transactions. The 10% Notes are not entitled to
redemption at the option of the Company, prior to August 1, 2007 in the
absence of an equity offering. The Company may redeem up to 35% of the
outstanding notes at a redemption price of 110.0% with the proceeds of
equity offerings, subject to certain restrictions. On and after August 1,
2007, they are redeemable at prices declining annually to 100% on and after
August 1, 2009. In the event of a Change of Control (as defined in the
indenture for such notes), each holder of the 10% Notes may require the
Company to repurchase all or a portion of such holder's 10% Notes at a
purchase price equal to 101% of the principal amount thereof. The 10% Notes
are secured by a second-priority interest in all domestic inventory,
receivables, equipment, real property, subsidiary stock (limited to 65% for
foreign subsidiaries) and intellectual property. The 10% Notes are
guaranteed by certain existing and future domestic subsidiaries and are not
subject to any sinking fund requirements.
As a result of the bond offering and repayment of the Senior Second Secured
Term Loan and a portion of the Term Loan and 8 1/2% Senior Subordinated
Notes, approximately $4.9 million of deferred financing costs will be
written-off in the second quarter of fiscal 2004. Approximately $3.0
million of new deferred financing costs were incurred and will be amortized
over the seven year term of the 10% Notes. In addition, a $5.6 million gain
will be recorded in the fiscal 2004 quarter for the redemption of the 8
1/2% Notes at a discount.
Also, effective August 4, 2003, the Company entered into an interest rate
swap agreement to effectively convert $93.5 million of fixed-rate debt
(10%) to variable-rate debt (LIBOR plus 578.2 basis points) through August
2008 and $57.5 million from August 2008 through August 2010.
5. Upon the adoption of SFAS No. 142, the Company recorded a one-time,
non-cash charge of $8,000,000 to reduce the carrying value of its goodwill
as of April 1, 2002. Such charge is reflected as a cumulative effect of a
change in accounting principle in the accompanying consolidated statement
of operations. The impairment charge was related to the Cranebuilder
reporting unit in the Products segment and the Univeyor reporting unit in
the Solutions segment. In relation to the initial adoption of SFAS No. 142,
goodwill was allocated among the reporting units so that goodwill was
allocated to the units that benefited from the acquisitions. The Company
will record any future impairment charges as a component of operating
income.
- 8 -
6. During the first quarter of fiscal 2004, the Company implemented a
Corporate-wide reorganization plan and recorded restructuring costs of $0.8
million related to various employee termination benefits. All of these
costs are related to the Products segment, with the exception of
approximately $0.1 million. Approximately 40 employees were to be
terminated at the various facilities. As of June 29, 2003, substantially
all of the terminations had occurred, with the remainder to occur by the
end of the second quarter of fiscal 2004. The liability as of June 29, 2003
consists of severance payments and costs associated with the preparation
and maintenance of non-operating of facilities prior to disposal which were
accrued prior to the adoption of SFAS No. 146 "Accounting for Costs
Associated with Exit or Disposal Activities." Regarding our fiscal 2003
projects, of the four facilities being completely closed and prepared for
disposal, two are expected to be disposed of in the second quarter of
fiscal 2004 and two others in the second half of Fiscal 2005.
The following table provides a reconciliation of the activity related to
restructuring reserves, segregated by year and between employee costs
("employee") and facility closure related costs ("facility"):
FISCAL 2002 FISCAL 2003 FISCAL 2004
----------- ------------------------ -----------
FACILITY EMPLOYEE FACILITY EMPLOYEE TOTAL
-------------------------------------------------------------------------
Reserve at March 31, 2003....... $ 360 $ 922 $ 1,049 $ - $ 2,331
Fiscal 2004 first quarter
restructuring charges........ - 41 97 663 801
Cash payments................... (33) (416) (345) (277) (1,071)
-------------------------------------------------------------------------
Reserve at June 29, 2003........ $ 327 $ 547 $ 801 $ 386 $ 2,061
=========================================================================
7. Income tax expense as a percentage of income before income tax expense was
27.5% and 38.5% in the fiscal 2004 and 2003 quarters, respectively. The
percentage for fiscal 2004 varies from the U.S. statutory rate due to
jurisdictional mix.
8. The following table sets forth the computation of basic and diluted
earnings per share:
THREE MONTHS ENDED
JUNE 29, JUNE 30,
2003 2002
---------- ----------
Numerator for basic and diluted earnings per share:
Net income (loss) ................................................. $ 499 $ (4,501)
========== ==========
Denominators:
Weighted-average common stock outstanding -
denominator for basic EPS...................................... 14,539 14,477
Effect of dilutive employee stock options.......................... - -
---------- ----------
Adjusted weighted-average common stock outstanding
and assumed conversions - denominator for diluted EPS............ 14,539 14,477
========== ==========
- 9 -
9. 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 two reportable segments: Products and
Solutions. The Company's 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 Solutions
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. Intersegment sales
are not significant. The Company evaluates performance based on operating
income of the respective business units prior to the effects of
amortization.
Segment information as of and for the three months ended June 29, 2003 and
June 30, 2002, is as follows:
THREE MONTHS ENDED JUNE 29, 2003
--------------------------------
PRODUCTS SOLUTIONS TOTAL
----------- ----------- -----------
Sales to external customers...................... $ 91,957 $ 14,618 $ 106,575
Operating income before restructuring
charges and amortization.............. 8,148 61 8,209
Depreciation and amortization.................... 2,441 294 2,735
Total assets..................................... 451,357 34,015 485,372
THREE MONTHS ENDED JUNE 30, 2002
--------------------------------
PRODUCTS SOLUTIONS TOTAL
----------- ----------- -----------
Sales to external customers...................... $ 97,854 $ 16,037 $ 113,891
Operating income before restructuring
charges and amortization.............. 8,960 643 9,603
Depreciation and amortization.................... 2,616 250 2,866
Total assets..................................... 433,247 67,390 500,637
The following schedule provides a reconciliation of operating income before
restructuring charges and amortization with income from operations before
income tax expense and cumulative effect of accounting change:
THREE MONTHS ENDED
------------------
JUNE 30, JUNE 29,
2003 2002
---- ----
Operating income before restructuring
charges and amortization................................. $ 8,209 $ 9,603
Restructuring charges....................................... (801) -
Amortization of intangibles................................. (142) (129)
Interest and debt expense................................... (9,672) (7,277)
Other income and (expense), net............................. 3,094 3,493
----------- -----------
Income from operations before income tax expense
and cumulative effect of accounting change............... $ 688 $ 5,690
=========== ===========
- 10 -
10. The summary financial information of the parent, guarantors and
nonguarantors of the 8.5% senior subordinated notes is as follows:
Non- Elimina- Consoli-
(In thousands) Parent Guarantors Guarantors tions dated
------------------------------------------------------------------
AS OF JUNE 29, 2003
Current assets:
Cash and cash equivalents $ 1,901 $ (917) $ 4,242 $ - $ 5,226
Trade accounts receivable and unbilled revenues 50,855 (10) 37,011 - 87,856
Inventories 35,935 18,909 21,376 (972) 75,248
Other current assets 9,553 (53) 4,871 - 14,371
------------------------------------------------------------------
Total current assets 98,244 17,929 67,500 (972) 182,701
Property, plant, and equipment, net 31,329 16,018 19,740 - 67,087
Goodwill and other intangibles, net 98,569 57,364 39,184 - 195,117
Intercompany 37,999 (68,577) (41,488) 72,066 -
Other assets 207,515 174,335 32,115 (373,498) 40,467
------------------------------------------------------------------
Total assets $ 473,656 $ 197,069 $ 117,051 $ (302,404) $ 485,372
==================================================================
Current liabilities $ 45,943 $ 9,955 $ 28,808 $ (2,849) $ 81,857
Long-term debt, less current portion 283,697 - 15,514 - 299,211
Other non-current liabilities 27,565 14,286 4,437 - 46,288
------------------------------------------------------------------
Total liabilities 357,205 24,241 48,759 (2,849) 427,356
Shareholders' equity 116,451 172,828 68,292 (299,555) 58,016
------------------------------------------------------------------
Total liabilities and shareholders' equity $ 473,656 $ 197,069 $ 117,051 $ (302,404) $ 485,372
==================================================================
FOR THE THREE MONTHS ENDED JUNE 29, 2003
Net sales $ 53,053 $ 27,661 $ 30,792 $ (4,931) $ 106,575
Cost of products sold 40,356 22,016 23,236 (4,931) 80,677
------------------------------------------------------------------
Gross profit 12,697 5,645 7,556 - 25,898
------------------------------------------------------------------
Selling, general and administrative expenses 8,370 2,971 6,348 - 17,689
Restructuring charges 747 - 54 - 801
Amortization of intangibles 58 - 84 142
------------------------------------------------------------------
9,175 2,971 6,486 - 18,632
------------------------------------------------------------------
Income from operations 3,522 2,674 1,070 - 7,266
Interest and debt expense 9,172 - 500 - 9,672
Other (income) and expense, net 198 (3,282) (10) - (3,094)
------------------------------------------------------------------
Income before income taxes (5,848) 5,956 580 - 688
Income tax expense (2,322) 2,368 143 - 189
------------------------------------------------------------------
Net (loss) income $ (3,526) $ 3,588 $ 437 $ - $ 499
==================================================================
- 11 -
Non- Elimina- Consoli-
(In thousands) Parent Guarantors Guarantors tions dated
------------------------------------------------------------------
FOR THE THREE MONTHS ENDED JUNE 29, 2003
OPERATING ACTIVITIES:
Net cash provided by (used in) operating
activities $ 17,587 $ (3,282) $ (7,326) $ - $ 6,979
------------------------------------------------------------------
INVESTING ACTIVITIES:
Purchase of marketable securities, net (415) - - - (415)
Capital expenditures (1,020) (86) (393) - (1,499)
Other - 3,282 - - 3,282
------------------------------------------------------------------
Net cash (used in) provided by investing
activities (1,435) 3,196 (393) - 1,368
------------------------------------------------------------------
FINANCING ACTIVITIES:
Net borrowings under revolving
line-of-credit agreements 7,324 - 9,278 - 16,602
Repayment of debt (21,472) - (395) - (21,867)
Other (58) - - - (58)
------------------------------------------------------------------
Net cash (used in) provided by financing
activities (14,206) - 8,883 - (5,323)
Effect of exchange rate changes on cash (101) (2) 362 - 259
------------------------------------------------------------------
Net change in cash and cash equivalents 1,845 (88) 1,526 - 3,283
Cash and cash equivalents at
beginning of period 56 (829) 2,716 - 1,943
------------------------------------------------------------------
Cash and cash equivalents at end of period $ 1,901 $ (917) $ 4,242 $ - $ 5,226
==================================================================
AS OF JUNE 30, 2002
Current assets:
Cash and cash equivalents $ (538) $ (835) $ 3,632 $ - $ 2,259
Trade accounts receivable and unbilled
revenues 54,316 5,760 25,771 - 85,847
Inventories 42,635 24,189 27,882 (949) 93,757
Other current assets 10,531 (1,368) 4,193 - 13,356
-------------------------------------------------------------------
Total current assets 106,944 27,746 61,478 (949) 195,219
Property, plant, and equipment, net 34,725 17,896 17,297 - 69,918
Goodwill and other intangibles, net 36,623 121,049 44,821 - 202,493
Intercompany 259,219 (273,512) (57,747) 72,040 -
Other assets 76,853 159,486 (1,551) (201,781) 33,007
-------------------------------------------------------------------
Total assets $ 514,364 $ 52,665 $ 64,298 $ (130,690) $ 500,637
===================================================================
Current liabilities $ 165,004 $ 5,006 $ 22,708 $ (2,866) $ 189,852
Long-term debt, less current portion 199,694 - 1,829 - 201,523
Other non-current liabilities 17,078 11,182 3,253 - 31,513
-------------------------------------------------------------------
Total liabilities 381,776 16,188 27,790 (2,866) 422,888
Shareholders' equity 132,588 36,477 36,508 (127,824) 77,749
-------------------------------------------------------------------
Total liabilities and shareholders' equity $ 514,364 $ 52,665 $ 64,298 $ (130,690) $ 500,637
===================================================================
- 12 -
Non- Elimina- Consoli-
(In thousands) Parent Guarantors Guarantors tions dated
-------------------------------------------------------------------
FOR THE THREE MONTHS ENDED JUNE 30, 2002
Net sales $ 58,521 $ 31,052 $ 28,297 $ (3,979) $ 113,891
Cost of products sold 44,448 24,320 21,472 (3,979) 86,261
-------------------------------------------------------------------
Gross profit 14,073 6,732 6,825 - 27,630
-------------------------------------------------------------------
Selling, general and administrative expenses 9,783 3,049 5,195 - 18,027
Amortization of intangibles 57 1 71 - 129
-------------------------------------------------------------------
9,840 3,050 5,266 - 18,156
-------------------------------------------------------------------
Income from operations 4,233 3,682 1,559 - 9,474
Interest and debt expense 7,128 38 111 - 7,277
Other (income) and expense, net (3,359) (60) (74) - (3,493)
-------------------------------------------------------------------
Income before income taxes 464 3,704 1,522 - 5,690
Income tax expense 202 1,519 470 - 2,191
-------------------------------------------------------------------
Net income before cumulative effect of
accounting change 262 2,185 1,052 - 3,499
-------------------------------------------------------------------
Cumulative effect of change in
accounting principle - (1,930) (6,070) - (8,000)
-------------------------------------------------------------------
Net income (loss) $ 262 $ 255 $ (5,018) $ - $ (4,501)
-------------------------------------------------------------------
FOR THE THREE MONTHS ENDED JUNE 30, 2002
OPERATING ACTIVITIES:
Net cash provided by (used in) operating
activities $ 3,168 $ (5,751) $ (3,559) $ - $ (6,142)
------------------------------------------------------------------
INVESTING ACTIVITIES:
Purchase of marketable securities, net (50) - - - (50)
Capital expenditures (362) (258) (330) - (950)
Proceeds from sale of business - 15,950 - - 15,950
Other - 1,990 - - 1,990
------------------------------------------------------------------
Net cash (used in) provided by investing
activities (412) 17,682 (330) - 16,940
------------------------------------------------------------------
FINANCING ACTIVITIES:
Net (payments) borrowings under revolving
line-of-credit agreements (10,249) (11,551) 271 - (21,529)
Repayment of debt (329) - (5) - (334)
Other (736) - - - (736)
------------------------------------------------------------------
Net cash (used in) provided by financing
activities (11,314) (11,551) 266 - (22,599)
Effect of exchange rate changes on cash (4) 4 510 - 510
------------------------------------------------------------------
Net cash (used in) provided by continuing
operations (8,562) 384 (3,113) - (11,291)
Net cash provided by discontinued operations - 482 - - 482
------------------------------------------------------------------
Net change in cash and cash equivalents (8,562) 866 (3,113) - (10,809)
Cash and cash equivalents at beginning of period 8,024 (1,701) 6,745 - 13,068
------------------------------------------------------------------
Cash and cash equivalents at end of period $ (538) $ (835) $ 3,632 $ - $ 2,259
==================================================================
- 13 -
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
(AMOUNTS IN THOUSANDS)
The Company is a leading U.S. 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'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 businesses primarily deal
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.
RESULTS OF OPERATIONS
THREE MONTHS ENDED JUNE 29, 2003 AND JUNE 30, 2002
Net sales in the fiscal 2004 quarter ended June 29, 2003 were $106,575, a
decrease of $7,316 or 6.4% from the quarter ended June 30, 2002. Sales in the
Products segment were down 6.0% as a result of the ongoing softness in
industrial markets, offset by $1.8 million attributable to translation of
foreign currencies, particularly the Euro, into U.S. dollars. Sales in the
Solutions segment decreased by 8.8%,primarily as a result of the divestiture of
a subsidiary ($1.7 million) on March 31, 2003. Sales in the individual segments
were as follows, in thousands of dollars and with percentage changes for each
segment:
THREE MONTHS ENDED
------------------
JUNE 29, JUNE 30, CHANGE
2003 2002 AMOUNT %
---- ---- ------ -------
(IN THOUSANDS, EXCEPT PERCENTAGES)
Products segment $ 91,957 $ 97,854 $ (5,897) (6.0)
Solutions segment 14,618 16,037 (1,419) (8.8)
----------- ----------- -----------
Consolidated net sales $ 106,575 $ 113,891 $ (7,316) (6.4)
=========== =========== ===========
The Company's consolidated gross profit margin was 24.3% for both the fiscal
2004 and 2003 quarters. Gross profit margins were 25.8% and 25.5% for the
Products segment and 14.9% and 16.7% for the Solutions segment, in the fiscal
2004 and 2003 quarters, respectively. The maintenance of the consolidated gross
profit margin and the Products segment gross profit margin despite lower sales
volumes is the result of cost containment activities. The decrease in the
Solutions segment gross profit margin was the result of a shift in sales mix to
larger integrated solutions projects which typically carry lower gross profit
margins and the impact of the divestiture of a small subsidiary on March 31,
2003.
- 14 -
Selling expenses were $11,922 and $11,323 in the fiscal 2004 and 2003 quarters,
respectively. The increase is primarily attributable to translation of foreign
currencies, particularly the Euro into U.S. dollars ($0.5 million). As a
percentage of consolidated net sales, selling expenses were 11.2% and 9.9% for
the fiscal 2004 and 2003 quarters, respectively. The increase in percentage is
the result of the fixed nature of the selling expenses, including investments in
new markets, relative to a decrease in sales volume.
General and administrative expenses were $5,767 and $6,704 in the fiscal 2004
and 2003 quarters, respectively. The decrease is the result of having no bonus
expense in the current year compared to prior year ($0.4 million), the
divestiture of a small subsidiary ($0.2 million) and general cost containment.
As a percentage of consolidated net sales, general and administrative expenses
were 5.4% and 5.9% in the fiscal 2004 and 2003 quarters, respectively.
During the first quarter of fiscal 2004, the Company implemented a
Corporate-wide reorganization plan and recorded restructuring costs of $0.8
million related to various employee termination benefits. All of these costs are
related to the Products segment, with the exception of approximately $0.1
million. Approximately 40 employees were to be terminated at the various
facilities. As of June 29, 2003, substantially all of the terminations had
occurred, with the remainder to occur by the end of the second quarter of fiscal
2004. The liability as of June 29, 2003 consists of severance payments and costs
associated with the preparation and maintenance of non-operating of facilities
prior to disposal which were accrued prior to the adoption of SFAS No. 146
"Accounting for Costs Associated with Exit or Disposal Activities". Regarding
our fiscal 2003 projects, of the four facilities being completely closed and
prepared for disposal, two are expected to be disposed of in the second quarter
of fiscal 2004 and two others in the second half of Fiscal 2005.
Amortization of intangibles was $142 and $129 in the fiscal 2004 and 2003
quarters, respectively.
Interest and debt expense was $9,672 and $7,277 in the fiscal 2004 and 2003
quarters, respectively. The company renegotiated its credit facility in November
of 2002. A portion of the renegotiated debt has a higher effective interest rate
than the Company's previous credit facility, causing an increase in interest
expense despite the reduced debt level. In addition, the Company incurred $1.2
million in the fiscal 2004 first quarter for amendment fees relating to the
credit facilities. As a percentage of consolidated net sales, interest and debt
expense was 9.1% and 6.4% for the fiscal 2004 and 2003 quarters, respectively.
Other (income) and expense, net was ($3,094) and ($3,493) in the fiscal 2004 and
2003 quarters, respectively. The 2004 amount is composed of $3.3 million in
proceeds from the sale of excess property, while the 2003 amount is primarily
the result of realized gains of $3.2 million on the Company's marketable
securities held by its captive insurance subsidiary.
Income tax expense as a percentage of income before income tax expense was 27.5%
and 38.5% in the fiscal 2004 and 2003 quarters, respectively. The percentage for
fiscal 2004 varies from the U.S. statutory rate due to jurisdictional mix.
- 15 -
LIQUIDITY AND CAPITAL RESOURCES
On November 21, 2002, the Company refinanced its credit facilities. The new
arrangement consisted of a Revolving Credit Facility, a Term Loan, and a Senior
Second Secured Term Loan. The Revolving Credit Facility provides availability up
to a maximum of $57 million ($22 million outstanding at June 29, 2003). Interest
is payable at varying Eurodollar rates based on LIBOR or prime plus a spread
determined by the Company's leverage ratio amounting to 275 or 150 basis points,
respectively, at June 29, 2003 (4.00% or 5.50%). The Revolving Credit Facility
is secured by all domestic and Canadian inventory, receivables, equipment, real
property, subsidiary stock (limited to 65% for foreign subsidiaries) and
intellectual property.
The Term Loan requires quarterly payments of $1,179,000, which, with the effect
of the refinancing described below, would result in repayment in full on October
1, 2005. Interest is payable at varying Eurodollar rates based on LIBOR plus a
spread determined by the Company's leverage ratio amounting to 325 basis points
at June 29, 2003 (4.54%). The Term Loan is secured by all domestic inventory,
receivables, equipment, real property, subsidiary stock (limited to 65% for
foreign subsidiaries) and intellectual property.
The Senior Second Secured Term loan was repaid in its entirety on July 22, 2003
as outlined below. As a result of the repayment occurring prior to the first
anniversary of the loan, approximately $1.1 million of interest expense will be
reversed in the second quarter of fiscal 2004.
The corresponding credit agreements associated with the Revolving Credit
Facility and the Term Loan place certain debt covenant restrictions on the
Company including certain financial requirements and a restriction on dividend
payments.
The carrying amount of the Company's senior debt instruments approximates the
fair value based on current market rates. At June 29, 2003, the Company's
subordinated debt had an approximate fair market value of $158,000,000 based on
quoted market prices, which is less than the carrying amount of $199,747,000.
From time to time, the Company manages its debt portfolio by using interest rate
swaps to achieve an overall desired position of fixed and floating rates. The
Company entered into an interest rate swap agreement, which matured in June
2003. The cash flow hedge was considered effective and the gain or loss on the
change in fair value was reported in other comprehensive loss, net of tax and
amounted to a gain of $191 for the fiscal 2004 quarter versus a loss of $130 for
the fiscal 2003 quarter.
On July 22, 2003, the Company issued $115 million of 10% Senior Secured Notes
(10% Notes) due August 1, 2010. The following table sets forth actual long-term
debt as of June 29, 2003 and as adjusted to give effect to the use of proceeds
from the note offering:
- 16 -
JUNE 29, 2003
--------------------------------
ACTUAL AS ADJUSTED
--------------------------------
Revolving Credit Facility............... $ 22,203 $ 12,203
Term Loan............................... 14,635 10,735
Senior Second Secured Term Loan......... 66,800 -
10% Senior Secured Notes................ - 115,000
Other senior debt....................... 664 664
8 1/2% Senior Subordinated Notes........ 199,747 164,097
--------------------------------
Total long-term debt.................... $ 304,049 $ 302,699
================================
Provisions of the 10% Notes include, without limitation, restrictions on
indebtedness, restricted payments, asset and subsidiary stock sales, liens, and
other restricted transactions. The 10% Notes are not entitled to redemption at
the option of the Company, prior to August 1, 2007 in the absence of an equity
offering. The Company may redeem up to 35% of the outstanding notes at a
redemption price of 110.0% with the proceeds of equity offerings, subject to
certain restrictions. On and after August 1, 2007, they are redeemable at prices
declining annually to 100% on and after August 1, 2009. In the event of a Change
of Control (as defined in the indenture for such notes), each holder of the 10%
Notes may require the Company to repurchase all or a portion of such holder's
10% Notes at a purchase price equal to 101% of the principal amount thereof. The
10% Notes are secured by a second-priority interest in all domestic inventory,
receivables, equipment, real property, subsidiary stock (limited to 65% for
foreign subsidiaries) and intellectual property. The 10% Notes are guaranteed by
certain existing and future domestic subsidiaries and are not subject to any
sinking fund requirements.
As a result of the bond offering and repayment of the Senior Second Secured Term
Loan and a portion of the Term Loan and 8 1/2% Senior Subordinated Notes,
approximately $4.9 million of deferred financing costs will be written-off in
the second quarter of fiscal 2004. Approximately $3.0 million of new deferred
financing costs were incurred and will be amortized over the seven year term of
the 10% Notes. In addition, a $5.6 million gain will be recorded in the fiscal
2004 quarter for the redemption of the 8 1/2% Notes at a discount.
In addition, effective August 4, 2003, the Company entered into an interest rate
swap agreement to effectively convert $93.5 million of fixed-rate debt (10%) to
variable-rate debt (LIBOR plus 578.2 basis points) through August 2008 and $57.5
million from August 2008 through August 2010.
We believe that our cash on hand, cash flows from operations, and borrowing
capacity under our Revolving Credit Facility will be sufficient to fund our
ongoing operations and budgeted capital expenditures for at least the next
twelve months. This belief is dependent upon a steady economy and successful
execution of our current business plan which is focused on cash generation for
debt repayment. The business plan includes continued implementation of lean
manufacturing, facility rationalization projects, possible divestiture of excess
facilities and certain non-strategic operations, and improving working capital
components, including inventory reductions.
Net cash provided by operating activities was $6,979 for the three months ended
June 29, 2003 compared to net cash used by operating activities of $6,142 for
the three months ended June 30, 2002. The $13,121 improvement is due to changes
in net working capital components, primarily inventories ($7.0 million) and
accounts payable and accrued liabilities ($9.0 million) offset by lower
operating income ($3.0 million).
- 17 -
Net cash provided by investing activities decreased to $1,368 for the three
months ended June 29, 2003 from $16,940 for the three months ended June 30, 2002
as a result of the proceeds from the sale of ASI in the first quarter of fiscal
2003.
Net cash used in financing activities was $5,323 for the three months ended June
29, 2003 compared to $22,599 for the three months ended June 30, 2002. The
$17,276 decrease is primarily the result of proceeds from the sale of ASI used
to repay debt in the first quarter of fiscal 2003.
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 the three months ended June 29, 2003 and June 30, 2002
were $1,499 and $950, respectively.
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 general inflation has had
a material effect on results of operations over the periods presented primarily
due to overall low inflation levels over the periods and because the Company has
generally been able to pass on rising costs through price increases. However,
employee benefit costs such as health insurance, workers compensation insurance,
pensions as well as energy and business insurance have exceeded general
inflation levels. In the future, we may be further affected by inflation that we
may not be able to pass on as price 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, by the timing
and extent of restructuring projects, 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.
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.
- 18 -
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Effective August 4, 2003, the Company entered into an interest rate swap
agreement to effectively convert $93.5 million of fixed-rate debt (10%) to
variable-rate debt (LIBOR plus 578.2 basis points) through August 2008 and $57.5
million from August 2008 through August 2010.
There have been no other material changes in the reported market risks since the
end of Fiscal 2003.
Item 4. Controls and Procedures
Within 90 days before the filing date of this report, we carried out an
evaluation, under the supervision and with the participation of our management,
including our chief executive officer and chief financial officer, of the
effectiveness of the design and operation of our disclosure controls and
procedures pursuant to the Securities Exchange Act of 1934, Rule 13a-14. Based
upon that evaluation, our management, including our chief executive officer and
chief financial officer, concluded that our disclosure controls and procedures
were effective in timely alerting them to material information relating to us
required to be included in our periodic SEC filings. There have been no
significant changes in our internal controls or in other factors that could
significantly affect internal controls subsequent to the date of their
evaluation, including any corrective actions with regard to significant
deficiencies and material weaknesses.
- 19 -
PART II. OTHER INFORMATION
Item 1. Legal Proceedings - none.
Item 2. Changes in Securities - none.
Item 3. Defaults upon Senior Securities - none.
Item 4. Submission of Matters to a Vote of Security Holders - none.
Item 5. Other Information - none.
Item 6. Exhibits and Reports on Form 8-K
Exhibit 4.1 Registration Rights Agreement dated July 15, 2003
among Columbus McKinnon Corporation, Credit Suisse
First Boston LLC and Fleet Securities, Inc.
Exhibit 4.2 Indenture among Columbus McKinnon Corporation,
the subsidiary guarantors named on the signature
pages thereto and U.S. Bank Trust National
Association, as trustee, dated July 22, 2003.
Exhibit 10.1 Intercreditor Agreement, dated as of July 22, 2003
among Columbus McKinnon Corporation as Borrower,
subsidiary Guarantors as listed thereto, Fleet
Capital Corporation, as Credit Agent, and U.S. Bank
Trust National Association, as Trustee.
Exhibit 99.1 Certification of Chief Executive Officer
Exhibit 99.2 Certification of Chief Financial Officer
On July 8, 2003, the Company filed a Current Report on Form 8-K with
respect to its offer to sell $100 million in senior secured notes.
On July 8, 2003, the Company filed a Current Report on Form 8-K with
respect to guidance regarding its expected financial results for the
first quarter of fiscal 2004.
On July 8, 2003, the Company filed a Current Report on Form 8-K with
respect to certain financial information contained within the
preliminary confidential offering circular for $100 million in senior
secured notes.
On July 16, 2003, the Company filed a Current Report on Form 8-K with
respect to its pricing of the $115 million in senior secured notes.
On July 22, 2003, the Company filed a Current Report on Form 8-K with
respect to its financial results for the first quarter of fiscal
2004.
On July 22, 2003, the Company filed a Current Report on Form 8-K with
respect to its completion of the sale of $115 million in senior
secured notes.
- 20 -
SIGNATURES
Pursuant to the requirements 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.
COLUMBUS MCKINNON CORPORATION
------------------------------
(Registrant)
Date: AUGUST 13, 2003 /S/ ROBERT L. MONTGOMERY, JR.
---------------- ---------------------------------
Robert L. Montgomery, Jr.
Executive Vice President and
Chief Financial Officer (Principal
Financial Officer)
- 21 -
CERTIFICATION
I, Timothy T. Tevens, Chief Executive Officer, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Columbus
McKinnon Corporation;
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this quarterly report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant
and have:
a. designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
quarterly report is being prepared;
b. evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this quarterly report (the "Evaluation Date"); and
c. presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on
our evaluation as of the Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the
audit committee of registrant's board of directors (or persons
performing the equivalent functions):
a. all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's
ability to record, process, summarize and report financial data
and have identified for the registrant's auditors any material
weaknesses in internal controls; and
b. any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
6. The registrant's other certifying officer and I have indicated in this
quarterly report whether there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant
deficiencies and material weaknesses.
Date: August 13, 2003
/S/ TIMOTHY T. TEVENS
- ----------------------
Timothy T. Tevens
Chief Executive Officer
- 22 -
CERTIFICATION
I, Robert L. Montgomery, Chief Financial Officer, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Columbus
McKinnon Corporation;
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this quarterly report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant
and have:
a. designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
quarterly report is being prepared;
b. evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this quarterly report (the "Evaluation Date"); and
c. presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on
our evaluation as of the Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the
audit committee of registrant's board of directors (or persons
performing the equivalent functions):
a. all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's
ability to record, process, summarize and report financial data
and have identified for the registrant's auditors any material
weaknesses in internal controls; and
b. any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
6. The registrant's other certifying officer and I have indicated in this
quarterly report whether there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant
deficiencies and material weaknesses.
Date: August 13, 2003
/S/ ROBERT L. MONTGOMERY
- ------------------------
Robert L. Montgomery
Chief Financial Officer
- 23 -