Exhibit 99.1
NEWS RELEASE
CONTACT:
Robert L. Montgomery, Jr.
Executive Vice President and Chief Financial Officer
Columbus McKinnon Corporation
716-689-5405
COLUMBUS MCKINNON EARNS A PROFIT IN FISCAL 2004 SECOND QUARTER;
NET DEBT REDUCED BY $17.8 MILLION TO $287.5 MILLION
AMHERST, N.Y., October 21, 2003 -- Columbus McKinnon Corporation (Nasdaq:
CMCO), a leading designer and manufacturer of material handling products,
today announced its financial results for the fiscal 2004 second quarter,
which ended on September 28, 2003.
Columbus McKinnon's fiscal 2004 second quarter consolidated net sales were
$106.6 million, compared with $113.2 million a year ago, a decrease of 5.9%.
Net income for the second quarter of fiscal 2004 was $1.5 million, or $0.10
per diluted share, compared with net income of $1.0 million, or $0.07 per
diluted share in the year-ago quarter. Results for the second quarter of
fiscal 2004 include pre-tax restructuring charges of $0.6 million, a $1.1
million pre-tax reversal of previously accrued payment-in-kind interest
charges, a $4.9 million pre-tax write-off of deferred financing costs
relating to early debt extinguishment and a $5.6 million pre-tax gain
relating to senior subordinated notes purchased at a discount. Net cash
provided by operating activities in the fiscal 2004 second quarter was $17.6
million and included a $1.5 million cash tax refund related to the May 2002
sale of the ASI business that was received in July 2003 and applied to debt
reduction.
Net sales for the first six months of fiscal 2004 were $213.2 million,
compared with $227.1 million in the same period last year, a decrease of
6.2%. Net income for the first six months of fiscal 2004 was $2.0 million,
or $0.14 per diluted share, compared with a fiscal 2003 first half net loss
of ($3.5 million), or ($0.24) per diluted share. Results for the fiscal 2004
first half include a $3.3 million pre-tax first quarter gain related to the
sale of real estate and a $1.2 million pre-tax first quarter charge for
amending the credit agreements in June 2003. Results for the fiscal 2003
first half include the cumulative effect of a change in accounting principle
charge of $8.0 million, or $0.55 per diluted share, related to the April 1,
2002 adoption of FAS 142 and a $3.5 million pre-tax first quarter gain
related to the sale of a portion of the equity portfolio of Columbus
McKinnon's captive insurance subsidiary.
Timothy T. Tevens, President and Chief Executive Officer, commented, "We
continue to make significant progress in reducing debt and taking costs out
of our business. During the quarter, we successfully completed a debt
refinancing which will reduce our annual interest expense by about $3.0
million going forward. We also reduced debt net of cash by $17.8 million in
the second quarter. Inventories are down $8.5 million from last year, a
10.4% decline, and we continue to benefit from our lean manufacturing
initiatives, facility rationalization and other strategic initiatives. While
the industrial sales environment remains soft, sales from our Products
segment, which make up over 85% of total sales, improved by 2.8% over the
first quarter of fiscal 2004 and are within 2.5% of last year, suggesting a
stabilization of business activity in this important market segment."
Mr. Tevens continued, "Debt reduction remains a major focus for Columbus
McKinnon. Our original target for the last three quarters of fiscal 2004 was
$10 million to $20 million. We are now targeting an additional debt
reduction of $5.0 to $10.0 million in the second half of fiscal 2004 from
operating cash flow. Any additional cash we may generate from the sale of
surplus property and less synergistic businesses will also be applied to
debt. Columbus McKinnon is in a much stronger financial position than at the
start of this fiscal year, and making additional reductions in debt will
further enhance our financial flexibility and profitability."
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At September 28, 2003, Columbus McKinnon's funded debt, net of $13.2 million
of cash and a $3.0 million fair value interest rate hedge, was $287.5
million, down from $305.3 million at June 29, 2003 -- a reduction of $33.8
million from the $321.3 million at September 29, 2002. On July 22, 2003, the
Company completed the sale of $115 million of Senior Secured 10% Notes due
2010. The net proceeds from this offering were used to repay all outstanding
borrowing under its senior second secured term loan -- $66.8 million plus
interest and expenses -- to repurchase senior subordinated notes in the
amount of $30.1 million plus interest, and to repay a portion of its senior
credit facility debt -- $3.9 million on the term loan and $10.0 million on
the revolver. The senior subordinated notes repurchased by Columbus McKinnon
had a face value of $35.7 million, which resulted in a $5.6 million
additional reduction in debt. The Company was in compliance with its senior
bank debt covenants at September 28, 2003.
Mr. Tevens concluded, "Over the last year, we have accomplished a great deal
in improving Columbus McKinnon's financial condition and positioning the
Company for improved performance. We reduced debt by $33.8 million and
maintained our leading North American market share in key product lines,
while expanding our manufacturing and sales presence in international
markets such as Europe, Mexico and China. These actions, combined with our
improved cost structure and a renewed focus on our core Products business,
will produce additional benefits for Columbus McKinnon when a sustained
recovery in the industrial economy takes hold."
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 October 21, 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/AJWZ390914387GF12.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 December 19, 2003 by dialing 1-800-925-0870.
Alternatively, you may access an archive of the call until December 19, 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 December 19, 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
----------------------------------------------
9/28/03 9/29/02
----------------------------------------------
(IN THOUSANDS, EXCEPT
PER SHARE AND PERCENTAGE DATA)
Net sales........................................................... $ 106,584 $ 113,238
Cost of products sold............................................... 81,517 86,665
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Gross profit........................................................ 25,067 26,573
Gross profit margin................................................. 23.5% 23.5%
Selling, general and administrative expense......................... 17,248 17,900
Restructuring charges............................................... 574 -
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Income from operations before amortization.......................... 7,245 8,673
Amortization........................................................ 78 134
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Income from operations.............................................. 7,167 8,539
Interest and debt expense........................................... 5,730 7,207
Other (income) and expense, net..................................... (1,353) (225)
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Income before income tax expense ................................... 2,790 1,557
Income tax expense.................................................. 1,290 542
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Net income.......................................................... $ 1,500 $ 1,015
==============================================
Average basic and diluted shares outstanding.................... 14,549 14,487
Basic and diluted income per share.............................. $ 0.10 $ 0.07
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COLUMBUS MCKINNON CORPORATION
CONSOLIDATED INCOME STATEMENTS
SIX MONTHS ENDED
----------------------------------------------
9/28/03 9/29/02
----------------------------------------------
(IN THOUSANDS, EXCEPT
PER SHARE AND PERCENTAGE DATA)
Net sales........................................................... $ 213,159 $ 227,129
Cost of products sold............................................... 162,194 172,926
----------------------------------------------
Gross profit........................................................ 50,965 54,203
Gross profit margin................................................. 23.9% 23.9%
Selling, general and administrative expense......................... 34,937 35,927
Restructuring charges............................................... 1,375 -
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Income from operations before amortization.......................... 14,653 18,276
Amortization........................................................ 220 263
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Income from operations.............................................. 14,433 18,013
Interest and debt expense........................................... 15,402 14,484
Other (income) and expense, net..................................... (4,447) (3,718)
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Income before income tax expense and cumulative effect
of accounting change....................................... 3,478 7,247
Income tax expense.................................................. 1,479 2,733
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Income before cumulative effect of accounting change................ 1,999 4,514
Cumulative effect of accounting change.............................. - ( 8,000)
----------------------------------------------
Net income (loss)................................................... $ 1,999 ($ 3,486)
==============================================
Average basic and diluted shares outstanding.................... 14,544 14,483
Basic and diluted income (loss) per share:
Income before cumulative effect of
accounting change......................................... $ 0.14 $ 0.31
Cumulative effect of accounting change..................... - ( 0.55)
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Net income (loss).......................................... $ 0.14 ($ 0.24)
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COLUMBUS McKINNON CORPORATION
CONSOLIDATED BALANCE SHEET
(In Thousands)
9/28/03 3/31/03
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ASSETS
Current assets:
Cash and cash equivalents......................................................... $ 13,170 $ 1,943
Trade accounts receivable......................................................... 75,519 79,335
Unbilled revenue.................................................................. 9,748 8,861
Inventories....................................................................... 73,387 78,613
Net assets held for sale.......................................................... 1,800 1,800
Prepaid expenses.................................................................. 13,448 10,819
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Total current assets................................................................... 187,072 181,371
Net property, plant, and equipment..................................................... 64,723 67,295
Goodwill and other intangibles, net.................................................... 193,774 195,129
Marketable securities.................................................................. 24,035 21,898
Deferred taxes on income............................................................... 14,619 15,245
Other assets........................................................................... 5,007 1,668
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Total assets........................................................................... $ 489,230 $ 482,606
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Notes payable to banks............................................................ $ 6,091 $ 2,245
Trade accounts payable............................................................ 26,028 28,654
Accrued liabilities............................................................... 56,180 36,540
Restructuring reserve............................................................. 1,490 2,331
Current portion of long-term debt................................................. 4,822 4,981
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Total current liabilities.............................................................. 94,611 74,751
Senior debt, less current portion...................................................... 128,603 109,355
Subordinated debt...................................................................... 164,109 199,734
Other non-current liabilities.......................................................... 41,916 46,059
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Total liabilities...................................................................... 429,239 429,899
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Shareholders' equity:
Common stock...................................................................... 149 149
Additional paid-in capital........................................................ 104,170 104,412
Accumulated deficit............................................................... (24,548) (26,547)
ESOP debt guarantee............................................................... (5,415) (5,709)
Unearned restricted stock......................................................... (208) (208)
Accumulated other comprehensive loss.............................................. (14,157) (19,390)
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Total shareholders' equity............................................................. 59,991 52,707
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Total liabilities and shareholders' equity............................................. $ 489,230 $ 482,606
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COLUMBUS McKINNON CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOW
SIX MONTHS ENDED
-------------------------------------
9/28/03 9/29/02
-------------------------------------
(IN THOUSANDS)
OPERATING ACTIVITIES:
Net income from continuing operations.............................................. $ 1,999 $ 4,514
Adjustments to reconcile net income from continuing operations to
net cash provided by operating activities:
Depreciation and amortization................................................. 5,375 5,702
Deferred income taxes......................................................... 626 (937)
Gain on sale of real estate/investments....................................... (3,282) (2,757)
Other......................................................................... 192 1,237
Changes in operating assets and liabilities
net of effects from business divestitures:
Trade accounts receivable................................................ 4,255 2,005
Inventories.............................................................. 6,863 150
Prepaid expenses......................................................... (1,596) (1323)
Other assets............................................................. (241) 26
Trade accounts payable................................................... (3,469) (7,232)
Accrued and non-current liabilities...................................... 13,843 (730)
-------------------------------------
Net cash provided by operating activities of continuing operations................. 24,565 655
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INVESTING ACTIVITIES:
Purchase of marketable securities, net............................................. (811) 1,184
Capital expenditures............................................................... (2,094) (2,270)
Proceeds from sale of business..................................................... - 15,950
Net assets held for sale........................................................... 3,282 1,879
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Net cash provided by investing activities of continuing operations................. 377 16,743
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FINANCING ACTIVITIES:
Net payments under revolving line-of-credit agreements............................. (1,090) (23,366)
Repayment of debt.................................................................. (124,206) (1,531)
Payment of deferred financing costs................................................ (4,011) (1,666)
Proceeds from issuance of long-term debt........................................... 115,000 -
Other.............................................................................. 294 281
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Net cash used in financing activities of continuing operations..................... (14,013) (26,282)
EFFECT OF EXCHANGE RATE CHANGES ON CASH............................................ 298 (177)
-------------------------------------
Net cash provided by (used in) continuing operations............................... 11,227 (9,061)
NET CASH PROVIDED BY DISCONTINUED OPERATIONS....................................... - 504
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Net change in cash and cash equivalents............................................ 11,227 (8,557)
Cash and cash equivalents at beginning of year..................................... 1,943 13,068
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Cash and cash equivalents at end of year........................................... $ 13,170 $ 4,511
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COLUMBUS McKINNON CORPORATION
BUSINESS SEGMENT INFORMATION
PRODUCTS SOLUTIONS CONSOLIDATED
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(IN THOUSANDS, EXCEPT FOR PERCENTAGES)
Quarter ended 9/28/03
Net sales................................. 94,571 12,013 106,584
Gross profit.............................. 23,654 1,413 25,067
Margin............................. 25.0% 11.8% 23.5%
Income from operations before
amortization and restructuring charges 8,051 (232) 7,819
Margin............................. 8.5% (1.9%) 7.3%
Quarter ended 9/29/02
Net sales................................. 96,964 16,274 113,238
Gross profit.............................. 24,140 2,433 26,573
Margin............................. 24.9% 15.0% 23.5%
Income from operations before
amortization and restructuring charges 8,391 282 8,673
Margin............................. 8.7% 1.7% 7.7%
Six months ended 9/28/03
Net sales................................. 186,528 26,631 213,159
Gross profit.............................. 47,373 3,592 50,965
Margin............................. 25.4% 13.5% 23.9%
Income from operations before
amortization and restructuring charges 16,199 (171) 16,028
Margin............................. 8.7% (0.6)% 7.5%
Six months ended 9/29/02
Net sales................................. 194,818 32,311 227,129
Gross profit.............................. 49,098 5,105 54,203
Margin............................. 25.2% 15.8% 23.9%
Income from operations before
amortization and restructuring charges 17,351 925 18,276
Margin............................. 8.9% 2.9% 8.0%
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COLUMBUS McKINNON CORPORATION
OTHER CONSOLIDATED INFORMATION
SEPTEMBER 28, 2003 SEPTEMBER 29, 2002
------------------ ------------------
Backlog (in thousands)
Products segment.......................... $ 46,783 $ 41,465
Solutions segment......................... 10,262 17,576
Trade accounts receivable -
Days sales outstanding.................... 64.5 67.9
Inventory turns per year (based on
Cost of products sold..................... 4.4x 4.1x
Trade accounts payable -
Days payables outstanding................. 29.1 26.8
Debt to total capitalization ratio............ 83:17 83:17