NEWS RELEASE
CONTACT:
Karen L. Howard
Vice President, Treasurer and Interim Chief Financial Officer
Columbus McKinnon Corporation
716-689-5550
karen.howard@cmworks.com
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FOR IMMEDIATE RELEASE
COLUMBUS MCKINNON CALLS FOR PARTIAL REDEMPTION OF
10% SENIOR SECURED NOTES DUE 2010
o REDUCING DEBT BY $40.25 MILLION WITH EQUITY PROCEEDS FROM STOCK SALE
o POSITIVE NET IMPACT TO EARNINGS OF $0.22 PER SHARE ON ANNUAL INTEREST
EXPENSE SAVINGS
o RESULTING DEBT TO TOTAL CAPITALIZATION IMPROVED TO APPROXIMATELY 60% FROM
75%
AMHERST, NY, November 17, 2005 -- Columbus McKinnon Corporation (Nasdaq: CMCO),
a leading designer, manufacturer and marketer of material handling products,
today announced that it is calling for the redemption of $40.25 million of its
outstanding 10% Senior Secured Notes due 2010 (the "Notes"). The Notes will be
redeemed at a price of 110.0% of the principal amount plus accrued interest up
to, but excluding the redemption date of December 16, 2005 (the "Redemption
Date"). All interest on the Notes redeemed will cease to accrue on and after the
Redemption Date. After this partial redemption, $74.75 million principal amount
of the Notes will remain outstanding.
Timothy Tevens, President and CEO of Columbus McKinnon stated, "The success of
our recent stock sale is enabling us to redeem the maximum amount of the 10%
2010 Notes as is currently allowed by the terms of the Notes. Our capital
structure strategy has been to reduce high cost debt to further improve
earnings, to have the financial flexibility to invest in growth opportunities
and to be in a strong financial position regardless of the point in the economic
cycle. Small, bolt-on, synergistic acquisitions that meet our strategic goals
could be considered to further our growth. Our near-term goal for debt to total
capitalization is 50%, and we now have a longer term goal of 30%. After the
redemption we will be at about 60% debt to total capitalization, down from 75%
at the end of fiscal September 2005 and significantly below the 81% we were at a
year ago."
At October 2, 2005, total debt was $280.7 million and shareholders' equity was
$93.4 million. On a pro forma basis after the partial redemption of the Notes
and the redemption of the Company's remaining senior subordinated notes which
occurred on October 14, 2005, total debt will be $214.8 million and
shareholders' equity, taking the stock sale into consideration, will be $144.5
million. The Company will use a portion of the $56 million in net proceeds from
its recent stock sale for the redemption.
"This capital restructuring will also have a strong positive impact on future
earnings," Mr. Tevens added. "The $4.03 million annual reduction in interest
expense from this redemption will substantially convert directly to earnings
because of our fully reserved U.S. federal tax loss carryforwards. This annual
interest savings equates to about $0.22 per share. The remaining tax loss
carryforwards, which expire in fiscal 2023 and 2024, amount to approximately $93
million at the end of fiscal September 2005 and will continue to benefit our
U.S.-generated earnings and enhance free cash flow."
The redemption of the Notes will be made under the terms of the indenture, dated
as of July 22, 2003 among Columbus McKinnon, its subsidiary guarantors and U.S.
Bank National Association, as trustee, which permits Columbus McKinnon to redeem
the $40.25 million of the Notes prior to August 1, 2006 from the proceeds of the
sale of equity. A Notice of Redemption has been mailed with respect to the Notes
to all registered holders of the Notes. Copies of the Notice of Redemption and
additional information relating to the procedures for redemption will be
available from U.S. Bank Corporate Trust Services at 60 Livingston Avenue, St.
Paul, Minnesota 55107 or by calling 1-800-934-6802.
Payment of the redemption price on the Notes called for redemption will be made
only upon presentation and surrender of the Notes by Noteholders as described in
the procedures provided on the Notice of Redemption.
U.S. Bank National Association is the trustee, registrar and paying agent for
the Notes.
About Columbus McKinnon
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Columbus McKinnon is a leading worldwide designer, manufacturer and marketer 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.
Safe Harbor Statement
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The information contained in this news release, other than historical
information, consists of forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. These statements may involve
risks and uncertainties that could cause actual results to differ materially
from those described in such statements. Although Columbus McKinnon Corporation
believes that the expectations reflected in such forward-looking statements are
reasonable, it can give no assurance that such expectations will prove to have
been correct.
Financial table follows.
CAPITALIZATION
The following table sets forth our cash position and capitalization as of
October 2, 2005 (i) on an actual basis, (ii) as adjusted to give effect to the
redemption in October 2005 of $25.6 million principal amount of our outstanding
8 1/2% Notes and (iii) as further adjusted to give effect to the completion of
our equity sale which closed on November 14, 2005 and the redemption of $40.25
million principal amount of our outstanding 10% Notes with a portion of the net
proceeds therefrom.
OCTOBER 2, 2005
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AS FURTHER
ACTUAL AS ADJUSTED ADJUSTED
------ ----------- --------
(DOLLARS IN MILLIONS)
Cash and cash equivalents (1) $ 42.5 $ 16.9 $ 27.5
======== ======== ========
Debt:
Revolving credit facility $ - $ - $ -
10% Notes 115.0 115.0 74.7
Other senior debt 4.1 4.1 4.1
8 1/2% Notes 25.6 - -
8 7/8% Notes 136.0 136.0 136.0
-------- -------- --------
Total debt 280.7 255.1 214.8
-------- -------- --------
Shareholders' equity (2)
Voting common stock 0.2 0.2 0.2
Additional paid-in capital 106.8 106.8 162.8
Retained earnings (accumulated deficit) 1.9 1.9 (3.0)
ESOP debt guarantee (4.3) (4.3) (4.3)
Unearned restricted stock - - -
Accumulated other comprehensive loss (11.2) (11.2) (11.2)
-------- -------- --------
Total shareholders' equity 93.4 93.4 144.5
-------- -------- --------
Total capitalization $ 374.1 $ 348.5 $ 359.3
======== ======== ========
Total debt as a percentage of total capitalization 75.0% 73.2% 59.8%
======== ======== ========
(1) Cash and cash equivalents As Further Adjusted includes net proceeds of
$56.0 million from the recently closed stock sale less debt redeemed
of $40.3 million, redemption premiums of $4.0 million, and accrued
interest on our debt redeemed of $1.1 million.
(2) Adjustments to our shareholders' equity reflect fees of $4.0 million,
redemption premiums of $4.0 million, write-offs of capitalized
financing fees on our 10% Notes of $0.9 million, and the proceeds from
the recently completed stock offering.
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