NEWS RELEASE
CONTACT:
Karen L. Howard
Vice President - Finance and Chief Financial Officer
Columbus McKinnon Corporation
716-689-5550
karen.howard@cmworks.com
------------------------
COLUMBUS MCKINNON REPORTS CONTINUED REVENUE GAINS AND STRONG
EARNINGS GROWTH ALONG WITH DEBT REDUCTION IN FISCAL 2008
SECOND QUARTER
o STRONG CMCO EUROPE PERFORMANCE AND SOLID DOMESTIC DEMAND DRIVES
PRODUCTS SEGMENT SECOND QUARTER SALES UP 8.7%
o DILUTED EPS OF $0.49; PRO FORMA DILUTED EPS OF $0.54, EXCLUDING DEBT
REFINANCING COSTS, UP 22.7% COMPARED TO YEAR-AGO QUARTER
o OPERATING MARGIN ADVANCES 140 BASIS POINTS TO 12.6% IN QUARTER,
GENERATING 42% OPERATING LEVERAGE
o DEBT, NET OF CASH, REDUCED 10.8% IN QUARTER TO $100.7 MILLION, 27.3%
OF TOTAL CAPITALIZATION
o CASH GENERATED FROM OPERATIONS GROWS 60% TO $23.9 MILLION IN FIRST
HALF
AMHERST, N.Y., October 23, 2007 - Columbus McKinnon Corporation (NASDAQ: CMCO),
a leading designer, manufacturer and marketer of material handling products,
today announced financial results for its fiscal 2008 second quarter that ended
on September 30, 2007. Operating margin improved 140 basis points to 12.6% on a
5.0% increase in net sales to $151.4 million. The Company's Products segment,
which represents 92.7% of total revenue, increased sales by 8.7% to $140.3
million, more than offsetting the managed hold-back of sales in the much smaller
Solutions segment which declined 26.9% to $11.1 million. Net income was $9.5
million for the fiscal 2008 second quarter, a 13.7% increase from fiscal 2007
second quarter net income of $8.3 million. On a per diluted share basis, second
quarter fiscal 2008 net income was $0.49, 11.4% higher than $0.44 in the same
period last year.
Timothy T. Tevens, President and Chief Executive Officer, commented, "Strong
performance from CMCO Europe along with solid growth in domestic hoist, crane
and chain sales continues to drive our growth in fiscal 2008. We are generating
significant levels of cash from operations, enabling continued debt reduction
which, along with sales growth and favorable operating leverage, is further
enhancing Columbus McKinnon's profitability. During the quarter, we redeemed the
remaining $22.1 million of our 10% 2010 notes which will reduce our annual
interest expense going forward by about $2.2 million, with a favorable net
effect on future earnings of seven cents per diluted share. Excluding the impact
of refinancing costs from this redemption, pro forma net income per share of
$0.54 in this quarter reflects a 22.7% increase over last year's second quarter
net income per diluted share. The combination of continued improvements in
sales, operating profitability and financial condition all contributed to recent
upgrades in CMCO's debt ratings from Standard & Poor's and Moody's."
Mr. Tevens added, "We are also encouraged to see further improved results from
the restructuring of our Univeyor business within the Solutions segment. Gross
margins measurably improved over the prior year on much lower revenue, as we
continued to focus on more profitable products. Notably, the increased backlog
in this segment at quarter end is of higher margin product and systems business.
Additionally, we are seeing favorable market interest in our latest proprietary
product, the EmptiCon, a highly innovative product that empties ocean-going
shipping containers faster and with fewer workers than conventional methods."
During the fiscal 2008 second quarter, the Company recorded net after-tax
charges of $0.9 million, or $0.05 per diluted share, in financing costs
associated with the redemption of all remaining outstanding 10% Senior Secured
Notes Due 2010. Excluding the effect of these refinancing charges, fiscal 2008
second quarter pro forma net income per diluted share was $0.54, a 22.7%
increase from fiscal 2007.
FY 2008/2007 Q2 RECONCILIATION OF GAAP NET INCOME TO NON-GAAP
PRO FORMA NET INCOME
(IN THOUSANDS EXCEPT PER SHARE DATA)
- ------------------------------------------------------ ------------------------------------- ------------------------
FY 2008 Q2 FY 2007 Q2
- ------------------------------------------------------ ------------------------------------- ------------------------
GAAP net income $9,453 +13.7% $8,314
- ------------------------------------------------------ ------------------------------------- ------------------------
Financing costs - 2010 Notes repurchase 1,443 --
- ------------------------------------------------------ ------------------------------------- ------------------------
Income tax expense on Notes repurchase (505) --
- ------------------------------------------------------ ------------------------------------- ------------------------
Non-GAAP pro forma net income $10,391 +25.0% $8,314
- ------------------------------------------------------ ------------------------------------- ------------------------
GAAP net income per diluted share* $0.49 +11.4% $0.44
- ------------------------------------------------------ ------------------------------------- ------------------------
Non-GAAP pro forma net income per diluted share* $0.54 +22.7% $0.44
- ------------------------------------------------------ ------------------------------------- ------------------------
* SHARES IN THOUSANDS USED IN Q2 PER DILUTED SHARE CALCULATIONS -- FY08:
19,143; FY07: 18,873
SECOND QUARTER FISCAL 2008 REVIEW
- ---------------------------------
Gross margin improved 330 basis points to 30.4% compared with 27.1% in the
second quarter of fiscal 2007, resulting in an 18.0% increase in gross profit on
the 5.0% increase in sales. Operating income of $19.1 million for the fiscal
2008 second quarter was up from $16.1 million for the fiscal 2007 second
quarter, generating 42% operating leverage on the incremental sales. These
results exceed our sustainable operating leverage target of 20%-30%. As a
percent of sales, operating income produced a 12.6% margin in the fiscal 2008
second quarter, up 140 basis points from 11.2% in the same period last year.
Both the Products segment's volume growth and Solutions segment's restructuring
results contributed to the improvement. Operating income was also affected by
strategic investment in marketing and selling expenses which increased $2.5
million, or 17.2%, reflecting activities to accelerate the Company's
international expansion and increase sales in targeted high growth U.S. markets,
as well as $0.6 million for foreign currency exchange. General and
administrative expense increases included investments to support our global
expansion as well as $0.4 million for foreign currency exchange. Also offsetting
operating income in the fiscal 2008 quarter were restructuring charges of $0.5
million, primarily related to demolition of an obsolete, unused facility within
our Solutions segment.
Mr. Tevens commented, "We are investing in our marketing and sales capabilities
to capitalize on our product breadth, brand strength and go-to-market logistics
to capture greater market share in Europe, Asia and Latin America, while
extending our penetration of growing domestic markets such as commercial
construction and energy-related industries."
Reduced debt resulted in a $0.5 million, or 13.1%, decrease in interest and debt
expense for the second quarter of fiscal 2008 compared with the prior year's
quarter and reflects the Company's efforts to strengthen its capital structure
by eliminating or efficiently refinancing higher cost debt.
2
Debt, net of cash, at September 30, 2007, was $100.7 million, or 27.3% of total
capitalization, a $12.1 million reduction from $112.8 million, or 30.8% of total
capitalization, at the end of the fiscal 2008 first quarter and a reduction of
$51.2 million from $151.9 million, or 40.4% of total capitalization, a year ago.
At the end of the fiscal 2008 second quarter, gross debt was $154.3 million, or
36.6% of total capitalization, a $20.4 million decrease from $174.7 million, or
40.8% of total capitalization at the end of the fiscal 2008 first quarter and a
reduction of $21.8 million from $176.1 million, or 44.0% of total capitalization
a year ago. The Company's availability on its line of credit with its bank group
at September 30, 2007 was $63.4 million. On August 1, 2007, the Company redeemed
the remaining $22.1 million of its outstanding 10% Senior Secured Notes Due
2010, using available cash on hand. The Notes were redeemed at a price of 105%
of the principal amount thereof, plus accrued interest. Also, during the quarter
Standard & Poor's upgraded the Company's overall debt rating to BB- from B+ and
Moody's changed the Company's outlook to positive from stable.
The Company continues to realize the cash flow benefits of its U.S. net
operating loss (NOL) carryforward, of which $16.8 million, representing
approximately $5.9 million of cash tax savings, remained available as of
September 30, 2007.
Capital expenditures for the second quarter of fiscal 2008 were $2.4 million,
consistent with the same period in fiscal 2007. Capital spending is focused on
new product development, the purchase of productivity-enhancing equipment and
capital maintenance items at various manufacturing facilities. The Company
anticipates capital spending to be approximately $11 to $12 million in fiscal
2008.
PRODUCTS SEGMENT
- ----------------
Products segment net sales for the second quarter of fiscal 2008 increased 8.7%
compared with last year's second quarter and represented 92.7% of consolidated
net sales. The fluctuation compared with last year's quarter is summarized as
follows, in millions:
Increased volume $ 8.9 6.9%
Improved pricing 2.5 1.9%
Foreign currency translation 2.3 1.8%
Divested business * (2.4) (1.9%)
---------- ------
Total $ 11.3 8.7%
========== ======
* Divested business is Larco Industrial Services, Ltd.; sale announced
March 5, 2007
Products segment sales growth included significant contributions from CMCO
Europe operations as well as solid demand from the domestic hoist, crane and
chain businesses. Gross margin for the segment improved 210 basis points to
31.5% compared with last year's second quarter margin of 29.4%. Income from
operations, as a percent of sales, was 14.0% for this period, up from 13.2% in
the fiscal 2007 second quarter.
Backlog stood at $58.4 million at the end of the quarter compared with backlog
of $63.0 million and $53.2 million at the end of the fiscal 2008 first quarter
and fiscal 2007 fourth quarter, respectively. The time to convert the majority
of Products segment backlog to sales averages from one day to a few weeks, and
backlog for this segment normally represents four to five weeks of shipments,
with backlog at September 30 representing approximately five weeks of shipments,
primarily driven by longer lead-time orders for more capital-type equipment such
as cranes.
SOLUTIONS SEGMENT
- -----------------
Net sales for the Solutions segment were $11.1 million in the fiscal 2008 second
quarter, down 26.9%, from sales of $15.2 million in the same period last year.
Importantly, Solutions segment gross profit improved 61.1%, an 890 basis point
improvement as a percent of sales, on significantly lower revenue reflecting the
3
intentional hold-back of sales to support this segment's transition to a more
"standard" product-oriented offering from its historic engineered-to-order
projects model. Gross margin improved to 16.3% compared with 7.4% last year.
Restructuring charges of $0.5 million for facility demolition costs unrelated to
Univeyor, contributed to the loss from operations of $0.5 million during the
current period compared with a loss from operations of $0.9 million during the
second quarter of fiscal 2007.
Backlog for the Solutions segment at September 30, 2007 was $15.7 million, an
increase from backlog of $8.4 million and $9.6 million at the end of the fiscal
2008 first quarter and fiscal 2007 fourth quarter, respectively. For this
segment, the average cycle time for backlog to convert to sales generally ranges
from one to six months.
"Our efforts to restructure Univeyor, the largest contributor to Solutions
segment sales, into a product-focused and service-based business are continuing
to pay off. Gross margin and backlog have improved measurably. There has also
been increased interest in EmptiCon, Univeyor's primary new proprietary product.
We will continue to monitor the Univeyor business and anticipate completing our
assessment of our future plans for it by calendar year end. We expect to
disclose these plans shortly thereafter," Mr. Tevens stated.
FIRST HALF FISCAL 2008 REVIEW
- -----------------------------
Net sales for the first half of fiscal 2008 were $299.5 million, up 3.0%, or
$8.6 million compared with the first half of fiscal 2007. Gross profit of $89.9
million was 10.6% higher for this fiscal year's first six months resulting in a
210 basis point improvement in gross profit margin to 30.0%. Selling, general
and administrative (SG&A) expenses combined were $51.7 million in the fiscal
2008 first half compared with $47.7 million in the prior fiscal year. As a
percent of sales, SG&A was 17.3% and 16.4% for the fiscal 2008 and 2007
half-year periods, respectively. As previously noted, the increase was primarily
due to investments made to support our strategic growth initiatives. Operating
margin for the first half of fiscal 2008 was 12.5% compared with 11.6% for the
first half of fiscal 2007, representing 41% operating leverage. Interest expense
in the first half of fiscal 2008 was down $0.9 million, or 10.2%, to $7.8
million reflecting the $22 million year-over-year reduction in average debt
outstanding.
Net income was $19.0 million for the first half of fiscal 2008 compared with the
first half of fiscal 2007 net income of $13.9 million. On a per diluted share
basis, first half fiscal 2008 net income was $0.99 compared with $0.73 in the
same period last year. As noted above, during the fiscal 2008 first half, the
Company recorded net after-tax charges of $0.9 million, or $0.05 per diluted
share, in financing costs. Similarly, during the fiscal 2007 first half, the
Company recorded net after-tax charges of $3.0 million, or $0.16 per diluted
share, in financing costs. Excluding the effect of these refinancing charges,
fiscal 2008 first half pro forma net income per diluted share was $1.04, a 16.9%
increase from fiscal 2007 pro forma net income per diluted share of $0.89.
4
FY 2008/2007 YTD RECONCILIATION OF GAAP NET INCOME TO NON-GAAP
PRO FORMA NET INCOME
(IN THOUSANDS EXCEPT PER SHARE DATA)
- ------------------------------------------------------ ------------------------------------- ------------------------
FY 2008 YTD FY 2007 YTD
- ------------------------------------------------------ ------------------------------------- ------------------------
GAAP net income $18,973 +36.6% $13,886
- ------------------------------------------------------ ------------------------------------- ------------------------
Financing costs - 2010 Notes repurchase 1,443 4,583
- ------------------------------------------------------ ------------------------------------- ------------------------
Income tax expense on Notes repurchase (505) (1,604)
- ------------------------------------------------------ ------------------------------------- ------------------------
Non-GAAP pro forma net income $19,911 +18.1% $16,865
- ------------------------------------------------------ ------------------------------------- ------------------------
GAAP net income per diluted share* $0.99 +35.6% $0.73
- ------------------------------------------------------ ------------------------------------- ------------------------
Non-GAAP pro forma net income per diluted share* $1.04 +16.9% $0.89
- ------------------------------------------------------ ------------------------------------- ------------------------
* SHARES IN THOUSANDS USED IN YTD PER DILUTED SHARE CALCULATIONS -- FY08:
19,115; FY07: 18,917
Net cash provided by operations was $23.9 million for the fiscal 2008 first
half, a 59.6% increase from $15.0 million in the fiscal 2007 first half when
higher working capital requirements affected cash generation. Working capital
requirements, particularly inventories, continued to utilize cash during fiscal
2008.
SUMMARY
- -------
Mr. Tevens concluded, "Our continued improvement in performance is evident by
improved profitability and strong cash flows for fiscal 2008, enabling us to
reduce net debt by nearly $23 million thus far this fiscal year. Our debt
reduction activities are moving closer to our goal of 30% long-term gross debt
to total capitalization. This capital structure positions us to make bolt-on
acquisitions as the right opportunities arise, which will complement our growth
while staying well within our leverage goals. Overall, market conditions remain
favorable in most of the industrial markets we serve, particularly in the global
regions where our expansion efforts are focused. Products segment bookings for
the second quarter were up in the high-single digits range over last year's
second quarter. We are on track for another year of continued revenue and
earnings growth and, given investments we are making in domestic and
international markets, we expect this trend to continue."
ABOUT COLUMBUS MCKINNON
- -----------------------
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.
- -----------------------
TELECONFERENCE/WEBCAST
- ----------------------
A teleconference and webcast have been scheduled for October 23, 2007 at 10:00
AM Eastern Time at which the management of Columbus McKinnon will discuss the
Company's financial results and strategy. Interested parties in the United
States and Canada can participate in the teleconference by dialing
1-888-459-1579, and asking to be placed in the "Columbus McKinnon Quarterly
Conference Call" and providing the password "Columbus McKinnon" and identifying
conference leader "Tim Tevens" when asked. The toll number for parties outside
the United States and Canada is +1-210-234-7695.
The webcast will be accessible at Columbus McKinnon's web site:
http://www.cmworks.com.
An audio recording of the call will be available two hours after its completion
and until October 30, 2007 by dialing 1-866-469-7805. Alternatively, you may
access an archive of the call until January 23, 2008 on Columbus McKinnon's web
site at: http://www.cmworks.com/invrel/presentation.asp.
----------------------------------------------
5
SAFE HARBOR STATEMENT
- ---------------------
THIS NEWS 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 EFFECT OF OPERATING LEVERAGE, THE
PACE OF BOOKINGS RELATIVE TO SHIPMENTS, THE ABILITY TO EXPAND INTO NEW MARKETS
AND GEOGRAPHIC REGIONS, THE SUCCESS IN ACQUIRING NEW BUSINESS, THE SPEED AT
WHICH SHIPMENTS IMPROVE, 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.
TABLES FOLLOW.
6
COLUMBUS MCKINNON CORPORATION
CONSOLIDATED INCOME STATEMENTS
(IN THOUSANDS, EXCEPT PER SHARE AND PERCENTAGE DATA)
THREE MONTHS ENDED
------------------
SEPTEMBER 30, 2007 OCTOBER 1, 2006 CHANGE
------------------ --------------- ------
NET SALES $ 151,410 $ 144,225 5.0%
Cost of products sold 105,372 105,208 0.2%
-------------------------------------------------
Gross profit 46,038 39,017 18.0%
Gross profit margin 30.4 % 27.1 %
Selling expense 17,269 14,739 17.2%
General and administrative expense 9,127 8,540 6.9%
Restructuring charges 469 (410) -214.4%
Amortization 25 44 -43.2%
-------------------------------------------------
INCOME FROM OPERATIONS 19,148 16,104 18.9%
-------------------------------------------------
Interest and debt expense 3,627 4,176 -13.1%
Cost of bond redemptions 1,443 - #DIV/0!
Investment income (257) (312) -17.6%
Other income (523) (754) -30.6%
-------------------------------------------------
Income from continuing operations before income
tax expense 14,858 12,994 14.3%
Income tax expense 5,544 4,898 13.2%
-------------------------------------------------
Income from continuing operations 9,314 8,096 15.0%
Income from discontinued operations 139 218 -36.2%
-------------------------------------------------
NET INCOME $ 9,453 $ 8,314 13.7%
=================================================
Average basic shares outstanding 18,716 18,500 1.2%
Basic income per share:
Continuing operations $ 0.50 $ 0.44 13.6%
Discontinued operations 0.01 0.01
-------------------------------------------------
Net income $ 0.51 $ 0.45 13.3%
=================================================
Average diluted shares outstanding 19,143 18,873 1.4%
Diluted income per share:
Continuing operations $ 0.48 $ 0.43 11.6%
Discontinued operations 0.01 0.01
-------------------------------------------------
Net income $ 0.49 $ 0.44 11.4%
=================================================
7
COLUMBUS MCKINNON CORPORATION
CONSOLIDATED INCOME STATEMENTS
(IN THOUSANDS, EXCEPT PER SHARE AND PERCENTAGE DATA)
SIX MONTHS ENDED
----------------
SEPTEMBER 30, 2007 OCTOBER 1, 2006 CHANGE
------------------ --------------- ------
NET SALES $ 299,520 $ 290,919 3.0%
Cost of products sold 209,594 209,619 0.0%
-------------------------------------------------
Gross profit 89,926 81,300 10.6%
Gross profit margin 30.0 % 27.9 %
Selling expense 33,390 30,106 10.9%
General and administrative expense 18,323 17,629 3.9%
Restructuring charges 745 (406) -283.5%
Amortization 53 87 -39.1%
-------------------------------------------------
INCOME FROM OPERATIONS 37,415 33,884 10.4%
-------------------------------------------------
Interest and debt expense -10.2%
7,805 8,688
Cost of bond redemptions 1,443 4,583 -68.5%
Investment income (551) (786) -29.9%
Other income (1,477) (1,293) 14.2%
-------------------------------------------------
Income from continuing operations before income
tax expense 30,195 22,692 33.1%
Income tax expense 11,500 9,163 25.5%
-------------------------------------------------
Income from continuing operations 18,695 13,529 38.2%
Income from discontinued operations 278 357 -22.1%
-------------------------------------------------
NET INCOME $ 18,973 $ 13,886 36.6%
=================================================
Average basic shares outstanding 18,677 18,465 1.1%
Basic income per share:
Continuing operations $ 1.00 $ 0.73 37.0%
Discontinued operations 0.02 0.02
-------------------------------------------------
Net income $ 1.02 $ 0.75 36.0%
=================================================
Average diluted shares outstanding 19,115 18,917 1.0%
Diluted income per share:
Continuing operations $ 0.97 $ 0.71 36.6%
Discontinued operations 0.02 0.02
-------------------------------------------------
Net income $ 0.99 $ 0.73 35.6%
=================================================
8
COLUMBUS MCKINNON CORPORATION
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
SEPTEMBER 30, 2007 MARCH 31, 2007
------------------ --------------
ASSETS
Current assets:
Cash and cash equivalents $ 53,628 $ 48,655
Trade accounts receivable 96,740 97,269
Unbilled revenues 11,716 15,050
Inventories 90,813 77,179
Prepaid expenses 16,896 18,029
-----------------------------------
Total current assets 269,793 256,182
-----------------------------------
Net property, plant, and equipment 56,266 55,231
Goodwill and other intangibles, net 186,501 185,903
Marketable securities 29,738 28,920
Deferred taxes on income 24,855 34,460
Other assets 6,730 4,942
-----------------------------------
TOTAL ASSETS $ 573,883 $ 565,638
===================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Notes payable to banks $ 10,308 $ 9,598
Trade accounts payable 34,326 35,896
Accrued liabilities 54,720 52,344
Restructuring reserve 19 599
Current portion of long-term debt 493 297
-----------------------------------
Total current liabilities 99,866 98,734
-----------------------------------
Senior debt, less current portion 7,485 26,168
Subordinated debt 136,000 136,000
Other non-current liabilities 62,979 63,411
-----------------------------------
Total liabilities 306,330 324,313
-----------------------------------
Shareholders' equity:
Common stock 189 188
Additional paid-in capital 176,374 174,654
Retained earnings 104,024 85,237
ESOP debt guarantee (3,134) (3,417)
Accumulated other comprehensive loss (9,900) (15,337)
-----------------------------------
Total shareholders' equity 267,553 241,325
-----------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 573,883 $ 565,638
===================================
9
COLUMBUS MCKINNON CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
SIX MONTHS ENDED
----------------
SEPTEMBER 30, 2007 October 1, 2006
------------------ ---------------
OPERATING ACTIVITIES:
Income from continuing operations $ 18,695 $ 13,529
Adjustments to reconcile income from continuing operations to
net cash provided by operating activities:
Depreciation and amortization 4,304 4,208
Deferred income taxes 9,605 8,710
Gain on sale of investments/real estate (333) (1,170)
Loss on early retirement of bonds 1,106 3,780
Stock option expense 395 866
Amortization/write-off of deferred financing costs 643 1,148
Changes in operating assets and liabilities:
Trade accounts receivable 169 2,278
Unbilled revenues and excess billings 4,065 (4,212)
Inventories (12,769) (10,532)
Prepaid expenses 1,189 (2,521)
Other assets (981) (258)
Trade accounts payable (1,998) 1,102
Accrued and non-current liabilities (206) (1,967)
----------------------------------------------
Net cash provided by operating activities 23,884 14,961
----------------------------------------------
INVESTING ACTIVITIES:
Sale of marketable securities, net (711) 777
Capital expenditures (4,979) (4,336)
Proceeds from sale of property 5,454 2,051
Proceeds from discontinued operations note receivable 278 357
----------------------------------------------
Net cash used by investing activities 42 (1,151)
----------------------------------------------
FINANCING ACTIVITIES:
Proceeds from stock options exercised 1,061 2,051
Net borrowings under revolving line-of-credit agreements 74 1,571
Repayment of debt (23,397) (39,325)
Deferred financing costs incurred (2) (395)
Other 283 291
----------------------------------------------
Net cash used by financing activities (21,981) (35,807)
----------------------------------------------
EFFECT OF EXCHANGE RATE CHANGES ON CASH 3,028 576
----------------------------------------------
Net change in cash and cash equivalents 4,973 (21,421)
Cash and cash equivalents at beginning of year 48,655 45,598
----------------------------------------------
Cash and cash equivalents at end of period $ 53,628 $ 24,177
==============================================
10
COLUMBUS MCKINNON CORPORATION
BUSINESS SEGMENT DATA
(IN THOUSANDS, EXCEPT PERCENTAGE DATA)
QUARTER ENDED QUARTER ENDED
SEPTEMBER 30, 2007 OCTOBER 1, 2006 % CHANGE
------------------ --------------- ------------
PRODUCTS
Net sales $ 140,312 $ 129,037 8.7%
Gross profit 44,232 37,896 16.7%
MARGIN 31.5 % 29.4 %
Income from operations 19,608 17,039 15.1%
MARGIN 14.0 % 13.2 %
SOLUTIONS
Net sales $ 11,098 $ 15,188 -26.9%
Gross profit 1,806 1,121 61.1%
MARGIN 16.3 % 7.4 %
Income from operations (460) (935) -50.8%
MARGIN (4.1) % (6.2) %
CONSOLIDATED
Net sales $ 151,410 $ 144,225 5.0%
Gross profit 46,038 39,017 18.0%
MARGIN 30.4 % 27.1 %
Income from operations 19,148 16,104 18.9%
MARGIN 12.6 % 11.2 %
SIX MONTHS ENDED SIX MONTHS ENDED
SEPTEMBER 30, 2007 OCTOBER 1, 2006 % CHANGE
------------------ --------------- -------------
PRODUCTS
Net sales $ 277,078 $ 257,176 7.7%
Gross profit 86,331 77,313 11.7%
MARGIN 31.2 % 30.1 %
Income from operations 38,479 33,848 13.7%
MARGIN 13.9 % 13.2 %
SOLUTIONS
Net sales $ 22,442 $ 33,743 -33.5%
Gross profit 3,595 3,987 -9.8%
MARGIN 16.0 % 11.8 %
Income from operations (1,064) 36 -3055.6%
MARGIN (4.7) % 0.1 %
CONSOLIDATED
Net sales $ 299,520 $ 290,919 3.0%
Gross profit 89,926 81,300 10.6%
MARGIN 30.0 % 27.9 %
Income from operations 37,415 33,884 10.4%
MARGIN 12.5 % 11.6 %
11
COLUMBUS MCKINNON CORPORATION
ADDITIONAL DATA
SEPTEMBER 30, 2007 OCTOBER 1, 2006 MARCH 31, 2007
------------------ --------------- --------------
BACKLOG (IN MILLIONS)
Products segment $ 58.4 $ 54.9 $ 53.2
Solutions segment $ 15.7 $ 4.4 $ 9.6
TRADE ACCOUNTS RECEIVABLE
days sales outstanding 58.1 days 59.6 days 56.4 days
INVENTORY TURNS PER YEAR
(based on cost of products sold) 4.6 turns 4.9 turns 5.8 turns
DAYS' INVENTORY 78.6 days 74.5 days 62.8 days
TRADE ACCOUNTS PAYABLE
days payables outstanding 29.6 days 35.6 days 29.1 days
WORKING CAPITAL AS A % OF SALES 21.3 % 20.0 % 20.1 %
DEBT TO TOTAL CAPITALIZATION PERCENTAGE 36.6 % 44.0 % 41.6 %
DEBT, NET OF CASH, TO TOTAL CAPITALIZATION 27.3 % 40.4 % 33.8 %
SHIPPING DAYS BY QUARTER
Q1 Q2 Q3 Q4 TOTAL
-- -- -- -- -----
FY08 63 63 60 63 249
FY07 63 63 59 64 249
###
12