UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 11-K
/X/ ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 [NO FEE REQUIRED]
For the fiscal year ended March 31, 1999
/ / TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 [NO FEE REQUIRED]
For the transition period from to
Commission file number
A. Full title of the plan and the address of the plan, if different from that of
the issuer named below:
Columbus McKinnon Corporation
Employee Stock Ownership Plan
Restatement Effective April 1, 1989
B. Name of issuer of the securities held pursuant to the plan and the address of
its principal executive office:
COLUMBUS McKINNON CORPORATION
140 John James Audubon Parkway
Amherst, NY 14228-1197
Financial Statements and Schedules
Columbus McKinnon Corporation
Employee Stock Ownership Plan
Years ended March 31, 1999 and 1998
with Report of Independent Auditors
Columbus McKinnon Corporation
Employee Stock Ownership Plan
Financial Statements and Schedules
Years ended March 31, 1999 and 1998
CONTENTS
Report of Independent Auditors .........................................1
Financial Statements
Statements of Net Assets Available for Benefits.........................2
Statements of Changes in Net Assets Available for Benefits..............3
Notes to Financial Statements...........................................4
Schedules
Item 27a - Schedule of Assets Held for Investment Purposes.............10
Item 27d - Schedule of Reportable Transactions.........................11
Report of Independent Auditors
The Pension Committee
Columbus McKinnon Corporation
Employee Stock Ownership Plan
We have audited the accompanying statements of net assets available for benefits
of the Columbus McKinnon Corporation Employee Stock Ownership Plan (ESOP) as of
March 31, 1999 and 1998, and the related statements of changes in net assets
available for benefits for the years then ended. These financial statements are
the responsibility of the ESOP's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the ESOP at
March 31, 1999 and 1998, and the changes in its net assets available for
benefits for the years then ended, in conformity with generally accepted
accounting principles.
Our audits were made for the purpose of forming an opinion on the financial
statements taken as a whole. The accompanying supplemental schedules of assets
held for investment purposes as of March 31, 1999, and reportable transactions
for the year then ended, are presented for purposes of complying with the
Department of Labor's Rules and Regulations for Reporting and Disclosure under
the Employee Retirement Income Security Act of 1974, and are not a required part
of the financial statements. The supplemental schedules have been subjected to
the auditing procedures applied in our audit of the 1999 financial statements
and, in our opinion, are fairly stated in all material respects in relation to
the 1999 financial statements taken as a whole.
/s/ Ernst & Young LLP
Buffalo, New York
June 11, 1999
1
Columbus McKinnon Corporation
Employee Stock Ownership Plan
Statements of Net Assets Available for Benefits
MARCH 31
1999 1998
---------------------------------
ASSETS
Cash ................................................... $ 4,544 $ 50
Investments:
Columbus McKinnon Corporation common stock at market:
Allocated (cost - $6,698,620 in 1999 and
$6,124,294 in 1998) ........................... 17,844,495 23,521,768
Unallocated (cost - $9,864,296 in 1999 and
$3,202,156 in 1998; held in suspense account) . 14,256,148 8,940,030
----------- -----------
32,100,643 32,461,798
Stable asset fund at market ......................... 100,166 85,604
Employer contribution receivable ....................... 29,975 18,116
Interest receivable .................................... 2,137 2,127
----------- -----------
Total assets ........................................... $32,237,465 $32,567,695
=========== ===========
LIABILITIES AND NET ASSETS
AVAILABLE FOR BENEFITS
Exempt loans payable ................................... $10,523,255 $ 3,764,789
Accrued interest payable ............................... 29,975 18,116
----------- -----------
Total liabilities ...................................... 10,553,230 3,782,905
Net assets available for benefits:
Allocated ........................................... 17,951,342 23,609,549
Unallocated ......................................... 3,732,893 5,175,241
----------- -----------
Total net assets available for benefits ................ 21,684,235 28,784,790
----------- -----------
Total liabilities and net assets available for benefits $32,237,465 $32,567,695
=========== ===========
See accompanying notes.
2
Columbus McKinnon Corporation
Employee Stock Ownership Plan
Statements of Changes in Net Assets Available for Benefits
YEAR ENDED MARCH 31
1999 1998
---------------------------------
Additions:
Employer contributions .............................. $ 1,186,271 $ 1,007,383
Dividend income ..................................... 355,508 338,861
Interest income ..................................... 3,219 5,436
------------ -----------
Total additions ........................................ 1,544,998 1,351,680
Deductions:
Participant termination payments .................... 1,383,517 923,965
Interest expense on exempt loans payable............. 594,271 415,383
Transfer to other qualified plan .................... 101,600 --
Administrative expense .............................. 5,273 2,814
------------ -----------
Total deductions ....................................... 2,084,661 1,342,162
Net (depreciation) appreciation in fair
value of investments ................................ (6,560,892) 11,638,204
------------ -----------
Net (decrease) increase in assets available
for benefits ........................................ (7,100,555) 11,647,722
Net assets available for benefits:
Beginning of year ...................................... 28,784,790 17,137,068
------------ ------------
End of year ............................................ $ 21,684,235 $ 28,784,790
============ ============
See accompanying notes.
3
Columbus McKinnon Corporation
Employee Stock Ownership Plan
Notes to Financial Statements
March 31, 1999 and 1998
1. DESCRIPTION OF THE PLAN AND MAJOR PLAN PROVISIONS
The Columbus McKinnon Corporation Employee Stock Ownership Plan (ESOP), a
defined contribution plan, was established as a result of amending the
previously existing Columbus McKinnon Corporation Personal Retirement Account
Plan (PRA Plan), effective November 1, 1988. The PRA Plan was restated and its
assets became part of the ESOP. The ESOP is an employee stock ownership plan and
a stock bonus plan within the meanings of the applicable sections of the
Internal Revenue Code of 1986, as amended. It is also an eligible individual
account plan as defined in the applicable section of the Employee Retirement
Income Security Act of 1974 (ERISA).
The plan was amended effective February 23, 1996 and October 1, 1996 to
incorporate valuation and distribution procedures as required for a public
entity. The Plan was also amended effective April 1, 1998, to extend coverage to
all domestic non-union employees of the Durbin Durco and Positech Divisions of
Columbus McKinnon Corporation (the Company/CMC), and all domestic non-union
employees of Yale Industrial Products, Inc.
In accordance with the plan document, employees who have attained 55 years of
age and ten years of participation in the Plan have the option to diversify the
investments in their stock accounts by selling a specified percentage of their
shares at the current market value and transferring the sale proceeds to another
defined contribution plan maintained by the Company. As of March 31, 1999,
$101,600 has been transferred to the Company's thrift 401(k) plan.
A summary of the ESOP's provisions follows. Refer to the ESOP document or the
summary plan description (SPD) for a complete description of provisions.
PARTICIPATION
Substantially all of Columbus McKinnon Corporation's domestic non-union
employees are eligible to participate in the ESOP, excluding domestic employees
of certain companies acquired in fiscal 1998 and 1999.
Eligible employees must have attained age 21 and completed one year of
eligibility service to be a participant.
4
Columbus McKinnon Corporation
Employee Stock Ownership Plan
Notes to Financial Statements (continued)
1. DESCRIPTION OF THE PLAN AND MAJOR PLAN PROVISIONS (CONTINUED)
VESTING OF PARTICIPANTS
A participant will be fully vested and will have a non-forfeitable interest in
the participant's account balance upon completion of five years of vesting
service, excluding any service rendered prior to the calendar year in which
he/she attained age 18, or upon attainment of normal retirement age while in the
employ of the Company or any affiliated company. For participants with prior
employment with the Company in an ineligible classification or with an affiliate
of the Company, such employment shall be included in the calculation of
eligibility and vesting service.
RETIREMENT AND TERMINATION OF EMPLOYMENT
Upon a vested participant's termination, the value of his/her account will be
distributed if the value of the account is less than $5,000 or, at the
participant's option, either immediately or at any valuation date until
retirement, as provided in the ESOP. A retiree may elect to defer distribution
up to 69 1/2 years of age, where at the following valuation date distribution is
mandatory. Valuation dates for share distribution are September 30 and March 31.
During 1999, $1,383,517, or 58,739 shares, were distributed to vested
participants in the form of stock certificates ($923,965 or 44,617 shares,
distributed in 1998). This resulted in the sale of 27 shares held by the ESOP
back to the Company for $637 in 1999 as a result of fractional shares (27 shares
for $578 in 1998). At March 31, 1999, $1,249,077 ($792,339 at March 31, 1998) is
included in the ESOP assets for future distribution to terminated participants.
Forfeiture of a non-vested interest shall occur in the fifth consecutive
calendar year following a break in service. The forfeited accounts will be
allocated among the accounts of active participants. At March 31, 1999, the ESOP
assets include $212,574 ($249,682 at March 31, 1998) of undistributed forfeited
accounts.
ALLOCATION TO PARTICIPANT ACCOUNTS
As of each valuation date (March 31), each participant account is appropriately
adjusted to reflect any contributions or stock to be allocated as of such date,
the income of the trust fund during the period and the increase or decrease in
the fair market value of the trust fund during the period. The allocation will
be based on the fraction, the numerator of which is the participant's annual
earnings for the preceding calendar year and the denominator of which is the
aggregate annual earnings for such calendar year of all participants entitled to
an allocation.
5
Columbus McKinnon Corporation
Employee Stock Ownership Plan
Notes to Financial Statements (continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
INVESTMENTS
The ESOP's investment in Columbus McKinnon Corporation common stock is at fair
market value as of March 31, 1999 and 1998 based on quoted market prices. The
investment in the Stable Asset Fund is also reported at market value as
determined by open trading.
CONTRIBUTIONS
The Company will contribute to the ESOP such amount as its Board of Directors
shall determine. Each participant (a) who is actively employed as an employee on
the allocation date (December 31) and who has earned at least 1,000 hours of
service as an employee in the calendar year ending on the allocation date, or
(b) who terminates employment on or after January 1 during a plan year after
attaining age 60 and completing at least five years of eligibility service, or
(c) who dies on or after January 1 during a plan year, after attaining age 60
and completing at least five years of eligibility service, shall be entitled to
share in the contributions made for such plan year. Contributions shall be made
in cash or in shares of stock as determined by the Company, and need not be made
out of current or accumulated earnings and profits.
DIVIDENDS
Dividends paid on stock allocated to a participant's stock account will be
allocated to the participant's nonstock account. The pension committee may
direct that such dividends shall be either (a) paid directly to the participant,
former participant, or beneficiary within 90 days after the close of the plan
year in which such dividend was paid, or (b) applied as payment on the exempt
loans. Dividends paid on unallocated stock held by the trustee and acquired with
the proceeds of an exempt loan shall be held by the trustee until the end of the
plan year in which it was paid, and then, along with any interest or earnings,
be applied as payment on the exempt loans which shall trigger a release of stock
from the suspense account.
ESOP TERMINATION
The Company intends to continue the ESOP indefinitely, but reserves the right to
terminate it at any time. If the ESOP is terminated, each participant shall be
fully and nonforfeitably vested in his interest in the ESOP trust fund.
6
Columbus McKinnon Corporation
Employee Stock Ownership Plan
Notes to Financial Statements (continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements.
Estimates also affect the reported amounts of revenue and expenses. Actual
results could differ from those estimates.
3. EMPLOYER CONTRIBUTIONS
The employer contribution to the ESOP for the March 31, 1999 plan year end was
$1,186,271 ($1,007,383 in 1998). This includes interest on the exempt loans
payable April 1, 1999; therefore, a contribution receivable from the ESOP
sponsor in the amount of $29,975 has been recognized at March 31, 1999 ($18,116
at March 31, 1998 for interest due April 1, 1998). Participants are not
permitted to make contributions to the ESOP.
4. INVESTMENTS
At March 31, 1999 and 1998, the assets of the ESOP Plan consist of Columbus
McKinnon Corporation common stock and a stable asset fund with Fleet Bank.
The fair value of individual investments that represent 5% or more of the Plan's
assets at the plan years ended March 31, 1999 and 1998, are as follows:
1999 1998
---------------------------------
Columbus McKinnon Corporation common stock $ 32,100,643 $ 32,461,798
7
Columbus McKinnon Corporation
Employee Stock Ownership Plan
Notes to Financial Statements (continued)
5. EXEMPT LOANS PAYABLE AND SHARE RELEASE
On October 27, 1994, the ESOP obtained $6,000,000 of new debt ($2,000,000 from
Marine Midland Bank and $4,000,000 from Fleet Bank). The Fleet loan is payable
in quarterly installments of $103,000 through January 2002, and $770,627 in
April 2002, plus interest at a Eurodollar rate based upon LIBOR plus a spread
determined by the Company's leverage ratio (6.62% and 7.34% at March 31, 1999
and 1998, respectively). The Marine loan is payable in quarterly installments of
$45,000 through January 2002, and $328,257 in April 2002, plus interest at a
Eurodollar rate based upon LIBOR plus a spread determined by the Company's
leverage ratio (6.62% and 7.34% at March 31, 1999 and 1998, respectively).
On October 13, 1998, the ESOP obtained $7,682,281 of new debt from the Company.
The CMC loan is payable in quarterly installments of interest only through April
2002, and thereafter quarterly installments of $150,000 through July 2014, and
$298,371 in October 2014, plus interest at the prime rate (7.75% at March 31,
1999).
In October 1994 and October 1998, the ESOP purchased 609,144 and 479,900 shares,
respectively, of common stock of the Company with the debt proceeds, which were
recorded by the trustee in the suspense account. Such stock ceases to be
collateral and is released from the suspense account as the exempt loan is
repaid. In each year prior to full payment of the loan, the number of shares of
stock released will equal the number of shares of stock held as collateral
immediately before the release for such plan year multiplied by the release
fraction.
Employer contributions of $592,000 were applied to principal in 1999 and 1998.
Employer contributions of $594,271 and $415,383 were applied to interest in 1999
and 1998, respectively. Dividend and interest income of $331,815 and $325,161
was applied to principal in 1999 and 1998, respectively. The loans, which are
guaranteed by the Company, are collateralized by an equivalent number of shares
of common stock recorded by the trustees in a suspense account.
8
Columbus McKinnon Corporation
Employee Stock Ownership Plan
Notes to Financial Statements (continued)
5. EXEMPT LOANS PAYABLE AND SHARE RELEASE (CONTINUED)
The numerator of the release fraction is the amount of principal and interest
payments made toward the loan during the plan year and the denominator is the
sum of the numerator plus the principal and interest payments to be made on the
loan in the future, using the interest rate applicable at the end of the plan
year. Shares of stock released from the suspense account for a plan year shall
be held in the trust on an unallocated basis until allocated by the pension
committee as of the last day of that plan year. That allocation shall be
consistent with the method for allocating contributions to participants'
accounts, which is based on a fraction of each participant's annual earnings
during the preceding calendar year to the total earnings of those participants
during such calendar year. The allocation of shares released resulting from
dividends on participants' allocated shares, however, was based upon the
fraction of each participant's allocated shares to the total number of allocated
shares.
As of March 31, 1999, 708,382 shares were held as collateral for the loan
(325,092 shares held as of March 31, 1998); 96,610 shares were released from the
suspense account in 1999 (101,416 shares released in 1998). These shares were
allocated to participant accounts as of March 31, 1999.
6. TAX STATUS
The Plan has received a determination letter from the Internal Revenue Service
dated July 28, 1997, stating that the Plan is qualified under Section 401(a) of
the Internal Revenue Code of 1986 (the "Code") and that the trust, therefore, is
exempt from taxation under Section 501(a) of the Code. Once qualified, the Plan
is required to operate in conformity with the Code and ERISA to maintain its
tax-exempt status. The Plan was amended subsequent to the IRS determination
letter. Therefore, the amendments are not covered by the determination letter.
The administrator is not aware of any course of action or series of events that
have occurred that might adversely affect the Plan's qualified status.
9
Schedules
Columbus McKinnon Corporation
Employee Stock Ownership Plan
EIN: 16-0547600
Plan No. 016
Item 27a - Schedule of Assets Held for Investment Purposes
March 31, 1999
IDENTITY OF ISSUE DESCRIPTION OF INVESTMENT COST CURRENT VALUE
- ------------------ ------------------------- ------------ -------------
*Columbus McKinnon Employer Common Stock,
Corporation 1,595,066 shares $ 16,562,916 $32,100,643
Fleet Investment Stable Asset Fund $ 100,166 $ 100,166
Services
* Indicates a party-in-interest
10
Columbus McKinnon Corporation
Employee Stock Ownership Plan
EIN: 16-0547600
Plan No. 016
Item 27d - Schedule of Reportable Transactions
For the year ended March 31, 1999
Identity of Description Number Number Total Total Net
Party Involved of Assets of Purchases of Sales Purchases Sales Gain (Loss)
- --------------------------- --------------------- ------------- ------------ ------------- ------------ --------------
Columbus McKinnon Columbus McKinnon
Corp Common
Stock 486,426
shares 3 2 $7,682,000 $ 101,600 $ (2,030)
11
SIGNATURES
The Plan. Pursuant to the requirements of the Securities Exchange Act
of 1934, the trustees (or other persons who administer the employee benefit
plan) have duly caused this annual report to be signed on its behalf by the
undersigned hereunto duly authorized.
COLUMBUS McKINNON CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
RESTATEMENT EFFECTIVE APRIL 1, 1989
By: /s/ Timothy R. Harvey
----------------------------------
Timothy R. Harvey, Trustee
/s/ Karen L. Howard
----------------------------------
Karen L. Howard, Trustee
/s/ Robert L. Montgomery, Jr.
----------------------------------
Robert L. Montgomery, Jr., Trustee
/s/ Neal E. Wixson
----------------------------------
Neal E. Wixson, Trustee
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in (a) the Registration Statement
(Form S-8 No. 333-3212) pertaining to the Columbus McKinnon Corporation 1995
Incentive Stock Option Plan, the Columbus McKinnon Corporation Non-Qualified
Stock Option Plan, the Columbus McKinnon Corporation Restricted Stock Plan and
the Columbus McKinnon Corporation Employee Stock Ownership Plan Restatement
Effective April 1, 1989 of Columbus McKinnon Corporation and (b) the
Registration Statement(Form S-8 No. 333-81719) pertaining to the Options assumed
by Columbus McKinnon Corporation originally granted under the G.L. International
Inc. 1997 Stock Option Plan and the Larco Industrial Services Ltd. 1997 Stock
Option Plan of our report dated June 11, 1999, with respect to the financial
statements and schedules of the Columbus McKinnon Corporation Employee Stock
Ownership Plan included in this Annual Report (Form 11-K) for the year ended
March 31, 1999.
/s/ Ernst & Young LLP
Buffalo, New York
June 29, 1999