-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, B3DfuA2HfG7546Kz5b4YS90CQDEc2S3sLHWT1ccsjzsD+NWvk92d7jOMQDR5V5sy m36T4xLkcaaOMuiivHBO7A== 0001005229-97-000002.txt : 19970222 0001005229-97-000002.hdr.sgml : 19970222 ACCESSION NUMBER: 0001005229-97-000002 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19961229 FILED AS OF DATE: 19970212 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: COLUMBUS MCKINNON CORP CENTRAL INDEX KEY: 0001005229 STANDARD INDUSTRIAL CLASSIFICATION: CONSTRUCTION MACHINERY & EQUIP [3531] IRS NUMBER: 160547600 STATE OF INCORPORATION: NY FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-27618 FILM NUMBER: 97527115 BUSINESS ADDRESS: STREET 1: 140 JOHN JAMES AUDUBON PKWY CITY: AMHERST STATE: NY ZIP: 14228-1197 BUSINESS PHONE: 7166895400 MAIL ADDRESS: STREET 1: 140 JOHN JAMES AUDUBON PARKWAY CITY: AMHERST STATE: NY ZIP: 14228-1197 10-Q 1 QUARTERLY 10Q SUBMISSION INDEX COLUMBUS McKINNON CORPORATION Page # Part I. Financial Information Item 1. Condensed Consolidated Financial Statements (Unaudited) Condensed consolidated balance sheets - December 29, 1996 and March 31, 1996 2 Condensed consolidated statements of income and retained earnings - Three months and nine months ended December 29, 1996 and December 31, 1995 3 Condensed consolidated statements of cash flows - Nine months ended December 29, 1996 and December 31, 1995 4 Notes to condensed consolidated financial statements - December 29, 1996 5 Item 2. Management's Discussion and Analysis of Results of Operations and Financial Condition 8 Part II. Other Information Item 1. Legal Proceedings 11 Item 2. Changes in Securities - none. 11 Item 3. Defaults upon Senior Securities - none. 11 Item 4. Submission of Matters to a Vote of Security Holders - none. 11 Item 5. Other Information - none. 11 Item 6. Exhibits and Reports on Form 8-K 11 1 Part I. Financial Information Item 1. Condensed Consolidated Financial Statements (Unaudited)
COLUMBUS McKINNON CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) December 29, March 31, 1996 1996 ----------------------------- (In thousands) ASSETS: Current assets: Cash and cash equivalents $12,751 $10,171 Trade accounts receivable 68,504 38,741 Inventories 94,606 48,303 Net assets of discontinued operations 10,192 0 Prepaid expenses 10,475 1,788 -------- -------- Total current assets 196,528 99,003 Net property, plant, and equipment 59,475 30,909 Goodwill and other intangibles, net 207,914 42,951 Marketable securities 13,192 11,174 Deferred taxes on income 17,884 2,881 Other assets 4,478 1,816 -------- -------- Total assets $499,471 $188,734 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY: Current liabilities: Notes payable to banks $ 1,535 $1,635 Trade accounts payable 21,245 15,661 Accrued liabilities 34,080 15,803 Current portion of long-term debt 22,268 1,446 -------- -------- Total current liabilities 79,128 34,545 Long-term debt, less current portion 226,928 8,298 Other non-current liabilities 46,405 8,269 -------- -------- Total liabilities 352,461 51,112 Minority interest 323 0 Shareholders' equity: Common stock 137 137 Additional paid-in capital 94,600 94,283 Retained earnings 57,105 49,386 ESOP debt guarantee (4,540) (5,238) Other (615) (946) -------- -------- Total shareholders' equity 146,687 137,622 -------- -------- Total liabilities,minority interest and shareholders' equity $499,471 $188,734 ======== ======== See accompanying notes to condensed consolidated financial statements.
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COLUMBUS McKINNON CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS (UNAUDITED) Three Months Ended Nine Months Ended ------------------------- ------------------------- December 29, December 31, December 29, December 31, 1996 1995 1996 1995 ------------- ---------- ------------- ---------- (In thousands, except per share data) Net sales $103,393 $53,408 $233,554 $142,474 Cost of products sold 73,289 38,293 164,249 102,340 ------ ------ ------ ------ Gross profit 30,104 15,115 69,305 40,134 Selling expenses 9,522 4,822 20,834 12,819 General and administrative expenses 7,490 3,783 16,889 9,451 Amortization of intangibles 1,852 309 2,751 349 Environmental remediation costs 0 3 0 627 ------ ------ ------- ------ 18,864 8,917 40,474 23,246 ------ ------ ------- ------ Income from operations 11,240 6,198 28,831 16,888 Interest and debt expense 4,819 1,667 5,298 2,880 Interest and other income 491 107 906 347 ------ ------ ------- ------ Income before income taxes 6,912 4,638 24,439 14,355 Income tax expense 3,370 1,882 10,654 5,597 ------ ------ ------- ------ Income before minority interest 3,542 2,756 13,785 8,758 Minority interest 323 0 323 0 ------ ------ ------- ------ Income before extraordinary charge 3,219 2,756 13,462 8,758 Extraordinary charge for debt extinguishment (3,101) 0 (3,101) 0 ------ ------ ------- ------ Net income 118 2,756 10,361 8,758 Retained earnings - beginning of period 57,910 43,628 49,386 38,443 Cash dividends of $0.07, $0.059, $0.20 and $0.177 per share (923) (417) (2,642) (1,229) Cash dividends on preferred shares 0 (3) 0 (8) ------ ------ ------ ------ Retained earnings - end of period $57,105 $45,964 $57,105 $45,694 ======= ======= ======= ======= Earnings per share, both primary and fully diluted: Before extraordinary charge $0.25 $0.39 $1.02 $1.24 Extraordinary charge (0.24) (0.23) Net Income $0.01 $0.39 $0.79 $1.24 Average number of shares outstanding 13,116 7,103 13,184 7,048 See accompanying notes to condensed consolidated financial statements.
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COLUMBUS McKINNON CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) Nine Months Ended -------------------------- December 29, December 31, 1996 1995 ---------- --------- (In thousands) OPERATING ACTIVITIES: Net income $10,361 $8,758 Adjustments to reconcile net income to net cash provided by operating activities: Extraordinary charge for early debt retirement 3,101 0 Minority interest 323 0 Depreciation and amortization 6,796 3,006 Other 215 44 Changes in operating assets and liabilities: Trade accounts receivable (248) 4,939 Inventories (51) (1,322) Prepaid expenses 472 1,304 Other assets (346) 56 Trade accounts payable (7,444) (5,505) Accrued and non-current liabilities 5,124 (1,869) -------- -------- Net cash provided by operating activities 18,303 9,411 INVESTING ACTIVITIES: Acquisition of patents (234) (112) Lister acquisition costs (7,054) 0 Yale acquisition costs (159,247) 0 Lift-Tech Acquisition costs 0 (62,950) Purchases of marketable securities, net of sales (1,597) (1,310) Capital expenditures (4,983) (5,257) -------- -------- Net cash used in investing activities (173,115) (69,629) FINANCING ACTIVITIES: Net (payments) borrowings under revolving line-of-credit agreements 75,382 15,559 Repayment of debt (72,865) (2,681) Proceeds from issuance of long term debt 164,099 50,000 Deferred financing costs incurred (10,000) (889) Dividends paid (2,505) (1,259) Reduction of ESOP debt guarantee 1,075 890 Other 2,667 (907) -------- -------- Net cash provided by financing activities 157,853 60,713 Effect of exchange rate changes on cash (461) (28) -------- -------- Net increase in cash and cash equivalents 2,580 467 Cash and cash equivalents at beginning of period 10,171 392 -------- -------- Cash and cash equivalents at end of period $12,751 $ 859 ======== ======== See accompanying notes to condensed consolidated financial statements.
4 COLUMBUS McKINNON CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) DECEMBER 29, 1996 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 the Company at December 29, 1996, and the results of its operations and its cash flows for the three and nine month periods ended December 29, 1996 and December 31, 1995 have been included. Results for the period ended December 29, 1996 are not necessarily indicative of the results that may be expected for the year ended March 31, 1997. For further information, refer to the consolidated financial statements and footnotes thereto included in the Columbus McKinnon Corporation annual report on Form 10-K for the year ended March 31, 1996 and the consolidated financial statements and footnotes thereto included in the Spreckles Industries, Inc. (doing business as Yale International Inc. "Yale") annual report on Form 10-K for the year ended June 30, 1996. 2. Inventories consisted of the following at December 29, 1996 and March 31, 1996 (in thousands): At cost--FIFO basis: Raw materials $ 21,133 $ 24,596 Work-in-process 30,084 11,533 Finished goods 46,895 15,180 ------------------ ----------------- 98,112 51,309 LIFO cost less than FIFO cost (3,506) (3,006) ------------------ ----------------- $ 94,606 $ 48,303 ================== ================= 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. 3. Property, plant, and equipment is net of $19,890,440 and $15,656,000 of accumulated depreciation at December 29, 1996 and March 31, 1996, respectively. 4. Goodwill and other intangibles, net includes $3,420,420 and $690,000 of accumulated amortization at December 29, 1996 and March 31, 1996, respectively. 5. General and Product Liability - The accrued general and product liability costs which are included in other non-current liabilities are the actuarial present value of estimated reserves based on an amount determined from loss reports and individual cases filed with the Company and an amount, based on past experience, for losses incurred but not reported. The accrual in these condensed consolidated financial statements was determined by applying a discount factor based on interest rates customarily used in the insurance industry. Yale is self-insured for product liability claims up to a maximum of $500,000 per occurrence and maintains product liability insurance with a $100 million cap per occurrence. The Company has been advised that a customer has alleged that one of Yale's products was the cause of a fire which occurred in January 1995 at a manufacturing facility, resulting in losses in excess of Yale's policy limits. A formal complaint has been filed seeking damages in excess of $500 million. However, it is the opinion of management that there was no manufacturing defect and that the claim will in all likelihood be settled within the Company's policy limits. Environmental - Yale discovered in 1987 that groundwater and sediments beneath the Jackson, Michigan plant of Yale's subsidiary, Mechanical Products, Inc., contain certain organic chemical compounds in concentrations above those permitted by applicable law. The Company conducted an extensive investigation of the site and has entered into an Administrative Order by Consent with the State of Michigan Department of Natural Resources which provides for further investigation, the development of a remedial plan and subsequent remedial action. In 1991, the Company began removal of such compounds from the groundwater and affected sediments. These efforts are continuing during fiscal 1997 and possibly beyond. Although no assurances can be given, management believes that the remaining cost to the Company of remedial efforts at the Jackson plant will not have a material adverse effect on the Company's business, financial condition or results of operations. 5 6. Primary and fully diluted earnings per share were based on the following (in thousands): Three Months Ended Nine Months Ended -------------------- ------------------ Dec. 29 Dec. 31, Dec. 29, Dec. 31, 1996 1995 1996 1995 ---- ---- ---- ---- Weighted-average common stock outstanding 13,116 7,103 13,184 7,048 Common stock equivalents - - - - 7. Income tax expense for the three and nine month periods ended December 29, 1996 exceeds the customary relationship between income tax expense and income before income taxes due to nondeductible amortization of goodwill of $1,770,000 and $2,597,000, respectively. 8. On October 17, 1996, through a tender offer, the Company acquired approximately 72% of the outstanding stock (on a fully diluted basis) of Spreckels Industries, Inc., now known as Yale International, Inc. ("Yale"), a manufacturer of a wide range of industrial products, including hoists, scissor lifts, mechanical jacks, rotating joints, actuators and circuit protection devices. On January 3, 1997 the Company acquired the remaining outstanding shares, effected a merger, and has accounted for the acquisition as a purchase. The total cost of the acquisition was approximately $270 million, consisting of $200 million of cash and $70 million of acquired Yale debt. The funding required to complete the transactions was financed through borrowings under a bank credit facility, which consists of: 1) $125 million of five year term debt with interest payable at varying rates based on the Company's leverage ratio, currently at a Eurodollar rate based on LIBOR ("Eurodollar rate") plus 250 basis points, 2) $75 million of seven year term debt with interest also payable at varying rates, currently at a Eurodollar rate plus 300 basis points, and 3) $125 million of five year revolving debt, of which $75 million was designated for the refinancing of the acquired Yale debt, with interest also payable at varying rates, currently at a Eurodollar rate plus 250 basis points. This new debt is secured by all equipment, inventory, receivables, subsidiary stock (limited to 65% for foreign subsidiaries), and intellectual property. In conjunction with this financing transaction, the Company's existing domestic line of credit was retired, and the interest rate on the Company's ESOP loans was changed to that consistent with the new five year term loan previously referred to above. The goodwill acquired is being amortized on a straight-line basis over a 25 year period. The condensed consolidated statements of income and retained earnings for the three and nine month periods ended December 29, 1996 and the condensed consolidated statement of cash flows for the nine months ended December 29, 1996 include the Yale activity since the October 17 acquisition. The minority interest share of Yale's earnings since acquisition has been appropriately segregated from consolidated net income. On December 18, 1996, $69.5 million of the $70 million of acquired Yale debt was refinanced under the available five year revolving debt referred to above. The debt was retired at a premium of 825 basis points, amounting to $5.7 million. The resulting loss on debt extinguishment has been reflected as an extraordinary item, net of the related tax benefit. On December 19, 1996, the Company acquired all of the outstanding stock of Lister Bolt and Chain Ltd. and of Lister Chain and Forge, Inc. (together known as "Lister"), a chain and forgings manufacturer, and has accounted for the acquisition as a purchase. The total cost of the acquisition was approximately $7 million of cash, which was financed by the Company's revolving debt facility. The Lister acquisition did not have a material impact on current period or pro forma period operations. On November 1, 1995, the Company acquired all of the outstanding stock of LTI Holdings, Inc. ("Lift-Tech"), a hoist manufacturer, and has accounted for the acquisition as a purchase. The total cost of the acquisition was approximately $63 million, consisting of $43 million in cash and $20 million for the refinancing of Lift-Tech bank debt. The funding required to complete the transaction was financed through borrowings under bank credit facilities, which consisted of $50 million of seven-year term debt with interest payable at prime plus 1% and $25 million revolving debt with interest payable at prime plus 1/2% which would have expired November 1, 1998. The obligations outstanding under these debt instruments were paid in full by application of proceeds received from the Company's initial public offering which commenced on February 22, 1996. The goodwill acquired is being amortized on a straight-line basis over a 25 year period. The condensed consolidated statements of income and retained earnings for the three and nine month periods ended December 29, 1996 and the condensed consolidated statement of cash flows for the nine months ended December 29, 1996 include the Lift-Tech activity. 6 The following table presents pro forma summary information for the nine month periods ended December 29, 1996 and December 31, 1995 as if the Yale and Lift-Tech acquisitions and related borrowings, and the initial public offering, had occurred as of April 1, 1995, which is the beginning of fiscal 1996. The pro forma information is provided for informational purposes only. It is based on historical information and does not necessarily reflect the actual results that would have occurred nor is it necessarily indicative of future results of operations of the combined enterprise: Nine Months Ended -------------------------------------- December 29, 1996 December 31, 1995 ----------------- ----------------- (In thousands, except per share data) Pro forma: Net sales $ 337,989 $ 321,101 Income from operations 38,530 32,070 Income before extraordinary item 10,114 6,017 Net income 7,013 6,017 Earnings per share before extraordinary item, both primary and fully diluted 0.77 0.46 Earnings per share, both primary and fully diluted 0.53 0.46 9. In conjunction with the Yale acquisition, the Company has formulated a plan which will involve termination of employees resulting from redundant or unnecessary efforts. A $1.3 million liability has been estimated and established as of the acquisition date, consisting of salaries, severance and related benefits in administrative and marketing functional areas, including executive, sales and accounting departments. During the three months ended December 29, 1996, $350,000 was charged against the liability. It is anticipated that the plan will be complete by early fiscal 1998. 7 Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION Results of Operations Three Months and Nine Months Ended December 29, 1996 and December 31, 1995 Net sales in the fiscal 1997 quarter ended December 29, 1996 were $103,393,000, an increase of $49,985,000 or 93.6% over the fiscal 1996 quarter ended December 31, 1995. Net sales for the nine months ended December 29, 1996 were $233,554,000, an increase of $91,080,000 or 63.9% over the nine months ended December 1, 1995. Sales growth during the current quarter was due primarily to the December 1996 Yale and November 1995 Lift-Tech acquisitions which affected the general distribution, service-after-sale, and original equipment manufacturers distribution channels. The Company also experienced increased sales volume primarily in the following distribution channels: 1) specialty distributors due primarily to new product introductions and an expanding customer base, 2) general distributors due to increased market share, 3) waste management due to timing of orders, 4) original equipment manufacturers due to timing of orders, and 5) consumer due to timing of orders. In addition, list price increases of approximately 4% were introduced in November of 1995 and November/December of 1996 affecting many of the Company's hoist, chain and forged products sold in its domestic commercial markets. Sales in the commercial and the consumer distribution channel groups were as follows, in thousands of dollars and with percentage changes for each group:
Three Months Ended Nine Months Ended Dec. 29, Dec. 31, Change Dec. 29, Dec. 31, Change 1996 1995 Amount % 1996 1995 Amount % ------------------------------------- -------------------------------------- (In thousands, except percentages) Commercial sales: Domestic $ 79,597 $ 39,406 $ 40,191 102.0 $ 176,738 $ 102,616 $ 74,122 72.2 International 17,647 8,318 9,329 112.2 37,558 21,033 16,525 78.6 -------- -------- ------- --------- --------- -------- 97,244 47,724 49,520 103.8 214,296 123,649 90,647 73.3 Consumer sales: Domestic 5,609 5,052 557 11.0 17,487 17,037 450 2.6 International 540 632 (92) (14.6) 1,771 1,788 (17) (1.0) -------- -------- -------- --------- --------- --------- 6,149 5,684 465 8.2 19,258 18,825 433 2.3 -------- -------- -------- --------- --------- --------- Net sales $103,393 $ 53,408 $ 49,985 93.6 $ 233,554 $ 142,474 $ 91,080 63.9 ======== ======== ======== ========= ========= =========
The Company's gross profit margins were approximately 29.1%, 28.3%, 29.7% and 28.2% for the fiscal 1997 and 1996 quarters and the nine months then ended, respectively. The increase in gross profit margin in the current quarter and year-to-date resulted from the effects of the Company's cost control efforts and changes in product mix. Selling expenses were $9,522,000, $4,822,000, $20,834,000 and $12,819,000 in the fiscal 1997 and 1996 quarters and the nine months then ended, respectively. The 1997 expenses were impacted by the addition of Yale and Lift-Tech sales. As a percentage of consolidated net sales, selling expenses were 9.2%, 9.0%, 8.9% and 9.0% in the fiscal 1997 and 1996 quarters and the nine months then ended, respectively. The higher percentage in the fiscal 1997 quarter is due primarily to the timing of various marketing related expenses. General and administrative expenses were $7,490,000, $3,783,000, $16,889,000 and $9,451,000 in the fiscal 1997 and 1996 quarters and the nine months then ended, respectively. The 1997 expenses were impacted by the addition of Yale and Lift-Tech activities. As a percentage of consolidated net sales, general and administrative expenses were 7.2%, 7.1%, 7.2% and 6.6% in the fiscal 1997 and 1996 quarters and the nine months then ended, respectively. In fiscal 1997, these expenses include a provision for corporate-wide incentive compensation. Amortization of intangibles was $1,852,000, $309,000, $2,751,000 and $349,000 in the fiscal 1997 and 1996 quarters and the nine months then ended, respectively; increases are due to the amortization of goodwill resulting from the acquisitions of Yale and of Lift-Tech. 8 Environmental remediation costs were $3,000 in the fiscal 1996 quarter and $627,000 for the nine months then ended, with no corresponding expense in fiscal 1997. Those costs related primarily to a specific project which is substantially complete. Interest and debt expense was $4,819,000, $1,667,000, $5,298,000 and $2,880,000 in the fiscal 1997 and 1996 quarters and the nine months then ended. The fiscal 1997 increase is due to debt incurred to fund the Yale acquisition. As a percentage of consolidated net sales, interest and debt expense was 4.7%, 3.1%, 2.3% and 2.0% in the fiscal 1997 and 1996 quarters and the nine months then ended, respectively. Interest and other income was $491,000, $107,000, $906,000 and $347,000 in the fiscal 1997 and 1996 quarters and the nine months then ended, respectively. The fiscal 1997 increase is due to additional investment holdings to fund the Company's general and products liability self-insurance reserves. Income taxes as a percentage of pre-tax accounting income were 48.8%, 40.6%, 43.6% and 40.0% in the fiscal 1997 and 1996 quarters and the nine months then ended, respectively. The fiscal 1997 percentages reflect the effect of nondeductible amortization of goodwill resulting from the Yale and Lift-Tech acquisitions. Minority interest was $323,000 in the fiscal 1997 quarter and also in the nine months then ended. This resulted from the 28% of Yale which was not owned by the Company during this period. As a result of the above, income before extraordinary item increased $463,000 or 16.8% for the quarter and $4,704,000 or 53.7% for the nine months then ended. As a percentage of consolidated net sales, income before extraordinary item was 3.1%, 5.2%, 5.8% and 6.1% in the fiscal 1997 and 1996 quarters and the nine months then ended, respectively. The extraordinary charge for early retirement of debt of $3,101,000 in the fiscal 1997 quarter and also in the nine months then ended resulted from the refinancing of acquired Yale debt which was at 11 1/2% interest, replaced with five year revolving debt with interest currently at a Eurodollar rate plus 250 basis points. As a result of the above, net income decreased $2,638,000 or 95.7% for the quarter and increased $1,603,000 or 18.3% for the nine months then ended. Liquidity and Capital Resources On October 17, 1996, through a tender offer, the Company acquired approximately 72% of the outstanding stock (on a fully diluted basis) of Spreckels Industries, Inc., now known as Yale International, Inc. ("Yale"), a manufacturer of a wide range of industrial products, including hoists, scissor lifts, mechanical jacks, rotating joints, actuators and circuit protection devices. On January 3, 1997 the Company acquired the remaining outstanding shares, effected a merger, and has accounted for the acquisition as a purchase. The total cost of the acquisition was approximately $270 million, consisting of $200 million of cash and $70 million of acquired Yale debt. The funding required to complete the transactions was financed through borrowings under a bank credit facility, which consists of: 1) $125 million of five year term debt with interest payable at varying rates based on the Company's leverage ratio, currently at a Eurodollar rate based on LIBOR ("Eurodollar rate") plus 250 basis points, 2) $75 million of seven year term debt with interest also payable at varying rates, currently at a Eurodollar rate plus 300 basis points, and 3) $125 million of five year revolving debt, of which $75 million was designated for the refinancing of the acquired Yale debt, with interest also payable at varying rates, currently at a Eurodollar rate plus 250 basis points. This new debt is secured by all equipment, inventory, receivables, subsidiary stock (limited to 65% for foreign subsidiaries), and intellectual property. In conjunction with this financing transaction, the Company's existing domestic line of credit was retired, and the interest rate on the Company's ESOP loans was changed to that consistent with the new five year term loan previously referred to above. The goodwill acquired is being amortized on a straight-line basis over a 25 year period. On December 18, 1996, $69.5 million of the $70 million of acquired Yale debt was refinanced under the available five year revolving debt referred to above. The debt was retired at a premium of 825 basis points, amounting to $5.7 million. The resulting loss on debt extinguishment has been reflected as an extraordinary item, net of the related tax benefit. On December 19, 1996, the Company acquired all of the outstanding stock of Lister Bolt and Chain Ltd. and of Lister Chain and Forge, Inc. (together known as "Lister"), a chain and forgings manufacturer, and has accounted for the acquisition as a purchase. The total cost of the acquisition was approximately $7 million of cash, which was financed by the Company's revolving debt facility. 9 At December 29, 1996 $77,000,000 was outstanding under the revolving credit facility. The Company believes that its cash on hand, cash flows, and borrowing capacity under its revolving credit facility will be sufficient to fund its ongoing operations, debt service and budgeted capital expenditures for the next twelve months. Net cash provided by operating activities increased to $18,303,000 for the nine months ended December 29, 1996 from $9,411,000 for the nine months ended December 31, 1995. The $8,892,000 increase in net cash provided by operating activities resulted primarily from improved operating results before minority interest and extraordinary charge of $5,027,000 and an increase in depreciation and amortization of $3,790,000 mainly as a result of acquiring Yale and Lift-Tech. Net cash used in investing activities increased to $173,115,000 for the nine months ended December 29, 1996 from $69,629,000 for the nine months ended December 31, 1995. The $103,486,000 increase is due primarily to $159,247,000 and $7,054,000 for the acquisitions of Yale and Lister, respectively. Net cash provided by financing activities increased to $157,853,000 for the nine months ended December 29, 1996 from $60,713,000 for the nine months ended December 31, 1995. The increase is primarily due to debt incurred to fund the acquisitions of Yale and Lister. 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 nine months ended December 29, 1996 and December 31, 1995 were $4,983,000 and $5,257,000, 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 inflation has had a material effect on results of operations over the periods presented because of low inflation levels over the periods and because the Company has generally been able to pass on rising costs through price increases. However, in the future there can be no assurance that the Company's business will not be affected by inflation or that it will be able to pass on cost increases. Effects of New Accounting Pronouncements In 1997, the Company adopted FAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of," which has not had a material effect on the financial statements. 10 Part II. Other Information Item 1. Legal Proceedings - none other than those previously disclosed within "Notes to Condensed Consolidated Financial Statements" footnote no.5, incorporated herein by reference. 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 11.1 - Columbus McKinnon Corporation Computation of Earnings per Share On October 30, 1996 the Company filed Form 8-K dated October 17, 1996 with respect to the completion of its cash tender offer for all of the outstanding shares of Class A Common Stock of Spreckels Industries, Inc., now known as Yale International, Inc. On November 14, 1996 the Company filed Form 8-K dated November 12, 1996 with respect to the Company's intent to commence a tender offer for all $70 million of the Company's 11-1/2% Senior Secured Notes due 2000. Anticipated commencement on or about November 15, 1996. On December 6, 1996 the Company filed form 8-K dated November 29, 1996 with respect to its amended tender offer and consent solicitation including an exhibit for Amendment 1 to the Credit Agreement among Parent, Fleet Bank, as Administration Agent, and the Bank, Financial Institutions and other Institutional Lenders named therein dated as of November 14, 1996. On December 19, 1996 the Company filed form 8-K dated December 16, 1996 with respect to the completed Tender offer to purchase at a price equal to 108,250% of the outstanding principal amount, plus accrued interest, for all $70 million of the Company's 11-1/2% Senior Secured Notes due 2000. The Tender offer expired at 5:00 p.m. New York City time on December 13, 1996. On December 31, 1996 the Company filed form 8-K/A with respect to the financial statements and exhibits for the Company's business acquisition, Spreckels Industries, Inc. (doing business as Yale International, Inc. "Yale"). On January 9, 1997 the Company filed form 8-K dated January 9, 1997 with respect to the completed acquisition of Spreckles Industries, Inc. (Spreckels) (known as Yale International, Inc.) by merger of the Company's wholly owned subsidiary, L Aquisition Corp., with and into Spreckles pursuant to terms of its merger agreement with Spreckles. 11 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: February 12, 1997 /s/ Robert L. Montgomery, Jr. ------------------- ----------------------------- Robert L. Montgomery, Jr. Executive Vice President and Chief Financial Officer 12 EXHIBIT INDEX Exhibit Exhibit Description Location 11.1 Columbus McKinnon Corporation Computation of Earnings per Share E - 11.1 13 EX-11 2 COMPUTATION OF EARNINGS PER SHARE
(EPS) COLUMBUS McKINNON CORPORATION COMPUTATION OF EARNINGS PER SHARE Exhibit 11.1 Three Months Ended Nine Months Ended ------------------------------------------------ 29-Dec-96 31-Dec-95 29-Dec-96 31-Dec-95 ------------------------------------------------ Primary and fully diluted: Weighted average common shares outstanding 13,116,000 7,101,000 13,184,000 7,040,000 Weighted average shares issued in fiscal 1996 (1) 0 36,000 0 91,000 Weighted average shares issued in fiscal 1996 which can be repurchased (2) 0 (34,000) 0 (83,000) ----------- ---------- ----------- ---------- Total 13,116,000 7,103,000 13,184,000 7,048,000 =========== ========== =========== ========== Net income applicable to common shareholders $ 118,000 $2,754,000 $10,361,000 $8,751,000 Net income per common share 0.01 0.39 0.79 1.24 - -------------------------------------------------------------- (1) Includes shares issued since December 20, 1994 (one year prior to the initial filing of the IPO registration statement) at $12.69 per share which is less than the initial public offering price of $15 deemed outstanding for all periods presented in accordance with Staff Accounting Bulletin No. 83. (2) Represents the number of shares assumed to be purchased at $14 per share, the IPO mid-point price, with proceeds from the shares issued in 1996.
EX-27 3 FDS DEC-29-96
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE COMPANY'S UNAUDITED CONDENSED FINANCIAL STATEMENTS AS OF DECEMBER 29, 1996 AND FOR THE THREE MONTH PERIOD THEN ENDED AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 0001005229 COLUMBUS MCKINNON CORPORATION 1,000 3-MOS MAR-31-1997 SEP-30-1996 DEC-29-1996 12,751 0 68,504 0 94,606 196,528 79,365 19,890 499,471 79,128 0 0 0 137 146,550 499,471 103,393 103,393 73,289 73,289 18,864 0 4,819 6,912 3,370 3,219 0 (3,101) 0 118 .01 .01
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