-----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, DpGOiPBK8CpufeVxldhe8plIji4U+SH4R1qzslUXUk4jZoopW4Ge+LOSAwoebEtf W2KaEEbuP2vscRmP/CWV2A== 0001005229-97-000008.txt : 19970814 0001005229-97-000008.hdr.sgml : 19970814 ACCESSION NUMBER: 0001005229-97-000008 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970629 FILED AS OF DATE: 19970813 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: 97658508 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 10-Q 1ST QTR ENDED 6-29-97 FORM 10-Q INDEX COLUMBUS McKINNON CORPORATION JUNE 29, 1997 Page # PART I. FINANCIAL INFORMATION Item 1. Condensed Consolidated Financial Statements (Unaudited) Condensed consolidated balance sheets - 2 June 29, 1997 and March 31, 1997 Condensed consolidated statements of income and retained earnings - 3 Three months ended June 29, 1997 and June 30, 1996 Condensed consolidated statements of cash flows - 4 Three months ended June 29, 1997 and June 30, 1996 Notes to condensed consolidated financial statements - 5 June 29, 1997 Item 2. Management's Discussion and Analysis of 8 Results of Operations and Financial Condition 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) JUNE 29, MARCH 31, 1997 1997 -------- -------- ASSETS: (IN THOUSANDS) Current assets: Cash and cash equivalents $ 11,079 $ 8,907 Trade accounts receivable 76,655 74,446 Inventories 92,800 94,409 Net assets held for sale 15,217 14,971 Prepaid expenses 11,010 13,638 ------------------------- Total current assets 206,761 206,371 Net property, plant, and equipment 63,241 63,942 Goodwill and other intangibles, net 247,038 250,062 Marketable securities 14,925 13,590 Deferred taxes on income 9,494 8,935 Other assets 5,375 5,345 -------------------------- Total assets $546,834 $548,245 ========================== LIABILITIES AND SHAREHOLDERS' EQUITY: Current liabilities: Notes payable to banks $ 129 $ 1,562 Trade accounts payable 22,026 28,330 Accrued liabilities 47,061 35,761 Current portion of long-term debt 22,568 22,344 -------------------------- Total current liabilities 91,784 87,997 Long-term debt, less current portion 262,852 263,944 Other non-current liabilities 38,380 46,148 -------------------------- Total liabilities 393,016 398,089 Shareholders' equity: Common stock 137 137 Additional paid-in capital 95,444 95,254 Retained earnings 64,497 60,999 ESOP debt guarantee (3,978) (4,201) Other (2,282) (2,033) -------------------------- Total shareholders' equity 153,818 150,156 -------------------------- Total liabilities and shareholders' equity $546,834 $548,245 ========================== See accompanying notes to condensed consolidated financial statements. - 2 - COLUMBUS MCKINNON CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS (UNAUDITED) THREE MONTHS ENDED -------------------------- JUNE 29, JUNE 30, 1997 1996 -------- -------- (IN THOUSANDS, EXCEPT PER SHARE DATA) Net sales $124,442 $ 65,735 Cost of products sold 89,239 45,718 ------------------------- Gross profit 35,203 20,017 Selling expenses 11,165 6,002 General and administrative expenses 6,343 4,892 Amortization of intangibles 2,549 442 ------------------------- 20,057 11,336 ------------------------- Income from operations 15,146 8,681 Interest and debt expense 6,525 256 Interest and other income 316 183 ------------------------- Income before income taxes 8,937 8,608 Income tax expense 4,506 3,576 ------------------------- Net income 4,431 5,032 Retained earnings - beginning of period 60,999 49,386 Cash dividends of $0.07 and $0.06 per share (933) (786) ------------------------- Retained earnings - end of period $ 64,497 $ 53,632 ========================= Earnings per share, both primary and fully diluted $ 0.33 $ 0.38 ========================= See accompanying notes to condensed consolidated financial statements. - 3 - COLUMBUS MCKINNON CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) THREE MONTHS ENDED --------------------- JUNE 29, JUNE 30, 1997 1996 -------- ------- (IN THOUSANDS) OPERATING ACTIVITIES: Net income $ 4,431 $ 5,032 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 4,760 1,636 Other (79) 65 Changes in operating assets and liabilities: Trade accounts receivable (2,908) 1,921 Inventories 1,609 368 Prepaid expenses 2,628 66 Other assets (226) (659) Trade accounts payable (5,438) (4,614) Accrued and non-current liabilities 3,620 3,165 --------------------- Net cash provided by operating activities 8,397 6,980 INVESTING ACTIVITIES: Purchases of marketable securities, net of sales (927) (501) Net assets held for sale (246) - Capital expenditures (1,509) (1,401) Other (122) (64) --------------------- Net cash used in investing activities (2,804) (1,966) FINANCING ACTIVITIES: Net payments under revolving line-of-credit agreements (1,433) (840) Repayment of debt (867) (878) Dividends paid (933) (786) Reduction of ESOP debt guarantee 407 380 --------------------- Net cash used in financing activities (2,826) (2,124) Effect of exchange rate changes on cash (595) (72) --------------------- Net increase in cash and cash equivalents 2,172 2,818 Cash and cash equivalents at beginning of period 8,907 10,171 --------------------- Cash and cash equivalents at end of period $11,079 $12,989 ===================== See accompanying notes to condensed consolidated financial statements. - 4 - COLUMBUS MCKINNON CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) JUNE 29, 1997 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 June 29, 1997, and the results of its operations and its cash flows for the three month periods ended June 29, 1997 and June 30, 1996 have been included. Results for the period ended June 29, 1997 are not necessarily indicative of the results that may be expected for the year ended March 31, 1998. 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, 1997. 2. Inventories consisted of the following: June 29, 1997 March 31, 1997 ------------- -------------- (in thousands) At cost--FIFO basis: Raw materials $ 23,690 $ 35,815 Work-in-process 25,646 17,206 Finished goods 46,973 44,344 ------ ------ 96,309 97,365 LIFO cost less than FIFO cost (3,509) (2,956) ------ ------ $ 92,800 $ 94,409 ====== ====== 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 $24,598,000 and $16,822,000 of accumulated depreciation at June 29, 1997 and March 31, 1997, respectively. 4. Goodwill and other intangibles, net includes $24,919,000 and $22,370,000 of accumulated amortization at June 29, 1997 and March 31, 1997, 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. - 5 - 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. 6. Primary and fully diluted earnings per share were based on the following: Three Months Ended ------------------------- June 29, June 30, 1997 1996 ---------- ---------- Weighted-average common stock outstanding 13,325,459 13,199,818 Common stock equivalents - primary 33,333 - Common stock equivalents - fully diluted 34,211 - 7. Income tax expense for the three month periods ended June 29, 1997 and June 30, 1996 exceeds the customary relationship between income tax expense and income before income taxes due to nondeductible amortization of goodwill of $2,549,000 and $442,000, 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 Industrial Products, 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. On December 19, 1996, the Company acquired all of the outstanding stock of Lister Bolt & Chain Ltd. and of Lister Chain & 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. - 6 - The following table presents pro forma summary information for the three month period ended June 30, 1996 as if the Yale and Lister acquisitions and related borrowings had occurred as of April 1, 1996, which is the beginning of fiscal 1997. 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: Three Months Ended ------------------ June 30, 1996 ------------------ (In thousands, except per share data) Pro forma: Net sales $ 116,711 Income from operations 14,447 Net income 4,287 Earnings per share, both primary and fully diluted 0.32 - 7 - Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION RESULTS OF OPERATIONS THREE MONTHS ENDED JUNE 29, 1997 AND JUNE 30, 1996 Net sales in the fiscal 1998 quarter ended June 29, 1997 were $124,442,000, an increase of $58,707,000 or 89.3% over the fiscal 1997 quarter ended June 30, 1996. Sales growth during the current quarter was due primarily to the October 1996 Yale acquisition and December 1996 Lister acquisition which affected the general distribution, specialty distribution, service-after-sale, and original equipment manufacturers distribution channels. The Company also experienced increased sales volume to the consumer and waste management distribution channels. In addition, list price increases of approximately 4% were introduced in 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 --------------------- CHANGE JUNE 29, JUNE 30, ---------------- 1997 1996 AMOUNT % --------------------- ---------------- (IN THOUSANDS, EXCEPT PERCENTAGES) Commercial sales: Domestic $ 89,633 $ 48,385 $ 41,248 85.2 International 27,441 10,312 17,129 166.1 ------- ------ ------ 117,074 58,697 58,377 99.5 Consumer sales: Domestic 7,064 6,412 652 10.2 International 304 626 (322) (51.4) ------- ------ ------ 7,368 7,038 330 4.7 ------- ------ ------ Net sales $124,442 $ 65,735 $ 58,707 89.3 ======= ====== ====== The Company's gross profit margins were approximately 28.3% and 30.5% for the fiscal 1998 and 1997 quarters, respectively. The decrease in gross profit margin in the current quarter resulted primarily from a change in the classification of approximately $1.9 million of costs into cost of products sold which previously had been classified as general and administrative expenses. This change was made for intracorporate consistency. In addition, fiscal 1998 gross profit was impacted by a temporary two week slow-down in production and shipments at one of its facilities during a computer systems conversion, amounting to approximately $400,000 of gross profit. Also, one of the Yale facilities acquired in fiscal 1997 is realizing lower-than-average gross profit due to temporary production workflow inefficiencies, amounting to approximately $500,000. Selling expenses were $11,165,000 and $6,002,000 in the fiscal 1998 and 1997 quarters, respectively. The 1998 expenses were impacted by the addition of Yale and Lister sales. As a percentage of - 8 - consolidated net sales, selling expenses were 9.0% and 9.1% in the fiscal 1998 and 1997 quarters, respectively. General and administrative expenses were $6,343,000 and $4,892,000 in the fiscal 1998 and 1997 quarters, respectively. The 1998 expenses were impacted by the addition of Yale and Lift-Tech activities. As a percentage of consolidated net sales, general and administrative expenses were 5.1%, and 7.4% in the fiscal 1998 and 1997 quarters, respectively. As noted above, the improved percentage is due primarily to a change that classifies approximately $1.9 million of expenses previously classified as general and administrative into cost of products sold for intracorporate consistency. The improved percentage also results from the fixed nature of costs in relation to the increased sales. Amortization of intangibles was $2,549,000 and $442,000 in the fiscal 1998 and 1997 quarters, respectively; increases are due to the amortization of goodwill resulting from the acquisitions of Yale and of Lister. Interest and debt expense was $6,525,000 and $256,000 in the fiscal 1998 and 1997 quarters, respectively. The fiscal 1998 increase is primarily due to debt incurred to fund the Yale acquisition. As a percentage of consolidated net sales, interest and debt expense was 5.2% and 0.4% in the fiscal 1998 and 1997 quarters, respectively. Interest and other income was $316,000 and $183,000 in the fiscal 1998 and 1997 quarters, respectively. The fiscal 1998 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 50.4% and 41.5% in the fiscal 1998 and 1997 quarters, respectively. The fiscal 1998 percentage reflects the effect of nondeductible amortization of goodwill resulting from the Yale, Lister and Lift-Tech acquisitions. The fiscal 1997 percentage reflects the effect of Lift-Tech nondeductible goodwill amortization. As a result of the above, net income decreased $601,000 or 11.9% for the quarter. As a percentage of consolidated net sales, net income was 3.6% and 7.7% in the fiscal 1998 and 1997 quarters, respectively. LIQUIDITY AND CAPITAL RESOURCES 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, budgeted capital expenditures, and business acquisitions for the next twelve months. Effective July 17, 1997 the interest rates on the Company's credit facility were revised as follows: Term Loan A and the Revolving Credit facility rates vary based on the Company's leverage ratio, and are currently at a Eurodollar rate based on LIBOR ("Eurodollar rate") plus 175 basis points; the Term Loan B rate also varies based on the Company's leverage ratio, and is currently at a Eurodollar rate plus 225 basis points. - 9 - At June 29, 1997 $83,000,000 was outstanding under the revolving credit facility. Net cash provided by operating activities increased to $8,397,000 for the three months ended June 29, 1997 from $6,980,000 for the three months ended June 30, 1996. The $1,417,000 increase in net cash provided by operating activities resulted primarily from an increase in depreciation and amortization of $3,124,000 mainly as a result of acquiring Yale and Lister. Net cash used in investing activities increased to $2,804,000 for the three months ended June 29, 1997 from $1,966,000 for the three months ended June 30, 1996. The $838,000 increase is due primarily to normal purchases of marketable securities to fund general and products liability self-insurance reserves. Net cash used in financing activities increased to $2,826,000 for the three months ended June 29, 1997 from $2,124,000 for the three months ended June 30, 1996. The $702,000 increase is primarily due to repayment of indebtedness of subsidiary lines of credit. 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 three months ended June 29, 1997 and June 30, 1996 were $1,509,000 and $1,401,000, 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 1998, the Company will adopt FAS No. 128, "Earnings per Share", which is not expected to have a material effect on the financial statements. - 10 - PART II. OTHER INFORMATION Item 1. Legal Proceedings - none other than that previously disclosed within "Notes to Condensed Consolidated Financial Statements" footnote number 5 contained herein. 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 There are no Reports on Form 8-K. - 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: August 13, 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-11.1 2 10-K EXH 11.1 COMPUTATION OF EARNINGS PER SHARE EXHIBIT 11.1 COLUMBUS MCKINNON CORPORATION COMPUTATION OF EARNINGS PER SHARE THREE MONTHS ENDED ---------------------------- JUNE 29, 1997 JUNE 30, 1996 Primary: ------------- ------------- Weighted average common shares outstanding 13,325,459 13,199,818 Common Stock Equivalents (stock options) 33,333 0 ---------- ---------- Total 13,358,792 13,199,818 ========== ========== Net income applicable to common shareholders $ 4,431,000 $ 5,032,000 Net income per common share (primary) .33 .38 THREE MONTHS ENDED ---------------------------- JUNE 29, 1997 JUNE 30, 1996 Fully Diluted: ---------------------------- Weighted average common shares outstanding 13,325,459 13,199,818 Common Stock Equivalents (stock options) 34,211 0 ---------- ---------- Total 13,359,670 13,199,818 Net income applicable to common shareholders $ 4,431,000 $ 5,032,000 Net income per common share (fully diluted) .33 .38 - 14 - EX-27 3 FDS JUN-29-97
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM SEC FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH CONDENSED FINANCIAL STATEMENTS. 0001005229 COLUMBUS MCKINNON CORPORATION 1,000 3-MOS MAR-31-1998 APR-01-1997 JUN-29-1997 11,079 0 76,665 0 92,800 206,761 87,839 24,598 546,834 91,784 0 0 0 137 153,681 546,834 124,442 124,442 89,239 89,239 20,057 0 6,525 8,937 4,506 4,431 0 0 0 4,431 .33 .33
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