-----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, BNOQ0SsrtdcdctpGHBOACY6q/eCLdoaFpiQhUlM2FFgVUIfBaSdxDvUaevgCK1A6 AJBfwzxAWd14iNrTqIAF6w== 0001005229-98-000002.txt : 19980212 0001005229-98-000002.hdr.sgml : 19980212 ACCESSION NUMBER: 0001005229-98-000002 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19971228 FILED AS OF DATE: 19980211 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: SEC FILE NUMBER: 000-27618 FILM NUMBER: 98532127 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 3RD QUARTER ENDED 12-28-97 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT 1934 For the quarterly period ended December 28, 1997 or [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934. For the transition period from ____________ to ____________ Commission File Number: 0-27618 ------- Columbus McKinnon Corporation ----------------------------------------------------------------------- (Exact name of registrant as specified in its charter) New York 16-0547600 ----------------------------------------------------------------------- (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 140 John James Audubon Parkway, Amherst, NY 14228-1197 ----------------------------------------------------------------------- (Address of principal executive offices) (Zip code) (716) 689-5400 ----------------------------------------------------------------------- (Registrant's telephone number, including area code) (Former name, former address and former fiscal year, if changed since last report.) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. : [X] Yes [ ] No The number of shares of common stock outstanding as of January 31, 1997 was: 13,755,858 shares. FORM 10-Q INDEX COLUMBUS MCKINNON CORPORATION DECEMBER 28, 1997 Page # PART I. FINANCIAL INFORMATION ------ Item 1. Condensed Consolidated Financial Statements (Unaudited) Condensed consolidated balance sheets - December 28, 1997 and March 31, 1997 2 Condensed consolidated statements of income and retained earnings Three months and nine months ended December 28, 1997 and December 29, 1996 3 Condensed consolidated statements of cash flows - Nine months ended December 28, 1997 and December 29, 1996 4 Notes to condensed consolidated financial statements - December 28, 1997 5 Item 2. Management's Discussion and Analysis of Results of Operations and Financial Condition 9 PART II. OTHER INFORMATION Item 1. Legal Proceedings 13 Item 2. Changes in Securities - none. 13 Item 3. Defaults upon Senior Securities - none. 13 Item 4. Submission of Matters to a Vote of Security Holders - none. 13 Item 5. Other Information - none. 13 Item 6. Exhibits and Reports on Form 8-K 13 1 PART I. FINANCIAL INFORMATION Item 1. Condensed Consolidated Financial Statements (Unaudited) COLUMBUS MCKINNON CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) DECEMBER 28, MARCH 31, 1997 1997 ----------------------------- (IN THOUSANDS) ASSETS: Current assets: Cash and cash equivalents $ 5,883 $ 8,907 Trade accounts receivable 79,726 74,446 Inventories 95,999 94,409 Net assets held for sale 10,302 14,971 Prepaid expenses 6,877 13,638 ------- ------- Total current assets 198,787 206,371 Net property, plant, and equipment 63,489 63,942 Goodwill and other intangibles, net 241,687 250,062 Marketable securities 16,293 13,590 Deferred taxes on income 9,196 8,935 Other assets 5,573 5,345 ------- ------- Total assets $535,025 $548,245 ======= ======= LIABILITIES AND SHAREHOLDERS' EQUITY: Current liabilities: Notes payable to banks $ 445 $ 1,562 Trade accounts payable 21,426 28,330 Accrued liabilities 41,956 35,761 Current portion of long-term debt 22,504 22,344 ------- ------- Total current liabilities 86,331 87,997 Long-term debt, less current portion 246,016 263,944 Other non-current liabilities 39,068 46,148 ------- ------- Total liabilities 371,415 398,089 Shareholders' equity: Common stock 137 137 Additional paid-in capital 96,024 95,254 Retained earnings 73,743 60,999 ESOP debt guarantee (3,539) (4,201) Other (2,755) (2,033) -------- ------- Total shareholders' equity 163,610 150,156 -------- ------- Total liabilities and shareholders' equity $535,025 $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 NINE MONTHS ENDED --------------------------- --------------------------- DECEMBER 28, DECEMBER 29, DECEMBER 28, DECEMBER 29, 1997 1996 1997 1996 ------------ ------------ ------------ ------------ (IN THOUSANDS, EXCEPT PER SHARE DATA) Net sales $124,093 $103,393 $372,442 $233,554 Cost of products sold 88,680 73,289 265,990 164,249 ------- ------- ------- ------- Gross profit 35,413 30,104 106,452 69,305 Selling expenses 11,565 9,522 33,358 20,834 General and administrative expenses 5,751 7,490 18,087 16,889 Amortization of intangibles 2,487 1,852 7,581 2,751 ------- ------- ------- ------- 19,803 18,864 59,026 40,474 ------- ------- ------- ------- Income from operations 15,610 11,240 47,426 28,831 Interest and debt expense 5,294 4,819 17,729 5,298 Interest and other income 432 491 1,076 906 ------- ------- ------- ------- Income before income taxes, minority interest and extraordinary charge 10,748 6,912 30,773 24,439 Income tax expense 5,263 3,370 15,227 10,654 ------- ------- ------- ------- Income before minority interest and extraordinary charge 5,485 3,542 15,546 13,785 Minority interest - 323 - 323 ------- ------- ------- ------- Income before extraordinary charge 5,485 3,219 15,546 13,462 Extraordinary charge for debt extinguishment - (3,101) - (3,101) ------- ------- ------- ------- Net income 5,485 118 15,546 10,361 Retained earnings - beginning of period 69,194 57,910 60,999 49,386 Cash dividends of $0.07, $0.07, $0.21 and $0.20 per share (936) (923) (2,829) (2,642) ------- ------- ------- ------- Retained earnings - end of period $ 73,743 $ 57,105 $ 73,716 $ 57,105 ======= ======= ======= ======= Earnings per share data, both basic and diluted: Income before extaordinary charge for debt extinguishment $0.41 $0.25 $1.16 $1.02 Extraordinary charge for debt extinguishment - (.24) - (.23) ----- ----- ----- ----- Net income $0.41 $0.01 $1.16 $0.79 ===== ===== ===== ===== See accompanying notes to condensed consolidated financial statements.
3 COLUMBUS MCKINNON CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) NINE MONTHS ENDED -------------------------- DECEMBER 28, DECEMBER 29, 1997 1996 ------------ ------------ (IN THOUSANDS) OPERATING ACTIVITIES: Net income $ 15,546 $ 10,361 Adjustments to reconcile net income to net cash provided by operating activities: Extraordinary charge for early debt extinguishment - 3,101 Minority interest - 323 Depreciation and amortization 14,244 6,796 Other 1,080 215 Changes in operating assets and liabilities net of effects from businesses purchased: Trade accounts receivable (5,979) (248) Inventories (1,590) (51) Prepaid expenses 8,986 472 Other assets (311) (346) Trade accounts payable (6,038) (7,444) Accrued and non-current liabilities (1,909) 5,124 --------- --------- Net cash provided by operating activities 24,029 18,303 INVESTING ACTIVITIES: Purchase of marketable securities, net of sales (2,295) (1,597) Net assets held for sale 4,669 - Capital expenditures (6,161) (4,983) Yale acquisition costs 42 (159,247) Lister acquisition costs (6) (7,054) Other (204) (234) --------- --------- Net cash used in investing activities (3,955) (173,115) FINANCING ACTIVITIES: Net (payments) borrowings under revolving line-of-credit agreements (1,273) 75,382 Repayment of debt (17,622) (72,865) Proceeds from issuance of long-term debt 12 164,099 Deferred financing costs incurred (558) (10,000) Dividends paid (2,802) (2,505) Reduction of ESOP debt guarantee 625 1,075 Other - 2,667 --------- --------- Net cash (used in) provided by financing activities (21,618) 157,853 Effect of exchange rate changes on cash (1,480) (461) --------- --------- Net increase in cash and cash equivalents (3,024) 2,580 Cash and cash equivalents at beginning of period 8,907 10,171 --------- --------- Cash and cash equivalents at end of period $ 5,883 $ 12,751 ========= ========= See accompanying notes to condensed consolidated financial statements. 4 COLUMBUS MCKINNON CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) DECEMBER 28, 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 December 28, 1997, and the results of its operations and its cash flows for the three and nine month periods ended December 28, 1997 and December 29, 1996, have been included. Results for the period ended December 28, 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: DECEMBER 28, MARCH 31, 1997 1997 ------------------------- (IN THOUSANDS) At cost--FIFO basis: Raw materials $ 25,747 $ 35,815 Work-in-process 25,469 17,206 Finished goods 48,498 44,344 -------- ------- 99,714 97,365 LIFO cost less than FIFO cost (3,715) (2,956) -------- ------- $ 95,999 $ 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 $29,033,000 and $22,370,000 of accumulated depreciation at December 28, 1997 and March 31, 1997, respectively. 4. Goodwill and other intangibles, net includes $12,836,000 and $5,644,000 of accumulated amortization at December 28, 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 was self-insured for product liability claims up to a maximum of $500,000 per occurrence and maintained product liability insurance with a $100 million cap per occurrence through July 31, 1997 when Yale was added to the Company's coverage as described above. The Company has been advised that a customer has alleged that one of Yale's products was the cause of a fire that 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. To manage its exposure to interest rate fluctuations, the Company has interest rate swaps with a notional amount of $22 million through January 2, 1999 and $3.5 million from January 2, 1999 through July 2, 2002, both based on LIBOR at 5.9025%. In order to comply with its credit agreements, the Company also has LIBOR-based interest rate caps on $40 million of debt through December 16, 1998 and on an additional $49.5 million of debt through December 16, 1999 at 9% and 10%, respectively. Net payments or receipts under the swap and cap agreements are recorded as adjustments to interest expense. The carrying amount of the Company's debt instruments approximates the fair values. 7. In 1997 the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 128, Earnings per Share. Statement 128 replaced the previously reported primary and fully diluted earnings per share with basic and diluted earnings per share. Unlike primary earnings per share, basic earnings per share excludes any dilutive effects of options, warrants, and convertible securities. Diluted earnings per share is very similar to the previously reported fully diluted earnings per share. All earnings per share amounts for all periods have been presented, and where necessary, restated to conform to the Statement 128 requirements. 6
The following table sets forth the computation of basic and diluted earnings per share before extraordinary charge for debt extinguishment: THREE MONTHS ENDED NINE MONTHS ENDED ----------------------------- ----------------------------- DECEMBER 28, DECEMBER 29, DECEMBER 28, DECEMBER 29, 1997 1996 1997 1996 ----------------------------- ----------------------------- Numerator for basic and diluted earnings per share: Income before extraordinary charge $5,485,000 $3,219,000 $15,546,000 $13,462,000 ========== ========== =========== =========== Denominators: Weighted-average common stock outstanding - denominator for basic EPS 13,274,000 13,116,000 13,344,000 13,184,000 Effect of dilutive employee stock options 50,000 - 50,000 - ---------- ---------- ------------- ---------- Adjusted weighted-average common stock outstanding and assumed conversions - denominator for diluted EPS 13,324,000 13,116,000 13,394,000 13,184,000 ========== ========== ========== ==========
8. Income tax expense for the three month periods ended December 28, 1997 and December 29, 1996 and also for the nine month periods then ended exceeds the customary relationship between income tax expense and income before income taxes due to nondeductible amortization of goodwill of $2,487,000, $1,852,000, $7,581,000 and $2,751,000, respectively. 9. 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. 7 The following table presents pro forma summary information for the three and nine month periods ended December 29, 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 NINE MONTHS ENDED ------------------ ----------------- DECEMBER 29, 1996 ----------------- (IN THOUSANDS, EXCEPT PER SHARE DATA) Pro forma: Net sales $ 112,794 $ 343,225 Income from operations 12,097 38,951 Income before extraordinary charge 2,908 10,113 Net (loss) income (193) 7,012 Earnings per share before extraordinary charge, both basic and diluted 0.22 0.77 Earnings per share, both basic and diluted (0.01) 0.53 10. On January 7, 1998 the Company acquired all of the outstanding stock of Univeyor A/S ("Univeyor"), a Denmark-based manufacturer and distributor of automated material handling systems, and has accounted for the acquisition as a purchase. The total cost of the acquisition was approximately $16.5 million, consisting of $15.0 million of cash financed by the Company's revolving debt facility and $1.5 million of assumed debt. 8 Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION RESULTS OF OPERATIONS Three Months and Nine Months Ended December 28, 1997 and December 29, 1996 Net sales in the fiscal 1998 quarter ended December 28, 1997 were $124,093,000, an increase of $20,700,000 or 20.0% over the fiscal 1997 quarter ended December 29, 1996. Net sales for the nine months ended December 28, 1997 were $372,442,000, an increase of 59.5% over the nine months ended December 29, 1996. Sales growth during the current quarter and nine month periods 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 categorizes all of those distribution channels as "commercial" sales. In addition to the effects of the acquisitions, the Company also experienced increased sales volume in the quarter through all of its commercial distribution channels due to strong demand in the marketplace. The only market channel experiencing softness was the international consumer channel due to a shift in demand from small retail hardware stores to larger do-it-yourself superstores, to which the Company supplies only a small share. In addition, list price increases of approximately 4% were introduced in both December 1997 and November/December 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. 28, DEC. 29, CHANGE DEC. 28, DEC. 29, CHANGE 1997 1996 AMOUNT % 1997 1996 AMOUNT % ----------------------------- ------------------------------- (IN THOUSANDS, EXCEPT PERCENTAGES) Commercial sales: Domestic $ 93,310 $ 79,597 $13,713 17.2 $275,903 $176,738 $ 99,165 56.1 International 24,437 17,647 6,790 38.5 76,404 37,558 38,846 103.4 ------- ------- ------ ------- ------- ------- 117,747 97,244 20,503 21.1 352,307 214,296 138,011 64.4 Consumer sales: Domestic 6,144 5,609 535 9.5 18,710 17,487 1,223 7.0 International 202 540 (338) (62.6) 1,425 1,771 (346) (19.5) ------- ------- ------ ------- ------- ------- 6,346 6,149 197 3.2 20,135 19,258 877 4.6 ------- ------- ------ ------- ------- ------- Net sales $124,093 $103,393 $20,700 20.0 $372,442 $233,554 $138,888 59.5 ======= ======= ====== ======= ======= ======= The Company's gross profit margins were approximately 28.5%, 29.1%, 28.6% and 29.7% for the fiscal 1998 and 1997 quarters and the nine months then ended, respectively. The decrease in gross profit margin in the current quarter and nine month periods resulted primarily from a change in the classification of approximately $1.9 million and $5.7 million, respectively, of costs into cost of products sold which previously had been classified as general and administrative expenses. This change was made for intracorporate consistency and had a minimal effect on income from operations. The current quarter's gross profit margin was favorably impacted by slight fluctuations in product mix. However, one of the Yale facilities acquired in fiscal 1997 is continuing to realize lower-than-average gross profit due to production workflow inefficiencies that are being aggressively addressed by management, which unfavorably impacted gross profit by approximately $1,350,000 during the first three quarters of fiscal 1998. Selling expenses were $11,565,000, $9,522,000, $33,358,000 and $20,834,000 in the fiscal 1998 and 1997 quarters and the nine months then ended, respectively. The 1998 expenses were impacted by the addition of Yale and Lister sales. As a percentage of consolidated net sales, selling expenses were 9.3%, 9.2%, 9.0% and 8.9% in the fiscal 1998 and 1997 quarters and the nine months then ended, respectively. The higher percentage in the fiscal 1998 quarter is due primarily to the timing of various marketing related expenses. 9 General and administrative expenses were $5,751,000, $7,490,000, $18,087,000 and $16,889,000 in the fiscal 1998 and 1997 quarters and the nine months then ended, respectively. The 1998 expenses were impacted by the addition of Yale and Lister activities. As a percentage of consolidated net sales, general and administrative expenses were 4.6%, 7.2%, 4.9% and 7.2% in the fiscal 1998 and 1997 quarters and the nine months then ended, respectively. As noted above, the improved percentages in fiscal 1998 are due primarily to a change that reclassifies approximately $1.9 million and $5.7 million for the three and nine month periods, respectively, 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 $2,487,000, $1,852,000, $7,581,000 and $2,751,000 in the fiscal 1998 and 1997 quarters and the nine months then ended, respectively; increases are due to the amortization of goodwill resulting from the acquisitions of Yale and of Lister. Interest and debt expense was $5,294,000, $4,819,000, $17,729,000 and $5,298,000 in the fiscal 1998 and 1997 quarters and the nine months then ended, 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 4.3%, 4.7%, 4.8% and 2.3% in the fiscal 1998 and 1997 quarters and the nine months then ended, respectively. Interest and other income was $432,000, $491,000, $1,076,000 and $906,000 in the fiscal 1998 and 1997 quarters and the nine months then ended, 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 income before income taxes were 49.0%, 48.8%, 49.5% and 43.6% in the fiscal 1998 and 1997 quarters and the nine months then ended, respectively. The fiscal 1998 percentages reflect the effect of nondeductible amortization of goodwill resulting from the Yale, Lister and Lift-Tech acquisitions. The fiscal 1997 percentages reflect the effect of Lift-Tech nondeductible goodwill, and Yale for the quarter only. Minority interest was $323,000 in the fiscal 1997 quarter and also in the nine months then ended, resulting from the 28% of Yale which was not owned by the Company during that period. As a result of the above, income before extraordinary charge increased $1,943,000 or 60.4% for the quarter and $2,084,000 or 15.5% for the nine months then ended. In December of fiscal 1997 an extraordinary charge of $3,101,000 was recorded for the early extinguishment of acquired Yale debt which was at 11.5% interest, replaced with five year revolving debt with interest currently at a Eurodollar rate based on LIBOR ("Eurodollar rate") plus 150 basis points. Net income, therefore, increased $5,044,000 and $5,185,000 for the quarter and nine months then ended, respectively. LIQUIDITY AND CAPITAL RESOURCES On January 7, 1998 the Company acquired all of the outstanding stock of Univeyor A/S ("Univeyor"), a Denmark-based manufacturer and distributor of automated material handling systems, and has accounted for the acquisition as a purchase. The total cost of the acquisition was approximately $16.5 million, consisting of $15.0 million of cash financed by the Company's revolving debt facility and $1.5 million of assumed debt. 10 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. 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 plus 150 basis points; the Term Loan B rate also varies based on the Company's leverage ratio, and is currently at a Eurodollar rate plus 200 basis points. At December 28, 1997 $83,000,000 was outstanding under the revolving credit facility and $36,000,000 was available. Net cash provided by operating activities increased to $24,029,000 for the nine months ended December 28, 1997 from $18,303,000 for the nine months ended December 29, 1996. The $5,726,000 increase in net cash provided by operating activities resulted primarily from a $7,448,000 increase in depreciation and amortization offset somewhat by an increase in working capital. These fluctuations are primarily a result of including the Yale and Lister operations in the current fiscal period. Net cash used in investing activities decreased to $3,955,000 for the nine months ended December 28, 1997 from $173,115,000 for the nine months ended December 29, 1996. The $169,160,000 decrease is due primarily to the Yale and Lister acquisitions which occurred in fiscal 1997. Net cash used in financing activities was $21,618,000 for the nine months ended December 28, 1997 while net cash provided by financing activities was $157,853,000 for the nine months ended December 29, 1996. The $179,471,000 change is primarily due to the financing of the Yale and Lister acquisitions reflected in the nine months ended December 29, 1996. 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 28, 1997 and December 29, 1996 were $6,161,000 and $4,983,000, 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 Canada, Mexico, Europe, 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. YEAR 2000 CONVERSIONS The Company is moving forward with its Year 2000 Readiness project. This project is addressing all components of its information technology infrastructure. Currently, corporate-wide assessment is underway with specific areas already complete. The assessment of Year 2000 on the Company's customized business information system has been completed with modifications and enhancements underway. 11 EFFECTS OF NEW ACCOUNTING PRONOUNCEMENTS The Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 130 "Reporting Comprehensive Income," which the Company will adopt as of April 1, 1998. Statement No. 130 establishes new rules for the reporting and display of comprehensive income and its components. This includes unrealized gains or losses on the Company's available-for-sale securities, foreign currency translation adjustments, and minimum pension liability adjustments, which currently are reported in shareholders' equity, and will be included and disclosed in total comprehensive income upon adoption of the Statement. The impact of compliance with this Statement has not yet been determined. The FASB also issued FAS Statement No. 131 "Disclosures about Segments of an Enterprise and Related Information," which the Company will adopt as of April 1, 1998. Statement No. 131 superseded FAS Statement No. 14 "Financial Reporting for Segments of a Business Enterprise." Statement No. 131 establishes new standards for determining segment criteria and annual and interim reporting of that data. It also establishes new disclosures about products, geographic areas and major customers. Currently, the Company reports one operating segment under Statement No. 14 and, while the impact of compliance with Statement No. 131 has not yet been determined, the Company may be required to report more than one segment upon its adoption. 12 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 On October 29, 1997 the Company filed Form 8-K dated October 29, 1997 with respect to Stockholder Rights Agreement. 13 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 11, 1998 /s/ Robert L. Montgomery, Jr. ------------------- ------------------------------ Robert L. Montgomery, Jr. Executive Vice President and Chief Financial Officer 14 EX-27 2 FDS DEC-28-97
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM SEC FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 0001005229 COLUMBUS MCKINNON CORPORATION 1,000 9-MOS MAR-31-1998 APR-01-1997 DEC-28-1997 5,883 0 79,726 0 95,999 198,787 92,522 29,033 535,025 86,331 0 0 0 137 163,473 535,025 372,442 372,442 265,990 265,990 59,026 0 17,729 30,773 15,227 15,546 0 0 0 15,546 1.16 1.16
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