-----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, ThtyOFn5+LLnP1Pm0al1L67lV9fMGLV23xe9eN692spAHbk6RihjYKC+B6bOj60b OOfcb0wMWzHV7XtywgmRxw== 0001005229-02-000023.txt : 20021113 0001005229-02-000023.hdr.sgml : 20021113 20021113100018 ACCESSION NUMBER: 0001005229-02-000023 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 8 CONFORMED PERIOD OF REPORT: 20020929 FILED AS OF DATE: 20021113 FILER: COMPANY DATA: COMPANY CONFORMED NAME: YALE INDUSTRIAL PRODUCTS INC CENTRAL INDEX KEY: 0001062624 IRS NUMBER: 710585582 STATE OF INCORPORATION: MO FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 333-53759-06 FILM NUMBER: 02818617 BUSINESS ADDRESS: STREET 1: 140 JOHN JAMES AUDUBON PARKWAY CITY: AMHERST STATE: NY ZIP: 19228-1197 BUSINESS PHONE: 7166895400 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AUTOMATIC SYSTEMS INC CENTRAL INDEX KEY: 0001062623 IRS NUMBER: 430978181 STATE OF INCORPORATION: MO FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 333-53759-05 FILM NUMBER: 02818618 BUSINESS ADDRESS: STREET 1: 140 JOHN JAMES AUDUBON PARKWAY CITY: AMHERST STATE: NY ZIP: 19228-1197 BUSINESS PHONE: 7166895400 FILER: COMPANY DATA: COMPANY CONFORMED NAME: LICO STEEL INC CENTRAL INDEX KEY: 0001062622 STATE OF INCORPORATION: MO FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 333-53759-04 FILM NUMBER: 02818619 BUSINESS ADDRESS: STREET 1: 140 JOHN JAMES AUDUBON PARKWAY CITY: AMHERST STATE: NY ZIP: 19228-1197 BUSINESS PHONE: 7166895400 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: 02818616 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 q203.txt 10Q SECOND QUARTER FISCAL 2003 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 September 29, 2002 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 October 31, 2002 was: 14,895,172 shares. FORM 10-Q INDEX COLUMBUS MCKINNON CORPORATION SEPTEMBER 29, 2002 PAGE # ------ PART I. FINANCIAL INFORMATION Item 1. Condensed Consolidated Financial Statements (Unaudited) Condensed consolidated balance sheets - September 29, 2002 and March 31, 2002 2 Condensed consolidated statements of income and retained earnings - Three months and six months ended September 29, 2002 and September 30, 2001 3 Condensed consolidated statements of cash flows - Six months ended September 29, 2002 and September 30, 2001 4 Condensed consolidated statements of comprehensive income - Three months and six months ended September 29, 2002 and September 30, 2001 5 Notes to condensed consolidated financial statements - September 29, 2002 6 Item 2. Management's Discussion and Analysis of Results of Operations and Financial Condition 15 Item 3. Quantitative and Qualitative Disclosures About Market Risk 19 Item 4. Disclosure Controls and Procedures 19 PART II. OTHER INFORMATION Item 1. Legal Proceedings - none. 20 Item 2. Changes in Securities - none. 20 Item 3. Defaults upon Senior Securities - none. 20 Item 4. Submission of Matters to a Vote of Security Holders 20 Item 5. Other Information - none. 20 Item 6. Exhibits and Reports on Form 8-K 20 - 1 - PART I. FINANCIAL INFORMATION Item 1. Condensed Consolidated Financial Statements (Unaudited)
COLUMBUS MCKINNON CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) SEPTEMBER 29, MARCH 31, 2002 2002 ----------- ----------- ASSETS: (IN THOUSANDS) Current assets: Cash and cash equivalents $ 4,511 $ 13,068 Trade accounts receivable 84,546 82,266 Inventories 91,101 89,656 Net assets held for sale 2,411 4,290 Net current assets of discontinued operations - 21,497 Prepaid expenses 10,423 8,543 ----------- ----------- Total current assets 192,992 219,320 Property, plant, and equipment, net 68,277 70,742 Goodwill and other intangibles, net 194,487 200,801 Marketable securities 20,714 24,634 Deferred taxes on income 5,173 3,133 Other assets 5,469 5,665 ----------- ----------- Total assets $ 487,112 $ 524,295 =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY: Current liabilities: Notes payable to banks $ 2,843 $ 2,518 Trade accounts payable 25,534 31,617 Accrued liabilities 36,008 39,533 Restructuring reserve 306 949 Current portion of long-term debt 122,404 146,663 ----------- ----------- Total current liabilities 187,095 221,280 Senior debt, less current portion 811 1,509 Subordinated debt 199,707 199,681 Other non-current liabilities 31,427 30,214 ----------- ----------- Total liabilities 419,040 452,684 ----------- ----------- Shareholders' equity Common stock 149 149 Additional paid-in capital 104,864 104,920 Accumulated deficit (16,022) (12,536) ESOP debt guarantee (6,233) (6,514) Unearned restricted stock (312) (414) Total accumulated other comprehensive loss (14,374) (13,994) ----------- ----------- Total shareholders' equity 68,072 71,611 ----------- ----------- Total liabilities and shareholders' equity $ 487,112 $ 524,295 =========== ===========
SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS. - 2 - COLUMBUS MCKINNON CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS (UNAUDITED)
THREE MONTHS ENDED SIX MONTHS ENDED ------------------ ---------------- SEPTEMBER 29, SEPTEMBER 30, SEPTEMBER 29, SEPTEMBER 30, 2002 2001 2002 2001 ---- ---- ---- ---- (IN THOUSANDS, EXCEPT PER SHARE DATA) Net sales $ 113,238 $ 122,542 $ 227,129 $ 251,628 Cost of products sold 86,665 91,348 172,926 186,961 ----------- ----------- ----------- ----------- Gross profit 26,573 31,194 54,203 64,667 ----------- ----------- ----------- ----------- Selling expenses 11,662 10,940 22,985 22,050 General and administrative expenses 6,238 6,926 12,942 12,746 Restructuring charges - 727 - 9,567 Amortization of intangibles 134 2,761 263 5,542 ----------- ----------- ----------- ----------- 18,034 21,354 36,190 49,905 ----------- ----------- ----------- ----------- Income from operations 8,539 9,840 18,013 14,762 Interest and debt expense 7,207 7,914 14,484 16,181 Interest and other income (expense) 225 31 3,718 (82) ----------- ----------- ----------- ----------- Income (loss) before income taxes 1,557 1,957 7,247 (1,501) Income tax expense 542 1,689 2,733 1,050 ----------- ----------- ----------- ----------- Income (loss) from continuing operations before cumulative effect of accounting change 1,015 268 4,514 (2,551) Loss from discontinued operations - (1,600) - (3,442) ----------- ----------- ----------- ----------- Income (loss) before cumulative effect of accounting change 1,015 (1,332) 4,514 (5,993) Cumulative effect of accounting change - - (8,000) - ----------- ----------- ------------ ----------- Net income (loss) 1,015 (1,332) (3,486) (5,993) (Accumulated deficit) retained earnings - beginning of period (17,037) 119,139 (12,536) 124,806 Cash dividends of $0.00, $0.07, $0.00 and $0.14 per share - (1,010) - (2,016) ----------- ----------- ----------- ----------- (Accumulated deficit) retained earnings - end of period $ (16,022) $ 116,797 $ (16,022) $ 116,797 =========== =========== =========== =========== Earnings per share data, basic and diluted Continuing operations $ 0.07 $ 0.02 $ 0.31 $ (0.18) Discontinued operations - (0.11) - (0.24) Cumulative effect of accounting change - - (0.55) - ----------- ----------- ----------- ----------- Basic and diluted net income (loss) per share $ 0.07 $ (0.09) $ (0.24) $ (0.42) =========== =========== =========== ===========
SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS. - 3 - COLUMBUS MCKINNON CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
SIX MONTHS ENDED ---------------- SEPTEMBER 29, SEPTEMBER 30, 2002 2001 ----------- ----------- (IN THOUSANDS) OPERATING ACTIVITIES: Income (loss) from continuing operations before cumulative effect of accounting change $ 4,514 $ (2,551) Adjustments to reconcile income (loss) from continuing operations before cumulative effect of accounting change to net cash provided by operating activities: Depreciation and amortization 5,702 11,782 Deferred income taxes (937) (358) Gain on investments (2,757) - Other 1,237 730 Changes in operating assets and liabilities: Trade accounts receivable 2,005 14,689 Inventories 150 9,058 Prepaid expenses (1,323) (1,132) Other assets 26 (172) Trade accounts payable (7,232) 2,873 Accrued and non-current liabilities (730) (2,660) ------------ ------------ Net cash provided by operating activities of continuing operations 655 32,259 ----------- ----------- INVESTING ACTIVITIES: Sales (purchase) of marketable securities, net 1,184 (25) Capital expenditures (2,270) (3,182) Proceeds from sale of businesses 15,950 - Net assets held for sale 1,879 158 ----------- ----------- Net cash provided by (used in) investing activities of continuing operations 16,743 (3,049) ----------- ----------- FINANCING ACTIVITIES: Net payments under revolving line-of-credit agreements (23,366) (39,691) Repayment of debt (1,531) (559) Dividends paid - (2,016) Other (1,385) (119) ----------- ------------ Net cash used in financing activities of continuing operations (26,282) (42,385) Effect of exchange rate changes on cash (177) 516 ------------ ----------- Net cash used in continuing operations (9,061) (12,659) Cash provided by (used in) discontinued operations 504 (1,356) ----------- ----------- Net decrease in cash and cash equivalents (8,557) (14,015) Cash and cash equivalents at beginning of period 13,068 14,015 ----------- ----------- Cash and cash equivalents at end of period $ 4,511 $ - =========== ===========
SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS. - 4 - COLUMBUS MCKINNON CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
THREE MONTHS ENDED SIX MONTHS ENDED SEPTEMBER 29, SEPTEMBER 30, SEPTEMBER 29, SEPTEMBER 30, 2002 2001 2002 2001 ---- ---- ---- ---- (IN THOUSANDS) Net income (loss) $ 1,015 $ (1,332) $ (3,486) $ (5,993) ---------- ---------- ---------- ---------- Other comprehensive loss net of tax: Foreign currency translation adjustments (1,516) 2,133 4,107 1,892 Unrealized gain (loss) on derivatives qualifying as hedges 33 (695) (97) (572) Unrealized losses on investments: Unrealized holding (losses) gains arising during the period (1,596) (1,630) (2,585) (1,272) Reclassification adjustment for (gains) losses included in net income 229 145 (1,805) 383 ---------- ---------- ----------- ---------- (1,367) (1,485) (4,390) (889) ---------- ---------- ---------- ---------- Total other comprehensive (loss) income (2,850) (47) (380) 431 ---------- ---------- ----------- ---------- Comprehensive loss $ (1,835) $ (1,379) $ (3,866) $ (5,562) ========== ========== ========== ==========
SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS. - 5 - COLUMBUS MCKINNON CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) SEPTEMBER 29, 2002 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 Columbus McKinnon Corporation (the Company) at September 29, 2002, and the results of its operations and its cash flows for the three and six-month periods ended September 29, 2002 and September 30, 2001, have been included. Results for the period ended September 29, 2002 are not necessarily indicative of the results that may be expected for the year ended March 31, 2003. 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, 2002. The Company is a leading U.S. designer and manufacturer of material handling products, systems and services which efficiently and ergonomically move, lift, position and secure material. Key products include hoists, cranes, chain and forged attachments. The Company's material handling products are sold, domestically and internationally, principally to third party distributors through diverse distribution channels, and to a lesser extent directly to manufacturers and other end-users. The Company's integrated material handling solutions businesses deal primarily with end users and sales are concentrated, domestically and internationally (primarily Europe), in the consumer products, manufacturing, warehousing and, to a lesser extent, the steel, construction, automotive and other industrial markets. In May of 2002, the Company sold substantially all of the assets of Automatic Systems, Inc. (ASI). The ASI business was the principal business unit in the Company's former Solutions-Automotive segment. The operations of ASI have been reflected as a discontinued operation as of March 31, 2002 and all periods presented have been restated to reflect this change. 2. Inventories consisted of the following: SEPTEMBER 29, MARCH 31, 2002 2002 ---------- ----------- (IN THOUSANDS) At cost - FIFO basis: Raw materials......................... $ 48,626 $ 48,477 Work-in-process....................... 17,535 13,735 Finished goods........................ 31,979 34,417 ---------- ----------- 98,140 96,629 LIFO cost less than FIFO cost............ (7,039) (6,973) ---------- ----------- Net inventories ....................... $ 91,101 $ 89,656 ========== =========== 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 $74,856,000 and $69,417,000 of accumulated depreciation at September 29, 2002 and March 31, 2002, respectively. - 6 - 4. On April 1, 2002, the Company adopted Statement of Financial Accounting Standards (SFAS) No. 142, "Goodwill and Other Intangible Assets," which requires that goodwill no longer be amortized, but reviewed on an annual basis at the reporting unit level for impairment. Identifiable intangible assets acquired in a business combination are amortized over their useful lives unless their useful lives are indefinite, in which case those intangible assets are tested for impairment annually and not amortized until their lives are determined to be finite. Under SFAS No. 142, goodwill impairment is deemed to exist if the net book value of a reporting unit exceeds its estimated fair value. The fair value of a reporting unit is determined using a discounted cash flow methodology. The Company's reporting units are determined based upon whether discrete financial information is available and regularly reviewed, whether those units constitute a business, and the extent of economic similarities between those reporting units for purposes of aggregation. As a result of this analysis, the reporting units identified under SFAS No. 142 were at the component level, or one level below the reporting segment level as defined under SFAS No. 131. The Products and Solutions segments were each further subdivided into three reporting units. The Company completed its transitional goodwill impairment test for SFAS No. 142 during the quarter ended September 29, 2002. Related to the adoption of SFAS No. 142, the Company recorded a one-time, noncash charge of $8,000,000 to reduce the carrying value of its goodwill as of April 1, 2002. Such charge is reflected as a cumulative effect of an accounting change in the accompanying consolidated statement of operations. The impairment charge was related to the Cranebuilder reporting unit in the Products segment and the Univeyor reporting unit in the Solutions segment. The Company will perform its annual impairment review during the fourth quarter of each year commencing in the fourth quarter of Fiscal 2003. Depending on further decline in the economy or decline in the Company's stock price, the Company may be required to record additional significant non-cash charges to write down its carrying value of goodwill. Upon finalization of the transitional goodwill impairment test, goodwill was reallocated amongst reporting units. A summary of changes in goodwill during the first six months of Fiscal 2003 by business segment is as follows:
MARCH 31, RECLASSIFICATIONS SEPTEMBER 29, 2002 AND TRANSLATION IMPAIRMENTS 2002 ---- --------------- ----------- ---- (IN THOUSANDS) Products $ 165,295 $ 24,803 $ (1,930) $ 188,168 Solutions 30,360 (23,561) (6,070) 729 ------------ ------------ ------------ ------------ Total $ 195,655 $ 1,242 $ (8,000) $ 188,897 ============ ============ ============ ============
As of September 29, 2002, the gross balance of deferred financing costs is $9,467,000 and accumulated amortization is $5,121,000. Other intangibles have a net value of $1,244,000. - 7 - No reclassification of identifiable intangible assets apart from goodwill was necessary as a result of adoption of SFAS No. 142. The following table presents the consolidated results of operations adjusted as though the adoption of SFAS No. 142 occurred as of April 1, 2001.
SIX MONTHS ENDED ---------------- SEPTEMBER 29, SEPTEMBER 30, 2002 2001 ---- ---- (IN THOUSANDS) Reported income (loss) from continuing operations $ 4,514 $ (2,551) Goodwill amortization add-back, net of tax - 5,085 ---------- ---------- Adjusted income from continuing operations $ 4,514 $ 2,534 ========== ========== Reported income (loss) from continuing operations per share - basic and diluted $ 0.31 $ (0.18) Goodwill amortization add-back - 0.35 ---------- --------- Adjusted income from continuing operations per share - basic and diluted $ 0.31 $ 0.17 ========== =========
Amortization expense is estimated to be $3,250,000 for fiscal 2003 including $500,000 of amortization reflected on the amortization of intangibles line and $2,750,000 of amortization of deferred financing costs shown on the interest and debt expense line on the financial statements. Amortization expense is estimated to be $2,150,000 for each of the four succeeding fiscal years thereafter including $500,000 of amortization reflected on the amortization of intangibles line and $1,650,000 of amortization of deferred financing costs shown on the interest and debt expense line on the financial statements without consideration of additional financing costs expected in conjunction with the refinancing currently in process. Goodwill and other intangibles is net of $66,606,000 and $58,343,000 of accumulated amortization at September 29, 2002 and March 31, 2002, 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 expenditures based on amounts determined from loss reports and individual cases filed with the Company, and an amount, based on 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. 6. The Company manages its debt portfolio by using interest rate swaps to achieve an overall desired position of fixed and floating rates. The Company entered into an interest rate swap agreement to effectively convert $40 million of variable-rate debt to fixed-rate debt which matures in June 2003. The cash flow hedge is considered effective and the gain or loss on the change in fair value is reported in other comprehensive income, net of tax. The interest rate swap is the only derivative instrument held by the Company. The net impact of the derivative instrument was an increase to other comprehensive income of $33,000 for the quarter ended September 29, 2002 versus a decrease to other comprehensive income of $695,000 for the quarter ended September 30, 2001. For the six-month periods ended September 29, 2002 and September 30, 2001, the net impact was a $97,000 and $572,000 decrease to other comprehensive income, respectively. The fair value of the derivative at September 29, 2002 was an $868,000 liability. The carrying amount of the Company's senior debt instruments approximates the fair value. The Company's subordinated debt has an approximate fair value of $152,000,000 based on quoted market prices, which is less than its carrying amount of $199,707,000. - 8 - 7. The following table sets forth the computation of basic and diluted earnings per share:
THREE MONTHS ENDED SIX MONTHS ENDED ------------------ ---------------- SEPTEMBER 29, SEPTEMBER 30, SEPTEMBER 29, SEPTEMBER 30, 2002 2001 2002 2001 ---- ---- ---- ---- (IN THOUSANDS) Numerator for basic and diluted earnings per share: Net income (loss) $ 1,015 $ (1,332) $ (3,486) $ (5,993) ======== ======== ======== ======== Denominators: Weighted-average common stock outstanding - denominator for basic EPS 14,487 14,407 14,483 14,399 Effect of dilutive employee stock options - - - - -------- -------- -------- -------- Adjusted weighted-average common stock outstanding and assumed conversions - denominator for diluted EPS 14,487 14,407 14,483 14,399 ======== ======== ======== ========
8. Income tax expense for the three and six-month periods ended September 29, 2001 exceeds the customary relationship between income tax expense and income (loss) before income taxes due to nondeductible amortization of goodwill of $2,389,000 and $4,719,000, respectively. 9. As a result of the way the Company manages the business, its reportable segments are strategic business units that offer products with different characteristics. The most defining characteristic is the extent of customized engineering required on a per-order basis. In addition, the segments serve different customer bases through differing methods of distribution. The Company has two reportable segments: Products and Solutions. The Company's Products segment sells hoists, industrial cranes, chain, attachments, and other material handling products principally to third party distributors through diverse distribution channels, and to a lesser extent directly to manufacturers and other end-users. The Solutions segment sells engineered material handling systems such as conveyors, manipulators, and lift tables primarily to end-users in the consumer products, manufacturing, warehousing, and, to a lesser extent, the steel, construction, automotive, and other industrial markets. The accounting policies of the segments are the same as those described note 1. Intersegment sales are not significant. The Company evaluates performance based on operating income of the respective business units prior to the effects of amortization. Segment information as of and for the six months ended September 29, 2002 and September 30, 2001, is as follows:
SIX MONTHS ENDED SEPTEMBER 29, 2002 ----------------------------------- PRODUCTS SOLUTIONS TOTAL -------- --------- ----- (IN THOUSANDS) Sales to external customers...................... $ 194,818 $ 32,311 $ 227,129 Operating income before amortization and restructuring charges..................... 17,351 925 18,276 Depreciation and amortization.................... 5,190 512 5,702 Total assets..................................... 450,517 36,595 487,112 Capital expenditures............................. 2,097 173 2,270 - 9 - SIX MONTHS ENDED SEPTEMBER 30, 2001 ----------------------------------- PRODUCTS SOLUTIONS TOTAL -------- --------- ----- (IN THOUSANDS) Sales to external customers...................... $ 212,769 $ 38,859 $ 251,628 Operating income before amortization and restructuring charges..................... 29,402 469 29,871 Depreciation and amortization.................... 10,258 1,524 11,782 Total assets..................................... 447,881 66,492 514,373 Capital expenditures............................. 2,663 519 3,182
The following schedule provides a reconciliation of operating income before amortization with (loss) income before income taxes:
SIX MONTHS ENDED ---------------- SEPTEMBER 29, SEPTEMBER 30, 2002 2001 ---- ---- (IN THOUSANDS) Operating income before amortization............................... $ 18,276 $ 29,871 Restructuring charges.............................................. - (9,567) Amortization of intangibles........................................ (263) (5,542) Interest and debt expense.......................................... (14,484) (16,181) Interest income and other (expense) income......................... 3,718 (82) ----------- ----------- Income (loss) before income taxes.................................. $ 7,247 $ (1,501) =========== ===========
- 10 - 10. The summary financial information of the parent, domestic subsidiaries (guarantors) and foreign subsidiaries (nonguarantors of the 8.5% senior subordinated notes) follows:
Domestic Foreign Elimina- Consoli- (In thousands) Parent Subsidiaries Subsidiaries tions dated ------------------------------------------------------------------ AS OF SEPTEMBER 29, 2002 Current assets: Cash and cash equivalents $ 1,673 $ (1,377) $ 4,215 $ - $ 4,511 Trade accounts receivable 58,169 3,603 22,774 - 84,546 Inventories 42,110 21,066 28,897 (972) 91,101 Other current assets 9,975 (1,299) 4,158 - 12,834 ------------------------------------------------------------------ Total current assets 111,927 21,993 60,044 (972) 192,992 Property, plant, and equipment, net 33,859 17,263 17,155 - 68,277 Goodwill and other intangibles, net 36,816 119,118 38,553 - 194,487 Intercompany 255,251 (269,575) (56,793) 71,117 - Other assets 75,175 159,483 (1,494) (201,808) 31,356 ------------------------------------------------------------------ Total assets $ 513,028 $ 48,282 $ 57,465 $ (131,663) $ 487,112 ================================================================== Current liabilities $ 165,573 $ 1,492 $ 23,828 $ (3,798) $ 187,095 Long-term debt, less current portion 199,707 - 811 - 200,518 Other non-current liabilities 16,923 11,233 3,271 - 31,427 ------------------------------------------------------------------ Total liabilities 382,203 12,725 27,910 (3,798) 419,040 Shareholders' equity 130,825 35,557 29,555 (127,865) 68,072 ------------------------------------------------------------------ Total liabilities and shareholders' equity $ 513,028 $ 48,282 $ 57,465 $ (131,663) $ 487,112 ================================================================== FOR THE SIX MONTHS ENDED SEPTEMBER 29, 2002 Net sales $ 117,398 $ 62,585 $ 56,332 $ (9,186) $ 227,129 Cost of products sold 88,080 51,143 42,866 (9,163) 172,926 ------------------------------------------------------------------ Gross profit 29,318 11,442 13,466 (23) 54,203 ------------------------------------------------------------------ Selling, general and administrative expenses 18,946 6,125 10,856 - 35,927 Amortization of intangibles 117 2 144 - 263 ------------------------------------------------------------------ 19,063 6,127 11,000 - 36,190 ------------------------------------------------------------------ Income from operations 10,255 5,315 2,466 (23) 18,013 Interest and debt expense 14,179 76 229 - 14,484 Interest and other income 3,495 116 107 - 3,718 ------------------------------------------------------------------ Income before income taxes (429) 5,355 2,344 (23) 7,247 Income tax expense (92) 2,160 674 (9) 2,733 ------------------------------------------------------------------ Income before cumulative effect of accounting change (337) 3,195 1,670 (14) 4,514 Cumulative effect of accounting change - (1,930) (6,070) - (8,000) ------------------------------------------------------------------ Net (loss) income $ (337) $ 1,265 $ (4,400) $ (14) $ (3,486) ================================================================== - 11 - Domestic Foreign Elimina- Consoli- (In thousands) Parent Subsidiaries Subsidiaries tions dated ------------------------------------------------------------------ FOR THE SIX MONTHS ENDED SEPTEMBER 29, 2002 OPERATING ACTIVITIES: Net cash provided by (used in) operating activities $ 7,328 $ (6,090) $ (583) $ - $ 655 ------------------------------------------------------------------ INVESTING ACTIVITIES: Purchase of marketable securities, net 1,184 - - - 1,184 Capital expenditures (1,001) (372) (897) - (2,270) Proceeds from sale of business - 15,950 - - 15,950 Other - 1,879 - - 1,879 ------------------------------------------------------------------ Net cash (used in) provided by investing activities 183 17,457 (897) - 16,743 ------------------------------------------------------------------ FINANCING ACTIVITIES: Net (payments) borrowings under revolving line-of-credit agreements (12,049) (11,551) 234 - (23,366) Repayment of debt (432) - (1,099) - (1,531) Other (1,385) - - - (1,385) ------------------------------------------------------------------ Net cash used in financing activities (13,866) (11,551) (865) - (26,282) Effect of exchange rate changes on cash 4 4 (185) - (177) ------------------------------------------------------------------ Net cash used in continuing operations (6,351) (180) (2,530) - (9,061) Net cash provided by discontinued operations - 504 - - 504 ------------------------------------------------------------------ Net change in cash and cash equivalents (6,351) 324 (2,530) - (8,557) Cash and cash equivalents at beginning of period 8,024 (1,701) 6,745 - 13,068 ------------------------------------------------------------------ Cash and cash equivalents at end of period $ 1,673 $ (1,377) $ 4,215 $ - $ 4,511 ================================================================== AS OF SEPTEMBER 30, 2001 Current assets: Cash and cash equivalents $ 570 $ (3,393) $ 2,823 $ - $ - Trade accounts receivable 53,331 10,727 21,441 - 85,499 Inventories 46,294 26,220 28,556 (962) 100,108 Net current assets of discontinued operations - 22,731 - - 22,731 Other current assets 5,903 1,289 3,692 - 10,884 ------------------------------------------------------------------ Total current assets 106,098 57,574 56,512 (962) 219,222 Property, plant, and equipment, net 33,276 23,314 18,203 - 74,793 Goodwill and other intangibles, net 37,842 124,447 45,944 - 208,233 Intercompany 123,354 (291,193) (59,100) 226,939 - Net non-current assets of discontinued operations - 113,998 - - 113,998 Other assets 226,025 161,070 (1,350) (350,889) 34,856 ------------------------------------------------------------------ Total assets $ 526,595 $ 189,210 $ 60,209 $ (124,912) $ 651,102 ================================================================== Current liabilities $ 41,154 $ 15,793 $ 21,178 $ (3,118) $ 75,007 Long-term debt, less current portion 337,654 3,884 - 341,538 Other non-current liabilities 15,946 14,887 2,979 - 33,812 ------------------------------------------------------------------ Total liabilities 394,754 30,680 28,041 (3,118) 450,357 Shareholders' equity 131,841 158,530 32,168 (121,794) 200,745 ------------------------------------------------------------------ Total liabilities and shareholders' equity $ 526,595 $ 189,210 $ 60,209 $ (124,912) $ 651,102 ================================================================== - 12 - Domestic Foreign Elimina- Consoli- (In thousands) Parent Subsidiaries Subsidiaries tions dated ------------------------------------------------------------------ FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2001 Net sales $ 111,779 $ 97,173 $ 53,764 $ (11,088) $ 251,628 Cost of products sold 80,723 76,933 40,405 (11,100) 186,961 ------------------------------------------------------------------ Gross profit 31,056 20,240 13,359 12 64,667 ------------------------------------------------------------------ Selling, general and administrative expenses 16,648 8,503 9,645 - 34,796 Restructuring charges 9,567 - - - 9,567 Amortization of intangibles 1,093 3,243 1,206 - 5,542 ------------------------------------------------------------------ 27,308 11,746 10,851 - 49,905 ------------------------------------------------------------------ Income from operations 3,748 8,494 2,508 12 14,762 Interest and debt expense 15,891 - 290 - 16,181 Interest and other (expense) income (324) 113 129 - (82) ------------------------------------------------------------------ (Loss) income from continuing operations before income tax (benefit) expense (12,467) 8,607 2,347 12 (1,501) Income tax (benefit) expense (4,635) 4,619 1,061 5 1,050 ------------------------------------------------------------------ (Loss) income from continuing operations (7,832) 3,988 1,286 7 (2,551) Loss from discontinued operations - (3,442) - - (3,442) ------------------------------------------------------------------ Net (loss) income $ (7,832) $ 546 $ 1,286 $ 7 $ (5,993) ================================================================== FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2001 OPERATING ACTIVITIES: Net cash (used in) provided by operating activities $ 57,976 $ (24,931) $ (786) $ - $ 32,259 ------------------------------------------------------------------ INVESTING ACTIVITIES: Purchase of marketable securities, net (25) - - - (25) Capital expenditures (1,673) (116) (1,393) - (3,182) Other - 158 - - 158 ------------------------------------------------------------------ Net cash used in investing activities (1,698) 42 (1,393) - (3,049) ------------------------------------------------------------------ FINANCING ACTIVITIES: Net (payments) borrowings under revolving line-of-credit agreements (64,000) 24,717 (408) - (39,691) Repayment of debt (555) - (4) - (559) Dividends paid (2,016) - - - (2,016) Other (119) - - - (119) ------------------------------------------------------------------ Net cash provided by (used in) financing activities (66,690) 24,717 (412) - (42,385) Effect of exchange rate changes on cash (35) - 551 - 516 ------------------------------------------------------------------ Net cash used in continuing operations (10,447) (172) (2,040) - (12,659) Net cash used in discontinued operations - (1,356) - - (1,356) ------------------------------------------------------------------ Net change in cash and cash equivalents (10,447) (1,528) (2,040) - (14,015) Cash and cash equivalents at beginning of period 11,017 (1,865) 4,863 - 14,015 ------------------------------------------------------------------ Cash and cash equivalents at end of period $ 570 $ (3,393) $ 2,823 $ - $ - ==================================================================
- 13 - 11. The Financial Accounting Standards Board (FASB) issued SFAS No. 143, "Accounting for Asset Retirement Obligations" in June 2001. SFAS No. 143 requires that the fair value of a liability for an asset retirement obligation be recognized in the period in which it is incurred. The associated asset retirement costs are capitalized as part of the carrying amount of the long-lived asset. This Statement is effective for the Company's fiscal year beginning April 1, 2003. The Company is currently assessing the Statement and the impact, if any, that adoption will have on the consolidated financial statements. The FASB issued SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets" in August 2001. SFAS No. 144 supersedes SFAS No. 121 "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of," and the accounting and reporting provisions of APB Opinion No. 30, "Reporting the Results of Operations - Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions." The statement, while retaining many of the fundamental recognition and measurement provisions of SFAS No. 121, changes the criteria to be met to classify an asset as held-for-sale as well as the grouping of long-lived assets and liabilities that represent the unit of accounting for a long-lived asset to be held and used. SFAS No. 144 is effective for the Company's fiscal year beginning April 1, 2002. As of September 29, 2002, this Statement has not had any impact on the consolidated financial statements. - 14 - Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION (AMOUNTS IN THOUSANDS) The Company is a leading U.S. designer and manufacturer of material handling products, systems and services which efficiently and ergonomically move, lift, position or secure material. Key products include hoists, cranes, chain and forged attachments. The Company's material handling Products are sold, domestically and internationally, principally to third party distributors through diverse distribution channels, and to a lesser extent directly to manufacturers and other end-users. Distribution channels include general distributors, specialty distributors, crane end users, service-after-sale distributors, original equipment manufacturers (OEMs), government, consumer and international. The general distributors are comprised of industrial distributors, rigging shops and crane builders. Specialty distributors include catalog houses, material handling specialists and entertainment equipment riggers. The service-after-sale network includes repair parts distribution centers, chain service centers and hoist repair centers. Consumer distribution channels include mass merchandisers, hardware distributors, trucking and transportation distributors, farm hardware distributors and rental outlets. The Company's integrated material handling Solutions businesses primarily deal directly with end-users and sales are concentrated, domestically and internationally (primarily Europe), in the consumer products, manufacturing, warehousing and, to a lesser extent, the steel, construction, automotive, and other industrial markets. RESULTS OF OPERATIONS THREE MONTHS AND SIX MONTHS ENDED SEPTEMBER 29, 2002 AND SEPTEMBER 30, 2001 Net sales in the fiscal 2002 quarter ended September 29, 2002 were $113,238, a decrease of $9,304 or 7.6% from the fiscal 2001 quarter ended September 30, 2001. Net sales for the six months ended September 29, 2002 were $227,129, a decrease of $24,499 or 9.7% from the six months ended September 30, 2001. Sales in the Products segment decreased by $6,186 or 6.0% from the previous year's quarter and $17,951 or 8.4% for the six months ended September 29, 2002 in comparison to the prior year period due to continued softness in all industrial markets (particularly domestically). Sales in the Solutions segment decreased 16.1% or $3,118 for the quarter and 16.9% or $6,548 for the six months ended September 29, 2002 when compared to the same periods in the prior year due to weak industrial markets. Sales in the individual segments were as follows, in thousands of dollars and with percentage changes for each group:
THREE MONTHS ENDED SIX MONTHS ENDED SEPTEMBER 29, SEPTEMBER 30, CHANGE SEPTEMBER 29, SEPTEMBER 30, CHANGE 2002 2001 AMOUNT % 2002 2001 AMOUNT % ---- ---- ------ - ---- ---- ------ - (IN THOUSANDS, EXCEPT PERCENTAGES) Products $ 96,964 $ 103,150 $ (6,186) (6.0) $ 194,818 $ 212,769 $ (17,951) (8.4) Solutions 16,274 19,392 (3,118) (16.1) 32,311 38,859 (6,548) (16.9) --------- --------- --------- --------- --------- --------- Net sales $ 113,238 $ 122,542 $ (9,304) (7.6) $ 227,129 $ 251,628 $ (24,499) (9.7) ========= ========= ========= ========= ========= =========
The Company's gross profit margins were 23.5%, 25.5%, 23.9%, and 25.7% for the fiscal 2002 and 2001 quarters and the six-month periods ended September 29, 2002 and September 30, 2001, respectively. Gross profit margins in the Products segment were 24.9%, 27.3%, 25.2%, 27.9% for the fiscal 2002 and 2001 quarters and the six-month periods ended September 29, 2002 and September 30, 2001, respectively. Gross profit margins in the Solutions segment were 15.0%, 15.4%, 15.8%, 13.6% for the fiscal 2002 and 2001 quarters and the six-month periods ended September 29, 2002 and September 30, 2001, respectively. The decrease in all margins relative to the respective periods in the prior year, with the exception of the six-month period margin in the Solutions segment, is a combined result of decreased volume and lack of pricing increases to customers. The increase in margin in the six-month period for the Solutions segment is a function of an ease in competitive pricing in overseas markets and core business refocus in one domestic market. - 15 - Selling expenses were $11,662, $10,940, $22,985, and $22,050 in the fiscal 2003 and 2002 quarters and the six-month periods then ended, respectively. As a percentage of consolidated net sales, selling expenses were 10.3%, 8.9%, 10.1%, and 8.8% in the fiscal 2003 and 2002 quarters and the six-month periods then ended, respectively. The increased selling expenses are the result of increased commissions, foreign exchange rates, and inflation. General and administrative expenses were $6,238, $6,926, $12,942, and $12,746 in the fiscal 2003 and 2002 quarters and the six-month periods then ended, respectively. As a percentage of consolidated net sales, general and administrative expenses were 5.5%, 5.7%, 5.7% and 5.1% in the fiscal 2003 and 2002 quarters and the six-month periods then ended, respectively. The decrease in the current quarter is the result of a reclassification of general and administrative expense of crane builders to cost of products sold. The six-month period expenses are comparable as a result of the decrease from the reclassification of general and administrative expense of crane builders to cost of products sold being offset by an increase in product liability expense recorded by the Company's captive insurance company. In conjunction with the continuation of its strategic integration process, the Company incurred restructuring charges of $727 and $9,567 in the fiscal 2002 quarter and the six-month period ended September 30, 2001, respectively. The charges for the quarter consist of costs associated with the closure of the Lister Bolt and Chain Division manufacturing facility in Richmond, British Columbia, Canada and year to date charges include those costs associated with the closure of the Forrest City, Arkansas plant as well. The charges consist mainly of property resolution and employee separation costs. Amortization of intangibles was $134, $2,761, $263, and $5,542 in the fiscal 2003 and 2002 quarters and the six-month periods then ended, respectively. The decrease in amortization is reflective of the cessation of goodwill amortization in accordance with SFAS No. 142 beginning April 1, 2002. Interest and debt expense was $7,207, $7,914, $14,484, and $16,181 in the fiscal 2003 and 2002 quarters and the six-month periods then ended, respectively. The fiscal 2003 decreases are the result of decreasing debt levels. As a percentage of consolidated net sales, interest and debt expense was 6.4%, 6.5%, 6.4%, and 6.4% in the fiscal 2003 and 2002 quarters and the six-month periods then ended, respectively. Interest and other income (expense) was $225, $31, $3,718, and $(82) in the fiscal 2003 and 2002 quarters and the six-month periods then ended, respectively. The increase in the current fiscal year to date results is due to higher investment earnings, specifically realized gains, on assets in the Company's captive insurance company. Income taxes as a percentage of income (loss) before income taxes were 34.8%, 86.3%, 37.7%, and (70.0)% in the fiscal 2003 and 2002 quarters and the six-month periods then ended, respectively. The percentages for fiscal 2002 differ from the U.S. statutory rate as a result of the effect of nondeductible amortization of goodwill resulting from acquisitions. LIQUIDITY AND CAPITAL RESOURCES The Revolving Credit Facility provides availability up to $150 million, due March 31, 2003, against which $122.2 million was outstanding at September 29, 2002. Interest is payable at varying Eurodollar rates based on LIBOR plus a spread determined by the Company's leverage ratio amounting to 400 basis points at October 31, 2002. The Revolving Credit Facility is secured by all equipment, inventory, receivables, subsidiary stock (limited to 65% for foreign subsidiaries) and intellectual property. - 16 - The senior subordinated 8 1/2% Notes issued on March 31, 1998 amounted to $199,468 net of original issue discount of $532 and are due March 31, 2008. Interest is payable semi-annually based on an effective rate of 8.45%, considering $1,902 of proceeds from rate hedging in advance of the placement. Provisions of the 8 1/2% Notes include, without limitation, restrictions of liens, indebtedness, asset sales, and dividends and other restricted payments. Prior to April 1, 2003, the 8 1/2% Notes are redeemable at the option of the Company, in whole or in part, at the Make-Whole Price (as defined in the 8 1/2% Notes agreement). On or after April 1, 2003, they are redeemable at prices declining annually to 100% on and after April 1, 2006. In the event of a Change of Control (as defined in the indenture for such notes), each holder of the 8 1/2% Notes may require the Company to repurchase all or a portion of such holder's 8 1/2% Notes at a purchase price equal to 101% of the principal amount thereof. The 8 1/2% Notes are guaranteed by certain domestic subsidiaries and are not subject to any sinking fund requirements. The Company manages its debt portfolio by using interest rate swaps to achieve an overall desired position of fixed and floating rates. The Company entered into an interest rate swap agreement to effectively convert $40 million of variable-rate debt to fixed-rate debt which matures in June 2003. The cash flow hedge is considered effective and the gain or loss on the change in fair value is reported in other comprehensive income, net of tax. The interest rate swap is the only derivative instrument held by the Company. The net impact of the derivative instrument was an increase to other comprehensive income of $33 for the quarter ended September 29, 2002 and a decrease of $695, $97, and $572 for the quarter ended September 30, 2001, six-month period ended September 29, 2002, and six-month period ended September 30, 2001, respectively. The fair value of the derivative at September 29, 2002 was an $868 liability. Since the Revolving Credit Facility expires on March 31, 2003, the Company is currently in the process of negotiating new debt instruments which are expected to be finalized in November 2002. The new debt instruments will place certain restrictions and covenants on the Company. The new debt instruments are believed to be sufficient to fund ongoing operations and budgeted capital expenditures for at least the next twelve months. Net cash provided by operating activities was $655 for the six months ended September 29, 2002 compared to $32,259 for the six months ended September 30, 2001. The difference of $31,604 is due to changes in net working capital components particularly accounts receivable, inventories, and accounts payable. Net cash provided by investing activities was $16,743 for the six months ended September 29, 2002 compared to net cash used in investing activities of $3,049 for the six months ended September 30, 2001 as a result of the proceeds from the sale of ASI and proceeds from the sale of assets held for sale. Net cash used in financing activities was $26,282 for the six months ended September 29, 2002 compared to $42,385 for the six months ended September 30, 2001. The $16,103 change is the result of debt payments made from funds freed from working capital during the first six months of fiscal 2002 and excess cash on hand at the beginning of fiscal 2002. 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 six months ended September 29, 2002 and September 30, 2001 were $2,270 and $3,182, respectively. - 17 - 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. SEASONALITY AND QUARTERLY RESULTS Quarterly results may be materially affected by the timing of large customer orders, by periods of high vacation and holiday concentrations, and by acquisitions and the magnitude of acquisition costs. Therefore, the operating results for any particular fiscal quarter are not necessarily indicative of results for any subsequent fiscal quarter or for the full fiscal year. EFFECTS OF NEW ACCOUNTING PRONOUNCEMENTS The FASB issued SFAS No. 143, "Accounting for Asset Retirement Obligations" in June 2001. SFAS No. 143 requires that the fair value of a liability for an asset retirement obligation be recognized in the period in which it is incurred. The associated asset retirement costs are capitalized as part of the carrying amount of the long-lived asset. This Statement, which is effective for the Company's fiscal year beginning April 1, 2003, may be adopted as of April 1, 2002. We are currently assessing the Statement and the impact, if any, that adoption will have on our consolidated financial statements. The FASB issued SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets" in August 2001. SFAS No. 144 supersedes SFAS No. 121 "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of," and the accounting and reporting provisions of APB Opinion No. 30, "Reporting the Results of Operations - Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions." The statement, while retaining many of the fundamental recognition and measurement provisions of SFAS No. 121, does change the criteria to be met to classify an asset as held-for-sale as well as the grouping of long-lived assets and liabilities that represent the unit of accounting for a long-lived asset to be held and used. SFAS No. 144 is effective for the Company's fiscal year beginning April 1, 2002. As of September 29, 2002, this Statement has not had any impact on the consolidated financial statements. - 18 - SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 This report may include "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements involve known and unknown risks, uncertainties and other factors that could cause the actual results of the Company to differ materially from the results expressed or implied by such statements, including general economic and business conditions, conditions affecting the industries served by the Company and its subsidiaries, conditions affecting the Company's customers and suppliers, competitor responses to the Company's products and services, the overall market acceptance of such products and services, the integration of acquisitions and other factors disclosed in the Company's periodic reports filed with the Commission. Consequently such forward-looking statements should be regarded as the Company's current plans, estimates and beliefs. The Company does not undertake and specifically declines any obligation to publicly release the results of any revisions to these forward-looking statements that may be made to reflect any future events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events. Item 3. Quantitative and Qualitative Disclosures About Market Risk There have been no material changes in the reported market risks since the end of Fiscal 2002. Item 4. Disclosure Controls and Procedures As of September 29, 2002, an evaluation was performed under the supervision and with the participation of the Company's management including the chief executive and chief financial officer of the effectiveness of the design and operation of the Company's disclosure controls and procedures. Based on that evaluation, the Company's management including the chief executive officer and chief financial officer concluded that the Company's disclosure controls and procedures were effective as of September 29, 2002. There have been no significant changes in the Company's internal controls or in other factors that could significantly affect internal controls subsequent to September 29, 2002. - 19 - PART II. OTHER INFORMATION Item 1. Legal Proceedings - none. Item 2. Changes in Securities - none. Item 3. Defaults upon Senior Securities - none. Item 4. Submission of Matters to a Vote of Security Holders On August 19, 2002, the Annual Meeting of Shareholders was held and the following directors were elected: 12,524,951 votes cast for: Herbert P. Ladds, Jr.; 12,512,907 votes cast for: Timothy T. Tevens; 12,534,936 votes cast for: Robert L. Montgomery, Jr.; 12,474,532 votes cast for: L. David Black; 12,487,103 votes cast for: Richard J. Fleming; 12,487,103 votes cast for: Carlos Pasqual. Item 5. Other Information - none. Item 6. Exhibits and Reports on Form 8-K Exhibit 4.1 Sixth Supplemental Indenture among Columbus McKinnon Corporation, Audubon West, Inc., Crane Equipment & Service, Inc., LICO Steel, Inc., Yale Industrial Products, Inc., Audubon Europe S.a.r.l. and State Street Bank and Trust Company, N.A., as trustee, dated as of August 5, 2002. Exhibit 10.1 Twelfth Amendment, dated as of September 27, 2002, to the Credit Agreement, dated as of March 31, 1998, among Columbus McKinnon Corporation, as the Borrower, the banks, financial institutions and other institutional lenders named therein, as Initial Lenders, Fleet National Bank, as the Initial Issuing Bank, Fleet National Bank, as the Swing Line Bank and Fleet National Bank, as the Administrative Agent. Exhibit 10.2 Second Amendment to the Columbus McKinnon Corporation 1995 Incentive Stock Option Plan, as amended and restated. Exhibit 10.3 Second Amendment to the Columbus McKinnon Corporation Restricted Stock Plan. Exhibit 10.4 Amendment No. 4 to the 1998 Plan Restatement of the Columbus McKinnon Corporation Thrift 401(k) Plan dated May 10, 2002. Exhibit 99.1 Certification of Chief Executive Officer Exhibit 99.2 Certification of Chief Financial Officer On August 26, 2002, the Company filed a Current Report on Form 8-K with respect to shareholders approval of amendments to its Incentive Stock Option and Restricted Stock Plans. 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: NOVEMBER 13, 2002 /S/ ROBERT L. MONTGOMERY, JR. ------------------ ----------------------------------- Robert L. Montgomery, Jr. Executive Vice President and Chief Financial Officer (Principal Financial Officer) - 21 - CERTIFICATION I, Timothy T. Tevens, Chief Executive Officer, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Columbus McKinnon Corporation; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have: a. designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b. evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and c. presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): a. all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this quarterly report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: November 8, 2002 /S/ TIMOTHY T. TEVENS - ----------------------- Timothy T. Tevens Chief Executive Officer - 22 - CERTIFICATION I, Robert L. Montgomery, Chief Financial Officer, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Columbus McKinnon Corporation; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have: a. designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b. evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and c. presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): a. all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this quarterly report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: November 13, 2002 /S/ ROBERT L. MONTGOMERY - ------------------------ Robert L. Montgomery Chief Financial Officer - 23 - EX-4 3 sixsup.txt EXHIBIT 4.1 SIXTH SUPPLEMENTAL INDENTURE SIXTH SUPPLEMENTAL INDENTURE SUPPLEMENTAL INDENTURE (this "SUPPLEMENTAL INDENTURE"), dated as of August 5th, 2002, among Audubon Europe S. a.r.l. (the "GUARANTEEING SUBSIDIARY") a subsidiary of Columbus McKinnon Corporation (or its permitted successor), a New York corporation (the "COMPANY"), the company, the other Guarantors (as defined in the Indenture referred to herein) and State Street Bank and Trust Company, N.A., as trustee under the indenture referred to below (the "TRUSTEE"). W I T N E S S E T H WHEREAS, the Company has heretofore executed and delivered to the Trustee an indenture (the "ORIGINAL INDENTURE"), dated as of March 31, 1998 providing for the issuance of an aggregate principal amount of up to $300.0 million of 8 1/2% Senior Subordinated Notes due 2008 (the "NOTES"); WHEREAS, the Company, the Guarantors and the Trustee amended the Original Indenture by entering into a Supplemental Indenture dated as of March 31, 1998, a Second Supplemental Indenture dated as of February 12, 1999, a Third Supplemental Indenture dated as of March 1, 1999, a Fourth Supplemental Indenture dated as of November 1, 1999 and a Fifth Supplemental Indenture dated as of April 4, 2002 in order to add certain entities as guarantors and to reflect the merger or disposition of certain Guarantors (the Original Indenture, as supplemented by the First Supplemental Indenture, the Second Supplemental Indenture, the Third Supplemental Indenture, the Fourth Supplemental Indenture and the Fifth Supplemental Indenture, the "INDENTURE"); and WHEREAS, the Indenture provides that under certain circumstances the Guaranteeing Subsidiary shall execute and deliver to the Trustee a supplemental indenture pursuant to which the Guaranteeing Subsidiary shall unconditionally guarantee all of the Company's Obligations under the Notes and the Indenture on the terms and conditions set forth herein (the "SUBSIDIARY GUARANTEE"); and WHEREAS, pursuant to Section 9.01 of the Indenture, the Trustee is authorized to execute and deliver this Sixth Supplemental Indenture; NOW THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the Guaranteeing Subsidiary and the Trustee mutually covenant and agree for the equal and ratable benefit of the Holders of the Notes as follows: 1. CAPITALIZED TERMS. Capitalized terms used herein without definition shall have the meanings assigned to them in the Indenture. 2. AGREEMENT TO GUARANTEE. The Guaranteeing Subsidiary hereby agrees as follows: (a) Along with all Guarantors named in the Indenture, to jointly and severally Guarantee to each Holder of a Note authenticated and delivered by the Trustee and to the Trustee and its successors and assigns, irrespective of the validity and enforceability of the Indenture, the Notes or the obligations of the Company hereunder or thereunder, that: (i) the principal of and interest on the Notes will be promptly paid in full when due, whether at maturity, by acceleration, redemption or otherwise, and interest on the overdue principal of and interest on the Notes, if any, if lawful, and all other obligations of the Company to the Holders or the Trustee hereunder or thereunder will be promptly paid in full or performed, all in accordance with the terms hereof and thereof; and (ii) in case of any extension of time of payment or renewal of any Notes or any of such other obligations, that same will be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, whether at stated maturity, by acceleration or otherwise. Failing payment when due of any amount so guaranteed or any performance so guaranteed for whatever reason, the Guarantors shall be jointly and severally obligated to pay the same immediately. (b) The obligations hereunder shall be unconditional, irrespective of the validity, regularity or enforceability of the Notes or the Indenture, the absence of any action to enforce the same, any waiver or consent by any Holder of the Notes with respect to any provisions hereof or thereof, the recovery of any judgment against the Company, any action to enforce the same or any other circumstance which might otherwise constitute a legal or equitable discharge or defense of a guarantor. (c) The following is hereby waived: diligence presentment, demand of payment, filing of claims with a court in the event of insolvency or bankruptcy of the Company, any right to require a proceeding first against the Company, protest, notice and all demands whatsoever. (d) This Subsidiary Guarantee shall not be discharged except by complete performance of the obligations contained in the Notes and the Indenture. (e) If any Holder or the Trustee is required by any court or otherwise to return to the Company, the Guarantors, or any Custodian, Trustee, liquidator or other similar official acting in relation to either the Company or the Guarantors, any amount paid by either to the Trustee or such Holder, this Subsidiary Guarantee, to the extent theretofore discharged, shall be reinstated in full force and effect. - 2 - (f) The Guaranteeing Subsidiary shall not be entitled to any right of subrogation in relation to the Holders in respect of any obligations guaranteed hereby until payment in full of all obligations guaranteed hereby. (g) As between the Guarantors, on the one hand, and the Holders and the Trustee, on the other hand, (x) the maturity of the obligations guaranteed hereby may be accelerated as provided in Article 6 of the Indenture for the purposes of this Subsidiary Guarantee, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the obligations guaranteed hereby, and (y) in the event of any declaration of acceleration of such obligations as provided in Article 6 of the Indenture, such obligations (whether or not due and payable) shall forthwith become due and payable by the Guarantors for the purpose of this Subsidiary Guarantee. (h) The Guarantors shall have the right to seek contribution from any non-paying Guarantor so long as the exercise of such right does not impair the rights of the Holders under the Subsidiary Guarantee. (i) Notwithstanding the foregoing, in the event that this Subsidiary Guarantee would constitute or result in a violation of any applicable fraudulent conveyance or similar law of any relevant jurisdiction, the liability of the Guarantor under this Sixth Supplemental Indenture and its Subsidiary Guarantee shall be reduced to the maximum amount permissible under such fraudulent conveyance or similar law. 3. SUBORDINATION. Payment of principal, premium, if any, and interest and Liquidated Damages, if any, on the Subsidiary Guarantee is subordinated to the prior payment in full of Senior Debt on the terms provided in the Indenture. 4. EXECUTION AND DELIVERY. Each Guaranteeing Subsidiary agrees that the Subsidiary Guarantees shall remain in full force and effect notwithstanding any failure to endorse on each Note a notation of such Subsidiary Guarantee. 5. GUARANTEEING SUBSIDIARY MAY CONSOLIDATE, ETC. ON CERTAIN TERMS. (a) The Guaranteeing Subsidiary may not consolidate with or merge with or into (whether or not such Guarantor is the surviving Person) another corporation, Person or entity whether or not affiliated with such Guarantor unless: (i) subject to Section 11.05 of the Indenture, the Person formed by or surviving any such consolidation or merger (if other than a Guarantor or the Company) unconditionally assumes all - 3 - the obligations of such Guarantor, pursuant to a supplemental indenture in form and substance reasonably satisfactory to the Trustee, under the Notes, the Indenture and the Subsidiary Guarantee on the terms set forth herein or therein; and (ii) immediately after giving effect to such transaction, no Default or Event of Default exists. (b) In case of any such consolidation, merger, sale or conveyance and upon the assumption by the successor corporation, by supplemental indenture, executed and delivered to the Trustee and satisfactory in form to the Trustee, of the Subsidiary Guarantee endorsed upon the Notes and the due and punctual performance of all of the covenants and conditions of the Indenture to be performed by the Guarantor, such successor corporation shall succeed to and be substituted for the Guarantor with the same effect as if it had been named herein as a Guarantor. Such successor corporation thereupon may cause to be signed any or all of the Subsidiary Guarantees to be endorsed upon all of the Notes issuable hereunder which theretofore shall not have been signed by the Company and delivered to the Trustee. All the Subsidiary Guarantees so issued shall in all respects have the same legal rank and benefit under the Indenture as the Subsidiary Guarantees theretofore and thereafter issued in accordance with the terms of the Indenture as though all of such Subsidiary Guarantees had been issued at the date of the execution hereof. (c) Except as set forth in Articles 4 and 5 of the Indenture, and notwithstanding clauses (a) and (b) above, nothing contained in the Indenture or in any of the Notes shall prevent any consolidation or merger of a Guarantor with or into the Company or another Guarantor, or shall prevent any sale or conveyance of the property of a Guarantor as an entirety or substantially as an entirety to the Company or another Guarantor. 6. RELEASES. (a) In the event of a sale or other disposition of all of the assets of any Guarantor, by way of merger, consolidation or otherwise, or a sale or other disposition of all of the capital stock of any Guarantor, then such Guarantor (in the event of a sale or other disposition, by way of merger, consolidation or otherwise, of all of the capital stock of such Guarantor) or the corporation acquiring the property (in the event of a sale or other disposition of all or substantially all of the assets of such Guarantor) will be released and relieved of any obligations under its Subsidiary Guarantee; PROVIDED that the Net Proceeds of such sale or other disposition are applied in accordance with the applicable provisions of the Indenture, including without limitation, Section 4.10 of the Indenture. Upon delivery by the - 4 - Company to the Trustee of an Officers' Certificate and an Opinion of Counsel to the effect that such sale or other disposition was made by the Company in accordance with the provisions of the Indenture, including without limitation Section 4.10 of the Indenture, the Trustee shall execute any documents reasonably required in order to evidence the release of any Guarantor from its obligations under its Subsidiary Guarantee. (b) Any Guarantor not released from its obligations under its Subsidiary Guarantee shall remain liable for the full amount of principal of and interest on the Notes and for the other obligations of any Guarantor under the Indenture as provided in Article 11 of the Indenture. 7. NO RECOURSE AGAINST OTHERS. No past, present or future director, officer, employee, incorporator, stockholder or agent of the Guaranteeing Subsidiary, as such, shall have any liability for any obligations of the Company or any Guaranteeing Subsidiary under the Notes, any Subsidiary Guarantees, the Indenture or this Sixth Supplemental Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder of the Notes by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes. Such waiver may not be effective to waive liabilities under the federal securities laws and it is the view of the SEC that such a waiver is against public policy. 8. NEW YORK LAW TO GOVERN. THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO CONSTRUE THIS SUPPLEMENTAL INDENTURE BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY. 9. COUNTERPARTS. The parties may sign any number of copies of this Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. 10. EFFECT OF HEADINGS. The Section headings herein are for convenience only and shall not affect the construction hereof. 11. THE TRUSTEE. The Trustee shall not be responsible in any manner whatsoever for or in respect of the validity or sufficiency of this Supplemental Indenture or for or in respect of the recitals contained herein, all of which recitals are made solely by the Guaranteeing Subsidiary and the Company. - 5 - IN WITNESS WHEREOF, the parties hereto have caused this Sixth Supplemental Indenture to be duly executed and attested, all as of the date first above written. Dated: August 5, 2002 - 6 - COLUMBUS McKINNON CORPORATION By: /S/ ROBERT L. MONTGOMERY --------------------------- Name: Robert L. Montgomery Title: Executive Vice President AUDUBON WEST, INC. By: /S/ ROBERT L. MONTGOMERY --------------------------- Name: Robert L. Montgomery Title: Treasurer CRANE EQUIPMENT & SERVICE, INC. By: /S/ ROBERT L. MONTGOMERY --------------------------- Name: Robert L. Montgomery Title: Treasurer LICO STEEL, INC. By: /S/ ROBERT L. MONTGOMERY --------------------------- Name: Robert L. Montgomery Title: Treasurer YALE INDUSTRIAL PRODUCTS, INC. By: /S/ ROBERT L. MONTGOMERY --------------------------- Name: Robert L. Montgomery Title: Vice President & Treasurer AUDUBON EUROPE S.a.r.l. By: /S/ ROBERT L. MONTGOMERY --------------------------- Name: Robert L. Montgomery Title: Director By: /S/ ROMAIN THILLENS --------------------------- Name: Romain Thillens Title: Director STATE STREET BANK AND TRUST COMPANY, N.A., as Trustee By: /S/ JASON G. GREGORY --------------------------- Name: Jason G. Gregory Title: Assistant Vice President - 7 - EX-10 4 twelftham.txt EXHIBIT 10.1 TWELFTH AMENDMENT TO CREDIT AGREEMENT TWELFTH AMENDMENT TO CREDIT AGREEMENT THIS TWELFTH AMENDMENT TO CREDIT AGREEMENT (this "AMENDMENT"), dated as of September 27, 2002, is by and among COLUMBUS MCKINNON CORPORATION, a New York corporation (the "BORROWER"), the banks, financial institutions and other institutional lenders which are parties to the Credit Agreement (as such term is defined below) (the "LENDERS"), FLEET NATIONAL BANK, as Initial Issuing Bank (the "INITIAL ISSUING BANK"), FLEET NATIONAL BANK, as the Swing Line Bank (the "SWING LINE BANK"; each of the Lenders, the Initial Issuing Bank and the Swing Line Bank, individually, a "LENDER PARTY" and, collectively, the "LENDER PARTIES"), and FLEET NATIONAL BANK, as administrative agent (together with any successor appointed pursuant to Article VII of the Credit Agreement, the "ADMINISTRATIVE AGENT") for the Lender Parties. W I T N E S S E T H : ------------------- WHEREAS, the Borrower, Lenders, Initial Issuing Bank, Swing Line Bank and Administrative Agent are party to that certain Credit Agreement, dated as of March 31, 1998, as amended by that certain First Amendment to Credit Agreement, dated as of September 23, 1998, that certain Second Amendment to Credit Agreement and Consent, dated as of February 12, 1999, that certain Third Amendment to Credit Agreement and Consent, dated as of November 16, 1999, that certain Fourth Amendment to Credit Agreement and Waiver, dated as of February 15, 2000, that certain Fifth Amendment to Credit Agreement, dated as of September 28, 2000, that certain Sixth Amendment to Credit Agreement and Consent, dated as of February 5, 2001, that certain Seventh Amendment to Credit Agreement and Consent, dated as of June 26, 2001, that certain Eighth Amendment to Credit Agreement, dated as of November 21, 2001, that certain Ninth Amendment to Credit Agreement, dated as of February 12, 2002, that certain Tenth Amendment to Credit Agreement, dated as of April 16, 2002, and that certain Eleventh Amendment to Credit Agreement, dated as of June 6, 2002 (the "ELEVENTH AMENDMENT") (the Credit Agreement, as so amended and as it may hereafter be further amended, supplemented, restated, extended or otherwise modified from time to time, the "CREDIT AGREEMENT"); WHEREAS, the Borrower believes that it may be in default under the covenants set forth in Section 5.04(a) (Maximum Funded Debt to EBITDA Ratio) and Section 5.04(e) (Minimum EBITDA) of the Credit Agreement for the period ending September 29, 2002; WHEREAS, the Borrower has requested that the Administrative Agent and Lender Parties waive any defaults which may arise under such sections of the Credit Agreement for the period ending September 29, 2002; WHEREAS, the Borrower, the Administrative Agent and Lender Parties are desirous of amending the Credit Agreement as and to the extent set forth herein; WHEREAS, the Administrative Agent and Lender Parties are agreeable to the foregoing as and to the extent set forth in this Amendment and subject to each of the terms and conditions stated herein. NOW THEREFORE, in consideration of the premises and the mutual covenants set forth herein and of the loans or other extensions of credit heretofore, now or hereafter made to, or for the benefit of, the Borrower and its Subsidiaries by the Lender Parties, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows: 1. DEFINITIONS. Except to the extent otherwise specified herein, capitalized terms used in this Amendment shall have the same meanings ascribed to them in the Credit Agreement. 2. WAIVER. The Administrative Agent and Lender Parties hereby waive any Events of Default which may arise solely under Sections 5.04(a) (Maximum Funded Debt to EBITDA Ratio) and 5.04(e) (Minimum EBITDA) of the Credit Agreement solely and exclusively for the period ending September 29, 2002. The foregoing waiver is only applicable and shall only be effective in the specific instance and for the specific purpose for which made. Such waiver is expressly limited to the facts and circumstances referred to herein and shall not operate (a) as a waiver of or consent to non-compliance with any other Section or provision of the Credit Agreement or any other Loan Document, (b) as a waiver of any other right, power or remedy of the Administrative Agent or any Lender Party under the Credit Agreement or any other Loan Document or (c) as a waiver of or consent to any Default or Event of Default under the Credit Agreement or any other Loan Document, other than as expressly provided in this Section 2. 3. COVENANTS. 3.1. In addition to any amounts which may be payable by the Borrower pursuant to Sections 6.2 and 6.3 of the Eleventh Amendment, on November 15, 2002, the Borrower shall pay to the Administrative Agent, for the benefit of the Lenders, a fee in the amount of $187,500; PROVIDED, HOWEVER, that, if the Borrower has prepaid all of the outstanding Advances and terminated the Revolving Credit Facility on or before November 15, 2002, then such $187,500 fee shall not be payable. 3.2. Section 5.1 of the Eleventh Amendment is hereby restated in its entirety to read as follows: "5.1 If the Borrower has not prepaid the Revolving Credit Advances by at least $50,000,000 and correspondingly permanently reduced the Revolving Credit Facility by at least $50,000,000 on or before November 15, 2002, then: (a) on November 15, 2002, the Borrower and each of its Domestic Subsidiaries shall enter into a new cash management system, which shall include a cash collateral account, with the Administrative Agent and each bank at which the Borrower or such Subsidiary maintains a bank account, such cash management system to be in form and substance satisfactory to the Administrative Agent; and (b) from and after November 15, 2002, the Borrower shall permit the Administrative Agent to conduct at any time - 2 - and from time to time such commercial finance examinations and/or Collateral audits of the Borrower and its Subsidiaries as the Administrative Agent may request." 4. CONDITIONS PRECEDENT TO THIS AMENDMENT. The effectiveness of this Amendment is subject to the satisfaction, in form and substance satisfactory to the Administrative Agent, of each of the following conditions precedent: 4.1. The Borrower and Lenders shall have duly executed and delivered this Amendment and each other Loan Party shall have duly executed the attached Acknowledgment and Ratification in connection with this Amendment 4.2. After giving effect to this Amendment, no Default or Event of Default shall have occurred and be continuing. 4.3. The Borrower and the other Loan Parties shall have taken all such other actions and executed and delivered all such other agreements, instruments, certificates and documents, if any, as the Administrative Agent shall have reasonably requested. 5. REFERENCE TO AND EFFECT UPON THE CREDIT AGREEMENT AND OTHER LOAN DOCUMENTS. 5.1. Except as specifically set forth in this Amendment, the Credit Agreement and each of the other Loan Documents shall remain in full force and effect and each is hereby ratified and confirmed. 5.2. Upon the effectiveness of this Amendment, each reference in the Credit Agreement to "this Agreement", "hereunder", "hereof", "herein" or any other word or words of similar import shall mean and be a reference to the Credit Agreement as amended hereby, and each reference in any other Loan Document to the Credit Agreement or any word or words of similar import shall mean and be a reference to the Credit Agreement as amended hereby. 6. COUNTERPARTS. This Amendment may be executed in any number of counterparts, each of which when so executed shall be deemed an original, but all such counterparts shall constitute one and the same instrument. Delivery of an executed counterpart to this Amendment by telecopier shall be as effective as delivery of a manually executed counterpart of this Amendment. 7. COSTS AND EXPENSES. The Borrower shall pay on demand all reasonable fees, costs and expenses incurred by Administrative Agent (including, without limitation, all reasonable attorneys' fees) in connection with the preparation, execution and delivery of this Amendment and the taking of any actions by any Person in connection herewith. 8. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED TO CONFLICTS OF LAW PROVISIONS) OF THE STATE OF NEW YORK. 9. HEADINGS. Section headings in this Amendment are included herein for convenience of reference only and shall not constitute a part of this Amendment for any other purpose. - 3 - [signature pages follow] IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by their respective officers thereunto duly authorized on the date first above written. COLUMBUS MCKINNON CORPORATION By: /S/ ROBERT L. MONTGOMERY ----------------------------- Robert L. Montgomery Title: Executive Vice President ACKNOWLEDGMENT AND RATIFICATION The undersigned hereby acknowledge and agree to this Amendment, and agree that the Guaranty, the Security Agreement and the Intellectual Property Security Agreement, and each other Loan Document executed by the undersigned shall remain in full force and effect and each is hereby ratified and confirmed by and on behalf of the undersigned, this 6th day of June 2002. AUDUBON WEST, INC. By: /S/ ROBERT L. MONTGOMERY ----------------------------- Robert L. Montgomery Title: Treasurer LICO STEEL, INC. By: /S/ ROBERT L. MONTGOMERY ----------------------------- Robert L. Montgomery Title: Treasurer CRANE EQUIPMENT & SERVICE, INC. By: /S/ ROBERT L. MONTGOMERY ----------------------------- Robert L. Montgomery Title: Treasurer YALE INDUSTRIAL PRODUCTS, INC. By: /S/ ROBERT L. MONTGOMERY ----------------------------- Robert L. Montgomery Title: Treasurer AUDUBON EUROPE S.A.R.L. By: /S/ ROBERT L. MONTGOMERY ----------------------------- Robert L. Montgomery Title: Director LENDERS FLEET NATIONAL BANK, as Administrative Agent, Initial Issuing Bank, Swing Line Bank and Lender By: /S/ JOHN C. WRIGHT ----------------------------- Name: John C. Wright Title: Vice President LENDERS THE BANK OF NOVA SCOTIA, as a Co-Agent and Lender By: /S/ PAUL A. WEISSENBERGER ----------------------------- Name: P.A. Weissenberger Title: Authorized Signatory LENDERS MANUFACTURERS AND TRADERS TRUST COMPANY, as a Co-Agent and Lender By: /S/ JEFFREY P. KENEFICK ----------------------------- Name: Jeffrey P. Kenefick Title: Vice President LENDERS HSBC BANK USA (formerly known as Marine Midland Bank), as a Co-Agent and Lender By: /S/ JOHN G. TIERNEY ----------------------------- Name: John G. Tierney Title: Vice President LENDERS COMERICA BANK By: /S/ JOEL S. GORDON ----------------------------- Name: Joel S. Gordon Title: Assistant Vice President LENDERS WACHOVIA BANK, NA By: /S/ JORGE A. GONZALEZ ----------------------------- Name: Jorge A. Gonzalez Title: Managing Director LENDERS KEYBANK NATIONAL ASSOCIATION By: /S/ MARY K. YOUNG ----------------------------- Name: Mary K. Young Title: Vice President LENDERS THE BANK OF NEW YORK By: /S/ CHRISTINE T. RIO ----------------------------- Name: Christine T. Rio Title: Vice President EX-10 5 isoamen2.txt EXHIBIT 10.2 2ND AMENDMENT TO ISO PLAN SECOND AMENDMENT TO COLUMBUS MCKINNON CORPORATION 1995 INCENTIVE STOCK OPTION PLAN AS AMENDED AND RESTATED WHEREAS, the Columbus McKinnon Corporation 1995 Incentive Stock Option Plan was adopted by the Board of Directors of Columbus McKinnon Corporation (the "Company") on October 27, 1995 and approved by the shareholders of the Company on January 8, 1996; and WHEREAS, an amendment and restatement of said plan was adopted by the Company's Board of Directors effective June 16, 1999 and approved by the Company's shareholders on August 16, 1999 (said plan as amended and restated is hereinafter referred to as the "Plan"); and WHEREAS, the Plan was amended by the First Amendment to Columbus McKinnon Corporation 1995 Incentive Stock Option, which amendment was effective August 19, 2002; and WHEREAS, the Company reserved the right to amend the Plan and desires to further amend the Plan; NOW, THEREFORE, the Plan is hereby amended in the following respect: Section 10 of the Plan is deleted in its entirety and the following is substituted in lieu thereof: "10. AMENDMENT AND TERMINATION OF PLAN. The Board of Directors of the Company may at any time suspend, amend or terminate the Plan; provided, however, that except as permitted in Section 13 hereof, no amendment or modification of the Plan which would: (a) increase the maximum aggregate number of shares as to which options may be granted hereunder (except as contemplated in Section 5); or (b) reduce the option price or change the method of determining the option price; or (c) increase the time for exercise of options to be granted or those which are outstanding beyond a term of ten (10) years; or (d) change the designation of the employees or class of employees eligible to receive options under this Plan; or (e) otherwise materially increase the benefits to participants under this Plan, may be adopted unless with the approval of the holders of a majority of the outstanding shares of Common Stock represented at a meeting of the Company's shareholders, or with the consent of the holders of a majority of the outstanding shares of Common Stock. No amendment, suspension or termination of the Plan may, without the consent of a holder of an option, terminate such option or adversely affect such holder's rights with respect to such option in any material respect." This Amendment shall be effective on August 24, 2002. Except as otherwise amended herein, the Plan shall remain unchanged and in full force and effect. IN WITNESS WHEREOF, the Company has caused this instrument to be executed by its duly authorized officer this 24th day of August, 2002. COLUMBUS MCKINNON CORPORATION BY /S/ ROBERT L. MONTGOMERY ------------------------ Robert L. Montgomery Executive Vice President EX-10 6 resamen2.txt EXHIBIT 10.3 2ND AMENDMENT TO RESTRICTED STOCK PLAN SECOND AMENDMENT TO COLUMBUS MCKINNON CORPORATION RESTRICTED STOCK PLAN WHEREAS, the Columbus McKinnon Corporation Restricted Stock Plan (the "Plan") was adopted by Columbus McKinnon Corporation (the "Company") on October 27, 1995; and WHEREAS, the Plan was amended by the First Amendment to Columbus McKinnon Corporation Restricted Stock Plan, which became effective on August 19, 2002; WHEREAS, the Company reserved the right to amend the Plan and desires to further amend the Plan; NOW, THEREFORE, the Plan is hereby amended in the following respect: Section 16 is amended by adding the following sentence at the end thereof: "Further notwithstanding the foregoing provisions of this Section 16, any amendment to this Plan that would materially increase the benefits to participants hereunder shall be subject to the requisite approval of the shareholders of the Company." This Amendment shall be effective as of August 24, 2002. Except as otherwise amended herein, the Plan shall remain unchanged and in full force and effect. IN WITNESS WHEREOF, the Company has caused this instrument to be executed by its duly authorized officer this 24th day of August, 2002. COLUMBUS MCKINNON CORPORATION BY /S/ ROBERT L. MONTGOMERY ------------------------ Robert L. Montgomery Executive Vice President EX-10 7 cm401amen4.txt EXHIBIT 10.4 4TH AMENDMENT TO 401(K) PLAN COLUMBUS MCKINNON CORPORATION THRIFT 401(K) PLAN AMENDMENT NO. 4 OF THE 1998 PLAN RESTATEMENT Columbus McKinnon Corporation (the "Corporation") hereby amends the Columbus McKinnon Corporation Thrift 401(K) Plan (the "Plan"), as amended and restated in its entirety effective January 1, 1998, and as further amended by Amendment Nos. 1, 2 and 3, as permitted under Section 14.1 of the Plan, as follows: 1. New Schedule D, entitled "Special Rules for Divested Employees" is added to the Plan effective May 1, 2002, to read as follows: "SCHEDULE D SPECIAL RULES FOR DIVESTED EMPLOYEES SD.1 SALE OF ASSETS OF AUTOMATIC SYSTEMS, INC. (A) TRANSFER OF ACCOUNT BALANCES TO NEW PLAN. NOTWITHSTANDING SECTION 8.1 NOR ANY OTHER SECTION OF THE PLAN, ALL ACCOUNT BALANCES OF PARTICIPANTS ("TRANSFERRED EMPLOYEES") IN THE PLAN WHO CEASE TO BE EMPLOYEES IN CONNECTION WITH THE SALE OF ASSETS ASSOCIATED WITH AUTOMATIC SYSTEMS, INC. BY THE CORPORATION AND AUTOMATIC SYSTEMS, INC. TO ASI ACQUISITION CORP. OR ANOTHER UNRELATED ENTITY ("BUYER") SHALL BE TRANSFERRED FROM THE PLAN TO A NEW 401(K) PLAN (THE "NEW PLAN") ESTABLISHED BY THE BUYER BY MEANS OF A TRUSTEE-TO-TRUSTEE TRANSFER. (B) TIME OF TRANSFER. THE TRANSFER OF ACCOUNT BALANCES PURSUANT TO THIS SECTION SD.1 SHALL OCCUR ON THE DATE OF THE CLOSING OF THE SALE OF ASSETS TO THE BUYER OR SUCH LATER DATE AS SHALL BE DETERMINED BY THE CORPORATION BUT, IN ALL EVENTS, AS SOON AS PRACTICABLE AFTER THE CLOSING. (C) VESTING. TO THE EXTENT THAT A TRANSFERRED EMPLOYEE IS NOT FULLY VESTED IN HIS ACCOUNT BALANCE AT THE TIME OF TRANSFER TO THE NEW PLAN, HIS VESTING STATUS SHALL BE DETERMINED UNDER THE PROVISIONS OF THE NEW PLAN. (D) FORM OF TRANSFERRED ASSETS. ANY PORTION OF A TRANSFERRED EMPLOYEE'S ACCOUNT BALANCE COMPRISED OF LOAN(S) TO THE TRANSFERRED EMPLOYEE SHALL BE TRANSFERRED TO THE NEW PLAN IN-KIND. THE REMAINDER OF THE TRANSFERRED EMPLOYEE'S ACCOUNT BALANCE SHALL BE TRANSFERRED IN CASH AND/OR IN-KIND AS REQUESTED BY THE ADMINISTRATOR OF THE NEW PLAN BUT SUBJECT TO ANY RESTRICTIONS ON TRANSFERS IN-KIND IMPOSED ON THE PLAN WITH RESPECT TO A GIVEN INVESTMENT." Columbus McKinnon Corporation Thrift 401(k) Plan Page 2 of Amendment No. 4 of the 1998 Plan Restatement IN WITNESS WHEREOF, this instrument of amendment has been executed by a duly authorized officer of the Corporation this 10th day of May, 2002. COLUMBUS McKINNON CORPORATION By /S/ ROBERT L. MONTGOMERY -------------------------- Title EXECUTIVE VICE PRESIDENT -------------------------- EX-99 8 ceo.txt EXHIBIT 99.1 CEO CERTIFICATION EXHIBIT 99.1 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report of Columbus McKinnon Corporation (the "Company") on Form 10-Q for the period ending June 30, 2002 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Timothy T. Tevens, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the Sarbanes-Oxley Act of 2002, that: (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. Dated: November 13, 2002 /S/ TIMOTHY T. TEVENS ---------------------- Timothy T. Tevens, Chief Executive Officer EX-99 9 cfo.txt EXHIBIT 99.2 CFO CERTIFICATION EXHIBIT 99.2 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report of Columbus McKinnon Corporation (the "Company") on Form 10-Q for the period ending June 30, 2002 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Robert L. Montgomery, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the Sarbanes-Oxley Act of 2002, that: (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. Dated: November 13, 2002 /S/ ROBERT L. MONTGOMERY, JR. ----------------------------- Robert L. Montgomery, Jr. Chief Financial Officer -----END PRIVACY-ENHANCED MESSAGE-----