-----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, RKihAxd7xBpa4kSBCJU7jOfEoQ5G1Ypvty2Dem0NWk43/j5zoiKQey1EkPXv2M9c yF5lCL5Nf5zifJ019DV+tw== 0001005229-98-000017.txt : 19981113 0001005229-98-000017.hdr.sgml : 19981113 ACCESSION NUMBER: 0001005229-98-000017 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19980927 FILED AS OF DATE: 19981112 FILER: COMPANY DATA: COMPANY CONFORMED NAME: COLUMBUS MCKINNON CORP CENTRAL INDEX KEY: 0001005229 STANDARD INDUSTRIAL CLASSIFICATION: CONSTRUCTION MACHINERY & EQUIP [3531] IRS NUMBER: 160547600 STATE OF INCORPORATION: NY FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-27618 FILM NUMBER: 98744438 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 FILER: COMPANY DATA: COMPANY CONFORMED NAME: LICO INC CENTRAL INDEX KEY: 0001062619 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 431234309 STATE OF INCORPORATION: MO FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 333-53759-03 FILM NUMBER: 98744439 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 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] STATE OF INCORPORATION: MO FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 333-53759-04 FILM NUMBER: 98744440 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 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 430978181 STATE OF INCORPORATION: MO FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 333-53759-05 FILM NUMBER: 98744441 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: YALE INDUSTRIAL PRODUCTS INC CENTRAL INDEX KEY: 0001062624 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 710585582 STATE OF INCORPORATION: MO FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 333-53759-06 FILM NUMBER: 98744442 BUSINESS ADDRESS: STREET 1: 140 JOHN JAMES AUDUBON PARKWAY CITY: AMHERST STATE: NY ZIP: 19228-1197 BUSINESS PHONE: 7166895400 10-Q 1 SECOND QUARTER 10-Q 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 27, 1998 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 30, 1998 was: 13,768,358 shares. FORM 10-Q INDEX COLUMBUS MCKINNON CORPORATION SEPTEMBER 27, 1998 PAGE # ------ PART I. FINANCIAL INFORMATION Item 1. Condensed Consolidated Financial Statements (Unaudited) Condensed consolidated balance sheets - September 27, 1998 and March 31, 1998 2 Condensed consolidated statements of income and retained earnings - Three months and six months ended September 27, 1998 and September 28, 1997 3 Condensed consolidated statements of cash flows - Six months ended September 27, 1998 and September 28, 1997 4 Condensed consolidated statements of comprehensive income - Three months and six months ended September 27, 1998 and September 28, 1997 5 Notes to condensed consolidated financial statements - September 27, 1998 6 Item 2. Management's Discussion and Analysis of Results of Operations and Financial Condition 11 PART II. OTHER INFORMATION Item 1. Legal Proceedings 17 Item 2. Changes in Securities - none. 17 Item 3. Defaults upon Senior Securities - none. 17 Item 4. Submission of Matters to a Vote of Security Holders 17 Item 5. Other Information - none. 17 Item 6. Exhibits and Reports on Form 8-K 17 - 1 - PART I. FINANCIAL INFORMATION Item 1. Condensed Consolidated Financial Statements (Unaudited)
COLUMBUS MCKINNON CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) SEPTEMBER 27, MARCH 31, 1998 1998 -------- -------- (IN THOUSANDS) ASSETS: Current assets: Cash and cash equivalents $ 17,132 $ 22,841 Trade accounts receivable 131,233 113,509 Unbilled revenues 16,659 19,634 Inventories 103,885 107,673 Net assets held for sale 8,993 10,396 Prepaid expenses 6,711 9,969 -------- -------- Total current assets 284,613 284,022 Net property, plant, and equipment 80,747 81,927 Goodwill and other intangibles, net 355,977 368,137 Marketable securities 15,980 16,665 Deferred taxes on income 6,859 7,534 Other assets 8,697 5,463 -------- -------- Total assets $752,873 $763,748 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY: Current liabilities: Notes payable to banks $ 2,660 $ 2,801 Trade accounts payable 39,381 53,901 Excess billings 4,853 3,290 Accrued liabilities 45,987 43,065 Current portion of long-term debt 1,425 1,456 -------- -------- Total current liabilities 94,306 104,513 Senior debt, less current portion 244,270 247,388 Subordinated debt 199,468 199,468 Other non-current liabilities 37,843 45,857 -------- -------- Total liabilities 575,887 597,226 Shareholders' equity: Common stock 137 137 Additional paid-in capital 97,248 96,544 Retained earnings 85,473 76,187 ESOP debt guarantee (2,767) (3,203) Unearned restricted stock (394) (538) Total accumulated other comprehensive income (loss) (2,711) (2,605) -------- -------- Total shareholders' equity 176,986 166,522 -------- -------- Total liabilities and shareholders' equity $752,873 $763,748 ======== ========
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 27, SEPTEMBER 28, SEPTEMBER 27, SEPTEMBER 28, 1998 1997 1998 1997 ---- ---- ---- ---- (IN THOUSANDS, EXCEPT PER SHARE DATA) Net sales $168,634 $123,907 $339,138 $248,349 Cost of products sold 126,234 88,071 253,283 177,310 ------- ------- ------- ------- Gross profit 42,400 35,836 85,855 71,039 ------- ------- ------- ------- Selling expenses 12,461 10,628 24,941 21,793 General and administrative expenses 7,213 5,993 14,109 12,336 Amortization of intangibles 3,847 2,545 7,607 5,094 ------- ------- ------- ------- 23,521 19,166 46,657 39,223 ------- ------- ------- ------- Income from operations 18,879 16,670 39,198 31,816 Interest and debt expense 8,978 5,910 17,596 12,435 Interest and other income 262 328 633 644 ------- ------- ------- ------- Income before income taxes 10,163 11,088 22,235 20,025 Income tax expense 5,078 5,458 11,066 9,964 ------- ------- ------- ------- Net income 5,085 5,630 11,169 10,061 Retained earnings - beginning of period 81,330 64,497 76,187 60,999 Cash dividends of $0.07, $0.07, $0.14 and $0.14 per share (942) (933) (1,883) (1,866) ------- ------- ------- ------- Retained earnings - end of period $85,473 $69,194 $85,473 $69,194 ======= ======= ======= ======= Earnings per share data, both basic and diluted: $0.38 $0.42 $0.83 $0.75 ===== ===== ===== =====
See accompanying notes to condensed consolidated financial statements. - 3 -
COLUMBUS MCKINNON CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) SIX MONTHS ENDED ---------------- SEPTEMBER 27, SEPTEMBER 28, 1998 1997 ---- ---- (IN THOUSANDS) OPERATING ACTIVITIES: Net income $ 11,169 $ 10,061 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 13,231 9,539 Other 1,166 347 Changes in operating assets and liabilities net of effects from businesses purchased and sold: Trade accounts receivable (18,940) (4,906) Unbilled revenues and excess billings 4,538 - Inventories 1,656 210 Prepaid expenses (67) 769 Other assets (367) (284) Trade accounts payable (14,231) (4,900) Accrued and non-current liabilities 4,072 5,132 --------- -------- Net cash provided by operating activities 2,227 15,968 --------- -------- INVESTING ACTIVITIES: Purchase of marketable securities, net of sales 438 (1,687) Capital expenditures (5,363) (3,280) Proceeds from sale of businesses 9,301 - Purchases of businesses, net of cash (7,323) - Net assets held for sale 1,403 (324) Other - (148) --------- --------- Net cash used in investing activities (1,544) (5,439) ---------- --------- FINANCING ACTIVITIES: Net payments under revolving line-of-credit agreements (2,741) (1,526) Repayment of debt (549) (7,093) Dividends paid (1,883) (1,866) Reduction of ESOP debt guarantee 436 407 Other (891) (558) ---------- --------- Net cash used in financing activities (5,628) (10,636) Effect of exchange rate changes on cash (764) (730) ---------- --------- Net change in cash and cash equivalents (5,709) (837) Cash and cash equivalents at beginning of period 22,841 8,907 --------- -------- Cash and cash equivalents at end of period $ 17,132 $ 8,070 ========= ========
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 27, SEPTEMBER 28, SEPTEMBER 27, SEPTEMBER 28, 1998 1997 1998 1997 ---- ---- ---- ---- (IN THOUSANDS) Net income $ 5,085 $ 5,630 $ 11,169 $ 10,061 ---------- ---------- ---------- ---------- Other comprehensive income (loss), net of tax: Foreign currency translation adjustments 360 (219) 143 (957) Unrealized gains on investments: Unrealized holding gains arising during the period (268) 304 (221) 801 Less: reclassification adjustment for gains included in net income 48 (158) (28) (247) ---------- ---------- ---------- ---------- (220) 146 (249) 554 ---------- ---------- ---------- ---------- Total other comprehensive income (loss) 140 (73) (106) (403) ---------- ---------- ---------- ---------- Comprehensive income $ 5,225 $ 5,557 $ 11,063 $ 9,658 ========== ========== ========== ==========
See accompanying notes to condensed consolidated financial statements. - 5 - COLUMBUS MCKINNON CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) SEPTEMBER 27, 1998 1. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of the financial position of the Company at September 27, 1998, and the results of its operations and its cash flows for the three and six month periods ended September 27, 1998 and September 28, 1997, have been included. Results for the period ended September 27, 1998 are not necessarily indicative of the results that may be expected for the year ended March 31, 1999. 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, 1998. 2. Inventories consisted of the following: SEPTEMBER 27, MARCH 31, 1998 1998 ------------------------------- (IN THOUSANDS) At cost - FIFO basis: Raw materials $ 47,835 $ 52,158 Work-in-process 17,401 22,188 Finished goods 42,399 37,089 ----------- ----------- 107,635 111,435 LIFO cost less than FIFO cost (3,750) (3,762) ----------- ----------- $ 103,885 $ 107,673 =========== =========== 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 $35,722,000 and $30,876,000 of accumulated depreciation at September 27, 1998 and March 31, 1998, respectively. 4. Goodwill and other intangibles, net includes $21,993,000 and $14,979,000 of accumulated amortization at September 27, 1998 and March 31, 1998, respectively. 5. General and Product Liability - 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 past experience, for losses incurred but not reported. The accrual in these condensed consolidated financial statements was determined by applying a discount factor based on interest rates customarily used in the insurance industry. - 6 - Yale was self-insured for product liability claims up to a maximum of $500,000 per occurrence and maintained product liability insurance with a $100 million cap per occurrence through July 31, 1997 when Yale was added to the Company's coverage as described above. The Company has been advised that a customer has alleged that one of Yale's products was the cause of a fire that occurred in January 1995 at a manufacturing facility, resulting in losses in excess of Yale's policy limits. A formal complaint has been filed seeking damages in excess of $500 million. However, it is the opinion of management that there was no manufacturing defect and that the claim will in all likelihood be settled within the Company's policy limits. 6. To manage its exposure to interest rate fluctuations, the Company has interest rate swaps with a notional value of $22 million through January 2, 1999 and $3.5 million from January 2, 1999 through July 2, 2002, both based on LIBOR at 5.9025%. The Company also has LIBOR-based interest rate caps on $40 million of debt through December 16, 1998 and on an additional $49.5 million of debt through December 16, 1999 at 9% and 10%, respectively. Net payments or receipts under the swap and cap agreements are recorded as adjustments to interest expense. The carrying amount of the Company's senior debt instruments approximates the fair values. The Company's subordinated debt has an approximate fair value of $184,000,000, which is less than its carrying amount of $199,468,000. 7. The following table sets forth the computation of basic and diluted earnings per share before extraordinary charge for debt extinguishment:
THREE MONTHS ENDED SIX MONTHS ENDED ------------------ ---------------- SEPTEMBER 27, SEPTEMBER 28, SEPTEMBER 27, SEPTEMBER 28, 1998 1997 1998 1997 ---- ---- ---- ---- Numerator for basic and diluted earnings per share: Income before extraordinary charge $5,085,000 $5,630,000 $11,169,000 $10,061,000 ========== ========== =========== =========== Denominators: Weighted-average common stock outstanding - denominator for basic EPS 13,456,000 13,352,000 13,444,000 13,340,000 Effect of dilutive employee stock options 47,000 53,000 66,000 41,000 ---------- ---------- ---------- ---------- Adjusted weighted-average common stock outstanding and assumed conversions - denominator for diluted EPS 13,503,000 13,405,000 13,510,000 13,381,000 ========== ========== ========== ==========
8. Income tax expense for the three month periods ended September 27, 1998 and September 28, 1997 and also for the six month periods then ended exceeds the customary relationship between income tax expense and income before income taxes due to nondeductible amortization of goodwill of $3,847,000, $2,545,000, $7,607,000, and $5,094,000, respectively. 9. On August 21, 1998 the Company acquired the net assets of the Abell-Howe Crane division ("Abell-Howe") of Abell-Howe Company, a regional manufacturer of jib, gantry, and bridge cranes. The total cost of the acquisition, which was accounted for as a purchase, was approximately $7 million of cash and was financed by proceeds from the Company's revolving debt facility. - 7 - On August 7, 1998 the Company sold its Mechanical Products division, a producer of circuit protection devices, for $12 million, consisting of $9.6 million of cash and a $2.4 million note receivable, to Mechanical Products' senior management team. On March 31, 1998 the Company acquired all of the outstanding stock of LICO, Inc. ("LICO"), a leading designer, manufacturer and installer of custom conveyor and automated material handling systems primarily for the automotive industry and, to a lesser extent, the steel and other industrial markets. The total cost of the acquisition, which was accounted for as a purchase, was approximately $155 million of cash, which was financed by proceeds from the Company's new revolving debt facility and a private placement of senior subordinated notes, both of which also closed effective March 31, 1998. On January 7, 1998 the Company acquired all of the outstanding stock of Univeyor A/S ("Univeyor"), a Denmark-based designer, manufacturer and distributor of automated material handling systems, and has accounted for the acquisition as a purchase. The cost of the acquisition was approximately $15 million of cash financed by the Company's revolving debt facility, plus the assumption of certain debt. The following table presents pro forma summary information for the six month periods ended September 27, 1998 and September 28, 1997 as if the Mechanical Products sale, Abell-Howe, LICO and Univeyor acquisitions, and related borrowings had occurred as of April 1, 1997, which is the beginning of fiscal 1998. The pro forma information is provided for informational purposes only. It is based on historical information and does not necessarily reflect the actual results that would have occurred nor is it necessarily indicative of future results of operations of the combined enterprise: SIX MONTHS ENDED ---------------- SEPTEMBER 27, 1998 SEPTEMBER 28, 1997 ------------------ ------------------ (IN THOUSANDS, EXCEPT PER SHARE DATA) Pro forma: Net sales $ 335,836 $ 322,615 Income from operations 38,818 35,365 Net income 11,087 8,729 Earnings per share, both basic and diluted 0.82 0.65 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 27, 1998 Current assets: Cash and cash equivalents $ 17,038 $ (3,526) $ 3,620 $ - $ 17,132 Trade accounts receivable 57,073 56,209 17,951 - 131,233 Unbilled revenues - 16,659 - - 16,659 Inventories 46,479 34,806 22,802 (202) 103,885 Other current assets 1,742 10,156 3,806 - 15,704 ------------------------------------------------------------ Total current assets 122,332 114,304 48,179 (202) 284,613 Net property, plant, and equipment 34,567 29,676 16,504 - 80,747 Goodwill and other intangibles, net 43,511 263,960 48,506 - 355,977 Intercompany 214,865 (380,000) (64,073) 229,208 (0) Other assets 218,229 161,251 (1,811) (346,133) 31,536 ------------------------------------------------------------ Total assets $ 633,504 $ 189,191 $ 47,305 $ (117,127) $ 752,873 ============================================================ - 8 - Current liabilities $ 31,098 $ 45,645 $ 17,817 $ (254) $ 94,306 Long-term debt, less current portion 441,088 103 2,547 - 443,738 Other non-current liabilities 10,725 24,103 3,015 - 37,843 ------------------------------------------------------------ Total liabilities 482,911 69,851 23,379 (254) 575,887 Shareholders' equity 150,593 119,340 23,926 (116,873) 176,986 ------------------------------------------------------------ Total liabilities and shareholders' equity $ 633,504 $ 189,191 $ 47,305 $ (117,127) $ 752,873 ============================================================ FOR THE SIX MONTHS ENDED SEPTEMBER 27, 1998 Net sales $ 130,613 $ 166,862 $ 48,050 $ (6,387) $ 339,138 Cost of products sold 93,092 132,050 34,528 (6,387) 253,283 ------------------------------------------------------------ Gross profit 37,521 34,812 13,522 - 85,855 ------------------------------------------------------------ Selling, general and administrative expenses 17,372 12,503 9,175 - 39,050 Amortization of intangibles 976 5,577 1,054 - 7,607 ------------------------------------------------------------ 18,348 18,080 10,229 - 46,657 ------------------------------------------------------------ Income from operations 19,173 16,732 3,293 - 39,198 Interest and debt expense 17,358 73 165 - 17,596 Interest and other income 752 50 (169) - 633 ------------------------------------------------------------ Income before income taxes 2,567 16,709 2,959 - 22,235 Income tax expense 1,375 8,134 1,557 - 11,066 ------------------------------------------------------------ Net income $ 1,192 $ 8,575 $ 1,402 $ - $ 11,169 ============================================================ FOR THE SIX MONTHS ENDED SEPTEMBER 27, 1998 OPERATING ACTIVITIES: Net cash (used in) provided by operating activities $ 5,414 $ (4,456) $ 1,219 $ 50 $ 2,227 ------------------------------------------------------------ INVESTING ACTIVITIES: Purchase of marketable securities, net 438 - - - 438 Capital expenditures (3,720) (449) (1,194) - (5,363) Proceeds from sale of businesses 9,390 (89) - - 9,301 Purchases of businesses, net of cash (7,000) (323) - - (7,323) Other - 1,403 - - 1,403 ------------------------------------------------------------ Net cash used in investing activities (892) 542 (1,194) - (1,544) ------------------------------------------------------------ FINANCING ACTIVITIES: Net payments under revolving line-of-credit agreements (2,600) - (141) - (2,741) Repayment of debt (537) (380) 368 - (549) Dividends paid (1,883) - - - (1,883) Other (455) - - - (455) ------------------------------------------------------------ Net cash used in financing activities (5,475) (380) 227 - (5,628) ------------------------------------------------------------ Effect of exchange rate changes on cash - - (714) (50) (764) ------------------------------------------------------------ Net change in cash and cash equivalents (953) (4,294) (462) - (5,709) Cash and cash equivalents at beginning of period 17,991 768 4,082 - 22,841 ------------------------------------------------------------ Cash and cash equivalents at end of period $ 17,038 $ (3,526) $ 3,620 $ - $ 17,132 ============================================================
11. During October 1998 the Company repurchased 479,900 shares of its common stock for a total consideration of $7,682,000. These shares were deposited in the Employee Stock Ownership Plan and are owned by such plan. - 9 - 12. The Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 130 "Reporting Comprehensive Income," which the Company adopted for the interim reporting period ending June 28, 1998. Statement No. 130 establishes new rules for the reporting and display of comprehensive income and its components. This includes unrealized gains and losses on the Company's available-for-sale securities, foreign currency translation adjustments, and minimum pension liability adjustments, which previously were reported in shareholders' equity and will now be included and disclosed in total comprehensive income. Compliance with this Statement does not impact financial position, net income or cash flows. The FASB also issued FAS Statement No. 131 "Disclosures about Segments of an Enterprise and Related Information," which the Company will adopt for the year ended March 31, 1999. Statement No. 131 superseded FAS Statement No. 14 "Financial Reporting for Segments of a Business Enterprise." Statement No. 131 establishes new standards for determining segment criteria and annual and interim reporting of that data. It also establishes new disclosures about products, geographic areas and major customers. Currently, the company reports one operating segment under Statement No. 14 and, while the impact of compliance with Statement No. 131 has not yet been determined, the Company expects to report at least two segments upon its adoption. - 10 - Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION OVERVIEW Excluding the recent acquisitions of LICO and Univeyor on March 31, 1998 and January 7, 1998, respectively, the Company's products are sold, domestically and internationally, principally to third party distributors in commercial and consumer distribution channels, and to a lesser extent directly to manufacturers and other end-users. These are referred to as "Products" sales. Commercial distribution channels include general distributors, specialty distributors, service-after-sale distributors and original equipment manufacturers ("OEMs"). 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. Company products are also sold to OEMs, and to the U.S. and Canadian governments. Consumer distribution channels include mass merchandisers, hardware distributors, trucking and transportation distributors, farm hardware distributors and rental outlets. LICO and Univeyor sales, as well as those of previously existing specialty divisions, are made primarily to end-users. These are referred to as "Solutions" sales. LICO's sales are concentrated in the domestic automotive industry and, to a lesser extent, the steel, construction and other industrial markets. Univeyor's sales are made to automotive, consumer products manufacturing, warehousing and other industrial markets, primarily in Europe. RESULTS OF OPERATIONS Three Months and Six Months Ended September 27, 1998 and September 28, 1997 Net sales in the fiscal 1999 quarter ended September 27, 1998 were $168,634,000, an increase of $44,727,000 or 36.1% over the fiscal 1998 quarter ended September 28, 1997. Net sales for the six months ended September 27, 1998 were $339,138,000, an increase of $90,789,000 or 36.6% over the six months ended September 28, 1997. Sales growth during the current quarter was due primarily to the March 1998 LICO acquisition and January 1998 Univeyor acquisition. The impact of the August 1998 sale of the Mechanical Products division resulted in a decrease in sales of $2,446,000 for the quarter ended September 27, 1998 compared to the quarter ended September 28, 1997. Excluding the effects of the acquisitions and the divestiture, compared with the prior year quarter, the Company experienced consistent sales volume through certain of its commercial distribution channels due to solid demand in the marketplace. This was offset by softness in the international and consumer market channels. Softness resulted from the effect of the General Motors strike, the impact of the Asian economic situation and also a shift in demand from small retail hardware stores to larger do-it-yourself superstores, to which the Company supplies only a small share. In addition, list price increases of approximately 4% were introduced in both December 1997 and November/December 1996 affecting many of the Company's hoist, chain and forged products sold in its domestic commercial markets. Sales in the Products and Solutions segments were as follows, in thousands of dollars and with percentage changes for each group: - 11 -
THREE MONTHS ENDED SIX MONTHS ENDED ------------------ ---------------- SEPT. 27, SEPT. 28, CHANGE SEPT. 27 SEPT. 28 CHANGE ------ ------ 1998 1997 AMOUNT % 1998 1997 AMOUNT % ---- ---- ------ - ---- ---- ------ - (IN THOUSANDS, EXCEPT PERCENTAGES) Products $ 115,998 $ 118,304 $ (2,306) (1.9) $ 233,923 $ 237,479 $ (3,556) (1.5) Solutions 55,906 8,788 47,118 536.2 111,602 16,944 94,658 558.7 Intercompany Eliminations (3,270) (3,185) (85) (2.7) (6,387) (6,074) (313) (5.2) --------- --------- -------- ---------- --------- -------- Net sales $ 168,634 $ 123,907 $ 44,727 36.1 $ 339,138 $ 248,349 $ 90,789 36.6 ========= ========= ======== ========== ========= ========
The Company's gross profit margins were approximately 25.1%, 28.9%, 25.3% and 28.6% for the fiscal 1999 and 1998 quarters and the six months then ended, respectively. The decrease in gross profit margin in the current quarter and six month periods resulted from the inclusion of the LICO and Univeyor operations. These design and engineer-to-order businesses typically experience gross profit margins of approximately 20%, which is lower than the Company's margins in its product-oriented businesses. Selling expenses were $12,461,000, $10,628,000, $24,941,000 and $21,793,000 in the fiscal 1999 and 1998 quarters and the six months then ended, respectively. The 1999 expenses were impacted by the addition of LICO and Univeyor activities. As a percentage of consolidated net sales, selling expenses were 7.4%, 8.6%, 7.4% and 8.8% in the fiscal 1999 and 1998 quarters and the six months then ended, respectively. The more favorable percentages in the fiscal 1999 quarter and the six month period are primarily due to low selling expenses relative to sales for LICO and Univeyor, which is normal for these businesses. General and administrative expenses were $7,213,000, $5,993,000, $14,109,000 and $12,336,000 in the fiscal 1999 and 1998 quarters and the six months then ended, respectively. The 1999 expenses were impacted by the addition of LICO and Univeyor activities. As a percentage of consolidated net sales, general and administrative expenses were 4.3%, 4.8%, 4.2% and 5.0% in the fiscal 1999 and 1998 quarters and the six months then ended, respectively. The improved percentages result from continued integration of acquisitions and the fixed nature of costs in relation to the increased sales. Amortization of intangibles was $3,847,000, $2,545,000, $7,607,000 and $5,094,000 in the fiscal 1999 and 1998 quarters and the six months then ended, respectively. The fiscal 1999 increase is due to the amortization of goodwill resulting from the acquisitions of LICO and Univeyor. As a result of the above, income from operations increased $2,209,000 or 13.3% in the fiscal 1999 quarter and $7,382,000 or 23.2% in the fiscal 1999 six month period compared to the respective periods in fiscal 1998. This is based on income from operations of $18,879,000, $16,670,000, $39,198,000 and $31,816,000 or 11.2%, 13.5%, 11.6% and 12.8% as a percentage of consolidated net sales in the fiscal 1999 and 1998 quarters and six months then ended, respectively. Interest and debt expense was $8,978,000, $5,910,000, $17,596,000 and $12,435,000 in the fiscal 1999 and 1998 quarters and the six months then ended, respectively. The fiscal 1999 increase is primarily due to debt incurred to finance the LICO acquisition. As a percentage of consolidated net sales, interest and debt expense was 5.3%, 4.8%, 5.2% and 5.0% in the fiscal 1999 and 1998 quarters and the six months then ended, respectively. - 12 - Interest and other income was $262,000, $328,000, $633,000 and $644,000 in the fiscal 1999 and 1998 quarters and the six months then ended, respectively. The fiscal 1999 decrease is due to decreases in the investment return on marketable securities held for settlement of a portion of the Company's general and products liability claims. Income taxes as a percentage of income before income taxes were 50.0%, 49.2%, 49.8% and 49.8% in the fiscal 1999 and 1998 quarters and the six months then ended, respectively. The percentages reflect the effect of nondeductible amortization of goodwill resulting from acquisitions. As a result of the above, net income decreased $545,000 or 9.7% for the quarter and increased $1,108,000 or 11.0% for the six months then ended. As a percentage of consolidated net sales, net income was 3.0%, 4.5%, 3.3% and 4.1% in the fiscal 1999 and 1998 quarters and the six months then ended, respectively. LIQUIDITY AND CAPITAL RESOURCES On August 21, 1998 the Company acquired the net assets of the Abell-Howe Crane division of Abell-Howe Company, a regional manufacturer of jib, gantry, and bridge cranes. The total cost of the acquisition, which was accounted for as a purchase, was approximately $7 million of cash, and was financed by proceeds from the Company's revolving debt facility. On August 7, 1998 the Company sold its Mechanical Products division, a producer of circuit controls and protection devices, for $12 million, consisting of $9.6 million of cash and a $2.4 million note receivable, to Mechanical Products' senior management team. On March 31, 1998, the Company acquired all of the outstanding stock of LICO for approximately $155 million in cash, which was financed by proceeds from the Company's new revolving credit facility ("1998 Revolving Credit Facility") and a private placement of senior subordinated notes ("8.5% Notes"), both of which also closed effective March 31, 1998. The Company's previously existing Term Loan A, Term Loan B and revolving credit facility were repaid and retired on March 31, 1998. On January 7, 1998, the Company acquired all of the outstanding stock of Univeyor for approximately $15 million of cash financed by the Company's revolving credit facility, plus the assumption of certain debt. The new 1998 Revolving Credit Facility provides availability up to $300 million, due March 31, 2003, against which $237.4 million was outstanding at September 27, 1998. Interest is payable at varying Eurodollar rates based on LIBOR plus a spread determined by the Company's leverage ratio, revised to 112.5 basis points effective July 20, 1998. The 1998 Revolving Credit Facility is secured by all equipment, inventory, receivables and subsidiary stock (limited to 65% for foreign subsidiaries). To manage its exposure to interest rate fluctuations, the Company has interest rate swaps and caps. The 8.5% Notes issued on March 31, 1998 amounted to $199,468,000, net of original issue discount of $532,000 and are due March 31, 2008. Interest is payable semi-annually based on an effective rate of 8.45%, considering $1,902,000 of proceeds from rate hedging in advance of the placement. Provisions of the 8.5% Notes include, without limitation, restrictions on liens, indebtedness, asset sales, and dividends and other restricted payments. Prior to April 1, 2003, the 8.5% Notes are redeemable at the option of the Company, in whole or in part, at the Make-Whole Price (as defined). On or after April 1, 2003 they are redeemable at prices declining annually from 108.5% to 100% on and after April 1, 2006. In addition, on or prior to April 1, 2001, the Company may redeem up to 35% of the outstanding notes at a redemption price of 108.5% with the proceeds of equity offerings, subject to certain restrictions. In the event of a Change in Control (as defined), each holder of the 8.5% Notes may require the Company to repurchase all or a portion of such holder's 8.5% Notes at a purchase price equal to 101% of the principal amount thereof. The 8.5% Notes are not subject to any sinking fund requirements. - 13 - The Company believes that its cash on hand, cash flows, and borrowing capacity under its 1998 Revolving Credit Facility will be sufficient to fund its ongoing operations, budgeted capital expenditures and business acquisitions for the next twelve months. Net cash provided by operating activities decreased to $2,227,000 for the six months ended September 27, 1998 from $15,968,000 for the six months ended September 28, 1997. The $13,741,000 decrease is primarily due to changes in working capital, reflecting fluctuations in the temporary working capital needs of LICO. Net cash used in investing activities decreased to $1,544,000 for the six months ended September 27, 1998 from $5,439,000 for the six months ended September 28, 1997. The $3,895,000 decrease in cash usage is due primarily to proceeds received from the sale of Mechanical Products offset by cash used for the acquisition of Abell-Howe. Net cash used in financing activities decreased to $5,628,000 for the six months ended September 27, 1998 from $10,636,000 for the six months ended September 28, 1997. The $5,008,000 decrease in cash usage is primarily due to the timing of debt repayments. 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 27, 1998 and September 28, 1997 were $5,363,000 and $3,280,000, respectively. The increase reflects timing of the incurrence of maintenance capital expenditures. 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. - 14 - YEAR 2000 CONVERSIONS The Company's corporate-wide Year 2000 initiative is being managed by a team of internal staff and administered by an outside consultant. The Company has completed the assessment phase of its Year 2000 compliance project and is currently working on remediation of affected components. The Company has determined that it needs to modify significant portions of its corporate business information software so that its computer system will function properly with respect to dates in the year 2000 and beyond. Both internal and external resources have been dedicated to identifying, implementing, and testing corrective action in order to make such programs Year 2000 compliant; all such work is planned to be completed by July 1999 and is currently on schedule. To date the corporate business information software has been 100% assessed, approximately 75% has been remedially reprogrammed, approximately 25% has been successfully tested, and approximately 20% is now implemented as totally Year 2000 compliant. The Company believes that, with modifications to existing software, the Year 2000 issue will not pose significant operational problems for its computer systems. The Company has completed a corporate-wide assessment of the Year 2000 readiness of microprocessor controlled equipment such as robotics, CNC machines, and security and environmental systems. This assessment has revealed that at least 70% of microprocessor controlled equipment, including over 95% of all security and environmental systems, is currently compliant. Any necessary upgrades to ensure Year 2000 readiness are expected to be in place by the end of December 1998. In addition, the Company has determined that all of its manufactured products are 100% Year 2000 compliant. The Company has initiated communications with its suppliers and customers to determine the extent to which systems, products or services are vulnerable to failure should those third parties fail to remediate their own Year 2000 issues. To date the Company has received responses to over 60% of its inquiries and no Year 2000 compliance problem has been identified from these responses. While we believe that our Year 2000 compliance plan adequately addresses potential Year 2000 concerns and to date no significant Year 2000 issues have been identified with our suppliers and customers, there can be no guarantee that the systems of other companies on which our operations rely will be compliant on a timely basis and will not have an effect on our operations. The Company has conducted preliminary contingency planning and identified the critical need areas. A high level approach incorporating manual workarounds, increasing critical inventories, identifying alternate suppliers, and adjusting staffing levels has been discussed and forms the basis for the initial contingency planning. The Company believes this level of planning is appropriate at the current time, however, the planning will be further expanded if warranted byfuture events. The cost of the Year 2000 initiatives is not expected to be material to the Company's results of operations or financial position. The forward looking statements contained in the Year 2000 Conversions should be read in conjunction with the Company's disclosures under the heading "Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995." - 15 - EFFECTS OF NEW ACCOUNTING PRONOUNCEMENTS The Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 130 "Reporting Comprehensive Income," which the Company adopted for the interim reporting period ending June 28, 1998. Statement No. 130 establishes new rules for the reporting and display of comprehensive income and its components. This includes unrealized gains or losses on the Company's available-for-sale securities, foreign currency translation adjustments, and minimum pension liability adjustments, which previously were reported in shareholders' equity, and will be included and disclosed in total comprehensive income. Compliance with this Statement does not impact financial position, net income or cash flows. The FASB also issued FAS Statement No. 131 "Disclosures about Segments of an Enterprise and Related Information," which the Company will adopt for the year ended March 31, 1999. Statement No. 131 superseded FAS Statement No. 14 "Financial Reporting for Segments of a Business Enterprise." Statement No. 131 establishes new standards for determining segment criteria and annual and interim reporting of that data. It also establishes new disclosures about products, geographic areas and major customers. Currently, the Company reports one operating segment under Statement No. 14 and, while the impact of compliance with Statement No. 131 has not yet been determined, the Company expects to report at least two segments upon its adoption. SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 Forward-looking statements in this report, including without limitation, statements relating to the Company's plans, strategies, objectives, expectations, intention and adequacy of resources, are made pursuant to the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that such forward-looking statements involve risks and uncertainties including without limitation the following: (i) the Company's plans, strategies, objectives, expectations, and intentions are subject to change at any time at the discretion of the Company, (ii) the Company's plans and results of operations will be affected by the Company's ability to manage its growth, and (iii) other risks and uncertainties indicated from time to time in the Company's filings with the Securities and Exchange Commission. - 16 - PART II. OTHER INFORMATION Item 1. Legal Proceedings - none other than that previously disclosed within "Notes to Condensed Consolidated Financial Statements" footnote number 5 contained herein. Item 2. Changes in Securities - none. Item 3. Defaults upon Senior Securities - none. Item 4. Submission of Matters to a Vote of Security Holders On August 17, 1998, the following directors were elected at an Annual Meeting of Shareholders with: 12,717,917 votes cast for and 5,112 against: Herbert P. Ladds, Jr.; Timothy T. Tevens; Robert L. Montgomery, Jr.; Edward W. Duffy; Randolph A. Marks; and L. David Black. Item 5. Other Information - none. Item 6. Exhibits and Reports on Form 8-K Exhibit 10.1 - First Amendment to the Credit Agreement By and Among THE BANKS, FINANCIAL INSTITUTIONS AND OTHER INSTITUTIONAL LENDERS NAMED THEREIN, as Lenders, FLEET NATIONAL BANK, as Initial Issuing Bank, FLEET NATIONAL BANK, as Swing Line Bank, FLEET NATIONAL BANK, as Administrative Agent and Columbus McKinnon Corporation as the Borrower, Dated as of September 23, 1998. On October 29, 1998 the Company filed Form 8-K dated October 29, 1998 with respect to First Amendment and Restatement of Rights Agreement. - 16 - 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 11, 1998 /S/ ROBERT L. MONTGOMERY, JR. ------------------ ------------------------------ Robert L. Montgomery, Jr. Executive Vice President and Chief Financial Officer (Principal Financial Officer) - 17 - EX-10.1 2 FIRST AMENDMENT TO CREDIT AGREEMENT FIRST AMENDMENT TO CREDIT AGREEMENT THIS FIRST AMENDMENT TO CREDIT AGREEMENT (this "Amendment"), dated as of September 23, 1998, 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 it may hereafter be further amended, supplemented, restated, extended or otherwise modified from time to time, the "CREDIT AGREEMENT"); WHEREAS, the Borrower has requested that the Administrative Agent and Lender Parties amend the Credit Agreement in order to, among other things, modify certain covenants thereunder to allow the Borrower to repurchase directly or to loan funds to the Borrower ESOP so that the Borrower ESOP may purchase up to $10,000,000 in the aggregate of the common stock of the Borrower during the term of the Credit Agreement; 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; and WHEREAS, the Borrower and each of its Subsidiaries will benefit from the changes to the Credit Agreement proposed pursuant to this Amendment. 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, the parties hereto 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. AMENDMENTS. 2.1 Section 1.01 is amended by inserting the following in the appropriate alphabetical order: "`BORROWER ESOP' means the Columbus McKinnon Corporation Employee Stock Ownership Trust as organized pursuant to the Columbus McKinnon Corporation Employee Stock Ownership Trust Agreement, dated April 1, 1987, as amended, supplemented, restated, extended or otherwise modified from time to time." 2.2 Section 2.14 is amended by inserting after the words "Section 5.02(d)(iii)" at the end of the first sentence thereof, the following: ", to finance loans made by the Borrower to the Borrower ESOP for the purpose and to the extent permitted under Section 5.02(f)(vi) and to finance repurchases of the Borrower's common stock to the extent permitted under Section 5.02(g)(v)." 2.3 Section 5.02(f) is amended by (a) deleting the word "and" at the end of clause (iv) thereof and (b) deleting the period at the end of clause (v) thereof and inserting in its place, the following: "; and (vi) so long as no Default or Event of Default shall have occurred and be continuing, or would result therefrom, Investments by the Borrower consisting of loans made from time to time to the Borrower ESOP for the sole purpose of enabling the Borrower ESOP to purchase common stock of the Borrower in an aggregate amount during the term of the Credit Agreement which, when added to the aggregate amounts paid by the Borrower pursuant to Section 5.02(g)(v), shall not exceed $10,000,000; PROVIDED, THAT, such loans made by the Borrower to the Borrower ESOP are secured by the common stock of the Borrower so purchased by the Borrower ESOP with the proceeds of such loans." 2.4 Section 5.02(g) is amended by deleting the period at the end of clause (iv) thereof and inserting in its place, the following: - 2 - ", and (v) so long as no Default or Event of Default shall have occurred and be continuing, or would result therefrom, the Borrower may from time to time repurchase shares of its common stock for aggregate consideration during the term of the Credit Agreement which, when added to the aggregate amounts loaned by the Borrower pursuant to Section 5.02(f)(vi), shall not exceed $10,000,000." 2.5 Section 5.02(r)(i) is amended by inserting after the word "below" and before the period at the end thereof, the following: ", and except for pledges of the common stock of the Borrower to the Borrower by the Borrower ESOP as contemplated by Section 5.02(f)(vi)." 3. REPRESENTATIONS AND WARRANTIES. The Borrower hereby represents and warrants as follows: 3.1 Each of the representations and warranties set forth in the Credit Agreement, including, without limitation, in Article IV of the Credit Agreement, and in each other Loan Document, is true, correct and complete on and as of the closing date of this Amendment as though made on such date. In addition, the Borrower hereby represents, warrants and affirms that the Credit Agreement and each of the other Loan Documents remains in full force and effect. 3.2 As of the closing date of this Amendment, there exists no Default or Event of Default under the Credit Agreement or any other Loan Document, and no event which, with the giving of notice or lapse of time, or both, would constitute a Default or Event of Default. 3.3 The execution, delivery and/or performance by each applicable Loan Party of this Amendment, the reaffirmations and confirmations attached hereto, each other Loan Document, and each other agreement or document related to or contemplated by the foregoing to which such Loan Party is or is to be a party or otherwise bound, are within such Loan Party's corporate powers, have been duly authorized by all necessary corporate action, and do not, and will not, (i) contravene any Loan Party's charter or bylaws, (ii) violate any law (including, without limitation, ERISA, the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended), rule, regulation (including, without limitation, Regulation T, U or X of the Board of Governors of the Federal Reserve System), order, writ, judgment, injunction, decree, determination or award, (iii) conflict with or result in the breach of, or constitute a default under, any material contract, loan agreement, indenture, mortgage, deed of trust, lease or other material instrument or agreement binding on or affecting any Loan Party, any of its Subsidiaries or any of their respective properties or assets, or the Borrower ESOP or any of its properties or assets, or (iv) except for the Liens created under the Collateral Documents, result in or require the creation or imposition of any Lien upon or with respect to any of the properties of any Loan Party or any of its Subsidiaries. Neither any Loan Party nor any of its Subsidiaries is in violation of any such law, rule, regulation, order, writ, judgment, injunction, decree, determination or award or in breach of any such contract, loan agreement, indenture, mortgage, deed of trust, lease or other instrument or agreement, the violation or breach of which could reasonably be expected to have a Material Adverse Effect. - 3 - 3.4 Each of this Amendment and each other Loan Document has been duly executed and delivered by each Loan Party thereto. Each of this Amendment and each other Loan Document is the legal, valid and binding obligation of each Loan Party which is a party hereto or thereto, enforceable against such Loan Party in accordance with its terms. 3.5 No authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body or any other third party is required for (i) the due execution, delivery, recordation, filing or performance by any Loan Party of this Amendment, any other Loan Document or any other agreement or document related hereto or thereto or contemplated hereby or thereby to which it is or is to be a party or otherwise bound, (ii) the grant by any Loan Party of the Liens granted by it pursuant to the Collateral Documents, (iii) the perfection or maintenance of the Liens created by the Collateral Documents (including the first and only priority nature thereof) or (iv) the exercise by the Administrative Agent or any Lender Party of its rights under the Loan Documents or remedies in respect of the Collateral pursuant to the Collateral Documents, other than filings which have previously been made and, in the case of UCC-1 financing statements, future continuation statements when required to be filed. 4. CONDITIONS PRECEDENT TO THIS AMENDMENT. The effectiveness of each and all of the amendments contained in Section 2 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 AMENDMENT DOCUMENTATION. (1) The Borrower and the Lenders shall have duly executed and delivered this Amendment. (2) Each of the Guarantors shall each have executed and delivered the reaffirmation and confirmation attached hereto. 4.2 OTHER DOCUMENTS. The Borrower, each Guarantor and each of the other Subsidiaries of the Borrower shall have delivered such other documents and taken such other actions as the Administrative Agent may reasonably request. 4.3 NO DEFAULT. As of the closing date of this Amendment, no Default or Event of Default shall have occurred and be continuing. - 4 - 4.4 REPRESENTATIONS AND WARRANTIES. The representations and warranties contained in Section 3 of this Amendment and in each other Loan Document shall be true, correct and complete on and as of the closing date of this Amendment, in each instance as though made on such date. 5. EFFECTIVENESS OF AMENDMENTS. This Amendment, including, without limitation, the amendments contemplated by Section 2 hereof, shall not become effective unless and until each of the conditions precedent set forth in Section 4 hereof has been satisfied. 6. REFERENCE TO AND EFFECT UPON THE CREDIT AGREEMENT AND OTHER LOAN DOCUMENTS. 6.1 Except as specifically amended in Section 2 above, the Credit Agreement and each of the other Loan Documents shall remain in full force and effect and each is hereby ratified and confirmed. 6.2 The execution, delivery and effect of this Amendment shall be limited precisely as written and shall not be deemed to (i) be a consent to any waiver of any term or condition or to any amendment or modification of any term or condition of the Credit Agreement or any other Loan Document, except, upon the effectiveness, if any, of this Amendment, as specifically amended in Section 2 above, or (ii) prejudice any right, power or remedy which the Administrative Agent or any Lender Party now has or may have in the future under or in connection with the Credit Agreement or any other Loan Document. Upon the effectiveness, if any, 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. 7. 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. 8. 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. 9. 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. 10. HEADINGS. Article 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. [Signature pages follow] - 5 - IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered as of the date first written above. COLUMBUS MCKINNON CORPORATION By: /S/ROBERT L. MONTGOMERY, JR. ----------------------------- Title: EXECUTIVE VICE PRESIDENT ------------------------- The undersigned hereby acknowledge and agree to this Amendment, and agree that the Guaranty, dated March 31, 1998, the Security Agreement, dated March 31, 1998, and the Intellectual Property Security Agreement, dated March 31, 1998, 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 23 day of September, 1998. YALE INDUSTRIAL PRODUCTS, INC. By: /S/ROBERT L. MONTGOMERY, JR. ----------------------------- Title: TREASURER ---------- LICO, INC. By: /S/ROBERT L. MONTGOMERY, JR. ----------------------------- Title: TREASURER ---------- AUTOMATIC SYSTEMS, INC. By: /S/ROBERT L. MONTGOMERY, JR. ----------------------------- Title: TREASURER ---------- LICO STEEL, INC. By: /S/ROBERT L. MONTGOMERY, JR. ----------------------------- Title: TREASURER ---------- FLEET NATIONAL BANK, AS ADMINISTRATIVE AGENT By: /S/ JOHN G. TIERNEY -------------------- Title: VICE PRESIDENT --------------- FLEET NATIONAL BANK, AS INITIAL ISSUING BANK By: /S/ JOHN G. TIERNEY -------------------- Title: VICE PRESIDENT --------------- FLEET NATIONAL BANK, AS SWING LINE BANK By: /S/ JOHN G. TIERNEY -------------------- Title: VICE PRESIDENT --------------- LENDERS FLEET NATIONAL BANK By: /S/ JOHN G. TIERNEY -------------------- Title: VICE PRESIDENT --------------- LENDERS ABN-AMRO BANK N.V. NEW YORK BRANCH, AS A CO-AGENT AND LENDER By: /S/ DONALD SUTTON ------------------ Title: VICE PRESIDENT --------------- By: /S/ CAMERON D. GATEMAN ----------------------- Title: VICE PRESIDENT --------------- LENDERS THE BANK OF NOVA SCOTIA, AS A CO-AGENT AND LENDER By: /S/ J. ALAN EDWARDS -------------------- Title: AUTHORIZED SIGNATORY --------------------- LENDERS MANUFACTURERS AND TRADERS TRUST COMPANY, AS A CO-AGENT AND LENDER By: /S/ STEPHEN WYDYSH ------------------- Title: VICE PRESIDENT --------------- LENDERS MARINE MIDLAND BANK, AS A CO-AGENT AND LENDER By: /S/ SUSAN L. LEFEVRE --------------------- Title: AUTHORIZED SIGNATORY --------------------- LENDERS COMERICA BANK By: /S/ DAVID W. SHIREY -------------------- Title: ACCOUNT OFFICER ---------------- LENDERS FIRST UNION NATIONAL BANK By: /S/ MARK B. FELKER ------------------- Title: SENIOR VICE PRESIDENT ---------------------- LENDERS KEYBANK NATIONAL ASSOCIATION By: /S/ LAWRENCE A. MACK --------------------- Title: SENIOR VICE PRESIDENT ---------------------- LENDERS MELLON BANK, N.A. By: /S/ BRIAN CIAVERELLA --------------------- Title: VICE PRESIDENT --------------- LENDERS BANKERS TRUST COMPANY By: /S/ ANTHONY LOGRIPPO --------------------- Title: VICE PRESIDENT --------------- LENDERS THE BANK OF NEW YORK By: /S/ RANDOLPH E. J. MEDRANO --------------------------- Title: VICE PRESIDENT --------------- LENDERS NATIONAL BANK OF CANADA By: /S/ ROBERT UHRIG ----------------- Title: VICE PRESIDENT --------------- By: /s/ MICHAEL R. BRACE --------------------- Title: MARKETING OFFICER ------------------ LENDERS NATIONAL CITY BANK OF PENNSYLVANIA By: /S/ WILLIAM FELDMANN --------------------- Title: VICE PRESIDENT --------------- LENDERS TORONTO DOMINION (TEXAS), INC. By: /S/ DEBBIE A. GREENE --------------------- Title: VICE PRESIDENT --------------- EX-27 3 FDS SEPTEMBER-27-98
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM SEC FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 0001005229 COLUMBUS MCKINNON CORPORATION 1,000 3-MOS MAR-31-1999 JUN-29-1998 SEP-27-1998 17,132 0 131,233 2,186 103,885 284,613 116,469 35,722 752,873 94,306 443,738 0 0 137 176,849 752,873 168,634 168,634 126,234 126,234 23,521 0 8,978 10,163 5,078 5,085 0 0 0 5,085 .38 .38
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