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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
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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 -