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JULY 27, 1999
COLUMBUS MCKINNON CORPORATION
QUARTERLY EARNINGS RELEASE CONFERENCE CALL
OPERATOR:
This conference call will be recorded..... At this time I
would like to turn the meeting over to Mr. Tevens. You may
begin.
TEVENS:
Thank you, Anita.
OPERATOR:
You're welcome.
TEVENS:
Good morning all and welcome to the Columbus McKinnon
conference call. Hopefully, by now you have received the
press release and corresponding financial summary information
for CM's first fiscal quarter for our year 2000. With me
today is Bob Montgomery, our Executive Vice President and
Chief Financial Officer, Karen Howard, our V.P. Controller
and Ed Librock, our V.P. of Sales and Marketing.
The first quarter of our fiscal year 2000 represents a
quarter that exceeded expectation in some instances and
presented challenges in others. We have seen a slight
increase in our sales of our Products segment up 8% overall.
Having said that, we're still not 100% pleased with the sales
of all product lines and are looking forward to sales
returning to a more growth pattern.
The Product segment has also shown strong operating margin
improvement, which we believe is a direct result of our
ability to integrate prior acquisitions and operate them
effectively. Mr. Montgomery will review the details shortly.
The Solutions Industrial segments are a slight decrease in
shipment, and considering that, a corresponding slight
decrease in operating margin. The Solutions Automotive
segment is below our internal objectives and we have
accelerated our integration activities. Additionally, Mr. Bob
Hoehn, our President, retired from this business and has been
replaced by a very capable Mr. David Clark. David has over 20
years experience in the industry, the last six at
ASI--Automatic Systems. He is certainly well liked by ASI
customers and associates and we look forward to working with
David in continuing the integration and reorganization
process. As you might imagine, changes continue to occur at
ASI and we are focusing on administrative productivity
improvements in this implementation, purchasing and internal
sourcing activities. Additionally, a project management
system to help manage and control projects is currently being
developed as part of the CMBIS implementation.
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On another note, as you may know a group of dissident
shareholders has now commenced a proxy contest in an attempt
to seize control of your company. The dissidents are
advocating that the sale of the company is the best means to
maximize shareholder value. Your board and management team
strongly believes that this is not the right time to sell
your company. As indicated in this quarter's results,
integration synergies are now starting to gain momentum and
selling now would sell all shareholders short. Your board and
management team are committed to maximizing value for all
shareholders and is continuing to pursue the strategic plan
which we believe will best achieve that objective. By now you
should have received the company's proxy material. We will be
contacting most of you or your firm's directly to answer any
questions you may have. In the meantime, if you have any
questions, please do not hesitate to call Bob Montgomery or
me.
At this time I would like to turn the conference over to Bob
Montgomery for our financial review.
MONTGOMERY:
Okay, thank you Tim. In preparation for this I did a little
look at some of the growth rates of real GDP versus
industrial production last year, and into this year, and
without reciting a lot of numbers, it is clear that
industrial production was way below the GDP numbers that we
have been hearing in the popular press, just barely in the
growth column in some quarters. Starting with the income
statement, the consolidated actual quarterly P & L, the only
one I really want to pull out of that is the earnings per
share numbers which show current $.45 which is right exactly
where we had expected and versus last year's, of course,
restated for the GL International merger, at $.44. For some
more of the discussion, I would refer everybody to the
segment quarterly, and I would look at the pro forma data
rather than the actual. Tim gave you that actual sales
increase and products of 8%. On a pro forma basis that
increase in sales for the Products segment was 4.4%, which
well exceeded the industrial production index for that
quarter. The Solutions-Industrial business was down about
14.6%, reflecting Scandinavian business softness as well as
Positech has had soft market for its manipulator line most of
last year and into this year. Solutions-Automotive sales were
down 11.5% which really reflects still the impact of the
General Motors strike and the six month hiatus in projects.
Some of their backlog carried them through last year, to some
extent anyway. Obviously, it went down. Their backlog today
is just north of $100,000,000, and, as you know, when we talk
of backlog in the Automotive segment, it is firm backlog. The
Delta projects which had been focused on to some extent were
now put on hold and that was announced, I don't know, a month
ago. There has been a shift of capital to the truck and SUV
assembly plants by General Motors, anyway, and the amount of
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that capital appears to be similar to what the amounts were
to be spent on Delta and timing again becomes our issue.
Income from operations before amortization on the segment
statement, Products, and Tim gave you a hint on this one,
last year the margin was 13.8%. This year its 16.6% and that
reflects an incredible increase, really, I think in operating
synergies and efficiencies driven a lot, I think, by the
purchasing counsel's work that most of you are familiar with
our discussions about in the past. Our Solutions-Industrial
margins went from 10.5% last year to 8.4% this year, and that
really reflects purely the fixed nature of SG&A expenses, but
the growth profit line, which we didn't put in the press
release, their numbers are very similar year to year, and the
dollars spent on SG&A are the same, but when you have more
sales, obviously, your margins suffer. It is a different
story with Solutions-Automotive in that their margins went
from 11.6% last year to 1.7% this year. Quite a dramatic fall
and that's really caused by a couple of things and perhaps
we'll have a chance to talk about ASI in greater detail,
although Tim has told you some of the reorganization changes
that have taken place recently, but that's attributable, of
course, to the lower sales volume that we have discussed
before. They have also had some unusual warranty work on one
project that has just recently surfaced. We don't know the
root cause, but we have provided, accordingly, in the
accounts.
Back to the consolidated actual quarterly P&L, the SG&A
expense line is the only other one that I would pull out, and
there is really nothing out of the ordinary in that line
quarter to quarter other than say about $130,000 of proxy
expenses have been recorded in there. Going quickly to the
balance sheet, pull out a couple of statistics for us, the
days sales outstanding at 74 days are the same as they were
in March and down a little from last year's 81 days.
Inventory turns are about 4.7, which is almost exactly what
it was a year ago and up very slightly from March's 4.4,
probably reflecting the lower sales volume. Our current ratio
of 2.65 times is excellent, very strong statistic for us.
Funded debt to total capitalization is down slightly from
both last year, and also March 31, at just under 69 - about a
little over 68 1/2%. Balance sheet, I think, continues to be
strong and is getting stronger as we buy ourselves to
reducing debt and taking advantage of some of the integration
strategies that Tim has mentioned. A couple of other
statistics before I turn it over to Ned, depreciation a year
ago was $3 million and this quarter it was $3.2 million.
Capital expenses, expenditures last year, was $2.2 million
and this year $2.3 million. Cash flow from operating
activities the first quarter of last year it was a negative
$11.1 million as we put money into the then newly acquired
LICO or Automatic Systems. This quarter it was a positive
$3.3 million, a turn around of a little over $14 million,
and, just to say that in the first quarter of the year we
typically have heavy expenditures. That is a time when we
have bonuses to pay and interest on bonds, and so on. Nothing
terribly unusual except that we continue to be a
cash-generating company. With that wrap-up, I'll ask Ned to
talk about his part of it.
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LIBROCK:
Thanks Bob and good morning to everybody. I thought what I'd
do this morning is give you some highlights behind the 4.4%
pro forma increase on the Products segment of our business.
Our general distribution channels were up 1.8% and what's
significant here compared to a strong first quarter last year
is that we've reversed the trend where it has been flat or
down a little bit, so we're seeing some of our traditional
distribution channels picking up. Our specialized
distribution channels were up 4.2% and, as we all know, this
is a continuing trend as the consumer base in the United
States shifts their purchasing patterns to more specialized
distribution, and I am glad to say that again our catalog
sales has lead all specialized distribution with an 8.1%
increase. We saw a very nice spike in our OEM and government
business this quarter. This particular category was up 25%
compared to last year due to the timing of OEM quotas, and,
of course, when there is a military conflict in the world our
government sales for chain and related products increase. On
the consumer or retail side of our business, we posted a 5%
increase primarily due to a few new merchandising techniques
and the addition of a couple of new customers that are very
welcome, and we are very encouraged by our consumer side of
the business and so, all and all domestically to all our
channels we had a very very good first quarter. Outside the
United States we are seeing a global rebound that is
exciting. Our sales in Europe, South America and Mexico were
all up significantly and we are starting to see a glimmer of
hope on a very small volume of business in Asia, where some
of our Northern Asia customers are starting to repurchase
chain and forgings that really have disappeared for the last
year, so there is a glimmer of hope on the international
front. Basically, in conclusion, what we are saying is our
distribution channels in the states are starting to rebound.
We are directing all of the industry and distribution trends
affecting our distribution, an example being vendor
consolidation and the share shift of products between
channels. The business environment is not easy, although it
is rebounding. There are a significant number of competitors
and new competitors coming into the states putting pricing
pressure on products, but I think we are handing that in a
very satisfactory manner and we remain optimistic for
continued growth on the product side of the business with
good sales efforts and good cost management. So, that said,
I'm going to turn it back over to Tim.
TEVENS:
Thanks Ned, a quick operations review before we open it up
for questions. In addition to the previously mentioned ASI
integration and improvements underway, we continue to
implement CMBIS throughout the company. As you know, it is an
integrated approach to operating our business, and one of the
key components to this strategy is that CMBIS System, the
Columbus McKinnon business information system. This
integrated system enables the entire organization to act as
one. As previously announced, we did complete a couple last
year - Duff Norton, Lift-Tech Limited - and this year we are
still focusing on Endor, which is this summer, ASI, at least
the financial and project
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management portion of it in October of 1999, Positech,
October of 1999, Abell- Howe, the recently acquired crane
builder in December, and GL and Washington Equipment in the
fourth quarter of our fiscal year 2000. Additionally, we
continue to focus on integrating the recently acquired crane
builders. Abell Howe, GL and Washington Equipment Integration
planning activities are well underway and specific
operational improvements are being implemented.
A quick Y2K update. We did previously report this, we have an
effort under way and it is almost complete. Detailed Y2K
tests will be held during August to ensure that our
corrections are completed in working order. We also continue
to have success at selecting and implementing purchasing
agreements with strategic suppliers. To date we've done about
20 agreements with 28 strategic and preferred suppliers.
A little update on the international front, we have three
operating chain makers in Mexico at our Endor facility. These
machines are making the smaller dimension, grade 30 chain,
that will compete in the consumer markets in Mexico and the
US and basically against the Chinese imports, which we think
we would have a leg up on.
One last point here, the operating group, organization and
leadership that we put into place last June continue to be
very effective. Their efforts have contributed to the
dramatic increase in our operating income margin and we're
thankful for all the associates that have contributed to that
in the past quarter.
In conclusion, thank you, this morning, for your time and we
are excited about the continued positive trend and the future
outlook for CM. We continue to generate value for CM
shareholders through the execution our a growth strategy
which has served us well. We continue to be committed to
servicing customers, growing our sales and gaining market
shares, ultimately generating earnings through exceeding our
customer's expectations. And with that Anita I will open up
the floor for questions.
[END OF CONFERENCE CALL]
[CONFERENCE CALL RESUMES]
OPERATOR:
You may begin.
TEVENS:
Thank you Sheila and good afternoon everyone now. First of
all, let me apologize for the technical difficulties that
apparently MCI was having. They were unaware that there were
questions and apparently after the conference call
5
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we quickly realized there were questions so we will have that
Q & A session now. Thank you all for calling back, and
Sheila, with that, we will start with the questions and
answers period now.
OPERATOR:
Thank you, at this time we will now pause for questions using
our Q & A polling feature. If you would like to ask a
question, please press "star 1" on your telephone touch pad,
at any time you wish to withdraw your question please press
"star 2." If you are using speaker equipment you will have to
lift the hand set first before doing so. Once again press
"star 1" to ask a question and "star 2" to withdraw your
question. Please stand by, these questions are calculated in
the order they are received. Our first question comes from
John Inch of Bear Stearns.
Q- [ALANA] Oh, hi it's actually Alana, um, I have a couple of
questions. Did industrial sales decline, industrial
distribution decline?
A- Industrial distribution was even with last year.
Q- Ok.
A- First quarter.
Q- What percent of sales were international, at the end of
the quarter, best quarter is about 28.5%?
A- It's about the same, I don't have the exact calculation
with me.
Q- Ok, um and you said that South America improved?
A-Yes.
Q-You have the number or...
A- In South American sales increased, excluding Mexico,
increased 4%.
Q- And what was Mexico?
A- Mexico was up 25%.
Q- Ok, um and then I have some questions on your backlog. The
Solutions-Industrial backlog, do you have the number for
that?
A- That's about $110 million for total solutions backlog.
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Q- How does that compare to, this is total solutions, how
does that compare to last year?
A- The NQ was 116, so it's a little down from, but pretty
much the same.
Q- Now, do you have numbers for Solutions-Automotive or for
LICO?
A- Say that again, I did not hear the whole question, Alana.
Q- Um, do you have backlog broken down by industrial and
LICO?
A- Sure, um LICO, which would be the Automotive Solution
segment, this year, is about 104, last year was about 107
million, they are about the same.
Q- Um, and what about the margin from the profitability of
the backlog, would that be in line with average?
A- It is about the same, yes.
Q- Ok. Um and then with respect to LICO, do you have any
sense of what LICO's market share is today and how it
compares to previous quarters?
A- No. That's a statistic we don't know, specifically. We do
know who the competition is, and I would say that it's still
in line with what it historically has been.
Q-Have there been any big projects?
A- No.
Q-...that have been [unintelligible]
A- The Delta project was the biggest project and in fact, as
reported this morning is on hold. Right, that information in
terms of market share just has not been accumulated.
Q- Do you have any CM field people working at LICO? Or is it
just pure LICO people?
A- Oh no, there is a number of Columbus McKinnon associates
working there on various elements of, for example, the
systems implementation, as a matter of fact there is a GL
person working there as the inner controller, his name is
Mark Fitzpatrick, and there is one of Karen's accounting
folks sent down there a number of times, Andy Gigs, so yeah,
there are a number of CM people, Joe Owen in the purchasing
and counsel work.
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Q- I guess my final question is would you ever consider
selling LICO, under what circumstances, would you think about
selling it?
A- I think that we would consider selling any assets, LICO
aside, for that matter if it makes good sense, and it is a
prudent business decision, we could divest of anything,
including LICO.
Q- And have you thought about, you know, what if next quarter
is disappointing as well is that?
A- Right now, we are really focused on, and have been for a
while now, of integrating and working closely with bringing
them into the CM fold. We think from a technical standpoint
it is the most important thing to do now, and we would
evaluate over time the divestiture of LICO. If it makes sense
to do that at some point.
Q- Ok.
A- We recently accelerated those integration efforts which
includes that management organizational change.
Q- Right.
A- This is [unintelligible].
Q- Ok. Thank you.
OPERATOR:
Thank you. Our next question comes from Steve Eich of Avery
Partners.
Q- [STEVE EICH] Ah, thank you. Um, I think that the ING
Barings Conference you stated that all your acquisitions have
been EVA positive. I was wondering if LICO is EVA positive?
A- To date LICO has not yet been EVA positive. Generally,
though, with respect to evaluation of acquisitions on an EVA
basis, in the first year, frequently they are not EVA
positive just based on timing in the initial capital
invested. We did not expect LICO to be EVA positive in the
first year.
Q- Do you expect it to be EVA positive in the second year?
A- Ah, I don't have that number in front of me. But I think
we expected it to be slightly negative in the second year as
well. As you know, it is not performing up to the
expectations that we had or they had communicated to us.
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We're obviously not pleased with the results this far from an
operating stand point as well the EVA stand point.
Q- Thank you.
OPERATOR:
Our next question comes from Jennifer Cole from First Union.
Q- [JENNIFER COLE] Good afternoon, um a few things, one is
did you address the Crane Mart process and how things are
going there in the call this morning I don't seem to
recollect that.
A- Yes I think, Jennifer, we touched on it briefly. As you
know, we identified 40 to 50 some odd crane builders. We have
three in the family and Ned mentioned this morning that there
is about, oh, 25 or so that are in the process of being
signed up, and anticipate them to be...
Q- I'm referring more to those that you've already acquired
and how business is going and changes that are being made,
etc.
A- Ok. No, we did not report on that specifically. Um the
three crane builders that we have acquired are working
together from an integration stand point, coming under our
purchasing contract, to that degree, also from a management
and capacity resource sharing, those kinds of discussions are
taking place. In fact, we're moving some production of
amongst them as well as between our hoist plants and right
now, as we speak, the CMBIS system is scheduled to begin and
the, um, I think our third quarter...our third fiscal
quarter...which would be the fourth calendar quarter his
year, so they should be coming on the systems toward the back
half of our calendar year, excuse me our fiscal year.
Q- And so far how has all of this gone and have you been able
to record sales expansion because of the synergies among the
various parts of Columbus McKinnon?
A- Hi Jennifer, this is Ned.
Q- Hi Ned.
A- Probably the biggest synergy that we've realized so far
has been with Abell Howe, they manufacture what we call jib
cranes in half of their business, and we have been successful
in selling that through three additional sales divisions and
in some of the largest catalog houses in the country and will
be putting it in the catalog next spring. So that's probably
from a revenue enhancement stand point, the largest. Hoist
sales I think are up to them as well, to GL, at least I know.
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Q- Ok. So would you consider everything going on plan, ahead
of plan, behind plan on these particular acquisitions?
A- Generally speaking I think we're right on plan, right on
target.
Q- Ok. As far as the Automotive-Solutions side, we had a
sales increase sequentially of about $6 million, and yet we
had a profit level which was pretty flat from the fourth
quarter to the first quarter, I gather some of that is due to
the warranty reserve, is it all due to that? Shouldn't we
have seen some profit improvements?
A- Predominantly warranty work...warranty issue. It really
was. We look at each other thinking someone else is going to
answer the question. Sorry about that.
Q- $6 million in sales should be... normally you should have
a pretty good, high incremental margin on that.
A- That's right. One of the, the biggest factor is that one
job, where they had all of the warranty problems, additional
costs between $1 and $2 million. You know, they are pretty
significant.
Q- And that is a charge now that you've taken to reserve for
future expenses related to that, or is it the amount that you
expense, that be incurred in the quarter?
A- It's, um, a little bit of both.
Q- So it could continue?
A- Yes, it's been reflected. The work is ongoing, but it's
reflected in the percentage of completion of costs associated
with the job.
Q- So we shouldn't hear about this next quarter?
A- I hope not.
Q- Ok. And then in general, in terms of first quarter, do you
have an order number for the quarter for Auto-Solutions?
A- Quotes? You mean quotes Jennifer?
Q- No actually orders.
A- The way it was booked is about $33 million.
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Q- So bookings were actually below sales?
A- Yes.
Q- And what is the prognosis on the Delta project? When you
say on hold, does that mean on hold for a couple more
quarters or a couple more years?
A- Um, Delta. The word we got from our contacts at General
Motors, Jennifer, was 18 months. My sense is they want to get
by the contract negotiations.
Q- And, um...
A- To mention a follow up point, Jennifer, with respect to
the order number, we are kind of sensitive to it because of
timing, you know you could get a $10 million one tomorrow,
you know there could be a large contracts at any given point
and time. So while you are comparing that order number to the
sales number for the quarter, just slightly below, but they
got a lot in the pipeline.
Q- So what are you hearing about both orders and revenues in
the next quarter. You should have pretty good visibility
about that at this point, shouldn't you?
A- We expect them to, to push forward with their truck
expansion, as well as the Catera, the new Cadillac that is
coming on line. And right now it is scheduled to be, it's
been, a lot of that work for Arlington, which is the truck
plant has been bid and should be released next quarter.
However, having said that, we reported that before and GM of
course has delayed, Delta is a good example of that.
Q- Alright, okay, um, but if we take a broader look and just,
look at your overall, orders at Solutions-Automotive, in
other words you were talking before about the bidding
indications before, and what you think orders might be based
on quoting activity, and what you think revenues might be
based on order activity and backlog in the quarter that we
are now in? The second fiscal quarter?
A- Based on most recent forecasts, the expectations that the
revenue level will be slightly higher next quarter.
Q- And Karen you had said something before that indicated
that maybe quoting activity was still pretty good?
A- Quoting activity is still pretty good.
Q- Just meaning higher than revenues.
A- Oh well yeah, much higher, quoting activity is almost two
hundred million.
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Q- And of course you would have to adjust that to what you
would typically expect out of share.
A- Right.
Q- Okay thank you.
A- You're welcome.
OPERATOR:
Our next question comes from John Walthausen at C.L. King.
Q- [WALTHAUSEN] Yes, good afternoon. The horses that I wanted
to beat have already, I think, been fully beaten, so I'll
move on.
OPERATOR:
Our next questions comes from Steve Hayes of Seneca Capital.
Q- [SIMONIAN] Its actually Charles Simonian. I have a couple
of questions. I got on the call a minute late. If it hasn't
been covered I wondered if you guys could explain in a little
more detail Goldman Sach's role and if you can detail any
indications or interest you might have received in some or
any of your businesses or the overall business. Thank you.
A- Goldman Sachs, Steve, is representing us in this narrow
effort. As you know from reading the proxy, they also would
like to represent us if, in fact, there is a transaction
later on. But, at the moment, all they are doing is helping
us with this particular proxy contest. In terms of whether or
not we have received anything, no, nothing. No indication of
interest.
Q- [SIMONIAN] Their current role is just in regard to proxy,
they have been given no other parameters on receiving an
approach or something?
A- That's correct.
Q- Okay, thank you.
OPERATOR:
We have a follow-up question from John Inch.
Q- [ALANA] Hi, I should have asked this earlier. How did
Europe perform this quarter and do you have a number?
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A- Europe performance - 11%, sales up 11% for products and
they performed well.
Q- Okay, and can you also just go over the areas of weakness
in Solutions Industrial. I know you touched upon it briefly
in the conference call. Would you mind just going over it
again.
A- The Solutions-Industrial business was weak in Scandinavian
orders.
Q-Okay.
A- And UK I think was not up to what our expectations were at
this point. Positech has been a little weak. Positech has
been week, although bookings have rebounded nicely in the
past quarter, but, of course, those shipments won't be
reflected until this quarter generally.
Q- Ok, so you'll capture most of it or part of it in this
quarter.
A- Yea, I would expect that business to come back in a normal
course. Yes. Um hum.
Q-Okay, thanks.
OPERATOR:
Our next question, we have a follow-up question from Jennifer
Cole.
Q- [JENNIFER COLE] On the business of doing well on the
solutions side. What can we expect going forward. Is this a
level of profitability that is kind of a new plateau or if
volumes rise do we continue to book very high incremental
margins on it. How shall be view the profitability there?
A- Are you referring to the entire Solutions business?
Q- I'm sorry, products.
A- Products.
Q- Yes, products, I'm sorry.
A- Um, I think that we can continue to see income from
operations grow. All the fruit is not yet been harvested
Jennifer. I think a lot of our efforts over the last year or
two are really accelerating, quite honestly, purchasing
activities as well as just generally operating differently
and managing our operations much more closely are working and
its working very well. I don't think it's going to stop here,
I know your next question is going to be, "Well Tim where is
it going to
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stop?"and I'd like to see it not stop so we're going to
continue to push it forward and upward and there is no reason
to believe that we couldn't continue to see another point or
two come out of this.
Q- You were mentioning pricing competitive situations
earlier, what happens when your customer sees these margins
do you open yourself up for tougher pricing negotiations?
A- I like to show some of our customers some of the margins
we do on some of our products, because its not nowhere near
where it needs to be or should be.
As you know some of our chain products are very competitive
and forgings, and we work very hard to get the margins we do
get on that business really from a pricing standpoint
competitively priced we think we are fair in the market place
and we are selling value that our customer is willing for
today, and he in turn is making a fair profit on that hoist
as well. So I think that's on level. Most of this margin
improvement is coming not from price control but more from
cost control and operating more efficiently and effectively.
Q- Just want to make sure it doesn't get eaten away by the
pricing side going forward.
A- Good point.
Q- Um, and my final question is why the choice of an inside
person at LICO as opposed to somebody from Columbus McKinnon
or from the outside.
A- Very good question. David Clark is a fairly unique guy, he
comes from ASI which is a very able competitor, spent most of
his working career there, the last 5 or 6 years at ASI, he
has gained the respect of and is well respected by customers.
He was on the Delta project with GM and had nothing but high
accolades from him as well as from Ford. That combination, as
well as a high respect from inside at ASI and from Columbus
McKinnon, led us to believe that David is the best candidate
to push forward. He is well in tuned with the integration
efforts that we have laid out and is in fact driving them as
we speak and driving them very hard, I might add, to focus on
this business and make it more efficient and effective So
I...we all feel very confident and comfortable with this and
quite honestly we were lucky.
Q- So you would put his standards of expectations more in
line with yours than the way the old LICO was run?
A- Yes Jennifer that's true.
Q- Ok. Thank you.
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A- Thank you.
OPERATOR:
We have a follow up question from Steve Eich.
Q- [STEVE EICH] I thank you. Can you explain the recent
registration for sale of insider stock, I think it was
900,000 shares?
A- Um Yes, yes I can. It took me a minute to remember that.
Actually the stock that was trade for an exchange for the
merger of GL International.
Q- OK.
A- Remember that was a pooling of interest, maybe one of the
last poolings who knows, but we had deferred our
responsibility in registering it basically while things were
in a little turmoil but now is the time to do it, and it is
fair to those people that we do it.
Q- Ok. Thank you
OPERATOR:
Our next question come from Jeffrey Schwarz of Metropolitan
Capital.
Q- [JEFFREY SCHWARZ] Hi Bob and Tim. I was a little surprised
at your response to the question of have there been any
approaches. Earlier this spring we had spoken to a number of
parties and we suggested that they contact Bear Stearns, the
investment banker we thought at the time it represented the
company and the response that we had gotten back from those
parties was that Bear Stearns had told them that the company
had no interest in talking. And so I'm wondering how can you
make the representation that you haven't had any approaches
when you have been unwilling to sit down and talk to people.
A- [MONTGOMERY] Well nobody has contacted us.
Q- [SCHWARZ] So you're saying that a call into Bear Stearns
didn't get...um...that Bear Stearns didn't bother to call
over to the company.
A- [MONTGOMERY] They filed a report on the call they did not
call to ask what the response should be, they know.
Q- [SCHWARZ] Ok so what does that mean that when they say,
when you say that they knew what the response should be, what
does that mean?
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A- [MONTGOMERY] Jeffrey, I think it means that we'll listen
to anybody out there who wants to talk to us but it is not
our responsibility to take offensive action here...that we
don't agree with.
Q- [SCHWARZ] Well when someone calls...I'm sorry?
A- [MONTGOMERY] I think you heard me.
Q- [SCHWARZ] Well what I heard is what I would characterize
as double talk. What I said to you was that various parties
called Bear Stearns who they believed at the time to be the
company's banker. That the response I got back from Bear
Stearns was that the company had no interest in talking. If
you are saying that you told Bear Stearns to tell those
parties yes we want it and we'd be willing to sit down and
talk, that would be one response, it would be inconsistent
with the facts as I know them, but that would be a potential
response. If alternatively you told Bear Stearns no we don't
want to sit down and talk, then it would seem that your
response to the question of have there been approaches would
be inconsistent with the facts. Could you clarify which of
those it is?
A- [TEVENS] Well Jeffrey, as you know, let me just touch this
for moment, if I can, this is Tim, we have sat down with you
and have looked into you and Rob explain how process we might
go through to sell the company. We've evaluated that, um,
specific, um, request and it concluded that that's not in the
best interest of our shareholders today and I think that's
what we reported back to you.
Q- [SCHWARZ] Tim, I'm not actually looking to...that's not
the question I'm asking.
A- [TEVENS] Can I finish?
Q- [SCHWARZ] Surely.
A- [TEVENS] Ok. Um, so in response to this question is if
we ever responded as interested parties the answer is yes?
Any party that has come to us with...wanting to talk we are
open to talk and listen, and that's the extent of it. Any
parties that have gone to Bear Stearns, Bear Stearns has
responded to them, I think, appropriately to their
knowledge the company is not for sale. And those parties have
not pursued that, have not called me, and have not talked to
Bob, to my knowledge, anybody here.
Q- [SCHWARZ] Tim, given that given that the message that they
got from what they perceived to be the company's banker was
the company is not for sale, I'm not quite sure how you why
you would suggest, why you think they ought to be pursuing
it?
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A- [MONTGOMERY] I think there was a big difference between
our hanging a for sale sign in front of the building and
willingness to listen to anybody who will come talk to us.
Q- [SCHWARZ] How do you get, how do you get past one
investment banker. Typically the way this works, I know
you've done a few acquisitions in your time, would be if
someone were to contact your investment banker, especially if
they were deemed to be a qualified party and would have an
interest in sitting down and talking, yes the company might
say Bear Stearns tell them no we're not interested. And that
would be the company's prerogative clearly. And that was what
happened here. But alternatively, the company could say yes
we'd be willing to sit down and talk. What you were saying on
this call is that the latter is the approach that the company
is taking right now, that if a qualified party would be
interested in talking, that the company would be willing to
sit down and talk with them. But what you're saying on this
call however your actions with regard to the approaches that
Bear Stearns received were contrary to what you were saying.
A- [MONTGOMERY] Jeffrey, I don't think this is the time for
this kind of debate and I think we heard enough. Ok.
Q- [SCHWARZ] Thank you.
OPERATOR:
Once again lades and gentlemen let's dial "star 1" to ask
your question and "star 2" to withdraw your question.
At this time I show we have no further questions.
Thank you for calling back and we appreciate it and again
apologize for the technical snafu apparently MCI did this
morning we appreciate your attention and look forward to
speaking to all of you again. Thank you.
This concludes the teleconference and we thank you for your
participation and have a good day.
THIS TRANSCRIPT WAS TRANSCRIBED BY THE COLUMBUS MCKINNON SHAREHOLDERS COMMITTEE
FROM A RECORDING OF THE JULY 27, 1999 CONFERENCE CALL AND MAY INCLUDE UNINTENDED
INACCURACIES.
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