INDEX
COLUMBUS McKINNON CORPORATION
Page #
Part I. Financial Information
Item 1. Condensed Consolidated Financial Statements (Unaudited)
Condensed consolidated balance sheets -
December 29, 1996 and March 31, 1996 2
Condensed consolidated statements of income and retained earnings -
Three months and nine months ended December 29, 1996 and
December 31, 1995 3
Condensed consolidated statements of cash flows -
Nine months ended December 29, 1996 and December 31, 1995 4
Notes to condensed consolidated financial statements -
December 29, 1996 5
Item 2. Management's Discussion and Analysis of Results of Operations
and Financial Condition 8
Part II. Other Information
Item 1. Legal Proceedings 11
Item 2. Changes in Securities - none. 11
Item 3. Defaults upon Senior Securities - none. 11
Item 4. Submission of Matters to a Vote of Security Holders - none. 11
Item 5. Other Information - none. 11
Item 6. Exhibits and Reports on Form 8-K 11
1
<PAGE>
Part I. Financial Information
Item 1. Condensed Consolidated Financial Statements (Unaudited)
<TABLE>
<CAPTION>
COLUMBUS McKINNON CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
December 29, March 31,
1996 1996
-----------------------------
(In thousands)
<S> <C> <C>
ASSETS:
Current assets:
Cash and cash equivalents $12,751 $10,171
Trade accounts receivable 68,504 38,741
Inventories 94,606 48,303
Net assets of discontinued operations 10,192 0
Prepaid expenses 10,475 1,788
-------- --------
Total current assets 196,528 99,003
Net property, plant, and equipment 59,475 30,909
Goodwill and other intangibles, net 207,914 42,951
Marketable securities 13,192 11,174
Deferred taxes on income 17,884 2,881
Other assets 4,478 1,816
-------- --------
Total assets $499,471 $188,734
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY:
Current liabilities:
Notes payable to banks $ 1,535 $1,635
Trade accounts payable 21,245 15,661
Accrued liabilities 34,080 15,803
Current portion of long-term debt 22,268 1,446
-------- --------
Total current liabilities 79,128 34,545
Long-term debt, less current portion 226,928 8,298
Other non-current liabilities 46,405 8,269
-------- --------
Total liabilities 352,461 51,112
Minority interest 323 0
Shareholders' equity:
Common stock 137 137
Additional paid-in capital 94,600 94,283
Retained earnings 57,105 49,386
ESOP debt guarantee (4,540) (5,238)
Other (615) (946)
-------- --------
Total shareholders' equity 146,687 137,622
-------- --------
Total liabilities,minority interest
and shareholders' equity $499,471 $188,734
======== ========
<FN>
See accompanying notes to condensed consolidated financial statements.
</FN>
</TABLE>
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<TABLE>
<CAPTION>
COLUMBUS McKINNON CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
(UNAUDITED)
Three Months Ended Nine Months Ended
------------------------- -------------------------
December 29, December 31, December 29, December 31,
1996 1995 1996 1995
------------- ---------- ------------- ----------
(In thousands, except per share data)
<S> <C> <C> <C> <C>
Net sales $103,393 $53,408 $233,554 $142,474
Cost of products sold 73,289 38,293 164,249 102,340
------ ------ ------ ------
Gross profit 30,104 15,115 69,305 40,134
Selling expenses 9,522 4,822 20,834 12,819
General and administrative expenses 7,490 3,783 16,889 9,451
Amortization of intangibles 1,852 309 2,751 349
Environmental remediation costs 0 3 0 627
------ ------ ------- ------
18,864 8,917 40,474 23,246
------ ------ ------- ------
Income from operations 11,240 6,198 28,831 16,888
Interest and debt expense 4,819 1,667 5,298 2,880
Interest and other income 491 107 906 347
------ ------ ------- ------
Income before income taxes 6,912 4,638 24,439 14,355
Income tax expense 3,370 1,882 10,654 5,597
------ ------ ------- ------
Income before minority interest 3,542 2,756 13,785 8,758
Minority interest 323 0 323 0
------ ------ ------- ------
Income before extraordinary charge 3,219 2,756 13,462 8,758
Extraordinary charge for debt extinguishment (3,101) 0 (3,101) 0
------ ------ ------- ------
Net income 118 2,756 10,361 8,758
Retained earnings - beginning of period 57,910 43,628 49,386 38,443
Cash dividends of $0.07, $0.059, $0.20 and $0.177 per share (923) (417) (2,642) (1,229)
Cash dividends on preferred shares 0 (3) 0 (8)
------ ------ ------ ------
Retained earnings - end of period $57,105 $45,964 $57,105 $45,694
======= ======= ======= =======
Earnings per share, both primary and fully diluted:
Before extraordinary charge $0.25 $0.39 $1.02 $1.24
Extraordinary charge (0.24) (0.23)
Net Income $0.01 $0.39 $0.79 $1.24
Average number of shares outstanding 13,116 7,103 13,184 7,048
<FN>
See accompanying notes to condensed consolidated financial statements.
</FN>
</TABLE>
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<TABLE>
<CAPTION>
COLUMBUS McKINNON CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Nine Months Ended
--------------------------
December 29, December 31,
1996 1995
---------- ---------
(In thousands)
OPERATING ACTIVITIES:
<S> <C> <C>
Net income $10,361 $8,758
Adjustments to reconcile net income to net cash
provided by operating activities:
Extraordinary charge for early debt retirement 3,101 0
Minority interest 323 0
Depreciation and amortization 6,796 3,006
Other 215 44
Changes in operating assets and liabilities:
Trade accounts receivable (248) 4,939
Inventories (51) (1,322)
Prepaid expenses 472 1,304
Other assets (346) 56
Trade accounts payable (7,444) (5,505)
Accrued and non-current liabilities 5,124 (1,869)
-------- --------
Net cash provided by operating activities 18,303 9,411
INVESTING ACTIVITIES:
Acquisition of patents (234) (112)
Lister acquisition costs (7,054) 0
Yale acquisition costs (159,247) 0
Lift-Tech Acquisition costs 0 (62,950)
Purchases of marketable securities, net of sales (1,597) (1,310)
Capital expenditures (4,983) (5,257)
-------- --------
Net cash used in investing activities (173,115) (69,629)
FINANCING ACTIVITIES:
Net (payments) borrowings under revolving
line-of-credit agreements 75,382 15,559
Repayment of debt (72,865) (2,681)
Proceeds from issuance of long term debt 164,099 50,000
Deferred financing costs incurred (10,000) (889)
Dividends paid (2,505) (1,259)
Reduction of ESOP debt guarantee 1,075 890
Other 2,667 (907)
-------- --------
Net cash provided by financing activities 157,853 60,713
Effect of exchange rate changes on cash (461) (28)
-------- --------
Net increase in cash and cash equivalents 2,580 467
Cash and cash equivalents at beginning of period 10,171 392
-------- --------
Cash and cash equivalents at end of period $12,751 $ 859
======== ========
<FN>
See accompanying notes to condensed consolidated financial statements.
</FN>
</TABLE>
4
<PAGE>
COLUMBUS McKINNON CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
DECEMBER 29, 1996
1. The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles
for interim financial information. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary
for a fair presentation of the financial position of the Company at
December 29, 1996, and the results of its operations and its cash flows for
the three and nine month periods ended December 29, 1996 and December 31,
1995 have been included. Results for the period ended December 29, 1996 are
not necessarily indicative of the results that may be expected for the year
ended March 31, 1997. 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, 1996 and the consolidated financial statements and footnotes thereto
included in the Spreckles Industries, Inc. (doing business as Yale
International Inc. "Yale") annual report on Form 10-K for the year ended
June 30, 1996.
2. Inventories consisted of the following at December 29, 1996 and March 31,
1996 (in thousands):
At cost--FIFO basis:
Raw materials $ 21,133 $ 24,596
Work-in-process 30,084 11,533
Finished goods 46,895 15,180
------------------ -----------------
98,112 51,309
LIFO cost less than FIFO cost (3,506) (3,006)
------------------ -----------------
$ 94,606 $ 48,303
================== =================
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 $19,890,440 and $15,656,000 of
accumulated depreciation at December 29, 1996 and March 31, 1996,
respectively.
4. Goodwill and other intangibles, net includes $3,420,420 and $690,000 of
accumulated amortization at December 29, 1996 and March 31, 1996,
respectively.
5. General and Product Liability - The accrued general and product liability
costs which are included in other non-current liabilities are the actuarial
present value of estimated reserves based on an amount determined from loss
reports and individual cases filed with the Company and an amount, based on
past experience, for losses incurred but not reported. The accrual in these
condensed consolidated financial statements was determined by applying a
discount factor based on interest rates customarily used in the insurance
industry.
Yale is self-insured for product liability claims up to a maximum of
$500,000 per occurrence and maintains product liability insurance with a
$100 million cap per occurrence. The Company has been advised that a
customer has alleged that one of Yale's products was the cause of a fire
which occurred in January 1995 at a manufacturing facility, resulting in
losses in excess of Yale's policy limits. A formal complaint has been filed
seeking damages in excess of $500 million. However, it is the opinion of
management that there was no manufacturing defect and that the claim will
in all likelihood be settled within the Company's policy limits.
Environmental - Yale discovered in 1987 that groundwater and sediments
beneath the Jackson, Michigan plant of Yale's subsidiary, Mechanical
Products, Inc., contain certain organic chemical compounds in
concentrations above those permitted by applicable law. The Company
conducted an extensive investigation of the site and has entered into an
Administrative Order by Consent with the State of Michigan Department of
Natural Resources which provides for further investigation, the development
of a remedial plan and subsequent remedial action. In 1991, the Company
began removal of such compounds from the groundwater and affected
sediments. These efforts are continuing during fiscal 1997 and possibly
beyond. Although no assurances can be given, management believes that the
remaining cost to the Company of remedial efforts at the Jackson plant will
not have a material adverse effect on the Company's business, financial
condition or results of operations.
5
<PAGE>
6. Primary and fully diluted earnings per share were based on the following
(in thousands):
Three Months Ended Nine Months Ended
-------------------- ------------------
Dec. 29 Dec. 31, Dec. 29, Dec. 31,
1996 1995 1996 1995
---- ---- ---- ----
Weighted-average common stock
outstanding 13,116 7,103 13,184 7,048
Common stock equivalents - - - -
7. Income tax expense for the three and nine month periods ended December 29,
1996 exceeds the customary relationship between income tax expense and
income before income taxes due to nondeductible amortization of goodwill of
$1,770,000 and $2,597,000, respectively.
8. On October 17, 1996, through a tender offer, the Company acquired
approximately 72% of the outstanding stock (on a fully diluted basis) of
Spreckels Industries, Inc., now known as Yale International, Inc. ("Yale"),
a manufacturer of a wide range of industrial products, including hoists,
scissor lifts, mechanical jacks, rotating joints, actuators and circuit
protection devices. On January 3, 1997 the Company acquired the remaining
outstanding shares, effected a merger, and has accounted for the
acquisition as a purchase. The total cost of the acquisition was
approximately $270 million, consisting of $200 million of cash and $70
million of acquired Yale debt. The funding required to complete the
transactions was financed through borrowings under a bank credit facility,
which consists of: 1) $125 million of five year term debt with interest
payable at varying rates based on the Company's leverage ratio, currently
at a Eurodollar rate based on LIBOR ("Eurodollar rate") plus 250 basis
points, 2) $75 million of seven year term debt with interest also payable
at varying rates, currently at a Eurodollar rate plus 300 basis points, and
3) $125 million of five year revolving debt, of which $75 million was
designated for the refinancing of the acquired Yale debt, with interest
also payable at varying rates, currently at a Eurodollar rate plus 250
basis points. This new debt is secured by all equipment, inventory,
receivables, subsidiary stock (limited to 65% for foreign subsidiaries),
and intellectual property. In conjunction with this financing transaction,
the Company's existing domestic line of credit was retired, and the
interest rate on the Company's ESOP loans was changed to that consistent
with the new five year term loan previously referred to above. The goodwill
acquired is being amortized on a straight-line basis over a 25 year period.
The condensed consolidated statements of income and retained earnings for
the three and nine month periods ended December 29, 1996 and the condensed
consolidated statement of cash flows for the nine months ended December 29,
1996 include the Yale activity since the October 17 acquisition. The
minority interest share of Yale's earnings since acquisition has been
appropriately segregated from consolidated net income.
On December 18, 1996, $69.5 million of the $70 million of acquired Yale
debt was refinanced under the available five year revolving debt referred
to above. The debt was retired at a premium of 825 basis points, amounting
to $5.7 million. The resulting loss on debt extinguishment has been
reflected as an extraordinary item, net of the related tax benefit.
On December 19, 1996, the Company acquired all of the outstanding stock of
Lister Bolt and Chain Ltd. and of Lister Chain and Forge, Inc. (together
known as "Lister"), a chain and forgings manufacturer, and has accounted
for the acquisition as a purchase. The total cost of the acquisition was
approximately $7 million of cash, which was financed by the Company's
revolving debt facility. The Lister acquisition did not have a material
impact on current period or pro forma period operations.
On November 1, 1995, the Company acquired all of the outstanding stock of
LTI Holdings, Inc. ("Lift-Tech"), a hoist manufacturer, and has accounted
for the acquisition as a purchase. The total cost of the acquisition was
approximately $63 million, consisting of $43 million in cash and $20
million for the refinancing of Lift-Tech bank debt. The funding required to
complete the transaction was financed through borrowings under bank credit
facilities, which consisted of $50 million of seven-year term debt with
interest payable at prime plus 1% and $25 million revolving debt with
interest payable at prime plus 1/2% which would have expired November 1,
1998. The obligations outstanding under these debt instruments were paid in
full by application of proceeds received from the Company's initial public
offering which commenced on February 22, 1996. The goodwill acquired is
being amortized on a straight-line basis over a 25 year period.
The condensed consolidated statements of income and retained earnings for
the three and nine month periods ended December 29, 1996 and the condensed
consolidated statement of cash flows for the nine months ended December 29,
1996 include the Lift-Tech activity.
6
<PAGE>
The following table presents pro forma summary information for the nine
month periods ended December 29, 1996 and December 31, 1995 as if the Yale
and Lift-Tech acquisitions and related borrowings, and the initial public
offering, had occurred as of April 1, 1995, which is the beginning of
fiscal 1996. The pro forma information is provided for informational
purposes only. It is based on historical information and does not
necessarily reflect the actual results that would have occurred nor is it
necessarily indicative of future results of operations of the combined
enterprise:
Nine Months Ended
--------------------------------------
December 29, 1996 December 31, 1995
----------------- -----------------
(In thousands, except per share data)
Pro forma:
Net sales $ 337,989 $ 321,101
Income from operations 38,530 32,070
Income before extraordinary item 10,114 6,017
Net income 7,013 6,017
Earnings per share before
extraordinary item, both
primary and fully diluted 0.77 0.46
Earnings per share, both
primary and fully diluted 0.53 0.46
9. In conjunction with the Yale acquisition, the Company has formulated a plan
which will involve termination of employees resulting from redundant or
unnecessary efforts. A $1.3 million liability has been estimated and
established as of the acquisition date, consisting of salaries, severance
and related benefits in administrative and marketing functional areas,
including executive, sales and accounting departments. During the three
months ended December 29, 1996, $350,000 was charged against the liability.
It is anticipated that the plan will be complete by early fiscal 1998.
7
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
Results of Operations
Three Months and Nine Months Ended December 29, 1996 and December 31, 1995 Net
sales in the fiscal 1997 quarter ended December 29, 1996 were $103,393,000, an
increase of $49,985,000 or 93.6% over the fiscal 1996 quarter ended December 31,
1995. Net sales for the nine months ended December 29, 1996 were $233,554,000,
an increase of $91,080,000 or 63.9% over the nine months ended December 1, 1995.
Sales growth during the current quarter was due primarily to the December 1996
Yale and November 1995 Lift-Tech acquisitions which affected the general
distribution, service-after-sale, and original equipment manufacturers
distribution channels. The Company also experienced increased sales volume
primarily in the following distribution channels: 1) specialty distributors due
primarily to new product introductions and an expanding customer base, 2)
general distributors due to increased market share, 3) waste management due to
timing of orders, 4) original equipment manufacturers due to timing of orders,
and 5) consumer due to timing of orders. In addition, list price increases of
approximately 4% were introduced in November of 1995 and November/December of
1996 affecting many of the Company's hoist, chain and forged products sold in
its domestic commercial markets. Sales in the commercial and the consumer
distribution channel groups were as follows, in thousands of dollars and with
percentage changes for each group:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
Dec. 29, Dec. 31, Change Dec. 29, Dec. 31, Change
1996 1995 Amount % 1996 1995 Amount %
------------------------------------- --------------------------------------
(In thousands, except percentages)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Commercial sales:
Domestic $ 79,597 $ 39,406 $ 40,191 102.0 $ 176,738 $ 102,616 $ 74,122 72.2
International 17,647 8,318 9,329 112.2 37,558 21,033 16,525 78.6
-------- -------- ------- --------- --------- --------
97,244 47,724 49,520 103.8 214,296 123,649 90,647 73.3
Consumer sales:
Domestic 5,609 5,052 557 11.0 17,487 17,037 450 2.6
International 540 632 (92) (14.6) 1,771 1,788 (17) (1.0)
-------- -------- -------- --------- --------- ---------
6,149 5,684 465 8.2 19,258 18,825 433 2.3
-------- -------- -------- --------- --------- ---------
Net sales $103,393 $ 53,408 $ 49,985 93.6 $ 233,554 $ 142,474 $ 91,080 63.9
======== ======== ======== ========= ========= =========
</TABLE>
The Company's gross profit margins were approximately 29.1%, 28.3%, 29.7% and
28.2% for the fiscal 1997 and 1996 quarters and the nine months then ended,
respectively. The increase in gross profit margin in the current quarter and
year-to-date resulted from the effects of the Company's cost control efforts and
changes in product mix.
Selling expenses were $9,522,000, $4,822,000, $20,834,000 and $12,819,000 in the
fiscal 1997 and 1996 quarters and the nine months then ended, respectively. The
1997 expenses were impacted by the addition of Yale and Lift-Tech sales. As a
percentage of consolidated net sales, selling expenses were 9.2%, 9.0%, 8.9% and
9.0% in the fiscal 1997 and 1996 quarters and the nine months then ended,
respectively. The higher percentage in the fiscal 1997 quarter is due primarily
to the timing of various marketing related expenses.
General and administrative expenses were $7,490,000, $3,783,000, $16,889,000 and
$9,451,000 in the fiscal 1997 and 1996 quarters and the nine months then ended,
respectively. The 1997 expenses were impacted by the addition of Yale and
Lift-Tech activities. As a percentage of consolidated net sales, general and
administrative expenses were 7.2%, 7.1%, 7.2% and 6.6% in the fiscal 1997 and
1996 quarters and the nine months then ended, respectively. In fiscal 1997,
these expenses include a provision for corporate-wide incentive compensation.
Amortization of intangibles was $1,852,000, $309,000, $2,751,000 and $349,000 in
the fiscal 1997 and 1996 quarters and the nine months then ended, respectively;
increases are due to the amortization of goodwill resulting from the
acquisitions of Yale and of Lift-Tech.
8
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Environmental remediation costs were $3,000 in the fiscal 1996 quarter and
$627,000 for the nine months then ended, with no corresponding expense in fiscal
1997. Those costs related primarily to a specific project which is substantially
complete.
Interest and debt expense was $4,819,000, $1,667,000, $5,298,000 and $2,880,000
in the fiscal 1997 and 1996 quarters and the nine months then ended. The fiscal
1997 increase is due to debt incurred to fund the Yale acquisition. As a
percentage of consolidated net sales, interest and debt expense was 4.7%, 3.1%,
2.3% and 2.0% in the fiscal 1997 and 1996 quarters and the nine months then
ended, respectively.
Interest and other income was $491,000, $107,000, $906,000 and $347,000 in the
fiscal 1997 and 1996 quarters and the nine months then ended, respectively. The
fiscal 1997 increase is due to additional investment holdings to fund the
Company's general and products liability self-insurance reserves.
Income taxes as a percentage of pre-tax accounting income were 48.8%, 40.6%,
43.6% and 40.0% in the fiscal 1997 and 1996 quarters and the nine months then
ended, respectively. The fiscal 1997 percentages reflect the effect of
nondeductible amortization of goodwill resulting from the Yale and Lift-Tech
acquisitions.
Minority interest was $323,000 in the fiscal 1997 quarter and also in the nine
months then ended. This resulted from the 28% of Yale which was not owned by the
Company during this period.
As a result of the above, income before extraordinary item increased
$463,000 or 16.8% for the quarter and $4,704,000 or 53.7% for the nine months
then ended. As a percentage of consolidated net sales, income before
extraordinary item was 3.1%, 5.2%, 5.8% and 6.1% in the fiscal 1997 and 1996
quarters and the nine months then ended, respectively.
The extraordinary charge for early retirement of debt of $3,101,000 in the
fiscal 1997 quarter and also in the nine months then ended resulted from the
refinancing of acquired Yale debt which was at 11 1/2% interest, replaced with
five year revolving debt with interest currently at a Eurodollar rate plus 250
basis points.
As a result of the above, net income decreased $2,638,000 or 95.7% for the
quarter and increased $1,603,000 or 18.3% for the nine months then ended.
Liquidity and Capital Resources
On October 17, 1996, through a tender offer, the Company acquired approximately
72% of the outstanding stock (on a fully diluted basis) of Spreckels Industries,
Inc., now known as Yale International, Inc. ("Yale"), a manufacturer of a wide
range of industrial products, including hoists, scissor lifts, mechanical jacks,
rotating joints, actuators and circuit protection devices. On January 3, 1997
the Company acquired the remaining outstanding shares, effected a merger, and
has accounted for the acquisition as a purchase. The total cost of the
acquisition was approximately $270 million, consisting of $200 million of cash
and $70 million of acquired Yale debt. The funding required to complete the
transactions was financed through borrowings under a bank credit facility, which
consists of: 1) $125 million of five year term debt with interest payable at
varying rates based on the Company's leverage ratio, currently at a Eurodollar
rate based on LIBOR ("Eurodollar rate") plus 250 basis points, 2) $75 million of
seven year term debt with interest also payable at varying rates, currently at a
Eurodollar rate plus 300 basis points, and 3) $125 million of five year
revolving debt, of which $75 million was designated for the refinancing of the
acquired Yale debt, with interest also payable at varying rates, currently at a
Eurodollar rate plus 250 basis points. This new debt is secured by all
equipment, inventory, receivables, subsidiary stock (limited to 65% for foreign
subsidiaries), and intellectual property. In conjunction with this financing
transaction, the Company's existing domestic line of credit was retired, and the
interest rate on the Company's ESOP loans was changed to that consistent with
the new five year term loan previously referred to above. The goodwill acquired
is being amortized on a straight-line basis over a 25 year period.
On December 18, 1996, $69.5 million of the $70 million of acquired Yale debt was
refinanced under the available five year revolving debt referred to above. The
debt was retired at a premium of 825 basis points, amounting to $5.7 million.
The resulting loss on debt extinguishment has been reflected as an extraordinary
item, net of the related tax benefit.
On December 19, 1996, the Company acquired all of the outstanding stock of
Lister Bolt and Chain Ltd. and of Lister Chain and Forge, Inc. (together known
as "Lister"), a chain and forgings manufacturer, and has accounted for the
acquisition as a purchase. The total cost of the acquisition was approximately
$7 million of cash, which was financed by the Company's revolving debt facility.
9
<PAGE>
At December 29, 1996 $77,000,000 was outstanding under the revolving credit
facility.
The Company believes that its cash on hand, cash flows, and borrowing capacity
under its revolving credit facility will be sufficient to fund its ongoing
operations, debt service and budgeted capital expenditures for the next twelve
months.
Net cash provided by operating activities increased to $18,303,000 for the nine
months ended December 29, 1996 from $9,411,000 for the nine months ended
December 31, 1995. The $8,892,000 increase in net cash provided by operating
activities resulted primarily from improved operating results before minority
interest and extraordinary charge of $5,027,000 and an increase in depreciation
and amortization of $3,790,000 mainly as a result of acquiring Yale and
Lift-Tech.
Net cash used in investing activities increased to $173,115,000 for the nine
months ended December 29, 1996 from $69,629,000 for the nine months ended
December 31, 1995. The $103,486,000 increase is due primarily to $159,247,000
and $7,054,000 for the acquisitions of Yale and Lister, respectively.
Net cash provided by financing activities increased to $157,853,000 for the nine
months ended December 29, 1996 from $60,713,000 for the nine months ended
December 31, 1995. The increase is primarily due to debt incurred to fund the
acquisitions of Yale and Lister.
Capital Expenditures
In addition to keeping its current equipment and plants properly maintained, the
Company is committed to replacing, enhancing, and upgrading its property, plant,
and equipment to reduce production costs, increase flexibility to respond
effectively to market fluctuations and changes, meet environmental requirements,
enhance safety, and promote ergonomically correct work stations. Consolidated
capital expenditures for the nine months ended December 29, 1996 and December
31, 1995 were $4,983,000 and $5,257,000, respectively.
Inflation and Other Market Conditions
The Company's costs are affected by inflation in the U.S. economy, and to a
lesser extent, in foreign economies including those of 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.
Effects of New Accounting Pronouncements
In 1997, the Company adopted FAS No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of," which has not
had a material effect on the financial statements.
10
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Part II. Other Information
Item 1. Legal Proceedings - none other than those previously disclosed
within "Notes to Condensed Consolidated Financial Statements"
footnote no.5, incorporated herein by reference.
Item 2. Changes in Securities - none.
Item 3. Defaults upon Senior Securities - none.
Item 4. Submission of Matters to a Vote of Security Holders - none
Item 5. Other Information - none.
Item 6. Exhibits and Reports on Form 8-K
Exhibit 11.1 - Columbus McKinnon Corporation Computation of
Earnings per Share
On October 30, 1996 the Company filed Form 8-K dated October 17, 1996 with
respect to the completion of its cash tender offer for all of the
outstanding shares of Class A Common Stock of Spreckels Industries, Inc.,
now known as Yale International, Inc.
On November 14, 1996 the Company filed Form 8-K dated November 12, 1996
with respect to the Company's intent to commence a tender offer for all $70
million of the Company's 11-1/2% Senior Secured Notes due 2000. Anticipated
commencement on or about November 15, 1996.
On December 6, 1996 the Company filed form 8-K dated November 29, 1996 with
respect to its amended tender offer and consent solicitation including an
exhibit for Amendment 1 to the Credit Agreement among Parent, Fleet Bank,
as Administration Agent, and the Bank, Financial Institutions and other
Institutional Lenders named therein dated as of November 14, 1996.
On December 19, 1996 the Company filed form 8-K dated December 16, 1996
with respect to the completed Tender offer to purchase at a price equal to
108,250% of the outstanding principal amount, plus accrued interest, for
all $70 million of the Company's 11-1/2% Senior Secured Notes due 2000. The
Tender offer expired at 5:00 p.m. New York City time on December 13, 1996.
On December 31, 1996 the Company filed form 8-K/A with respect to the
financial statements and exhibits for the Company's business acquisition,
Spreckels Industries, Inc. (doing business as Yale International, Inc.
"Yale").
On January 9, 1997 the Company filed form 8-K dated January 9, 1997 with
respect to the completed acquisition of Spreckles Industries, Inc.
(Spreckels) (known as Yale International, Inc.) by merger of the Company's
wholly owned subsidiary, L Aquisition Corp., with and into Spreckles
pursuant to terms of its merger agreement with Spreckles.
11
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
COLUMBUS McKINNON CORPORATION
(Registrant)
Date: February 12, 1997 /s/ Robert L. Montgomery, Jr.
------------------- -----------------------------
Robert L. Montgomery, Jr.
Executive Vice President and Chief
Financial Officer
12
<PAGE>
EXHIBIT INDEX
Exhibit Exhibit Description Location
11.1 Columbus McKinnon Corporation Computation of Earnings per Share E - 11.1
13
<PAGE>
<TABLE>
<CAPTION>
(EPS)
COLUMBUS McKINNON CORPORATION
COMPUTATION OF EARNINGS PER SHARE
Exhibit 11.1
Three Months Ended Nine Months Ended
------------------------------------------------
29-Dec-96 31-Dec-95 29-Dec-96 31-Dec-95
------------------------------------------------
<S> <C> <C> <C> <C>
Primary and fully diluted:
Weighted average common
shares outstanding 13,116,000 7,101,000 13,184,000 7,040,000
Weighted average shares issued
in fiscal 1996 (1) 0 36,000 0 91,000
Weighted average shares issued
in fiscal 1996 which can be
repurchased (2) 0 (34,000) 0 (83,000)
----------- ---------- ----------- ----------
Total 13,116,000 7,103,000 13,184,000 7,048,000
=========== ========== =========== ==========
Net income applicable to
common shareholders $ 118,000 $2,754,000 $10,361,000 $8,751,000
Net income per
common share 0.01 0.39 0.79 1.24
<FN>
- --------------------------------------------------------------
(1) Includes shares issued since December 20, 1994 (one year prior to the
initial filing of the IPO registration statement) at $12.69 per share
which is less than the initial public offering price of $15 deemed
outstanding for all periods presented in accordance with Staff
Accounting Bulletin No. 83.
(2) Represents the number of shares assumed to be purchased at $14 per
share, the IPO mid-point price, with proceeds from the shares issued in
1996.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S UNAUDITED CONDENSED FINANCIAL STATEMENTS AS OF DECEMBER 29, 1996 AND
FOR THE THREE MONTH PERIOD THEN ENDED AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0001005229
<NAME> COLUMBUS MCKINNON CORPORATION
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-START> SEP-30-1996
<PERIOD-END> DEC-29-1996
<CASH> 12,751
<SECURITIES> 0
<RECEIVABLES> 68,504
<ALLOWANCES> 0
<INVENTORY> 94,606
<CURRENT-ASSETS> 196,528
<PP&E> 79,365
<DEPRECIATION> 19,890
<TOTAL-ASSETS> 499,471
<CURRENT-LIABILITIES> 79,128
<BONDS> 0
0
0
<COMMON> 137
<OTHER-SE> 146,550
<TOTAL-LIABILITY-AND-EQUITY> 499,471
<SALES> 103,393
<TOTAL-REVENUES> 103,393
<CGS> 73,289
<TOTAL-COSTS> 73,289
<OTHER-EXPENSES> 18,864
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,819
<INCOME-PRETAX> 6,912
<INCOME-TAX> 3,370
<INCOME-CONTINUING> 3,219
<DISCONTINUED> 0
<EXTRAORDINARY> (3,101)
<CHANGES> 0
<NET-INCOME> 118
<EPS-PRIMARY> .01
<EPS-DILUTED> .01
</TABLE>
