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 December 28, 1997
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
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(Exact name of registrant as specified in its charter)
New York 16-0547600
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
140 John James Audubon Parkway, Amherst, NY 14228-1197
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(Address of principal executive offices) (Zip code)
(716) 689-5400
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(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
January 31, 1997 was: 13,755,858 shares.
<PAGE>
FORM 10-Q INDEX
COLUMBUS MCKINNON CORPORATION
DECEMBER 28, 1997
Page #
PART I. FINANCIAL INFORMATION ------
Item 1. Condensed Consolidated Financial Statements (Unaudited)
Condensed consolidated balance sheets -
December 28, 1997 and March 31, 1997 2
Condensed consolidated statements of income and retained earnings
Three months and nine months ended December 28, 1997
and December 29, 1996 3
Condensed consolidated statements of cash flows -
Nine months ended December 28, 1997 and December 29, 1996 4
Notes to condensed consolidated financial statements -
December 28, 1997 5
Item 2. Management's Discussion and Analysis of Results of Operations
and Financial Condition 9
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 13
Item 2. Changes in Securities - none. 13
Item 3. Defaults upon Senior Securities - none. 13
Item 4. Submission of Matters to a Vote of Security Holders - none. 13
Item 5. Other Information - none. 13
Item 6. Exhibits and Reports on Form 8-K 13
1
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements (Unaudited)
COLUMBUS MCKINNON CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
DECEMBER 28, MARCH 31,
1997 1997
-----------------------------
(IN THOUSANDS)
ASSETS:
Current assets:
Cash and cash equivalents $ 5,883 $ 8,907
Trade accounts receivable 79,726 74,446
Inventories 95,999 94,409
Net assets held for sale 10,302 14,971
Prepaid expenses 6,877 13,638
------- -------
Total current assets 198,787 206,371
Net property, plant, and equipment 63,489 63,942
Goodwill and other intangibles, net 241,687 250,062
Marketable securities 16,293 13,590
Deferred taxes on income 9,196 8,935
Other assets 5,573 5,345
------- -------
Total assets $535,025 $548,245
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY:
Current liabilities:
Notes payable to banks $ 445 $ 1,562
Trade accounts payable 21,426 28,330
Accrued liabilities 41,956 35,761
Current portion of long-term debt 22,504 22,344
------- -------
Total current liabilities 86,331 87,997
Long-term debt, less current portion 246,016 263,944
Other non-current liabilities 39,068 46,148
------- -------
Total liabilities 371,415 398,089
Shareholders' equity:
Common stock 137 137
Additional paid-in capital 96,024 95,254
Retained earnings 73,743 60,999
ESOP debt guarantee (3,539) (4,201)
Other (2,755) (2,033)
-------- -------
Total shareholders' equity 163,610 150,156
-------- -------
Total liabilities and shareholders' equity $535,025 $548,245
======= =======
See accompanying notes to condensed consolidated financial statements.
2
<PAGE>
<TABLE>
<CAPTION>
COLUMBUS MCKINNON CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
(UNAUDITED)
THREE MONTHS ENDED NINE MONTHS ENDED
--------------------------- ---------------------------
DECEMBER 28, DECEMBER 29, DECEMBER 28, DECEMBER 29,
1997 1996 1997 1996
------------ ------------ ------------ ------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Net sales $124,093 $103,393 $372,442 $233,554
Cost of products sold 88,680 73,289 265,990 164,249
------- ------- ------- -------
Gross profit 35,413 30,104 106,452 69,305
Selling expenses 11,565 9,522 33,358 20,834
General and administrative expenses 5,751 7,490 18,087 16,889
Amortization of intangibles 2,487 1,852 7,581 2,751
------- ------- ------- -------
19,803 18,864 59,026 40,474
------- ------- ------- -------
Income from operations 15,610 11,240 47,426 28,831
Interest and debt expense 5,294 4,819 17,729 5,298
Interest and other income 432 491 1,076 906
------- ------- ------- -------
Income before income taxes, minority
interest and extraordinary charge 10,748 6,912 30,773 24,439
Income tax expense 5,263 3,370 15,227 10,654
------- ------- ------- -------
Income before minority interest and
extraordinary charge 5,485 3,542 15,546 13,785
Minority interest - 323 - 323
------- ------- ------- -------
Income before extraordinary charge 5,485 3,219 15,546 13,462
Extraordinary charge for debt extinguishment - (3,101) - (3,101)
------- ------- ------- -------
Net income 5,485 118 15,546 10,361
Retained earnings - beginning of period 69,194 57,910 60,999 49,386
Cash dividends of $0.07, $0.07, $0.21 and
$0.20 per share (936) (923) (2,829) (2,642)
------- ------- ------- -------
Retained earnings - end of period $ 73,743 $ 57,105 $ 73,716 $ 57,105
======= ======= ======= =======
Earnings per share data, both basic and diluted:
Income before extaordinary charge
for debt extinguishment $0.41 $0.25 $1.16 $1.02
Extraordinary charge for debt extinguishment - (.24) - (.23)
----- ----- ----- -----
Net income $0.41 $0.01 $1.16 $0.79
===== ===== ===== =====
See accompanying notes to condensed consolidated financial statements.
</TABLE>
3
<PAGE>
COLUMBUS MCKINNON CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
NINE MONTHS ENDED
--------------------------
DECEMBER 28, DECEMBER 29,
1997 1996
------------ ------------
(IN THOUSANDS)
OPERATING ACTIVITIES:
Net income $ 15,546 $ 10,361
Adjustments to reconcile net income to
net cash provided by operating activities:
Extraordinary charge for early debt extinguishment - 3,101
Minority interest - 323
Depreciation and amortization 14,244 6,796
Other 1,080 215
Changes in operating assets and liabilities
net of effects from businesses purchased:
Trade accounts receivable (5,979) (248)
Inventories (1,590) (51)
Prepaid expenses 8,986 472
Other assets (311) (346)
Trade accounts payable (6,038) (7,444)
Accrued and non-current liabilities (1,909) 5,124
--------- ---------
Net cash provided by operating activities 24,029 18,303
INVESTING ACTIVITIES:
Purchase of marketable securities, net of sales (2,295) (1,597)
Net assets held for sale 4,669 -
Capital expenditures (6,161) (4,983)
Yale acquisition costs 42 (159,247)
Lister acquisition costs (6) (7,054)
Other (204) (234)
--------- ---------
Net cash used in investing activities (3,955) (173,115)
FINANCING ACTIVITIES:
Net (payments) borrowings under revolving
line-of-credit agreements (1,273) 75,382
Repayment of debt (17,622) (72,865)
Proceeds from issuance of long-term debt 12 164,099
Deferred financing costs incurred (558) (10,000)
Dividends paid (2,802) (2,505)
Reduction of ESOP debt guarantee 625 1,075
Other - 2,667
--------- ---------
Net cash (used in) provided by financing activities (21,618) 157,853
Effect of exchange rate changes on cash (1,480) (461)
--------- ---------
Net increase in cash and cash equivalents (3,024) 2,580
Cash and cash equivalents at beginning of period 8,907 10,171
--------- ---------
Cash and cash equivalents at end of period $ 5,883 $ 12,751
========= =========
See accompanying notes to condensed consolidated financial statements.
4
<PAGE>
COLUMBUS MCKINNON CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
DECEMBER 28, 1997
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
28, 1997, and the results of its operations and its cash flows for the three
and nine month periods ended December 28, 1997 and December 29, 1996, have
been included. Results for the period ended December 28, 1997 are not
necessarily indicative of the results that may be expected for the year
ended March 31, 1998. 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, 1997.
2. Inventories consisted of the following:
DECEMBER 28, MARCH 31,
1997 1997
-------------------------
(IN THOUSANDS)
At cost--FIFO basis:
Raw materials $ 25,747 $ 35,815
Work-in-process 25,469 17,206
Finished goods 48,498 44,344
-------- -------
99,714 97,365
LIFO cost less than FIFO cost (3,715) (2,956)
-------- -------
$ 95,999 $ 94,409
======== =======
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 $29,033,000 and $22,370,000 of
accumulated depreciation at December 28, 1997 and March 31, 1997,
respectively.
4. Goodwill and other intangibles, net includes $12,836,000 and $5,644,000 of
accumulated amortization at December 28, 1997 and March 31, 1997,
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.
5
<PAGE>
Yale was self-insured for product liability claims up to a maximum of
$500,000 per occurrence and maintained product liability insurance with a
$100 million cap per occurrence through July 31, 1997 when Yale was added to
the Company's coverage as described above. The Company has been advised that
a customer has alleged that one of Yale's products was the cause of a fire
that occurred in January 1995 at a manufacturing facility, resulting in
losses in excess of Yale's policy limits. A formal complaint has been filed
seeking damages in excess of $500 million. However, it is the opinion of
management that there was no manufacturing defect and that the claim will in
all likelihood be settled within the Company's policy limits.
6. To manage its exposure to interest rate fluctuations, the Company has
interest rate swaps with a notional amount of $22 million through January 2,
1999 and $3.5 million from January 2, 1999 through July 2, 2002, both based
on LIBOR at 5.9025%. In order to comply with its credit agreements, the
Company also has LIBOR-based interest rate caps on $40 million of debt
through December 16, 1998 and on an additional $49.5 million of debt through
December 16, 1999 at 9% and 10%, respectively. Net payments or receipts
under the swap and cap agreements are recorded as adjustments to interest
expense. The carrying amount of the Company's debt instruments approximates
the fair values.
7. In 1997 the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128, Earnings per Share. Statement 128
replaced the previously reported primary and fully diluted earnings per
share with basic and diluted earnings per share. Unlike primary earnings per
share, basic earnings per share excludes any dilutive effects of options,
warrants, and convertible securities. Diluted earnings per share is very
similar to the previously reported fully diluted earnings per share. All
earnings per share amounts for all periods have been presented, and where
necessary, restated to conform to the Statement 128 requirements.
6
<PAGE>
<TABLE>
<CAPTION>
The following table sets forth the computation of basic and diluted earnings
per share before extraordinary charge for debt extinguishment:
THREE MONTHS ENDED NINE MONTHS ENDED
----------------------------- -----------------------------
DECEMBER 28, DECEMBER 29, DECEMBER 28, DECEMBER 29,
1997 1996 1997 1996
----------------------------- -----------------------------
<S> <C> <C> <C> <C>
Numerator for basic and diluted earnings
per share:
Income before extraordinary charge $5,485,000 $3,219,000 $15,546,000 $13,462,000
========== ========== =========== ===========
Denominators:
Weighted-average common
stock outstanding -
denominator for basic EPS 13,274,000 13,116,000 13,344,000 13,184,000
Effect of dilutive employee stock options 50,000 - 50,000 -
---------- ---------- ------------- ----------
Adjusted weighted-average common
stock outstanding and assumed
conversions - denominator
for diluted EPS 13,324,000 13,116,000 13,394,000 13,184,000
========== ========== ========== ==========
</TABLE>
8. Income tax expense for the three month periods ended December 28, 1997 and
December 29, 1996 and also for the nine month periods then ended exceeds the
customary relationship between income tax expense and income before income
taxes due to nondeductible amortization of goodwill of $2,487,000,
$1,852,000, $7,581,000 and $2,751,000, respectively.
9. 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 Industrial Products, 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.
On December 19, 1996, the Company acquired all of the outstanding stock of
Lister Bolt & Chain Ltd. and of Lister Chain & 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.
7
<PAGE>
The following table presents pro forma summary information for the three and
nine month periods ended December 29, 1996 as if the Yale and Lister
acquisitions and related borrowings had occurred as of April 1, 1996, which
is the beginning of fiscal 1997. 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:
THREE MONTHS ENDED NINE MONTHS ENDED
------------------ -----------------
DECEMBER 29, 1996
-----------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
Pro forma:
Net sales $ 112,794 $ 343,225
Income from operations 12,097 38,951
Income before extraordinary charge 2,908 10,113
Net (loss) income (193) 7,012
Earnings per share before
extraordinary charge, both
basic and diluted 0.22 0.77
Earnings per share, both
basic and diluted (0.01) 0.53
10. On January 7, 1998 the Company acquired all of the outstanding stock of
Univeyor A/S ("Univeyor"), a Denmark-based manufacturer and distributor of
automated material handling systems, and has accounted for the acquisition
as a purchase. The total cost of the acquisition was approximately $16.5
million, consisting of $15.0 million of cash financed by the Company's
revolving debt facility and $1.5 million of assumed debt.
8
<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 28, 1997 and December 29, 1996
Net sales in the fiscal 1998 quarter ended December 28, 1997 were $124,093,000,
an increase of $20,700,000 or 20.0% over the fiscal 1997 quarter ended December
29, 1996. Net sales for the nine months ended December 28, 1997 were
$372,442,000, an increase of 59.5% over the nine months ended December 29, 1996.
Sales growth during the current quarter and nine month periods was due primarily
to the October 1996 Yale acquisition and December 1996 Lister acquisition which
affected the general distribution, specialty distribution, service-after-sale,
and original equipment manufacturers distribution channels. The Company
categorizes all of those distribution channels as "commercial" sales. In
addition to the effects of the acquisitions, the Company also experienced
increased sales volume in the quarter through all of its commercial distribution
channels due to strong demand in the marketplace. The only market channel
experiencing softness was the international consumer channel due to a shift in
demand from small retail hardware stores to larger do-it-yourself superstores,
to which the Company supplies only a small share. In addition, list price
increases of approximately 4% were introduced in both December 1997 and
November/December 1996 affecting many of the Company's hoist, chain and forged
products sold in its domestic commercial markets. Sales in the commercial and
the consumer distribution channel groups were as follows, in thousands of
dollars and with percentage changes for each group:
THREE MONTHS ENDED NINE MONTHS ENDED
DEC. 28, DEC. 29, CHANGE DEC. 28, DEC. 29, CHANGE
1997 1996 AMOUNT % 1997 1996 AMOUNT %
----------------------------- -------------------------------
(IN THOUSANDS, EXCEPT PERCENTAGES)
Commercial sales:
Domestic $ 93,310 $ 79,597 $13,713 17.2 $275,903 $176,738 $ 99,165 56.1
International 24,437 17,647 6,790 38.5 76,404 37,558 38,846 103.4
------- ------- ------ ------- ------- -------
117,747 97,244 20,503 21.1 352,307 214,296 138,011 64.4
Consumer sales:
Domestic 6,144 5,609 535 9.5 18,710 17,487 1,223 7.0
International 202 540 (338) (62.6) 1,425 1,771 (346) (19.5)
------- ------- ------ ------- ------- -------
6,346 6,149 197 3.2 20,135 19,258 877 4.6
------- ------- ------ ------- ------- -------
Net sales $124,093 $103,393 $20,700 20.0 $372,442 $233,554 $138,888 59.5
======= ======= ====== ======= ======= =======
The Company's gross profit margins were approximately 28.5%, 29.1%, 28.6% and
29.7% for the fiscal 1998 and 1997 quarters and the nine months then ended,
respectively. The decrease in gross profit margin in the current quarter and
nine month periods resulted primarily from a change in the classification of
approximately $1.9 million and $5.7 million, respectively, of costs into cost of
products sold which previously had been classified as general and administrative
expenses. This change was made for intracorporate consistency and had a minimal
effect on income from operations. The current quarter's gross profit margin was
favorably impacted by slight fluctuations in product mix. However, one of the
Yale facilities acquired in fiscal 1997 is continuing to realize
lower-than-average gross profit due to production workflow inefficiencies that
are being aggressively addressed by management, which unfavorably impacted gross
profit by approximately $1,350,000 during the first three quarters of fiscal
1998.
Selling expenses were $11,565,000, $9,522,000, $33,358,000 and $20,834,000 in
the fiscal 1998 and 1997 quarters and the nine months then ended, respectively.
The 1998 expenses were impacted by the addition of Yale and Lister sales. As a
percentage of consolidated net sales, selling expenses were 9.3%, 9.2%, 9.0% and
8.9% in the fiscal 1998 and 1997 quarters and the nine months then ended,
respectively. The higher percentage in the fiscal 1998 quarter is due primarily
to the timing of various marketing related expenses.
9
<PAGE>
General and administrative expenses were $5,751,000, $7,490,000, $18,087,000 and
$16,889,000 in the fiscal 1998 and 1997 quarters and the nine months then ended,
respectively. The 1998 expenses were impacted by the addition of Yale and Lister
activities. As a percentage of consolidated net sales, general and
administrative expenses were 4.6%, 7.2%, 4.9% and 7.2% in the fiscal 1998 and
1997 quarters and the nine months then ended, respectively. As noted above, the
improved percentages in fiscal 1998 are due primarily to a change that
reclassifies approximately $1.9 million and $5.7 million for the three and nine
month periods, respectively, of expenses previously classified as general and
administrative into cost of products sold for intracorporate consistency. The
improved percentage also results from the fixed nature of costs in relation to
the increased sales.
Amortization of intangibles was $2,487,000, $1,852,000, $7,581,000 and
$2,751,000 in the fiscal 1998 and 1997 quarters and the nine months then ended,
respectively; increases are due to the amortization of goodwill resulting from
the acquisitions of Yale and of Lister.
Interest and debt expense was $5,294,000, $4,819,000, $17,729,000 and $5,298,000
in the fiscal 1998 and 1997 quarters and the nine months then ended,
respectively. The fiscal 1998 increase is primarily due to debt incurred to fund
the Yale acquisition. As a percentage of consolidated net sales, interest and
debt expense was 4.3%, 4.7%, 4.8% and 2.3% in the fiscal 1998 and 1997 quarters
and the nine months then ended, respectively.
Interest and other income was $432,000, $491,000, $1,076,000 and $906,000 in the
fiscal 1998 and 1997 quarters and the nine months then ended, respectively. The
fiscal 1998 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 income before income taxes were 49.0%, 48.8%,
49.5% and 43.6% in the fiscal 1998 and 1997 quarters and the nine months then
ended, respectively. The fiscal 1998 percentages reflect the effect of
nondeductible amortization of goodwill resulting from the Yale, Lister and
Lift-Tech acquisitions. The fiscal 1997 percentages reflect the effect of
Lift-Tech nondeductible goodwill, and Yale for the quarter only.
Minority interest was $323,000 in the fiscal 1997 quarter and also in the nine
months then ended, resulting from the 28% of Yale which was not owned by the
Company during that period.
As a result of the above, income before extraordinary charge increased
$1,943,000 or 60.4% for the quarter and $2,084,000 or 15.5% for the nine months
then ended.
In December of fiscal 1997 an extraordinary charge of $3,101,000 was recorded
for the early extinguishment of acquired Yale debt which was at 11.5% interest,
replaced with five year revolving debt with interest currently at a Eurodollar
rate based on LIBOR ("Eurodollar rate") plus 150 basis points.
Net income, therefore, increased $5,044,000 and $5,185,000 for the quarter and
nine months then ended, respectively.
LIQUIDITY AND CAPITAL RESOURCES
On January 7, 1998 the Company acquired all of the outstanding stock of Univeyor
A/S ("Univeyor"), a Denmark-based manufacturer and distributor of automated
material handling systems, and has accounted for the acquisition as a purchase.
The total cost of the acquisition was approximately $16.5 million, consisting of
$15.0 million of cash financed by the Company's revolving debt facility and $1.5
million of assumed debt.
10
<PAGE>
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.
Effective July 17, 1997 the interest rates on the Company's credit facility were
revised as follows: Term Loan A and the Revolving Credit facility rates vary
based on the Company's leverage ratio, and are currently at a Eurodollar rate
plus 150 basis points; the Term Loan B rate also varies based on the Company's
leverage ratio, and is currently at a Eurodollar rate plus 200 basis points.
At December 28, 1997 $83,000,000 was outstanding under the revolving credit
facility and $36,000,000 was available.
Net cash provided by operating activities increased to $24,029,000 for the nine
months ended December 28, 1997 from $18,303,000 for the nine months ended
December 29, 1996. The $5,726,000 increase in net cash provided by operating
activities resulted primarily from a $7,448,000 increase in depreciation and
amortization offset somewhat by an increase in working capital. These
fluctuations are primarily a result of including the Yale and Lister operations
in the current fiscal period.
Net cash used in investing activities decreased to $3,955,000 for the nine
months ended December 28, 1997 from $173,115,000 for the nine months ended
December 29, 1996. The $169,160,000 decrease is due primarily to the Yale and
Lister acquisitions which occurred in fiscal 1997.
Net cash used in financing activities was $21,618,000 for the nine months ended
December 28, 1997 while net cash provided by financing activities was
$157,853,000 for the nine months ended December 29, 1996. The $179,471,000
change is primarily due to the financing of the Yale and Lister acquisitions
reflected in the nine months ended December 29, 1996.
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 28, 1997 and December
29, 1996 were $6,161,000 and $4,983,000, 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 Canada, Mexico, Europe,
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.
YEAR 2000 CONVERSIONS
The Company is moving forward with its Year 2000 Readiness project. This project
is addressing all components of its information technology infrastructure.
Currently, corporate-wide assessment is underway with specific areas already
complete. The assessment of Year 2000 on the Company's customized business
information system has been completed with modifications and enhancements
underway.
11
<PAGE>
EFFECTS OF NEW ACCOUNTING PRONOUNCEMENTS
The Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 130 "Reporting Comprehensive Income," which the Company
will adopt as of April 1, 1998. Statement No. 130 establishes new rules for the
reporting and display of comprehensive income and its components. This includes
unrealized gains or losses on the Company's available-for-sale securities,
foreign currency translation adjustments, and minimum pension liability
adjustments, which currently are reported in shareholders' equity, and will be
included and disclosed in total comprehensive income upon adoption of the
Statement. The impact of compliance with this Statement has not yet been
determined.
The FASB also issued FAS Statement No. 131 "Disclosures about Segments of an
Enterprise and Related Information," which the Company will adopt as of April 1,
1998. Statement No. 131 superseded FAS Statement No. 14 "Financial Reporting for
Segments of a Business Enterprise." Statement No. 131 establishes new standards
for determining segment criteria and annual and interim reporting of that data.
It also establishes new disclosures about products, geographic areas and major
customers. Currently, the Company reports one operating segment under Statement
No. 14 and, while the impact of compliance with Statement No. 131 has not yet
been determined, the Company may be required to report more than one segment
upon its adoption.
12
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings - none other than that previously disclosed
within "Notes to Condensed Consolidated Financial Statements"
footnote number 5 contained herein.
Item 2. Changes in Securities - none.
Item 3. Defaults upon Senior Securities - none.
Item 4. Submission of Matters to a Vote of Security Holders - none.
Item 5. Other Information - none.
Item 6. Exhibits and Reports on Form 8-K
On October 29, 1997 the Company filed Form 8-K dated October 29, 1997 with
respect to Stockholder Rights Agreement.
13
<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 11, 1998 /s/ Robert L. Montgomery, Jr.
------------------- ------------------------------
Robert L. Montgomery, Jr.
Executive Vice President and Chief
Financial Officer
14
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM SEC
FORM 10-Q 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> 9-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-START> APR-01-1997
<PERIOD-END> DEC-28-1997
<CASH> 5,883
<SECURITIES> 0
<RECEIVABLES> 79,726
<ALLOWANCES> 0
<INVENTORY> 95,999
<CURRENT-ASSETS> 198,787
<PP&E> 92,522
<DEPRECIATION> 29,033
<TOTAL-ASSETS> 535,025
<CURRENT-LIABILITIES> 86,331
<BONDS> 0
0
0
<COMMON> 137
<OTHER-SE> 163,473
<TOTAL-LIABILITY-AND-EQUITY> 535,025
<SALES> 372,442
<TOTAL-REVENUES> 372,442
<CGS> 265,990
<TOTAL-COSTS> 265,990
<OTHER-EXPENSES> 59,026
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 17,729
<INCOME-PRETAX> 30,773
<INCOME-TAX> 15,227
<INCOME-CONTINUING> 15,546
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 15,546
<EPS-PRIMARY> 1.16
<EPS-DILUTED> 1.16
</TABLE>
