Columbus McKinnon Corporation
2004 Annual Report
Market Leadership Columbus McKinnon is North America’s largest producer of hoists and
higher grade chain and the second largest producer of forged attachments.
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Global Reach Columbus McKinnon’s market presence and reach cover the major industrial markets of
North America, Central America, South America, Europe and Asia.
Financial Summary
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(In thousands, except per share,
percent change, margin and ratio data)
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Data as of or for the year ended March 31,
2004
2003
% change
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Income Statement Data
Net sales
Restructuring charges
Amortization of intangibles
Income from operations
Income (loss) before cumulative effect of accounting change
Net income (loss)
Per diluted share
Margin Data
Gross margin
Operating income margin
Other Data
Cash flow from operating activities per share
Revenues per employee
Capital expenditures
Balance Sheet Data
Total assets
Total liabilities
Total funded debt
Total shareholders’ equity
$ 444,591
$ 453,320
1,239
383
29,867
1,193
1,193
0.08
3,697
4,246
25,380
( 6,011 )
(14,011 )
( 0.97 )
23.6 %
6.7 %
23.7 %
5.6 %
$
1.81
162.0
3,619
$
0.98
150.9
5,040
$ 473,363
$ 482,606
410,385
287,939
62,978
429,899
314,070
52,707
-1.9
-66.5
-91.0
17.7
N/M
N/M
N/M
84.7
7.4
-28.2
-1.9
-4.5
-8.3
19.5
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N/M - not meaningful
Company Profile
Columbus McKinnon Corporation (Nasdaq: CMCO) is a leading designer and
manufacturer of material handling products, systems and services which lift,
secure, position and move material ergonomically, safely, precisely and efficiently.
Headquartered in Amherst, New York, Columbus McKinnon’s major products
include hoists, cranes, chain and forged attachments. The Company’s products
serve a wide variety of commercial and industrial applications that require the
safety and quality provided by Columbus McKinnon’s superior product design
and engineering know-how.
Table of Contents
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Letter to Shareholders
Major Products
Market Leadership/
Global Reach
SEC Form 10K Document
1
2
4
5
Corporate Information/
Board of Directors and
Corporate Officers
Inside
Back
Cover
Strategy and Focus
Our strategy is to leverage our superior material handling design and engineering know-how to provide differentiated
products, systems and services to lift, secure, position and move material ergonomically, safely, precisely and efficiently.
Our focus is on industrial and commercial applications with the highest potential for growing market share in countries
that offer the greatest volume and profit potential.
Dear Shareholders:
Fiscal 2004 was a year of continued progress and improvement for Columbus McKinnon. We stabilized sales, returned
to profitability and reduced net debt by over $32 million. Fiscal 2004 net sales were $444.6 million, compared with
$453.3 million last year, with the difference primarily attributable to divestitures. Net income for fiscal 2004 was $1.2
million, or $0.08 per diluted share, compared with a net loss of $14.0 million or $0.97 per diluted share for fiscal 2003.
The focus on our more profitable core Products segment – which currently contributes almost 90% to sales – and on our
major strategic objectives discussed below is producing positive results while positioning Columbus McKinnon for further
improvement as the industrial economy recovers.
Reducing costs and increasing productivity Over the last three years, facility rationalizations and Lean
Manufacturing have led our drive to lower CM’s cost structure and improve our productivity. Because these initiatives
were undertaken during a prolonged industrial recession, their full favorable long-term impact on our profitability has
been muted by lower market demand. In a recovering economy, our reduced cost structure positions us well for higher
marginal profitability as volumes increase.
Increasing financial flexibility In July 2003, we successfully completed a refinancing of debt, selling $115 million of
senior secured notes which allowed us to repay the $66.8 million second secured senior term loan and repurchase $35.7
million in senior subordinated notes. This refinancing provided a significant boost to our financial flexibility by reducing
interest costs by over $2 million per year, ensuring the liquidity to fund our working capital needs and extending the matu-
rity of a significant portion of our long-term debt to 2010.
Over the last three years, we reduced net debt by $113.7 million, with $90.4 million of this reduction funded by operating
activities. The fact that we achieved this during the worst industrial recession in 20 years attests to the strength of
Columbus McKinnon’s cash flow and the benefit of our cost reduction initiatives.
During the year, we completed the divestiture of our Positech and Lister divisions which were businesses with lower
synergistic value and low or negative earnings. We continue to market surplus property and to move toward divesting
several less synergistic businesses, primarily based in our less profitable Solutions segment. Any additional cash
generated by asset sales will be applied to debt.
Protecting domestic market share The strength of Columbus McKinnon’s brands and the breadth of our product
line, combined with our large installed base, strong distributor relationships and excellent reputation for service, provide
a formidable defense of our leading domestic market positions in hoists, chain and forgings. In a more competitive
market environment, we are also acting offensively to grow share by reducing costs to be more competitive and by
developing new and enhanced products. In the last three years, we developed over 100 new products, which contribute
approximately $35 million in annual revenues. The launch of new and improved products will continue to be a focus
of our efforts to grow domestic sales and market share.
Increasing penetration into international markets For many years, we have viewed international markets as
our best opportunity for top line growth because we already hold leading market positions in the United States and
because of the trend of manufacturers, a primary end user of our products, to build facilities in lower cost global markets.
In fiscal 2004, Columbus McKinnon’s international sales were $158.6 million or 36% of net sales. Over the last eight
years, international sales have grown at a 24.7% compound annual growth rate. Our global operations are very well-
established with manufacturing facilities in Mexico and China, large world markets where manufacturing operations are
rapidly expanding, as well as factories strategically located in Europe. With sales and warehouse locations covering
major markets of Central and South America, Western and Eastern Europe, and Asia, we have built a very strong founda-
tion to grow international sales.
I want to thank all of the CM Associates around the world for their support in implementing new initiatives while continuing
to deliver the quality products and service for which we are known worldwide. On behalf of everyone at Columbus McKinnon,
I also want to thank Bob Montgomery, our long-time Chief Financial Officer, who retired as Executive Vice President and a
Director on March 31, 2004, for his many contributions to the Company’s success over 30 years of outstanding service.
As fiscal 2005 begins, we are feeling better about the future than we have in some time. Demand in most of the markets
our Products segment serves began to improve during the second half of last year. With the new cost structure at CM,
we have significant operating leverage. We are also on firmer ground financially and are effectively executing our strategy
for continued recovery and renewed growth. I look forward to reporting to shareholders on our continued progress.
Timothy T. Tevens President and Chief Executive Officer
1
Major Products Hoists, chain and forgings, and industrial cranes are Columbus McKinnon’s leading
product groups representing 81% of fiscal 2004 sales.
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Hoists
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Columbus McKinnon manufactures a variety of hoist products including electric chain hoists, electric wire rope hoists,
hand-operated hoists, lever tools, hoist trolleys, air balancers and air-powered hoists that are sold under several industry-
recognized brand names. Load capacities for the Company’s hoist product lines generally range from one-eighth of a
ton to 100 tons. As North America’s largest manufacturer of overhead lifting devices, we believe Columbus McKinnon
has more overhead hoists in use in North America than all of its competitors combined. We also offer a line of standard
and custom-designed below-the-hook tooling, clamps and textile strappings that work in concert with hoists and cranes.
Independent crane builders represent a significant specialized
distribution channel for Columbus McKinnon’s flagship hoist
and chain products and other crane components, including end
trucks, electronic controls and manual and electronic motor
driven hoist trolleys. As the owner of CraneMart, North America’s
largest integrated network of overhead crane builders,
Columbus McKinnon operates a nationally recognized marketing
program currently supporting over 50 independent crane
builders covering 89 metropolitan areas. Participants utilize
Columbus McKinnon products in their own offerings and receive
a full range of services from CraneMart including best pricing,
parts distribution rights, dedicated technical support, shared
resources and TechLink, our newest
service that allows for automated crane
and hoist inspection.
Hoist Product Line Performance Metrics
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Metric
FYE 2004
FYE 2003
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Sales
$197.4 million
Percentage of
total sales
U.S. market share*
Lean Manufacturing
Rapid Improvement
Events
Manufacturing facilities
Manufacturing
square footage
Inventories
44%
61%
77
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1,011,900
$34.3 million
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$202.3 million
45%
62%
79
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1,011,900
$37.6 million
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Brands:
Yale, CM, Coffing, Shaw-Box, Budgit,
Chester, Little Mule, Camlok, Tugit, Tigrip, Cady
* Powered hoists, manual hoists, and trolleys representing 52% and
53% of fiscal 2004 and fiscal 2003 hoist sales, respectively.
Distribution and Service:
Primarily sold through a network of over 20,000 distributors in commercial and consumer channels
for both domestic and international markets. Columbus McKinnon is also a leading supplier to
industrial catalog houses. Service for hoist products is provided through over 350 hoist parts,
product, service and repair centers.
End-user Markets:
General manufacturing, production industries, marine, power generation and distribution, auto-
motive parts manufacturing, entertainment, construction, mining, crane building, logging, oil and
gas production, pulp and paper, metals production, steel processing, warehousing and distribution.
Chain & Forgings
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Columbus McKinnon manufactures alloy chain for use in hoists, overhead lifting, pulling and restraining applications
and carbon steel welded-link chain for various load securement and other non-overhead lifting applications.
Federal regulations in the United States require the use of alloy chain – which Columbus McKinnon first
developed in 1933 – for overhead lifting applications because of its strength and wear characteristics.
Columbus McKinnon holds the number one market share for load chain used in hoists and in high-strength
carbon steel chain used in the transportation industry.
Columbus McKinnon is the second largest North American producer of
forged products and rigging accessories, manufacturing a complete line of
alloy and carbon steel closed-die forged attachments. These attachments
are used in virtually all types of chain and wire rope rigging applications
in a variety of industries. Columbus McKinnon also produces specific
application forgings for a number of OEM customers.
2
Chain and Forged Attachments
Product Line Performance Metrics
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Metric
FYE 2004
FYE 2003
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Sales
$110.7 million
Percentage of
total sales
U.S. market share* –
Chain Product
U.S. market share** –
Forged Attachments
Lean Manufacturing
Rapid Improvement
Events
Manufacturing facilities
25%
37%
41%
61
5
Manufacturing
square footage
448,200
Inventories
$16.5 million
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$105.5 million
23%
39%
39%
80
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464,000
$18.3 million
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Brands:
CM, Big Orange, Hammerlok, Herc-Alloy, Dixie
Industries, Midland Forge, Durbin Durco,
AgWorks, ColorLinks
Distribution and Service:
Chain and forged attachments are distributed
to the industrial and consumer markets through
industrial distributors, hardware distributors and
mass merchandiser outlets. Aftermarket service
is provided to product end-users through a
network of independent distributors, including
13 chain service centers.
End-user Markets:
General manufacturing, marine, agricultural,
automotive parts manufacturing, entertainment,
construction, mining, crane building, trans-
portation, logging, oil and gas, primary metals
production and steel processing.
** Alloy chain, which comprised 51% and 55% of fiscal 2004 and
fiscal 2003 sales, respectively.
** Selected categories comprising 74% and 72% of our fiscal 2004
and 2003 forged attachments revenues, respectively.
Industrial Cranes
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Columbus McKinnon’s Company-owned group of crane builders design, engineer,
manufacture, install, and service industrial crane systems and light rail systems such as
overhead bridge, jib, patented track and gantry cranes. This group manufactures cranes
with capacities up to 100 tons and includes crane builders: Abell-Howe, Larco, Washington
Equipment, Gaffey and All Cranes, a division of Gaffey. Columbus McKinnon’s U.S. crane
service operations are centralized in its Crane Equipment & Service, Inc. (CES) subsidiary.
In addition to OSHA-mandated inspections, repair and preventive maintenance, CES
installs and services cranes and sells replacement parts.
Brands:
Abell-Howe, Gaffey, Larco, WECO (Washington Equipment)
Distribution and Service:
Cranes are sold to large contractors and direct to
end users. Columbus McKinnon’s Crane Equipment
& Service, Inc. (CES) subsidiary is one of the largest
crane service providers in the United States with
approximately 70 service technicians in 19 locations.
End-user Markets:
General manufacturing, marine, agricultural,
construction, crane building, transportation, pulp
and paper, primary metals production, steel pro-
cessing, warehouse.
Crane Product Line Performance Metrics
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Metric
FYE 2004
FYE 2003
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Sales
$53.3 million
Percentage of
total sales
Manufacturing facilities
12%
3
Manufacturing
square footage
Backlog
168,700
$16.3 million
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$48.7 million
11%
4
284,700
$17.5 million
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3
Market Leadership
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North America
Over 2/3 of Columbus McKinnon’s domestic sales are into markets where it has a number one market
position. Product categories in the United States where Columbus McKinnon is the largest domestic supplier
include: powered hoists, manual hoists and trolleys, hoist parts, alloy chain, mechanical actuators, tire shredders,
and jib cranes. With over 20,000 active customers including distributors, industrial catalog
houses and original equipment manufacturers (OEMs), Columbus McKinnon has a
large and diverse customer base and sells to virtually every major industry
group. Competitive strengths include a broad product line of well-known
and respected brands, a large installed base and a reputation for product
quality and service after the sale. These attributes favorably position
Columbus McKinnon in a market environment where distributors,
catalog houses and OEMs are consolidating their supplier base. As a
leading manufacturer of industrial products that enhance productivity
and efficiency while supporting worker safety requirements and needs,
Columbus McKinnon is favorably positioned to benefit from general
industry trends that focus on increasing productivity and safety.
Global Reach
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South America / Europe / Asia
Since Columbus McKinnon’s IPO in 1996, its international sales have grown from 13% of sales to 36% of sales.
The current global presence of Columbus McKinnon includes 26 manufacturing facilities in eight countries
and 35 stand-alone sales/service offices, distribution centers and warehouses in 12 countries. Through direct
sales and its international distribution network, Columbus McKinnon has the capability to sell into most of the
world’s major industrial markets. To support and expand its global customer base, Columbus McKinnon
launched an international web site at www.cminternational.com in March 2003
which provides sales contact information for over 75 countries where its
products can be sold. The focus of Columbus McKinnon’s international
expansion initiative is on the largest industrial markets of South America,
Asia and Europe. With manufacturing plants in Mexico and China,
Columbus McKinnon is located in close proximity to the fastest growing
world markets for expansion of manufacturing capacity. Columbus
McKinnon is currently developing hoist products designed to standards
established by the Federation of European Manufacturers (FEM). The
development of hoist products manufactured to FEM standards will
enhance Columbus McKinnon's competitive position and facilitate
global sales growth.
4
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended March 31, 2004
Commission file number 0-27618
_________________
COLUMBUS McKINNON CORPORATION
(Exact name of Registrant as specified in its charter)
New York
(State of Incorporation)
16-0547600
(I.R.S. Employer Identification Number)
140 John James Audubon Parkway
Amherst, New York 14228-1197
(Address of principal executive offices, including zip code)
(716) 689-5400
(Registrant’s telephone number, including area code)
_________________
Securities pursuant to section 12(b) of the Act:
NONE
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $0.01 Par Value (and rights attached thereto)
Indicate by checkmark 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.
Yes [X] No[ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405
of this chapter) is not contained herein, and will not be contained, to the best of Registrant’s knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K [ ].
Indicate by check mark whether the Registrant is an accelerated filer (as defined in Rule 12b-2 of the Act).
Yes [ ] No[X]
The aggregate market value of the voting stock held by non-affiliates of the Registrant as of September 30,
2003 was $55,947,637, based upon the closing price of the Company’s common shares as quoted on the Nasdaq Stock
Market on such date. The number of shares of the Registrant’s common stock outstanding as of May 31, 2004
was14,896,172 shares.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant’s proxy statement for its 2004 Annual Meeting of Shareholders to be filed with the
Securities and Exchange Commission pursuant to Regulation 14A not later than 120 days after the end of the
Registrant’s fiscal year ended March 31, 2004 are incorporated by reference into Part III of this report.
COLUMBUS McKINNON CORPORATION
2004 Annual Report on Form 10-K
This annual report contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform
Act of 1995. Such statements involve known and unknown risks, uncertainties and other factors that could cause our actual
results to differ materially from the results expressed or implied by such statements, including general economic and business
conditions, conditions affecting the industries served by us and our subsidiaries, conditions affecting our customers and suppliers,
competitor responses to our products and services, the overall market acceptance of such products and services, the integration of
acquisitions and other factors set forth herein under “Management’s Discussion and Analysis of Results of Operations and
Financial Condition – Factors Affecting Our Operating Results.” We use words like “will,” “may,” “should,” “plan,” “believe,”
“expect,” “anticipate,” “intend,” “future” and other similar expressions to identify forward looking statements. These forward
looking statements speak only as of their respective dates and we do not undertake and specifically decline any obligation to
publicly release the results of any revisions to these forward-looking statements that may be made to reflect any future events or
circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated changes. Our actual
operating results could differ materially from those predicted in these forward-looking statements, and any other events
anticipated in the forward-looking statements may not actually occur.
PART I
Item 1.
Business.
General
We are a leading manufacturer and marketer of hoists, cranes, chain, conveyors, material handling systems, lift tables and
component parts serving a wide variety of commercial and industrial end markets. Our products are used to efficiently and
ergonomically move, lift, position or secure objects and loads. We are the domestic market leader in hoists, our principal line of
products, which we believe provides us with a strategic advantage in selling our other products. We have achieved this leadership
position through strategic acquisitions, our extensive and well-established distribution channels and our commitment to product
innovation and quality. We have one of the most comprehensive product offerings in the industry and we believe we have more
overhead hoists in use in North America than all of our competitors combined. Our brand names, including CM, Coffing, Duff-
Norton, Shaw-Box and Yale, are among the most recognized and well-respected in our marketplace.
The Building of Our Business
Founded in 1875, we have grown to our current leadership position through organic growth and also as the result of the 14
businesses we acquired since February 1994. We have developed our leading market position over our 125-year history by
emphasizing technological innovation, manufacturing excellence and superior after-sale service. In addition, the acquisitions
significantly broadened our product lines and services and expanded our geographic, end-user markets and our customer base.
Our senior management has substantial experience in the acquisition and integration of businesses, aggressive cost management,
efficient manufacturing techniques and global operations, all of which are critical to our long-term growth strategy. We have a
proven track record of acquiring complementary businesses and product lines, integrating their activities into our organization,
and aggressively managing their cost structures to improve operating efficiencies. The history of our Products and Solutions
acquisitions since 1994 is outlined below (purchase price in millions):
1
Date of
Acquisition
Acquired Company
Purchase Price
Products/Services
Washington Equipment Company
GL International (1)
Camlok/Tigrip
April 1999
March 1999
January 1999
December 1998 Gautier
August 1998
March 1998
Abell-Howe Crane
ASI (2)
January 1998
Univeyor
December 1996 Lister (4)
October 1996
Yale (3)
November 1995 Lift-Tech
October 1995
January 1995
December 1994 Conco
February 1994
Endor
Cady Lifters
Durbin-Durco
$ 6.4
20.6
10.6
2.9
7.0
155.0
15.0
7.0
270.0
63.0
2.0
0.8
0.8
2.4
Overhead cranes
Overhead cranes
Plate clamps, crane scales
Rotary unions, swivel joints
Overhead cranes
Design and manufacture of custom
conveyor systems
Design and manufacture of powered
roller conveyor systems
Cement kiln chain
Hoists, scissor lift tables, actuators,
jacks and rotary unions
Hoists
Hoists
Below-the-hook lifters
Operator controlled manipulators
Load securing equipment and
attachments
______________________
(1) In January 2002, we sold Handling Systems & Conveyors, Inc., a subsidiary of GL International.
(2) In May 2002, we sold substantially all of the assets of Automatic Systems, Inc. (“ASI”) and in March 2003, we sold LICO Steel, Inc., a subsidiary of
Audubon West, formerly ASI.
(3) In August 1998, we sold the Mechanical Products division of Yale.
(4) In February 2004, we sold the assets of the Lister Chain & Forge division.
Our Position in the Industry
The U.S. material handling industry is generally divided into the following sectors:
• overhead material handling and lifting devices;
• continuous materials movement;
• wheeled handling devices;
• pallets, containers and packaging;
• storage equipment and shop furniture;
• automation systems and robots; and
• services and unbundled software.
The breadth of our products and services enables us to participate in each of these sectors, except for pallets, containers and
packaging and storage equipment and shop furniture. This diversification, together with our extensive and varied distribution
channels, minimizes our dependence on any particular product, market or customer. We believe that none of our competitors
offers the variety of products or services in the markets we serve.
We believe that the demand for our products and services will increase in the future as a result of several favorable trends.
These trends include:
• Productivity Enhancement. In recent years, employers have responded to competitive pressures by seeking to
maximize productivity and efficiency. Our hoists and other lifting and positioning products allow loads to be lifted and placed
quickly, precisely, with little effort and fewer people, thereby increasing productivity and reducing cycle time.
• Safety Regulations and Concerns. Driven by federal and state workplace safety regulations such as the
Occupational Safety and Health Act and the Americans with Disabilities Act, and by the general competitive need to reduce costs
such as health insurance premiums and workers’ compensation expenses, employers seek safer ways to lift and position loads.
Our lifting and positioning products enable these tasks to be performed with reduced risk of personal injury.
• Consolidation of Suppliers. In an effort to reduce costs and increase productivity, our customers and end-users are
2
increasingly consolidating their suppliers. We believe that our competitive strengths will enable us to benefit from this
consolidation and enhance our market share.
Our Competitive Strengths
• Comprehensive Product Line and Strong Brand Name Recognition. We believe we offer the most comprehensive
product lines in the markets we serve. The breadth of product lines enables us to provide a “one-stop shop” to many of our
distributors who are looking to consolidate their suppliers. In addition, our brand names, including Budgit, Chester, CM, Coffing,
Duff-Norton, Little Mule, Shaw-Box and Yale, are among the most recognized and respected in the industry. We believe that our
strong brand name recognition has created customer loyalty and helps us maintain existing business, as well as capture additional
business.
• Leading Market Position and Reputation. We are the largest manufacturer of hoists and alloy and high strength
carbon steel chain in North America. We have developed our leading market position over our 125-year history by emphasizing
technological innovation, manufacturing excellence and superior after-sale service. Over 65% of our domestic net sales in fiscal
2004 were from product categories in which we believe we hold the leading market share. We believe that the strength of our
established products and brands and our leading market position provide us with significant competitive advantages, including
preferred supplier status with a majority of our largest customers. Our large installed base of products also provides us with a
significant competitive advantage in selling our products to existing customers as well as providing repair and replacement parts.
• Low-Cost Manufacturing Capability. We believe we are a low-cost manufacturer and we will continue to consolidate
our manufacturing operations and reduce our manufacturing costs through the following initiatives:
− Rationalization and Consolidation. In fiscal 2002 through fiscal 2004, we conducted projects to close
manufacturing plants and warehouses, as more fully described in Our Strategy on the next page of this document.
− Lean Manufacturing. In fiscal 2002, we initiated Lean Manufacturing techniques, facilitating substantial
inventory reductions, a significant decline in required manufacturing floor area, decreased product lead time and
improved productivity.
− Purchasing Council. We continue to leverage our company-wide purchasing power through our Purchasing
Council to reduce our costs.
− Selective Vertical Integration. We manufacture many of the critical parts and components used in our
manufacture of hoists and cranes, resulting in reduced costs.
− International Expansion. Our continued expansion of our manufacturing facilities in China and Mexico, along
with opening additional sales offices in Europe, South America and the Far East, provides us with another cost
efficient platform to manufacture and distribute certain of our products.
• Distribution Channel Diversity and Strength. Our products are sold to over 20,000 general and specialty distributors
and OEMs, as well as to over 100 consumer outlets. We enjoy long-standing relationships with, and are a preferred provider to,
the majority of our largest distributors and industrial buying groups. Over the past decade, there has been significant
consolidation among distributors of material handling equipment. We have benefited from this consolidation and have
maintained and enhanced our relationships with our leading distributors, as well as formed new relationships. We believe our
extensive North American distribution channels provide a significant competitive advantage and allow us to effectively market
new product line extensions and promote cross-selling.
• Strong After-Market Sales and Support. We believe that we retain customers and attract new customers due to our
ongoing commitment to customer service and satisfaction. We have a large installed base of hoists and chain that drives our
after-market sales for components and repair parts and is a stable source of higher margin business. We maintain strong
relationships with our customers and provide prompt aftermarket service to end-users of our products through our authorized
network of 13 chain repair stations and over 350 hoist service and repair stations.
• Experienced Management Team. Our senior management team provides a depth and continuity of experience in the
material handling industry, with our top six executives possessing an average of approximately 15 years of experience with us.
Our management has experience in aggressive cost management, balance sheet management, efficient manufacturing techniques,
3
acquiring and integrating businesses and global operations, all of which are critical to our long-term growth.
Our Strategy
•
Reduce Our Operating Costs. Our objective is to remain a low-cost producer. We continuously seek ways to reduce
our operating costs and increase our manufacturing productivity. In furtherance of this objective, we have undertaken the
following:
− Rationalization of Facilities. Consolidating acquired operations is an integral part of our acquisition strategy.
In fiscal 2002 through fiscal 2004, we conducted projects to close ten manufacturing plants and three
warehouses, consolidate a number of similar product lines and standardize certain component parts. All of
those projects are complete and properties relating to those closures have been sold or are currently in the
process of being marketed.
−
Implementation of Lean Manufacturing. Through fiscal 2004, we have instituted Lean Manufacturing at 15 of
our major facilities, an initiative which we began in fiscal 2002. Through fiscal 2004, largely as a result of our
Lean Manufacturing initiatives, we recaptured approximately 164,000 square feet of manufacturing floor area
and consolidated an additional 920,000 square feet from closed facilities. Additionally, we reduced inventories
by approximately $40 million, or 36.5%, improved productivity and achieved significant reductions in product
lead times. Specifically in fiscal 2004, we improved inventory turns by 20% to 5.3 times at March 31, 2004
from 4.4 times at March 31, 2003. Our Lean Manufacturing initiative complements our strategy of integrating
and consolidating our manufacturing facilities.
− Leverage Purchasing Power. The Columbus McKinnon Purchasing Council was formed in fiscal 1998 to
centralize and leverage our overall purchasing power, which has grown through acquisitions and has resulted in
significant savings for our Company.
•
Increase Our Domestic Organic Growth. We intend to use our competitive advantages to increase our domestic and
international market share across all of our product lines through the following initiatives:
− Leverage Strong Competitive Position. Our large diversified customer base, our extensive distribution channels
and our close relationships with our distributors provide us with insights into customer preferences and product
requirements that allow us to anticipate and address the future needs of end-users. Additionally, we continue to
implement our CraneMart™ initiative launched in 1999 to build an integrated North American network of
independent and company-owned crane builders. CraneMart™ participants purchase our products and parts for
incorporation in their products as well as for distribution and are provided a full range of services, including best
pricing, parts distribution rights, technical support and shared resources.
− Introduce New Products. We continue to expand our business by developing new material handling products
and services and expand the breadth of our product lines to address customer needs. Over the past three years,
we developed over 100 new or cross-branded products, representing approximately $35 million in fiscal 2004
revenues. During fiscal 2004, we established a dedicated hoist new product development team. The majority of
the hoist products currently under development by this team are guided by the standards established by the
Federation of European Manufacturers, or FEM. We believe these FEM hoist products will facilitate our global
sales expansion strategy as well as improve our cost competitiveness against U.S. imports. Recent new product
introductions include:
o light-weight high speed industrial air hoists;
o a variety of new forged lifting attachments;
o global wire rope hoists used in overhead cranes;
o hand hoists and lever tools manufactured at our Chinese plants; and
o top-running and underhung end-trucks used in the crane builder industry.
•
Increase Our Penetration of International Markets. Our international sales of $158.6 million comprised 36% of our
net sales in fiscal 2004, as compared to $154.2 million, or 26% of our net sales in fiscal 1999. We sell to distributors in
approximately 50 countries and have our primary international facilities in Canada, Mexico, Germany, the United Kingdom,
Denmark, France and China. In addition to new product introductions, we intend to increase international sales and enhance
margins by:
4
− Expanding Our Sales and Service Presence. We continue to expand our sales and service presence in the
major market areas of Europe, Asia and South America through our sales offices and warehouse facilities in
Europe, Thailand, Brazil and Mexico.
−
Increasing Sales and Improving Margins. We intend to increase our sales and improve our margins by
manufacturing and exporting a broader array of high quality, low-cost products and components from our
facilities in Mexico and China. We are developing new hoist products in compliance with FEM standards to
enhance our global distribution and we have sales offices in Europe, South America and the Far East.
•
Reduce Our Debt. We intend to continue our significant focus on cash generation for debt reduction through the
following initiatives:
-
Increase Operating Cash Flow. As a result of execution of our strategies to reduce our operating costs,
increase our domestic organic growth and increase our penetration of international markets, we believe that
with an improved economic climate, we will realize favorable operational leverage. We further believe that
such operational leverage will result in operating cash flow available for debt reduction.
- Reduce Working Capital. We believe that our Lean Manufacturing activities are facilitating inventory
reduction, improving product lead times and increasing our productivity. Since initiating our Lean activities,
we’ve reduced inventory by $39.8 million and improved turns from 3.8 times to 5.3 times, or 39.5%.
Specifically in fiscal 2004, we realized approximately 20% improvement from 4.4 times at March 31, 2003.
- Pursue Selected Divestitures. Our strategy is to exit non-strategic businesses that (i) are not integrated, either
operationally or through sales and marketing, with the rest of our Company; (ii) have market channels and
customers different from the business of our core Products segment; or (iii) have had, and are expected to
continue to have, low returns on our investment of financial and management resources. For example, in fiscal
2004 and 2003, we sold our Positech, Lister Chain & Forge, ASI and LICO Steel businesses after determining
that they did not meet our criteria for continuing investment. We periodically review our businesses and are
currently evaluating strategic alternatives for certain of our businesses. In the aggregate, these businesses
generated fiscal 2004 sales and EBITDA of $82.4 million and $2.5 million, respectively. The proceeds from
divestitures will provide additional liquidity and improve the flexibility of our capital structure.
Our Segments
We currently report our operations in two business segments, Products and Solutions.
Our Products segment designs, manufactures and distributes a broad range of material handling products for various
industrial applications and for consumer use. Products in this segment include a wide variety of electric, lever, hand and air-
powered hoists; hoist trolleys; industrial crane systems such as bridge, gantry and jib cranes; alloy, carbon steel and kiln chain;
closed-die forged attachments, such as hooks, shackles, logging tools and loadbinders; industrial components, such as mechanical
and electromechanical actuators, mechanical jacks and rotary unions; and below-the-hook special purpose lifters. These products
are typically manufactured for stock or assembled to order from standard components and are sold through a variety of
commercial distributors and to end-users. The end-users of our products are in manufacturing plants, power utility facilities and
warehouses. Some of our products have farming, mining and logging applications, and we serve a niche market for the
entertainment industry. We also sell some of our products to the consumer market through a variety of retailers and wholesalers.
In February 2004, we divested our Lister business which manufactured anchor and buoy chain primarily for the U.S.
government.
Our Solutions segment is engaged primarily in the design, fabrication and installation of integrated workstation and facility-
wide material handling systems and in the design and manufacture of tire shredders. This segment also included our Positech
manipulator business and our LICO steel erection operation, which were divested in February 2004 and March 2003,
respectively. The products and services of this segment are highly engineered, are typically built to order and are primarily sold
directly to end-users for specific applications in a variety of industries.
Note 20 to our consolidated financial statements included elsewhere in this annual report provides information related to our
business segments in accordance with generally accepted accounting principles in the United States. Summary information
concerning our business segments for fiscal 2002, 2003 and 2004 is set forth below.
5
2002
Fiscal Years Ended March 31,
2003
(Dollars in millions)
2004
Amount
% of Total
Sales
Amount
% of Total
Sales
Amount
% of Total
Sales
Net Sales
Products ..........................................
Solutions .........................................
Total ......................................
$404.7
75.3
$480.0
84.3
15.7
100.0
$388.1
65.2
$453.3
85.6
14.4
100.0
$394.2
50.4
$444.6
88.7
11.3
100.0
% of
Segment
Sales
% of
Segment
Sales
Amount
Amount
% of
Segment
Sales
Amount
Income from Operations before
Restructuring Charges and
Amortization
Products ..........................................
Solutions .........................................
Total ......................................
Products Segment
Products
$47.0
1.7
$48.7
11.6
2.2
10.1
$33.6
(0.3)
$33.3
8.7
(0.4)
7.4
$33.5
(2.0)
$31.5
8.5
(4.0)
7.1
Our Products segment primarily designs, manufactures and distributes a broad range of material handling, lifting and
positioning products for various applications in industry and for consumer use and has total assets of approximately $446.1 million as
of March 31, 2004, of which $185.0 million is goodwill. These products are typically manufactured for stock or assembled to order
from standard components and are sold through a variety of distributors. Approximately 75% of our Products segment net sales is
derived from the sale of products that we sell at a unit price of less than $5,000. In fiscal 2004, net sales of the Products segment were
approximately $394.2 million or approximately 88.7% of our net sales, of which approximately $267.5 million, or 67.9%, were
domestic and $126.7 million, or 32.1%, were international. The following table sets forth certain sales data for the products of our
Products segment, expressed as a percentage of net sales of this segment for fiscal 2003 and 2004:
Hoists
Chain
Forged attachments
Industrial cranes
Industrial components
Fiscal Years Ended March 31,
2003
52%
16
11
13
8
100%
2004
50%
16
12
14
8
100%
• Hoists. We manufacture a variety of electric chain hoists, electric wire rope hoists, hand-operated hoists, lever tools
and air-powered balancers and hoists. Load capacities for our hoist product lines generally range from one-eighth of a
ton to 100 tons. These products are sold under our Budgit, Chester, CM, Coffing, Little Mule, Shaw-Box, Yale and
other recognized trademarks. Our hoists are sold for use in a variety of general industrial applications, as well as for
use in the construction, entertainment, power generation and other markets. We also supply hoist trolleys, driven
manually or by electric motors, for the industrial, consumer and OEM markets.
We offer a line of custom-designed below-the-hook tooling, clamps, textile strappings and pallet trucks. Below-the-
hook tooling and clamps are specialized lifting apparatus used in a variety of lifting activities performed in conjunction
with hoist and chain applications. Textile strappings are below-the-hook attachments, frequently used in conjunction
with hoists. Pallet trucks are manual devices used for across-the-floor material handling, frequently in warehouse
settings.
• Chain. We manufacture alloy and carbon steel chain for various industrial and consumer applications. Federal
6
regulations require the use of alloy chain, which we first developed, for overhead lifting applications because of its
strength and wear characteristics. A line of our alloy chain is sold under the Herc-Alloy brand name for use in overhead
lifting, pulling and restraining applications. In addition, we also sell specialized load chain for use in hoists, as well as
three grades and multiple sizes of carbon steel welded-link chain for various load securing and other non-overhead
lifting applications. We also manufacture kiln chain sold primarily to the cement manufacturing market. We previously
manufactured and sold anchor and buoy chain through our Lister Chain & Forge division which was sold in February
2004.
• Forged Attachments. We produce a complete line of alloy and carbon steel closed-die forged attachments, including
hooks, shackles, hitch pins and master links. These forged attachments are used in chain, wire rope and textile rigging
applications in a variety of industries, including transportation, mining, construction, marine, logging, petrochemical
and agriculture.
In addition, we manufacture carbon steel forged and stamped products such as loadbinders, logging tools and other
securing devices, for sale to the industrial, consumer and logging markets through industrial distributors, hardware
distributors, mass merchandiser outlets and OEMs.
•
•
Industrial Cranes. We entered the crane manufacturing market through our August 1998 acquisition of Abell-Howe, a
Chicago-based regional manufacturer of jib and overhead bridge cranes. Our March 1999 acquisition of GL
International, which included the Gaffey and Larco brands, and our April 1999 acquisition of Washington Equipment
Company established us as a significant participant in the crane building and servicing markets. Crane builders
represent a specialized distribution channel for electric wire rope hoists and other crane components.
Industrial Components. Through our Duff-Norton division, we design and manufacture industrial components such as
mechanical and electromechanical actuators, mechanical jacks and rotary unions for sale domestically and abroad.
Actuators are linear motion devices used in a variety of industries, including the paper, steel and aerospace industries.
Mechanical jacks are heavy duty lifting devices used in the repair and maintenance of railroad equipment, locomotives
and industrial machinery. Rotary unions are devices that transfer a liquid or gas from a fixed pipe or hose to a rotating
drum, cylinder or other device. These unions are unique in that they connect a moving or rotating component of a
machine to fixed plumbing without major spillage or leakage. Rotary unions are used in a variety of industries
including pulp and paper, printing, textile and fabric manufacturing, rubber and plastic.
Sales and Marketing
Our sales and marketing efforts in support of our Products segment consist of the following programs:
• Factory-Direct Field Sales and Customer Service. We sell our products through our direct sales forces of more than
125 salespersons and through independent sales agents worldwide. Our sales are further supported by our more than
230 company-trained customer service correspondents and sales application engineers. We compensate our sales force
through a combination of base salary and a commission plan based on top line sales and a pre-established sales quota.
• Product Advertising. We promote our products by regular advertising in leading trade journals as well as producing
and distributing high quality information catalogs. We support our product distribution by running cooperative “pull-
through” advertising in over 15 vertical trade magazines and directories aimed toward theatrical, international,
consumer and crane builder markets. We run targeted advertisements for chain, hoists, forged attachments, scissor lift
tables, actuators, hydraulic jacks, hardware programs, cranes and light-rail systems.
• Trade Show Participation. Trade shows are central to the promotion of our products, and we participate in more than
30 regional, national and international trade shows each year. Shows in which we participate range from global events
held in Germany to local “markets” and “open houses” organized by individual hardware and industrial distributors.
We also attend specialty shows for the entertainment, rental and safety markets, as well as general purpose industrial
and consumer hardware shows. In fiscal 2004, we participated in trade shows in the U.S., Canada, France, Mexico,
Germany, England and Brazil.
•
Industry Association Membership and Participation. As a recognized industry leader, we have a long history of work
and participation in a variety of industry associations. Our management is directly involved at the officer and director
levels of numerous industry associations including the following: ISMA (Industrial Supply Manufacturers
Association), AWRF (Associated Wire Rope Fabricators), PTDA (Power Transmission and Distributors Association),
SCRA (Specialty Carriers and Riggers Association), WSTDA (Web Sling and Tie Down Association), MHI (Material
7
Handling Institute), HMI (Hoist Manufacturers Institute), CMAA (Crane Manufacturers Association of America),
ESTA (Entertainment Services and Technology Association), NACM (National Association of Chain Manufacturers),
AHMA (American Hardware Manufacturers Association), ARA (American Rental Association) and IDA (Industrial
Distributors Association).
• Product Standards and Safety Training Classes. We conduct on-site training programs worldwide for distributors and
end-users to promote and reinforce the attributes of our products and their safe use and operation in various material
handling applications.
• Web Sites. In addition to our main corporate web site at www.cmworks.com, we currently sponsor an additional 25
brand specific web sites and sell hand pallet trucks on one of these sites. Our web site at www.cmindustrial.com
currently includes electronic catalogs of CM brand hoist and chain products and list prices. Current and potential
customers can browse through our diverse product offering or search for specific products by name or classification
code and obtain technical product specifications. We continue to add additional product catalogs, maintenance
manuals, advertisements and customer service information on our various web sites. Many of the web sites allow
distributors to search for personalized pricing information, order status and product serial number data.
Distribution and Markets
The distribution channels for the Products segment include a variety of commercial distributors. In addition, the Products
segment sells overhead bridge, jib and gantry cranes directly to end-users. We also sell to the consumer market through wholesalers.
The following summarizes our distribution channels:
• General Distribution Channels. Our general distribution channels consist of:
−
Industrial distributors that serve local or regional industrial markets and sell a variety of products for maintenance,
repair, operating and production, or MROP, applications through their own direct sales force.
− Rigging shops that are distributors with expertise in rigging, lifting, positioning and load securing. Most rigging shops
assemble and distribute chain, wire rope and synthetic slings and distribute off-the-shelf hoists and attachments, chain
slings and other off-the-shelf products.
−
Independent crane builders that design, build, install and service overhead crane and light-rail systems for general
industry and also sell a wide variety of hoists and lifting attachments. We sell electric wire rope hoists and chain hoists
as well as crane components, such as end trucks, trolleys, drives and electrification systems to crane builders.
• Crane End-Users. We sell overhead bridge, jib and gantry cranes, parts and service to end-users through our wholly owned
crane builders within the CraneMart™ network. Our wholly owned crane builders (Abell-Howe, Gaffey, Larco and
Washington Equipment) design, manufacture, install and service a variety of cranes with capacities up to 100 tons.
• Specialty Distribution Channels. Our specialty distribution channels consist of:
− Catalog houses that market a variety of MROP supplies, including material handling products, either exclusively
through large, nationally distributed catalogs, or through a combination of catalog and internet sales and a field sales
force. More recently, catalog houses, particularly W.W. Grainger, Inc., are pursuing e-commerce through their web
sites. The customer base served by catalog houses, which traditionally included smaller industrial companies and
consumers, has grown to include large industrial accounts and integrated suppliers.
− Material handling specialists and integrators that design and assemble systems incorporating hoists, overhead rail
systems, trolleys, scissor lift tables, manipulators, air balancers, jib arms and other material handling products to
provide end-users with solutions to their material handling problems.
− Entertainment equipment distributors that design, supply and install a variety of material handling and rigging
equipment for concerts, theaters, ice shows, sports arenas, convention centers and discos.
• Service-After-Sale Distribution Channel. Service-after-sale distributors include our authorized network of 13 chain repair
service stations and over 350 hoist service and repair stations. This service network is designed for easy parts and service
8
access for our large installed base of hoists and related equipment in North America.
• OEM/Government Distribution Channels. This channel consists of:
− OEMs that supply various component parts directly to other industrial manufacturers as well as private branding and
packaging of our traditional products for material handling, lifting, positioning and special purpose applications.
− Government agencies, including the United States and Canadian Navies and Coast Guards, that purchase primarily load
securing chain and forged attachments.
• Consumer Distribution. Consumer sales, consisting primarily of carbon steel chain and assemblies, forged attachments and
hand powered hoists, are made through five distribution channels: two-step wholesale hardware distribution; one-step
distribution direct to retail outlets; trucking and transportation distributors; farm hardware distributors; and rental outlets.
• International Distribution. We distribute virtually all of our products in over 50 countries on six continents through a
variety of distribution channels.
Customer Service and Training
We maintain customer service departments staffed by trained personnel for all of our Products segment sales divisions, and
regularly schedule product and service training schools for all customer service representatives and field sales personnel. Training
programs for distribution and service station personnel, as well as for end-users, are scheduled on a regular basis at most of our
facilities and in the field. We have more than 350 service and repair stations worldwide that provide local and regional repair,
warranty and general service work for distributors and end-users. End-user trainees attending our various programs include
representatives of General Motors, DuPont, 3M, GTE, Cummins Engine, General Electric and many other industrial and
entertainment organizations.
We also provide, in multiple languages, a variety of collateral material in video, cassette, CD-ROM, slide and print format
addressing relevant material handling topics such as the care, use and inspection of chains and hoists, and overhead lifting and
positioning safety. In addition, we sponsor advisory boards made up of representatives of our primary distributors and service-after-
sale network members who are invited to participate in discussions focused on improving products and service. These boards enable
us and our primary distributors to exchange product and market information relevant to industry trends.
Backlog
Our Products segment backlog of orders at March 31, 2004 was approximately $45.3 million compared to approximately $41.7
million at March 31, 2003. The March 31, 2003 backlog included $6.2 million relating to our Lister business, which was divested in
February 2004. Our orders for standard products are generally shipped within one week. Orders for products that are manufactured to
customers’ specifications are generally shipped within four to twelve weeks. Given the short product lead times, we do not believe
that the amount of our Products segment backlog of orders is a reliable indication of our future sales.
Competition
Despite recent consolidation, the material handling industry remains highly fragmented. We face competition from a wide range
of regional, national and international manufacturers in both domestic and international markets. In addition, we often compete with
individual operating units of larger, highly diversified companies.
The principal competitive factors affecting our Products segment include product performance, functionality, price, brand,
reputation, reliability and availability, as well as customer service and support. Other important factors include distributor
relationships, territory coverage and the ability to service the distributor with on-time delivery and repair services.
Major competitors with our Products segment for hoists are Demag, Kito-Harrington, Ingersoll-Rand, KCI Konecranes and
Morris Material Handling; for chain are Campbell Chain, Peerless Chain Company and American Chain and Cable Company; for
forged attachments are The Crosby Group and Brewer Tichner Company; for crane building are Demag, KCI Konecranes, Morris
Material Handling, R. Stahl and a variety of independent crane builders; and for industrial components are Deublin, Joyce-Dayton
and Nook Industries.
9
Solutions Segment
The Solutions segment is engaged primarily in the design, fabrication and installation of integrated work station and facility-
wide material handling systems and in the manufacture and distribution of operator-controlled manipulators, lift tables and tire
shredders and has total assets of approximately $27.3 million as of March 31, 2004, of which none is goodwill. Net sales of the
Solutions segment in fiscal 2004 were approximately $50.4 million, or approximately 11.3% of our total net sales, of which
approximately $18.5 million, or 36.7%, were domestic and approximately $31.9 million, or 63.3% were international. We are
currently evaluating strategic alternatives for certain businesses within this segment. The following table sets forth certain sales data
for the products and services of our Solutions segment, expressed as a percentage of this segment’s net sales for fiscal 2003 and
2004:
Integrated material handling conveyor systems
Lift tables
Light-rail systems and manipulators
Steel erection
Other
Fiscal Years Ended March 31,
2003
50%
13
15
12
10
100%
2004
57%
15
13
--
15
100%
Products and Services
• Integrated Material Handling Conveyor Systems. Conveyors are an important component of many material handling
systems, reflecting their high functionality for transporting material throughout manufacturing and warehouse facilities. We
specialize in designing computer-controlled and automated powered roller conveyors for use in warehouse operations and
distribution systems. In fiscal 2002 and 2003 we executed a revenue growth strategy by developing our capabilities to
function as a turnkey integrator of material handling systems, while continuing to provide the conveyors required for the
systems.
• Lift Tables. Our American Lifts division manufactures powered lift tables. These products enhance workplace ergonomics
and are sold primarily to customers in the manufacturing, construction, general industrial and air cargo industries.
• Light-Rail Systems and Manipulators. Introduced in fiscal 2001, light-rail systems are portable steel overhead beam
configurations used at workstations, from which hoists are frequently suspended. We previously manufactured two lines of
sophisticated operator-controlled manipulators under the names Positech and Conco. These products are articulated
mechanical arms with specialized end tooling designed to perform lifting, rotating, turning, tilting, reaching and positioning
tasks in a manufacturing process. That manipulator business, known as our Positech division, was sold in February 2004.
Sales and Marketing
The products and services of the Solutions segment are sold primarily to large sophisticated corporate end-users, including
Federal Express, UPS, United Biscuits, Lego, John Deere, Lowe’s and other industrial companies, systems integrators and
distributors. In the sale of our integrated material handling conveyor systems, we act as a prime contractor with turnkey responsibility
or as a supplier working closely with the customer’s general contractor. Sales are generated by internal sales personnel and rely
heavily on engineer-to-engineer interactions with the customer. The process of generating client contract awards for integrated
conveyor systems generally entails receiving a request-for-quotation from customers and undergoing a competitive bidding process.
The Solutions segment also sells light-rail systems and scissor lift tables through its internal sales force and through specialized
independent distributors and manufacturers representatives.
Customer Service and Training
The Solutions segment offers a wide range of value-added services to customers including: an engineering review of the
customer’s processes; an engineering solution for identified material handling problems; project management; and custom design,
manufacturing and installation services. We also offer after-sales services including operator training, maintenance and hot-line
support. The typical length of after-sales service varies depending on customer requirements and supplemental training courses are
offered as needed.
Backlog
10
Revenues from our Solutions segment are generally recognized within one to six months. Our backlog of orders at March 31,
2004 was approximately $9.2 million compared to approximately $10.5 million at March 31, 2003. The March 31, 2003 backlog
included $0.9 million relating to our Positech business, which was divested in February 2004.
Competition
The principal competitive factors affecting the market for the products and services of our Solutions segment include
application solutions, performance and price. The process of generating client contract awards for these businesses generally entails
receiving a request-for-quotation from end-users and undergoing a competitive bidding process. Our Solutions segment competes
primarily with Crisplant, Diafuku, Swisslog, Gorbel and Southworth.
Employees
At March 31, 2004, we had 2,716 employees; 1,983 in the U.S., 126 in Canada, 129 in Mexico and 478 in Europe and Asia.
Approximately 670 of our employees are represented under seven separate U.S. or Canadian collective bargaining agreements which
terminate at various times between July 2004 and March 2008. The contract which expires July 2004 currently covers 11 associates.
We believe that our relationship with our employees is good.
Raw Materials and Components
Our principal raw materials and components are steel, consisting of structural steel, processed steel bar, forging bar steel, steel
rod and wire, steel pipe and tubing and tool steel; electric motors; bearings; gear reducers; castings; and electro-mechanical
components. These commodities are all available from multiple sources. We purchase most of these raw materials and components
from a limited number of strategic and preferred suppliers under long-term agreements which are negotiated on a company-wide
basis through our Purchasing Council to take advantage of volume discounts. As the steel industry is cyclical and steel prices can
fluctuate significantly, beginning in approximately January 2004 we have seen significant cost increases in certain types of steel in
certain markets. We generally seek to pass on materials price increases to our distribution channel partners and end user customers,
although a lag period often exists. We instituted price increases for our chain and forged attachment products effective April 1, 2004
and for the majority of our hoist products effective May 1, 2004. In addition, we initiated price surcharges beginning March 18,
2004 on certain products, and increased some of those and added price surcharges to other products effective May 3, 2004. We will
continue to monitor our costs and reevaluate our price surcharges on a monthly basis. Our ability to pass on these increases is
determined by market conditions.
Manufacturing
We manufacture approximately 90% of the products we sell. Additionally, we outsource components and finished goods from
an established global network of suppliers. We regularly upgrade our manufacturing facilities and invest in tooling, equipment and
technology. We have implemented Lean Manufacturing in our plants which has resulted in inventory reductions, reductions in
required manufacturing floor area, shorter product lead time and increased productivity.
Our manufacturing operations are highly integrated. Although raw materials and some components such as motors, bearings,
gear reducers, castings and electro-mechanical components, are purchased, our vertical integration enables us to produce many of the
components used in the manufacturing of our products. We manufacture hoist lifting chain, steel forged gear blanks, lift wheels,
trolley wheels, and hooks and other attachments for incorporation into our hoist products. These products are also sold as spare parts
for hoist repair. Additionally, our hoists are used as components in the manufacture of crane systems by us and by our end-users. We
believe this vertical integration results in lower production costs, greater manufacturing flexibility and higher product quality, and
reduces our reliance on outside suppliers.
Environmental and Other Governmental Regulation
Like most manufacturing companies, we are subject to various federal, state and local laws relating to the protection of the
environment. To address the requirements of such laws, we have adopted a corporate environmental protection policy which
provides that all of our owned or leased facilities shall, and all of our employees have the duty to, comply with all applicable
environmental regulatory standards, and we have initiated an environmental auditing program for our facilities to ensure compliance
with such regulatory standards. We have also established managerial responsibilities and internal communication channels for
dealing with environmental compliance issues that may arise in the course of our business. Because of the complexity and changing
nature of environmental regulatory standards, it is possible that situations will arise from time to time requiring us to incur
expenditures in order to ensure environmental regulatory compliance. However, we are not aware of any environmental condition or
11
any operation at any of our facilities, either individually or in the aggregate, which would cause expenditures having a material
adverse effect on our results of operations, financial condition or cash flows and, accordingly, have not budgeted any material capital
expenditures for environmental compliance for fiscal 2005.
Certain federal and state laws, sometimes referred to as Superfund laws, require certain companies to remediate sites that are
contaminated by hazardous substances. These laws apply to sites owned or operated by a company, as well as certain off-site areas
for which a company may be jointly and severally liable with other companies or persons. The required remedial activities are
usually performed in the context of administrative or judicial enforcement proceedings brought by regulatory authorities. We have
been identified by the New York State Department of Environmental Conservation, or NYSDEC, along with other companies, as a
potentially responsible party, or PRP, at the Frontier Chemical Site in Pendleton, New York, a site listed on NYSDEC’s Registry.
From 1958 to 1977, the Pendleton Site had been operated as a commercial waste treatment and disposal facility. We sent waste-
pickling liquor generated at our facility in Tonawanda, New York, to the Pendleton Site during the period from approximately 1969
to 1977, and we participated with other PRPs in conducting the remediation of the Pendleton Site under a consent order with
NYSDEC. Construction in connection with the remediation has been completed and this project is currently in its operations and
maintenance phase. As a result of a negotiated cost allocation among the participating PRPs, we have paid our pro rata share of the
remediation construction costs and accrued our share of the ongoing operations and maintenance costs. As of March 31, 2004, we
have paid approximately $1.0 million in remediation and ongoing operations and maintenance costs associated with the Pendleton
Site. The participating PRPs have identified and commenced a cost recovery action against a number of other parties who sent
hazardous substances to the Pendleton Site. Full settlements have been reached with all defendants in the cost recovery action. All
settlement payments in connection with the Pendleton Site litigation have been made, and we have received $0.2 million as our share
of the settlement proceeds. We have also entered into a settlement agreement with one of our insurance carriers in the amount of $0.7
million in connection with the Pendleton Site and have received payment in full of the settlement amount.
We are investigating past waste disposal activities at a facility in Cleveland, Texas, operated by our subsidiary, Crane
Equipment and Service, Inc., and we plan to apply to the Texas Commission on Environmental Quality for entry into its Voluntary
Cleanup Program in connection with the site. At this time, it is not possible to determine the costs of future site investigation or, if
necessary, remediation, but we believe any such costs will not have a material adverse effect on our operating results or financial
condition.
For all of the currently known environmental matters, we have accrued a total of approximately $0.3 million as of March 31,
2004, which, in our opinion, is sufficient to deal with such matters. Further, our management believes that the environmental matters
known to, or anticipated by, us should not, individually or in the aggregate, have a material adverse effect on our operating results or
financial condition. However, there can be no assurance that potential liabilities and expenditures associated with unknown
environmental matters, unanticipated events, or future compliance with environmental laws and regulations will not have a material
adverse effect on us.
Our operations are also governed by many other laws and regulations, including those relating to workplace safety and worker
health, principally OSHA and regulations thereunder. To our knowledge, we are in material compliance with these laws and
regulations and do not believe that future compliance with such laws and regulations will have a material adverse effect on our
operating results or financial condition.
Available Information
Our internet address is www.cmworks.com. We make available free of charge through our website our Annual Report on Form
10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to
Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, as soon as reasonably practicable after such documents
are electronically filed with, or furnished to, the Securities and Exchange Commission.
12
Item 2.
Properties.
We maintain our corporate headquarters in Amherst, New York and conduct our principal manufacturing at the following
facilities:
Location
Products/Operations
Square
Footage
Owned or
Leased
Business
Segment
United States:
Muskegon, MI
Charlotte, NC
Tonawanda, NY
Wadesboro, NC
Lexington, TN
Cedar Rapids, IA
Eureka, IL
Damascus, VA
Chattanooga, TN
Greensburg, IN
Lisbon, OH
Cleveland, TX
Chattanooga, TN
Sarasota, FL
Hoists
Industrial components
Light-rail crane systems
Hoists
Chain
Forged attachments
Cranes
Hoists
Forged attachments
Scissor lifts
Hoists
Cranes
Forged attachments
Tire shredders
International:
Santiago, Tianguistenco, Mexico Hoists and chain
Arden, Denmark
Velbert, Germany
Chester, United Kingdom
Stoney Creek, Ontario, Canada
Project design and conveyors
Hoists
Plate clamps
Cranes
Metal fabrication, textiles and
textile strappings
Plate clamps
Rotary unions
Textile strappings
Project construction
Hoists
Hoists and hand pallet trucks
Hangzhou, China
Chester, United Kingdom
Romeny-sur-Marne, France
Hangzhou, China
Arden, Denmark
Vierzon, France
Hangzhou, China
500,000
250,000
187,600
180,000
153,200
100,000
91,300
87,400
77,000
60,000
37,000
35,000
33,000
25,000
85,000
70,500
56,000
47,900
42,400
37,000
25,400
21,600
20,000
19,500
14,000
7,200
Owned
Owned
Owned
Owned
Owned
Owned
Owned
Owned
Owned
Owned
Owned
Owned
Owned
Owned
Owned
Owned
Leased
Leased
Owned
Products
Products
Solutions
Products
Products
Products
Products
Products
Products
Solutions
Products
Products
Products
Solutions
Products
Solutions
Products
Products
Products
Leased
Products
Owned
Owned
Leased
Leased
Leased
Leased
Products
Products
Products
Solutions
Products
Products
In addition, we have a total of 35 sales offices, distribution centers and warehouses. We believe that our properties have been
adequately maintained, are in generally good condition and are suitable for our business as presently conducted. We also believe
our existing facilities provide sufficient production capacity for our present needs and for our anticipated needs in the foreseeable
future. Upon the expiration of our current leases, we believe that either we will be able to secure renewal terms or enter into
leases for alternative locations at market terms.
Item 3.
Legal Proceedings.
From time to time, we are named a defendant in legal actions arising out of the normal course of business. We are not a
party to any pending legal proceeding other than ordinary, routine litigation incidental to our business. We do not believe that any of
our pending litigation will have a material impact on our business. We maintain comprehensive general liability insurance against
risks arising out of the normal course of business through our wholly-owned insurance subsidiary of which we are the sole policy
holder. The limits of this coverage are $3.0 million per occurrence ($2.0 million through March 31, 2003) and $6.0 million aggregate
($5.0 million through March 31, 2003) per year. We obtain additional insurance coverage from independent insurers to cover
13
potential losses in excess of these limits.
Item 4.
Submission of Matters to a Vote of Security Holders.
Not applicable.
14
PART II
Item 5.
Market for the Company’s Common Stock and Related Security Holder Matters.
Our common stock is traded on the Nasdaq Stock Market under the symbol ‘‘CMCO.” As of May 31, 2004, there were 557
holders of record of our common stock.
We paid quarterly cash dividends on our common stock from 1988 through the second quarter of fiscal 2002. In January 2002,
we announced that we were indefinitely suspending the payment of cash dividends on our common stock in order to dedicate our
cash resources to the repayment of outstanding indebtedness. Our current credit agreement does not permit us to pay dividends. We
may reconsider or revise this policy from time to time based upon conditions then existing, including, without limitation, our
earnings, financial condition, capital requirements, restrictions under credit agreements or other conditions our Board of Directors
may deem relevant.
The following table sets forth, for the fiscal periods indicated, the high and low sale prices per share for our common stock as
reported on the Nasdaq Stock Market and our dividend history.
Price Range of
Common Stock
Low
High
Dividend
Per Share
Year Ended March 31, 2002
First Quarter ..................................................... $
Second Quarter ................................................
Third Quarter ...................................................
Fourth Quarter..................................................
11.25
10.40
10.15
12.80
$ 6.96
9.36
7.45
9.31
Year Ended March 31, 2003
First Quarter ..................................................... $
Second Quarter ................................................
Third Quarter ..................................................
Fourth Quarter .................................................
13.67
9.08
5.38
3.90
$ 6.95
4.90
3.30
1.40
Year Ended March 31, 2004
First Quarter ..................................................... $
Second Quarter ................................................
Third Quarter....................................................
Fourth Quarter..................................................
2.72
4.84
7.80
11.72
$
1.30
2.31
4.58
6.35
$
$
$
0.07
0.07
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
On June 10, 2004, the last reported sale price of our common stock on the Nasdaq Stock Market was $5.28 per share.
15
Item 6.
Selected Financial Data.
The consolidated balance sheets as of March 31, 2004 and 2003 and the related statements of operations, cash flows and
shareholders’ equity for the three years ended March 31, 2004 and notes thereto appear elsewhere in this annual report. The
selected consolidated financial data presented below should be read in conjunction with, and are qualified in their entirety by
“Management’s Discussion and Analysis of Results of Operations and Financial Condition,” our consolidated financial
statements and the notes thereto and other financial information included elsewhere in this annual report.
2004
Fiscal Years Ended March 31,
2002
(Amounts in millions, except per share data)
2003
2001
2000
Statement of Operations Data (1):
Net sales
Cost of products sold
Gross profit
Selling expenses
General and administrative expenses
Restructuring charges
Write-off/amortization of intangibles (2)
Income from operations
Interest and debt expense
Other (income) and expense, net
Income (loss) before income taxes
Income tax expense
Income (loss) from continuing operations
Income (loss) from discontinued operations
Loss on disposition of discontinued operations
Total income (loss) from discontinued operations
Cumulative effect of change in accounting
principle (2)
Net income (loss)
Diluted earnings (loss) per share from continuing
operations
Basic earnings (loss) per share from continuing
operations
Weighted average shares outstanding – assuming
dilution
Weighted average shares outstanding – basic
Balance Sheet Data (at end of period):
Total assets (3)
Total debt
Total shareholders’ equity
Other Financial Data:
$
$
$
$
$
444.6 $
339.7
104.8
48.3
25.0
1.2
0.4
29.9
28.9
(4.2)
5.2
4.0
1.2
—
—
—
—
1.2 $
480.0 $ 586.2 $ 609.2
453.3 $
436.8
426.7
359.5
346.0
172.4
159.5
120.5
107.3
48.7
48.4
43.5
47.4
40.5
34.3
28.3
26.6
—
—
9.6
3.7
11.4
11.0
11.0
4.2
71.8
65.8
28.1
25.4
33.4
36.3
29.4
32.0
(1.3)
(2.2)
2.4
(2.1)
39.7
31.7
(3.7)
(4.5)
17.6
16.8
2.3
1.5
22.1
14.9
(6.0)
(6.0)
(5.0)
0.3
—
(7.9)
—
—
— (121.4)
(5.0)
0.3
— (129.3)
(8.0)
—
—
(14.0) $ (135.3) $
15.2 $
—
17.1
0.08 $
(0.42) $
(0.41) $
1.04 $
1.55
0.08 $
(0.42) $
(0.41) $
1.04 $
1.57
14.6
14.6
14.5
14.5
14.4
14.4
14.3
14.3
14.2
14.1
473.4 $
287.9
63.0
482.6 $
314.1
52.7
524.3 $ 722.4 $ 731.8
413.8
407.0
347.9
203.5
207.9
71.6
Net cash provided by operating activities
26.4
14.2
49.8
38.3
44.3
Net cash provided by (used in) investing activities
4.3
16.0
(1.6)
(7.2)
(18.7)
Net cash used in financing activities
Capital expenditures
Cash dividends per common share
(21.5)
(41.9)
3.6 5.0
0.00
0.00
(48.5)
4.7
0.14
(19.5)
10.2
0.28
(24.2)
7.9
0.28
_____________
16
(1) Statement of Operations data represent our continuing operations and reflect the May 2002 sale of substantially all of the
assets of ASI. The financial statements of all periods presented have been restated to remove ASI results from the
continuing operations data. Refer to Note 3 to our consolidated financial statements for more information on the
Discontinued Operations.
(2) As a result of our adoption of SFAS 142 effective April 1, 2002, goodwill is no longer amortized. The charge in fiscal
2003 represents a $4.0 million impairment write-off. In addition, the cumulative effect of change in accounting principle
represents the impact of adopting SFAS 142.
(3) Total assets includes net assets of discontinued operations of $21.5 million, $163.5 million and $152.6 million as of
March 31, 2002, 2001 and 2000, respectively.
Item 7. Management’s Discussion And Analysis Of Results Of Operations And Financial Condition.
This section should be read in conjunction with our consolidated financial statements included elsewhere in this annual
report. Comments on the results of operations and financial condition below refer to our continuing operations, except in the
section entitled “Discontinued Operations.”
EXECUTIVE OVERVIEW
We are a leading manufacturer and marketer of hoists, cranes, chain, conveyors, material handling systems, lift tables and
component parts serving a wide variety of commercial and industrial end markets. Our products are used to efficiently and
ergonomically move, lift, position or secure objects and loads. Our Products segment sells a wide variety of powered and manually
operated wire rope and chain hoists, industrial crane systems, chain, hooks and attachments, actuators and rotary unions. Our
Solutions segment designs, manufactures, and installs application-specific material handling systems and solutions for end-users to
improve work station and facility-wide work flow.
Founded in 1875, we have grown to our current leadership position through organic growth and also as the result of the 14
businesses we acquired between February 1994 and April 1999. We have developed our leading market position over our 125-
year history by emphasizing technological innovation, manufacturing excellence and superior after-sale service. In addition, the
acquisitions significantly broadened our product lines and services and expanded our geographic reach, end-user markets and
customer base. We continue to further integrate the operations of the acquired businesses with our previously existing businesses.
The current phase of the ongoing integration of these businesses includes improving our productivity, further reducing our excess
manufacturing capacity and extending our cross-selling activities to the European marketplace. This phase is in process through
our Lean Manufacturing efforts, facility rationalization program and European sales initiatives. Our Lean Manufacturing efforts
are fundamentally changing our manufacturing processes to be more responsive to customer demand, resulting in significant
inventory reductions and improving on-time delivery and productivity. For example, we realized nearly 40% inventory turn
improvement to 5.3 times at March 31, 2004 from 3.8 times at March 31, 2001. Specifically in fiscal 2004, we realized
approximately 20% improvement from 4.4 times at March 31, 2003. Over the past three years, under our facility rationalization
program, we have closed 13 facilities and consolidated several product lines, with potential opportunity for further
rationalization. Also, as previously reported, we have been undergoing assessments for possible divestiture of several less-
strategic businesses, including most of our Solutions segment and certain businesses within our Products segment. Two
businesses were sold in fiscal 2004 and four others remain as possible divestiture candidates. Furthermore, we are selling real
properties that resulted from our facility rationalization projects. These divestitures may result in gains or losses. To further
expand our global sales, we have begun introducing certain of our products through our existing European distribution network
that historically have been distributed only in North America.
Many of the U.S. industrial sectors that we serve have been impacted by soft economic conditions since mid-1998. These
conditions deteriorated significantly in our fiscal 2001 fourth quarter and continued to decline throughout fiscal 2002 and 2003,
negatively impacting our net sales and financial performance. We began to see some stabilization and then very modest
improvement in the latter half of fiscal 2004. While reaching a historical high of $609.2 million in fiscal 2000, our net sales
dropped by 18.1% to $480.0 million in fiscal 2002, by an additional 5.6% to $453.3 million in fiscal 2003 and by an additional
1.9% to $444.6 million in fiscal 2004, primarily due to this downturn in the business cycle. Despite these economic conditions
and their impact on our operating results, we maintained our leading market share, generated positive cash flow from operations
and business divestitures and repaid $59.7 million, $34.5 million and $17.7 million of debt in fiscal 2002, 2003 and 2004,
respectively.
We continue to be cautiously optimistic that the economic environment as it impacts our Company is modestly improving.
17
We monitor such indicators as U.S. Industrial Capacity Utilization and Industrial Production which have been steadily increasing
since July 2003. We sell our products domestically to a cross-section of business sectors, spanning the breadth of primarily the
industrial contributors to the U.S. gross domestic product. These sectors are impacted by these indicators in varying degrees and
at various points in a business cycle. We will continue to monitor these indicators to assess the impact on our future business. In
addition, to enhance future revenue opportunities, we are increasing our sales and marketing efforts in international markets and
investing in new products and services as further described in Item 1 of this Annual Report within the section described as “Our
Strategy”.
On the cost side we, like many companies, have been challenged over the past several years with significantly increased
costs for fringe benefits such as health insurance, workers compensation insurance and pension. Combined, those benefits cost us
almost $30 million in fiscal 2004 and we work dilingently with our advisors to balance cost control with the need to provide
competitive benefits packages for our associates. Another cost area of focus is steel pricing. We utilize approximately $20-$25
million of steel annually in a variety of forms including rod, wire, bar, structural and others. With increases in worldwide
demand for steel and significant increases in scrap steel prices, we have experienced increases in our costs that we have reflected
as price increases and surcharges to our customers. Our surcharges went into effect beginning March 18, 2004 and currently
affect most of our chain and forged attachment products. We continue to monitor steel costs and potential surcharge requirements
on a monthly basis.
RESULTS OF OPERATIONS
Net sales of our Products and Solutions segments, in millions of dollars and with percentage changes for each segment,
were as follows:
Fiscal Years Ended March 31,
2002
2003
2004
Change
2004 vs. 2003
%
Amount
Change
2003 vs. 2002
%
Amount
Products segment ...................
Solutions segment ..................
Total net sales ...................
$394.2
50.4
$444.6
$388.1
65.2
$453.3
$404.7
75.3
$480.0
$6.1
(14.8)
$(8.7)
1.6
(22.7)
(1.9)
$(16.6)
(10.1)
$(26.7)
(4.1)
(13.4)
(5.6)
Sales in recent years were affected by the downturn in the general North American and European economies and the
industrial sectors in particular. Net sales in fiscal 2004 of $444.6 million decreased by $8.7 million, or 1.9%, from fiscal 2003,
and net sales in fiscal 2003 of $453.3 million decreased $26.7 million, or 5.6%, from fiscal 2002. Our Products segment net sales
improved 1.6% in fiscal 2004 as we saw stabilization by mid-2004 and improvement of 7.4% in the latter half of the fiscal year.
Fiscal 2003 Products segment was marked with a 4.1% decline, primarily due to decreased unit sales resulting from the soft U.S.
industrial markets. Both fiscal 2004 and 2003 were impacted by the weakening U.S. dollar relative to other currencies,
particularly the euro, and reported Products segment sales were favorably affected by $11.3 million and $4.6 million in fiscal
2004 and 2003, respectively. Our Solutions segment net sales decreased 22.7% and 13.4% in fiscal 2004 and 2003, respectively.
The declines in fiscal 2004 and 2003 were primarily due to soft U.S. and European industrial markets, particularly affecting
purchasing decisions for capital goods. The fiscal 2004 decline was further impacted by the March 2003 divestiture of our steel
erection business, which generated $7.9 million and $17.7 million of revenues in fiscal 2003 and 2002, respectively.
Gross profit of the Products and Solutions segments, in millions of dollars and as a percentage of total segment net sales,
was as follows:
2004
Amount %
Fiscal Years Ended March 31,
2003
Amount %
2002
Amount %
Products segment .................
Solutions segment ................
Total gross profit .............
$99.2
5.6
$104.8
25.2
11.1
23.6
$98.7
8.6
$107.3
25.4
$109.3
13.2 11.2
23.7 $120.5
27.0
14.9
25.1
Our gross profit margins were approximately 23.6%, 23.7% and 25.1% in fiscal 2004, 2003 and 2002, respectively. The
Products segment reflected a stabilized gross profit margin in fiscal 2004 as the revenues stabilized during the year and costs
were closely monitored. The decrease in Products segment gross profit margin for fiscal 2003 was primarily the result of
18
economic and inventory reduction factors. The Product segment’s gross profit margin decreased in fiscal 2003 due to the
following factors: i) our price increase implementation was delayed eight months until August 2002 due to economic market
conditions (approximately $2.0 million impact); ii) cost increases, particularly for employee benefits such as health insurance,
workers compensation insurance and pension and also general property insurance (approximately $1.4 million impact); iii)
pricing pressure, especially on our capital-type products such as cranes (approximately $1.5 million impact); iv) the 4.1% decline
in net sales and the resulting decrease in absorption of fixed production costs; v) production at levels lower than sales levels to
reduce inventories and the resulting further decrease in absorption of fixed production costs; vi) production inefficiencies at our
facilities impacted by facility rationalization activities; and vii) a $2.5 million reclassification of certain crane builder expenses to
cost of products sold from general and administrative expenses in fiscal 2003. The Solutions segment’s gross profit margins
decreased in fiscal 2004 and 2003 primarily due to the 22.7% and 13.4% declines in net sales, respectively, and resulting decease
in absorption of fixed production costs, increased employee benefits costs as described above and an increase in larger integrated
solutions projects which carry a lower gross profit margin overall.
Selling expenses were $48.3 million, $47.4 million and $43.5 million in fiscal 2004, 2003 and 2002, respectively. As a
percentage of net sales, selling expenses were 10.9%, 10.5% and 9.1% in fiscal 2004, 2003 and 2002, respectively. The fiscal
2004 and 2003 increases include $2.2 million and $1.8 million, respectively, resulting from the weakening of the U.S. dollar
relative to foreign currencies, particularly the euro, upon translation of foreign operating results into U.S. dollars for reporting
purposes. The fiscal 2004 and 2003 increases also include $0.4 million and $0.9 million, respectively, resulting from
reclassification of certain crane builder expenses from general and administrative expenses in fiscal 2003 to improve reporting
consistency. The fiscal 2003 increase further includes $0.5 million for investing in new geographic markets and other increases
for employee benefits costs, catalogs, and commissions in certain markets, partially offset by cost control measures.
General and administrative expenses were $25.0 million, $26.6 million and $28.2 million in fiscal 2004, 2003 and 2002,
respectively. As a percentage of net sales, general and administrative expenses were 5.6%, 5.9% and 5.9% in fiscal 2004, 2003
and 2002, respectively. Much of the expense reductions resulted from general discretionary cost control measures. Partially
offsetting those savings, fiscal 2004 was unfavorably impacted by $1.2 million resulting from the translation of foreign
currencies into the weaker U.S. dollar for reporting purposes and also included $0.8 million higher bad debt expenses. The fiscal
2003 expenses were favorably impacted by a $0.8 million reduction in product liability expense due to reassessment of self-
insurance exposure relative to certain claims and the reclassification of $3.4 million of crane builder expenses into cost of
products sold or selling expense. These fiscal 2003 favorable results were partially offset by $1.2 million for professional fees for
special projects to improve the Company’s organization structure, $1.1 million for a business divested in March 2003, $0.8
million for intercompany exchange losses and $0.5 million for increased bad debt expenses.
Restructuring charges of $1.2 million, $3.7 million and $9.6 million, or 0.3%, 0.8% and 2.0% of net sales in fiscal 2004,
2003 and 2002, respectively, were primarily attributable to the closure or significant reorganization of thirteen manufacturing or
warehouse facilities. During fiscal 2004, we recorded restructuring charges of $1.2 million related to various employee
termination benefits and facility costs as a result of our continued closure, merging and reorganization and completion of two
open projects from fiscal 2003. The following facilities were closed, merged or significantly reorganized beginning in fiscal
2003: Abingdon, VA; Tonawanda, NY; Cobourg, Ontario, Canada; Forest Park, IL; and Reform, AL. Excluding the Tonawanda
facility, these operations were included within our Products segment, and were relocated into other existing Products segment
facilities. Fiscal 2003 charges included exit costs of $1.8 million for severance relating to approximately 215 employees, $1.0
million of lease termination, facility wind-down, preparation for sale and maintenance of non-operating facilities prior to disposal
and $0.9 million for facility closure costs on projects begun in 2002. Three of the five 2003 projects were completed as planned
in the fourth quarter of fiscal 2003 while two were completed by the second quarter of fiscal 2004. The remaining liability of
$0.4 million for fiscal 2003-2004 projects relates to the ongoing maintenance costs of the non-operating facilities.
The following facilities were closed, merged or significantly reorganized beginning in fiscal 2002: Houma, LA; Woodland,
CA; Romeoville, IL; Forrest City, AR; Monterrey, Mexico; Hobro, Denmark; Atlanta, GA; and Richmond, British Columbia,
Canada. All operations except for the Hobro facility were included within our Products segment, and all activities were relocated
into other existing company facilities within their respective segments. Charges included exit costs of $2.4 million for severance
relating to approximately 250 employees and $7.2 million of lease termination, facility wind-down, preparation for sale and
maintenance of non-operating facilities prior to disposal. Included in the restructuring charges was approximately $8.3 million to
terminate a facility lease, resulting in the purchase of the property with an estimated fair value of approximately $2.3 million
which was recorded as an offset to the restructuring charges. Due to changes in the real estate market and a reassessment of the
fair value of the property, the net asset held for sale was adjusted downward by $0.5 million as a further restructuring charge
during fiscal 2003. All of the projects were completed as planned during fiscal 2002. The remaining liability of $0.2 million
relates to the ongoing maintenance costs of the non-operating facility.
Each rationalization project was analyzed based on our capacity and the cost structure of the specific facilities relative to
19
others. As a result of these rationalization projects we expect to achieve approximately $13 million to $15 million of annualized
savings primarily in cost of products sold including facility fixed costs and employee costs, of which approximately $8 million
and $11 million was realized during fiscal 2003 and 2004, respectively. We anticipate that our restructuring charges for fiscal
2005 in connection with our ongoing facility rationalization and reorganization initiatives will be between $0.4 million and $0.7
million.
Write-off/amortization of intangibles was $0.4 million, $4.2 million and $11.0 million in fiscal 2004, 2003 and 2002,
respectively. Fiscal 2003 reflected a $4.0 million goodwill write-off in the fourth quarter relating to impairment under Statement
of Financial Accounting Standard (SFAS) No. 142 “Goodwill and Other Intangible Assets,” which pronouncement eliminated
the requirement to amortize goodwill and indefinite-lived intangible assets beginning in fiscal 2003 but added new impairment
testing rules. The fiscal 2002 amount relates primarily to non tax-deductible goodwill amortization.
Interest and debt expense was $28.9 million, $32.0 million and $29.4 million in fiscal 2004, 2003 and 2002, respectively.
As a percentage of net sales, interest and debt expense was 6.5%, 7.1% and 6.1% in fiscal 2004, 2003 and 2002, respectively.
The fiscal 2004 decrease primarily resulted from lower debt levels. The fiscal 2003 increase included a $1.2 million write-off of
deferred financing costs associated with the Company’s former credit facility, which was replaced with a new credit arrangement
in November 2002, a portion of which carried higher effective interest rates than the Company’s former credit facility.
Other (income) and expense, net was ($4.2) million, ($2.1) million and $2.5 million in fiscal 2004, 2003 and 2002,
respectively. The income in fiscal 2004 included $5.7 million from asset sales and $1.9 million from an interest rate swap
partially offset by $3.9 million of losses upon business divestitures. The income in fiscal 2003 included $5.3 million from asset
sales offset by a $2.2 million unrealized, non-cash, mark-to-market loss recognized within our captive insurance company’s
securities portfolio and a $1.3 million loss on a business divestiture. The unrealized loss within the securities portfolio was
recognized since it was deemed to be other than temporary in nature, resulting from unrealized losses that existed longer than a
six month period. The expense in fiscal 2002 similarly included a $2.8 million unrealized, non-cash, mark-to-market loss
recognized on marketable securities held by our captive insurance subsidiary, a $1.5 million loss on a business divestiture and a
$1.8 million gain on asset sales.
Income taxes as a percentage of income before income taxes were not reflective of U.S statutory rates in fiscal 2004, 2003
or 2002 primarily due to the impact of non-deductible goodwill amortization/write-off in fiscal 2003 and 2002 and also due to
varying tax jurisdiction rates on low or negative pretax income, and the existence of losses for which no tax benefit has been
recorded.
Upon adoption of SFAS No. 142, “Goodwill and Other Intangible Assets,” we reduced goodwill by $8.0 million as of the
beginning of fiscal 2003, reflected as the cumulative effect of a change in accounting principle on our statement of operations. A
discounted cash flows approach was used to test goodwill for potential impairment.
LIQUIDITY AND CAPITAL RESOURCES
In November 2002, we refinanced our credit facilities. The new arrangement replaced our previous revolving credit facility
that was scheduled to mature on March 31, 2003. The new arrangement consisted of a Revolving Credit Facility, a Term Loan
and a Senior Second Secured Term Loan. The Revolving Credit Facility currently provides availability up to a maximum of $50
million through March 31, 2007. Availability based on the underlying collateral at March 31, 2004 amounted to $48.9 million.
The unused Revolving Credit Facility totaled $39.7 million at March 31, 2004 with no borrowings outstanding but with $9.2
million of outstanding letters of credit. Interest is payable at varying Eurodollar rates based on LIBOR or prime plus spreads
determined by our leverage ratio, amounting to 275 or 150 basis points applied to each, respectively, at March 31, 2004.
The Term Loan requires quarterly $0.5 million payments with the balance due on March 31, 2007. At March 31, 2004,
$7.8 million was outstanding under the Term Loan. Interest is payable at varying Eurodollar rates based on LIBOR plus a spread
determined by our leverage ratio, amounting to 325 basis points at March 31, 2004 (4.37%).
The Revolving Credit Facility and Term Loan are secured by all of our domestic tangible and intangible assets (limited to
65% for stock ownership of foreign subsidiaries).
In July 2003, we issued $115.0 million of 10% Senior Secured Notes due August 1, 2010 which remain outstanding at
March 31, 2004. Proceeds from this offering were used for the repayment in full of a then outstanding senior second secured
term loan ($66.8 million), the repurchase of $35.7 million of Senior Subordinated 8½% Notes at a discount ($30.1 million), the
repayment of a portion of the outstanding Revolving Credit Facility ($10.0 million), the repayment of a portion of the Term Loan
($3.9 million), the payment of financing costs ($2.8 million) and the payment of accrued interest ($1.4 million). Provisions of the
20
10% Notes include, without limitation, restrictions on liens, indebtedness, asset sales, and dividends and other restricted
payments. The 10% Notes are redeemable at our option, in whole or in part, at prices declining annually from the Make-Whole
Price (as defined in the Indenture for the Notes). In the event of a Change of Control (as defined), each holder of the 10% Notes
may require us to repurchase all or a portion of such holder’s 10% Notes at a purchase price equal to 101% of the principal
amount thereof. The 10% Notes are guaranteed by certain existing and future domestic subsidiaries and are not subject to any
sinking fund requirements. The 10% Notes are also secured, in a second lien position, by all domestic inventory, receivables,
equipment, real property, subsidiary stock (limited to 65% for foreign subsidiaries) and intellectual property.
The redemption of a portion of the outstanding Senior Subordinated 8½% Notes occurred at a discount resulting in a $5.6
million pre-tax gain on early extinguishment of debt. As a result of the repayment of the senior second secured term loan and a
portion of the Term Loan and Senior Subordinated 8½% Notes, $4.9 million of pre-tax deferred financing costs were written-off
in fiscal 2004. The net effect of these two items, a $0.7 million pre-tax gain, is shown as part of other (income) and expense, net.
The corresponding credit agreements associated with the Revolving Credit Facility and the Term Loan place certain debt
covenant restrictions on us, including financial requirements and a restriction on dividend payments, with which we are currently
in compliance.
From time to time, we manage our debt portfolio by using interest rate swaps to achieve an overall desired position of fixed
and floating rates. In June 2001, we entered into an interest rate swap agreement to effectively convert $40 million of variable-
rate debt to fixed-rate debt, which matured in June 2003. That cash flow hedge was considered effective and the gain or loss on
the change in fair value was reported in other comprehensive income, net of tax. In August 2003, we entered into an interest rate
swap agreement to convert $93.5 million of fixed-rate debt (10%) to variable-rate debt (LIBOR plus 578.2 basis points) through
August 2008 and $57.5 million from August 2008 through August 2010 at the same rate. That interest rate swap was considered
an ineffective hedge and therefore the change in fair value was recognized in income as a gain. The swap was terminated in
January 2004 and a pre-tax gain of $1.9 million was recognized as other income as a result of changes in the fair value of the
swap.
At March 31, 2004, our Senior Subordinated 8½% Notes issued on March 31, 1998 and due March 31, 2008 amounted to
$164.1 million, net of original issue discount. Interest is payable semi-annually based on an effective rate of 8.45%, considering
$1.9 million of proceeds from rate hedging in advance of the placement. Provisions of the 8½% Notes include, without
limitation, restrictions on liens, indebtedness, asset sales and dividends and other restricted payments. Prior to April 1, 2003, the
8½% Notes were redeemable at our option, in whole or in part, at the Make-Whole Price (as defined in the Indenture for the
Notes). On or after April 1, 2003, they are redeemable at prices declining annually from 104.25% to 100% on and after April 1,
2006. In the event of a Change of Control (as defined), each holder of the 8½% Notes may require us to repurchase all or a
portion of such holder’s 8½% Notes at a purchase price equal to 101% of the principal amount thereof. The 8½% Notes are
guaranteed by certain existing and future domestic subsidiaries and are not subject to any sinking fund requirements.
We believe that our cash on hand, cash flows, and borrowing capacity under our Revolving Credit Facility will be sufficient
to fund our ongoing operations and budgeted capital expenditures for at least the next twelve months. This belief is dependent
upon a steady economy and successful execution of our current business plan which is focused on cash generation for debt
repayment. The business plan includes continued implementation of lean manufacturing, facility rationalization projects,
divestiture of excess facilities and certain non-strategic operations, improving working capital components, including inventory
reductions, and new market and new product development.
Net cash provided by operating activities was $26.4 million, $14.2 million and $49.8 million in fiscal 2004, 2003 and 2002,
respectively. Overall, operating assets net of liabilities provided cash of $8.8 million, $4.0 million and $28.3 million in fiscal
2004, 2003 and 2002, respectively. The $12.2 million increase in fiscal 2004 relative to fiscal 2003 was primarily due to stronger
operating performance in fiscal 2004 and income tax refunds of $12.5 million. The $35.6 million decrease in fiscal 2003 relative
to fiscal 2002 was due to weaker operating performance in fiscal 2003 and to working capital changes. In particular, trade
accounts receivable and inventories provided cash of $10.2 million in fiscal 2003 compared to $33.5 million in fiscal 2002 and
trade accounts payable used $4.8 million of cash in fiscal 2003 but provided $3.7 million of cash in fiscal 2002.
Net cash provided by investing activities was $4.3 million and $16.0 million in fiscal 2004 and 2003, respectively, and used
in investing activities was $1.6 million in fiscal 2002. The fiscal 2004, 2003 and 2002 amounts included $7.8 million, $21.7
million and $4.9 million, respectively, from business and property divestitures.
Net cash used in financing activities was $21.5 million, $41.9 million and $48.5 million in fiscal 2004, 2003 and 2002,
respectively. Those amounts included $17.7 million, $34.5 million and $46.7 million of debt repayment in fiscal 2004, 2003 and
2002, respectively, as well as $2.0 million of dividends paid in fiscal 2002. We also paid $4.4 million and $8.2 million of
21
financing costs in fiscal 2004 and 2003, respectively, to effect the capital transactions previously described.
CONTRACTUAL OBLIGATIONS
The following table reflects a summary of our contractual obligations in millions of dollars as of March 31, 2004, by period
of estimated payments due:
Long-term debt obligations (a)
Operating lease obligations (b)
Purchase obligations (c) .........
Interest obligations (d) ............
Letter of credit obligations......
long-term
Other
reflected on
balance sheet under GAAP (e)
Total...................................
liabilities
the Company’s
Total
Fiscal
2005
Fiscal 2006-
Fiscal 2007
Fiscal 2008- More Than
Five Years
Fiscal 2009
$287.9
12.6
--
129.3
9.2
$2.2
3.8
--
25.8
7.5
$6.1
4.9
--
51.2
1.7
$164.3
2.9
--
37.0
--
$115.3
1.0
--
15.3
--
37.9
$476.9
2.9
$42.1
22.8
$86.7
9.2
$213.3
3.0
$134.6
(a) As described in note 10 to our consolidated financial statements.
(b) As described in note 18 to our consolidated financial statements.
(c) We have no purchase obligations specifying fixed or minimum quantities to be purchased. We estimate that, at any
given point in time, our open purchase orders to be executed in the normal course of business approximate $40 million.
(d) Estimated for our Term Loan due 3/31/07, Senior Secured Notes due 8/1/10 and Senior Subordinated Notes due
3/31/08.
(e) As described in note 9 to our consolidated financial statements.
We have no additional off-balance sheet obligations that are not reflected above.
CAPITAL EXPENDITURES
In addition to keeping our current equipment and plants properly maintained, we are committed to replacing, enhancing and
upgrading our property, plant and equipment to support new product development, reduce production costs, increase flexibility to
respond effectively to market fluctuations and changes, meet environmental requirements, enhance safety and promote
ergonomically correct work stations. Further, our facility rationalization program underway over the past three years reduced our
annual capital expenditure requirements and also provided for transfers of equipment from the rationalized facilities to other
operating facilities. Our capital expenditures for fiscal 2004, 2003 and 2002 were $3.6 million, $5.0 million and $4.8 million,
respectively. The decreased spending throughout the period reflects a deferral of certain projects due to soft market conditions, as
well as reduced needs resulting from our facility rationalization program. We expect capital expenditure spending to increase
modestly in fiscal 2005, to $4.0-$6.0 million.
INFLATION AND OTHER MARKET CONDITIONS
Our 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. We do not believe that general inflation has had a material effect on our results of
operations over the periods presented primarily due to overall low inflation levels over such periods and our ability to generally
pass on rising costs through annual price increases. However, employee benefits costs such as health insurance, workers
compensation insurance, pensions as well as energy and business insurance have exceeded general inflation levels. In the future,
we may be further affected by inflation that we may not be able to pass on as price increases. In the fourth quarter of fiscal 2004,
we were impacted by high inflation in steel costs which varied by type of steel. We generally incorporated those cost increases
into our sales price increases effective in early fiscal 2005 as well as surcharges on certain products that began in March 2004.
We continue to monitor steel costs and potential surcharge requirements on a monthly basis.
SEASONALITY AND QUARTERLY RESULTS
Our quarterly results may be materially affected by the timing of large customer orders, periods of high vacation and
holiday concentrations, restructuring charges and other costs attributable to our facility rationalization program, divestitures,
acquisitions and the magnitude of rationalization integration costs. Therefore, our operating results for any particular fiscal
22
quarter are not necessarily indicative of results for any subsequent fiscal quarter or for the full fiscal year.
DISCONTINUED OPERATIONS
In May 2002, we completed the divestiture of substantially all of the assets of ASI which comprised the principal business
unit in our former Solutions - Automotive segment. Proceeds from this sale included cash of $15.9 million and an 8%
subordinated note in the principal amount of $6.8 million payable over 10 years.
Accordingly, the ASI operation was reflected as discontinued operations in our financial statements and all prior financial
statements have been restated. The loss from discontinued operations was $7.9 million and in fiscal 2002 and the loss on the
disposition of the discontinued operations was $121.5 million, both reflected in our fiscal 2002 consolidated statement of
operations.
Cash provided by (used in) discontinued operations was $0.5 million and ($0.3) million in fiscal 2003 and 2002,
respectively, as shown on our consolidated statements of cash flows.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
The preparation of financial statements in conformity with generally accepted accounting principles requires us to make estimates
and assumptions that affect the amounts reported in our consolidated financial statements and accompanying notes. We continually
evaluate the estimates and their underlying assumptions, which form the basis for making judgments about the carrying value of our
assets and liabilities. Actual results inevitably will differ from those estimates. We have identified below the accounting policies
involving estimates that are critical to our financial statements. Other accounting policies are more fully described in note 2 of notes to
our consolidated financial statements.
Pension and Other Postretirement Benefits. The determination of the obligations and expense for pension and postretirement
benefits is dependent on our selection of certain assumptions that are used by actuaries in calculating such amounts. Those assumptions
are disclosed in Notes 11 and 13, respectively, to our consolidated financial statements and include the discount rates, expected long-
term rate of return on plan assets and rates of future increases in compensation and healthcare costs.
The pension discount rate assumptions of 6¼%, 6 ¾% and 7 ¼% as of March 31, 2004, 2003 and 2002, respectively, are based on
long-term bond rates. The decrease in discount rates for fiscal 2004 and 2003 resulted in $7.0 million and $5.6 million increases in the
projected benefit obligations as of March 31, 2004 and 2003, respectively. The rate of return on plan assets assumptions of 8.4%, 8½%
and 8 7/8% for the years ended March 31, 2004, 2003 and 2002, respectively, are based on the composition of the asset portfolios
(approximately 55% equities and 45% fixed income at March 31, 2004) and their long-term historical returns. The actual assets
realized gains of $9.8 million in fiscal 2004 but sustained losses of $(8.4) million in fiscal 2003. Accordingly, our funded status as of
March 31, 2004 and 2003 was negative by $30.3 million and $31.1 million, or 27.3% and 32.2%, respectively. To improve our funded
status, we increased our pension contributions during fiscal 2004 by $4.0 million over fiscal 2003. Accordingly, our accrued pension
cost decreased by $3.6 million as of March 31, 2004 as compared to March 31, 2003. The negative funded status may result in future
pension expense increases. However, pension expense for the March 31, 2005 fiscal year is expected to approximate fiscal 2004
expense. These factors will also result in increases in funding requirements over time, unless there is continued significant market
appreciation in the asset values. However, pension funding contributions for the March 31, 2005 fiscal year are expected to decrease
by approximately $1.5 million compared to fiscal 2004. The compensation increase assumption of 4% as of March 31, 2004, 2003 and
2002 is based on historical trends.
The healthcare inflation assumptions of 12%, 12% and 9% for fiscal 2004, 2003 and 2002, respectively are based on anticipated
trends. Healthcare costs in the United States have increased substantially over the last several years. If this trend continues, the cost of
postretirement healthcare will increase in future years.
Insurance Reserves. Our accrued general and product liability reserves as described in Note 15 to our consolidated financial
statements involve actuarial techniques including the methods selected to estimate ultimate claims, and assumptions including
emergence patterns, payment patterns, initial expected losses and increased limit factors. Other insurance reserves such as workers
compensation and group health insurance are based on actual historical and current claim data provided by third party administrators or
internally maintained.
Inventory and Accounts Receivable Reserves. Slow-moving and obsolete inventory reserves are judgmentally determined based
on historical and expected future usage within a reasonable timeframe. We reassess trends and usage on a regular basis and if we
identify changes we revise our estimated allowances. Allowances for doubtful accounts and credit memo reserves are also
judgmentally determined based on historical bad debt write-offs and credit memos issued, assessing potentially uncollectible customer
23
accounts and analyzing the accounts receivable agings.
Long-Lived Assets. Property, plants and equipment and certain intangibles are depreciated or amortized over their assigned lives.
These assets as well as goodwill are also periodically measured for impairment. The assigned lives and the projected cash flows used
to test impairment are subjective. If actual lives are shorter than anticipated or if future cash flows are less than anticipated, we could
incur a future impairment charge or a loss on disposal relating to these assets.
Marketable Securities. On a quarterly basis, we review our marketable securities for declines in market value that may be
considered other than temporary. We consider market value declines to be other than temporary if they are declines for a period longer
than six months and in excess of 20% of original cost.
Deferred Tax Asset Valuation Allowance. As of March 31, 2004, the Company had $56.3 million of total net deferred tax assets
before valuation allowances. As described in Note 17 to the consolidated financial statements, $39.7 million of the assets pertain to net
operating loss carryforwards and the remainder relate principally to liabilities including employee benefit plans, insurance reserves,
accrued vacation and incentive costs and also to asset valuation reserves such as inventory obsolescence reserves and bad debt reserves.
The net operating loss carryforwards expire in 2023. A valuation allowance of $48.2 million was recorded at March 31, 2004 due to
the uncertainty of whether the Company’s net operating loss carryforwards, capital loss carryforwards and other deferred tax assets
may ultimately be realized. Our ability to realize our deferred tax assets is primarily dependent on generating sufficient future taxable
income. If we do not generate sufficient taxable income, we would record an additional valuation allowance.
Revenue Recognition. Sales are recorded when title passes to the customer, which is generally at the time of shipment to the
customer, except for long-term construction contracts. For long-term construction contracts, we recognize contract revenues under the
percentage of completion method, measured by comparing direct costs incurred to total estimated direct costs. Changes in job
performance, job conditions and estimated profitability, including those arising from final contract settlements, may result in revisions
to costs and income and are recognized in the period in which the revisions are determined. In the event that a loss is anticipated on an
uncompleted contract, a provision for the estimated loss is made at the time it is determined. Billings on contracts may precede or lag
revenues earned, and such differences are reported in the balance sheet as current liabilities (accrued liabilities) and current assets
(unbilled revenues), respectively. Customers do not routinely return product. However, sales returns are permitted in specific situations
and typically include a restocking charge or the purchase of additional product. We have established an allowance for returns based
upon historical trends.
EFFECTS OF NEW ACCOUNTING PRONOUNCEMENTS
The Emerging Issues Task Force (EITF) reached a consensus on EITF Issue No. 03-01, “The Meaning of Other-Than-
Temporary Impairment and Its Application to Certain Investments” (EITF 03-01) in November 2003. EITF 03-01 provides
guidance on other-than-temporary impairments and its application to debt and equity investments and applies to investments in
debt and marketable securities that are accounted for under Statement of Financial Accounting Standards (SFAS) No. 115
“Accounting for Certain Investments in Debt and Equity Securities.” EITF 03-01 requires additional disclosure of investments
with unrealized losses. The requirements are effective for fiscal years ending after December 15, 2003 and accordingly we have
reflected those expanded disclosures in note 6 to our consolidated financial statements.
The Financial Accounting Standards Board (FASB) issued SFAS No. 132 (revised 2003), “Employers’ Disclosures about
Pensions and Other Postretirement Benefits” (FAS 132R) in December 2003. SFAS No. 132R requires additional disclosure
regarding certain aspects of pension plans including, but not limited to, asset and investment strategy, expected employer
contributions and expected benefit payments. The disclosure requirements of SFAS No. 132R are effective for financial
statements of periods ending after December 15, 2003 and accordingly we have reflected those expanded disclosures in note 11
to our consolidated financial statements.
FACTORS AFFECTING OUR OPERATING RESULTS
Our business is cyclical and is affected by industrial economic conditions, and over the past several years we experienced
substantially reduced demand for our products.
Many of the end-users of our products are in highly cyclical industries, such as general manufacturing and construction, that
are sensitive to changes in general economic conditions. Their demand for our products, and thus our results of operations, is
directly related to the level of production in their facilities, which changes as a result of changes in general economic conditions
and other factors beyond our control. Since the fourth quarter of fiscal 2001, for example, we experienced significantly reduced
demand for our products, generally as a result of the global economic slowdown, and more specifically as a result of the dramatic
decline in capital goods spending in the industries in which our end-users operate. These lower levels of demand resulted in a
24
24% decline in net sales from fiscal 2001 to fiscal 2004, from approximately $586.2 million to approximately $444.6 million.
This decline in net sales resulted in a 55% decline in our income from operations during the same period. In addition, our fiscal
2002 annual price increase implementation, scheduled for December 2001, was delayed for eight months due to weak economic
conditions. During fiscal 2004, we began to see stabilization and modest improvement in sales and operating profitability in the
latter half of the year.
If there is further deterioration in the general economy or in the industries we serve, our business, results of operations and
financial condition could be further adversely affected. In addition, the cyclical nature of our business could at times also
adversely affect our liquidity and ability to borrow under our revolving credit facility.
If demand for our products deteriorates further, the cost saving efforts we have implemented may not be sufficient to achieve the
benefits we expect.
In fiscal 2004, we continued our facility rationalization and Lean manufacturing programs in an ongoing effort to reduce our
cost structure. If the economy does not continue to improve or deteriorates further, our sales could continue to decline. If sales
are lower than our expectations, our cost saving programs may not achieve the benefits we expect. We may be forced to take
additional cost savings steps that could result in additional charges and materially affect our ability to compete or implement our
business strategies.
We rely in large part on independent distributors for sales of our products.
We depend on independent distributors to sell our products and provide service and aftermarket support to our customers.
Distributors play a significant role in determining which of our products are stocked at the branch locations, and hence are most
readily accessible to aftermarket buyers, and the price at which these products are sold. Almost all of the distributors with whom
we transact business offer competitive products and services to our customers. We do not have written agreements with our
distributors located in the United States. The loss of a substantial number of these distributors or an increase in the distributors’
sales of our competitors’ products to our ultimate customers could materially reduce our sales and profits.
We are subject to currency fluctuations from our international sales.
Our products are sold in many countries around the world. Thus, a portion of our revenues (approximately $124.8 million in
fiscal year 2004) is generated in foreign currencies, including principally the euro and the Canadian dollar, while a portion of the
costs incurred to generate those revenues are incurred in other currencies. Since our financial statements are denominated in U.S.
dollars, changes in currency exchange rates between the U.S. dollar and other currencies have had, and will continue to have, an
impact on our earnings. We currently do not have exchange rate hedges in place to reduce the risk of an adverse currency
exchange movement. Currency fluctuations may impact our financial performance in the future.
Our international operations pose certain risks that may adversely impact sales and earnings.
We have operations and assets located outside of the United States, primarily in Canada, Mexico, Germany, the United
Kingdom, Denmark, France and China. In addition, we import a portion of our hoist product line from China and Japan, and sell
our products to distributors located in approximately 50 countries. In fiscal year 2004, approximately 36% of our net sales were
derived from non-U.S. markets. These international operations are subject to a number of special risks, in addition to the risks of
our domestic business, including currency exchange rate fluctuations, differing protections of intellectual property, trade barriers,
labor unrest, exchange controls, regional economic uncertainty, differing (and possibly more stringent) labor regulation, risk of
governmental expropriation, domestic and foreign customs and tariffs, current and changing regulatory environments, difficulty
in obtaining distribution support, difficulty in staffing and managing widespread operations, differences in the availability and
terms of financing, political instability and risks of increases in taxes. Also, in some foreign jurisdictions we may be subject to
laws limiting the right and ability of entities organized or operating therein to pay dividends or remit earnings to affiliated
companies unless specified conditions are met. These factors may adversely affect our future profits.
Part of our strategy is to expand our worldwide market share and reduce costs by strengthening our international distribution
capabilities and sourcing basic components in foreign countries, in particular in Mexico and China. Implementation of this
strategy may increase the impact of the risks described above, and we cannot assure you that such risks will not have an adverse
effect on our business, results of operations or financial condition.
Our business is highly competitive and increased competition could reduce our sales, earnings and profitability.
The principal markets that we serve within the material handling industry are fragmented and highly competitive.
25
Competition is based primarily on performance, functionality, price, brand recognition, customer service and support, and
product availability. Our competition in the markets in which we participate comes from companies of various sizes, some of
which have greater financial and other resources than we do. Increased competition could force us to lower our prices or to offer
additional services at a higher cost to us, which could reduce our gross margins and net income.
The greater financial resources or the lower amount of debt of certain of our competitors may enable them to commit larger
amounts of capital in response to changing market conditions. Certain competitors may also have the ability to develop product
or service innovations that could put us at a disadvantage. In addition, some of our competitors have achieved substantially more
market penetration in certain of the markets in which we operate. If we are unable to compete successfully against other
manufacturers of material handling equipment, we could lose customers and our revenues may decline. There can also be no
assurance that customers will continue to regard our products favorably, that we will be able to develop new products that appeal
to customers, that we will be able to improve or maintain our profit margins on sales to our customers or that we will be able to
continue to compete successfully in our core markets.
Improper use of our products involves risks of personal injury and property damage, which exposes us to potential liability.
Our business exposes us to possible claims for personal injury or death and property damage resulting from the products that
we sell. We maintain insurance through a combination of self-insurance retentions and excess insurance coverage. We monitor
claims and potential claims of which we become aware and establish accrued liability reserves for the self-insurance amounts
based on our liability estimates for such claims. We cannot give any assurance that existing or future claims will not exceed our
estimates for self-insurance or the amount of our excess insurance coverage. In addition, we cannot give any assurance that
insurance will continue to be available to us on economically reasonable terms or that our insurers would not require us to
increase our self-insurance amounts. Claims brought against us that are not covered by insurance or that result in recoveries in
excess of insurance coverage could have a material adverse effect on our results and financial condition.
Our operating results may be affected by fluctuations in steel prices. We may not be able to pass on increases in raw material
costs to our customers.
The principal raw material used in our specialty chain, forging and crane building operations is steel. We utilize
approximately $20-$25 million of steel annually in a variety of forms including rod, wire, bar, structural and others. The steel
industry as a whole is highly cyclical, and at times pricing can be volatile due to a number of factors beyond our control,
including general economic conditions, labor costs, competition, import duties, tariffs and currency exchange rates. Recently, the
market price of steel has increased significantly. This volatility can significantly affect our raw material costs. In an
environment of increasing raw material prices, competitive conditions will determine how much of the steel price increases we
can pass on to our customers. To the extent we are unable to pass on sufficient price increases to our customers, our profitability
could be adversely affected.
We depend on our senior management team and the loss of any member could adversely affect our operations.
Our success is dependent on the management and leadership skills of our senior management team. The loss of any of these
individuals or an inability to attract, retain and maintain additional personnel could prevent us from implementing our business
strategy. We cannot assure you that we will be able to retain our existing senior management personnel or to attract additional
qualified personnel when needed. We have not entered into employment agreements with any of our senior management
personnel.
We are subject to various environmental laws which may require us to expend significant capital and incur substantial cost.
Our operations and facilities are subject to various federal, state, local and foreign requirements relating to the protection of
the environment, including those governing the discharges of pollutants in the air and water, the generation, management and
disposal of hazardous substances and wastes and the cleanup of contaminated sites. We have made, and will continue to make,
expenditures to comply with such requirements. Violations of, or liabilities under, environmental laws and regulations, or
changes in such laws and regulations (such as the imposition of more stringent standards for discharges into the environment),
could result in substantial costs to us, including operating costs and capital expenditures, fines and civil and criminal sanctions,
third party claims for property damage or personal injury, clean-up costs or costs relating to the temporary or permanent
discontinuance of operations. Certain of our facilities have been in operation for many years, and we have remediated
contamination at some of our facilities. Over time, we and other predecessor operators of such facilities have generated, used,
handled and disposed of hazardous and other regulated wastes. Additional environmental liabilities could exist, including clean-
up obligations at these locations or other sites at which materials from our operations were disposed, which could result in
substantial future expenditures that cannot be currently quantified and which could reduce our profits or have an adverse effect
26
on our financial condition.
We could pursue selected divestitures which would impact future sales, operating results, financial position and cash flows.
Our strategy is to exit businesses that (i) are not integrated, either operationally or through sales and marketing, with the rest
of our Company; (ii) have market channels and customers different from the business of our core Products segment; (iii) are not
designated as recipients of significant investment of corporate resources in the foreseeable future; or (iv) have had, and are
expected to continue to have, low returns on our investment of financial and management resources. For example, in fiscal 2004,
we sold our Positech and Lister Chain & Forge businesses and in fiscal 2003, we sold our ASI and LICO Steel businesses after
determining that they did not meet our criteria for continuing investment. We periodically review our businesses and are
currently evaluating strategic alternatives for certain of our businesses. In the aggregate, these businesses generated fiscal 2004
sales and EBITDA of $82.4 million and $2.5 million, respectively. Divestiture of some or all of such businesses would affect
future sales, operating results, financial position and cash flows.
Item 7A.
Quantitative and Qualitative Disclosures About Market Risk
Market risk is the potential loss arising from adverse changes in market rates and prices, such as interest rates. We are
exposed to various market risks, including commodity prices for raw materials, foreign currency exchange rates and changes in
interest rates. We may enter into financial instrument transactions, which attempt to manage and reduce the impact of such
changes. We do not enter into derivatives or other financial instruments for trading or speculative purposes.
Our primary commodity risk is related to changes in the price of steel. We control this risk through negotiating purchase
contracts on a consolidated basis and by attempting to build changes in raw material costs into the selling prices of our products.
We also evaluate our steel cost increases and assess the need for price increases and surcharges to our customers. We have not
entered into financial instrument transactions related to raw material costs.
In fiscal 2004, approximately 28.1% of our net sales were from manufacturing plants and sales offices in foreign
jurisdictions. We manufacture our products in the United States, Mexico, China, Denmark, the United Kingdom, France and
Germany and sell our products and solutions in over 50 countries. Our results of operations could be affected by factors such as
changes in foreign currency rates or weak economic conditions in foreign markets. Our operating results are exposed to
fluctuations between the U.S. dollar and the Canadian dollar, European currencies and the Mexican peso. For example, when the
U.S. dollar strengthens against the Canadian dollar, the value of our net sales and net income denominated in Canadian dollars
decreases when translated into U.S. dollars for inclusion in our consolidated results. We are also exposed to foreign currency
fluctuations in relation to purchases denominated in foreign currencies. Our foreign currency risk is mitigated since the majority
of our foreign operations’ net sales and the related expense transactions are denominated in the same currency so therefore a
significant change in foreign exchange rates would likely have a very minor impact on net income. For example, a 10% decline
in the rate of exchange between the euro and the U.S. dollar impacts net income by approximately $0.3 million. In addition, the
majority of our export sale transactions are denominated in U.S. dollars. Accordingly, we currently have not invested in
derivative instruments, such as foreign exchange contracts, to hedge foreign currency transactions.
We control risk related to changes in interest rates by structuring our debt instruments with a combination of fixed and
variable interest rates and by periodically entering into financial instrument transactions as appropriate. At March 31, 2004, we
do not have any swap agreements or similar financial instruments in place. At March 31, 2004 and 2003, approximately 95% and
98%, respectively, of our outstanding debt had fixed interest rates, including the effect of an interest rate swap that was in place
at March 31, 2003. At those dates, we had approximately $14.3 million and $6.6 million, respectively, of outstanding variable
rate debt. A 1% fluctuation in interest rates in fiscal 2003 and 2002 would have changed interest expense on that outstanding
variable rate debt by approximately $0.1 million and $0.6 million, respectively.
Like most industrial manufacturers, we are involved with asbestos-related litigation. In continually evaluating our estimated
asbestos-related liability we review, among other things, the incidence of past and recent claims, the historical case dismissal rate, the
mix of the claimed illnesses and occupations of the plaintiffs, our recent and historical resolution of the cases, the number of cases
pending against us, the status and results of broad-based settlement discussions and the number of years such activity might continue.
Based on this review, we have estimated our share of the liability to defend and resolve probable asbestos-related personal injury
claims. This estimate is highly uncertain due to the limitations of the available data and the difficulty of forecasting with any certainty
the numerous variables that can affect the range of the liability. We will continue to study the variables in light of additional
information in order to identify trends that may become evident and to assess their impact on the range of liability that is probable
and estimable.
27
Our actuaries have estimated our asbestos-related liability to range from $2.8 million to $12.3 million through
approximately March 31, 2034. The estimate of our asbestos-related liability that is probable and estimable through 2012 ranges
from $2.8-$4.0 million as of March 31, 2004. The range of probable and estimable liability reflects uncertainty in the number of
future claims that will be filed and the cost to resolve those claims, which may be influenced by a number of factors, including
the outcome of the ongoing broad-based settlement negotiations, defensive strategies, and the cost to resolve claims outside the
broad-based settlement program. We have concluded that no amount within that range is more likely than any other, and
therefore we have reflected $3.0 million as a liability in our consolidated financial statements in accordance with generally
accepted accounting principles. The recorded liability does not consider the impact of any potential favorable federal legislation
such as the “FAIR Act.” Of this amount, we expect to incur asbestos liability payments of approximately $0.2 million over the
next 12 months. Because payment of the liability is likely to extend over many years, we believe that the potential additional
costs for claims will not have a material after-tax effect on the financial condition of the Company or its liquidity, although the
net after-tax effect of any future liabilities recorded could be material to earnings in a future period.
28
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosures.
None.
Item 9A. Controls and Procedures.
As of March 31, 2004, an evaluation was performed under the supervision and with the participation of our management,
including the chief executive officer and chief financial officer, of the effectiveness of the design and operation of our disclosure
controls and procedures. Based on that evaluation, our management, including the chief executive officer and chief financial
officer, concluded that our disclosure controls and procedures were effective as of March 31, 2004. Furthermore, there were no
significant changes in our internal controls or in other factors during our fourth quarter ended March 31, 2004.
Item 10.
Directors and Executive Officers of the Registrant.
PART III
The information regarding Directors and Executive Officers of the Registrant will be included in a Proxy Statement to be filed
with the Commission prior to July 29, 2004 and upon the filing of such Proxy Statement, is incorporated by reference herein.
The charters of our Audit Committee, Compensation Committee, Nomination/Succession Committee and Governance
Committee are available on our website at www.cmworks.com and are available to any shareholder upon request to the Corporate
Secretary. The information on the Company's website is not incorporated by reference into this Annual Report on Form 10-K.
We have adopted a code of ethics that applies to all of our employees, including our principal executive officer, principal
financial officer and principal accounting officer, as well as our directors. Our code of ethics, the Columbus McKinnon
Corporation Legal Compliance & Business Ethics Manual, is available on our website at www.cmworks.com. We intend to
disclose any amendment to, or waiver from, the code of ethics that applies to our principal executive officer, principal financial
officer or principal accounting officer otherwise required to be disclosed under Item 10 of Form 8-K by posting such amendment
or waiver, as applicable, on our website.
Item 11.
Executive Compensation.
The information regarding Executive Compensation will be included in a Proxy Statement to be filed with the Commission prior
to July 29, 2004 and upon the filing of such Proxy Statement, is incorporated by reference herein.
Item 12.
Security Ownership of Certain Beneficial Owners and Management.
The information regarding Security Ownership of Certain Beneficial Owners and Management will be included in a Proxy
Statement to be filed with the Commission prior to July 29, 2004 and upon the filing of such Proxy Statement, is incorporated by
reference herein.
Item 13.
Certain Relationships and Related Transactions.
The information regarding Certain Relationships and Related Transactions will be included in a Proxy Statement to be filed
with the Commission prior to July 29, 2004 and upon the filing of such Proxy Statement, is incorporated by reference herein.
Item 14.
Principal Accountant Fees and Services.
PART IV
The information regarding Principal Accountant Fees and Services will be included in a Proxy Statement to be filed with the
Commission prior to July 29, 2004 and upon the filing of such Proxy Statement, is incorporated by reference herein.
Item 15.
Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
(a)(1) Financial Statements:
29
The following consolidated financial statements of Columbus McKinnon Corporation are included in Item 8:
Reference
Report of Independent Registered Public Accounting Firm
Consolidated balance sheets - March 31, 2004 and 2003
Consolidated statements of operations - Years ended March 31, 2004, 2003 and 2002
Page No.
F-2
F-3
F-4
Consolidated statements of shareholders’ equity - Years ended March 31, 2004, 2003 and 2002
F-5
Consolidated statements of cash flows - Years ended March 31, 2004, 2003 and 2002
F-6
Notes to consolidated financial statements
(a)(2) Financial Statement Schedule:
F-7 to F-38
Page No.
Schedule II - Valuation and qualifying accounts
F-39
All other schedules for which provision is made in the applicable accounting regulation of the Securities and Exchange
Commission are not required under the related instructions or are inapplicable and therefore have been omitted.
(a)(3) Exhibits:
Exhibit
Number
Exhibit
3.1 Restated Certificate of Incorporation of the Registrant (incorporated by reference to Exhibit 3.1 to the
Company’s Registration Statement No. 33-80687 on Form S-1 dated December 21, 1995).
3.2 Amended By-Laws of the Registrant (incorporated by reference to Exhibit 3 to the Company’s Current
Report on Form 8-K dated May 17, 1999).
4.1 Specimen common share certificate (incorporated by reference to Exhibit 4.1 to the Company’s Registration
Statement No. 33-80687 on Form S-1 dated December 21, 1995.)
4.2 First Amendment and Restatement of Rights Agreement, dated as of October 1, 1998, between Columbus
McKinnon Corporation and American Stock Transfer & Trust Company, as Rights Agent (incorporated by
reference to Exhibit 4.2 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended
June 29, 2003).
4.3 Indenture, dated as of March 31, 1998, among Columbus McKinnon Corporation, the guarantors named on
the signature pages thereto and State Street Bank and Trust Company, N.A., as trustee (incorporated by
reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K dated April 9, 1998).
4.4 Supplemental Indenture among LICO, Inc., Automatic Systems, Inc., LICO Steel, Inc., Columbus McKinnon
Corporation, Yale Industrial Products, Inc., Mechanical Products, Inc., Minitec Corporation and State Street
Bank and Trust Company, N.A., as trustee, dated March 31, 1998 (incorporated by reference to Exhibit 4.3 to
the Company’s Current Report on form 8-K dated April 9, 1998).
4.5 Second Supplemental Indenture among Abell-Howe Crane, Inc., LICO, Inc., Automatic Systems, Inc. LICO
Steel, Inc., Columbus McKinnon Corporation, Yale Industrial Products Inc. and State Street Bank and Trust
Company, N.A., as trustee, dated as of February 12, 1999 (incorporated by reference to Exhibit 4.6 to the
Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 1999).
30
4.6 Third Supplemental Indenture among G.L. International, Inc., Gaffey, Inc., Handling Systems and Conveyors,
Inc., Larco Material Handling Inc., Abell-Howe Crane, Inc., LICO, Inc., Automatic Systems, Inc., LICO Steel,
Inc., Columbus McKinnon Corporation, Yale Industrial Products, Inc. and State Street Bank and Trust
Company, N.A., as trustee, dated as of March 1, 1999 (incorporated by reference to Exhibit 4.7 to the
Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 1999).
4.7 Fourth Supplemental Indenture among Washington Equipment Company, G.L. International, Inc., Gaffey, Inc.,
Handling Systems and Conveyors, Inc., Larco Material Handling Inc., Abell-Howe Crane, Inc., Automatic
Systems, Inc., LICO Steel, Inc., Columbus McKinnon Corporation, Yale Industrial Products, Inc. and State
Street Bank and Trust Company, N.A., as trustee, dated as of November 1, 1999 (incorporated by reference to
Exhibit 10.2 to the Company’s quarterly report on form 10-Q for the quarterly period ended October 3, 1999).
4.8 Fifth Supplemental Indenture among Columbus McKinnon Corporation, Crane Equipment & Service, Inc.,
Automatic Systems, Inc., LICO Steel, Inc., Yale Industrial Products, Inc. and State Street Bank and Trust
Company, N.A., as trustee, dated as of April 4, 2002 (incorporated by reference to Exhibit 4.8 to the
Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2002).
4.9 Sixth Supplemental Indenture among Columbus McKinnon Corporation, Audubon West, Inc., Crane
Equipment & Service, Inc., LICO Steel, Inc., Yale Industrial Products, Inc., Audubon Europe S.a.r.l. and
State Street Bank and Trust Company, N.A., as trustee, dated as of August 5, 2002 (incorporated by reference
to Exhibit 4.9 to the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2002).
4.10 Indenture, dated as of July 22, 2003, among Columbus McKinnon Corporation, the guarantors named on the
signature pages thereto and U.S. Bank Trust National Association, as trustee (incorporated by reference to
Exhibit 4.2 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 29, 2003).
4.11 First Supplemental Indenture, dated as of September 19, 2003, among Columbus McKinnon Corporation, the
guarantors named on the signature pages thereto and U.S. Bank Trust National Association, as trustee
(incorporated by reference to Exhibit 4.13 to Amendment No. 1 to the Company’s Registration Statement
No. 333-109730 on Form S-4/A dated November 7, 2003).
4.12 Registration Rights Agreement dated as of July 15, 2003 among Columbus McKinnon Corporation, the
guarantors named on the signature pages thereto, Credit Suisse First Boston LLC and Fleet Securities, Inc.
(incorporated by reference to Exhibit 4.1 to the Company’s Quarterly Report on Form 10-Q for the quarterly
period ended June 29, 2003).
10.1 Agreement by and among Columbus McKinnon Corporation Employee Stock Ownership Trust, Columbus
McKinnon Corporation and Marine Midland Bank, dated November 2, 1995 (incorporated by reference to
Exhibit 10.6 to the Company’s Registration Statement No. 33-80687 on Form S-1 dated December 21,
1995).
#10.2 Columbus McKinnon Corporation Employee Stock Ownership Plan Restatement Effective April 1, 1989
(incorporated by reference to Exhibit 10.23 to the Company’s Registration Statement No. 33-80687 on Form
S-1 dated December 21, 1995).
#10.3 Amendment No. 1 to the Columbus McKinnon Corporation Employee Stock Ownership Plan as Amended
and Restated as of April 1, 1989, dated March 2, 1995 (incorporated by reference to Exhibit 10.24 to the
Company’s Registration Statement No. 33-80687 on Form S-1 dated December 21, 1995).
#10.4 Amendment No. 2 to the Columbus McKinnon Corporation Employee Stock Ownership Plan, dated
October 17, 1995 (incorporated by reference to Exhibit 10.38 to the Company’s Annual Report on Form 10-
K for the fiscal year ended March 31, 1997).
#10.5 Amendment No. 3 to the Columbus McKinnon Corporation Employee Stock Ownership Plan, dated March
27, 1996 (incorporated by reference to Exhibit 10.39 to the Company’s Annual Report on Form 10-K for the
fiscal year ended March 31, 1997).
#10.6 Amendment No. 4 of the Columbus McKinnon Corporation Employee Stock Ownership Plan as Amended
31
and Restated as of April 1, 1989, dated September 30, 1996 (incorporated by reference to Exhibit 10.1 to the
Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 1996).
#10.7 Amendment No. 5 to the Columbus McKinnon Corporation Employee Stock Ownership Plan as Amended
and Restated as of April 1, 1989, dated August 28, 1997 (incorporated by reference to Exhibit 10.37 to the
Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 1998).
#10.8 Amendment No. 6 to the Columbus McKinnon Corporation Employee Stock Ownership Plan as Amended
and Restated as of April 1, 1989, dated June 24, 1998 (incorporated by reference to Exhibit 10.38 to the
Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 1998).
#10.9 Amendment No. 7 to the Columbus McKinnon Corporation Employee Stock Ownership Plan as Amended
and Restated as of April 1, 1989, dated April 30, 2000 (incorporated by reference to Exhibit 10.24 to the
Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2000).
#10.10 Amendment No. 8 to the Columbus McKinnon Corporation Employee Stock Ownership Plan as Amended
and Restated as of April 1, 1989, dated March 26, 2002 (incorporated by reference to Exhibit 10.30 to the
Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2002).
#10.11 Amendment No. 9 to the Columbus McKinnon Corporation Employee Stock Ownership Plan as Amended
and Restated as of April 1, 1989, dated March 27, 2003 (incorporated by reference to Exhibit 10.32 to the
Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2003).
*#10.12 Amendment No. 10 to the Columbus McKinnon Corporation Employee Stock Ownership Plan as Amended
and Restated as of April 1, 1989, dated February 28, 2004.
#10.13 Amendment No. 11 to the Columbus McKinnon Corporation Employee Stock Ownership Plan as Amended
and Restated as of April 1, 1989, dated December 19, 2003 (incorporated by reference to Exhibit 10.2 to the
Company’s Quarterly Report on Form 10-Q for the quarterly period ended December 28, 2003).
#10.14 Columbus McKinnon Corporation Personal Retirement Account Plan Trust Agreement, dated April 1, 1987
(incorporated by reference to Exhibit 10.25 to the Company’s Registration Statement No. 33-80687 on Form
S-1 dated December 21, 1995).
#10.15 Amendment No. 1 to the Columbus McKinnon Corporation Employee Stock Ownership Trust Agreement
(formerly known as the Columbus McKinnon Corporation Personal Retirement Account Plan Trust
Agreement) effective November 1, 1988 (incorporated by reference to Exhibit 10.26 to the Company’s
Registration Statement No. 33-80687 on Form S-1 dated December 21, 1995).
#10.16 Amendment and Restatement of Columbus McKinnon Corporation 1995 Incentive Stock Option Plan
(incorporated by reference to Exhibit 10.25 to the Company’s Annual Report on Form 10-K for the fiscal
year ended March 31, 1999).
#10.17 Second Amendment to the Columbus McKinnon Corporation 1995 Incentive Stock Option Plan, as amended
and restated (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for
the quarterly period ended September 29, 2002).
#10.18 Columbus McKinnon Corporation Restricted Stock Plan, as amended and restated (incorporated by reference
to Exhibit 10.28 to the Company’s Registration Statement No. 33-80687 on Form S-1 dated December 21,
1995).
#10.19 Second Amendment to the Columbus McKinnon Corporation Restricted Stock Plan (incorporated by
reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended
September 29, 2002).
#10.20 Amendment and Restatement of Columbus McKinnon Corporation Non-Qualified Stock Option Plan
(incorporated by reference to Exhibit 10.27 to the Company’s Annual Report on Form 10-K for the fiscal
year ended March 31, 1999).
32
#10.21 Columbus McKinnon Corporation Thrift [401(k)] Plan 1989 Restatement Effective January 1, 1998
(incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the
quarterly period ended December 27, 1998).
#10.22 Amendment No. 1 to the 1998 Plan Restatement of the Columbus McKinnon Corporation Thrift [401(k)]
Plan, dated December 10, 1998 (incorporated by reference to Exhibit 10.29 to the Company’s Annual Report
on Form 10-K for the fiscal year ended March 31, 1999).
#10.23 Amendment No. 2 to the 1998 Plan Restatement of the Columbus McKinnon Corporation Thrift [401 (k)]
Plan, dated June 1, 2000 (incorporated by reference to Exhibit 10.33 to the Company’s Annual Report on
Form 10-K for the fiscal year ended March 31, 2000).
#10.24 Amendment No. 3 to the 1998 Plan Restatement of the Columbus McKinnon Corporation Thrift [401 (k)]
Plan, dated March 26, 2002 (incorporated by reference to Exhibit 10.39 to the Company’s Annual Report on
Form 10-K for the fiscal year ended March 31, 2002).
#10.25 Amendment No. 4 to the 1998 Plan Restatement of the Columbus McKinnon Corporation Thrift [401(k)]
Plan, dated May 10, 2002 (incorporated by reference to Exhibit 10.4 to the Company’s Quarterly Report on
Form 10-Q for the quarterly period ended September 29, 2002).
#10.26 Amendment No. 5 to the 1998 Plan Restatement of the Columbus McKinnon Corporation Thrift [401(k)]
Plan, dated December 20, 2002 (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly
Report on Form 10-Q for the quarterly period ended December 29, 2002).
#10.27 Amendment No. 6 to the 1998 Plan Restatement of the Columbus McKinnon Corporation Thrift [401(k)]
Plan, dated May 22, 2003 (incorporated by reference to Exhibit 10.46 to the Company’s Annual Report on
Form 10-K for the fiscal year ended March 31, 2003).
*#10.28 Amendment No. 7 to the 1998 Plan Restatement of the Columbus McKinnon Corporation Thrift [401(k)]
Plan, dated April 14, 2004.
#10.29 Amendment No. 8 to the 1998 Plan Restatement of the Columbus McKinnon Corporation Thrift [401(k)]
Plan, dated December 19, 2003 (incorporated by reference to Exhibit 10.3 to the Company’s Quarterly
Report on Form 10-Q for the quarterly period ended December 28, 2003).
*#10.30 Amendment No. 9 to the 1998 Plan Restatement of the Columbus McKinnon Corporation Thrift [401(k)]
Plan, dated March 16, 2004.
#10.31 Columbus McKinnon Corporation Thrift 401(k) Plan Trust Agreement Restatement Effective August 9,
1994 (incorporated by reference to Exhibit 10.32 to the Company’s Registration Statement No. 33-80687 on
Form S-1 dated December 21, 1995).
#10.32 Columbus McKinnon Corporation Monthly Retirement Benefit Plan Restatement Effective April 1, 1998
(incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the
quarterly period ended December 27, 1998).
#10.33 Amendment No. 1 to the 1998 Plan Restatement of the Columbus McKinnon Corporation Monthly
Retirement Benefit Plan, dated December 10, 1998 (incorporated by reference to Exhibit 10.32 to the
Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 1999).
#10.34 Amendment No. 2 to the 1998 Plan Restatement of the Columbus McKinnon Corporation Monthly
Retirement Benefit Plan, dated May 26, 1999 (incorporated by reference to Exhibit 10.33 to the Company’s
Annual Report on Form 10-K for the fiscal year ended March 31, 1999).
#10.35 Amendment No. 3 to the 1998 Plan Restatement of the Columbus McKinnon Corporation Monthly
Retirement Benefit Plan, dated March 26, 2002 (incorporated by reference to Exhibit 10.44 to the
Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2002).
#10.36 Amendment No. 4 to the 1998 Plan Restatement of the Columbus McKinnon Corporation Monthly
33
Retirement Benefit Plan, dated December 20, 2002 (incorporated by reference to Exhibit 10.1 to the
Company’s Quarterly Report on Form 10-Q for the quarterly period ended December 29, 2002).
*#10.37 Amendment No. 5 to the 1998 Plan Restatement of the Columbus McKinnon Corporation Monthly
Retirement Benefit Plan, dated February 28, 2004.
#10.38 Columbus McKinnon Corporation Monthly Retirement Benefit Plan Trust Agreement Effective as of April
1, 1987 (incorporated by reference to Exhibit 10.34 to the Company’s Registration Statement No. 33-80687
on Form S-1 dated December 21, 1995).
#10.39 Form of Change in Control Agreement as entered into between Columbus McKinnon Corporation and each
of Timothy T. Tevens, Robert L. Montgomery, Jr., Ned T. Librock, Karen L. Howard, Lois H. Demler,
Timothy R. Harvey, John Hansen and Neal Wixson (incorporated by reference to Exhibit 10.33 to the
Company’s Annual Report on Form 10-K for the fiscal year ended March, 31, 1998).
#10.40 Columbus McKinnon Corporation Corporate Incentive Plan (incorporated by reference to Exhibit 10.1 to
the Company’s Quarterly Report on Form 10-Q for the quarterly period ended July 1, 2001).
10.41 Asset Purchase Agreement dated as of May 10, 2002 by and among Automatic Systems, Inc., Columbus
McKinnon Corporation and ASI Acquisition Corp (incorporated by reference to Exhibit 10.1 to the
Company’s Current Report on Form 8-K dated May 29, 2002).
10.42 Intercreditor Agreement dated as of July 22, 2003 among Columbus McKinnon Corporation, the subsidiary
guarantors as listed thereon, Fleet Capital Corporation, as Credit Agent, and U.S. Bank Trust National
Association, as Trustee (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on
Form 10-Q for the quarterly period ended June 29, 2003).
10.43 Second Amended and Restated Credit and Security Agreement, dated as of November 21, 2002 and
amended and restated as of January 2, 2004, among Columbus McKinnon Corporation, as Borrower, Larco
Industrial Services Ltd., Columbus McKinnon Limited, the Guarantors Named Herein, the Lenders Party
Hereto From Time to Time, Fleet Capital Corporation, as Administrative Agent, Fleet National Bank, as
Issuing Lender, Congress Financial Corporation (Central), Syndication Agent, Merrill Lynch Capital, a
Division of Merrill Lynch Business Financial Services Inc., as Documentation Agent, and Fleet Securities,
Inc., as Arranger (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form
10-Q for the quarterly period ended December 28, 2003).
*21.1 Subsidiaries of the Registrant.
*23.2 Consent of Ernst & Young LLP.
*31.1 Certification of the principal executive officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of
1934, as amended.
*31.2 Certification of the principal financial officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of
1934, as amended.
*32.1 Certification of the principal executive officer and the principal financial officer pursuant to Rule 13a-14(b)
of the Securities Exchange Act of 1934, as amended and 18 U.S.C. Section 1350, as adopted by pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002. The information contained in this exhibit shall not be
deemed filed with the Securities and Exchange Commission nor incorporated by reference in any
registration statement foiled by the Registrant under the Securities Act of 1933, as amended.
_________________
* Filed herewith
** To be filed by amendment
# Indicates a Management contract or compensation plan or arrangement
(b)
Reports on Form 8-K for the quarter ended March 31, 2004:
34
1. On March 4, 2004, the Registrant filed a Current Report on Form 8-K under Items 2 and 7 with respect to the sale
of its Lister Division.
2. On February 3, 2004, the Registrant filed a Current Report on Form 8-K under Items 2 and 7 with respect to the
sale of its Positech Division.
3. On January 21, 2004, the Registrant furnished a Current Report on Form 8-K under Items 7 and 12 relating to its
financial results for the quarter ended December 28, 2003.
35
Pursuant to the requirements of Section 13 or 15(d) 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.
SIGNATURES
Date: June 22, 2004
COLUMBUS McKINNON CORPORATION
By: /S/ TIMOTHY T. TEVENS
Timothy T. Tevens
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following
persons on behalf of the registrant and in the capacities and on the dates indicated.
Signature
Title
/S/ TIMOTHY T. TEVENS
____________________________________
Timothy T. Tevens
President, Chief Executive Officer and Director
(Principal Executive Officer)
/S/ ROBERT R. FRIEDL
____________________________________
Robert R. Friedl
Vice President – Finance and Chief Financial Officer
(Principal Financial Officer and Principal
Accounting Officer)
Date
June 22, 2004
June 22, 2004
/S/ HERBERT P. LADDS, JR.
____________________________________
Herbert P. Ladds, Jr.
/S/ CARLOS PASCUAL
____________________________________
Carlos Pascual
/S/ RICHARD H. FLEMING
____________________________________
Richard H. Fleming
/S/ ERNEST R. VEREBELYI
____________________________________
Ernest R. Verebelyi
/S/ WALLACE W. CREEK
____________________________________
Wallace W. Creek
Chairman of the Board of Directors
June 22, 2004
June 22, 2004
June 22, 2004
June 22, 2004
June 22, 2004
Director
Director
Director
Director
36
CERTIFICATION
Exhibit 31.1
I, Timothy T. Tevens, Chief Executive Officer, certify that:
1.
I have reviewed this annual report on Form 10-K of Columbus McKinnon Corporation;
2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this annual report.
3. Based on my knowledge, the financial statements, and other financial information included in this annual report,
fairly present in all material respects the financial condition, results of operations and cash flows of the registrant
as of, and for, the periods presented in this annual report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchanged Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
a. designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be
designed under our supervision, to ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities, particularly during the
period in which this annual report is being prepared;
b. evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this
annual report our conclusions about the effectiveness of the disclosure controls and procedures, as of the
end of the period covered by this annual report based on such evaluation; and
c. disclosed in this annual report any change in the registrant’s internal control over financial reporting that
occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case
of an annual report) that has materially affected, or is likely to materially affect, the registrant’s internal
control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal
control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of
directors (or persons performing the equivalent functions):
a. all significant deficiencies and material weaknesses in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the registrant’s ability to record,
process, summarize and report financial information; and
b. any fraud, whether or not material, that involves management or other employees who have a significant
role in the registrant’s internal control over financial reporting.
Date: June 22, 2004
/S/ TIMOTHY T. TEVENS
Timothy T. Tevens
Chief Executive Officer
37
CERTIFICATION
Exhibit 31.2
I, Robert R. Friedl, Chief Financial Officer, certify that:
1.
I have reviewed this annual report on Form 10-K of Columbus McKinnon Corporation;
2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this annual report.
3. Based on my knowledge, the financial statements, and other financial information included in this annual report,
fairly present in all material respects the financial condition, results of operations and cash flows of the registrant
as of, and for, the periods presented in this annual report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchanged Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
c. designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be
designed under our supervision, to ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities, particularly during the
period in which this annual report is being prepared;
d. evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this
annual report our conclusions about the effectiveness of the disclosure controls and procedures, as of the
end of the period covered by this annual report based on such evaluation; and
e. disclosed in this annual report any change in the registrant’s internal control over financial reporting that
occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case
of an annual report) that has materially affected, or is likely to materially affect, the registrant’s internal
control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal
control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of
directors (or persons performing the equivalent functions):
f. all significant deficiencies and material weaknesses in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the registrant’s ability to record,
process, summarize and report financial information; and
g. any fraud, whether or not material, that involves management or other employees who have a significant
role in the registrant’s internal control over financial reporting.
Date: June 22, 2004
/S/ ROBERT R. FRIEDL
Robert R. Friedl
Chief Financial Officer
38
CERTIFICATION
Exhibit 32.1
Each of the undersigned hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002, that the Annual Report of Columbus McKinnon Corporation (the
"Company") on Form 10-K for the year ended March 31, 2004, fully complies with the requirements of Section 13(a)
or 15(d) of the Securities Exchange Act of 1934 and that information contained in the such Annual Report on Form
10-K fairly presents, in all material respects, the financial condition and result of operations of the Company.
A signed original of this written statement required by Section 906 has been provided to the Company and
will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.
Dated: June 22, 2004
_/S/ TIMOTHY T. TEVENS__
Timothy T. Tevens
Chief Executive Officer
_/S/ ROBERT R. FRIEDL__
Robert R. Friedl
Chief Financial Officer
39
Corporate Information
Common Stock
Columbus McKinnon’s common stock is traded on the
Nasdaq under the symbol, CMCO. As of March 31,
2004, there were 549 shareholders of record of the
Company’s common stock.
In addition, 1,443
Columbus McKinnon employees owned shares through
the Company ESOP. Approximately X,XXX additional
shareholders held shares in “street name.”
According to the March 31, 2004 SEC filings, approxi-
mately 36 institutional investors own 44.6% of
Columbus McKinnon’s outstanding shares.
Annual Shareholders Meeting
August 16, 2004; 10:00 a.m.
Columbus McKinnon Corporation
Corporate Headquarters
140 Audubon Parkway
Amherst, NY 14228-1197
Transfer Agent
Please direct questions about lost certificates, change
of address and consolidation of accounts to the
Company’s transfer agent and registrar:
American Stock Transfer & Trust Company
59 Maiden Lane, Plaza Level
New York, NY 10038
(718) 921-8200
www.amstock.com
Investor Relations
Timothy R. Harvey
Corporate Secretary and General Counsel
Phone: (716) 689-5648
E-mail: timothy.harvey@cmworks.com
Investor information is available on the Company’s
Web site: www.cmworks.com
Corporate Headquarters
Columbus McKinnon Corporation
140 Audubon Parkway
Amherst, NY 14228-1197
Telephone: (716) 689-5400
Independent Auditors
Ernst & Young LLP
50 Fountain Plaza, 14th floor
Buffalo, NY 14202-2297
The following are trademarks of Columbus McKinnon Corporation
registered in the U.S. Patent and Trademark Office: CM, Big Orange,
Budgit, Cady, Coffing, ColorLinks, Hammerlok, Herc-Alloy, Little
Mule, Shaw-Box, Tigrip, Tugit, Yale.
The following are trademarks of Columbus McKinnon Corporation:
Abell-Howe, AgWorks, Camlok, CraneMart, Gaffey, LARCO,
TechLink, WECO.
Forward-Looking Information
The Columbus McKinnon annual report contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include, but are not
limited to, statements concerning future revenue and earnings, involve known and unknown risks, uncertainties and other factors that could cause the actual results of the Company to differ materially
from the results expressed or implied by such statements, including general economic and business conditions, conditions affecting the industries served by the Company and its subsidiaries,
conditions affecting the Company’s customers and suppliers, competitor responses to the Company’s products and services, the overall market acceptance of such products and services and
other factors disclosed in the Company’s periodic reports filed with the Securities and Exchange Commission. The Company assumes no obligation to update the forward-looking information
contained in this report.
Board of Directors and Corporate Officers
Board of Directors
Herbert P. Ladds, Jr. has been a Director of the Company since 1973 and was elected Chairman of the Board of
Directors in January 1998. Mr. Ladds served as the Company’s Chief Executive Officer from 1986 until his retirement in
July 1998. Mr. Ladds was President of the Company from 1982 until January 1998, Executive Vice President from 1981
to 1982 and Vice President – Sales & Marketing from 1971 to 1980. Mr. Ladds is also a director of Utica Mutual Insurance
Company and Utica Life Insurance Company.
Timothy T. Tevens was elected President and a Director of the Company in January 1998 and assumed the duties of
Chief Executive Officer in July 1998. From May 1991 to January 1998 he served as Vice President – Information Services
and was also elected Chief Operating Officer in October 1996. From 1980 to 1991, Mr. Tevens was employed by Ernst
& Young LLP in various management consulting capacities. He is a Vice President in the newly formed Industrial Supply
Association.
Carlos Pascual has been a Director of the Company since 1998. Since January 2000, Mr. Pascual has been Executive
Vice President and President of Developing Markets Operations for Xerox. From January 1999 to January 2000, Mr.
Pascual served as Deputy Executive Officer of Xerox’s Industry Solutions Operations. From August 1995 to January 1999,
Mr. Pascual served as President of Xerox Corporation’s United States Customer Operations. Prior thereto, he has served
in various capacities with Xerox Corporation. Mr. Pascual also serves as Chairman of the Board of Directors of Xerox de
Espana S.A. (Spain). He is the Chairman of the Compensation and Succession Committee and is also a member of the
Company’s Audit Committee and Corporate Governance and Nomination Committee.
Richard H. Fleming was appointed a Director of the Company in March 1999. In February 1999, Mr. Fleming was
appointed Executive Vice President and Chief Financial Officer of USG Corporation. Prior thereto, Mr. Fleming served
USG Corporation in various executive financial capacities, including Senior Vice President and Chief Financial Officer
from January 1995 to February 1999 and Vice President and Chief Financial Officer from January 1994 to January 1995.
Mr. Fleming also serves as a member of the Board of Directors for several non-for-profit entities including FamilyCare
Services of Illinois, the Child Welfare League of America, and Chicago United. He is the Chairman of the Company’s
Audit Committee and is also a member of the Compensation and Succession Committee and the Corporate
Governance and Nomination Committee.
Ernest R. Verebelyi was appointed a Director of the Company in January 2003. Mr. Verebelyi retired from Terex
Corporation, a global diversified equipment manufacturer, in October 2002 where he held the position of Group
President, Terex Americas. Prior to joining Terex in 1998, he held executive general management and operating positions
at General Signal Corporation, Emerson, Hussmann Corporation, and General Electric. Mr. Verebelyi also serves as a
director of both The Nash Engineering Company of Fairfield, Connecticut and Fairfield Manufacturing Company,
headquartered in Lafayette, Indiana. Mr. Verebelyi serves on the Company’s Audit Committee, Corporate Governance
and Nomination Committee and the Compensation and Succession Committee.
Wallace W. Creek was appointed a Director of the Company in January 2003. He served as Senior Vice President of
Finance of Collins & Aikman, a leading manufacturer of automotive interior components, from December 2002 to June
2004. Prior to that, Mr. Creek was the Controller of General Motors Corporation for nearly ten years and held several
executive positions in finance at GM over a forty-three year career. He is Chairman of the Company’s Corporate
Governance and Nomination Committee and also serves on the Audit Committee and the Compensation and
Succession Committee.
Corporate Officers
Timothy T. Tevens, President and Chief Executive Officer
Robert R. Friedl, Vice President, Finance and Chief Financial Officer
Karen L. Howard, Vice President, Controller
Ned T. Librock, Vice President, Sales
Robert H. Myers, Jr., Vice President, Human Resources
Joseph J. Owen, Vice President, Strategic Integration
Timothy R. Harvey, Corporate Secretary and General Counsel
Board of Directors and Corporate Officers
Board of Directors
Herbert P. Ladds, Jr. has been a Director of the Company since 1973 and was elected Chairman of the Board of
Directors in January 1998. Mr. Ladds served as the Company’s Chief Executive Officer from 1986 until his retirement in
July 1998. Mr. Ladds was President of the Company from 1982 until January 1998, Executive Vice President from 1981
to 1982 and Vice President – Sales & Marketing from 1971 to 1980. Mr. Ladds is also a director of Utica Mutual Insurance
Company and Utica Life Insurance Company.
Timothy T. Tevens was elected President and a Director of the Company in January 1998 and assumed the duties of
Chief Executive Officer in July 1998. From May 1991 to January 1998 he served as Vice President – Information Services
and was also elected Chief Operating Officer in October 1996. From 1980 to 1991, Mr. Tevens was employed by Ernst
& Young LLP in various management consulting capacities. He is a Vice President in the newly formed Industrial Supply
Association.
Carlos Pascual has been a Director of the Company since 1998. Mr. Pascual currently serves as Chairman of the Board
of Directors of Xerox de Espana S.A. (Spain). From January 2000 through December 2003, Mr. Pascual served as
Executive Vice President and President of Developing Markets Operations for Xerox. From January 1999 to January
2000, Mr. Pascual served as Deputy Executive Officer of Xerox's Industry Solutions Operations. From August 1995 to
January 1999, Mr. Pascual served as President of Xerox Corporation's United States Customer Operations. Prior
thereto, he served in various capacities with Xerox Corporation. He is the Chairman of the Company's Compensation
and Succession Committee and is also a member of the Company's Audit Committee and Corporate Governance and
Nomination Committee.
Richard H. Fleming was appointed a Director of the Company in March 1999. In February 1999, Mr. Fleming was
appointed Executive Vice President and Chief Financial Officer of USG Corporation. Prior thereto, Mr. Fleming served
USG Corporation in various executive financial capacities, including Senior Vice President and Chief Financial Officer
from January 1995 to February 1999 and Vice President and Chief Financial Officer from January 1994 to January 1995.
Mr. Fleming also serves as a member of the Board of Directors for several non-for-profit entities including FamilyCare
Services of Illinois, the Child Welfare League of America, and Chicago United. He is the Chairman of the Company’s
Audit Committee and is also a member of the Compensation and Succession Committee and the Corporate
Governance and Nomination Committee.
Ernest R. Verebelyi was appointed a Director of the Company in January 2003. Mr. Verebelyi retired from Terex
Corporation, a global diversified equipment manufacturer, in October 2002 where he held the position of Group
President, Terex Americas. Prior to joining Terex in 1998, he held executive general management and operating positions
at General Signal Corporation, Emerson, Hussmann Corporation, and General Electric. Mr. Verebelyi also serves as a
director of both The Nash Engineering Company of Fairfield, Connecticut and Fairfield Manufacturing Company,
headquartered in Lafayette, Indiana. Mr. Verebelyi serves on the Company’s Audit Committee, Corporate Governance
and Nomination Committee and the Compensation and Succession Committee.
Wallace W. Creek was appointed a Director of the Company in January 2003. He served as Senior Vice President of
Finance of Collins & Aikman, a leading manufacturer of automotive interior components, from December 2002 to June
2004. Prior to that, Mr. Creek was the Controller of General Motors Corporation for nearly ten years and held several
executive positions in finance at GM over a forty-three year career. He is Chairman of the Company’s Corporate
Governance and Nomination Committee and also serves on the Audit Committee and the Compensation and
Succession Committee.
Corporate Officers
Timothy T. Tevens, President and Chief Executive Officer
Robert R. Friedl, Vice President, Finance and Chief Financial Officer
Karen L. Howard, Vice President, Controller
Ned T. Librock, Vice President, Sales
Robert H. Myers, Jr., Vice President, Human Resources
Joseph J. Owen, Vice President, Strategic Integration
Timothy R. Harvey, Corporate Secretary and General Counsel
®
Columbus McKinnon Corporation
140 Audubon Parkway
Amherst, New York 14228-1197
716-689-5400
http://www.cmworks.com