Columbus McKinnon
Annual Report 2005

Plain-text annual report

S T E A D Y P R O G R E S S G L O B A L S T R A T E G Y Columbus McKinnon Corporation 2005 annual report cmco fiscal 2005 ▲ SALES +16% ▲ NET INCOME +1301% millions GROWING GLOBAL SALES 2005 FINANCIAL SUMMARY $600 500 400 300 200 100 0 millions $600 500 400 300 200 100 0 $586.2 24.4% $480.0 29.4% $453.3 $444.6 31.1% 35.7% $514.8 37.2% fy 01 fy 02 fy 03 fy 04 fy 05 ■ DOMESTIC SALES ■ INTERNATIONAL SALES STRONG OPERATING LEVERAGE 27.2% 25.1% 23.7% 23.6% $586.2 $480.0 $453.3 $444.6 fy 02 fy 01 fy 04 ■ NET SALES –O– GROSS MARGIN fy 03 24.5% $514.8 fy 05 25% 20% 15% 10% 5% 0% millions CONTINUED DEBT REDUCTION $500 400 300 200 100 0 $410.1 $350.4 $316.3 $293.4 $270.9 fy 01 fy 02 fy 03 fy 04 fy 05 TOTAL DEBT (In thousands, except per share, percent change, margin and ratio data) INCOME STATEMENT DATA net sales restructuring charges amortization of intangibles income from operations net income per diluted share MARGIN DATA gross margin operating income margin OTHER DATA cash flow from operating activities per share revenues per employee capital expenditures inventory turns working capital ⁄ sales BALANCE SHEET DATA total assets total liabilities total debt total shareholders’ equity debt ⁄ capitalization Data as of or for the year ended March 31, 2005 2004 % change $514,752 910 312 40,665 16,710 1.13 $444,591 1,239 383 29,867 1,193 0.08 15.8 -26.6 -18.5 36.2 1,300.7 1,312.5 24.5% 7.9% $1.16 188.0 5,925 5.01 20.2% 23.6% 6.7% $1.81 164.0 3,619 4.92 22.0% $480,871 399,104 270,941 81,767 76.8% $473,363 410,385 293,410 62,978 82.3% -35.9 14.6 63.7 1.6 -2.7 -7.7 29.8 TABLE OF CONTENTS COMPANY PROFILE Letter to Shareholders Investor FAQs Major Products SEC Form 10K Document 1 2 4 5 Corporate Information/ Board of Directors and Corporate Officers Inside Back Cover 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. 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 applica- tions with the highest potential for growing market share in countries that offer the greatest volume and profit potential. ▲ DEBT/CAPITALIZATION –550 ▲ STOCK PRICE +78% basis points DEAR SHAREHOLDERS: Columbus McKinnon’s performance in fiscal 2005 reflects our steady progress as we returned to a top-line growth mode, significantly increased profitability, and continued to improve our financial condi- tion. The Company’s net sales and profitability rose to the highest level in four years while debt declined to the lowest level in eight years. Our results in fiscal 2005 benefited from a recovery in the industrial economy and our significant operating leverage, supported by our successful strat- egy to maintain our leading North American market positions, expand globally, develop new products and reduce operating costs and debt. Fiscal 2005 net sales were $514.8 million, a $70.2 million or 15.8% increase from $444.6 million last year. Net income for fiscal 2005 was $16.7 million, or $1.13 per diluted share, a $15.5 million and $1.05 per share improvement from net income of $1.2 million or $0.08 per diluted share in fiscal 2004. Net income in fiscal 2005 included a favorable effect of $3.7 million, or $.25 per share, from the sale of underutilized property. Higher volumes and a lower cost base also produced significant improvement in every major performance metric for the year. The gross margin for 2005 increased to 24.5%, up 90 basis points from last year, with margins improving in both the Products and Solutions segments. Income from operations increased 36.2% in fiscal 2005, while income from operations as a percent of sales improved 120 basis points to 7.9%. Our steady progress is further reflected in an improvement in inventory turns to 5.7 times in the fiscal 2005 fourth quarter from 5.3 times and 4.6 times in the fourth quarters of fiscal 2004 and 2003. Working capital as a percent of revenue improved to 20.2% at 2005 fiscal year-end from 22.0% and 24.7% at year-end fiscal 2004 and 2003. We continue to make steady progress in de-levering our balance sheet. Total debt declined by $22.5 million, or 7.7% in the year, to $270.9 million at year end, a decrease of $145.5 million over the last five years. This year’s debt reduction and increased earnings produced a 550 basis point improvement in our debt-to-total capitalization ratio to 76.8%. We are also making steady progress on our major objectives to grow the business. International sales increased 20% to $191 million in fiscal 2005 to 37% of sales. Since becoming a public company nine years ago, international sales have grown at a 24.3% compound annual growth rate. With established and expanding manufacturing, sales and service operations in global markets, we have a strong platform for future growth of international sales with 26 manufacturing facilities in eight countries, 28 sales and service offices in 11 countries and nine ware- house facilities in five countries. We are successfully maintaining strong domestic market share with significant leading North American market positions in hoists, lifting and sling chain, and forged attachments. Columbus McKinnon also continues to have a large and diverse North American customer base numbering over 20,000 distributors and end- user customers in fiscal 2005. In February 2005, Derwin Gilbreath joined Columbus McKinnon in the newly created position of Vice President and Chief Operating Officer. Derwin has more than 30 years of experience in industrial operations and management with a very strong background in implementing lean manufacturing, and significant experience managing large global man- ufacturing operations and leading sales organizations that sell through a variety of distribution channels. He is a great fit for Columbus McKinnon as we transition from recovery to growth. Linda Goodspeed, Executive Vice President and Chief Technology Officer of Lennox International, Inc., and Stephen Rabinowitz, the retired Chairman and Chief Executive Officer of General Cable Corporation, joined the Columbus McKinnon Board in October 2004.With experience as senior executives of large multinational manufacturers, Linda and Steve have already proven to be outstanding additions to our Board. On the corporate governance front, our initial Sarbanes-Oxley Section 404 audit was completed successfully with no material weaknesses identified. Columbus McKinnon’s initial external costs to implement Section 404 were $1.4 million in fiscal 2005, and we are targeting a minimum reduction of 50% for fiscal 2006 Sarbanes-Oxley expenses. Going into fiscal 2006, we are very optimistic about Columbus McKinnon’s future prospects. Of course, like many other industrial manufacturers, we are challenged by increasing competition in all of our markets, rising employee health costs and being a business that is tied to GDP growth and industrial capacity utilization. That said, the global market opportunity is significant for Columbus McKinnon with multiple new revenue opportunities through new products and customer segments and further expansion in global markets. We have sustainable operating leverage as we grow sales on a lower cost base and continue to reduce costs through lean manufacturing, debt and inven- tory reductions and increased supply chain efficiencies. Our focus on generating cash for debt reduction has significantly improved Columbus McKinnon’s financial condition and flexibility. Higher volumes and increased profitability, along with plans to enhance working capital management, position us to further increase cash flow from operations and continue to improve our financial position. Our strategy would not be successful without the continued hard work and commitment of the 3,061 Associates of Columbus McKinnon. Their efforts and support are greatly appreciated and critical to this year’s robust turnaround and our continued success. Everyone at Columbus McKinnon is very pleased with the significant improvements in our results and financial condition, and their favorable effect on our share price over the last year. But our work is far from done. There is significant potential for further improvement on all fronts, and our global strategy positions us very well to continue making steady progress in growing our business, strengthening our financial performance and position, and creating new value for the shareholders of Columbus McKinnon. Timothy T. Tevens, President and Chief Executive Officer 1 Investor FAQs Tim Tevens PRESIDENT AND CHIEF EXECUTIVE OFFICER Q: Do you see this year’s top-line recovery continuing,and what are you doing to further expand revenue growth? a strong #1 in North America and I think we can better leverage our reputation for quality and reliability across the rest of the world. A: Based on recent market conditions, we are pretty comfortable that our sales growth will continue over the next year. We held market share in our traditional North American business throughout the industrial recession and have seen a strong resurgence over the last year. Global markets continue to be a major area of opportunity driving CM’s revenue growth with international sales increasing 20% in fiscal 2005. New products are also contributing to top line growth with over 100 new and cross-branded products developed in the last three years, which represent about $30 million in annual revenue. Across the board, trends in bookings coming into fiscal 2006 are robust and we also think that our global expansion and new products initiatives can extend top line growth beyond this year. Because of our significant operating leverage, incremental volume also has a very favorable impact on Columbus McKinnon’s profitability–in fiscal 2005 income from operations increased 36% on 16% growth in sales. Q: Can you update us on your progress in further expanding in global markets? A: CM’s global expansion initiatives put us in an excellent position to drive future growth. International sales increased to 37% of total sales this year. That’s up from 24% of sales five years ago. We eventually would like to get to a 50% U.S./50% international sales mix and feel we now have the foundation in place to get us there. Columbus McKinnon already has a strong established manufacturing presence in China and Mexico, close to the global markets where the greatest new growth is occurring. From our Mexican base, we have built a strong foothold in Latin America, and notably in Brazil, which is a rapidly growing market. We recently opened a sales office in Hungary to access the eastern European market which is rapidly developing. We have really just begun to tap into the potential of the Asian markets. Historically we manufactured lower end, less engineered products in China for import into Europe and the U.S. We recently began selling products made there into China and other Asian markets. With four manufacturing plants in China, we are also looking to make further inroads into lower-end manufacturing and consumer segments globally by developing more products targeted to these markets that we can make in China and price very competitively worldwide. Derwin Gilbreath VICE PRESIDENT AND CHIEF OPERATING OFFICER Q: As a newcomer to Columbus McKinnon, what do you see that you like and what would you like to change? A: Columbus McKinnon has great people, great customer relation- ships, great products and great engineering. A company with all of these attributes has a terrific foundation to grow its business. We are To do that, we need to spend more time in Asia, Latin America and Europe because that’s where our best opportunities are to grow volumes and share. The potential of these markets is huge, and we need to continue to expand our marketing programs and sales coverage in these markets. Globally, the Yale brand is very strong in Europe and Asia-Pacific, but we also need to boost awareness and sales of other CM brands in these markets. Our best start for growth in the Asia-Pacific markets is the more sophisticated manufacturing operations because that is the market our current line fits best. We also have a well-established manufacturing presence in China. Many multina- tional manufacturers building plants in China prefer buying product from U.S. companies with operations in China because they can offer proximity, along with familiar quality and reliability. We have a few underperforming businesses with significant potential for margin improvement which, as their profitability improves, will help boost our overall profitability. Increased sales and marketing, along with more sophisticated pricing research and analysis, can drive further top line growth. We also think we can get more costs out of our value stream. Columbus McKinnon has done a great job implementing lean manufacturing, but there are still significant opportunities to make new improvements in productivity and profitability through lean. Q: How are you defending your leading presence in North America against foreign competition? A: We have a great record of defending our leading North American market positions against Asian competitors because of our excellent channel partner relationships in North America. Distribution, along with superior product quality, are major strengths of Columbus McKinnon. We also have a significant manufacturing presence in China and Mexico, and an established repurchase program, which helps us competitively develop and offer lower-end, less engineered products to both domestic and international markets. We stand behind all of our products with CM engineering and technical and service support. There is also much more we can do from a lean perspective to take additional costs out of production and ensure we remain competitive in North America and other global markets. Q: What impact is the higher cost of steel having on your business? A: Overall, steel represents about 10% of our cost of goods sold, so when the price of steel began to rise rapidly last year, we acted quickly and instituted a steel surcharge policy, along with price increases, to keep neutral. Customer acceptance of this policy was good and it did not have a significant impact on sales in our major product groups. Now that steel costs have stabilized, we recently incorporated surcharges into our base prices. us margin 2 Bob Friedl VICE PRESIDENT, FINANCE AND CHIEF FINANCIAL OFFICER Karen Howard VICE PRESIDENT AND TREASURER Q: What progress is being made in de-levering your balance sheet? What are your objectives for further improvements in your capital structure? A: In fiscal 2005, we improved our debt to total capitalization by 550 basis points to 76.8%. The $22.5 million debt reduction in 2005 was driven by $17.2 million of net cash provided by operating activities, and $7.1 million from sales of underutilized property. Over the last five fiscal years, CM paid down debt by $145.5 million through strong cash management, debt restructuring and facility rationalization. That is a very significant accomplishment considering the extent of the U.S. industrial downturn, the 27% decline in our sales from fiscal 2000 through fiscal 2004 and that the economy and our sales have only begun to recover in the last year and a half. In fiscal 2006, we are targeting $15 million to $20 million in debt reduction. Our longer-range goal is 50% debt to total capitalization, and a senior subordinated debt rating of BB or better. We think it is achievable over the next three to five years for several reasons. Our continued growth in sales and significant operating leverage and minimal capital expendi- ture requirements, along with additional opportunities for property sales and enhancing working capital utilization, is driving increased cash flow to fund further debt reduction. At the same time, these earnings will be enhanced by the utilization of U.S. federal net operat- ing loss carry forwards and will continue to build shareholder’s equity. As we continue to pay down debt, it puts us in a better position to re- evaluate our capital structure and potentially convert higher cost debt to lower cost debt while enhancing our ability to access equity markets. Q: What are the short-term and the long-term impacts of Columbus McKinnon’s tax benefits? A: Through a valuation allowance established in fiscal 2004, we fully reserved the deferred tax benefit associated with the carry forward of a $108 million U.S. federal income tax loss. In fiscal 2005 we began to realize the cash and income statement benefits of utilizing this carry forward since the Company pays no regular U.S. federal income taxes for its U.S. entities and records no regular federal income tax expense. These carry forward losses will expire in fiscal 2023 and 2024. Assuming a normal U.S. federal tax rate of 35%, these benefits had a favorable effect of $0.28 cents on earnings per share in fiscal 2005 and $4.2 million on cash flow. Columbus McKinnon’s effective tax rate for fiscal 2005 was unusually low at 12% due to the use of some of these loss carry forwards and the tax benefits of a federal tax refund. At year-end about $98.0 million in U.S. federal net operating loss carry forwards remained for future use. Based on their magnitude and duration, we expect these tax benefits will have a favorable effect on earnings and cash flow for some time with increased utilization as we further reduce deductible interest expense and increase U.S.-generated taxable income. Q: How have you improved financial flexibility in fiscal 2005? A: This year’s significant growth in sales, profitability, inventory turns and days sales outstanding, along with underutilized property sales, allowed us to generate cash and reduce debt. That reduction included the repurchase of $19.6 million of our 2008 Notes, which carry an 8 1/2% coupon. Annual interest expense was reduced by over 4% to $27.6 million for the year and is down almost $9 million from a peak of $36.3 million in fiscal 2001. Following year end, we amended our bank credit facility to extend our revolver commitment from $50 million to $65 million, with approval to use up to $30 million for repurchase of 2008 Notes, providing us further capital structure flexibility. Lower interest costs, along with approximately $13.5 million in annual fixed cost reductions since fiscal 2001 from our facility rationalizations and lean manufacturing, are providing substantial operating leverage which we expect to continue. These improvements contributed to rating upgrades from S&P and Moody’s in 2005, a reduction in borrowing costs under our revolving credit line and flexibility to further improve our capital structure. All of this reflects the greater comfort of the rating agencies and our lenders with our business and outlook, and greatly improves our financial flexibility, while providing a stronger platform for making further improvements in Columbus McKinnon’s financial condition. 3 Q: Are there opportunities to make further reductions in your working capital utilization? A: Over the last few years, we have brought working capital as a percent of sales down from the mid-20s to the low-20s which is in line with where average U.S. industrial manufacturers are. The major driver of this improvement has been the inventory reduction that comes from lean manufacturing and its one-piece flow process which reduces inventory needs. Lean has helped us increase inventory turns from four times three years ago to annualized turns of nearly six times in the fourth quarter of fiscal 2005. We are now focusing on further reductions in working capital utiliza- tion because improvements have such a powerful impact on cash generation. Currently a one percent reduction in working capital as a percent of sales generates approximately $5 million in incremental cash flow. Ultimately, we’d like to get to working capital utilization to the 15% level and inventory turns to 7-8 times, which is where some of the very best industrial manufacturers are. This year we are undertaking a comprehensive initiative evaluating the major compo- nents of our working capital needs–inventories, receivables, and payables–to drive us toward a more optimal working capital utiliza- tion level over time. By benchmarking against other companies and reviewing the practices of those companies with world-class working capital utilization, we will identify opportunities for implementing best practices at Columbus McKinnon. MAJOR PRODUCTS 81 PERCENT OF FISCAL 2005 SALES COLUMBUS MCKINNON IS NORTH AMERICA’S LARGEST PRODUCER OF HOISTS, HIGHER GRADE CHAIN AND FORGED ATTACHMENTS AND ONE OF THE LARGEST CRANE BUILDERS AND SERVICE PROVIDERS IN THE UNITED STATES. HOISTS Products: Electric chain hoists, electric wire rope hoists, hand-operated hoists, lever tools, hoist trolleys, air balancers and air-powered hoists. tooling, Custom-designed, below-the-hook clamps, pallet trucks and textile strappings. Brands: Yale, CM, Coffing, Shaw-Box, Budgit, Chester, Little Mule, Camlok, Tugit, Tigrip, Cady Distribution and Service: Over 20,000 distributors in commercial and consumer channels for both domestic and international markets. A leading supplier to industrial catalog houses. Service for hoist products is provided through over 350 hoist parts, product, service and repair centers. Columbus McKinnon’s CraneMart program supports over 50 independent crane builders covering 89 markets with best pricing, parts distribution rights, dedicated technical support, shared resources and its TechLink automated crane and hoist inspection service. CHAIN & FORGED ATTACHMENTS Products: Alloy chain (used in overhead lifting, pulling and restraining applications), carbon steel welded-link chain (used for load securement and other non-overhead lifting applications). Forged products and rigging accessories, including a complete line of alloy and carbon steel closed-die forged attachments used in virtually all types of chain and wire rope rigging applications in a variety of industries. Columbus McKinnon also produces custom application forgings for a number of OEM customers. Brands: CM, Big Orange, Hammerlok, Herc-Alloy, Dixie Industries, Midland Forge, Durbin Durco, AgWorks, ColorLinks Distribution and Service: 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, transportation, logging, oil and gas, primary metals production, steel processing and consumer. 4 HOIST PRODUCT LINE PERFORMANCE METRICS Metric sales percentage of total sales u.s. #1 market share* lean manufacturing rapid improvement events inventories FYE 2005 FYE 2004 $227.8 million $197.4 million 44% 61% 44% 61% 109 $39.5 million 77 $34.3 million *Powered hoists, manual hoists and trolleys comprising 52% of both fiscal 2005 and fiscal 2004 hoist sales. End-user Markets: General manufacturing, production industries, marine, power generation and distribution, automotive parts manufac- turing, entertainment, construction, mining, crane building, logging, oil and gas production, pulp and paper, metals production, steel processing, warehousing and distribution CHAIN AND FORGED ATTACHMENTS PRODUCT LINE PERFORMANCE METRICS Metric sales percentage of total sales u.s. #1 market share chain product* u.s. #1 market share forged attachments** lean manufacturing rapid improvement events inventories FYE 2005 $127.3 million 25% FYE 2004 $110.7 million 25% 45% 49% 48% 46% 52 $18.5 million 61 $16.5 million *Lifting and sling chain, comprising 32% and 34% of fiscal 2005 and fiscal 2004 chain sales, respectively. ** Selected categories comprising 58% and 53% of our fiscal 2005 and fiscal 2004 forged attachments sales, respectively. INDUSTRIAL CRANES Products: Industrial crane systems and light rail systems using overhead bridge, jib, patented track and gantry cranes with capacities up to 100 tons. Services: Columbus McKinnon’s subsidiary, Crane Equipment & Service, Inc. (CES), provides OSHA-mandated inspections, installation, service, repair, preventive maintenance, and replacement parts. CES is one of the largest crane service providers in the United States with approximately 85 service technicians in 24 locations. Brands: Abell-Howe, Gaffey, Larco, WECO (Washington Equipment) Distribution and Service: Large contractors and end users End-user Markets: General manufacturing, marine, agricultural, construction, crane building, transportation, pulp and paper, primary metals production, steel processing, warehousing and oil exploration. CRANE PRODUCT LINE PERFORMANCE METRICS Metric sales percentage of total sales backlog inventories FYE 2005 $62.5 million 12% $13.2 million $7.2 million FYE 2004 $53.3 million 12% $16.3 million $7.1 million Major 2005 Projects: Project: Offshore drilling platform-Angola, Africa Products: Two 60 metric ton explosion-proof cranes One 10 metric ton explosion-proof crane Eight 1, 2 and 3 metric ton explosion-proof jib cranes 40 Chester explosion-proof hoists, 1 to 20 metric ton capacities Project: Rail terminal-Peoples Republic of China Products: Ten explosion-proof Yale Hoists, 1000 kg capacity CORPORATE INFORMATION CORPORATE INFORMATION Common Stock Columbus McKinnon’s common stock is traded on Nasdaq under the symbol CMCO. As of June 23, 2005, there were 627 shareholders of record of the Company’s common stock. In addition, 1,208 Columbus McKinnon employees owned shares through the Company ESOP. Approximately 2,500 additional shareholders held shares in “street name.” According to the March 31, 2005 SEC filings, approximately 50 institutional investors own 56.5% of Columbus McKinnon’s outstanding shares. Corporate Headquarters Columbus McKinnon Corporation 140 John James Audubon Parkway Amherst, NY 14228-1197 Telephone: (716) 689-5400 Independent Auditors Ernst & Young LLP 50 Fountain Plaza, 14th floor Buffalo, NY 14202-2297 Annual Shareholders Meeting August 15, 2005; 10:00 am University Inn & Conference Center 2402 North Forest Road Amherst, NY 14226 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 (800) 937-5449 (718) 921-8200 www.amstock.com Investor Relations Robert R. Friedl Vice President, Finance and Chief Financial Officer Phone: (716) 689-5479 E-mail: bob.friedl@cmworks.com Investor information is available on the Company’s web site: www.cmworks.com 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 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 Chief Executive Officer of the Company from 1986 until his retirement in July 1998. Mr. Ladds was President of the Company from 1982 until January 1998, and 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 of the Company in October 1996. From 1980 to 1991, Mr. Tevens was employed by Ernst & Young LLP in various management consulting capacities. 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 was 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. He is 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 UCAN, the Child Welfare League of America and Chicago United. He is the Chairman of the the Company’s Audit Committee and is also a member of Compensation and Succession Committee and the Corporate Governance and Nomination Committee. CORPORATE OFFICERS Timothy T. Tevens, President and Chief Executive Officer Robert R. Friedl, Vice President, Finance and Chief Financial Officer Derwin R. Gilbreath, Vice President and Chief Operating Officer Timothy R. Harvey, Corporate Secretary and General Counsel Karen L. Howard, Vice President and Treasurer Ned T. Librock, Vice President, Sales Robert H. Myers, Jr., Vice President, Human Resources Joseph J. Owen, Vice President and Hoist Group Leader Wallace W. Creek was appointed a Director of the Company in January 2003. From December 2002 through June 2004, Mr. Creek served as Senior Vice President of Finance for Collins & Aikman, a leading manufacturer of automotive components. Prior to that, Mr. Creek served as Controller of the General Motors Corporation from 1992 to 2002 and held several executive positions in finance at General Motors over a 43-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. 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. 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 Trumbull, Connecticut and Fairfield Manufacturing Company, headquartered in Lafayette, Indiana. Mr. Verebelyi serves on the Company’s Audit Committee, Corporate Governance and Nomination Committee and Compensation and Succession Committee. Linda A. Goodspeed became a Director of the Company in October 2004. In 2001, she joined Lennox International, Inc., a global supplier of climate control solutions, and currently serves as Executive Vice President and Chief Technology Officer of that company. Prior to that, Ms. Goodspeed served as President and Chief Operating Officer of PartMiner, Inc., a global supplier of electronic components. She has also held management positions in product management and development, research and development and design engineering at General Electric Appliances, Nissan North America, Inc. and the Ford Motor Company. Stephen Rabinowitz became a Director of the Company in October 2004. He retired in 2001 from his position as Chairman and Chief Executive Officer of General Cable Corporation, a leading manufacturer of electrical, communications and utility cable. Prior to joining General Cable as President and Chief Executive Officer in 1994, he served as President and CEO of AlliedSignal Braking Systems, and before that as President and CEO of General Electric’s Electrical Distribution and Control business. He also held management positions in manufacturing operations and technology at the General Electric Company and the Ford Motor Company. Mr. Rabinowitz is also a Director of Energy Conversion Devices, Inc., JLG Industries, Inc. and the Nanosteel Company. Columbus McKinnon Corporation _____ 50 Years of LODESTAR.® _____ 130 Years of Operation. _____ A Celebration of Excellence. ® Columbus McKinnon Corporation 140 John James Audubon Parkway Amherst, New York 14228-1197 716-689-5400 http://www.cmworks.com 

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