form10q.htm


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q

x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT 1934

For the quarterly period ended December 31, 2011
 
or

o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the transition period from________to

Commission File Number:       0-27618

Columbus McKinnon Corporation
(Exact name of registrant as specified in its charter)

New York
16-0547600
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
   
140 John James Audubon Parkway, Amherst, NY
14228-1197
(Address of principal executive offices)
(Zip code)

(716) 689-5400
(Registrant's telephone number, including area code)
 
 
(Former name, former address and former fiscal year, if changed since last report.)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  : xYes   oNo

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes x  No o

Indicate by checkmark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Act.

Large accelerated filer  o
Accelerated filer x     
Non-accelerated filer o  (Do not check if a smaller reporting company)
Smaller Reporting Company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). o Yes    x No

The number of shares of common stock outstanding as of January 24, 2012 was:  19,393,932 shares.
 


 
 

 

FORM 10-Q INDEX
COLUMBUS McKINNON CORPORATION
December 31, 2011

     
Page #
Part I. Financial Information
 
       
Item 1.
 
Condensed Consolidated Financial Statements (Unaudited)
 
       
   
3
       
   
4
       
   
5
       
   
6
       
   
7
       
Item 2.
 
26
       
Item 3.
 
33
       
Item 4.
 
33
       
Part II. Other Information
 
       
Item 1.
 
34
       
Item 1A.
 
34
       
Item 2.
 
34
       
Item 3.
 
34
       
Item 4.
 
34
       
Item 5.
 
34
       
Item 6.
 
35

 
2


Part I.     Financial Information
 
Item 1.
Condensed Consolidated Financial Statements (Unaudited)

COLUMBUS McKINNON CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS

 
 
December 31, 2011
   
March 31, 2011
 
 
 
 
   
 
 
 
 
(unaudited)
   
 
 
ASSETS:
 
(In thousands)
 
Current assets:
 
 
   
 
 
Cash and cash equivalents
  $ 82,033     $ 80,139  
Trade accounts receivable, net
    79,377       77,744  
Inventories, net
    104,288       90,031  
Prepaid expenses and other
    11,563       14,294  
Total current assets
    277,261       262,208  
Property, plant, and equipment, net
    61,228       59,360  
Goodwill
    105,812       106,055  
Other intangibles, net
    15,332       18,089  
Marketable securities
    23,860       24,592  
Deferred taxes on income
    1,207       1,217  
Other assets
    6,879       7,351  
Total assets
  $ 491,579     $ 478,872  
 
               
LIABILITIES AND SHAREHOLDERS' EQUITY:
               
Current liabilities:
               
Notes payable to banks
    235       473  
Trade accounts payable
    38,028       37,174  
Accrued liabilities
    56,436       56,502  
Current portion of long-term debt
    1,396       1,116  
Total current liabilities
    96,095       95,265  
Senior debt, less current portion
    3,992       4,949  
Subordinated debt
    148,072       147,867  
Other non-current liabilities
    67,313       68,645  
Total liabilities
    315,472       316,726  
Shareholders' equity:
               
Voting common stock; 50,000,000 shares authorized;19,393,932 and 19,171,428 shares issued and outstanding
    193       191  
Additional paid in capital
    188,205       184,884  
Retained earnings (accumulated deficit)
    16,898       (1,072 )
ESOP debt guarantee
    (1,083 )     (1,407 )
Accumulated other comprehensive loss
    (28,106 )     (20,450 )
Total shareholders' equity
    176,107       162,146  
Total liabilities and shareholders' equity
  $ 491,579     $ 478,872  

See accompanying notes.

 
3


COLUMBUS McKINNON CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS (ACCUMULATED DEFICIT)
(UNAUDITED)

 
 
Three Months Ended
   
Nine Months Ended
 
 
 
December 31,
   
December 31,
   
December 31,
   
December 31,
 
 
 
2011
   
2010
   
2011
   
2010
 
 
 
(In thousands, except per share data)
 
 
 
 
   
 
   
 
   
 
 
Net sales
  $ 142,750     $ 128,696     $ 432,373     $ 380,095  
Cost of products sold
    104,147       99,345       318,897       291,488  
Gross profit
    38,603       29,351       113,476       88,607  
 
                               
Selling expenses
    15,980       15,524       47,515       46,219  
General and administrative expenses
    11,605       10,275       33,956       29,855  
Restructuring (gain) charges, net
    (1,467 )     150       (1,037 )     1,947  
Amortization of intangibles
    485       452       1,515       1,315  
Operating expenses
    26,603       26,401       81,949       79,336  
 
                               
Income from operations
    12,000       2,950       31,527       9,271  
Interest and debt expense
    3,590       3,281       10,651       9,885  
Investment income
    (275 )     (317 )     (824 )     (1,020 )
Foreign currency exchange (gain) loss
    (97 )     641       121       303  
Other income, net
    (1,399 )     (294 )     (1,880 )     (933 )
Income (loss) before income tax expense
    10,181       (361 )     23,459       1,036  
Income tax expense
    1,666       39,406       5,898       39,790  
Income (loss) from continuing operations
    8,515       (39,767 )     17,561       (38,754 )
Income from discontinued operations - net of tax
    -       128       409       261  
Net income (loss)
    8,515       (39,639 )     17,970       (38,493 )
Retained earnings (accumulated deficit) - beginning of period
    8,383       36,024       (1,072 )     34,878  
Retained earnings (accumulated deficit) - end of period
  $ 16,898     $ (3,615 )   $ 16,898     $ (3,615 )
 
                               
Average basic shares outstanding
    19,313       19,082       19,256       19,050  
Average diluted shares outstanding
    19,488       19,082       19,526       19,050  
 
                               
Basic income (loss) per share:
                               
Income (loss) from continuing operations
  $ 0.44     $ (2.09 )   $ 0.91     $ (2.03 )
Income from discontinued operations
    -       0.01       0.02       0.01  
Net income (loss)
  $ 0.44     $ (2.08 )   $ 0.93     $ (2.02 )
 
                               
Diluted income (loss) per share:
                               
Income (loss) from continuing operations
  $ 0.44     $ (2.09 )   $ 0.90     $ (2.03 )
Income from discontinued operations
    -       0.01       0.02       0.01  
Net income (loss)
  $ 0.44     $ (2.08 )   $ 0.92     $ (2.02 )

See accompanying notes.

 
4


COLUMBUS McKINNON CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

 
 
Nine Months Ended
 
 
 
December 31,
   
December 31,
 
 
 
2011
   
2010
 
 
 
(In thousands)
 
OPERATING ACTIVITIES:
 
 
   
 
 
Net income (loss)
  $ 17,970     $ (38,493 )
Adjustments to reconcile net income (loss) to net cash provided by (used for) operating activities:
               
Income from discontinued operations
    (409 )     (261 )
Depreciation and amortization
    8,609       8,257  
Deferred income taxes and related valuation allowance
    378       39,846  
Gain on sale of real estate/investments
    (1,909 )     (991 )
Gain on re-measurement of investment
    (850 )     -  
Stock-based compensation
    2,246       1,347  
Amortization of deferred financing costs
    289       208  
Changes in operating assets and liabilities net of effects of the business acquired:
               
Trade accounts receivable
    (775 )     514  
Inventories
    (14,011 )     (18,251 )
Prepaid expenses and other
    2,440       (2,836 )
Other assets
    332       268  
Trade accounts payable
    927       (1,363 )
Accrued and non-current liabilities
    (1,774 )     (5,254 )
Net cash provided by (used for) operating activities
    13,463       (17,009 )
 
               
INVESTING ACTIVITIES:
               
Proceeds from sale of marketable securities
    5,747       8,316  
Purchases of marketable securities
    (4,503 )     (1,830 )
Capital expenditures
    (10,464 )     (8,859 )
Purchase of businesses, net of cash acquired
    (3,356 )     -  
Proceeds from sale of businesses or assets
    1,971       1,182  
Net cash used for investing activities from continuing operations
    (10,605 )     (1,191 )
Net cash provided by investing activities from discontinued operations
    409       261  
Net cash used for investing activities
    (10,196 )     (930 )
 
               
FINANCING ACTIVITIES:
               
Proceeds from exercise of stock options
    1,733       4  
Net payments under lines-of-credit
    (238 )     (290 )
Repayment of debt
    (488 )     (835 )
Change in ESOP guarantee
    324       334  
Net cash provided by (used for) financing activities
    1,331       (787 )
Effect of exchange rate changes on cash
    (2,704 )     848  
Net change in cash and cash equivalents
    1,894       (17,878 )
Cash and cash equivalents at beginning of period
    80,139       63,968  
Cash and cash equivalents at end of period
    82,033       46,090  
Supplementary cash flow data:
               
Interest paid
  $ 10,202     $ 11,831  
Income taxes paid, net of refunds
  $ 5,272     $ 3,278  

See accompanying notes.

 
5


COLUMBUS McKINNON CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(UNAUDITED)

   
Three Months Ended
   
Nine Months Ended
 
   
December 31,
   
December 31,
   
December 31,
   
December 31,
 
   
2011
   
2010
   
2011
   
2010
 
   
(In thousands)
 
   
 
   
 
   
 
   
 
 
Net income (loss)
  $ 8,515     $ (39,639 )   $ 17,970     $ (38,493 )
Foreign currency translation adjustments
    (3,597 )     (193 )     (8,047 )     1,122  
Change in derivatives qualifying as hedges, net of deferred tax (benefit) expense of $(3), $17, $(3), and $154
    (36 )     32       36       286  
Unrealized holding gain (loss) on marketable securities arising during the period, net of deferred taxes of $0 for all periods*
    610       (331 )     198       413  
Reclassification adjustment on marketable securities for gain included in net income, net of deferred tax expense of $0 for all periods*
    32       90       157       299  
Total Adjustments
    642       (241 )     355       712  
Total other comprehensive (loss) income
    (2,991 )     (402 )     (7,656 )     2,120  
Comprehensive income (loss)
  $ 5,524     $ (40,041 )   $ 10,314     $ (36,373 )

* The zero net deferred tax benefit during the three and nine months ended December 31, 2011 is due to the U.S. deferred tax asset valuation allowance.

See accompanying notes.

 
6


COLUMBUS McKINNON CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
December 31, 2011

1.           Description of Business

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of the financial position of Columbus McKinnon Corporation (the Company) at December 31, 2011, the results of its operations for the three and nine month periods ended December 31, 2011 and December 31, 2010, and cash flows for the nine months ended December 31, 2011 and December 31, 2010, have been included. Results for the period ended December 31, 2011 are not necessarily indicative of the results that may be expected for the year ending March 31, 2012. The balance sheet at March 31, 2011 has been derived from the audited consolidated financial statements at that date, but does not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements. Certain prior year numbers have been reclassified to conform to current year reporting presentations. For further information, refer to the consolidated financial statements and footnotes thereto included in the Columbus McKinnon Corporation annual report on Form 10-K for the year ended March 31, 2011.

The Company is a leading designer, marketer and manufacturer of material handling products and services which efficiently and safely move, lift, position and secure material. Key products include hoists, rigging tools, cranes, and actuators. The Company’s material handling products are sold globally, principally to third party distributors through diverse distribution channels, and to a lesser extent directly to end-users. During the three and nine months ended December 31, 2011, approximately 52% and 53% of sales were to customers in the U.S., respectively.

2.           Acquisitions

On December 13, 2011, the Company acquired 80% of the outstanding common shares of Yale Lifting Solutions (Pty) LTD (“YLS PTY”) located in Magaliesburg, South Africa, a privately owned company with annual sales of less than $10,000,000. The Company now owns 100% of YLS PTY. YLS PTY has been representing the Company’s Yale brand of products as a distributor to the South African mining industry for over 14 years. The Company had previously owned 20% of the outstanding common shares of YLS PTY which the Company accounted for as a cost method investment as it did not exercise significant influence over YLS PTY’s operating or financial policies. The carrying amount of the cost method investment prior to the acquisition of the remaining 80% interest was under $1,000.  The results of YLS PTY are included in the Company’s condensed consolidated financial statements from the date of acquisition. The acquisition of YLS PTY is not considered significant to the Company’s consolidated financial position and results of operations.

This transaction was accounted for as a step acquisition in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 805 “Business Combinations.” The aggregate purchase consideration for the remaining 80% ownership of Yale Lifting Solutions (Pty) LTD was $3,356,000. The acquisition date fair value of the Company’s 20% interest in YLS PTY was $850,000 and resulted in an $850,000 gain. The acquisition was funded with existing cash. The purchase price and fair value of the previously held 20% ownership interest has been preliminarily assigned to the assets acquired and liabilities assumed based upon their carrying values as of the date of acquisition and the excess consideration of $2,669,000 was recorded as goodwill.  Final calculations of the fair values are expected to be completed during the fourth quarter of fiscal 2012. Goodwill recorded in connection with the acquisition will not be deductible for tax purposes. The preliminary assignment of purchase consideration to the assets acquired and liabilities assumed is as follows (in thousands):

Working capital
  $ 1,399  
Property, plant and equipment
    236  
Other long term liabilities, net
    (98 )
Goodwill
    2,669  
Total
  $ 4,206  

 
7


3.           Fair Value Measurements

ASC Topic 820 “Fair Value Measurements and Disclosures” establishes the standards for reporting financial assets and liabilities and nonfinancial assets and liabilities that are recognized or disclosed at fair value on a recurring basis (at least annually). Under these standards, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., the "exit price") in an orderly transaction between market participants at the measurement date.

ASC Topic 820-10-35-37, as amended, establishes a hierarchy for inputs that may be used to measure fair value. Level 1 is defined as quoted prices in active markets that the Company has the ability to access for identical assets or liabilities. The fair value of the Company’s marketable securities is based on Level 1 inputs. Level 2 is defined as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets. Level 3 inputs are unobservable inputs based on the Company’s own assumptions used to measure assets and liabilities at fair value. The Company primarily uses readily observable market data in conjunction with internally developed discounted cash flow valuation models when valuing its derivative portfolio and, consequently, the fair value of the Company’s derivatives is based on Level 2 inputs.  As of December 31, 2011, the Company’s assets and liabilities measured at fair value on recurring bases were as follows (in thousands):

 
 
 
   
Fair value measurements at reporting date using
 
Description
 
December 31,
2011
   
Quoted prices in
active markets for
identical assets
(Level 1)
   
Significant other
observable
inputs
(Level 2)
   
Significant
unobservable
inputs
(Level 3)
 
Assets/(Liabilities):
 
 
   
 
   
 
   
 
 
Marketable securities
  $ 23,860     $ 23,860     $ -     $ -  
Derivative assets
    25       -       25       -  

Assets that are measured on a nonrecurring basis include the Company’s reporting units that are used to test goodwill for impairment on an annual or interim basis under the provisions of ASC Topic 350-20-35-1 “Intangibles, Goodwill and Other – Goodwill Subsequent Measurement,” as well as property, plant and equipment in circumstances when the Company determines that those assets are impaired under the provisions of ASC Topic 360-10-35-17 “Property Plant and Equipment – Subsequent Measurement” and the measurement of termination benefits in connection with the Company’s restructuring plan under the provisions of ASC Topic 420 “Exit or Disposal Cost Obligations.”  During the nine months ended December 31, 2011 assets measured at fair value on a nonrecurring basis include the Company’s 20% ownership interest in YLS PTY.  The fair value was determined by virtue of the amount paid by the Company to acquire the other 80% interest on December 13, 2011, and is considered a level 3 input.

 
8


Fair Values of Defined Benefit Plan Assets

The Company holds a variety of equity and fixed income securities within the assets of its defined benefit plans. The fair values of these assets were determined using the fair value hierarchy of inputs described above. These fixed income securities consist primarily of insurance contracts which are carried at their liquidation value based on actuarial calculations and the terms of the contracts. A summary of changes in Level 3 fixed income securities within those defined benefit plans during the three and nine months ended December 31, 2011 is as follows (in thousands):

Three months ended December 31, 2011
 
 
 
Balance at October 1, 2011
  $ 16,280  
Return on investment
    214  
Disbursements
    (114 )
Balance at December 31, 2011
  $ 16,380  
 
       
Nine Month Period Ended December 31, 2011
       
Balance at April 1, 2011
  $ 15,872  
Return on investment
    830  
Disbursements
    (322 )
Balance at December 31, 2011
  $ 16,380  

 
9


4.           Inventories

Inventories consisted of the following (in thousands):

 
 
December 31,
   
March 31,
 
 
 
2011
   
2011
 
At cost - FIFO basis:
 
 
   
 
 
Raw materials
  $ 51,563     $ 44,769  
Work-in-process
    16,209       15,175  
Finished goods
    56,238       47,329  
 
    124,010       107,273  
LIFO cost less than FIFO cost
    (19,722 )     (17,242 )
Net inventories
  $ 104,288     $ 90,031  

An actual valuation of inventory under the LIFO method can be made only at the end of each year based on the inventory levels and costs at that time. Accordingly, interim LIFO calculations must necessarily be based on management's estimates of expected year-end inventory levels and costs. Because these are subject to many factors beyond management's control, estimated interim results are subject to change in the final year-end LIFO inventory valuation.

5.           Marketable Securities

All of the Company’s marketable securities, which consist of equity securities and fixed income securities, have been classified as available-for-sale securities and are therefore recorded at their fair values with the unrealized gains and losses, net of tax, reported in accumulated other comprehensive loss in the shareholders’ equity section of the balance sheet unless unrealized losses are deemed to be other-than-temporary. In such instances, the unrealized losses are reported in the consolidated statements of operations and retained earnings within investment income. Estimated fair value is based on published trading values at the balance sheet dates. The cost of securities sold is based on the specific identification method. Interest and dividend income are included in investment income in the consolidated statements of operations and retained earnings.

The marketable securities are carried as long-term assets since they are held for the settlement of the Company’s general and products liability insurance claims filed through CM Insurance Company, Inc., a wholly owned captive insurance subsidiary.  The marketable securities are not available for general working capital purposes.

In accordance with ASC Topic 320-10-35-30 “Investments – Debt & Equity Securities – Subsequent Measurement,” the Company reviews its marketable securities for declines in market value that may be considered other-than-temporary. The Company generally considers market value declines to be other-than-temporary if there are declines for a period longer than nine months and in excess of 20% of original cost, or when other evidence indicates impairment.  There were no other-than-temporary impairments for the nine months ended December 31, 2011 or December 31, 2010.

The following is a summary of available-for-sale securities at December 31, 2011 (in thousands):

 
 
 
   
Gross Unrealized
   
Gross Unrealized
   
Estimated Fair
 
 
 
Cost
   
Gains
   
Losses
   
Value
 
Marketable securities
  $ 22,308     $ 1,728     $ 176     $ 23,860  

 
10


The aggregate fair value of investments and unrealized losses on available-for-sale securities in an unrealized loss position at December 31, 2011 are as follows (in thousands):

 
 
Aggregate
   
Unrealized
 
 
 
Fair Value
   
Losses
 
Securities in a continuous loss position for less than 12 months
  $ 2,335     $ 176  
Securities in a continuous loss position for more than 12 months
    -       -  
 
  $ 2,335     $ 176  

Net realized gains related to sales of marketable securities were $31,000 and $90,000 for the three month periods ended December 31, 2011 and 2010, respectively and $152,000 and $298,000 for the nine month periods then ended, respectively.

The following is a summary of available-for-sale securities at March 31, 2011 (in thousands):

 
 
 
   
 
   
 
   
 
 
 
 
Cost
   
Gross Unrealized Gains
   
Gross Unrealized Losses
   
Estimated Fair Value
 
Marketable securities
  $ 23,708     $ 1,064     $ 180     $ 24,592  

6.           Goodwill and Intangible Assets

Goodwill is not amortized but is tested for impairment at least annually, in accordance with the provisions of ASC Topic 350-20-35-1.  Goodwill impairment is deemed to exist if the net book value of a reporting unit exceeds its estimated fair value.  The fair value of a reporting unit is determined using two valuation techniques: an income approach and a market approach.  The Company’s reporting units are determined based upon whether discrete financial information is available and regularly reviewed, whether those units constitute a business, and the extent of economic similarities between those reporting units for purposes of aggregation.  The Company’s reporting units identified under ASC Topic 350-20-35-33 are at the component level, or one level below the reporting segment level as defined under ASC Topic 280-10-50-10 “Segment Reporting – Disclosure.” The Company has four reporting units.  Only two of the four reporting units carry goodwill at December 31, 2011 and March 31, 2011.

In accordance with ASC Topic 350-20-35-3, the measurement of impairment of goodwill consists of two steps. In the first step, the Company compares the fair value of each reporting unit to its carrying value. As part of the impairment analysis, the Company determines the fair value of each of its reporting units with goodwill using both the income approach and market approach. The income approach uses a discounted cash flow methodology to determine fair value. This methodology recognizes value based on the expected receipt of future economic benefits. Key assumptions in the income approach include a free cash flow projection, an estimated discount rate, a long-term growth rate and a terminal value. These assumptions are based upon the Company’s historical experience, current market trends and future expectations. The market approach involves the determination of implied EBITDA multiples selected from an analysis of peer companies considered to be market participants and the application of those multiples to each reporting units’ historical and forecasted earnings.

No impairment charges related to goodwill or intangible assets were recorded during the nine months ended December 31, 2011 or 2010.  However, future impairment indicators, such as declines in forecasted cash flows, may cause the need for interim impairment tests which may result in significant impairment charges. Impairment indicators could be the result of a significant decline in the Company’s stock price, significant adverse changes in forecasted cash flows, declines in control premiums or other variables.

 
11


A summary of changes in goodwill during the nine months ended December 31, 2011 is as follows (in thousands):

Balance at April 1, 2011
  $ 106,055  
Acquisition of YLS PTY  (See Note 2)
    2,669  
Currency translation
    (2,912 )
Balance at December 31, 2011
  $ 105,812  

Identifiable intangible assets acquired in a business combination are amortized over their useful lives unless their useful lives are indefinite, in which case those intangible assets are tested for impairment annually (or upon identification of impairment indicators) and not amortized until their lives are determined to be finite.

Identifiable intangible assets are summarized as follows (in thousands):

 
 
December 31, 2011
   
March 31, 2011
 
 
 
Gross Carrying Amount
   
Accumulated Amortization
   
Net
   
Gross Carrying Amount
   
Accumulated Amortization
   
Net
 
Trademark
  $ 5,616     $ (1,000 )   $ 4,616     $ 6,136     $ (841 )   $ 5,295  
Customer relationships
    13,893       (4,146 )     9,747       15,179       (3,485 )     11,694  
Other
    1,302       (333 )     969       1,339       (239 )     1,100  
Total
  $ 20,811     $ (5,479 )   $ 15,332     $ 22,654     $ (4,565 )   $ 18,089  

Based on the current amount of identifiable intangible assets, the estimated amortization expense for each of the fiscal years 2012 through 2016 is expected to be approximately $1,900,000.

7.           Derivative Instruments

The Company uses derivative instruments to manage selected foreign currency exposures. The Company does not use derivative instruments for speculative trading purposes. All derivative instruments must be recorded on the balance sheet at fair value. For derivatives designated as cash flow hedges, the effective portion of changes in the fair value of the derivative is recorded as accumulated other comprehensive loss, or AOCL, and is reclassified to earnings when the underlying transaction has an impact on earnings. The ineffective portion of changes in the fair value of the derivative is reported in foreign currency exchange loss (gain) in the Company’s consolidated statement of operations. For derivatives not classified as cash flow hedges, all changes in market value are recorded as a foreign currency exchange loss (gain) in the Company’s consolidated statements of operations.

The Company has foreign currency forward agreements and a cross-currency swap in place to offset changes in the value of intercompany loans to certain foreign subsidiaries due to changes in foreign exchange rates. The notional amount of these derivatives is $12,317,000 as of December 31, 2011 and all contracts mature by September 2013. These contracts are not designated as hedges.

The Company has foreign currency forward agreements in place to hedge changes in the value of recorded foreign currency liabilities due to changes in foreign exchange rates at the settlement date. The notional amount of those derivatives is $2,613,000 as of December 31, 2011 and all contracts mature within twelve months. These contracts are marked to market each balance sheet date and are not designated as hedges.

The Company has foreign currency forward agreements that are designated as cash flow hedges to hedge a portion of forecasted inventory purchases and sales, including multi-year contracts related to capital project sales, denominated in foreign currencies. The notional amount of those derivatives is $9,213,000 as of December 31, 2011 and all contracts mature within thirty-three months of December 31, 2011.

The Company is exposed to credit losses in the event of non-performance by the counterparties on its financial instruments. All counterparties have investment grade credit ratings. The Company anticipates that these counterparties will be able to fully satisfy their obligations under the contracts.  The Company has derivative contracts with four different counterparties as of December 31, 2011.

 
12


The following is the effect of derivative instruments on the condensed consolidated statement of operations for the nine months ended December 31, 2011 (in thousands):

Derivatives Designated as Cash Flow  Hedges
 
Amount of Gain Recognized in Other Comprehensive Loss on Derivatives (Effective Portion)
 
Location of Gain or (Loss) Recognized in Income on Derivatives
 
Amount of Gain Reclassified from AOCL into Income (Effective Portion)
 
Foreign exchange contracts
  $ 171  
Cost of products sold
  $ 138  

Derivatives Not Designated as Hedging Instruments
 
Location of Gain Recognized in Income on Derivatives
 
Amount of Gain Recognized in Income on Derivatives
 
Foreign exchange contracts
 
Foreign currency exchange gain
  $ 987  

As of December 31, 2011, the Company had no derivatives designated as net investments or fair value hedges in accordance with ASC Topic 815, “Derivatives and Hedging.”

The following is information relative to the Company’s derivative instruments in the condensed consolidated balance sheet as of December 31, 2011 (in thousands):

 
 
 
 
 
 
Derivatives Designated as Hedging Instruments
 
Balance Sheet Location
 
Fair Value of Asset (Liability)
 
Foreign exchange contracts
 
Other Assets
  $ 147  
Foreign exchange contracts
 
Accrued Liabilities
  $ (66 )

Derivatives Not Designated as Hedging Instruments
 
Balance Sheet Location
 
Fair Value of Asset (Liability)
 
Foreign exchange contracts
 
Other Assets
  $ 33  
Foreign exchange contracts
 
Accrued Liabilities
  $ (89 )

8.           Debt

The Company entered into an amended, restated and expanded revolving credit facility dated December 31, 2009. The Revolving Credit Facility provides availability up to a maximum of $85,000,000 and has an initial term ending December 31, 2013.

Provided there is no default, the Company may, on a one-time basis, request an increase in the availability of the Revolving Credit Facility by an amount not exceeding $65,000,000, subject to lender approval. The unused portion of the Revolving Credit Facility totalled $69,543,000 net of outstanding borrowings of $0 and outstanding letters of credit of $15,457,000 as of December 31, 2011.  Interest on the revolver is payable at varying Eurodollar rates based on LIBOR or prime plus a spread determined by the Company’s total leverage ratio amounting to 175 or 75 basis points, respectively, based on the Company’s leverage ratio at December 31, 2011.  The Revolving Credit Facility is secured by all U.S. inventory, receivables, equipment, real property, subsidiary stock (limited to 65% of non-U.S. subsidiaries) and intellectual property.

The corresponding credit agreement associated with the Revolving Credit Facility places certain debt covenant restrictions on the Company, including certain financial requirements and restrictions on dividend payments, with which the Company was in compliance as of December 31, 2011.  Key financial covenants include a minimum fixed charge coverage ratio of 1.25x, a maximum total leverage ratio, net of cash, of 3.50x and maximum annual capital expenditures of $18,000,000, excluding capital expenditures for a global ERP system.

 
13


The Company entered into a third amendment to its Revolving Credit Facility on July 15, 2011 to (i) make reductions in the ‘Applicable Rate’ grid, in recognition of improved market conditions, resulting in lower unused, Libor and Base Rate borrowing and letters of credit fees at various levels in the grid, based on the Total Leverage Ratio (ii) amend the definition of Total Funded Indebtedness to exclude commercial letters of credit. Total funded indebtedness is used in the calculation of the Total Leverage Ratio covenant (iii) allow for letters of credit to be issued for any period up to 5 days prior to the expiry date of the Revolving Credit Facility and a “basket” of $20,000,000 for letters of credit which may expire up to 1 year past the expiry date (iv) permit a general lien “basket” of $2,500,000 (v) extend the expected date for consummation of a pre-approved specific acquisition and divestiture, and (vi) increase the general Investments “basket” by $5,000,000 to $30,000,000.

On January 25, 2011, the Company issued $150,000,000 principal amount of 7 7/8% Senior Subordinated Notes due 2019 in a private placement pursuant to Rule 144A under the Securities Act of 1933, as amended (Unregistered 7 7/8% Notes). The offering price of the notes was 98.545% of par after adjustment for original issue discount.

Provisions of the Unregistered 7 7/8% Notes include, without limitation, restrictions on indebtedness, asset sales, and dividends and other restricted payments. Until February 1, 2014, the Company may redeem up to 35% of the outstanding Unregistered 7 7/8% Notes at a redemption price of 107.875% with the proceeds of equity offerings, subject to certain restrictions. On or after February 1, 2015, the Unregistered 7 7/8% Notes are redeemable at the option of the Company, in whole or in part, at a redemption price of 103.938%, reducing to 101.969% and 100% on February 1, 2016 and February 1, 2017, respectively and are due February 1, 2019. In the event of a Change of Control (as defined in the indenture for such notes), each holder of the Unregistered 7 7/8% Notes may require the Company to repurchase all or a portion of such holder’s Unregistered 7 7/8% Notes at a purchase price equal to 101% of the principal amount thereof. The Unregistered 7 7/8% Notes are guaranteed by certain existing and future U.S. subsidiaries and are not subject to any sinking fund requirements.

During the nine months ended December 31, 2011, the Company exchanged $150,000,000 of its outstanding Unregistered 7 7/8% Notes due 2019 for a like principal amount of its 7 7/8% Notes due 2019, registered under the Securities Act of 1933, as amended (7 7/8% Notes).  All of the Unregistered 7 7/8% Senior Subordinated Notes due 2019 were exchanged in the transaction.  The 7 7/8% Notes contain identical terms and provisions as the Unregistered 7 7/8% Notes.

The carrying amount of the Company’s revolving credit facility, notes payable to banks and other senior debt approximate their fair values based on current market rates. The Company’s 7 7/8% Notes, which have a par value of $150,000,000 at December 31, 2011, have an approximate fair value of $154,875,000 based on quoted market prices.

The Company’s Notes payable to banks consist primarily of draws against unsecured non-U.S. lines of credit.  The Company’s other senior debt consists primarily of capital lease obligations.

Unsecured and uncommitted lines of credit are available to meet short-term working capital needs for certain of our subsidiaries operating outside of the U.S. The lines of credit are available on an offering basis, meaning that transactions under the line of credit will be on such terms and conditions, including interest rate, maturity, representations, covenants and events of default, as mutually agreed between our subsidiaries and the local bank at the time of each specific transaction. As of December 31, 2011, significant unsecured credit lines totalled approximately $9,022,000 of which $235,000 was drawn.

Refer to the Company’s consolidated financial statements included in its annual report on Form 10-K for the year ended March 31, 2011 for further information on its debt arrangements.

 
14


9.           Net Periodic Benefit Cost

The following table sets forth the components of net periodic pension cost for the Company’s defined benefit pension plans (in thousands):

 
 
Three months ended
   
Nine months ended
 
 
 
December 31,
   
December 31,
   
December 31,
   
December 31,
 
 
 
2011
   
2010
   
2011
   
2010
 
Service costs
  $ 846     $ 986     $ 2,537     $ 2,957  
Interest cost
    2,507       2,492       7,521       7,476  
Expected return on plan assets
    (2,689 )     (2,470 )     (8,065 )     (7,408 )
Net amortization
    1,004       912       3,012       2,736  
Curtailment (see below)
    -       -       1,172       -  
Net periodic pension cost
  $ 1,668     $ 1,920     $ 6,177     $ 5,761  

During the quarter ended June 30, 2011, the Company completed negotiations with one of its labor unions which resulted in an amendment to one of its pension plans.  Within cost of products sold for the nine months ended December 31, 2011, the Company recorded a curtailment charge of $1,172,000 resulting from the amendment.

The Company currently plans to contribute approximately $6,900,000 to its pension plans in fiscal 2012.

The following table sets forth the components of net periodic postretirement benefit cost for the Company’s defined benefit postretirement plan (in thousands):

 
 
Three months ended
   
Nine months ended
 
 
 
December 31, 2011
   
December 31, 2010
   
December 31, 2011
   
December 31, 2010
 
Service costs
  $ -     $ -     $ -     $ -  
Interest cost
    120       128       359       383  
Amortization of plan net losses
    82       86       246       258  
Net periodic postretirement cost
  $ 202     $ 214     $ 605     $ 641  

For additional information on the Company’s defined benefit pension and postretirement benefit plans, refer to the consolidated financial statements included in the Company’s annual report on Form 10-K for the year ended March 31, 2011.

 
15


10.         Earnings Per Share

The following table sets forth the computation of basic and diluted earnings per share (in thousands):

 
 
Three months ended
   
Nine months ended
 
 
 
December 31, 2011
   
December 31, 2010
   
December 31, 2011
   
December 31, 2010
 
Numerator for basic and diluted earnings per share:
 
 
   
 
   
 
   
 
 
Net income (loss)
  $ 8,515     $ (39,639 )   $ 17,970     $ (38,493 )
 
                               
Denominators:
                               
Weighted-average common stock outstanding – denominator for basic EPS
    19,313       19,082       19,256       19,050  
Effect of dilutive employee stock options and other share-based awards
    175       -       270       -  
Adjusted weighted-average common stock outstanding and assumed conversions – denominator for diluted EPS
    19,488       19,082       19,526       19,050  

On July 26, 2010, the shareholders of the Company approved the 2010 Long Term Incentive Plan (“LTIP”).  The Company grants share based compensation to eligible participants under the LTIP.  The total number of shares of common stock with respect to which awards may be granted under the plan is 1,250,000 including shares not previously authorized for issuance under any of the Prior Stock Plans and any shares not issued or subject to outstanding awards under the Prior Stock Plans.

During the first nine months of fiscal 2012 and 2011, a total of 165,544 and 4,125 shares of stock were issued upon the exercising of stock options related to the Company’s stock option plans. During the nine months ended December 31, 2011 and 2010, 57,081 and 0 shares, respectively, of restricted stock vested and were issued. During the fiscal year ended March 31, 2011, 25,873 shares of restricted stock vested and were issued.

Refer to the Company’s consolidated financial statements included in its Form 10-K for the year ended March 31, 2011 for further information on its earnings per share and stock plans.

11.         Loss Contingencies

Like many industrial manufacturers, the Company is involved in asbestos-related litigation.  In continually evaluating costs relating to its estimated asbestos-related liability, the Company reviews, 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, its recent and historical resolution of the cases, the number of cases pending against it, the status and results of broad-based settlement discussions, and the number of years such activity might continue. Based on this review, the Company has estimated its share of 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. The Company 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.

Based on actuarial information, the Company has estimated its asbestos-related aggregate liability including related legal costs to range between $7,000,000 and $18,000,000 using actuarial parameters of continued claims for a period of 18 to 30 years from the end of the current fiscal year. The Company's estimation of its asbestos-related aggregate liability that is probable and estimable, in accordance with U.S. generally accepted accounting principles approximates $12,000,000, which has been reflected as a liability in the condensed consolidated financial statements as of December 31, 2011. The recorded liability does not consider the impact of any potential favorable federal legislation. This liability will fluctuate based on the 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. Of this amount, management expects to incur asbestos liability payments of approximately $1,000,000 over the next 12 months. Because payment of the liability is likely to extend over many years, management believes 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.

 
16


12.         Restructuring Charges

During the nine months ended December 31, 2011, the Company initiated and completed employee workforce reductions at one of its European facilities.  These reductions resulted in approximately $413,000 in one-time termination benefits recorded as restructuring costs during the nine months ended December 31, 2011.  These restructuring charges were fully paid by December 31, 2011.
 
During the three and nine months period ended December 31, 2011 and 2010 the Company recognized a gain of $1,467,000 and $500,000 respectively on the sales of previously closed manufacturing facilities.  The gain was recorded as a credit to restructuring expense in both periods.

13.         Income Taxes

Income tax expense as a percentage of income from continuing operations before income tax expense was ­16.4% and (10,915.8)% for the three month periods ended December 31, 2011 and 2010, respectively and 25.1% and 3,840.7% for the nine month periods then ended, respectively. Typically these percentages vary from the U.S. statutory rate primarily due to varying effective tax rates at the Company's foreign subsidiaries, and the jurisdictional mix of taxable income for these subsidiaries.  The unusual income tax percentage in fiscal year 2011 is due to the recording of a deferred tax asset valuation allowance described in the paragraph below. During the nine month period ended December 31, 2011, the Company received notice of a tax assessment related to a prior period for one of its foreign subsidiaries.  Income tax expense for the nine month period ended December 31, 2011 includes approximately $900,000 in past due taxes, interest, and penalties related to the assessment.

During the third and fourth quarters of fiscal 2011, the Company recorded a non-cash charge of $42,983,000 included within its provision for income taxes.  This charge relates to the Company’s determination that a full valuation allowance against its deferred tax assets generated in the U.S. and at three of the Company’s foreign subsidiaries was necessary.  Accounting rules require a reduction of the carrying amounts of deferred tax assets by a valuation allowance if, based on the available and objectively verifiable evidence, it is more likely than not that such assets will not be realized.  The existence of cumulative losses for a certain threshold period is a significant form of negative evidence used in the assessment.  If a cumulative loss threshold is met, the accounting rules indicate that forecasts of future profitability are generally not sufficient positive evidence to overcome the presumption that a valuation allowance is necessary.

We estimate that the effective tax rate including discrete items related to continuing operations will be approximately 20% to 25% for fiscal 2012 based on the forecasted jurisdictional mix of taxable income.

 
17


14.         Summary Financial Information

The following information (in thousands) sets forth the condensed consolidating summary financial information of the parent and guarantors, which guarantee the 7 7/8% Senior Subordinated Notes, and the nonguarantors. The guarantors are wholly owned and the guarantees are full, unconditional, joint and several.

The Company has reclassified certain balances in its March 31 2011 summary financial information to reflect the liquidation of a subsidiary effective as of that date.  The reclassifications have no impact on the Company’s consolidated financial statements.

 
 
 
   
 
   
Non
   
 
   
 
 
As of December 31, 2011
 
Parent
   
Guarantors
   
Guarantors
   
Eliminations
   
Consolidated
 
Current assets:
 
 
   
 
   
 
   
 
   
 
 
Cash and cash equivalents
  $ 49,882     $ 2,070     $ 30,081     $ -     $ 82,033  
Trade accounts receivable
    40,773       3,233       35,371       -       79,377  
Inventories
    32,144       17,139       57,358       (2,353 )     104,288  
Other current assets
    5,700       441       4,935       487       11,563  
Total current assets
    128,499       22,883       127,745       (1,866 )     277,261  
Property, plant, and equipment, net
    34,815       11,257       15,156       -       61,228  
Goodwill and other intangibles, net
    40,924       31,025       49,195       -       121,144  
Intercompany
    (25,102 )     88,387       (63,170 )     (115 )     -  
Other non-current assets
    2,339       4,156       25,451       -       31,946  
Investment in subsidiaries
    206,820       -       -       (206,820 )     -  
Total assets
  $ 388,295     $ 157,708     $ 154,377     $ (208,801 )   $ 491,579  
 
                                       
Current liabilities
    40,328       15,894       41,854       (1,981 )     96,095  
Long-term debt, less current portion
    148,072       2,033       1,959       -       152,064  
Other non-current liabilities
    23,788       8,445       35,080       -       67,313  
Total liabilities
    212,188       26,372       78,893       (1,981 )     315,472  
Shareholders' equity
    176,107       131,336       75,484       (206,820 )     176,107  
Total liabilities and shareholders' equity
  $ 388,295     $ 157,708     $ 154,377     $ (208,801 )   $ 491,579  
 
 
18

 
For the Three months ended December 31, 2011
   
Non
   
 
   
 
 
 
 
Parent
   
Guarantors
   
Guarantors
   
Eliminations
   
Consolidated
 
Net sales
  $ 55,631     $ 34,900     $ 65,124     $ (12,905 )   $ 142,750  
Cost of products sold
    40,354       30,007       46,691       (12,905 )     104,147  
Gross profit
    15,277       4,893       18,433       -       38,603  
Selling, general and administrative expenses
    9,357       5,004       13,224       -       27,585  
Restructuring charges
    (1,467 )     -       -       -       (1,467 )
Amortization of intangibles
    28       -       457       -       485  
 
    7,918       5,004       13,681       -       26,603  
Income (loss) from operations
    7,359       (111 )     4,752       -       12,000  
Interest and debt expense
    2,862       642       86       -       3,590  
Other (income) and expense, net
    (180 )     15       (1,606 )     -       (1,771 )
Income (loss) before income tax (benefit) expense and equity in income of subsidiaries
    4,677       (768 )     6,272       -       10,181  
Income tax (benefit) expense
    (807 )     -       2,473       -       1,666  
Equity in income from continuing operations of subsidiaries
    3,031       -       -       (3,031 )     -  
Income (loss) from continuing operations
    8,515       (768 )     3,799       (3,031 )     8,515  
Income from discontinued operations
    -       -       -       -       -  
Net income (loss)
  $ 8,515     $ (768 )   $ 3,799     $ (3,031 )   $ 8,515  
 
 
For the Nine months ended December 31, 2011
   
Non
   
 
   
 
 
 
 
Parent
   
Guarantors
   
Guarantors
   
Eliminations
   
Consolidated
 
Net sales
  $ 159,172     $ 121,760     $ 191,495     $ (40,054 )   $ 432,373  
Cost of products sold
    118,157       105,425       135,369       (40,054 )     318,897  
Gross profit
    41,015       16,335       56,126       -       113,476  
Selling, general and administrative expenses
    26,150       14,756       40,565       -       81,471  
Restructuring charges
    (1,455 )     -       418       -       (1,037 )
Amortization of intangibles
    82       -       1,433       -       1,515  
 
    24,777       14,756       42,416       -       81,949  
Income from operations
    16,238       1,579       13,710       -       31,527  
Interest and debt expense
    9,340       1,048       263       -       10,651  
Other (income) and expense, net
    (586 )     33       (2,030 )     -       (2,583 )
Income before income tax expense and equity in income of subsidiaries
    7,484       498       15,477       -       23,459  
Income tax expense
    557       169       5,172       -       5,898  
Equity in income from continuing operations of subsidiaries
    10,634       -       -       (10,634 )     -  
Income (loss) from continuing operations
    17,561       329       10,305       (10,634 )     17,561  
Income from discontinued operations
    409       -       -       -       409  
Net income (loss)
  $ 17,970     $ 329     $ 10,305     $ (10,634 )   $ 17,970  

 
19

 
For the Nine months ended December 31, 2011
   
 
   
Non
   
 
   
 
 
 
 
Parent
   
Guarantors
   
Guarantors
   
Eliminations
   
Consolidated
 
Operating activities:
 
 
   
 
   
 
   
 
   
 
 
Net cash provided by operating activities
  $ 8,044     $ 2,942     $ 2,477     $ -     $ 13,463  
 
                                       
Investing activities:
                                       
Purchase of marketable securities, net
    -       -       1,244       -       1,244  
Capital expenditures
    (8,553 )     (702 )     (1,209 )     -       (10,464 )
Proceeds from sale of real estate, net
    1,971       -       -       -       1,971  
Purchase of business, net of cash acquired
    -       -       (3,356 )     -       (3,356 )
Net cash used for investing activities from continuing operations
    (6,582 )     (702 )     (3,321 )     -       (10,605 )
 
                                       
Net cash provided by investing activities from discontinued operations
    409       -       -       -       409  
Net cash used for investing activities
    (6,173 )     (702 )     (3,321 )     -       (10,196 )
 
                                       
Financing activities:
                                       
Proceeds from stock options exercised
    1,733       -       -       -       1,733  
 
                                       
Net payments under lines-of-credit
    -       -       (238 )     -       (238 )
Other
    324       (177 )     (311 )     -       (164 )
Net cash provided by (used for) financing activities
    2,057       (177 )     (549 )     -       1,331  
Effect of exchange rate changes on cash
    -       -       (2,704 )     -       (2,704 )
Net change in cash and cash equivalents
    3,928       2,063       (4,097 )     -       1,894  
Cash and cash equivalents at beginning of period
    45,954       7       34,178       -       80,139  
Cash and cash equivalents at end of period
  $ 49,882     $ 2,070     $ 30,081     $ -     $ 82,033  

 
20

 
 
 
 
   
 
   
Non
   
 
   
 
 
As of March 31, 2011
 
Parent
   
Guarantors
   
Guarantors
   
Eliminations
   
Consolidated
 
Current assets:
 
 
   
 
   
 
   
 
   
 
 
Cash and cash equivalents
  $ 45,954     $ 7     $ 34,178     $ -     $ 80,139  
Trade accounts receivable
    41,395       32       36,317       -       77,744  
Inventories
    25,937       18,497       47,597       (2,000 )     90,031  
Other current assets
    (4,407 )     698       16,404       1,599       14,294  
Total current assets
    108,879       19,234       134,496       (401 )     262,208  
Property, plant, and equipment, net
    30,451       11,866       17,043       -       59,360  
Goodwill and other intangibles, net
    40,953       31,025       52,166       -       124,144  
Intercompany
    (19,058 )     91,245       (72,773 )     586       -  
Other non-current assets
    4,278       4,152       26,492       (1,762 )     33,160  
Investment in subsidiaries
    203,516       -       -       (203,516 )     -  
Total assets
  $ 369,019     $ 157,522     $ 157,424     $ (205,093 )   $ 478,872  
 
                                       
Current liabilities
  $ 35,792     $ 15,774     $ 44,523     $ (824 )   $ 95,265  
Long-term debt, less current portion
    147,867       2,235       2,714       -       152,816  
Other non-current liabilities
    23,214       8,506       37,678       (753 )     68,645  
Total liabilities
    206,873       26,515       84,915       (1,577 )     316,726  
Shareholders' equity
    162,146       131,007       72,509       (203,516 )     162,146  
Total liabilities and shareholders' equity
  $ 369,019     $ 157,522     $ 157,424     $ (205,093 )   $ 478,872  

 
21

 
For the Three months ended December 31, 2010
   
 
   
Non
   
 
   
 
 
 
 
Parent
   
Guarantors
   
Guarantors
   
Eliminations
   
Consolidated
 
Net sales
  $ 45,886     $ 35,982     $ 56,635     $ (9,807 )   $ 128,696  
Cost of products sold
    39,543       29,478       40,087       (9,763 )     99,345  
Gross profit
    6,343       6,504       16,548       (44 )     29,351  
Selling, general and administrative expenses
    7,190       6,000       12,609       -       25,799  
Restructuring charges
    150       -       -       -       150  
Amortization of intangibles
    29       1       422       -       452  
 
    7,369       6,001       13,031       -       26,401  
(Loss) income from operations
    (1,026 )     503       3,517       (44 )     2,950  
Interest and debt expense
    3,146       61       74       -       3,281  
Other (income) and expense, net
    156       50       (176 )     -       30  
(Loss) income before income tax expense (benefit) and equity in income of subsidiaries
    (4,328 )     392       3,619       (44 )     (361 )
Income tax expense (benefit)
    38,352       (41 )     1,139       (44 )     39,406  
Equity in income from continuing operations of subsidiaries
    2,913       -       -       (2,913 )     -  
(Loss) income from continuing operations
    (39,767 )     433       2,480       (2,913 )     (39,767 )
Income from discontinued operations
    128       -       -       -       128  
Net  (loss) income
  $ (39,639 )   $ 433     $ 2,480     $ (2,913 )   $ (39,639 )

 
22

 
For the Nine months ended December 31, 2010
   
 
   
Non
   
 
   
 
 
 
 
Parent
   
Guarantors
   
Guarantors
   
Eliminations
   
Consolidated
 
Net sales
  $ 145,257     $ 107,036     $ 156,204     $ (28,402 )   $ 380,095  
Cost of products sold
    122,603       87,439       109,900       (28,454 )     291,488  
Gross profit
    22,654       19,597       46,304       52       88,607  
Selling, general and administrative expenses
    23,733       16,685       35,656       -       76,074  
Restructuring charges
    1,910       -       37       -       1,947  
Amortization of intangibles
    86       2       1,227       -       1,315  
 
    25,729       16,687       36,920       -       79,336  
(Loss) income from operations
    (3,075 )     2,910       9,384       52       9,271  
Interest and debt expense
    8,861       796       228       -       9,885  
Other (income) and expense, net
    (1,027 )     17       (640 )     -       (1,650 )
(Loss) income from continuing operations before income tax expense and equity in income of subsidiaries
    (10,909 )     2,097       9,796       52       1,036  
Income tax expense
    36,312       714       2,712       52       39,790  
Equity in income from continuing operations of subsidiaries
    8,467       -