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
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For the quarterly period ended December 31, 2011
o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
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For the transition period from________to
Commission File Number: 0-27618
Columbus McKinnon Corporation
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(Exact name of registrant as specified in its charter)
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New York
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16-0547600
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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140 John James Audubon Parkway, Amherst, NY
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14228-1197
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(Address of principal executive offices)
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(Zip code)
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(716) 689-5400
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(Registrant's telephone number, including area code)
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|
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(Former name, former address and former fiscal year, if changed since last report.)
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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
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Accelerated filer x
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Non-accelerated filer o (Do not check if a smaller reporting company)
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Smaller Reporting Company o
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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.
COLUMBUS McKINNON CORPORATION
December 31, 2011
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Page #
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Part I. Financial Information
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Item 1.
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Condensed Consolidated Financial Statements (Unaudited)
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3
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4
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5
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6
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7
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Item 2.
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26
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Item 3.
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33
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Item 4.
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33
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Part II. Other Information
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Item 1.
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34
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Item 1A.
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34
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Item 2.
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34
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Item 3.
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34
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Item 4.
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34
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Item 5.
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34
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Item 6.
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35
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Part I. Financial Information
Item 1.
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Condensed Consolidated Financial Statements (Unaudited)
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COLUMBUS McKINNON CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
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December 31, 2011
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March 31, 2011
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(unaudited)
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ASSETS:
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(In thousands)
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Current assets:
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Cash and cash equivalents
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$ |
82,033 |
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$ |
80,139 |
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Trade accounts receivable, net
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79,377 |
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77,744 |
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Inventories, net
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104,288 |
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90,031 |
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Prepaid expenses and other
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11,563 |
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14,294 |
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Total current assets
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277,261 |
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262,208 |
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Property, plant, and equipment, net
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61,228 |
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59,360 |
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Goodwill
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105,812 |
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106,055 |
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Other intangibles, net
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15,332 |
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18,089 |
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Marketable securities
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23,860 |
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24,592 |
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Deferred taxes on income
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1,207 |
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1,217 |
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Other assets
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6,879 |
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7,351 |
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Total assets
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$ |
491,579 |
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$ |
478,872 |
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LIABILITIES AND SHAREHOLDERS' EQUITY:
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Current liabilities:
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Notes payable to banks
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235 |
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473 |
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Trade accounts payable
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38,028 |
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37,174 |
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Accrued liabilities
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56,436 |
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56,502 |
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Current portion of long-term debt
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1,396 |
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1,116 |
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Total current liabilities
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96,095 |
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95,265 |
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Senior debt, less current portion
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3,992 |
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4,949 |
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Subordinated debt
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148,072 |
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147,867 |
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Other non-current liabilities
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67,313 |
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68,645 |
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Total liabilities
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315,472 |
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316,726 |
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Shareholders' equity:
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Voting common stock; 50,000,000 shares authorized;19,393,932 and 19,171,428 shares issued and outstanding
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193 |
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191 |
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Additional paid in capital
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188,205 |
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184,884 |
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Retained earnings (accumulated deficit)
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16,898 |
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(1,072 |
) |
ESOP debt guarantee
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(1,083 |
) |
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(1,407 |
) |
Accumulated other comprehensive loss
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(28,106 |
) |
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(20,450 |
) |
Total shareholders' equity
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176,107 |
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162,146 |
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Total liabilities and shareholders' equity
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$ |
491,579 |
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$ |
478,872 |
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See accompanying notes.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS (ACCUMULATED DEFICIT)
(UNAUDITED)
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Three Months Ended
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Nine Months Ended
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December 31,
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December 31,
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December 31,
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December 31,
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2011
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2010
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2011
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2010
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(In thousands, except per share data)
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Net sales
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$ |
142,750 |
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$ |
128,696 |
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$ |
432,373 |
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$ |
380,095 |
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Cost of products sold
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104,147 |
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99,345 |
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318,897 |
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291,488 |
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Gross profit
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38,603 |
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29,351 |
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113,476 |
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88,607 |
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Selling expenses
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15,980 |
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15,524 |
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47,515 |
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46,219 |
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General and administrative expenses
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11,605 |
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10,275 |
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33,956 |
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29,855 |
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Restructuring (gain) charges, net
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(1,467 |
) |
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150 |
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(1,037 |
) |
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1,947 |
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Amortization of intangibles
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485 |
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452 |
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1,515 |
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1,315 |
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Operating expenses
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26,603 |
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26,401 |
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81,949 |
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79,336 |
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Income from operations
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12,000 |
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2,950 |
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31,527 |
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9,271 |
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Interest and debt expense
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3,590 |
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3,281 |
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10,651 |
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9,885 |
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Investment income
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(275 |
) |
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(317 |
) |
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(824 |
) |
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(1,020 |
) |
Foreign currency exchange (gain) loss
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(97 |
) |
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|
641 |
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121 |
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303 |
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Other income, net
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(1,399 |
) |
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(294 |
) |
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(1,880 |
) |
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|
(933 |
) |
Income (loss) before income tax expense
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10,181 |
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(361 |
) |
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23,459 |
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1,036 |
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Income tax expense
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1,666 |
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|
39,406 |
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5,898 |
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39,790 |
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Income (loss) from continuing operations
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8,515 |
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(39,767 |
) |
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17,561 |
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(38,754 |
) |
Income from discontinued operations - net of tax
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- |
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128 |
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|
409 |
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261 |
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Net income (loss)
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|
8,515 |
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(39,639 |
) |
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17,970 |
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(38,493 |
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Retained earnings (accumulated deficit) - beginning of period
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8,383 |
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36,024 |
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(1,072 |
) |
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34,878 |
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Retained earnings (accumulated deficit) - end of period
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$ |
16,898 |
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$ |
(3,615 |
) |
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$ |
16,898 |
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$ |
(3,615 |
) |
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Average basic shares outstanding
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19,313 |
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19,082 |
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19,256 |
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|
19,050 |
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Average diluted shares outstanding
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19,488 |
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19,082 |
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19,526 |
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19,050 |
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Basic income (loss) per share:
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|
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Income (loss) from continuing operations
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$ |
0.44 |
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$ |
(2.09 |
) |
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$ |
0.91 |
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$ |
(2.03 |
) |
Income from discontinued operations
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- |
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|
0.01 |
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|
0.02 |
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|
|
0.01 |
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Net income (loss)
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|
$ |
0.44 |
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|
$ |
(2.08 |
) |
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$ |
0.93 |
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$ |
(2.02 |
) |
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Diluted income (loss) per share:
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|
|
|
|
|
|
|
|
|
|
|
|
|
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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.
COLUMBUS McKINNON CORPORATION
(UNAUDITED)
|
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Nine Months Ended
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
2011
|
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|
2010
|
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(In thousands)
|
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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.
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.
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 |
|
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
|
|
|
|
|
Quoted prices in
active markets for
identical assets
(Level 1)
|
|
|
Significant other
observable
inputs
(Level 2)
|
|
|
|
|
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.
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 |
|
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 |
|
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.
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.
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.
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.
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.
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.
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.
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 |
|
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 |
|
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 |
|
|
|
|
|
|
|
|
|
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 |
|
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 |
) |
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 |
|
|
|
- |
|