Lifting equipment manufacturer Columbus McKinnon has reached an agreement in principle with its senior lenders to amend its senior bank debt covenants after warning that one of its covenants would not be met in the next few months.
The news came as CM reported a 5.6% decline in net sales from continuing operations for the year to 31 March 2003 (fiscal 2003). Net sales were $453.3m, compared with $480.0m in fiscal 2002. Operating income before restructuring charges and amortisation was $33.3m for fiscal 2003, compared with $48.7m in fiscal 2002. Loss from continuing operations (before cumulative effect of adopting a new accounting standard) was $6.0m, the same as the previous year. Net loss for fiscal 2003 was reduced to $14.0m, compared with a net loss of $135.4m for fiscal 2002.
At 31 March 2003, CM’s long-term debt was $314.1,, a $20.5m reduction from 29 December 2002 and a reduction of $33.8 million from 31 March 2002. The company was in compliance with its senior bank debt covenants at March 31, 2003 but said: “It is likely, however, that one of the financial covenants will not be met early in fiscal 2004. Accordingly, the company has reached an agreement in principle with its senior lenders to amend such covenant for fiscal 2004.” President and CEO Timothy Tevens said: “While economic conditions remain soft, we are intent upon producing profits and reducing debt despite the sustained weakness in the industrial markets. Our fourth quarter 2003 sales reflect a level of stabilisation and we are confident we continue to hold a leading market position in our key product lines. In addition to reducing debt, we accomplished a great deal in 2003, including: – we initiated the rationalisation of our chain and crane-building operations and that process is now nearly complete.
– we completed the rationalisation of 11 facilities companywide and most of the real estate associated with these rationalised facilities is now being actively marketed for sale.
– we implemented lean manufacturing at 15 of Columbus McKinnon’s North American facilities and reduced inventory by over $10.0m at those facilities.
– we began the divestiture of less synergistic businesses to further reduce costs and debt, with LICO Steel being the first completed divestiture.” Tevens added: “Accelerating the paydown of debt remains a top priority for Columbus McKinnon. We remain confident in our ability to achieve this goal based on the strength of our business and the cash flow it generates as well as our numerous initiatives to further reduce costs, which will all support further debt reduction and strengthen Columbus McKinnon’s future financial position and operating performance.”