10-Q 1 form10q.htm COLUMBUS MCKINNON CORPORATION 10-Q 12-31-2012 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, 2012
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.  : x Yes   o  No

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 18, 2013 was: 19,498,879 shares.
 


 
 

 
 
FORM 10-Q INDEX
COLUMBUS McKINNON CORPORATION
December 31, 2012

   
Page #
Part I. Financial Information
 
     
Item 1.
Condensed Consolidated Financial Statements (Unaudited)
 
     
 
Condensed consolidated balance sheets – December 31, 2012 and March 31, 2012
3
     
 
Condensed consolidated statements of operations and retained earnings - Three and nine months ended December 31, 2012 and December 31, 2011
4
     
 
Condensed consolidated statements of comprehensive income (loss) - Three and nine months ended December 31, 2012 and December 31, 2011
5
     
 
Condensed consolidated statements of cash flows – Nine months ended December 31, 2012 and December 31, 2011
6
     
 
Notes to condensed consolidated financial statements – December 31, 2012
7
     
Item 2.
Management's Discussion and Analysis of Results of Operations and Financial Condition
25
     
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
33
     
Item 4.
Controls and Procedures
33
     
Part II. Other Information
 
     
Item 1.
Legal Proceedings – none.
34
     
Item 1A.
Risk Factors
34
     
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds – none.
34
     
Item 3.
Defaults upon Senior Securities – none.
34
     
Item 4.
Mine Safety Disclosures – N/A.
34
     
Item 5.
Other Information – none.
34
     
Item 6.
Exhibits
34
 
 
2

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

COLUMBUS McKINNON CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS

   
December 31, 2012
   
March 31, 2012
 
             
   
(unaudited)
       
ASSETS:
 
(In thousands)
 
Current assets:
           
Cash and cash equivalents
  $ 111,937     $ 89,473  
Trade accounts receivable
    78,710       88,642  
Inventories
    101,531       108,055  
Prepaid expenses and other
    9,111       10,449  
Total current assets
    301,289       296,619  
Property, plant, and equipment, net
    60,765       61,709  
Goodwill
    106,061       106,435  
Other intangibles, net
    14,281       15,791  
Marketable securities
    23,699       25,393  
Deferred taxes on income
    3,033       2,824  
Other assets
    6,614       6,636  
Total assets
  $ 515,742     $ 515,407  
                 
LIABILITIES AND SHAREHOLDERS' EQUITY:
               
Current liabilities:
               
Notes payable to banks
  $ -     $ 112  
Trade accounts payable
    30,310       40,991  
Accrued liabilities
    51,603       61,713  
Current portion of long-term debt
    1,108       1,093  
Total current liabilities
    83,021       103,909  
Senior debt, less current portion
    2,881       3,749  
Subordinated debt
    148,345       148,140  
Other non-current liabilities
    92,035       99,143  
Total liabilities
    326,282       354,941  
Shareholders' equity:
               
Voting common stock; 50,000,000 shares authorized; 19,498,879 and 19,400,526 shares issued and outstanding
    194       193  
Additional paid in capital
    191,945       189,260  
Retained earnings
    52,162       25,895  
ESOP debt guarantee
    (657 )     (975 )
Accumulated other comprehensive loss
    (54,184 )     (53,907 )
Total shareholders' equity
    189,460       160,466  
Total liabilities and shareholders' equity
  $ 515,742     $ 515,407  

See accompanying notes.
 
 
3


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

   
Three Months Ended
   
Nine Months Ended
 
   
December 31,
   
December 31,
   
December 31,
   
December 31,
 
   
2012
   
2011
   
2012
   
2011
 
   
(In thousands, except per share data)
 
                         
Net sales
  $ 153,225     $ 142,750     $ 452,710     $ 432,373  
Cost of products sold
    109,428       104,147       322,687       318,897  
Gross profit
    43,797       38,603       130,023       113,476  
                                 
Selling expenses
    16,390       15,980       49,204       47,515  
General and administrative expenses
    12,725       11,605       39,448       33,956  
Restructuring charges
    -       (1,467 )     -       (1,037 )
Amortization of intangibles
    493       485       1,481       1,515  
      29,608       26,603       90,133       81,949  
                                 
Income from operations
    14,189       12,000       39,890       31,527  
Interest and debt expense
    3,413       3,590       10,418       10,651  
Investment income
    (354 )     (275 )     (1,017 )     (824 )
Foreign currency exchange loss (gain)
    293       (97 )     147       121  
Other expense (income), net
    65       (1,399 )     (429 )     (1,880 )
Income from continuing operations before income tax expense
    10,772       10,181       30,771       23,459  
Income tax expense
    1,193       1,666       4,504       5,898  
Income from continuing operations
    9,579       8,515       26,267       17,561  
Income from discontinued operations - net of tax
    -       -       -       409  
Net income
    9,579       8,515       26,267       17,970  
Retained earnings (accumulated deficit) - beginning of period
    42,583       8,383       25,895       (1,072 )
Retained earnings -  end of period
  $ 52,162     $ 16,898     $ 52,162     $ 16,898  
                                 
Average basic shares outstanding
    19,451       19,313       19,406       19,256  
Average diluted shares outstanding
    19,697       19,488       19,620       19,526  
                                 
Basic income per share:
                               
Income from continuing operations
  $ 0.49     $ 0.44     $ 1.35     $ 0.91  
Income from discontinued operations
    -       -       -       0.02  
Net income
  $ 0.49     $ 0.44     $ 1.35     $ 0.93  
                                 
Diluted income per share:
                               
Income from continuing operations
  $ 0.49     $ 0.44     $ 1.34     $ 0.90  
Income from discontinued operations
    -       -       -       0.02  
Net income
  $ 0.49     $ 0.44     $ 1.34     $ 0.92  
 
See accompanying notes.
 
 
4

 
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,
 
   
2012
   
2011
   
2012
   
2011
 
   
(In thousands)
 
                         
Net income
  $ 9,579     $ 8,515     $ 26,267     $ 17,970  
Other comprehensive income (loss), net of tax:
                               
Foreign currency translation adjustments
    2,604       (3,597 )     (40 )     (8,047 )
Change in derivatives qualifying as hedges, net of deferred tax (benefit) expense of ($89), ($3), ($158), and $3 *
    (138 )     (36 )     (326 )     36  
Adjustments:
                               
Unrealized holding gain arising during the period, net of deferred taxes of $0 *
    194       610       489       198  
Reclassification adjustment for (loss) gain included in net income, net of deferred tax expense of $0 *
    (253 )     32       (400 )     157  
Net change in unrealized gain (loss) on investments
    (59 )     642       89       355  
Total other comprehensive income (loss)
    2,407       (2,991 )     (277 )     (7,656 )
Comprehensive income
  $ 11,986       5,524     $ 25,990     $ 10,314  

* The zero net deferred tax benefit related to the change in derivatives for our domestic subsidiaries qualifying as hedges, unrealized holding gains and losses, and reclassification adjustments during the three and nine months ended December 31, 2012 and 2011 is due to the related deferred tax asset valuation allowance.

See accompanying notes.
 
 
5


COLUMBUS McKINNON CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
 
   
Nine Months Ended
 
   
December 31,
   
December 31,
 
   
2012
   
2011
 
   
(In thousands)
 
OPERATING ACTIVITIES:
           
Net income
  $ 26,267     $ 17,970  
Adjustments to reconcile net income to net cash provided by operating activities:
               
Income from discontinued operations
    -       (409 )
Depreciation and amortization
    9,116       8,609  
Deferred income taxes and related valuation allowance
    153       378  
Gain on sale of real estate/investments
    (431 )     (1,909 )
Gain on re-measurement of investment
    -       (850 )
Stock-based compensation
    2,474       2,246  
Amortization of deferred financing costs
    226       289  
Changes in operating assets and liabilities:
               
Trade accounts receivable
    9,330       (775 )
Inventories
    4,129       (14,011 )
Prepaid expenses and other
    (345 )     2,440  
Other assets
    415       332  
Trade accounts payable
    (8,835 )     927  
Accrued and non-current liabilities
    (16,212 )     (1,774 )
Net cash provided by operating activities
    26,287       13,463  
                 
INVESTING ACTIVITIES:
               
Proceeds from sale of marketable securities
    4,907       5,747  
Purchases of marketable securities
    (2,724 )     (4,503 )
Capital expenditures
    (7,139 )     (10,464 )
Purchase of businesses
    -       (3,356 )
Proceeds from sale of assets
    2,357       1,971  
Net cash used for investing activities from continuing operations
    (2,599 )     (10,605 )
Net cash provided by investing activities from discontinued operations
    -       409  
Net cash used for investing activities
    (2,599 )     (10,196 )
                 
FINANCING ACTIVITIES:
               
Proceeds from exercise of stock options
    232       1,733  
Net payments under lines-of-credit
    (52 )     (238 )
Repayment of debt
    (592 )     (488 )
Payment of deferred financing costs
    (684 )     -  
Change in ESOP guarantee
    318       324  
Net cash (used for) provided by financing activities
    (778 )     1,331  
Effect of exchange rate changes on cash
    (446 )     (2,704 )
Net change in cash and cash equivalents
    22,464       1,894  
Cash and cash equivalents at beginning of period
    89,473       80,139  
Cash and cash equivalents at end of period
  $ 111,937     $ 82,033  
Supplementary cash flow data:
               
Interest paid
  $ 10,227     $ 10,202  
Income taxes paid, net of refunds
  $ 3,591     $ 5,272  
 
See accompanying notes.
 
 
6


COLUMBUS McKINNON CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
December 31, 2012

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, 2012, the results of its operations for the three and nine month periods ended December 31, 2012 and December 31, 2011, and cash flows for the nine months ended December 31, 2012 and December 31, 2011, have been included. Results for the period ended December 31, 2012 are not necessarily indicative of the results that may be expected for the year ending March 31, 2013. The balance sheet at March 31, 2012 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. 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, 2012.

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, 2012, approximately 54% and 56% of sales were to customers in the U.S., respectively.
 
2.
Divestitures

Income from discontinued operations presented in the condensed consolidated statements of operations and retained earnings for the three and nine month period ending December 31, 2011 includes payments received on a note receivable related to the Company’s fiscal 2002 disposal of Automatic Systems, Inc. The note was collected in full during the three months ended June 30, 2012.

During the nine months ended December 31, 2012 the Company sold certain assets of the Gaffey division of Crane Equipment and Service, Inc.  The sale of the Gaffey assets did not have a material effect on the Company’s financial statements for the three and nine months ended December 31, 2012 and therefore was not reclassified as a discontinued operation.

3.
Fair Value Measurements

Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“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 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.  The Company uses quoted prices in an inactive market when valuing its Subordinated Debt, represented by the 7 7/8% Notes and, consequently, the fair value is based on Level 2 inputs. The carrying values of the Company’s senior debt and notes payable to banks approximate fair value based on current market interest rates for debt instruments of similar credit standing and, consequently, their fair values are based on Level 2 inputs. As of December 31, 2012, the Company’s assets and liabilities measured or disclosed at fair value on recurring bases were as follows (in thousands):
 
 
7


   
Fair value measurements at reporting date using
 
         
Quoted prices in
   
Significant other
   
Significant
 
         
active markets for
   
observable
   
unobservable
 
   
At December 31,
   
identical assets
   
inputs
   
inputs
 
Description
 
2012
   
(Level 1)
   
(Level 2)
   
(Level 3)
 
Assets/(Liabilities) measured at fair value:
                       
Marketable securities
  $ 23,699     $ 23,699     $ -     $ -  
Derivative liabilities
    (742 )     -       (742 )     -  
Other equity investments
    1,176       1,176       -       -  
                                 
Assets/(Liabilities) disclosed at fair value:
                               
Subordinated debt
  $ (160,875 )   $ -     $ (160,875 )   $ -  
Senior debt
    (3,989 )     -       (3,989 )     -  

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 certain termination benefits in connection with the Company’s restructuring plan under the provisions of ASC Topic 420 “Exit or Disposal Cost Obligations.” There were no assets or liabilities measured at fair value on a nonrecurring basis during the three or nine month periods ended December 31, 2012.
 
 
8


4.
Inventories

Inventories consisted of the following (in thousands):

   
December 31,
   
March 31,
 
   
2012
   
2012
 
At cost - FIFO basis:
               
Raw materials
 
$
 58,095
   
$
 59,252
 
Work-in-process
   
 11,579
     
 18,952
 
Finished goods
   
 52,793
     
 49,315
 
     
 122,467
     
 127,519
 
LIFO cost less than FIFO cost
   
 (20,936)
     
 (19,464)
 
Net inventories
 
$
 101,531
   
$
 108,055
 

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 income (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 six 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, 2012 or December 31, 2011.

The following is a summary of available-for-sale securities at December 31, 2012 (in thousands):
 
         
Gross Unrealized
   
Gross Unrealized
   
Estimated Fair
 
   
Cost
   
Gains
   
Losses
   
Value
 
Marketable securities
  $ 21,385     $ 2,320     $ 6     $ 23,699  
 
 
9

 
The aggregate fair value of investments and unrealized losses on available-for-sale securities in an unrealized loss position at December 31, 2012 are as follows (in thousands):

   
Aggregate
   
Unrealized
 
   
Fair Value
   
Losses
 
Securities in a continuous loss position for less than 12 months
  $ 1,125     $ 6  
Securities in a continuous loss position for more than 12 months
    -       -  
    $ 1,125     $ 6  

Net realized gains related to sales of marketable securities were $147,000 and $31,000, in the three-month periods ended December 31, 2012 and December 31, 2011, respectively and $399,000 and $152,000 for the nine month periods then ended, respectively.

The following is a summary of available-for-sale securities at March 31, 2012 (in thousands):

   
Cost
   
Gross Unrealized
Gains
   
Gross Unrealized
Losses
   
Estimated
Fair Value
 
Marketable securities
  $ 23,183     $ 2,249     $ 39     $ 25,393  

6.
Goodwill and Intangible Assets

Goodwill is not amortized but is tested for impairment at least annually or when indicators of impairment are identified, 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 a discounted cash flow methodology.  The Company’s reporting units are determined based upon whether discrete financial information is available and reviewed regularly, 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, 2012 and March 31, 2012.

When we evaluate the potential for goodwill impairment, we assess a range of qualitative factors including, but not limited to, macroeconomic conditions, industry conditions, the competitive environment, changes in the market for our products and services, regulatory and political developments, entity specific factors such as strategy and changes in key personnel and overall financial performance. If, after completing this assessment, it is determined that it is more likely than not that the fair value of a reporting unit is less than its carrying value, we proceed to a two-step impairment test.

In accordance with ASC Topic 350-20-35-3, the assessment of goodwill for impairment 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 the income 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.

We performed our qualitative assessment including consideration of relevant events and circumstances impacting each of our reporting units during the fourth quarter of fiscal year 2012 and determined it was not more likely than not that the fair value of each of our reporting units was less than its applicable carrying value. Accordingly, we did not perform the two-step goodwill impairment test for any of our reporting units.
 
 
10


Future impairment indicators, such as declines in forecasted cash flows, may cause additional significant impairment charges. Impairment indicators could be based on such factors as the Company’s stock price, forecasted cash flows, assumptions used, control premiums or other variables.

A summary of changes in goodwill during the nine months ended December 31, 2012 is as follows (in thousands):

Balance at April 1, 2012
  $ 106,435  
Currency translation
    (374 )
Balance at December 31, 2012
  $ 106,061  

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, 2012
   
March 31, 2012
 
   
Gross
Carrying
Amount
   
Accumulated
Amortization
   
Net
   
Gross
Carrying
Amount
   
Accumulated
Amortization
   
Net
 
Trademark
  $ 5,720     $ (1,332 )   $ 4,388     $ 5,783     $ (1,109 )   $ 4,674  
Customer relationships
    14,605       (5,723 )     8,882       14,808       (4,693 )     10,115  
Other
    1,378       (367 )     1,011       1,267       (265 )     1,002  
Total
  $ 21,703     $ (7,422 )   $ 14,281     $ 21,858     $ (6,067 )   $ 15,791  

Based on the current amount of identifiable intangible assets, the estimated amortization expense for each of the fiscal years 2013 through 2017 is expected to be in a range of $1,700,000 to $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 and retained earnings.

The Company has foreign currency forward agreements and cross-currency swaps 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 $4,554,000 and all contracts mature by September 30, 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 $2,803,000 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 a foreign currency. The notional amount of those derivatives is $9,392,000 and all contracts mature within twenty one months of December 31, 2012.

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 three different counterparties as of December 31, 2012.

 
11

 
The following is the effect of derivative instruments on the condensed consolidated statement of operations for the three months ended December 31, 2012 and 2011 (in thousands):

December 31,
Derivatives Designated as
Cash Flow  Hedges
 
(Loss)/Gain
Recognized (1)
   
Location of
Gain/(Loss)
Recognized in Income
on Derivatives
 
(Loss)/Gain
Reclassified (2)
 
2012
Foreign exchange contracts
  $ (128 )  
Cost of products sold
  $ 10  
2011
Foreign exchange contracts
  $ 36    
Cost of products sold
  $ 75  

(1) Recognized in Other Comprehensive Loss (AOCL) on Derivatives (Effective Portion)
(2)  Reclassified from AOCL into Income (Effective Portion)

December 31,
Derivatives
Not
Designated as
Hedging
Instruments
Location of Gain
Recognized in
Income on
Derivatives
   
Gain Recognized
in Income on
Derivatives
 
2012
Foreign exchange contracts
Foreign currency exchange gain (loss)
    $ (276 )
2011
Foreign exchange contracts
Foreign currency exchange gain
    $ (1 )

The following is the effect of derivative instruments on the condensed consolidated statement of operations for the nine months ended December 31, 2012 and 2011 (in thousands):

December 31,
Derivatives Designated as
Cash Flow  Hedges
 
(Loss)/Gain
Recognized (3)
   
Location of
Gain/(Loss)
Recognized in Income
on Derivatives
 
Gain Reclassified (4)
 
2012
Foreign exchange contracts
  $ (201 )  
Cost of products sold
  $ 125  
2011
Foreign exchange contracts
  $ 171    
Cost of products sold
  $ 138  

(3) Recognized in AOCL on Derivatives (Effective Portion)
(4)  Reclassified from AOCL into Income (Effective Portion)

December 31,
Derivatives
Not
Designated as
Hedging
Instruments
Location of Gain
Recognized in
Income on
Derivatives
   
Gain Recognized
in Income on
Derivatives
 
2012
Foreign exchange contracts
Foreign currency exchange gain
    $ 258  
2011
Foreign exchange contracts
Foreign currency exchange gain
    $ 987  
 
 
12

 
As of December 31, 2012, 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, 2012 (in thousands):

Derivatives Designated as Hedging
Instruments
 
Balance Sheet Location
 
Fair Value of Asset
(Liability)
 
Foreign exchange contracts
 
Other Assets
  $ 2  
Foreign exchange contracts
 
Accrued Liabilities
  $ (516 )
             
Derivatives Not Designated as Hedging
Instruments
 
Balance Sheet Location
 
Fair Value of Asset (Liability)
 
Foreign exchange contracts
 
Other Assets
  $ 9  
Foreign exchange contracts
 
Accrued Liabilities
  $ (237 )

8.
Debt

The Company entered into a fifth amended, restated and expanded revolving credit facility dated October 19, 2012 (New Revolving Credit Facility). The New Revolving Credit Facility provides availability up to a maximum of $100,000,000 and has an initial term ending October 31, 2017.

Provided there is no default, the Company may request an increase in the availability of the New Revolving Credit Facility by an amount not exceeding $75,000,000, subject to lender approval. The unused portion of the New Revolving Credit Facility totalled $88,530,000 net of outstanding borrowings of $0 and outstanding letters of credit of $11,470,000 as of December 31, 2012. The outstanding letters of credit at December 31, 2012 consisted of $2,362,000 in commercial letters of credit and $9,108,000 of standby letters of credit.   Interest on the revolver is payable at varying Eurodollar rates based on LIBOR plus an applicable margin of 100 basis points or at a Base Rate (equivalent to a fluctuating rate per annum equal to the higher of (a) the Federal Funds Rate plus 1/2 of 1% and (b) the rate of interest in effect for such day as publicly announced from time to time by Bank of America as its “prime rate.”) plus 0 basis points.  The applicable margin is determined based on the pricing grid in the New Revolving Credit Facility which varies based on the Company’s total leverage ratio at December 31, 2012. The New 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 New 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, 2012. 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 $30,000,000.

At March 31, 2012, the Company had entered into an amended, restated and expanded revolving credit facility dated December 31, 2009. The Revolving Credit Facility provided availability up to a maximum of $85,000,000 and had an initial term ending December 31, 2013. The Revolving Credit Facility was replaced by the New Revolving Credit Facility on October 19, 2012.

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 Unregistered 7 7/8% Notes was 98.545% of par after adjustment for original issue discount.

 
13

 
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.

On June 2, 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 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, 2012, unsecured credit lines totaled approximately $8,126,000, of which $0 was drawn. In addition to the above facilities, one of our foreign subsidiaries has a credit line secured by a parent company guarantee. This credit line provides availability of up to $963,000, of which $0 was drawn as of December 31, 2012.

Refer to the Company’s consolidated financial statements included in its annual report on Form 10-K for the year ended March 31, 2012 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, 2012
   
December 31, 2011
 
   
2012
   
2011
   
2012
   
2011
 
Service costs
  $ 623     $ 846     $ 1,869     $ 2,537  
Interest cost
    2,481       2,507       7,443       7,521  
Expected return on plan assets
    (2,803 )     (2,689 )     (8,410 )     (8,065 )
Net amortization
    1,558       1,004       4,675       3,012  
Curtailment (see below)
    -       -       -       1,172  
Net periodic pension cost
  $ 1,859     $ 1,668     $ 5,577     $ 6,177  
 
The Company currently plans to contribute approximately $10,400,000 to its pension plans in fiscal 2013.
 
 
14

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

   
Three months ended
   
Nine Months Ended
 
   
December 31, 2012
   
December 31, 2011
 
   
2012
   
2011
   
2012
   
2011
 
Interest cost
  $ 78     $ 120     $ 234     $ 359  
Amortization of plan net losses
    36       82       107       246  
Net periodic postretirement cost
  $ 114     $ 202     $ 341     $ 605  

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

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, 2012.

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,
2012
   
December 31,
2011
   
December 31,
2012
   
December 30,
2011
 
Numerator for basic and diluted earnings per share:
                       
Net income
  $ 9,579     $ 8,515     $ 26,267     $ 17,970  
                                 
Denominators:
                               
Weighted-average common stock outstanding – denominator for basic EPS
    19,451       19,313       19,406       19,256  
Effect of dilutive employee stock options and other share-based awards
    246       175       214       270  
Adjusted weighted-average common stock outstanding and assumed conversions – denominator for diluted EPS
    19,697       19,488       19,620       19,526  

Stock options and performance shares amounting to 275,000 and 448,000 common shares for the three month periods ended December 31, 2012 and 2011, respectively were not included in the computation of diluted earnings per share because they were antidilutive. Stock options and performance shares amounting to 275,000 and 215,000 common shares for the nine month periods ended December 31, 2012, and 2011, respectively were not included in the computation of diluted earnings per share respectively, because they were antidilutive.

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.

 
15

 
During the first nine months of fiscal 2013 and 2012, a total of 30,798 and 165,544 shares of common stock were issued upon the exercising of stock options related to the Company’s stock option plans. During the fiscal year ended March 31, 2012, 49,254 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, 2012 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 $8,000,000 and $13,000,000 using actuarial parameters of continued claims for a period of 18 to 30 years from December 31, 2012.  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 $10,700,000, which has been reflected as a liability in the consolidated financial statements as of December 31, 2012. 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 settlement costs and legal fees of approximately $2,000,000 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 effect on the financial condition of the Company or its liquidity, although the effect of any future liabilities recorded could be material to earnings in a future period.

The Company is also involved in other unresolved legal actions that arise in the normal course of business. The most prevalent of these unresolved actions involve disputes related to product design, manufacture and performance liability. The Company's estimation of its product-related aggregate liability that is probable and estimable, in accordance with U.S. generally accepted accounting principles approximates $6,400,000, which has been reflected as a liability in the consolidated financial statements as of December 31, 2012. In some cases, we cannot reasonably estimate a range of loss because there is insufficient information regarding the matter.  Management believes that the potential additional costs for claims will not have a material effect on the financial condition of the Company or its liquidity, although the effect of any future liabilities recorded could be material to earnings in a future period.

The total asbestos-related and product-related liability approximates $17,100,000 at December 31, 2012 and $20,500,000 at March 31, 2012. The decrease in these liabilities primarily resulted from the Company’s implementation of a defensive strategy that is beginning to yield a higher dismissal rate than in the past year.

12.
Restructuring Charges
 
The Company did not incur any restructuring costs during the three and nine months ended December 31, 2012.  The Company incurred $430,000 in restructuring costs for the nine months ended December 31, 2011 primarily related to workforce reductions at one of its European facilities.  

During the three and nine months period ended December 31, 2011 the Company recognized a net gain of $1,467,000 on the sale of one of its previously closed manufacturing facilities.  These net gains were recorded as a credit to restructuring expense in both periods.
 
 
16

 
13.
Income Taxes

Income tax expense as a percentage of income from continuing operations before income tax expense was 11% and 16% for the three month periods ended December 31, 2012 and 2011, respectively and 15% and 25% 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.  We estimate that the effective tax rate related to continuing operations will be approximately 13% to 17% for fiscal 2013 based on the forecasted jurisdictional mix of taxable income.

During the fiscal year ended March 31, 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 three of the Company’s international 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.
 
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.

               
Non
             
As of December 31, 2012
 
Parent
   
Guarantors
   
Guarantors
   
Eliminations
   
Consolidated
 
Current assets:
                             
Cash and cash equivalents
  $ 67,255     $ -     $ 44,682     $ -     $ 111,937  
Trade accounts receivable
    37,475       3,803       37,432       -       78,710  
Inventories
    29,851       16,343       55,337       -       101,531  
Other current assets
    4,402       534       4,175       -       9,111  
Total current assets
    138,983       20,680       141,626       -       301,289  
Property, plant, and equipment, net
    34,199       11,791       14,775       -       60,765  
Goodwill and other intangibles, net
    40,960       31,025       48,357       -       120,342  
Intercompany
    (184 )     63,175       (61,728 )     (1,263 )     -  
Other assets
    6,400       783       26,163       -       33,346  
Investment in subsidiaries
    203,753       -       -       (203,753 )     -  
Total assets
  $ 424,111     $ 127,454     $ 169,193     $ (205,016 )   $ 515,742  
                                         
Current liabilities
    34,755       11,374       38,155       (1,263 )     83,021  
Long-term debt, less current portion
    148,345       1,731       1,150       -       151,226  
Other non-current liabilities
    51,551       6,782       33,702       -       92,035  
Total liabilities
    234,651       19,887       73,007       (1,263 )     326,282  
Shareholders' equity
    189,460       107,567       96,186       (203,753 )     189,460  
Total liabilities and shareholders' equity
  $ 424,111     $ 127,454     $ 169,193     $ (205,016 )   $ 515,742  
 
 
17

 
For the Three months ended December 31, 2012
         
Non
             
   
Parent
   
Guarantors
   
Guarantors
   
Eliminations
   
Consolidated
 
Net sales
  $ 63,278     $ 34,323     $ 68,439     $ (12,815 )   $ 153,225  
Cost of products sold
    44,711       27,904       49,628       (12,815 )     109,428  
Gross profit
    18,567       6,419       18,811       -       43,797  
Selling, general and administrative expenses
    9,732       4,866       14,517       -       29,115  
Amortization of intangibles
    26       -       467       -       493  
      9,758       4,866       14,984       -       29,608  
Income from operations
    8,809       1,553       3,827       -       14,189  
Interest and debt expense
    3,863       (532 )     82       -       3,413  
Other (income) and expense, net
    (991 )     (180 )     1,175       -       4  
Income before income tax expense and equity in income of subsidiaries
    5,937       2,265       2,570       -       10,772  
Income tax expense (benefit)
    250       (80 )     1,023       -       1,193  
Equity in income from continuing operations of subsidiaries
    3,892       -       -       (3,892 )     -  
Net income
  $ 9,579     $ 2,345     $ 1,547     $ (3,892 )   $ 9,579  

For the Nine Months Ended December 31, 2012
   
Non
             
   
Parent
   
Guarantors
   
Guarantors
   
Eliminations
   
Consolidated
 
Net sales
  $ 180,008     $ 117,522     $ 195,625     $ (40,445 )   $ 452,710  
Cost of products sold
    128,941       97,740       136,451       (40,445 )     322,687  
Gross profit
    51,067       19,782       59,174       -       130,023  
Selling, general and administrative expenses
    30,061       15,997       42,594       -       88,652  
Restructuring charges
    -       -       -       -       -  
Amortization of intangibles
    73       -       1,408       -       1,481  
      30,134       15,997       44,002       -       90,133  
Income from operations
    20,933       3,785       15,172       -       39,890  
Interest and debt expense
    9,961       152       305       -       10,418  
Other (income) and expense, net
    (1,161 )     (164 )     26       -       (1,299 )
Income before income tax expense and equity in income of subsidiaries
    12,133       3,797       14,841       -       30,771  
Income tax (benefit) expense
    17       -       4,487       -       4,504  
Equity in income from continuing operations of subsidiaries
    14,151       -       -       (14,151 )     -  
Net income
  $ 26,267     $ 3,797     $ 10,354     $ (14,151 )   $ 26,267  

 
18


For the Three Months Ended December 31, 2012
             
Non
             
   
Parent
   
Guarantors
   
Guarantors
   
Eliminations
   
Consolidated
 
                               
Net income
  $ 9,579     $ 2,345     $ 1,547     $ (3,892 )   $ 9,579  
Other comprehensive income (loss), net of tax:
                                       
Foreign currency translation adjustments
    -       -       2,604       -       2,604  
Change in derivatives qualifying as hedges, net of deferred tax expense
    (161 )     -       23       -       (138 )
Adjustments:
                                       
Unrealized holding gain arising during the period, net of deferred tax expense
    -       -       194       -       194  
Reclassification adjustment for gain included in net income, net of deferred tax expense
    -       -       (253 )     -       (253 )
Total adjustments
    -       -       (59 )     -       (59 )
Total other comprehensive income
    (161 )     -       2,568       -       2,407  
Comprehensive income
  $ 9,418     $ 2,345     $ 4,115     $ (3,892 )   $ 11,986  

For the Nine Months Ended December 31, 2012
             
Non
             
   
Parent
   
Guarantors
   
Guarantors
   
Eliminations
   
Consolidated
 
                               
Net income
  $ 26,267     $ 3,797     $ 10,354     $ (14,151 )   $ 26,267  
Other comprehensive income (loss), net of tax:
                                       
Foreign currency translation adjustments
    -       -       (40 )     -       (40 )
Change in derivatives qualifying as hedges, net of deferred tax expense
    (118 )     -       (208 )     -       (326 )
Adjustments:
    -       -       -       -       -  
Unrealized holding gain arising during the period, net of deferred tax expense
    -       -       489       -       489  
Reclassification adjustment for gain included in net income, net of deferred tax expense
    -       -       (400 )     -       (400 )
Total adjustments
    -       -       89       -       89  
Total other comprehensive income (loss)
    (118 )     -       (159 )     -       (277 )
Comprehensive income
  $ 26,149     $ 3,797     $ 10,195     $ (14,151 )   $ 25,990  

 
19


For the Nine Months Ended December 31, 2012
         
Non
             
   
Parent
   
Guarantors
   
Guarantors
   
Eliminations
   
Consolidated
 
Operating activities:
                             
Net cash provided by (used for) operating activities
  $ 15,908     $ (1,715 )   $ 12,094     $ -     $ 26,287  
                                         
Investing activities:
                                       
Purchase of marketable securities, net
    -       -       2,183       -       2,183  
Capital expenditures
    (4,683 )     (445 )     (2,011 )     -       (7,139 )
Proceeds from sale of assets
    -       2,357       -       -       2,357  
Net cash (used for) provided by investing activities
    (4,683 )     1,912       172       -       (2,599 )
                                         
Financing activities:
                                       
Proceeds from stock options exercised
    232       -       -       -       232  
Net payments under lines-of-credit
    -       -       (52 )     -       (52 )
Other
    (160 )     (202 )     (596 )     -       (958 )
Net cash provided by (used for) financing activities
    72       (202 )     (648 )     -       (778 )
Effect of exchange rate changes on cash
    -       -       (446 )     -       (446 )
Net change in cash and cash equivalents
    11,297       (5 )     11,172       -       22,464  
Cash and cash equivalents at beginning of period
    55,958       5       33,510       -       89,473  
Cash and cash equivalents at end of period
  $ 67,255     $ -     $ 44,682     $ -     $ 111,937  

 
20


               
Non
             
As of March 31, 2012
 
Parent
   
Guarantors
   
Guarantors
   
Eliminations
   
Consolidated
 
Current assets:
                             
Cash and cash equivalents
  $ 55,958     $ 5     $ 33,510     $ -     $ 89,473  
Trade accounts receivable
    44,375       5,579       38,688       -       88,642  
Inventories
    29,161       20,087       61,347       (2,540 )     108,055  
Prepaid expenses
    5,398       502       4,004       545       10,449  
Total current assets
    134,892       26,173       137,549       (1,995 )     296,619  
Property, plant, and equipment, net
    32,679       13,050       15,980       -       61,709  
Goodwill and other intangibles, net
    40,906       31,025       50,295       -       122,226  
Intercompany
    (41,502 )     102,471       (61,149 )     180       -  
Other non-current assets
    6,449       784       27,620       -       34,853  
Investment in subsidiaries
    228,138       -       -       (228,138 )     -  
Total assets
  $ 401,562     $ 173,503     $ 170,295     $ (229,953 )   $ 515,407  
      -       -       -       -       -  
Current liabilities
  $ 37,480     $ 18,772     $ 49,472     $ (1,815 )   $ 103,909  
Long-term debt, less current portion
    148,140       1,961       1,788       -       151,889  
Other non-current liabilities
    55,476       6,842       36,825       -       99,143  
Total liabilities
    241,096       27,575       88,085       (1,815 )     354,941  
Shareholders' equity
    160,466       145,928       82,210       (228,138 )     160,466  
Total liabilities and shareholders' equity
  $ 401,562     $ 173,503     $ 170,295     $ (229,953 )   $ 515,407  

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  
Amortization of intangibles
    28       -       457       -       485  
      7,918       5,004       13,681       -       26,603  
Income 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 before income tax expense and equity in income of subsidiaries
    4,677       (768 )     6,272       -       10,181  
Income tax expense
    (807 )     -       2,473       -       1,666  
Equity in income from continuing operations of subsidiaries
    3,031       -       -       (3,031 )