Welcome to the Columbus McKinnon quarterly conference call. At this time all participants are in a listen-only mode. (Operator Instructions) Today’s conference is being recorded. If you have any objections, you may disconnect at this time. Now I’ll turn the meeting over to Mr. Tim Tevens, President and CEO of Columbus McKinnon.

Welcome to the Columbus McKinnon conference call to review the results of our fiscal 2009 second quarter. Earlier this morning we issued a press release with the corresponding financials. On the call with me today is Karen Howard, our Chief Financial Officer, and Derwin Gilbreath, our Chief Operating Officer. We want to remind you that the press release and this conference call may contain some forward-looking statements within the meaning of the Private Litigation Reform Act of 1995. These statements contain known and unknown risks and other factors that could cause the actual results to vary. You should in fact read the periodic reports that Columbus McKinnon files with the SEC to be sure you understand these risks. We have made a significant step forward in executing our strategic plan with the acquisition of Pfaff earlier this month. We also have a very strong balance sheet with about $29 million in cash; this is after the Pfaff acquisition; and an untapped revolver that is available to support us in the event of an economic downturn. I will remind you that we are considerably stronger today than we have ever been especially when comparing us to the last economic downturn of ’01 to ’04. We have only long-term debt in place today with approximately $100 million of net pro forma the Pfaff acquisition. Compared to 2000 we had in excess of $400 million. I think many of you know that we have weathered significant storms in our 133-year history and will certainly weather this one as well, but this time unlike the last downturn and others, from a position of strength. We will continue to be mindful of investments and will be tempered by these economic conditions. In an overview here, Columbus McKinnon performed very well this quarter notwithstanding the volatile…

I’m pleased to have the opportunity to review some of the financial highlights of Columbus McKinnon’s fiscal 2009 second quarter and year-to-date that ended on September 28, 2008. As a reminder, all the numbers reported here reflect our former Univeyor business as a discontinued operation divested on July 25, 2008. Accordingly, the reported numbers relate to ongoing operations unless otherwise noted. Consolidated sales increased by 6.7% to $154.7 million in the second quarter of this year compared with last year’s second quarter. The increase was driven by strong double-digit sales increases reported by our Columbus McKinnon Europe group and mid-single-digit growth reported by the rest of the business. Overall volume contributed a 0.3% increase over last year with international volume growing by 4.7% and US volumes declining by 1.7%. Unfortunately volume was negatively impacted by approximately $2 million due to Hurricane Ike that hit the US Gulf Coast region in September and deferred that revenue to October. However, pricing and currency translation favorably impacted the revenue growth by 5% and 1.4% respectively. On a year-to-date basis consolidated sales increased $19.4 million or 6.8% over last year. The company’s quarterly sales pattern assuming a period of consistent economic conditions typically shows sales strongest in the fourth quarter and weakest in the third. The recent quarter had 63 shipping days consistent with the year ago quarter and the next quarter will have 60 shipping days. Included in the press release is a table showing the number of shipping days in each of the quarter at fiscal ’09 and fiscal ’08. Overall, second quarter consolidated gross profit increased $300,000 or 0.6% with gross margin contracting 170 basis points to 29.5%. The contraction was primarily due to two factors as follows. First, our materials, freight and utilities costs increased quickly and dramatically during the…

Both shipments and bookings continued to be solid throughout the second quarter as the majority of product categories showed healthy gains compared to the same period one year ago. Overall shipments gained 6.7% versus the same quarter in FY08. We were particularly pleased with the US sales to the general distribution which increased 9.4%. This represents 65% of our US sales. A subset of general distribution is industrial distribution which was up 6.7%. Industrial distribution has been flat for several quarters so this was a good show of performance on the part of our refocused sales force which I will cover in a few minutes. International sales were up 10.6% from the second quarter of fiscal ’08 which included 4.4% currency translation. We had only one area of weakness which was CES, our crane builder group. CES was down 17%. 1/3 of this decline was due to the Hurricane that shut down a major facility in several service locations in the CES group. This will be made up in October. The other 2/3 of the decline was related to major crane builder projects shipped in the comparable quarter last year which made the comparison very difficult. We continue to develop ways to aggressively target prime user markets while cultivating our relationships with our channel partners in order to increase business to our traditional markets. The most recent change in this area was the establishment of a single hoist screw to handle all brands and products under a single executive director. This will allow us to develop cohesive strategies for developing high growth markets while broadening the portfolio at the user level. We have seen increased demand in areas such as offshore production, mining and construction due to our ability to offer a broad array of lifting products. The construction market…

We’ll take questions now.

(Operator Instructions) Our first question comes from Ryan Jones - RBC Capital Markets.

With China slowing to high single-digit growth and with emerging markets starting to rollover as well, what are your thoughts about international growth going forward?

It seems to me that with this credit crisis that we’re all faced with the global markets are certainly going to be affected in the long term. I think it’s fair to say that we will not see the global build that we’ve seen in the past. Things are indeed slowing albeit still growing but just growing at a much slower rate than what we’ve seen. Our expectations are that it will indeed be slower so we’re planning for that level of growth.

On steel and some other commodities that you’ve talked about, how far along are you in instituting the price increases with your customers and what has their feedback been so far?

I think you heard Derwin talk about an August price increase we just had for hoist products and we’re instituting another one toward the end of the year. I think November. Do we know the date?

Yes. The end of November.

The reaction from the distribution is I think there’s recognition that there’s certainly volatility in the commodity markets. We surcharge all of our steel-based products whether it be chain or attachments and we have been doing this now for a number of years so we actually move that price monthly. What we’ve seen this past couple of months is just something we’ve never seen before in terms of the volatility, the wild swings up and down that we’re seeing right now. We will adjust those surcharges accordingly. We also have been impacted by the motors that we buy for example, which have been impacted by those commodities as well both up and down. But we’re also seeing higher utility costs for example coming at us. We’re trying to react as quickly as we can and be as fair as we can to all of our distribution channel partners but the reality is it’s so volatile right now it’s tough to [inaudible].

But the price increases you think will stick?

Yes.

Our next question comes from Joe Giamichael - Rodman & Renshaw LLC. Joe Giamichael - Rodman & Renshaw LLC: You’ve used very cautious language going forward in regards to the overall environment and given the backlog, it would seem that things aren’t that bad right now. Are you hedging yourself given the macro environment or have you started to see a more significant downturn than the backlog suggests?

You’re right on. We’re sitting here probably like many other industrial companies with a fairly good backlog as you pointed out. Our bookings are fairly good today. We see a fair amount of activity in the markets we sell into. But the realities are we have to look beyond that and think about the long-term impact. If a slowing economy should occur given the credit debacle that’s going on right now, so we’re very cautious for the future. If you talk to our business leaders today, they’d say, “What recession? What problem?” They’re still seeing pretty good business activity. Joe Giamichael - Rodman & Renshaw LLC: I’ve always thought of your business as less susceptible to the swings in the overall market and more so now since you’ve done such a good job reducing the leverage the company has relative to the last macro downturn that the company faced. I realize that this is not a great quarterly conference call question, but could you walk us through why you think your business can continue to perform well or outperform relative to peers in this environment?

A couple areas that we look at. As you said earlier, we’re a much more global company. Going forward about 40% of our revenue will come from markets outside the US, a bunch of that in emerging markets which still are growing much faster than let’s say more Western markets are today. So that would be the first thing that comes to my mind. The second thing is we won’t be paying back banks or have that much debt that we have to pay a lot of interest expense so that we would be able to keep most of that for our shareholders to reinvest back in our business. We also have positioned the product portfolio to be much more global in nature and being able to be sold around the world which is very positive, and albeit even with the price of oil going into the $70 area, we still see some pretty good markets in the energy area which we spent a lot of our time and energy in selling to as well as nonresidential construction seems to be going pretty well. I think as we look at it, it certainly may be slower. It’s tough to say how much slower in the future but I think that we’re pretty well positioned to take advantage of those markets that will be growing even at much higher rates than the rest of the world or at a slower shrink rate than the rest of the world. Joe Giamichael - Rodman & Renshaw LLC: Given the current valuation of your stock and the free cash flow yields that you’re projected to have even if the business stays flat or turns down slightly, are you seeing opportunities out there that appear to be better uses of cash than say redeploying cash in a share buy-back or increasing dividend? Any of those potentially uses?

They certainly would be potential uses. I think I’d really like to see how this credit mass is going to fall out and what kind of results that are going to come from it. As we mentioned, we have around $30 million of cash after the Pfaff acquisition and plenty of room on a revolver so we have some dry gunpowder that we can use going forward for some strategic acquisitions like we’ve done in this Pfaff acquisition we just did on October 1. However, I think there’s a little more caution as we sit here today and look to the future because these markets are just really crazy and somewhat volatile in nature, and we’re trying to figure out where the direction is. We do have multiple conversations with multiple parties and we’ll continue to think about the acquisition process to continue to execute our strategic plan but we’re a little more cautious I would say today. Having said all of that, our Board will certainly consider and has considered multiple options in terms of the use of our free cash flow going forward. Joe Giamichael - Rodman & Renshaw LLC: Is it that the market is not rewarding you for making acquisitions such as Pfaff that you’re I guess more patient and cautious or is it that the opportunities haven’t been as plentiful or as potentially accretive?

Neither one. We have plenty of opportunities. We’re certainly disappointed that the market hasn’t rewarded us for executing our strategic growth plans. That’s for sure. But I would say that we’re thinking about the long-term impact on the tightening of the credit markets and the lack of currency flow around the world, and that impact on our end user markets, our industrial markets around the world. What does that really mean to us? How slow could it get or will it get? So that’s where the caution comes from really is a more longer-term view of the end markets we sell to.

Our next question comes from Theodor Kundtz - Needham & Company. Theodor Kundtz - Needham & Company: Could you talk a little bit about the Pfaff acquisition and how their business is doing? I know that they did like $90 million of revenues or annualized when you bought them. Is that business growing or is that seeing some weakness, I would expect because it’s a little more European oriented that it would but maybe you could comment on that?

The Pfaff business is going along fine. It’s actually on plan to the plan of what we bought them to so we’re pretty pleased with that. They have a potential for a couple fairly large products that they’re still hoping to get by the end of the calendar year. Those are still open. I would say that it’s growing but it’s not growing as fast as the other European business, the old Columbus McKinnon European business that you know us as. That’s actually growing a little bit better and I think that’s because our older business there is much more [Pan] European and into the emerging markets than Pfaff is today. Pfaff’s a little more Western European and predominantly German centric so maybe that’s why the growth isn’t as hot. But they’re on plan. They’re doing fine. Theodor Kundtz - Needham & Company: Tim, do you think we’ve bottomed out here in gross margins? You didn’t really give us any kind of outlook. You talked about it but do you think this is the bottom in the gross margin picture and do you think you have much room on the upside here or is it just going to kind of be at this level for a while?

Let’s hope not. That’s certainly not our plan. As we look to gross margins, this quarter was actually a little bit disappointing to us in this area predominantly because of this incredible volatility that we didn’t see coming in certain commodities, especially steel. As we look to the future, I think that it’s fair to say that we would expect gross margins to improve if we get decent revenue growth like we’ve been getting in this 5%, 6%, 7% area. So our expectations are that we would be able to control that a little bit better and improve that. Theodor Kundtz - Needham & Company: How about on the fx side? How is that going to impact you guys? You benefited from it in the past; it’s turned around here. What kind of impact do you think that could have on your top line and bottom line?

Good point. I’ll turn this over to Karen to talk about the translation effect but we buy in different denominations as well so on a sourcing basis it could improve. We also export some from the US market into Europe so that could have a negative effect. But at the end of the day I think Karen it’s fair to say that it’s a translation effect that might have the biggest impact.

Yes. More on each of the lines I will say, so for example in this quarter you could see that foreign currency translation added about $2 million to the top line, about 1.4%, and it does impact each expense line as well. By the time you get down to operating income, net income, the impact is negligible. Theodor Kundtz - Needham & Company: So that could hurt you a bit on the turnaround by the same amount?

On each of the lines but not on a net basis. Theodor Kundtz - Needham & Company: Any thoughts of a share buy-back here?

Given where the stock has traded, I think it’s fair to say that we would consider all options of using our free cash flow including a share buy-back. At this point in time we don’t have Board approval but that would be the case. Theodor Kundtz - Needham & Company: Looking at the capacity utilization rates in the US, they are continuing to come down. The US outlook, you indicated from what I gathered you thought it would be sort of flattish here. Is that a fair assessment of what you see right now?

Yes. It feels like it’s somewhere in that 77% to 78% area and if it stays in that area, things will be fine in the US. Of course if it continues to migrate south, then we have a different situation. Theodor Kundtz - Needham & Company: Yes, the manufacturing side seems to be migrating further down from that. So that was my concern where in September numbers were 74.5% on the manufacturing side, down from 77%. I’m just wondering if that continues to happen, I guess we would realistically expect somewhat of a decline in the US business? How do you avoid that?

Just a reminder to you, we’re much broader than just manufacturing so we look at all [inaudible] other than high tech and/or software and looking at them together. Mining and oil exploration and things of that nature beyond manufacturing. Having said that, the 77% area seems good right now. Manufacturing dipping a little bit lower to 74% as you indicate, and I haven’t looked at those numbers in individual markets yet, but certainly in that sector we’d have a negative impact on us. It usually lags by about a quarter or two. Theodor Kundtz - Needham & Company: Your stronger areas are still in the refinery business other than the storms hurting you. But other than that do you think that business is still robust?

Yes, it’s moving right along. It’s pretty good.

Our next question comes from James Bank - Sidoti & Company. James Bank - Sidoti & Company: I’m still a little confused on the margin pressure in the quarter year-over-year and especially sequentially. Given the divestiture of Univeyor, I’m a little confused how we’re below a 30% gross margin. I understand that the costs and the hurricane, but steel really since July has completely rolled over here. It’s back to the levels where it was in April so is it a lag effect from when those prices go up than when you guys get your price increases and then actually hits your line when your price increases finally come in? Is there just a tremendous lag there?

You’re looking at different steel than we’re looking at. I think that’s the first thing to say. Our steel actually spiked dramatically in September which was up maybe 20% or 30% in one month. Now when we put our surcharges in, we’re always looking back a month of course. So we don’t have that visibility going forward and that’s probably the biggest impact. Maybe Karen or Derwin want to comment further on that.

That’s correct. There is a lag effect that impacts it and Tim’s absolutely right about the steel that we’re buying is quite a bit different for the most part. We have a lot of specialty steel and those did go up about 20% to 30% in the month of September.

But we have seen them come back down I think it’s fair to say, Derwin?

That’s correct.

Down in October.

It’s coming down but there is a little bit of a lag because people are buying scrap to put into their inventory and of course they’re wanting to pass that on. Of course we go back and forth on that all the time. But we have contracts where what happens in the previous month rolls to the next month for us. James Bank - Sidoti & Company: So that with the added effect from Pfaff and the fact that Univeyor is gone, this incremental margin drop-off I saw in September quarter shouldn’t happen again for the rest of the year?

Yes. The Pfaff action did not affect the second quarter but if you’re looking to the future, it should have some of a negative impact because the gross margins were lower than the rest of the Columbus McKinnon business. James Bank - Sidoti & Company: But it is assumed to be accretive though, right?

That’s correct. You’re talking gross margins though. It’s accretive to the bottom line. We have shipped already the shipments in the downtime that we lost in our Gulf Coast business and our [inaudible] sorter tire shredder business. That’s already recovered. So we’ll see that in October. The key is to stay on top of this commodity cost increases and changes so that we can remain margin neutral which is as you know our policy. James Bank - Sidoti & Company: So at this point you guys are still committed to the 12% to 14% operating margin goal by the end of this fiscal year?

Yes, that’s correct.

Our next question comes from Analyst for [Arnold Erstiner - TJS Securities]. Analyst for [Arnold Erstiner - TJS Securities]: Five price increases? What other plans do you have to address costs and returning gross margins to desirable levels?

I think that you might have heard us talk in the past on the cost side about lean manufacturing and something we’ve been working on since 2001. That is what I’ll call our primary driver for cost reduction productivity improvement. Maybe I’ll just turn it over to Derwin and you can comment on some of the activities we have going on in this area.

We have a large number of projects in every plant that focuses on customer service costs and every plant has a lean coordinator. These projects are moving at an ever increasing rate. We’re very pleased with those activities. Some of them are giving us significant cost increases. In addition to that we’re also focusing very intensively on purchasing. What we’re doing there is we’re trying to find the lowest cost high quality supplier, we’re going to more global sources, and we’re certainly dealing with the day-to-day pressure on price increases and making sure that we’ve got the right level of productivity. It’s an every day every minute affair for us. Analyst for [Arnold Erstiner - TJS Securities]: You also spoke about seeing a slowdown in orders during October and the expectation that businesses can delay purchase decisions. With replacement kind of dictated by OSHA, how much is it possible to really delay the purchases?

OSHA doesn’t dictate replacement. What OSHA dictates is an annual inspection and that inspection typically drives either replacements and/or repair of units which drives then in turn our unit volume and/or our parts volume. Ultimately it comes back to us. The key there is or the way that we look at the business at least is industrial utilization, the more utilized the equipment is the more this activity has to occur in terms of replacement or repair. Having said that, we would expect normally if there was a downturn coming, which I’m not going to project but I’m going to be cautious about, we would normally see our parts business grow and our unit volume come down because people have a tendency to repair more frequently. And ultimately when things turn around, the unit volume comes back up.

Our next question comes from [Bob Franklin - Prudential]. [Bob Franklin - Prudential]: It seems like every quarter you’re asked about share repurchases and you say, “Yes, we think about that.” But it seems like this time you’re a little bit more enthusiastic. I’m wondering where you’d be with respect to repurchasing your bonds?

Karen, why don’t you touch on that one?

As you may have noticed in the earnings release, we did repurchase about $5 million of our bonds in early October. We used some of our excess available cash. But quite honestly, at this moment, at this point in time given the concerns about the global liquidity availability and the credit crisis, we are choosing to sit tight for the time being until things stabilize. Thereafter we will consider repurchase of our bonds in the open market as a potential option for use of cash as we have indicated in the past. Admittedly right now we’re sitting tight. [Bob Franklin - Prudential]: Would that then be true of share repurchases as well?

That would need to be re-evaluated as well.

Our next question comes from Theodor Kundtz - Needham & Company. Theodor Kundtz - Needham & Company: I just wanted to follow up with something. Tim or Derwin, this would be for you. Going back to the cost reduction efforts that you have in place, it sounds like it’s kind of two-fold. One is focusing on your existing plants. Do you have any plans for any further shutdowns of plants or you feel you’ve got the number of plants you’d like and now it’s just focusing on this lean effort you’ve talked about? Secondly, the global sourcing effort. Combining those two, what would be your target cost reduction efforts? Do you have a number?

Let me see if I can touch on it and then turn it over to Derwin. You might have noticed in the press release, we did in fact close two smaller facilities this past quarter. The plant rationalization program is still going on and we’ll continue to challenge our roof lines if you will and our square footage around the world. Basically we move production from those facilities to other existing plants. We did get a pretty good bang I think. We sold one building for $1,350,000 I believe it was and the other building somewhat substantially lower than that, maybe $300,000 or $400,000 that we’re expecting from that. But the key of course is the fixed cost reduction. There continues to be a couple of opportunities for us to work on and we are proceeding at pace with those in terms of plant consolidation. Nothing to announce just yet and actually we’ve not announced any targets but rest assured we will continue to do this kind of thing as we have in the past. Relative to global sourcing, let me just ask Derwin to comment on that activity.

On the global sourcing we have a very aggressive plan to look at sourcing. In fact we’re working on gears right now which represent a substantial amount of dollars, around $15 million to $16 million, and we’re looking at sourcing part of those out. We’re looking at other products that make sense. Of course as we do that it creates more space in factories and gives us more flexibility to do the kinds of things that Tim referred to before. We actually have someone that works for our operations in the US who works in purchasing but he lives in China so we have him focused on a lot of different projects for us right now. Theodor Kundtz - Needham & Company: Do you have a dollar amount targeted or can’t you share that?

No. Internally we do but we’ve not discussed that. Theodor Kundtz - Needham & Company: You mentioned the lower margins at Pfaff. Could you mention what they are, the gross margins there and how much that would impact overall margins?

We have commented that the overall margins are lower than Columbus McKinnon’s corporate average but we haven’t yet given a specific range. Admittedly, we are still going through and realigning their financial statements with Columbus McKinnon’s because they categorize things a little differently so we are still working through that process. I think that when we had announced the acquisition we did indicate that the operating margin level that they are currently in the high single digits.

Our next question comes from Analyst for Peter Lisnic – Robert W. Baird & Co., Inc. Analyst for Peter Lisnic – Robert W. Baird & Co., Inc.: With taking down kind of selling expenses as a percent of sales for the year, can you kind of break that in to how much of it is [inaudible], how much of it is you guys reducing kind of the international growth initiatives you guys are doing and then how much is you behind the scenes kind of controlling costs given the environment?

I’d say it’s really what you described, behind the scenes activities to control costs given the environment. We’ve still been moving forward with our international growth expansion activities so we have not scaled those back. Analyst for Peter Lisnic – Robert W. Baird & Co., Inc.: So that’s really intact despite all the uncertainty in the market right now?

Yes it is. Analyst for Peter Lisnic – Robert W. Baird & Co., Inc.: Then just to clarify, the $1 million you pointed out, given that it sounded like a lot of that was just that steel surcharge, just steel staying flat in October would kind of mean that you guys would have that margin gap kind of bridged in October for the third quarter, right? Because your surcharge should be kind of on a trailing month basis?

It’s definitely on a trailing month basis and I think it will be flat in November and December but with some carryover in to October so it’s not 100% taken care of in the month of October. Analyst for Peter Lisnic – Robert W. Baird & Co., Inc.: But relative to the second quarter you’d have at least kind of two months of coverage as opposed to-

Absolutely and we’ll have the price increase going in to effect in November and then we’ve caught up on the surcharges so there’s a very good possibility that that will be more than taken care of.

Let me just add to that, admittedly the surcharges on the steel most likely will have to be adjusted at some point in the not too distant future because steel has come down in October.

Absolutely. That’s correct. Analyst for Peter Lisnic – Robert W. Baird & Co., Inc.: One question on pricing, it looks like since you guys have started providing some of the breakout domestically versus international but domestic pricing has been substantially stronger than kind of the four international pricing. Is that just because of your relative market shares or is the overseas environment just a little bit tougher to get price increases on?

I’d say it’s really been not that the overseas market has been tougher but in the US market it’s been more driven by our mix of product. We sell more high steel content product in the US and do not in Europe for example. So, our surcharge program which falls in to this category of price is US based. Analyst for Peter Lisnic – Robert W. Baird & Co., Inc.: So really as international becomes a bigger percentage of sales it doesn’t reflect different than other than just steel content?

Yes, it really just reflects mix, what products are selling where.

At this time sir we have no further questions.

Let me thank all of you for your time this morning as well as questions. We certainly appreciate the interest in our company. We also want to thank all the Columbus McKinnon associates around the world for their hard work and success and certainly helping this quarter be a success. Just a couple of announcements as well, you might have also noticed we added two new directors this past weekend. Chris Ragot is the CEO of FreightCar America and Liam McCarthy, who is the President and Chief Operating Officer of Molex. Both fellows have a incredibly broad based operations, sales and marketing background as well as international experience in growing their various companies around the world. We welcome them to our company and hopefully you will do as well when you have a chance. As you can probably tell, we’re fairly optimistic yet cautious at this point in time and we’re going to remain cautious until we find out where the global credit markets are headed. Please bear with us as we and probably the rest of industrial America tries to work its way through this debacle we’re in. Thank you very much for your time and we look forward to talking to you in the future. Take care.

Thank you for participating in today’s conference call. You may disconnect your lines.