Welcome to the Columbus McKinnon’s fiscal 2008 third quarter earnings conference call. At this time, all participants are in a listen only my mode. Following the presentation we will conduct a question and answers session. (Operator Instructions) Now, I’ll turn the meeting over to Mr. Timothy Tevens, President and CEO. Sir, you may begin.

Good morning everyone and welcome to the Columbus McKinnon conference call to review the results of our fiscal 2008 third quarter. Earlier this morning, we did issue a press release with corresponding financials, hopefully you all have. With me today here in our headquarters is Karen Howard, our Chief Financial Officer, Derwin Gilbreath our Chief Operating Officer, and Joe Owen, Vice-President and Hoist Group Leader. We do want to remind you that the press release and this conference call may contain some forward-looking statements within the meaning of the Private Securities 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. Overall, our revenue for the second quarter exceeded the same quarter last year by a healthy 9.3%. This was led by our products segment, which was up 10.7% and negatively impacted by our focus on profitable revenue at Univeyor in our solutions segment, which was down about 3% as well as the divestiture of Larco, which occurred in the fourth quarter of our fiscal 2007 year. As we have been saying for a while now, we continue to experience a strong global industrial economy. Our gross profit was up almost 21% and income from operations increased almost 29%, leading to a solid operating leverage of 32%. Our actual net income was up about 9.5% over last year and as you can see this was a very solid quarter for Columbus McKinnon. Revenue for the products segment in the third quarter was up 10.7% as I mentioned. This was compared to the same quarter last year and flat with our second quarter of fiscal ‘08,…

Thank you Tim and good morning everyone. I am pleased to have the opportunity to review some of the financial highlights of Columbus McKinnon’s fiscal 2008 third quarter and year to date that ended on December 30th, 2007. Consolidated sales increased by 9.3% to $155.2 million in the third quarter of this year compared with last year’s third quarter. Products segment sales which accounted for approximately 91% of total sales in the quarter increased by $13.6 million or 10.7% with strong double-digit sales increases reported by our Columbus McKinnon in Europe and our domestic crane groups and mid to high single-digit growth reported by our domestic hoist and rigging businesses. Our Larco Canadian crane business which contributed $2.3 million of revenue to last year’s quarter was divested on March 1st, 2007 resulting in a 1.9% reduction in segment revenues. Accordingly the combination of volume and additional shipping date contributed to an 8.4 percentage point increase for this segment over last year. Further, pricing and foreign currency translations favorably impacted the change by 1.3 and 2.9 percentage points respectively. Solutions segment sales decreased $0.5 million or 3.0% compared with the third quarter of fiscal ’07, driven by the decision to transition the business model of our Univeyor operations but benefiting from strong backlog coming in to the quarter. As previously indicated, we are transforming this material handling systems business to be more product and service maintenance oriented, as we pursue its potential divestiture. On year to date basis, consolidated sales increased $21.8 million or 5% over last year. Products segment sales were up 8.7% while solutions segment sales were down 24%. 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 quarter, which such comparisons being…

Internationally, growth for the quarter was 13% excluding Larco, which was divested in March of ’07. Univeyor international sales growth was 24% with positive exchange effects that is going for half of this increase. Continued geographic and market expansion combined with generally robust economies is driving this growth. For the fourth quarter on fiscal year, we expect to see continued solid sales in our product segment, both domestically and internationally, driven by a continued focus on targeted attractive end user markets in the international expansion activities. Relative to operations, our operating leverage continues to be strong at 32% in the quarter. Our employees continue to pull together all the dimensions of our strategy to achieve this range of success quarter after quarter. Our strategic goal of superior customer excellence are supported with detailed and initiatives in operational excellent, people development, new products, and services as well as new markets and geographies to drive sales growth. Investments in all of these areas occurring all throughout the company. For example, in the new geographies category last quarter, we selected the distributor in the Middle East and one in India where the sophisticated entertainment markets are just developing. Our global entertainment business has had a compound to annual growth like more than 20% over the last five years. In Europe, we have just opened a sales office in Italy to penetrate independent industrial distribution. In Russia, we hired someone and will be opening an office very soon and are also on the brink of opening a bonded warehouse in Panama to support South America. Our sales in Poland have been growing nicely and we are investigating sales office opportunities there as well. In total, CMCO has 43 active operational excellent cross-functional teams, focusing on goals that will achieve a superior customer excellence. Internationally,…

Thanks Derwin. Operator, we’re ready for questions.

Analyst for Analyst for Peter Lisnic - Robert W. Baird & Co., Inc.: Good morning. It’s actually John on for Pete.

Hey John.

Hey John. Analyst for Peter Lisnic - Robert W. Baird & Co., Inc.: First off, nice solid quarter here, kind of given up the potential macro economic uncertainty. It was nice to see but if you kind of look at your margin profile, should we continue to kind to think that as the gross margin continues to improve that most of it is going to be reinvested into selling resources? So, you’re going to stay kind of on the operating margin line or in the 12%, 13% range?

No. I would say that as the revenue grows and let’s say, for example, it’s at the current rate even a lower rate for that matter, we would expect to see operating leverage in the 20% to 30% area. So the operating margins should continue to expand as the revenue grows, even with the investments we’re making in new markets of new products. Analyst for Peter Lisnic - Robert W. Baird & Co., Inc.: Okay, so, if I read into that, you are saying that implicitly, that the selling investments that you’re making are gaining traction pretty quickly.

They are doing quite nicely, yes. Analyst for Peter Lisnic - Robert W. Baird & Co., Inc.: Okay, and then I guess as an unrelated follow up, we’ve heard a lot of rumblings kind of in the January timeframe about there were some unexpected steel pressure where it seems like steel prices are going up some more and it was just unanticipated from people. Are you guys seeing anything like that? I mean, I know you put through the price increase before but I mean are you seeing more pressure there?

That increase was late October and November when we saw it.

Yes.

But we took care of it price increases as you said. Analyst for Peter Lisnic - Robert W. Baird & Co., Inc.: Okay and just a final one, on the backlog comments you had with kind of five weeks, I would assume the one area where the backlog probably just naturally runs a bit longer is the crane building kind of business that you had and that was just up pretty strongly year on year. I mean, what’s your visibility there into that because I imagined that’s a bit longer cycle just in terms of assembling the things and everything.

Analyst for Peter Lisnic - Robert W. Baird & Co., Inc.: Okay and is that still trending favorably for you?

I think it is doing fine, yeah. We just shipped some very large orders to one our key costumers in the Midwest recently here which actually took the backlog down quite a bit in the quarter. But their booking activity seems to be pretty solid right now. Analyst for Peter Lisnic - Robert W. Baird & Co., Inc.: Okay, thank you. I will get back in queue.

Thank you.

Your next question comes from Amit Daryanani, RBC Capital Markets. Your line is open.

Yeah, most of the selling expenses are in new people and locations. So, for example, you heard Derwin talk about Italy. We just opened up an office in Italy this past summer/fall kind of timeframe. I think it was actually August timeframe. When we open up an office like that, we hire a country manager. We’ve been exporting to that market for a while. We have good distribution and we hire the country manager. He hits the ground and then builds the infrastructure around that. We put inventory in his location. He begins to hire a sales force to more deeply penetrate the market. It takes some a little while for that cost expense, for the revenue to catch up for with expense. So that’s the investment that we talked about. Eventually, it does. It varies country by country but let’s say on average about a year we begin to the traction on the revenue side.

All right and then just from a working capital perspective, you know, your AP days tend to run 20, 25 days shy of your AR days typically. Is there some plans on where we can either, you know, stretch our AP days or bring down the AR days?

We actually have a working capital team that’s looking at that. I think it’s fair to say that our trade receivables are probably on a very good point in the mid-50s. I’m not sure how much more can be done there. I think there is some work that can be done in payables but the biggest opportunity in my mind is still in inventory. The investments that Derwin mentioned that we’re making in terms of the new countries and a new product adds to inventory a bit but we operationally can improve what we do and that’s what he’s using the lean tool for is to really help us put flow systems in around the world. The other thing we need to do, is improve our base systems in Europe where the ERP systems, the back office systems, the inventory planning systems need to be integrated. They are not just that yet. And we have embarked on a project to help Europe do that so, we will be tying a network together to cover the European continent. And that needs to be done and it is going to take a little bit of time. Then I think they will have a better shot in improving their terms in a normal course of operating European business.

Got it. And just finally, when you look at the market environment, can you just talk a little bit about what just seem domestically and internationally? I realized your backlogs probably now the best indicated to look at, but you know, when you talk to people in that channel, your customers, are you seeing the time from initial call to the final sale getting stretched out a bit or things look pretty good?

Look pretty good. I would say that the same end markets that we have seen for a while now continue to be pretty strong, oil and gas and all the industries that support that seem to be pretty solid. The construction market as well. We make a lot of lifting tools and hand points that service that market. The power utility market is very good. Right now, there is a lot of grid work going on around the world which is helping us. Internationally speaking, I think it is two things. I think it is economically driven in the Eastern portion of Europe but it is fair to say that I think Western Europe is alive and well and doing quite nicely and we actually might be taking a little share on top of the economic growth. But, it is pretty much the same story. We have not really seen any changes in our end user markets or our distribution channels. The things that have been weak have been automotive and automotive related so there are some channels that support that have not been strong for a long, long time, by the way, as an example of something that is maybe not going as strong as we would like to see it go. But those things change as well.

All right. Thanks a lot.

Next is Joe Giamichael of Rodman and Renshaw. Your line is open. Joe Giamichael - Rodman & Renshaw LLC: Thank you. Congratulations on the quarter.

Thank you, Joe.

Thank you. Joe Giamichael - Rodman & Renshaw LLC: You know, between the release of the introduction and the Q&A, I think most of my questions have been answered but do you have a sense for the traction in the market share you have been able to capture internationally and have you been able to quantify the addressable international market opportunity as a whole?

Wow, that is a big question, Joe.

Yes.

Let me take it in slices that I maybe can handle. Relative to the international market share, we do not have good reporting data like we have in the United States where we have trade associations that collect data in an objective way and report back to the member companies. So, in the states we are, you know, we can get pretty darn close to the actual market share numbers. When you talk about Europe, it does not happen that way so we actually measure it a little differently as a portion of the overall GDP and that we have seen that country by country our respective portion of the GDP is growing faster then the GDP is what leads us to conclude that we are gaining share. We continued to ask ourselves a question, you know, why, what is driving that? We keep coming back to the same issue is it innovative differentiated products that other competitors creditors may not, or do not have, as well as a very keen sense of customer service and quick deliveries and service and support to the market place which many of our competitors do, maybe not as good as we would. Those are the two issues that we see that might be driving the market share. And as I said, it is relatively gross. It is not as exact as we have here in the States. Are we covering the international market as well as we would like? Absolutely not. I think we are trending in a very positive way in Eastern and Western Europe where we are making investments in the Middle East that Derwin talked about. We export to that market today through other distribution channels but we do not have a presence there so that is an area of interest for us. And of course the big one, probably the biggest opportunity we have that we really do not have good coverage on just yet is China and quiet honestly the whole Asia Pacific region. It is a tiny slice of our revenue today. And we are making investments in that market. We just hired a business development manager this past summer. And he is on the ground and he is building a sales force. We are doing it organically today and things are moving albeit slowly. And that is a huge market to cover and we need a lot of skilled folks to help us do that. This is actually is an area where we are looking for some partners and maybe some acquisitions or joint ventures or alliances with people that already have presence in the market place there in China that can help us sell our product more directly to the indigenous industries that are present in China. So, that is a big opportunity for us. Joe Giamichael - Rodman & Renshaw LLC: Got it. And have you quantified as a whole what you feel the international market opportunity is?

Summarizing up from the details I know, the answer is no. But, I would say that, you know, we have huge opportunities probably bigger than United States is in terms of international markets. Those total markets that we do not anticipate in just probably larger than the U.S. Joe Giamichael - Rodman & Renshaw LLC: Okay, that is great. And just one last question. You have kind of touched upon it to a certain degree but, you know, given your conversion time, backlog is not a great long term indicator for this business. That being said, can you comment on sort of what visibility that you do have or what you are sort of seeing on a macro level that had you comfortable with the end market demand remaining robust?

Yes, you know what it is? It is mostly sales force touches to the various distribution channels partners as well as to the end-user communities. There is no question, there is concern floating around in those areas, but at this point in time, not many of our channel partners are seeing any slowing or recession kind of numbers. They may see maybe slowing from a growth standpoint. Also, the comps are getting a little more difficult as well. And many of the end users, of course, that we are talking to are looking for our kind of product and our kind of service and so there is activity in terms of they are trying to build something. I just happened to be in Las Vegas for a couple of entertainment meetings including I took our board to show them some of our hoists used in the entertainment market, and there is a huge demand in that part of the world for hoists for use in the construction market. And everybody I talked to, all of our sounds like rigging partners out there were very, very busy. So, it is more anecdotal I’d say and more of a feel with multiple touch points but it is the same comments we are hearing that we have been hearing for quite a while now that things are pretty good. Joe Giamichael - Rodman & Renshaw LLC: All right. Congratulations on the quarter and thank you very much.

Thank you.

Next, Ted Kundtz at Needham, your line is open. Theodor Kundtz - Needham & Company: Great, thank you. Hello everyone.

Hi Ted.

Hi Ted. Theodor Kundtz - Needham & Company: A couple of questions for you. Timothy, any thoughts on the potential to increase gross margin from these levels? Do you have any target sets out there for yourselves?

We do not at this point in time. But I would think it is fair to say that the operating leverage that we talked about that drives the income from operations line is somewhat tied to gross margin as well. We should continue to see some level of expansion so that as the revenue grows to the similar leverage we have seen today. Theodor Kundtz - Needham & Company: Okay so, that means you do expect to grow gross margins? I assume that is what you said? It was carefully crafted there.

Yes. Theodor Kundtz - Needham & Company: Okay, but you have not set out any targets for yourself or for the industry yet?

No. At this point. We are doing an investor day on February 1st in the city which we will talk more details about some long-term objectives for our company. Theodor Kundtz - Needham & Company: Okay, because at that point you were probably going to address me the operating leverage issues because you talked about potentially rethinking that. You still have your 20% to 30% guideline out there…

Right. Theodor Kundtz - Needham & Company: But doing better than that.

We are, but we are talking about 20% or 30% over the long term. Theodor Kundtz - Needham & Company: Right, yes, yes.

Quarter to quarter it is going to move a bit. Theodor Kundtz - Needham & Company: Right, okay. Okay, looking at the international market for a minute, representing about 35%, 36% of your total revenue right now, where would you like to see that be in the next several years?

You keep going to the targets there, don’t you? Theodor Kundtz - Needham & Company: Yes, obviously I think you probably expect international to keep growing faster, at a faster rate.

Yes, I mean, if you map it out and you say international’s growing at around 11% or so, and domestically it is maybe mid-single digits, you know, you kind of quickly get to the point that, in the not too distant future this company will look more like a more global company, more 50% international revenue and 50% U.S. Theodor Kundtz - Needham & Company: Okay and you still see that as very doable.

I do. I would say that the acquisitions that we’re focused on are international as well. So, you know, again leading down that strategy market presence that will add to the international growth as well. Theodor Kundtz - Needham & Company: Okay.

Of course, taking away Univeyor by the way is a negative against that, so. Theodor Kundtz - Needham & Company: Right, right. Do you expect Univeyor will continue to improve over the next quarters assuming you still to have it in the portfolio by the summer? Do you expect to see a continuing improvement in their contribution?

Yeah. That model shift that we have been talking about for the last year or so is taking root and growing nicely. Talk about the [inaudible] machine and layer pickers which are more standard products. Actually, some additional revenue to report which is good news, which is higher margin business for us. So we would expect that business to continue on the trend line that they are on right now. Theodor Kundtz - Needham & Company: Okay.

And be more profitable in the next several quarters. Theodor Kundtz - Needham & Company: Right. Was it a breakeven level in this particular quarter? I know the group was profitable. Was Univeyor itself at a breakeven level?

No. Theodor Kundtz - Needham & Company: Operating?

Slightly negative. Theodor Kundtz - Needham & Company: Slightly negative okay. A very modest drag. Okay terrific, thanks very much.

Thanks. Theodor Kundtz - Needham & Company: Very nice quarter.

Thank you.

Your next question comes from the line of James Bank, Sidoti and Company. Your line is open. James Bank – Sidoti and Company: Hi good morning everyone.

Hi James.

Hi James. James Bank – Sidoti and Company: Tire shredder is going to come out of nowhere a little bit. Could you tell me what the percentage breakdown to the solution sales was?

Sure. While Karen is giving it out. Yes, tire shedder there is a lot of international activity for that business as the European Union and various Asian countries outlaw tire piles which forces them to process their tires into reusable material and our tire shredder business out of [Circo]; Florida has done a great job of marketing those products internationally. Actually hired multiple sales guys in Europe to cover the continent there and its going very nicely. James Bank – Sidoti and Company: Yeah absolutely. So, I’m sorry, you will not disclose the percentage?

We do give the sales breakdown. We don’t talk about profitability by our different businesses but for this quarter, the tire shredder business was about 21% of the segment, which is still just about 2% of our consolidated revenue. James Bank – Sidoti and Company: Okay, I’m sorry you don’t give the profitability of that?

No but it is nicely profitable. James Bank – Sidoti and Company: Right. Univeyor, I guess the wording on press release is it’s leading me to ask these questions. I was kind of able to pick it apart in press releases. Can I assume that it is more or less a break even here or at the very least, by the end of this fiscal year can we assume it to be breakeven?

It will be as I said in this quarter, it was slightly negative. James Bank – Sidoti and Company: Okay.

One could argue with it’s on a trend line to improve so, you know, I would assume by the fourth quarter it’s going to be much more positive looking. James Bank – Sidoti and Company: Okay.

Not great and not at a level where anybody is happy just yet. James Bank – Sidoti and Company: Right. Certainly much better from the first quarter. Selling and marketing, the strategic investments you are doing. Is this something that you know, I guess would continue into the fourth quarter this year, but then also the way we think about selling expense next year, are you going to carry through next year with a similar type of incremental gains?

Yes. James Bank – Sidoti and Company: Okay. And then also with general administrative, similar question, kind of how we should think about it in the fourth quarter as well as next year?

Yes. James Bank – Sidoti and Company: Okay. Great. Thank you. That’s all I have.

Dori Koenig at Lehman Brothers, your line is open.

Great, thank you. Just a comment around international sales being up 24% on a year over year basis. Half of that being driven by the foreign exchange. That would suggest that you are selling in non-US dollars. Is that, correct?

Yeah.

Okay. Great. That’s all I had. Thank you.

For the most part, yes, that’s not 100% true, but generally speaking, it is.

Right, generally speaking. Thank you.

Holden Lewis of BB&T, your line is open. Holden Lewis - BB&T Capital Markets: Good morning. Thank you.

Hi Holden. Holden Lewis - BB&T Capital Markets: Hi. I know that you put in your price increases recently, and you know, looking at the gross margin and the products business, it’s ticked up a little bit but certainly not dramatically as the year has progressed, and then also kind of looking at the incremental margins of the product business, you know, you range it just like 20% to 30% and you’ve kind of been skirting around that 20% rate which, you know, I assume you sort of have you know, you can expect to do better than if you’re putting on a 20% to 30% type range. You know, are there some negatives, which is kind of compressing the gross margin, relative to our expectations of the incremental margins. It seemed like the pricing was expected to give us a little bit of a push and that push is not pretty modest, so I guess I’m curious if in the product’s gross margin, if there are some offsetting pressures in there that we should be aware of.

Well there certainly is, but do you think 20% is modest? Holden Lewis - BB&T Capital Markets: Well, when you’re putting out 20% to 30%, right? Assuming 20% is the barely acceptable level from your perspective, plus I think in Q1 before you had the price increase it was 18%. So a good number, you know, it’s just it seems you’re expecting to do better and I guess we kind of thought the improvement would be a little bit greater given the pricing. That’s why I’m curious if there are any pressures which have been kicking in that were you know, maybe unexpected as well.

First of all, its 20% to 30% for the company, the total company, not the product segment, okay? And we’re above that. So that’s the number we put out, but we don’t necessarily talk about the segment but let me address your real question, okay? And that is are we seeing pressures? Well, certainly we’re seeing raw material pressures which the price increase by the way, is designed for all intents and purposes to mitigate. It may not do that entirely. We also have situations where we have some contracts with some larger distributors where the price does not hit immediately, it takes time because of printing of catalogs, or things of that nature, so that’s another tiny issue more than anything, and then the other one that comes to mind is you know, we’re still seeing, healthcare costs rise, high single digits which is another cost pressure as well. Holden Lewis - BB&T Capital Markets: Okay. So those raw materials are certainly still a factor, I mean, net that’s still a drag as opposed to neutralized in the mix at this point.

Not a drag. We got 20% operating leverage in the products segment. Holden Lewis - BB&T Capital Markets: Okay.

Plus on top of making significant investments outside the US, and actually inside the US in certain markets, though you know, Holden, I think the spin is you’re looking at it a little differently than what I am looking at it, and that is, I’m saying we’re making significant investments in our international market in certain market segments like energy here in the United States, and on top of that, we’re generating 20% more operating income. Holden Lewis - BB&T Capital Markets: Yeah. Okay. And then you know, the increase in revenue in the solution to business sequentially, the tire shredder sounds like it’s a business you sort of ship out of, and say yes these big lumps of business but is the 14-7 you know, where did the sequential pop in the revenue come from?

I think it’s mostly Univeyor.

Yeah, Holden, Univeyor given the nature of that business, it does fluctuate with its projects and such, and they had nice backlogs coming in to the quarter so we did see a little bit of a pop there this quarter compared to the prior quarter. Holden Lewis - BB&T Capital Markets: Okay. But this was not sort of clearing out. This was actually business that you booked under your more disciplined sort of approach and it is a very profitable business then?

Both older projects and new projects. Holden Lewis - BB&T Capital Markets: Okay, thank you.

At this time we’re showing no further questions so I would like to turn today’s conference back over to your speaker for closing remarks. Thank you. Go ahead please.

Thank you Candy and thanks everyone on the call. Just as a summary for you all, we’ve poised to grow profitably with a stronger balance sheet and very solid and growing markets, with a strong market position in North America and excellent cash flows. Our use of free cash flow continue to be reducing debt, but we’re also focusing our attention on products oriented [inaudible] acquisitions that can add market presence, where we have a small or no presence. And add to our product portfolio, where we can leverage our existing distribution channels and brand name strength. Combine this with our lean initiatives cost reduction activities, investments in new products and market and I think we’re positioned to continue and finish our fiscal ‘08 on a very positive note. I would like to thank all of our Columbus McKinnon associates around the world for their hard work and ultimate success in making this quarter a very good one. As always, we certainly appreciate your time today. Have a good day.