UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-K

         [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
             EXCHANGE ACT OF 1934 (FEE REQUIRED)

                    FOR THE FISCAL YEAR ENDED MARCH 31, 2005

                         COMMISSION FILE NUMBER 0-27618
                                -----------------

                          COLUMBUS MCKINNON CORPORATION
--------------------------------------------------------------------------------
             (Exact name of Registrant as specified in its charter)

             NEW YORK                                   16-0547600
--------------------------------------------------------------------------------
     (State of Incorporation)            (I.R.S. Employer Identification Number)

                         140 JOHN JAMES AUDUBON PARKWAY
                          AMHERST, NEW YORK 14228-1197
--------------------------------------------------------------------------------
          (Address of principal executive offices, including zip code)

                                 (716) 689-5400
--------------------------------------------------------------------------------
              (Registrant's telephone number, including area code)
                                -----------------

                 Securities pursuant to section 12(b)of the Act:
                                      NONE

           Securities registered pursuant to Section 12(g) of the Act:
           COMMON STOCK, $0.01 PAR VALUE (AND RIGHTS ATTACHED THERETO)

         Indicate by checkmark  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. Yes [X] No[ ]

         Indicate by check mark if disclosure of delinquent  filers  pursuant to
Item 405 of Regulation S-K (ss.229.405 of this chapter) is not contained herein,
and will not be contained,  to the best of Registrant's knowledge, in definitive
proxy or information  statements  incorporated  by reference in Part III of this
Form 10-K or any amendment to this Form 10-K [ ].

         Indicate by check  mark whether the Registrant  is an accelerated filer
(as defined in Rule 12b-2 of the Act). Yes [X]  No[  ]

         The aggregate  market value of the voting stock held by  non-affiliates
of the  Registrant  as of September  30, 2004 was  $118,177,154,  based upon the
closing  price of the  Company's  common  shares as quoted on the  Nasdaq  Stock
Market on such  date.  The  number of shares of the  Registrant's  common  stock
outstanding as of May 31, 2005 was 14,949,172 shares.

                       DOCUMENTS INCORPORATED BY REFERENCE

         Portions  of the  Registrant's  proxy  statement  for its  2005  Annual
Meeting of Shareholders to be filed with the Securities and Exchange  Commission
pursuant  to  Regulation  14A not  later  than  120  days  after  the end of the
Registrant's fiscal year ended March 31, 2005 are incorporated by reference into
Part III of this report.

<PAGE>


                          COLUMBUS MCKINNON CORPORATION
                         2005 ANNUAL REPORT ON FORM 10-K

      This  annual  report  contains  "forward-looking  statements"  within  the
meaning of the Private Securities Litigation Reform Act of 1995. Such statements
involve  known and unknown  risks,  uncertainties  and other  factors that could
cause our actual  results to differ  materially  from the results  expressed  or
implied by such statements,  including general economic and business conditions,
conditions   affecting  the  industries  served  by  us  and  our  subsidiaries,
conditions  affecting our customers and suppliers,  competitor  responses to our
products  and  services,  the overall  market  acceptance  of such  products and
services,  the  integration of  acquisitions  and other factors set forth herein
under  "Management's  Discussion  and  Analysis  of  Results of  Operations  and
Financial  Condition - Factors  Affecting Our  Operating  Results." We use words
like  "will,"  "may,"  "should,"  "plan,"  "believe,"  "expect,"   "anticipate,"
"intend,"  "future" and other similar  expressions to identify  forward  looking
statements.  These forward looking  statements speak only as of their respective
dates  and we do not  undertake  and  specifically  decline  any  obligation  to
publicly  release  the  results  of  any  revisions  to  these   forward-looking
statements that may be made to reflect any future events or circumstances  after
the date of such  statements  or to reflect the  occurrence  of  anticipated  or
unanticipated changes. Our actual operating results could differ materially from
those  predicted  in these  forward-looking  statements,  and any  other  events
anticipated in the forward-looking statements may not actually occur.


                                     PART I
                                     ------

ITEM 1.          BUSINESS


GENERAL

      We are a leading  manufacturer  and  marketer  of hoists,  cranes,  chain,
conveyors,  material handling systems, lift tables and component parts serving a
wide variety of commercial and  industrial  end-user  markets.  Our products are
used to efficiently and ergonomically move, lift, position or secure objects and
loads.  We are the  domestic  market  leader in hoists,  our  principal  line of
products, which we believe provides us with a strategic advantage in selling our
other products.  We have achieved this  leadership  position  through  strategic
acquisitions,  our extensive and well-established  distribution channels and our
commitment  to  product  innovation  and  quality.  We  have  one  of  the  most
comprehensive  product  offerings  in the  industry  and we believe we have more
overhead  hoists in use in North America than all of our  competitors  combined.
Our brand names,  including CM,  Coffing,  Duff-Norton,  Shaw-Box and Yale,  are
among the most recognized and well-respected in our marketplace.


THE BUILDING OF OUR BUSINESS

      Founded in 1875, we have grown to our current size and leadership position
largely as the result of the 14  businesses  we acquired  since  February  1994.
These acquisitions have  significantly  broadened our product lines and services
and expanded our geographic,  end-user markets and our customer base. Our senior
management has  substantial  experience in the  acquisition  and  integration of
businesses,  aggressive cost management,  efficient manufacturing techniques and
global  operations,  all of which are critical to our long-term growth strategy.
We have a proven track record of acquiring complementary  businesses and product
lines,  integrating  their  activities into our  organization,  and aggressively
managing their cost structures to improve operating efficiencies. The history of
our Products and Solutions  acquisitions  since 1994 is outlined below (purchase
price in millions):


                                       1

<PAGE>

<TABLE>
<CAPTION>

                                                           PURCHASE
DATE OF ACQUISITION     ACQUIRED COMPANY                     PRICE        PRODUCTS/SERVICES
-------------------     ----------------                     -----        -----------------
<S>                     <C>                                <C>            <C>
April 1999              Washington Equipment Company       $ 6.4          Overhead cranes
March 1999              GL International (1)                20.6          Overhead cranes
January 1999            Camlok/Tigrip                       10.6          Plate clamps, crane weighers
December 1998           Gautier                              2.9          Rotary unions, swivel joints
August 1998             Abell-Howe Crane                     7.0          Overhead cranes
March 1998              ASI (2)                            155.0          Design and manufacture of custom conveyor systems
January 1998            Univeyor                            15.0          Design and manufacture of powered roller conveyor
                                                                               systems
December 1996           Lister (3)                           7.0          Cement kiln, anchor and buoy chain
October 1996            Yale (4)                           270.0          Hoists, scissor lift tables, actuators, jacks and
                                                                          rotary unions
November 1995           Lift-Tech                           63.0          Hoists
October 1995            Endor                                2.0          Hoists
January 1995            Cady Lifters                         0.8          Below-the-hook lifters
December 1994           Conco                                0.8          Operator controlled manipulators
February 1994           Durbin-Durco                         2.4          Load securing equipment and attachments
--------------------

(1)      In  January  2002,  we sold  Handling  Systems  &  Conveyors,  Inc.,  a
         subsidiary of GL International.
(2)      In May 2002,  we sold  substantially  all of the  assets  of  Automatic
         Systems,  Inc.  ("ASI") and in March 2003, we sold LICO Steel,  Inc., a
         subsidiary of Audubon West, formerly ASI.
(3)      In  February  2004,  we sold the  assets  of the  Lister  Chain & Forge
         division.
(4)      In August 1998, we sold the Mechanical Products division of Yale.

</TABLE>

OUR POSITION IN THE INDUSTRY

      The $60 billion U.S. material handling industry is generally divided into
      the following sectors:
         o       overhead material handling and lifting devices;
         o       continuous materials movement;
         o       wheeled handling devices;
         o       pallets, containers and packaging;
         o       storage equipment and shop furniture;
         o       automation systems and robots; and
         o       services and unbundled software.

      The breadth of our products and services enables us to participate in each
of these  sectors,  except for pallets,  containers  and  packaging  and storage
equipment and shop furniture. This diversification,  together with our extensive
and varied  distribution  channels,  minimizes our  dependence on any particular
product,  market or customer. We believe that none of our competitors offers the
variety of products or services in the markets we serve.

      We believe that the demand for our  products  and  services has  increased
during the last  twelve  months  and we believe  the  demand  will  continue  to
increase in the future as a result of several  favorable  trends.  These  trends
include:

      FAVORABLE INDUSTRY TRENDS. The U.S.  industrial economy has improved since
2003, as U.S. industrial capacity utilization rates have increased from cyclical
lows. Our business performance is influenced by the state of the U.S. industrial
economy.

      PRODUCTIVITY  ENHANCEMENT.  In recent years,  employers  have responded to
competitive  pressures by seeking to maximize  productivity and efficiency.  Our
hoists and other lifting and  positioning  products allow loads to be lifted and
placed  quickly,  precisely,  with  little  effort  and  fewer  people,  thereby
increasing productivity and reducing cycle time.

      SAFETY  REGULATIONS  AND CONCERNS.  Driven by federal and state  workplace
safety  regulations  such as the  Occupational  Safety  and  Health  Act and the
Americans with Disabilities  Act, and by the general  competitive need to reduce
costs such as health  insurance  premiums  and workers'  compensation  expenses,
employers  seek  safer  ways  to  lift  and  position  loads.  Our  lifting  and
positioning  products  enable these tasks to be  performed  with reduced risk of
personal injury.

                                       2
<PAGE>
      CONSOLIDATION  OF  SUPPLIERS.  In an effort to reduce  costs and  increase
productivity,  our customers and end-users are increasingly  consolidating their
suppliers.  We believe that our competitive  strengths will enable us to benefit
from this consolidation and enhance our market share.

OUR COMPETITIVE STRENGTHS

      LEADING MARKET POSITIONS.  We are a leading  manufacturer of hoists, alloy
and high strength  carbon steel chain in North  America.  We have  developed our
leading market positions over our 130-year history by emphasizing  technological
innovation,   manufacturing   excellence   and  superior   after-sale   service.
Approximately  73% of our  domestic  net sales for the year ended March 31, 2005
were from product  categories  in which we believe we hold the number one market
share. We believe that the strength of our  established  products and brands and
our leading market positions provide us with significant competitive advantages,
including  preferred  supplier status with a majority of our largest  customers.
Our  large  installed  base of  products  also  provides  us with a  significant
competitive  advantage in selling our products to existing  customers as well as
providing repair and replacement parts.

      The following table summarizes the  product categories where we believe we
are the market leader:
<TABLE>
<CAPTION>
                                                                                                           PERCENTAGE OF
PRODUCT CATEGORY                                 U.S. MARKET SHARE          U.S. MARKET POSITION         DOMESTIC NET SALES
----------------                                 -----------------          --------------------         ------------------
<S>            <C>                                      <C>                           <C>                          <C>
Powered Hoists (1)                                      58%                          #1                            25%
Manual Hoists & Trolleys (1)                            67%                          #1                            13%
Forged Attachments (1)                                  49%                          #1                            10%
Lifting and Sling Chains (1)                            45%                          #1                             8%
Hoist Parts (2)                                         60%                          #1                             9%
Mechanical Actuators (3)                                40%                          #1                             5%
Tire Shredders (4)                                      80%                          #1                             2%
Jib Cranes (5)                                          45%                          #1                             1%
                                                                                                                 -----
-------------                                                                                                      73%
(1)      Market share and  market position  data are internal  estimates derived
         from   survey   information   collected  and  provided   by  our  trade
         associations.

(2)      Market share and market  position data are internal  estimates based on
         our market shares of Powered Hoists and Manual Hoists & Trolleys, which
         we believe are good proxies for our Hoist Parts market share because we
         believe most end-users purchase Hoist Parts from the original equipment
         supplier.

(3)      Market share and market position data are internal estimates derived by
         comparison  of our net  sales to net  sales  of one of our  competitors
         based on discussions  with that  competitor,  and to estimates of total
         market sales from a trade association.

(4)      Market share and market position data are internal estimates derived by
         comparing the number of our tire shredders in use and their capacity to
         estimates  of the total number of tires  shredded  published by a trade
         association.

(5)      Market share and market  position are internal  estimates  derived from
         both the number of bids we win as a  percentage  of the total  projects
         for which we submit bids and from  estimates  of our  competitors'  net
         sales based on their relative position in distributor catalogues.
</TABLE>
      COMPREHENSIVE PRODUCT LINES AND STRONG BRAND NAME RECOGNITION.  We believe
we offer the most  comprehensive  product lines in the markets we serve.  We are
the only major supplier of material  handling  equipment  offering full lines of
hoists,  chain and  attachments.  Our  capability  as a full-line  supplier  has
allowed us to (i) provide our customers  with  "one-stop  shopping" for material
handling equipment,  which meets some customers' desires to reduce the number of
their  supply  relationships  in order to lower their costs,  (ii)  leverage our
engineering,  research and  development  and marketing costs over a larger sales
base and (iii) achieve  purchasing  efficiencies on common materials used across
our product lines.

      In addition,  our brand names,  including  Budgit,  Chester,  CM, Coffing,
Duff-Norton,  Little Mule,  Shaw-Box and Yale, are among the most recognized and
respected in the industry.  The CM name has been synonymous with overhead hoists
since manual  hoists were first  developed  and  marketed  under the name in the
early  1900s.  We believe  that our strong  brand name  recognition  has created
customer  loyalty and helps us maintain  existing  business,  as well as capture
additional  business.  No single product  comprises more than 1% of our sales, a
testament to our broad and diversified product offering.

      DISTRIBUTION CHANNEL DIVERSITY AND STRENGTH. Our products are sold to over
20,000  general  and  specialty  distributors  and OEMs,  as well as to over 100
customer outlets. We enjoy long-standing relationships with, and are a preferred
provider  to, the majority of our largest  distributors  and  industrial  buying
groups.  Over the past decade,  there has been significant  consolidation  among
distributors  of  material  handling  equipment.  We have  benefited  from  this
consolidation  and have  maintained  and  enhanced  our  relationships  with our

                                       3
<PAGE>

leading  distributors,  as well as formed  new  relationships.  We  believe  our
extensive North American distribution channels provide a significant competitive
advantage and allow us to  effectively  market new product line  extensions  and
promote cross-selling.

      EXPANDING   INTERNATIONAL   MARKETS.   We  have  significantly  grown  our
international  sales since becoming a public company in 1996. Our  international
sales have grown from $34.3 million  (representing 16% of total sales) in fiscal
1996 to $191.3  million  (representing  37% of our total sales)  during the year
ended  March 31,  2005.  This growth has  occurred  primarily  in Europe,  South
America and Asia-Pacific where we have recently opened additional sales offices.
Our  international  business has  provided  us, and we believe will  continue to
provide  us,  with  significant  growth  opportunities  and new  markets for our
products.

      LOW-COST  MANUFACTURING WITH SIGNIFICANT OPERATING LEVERAGE. We believe we
are  a  low-cost   manufacturer   and  we  will  continue  to  consolidate   our
manufacturing   operations  and  reduce  our  manufacturing  costs  through  the
initiatives summarized below. Our low-cost manufacturing capability continues to
positively impact our operating performance as volumes increase.

         --        RATIONALIZATION  AND CONSOLIDATION.  From fiscal 2002 through
                   fiscal  2004,  we closed 10  manufacturing  plants  and three
                   warehouses, as more fully described in "Our Strategy" below.

         --        LEAN  MANUFACTURING.   In  fiscal  2002,  we  initiated  Lean
                   Manufacturing techniques,  facilitating substantial inventory
                   reductions,  a significant decline in required  manufacturing
                   floor  area,  a decrease  in product  lead time and  improved
                   productivity and on-time deliveries.

         --        PURCHASING  COUNCIL. We continue to leverage our company-wide
                   purchasing power through our Purchasing Council to reduce our
                   costs.

         --        SELECTIVE  VERTICAL  INTEGRATION.  We manufacture many of the
                   critical parts and components  used in the manufacture of our
                   hoists and cranes, resulting in reduced costs.

         --        INTERNATIONAL  EXPANSION.  Our  continued  expansion  of  our
                   manufacturing facilities in China and Mexico provides us with
                   another cost efficient platform to manufacture and distribute
                   certain of our  products.  We now  operate  26  manufacturing
                   facilities in eight countries,  with 28 stand alone sales and
                   service  offices  in  11  countries,  and  nine  stand  alone
                   warehouse facilities in five countries.

      STRONG AFTER-MARKET SALES AND SUPPORT. We believe that we retain customers
and attract new customers due to our ongoing  commitment to customer service and
satisfaction. We have a large installed base of hoists and chain that drives our
after-market  sales for  components  and repair parts and is a stable  source of
higher margin business.  We maintain strong relationships with our customers and
provide  prompt  aftermarket  service to end-users  of our products  through our
authorized  network of 13 chain repair  stations and over 350 hoist  service and
repair stations.

      LONG HISTORY OF FREE CASH FLOW GENERATION AND SIGNIFICANT  DEBT REDUCTION.
We have consistently  generated  positive free cash flow (which we define as net
cash provided by operating activities less capital  expenditures) by continually
reducing our costs,  increasing our inventory  turnover and reducing the capital
intensity of our  manufacturing  operations.  From the  beginning of fiscal 2003
through  fiscal 2005, we have reduced total debt by $79.5  million,  from $350.4
million to $270.9 million.

      EXPERIENCED MANAGEMENT TEAM WITH SIGNIFICANT EQUITY OWNERSHIP.  Our senior
management  team  provides a depth and  continuity of experience in the material
handling industry.  Our management has experience in aggressive cost management,
balance sheet  management,  efficient  manufacturing  techniques,  acquiring and
integrating  businesses and global operations,  all of which are critical to our
long-term  growth.  Our  directors and executive  officers,  as a group,  own an
aggregate of approximately 10.6% of our outstanding common stock.

OUR STRATEGY

      INCREASE OUR  DOMESTIC  ORGANIC  GROWTH.  We intend to leverage our strong
competitive  advantages to increase our domestic  market share across all of our
product lines by:

         --         LEVERAGING  OUR  STRONG  COMPETITIVE  POSITION.   Our  large
                    diversified   customer  base,  our  extensive   distribution
                    channels and our close  relationship  with our  distributors
                    provide  us with  insights  into  customer  preferences  and
                    product requirements that allow us to anticipate and address
                    the future needs of end-users.


                                       4

<PAGE>
        --          INTRODUCING NEW AND CROSS-BRANDED  PRODUCTS.  We continue to
                    expand our  business by  developing  new  material  handling
                    products  and  services  and  expanding  the  breadth of our
                    product lines to address customer needs. Over the past three
                    years,  we have  developed  over  100  new or  cross-branded
                    products, representing approximately $30.3 million in fiscal
                    2005   revenues.   During  fiscal  2004,  we  established  a
                    dedicated  hoist product  development  team. The majority of
                    the hoist  products are guided by the Federation of European
                    Manufacturing,  or FEM, standard. We believe these FEM hoist
                    products will facilitate our global sales expansion strategy
                    as  well  as  improve  our  cost   competitiveness   against
                    internationally made products imported into the U.S.

                    Recent new product introductions include:

                         o global wire rope hoists used in overhead cranes;
                         o hand hoists and lever tools manufactured at our
                              Chinese plants;
                         o a variety of new forged lifting attachments;
                         o pallet layer picking systems;
                         o high-speed, light-weight,  mini-load cranes, used  in
                              warehouse applications; and
                         o Techlink crane and hoist maintenance and inspection
                              software.

         --         LEVERAGING OUR BRAND PORTFOLIO TO MAXIMIZE MARKET  COVERAGE.
                    Most  industrial  distributors  carry  one or two  lines  of
                    material handling products on a semi-exclusive basis. Unlike
                    many of our  competitors,  we have  developed  and  acquired
                    multiple  well-recognized  brands  that are  viewed  by both
                    distributors  and end-users as discrete  product lines. As a
                    result,  we are  able  to  sell  our  products  to  multiple
                    distributors  in the same  geographic  area.  This  strategy
                    maximizes  our market  coverage  and  provides  the  largest
                    number of end-users with access to our products.

      CONTINUE TO GROW IN  INTERNATIONAL  MARKETS.  Our  international  sales of
$191.3 million comprised 37% of our net sales for the year ended March 31, 2005,
as compared to $34.3 million,  or 16% of our net sales, in fiscal 1996, the year
we  became  a  public  company.  We sell to  distributors  in  approximately  50
countries  and have our  primary  international  facilities  in Canada,  Mexico,
Germany,  the United  Kingdom,  Denmark,  France and China.  In  addition to new
product  introductions,  we continue to expand our sales and service presence in
the major market areas of Europe,  Asia-Pacific  and South  America  through our
sales offices and warehouse facilities in Europe,  Thailand,  Brazil and Mexico.
We intend to increase our sales by  manufacturing  and exporting a broader array
of high quality,  low-cost products and components from our facilities in Mexico
and China for  distribution  in Europe and  Asia-Pacific.  We are developing new
hoist  products  in  compliance   with  FEM  standards  to  enhance  our  global
distribution.

      FURTHER   REDUCE   OUR   OPERATING   COSTS  AND   INCREASE   MANUFACTURING
PRODUCTIVITY.  Our objective is to remain a low-cost  producer.  We  continually
seek  ways  to  reduce  our  operating  costs  and  increase  our  manufacturing
productivity  including  through our  on-going  expansion  of our  manufacturing
capacity in low-cost regions, including Mexico and China. In furtherance of this
objective, we have undertaken the following:

        --          RATIONALIZATION  OF  FACILITIES.   From fiscal  2002 through
                    fiscal  2004,  we closed 10  manufacturing  plants and three
                    warehouses,  consolidated a number of similar  product lines
                    and  standardized  certain  component  parts resulting in an
                    aggregate cost savings of approximately $14 million. We have
                    sufficient  capacity to meet current and future  demand.  We
                    are  currently   investigating   opportunities  for  further
                    facility rationalization.

        --          IMPLEMENTATION OF LEAN MANUFACTURING.  We expect to continue
                    to identify potential efficiencies in our operations through
                    Lean Manufacturing  initiated in fiscal 2002. Through fiscal
                    2005, we have  instituted  Lean  Manufacturing  at 15 of our
                    major facilities resulting in the recapture of approximately
                    164,000  square  feet of  manufacturing  floor  area and the
                    consolidation  of an  additional  920,000  square  feet from
                    closed facilities. Additionally, we have reduced inventories
                    by   approximately   $31   million,   or   28.7%,   improved
                    productivity and achieved significant  reductions in product
                    lead  times.  Specifically,  in  fiscal  2005 and  2004,  we
                    improved  inventory  turns by  23.9% to 5.7x for the  fourth
                    quarter of fiscal  2005 from 4.6x for the fourth  quarter of
                    fiscal 2003. Our Lean Manufacturing  initiative  complements
                    our strategy of rationalizing our manufacturing facilities.

        --          LEVERAGE OUR  PURCHASING POWER.  Our Purchasing  Council was
                    formed in fiscal 1998 to centralize and leverage our overall
                    purchasing power,  which has grown through  acquisitions and
                    has resulted in significant savings for our company.

                                       5
<PAGE>

      REDUCE OUR DEBT.    We intend to continue our focus on cash generation for
debt reduction through the following initiatives:

         --         INCREASE  OPERATING  CASH FLOW. As a result of the execution
                    of our  strategies to reduce our operating  costs,  increase
                    our domestic  organic growth and increase our penetration of
                    international  markets,  we  believe  that with an  improved
                    global economic climate, we will realize favorable operating
                    leverage.  We further  believe that such operating  leverage
                    will result in increased  operating  cash flow available for
                    debt reduction,  as well as investment into new products and
                    new markets.

         --         REDUCE WORKING CAPITAL.  As described above, we believe that
                    our Lean Manufacturing activities are facilitating inventory
                    reduction,  improving  product lead times and increasing our
                    productivity.   We  believe  our  improved  working  capital
                    management and increased productivity will further result in
                    increased free cash flow available for debt reduction.

         --         SALE  OF  EXCESS  REAL  ESTATE.  As a  result  of  our  Lean
                    Manufacturing and plant rationalization initiatives, we have
                    identified,  and expect to continue to identify, excess real
                    estate to be sold.  During  fiscal 2005,  we generated  $6.9
                    million  from such real estate  sales.  The proceeds of such
                    sales have been,  and will continue to be, used to repay our
                    outstanding debt.

OUR SEGMENTS

      We currently report our operations in two business segments,  Products and
Solutions.

      Our Products segment  designs,  manufactures and distributes a broad range
of material  handling  products  for  various  industrial  applications  and for
consumer  use.  Products in this  segment  include a wide  variety of  electric,
lever,  hand and air-powered  hoists;  hoist trolleys;  industrial crane systems
such as bridge,  gantry and jib  cranes;  alloy,  carbon  steel and kiln  chain;
closed-die  forged  attachments,  such as  hooks,  shackles,  logging  tools and
loadbinders;  industrial  components,  such as mechanical and  electromechanical
actuators,  mechanical  jacks and  rotary  unions;  and  below-the-hook  special
purpose  lifters.  These  products  are  typically  manufactured  for  stock  or
assembled to order from  standard  components  and are sold through a variety of
commercial  distributors and to end-users.  The end-users of our products are in
manufacturing  plants,  power utility  facilities  and  warehouses.  Some of our
products have  farming,  mining and logging  applications,  and we serve a niche
market for the entertainment  industry. We also sell some of our products to the
consumer market through a variety of retailers and wholesalers.

      Our Solutions segment is engaged primarily in the design,  fabrication and
installation  of integrated  workstation  and  facility-wide  material  handling
systems and in the design and manufacture of tire  shredders.  This segment also
included  our  Positech   manipulator  business  and  our  LICO  Steel  erection
operation,  which were divested in February  2004 and March 2003,  respectively.
The products and services of this segment are highly  engineered,  are typically
built to order  and are  primarily  sold  directly  to  end-users  for  specific
applications in a variety of industries.

      Note 20 to our consolidated financial statements included elsewhere herein
provides  information  related to our business  segments in accordance with U.S.
generally accepted accounting  principles.  Summary  information  concerning our
business segments for fiscal 2005, 2004 and 2003 is set forth below.


                                       6

<PAGE>

<TABLE>
<CAPTION>
                                                                  FISCAL YEARS ENDED MARCH 31,
                               ----------------------------------------------------------------------------------------------------
                                             2005                               2004                             2003
                               ---------------------------------     ---------------------------     ------------------------------
                                                        % OF                            % OF
                                                        TOTAL                           TOTAL                           % OF TOTAL
                                       AMOUNT           SALES           AMOUNT          SALES           AMOUNT            SALES
                                   --------------    -----------     -----------     -----------     -------------    -------------
                                                                      (DOLLARS IN MILLIONS)
Net Sales
<S>                             <C>                     <C>       <C>                   <C>       <C>                     <C>
     Products...................$       453.1           88.0      $     394.2           88.7      $      388.1            85.6
     Solutions...................        61.7           12.0             50.4           11.3              65.2            14.4
                                   --------------    -----------     -----------     -----------     -------------    -------------
          Total.................$       514.8          100.0      $     444.6          100.0      $      453.3           100.0
                                   ==============    ===========     ===========     ===========     =============    =============

                                                     % OF                            % OF                             % OF
                                                     TOTAL                           TOTAL                            TOTAL
                                      AMOUNT           SALES           AMOUNT          SALES            AMOUNT         SALES
                                   --------------    -----------     -----------     -----------     -------------    -------------
Income from Operations
     Products...................$        39.4            8.7      $      32.3            8.2      $       25.7             6.6
     Solutions...................         1.3            2.1             (2.4)          (4.9)             (0.3)           (0.5)
                                   --------------    -----------     -----------     -----------     -------------    -------------
          Total.................$        40.7            7.9      $      29.9            6.7      $       25.4             5.6
                                   ==============    ===========     ===========     ===========     =============    =============
</TABLE>


PRODUCTS SEGMENT

PRODUCTS

      Our Products  segment  primarily  designs,  manufactures and distributes a
broad range of material handling,  lifting and positioning  products for various
applications  in  industry  and  for  consumer  use  and  has  total  assets  of
approximately  $449.3 million as of March 31, 2005. These products are typically
manufactured  for stock or assembled to order from standard  components  and are
sold  through a  variety  of  distributors.  Approximately  75% of our  Products
segment net sales is derived  from the sale of  products  that we sell at a unit
price of less than  $5,000.  In fiscal 2005,  net sales of the Products  segment
were  approximately  $453.1 million or approximately  88.0% of our net sales, of
which  approximately  $308.0 million, or 68.0% were domestic and $145.1 million,
or 32.0% were  international.  The following table sets forth certain sales data
for the products of our Products segment, expressed as a percentage of net sales
of this segment for fiscal 2005 and 2004:

                                                FISCAL YEARS ENDED MARCH 31,
                                                ----------------------------
                                                    2005            2004
                                                ------------    ------------
              Hoists...........................      50%             50%
              Chain............................      16              16
              Forged attachments...............      12              12
              Industrial cranes................      14              14
              Industrial components............       8               8
                                                ------------    ------------
                                                    100%            100%

      HOISTS.  We manufacture a variety of electric chain hoists,  electric wire
rope hoists,  hand-operated  hoists,  lever tools and air-powered  balancers and
hoists.  Load  capacities for our hoist product lines range from one-eighth of a
ton to 100 tons. These products are sold under our Budgit, Chester, CM, Coffing,
Little Mule, Shaw-Box, Yale and other recognized trademarks. Our hoists are sold
for use in a variety of general industrial  applications,  as well as for use in
the  entertainment,  consumer,  rental,  health care and other markets.  We also
supply  hoist  trolleys,   driven  manually  or  by  electric  motors,  for  the
industrial, consumer and OEM markets.

      We offer a line of custom-designed, below-the-hook tooling, clamps, pallet
trucks and textile strappings. Below-the-hook tooling and clamps are specialized
lifting  apparatus  used  in  a  variety  of  lifting  activities  performed  in
conjunction  with  hoist  and  chain   applications.   Textile   strappings  are
below-the-hook attachments, frequently used in conjunction with hoists.


                                       7

<PAGE>



      CHAIN. We manufacture alloy and carbon steel chain for various  industrial
and consumer  applications.  Federal regulations require the use of alloy chain,
which we first  developed,  for  overhead  lifting  applications  because of its
strength and wear  characteristics.  A line of our alloy chain is sold under the
Herc-Alloy  brand name for use in  overhead  lifting,  pulling  and  restraining
applications.  In  addition,  we also  sell  specialized  load  chain for use in
hoists,  as well as three grades and multiple sizes of carbon steel  welded-link
chain for various load securing and other non-overhead lifting applications.  We
also manufacture kiln chain sold primarily to the cement  manufacturing  market.
In addition,  we previously  sold anchor and buoy chain to the U.S. and Canadian
governments through our Lister Chain & Forge division which was sold in February
2004.

      FORGED  ATTACHMENTS.  We also produce a complete  line of alloy and carbon
steel closed-die forged attachments,  including hooks, shackles,  hitch pins and
master links.  These forged attachments are used in chain, wire rope and textile
rigging  applications  in a variety  of  industries,  including  transportation,
mining, construction, marine, logging, petrochemical and agriculture.

      In addition, we manufacture carbon steel forged and stamped products, such
as  loadbinders,  logging  tools and  other  securing  devices,  for sale to the
industrial,  consumer  and  logging  markets  through  industrial  distributors,
hardware distributors, mass merchandiser outlets and OEMs.

      INDUSTRIAL CRANES. We entered the crane  manufacturing  market through our
August 1998 acquisition of Abell-Howe,  a Chicago-based regional manufacturer of
jib and overhead bridge cranes.  Our March 1999 acquisition of GL International,
which  included the Gaffey and Larco brands,  and our April 1999  acquisition of
Washington Equipment Company established us as a significant  participant in the
crane building and servicing  markets.  Crane  builders  represent a specialized
distribution channel for electric wire rope hoists, chain hoists and other crane
components.

      INDUSTRIAL  COMPONENTS.  Through our Duff-Norton  division,  we design and
manufacture  industrial  components  such as  mechanical  and  electromechanical
actuators,  mechanical jacks and rotary unions for sale domestically and abroad.
Actuators are linear motion devices used in a variety of  industries,  including
the  paper,  steel and  aerospace  industries.  Mechanical  jacks are heavy duty
lifting  devices  used in the  repair and  maintenance  of  railroad  equipment,
locomotives and industrial machinery.  Rotary unions are devices that transfer a
liquid or gas from a fixed pipe or hose to a rotating  drum,  cylinder  or other
device.  These  unions  are  unique  in that they  connect a moving or  rotating
component  of a machine to fixed  plumbing  without  major  spillage or leakage.
Rotary  unions are used in a variety  of  industries  including  pulp and paper,
printing, textile and fabric manufacturing, rubber and plastic.


SALES AND MARKETING

      Our sales and marketing efforts in support of our Products segment consist
of  the  following  programs:

      FACTORY-DIRECT  FIELD SALES AND  CUSTOMER  SERVICE.  We sell our  products
through  our  direct  sales  forces of more than 125  salespersons  and  through
independent sales agents worldwide.  Our sales are further supported by our more
than 230 company-trained  customer service  correspondents and sales application
engineers.  We compensate  our sales force through a combination  of base salary
and a commission plan based on top line sales and a pre-established sales quota.

      PRODUCT  ADVERTISING.  We promote our products by regular  advertising  in
leading  trade  journals as well as  producing  and  distributing  high  quality
information catalogs. We support our product distribution by running cooperative
"pull-through"  advertising in over 15 vertical trade  magazines and directories
aimed toward theatrical,  international,  consumer and crane builder markets. We
run targeted advertisements for chain, hoists, forged attachments,  scissor lift
tables,  actuators,  hydraulic jacks,  hardware programs,  cranes and light-rail
systems.

      TRADE SHOW PARTICIPATION.  Trade shows are central to the promotion of our
products,   and  we  participate   in  more  than  30  regional,   national  and
international  trade shows each year.  Shows in which we participate  range from
global events held in Germany to local "markets" and "open houses"  organized by
individual hardware and industrial distributors.  We also attend specialty shows
for the  entertainment,  rental and safety  markets,  as well as general purpose
industrial and consumer hardware shows. In fiscal 2005, we participated in trade
shows in the U.S., Canada, Mexico,  Germany, the United Kingdom,  France, Spain,
China and Brazil.


                                       8

<PAGE>

      INDUSTRY  ASSOCIATION  MEMBERSHIP  AND  PARTICIPATION.   As  a  recognized
industry leader,  we have a long history of work and  participation in a variety
of industry associations. Our management is directly involved at the officer and
director levels of numerous industry associations  including the following:  ISA
(Industrial Supply Association),  AWRF (Associated Wire Rope Fabricators),  PTDA
(Power Transmission and Distributors Association),  SCRA (Specialty Carriers and
Riggers Association),  WSTDA (Web Sling and Tie Down Association), MHI (Material
Handling   Institute),   HMI  (Hoist  Manufacturers   Institute),   CMAA  (Crane
Manufacturers   Association  of  America),   ESTA  (Entertainment  Services  and
Technology Association),  NACM (National Association of Chain Manufacturers) and
ARA (American Rental Association).

      PRODUCT STANDARDS AND SAFETY TRAINING CLASSES. We conduct on-site training
programs  worldwide for  distributors and end-users to promote and reinforce the
attributes of our products and their safe use and operation in various  material
handling applications.

      WEB SITES. In addition to our main corporate web site at  www.cmworks.com,
we currently  sponsor an  additional  25 brand  specific web sites and sell hand
pallet  trucks  on one of  these  sites.  Our web  site at  www.cmindustrial.com
currently includes  electronic catalogs of CM brand hoist and chain products and
list prices.  Current and  potential  customers  can browse  through our diverse
product offering or search for specific products by name or classification  code
and obtain  technical  product  specifications.  We continue  to add  additional
product  catalogs,  maintenance  manuals,  advertisements  and customer  service
information on our various web sites.  Many of the web sites allow  distributors
to search for personalized pricing information,  order status and product serial
number data and to enter sales orders.

DISTRIBUTION AND MARKETS

      The  distribution  channels for the Products  segment include a variety of
commercial  distributors.  In addition,  the  Products  segment  sells  overhead
bridge,  jib and  gantry  cranes  directly  to  end-users.  We also  sell to the
consumer market through wholesalers. Our products are sold through the following
distribution channels:

      GENERAL DISTRIBUTION  CHANNELS.  Our general distribution channels consist
of:

        --          Industrial  distributors  that   serve  local   or  regional
                    industrial  markets  and  sell a  variety  of  products  for
                    maintenance,  repair,  operating  and  production,  or MROP,
                    applications through their own direct sales force.

        --          Rigging  shops  that are  distributors  with   expertise  in
                    rigging,  lifting,   positioning  and  load  securing.  Most
                    rigging shops assemble and distribute  chain,  wire rope and
                    synthetic  slings and  distribute  off-the-shelf  hoists and
                    attachments, chain slings and other off-the-shelf products.

        --          Independent crane builders that design,  build,  install and
                    service  overhead crane and  light-rail  systems for general
                    industry  and also sell a wide variety of hoists and lifting
                    attachments.  We sell  electric  wire rope  hoists and chain
                    hoists  as well as  crane  components,  such as end  trucks,
                    trolleys,   drives  and  electrification  systems  to  crane
                    builders.

      CRANE END-USERS. We sell overhead bridge, jib and gantry cranes, parts and
services to  end-users  through our wholly  owned  crane  builders  (Abell-Howe,
Gaffey,  Larco and Washington  Equipment) within the CraneMart(TM)  network. Our
wholly owned crane builders design,  manufacture,  install and service a variety
of cranes with capacities up to 100 tons.

      SPECIALTY  DISTRIBUTION  CHANNELS.  Our  specialty  distribution  channels
consist of:

        --          Catalog  houses  that  market a  variety of  MROP  supplies,
                    including  material handling  products,  either  exclusively
                    through large, nationally distributed catalogs, or through a
                    combination  of catalog and internet sales and a field sales
                    force.  More recently,  catalog  houses,  particularly  W.W.
                    Grainger,  Inc., are pursuing  e-commerce  through their web
                    sites.  The customer  base served by catalog  houses,  which
                    traditionally  included  smaller  industrial  companies  and
                    consumers,  has grown to include large  industrial  accounts
                    and integrated suppliers.

        --          Material handling  specialists  and integrators  that design
                    and assemble  systems  incorporating  hoists,  overhead rail
                    systems,  trolleys, scissor lift tables,  manipulators,  air
                    balancers,  jib arms and other material handling products to
                    provide  end-users with solutions to their material handling
                    problems.


                                       9

<PAGE>


        --          Entertainment equipment distributors that design, supply and
                    install a variety of material handling and rigging equipment
                    for concerts, theaters, ice shows, sports arenas, convention
                    centers and night clubs.

      SERVICE-AFTER-SALE  DISTRIBUTION CHANNEL.  Service-after-sale distributors
include our authorized  network of 13 chain repair service stations and over 350
hoist  service and repair  stations.  This service  network is designed for easy
parts and  service  access for our large  installed  base of hoists and  related
equipment in North America.

      OEM/GOVERNMENT  DISTRIBUTION  CHANNELS.  This channel consists of:

        --          OEMs that  supply various  component parts directly to other
                    industrial  manufacturers  as well as private  branding  and
                    packaging of our traditional products for material handling,
                    lifting, positioning and special purpose applications.

        --          Government agencies, including the U.S. and  Canadian Navies
                    and Coast  Guards,  that  purchase  primarily  load securing
                    chain and forged attachments.

      CONSUMER  DISTRIBUTION.  Consumer  sales,  consisting  primarily of carbon
steel chain and assemblies, forged attachments and hand powered hoists, are made
through five distribution  channels:  two-step wholesale hardware  distribution;
one-step  distribution  direct to retail  outlets;  trucking and  transportation
distributors; farm hardware distributors; and rental outlets.

      INTERNATIONAL DISTRIBUTION. We distribute virtually all of our products in
over 50 countries on six continents through a variety of distribution channels.

CUSTOMER SERVICE AND TRAINING

      We maintain customer service  departments staffed by trained personnel for
all of our Products segment sales divisions,  and regularly schedule product and
service  training  schools for all customer  service  representatives  and field
sales  personnel.   Training  programs  for  distribution  and  service  station
personnel, as well as for end-users, are scheduled on a regular basis at most of
our  facilities  and in the  field.  We have more than 350  service  and  repair
stations worldwide that provide local and regional repair,  warranty and general
service work for distributors  and end-users.  End-user  trainees  attending our
various programs include  representatives  of General Motors,  DuPont,  3M, GTE,
Cummins Engine,  General  Electric and many other  industrial and  entertainment
organizations.

      We also provide, in multiple  languages,  a variety of collateral material
in video, cassette,  CD-ROM, slide and print format addressing relevant material
handling  topics such as the care, use and inspection of chains and hoists,  and
overhead lifting and positioning safety. In addition, we sponsor advisory boards
made up of  representatives of our primary  distributors and  service-after-sale
network  members  who are  invited  to  participate  in  discussions  focused on
improving  products  and  service.  These  boards  enable  us  and  our  primary
distributors  to exchange  product and market  information  relevant to industry
trends.

BACKLOG

      Our Products segment backlog of orders at March 31, 2005 was approximately
$42.3 million  compared to  approximately  $45.3 million at March 31, 2004.  Our
orders for standard  products are generally  shipped within one week. Orders for
products  that are  manufactured  to  customers'  specifications  are  generally
shipped within four to twelve weeks.  Given the short product lead times,  we do
not  believe  that the  amount of our  Products  segment  backlog of orders is a
reliable indication of our future sales.

COMPETITION

      Despite  recent  consolidation,  the material  handling  industry  remains
highly fragmented.  We face competition from a wide range of regional,  national
and international  manufacturers in both domestic and international  markets. In
addition,  we often compete with individual  operating  units of larger,  highly
diversified companies.

      The principal  competitive  factors affecting our Products segment include
product performance,  functionality,  price, brand, reputation,  reliability and
availability,  as well as customer service and support.  Other important factors
include distributor relationships, territory coverage and the ability to service
the distributor with on-time delivery and repair services.


                                       10

<PAGE>

      Major  competitors  with  our  Products  segment  for  hoists  are  Demag,
Kito-Harrington,  Ingersoll-Rand,  KCI Konecranes and Morris Material  Handling;
for chain are Campbell  Chain,  Peerless  Chain  Company and American  Chain and
Cable Company;  for forged  attachments  are The Crosby Group and Brewer Tichner
Company; for crane building are Demag, KCI Konecranes,  Morris Material Handling
and a variety of independent crane builders;  and for industrial  components are
Deublin, Joyce-Dayton and Nook Industries.

SOLUTIONS SEGMENT

      The Solutions segment is engaged primarily in the design,  fabrication and
installation  of integrated  work station and  facility-wide  material  handling
systems  and in the  manufacture  and  distribution  of  lift  tables  and  tire
shredders and has total assets of $31.6 million as of March 31, 2005.  Net sales
of the  Solutions  segment in fiscal  2005 were $61.6  million,  or 12.0% of our
total net  sales,  of which  $15.4  million,  or 25.0% were  domestic  and $46.2
million,  or 75.0% were  international.  The following  table sets forth certain
sales data for the products and services of our Solutions segment,  expressed as
a percentage of this segment's net sales for fiscal 2005 and 2004:

                                                    FISCAL YEARS ENDED MARCH 31,
                                                    ----------------------------
                                                         2005          2004
                                                      ----------    ----------
   Integrated material handling conveyor systems...       70%           57%
   Lift tables.....................................       13            15
   Light-rail systems and manipulators.............        4            13
   Other...........................................       13            15
                                                      ----------    ----------
                                                         100%          100%

PRODUCTS AND SERVICES

      INTEGRATED MATERIAL HANDLING CONVEYOR SYSTEMS.  Conveyors are an important
component of many material handling systems, reflecting their high functionality
for transporting material throughout manufacturing and warehouse facilities.  We
specialize  in  designing   computer-controlled  and  automated  powered  roller
conveyors for use in warehouse operations and distribution systems. Since fiscal
2003,  we have been  executing  a revenue  growth  strategy  by  developing  our
capabilities to function as a turnkey  integrator of material  handling systems,
while continuing to provide the conveyors required for the systems.

      LIFT TABLES. Our American Lifts division manufactures powered lift tables.
These products enhance workplace  ergonomics and are sold primarily to customers
in the manufacturing, construction, general industrial and air cargo industries.

      LIGHT-RAIL SYSTEMS AND MANIPULATORS. Introduced in fiscal 2001, light-rail
systems are portable steel overhead beam  configurations  used at  workstations,
from which hoists are frequently suspended. Our manipulator business was sold in
February 2004.

SALES AND MARKETING

      The products and services of the Solutions  segment are sold  primarily to
large sophisticated corporate end-users,  including Federal Express, UPS, United
Biscuits,  Lego,  John Deere,  Lowe's and other  industrial  companies,  systems
integrators and  distributors.  In the sale of our integrated  material handling
conveyor systems, we act as a prime contractor with turnkey responsibility or as
a supplier  working closely with the customer's  general  contractor.  Sales are
generated by internal sales  personnel and rely heavily on  engineer-to-engineer
interactions with the customer. The process of generating client contract awards
for   integrated    conveyor    systems    generally    entails    receiving   a
request-for-quotation  from  customers  and  undergoing  a  competitive  bidding
process.  The Solutions  segment also sells light-rail  systems and scissor lift
tables  through its  internal  sales force and through  specialized  independent
distributors and manufacturers representatives.

CUSTOMER SERVICE AND TRAINING

      The  Solutions  segment  offers a wide range of  value-added  services  to
customers  including:  an  engineering  review of the customer's  processes;  an
engineering   solution  for  identified  material  handling  problems;   project
management; and custom design,  manufacturing and installation services. We also
offer after-sales services including operator training, maintenance and hot-line
support.  The typical length of after-sales service varies depending on customer
requirements and supplemental training courses are offered as needed.



                                       11

<PAGE>


BACKLOG

      Revenues from our Solutions segment are generally recognized within one to
six  months.  Our  backlog of orders at March 31,  2005 was  approximately  $9.6
million compared to approximately $9.2 million at March 31, 2004.

COMPETITION

      The principal  competitive  factors  affecting the market for the products
and services of our Solutions segment include application solutions, performance
and price. The process of generating client contract awards for these businesses
generally   entails  receiving  a   request-for-quotation   from  end-users  and
undergoing  a  competitive  bidding  process.  Our  Solutions  segment  competes
primarily with Crisplant, Diafuku, Swisslog, Gorbel and Southworth.

EMPLOYEES

      At March 31, 2005, our continuing operations had 3,061 employees; 1,983 in
the U.S., 122 in Canada, 152 in Mexico and 804 in Europe and Asia. Approximately
685 of our  employees  are  represented  under seven  separate  U.S. or Canadian
collective  bargaining  agreements  which  terminate  at various  times  between
September  2005 and March 2008.  The contract  which  expires in September  2005
currently  covers  84  employees.   Preliminary  informal  negotiations  for  an
extension of this agreement have begun.  We believe that our  relationship  with
our employees is good.

RAW MATERIALS AND COMPONENTS

      Our  principal  raw  materials  and  components  are steel,  consisting of
structural  steel,  processed steel bar, forging bar steel,  steel rod and wire,
steel pipe and tubing and tool steel; electric motors;  bearings; gear reducers;
castings; and electro-mechanical components. These commodities are all available
from multiple  sources.  We purchase most of these raw materials and  components
from a limited  number of strategic  and  preferred  suppliers  under  long-term
agreements  which are negotiated on a company-wide  basis through our Purchasing
Council to take advantage of volume discounts. As the steel industry is cyclical
and steel prices can fluctuate significantly, beginning in approximately January
2004 we have  seen  significant  cost  increases  in  certain  types of steel in
certain  markets.  We generally seek to pass on materials price increases to our
distribution  channel  partners  and end-user  customers,  although a lag period
often exists.  We instituted price increases for our chain and forged attachment
products  effective  April 1, 2004 and for the  majority  of our hoist  products
effective May 1, 2004 and again October 1, 2004. In addition, we initiated price
surcharges  beginning March 18, 2004 on certain products,  and increased some of
those and added price  surcharges to other products  throughout  fiscal 2005. We
will  continue to monitor our costs and  reevaluate  our price  surcharges  on a
monthly  basis.  Our ability to pass on these  increases is determined by market
conditions.

MANUFACTURING

      We manufacture approximately 90% of the products we sell. Additionally, we
outsource  components and finished  goods from an established  global network of
suppliers.  We  regularly  upgrade our  manufacturing  facilities  and invest in
tooling, equipment and technology. We have implemented Lean Manufacturing in our
plants  which has  resulted  in  inventory  reductions,  reductions  in required
manufacturing floor area, shorter product lead time and increased productivity.

      Our manufacturing operations are highly integrated. Although raw materials
and some  components  such as motors,  bearings,  gear  reducers,  castings  and
electro-mechanical  components,  are purchased, our vertical integration enables
us to produce many of the components used in the  manufacturing of our products.
We  manufacture  hoist  lifting  chain,  steel forged gear blanks,  lift wheels,
trolley wheels, and hooks and other attachments for incorporation into our hoist
products.  These  products  are  also  sold as spare  parts  for  hoist  repair.
Additionally,  our hoists are used as  components  in the  manufacture  of crane
systems by us and by our end-users. We believe this vertical integration results
in lower production costs, greater manufacturing  flexibility and higher product
quality, and reduces our reliance on outside suppliers.

ENVIRONMENTAL AND OTHER GOVERNMENTAL REGULATION

      Like most  manufacturing  companies,  we are  subject to various  federal,
state and local laws relating to the protection of the  environment.  To address
the  requirements  of such  laws,  we have  adopted  a  corporate  environmental
protection  policy  which  provides  that all of our owned or leased  facilities
shall,  and all of our employees  have the duty to,  comply with all  applicable
environmental  regulatory  standards,  and we have  initiated  an  environmental
auditing  program for our facilities to ensure  compliance  with such regulatory
standards.  We have also established  managerial  responsibilities  and internal
communication channels for dealing with environmental compliance issues that may
arise in the  course of our  business.  We have made and  could be  required  to


                                       12

<PAGE>

continue  to  make  significant   expenditures  to  comply  with   environmental
requirements.  Because of the  complexity and changing  nature of  environmental
regulatory  standards,  it is possible that  situations  will arise from time to
time  requiring  us  to  incur  additional   expenditures  in  order  to  ensure
environmental   regulatory  compliance.   However,  we  are  not  aware  of  any
environmental  condition  or any  operation  at any  of our  facilities,  either
individually  or in the  aggregate,  which  would  cause  expenditures  having a
material  adverse  effect on our results of operations,  financial  condition or
cash flows and, accordingly, have not budgeted any material capital expenditures
for environmental compliance for fiscal 2006.

      Certain  environmental  laws, such as the U.S. federal  Superfund laws and
similar  state  statutes,  can impose  liability on current or former  owners or
operators  of a site,  or on  parties  who  disposed  of waste at a site for the
entire cost of cleaning up a site  contaminated by hazardous  substances.  These
costs may be assessed regardless of whether the party owned or operated the site
at the time of the releases or the lawfulness of the original disposal activity.
The  required  remedial  activities  are  usually  performed  in the  context of
administrative  or  judicial  enforcement   proceedings  brought  by  regulatory
authorities.  We could incur  substantial  costs,  including  cleanup  costs and
third-party  claims, as a result of liabilities under such  environmental  laws.
For  example,  we have  been  identified  by the New York  State  Department  of
Environmental  Conservation,  or  NYSDEC,  along  with  other  companies,  as  a
potentially  responsible  party,  or  PRP,  at the  Frontier  Chemical  Site  in
Pendleton,  New York, a site listed on NYSDEC's  Registry of Inactive  Hazardous
Waste Disposal sites. From 1958 to 1977, the Pendleton Site had been operated as
a commercial  waste  treatment  and disposal  facility.  We sent waste  pickling
liquor  generated at our facility in Tonawanda,  New York, to the Pendleton Site
during the period from  approximately  1969 to 1977,  and we  participated  with
other PRPs in conducting  the  remediation of the Pendleton Site under a consent
order with NYSDEC.  Construction  in connection  with the  remediation  has been
completed and this project is currently in its operations and maintenance phase.
As a result of a negotiated cost  allocation  among the  participating  PRPs, we
have paid our pro rata share of the remediation  construction  costs and accrued
our share of the ongoing operations and maintenance costs. As of March 31, 2005,
we have paid $1.0 million in remediation and ongoing  operations and maintenance
costs associated with the Pendleton Site. The participating PRPs have identified
and commenced a cost recovery  action against a number of other parties who sent
hazardous  substances to the Pendleton Site. Full  settlements have been reached
with all  defendants in the cost recovery  action.  All  settlement  payments in
connection  with the  Pendleton  Site  litigation  have been  made,  and we have
received  $0.2  million as our share of the  settlement  proceeds.  We have also
entered into a settlement  agreement  with one of our insurance  carriers in the
amount of $0.7 million in connection  with the Pendleton  Site and have received
payment in full of the settlement amount.

      We are  investigating  past waste  disposal  activities  at a facility  in
Cleveland, Texas, operated by our subsidiary, Crane Equipment and Service, Inc.,
and we have  entered into a voluntary  agreement  with the Texas  Commission  on
Environmental   Quality  to   investigate   and,   as   appropriate,   remediate
environmental  conditions  at this  site.  At this  time it is not  possible  to
determine the costs of the investigation and, if necessary, the remediation, but
we  believe  any such  costs  will not have a  material  adverse  effect  on our
operating results or financial condition.

      For all of the currently known  environmental  matters,  we have accrued a
total of $0.6 million as of March 31, 2005, which, in our opinion, is sufficient
to  deal  with  such  matters.   Further,   our  management  believes  that  the
environmental  matters known to, or anticipated by, us should not,  individually
or in the aggregate,  have a material adverse effect on our operating results or
financial  condition.   However,  there  can  be  no  assurance  that  potential
liabilities  and  expenditures  associated with unknown  environmental  matters,
unanticipated   events,  or  future  compliance  with   environmental  laws  and
regulations will not have a material adverse effect on us.

      Our  operations  are also  governed  by many other  laws and  regulations,
including those relating to workplace safety and worker health, principally OSHA
and regulations  thereunder.  We believe that we are in material compliance with
these laws and regulations  and do not believe that future  compliance with such
laws and  regulations  will have a  material  adverse  effect  on our  operating
results or financial condition.

AVAILABLE INFORMATION

      Our internet address is WWW.CMWORKS.COM.  We make available free of charge
through our website our Annual  Report on Form 10-K,  Quarterly  Reports on Form
10-Q,  Current  Reports on Form 8-K and  amendments  to those  reports  filed or
furnished pursuant to Section 13 (a) or 15(d) of the Securities  Exchange Act of
1934, as amended,  as soon as reasonably  practicable  after such  documents are
electronically  filed  with,  or  furnished  to,  the  Securities  and  Exchange
Commission.



                                       13

<PAGE>


ITEM 2.          PROPERTIES

      We  maintain our corporate  headquarters  in Amherst,  New York and, as of
March  31,  2005,  conducted  our  principal   manufacturing  at  the  following
facilities:

<TABLE>
<CAPTION>

                                                                                            SQUARE       OWNED OR      BUSINESS
LOCATION                              PRODUCTS/OPERATIONS                                   FOOTAGE       LEASED        SEGMENT
-----------------------------------   --------------------------------------------------  ------------  ------------  ------------
<S>                                   <C>                                                     <C>       <C>           <C>
UNITED STATES:
Muskegon, MI                          Hoists                                                  441,225   Owned         Products
Charlotte, NC                         Industrial components                                   307,340   Owned         Products
Wadesboro, NC                         Hoists                                                  192,342   Owned         Products
Tonawanda, NY                         Light-rail crane systems                                187,630   Owned         Solutions
Lexington, TN                         Chain                                                   175,700   Owned         Products
Cedar Rapids, IA                      Forged attachments                                      100,000   Owned         Products
Eureka, IL                            Cranes                                                   91,300   Owned         Products
Damascus, VA                          Hoists                                                   90,338   Owned         Products
Chattanooga, TN                       Forged attachments                                       77,000   Owned         Products
Greensburg, IN                        Scissor lifts                                            60,000   Owned         Solutions
Lisbon, OH                            Hoists                                                   36,600   Owned         Products
Cleveland, TX                         Cranes                                                   35,000   Owned         Products
Chattanooga, TN                       Forged attachments                                       33,000   Owned         Products
Sarasota, FL                          Tire shredders                                           24,954   Owned         Solutions


INTERNATIONAL:
Arden, Denmark                        Project design and conveyors                             91,200   Owned         Solutions
Santiago, Tianguistenco, Mexico       Hoists and chain                                         85,000   Owned         Products
Velbert, Germany                      Hoists                                                   72,200   Leased        Products
Hangzhou, China                       Hoists and hand pallet trucks                            50,200   Leased        Products
Stoney Creek, Ontario, Canada         Cranes                                                   44,255   Owned         Products
Hangzhou, China                       Metal fabrication, textiles and textile
                                      strappings                                               37,000   Leased        Products
Hangzhou, China                       Textile strappings                                       30,000   Leased        Products
Chester, United Kingdom               Plate clamps                                             28,100   Leased        Products
Romeny-sur-Marne, France              Rotary unions                                            21,550   Owned         Products
Arden, Denmark                        Project construction                                     19,500   Leased        Solutions
Velbert, Germany                      Hoists                                                   12,800   Leased        Products
Szekesfeher, Hungary                  Textiles and textile strappings                          10,000   Leased        Products

</TABLE>


      In addition, we have a total of 37 sales offices, distribution centers and
warehouses. We believe that our properties have been adequately maintained,  are
in  generally  good  condition  and are  suitable  for our business as presently
conducted. We also believe our existing facilities provide sufficient production
capacity for our present needs and for our anticipated  needs in the foreseeable
future.  Upon the  expiration of our current  leases,  we believe that either we
will be able to  secure  renewal  terms or enter  into  leases  for  alternative
locations at market terms.


ITEM 3.          LEGAL PROCEEDINGS

      From time to time, we are named a defendant in legal  actions  arising out
of the  normal  course  of  business.  We are not a party to any  pending  legal
proceeding other than ordinary,  routine litigation  incidental to our business.
We do not believe that any of our pending litigation will have a material impact
on our business.  We maintain  comprehensive general liability insurance against
risks  arising  out of the normal  course of business  through our  wholly-owned
insurance  subsidiary of which we are the sole policy holder. The limits of this
coverage are currently $3.0 million per occurrence  ($2.0 million  through March
31, 2003) and $6.0 million  aggregate  ($5.0 million through March 31, 2003) per
year. We obtain additional insurance coverage from independent insurers to cover
potential losses in excess of these limits.


ITEM 4.          SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     None.



                                       14

<PAGE>


                                     PART II
                                     -------


ITEM 5.          MARKET FOR THE COMPANY'S COMMON STOCK AND RELATED SECURITY
                 HOLDER MATTERS

     Our common  stock is traded on the  Nasdaq  Stock  Market  under the symbol
"CMCO."  As of May 31,  2005,  there  were 580  holders  of record of our common
stock.

     We paid  quarterly cash dividends on our common stock from 1988 through the
second  quarter of fiscal  2002.  In January  2002,  we  announced  that we were
indefinitely  suspending  the payment of cash  dividends  on our common stock in
order  to  dedicate  our  cash   resources  to  the  repayment  of   outstanding
indebtedness.  Our current credit agreement does not permit us to pay dividends.
We may reconsider or revise this policy from time to time based upon  conditions
then existing, including, without limitation, our earnings, financial condition,
capital  requirements,  restrictions under credit agreements or other conditions
our Board of Directors may deem relevant.

     The following table sets forth, for the fiscal periods indicated,  the high
and low sale  prices per share for our common  stock as  reported  on the Nasdaq
Stock Market.

                                                 PRICE RANGE OF
                                                  COMMON STOCK
                                                  ------------
                                                HIGH         LOW
                                                -----       -----

     YEAR ENDED MARCH 31, 2003
          First Quarter................... $    13.67   $    6.95
          Second Quarter..................       9.08        4.90
          Third Quarter...................       5.38        3.30
          Fourth Quarter..................       3.90        1.40

     YEAR ENDED MARCH 31, 2004
          First Quarter................... $     2.72   $    1.30
          Second Quarter..................       4.84        2.31
          Third Quarter...................       7.80        4.58
          Fourth Quarter..................      11.72        6.35

     YEAR ENDED MARCH 31, 2005
          First Quarter................... $     8.08   $    5.08
          Second Quarter..................       9.79        6.79
          Third Quarter...................       9.30        7.10
          Fourth Quarter..................      13.82        8.30


     On June 7, 2005,  the closing price of our common stock on the Nasdaq Stock
Market was $11.37 per share.























                                       15

<PAGE>


ITEM 6.          SELECTED FINANCIAL DATA

      The  consolidated  balance  sheets as of March  31,  2005 and 2004 and the
related  statements of operations,  cash flows and shareholders'  equity for the
three  years ended March 31, 2005 and notes  thereto  appear  elsewhere  in this
annual report. The selected  consolidated  financial data presented below should
be  read  in   conjunction   with,  and  are  qualified  in  their  entirety  by
"Management's  Discussion  and Analysis of Results of  Operations  and Financial
Condition,"  our  consolidated  financial  statements  and the notes thereto and
other financial information included elsewhere in this annual report.

<TABLE>
<CAPTION>

                                                                       FISCAL YEARS ENDED MARCH 31,
                                                       -------------------------------------------------------------
                                                            2005        2004        2003        2002         2001
                                                         -----------  ---------   ---------   ----------   ---------
                                                               (AMOUNTS IN MILLIONS, EXCEPT PER SHARE DATA)
                                                       -------------------------------------------------------------
   STATEMENT OF OPERATIONS DATA (1):
<S>                                                    <C>          <C>        <C>          <C>          <C>
   Net sales                                           $     514.8  $   444.6  $     453.3  $     480.0  $    586.2
   Cost of products sold                                     388.9      339.8        346.0        359.5       426.7
                                                       -------------------------------------------------------------
   Gross profit                                              125.9      104.8        107.3        120.5       159.5
   Selling expenses                                           52.3       48.3         47.4         43.5        48.4
   General and administrative expenses                        31.7       25.0         26.6         28.3        34.3
   Restructuring charges (2)                                   0.9        1.2          3.7          9.6          --
   Write-off/amortization of intangibles (3)                   0.3        0.4          4.2         11.0        11.0
                                                       -------------------------------------------------------------
   Income from operations                                     40.7       29.9         25.4         28.1        65.8
   Interest and debt expense                                  27.6       28.9         32.0         29.4        36.3
   Other (income) and expense, net                            (5.2)      (4.2)        (2.1)         2.4        (2.2)
                                                       -------------------------------------------------------------
   Income (loss) before income taxes                          18.3        5.2         (4.5)        (3.7)       31.7
   Income tax expense                                          2.2        4.0          1.5          2.3        16.8
                                                       -------------------------------------------------------------
   Income (loss) from continuing operations                   16.1        1.2         (6.0)        (6.0)       14.9
   Income (loss) from discontinued operations (1)              0.6         --           --         (7.9)        0.3
   Loss on disposition of discontinued operations (1)           --         --           --       (121.4)         --
                                                       -------------------------------------------------------------
   Total income (loss) from discontinued operations            0.6         --           --       (129.3)        0.3
   Cumulative effect of change in accounting
    principle (3)                                               --         --         (8.0)          --          --
                                                       -------------------------------------------------------------
   Net income (loss)                                   $      16.7  $     1.2  $     (14.0) $    (135.3) $     15.2
                                                       =============================================================
   Diluted earnings (loss) per share from continuing   $      1.09  $    0.08  $     (0.42) $     (0.41) $     1.04
    operations
   Basic earnings (loss) per share from continuing
    operations                                         $      1.10  $    0.08  $     (0.42) $     (0.41) $     1.04
   Weighted average shares outstanding - assuming
    dilution                                                  14.8       14.6         14.5         14.4        14.3
   Weighted average shares outstanding - basic                14.6       14.6         14.5         14.4        14.3

BALANCE SHEET DATA (AT END OF PERIOD):
   Total assets (4)                                    $     480.9  $   473.4  $     482.6  $     524.3  $    722.4
   Total debt                                                266.1      287.9        314.1        347.9       407.0
   Total shareholders' equity                                 81.8       63.0         52.7         71.6       207.9

OTHER FINANCIAL DATA:
   Net cash provided by operating activities                  17.2       26.4         14.2         49.8        38.3
   Net cash provided by (used in) investing activities         2.5        4.3         16.0         (1.6)       (7.2)
  Net cash used in financing activities                      (21.9)     (21.5)       (41.9)       (48.5)      (19.5)
   Capital expenditures                                        5.9        3.6          5.0          4.7        10.2
   Cash dividends per common share                            0.00       0.00         0.00         0.14        0.28
-------------




                                       16

<PAGE>
   (1)   Statement of Operations  data represent our  continuing  operations for
         all periods presented have been restated to remove ASI results from the
         continuing operations data. In May 2002, the Company sold substantially
         all of the assets of ASI. The Company received  $20,600,000 in cash and
         an 8% subordinated  note in the principal amount of $6,800,000 which is
         payable over 10 years beginning in August 2004. The full amount of this
         note has been reserved due to the uncertainty of collection.  Principal
         payments  received on the note are recorded as income from discontinued
         operations at the time of receipt.  All interest and principal payments
         required under the note have been made to date. The Company recorded an
         after-tax loss of $121,475,000 or $8.43 per diluted share and reflected
         ASI as a  discontinued  operation in the fourth quarter of fiscal 2002.
         The loss  included  closing  costs from the  transaction  and estimated
         operating losses of the discontinued  operation through the date of the
         sale,  May 10, 2002.  The loss was due  primarily  to the  write-off of
         $104,000,000  of  goodwill  and  a  $17,475,000  loss  related  to  the
         write-off of the remaining  net assets in excess of the selling  price.
         Refer to Note 3 to our consolidated financial statements for additional
         information on Discontinued Operations.

   (2)   Refer to "Results of  Operations" in "Item 7.  Management's  Discussion
         and Analysis of Results of Operation  and  Financial  Condition"  for a
         discussion of the  restructuring  charges related to fiscal 2005, 2004,
         and 2003.  Restructuring  charges for 2002  include  exit costs of $2.4
         million for severance  relating to approximately 250 employees and $7.2
         million of lease termination,  facility  wind-down,  and maintenance of
         non-operating   facilities   prior  to   disposal.   Included   in  the
         restructuring  charges was  approximately  $8.3  million to terminate a
         facility  lease,  resulting  in the  purchase of the  property  with an
         estimated fair value of  approximately  $2.3 million which was recorded
         as an offset to the restructuring charges.

   (3)   As a result  of our  adoption  of SFAS  142  effective  April 1,  2002,
         goodwill is no longer amortized. The charge in fiscal 2003 represents a
         $4.0 million impairment write-off.  In addition,  the cumulative effect
         of change in  accounting  principle  represents  the impact of adopting
         SFAS 142.

   (4)   Total assets  include net assets of  discontinued  operations  of $21.5
         million,   and  $163.5   million  as  of  March  31,  2002,  and  2001,
         respectively.
</TABLE>

ITEM 7.          MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
                 AND FINANCIAL CONDITION.

      This section should be read in conjunction with our consolidated financial
statements included elsewhere in this annual report.  Comments on the results of
operations and financial  condition  below refer to our  continuing  operations,
except in the section entitled "Discontinued Operations."

EXECUTIVE OVERVIEW

      We are a leading  manufacturer  and  marketer  of hoists,  cranes,  chain,
conveyors,  material handling systems, lift tables and component parts serving a
wide variety of commercial and  industrial  end-user  markets.  Our products are
used to efficiently and ergonomically move, lift, position or secure objects and
loads.  Our  Products  segment  sells a wide  variety  of powered  and  manually
operated wire rope and chain hoists,  industrial crane systems, chain, hooks and
attachments,  actuators  and  rotary  unions.  Our  Solutions  segment  designs,
manufactures,  and installs  application-specific  material handling systems and
solutions for end-users to improve work station and facility-wide work flow.

      Founded in 1875, we have grown to our current leadership  position through
organic  growth and also as the result of the 14 businesses we acquired  between
February 1994 and April 1999. We have developed our leading market position over
our 130-year  history by  emphasizing  technological  innovation,  manufacturing
excellence  and  superior  after-sale  service.  In addition,  the  acquisitions
significantly  broadened  our  product  lines  and  services  and  expanded  our
geographic  reach,  end-user  markets  and  customer  base.  Integration  of the
operations of the acquired businesses with our previously existing businesses is
substantially  complete.   Ongoing  integration  of  these  businesses  includes
improving our productivity,  further reducing our excess manufacturing  capacity
and extending our sales  activities to the European and Asian  marketplaces.  We
are executing those initiatives through our Lean Manufacturing efforts, facility
rationalization  program, new product development and expanded sales activities.
Shareholder value will be enhanced through continued emphasis on the improvement
of  the  fundamentals  including  manufacturing  efficiency,  cost  containment,
efficient capital investment, and our markets and customers.

      Our  Lean   Manufacturing   efforts   are   fundamentally   changing   our
manufacturing  processes to be more  responsive to customer demand and improving
on-time  delivery  and  productivity.  From  2001 to  2004  under  our  facility
rationalization  program,  we  closed 13  facilities  and  consolidated  several
product lines, with potential opportunity for further rationalization.  Also, we
have  been   undergoing   assessments   for  possible   divestiture  of  several
less-strategic busineses. Our manipulator and specialty marine chain businesses


                                       17

<PAGE>
were  sold in  fiscal  2004  and  two  others  remain  as  possible  divestiture
candidates,  our conveyor  business which  comprises a majority of our Solutions
segment  and  a  specialty  crane  business  within  our  Products  segment.  In
furtherance  of our  facility  rationalization  projects,  in  January  2005  we
completed the sale of a Chicago-area  property resulting in a $2.7 million gain,
which was recorded in the fourth  quarter of fiscal 2005.  In February  2005, we
announced the sale and partial leaseback of our corporate  headquarters building
in Amherst,  New York at a $2.2 million gain, of which $1.0 was also recorded in
the  fourth  quarter  of fiscal  2005 and the  remainder  will be  deferred  and
recognized pro-rate over the life of the 10-year leaseback period. Additionally,
we sold a Virginia property in the fiscal 2005 fourth quarter,  and recognized a
$0.2 million gain. We will continue to sell surplus real estate  resulting  from
our  facility  rationalization  projects  and those sales may result in gains or
losses.  To broaden  our  product  offering  in  markets  where we have a strong
competitive  position as well as to facilitate  penetration  into new geographic
markets,  we  have  heightened  our new  product  development  activities.  This
includes development of hoist lines in accordance with international  standards,
to complement our current offering of hoist products designed in accordance with
U.S.  standards.  To further expand our global sales, we are introducing certain
of our products that  historically  have been  distributed only in North America
and also  introducing new products  through our existing  European  distribution
network. Furthermore, we are working to build a distribution network in China to
capture an  anticipated  growing demand for material  handling  products as that
economy continues to industrialize.

      Many of the U.S.  industrial  sectors that we serve have been  impacted by
soft  economic   conditions  since  mid-1998.   These  conditions   deteriorated
significantly  in our  fiscal  2001  fourth  quarter  and  continued  to decline
throughout  fiscal  2002  and  2003,  negatively  impacting  our net  sales  and
financial  performance.  We began to see some stabilization and then very modest
improvement  in the latter half of fiscal 2004 and  significant  improvement  in
fiscal 2005.  Our net sales dropped by 5.6% to $453.3 million in fiscal 2003 and
by an additional  1.9% to $444.6  million in fiscal 2004,  primarily due to this
downturn in the business cycle. However, our fiscal 2005 sales improved by 15.8%
to $514.8 million in fiscal 2005 as the Company experienced  definitive economic
improvement.  We monitor such indicators as U.S. Industrial Capacity Utilization
and Industrial Production,  which have been increasing since July 2003. Further,
we continue  to monitor the  potential  impact of negative  global and  domestic
trends,  including steel price fluctuations,  possibly rising interest rates and
uncertainty in some end-user  markets around the globe. In addition,  to enhance
future revenue opportunities,  we are increasing our sales and marketing efforts
in  international  markets and investing in new products and services as further
described in Item 1 of this Annual Report  within the section  described as "Our
Strategy".

      Consistent with most  companies,  over the past several years we have been
facing  significantly  increased  costs  for  fringe  benefits  such  as  health
insurance,  workers compensation insurance and pension. Combined, those benefits
cost us over $33 million in fiscal 2005 and we work  diligently  to balance cost
control with the need to provide competitive  employee benefits packages for our
associates.  Another cost area of focus is steel. We utilize  approximately  $35
million to $40 million of steel  annually in a variety of forms  including  rod,
wire, bar,  structural and others.  With increases in worldwide demand for steel
and  significant  increases  in  scrap  steel  prices  over the  past  year,  we
experienced increases in our costs that we have reflected as price increases and
surcharges  to our  customers.  Our  surcharges  for certain  products went into
effect beginning in March 2004 and currently affect most of our chain and forged
attachment products.  We continue to monitor steel costs and potential surcharge
requirements on a monthly basis. Costs of implementing  Sarbanes-Oxley  internal
control  documentation  and  compliance  have also had an impact on fiscal  2005
profitability.   We  are  focused  on  minimizing  the  future  added  costs  of
compliance.  On the  whole,  we are  encouraged  based  on  current  visibility,
remaining  cautiously  optimistic for steady revenue growth to continue over the
next year.

RESULTS OF OPERATIONS

      Net sales of our Products and Solutions  segments,  in millions of dollars
and with percentage changes for each segment, were as follows:
<TABLE>
<CAPTION>
                                                                            CHANGE                  CHANGE
                                  FISCAL YEARS ENDED MARCH 31,          2005 VS. 2004           2004 VS. 2003
                                  ----------------------------          -------------           -------------
                                  2005         2004       2003        AMOUNT        %         AMOUNT         %
                                  ----         ----       ----        ------        -         ------         -
<S>                               <C>          <C>        <C>         <C>           <C>       <C>            <C>
Products segment.............     $    453.1   $ 394.2    $  388.1    $    58.9     14.9      $     6.1      1.6
Solutions segment............           61.7      50.4        65.2         11.3     22.4          (14.8)   (22.7)
                                  ----------   -------    --------    ---------   ------      ----------  -------
     Total net sales.........     $    514.8   $ 444.6      $453.3    $    70.2     15.8      $    (8.7)    (1.9)
                                  ==========   =======    ========    =========               ==========
</TABLE>
      Sales in fiscal 2005 increased as a result of the improved  economy in the
industrial sector of North America compared to the downturn in the general North
American and European  economies  and the  industrial  sectors in  particular in
fiscal 2004 and 2003.  Net sales in fiscal 2005 of $514.8  million  increased by
$70.2  million,  or 15.8%,  from  fiscal  2004,  and net sales in fiscal 2004 of
$444.6 million  decreased $8.7 million,  or 1.9%, from fiscal 2003. The Products
segment for fiscal 2005 experienced a net sales increase of 14.9% over the prior

                                       18
<PAGE>
year.  The  increase  was due to a  combination  of  higher  volume as the North
American industrial economy recovered as well as price increases ($19.7 million)
including  surcharges  specifically  in  response  to rising  steel  costs.  Our
Products segment net sales improved 1.6% in fiscal 2004 as we saw  stabilization
by mid-2004 and  improvement of 7.4% in the latter half of the fiscal year. Both
fiscal 2005 and 2004 were  impacted by the  weakening  U.S.  dollar  relative to
other  currencies,  particularly  the euro, and reported  Products segment sales
were  favorably  affected by $6.2  million and $11.3  million in fiscal 2005 and
2004,  respectively.  For fiscal 2005, our Solutions segment net sales increased
22.4% as a result of increased  volume in Europe at our conveyor  business.  Our
Solutions  segment  net sales  decreased  22.7% in fiscal  2004.  The decline in
fiscal 2004 was  primarily  due to soft U.S.  and European  industrial  markets,
particularly  affecting  purchasing decisions for capital goods. The fiscal 2004
decline was further impacted by the March 2003 divestiture of our steel erection
business, which generated $7.9 million of revenues in fiscal 2003.

      Gross  profit of the  Products  and  Solutions  segments,  in  millions of
dollars and as a percentage of total segment net sales, was as follows:
<TABLE>
<CAPTION>
                                               FISCAL YEARS ENDED MARCH 31,
                                ---------------------------------------------------------
                                     2005                 2004                2003
                                     ----                 ----                ----
                                  AMOUNT       %      AMOUNT       %       AMOUNT      %
                                ---------    ----    --------    ----     -------    ----
<S>                             <C>          <C>     <C>         <C>      <C>        <C>
Products segment............    $   117.1    25.8    $   99.2    25.2     $  98.7    25.4
Solutions segment...........          8.8    14.3         5.6    11.1         8.6    13.2
                                ---------    ----    --------    ----     -------    ----
     Total gross profit.....    $   125.9    24.5    $  104.8    23.6     $ 107.3    23.7
                                =========            ========             =======
</TABLE>
         Our gross profit margins were  approximately  24.5%, 23.6% and 23.7% in
fiscal 2005,  2004 and 2003,  respectively.  The  Products  segment saw improved
gross  margin in fiscal 2005 as a result of  operational  leverage at  increased
volumes from the prior year.  Gross  margin for the  Products  segment in Fiscal
2004 was comparable to fiscal 2003 as revenue  stabilized during the fiscal 2004
year and costs were closely  monitored.  The  Solutions  segment's  gross profit
margins increased in Fiscal 2005 as a result of the recovery of European markets
which led to increased volume for one division,  as well as the divestiture of a
poor performing,  non-strategic business at the end of fiscal 2004. The decrease
in fiscal  2004  compared  to 2003 was  primarily  due to an  increase in larger
integrated  solutions  projects  which carry a lower gross profit margin overall
and a poor performing non-strategic business unit which was divested in February
of 2004.

      Selling  expenses were $52.3  million,  $48.3 million and $47.4 million in
fiscal 2005, 2004 and 2003, respectively.  As a percentage of net sales, selling
expenses  were  10.2%,   10.9%  and  10.5%  in  fiscal  2005,   2004  and  2003,
respectively.  The fiscal 2005 and 2004 increases  include $1.2 million and $2.2
million, respectively,  resulting from the weakening of the U.S. dollar relative
to  foreign  currencies,  particularly  the euro,  upon  translation  of foreign
operating results into U.S. dollars for reporting purposes. Fiscal 2005 includes
increases  related to variable costs  associated with the increase sales volume,
mainly  commissions  ($1.3 million),  increased benefit costs ($0.5 million) and
increased investments in international  markets ($0.5 million).  The fiscal 2004
increase also includes $0.4 million resulting from  reclassification  of certain
crane builder expenses from general and  administrative  expenses in fiscal 2003
to improve reporting consistency.  These increases were partially offset by cost
control measures.

      General and administrative  expenses were $31.7 million, $25.0 million and
$26.6 million in fiscal 2005,  2004 and 2003,  respectively.  As a percentage of
net sales,  general  and  administrative  expenses  were 6.2%,  5.6% and 5.9% in
fiscal 2005,  2004 and 2003,  respectively.  Fiscal 2005 increases  include $2.3
million  associated  with  variable   compensation,   $1.4  million  related  to
compliance costs associated with Sarbanes Oxley Section 404 implementation, $1.2
million of increasing benefit costs, $0.7 million resulting from the translation
of foreign  currencies  into the weaker U.S.  dollar for reporting  purposes and
$0.5 million for an increase in bad debt  reserves  based on increased  accounts
receivable  levels.  Much of the fiscal 2004 expense  reductions  resulted  from
general discretionary cost control measures. Partially offsetting those savings,
fiscal  2004  was  unfavorably  impacted  by $1.2  million  resulting  from  the
translation  of foreign  currencies  into the weaker U.S.  dollar for  reporting
purposes and also  included  $0.8  million for an increase in bad debt  reserves
based on increased accounts receivable levels.

      Restructuring  charges of $0.9 million,  $1.2 million and $3.7 million, or
0.2%,  0.3% and 0.8% of net sales in fiscal 2005,  2004 and 2003,  respectively,
were  primarily  attributable  to the closure or significant  reorganization  of
thirteen  manufacturing or warehouse  facilities.  The fiscal 2005 restructuring
charges of $0.9 million  relate  primarily to facility  costs as a result of our
continued closure, merging and reorganization.  $0.5 million of the costs relate
to  facility  costs being  expensed  on an as incurred  basis as a result of the
project  timing  being  subsequent  to the adoption of SFAS No. 144. The current
year charge also included $0.3 million of write-down on the net realizable value
of a facility based on changes in market  conditions  and a reassessment  of its
net realizable value. During fiscal 2004, we recorded  restructuring  charges of

                                       19
<PAGE>

$1.2 million related to various employee termination benefits and facility costs
as a result of our continued closure,  merging and reorganization and completion
of two open projects from fiscal 2003.  The  following  facilities  were closed,
merged or  significantly  reorganized  beginning in fiscal 2003:  Abingdon,  VA;
Tonawanda,  NY;  Cobourg,  Ontario,  Canada;  Forest Park,  IL; and Reform,  AL.
Excluding the Tonawanda  facility,  these  operations  were included  within our
Products  segment,  and were  relocated  into other  existing  Products  segment
facilities.  Fiscal  2003  charges  included  exit  costs  of $1.8  million  for
severance  relating  to  approximately  215  employees,  $1.0  million  of lease
termination,  facility  wind-down,  preparation  for  sale  and  maintenance  of
non-operating facilities prior to disposal and $0.9 million for facility closure
costs on projects begun in 2002.  Three of the five 2003 projects were completed
as  planned  in the  fourth  quarter  of  fiscal  2003  while the other two were
completed  as planned  by the  second  quarter  of fiscal  2004.  The  remaining
liability  of  $0.1  million  as of  March  31,  2005  relates  to  the  ongoing
maintenance costs of a non-operating facility.

      Each  rationalization  project was analyzed  based on our capacity and the
cost  structure of the specific  facilities  relative to others.  As a result of
these rationalization projects we expect to achieve approximately $13 million to
$14 million of annualized  savings  primarily in cost of products sold including
facility fixed costs and employee  costs, of which  approximately  $13.5 million
and $11 million was realized during fiscal 2005 and 2004, respectively.

      Write-off/amortization  of intangibles was $0.3 million,  $0.4 million and
$4.2 million in fiscal 2005, 2004 and 2003, respectively.  Fiscal 2003 reflected
a $4.0 million  goodwill  write-off in the fourth quarter relating to impairment
under  Statement of Financial  Accounting  Standard (SFAS) No. 142 "Goodwill and
Other  Intangible  Assets," which  pronouncement  eliminated the  requirement to
amortize  goodwill and  indefinite-lived  intangible  assets beginning in fiscal
2003 but added new impairment testing rules.

      Interest  and debt  expense  was $27.6  million,  $28.9  million and $32.0
million in fiscal 2005,  2004 and 2003,  respectively.  As a  percentage  of net
sales,  interest and debt expense was 5.4%,  6.5% and 7.1% in fiscal 2005,  2004
and 2003,  respectively.  The fiscal 2005 and 2004 decreases  primarily resulted
from lower debt levels.

      Other  income was $5.2  million,  $4.2  million and $2.1 million in fiscal
2005,  2004 and 2003,  respectively.  Fiscal 2005 includes $3.7 million in gains
from sales of real estate,  $2.1 million from  investment  and interest  income,
offset by $0.3 million of additional losses from 2004 business divestitures. The
income in fiscal 2004  included  $5.7  million from asset sales and $1.9 million
from an  interest  rate swap  partially  offset by $3.9  million of losses  upon
business  divestitures.  The income in fiscal 2003  included  $5.3  million from
asset sales offset by a $2.2 million unrealized,  non-cash,  mark-to-market loss
recognized within our captive  insurance  company's  securities  portfolio and a
$1.3 million loss on a business  divestiture.  The fiscal 2003  unrealized  loss
within the securities  portfolio was recognized  since it was deemed to be other
than temporary in nature,  resulting from unrealized  losses that existed longer
than a six-month period.

      Income  taxes as a  percentage  of income  before  income  taxes  were not
reflective of U.S statutory  rates in fiscal 2005, 2004 or 2003. The fiscal 2005
rate varies due to the benefit received from the utilization of the domestic net
operating loss  carry-forwards  that have been fully reserved and jurisdictional
mix. Income tax expense primarily results from non-U.S. taxable income and state
taxes on U.S. taxable income.  The fiscal 2004 rate varies due to jurisdictional
mix and the existence of losses at certain subsidiaries for which no benefit was
recorded.  The fiscal  2003 rate was  affected  by the impact of  non-deductible
goodwill amortization/write-off.

     Upon adoption of SFAS No. 142,  "Goodwill and Other Intangible  Assets," we
reduced  goodwill by $8.0 million as of the beginning of fiscal 2003,  reflected
as the cumulative effect of a change in accounting principle on our statement of
operations.  A  discounted  cash flows  approach  was used to test  goodwill for
potential impairment.


LIQUIDITY AND CAPITAL RESOURCES

      On November 21, 2002, the Company  refinanced its credit  facilities.  The
arrangement  consisted of a Revolving Credit Facility, a Term Loan, and a Senior
Second  Secured Term Loan. The Senior Second Secured Term Loan was refinanced as
described  below. On April 29, 2005, the Company amended its credit  facilities.
As a result of the amendment, the Term Loan was repaid in its entirety.

      The Revolving Credit Facility was amended to provide  availability up to a
maximum of $65 million.  Prior to the amendment,  the Revolving  Credit Facility
provided availability up to a maximum of $50 million.  Availability based on the
underlying  collateral  at March 31, 2005  amounted to $50  million.  The unused
Revolving Credit Facility totaled $39.4 million,  net of outstanding  borrowings
of $0.0 million and outstanding letters of credit of $10.6 million.  Interest on
the revolver is payable at varying Eurodollar rates based on LIBOR or prime plus
a spread  determined by the  Company's  leverage  ratio  amounting to 225 or 100
basis points,  respectively,  at March, 31, 2005.  Effective April 29, 2005, the

                                       20

<PAGE>
amended credit facility would have interest payable at varying  Eurodollar rates
based on LIBOR or prime plus a spread determined by the Company's leverage ratio
amounting  to 175 or 50 basis  points,  respectively,  at March  31,  2005.  The
Revolving  Credit  Facility is secured by all domestic  inventory,  receivables,
equipment,  real  property,   subsidiary  stock  (limited  to  65%  for  foreign
subsidiaries) and intellectual property.

      In July 2003,  we issued  $115.0  million of 10% Senior  Secured Notes due
August 1, 2010 which remain  outstanding  at March 31, 2005.  Proceeds from this
offering were used for the repayment in full of a then outstanding Senior Second
Secured Term Loan ($66.8  million),  the  repurchase  of $35.7 million of Senior
Subordinated  8 1/2% Notes at a discount  ($30.1  million),  the  repayment of a
portion of the  outstanding  Revolving  Credit  Facility  ($10.0  million),  the
repayment of a portion of the Term Loan ($3.9 million), the payment of financing
costs  ($2.8  million)  and the  payment of  accrued  interest  ($1.4  million).
Provisions of the 10% Notes include, without limitation,  restrictions on liens,
indebtedness,  asset sales, and dividends and other restricted payments. The 10%
Notes are  redeemable at our option,  in whole or in part,  at prices  declining
annually from the Make-Whole  Price (as defined in the Indenture for the Notes).
In the event of a Change of Control (as  defined),  each holder of the 10% Notes
may require us to  repurchase  all or a portion of such  holder's 10% Notes at a
purchase price equal to 101% of the principal amount thereof.  The 10% Notes are
guaranteed  by certain  existing and future  domestic  subsidiaries  and are not
subject to any sinking fund requirements.  The 10% Notes are also secured,  in a
second lien position, by all domestic inventory,  receivables,  equipment,  real
property,  subsidiary  stock  (limited  to 65%  for  foreign  subsidiaries)  and
intellectual property.

      The redemption of a portion of the outstanding Senior  Subordinated 8 1/2%
Notes occurred at a discount  resulting in a $5.6 million  pre-tax gain on early
extinguishment  of debt.  As a result  of the  repayment  of the  Senior  Second
Secured Term Loan and a portion of the Term Loan and Senior  Subordinated 8 1/2%
Notes,  $4.9 million of pre-tax  deferred  financing  costs were  written-off in
fiscal 2004. The net effect of these two items, a $0.7 million  pre-tax gain, is
shown as part of other (income) and expense, net.

      The  corresponding  credit agreement  associated with the Revolving Credit
Facility places certain debt covenant  restrictions on us,  including  financial
requirements and a restriction on dividend payments, with which we are currently
in compliance.

      At March 31, 2005,  our Senior  Subordinated  8 1/2% Notes issued on March
31, 1998 and due March 31,  2008  amounted  to $144.5  million,  net of original
issue discount.  Interest is payable semi-annually based on an effective rate of
8.45%,  considering $1.9 million of proceeds from rate hedging in advance of the
placement.   Provisions  of  the  8  1/2%  Notes  include,  without  limitation,
restrictions  on  liens,  indebtedness,  asset  sales  and  dividends  and other
restricted payments. Prior to April 1, 2003, the 8 1/2% Notes were redeemable at
our  option,  in whole or in part,  at the  Make-Whole  Price (as defined in the
Indenture  for the Notes).  On or after April 1, 2003,  they are  redeemable  at
prices  declining  annually  from 104.25% to 100% on and after April 1, 2006. In
the event of a Change of Control (as  defined),  each holder of the 8 1/2% Notes
may require us to repurchase all or a portion of such holder's 8 1/2% Notes at a
purchase price equal to 101% of the principal  amount thereof.  The 8 1/2% Notes
are guaranteed by certain existing and future domestic  subsidiaries and are not
subject to any sinking fund requirements.

      From time to time,  we manage our debt  portfolio by using  interest  rate
swaps to achieve an overall  desired  position of fixed and floating  rates.  In
June 2001,  we entered  into an  interest  rate swap  agreement  to  effectively
convert $40 million of  variable-rate  debt to fixed-rate debt, which matured in
June 2003. That cash flow hedge was considered effective and the gain or loss on
the change in fair value was reported in other comprehensive income, net of tax.
In August 2003, we entered into an interest rate swap agreement to convert $93.5
million of fixed-rate debt (10%) to  variable-rate  debt (LIBOR plus 578.2 basis
points)  through  August 2008 and $57.5 million from August 2008 through  August
2010 at the same rate.  That  interest rate swap was  considered an  ineffective
hedge and therefore the change in fair value was recognized in income as a gain.
The swap was  terminated  in January 2004 and a pre-tax gain of $1.9 million was
recognized  in fiscal  2004 as other  income,  net as a result of changes in the
fair value of the swap.

      We believe that our cash on hand, cash flows, and borrowing capacity under
our Revolving Credit Facility will be sufficient to fund our ongoing  operations
and budgeted  capital  expenditures  for at least the next twelve  months.  This
belief is  dependent  upon a steady  economy  and  successful  execution  of our
current  business plan which is focused on cash  generation for debt  repayment.
The business  plan  includes  continued  implementation  of lean  manufacturing,
facility rationalization projects,  divestiture of excess facilities and certain
non-strategic  operations,   improving  working  capital  components,  including
inventory reductions, and new market and new product development.

      Net cash provided by operating activities was $17.2 million, $26.4 million
and  $14.2  million  in  fiscal  2005,  2004 and  2003,  respectively.  Overall,
operating  assets net of  liabilities  used cash of $5.4  million in fiscal 2005
compared to  providing  cash of $8.8 million and $4.0 million in fiscal 2004 and
2003, respectively.  The $9.2 million decrease in fiscal 2005 relative to fiscal
2004 was primarily due to stronger  operating  performance in fiscal 2005 offset
by increased working capital requirements.  The $12.2 million increase in fiscal
2004 relative to fiscal 2003 was primarily due to stronger operating performance
in fiscal 2004 and income tax refunds of $12.5 million.

                                       21
<PAGE>

      Net cash provided by investing  activities was $2.5 million,  $4.3 million
and $16.0 million in fiscal 2005, 2004 and 2003, respectively.  The fiscal 2005,
2004 and 2003 amounts  included  $7.1 million,  $7.8 million and $21.7  million,
respectively, from business and property divestitures.

      Net cash used in financing activities was $21.9 million, $21.5 million and
$41.9  million  in fiscal  2005,  2004 and  2003,  respectively.  Those  amounts
included  $22.9  million,  $17.7 million and $34.5 million of debt  repayment in
fiscal  2005,  2004 and 2003,  respectively.  We also paid $4.4 million and $8.2
million of financing costs in fiscal 2004 and 2003, respectively,  to effect the
capital transactions previously described.

CONTRACTUAL OBLIGATIONS

     The following  table reflects a summary of our  contractual  obligations in
millions of dollars as of March 31, 2005, by period of estimated payments due:
<TABLE>
<CAPTION>
                                                      FISCAL      FISCAL 2007-     FISCAL 2009-     MORE THAN
                                        TOTAL          2006       FISCAL 2008      FISCAL 2010     FIVE YEARS
                                        -----          ----       -----------      -----------     ----------
<S>                                    <C>            <C>           <C>              <C>             <C>
Long-term debt obligations (a).        $  266.1       $  5.8        $ 144.9          $    0.1        $ 115.3
Operating lease obligations (b)            13.2          3.5            5.3               3.4            1.0
Purchase obligations (c) ......              --           --             --                --             --
Interest obligations (d).......            98.2         23.8           47.6              23.0            3.8
Letter of credit obligations...            10.6         10.6             --                --             --
Other   long-term   liabilities
reflected  on   the   Company's
balance sheet  under GAAP (e)..            42.4          3.4           20.1              15.8            3.1
                                       --------       ------        -------          --------        -------
     Total.....................        $  430.5       $ 47.1        $ 217.9          $   42.3        $ 123.2
                                       ========       ======        =======          ========        =======
</TABLE>
(a)      As described in note 10 to our  consolidated  financial  statements.
(b)      As described in note 18 to our consolidated financial statements.
(c)      We have no purchase obligations  specifying fixed or minimum quantities
         to be purchased. We estimate that, at any given point in time, our open
         purchase  orders  to be  executed  in the  normal  course  of  business
         approximate $40 million.
(d)      Estimated   for  our  Senior   Secured  Notes  due  8/1/10  and  Senior
         Subordinated  Notes  due  3/31/08.
(e)      As  described  in note 9 to our consolidated financial statements.

We have no  additional  off-balance  sheet  obligations  that are not  reflected
above.

CAPITAL EXPENDITURES

      In  addition  to  keeping  our  current   equipment  and  plants  properly
maintained, we are committed to replacing, enhancing and upgrading our property,
plant and equipment to support new product development, reduce production costs,
increase  flexibility to respond effectively to market fluctuations and changes,
meet  environmental  requirements,  enhance  safety  and  promote  ergonomically
correct work stations.  Further, our facility  rationalization  program underway
over the past four years reduced our annual capital expenditure requirements and
also provided for  transfers of equipment  from the  rationalized  facilities to
other operating  facilities.  Our capital expenditures for fiscal 2005, 2004 and
2003 were  $5.9  million,  $3.6  million  and $5.0  million,  respectively.  The
decreased  in fiscal 2004  reflects a deferral of certain  projects  due to soft
market  conditions,  as  well as  reduced  needs  resulting  from  our  facility
rationalization  program. We expect capital expenditure  spending in fiscal 2006
to be consistent with fiscal 2005 at $5.0-$7.0 million.

INFLATION AND OTHER MARKET CONDITIONS

      Our costs are affected by  inflation in the U.S.  economy and, to a lesser
extent, in foreign economies including those of Europe,  Canada,  Mexico and the
Pacific Rim. We do not believe that general  inflation has had a material effect
on our results of operations over the periods presented primarily due to overall
low  inflation  levels over such  periods and our ability to  generally  pass on
rising costs through annual price  increases and surcharges.  However,  employee
benefits  costs  such  as  health  insurance,  workers  compensation  insurance,
pensions  as well  as  energy  and  business  insurance  have  exceeded  general
inflation levels. In the future, we may be further affected by inflation that we
may not be able to pass on as price  increases.  In the fourth quarter of fiscal
2004, we were impacted by high  inflation in steel costs which varied by type of
steel.  We  generally  incorporated  those cost  increases  into our sales price
increases  throughout fiscal 2005 as well as surcharges on certain products that
began in March 2004. We continue to monitor steel costs and potential  surcharge
requirements on a monthly basis.

                                       22

<PAGE>
SEASONALITY AND QUARTERLY RESULTS

      Our quarterly  results may be  materially  affected by the timing of large
customer   orders,   periods  of  high  vacation  and  holiday   concentrations,
restructuring   charges   and  other   costs   attributable   to  our   facility
rationalization  program,  divestitures,   acquisitions  and  the  magnitude  of
rationalization  integration  costs.  Therefore,  our operating  results for any
particular  fiscal  quarter are not  necessarily  indicative  of results for any
subsequent fiscal quarter or for the full fiscal year.

DISCONTINUED OPERATIONS

      In May 2002,  we completed the  divestiture  of  substantially  all of the
assets  of ASI  which  comprised  the  principal  business  unit  in our  former
Solutions - Automotive  segment.  Proceeds from this sale included cash of $15.9
million and an 8%  subordinated  note in the  principal  amount of $6.8  million
payable  over  10  years.  Due  to the  uncertainty  surrounding  the  financial
viability of the new  organization,  the note has been recorded at the estimated
net realizable value of $0. Principal payments received on the note are recorded
as income from discontinued operations at the time of receipt. Accordingly, $0.6
million of income from discontinued  operations was recorded in fiscal 2005. All
interest and principal payments required under the note have been made to date.

      Cash provided by discontinued operations was $0.6 million and $0.5 million
in fiscal 2005 and 2003,  respectively,  as shown on our consolidated statements
of cash flows.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

      The preparation of financial  statements in conformity with U.S. generally
accepted  accounting  principles  requires us to make estimates and  assumptions
that affect the amounts  reported in our consolidated  financial  statements and
accompanying  notes. We continually  evaluate the estimates and their underlying
assumptions,  which form the basis for making judgments about the carrying value
of our assets and liabilities.  Actual results inevitably will differ from those
estimates.  We have identified below the accounting policies involving estimates
that are critical to our financial  statements.  Other  accounting  policies are
more  fully  described  in  note  2  of  notes  to  our  consolidated  financial
statements.

      PENSION  AND  OTHER  POSTRETIREMENT   BENEFITS.The  determination  of  the
obligations and expense for pension and postretirement  benefits is dependent on
our selection of certain  assumptions  that are used by actuaries in calculating
such amounts.  Those assumptions are disclosed in Notes 11 and 13, respectively,
to our fiscal 2005  consolidated  financial  statements and include the discount
rates,  expected  long-term  rate of return on plan  assets  and rates of future
increases in compensation and healthcare costs.

      The pension discount rate assumptions of 6%, 6 1/4% and 6 3/4% as of March
31, 2005, 2004 and 2003,  respectively,  are based on long-term bond rates.  The
decrease in discount rates for fiscal 2005 and 2004 resulted in $3.0 million and
$7.0 million increases in the projected benefit obligations as of March 31, 2005
and 2004, respectively. The rate of return on plan assets assumptions of 8 1/4%,
8.4% and 8 1/2% for the years ended March 31, 2005, 2004 and 2003, respectively,
are based on the composition of the asset portfolios (approximately 55% equities
and 45% fixed income at March 31, 2005) and their long-term  historical returns.
The actual  assets  realized  gains of $5.3 and $9.8  million in fiscal 2005 and
2004.  Our funded  status as of March 31,  2005 and 2004 was  negative  by $29.3
million  and  $30.3  million,  or 24.3% and  27.3%,  respectively.  Our  pension
contributions  during fiscal 2005 and 2004 were approximately $9.5 million.  The
negative funded status may result in future pension expense  increases.  Pension
expense for the March 31, 2006  fiscal  year is  expected  to  approximate  $6.3
million,  which is down from the  fiscal  2005  amount of $8.4  million.  During
fiscal 2005, we incurred a one-time  pre-tax charge of $2.0 million related to a
defined  benefit  pension plan at one of our foreign  operations for a change in
the discount rate used in determining  the amount required for US GAAP purposes.
The factors outlined above will result in increases in funding requirements over
time,  unless there is continued  significant  market  appreciation in the asset
values.  However,  pension funding  contributions  for the March 31, 2006 fiscal
year are expected to decrease by  approximately  $5.2 million compared to fiscal
2005. The compensation  increase assumption of 4% as of March 31, 2005, 2004 and
2003 is based on historical trends.

      The  healthcare  inflation  assumptions of 10 1/2%, 12% and 12% for fiscal
2005, 2004 and 2003,  respectively are based on anticipated  trends.  Healthcare
costs in the United States have  increased  substantially  over the last several
years.  If this trend  continues,  the cost of  postretirement  healthcare  will
increase in future years.

      INSURANCE RESERVES.  Our accrued general and product liability reserves as
described in Note 15 to our consolidated  financial statements involve actuarial
techniques  including  the methods  selected to estimate  ultimate  claims,  and
assumptions  including  emergence patterns,  payment patterns,  initial expected
losses and increased  limit factors.  Other  insurance  reserves such as workers
compensation  and group  health  insurance  are based on actual  historical  and

                                       23

<PAGE>
current  claim  data  provided  by  third  party  administrators  or  internally
maintained.

      INVENTORY  AND  ACCOUNTS  RECEIVABLE  RESERVES.  Slow-moving  and obsolete
inventory reserves are judgmentally  determined based on historical and expected
future usage within a reasonable  timeframe.  We reassess  trends and usage on a
regular  basis and if we identify  changes we revise our  estimated  allowances.
Allowances for doubtful  accounts and credit memo reserves are also judgmentally
determined  based on  historical  bad debt  write-offs  and credit memos issued,
assessing potentially uncollectible customer accounts and analyzing the accounts
receivable agings.

      LONG-LIVED ASSETS.  Property,  plant and equipment and certain intangibles
are depreciated or amortized over their assigned lives.  These assets as well as
goodwill are also periodically  measured for impairment.  The assigned lives and
the projected cash flows used to test impairment are subjective. If actual lives
are shorter than anticipated or if future cash flows are less than  anticipated,
we could  incur a future  impairment  charge or a loss on  disposal  relating to
these assets.

      MARKETABLE  SECURITIES.  On a quarterly  basis,  we review our  marketable
securities  for  declines  in market  value  that may be  considered  other than
temporary.  We consider market value declines to be other than temporary if they
are  declines  for a period  longer  than six  months  and in  excess  of 20% of
original cost.

      DEFERRED TAX ASSET VALUATION ALLOWANCE.  As of March 31, 2005, the Company
had $53.3 million of total net deferred tax assets before valuation  allowances.
As described in Note 17 to the consolidated financial statements,  $34.3 million
of the assets  pertain to net  operating  loss  carryforwards  and the remainder
relate principally to liabilities  including  employee benefit plans,  insurance
reserves,  accrued  vacation  and  incentive  costs and also to asset  valuation
reserves such as inventory  obsolescence reserves and bad debt reserves. The net
operating  loss  carryforwards  expire in 2023.  A valuation  allowance of $43.8
million was  recorded at March 31,  2005 due to the  uncertainty  of whether the
Company's net operating loss carryforwards, capital loss carryforwards and other
deferred  tax assets may  ultimately  be  realized.  Our  ability to realize our
deferred  tax assets is  primarily  dependent on  generating  sufficient  future
taxable income. If we do not generate sufficient taxable income, we would record
an additional valuation allowance.

      REVENUE RECOGNITION. Sales are recorded when title passes to the customer,
which is generally at the time of shipment to the customer, except for long-term
construction  contracts.  For  long-term  construction  contracts,  we recognize
contract  revenues  under the  percentage  of  completion  method,  measured  by
comparing direct costs incurred to total estimated direct costs.  Changes in job
performance, job conditions and estimated profitability, including those arising
from final contract settlements, may result in revisions to costs and income and
are recognized in the period in which the revisions are determined. In the event
that a loss is  anticipated  on an  uncompleted  contract,  a provision  for the
estimated loss is made at the time it is  determined.  Billings on contracts may
precede or lag revenues earned, and such differences are reported in the balance
sheet as current liabilities (accrued  liabilities) and current assets (unbilled
revenues),  respectively.  Customers do not routinely  return product.  However,
sales  returns are  permitted in specific  situations  and  typically  include a
restocking charge or the purchase of additional  product. We have established an
allowance for returns based upon historical trends.

EFFECTS OF NEW ACCOUNTING PRONOUNCEMENTS

      In November 2004, the FASB issued SFAS No. 151,  "Inventory  Costs," as an
amendment  to ARB No.  43,  Chapter  4,  "Inventory  Pricing,"  to  clarify  the
accounting  for abnormal  amounts of idle facility  expense,  freight,  handling
costs and wasted materials (spoilage).  This Statement requires that these items
be recognized  as  current-period  charges and requires the  allocation of fixed
production overheads to inventory based on the normal capacity of the production
facilities. This Statement becomes effective for inventory costs incurred during
fiscal  years  beginning  after June 15,  2005.  The Company does not expect the
adoption of SFAS No. 151 to have a material impact on the Company's consolidated
financial statements.

      In December 2004, the Financial  Accounting  Standards Board (FASB) issued
FASB  Statement No.  123(R)  (revised  2004),  Share-Based  Payment,  which is a
revision of FASB  Statement No. 123,  Accounting for  Stock-Based  Compensation.
Statement 123(R)  supersedes APB Opinion No. 25,  Accounting for Stock Issued to
Employees, and amends FASB Statement No. 95, Statement of Cash Flows. Generally,
the  approach  in  Statement  123(R) is similar  to the  approach  described  in
Statement 123.  However,  Statement 123(R) requires all share-based  payments to
employees,  including grants of employee stock options,  to be recognized in the
income  statement based on their fair values.  Pro forma disclosure is no longer
an alternative.

      Statement 123(R) was to be adopted for interim or annual periods beginning
after June 15,  2005.  On April  14th,  2005,  the SEC  announced  that it would
provide for a phased-in  implementation  process for FASB  statement No. 123(R).
The SEC is requiring that registrants adopt statement 123(R)'s fair value method
of accounting for share-based  payments to employees no later than the beginning
of the first  fiscal  year  beginning  after June 15,  2005.  We expect to adopt
123(R) in the first  quarter of Fiscal 2007.  Statement  123(R)  permits  public
companies to adopt its requirements using one of two methods:

                                       24
<PAGE>

     1.  A  "modified   prospective"   method  in  which  compensation  cost  is
         recognized   beginning  with  the  effective  date  (a)  based  on  the
         requirements of Statement  123(R) for all share-based  payments granted
         after the effective date and (b) based on the requirements of Statement
         123(R) for all share-based  payments  granted to employees prior to the
         effective  date  of  Statement  123(R)  that  remain  unvested  on  the
         effective date.

     2.  A "modified  retrospective"  method which includes the  requirements of
         the  modified  prospective  method  described  above,  but also permits
         entities  to  restate  based on  amounts  previously  recognized  under
         Statement  123 for  purposes  of pro forma  disclosures  either (a) all
         prior  periods  presented or (b) prior  interim  periods of the year of
         adoption.

      The Company is still  evaluating the method it plans to use when it adopts
statement 123(R).

      As  permitted  by  Statement  123,  the  Company  currently  accounts  for
share-based payments to employees using Opinion 25's intrinsic value method and,
as  such,   recognizes  no   compensation   cost  for  employee  stock  options.
Accordingly,  adoption  of  Statement  123(R)'s  fair value  method will have an
impact on our  results  of  operations,  although  it will have no impact on our
overall financial position. The impact of adoption of 123(R) cannot be predicted
at this time because it will depend on levels of share based payments granted in
the future.  However,  had we adopted  Statement  123(R) in prior  periods,  the
impact of that standard would have  approximated  the impact of statement 123 as
described  in the  disclosure  of pro forma net income and earnings per share in
Note 2 to our consolidated financial statements.


FACTORS AFFECTING OUR OPERATING RESULTS

OUR BUSINESS IS CYCLICAL AND IS AFFECTED BY INDUSTRIAL ECONOMIC CONDITIONS,  AND
OVER THE PAST SEVERAL YEARS WE EXPERIENCED  SUBSTANTIALLY REDUCED DEMAND FOR OUR
PRODUCTS.

      Many of the end-users of our products are in highly  cyclical  industries,
such as general manufacturing and construction, that are sensitive to changes in
general economic conditions. Their demand for our products, and thus our results
of  operations,  is  directly  related  to the  level  of  production  in  their
facilities,  which changes as a result of changes in general economic conditions
and other factors beyond our control.  In fiscal 2003 and 2004, for example,  we
experienced significantly reduced demand for our products, generally as a result
of the  global  economic  slowdown,  and more  specifically  as a result  of the
dramatic  decline in  capital  goods  spending  in the  industries  in which our
end-users  operate.  These lower levels of demand resulted in a 24.2% decline in
net sales  from  fiscal  2001 to fiscal  2004,  from  $586.2  million  to $444.6
million.  This decline in net sales  resulted in a 54.6%  decrease in our income
from operations during the same period.  We have seen a significant  improvement
in demand for our  products in fiscal  2005.  Our net sales for fiscal 2005 were
$514.8 million, up $70.2 million or 15.8% from fiscal 2004 sales.

      If the current  upturn does not continue or if there is  deterioration  in
the general  economy or in the  industries we serve,  our  business,  results of
operations and financial condition could be materially  adversely  affected.  In
addition,  the  cyclical  nature of our business  could at times also  adversely
affect our liquidity and ability to borrow under our revolving credit facility.

WE RELY IN LARGE PART ON INDEPENDENT DISTRIBUTORS FOR SALES OF OUR PRODUCTS.

    We depend on  independent  distributors  to sell our  products  and  provide
service  and  aftermarket   support  to  our  customers.   Distributors  play  a
significant role in determining  which of our products are stocked at the branch
locations,  and hence are most readily accessible to aftermarket buyers, and the
price at which these products are sold. Almost all of the distributors with whom
we transact business offer  competitive  products and services to our customers.
We do not have written  agreements with our  distributors  located in the United
States. The loss of a substantial number of these distributors or an increase in
the distributors'  sales of our competitors'  products to our ultimate customers
could materially reduce our sales and profits.

WE ARE SUBJECT TO CURRENCY FLUCTUATIONS FROM OUR INTERNATIONAL SALES.

     Our products are sold in many countries  around the world.  Thus, a portion
of our revenues  (approximately $153.8 million in fiscal year 2005) is generated
in foreign currencies,  including  principally the euro and the Canadian dollar,
while a portion of the costs incurred to generate those revenues are incurred in
other  currencies.  Since  our  financial  statements  are  denominated  in U.S.
dollars,  changes in currency  exchange rates between the U.S.  dollar and other
currencies  have had, and will continue to have,  an impact on our earnings.  We
currently  do not have  exchange  rate  hedges in place to reduce the risk of an
adverse  currency  exchange  movement.  Currency  fluctuations  may  impact  our
financial performance in the future.


                                       25

<PAGE>

OUR INTERNATIONAL  OPERATIONS POSE CERTAIN RISKS THAT MAY ADVERSELY IMPACT SALES
AND EARNINGS.

    We  have  operations  and  assets  located  outside  of the  United  States,
primarily in Canada, Mexico,  Germany, the United Kingdom,  Denmark,  France and
China. In addition, we import a portion of our hoist product line from Asia, and
sell our products to  distributors  located in  approximately  50 countries.  In
fiscal year 2005,  approximately 37% of our net sales were derived from non-U.S.
markets.  These  international  operations  are  subject  to a number of special
risks,  in addition to the risks of our domestic  business,  including  currency
exchange rate  fluctuations,  differing  protections of  intellectual  property,
trade barriers, labor unrest, exchange controls,  regional economic uncertainty,
differing (and possibly more stringent) labor  regulation,  risk of governmental
expropriation,  domestic and foreign  customs and tariffs,  current and changing
regulatory   environments,   difficulty  in  obtaining   distribution   support,
difficulty in staffing and managing  widespread  operations,  differences in the
availability  and  terms  of  financing,  political  instability  and  risks  of
increases in taxes.  Also,  in some foreign  jurisdictions  we may be subject to
laws limiting the right and ability of entities  organized or operating  therein
to pay dividends or remit  earnings to  affiliated  companies  unless  specified
conditions are met. These factors may adversely affect our future profits.

    Part of our  strategy  is to expand our  worldwide  market  share and reduce
costs by strengthening our international  distribution capabilities and sourcing
basic  components  in  foreign  countries,  in  particular  in Mexico and China.
Implementation  of this strategy may increase the impact of the risks  described
above,  and we cannot assure you that such risks will not have an adverse effect
on our business, results of operations or financial condition.

OUR BUSINESS IS HIGHLY  COMPETITIVE AND INCREASED  COMPETITION  COULD REDUCE OUR
SALES, EARNINGS AND PROFITABILITY.

    The principal  markets that we serve within the material  handling  industry
are  fragmented  and  highly  competitive.  Competition  is based  primarily  on
performance,  functionality,  price,  brand  recognition,  customer  service and
support,  and product  availability.  Our competition in the markets in which we
participate  comes from companies of various  sizes,  some of which have greater
financial and other resources than we do. Increased  competition  could force us
to lower our  prices or to offer  additional  services  at a higher  cost to us,
which could reduce our gross margins and net income.

    The greater  financial  resources  or the lower amount of debt of certain of
our  competitors may enable them to commit larger amounts of capital in response
to changing market conditions.  Certain competitors may also have the ability to
develop product or service  innovations that could put us at a disadvantage.  In
addition,  some of our  competitors  have  achieved  substantially  more  market
penetration  in certain  of the  markets in which we  operate,  including  crane
building.  If we are unable to compete  successfully against other manufacturers
of material  handling  equipment,  we could lose  customers and our revenues may
decline.  There can also be no assurance  that customers will continue to regard
our products favorably, that we will be able to develop new products that appeal
to customers,  that we will be able to improve or maintain our profit margins on
sales  to our  customers  or  that  we will  be  able  to  continue  to  compete
successfully in our core markets.

OUR PRODUCTS INVOLVE RISKS OF PERSONAL INJURY AND PROPERTY DAMAGE, WHICH EXPOSES
US TO POTENTIAL LIABILITY.

    Our business  exposes us to possible claims for personal injury or death and
property damage resulting from the products that we sell. We maintain  insurance
through  a  combination  of  self-insurance   retentions  and  excess  insurance
coverage.  We monitor  claims and potential  claims of which we become aware and
establish accrued liability reserves for the self-insurance amounts based on our
liability  estimates for such claims. We cannot give any assurance that existing
or future claims will not exceed our estimates for  self-insurance or the amount
of our excess insurance coverage. In addition, we cannot give any assurance that
insurance will continue to be available to us on economically  reasonable  terms
or that our  insurers  would  not  require  us to  increase  our  self-insurance
amounts.  Claims  brought  against us that are not covered by  insurance or that
result in  recoveries  in excess of  insurance  coverage  could  have a material
adverse effect on our results and financial condition.

OUR FUTURE OPERATING RESULTS MAY BE AFFECTED BY FLUCTUATIONS IN STEEL PRICES. WE
MAY NOT BE ABLE TO PASS ON INCREASES IN RAW MATERIAL COSTS TO OUR CUSTOMERS.

    The  principal raw material  used in our chain,  forging and crane  building
operations is steel.  The steel industry as a whole is highly  cyclical,  and at
times  pricing can be volatile  due to a number of factors  beyond our  control,
including general economic conditions, labor costs, competition,  import duties,
tariffs and currency  exchange  rates.  Recently,  the market price of steel has
increased  significantly.  This  volatility  can  significantly  affect  our raw
material costs. In an environment of increasing raw material prices, competitive
conditions  will determine how much of the steel price  increases we can pass on
to our customers.  Presently,  we have been able to add a surcharge to the costs
of our high steel content  products  reflecting the increased cost of steel.  In
the future,  to the extent we are unable to pass on any steel price increases to
our customers, our profitability could be adversely affected.

                                       26

<PAGE>

WE  DEPEND  ON OUR  SENIOR  MANAGEMENT  TEAM  AND THE LOSS OF ANY  MEMBER  COULD
ADVERSELY AFFECT OUR OPERATIONS.

    Our success is  dependent on the  management  and  leadership  skills of our
senior  management team. The loss of any of these individuals or an inability to
attract,  retain  and  maintain  additional  personnel  could  prevent  us  from
implementing our business strategy. We cannot assure you that we will be able to
retain  our  existing  senior  management  personnel  or to  attract  additional
qualified personnel when needed. We have not entered into employment  agreements
with any of our senior management personnel.

WE ARE  SUBJECT TO  VARIOUS  ENVIRONMENTAL  LAWS WHICH MAY  REQUIRE US TO EXPEND
SIGNIFICANT CAPITAL AND INCUR SUBSTANTIAL COST.

    Our operations and facilities are subject to various federal,  state,  local
and  foreign  requirements  relating  to  the  protection  of  the  environment,
including those governing the discharges of pollutants in the air and water, the
generation,  management and disposal of hazardous  substances and wastes and the
cleanup  of  contaminated  sites.  We have  made,  and  will  continue  to make,
expenditures  to comply with such  requirements.  Violations  of, or liabilities
under,  environmental  laws  and  regulations,  or  changes  in  such  laws  and
regulations  (such as the imposition of more stringent  standards for discharges
into the  environment),  could  result  in  substantial  costs to us,  including
operating  costs  and  capital  expenditures,   fines  and  civil  and  criminal
sanctions,  third party claims for property damage or personal injury,  clean-up
costs  or  costs  relating  to the  temporary  or  permanent  discontinuance  of
operations. Certain of our facilities have been in operation for many years, and
we have remediated  contamination  at some of our facilities.  Over time, we and
other predecessor operators of such facilities have generated, used, handled and
disposed of  hazardous  and other  regulated  wastes.  Additional  environmental
liabilities could exist,  including  clean-up  obligations at these locations or
other sites at which  materials from our operations  were disposed,  which could
result in substantial  future  expenditures that cannot be currently  quantified
and which could  reduce our profits or have an adverse  effect on our  financial
condition.


ITEM 7A.          QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

      Market risk is the potential  loss arising from adverse  changes in market
rates and prices,  such as  interest  rates.  We are  exposed to various  market
risks,  including commodity prices for raw materials,  foreign currency exchange
rates and  changes in interest  rates.  We may enter into  financial  instrument
transactions,  which attempt to manage and reduce the impact of such changes. We
do not enter into  derivatives  or other  financial  instruments  for trading or
speculative purposes.

      Our primary commodity risk is related to changes in the price of steel. We
control this risk through negotiating purchase contracts on a consolidated basis
and by attempting to build changes in raw material costs into the selling prices
of our products.  We also evaluate our steel cost  increases and assess the need
for price  increases and surcharges to our  customers.  We have not entered into
financial instrument transactions related to raw material costs.

      In fiscal 2005,  30% of our net sales were from  manufacturing  plants and
sales  offices in foreign  jurisdictions.  We  manufacture  our  products in the
United States,  Mexico, China,  Denmark, the United Kingdom,  France and Germany
and sell our  products  and  solutions  in over 50  countries.  Our  results  of
operations  could be  affected  by factors  such as changes in foreign  currency
rates or weak economic conditions in foreign markets.  Our operating results are
exposed  to  fluctuations  between  the U.S.  dollar  and the  Canadian  dollar,
European  currencies  and the Mexican peso.  For example,  when the U.S.  dollar
strengthens  against  the  Canadian  dollar,  the value of our net sales and net
income  denominated  in Canadian  dollars  decreases when  translated  into U.S.
dollars  for  inclusion  in our  consolidated  results.  We are also  exposed to
foreign  currency  fluctuations in relation to purchases  denominated in foreign
currencies.  Our foreign  currency  risk is mitigated  since the majority of our
foreign  operations'  net  sales  and  the  related  expense   transactions  are
denominated  in the same currency so therefore a  significant  change in foreign
exchange rates would likely have a very minor impact on net income. For example,
a 10%  decline  in the rate of  exchange  between  the euro and the U.S.  dollar
impacts net income by approximately $0.4 million.  In addition,  the majority of
our export sale  transactions are denominated in U.S. dollars.  Accordingly,  we
currently have not invested in derivative instruments,  such as foreign exchange
contracts, to hedge foreign currency transactions.

      We control risk related to changes in interest  rates by  structuring  our
debt instruments with a combination of fixed and variable  interest rates and by
periodically entering into financial instrument transactions as appropriate.  At
March 31, 2005, we do not have any material swap agreements or similar financial
instruments  in place.  At March 31, 2005 and 2004,  approximately  96% and 95%,
respectively,  of our outstanding debt had fixed interest rates. At those dates,
we  had  approximately  $11.4  million  and  $14.3  million,   respectively,  of
outstanding  variable rate debt. A 1%  fluctuation  in interest  rates in fiscal
2005 and 2004 would have changed interest  expense on that outstanding  variable
rate debt by approximately $0.1 million for both years.


                                       27

<PAGE>

      Like  many   industrial   manufacturers,   the   Company  is  involved  in
asbestos-related   litigation.   In   continually   evaluating   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 through March 31, 2030 and March 31, 2081
to  range  between  $4,200  and  $16,700.   The  Company's   estimation  of  its
asbestos-related  aggregate  liability that is probable and estimable is through
March 31, 2030 and ranges from $4,200 to $5,500 as of March 31, 2005.  The range
of probable and estimable liability reflects 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.  Based  on  the
underlying  actuarial  information,  the  Company  has  reflected  $4,800  as  a
liability in the  consolidated  financial  statements  in  accordance  with U.S.
generally accepted accounting principles. The increase in the recorded liability
from the  amount of $3,000  at March  31,  2004 is due to a change in  actuarial
parameters used to calculate  required asbestos  liability  reserve levels.  The
recorded  liability  does not  consider  the impact of any  potential  favorable
federal  legislation such as the "FAIR Act". Of this amount,  management expects
to incur  asbestos  liability  payments of  approximately  $220 over the next 12
months.  Because  payment of the  liability is likely to extend over many years,
management believes that the potential additional costs for claims will not have
a material  after-tax  effect on the  financial  condition of the Company or its
liquidity,  although the net after-tax effect of any future liabilities recorded
could be material to earnings in a future period.


















                                       28

<PAGE>


ITEM 8.           FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

COLUMBUS MCKINNON CORPORATION

Audited Consolidated Financial Statements as of March 31, 2005:
     Report of Independent Registered Public Accounting Firm............     F-2
     Consolidated Balance Sheets........................................     F-3
     Consolidated Statements of Operations..............................     F-4
     Consolidated Statements of Shareholders' Equity....................     F-5
     Consolidated Statements of Cash Flows..............................     F-6
     Notes to Consolidated Financial Statements
        1.    Description of Business...................................     F-7
        2.    Accounting Principles and Practices.......................     F-7
        3.    Discontinued Operations...................................    F-11
        4.    Unbilled Revenues and Excess Billings.....................    F-11
        5.    Inventories...............................................    F-12
        6.    Marketable Securities.....................................    F-12
        7.    Property, Plant, and Equipment............................    F-13
        8.    Goodwill and Intangible Assets............................    F-14
        9.    Accrued Liabilities and Other Non-current Liabilities.....    F-15
        10.   Debt......................................................    F-16
        11.   Retirement Plans..........................................    F-18
        12.   Employee Stock Ownership Plan (ESOP)......................    F-20
        13.   Postretirement Benefit Obligation.........................    F-20
        14.   Earnings per Share and Stock Plans........................    F-22
        15.   Loss Contingencies........................................    F-24
        16.   Restructuring Charges.....................................    F-25
        17.   Income Taxes..............................................    F-27
        18.   Rental Expense and Lease Commitments......................    F-28
        19.   Summary Financial Information.............................    F-29
        20.   Business Segment Information..............................    F-33
        21.   Selected Quarterly Financial Data (unaudited).............    F-35
        22.   Accumulated Other Comprehensive Loss......................    F-36
        23.   Effects of New Accounting Pronouncements..................    F-37

        Schedule II - Valuation and Qualifying Accounts.................    F-38




                                      F-1

<PAGE>


             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


The Board of Directors and Shareholders of Columbus McKinnon Corporation

We have  audited  the  accompanying  consolidated  balance  sheets  of  Columbus
McKinnon  Corporation  and  subsidiaries  as of March 31, 2005 and 2004, and the
related consolidated  statements of operations,  shareholders'  equity, and cash
flows for each of the three years in the period ended March 31, 2005. Our audits
also  included  the  financial  statement  schedule  listed in the Index at Item
15(a).  These financial  statements and schedule are the  responsibility  of the
Company's  management.  Our  responsibility  is to  express  an opinion on these
financial statements and schedule based on our audits.

We conducted our audits in accordance  with the standards of the Public  Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects,  the consolidated financial position of Columbus McKinnon
Corporation and  subsidiaries  at March 31, 2005 and 2004, and the  consolidated
results of their  operations and their cash flows for each of the three years in
the period ended March 31, 2005,  in  conformity  with U.S.  generally  accepted
accounting  principles.  Also, in our opinion,  the related financial  statement
schedule, when considered in relation to the basic financial statements taken as
a whole,  presents  fairly in all material  respects the  information  set forth
therein.

We also have  audited,  in accordance  with the standards of the Public  Company
Accounting  Oversight  Board  (United  States),  the  effectiveness  of Columbus
McKinnon Corporation and subsidiaries' internal control over financial reporting
as  of  March   31,   2005,   based  on   criteria   established   in   Internal
Control-Integrated Framework issued by the Committee of Sponsoring Organizations
of the  Treadway  Commission  and our  report  dated June 6, 2005  expressed  an
unqualified opinion thereon.

As discussed in Note 2 to the consolidated financial statements, effective April
1, 2002, the Company adopted the provisions of Statement of Financial Accounting
Standards No. 142, "Goodwill and Other Intangible Assets".



                                            /s/ Ernst & Young LLP

June 6, 2005
Buffalo, New York



                                      F-2


<PAGE>


                                                   COLUMBUS MCKINNON CORPORATION
                                                    CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                                        ----------------------------------
                                                                                                    MARCH 31,
                                                                                        ----------------------------------
                                                                                               2005             2004
                                                                                               ----             ----
                                                                                             (IN THOUSANDS, EXCEPT
                                                                                                   SHARE DATA)
                                        ASSETS
Current assets:
<S>                                                                                       <C>              <C>
       Cash and cash equivalents.......................................................   $      9,479     $     11,101
        Trade accounts receivable, less allowance for doubtful accounts
           ($3,015 and $2,811, respectively)...........................................         88,974           84,374
       Unbilled revenues...............................................................          8,848            5,160
       Inventories.....................................................................         77,626           69,119
     Net assets held for sale..........................................................             --            2,790
     Prepaid expenses..................................................................         14,198           15,486
                                                                                        ----------------------------------
Total current assets...................................................................        199,125          188,030
Net property, plant, and equipment.....................................................         57,237           58,773
Goodwill, net..........................................................................        185,443          184,994
Other intangibles, net.................................................................          1,842            1,748
Marketable securities..................................................................         24,615           25,355
Deferred taxes on income...............................................................          6,122            6,388
Other assets...........................................................................          6,487            8,075
                                                                                        ----------------------------------
Total assets...........................................................................   $    480,871     $    473,363
                                                                                        ==================================

                         LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
     Notes payable to banks............................................................   $      4,839     $      5,471
     Trade accounts payable............................................................         33,688           30,076
     Accrued liabilities...............................................................         51,962           48,416
     Restructuring reserve.............................................................            144              561
     Current portion of long-term debt.................................................          5,819            2,205
                                                                                        ----------------------------------
Total current liabilities..............................................................         96,452           86,729
Senior debt, less current portion......................................................        115,735          121,603
Subordinated debt......................................................................        144,548          164,131
Other non-current liabilities..........................................................         42,369           37,922
                                                                                        ----------------------------------
Total liabilities......................................................................        399,104          410,385
Shareholders' equity:
     Voting common stock; 50,000,000 shares authorized;
            14,948,172 and 14,896,172 shares issued....................................            149              149
     Additional paid-in capital........................................................        104,078          103,914
     Accumulated deficit...............................................................         (8,644)         (25,354)
     ESOP debt guarantee; 284,695 and 319,802 shares...................................         (4,554)          (5,116)
     Unearned restricted stock; 1,000 and 24,096 shares................................             (6)             (39)
     Accumulated other comprehensive loss..............................................         (9,256)         (10,576)
                                                                                        ----------------------------------
Total shareholders' equity.............................................................         81,767           62,978
                                                                                        ----------------------------------
Total liabilities and shareholders' equity.............................................   $    480,871     $    473,363
                                                                                        ==================================
</TABLE>


                             See accompanying notes.


                                      F-3

<PAGE>

<TABLE>
<CAPTION>
                                                   COLUMBUS MCKINNON CORPORATION
                                               CONSOLIDATED STATEMENTS OF OPERATIONS

                                                                     -----------------------------------------------------------
                                                                                        YEAR ENDED MARCH 31,
                                                                     -----------------------------------------------------------
                                                                              2005               2004               2003
                                                                              ----               ----               ----
                                                                                          (IN THOUSANDS,
                                                                                      EXCEPT PER SHARE DATA)

<S>                                                                     <C>                <C>                <C>
Net sales...........................................................    $     514,752      $     444,591      $     453,320
Cost of products sold...............................................          388,844            339,745            345,986
                                                                     -----------------------------------------------------------
Gross profit........................................................          125,908            104,846            107,334
Selling expenses....................................................           52,291             48,331             47,400
General and administrative expenses.................................           31,730             25,026             26,611
Restructuring charges...............................................              910              1,239              3,697
Write-off/amortization of intangibles...............................              312                383              4,246
                                                                     -----------------------------------------------------------
Income from operations..............................................           40,665             29,867             25,380
Interest and debt expense...........................................           27,620             28,856             32,008
Other income, net...................................................           (5,218)            (4,191)            (2,149)
                                                                     -----------------------------------------------------------
Income (loss) from continuing operations before
   income tax expense and cumulative effect of
   accounting change................................................           18,263              5,202             (4,479)
Income tax expense..................................................            2,196              4,009              1,532
                                                                     -----------------------------------------------------------
Income (loss) from continuing operations before
   cumulative effect of accounting change...........................           16,067              1,193             (6,011)
Income from discontinued operations.................................              643                  -                  -
                                                                     -----------------------------------------------------------
Net income (loss) before cumulative effect of
   accounting change................................................           16,710              1,193             (6,011)
Cumulative effect of change in accounting principle.................                -                  -             (8,000)
                                                                     -----------------------------------------------------------
Net income (loss)...................................................    $      16,710      $       1,193      $     (14,011)
                                                                     ===========================================================


Average basic shares outstanding....................................           14,594             14,553             14,496
Average diluted shares outstanding..................................           14,803             14,554             14,496
Basic income (loss) per share:
     Income (loss) from continuing operations.......................    $        1.10      $        0.08      $       (0.42)
     Income from discontinued operations............................             0.04                  -                  -
     Cumulative effect of accounting change.........................                -                  -              (0.55)
                                                                     -----------------------------------------------------------
     Basic income (loss) per share..................................    $        1.14      $        0.08      $       (0.97)
                                                                     ===========================================================

Diluted income (loss) per share:
     Income (loss) from continuing operations.......................    $        1.09      $        0.08      $       (0.42)
     Income from discontinued operations............................             0.04                  -                  -
     Cumulative effect of accounting change.........................                -                  -              (0.55)
                                                                     -----------------------------------------------------------
     Diluted income (loss) per share................................    $        1.13      $        0.08      $       (0.97)
                                                                     ===========================================================
</TABLE>



                             See accompanying notes.





                                      F-4
<PAGE>

<TABLE>
<CAPTION>

                                                   COLUMBUS MCKINNON CORPORATION
                                          CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

                                          (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

                                      COMMON     ADDI-                                          ACCUMULATED
                                      STOCK      TIONAL                   ESOP      UNEARNED       OTHER         TOTAL
                                      ($.01     PAID-IN    ACCUMULATED    DEBT     RESTRICTED  COMPREHENSIVE  SHAREHOLDERS'
                                    PAR VALUE)  CAPITAL      DEFICIT   GUARANTEE     STOCK     (LOSS) INCOME     EQUITY
                                    ----------------------------------------------------------------------------------------
<S>                                   <C>        <C>        <C>         <C>          <C>         <C>            <C>
Balance at March 31, 2002..........   $    149   $104,920   $ (12,536)  $   (6,514)  $   (414)   $    (13,994)  $  71,611
Comprehensive loss:
Net loss 2003......................         --         --     (14,011)          --        --               --     (14,011)
Change in foreign currency
  Translation adjustment...........         --         --          --           --        --            7,453       7,453
Net unrealized loss on
investments, net                            --         --          --           --        --           (2,411)     (2,411)
  of tax benefit of $1,564.........
Net change in unrealized loss
  on derivatives qualifying as
  hedges, net of tax of $155.......         --         --          --           --        --              233         233
Change in minimum pension
  liability adjustment, net of
  tax benefit of $7,115............         --         --          --           --        --          (10,671)    (10,671)
                                                                                                                ---------
Total comprehensive loss..........                                                                                (19,407)
Earned 61,003 ESOP shares..........         --       (464)         --          805        --               --         341
Earned portion and adjustment of
    restricted shares..............         --        (44)         --           --        206              --         162
                                    ----------------------------------------------------------------------------------------
Balance at March 31, 2003..........   $    149   $104,412   $ (26,547)  $   (5,709)  $   (208)   $    (19,390)  $  52,707
Comprehensive income:
Net income 2004....................         --         --       1,193           --        --               --       1,193
Change in foreign currency
  translation adjustment...........         --         --          --           --        --            6,389       6,389
Net unrealized gain on
investments, net                            --         --          --           --        --            1,706       1,706
  of tax of $918...................
Net change in unrealized loss
  on derivatives qualifying as
  hedges, net of tax of $127.......         --         --          --           --        --              191         191
Change in minimum pension
  liability adjustment, net of
  tax of $352......................         --         --          --           --        --              528         528
                                                                                                                ---------
Total comprehensive income........                                                                                 10,007
Earned 37,049 ESOP shares..........         --       (393)         --          593        --               --         200
Earned portion and adjustment of
    restricted shares..............         --       (105)         --           --        169              --          64
                                    ----------------------------------------------------------------------------------------
Balance at March 31, 2004..........   $    149   $103,914   $ (25,354)  $   (5,116)  $    (39)   $    (10,576)  $  62,978
Comprehensive income:
Net income 2005....................         --         --      16,710           --        --               --      16,710
Change in foreign currency
  translation adjustment...........         --         --          --           --        --            2,830       2,830
Net unrealized loss on
investments, net                            --         --          --           --        --             (131)       (131)
  of tax benefit of $70............
Change in minimum pension
  liability adjustment, net of
  tax benefit of $27...............         --         --          --           --        --           (1,379)     (1,379)
                                                                                                                ----------
Total comprehensive income........                                                                                 18,030
Earned 35,108 ESOP shares..........         --       (266)         --          562        --               --         296
Stock options exercised, 52,000             --        428          --           --        --               --         428
shares.............................
Earned portion of restricted shares         --          2          --           --         33              --          35
                                    ----------------------------------------------------------------------------------------
Balance at March 31, 2005..........   $    149   $104,078   $  (8,644)  $   (4,554)  $     (6)   $     (9,256)  $  81,767
                                    ========================================================================================
</TABLE>


                             See accompanying notes.




                                      F-5

<PAGE>

<TABLE>
<CAPTION>

                                                   COLUMBUS MCKINNON CORPORATION
                                               CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                                          --------------------------------------------------
                                                                                        YEAR ENDED MARCH 31,
                                                                          --------------------------------------------------

                                                                                  2005              2004           2003
                                                                                  ----              ----           ----
                                                                                          (IN THOUSANDS)
OPERATING ACTIVITIES:
<S>                                                                          <C>               <C>             <C>
Income (loss) from continuing operations.................................    $     16,067      $      1,193    $    (6,011)
Adjustments to reconcile income (loss) from continuing
   operations to net cash provided by operating activities:
     Depreciation and amortization.......................................           9,171            10,126         14,803
     Deferred income taxes...............................................            (971)            6,413           (713)
     Loss on divestitures................................................             330             3,875          1,357
     Gain on sale of real estate/investments.............................          (4,632)           (5,143)        (1,949)
     Loss (gain) on early retirement of 2008 bonds.......................              40            (5,590)            --
     Amortization/write-off of deferred financing costs..................           1,575             6,613          3,696
     Other...............................................................             --                 67         (1,045)
     Changes in operating assets and liabilities
        net of effects of business divestitures:
          Trade accounts receivable and  unbilled revenues...............          (6,896)            1,140         (1,214)
          Inventories....................................................          (6,834)            8,351         11,379
          Prepaid expenses...............................................           1,796            (1,332)        (2,891)
          Other assets...................................................              10              (181)         3,915
          Trade accounts payable.........................................           3,192              (976)        (4,820)
          Accrued and non-current liabilities............................           4,313             1,813         (2,328)
                                                                          --------------------------------------------------
Net cash provided by operating activities of continuing operations.......          17,161            26,369         14,179
                                                                          --------------------------------------------------
INVESTING ACTIVITIES:
Sale (purchase) of marketable securities, net............................           1,314               110           (672)
Capital expenditures.....................................................          (5,925)           (3,619)        (5,040)
Proceeds from sale of businesses and surplus real estate.................           6,742             4,015         17,262
Proceeds from sale of property, plant, and equipment.....................              --               387            --
Proceeds from net assets held for sale...................................             375             3,376          4,418
                                                                          --------------------------------------------------
Net cash provided by investing activities of continuing operations.......           2,506             4,269         15,968
                                                                          --------------------------------------------------
FINANCING ACTIVITIES:
Proceeds from issuance of common stock...................................             428               --              --
Payments under revolving line-of-credit agreements.......................        (345,664)         (332,218)      (282,211)
Borrowings under revolving line-of-credit agreements.....................         344,541           325,326        249,081
Repayment of debt........................................................         (21,745)         (125,764)        (1,395)
Proceeds from issuance of long-term debt.................................             --            115,000             --
Payment of deferred financing costs......................................             (24)           (4,432)        (8,188)
Change in ESOP debt guarantee............................................             562               593            805
                                                                          --------------------------------------------------
Net cash used in financing activities of continuing operations...........         (21,902)          (21,495)       (41,908)
EFFECT OF EXCHANGE RATE CHANGES ON CASH..................................             (30)               15            132
                                                                          --------------------------------------------------
Net cash (used in) provided by continuing operations.....................          (2,265)            9,158        (11,629)
NET CASH PROVIDED BY DISCONTINUED OPERATIONS.............................             643                 -            504
                                                                          --------------------------------------------------
Net change in cash and cash equivalents..................................          (1,622)            9,158        (11,125)
Cash and cash equivalents at beginning of year...........................          11,101             1,943         13,068
                                                                          --------------------------------------------------
Cash and cash equivalents at end of year.................................    $      9,479      $     11,101    $     1,943
                                                                          ==================================================
Supplementary cash flows data:
     Interest paid.......................................................    $     28,133      $     30,002    $    30,867
     Income taxes paid (received), net...................................    $      2,029      $     (9,683)   $    (4,197)

</TABLE>



                             See accompanying notes.



                                      F-6


<PAGE>

                          COLUMBUS MCKINNON CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                (TABULAR AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)

1.    DESCRIPTION OF BUSINESS

Columbus  McKinnon  Corporation  (the  Company) is a leading  U.S.  designer and
manufacturer  of  material  handling   products,   systems  and  services  which
efficiently and  ergonomically  move, lift,  position and secure  material.  Key
products include hoists,  cranes,  chain and forged  attachments.  The Company's
material   handling  products  are  sold,   domestically  and   internationally,
principally to third party distributors through diverse  distribution  channels,
and to a lesser extent directly to end-users.  The Company's integrated material
handling  solutions  businesses  deal  primarily  with end  users  and sales are
concentrated,  domestically  and  internationally  (primarily  Europe),  in  the
consumer  products,  manufacturing,  warehousing  and, to a lesser  extent,  the
steel,  construction,  automotive and other  industrial  markets.  During fiscal
2005, approximately 63% of sales were to customers in the United States.


2.    ACCOUNTING PRINCIPLES AND PRACTICES


   ADVERTISING

      Costs  associated  with  advertising are expensed in the year incurred and
are  included in selling  expense in the  statement of  operations.  Advertising
expenses were $2,521,000,  $2,406,000,  and $2,932,000 in fiscal 2005, 2004, and
2003, respectively.

   CASH AND CASH EQUIVALENTS

      The Company  considers as cash  equivalents all highly liquid  investments
with an original maturity of three months or less.

   CONCENTRATIONS OF LABOR

     Approximately  22% of the  Company's  employees  are  represented  by seven
separate domestic and Canadian collective  bargaining agreements which terminate
at various times between September 2005 and March 2008.  Approximately 3% of the
labor force is covered by a  collective  bargaining  agreement  that will expire
within one year.

   CONSOLIDATION

      These  consolidated  financial  statements  include  the  accounts  of the
Company and its domestic and foreign subsidiaries;  all significant intercompany
accounts and transactions have been eliminated.

   DERIVATIVES AND FINANCIAL INSTRUMENTS

      Derivative instruments held by the Company that have high correlation with
the underlying exposure and are highly effective in offsetting  underlying price
movements are designated as hedges.  Accordingly,  gains and losses from changes
in derivatives fair values are deferred until the underlying  transaction occurs
at which point they are then  recognized  in the statement of  operations.  When
derivatives  are not designated as hedges,  the gains and losses from changes in
fair value are recorded currently in the statement of operations.  All derivates
are carried at fair value in the balance  sheet.  The fair values of derivatives
are  determined  by reference to quoted  market  prices.  The  Company's  use of
derivative  instruments  has  historically  been  limited to cash flow hedges of
certain interest rate risks.

      The carrying value of the Company's current assets and current liabilities
approximate  their fair values based upon the relatively short maturity of those
instruments.  For the fair value of the Company's marketable securities and debt
instruments, see Notes 6 and 10, respectively.


                                      F-7

<PAGE>

                          COLUMBUS MCKINNON CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

    FOREIGN CURRENCY TRANSLATIONS

      The Company translates foreign currency financial  statements as described
in Financial  Accounting Standards (FAS) No. 52. Under this method, all items of
income and expense are translated to U.S.  dollars at average exchange rates for
the year.  All assets and  liabilities  are  translated  to U.S.  dollars at the
year-end  exchange  rate.  Gains or  losses  on  translations  are  recorded  in
accumulated  other  comprehensive  income  (loss)  in the  shareholders'  equity
section of the balance sheet. The functional currency is the foreign currency in
which the foreign  subsidiaries  conduct their  business.  Gains and losses from
foreign currency  transactions  are reported in other income,  net. There was an
approximate  $0.2  million  gain and $0.6  million  and $0.8  million  losses on
transactions  with foreign  subsidiaries  in fiscal 2005,  2004 and fiscal 2003,
respectively.

   GOODWILL

      On April 1, 2002, the Company  adopted  Statement of Financial  Accounting
Standards (SFAS) No. 142, "Goodwill and Other Intangible Assets," which requires
that goodwill no longer be amortized,  but reviewed for  impairment on an annual
basis,  or more  frequently if indicators of impairment  exist, at the reporting
unit level.  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 and not
amortized until their lives are determined to be finite.

      Under SFAS No. 142, 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 regularly reviewed,  whether those units constitute
a business,  and the extent of economic  similarities  between  those  reporting
units for purposes of aggregation.  As a result of this analysis,  the reporting
units  identified  under SFAS No. 142 were at the component  level, or one level
below the  reporting  segment  level as defined under SFAS No. 131. The Products
segment was subdivided into three reporting units and the Solutions  segment was
subdivided  into two reporting  units. As a result of adopting SFAS No. 142, the
Company ceased  amortization of goodwill beginning April 1, 2002. See Note 8 for
further discussion of goodwill and intangible assets.

   INVENTORIES

      Inventories  are  valued  at  the  lower  of  cost  or  market.   Cost  of
approximately  57% of  inventories  at March  31,  2005  (55% in 2004)  has been
determined  using  the  LIFO  (last-in,   first-out)  method.   Costs  of  other
inventories have been determined using the FIFO (first-in, first-out) or average
cost method. FIFO cost approximates replacement cost.

   MARKETABLE SECURITIES

      All of the  Company's  marketable  securities,  which  consist  of  equity
securities and corporate and governmental  obligations,  have been classified as
available-for-sale  securities  and are therefore  recorded at their fair values
with the unrealized gains and losses,  net of tax, reported in accumulated other
comprehensive  loss within  shareholders'  equity unless  unrealized  losses are
deemed to be other than temporary.  In such instance,  the unrealized losses are
reported in the  statement of operations  within other income and expense,  net.
Estimated  fair value is based on published  trading values at the balance sheet
dates.  The amortized cost of debt  securities is adjusted for  amortization  of
premiums and accretion of discounts to maturity.  The cost of securities sold is
based on the specific  identification  method.  Interest and dividend income are
included in other income, net in the consolidated statements of operations.

      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.


                                      F-8

<PAGE>


                          COLUMBUS MCKINNON CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

   NET ASSETS HELD FOR SALE

      At March 31,  2005 and 2004,  net  assets  held for sale  includes  $0 and
$2,790,000, respectively. During fiscal 2005, one property was sold at a gain of
$2,586,000  which is  included  under the caption  other  income,  net.  Another
property was reclassified as held and used in accordance with FAS No. 144, based
on the  determination  that the sale of the  property is not expected to qualify
for recognition as a completed sale within one year.

   PROPERTY, PLANT, AND EQUIPMENT

      Property,  plant,  and  equipment  are  stated  at  cost  and  depreciated
principally  using the  straight-line  method  over their  respective  estimated
useful lives (buildings and building  equipment--15  to 40 years;  machinery and
equipment--3 to 18 years).  When  depreciable  assets are retired,  or otherwise
disposed of, the cost and related accumulated  depreciation are removed from the
accounts and any resulting gain or loss is reflected in operating results.

    RECLASSIFICATION

      Certain  prior  year  amounts  have been  reclassified  to  conform to the
current year presentation.

    RELATED PARTY TRANSACTIONS

      The Company  entered into a consulting  agreement with the Chairman of the
Board of Directors on October 1, 2002. The agreement provided  compensation at a
monthly rate of $23,750 through January 2003, at which point the arrangement was
terminated.

   RESEARCH AND DEVELOPMENT

      Research  and  development  costs as  defined  in FAS No. 2, for the years
ended March 31, 2005, 2004 and 2003 were $1,289,000,  $1,625,000 and $1,239,000,
respectively  and are  classified as general and  administrative  expense in the
statement of operations.

   REVENUE RECOGNITION AND CONCENTRATION OF CREDIT RISK

      Sales are recorded when title passes to the customer which is generally at
time of shipment to the customer, except for long-term construction contracts as
described  below.  The  Company  performs  ongoing  credit  evaluations  of  its
customers'  financial  condition,  but generally does not require  collateral to
support  customer  receivables.  The credit risk is  controlled  through  credit
approvals, limits and monitoring procedures. Accounts receivable are reported at
net  realizable  value and do not accrue  interest.  The Company  establishes an
allowance for doubtful  accounts based upon factors  surrounding the credit risk
of specific customers,  historical trends and other factors. Accounts receivable
are charged  against the  allowance for doubtful  accounts  once all  collection
efforts have been exhausted.  The Company does not routinely permit customers to
return product.  However, sales returns are permitted in specific situations and
typically include a restocking charge or the purchase of additional product. The
Company has established an allowance for returns based upon historical trends.

      The  Company   recognizes   contract  revenues  under  the  percentage  of
completion  method,  measured  by  comparing  direct  costs  incurred  to  total
estimated direct costs. Changes in job performance, job conditions and estimated
profitability,  including  those arising from final  contract  settlements,  may
result in  revisions  to costs and  income and are  recognized  in the period in
which the revisions are  determined.  In the event that a loss is anticipated on
an uncompleted  contract, a provision for the estimated loss is made at the time
it is determined.  Billings on contracts may precede or lag revenues earned, and
such  differences  are  reported  in the  balance  sheet as current  liabilities
(accrued liabilities) and current assets (unbilled revenues), respectively.


                                      F-9

<PAGE>



                          COLUMBUS MCKINNON CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

    SALE-LEASEBACK TRANSACTIONS

      On January 28, 2005, the Company sold its corporate  headquarters property
and has entered into a leaseback  for a portion of the facility  under a 10-year
lease  agreement.  Net proceeds to the Company for the sale of the property were
approximately $2.7 million and the gain on the transaction was $2.2 million.  Of
the total gain,  $1.0  million was  recognized  in 2005 under the caption  other
income,  and $1.2 million was deferred and will be recognized as income over the
10-year  leaseback  period.  Additionally,  $0.5 million of non-cash value (rent
abatement)  will be  recognized  on a  straight-line  basis as  lower  operating
expenses over the 10-year leaseback period.

   SHIPPING AND HANDLING COSTS

      Shipping and handling costs are a component of cost of products sold.

    STOCK-BASED COMPENSATION

      At March 31, 2005, the Company has two stock-based  employee  compensation
plans in effect, which are described more fully in Note 14. The Company accounts
for these plans under the recognition  and measurement  principles of Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" (APB
25) and related  Interpretations.  No stock based employee  compensation cost is
reflected  in net  income,  as all  options  granted  under  these  plans had an
exercise price equal to the market value of the  underlying  common stock on the
date of grant and the number of options  granted was fixed.  The following table
illustrates  the effect on net income and  earnings per share if the Company had
applied the fair value  recognition of SFAS No. 123  "Accounting for Stock-Based
Compensation", to stock-based employee compensation:

<TABLE>
<CAPTION>
                                                                  -----------------------------------------------
                                                                               YEAR ENDED MARCH 31,
                                                                  -----------------------------------------------
                                                                         2005            2004           2003
                                                                  -----------------------------------------------
<S>                                                                <C>            <C>              <C>
  Net income (loss), as reported..............................     $    16,710    $     1,193      $   (14,011)
     Deduct: Total stock based employee compensation
     expenses determined under fair value based method
     for all awards, net of related tax effects...............          (1,135)          (504)          (1,019)
                                                                  -----------------------------------------------
     Net income (loss), pro forma.............................     $    15,575    $       689      $   (15,030)
                                                                  ===============================================

  Basic income (loss) per share:
     As reported..............................................     $      1.14    $      0.08      $     (0.97)
                                                                  ===============================================
     Pro forma................................................     $      1.07    $      0.05      $     (1.04)
                                                                  ===============================================

  Diluted income (loss) per share:
     As reported..............................................     $      1.13    $      0.08      $     (0.97)
                                                                  ===============================================
     Pro forma................................................     $      1.05    $      0.05      $     (1.04)
                                                                  ===============================================
</TABLE>

   USE OF ESTIMATES

      The preparation of financial  statements in conformity with U.S. generally
accepted  accounting  principles  requires  management  to  make  estimates  and
assumptions  that affect the amounts  reported in the financial  statements  and
accompanying notes. Actual results could differ from those estimates.


                                      F-10

<PAGE>

                          COLUMBUS MCKINNON CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

    WARRANTIES

      The Company offers  warranties  for certain of the products it sells.  The
specific  terms and  conditions  of those  warranties  vary  depending  upon the
product sold and the country in which the Company sold the product.  The Company
generally  provides a basic limited warranty,  including parts and labor for any
product deemed to be defective for a period of one year.  The Company  estimates
the costs that may be incurred under its basic limited  warranty,  based largely
upon actual warranty repair costs history, and records a liability in the amount
of such costs in the month that the product revenue is recognized. The resulting
accrual balance is reviewed  during the year.  Factors that affect the Company's
warranty liability include the number of units sold,  historical and anticipated
rate of warranty claims, and cost per claim.

      Changes in the Company's product warranty accrual are as follows:

                                               ---------------------------
                                                         MARCH 31,
                                               ---------------------------
                                                   2005           2004
                                                   ----           ----
          Balance at beginning of year.......  $    889       $    482
          Accrual for warranties issued......     2,475          2,634
          Warranties settled.................    (2,532)        (2,227)
                                               ---------------------------
          Balance at end of year.............  $    832      $     889
                                               ===========================


3.    DISCONTINUED OPERATIONS

      In May 2002, the Company sold substantially all of the assets of Automatic
Systems,  Inc.  (ASI).  The ASI business was the principal  business unit in the
Company's   former  Solutions  -  Automotive   segment.   The  Company  received
$20,600,000  in cash and an 8%  subordinated  note in the  principal  amount  of
$6,800,000  which is  payable at a rate of  $214,000  per  quarter  over 8 years
beginning  August  2004.  Due  to  the  uncertainty  surrounding  the  financial
viability of the new  organization,  the note has been recorded at the estimated
net realizable value of $0. Principal payments received on the note are recorded
as income from discontinued  operations at the time of receipt. All interest and
principal payments required under the note have been made to date.


4.    UNBILLED REVENUES AND EXCESS BILLINGS

                                                           ---------------------
                                                                 MARCH 31,
                                                           ---------------------
                                                               2005       2004
                                                               ----       ----
       Costs incurred on uncompleted contracts.........    $  34,154   $  23,891
       Estimated earnings..............................       11,498       8,339
                                                           ---------------------
       Revenues earned to date.........................       45,652      32,230
       Less billings to date...........................       37,133      27,681
                                                           ---------------------
                                                           $   8,519   $   4,549
                                                           =====================

The net amounts above are included in the consolidated  balance sheets under the
following captions:

                                                          ----------------------
                                                                    MARCH 31,
                                                          ----------------------
                                                              2005        2004
                                                              ----        ----
     Unbilled revenues.................................   $   8,848    $  5,160
     Accrued liabilities...............................        (329)       (611)
                                                          ----------------------
                                                          $   8,519    $  4,549
                                                          ======================




                                      F-11


<PAGE>


                          COLUMBUS MCKINNON CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

5.    INVENTORIES

      Inventories consisted of the following:

                                                --------------------------------
                                                           MARCH 31,
                                                --------------------------------
                                                     2005             2004
                                                     ----             ----
     At cost--FIFO basis:
          Raw materials.......................  $    42,283     $     34,657
          Work-in-process.....................       10,238           10,169
          Finished goods......................       35,800           31,205
                                                --------------------------------
                                                     88,321           76,031
     LIFO cost less than FIFO cost............      (10,695)          (6,912)
                                                --------------------------------
     Net inventories..........................  $    77,626      $    69,119
                                                ================================


6.    MARKETABLE SECURITIES

Marketable  securities are held for the settlement of the Company's  general and
products liability insurance claims filed through the Company's  subsidiary,  CM
Insurance  Company,  Inc. (see Notes 2 and 15). On a quarterly  basis, we review
our  marketable  securities  for declines in market value that may be considered
other  than  temporary.  We  consider  market  value  declines  to be other than
temporary if they are declines for a period longer than six months and in excess
of 20% of original cost.

      The following is a summary of  available-for-sale  securities at March 31,
2005:
<TABLE>
<CAPTION>
                                                                              GROSS           GROSS        ESTIMATED
                                                                            UNREALIZED     UNREALIZED        FAIR
                                                                COST          GAINS          LOSSES          VALUE
                                                            ------------------------------------------------------------
<S>                                                            <C>           <C>             <C>           <C>
     Government securities................................     $    7,967    $       251     $        -    $     8,218
     Equity securities....................................         14,751          2,076            430         16,397
                                                            ------------------------------------------------------------
                                                               $   22,718    $     2,327     $      430    $    24,615
                                                            ============================================================
</TABLE>

      As of March 31, 2005, in accordance  with FAS No. 115, the Company reduced
the cost bases of certain equity  securities  since it was  determined  that the
unrealized losses on those securities were other than temporary in nature.  This
determination  resulted in the  recognition  of a pre-tax  charge to earnings of
$280,000 for the year ended March 31, 2005, classified within other income, net.
The above schedule reflects the reduced cost bases.

      The aggregate fair value of investments and unrealized losses on available
for sale  securities  in an  unrealized  loss  position at March 31, 2005 are as
follows:

<TABLE>
<CAPTION>
                                                                                  AGGREGATE            UNREALIZED
                                                                                 FAIR VALUE              LOSSES
                                                                           ---------------------------------------------

<S>                                                                             <C>                   <C>
      Equity securities in a loss position for less than 12 months              $     2,553           $       259
      Equity securities in a loss position for more than 12 months                    1,413                   171
                                                                           ---------------------------------------------
                                                                                $     3,966           $       430
                                                                           =============================================
</TABLE>

      The net gain or (loss) related to sales of marketable  securities  totaled
$706,000 $1,861,000 and $(478,000) in fiscal 2005, 2004 and 2003, respectively.



                                      F-12

<PAGE>


                          COLUMBUS MCKINNON CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

      The following is a summary of  available-for-sale  securities at March 31,
2004:
<TABLE>
<CAPTION>
                                                                              GROSS           GROSS        ESTIMATED
                                                                            UNREALIZED     UNREALIZED        FAIR
                                                                COST          GAINS          LOSSES          VALUE
                                                            ------------------------------------------------------------
<S>                                                            <C>           <C>             <C>           <C>
     Government securities................................     $    6,874    $       440     $        -    $     7,314
     Equity securities....................................         16,383          1,929            271         18,041
                                                            ------------------------------------------------------------
                                                               $   23,257    $     2,369     $      271    $    25,355
                                                            ============================================================
</TABLE>

      As of March 31, 2004, in accordance  with FAS No. 115, the Company reduced
the cost bases of certain equity  securities  since it was  determined  that the
unrealized losses on those securities were other than temporary in nature.  This
determination  resulted in the  recognition  of a pre-tax  charge to earnings of
$110,000  and   $2,189,000  for  the  years  ended  March  31,  2004  and  2003,
respectively,  classified within other income,  net. The above schedule reflects
the reduced cost bases.

     The amortized cost and estimated  fair value of debt and equity  securities
at March 31, 2005, by contractual maturity, are shown below:

                                                                   ESTIMATED
                                                                     FAIR
                                                      COST           VALUE
                                                 -------------------------------
     Due in one year or less..............           $    3,706  $       3,704
     Due in one to five years.............                1,287          1,326
     Due in five to ten years.............                2,353          2,511
     Due after ten years..................                  621            677
                                                 -------------------------------
                                                          7,967          8,218
     Equity securities....................               14,751         16,397
                                                 -------------------------------
                                                     $   22,718  $      24,615
                                                 ===============================

      Net  unrealized  gain included in the balance sheet amounted to $1,897,000
at March 31, 2005 and $2,098,000 at March 31, 2004. The amounts,  net of related
income taxes of $664,000 and $734,000 at March 31, 2005 and 2004,  respectively,
are  reflected as a component of  accumulated  other  comprehensive  loss within
shareholders' equity.


7.    PROPERTY, PLANT, AND EQUIPMENT

      Consolidated  property,  plant, and equipment of the Company  consisted of
the following:

<TABLE>
<CAPTION>
                                                                                          ------------------------------
                                                                                                   MARCH 31,
                                                                                          ------------------------------
                                                                                               2005           2004
                                                                                               ----           ----
<S>                                                                                         <C>            <C>
     Land and land improvements.........................................................    $   5,183      $   5,554
     Buildings..........................................................................       33,991         32,541
     Machinery, equipment, and leasehold improvements...................................       99,147         96,809
     Construction in progress...........................................................        2,089          1,509
                                                                                          ------------------------------
                                                                                              140,410        136,413
     Less accumulated depreciation......................................................       83,173         77,640
                                                                                          ------------------------------
     Net property, plant, and equipment.................................................    $  57,237      $  58,773
                                                                                          ==============================
</TABLE>

      Depreciation   expense  from   continuing   operations   was   $8,859,000,
$9,743,000,  and  $10,557,000 for the years ended March 31, 2005, 2004 and 2003,
respectively.


                                      F-13

<PAGE>

                          COLUMBUS MCKINNON CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

8.    GOODWILL AND INTANGIBLE ASSETS

      As  discussed  in Note 2,  effective  April 1, 2002,  the Company  adopted
Statement of Financial  Accounting Standards (SFAS) No. 142, "Goodwill and Other
Intangible  Assets,"  which  requires that goodwill no longer be amortized,  but
reviewed for impairment on an annual basis,  or more frequently if indicators of
impairment  exist, at the reporting unit level.  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  and  not  amortized  until  their  lives  are
determined to be finite.

      Under SFAS No. 142, 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 regularly reviewed,  whether those units constitute
a business,  and the extent of economic  similarities  between  those  reporting
units for purposes of aggregation.  As a result of this analysis,  the reporting
units  identified  under SFAS No. 142 were at the component  level, or one level
below the  reporting  segment  level as defined under SFAS No. 131. The Products
segment was subdivided into three reporting units and the Solutions  segment was
subdivided into two reporting units.

      Upon the  adoption of SFAS No. 142 in the second  quarter of fiscal  2003,
the Company  recorded a one-time,  non-cash  charge of  $8,000,000 to reduce the
carrying value of its goodwill as of April 1, 2002.  Such charge is reflected as
a cumulative  effect of a change in  accounting  principle  in the  accompanying
consolidated  statement of operations.  The impairment charge was related to the
Cranebuilder  reporting unit in the Products segment and the Univeyor  reporting
unit in the Solutions  segment.  In relation to the initial adoption of SFAS No.
142,  goodwill was allocated  amongst the  reporting  units so that goodwill was
allocated to the units that  benefited from the  acquisitions.  The Company will
record any future impairment charges as a component of operating income.

      During the fourth quarter of fiscal 2003, the Company performed its annual
impairment  review.  Based on a decline in the  performance  of the Duff  Norton
Group reporting unit,  operating profits and cash flows were lower than expected
in Fiscal 2003.  Based on that trend,  the  earnings  forecast for the next five
years was  revised.  The Company  recorded a  $4,000,000  charge for  impairment
related  to our  Duff  Norton  Group  reporting  unit.  This was  recorded  as a
component  of operating  income in the  accompanying  consolidated  statement of
operations as part of write-off/amortization  of intangibles.  The fair value of
the Duff Norton Group  reporting unit was estimated  using the expected  present
value of future cash flows.

      The  impairment  charge is  non-cash  in  nature  and did not  affect  the
Company's  liquidity  or  result  in  non-compliance  with  respect  to any debt
covenants contained in the Company's credit facilities.

      No impairment charges were recorded during fiscal 2005 or 2004.

      A summary of changes in goodwill during the years ended March 31, 2005 and
2004 by business segment is as follows:
<TABLE>
<CAPTION>
                                                                 PRODUCTS         SOLUTIONS            TOTAL
                                                             ------------------------------------------------------
<S>                  <C> <C>                                   <C>               <C>               <C>
    Balance at March 31, 2003................................. $   184,921       $         -       $   184,921
    Currency translation...................................            725                 -               725
    Divestitures...........................................           (652)                -              (652)
                                                             ----------------- ----------------- ------------------
    Balance at March 31, 2004................................. $   184,994       $         -       $   184,994
    Currency translation...................................            449                 -               449
                                                             ----------------- ----------------- ------------------
    Balance at March 31, 2005................................. $   185,443       $         -       $   185,443
                                                             ================= ================= ==================
</TABLE>

      No reclassification of identifiable  intangible assets apart from goodwill
was necessary as a result of adoption of SFAS No. 142.


                                      F-14

<PAGE>


                          COLUMBUS MCKINNON CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

      Other intangibles, net consists of the following:

                                              ----------------------------------
                                                           MARCH 31,
                                              ----------------------------------
                                                    2005               2004
                                                    ----               ----
     Intangible pension assets............... $       1,537     $       1,320
     Patents and other, net..................           305               428
                                              ----------------------------------
     Other intangibles, net.................. $       1,842     $       1,748
                                              ==================================

      Only the patents and other, net is subject to  amortization.  Based on the
current amount of patents and other, net, the estimated amortization expense for
each of the succeeding five years is expected to be $108,000,  $86,000, $60,000,
$36,000, and 14,000, respectively.


9.    ACCRUED LIABILITIES AND OTHER NON-CURRENT LIABILITIES

      Consolidated accrued liabilities of the Company consisted the following:

                                                         -----------------------
                                                                  MARCH 31,
                                                         -----------------------
                                                             2005         2004
                                                             ----         ----
     Accrued payroll.................................... $   15,895   $   10,188
     Accrued pension cost...............................      4,325        7,869
     Interest payable...................................      8,097        8,970
     Accrued workers compensation.......................      6,093        5,220
     Accrued income taxes payable.......................      4,237        4,062
     Accrued postretirement benefit obligation..........      2,100        2,250
     Accrued health insurance...........................      2,550        2,100
     Other accrued liabilities..........................      8,665        7,757
                                                         -----------------------
                                                         $   51,962   $   48,416
                                                         =======================


      Consolidated  other  non-current  liabilities of the Company consisted the
following:

                                                         -----------------------
                                                                   MARCH 31,
                                                         -----------------------
                                                             2005         2004
                                                             ----         ----
     Accumulated postretirement benefit obligation...... $    5,273   $    5,840
     Accrued general and product liability costs........     16,094       15,930
     Accrued pension cost...............................     18,637       14,591
     Other non-current liabilities......................      2,365        1,561
                                                         -----------------------
                                                         $   42,369   $   37,922
                                                         =======================



                                      F-15

<PAGE>


                          COLUMBUS MCKINNON CORPORATION
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

10.    DEBT

      Consolidated debt of the Company consisted of the following:
<TABLE>
<CAPTION>
                                                                                          --------------------------------
                                                                                                    MARCH 31,
                                                                                          --------------------------------
                                                                                               2005            2004
                                                                                               ----            ----
<S>                                                                                         <C>             <C>
     Revolving Credit Facility due March 31, 2007........................................   $          -    $          -
     Term Loan to be repaid April 29, 2005...............................................          5,819           7,821
     10% Senior Secured Notes due August 1, 2010  with interest
        payable in semi-annual installments .............................................        115,000         115,000
     Other senior debt...................................................................            735             987
                                                                                          --------------------------------
     Total senior debt...................................................................        121,554         123,808
     8 1/2% Senior Subordinated Notes due March 31, 2008 with interest
        payable in semi-annual installments at 8.45% effective rate, recorded
        net of unamortized discount of $127 ($169 at March 31, 2004).....................        144,548         164,131
                                                                                          --------------------------------
     Total...............................................................................        266,102         287,939
     Less current portion................................................................          5,819           2,205
                                                                                          --------------------------------
                                                                                            $    260,283    $    285,734
                                                                                          ================================
</TABLE>

      On November 21, 2002, the Company  refinanced its credit  facilities.  The
arrangement  consisted of a Revolving Credit Facility, a Term Loan, and a Senior
Second  Secured Term Loan. The Senior Second Secured Term Loan was refinanced as
described  below. On April 29, 2005, the Company amended its credit  facilities.
As a result of the amendment, the Term Loan was repaid in its entirety.

      The Revolving Credit Facility was amended to provide  availability up to a
maximum of $65 million.  Prior to the amendment,  the Revolving  Credit Facility
provided availability up to a maximum of $50 million.  Availability based on the
underlying  collateral  at March 31, 2005  amounted to $50  million.  The unused
Revolving Credit Facility totaled $39.4 million,  net of outstanding  borrowings
of $0.0 million and outstanding letters of credit of $10.6 million.  Interest on
the revolver is payable at varying Eurodollar rates based on LIBOR or prime plus
a spread  determined by the  Company's  leverage  ratio  amounting to 225 or 100
basis points,  respectively,  at March, 31, 2005.  Effective Apirl 29, 2005, the
amended credit facility would have interest payable at varying  Eurodollar rates
based on LIBOR or prime plus a spread determined by the Company's leverage ratio
amounting  to 175 or 50 basis  points,  respectively,  at March  31,  2005.  The
Revolving  Credit  Facility is secured by all domestic  inventory,  receivables,
equipment,  real  property,   subsidiary  stock  (limited  to  65%  for  foreign
subsidiaries) and intellectual property.

      On July 22, 2003,  the Company  issued $115 million of 10% Senior  Secured
Notes  due  August  1,  2010.  Proceeds  from  this  offering  were used for the
repayment in full of the Senior Second  Secured Term Loan ($66.8  million),  the
repurchase of $35.7 million of Senior  Subordinated  Notes at a discount  ($30.1
million),  the  repayment  of a  portion  of the  outstanding  Revolving  Credit
Facility  ($10.0  million),  the  repayment  of a portion of the Term Loan ($3.9
million),  the payment of  financing  costs ($2.8  million),  and the payment of
accrued interest ($1.4 million).

      As noted  above,  the Senior  Second  Secured  Term loan was repaid in its
entirety on July 22, 2003. In accordance with the terms of the agreement,  since
the loan was repaid prior to the first  anniversary date, the payment of certain
accrued  interest  was waived.  As a result,  $1.1  million of accrued  interest
expense was  reversed in fiscal 2004 and is reflected as a reduction of interest
expense.

      The  redemption  in fiscal  2004 of the 8 1/2% Senior  Subordinated  Notes
occurred  at a  discount  resulting  in a $5.6  million  pre-tax  gain on  early
extinguishment  of debt.  As a result  of the  repayment  of the  Senior  Second
Secured Term Loan and a portion of the Term Loan and 8 1/2% Senior  Subordinated
Notes,  $4.9 million of pre-tax  deferred  financing  costs were  written-off in
fiscal 2004. The net effect of these two items, a $0.7 million  pre-tax gain, is
shown as part of other income, net.

      The  corresponding  credit agreement  associated with the Revolving Credit
Facility  places certain debt covenant  restrictions  on the Company,  including
certain  financial  requirements  and a restriction on dividend  payments,  with
which the Company was in compliance as of March 31, 2005.


                                      F-16

<PAGE>

                          COLUMBUS MCKINNON CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

      From  time to  time,  the  Company  manages  its debt  portfolio  by using
interest rate swaps to achieve an overall desired position of fixed and floating
rates. In June 2001, the Company entered into an interest rate swap agreement to
effectively  convert $40 million of variable-rate debt to fixed-rate debt, which
matured in June 2003. This cash flow hedge was considered effective and the gain
or loss on the change in fair value was reported in other comprehensive  income,
net of tax.

      In August 2003,  the Company  entered into an interest rate swap agreement
to convert $93.5 million of fixed-rate debt (10%) to  variable-rate  debt (LIBOR
plus 578.2 basis points)  through August 2008 and $57.5 million from August 2008
through August 2010. This interest rate swap was considered an ineffective hedge
and therefore the change in fair value was  recognized in income as a gain.  The
swap was  terminated  in January  2004 and a pre-tax  gain of $1.9  million  was
recognized as other income as a result of changes in the fair value of the swap.


      Provisions of the 8 1/2% Senior Subordinated Notes (8 1/2% Notes) include,
without  limitation,  restrictions  on liens,  indebtedness,  asset  sales,  and
dividends and other restricted payments.  The 8 1/2% Notes are redeemable at the
option of the Company,  in whole or in part, at prices  declining  annually from
the Make-Whole  Price (as defined in the 8 1/2% Notes  agreement) to 100% on and
after  April 1,  2006.  In the event of a Change of Control  (as  defined in the
indenture  for such  notes),  each  holder of the 8 1/2% Notes may  require  the
Company  to  repurchase  all or a portion  of such  holder's  8 1/2%  Notes at a
purchase price equal to 101% of the principal  amount thereof.  The 8 1/2% Notes
are guaranteed by certain existing and future domestic  subsidiaries and are not
subject to any sinking fund requirements.

      Provisions of the 10% Senior  Secured Notes (10% Notes)  include,  without
limitation,  restrictions on liens, indebtedness, asset sales, and dividends and
other  restricted  payments.  The 10% Notes are  redeemable at the option of the
Company,  in whole or in part, at prices declining  annually from the Make-Whole
Price (as  defined in the 10% Notes  agreement)  to 100% on and after  August 1,
2009.  In the event of a Change of Control (as defined in the indenture for such
notes),  each holder of the 10% Notes may require the Company to repurchase  all
or a portion of such holder's 10% Notes at a purchase price equal to 101% of the
principal  amount thereof.  The 10% Notes are guaranteed by certain existing and
future  domestic   subsidiaries   and  are  not  subject  to  any  sinking  fund
requirements.  The 10% Notes are also secured, in a second lien position, by all
domestic  inventory,  receivables,  equipment,  real property,  subsidiary stock
(limited to 65% for foreign subsidiaries) and intellectual property.

      The carrying  amount of the Company's  revolving  credit facility and term
loan  approximates  the fair value based on current market rates.  The Company's
Senior  Secured Notes and Senior  Subordinated  Notes have an  approximate  fair
market value of $122,187,000  and  $143,952,000,  respectively,  based on quoted
market prices,  the total of which is more than their aggregate  carrying amount
of $259,548,000.

      The  principal  payments  scheduled to be made as of March 31, 2005 on the
above debt, for the next five annual periods subsequent thereto,  are as follows
(in thousands):


        2006                           $       5,819
        2007                                     177
        2008                                 144,699
        2009                                      99
        2010                                      36





                                      F-17

<PAGE>

                          COLUMBUS MCKINNON CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

11.    RETIREMENT PLANS

      The Company provides  defined benefit pension plans to certain  employees.
The  Company  uses  December 31 as the  measurement  date for all of its pension
plans.  The following  provides a  reconciliation  of benefit  obligation,  plan
assets, and funded status of the plans:

<TABLE>
<CAPTION>
                                                                                        ----------------------------------
                                                                                                   MARCH 31,
                                                                                        ----------------------------------
                                                                                              2005            2004
                                                                                              ----            ----
     Change in benefit obligation:
<S>                                                                                        <C>              <C>
          Benefit obligation at beginning of year......................................    $   110,865      $    96,562
          Service cost.................................................................          4,285            3,921
          Interest cost................................................................          6,718            6,711
            Actuarial loss.............................................................          2,888            7,846
          Benefits paid................................................................         (4,410)          (4,248)
          Foreign exchange rate changes................................................            288               73
                                                                                        ----------------------------------
          Benefit obligation at end of year............................................    $   120,634      $   110,865
                                                                                        ==================================

     Change in plan assets:
          Fair value of plan assets at beginning of year...............................    $    80,564      $    65,428
          Actual gain (loss) on plan assets............................................          5,251            9,725
          Employer contribution........................................................          9,673            9,597
          Benefits paid................................................................         (4,411)          (4,248)
          Foreign exchange rate changes................................................            246               62
                                                                                        ----------------------------------
          Fair value of plan assets at end of year.....................................    $    91,323      $    80,564
                                                                                        ==================================

          Funded status ...............................................................    $   (29,311)     $   (30,301)
          Unrecognized actuarial loss..................................................         29,744           29,829
          Unrecognized prior service cost..............................................          1,537            1,320
                                                                                        ----------------------------------
          Net amount recognized........................................................    $     1,970      $       848
                                                                                        ==================================

      Amounts recognized in the consolidated balance sheets are as follows:
                                                                                        ----------------------------------
                                                                                                   MARCH 31,
                                                                                        ----------------------------------
                                                                                              2005            2004
                                                                                              ----            ----
          Intangible asset.............................................................    $     1,537      $     1,320
          Accrued liabilities..........................................................         (4,325)          (7,869)
          Other non-current liabilities................................................        (18,637)         (14,591)
          Deferred tax effect of accumulated other comprehensive loss..................          8,823            8,795
          Accumulated other comprehensive loss.........................................         14,572           13,193
                                                                                        ----------------------------------
          Net amount recognized........................................................    $     1,970      $       848
                                                                                        ==================================
</TABLE>

      Net periodic pension cost included the following components:
<TABLE>
<CAPTION>
                                                                           ------------------------------------------------
                                                                                        YEAR ENDED MARCH 31,
                                                                           ------------------------------------------------
                                                                                 2005            2004           2003
                                                                                 ----            ----           ----
<S>                                                                            <C>              <C>            <C>
     Service costs--benefits earned during the period......................    $    4,285       $    3,921     $    3,760
     Interest cost on projected benefit obligation........................         6,719            6,711          6,294
     Expected return on plan assets.......................................        (6,666)          (5,404)        (6,026)
     Net amortization.....................................................         4,033            1,978            299
                                                                           ------------------------------------------------
     Net periodic pension cost............................................    $    8,371       $    7,206     $    4,327
                                                                           ================================================
</TABLE>

      The fiscal 2005 pension  expense  includes a one-time,  non-cash charge of
$2,037,000 relating to a defined benefit plan at one of our foreign operations.

      The  accumulated  benefit  obligation  for all defined  benefit  plans was
$113,486,000 and $102,528,000 as of March 31, 2005 and 2004, respectively.


                                      F-18

<PAGE>

                          COLUMBUS MCKINNON CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)


      Information  for pension  plans with a  projected  benefit  obligation  in
excess of plan assets is as follows:
                                               --------------------------------
                                                          MARCH 31,
                                               --------------------------------

                                                      2005             2004
                                                      ----             ----
          Projected benefit obligation........    $   120,634      $   110,865
          Fair value of plan assets...........         91,323           80,564

      Information  for pension plans with an accumulated  benefit  obligation in
excess of plan assets is as follows:
                                               --------------------------------
                                                          MARCH 31,
                                               --------------------------------

                                                      2005             2004
                                                      ----             ----
          Accumulated benefit obligation......    $   113,486      $   102,528
          Fair value of plan assets...........         91,323           80,564

      Unrecognized gains and losses are amortized on a straight-line  basis over
the average remaining service period of active participants.

      The  weighted-average  assumptions  in the following  table  represent the
rates used to develop  the  actuarial  present  value of the  projected  benefit
obligation  for the  year  listed  and also net  periodic  pension  cost for the
following  year (with the exception of the expected long-term rate of return for
fiscal 2006 as noted below):

<TABLE>
<CAPTION>
                                                                                  MARCH 31,
                                                            --------------------------------------------------------
                                                                2005          2004          2003          2002
                                                            --------------------------------------------------------
<S>                                                              <C>          <C>            <C>           <C>
     Discount rate........................................       6.00%        6.25%          6.75%         7.25%
     Expected long-term rate of return on plan assets.....       8.25         8.40           8.50          8.88
     Rate of compensation increase........................       4.00         4.00           4.00          4.00
</TABLE>

      The expected  long-term rate of return on plan assets for determination of
the net periodic pension cost for fiscal 2006 will be 7.5%. The expected rate of
return on plan asset assumptions are determined  considering historical averages
and real returns on each asset class.

      The Company's  retirement plan target and actual asset  allocations are as
follows:
                                                   MARCH 31,
                             --------------------------------------------------
                                TARGET                       ACTUAL
                             --------------       -----------------------------
                                 2006                  2005          2004
                             --------------       -----------------------------
     Equity securities......       70%                   55%           55%
     Fixed income...........       30                    45            45
                             --------------       -----------------------------
     Total plan assets......      100%                  100%          100%
                             ==============       =============================

      The Company has an  investment  objective  for domestic  pension  plans to
adequately  provide  for both the growth  and  liquidity  needed to support  all
current and future benefit payment  obligations.  The investment  strategy is to
invest in a  diversified  portfolio  of assets which are expected to satisfy the
aforementioned  objective and produce both  absolute and risk  adjusted  returns
competitive  with a  benchmark  that is a blend of the S&P 500 and an  aggregate
bond fund.  The shift to the targeted  allocation is the result of  management's
re-evaluation  of its investment  allocation.  The targeted  allocation  will be
accomplished as some plan assets governed by collective  bargaining contracts to
be transferred from fixed income into equity securities, as well as reallocation
of remaining assets to achieve the desired balance during fiscal 2006.

      The Company's  funding policy with respect to the defined  benefit pension
plans is to  contribute  annually  at least the minimum  amount  required by the
Employee   Retirement   Income   Security  Act  of  1974   (ERISA).   Additional
contributions  may be made to minimize  PBGC  premiums.  The Company  expects to
contribute $4,491,000 to its pension plans in fiscal 2006.


                                      F-19

<PAGE>


                          COLUMBUS MCKINNON CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

      Information  about the expected benefit payments for the Company's defined
benefit plans is as follows:


        2006                           $      4,692
        2007                                  5,010
        2008                                  6,265
        2009                                  5,977
        2010                                  6,541
        2011-2015                            42,592

      The  Company   also   sponsors   defined   contribution   plans   covering
substantially all domestic employees. Participants may elect to contribute basic
contributions. These plans provide for employer contributions based primarily on
employee participation.  The Company recorded a charge for such contributions of
approximately  $673,000,  $635,000 and  $1,430,000 for the years ended March 31,
2005, 2004 and 2003, respectively.


12.    EMPLOYEE STOCK OWNERSHIP PLAN (ESOP)

      The AICPA Statement of Position 93-6,  "Employers' Accounting for Employee
Stock  Ownership  Plans" requires that  compensation  expense for ESOP shares be
measured  based on the fair value of those shares when  committed to be released
to employees, rather than based on their original cost. Also, dividends on those
ESOP shares that have not been  allocated  or  committed  to be released to ESOP
participants  are not  reflected  as a reduction of retained  earnings.  Rather,
since  those  dividends  are used for debt  service,  a charge  to  compensation
expense is recorded.  Furthermore,  ESOP shares that have not been  allocated or
committed  to be  released  are  not  considered  outstanding  for  purposes  of
calculating earnings per share.

      The obligation of the ESOP to repay borrowings incurred to purchase shares
of the Company's  common stock is guaranteed by the Company;  the unpaid balance
of such borrowings, if any, would be reflected in the consolidated balance sheet
as a liability.  An amount equivalent to the cost of the  collateralized  common
stock  and  representing  deferred  employee  benefits  has been  recorded  as a
deduction from shareholders' equity.

      Substantially  all of  the  Company's  domestic  non-union  employees  are
participants in the ESOP.  Contributions  to the plan result from the release of
collateralized  shares as debt service payments are made.  Compensation  expense
amounting  to $296,000,  $200,000  and  $341,000 in fiscal 2005,  2004 and 2003,
respectively,  is recorded based on the guaranteed release of the ESOP shares at
their fair market  value.  Dividends  on  allocated  ESOP  shares,  if any,  are
recorded  as a  reduction  of  retained  earnings  and are  applied  toward debt
service.

      At  March  31,  2005  and  2004,  795,791  and  836,949  of  ESOP  shares,
respectively,  were  allocated or  available  to be  allocated to  participants'
accounts.  At March 31,  2005 and 2004,  284,695 and 319,802 of ESOP shares were
pledged as collateral to guarantee the ESOP term loans.

      The fair market value of unearned  ESOP shares at March 31, 2005  amounted
to $3,878,000.


13.    POSTRETIREMENT BENEFIT OBLIGATION

      The Company sponsors defined benefit postretirement health care plans that
provide  medical and life insurance  coverage to certain  domestic  retirees and
their  dependents of one of its  subsidiaries.  Prior to the acquisition of this
subsidiary,  the Company did not sponsor any  postretirement  benefit plans. The
Company  pays the majority of the medical  costs for certain  retirees and their
spouses  who are under age 65. For  retirees  and  dependents  of  retirees  who
retired  prior  to  January  1,  1989,  and  are  age 65 or  over,  the  Company
contributes  100% toward the American  Association of Retired  Persons  ("AARP")
premium  frozen at the 1992 level.  For retirees and  dependents of retirees who
retired after January 1, 1989, the Company  contributes $35 per month toward the
AARP premium. The life insurance plan is noncontributory.


                                      F-20

<PAGE>

                          COLUMBUS MCKINNON CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

      On December  8, 2003,  Congress  passed the  Medicare  Prescription  Drug,
Improvement,  and Modernization Act of 2003 ("Medicare Act"). In March 2004, the
FASB issued Staff Position No FAS 106-2 "Accounting and Disclosure  Requirements
Related to the Medicare  Prescription  Drug Improvement and Modernization Act of
2003 ("FSP No 106-2")," which provides accounting guidance on how to account for
the  effects  of  the  Medicare  Act  on   postretirement   plans  that  provide
prescription drug benefits.  The Medicare Act also requires certain  disclosures
regarding the effect of the subsidy provided by the Medicare Act.  Additionally,
FSP 106-2 provides two transition methods - retroactive to the date of enactment
or prospective from the date of adoption. The Company elected to adopt FAS 106-2
and apply the  prospective  transition  method in the  second  quarter of fiscal
2005. The accumulated post retirement benefit obligation decreased $2,339,000 as
of July 4,  2004 and net  periodic  postretirement  benefit  cost  decreased  by
$225,000 for fiscal 2005.

      The  Company's  postretirement  health  benefit  plans are not funded.  In
accordance  with FAS No. 132  "Employers'  Disclosures  about Pensions and Other
Postretirement  Benefits," the following sets forth a reconciliation  of benefit
obligations and the funded status of the plan:
<TABLE>
<CAPTION>
                                                                                    ----------------------------------
                                                                                               MARCH 31,
                                                                                    ----------------------------------
                                                                                           2005            2004
                                                                                           ----            ----
     Change in benefit obligation:
<S>                                                                                    <C>             <C>
          Benefit obligation at beginning of year..................................    $    15,984     $    13,800
          Service cost.............................................................             17              11
          Interest cost............................................................            834             869
          Amendment................................................................         (2,339)              -
          Actuarial loss...........................................................            460           3,692
          Benefits paid............................................................         (2,029)         (2,388)
                                                                                    ----------------------------------
             Benefit obligation at end of year.....................................    $    12,927     $    15,984
                                                                                    ==================================

          Funded status ...........................................................    $   (12,927)    $   (15,984)
          Unrecognized actuarial loss..............................................          5,554           7,894
                                                                                    ----------------------------------
          Net amount recognized in accrued and other non-current liabilities.......    $    (7,373)    $    (8,090)
                                                                                    ==================================
</TABLE>

      Net periodic postretirement benefit cost included the following:
<TABLE>
<CAPTION>
                                                                              ----------------------------------------
                                                                                       YEAR ENDED MARCH 31,
                                                                              ----------------------------------------
                                                                                  2005         2004         2003
                                                                                  ----         ----         ----
<S>                                                                               <C>          <C>          <C>
     Service cost--benefits attributed to service during the period...........    $   17       $   11       $   13
     Interest cost...........................................................        834          869          832
     Amortization of prior service gain......................................          -         (153)        (154)
     Amortization of plan net losses.........................................        460          643          209
                                                                              ----------------------------------------
          Net periodic postretirement benefit cost...........................     $1,311       $1,370       $  900
                                                                              ========================================
</TABLE>

      For measurement purposes,  healthcare costs were assumed to increase 93/4%
in fiscal 2006,  grading down over time to 5% in seven years.  The discount rate
used in determining the accumulated  postretirement benefit obligation was 6.00%
and 6.25% as of March 31, 2005 and 2004, respectively.


      Information   about  the  expected  benefit  payments  for  the  Company's
postretirement health benefit plans is as follows:

        2006                           $       1,822
        2007                                   1,683
        2008                                   1,588
        2009                                   1,441
        2010                                   1,311
        2011-2015                              5,503


                                      F-21

<PAGE>


                          COLUMBUS MCKINNON CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

      Assumed  medical  claims  cost trend  rates have an effect on the  amounts
reported  for the health care plans.  A  one-percentage  point change in assumed
health care cost trend rates would have the following effects:

<TABLE>
<CAPTION>
                                                                               ONE PERCENTAGE        ONE PERCENTAGE
                                                                               POINT INCREASE        POINT DECREASE
                                                                           ---------------------------------------------
<S>                                                                                 <C>                 <C>
          Effect on total of service and interest cost components.........          $      42           $     (43)
          Effect on postretirement obligation.............................                591                (539)
</TABLE>


14. EARNINGS PER SHARE AND STOCK PLANS

   EARNINGS PER SHARE

      The Company calculates  earnings per share in accordance with Statement of
Financial  Accounting  Standards  No. 128,  "Earnings  per Share" (FAS No. 128).
Basic earnings per share excludes any dilutive effects of options, warrants, and
convertible securities. Diluted earnings per share includes any dilutive effects
of stock  options.  The effect of dilutive  employee  stock options has not been
included for the year ended March 31, 2003 since this would be antidilutive as a
result of the Company's net losses.

      The  following  table  sets  forth the  computation  of basic and  diluted
earnings per share:

<TABLE>
<CAPTION>
                                                                      -----------------------------------------------------
                                                                                           YEAR ENDED MARCH 31,
                                                                      -----------------------------------------------------
                                                                            2005             2004              2003
                                                                            ----             ----              ----
     Numerator for basic and diluted earnings per share:
<S>                                                                     <C>              <C>               <C>
        Income (loss) from continuing operations.....................   $       16,067   $        1,193    $       (6,011)
        Income from discontinued operations..........................              643                -                 -
        Loss from cumulative effect of change in
          accounting principle.......................................                -                -            (8,000)
                                                                      -----------------------------------------------------
          Net income (loss) .........................................   $       16,710   $        1,193    $      (14,011)
                                                                      =====================================================

     Denominators:
        Weighted-average common stock outstanding--
          denominator for basic EPS..................................           14,594           14,553            14,496
        Effect of dilutive employee stock options....................              209                1                --
                                                                      -----------------------------------------------------
        Adjusted weighted-average common stock
          outstanding and assumed conversions--
          denominator for diluted EPS................................           14,803           14,554            14,496
                                                                      =====================================================
</TABLE>


      The  weighted-average  common  stock  outstanding  shown  above  is net of
unallocated ESOP shares (see Note 12).

   STOCK PLANS

      The Company maintains two stock option plans, a Non-Qualified Stock Option
Plan  (Non-Qualified  Plan) and an Incentive Stock Option Plan (Incentive Plan).
Under the Non-Qualified  Plan,  options may be granted to officers and other key
employees of the Company as well as to non-employee  directors and advisors.  As
of March 31,  2005,  no  options  have been  granted to  non-employees.  Options
granted under the  Non-Qualified  and Incentive Plans become  exercisable over a
four-year  period at the rate of 25% per year  commencing one year from the date
of grant at an exercise  price of not less than 100% of the fair market value of
the  common  stock  on  the  date  of  grant.   Any  option  granted  under  the
Non-Qualified plan may be exercised not earlier than one year from the date such
option is granted.  Any option granted under the Incentive Plan may be exercised
not earlier  than one year and not later than 10 years from the date such option
is granted.


                                      F-22

<PAGE>

                          COLUMBUS MCKINNON CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

      A summary of option  transactions during each of the three fiscal years in
the period ended March 31, 2005 is as follows:
<TABLE>
<CAPTION>
                                                                                                  WEIGHTED-AVERAGE
                                                                               SHARES              EXERCISE PRICE
                                                                      --------------------------------------------------
<S>                                                                             <C>                   <C>
   Balance at March 31, 2002.......................................             1,406,160             $      14.34
      Cancelled....................................................               (94,410)                   18.31
                                                                      --------------------------------------------------
   Balance at March 31, 2003.......................................             1,311,750             $      14.05
      Granted......................................................                45,000                     6.92
      Cancelled....................................................              (126,900)                   14.28
                                                                      --------------------------------------------------
   Balance at March 31, 2004.......................................             1,229,850             $      13.77
      Granted......................................................               741,500                     6.41
         Exercised.................................................               (52,000)                    8.25
      Cancelled....................................................              (116,550)                   13.82
                                                                      --------------------------------------------------
   Balance at March 31, 2005.......................................             1,802,800             $      10.89
                                                                      ==================================================
</TABLE>

      A summary of exercisable and available for grant options is as follows:
<TABLE>
<CAPTION>
                                                                            ----------------------------------------------
                                                                                             YEAR ENDED MARCH 31,
                                                                            ----------------------------------------------
                                                                                   2005           2004           2003
                                                                                   ----           ----           ----
<S>                                                                               <C>            <C>            <C>
     Exercisable at end of year............................................       926,050        851,425        653,887
     Available for grant at end of year....................................       127,700        752,650        670,750
</TABLE>

      Exercise prices for options  outstanding as of March 31, 2005, ranged from
$5.46 to $29.00.  The following table provides certain  information with respect
to stock options outstanding at March 31, 2005:

<TABLE>
<CAPTION>
                                                                                                  WEIGHTED-AVERAGE
                                                    STOCK OPTIONS         WEIGHTED-AVERAGE     REMAINING CONTRACTUAL
           RANGE OF EXERCISE PRICES                  OUTSTANDING           EXERCISE PRICE               LIFE
           ------------------------                  -----------           --------------               ----
          <S>                                           <C>                 <C>                          <C>
           Up to $10.00.....................            1,236,450           $    7.63                    7.9
          $10.01 to $20.00..................              261,750               14.51                    4.8
          $20.01 to $30.00..................              304,600               21.02                    4.0
                                               -------------------------------------------------------------------------
                                                        1,802,800           $   10.89                    6.8
                                               =========================================================================
</TABLE>
      The following  table provides  certain  information  with respect to stock
options exercisable at March 31, 2005:

<TABLE>
<CAPTION>
                                                                            STOCK OPTIONS         WEIGHTED-AVERAGE
                      RANGE OF EXERCISE PRICES                               OUTSTANDING           EXERCISE PRICE
                      ------------------------                               -----------           --------------
<S>              <C>                                                              <C>                 <C>
           Up to $10.00............................................               442,200             $       9.88
          $10.01 to $20.00.........................................               179,250                    14.89
          $20.01 to $30.00.........................................               304,600                    21.02
                                                                           --------------             ------------
                                                                                  926,050             $      14.51
                                                                           ==============             ============
</TABLE>

      The Company has elected to follow Accounting  Principles Board Opinion No.
25,  "Accounting  for Stock Issued to Employees"  (APB 25) in accounting for its
employee stock options  because,  as discussed below, the alternative fair value
accounting  provided  for  under  FAS  No.  123,   "Accounting  for  Stock-Based
Compensation,"  requires use of option  valuation models that were not developed
for use in valuing  employee stock  options.  Under APB 25, because the exercise
price of the Company's  employee  stock  options  equals the market price of the
underlying  stock on the grant date and the number of options  granted is fixed,
no compensation expense is recognized.


                                      F-23

<PAGE>


                          COLUMBUS MCKINNON CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

      Pro forma  information  regarding  net  income and  earnings  per share is
required by FAS No. 123, and has been determined as if the Company had accounted
for its employee  stock options  under the fair value method of that  Statement.
The Black-Scholes option valuation model was developed for use in estimating the
fair value of traded  options which have no vesting  restrictions  and are fully
transferable.  In addition,  option valuation models require the input of highly
subjective  assumptions  including the expected stock price volatility.  Because
the  Company's  employee  stock  options  have   characteristics   significantly
different from those of traded  options,  and because  changes in the subjective
input assumptions can materially affect the fair value estimate, in management's
opinion,  the  existing  models do not  necessarily  provide a  reliable  single
measure of the fair value of its employee stock options.

      For purposes of pro forma  disclosures,  the  estimated  fair value of the
options is amortized to expense over the  options'  vesting  period.  No options
were  granted in fiscal 2003.  The fair value for issued  options in fiscal 2005
and 2004 was estimated at the date of grant using a Black-Scholes option pricing
model with the following weighted-average assumptions:

                                                  YEAR ENDED        YEAR ENDED
                                                MARCH 31, 2005    MARCH 31, 2004
                                               ---------------------------------
   Assumptions:
     Risk-free interest rate..................         4.9 %            4.5 %
     Dividend yield--Incentive Plan...........         0.0 %            0.0 %
     Volatility factor........................         0.569            0.567
     Expected life--Incentive Plan............       5 years          5 years

      The  weighted-average  fair value of options  granted in 2005 and 2004 was
$3.45 and $3.68 per share, respectively.

      The Company maintains a Restricted Stock Plan, under which the Company had
49,000  shares  reserved  for  issuance at March 31, 2005 and 2004.  The Company
charges  unearned  compensation,  a component of shareholders'  equity,  for the
market value of shares,  as they are issued.  It is then ratably  amortized over
the  restricted  period.  Grantees  who remain  continuously  employed  with the
Company  become  vested in their  shares five years after the date of the grant.
There were 1,000 shares  issued  during the year ended March 31, 2003. No shares
were issued during the years ended March 31, 2005 or 2004.


15.    LOSS CONTINGENCIES

      GENERAL AND  PRODUCT  LIABILITY--$15,984,000  of the  accrued  general and
product liability costs which are included in other  non-current  liabilities at
March 31, 2005  ($15,810,000 at March 31, 2004) are the actuarial  present value
of  estimated  reserves  based on an amount  determined  from loss  reports  and
individual cases filed with the Company and an amount, based on experience,  for
losses incurred but not reported.  The accrual in these  consolidated  financial
statements was determined by applying a discount  factor based on interest rates
customarily  used in the insurance  industry,  between  4.82% and 8.37%,  to the
undiscounted reserves of $19,543,000 and $19,535,000 at March 31, 2005 and 2004,
respectively.  This liability is funded by investments in marketable  securities
(see Notes 2 and 6).

      The following table provides a reconciliation  of the beginning and ending
balances for accrued general and product liability:
<TABLE>
<CAPTION>
                                                                 -------------------------------------------
                                                                             YEAR ENDED MARCH 31,
                                                                 -------------------------------------------
                                                                       2005          2004          2003
                                                                       ----          ----          ----
<S>                                                                 <C>           <C>           <C>
     Accrued general and product liability, beginning of year...    $ 15,930      $ 14,439      $ 16,013
     Add provision for claims...................................       5,780         5,398           447
     Deduct payments for claims.................................      (5,616)       (3,907)       (2,021)
                                                                 -------------------------------------------
     Accrued general and product liability, end of year.........    $ 16,094      $ 15,930      $ 14,439
                                                                 ===========================================
</TABLE>


                                      F-24

<PAGE>


                          COLUMBUS MCKINNON CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

      The per occurrence  limits on our  self-insurance  for general and product
liability  coverage to Columbus  McKinnon were $2,000,000 from inception through
fiscal 2003 and  $3,000,000 for fiscal 2004 and  thereafter.  In addition to the
per  occurrence  limits,  the  Company's  coverage is also  subject to an annual
aggregate  limit,  applicable to losses only. These limits range from $2,000,000
to $6,000,000 for each policy year from inception through fiscal 2005.

      Along  with  other  manufacturing  companies,  we are  subject  to various
federal, state and local laws relating to the protection of the environment.  To
address the requirements of such laws, we have adopted a corporate environmental
protection  policy  which  provides  that all of our owned or leased  facilities
shall,  and all of our employees  have the duty to,  comply with all  applicable
environmental  regulatory  standards,  and we have  initiated  an  environmental
auditing  program for our facilities to ensure  compliance  with such regulatory
standards.  We have also established  managerial  responsibilities  and internal
communication channels for dealing with environmental compliance issues that may
arise in the course of our  business.  Because of the  complexity  and  changing
nature of  environmental  regulatory  standards,  it is possible that situations
will  arise from time to time  requiring  us to incur  expenditures  in order to
ensure  environmental  regulatory  compliance.  However, we are not aware of any
environmental  condition  or any  operation  at any  of our  facilities,  either
individually  or in the  aggregate,  which  would  cause  expenditures  having a
material  adverse  effect on our results of operations,  financial  condition or
cash flows and, accordingly, have not budgeted any material capital expenditures
for environmental compliance for fiscal 2006.

      Like  many   industrial   manufacturers,   the   Company  is  involved  in
asbestos-related   litigation.   In   continually   evaluating   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 through March 31, 2030 and March 31, 2081
to range between  $4,200,000 and  $16,700,000.  The Company's  estimation of its
asbestos-related  aggregate  liability that is probable and estimable is through
March 31, 2030 and ranges from  $4,200,000  to  $5,500,000 as of March 31, 2005.
The range of probable and estimable liability reflects 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.  Based  on  the
underlying  actuarial  information,  the Company has  reflected  $4,800,000 as a
liability in the  consolidated  financial  statements  in  accordance  with U.S.
generally accepted accounting principles. The increase in the recorded liability
from the amount of  $3,000,000 at March 31, 2004 is due to a change in actuarial
parameters used to calculate  required asbestos  liability  reserve levels.  The
recorded  liability  does not  consider  the impact of any  potential  favorable
federal  legislation such as the "FAIR Act". Of this amount,  management expects
to incur asbestos liability payments of approximately  $220,000 over the next 12
months.  Because  payment of the  liability is likely to extend over many years,
management believes that the potential additional costs for claims will not have
a material  after-tax  effect on the  financial  condition of the Company or its
liquidity,  although the net after-tax effect of any future liabilities recorded
could be material to earnings in a future period.


16.    RESTRUCTURING CHARGES

      The  Company  has  analyzed  its global  capacity  requirements  and, as a
result,  began a series of facility  rationalization  projects  in early  fiscal
2002.  The  decision  to  close  or  significantly   reorganize  the  facilities
identified  was based upon the cost  structure of those  facilities  relative to
others  within the Company.  Production  operations  were  transferred  to other
facilities within the same reporting segment,  to better utilize their available
capacity.


                                      F-25

<PAGE>

                          COLUMBUS MCKINNON CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

      During fiscal 2005, the Company recorded  restructuring  costs of $910,000
related to various employee  termination benefits and facility costs as a result
of the continued closure,  merging and  reorganization of the Company.  $600,000
and $300,000 of these costs are related to the Products and Solutions  segments,
respectively.  The charges  primarily  relate to the  maintenance  of facilities
being  expensed  on  an as  incurred  basis  in  accordance  with  SFA  No.  146
"Accounting for the Costs  Associated  with Exit or Disposal  Activities." As of
March 31, 2005, the liability  primarily  consists of costs  associated with the
preparation and maintenance of a non-operating  facility prior to disposal which
were accrued prior to the adoption of SFAS No. 146. The Company has one facility
that is completely closed and prepared for disposal.  Due to changes in the real
estate market and a  reassessment  of the fair value of the property,  the asset
was  written-down by $300,000 during fiscal 2005. As a result of the uncertainty
surrounding the ability to complete a sale within the next twelve months, it has
also been reclassified from an asset held for sale to an asset held and used.

      During fiscal 2004, the Company recorded restructuring costs of $1,239,000
related to various employee  termination benefits and facility costs as a result
of  the  continued  closure,  merging  and  reorganization  of the  Company  and
completion of the two open  projects from fiscal 2003.  $800,000 and $400,000 of
these costs are related to the Products and  Solutions  segments,  respectively.
Approximately  130 employees were  terminated at the various  facilities.  As of
March  31,  2004,  the  liability  consisted  of  severance  payments  and costs
associated  with the preparation  and  maintenance of  non-operating  facilities
prior to  disposal  which were  accrued  prior to the  adoption  of SFAS No. 146
"Accounting for Costs Associated with Exit or Disposal Activities."

      During fiscal 2003, the Company recorded restructuring costs of $3,697,000
million related to various employee termination benefits and facility costs as a
result  of the  decision  to  close,  merge  or  significantly  reorganize  five
manufacturing  facilities.  Three of the five projects were completed as planned
in the fourth  quarter of 2003 while two  others  were  completed  in the second
quarter of fiscal 2004. All of these costs are related to the Products  segment,
with the exception of approximately  $100,000.  Approximately 215 employees were
to be terminated at the various facilities.  As of March 31, 2003, approximately
one  half of the  terminations  had  occurred  with the  remaining  terminations
completed  in fiscal  2004.  The  liability  as of March 31, 2003  consisted  of
severance  payments and costs associated with the preparation and maintenance of
non-operating  facilities  prior to  disposal  which were  accrued  prior to the
adoption of SFAS No. 146 "Accounting for Costs  Associated with Exit or Disposal
Activities".

      The  following  provides  a  reconciliation  of the  activity  related  to
restructuring reserves:

<TABLE>
<CAPTION>
                                                                                 ----------------------------------------
                                                                                   EMPLOYEE     FACILITY        TOTAL
                                                                                 ----------------------------------------
     <S>                                                                            <C>          <C>          <C>
     Reserve at March 31, 2002 .................................................         650          299          949
     Fiscal 2003 restructuring charges..........................................       1,789        1,908        3,697
     Cash payments..............................................................      (1,517)        (298)      (1,815)
     Write-down of non-operating property.......................................           -         (500)        (500)
                                                                                 ----------------------------------------
     Reserve at March 31, 2003..................................................    $    922     $  1,409     $  2,331
     Fiscal 2004 restructuring charges..........................................       1,005          234        1,239
     Cash payments..............................................................      (1,766)      (1,243)      (3,009)
                                                                                 ----------------------------------------
     Reserve at March 31, 2004..................................................    $    161     $    400     $    561
     Fiscal 2005 restructuring charges..........................................          81          829          910
     Cash payments..............................................................        (226)        (801)      (1,027)
     Write-down of non-operating property.......................................           -         (300)        (300)
                                                                                 ----------------------------------------
     Reserve at March 31, 2005..................................................    $     16     $    128     $    144
                                                                                 ========================================
</TABLE>


                                      F-26

<PAGE>

                          COLUMBUS MCKINNON CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

17.    INCOME TAXES

      The  provision  for  income  taxes  differs  from the amount  computed  by
applying the statutory  federal income tax rate to income (loss) from continuing
operations before income tax expense and cumulative effect of accounting change.
The sources and tax effects of the difference were as follows:
<TABLE>
<CAPTION>
                                                                            ----------------------------------------------
                                                                                        YEAR ENDED MARCH 31,
                                                                            ----------------------------------------------
                                                                                  2005           2004           2003
                                                                                  ----           ----           ----
<S>                                                                           <C>            <C>            <C>
     Expected tax at 35%...................................................   $     6,617    $     1,821    $    (1,568)
     State income taxes net of federal benefit.............................           363            614            715
     Nondeductible goodwill write-off/amortization.........................             -              -          1,398
     Foreign taxes (less) greater than statutory provision.................          (579)           905            632
     Benefit of worthless stock deduction..................................             -        (44,815)             -
     Research and development credit.......................................             -         (1,058)             -
     Valuation allowance...................................................        (4,435)        46,974          1,249
     Other.................................................................           230           (432)          (894)
                                                                            ----------------------------------------------
     Actual tax provision..................................................   $     2,196    $     4,009    $     1,532
                                                                            ==============================================

      The provision for income tax expense consisted of the following:
                                                                            ----------------------------------------------
                                                                                        YEAR ENDED MARCH 31,
                                                                            ----------------------------------------------
                                                                                  2005           2004           2003
                                                                                  ----           ----           ----
     Current income tax expense (benefit):
          United States Federal............................................   $      (426)   $       147    $    (6,148)
          State taxes......................................................           559            928          1,099
          Foreign..........................................................         3,034          2,779          1,083
     Deferred income tax expense (benefit):
          United States....................................................             -            880          5,715
          Foreign..........................................................          (971)          (725)          (217)
                                                                            ----------------------------------------------
                                                                              $     2,196    $     4,009    $     1,532
                                                                            ==============================================
</TABLE>

      The Company applies the liability method of accounting for income taxes as
required  by FAS  Statement  No.  109,  "Accounting  for Income  Taxes." The tax
effects of temporary  differences that give rise to significant  portions of the
deferred tax assets and deferred tax liabilities are as follows:

<TABLE>
<CAPTION>
                                                                                       -----------------------------------
                                                                                                    MARCH 31,
                                                                                       -----------------------------------
                                                                                              2005              2004
                                                                                              ----              ----
     Deferred tax assets:
<S>                                                                                       <C>               <C>
        Net operating loss carryforwards..............................................    $     34,292      $     39,741
        Employee benefit plans........................................................           7,929             9,629
        Asset reserves................................................................           2,596             2,835
        Insurance reserves............................................................           6,558             5,022
        Accrued vacation and incentive costs..........................................           2,077             2,090
        Capital loss carryforwards....................................................             708               869
        Other.........................................................................           6,543             4,607
        Valuation allowance...........................................................         (43,788)          (48,223)
                                                                                       -----------------------------------
          Gross deferred tax assets                                                             16,915            16,570
                                                                                       -----------------------------------
     Deferred tax liabilities:
        Inventory reserves............................................................          (3,050)           (3,577)
        Property, plant, and equipment................................................          (4,321)           (4,908)
                                                                                       -----------------------------------
          Gross deferred tax liabilities..............................................          (7,371)           (8,485)
                                                                                       -----------------------------------
             Net deferred tax assets..................................................    $      9,544      $      8,085
                                                                                       ===================================
</TABLE>

                                      F-27

<PAGE>


                          COLUMBUS MCKINNON CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

      As of March 31,  2005,  the Company had U.S.  federal net  operating  loss
carryforwards  of  approximately  $97,977,000 and capital loss  carryforwards of
$2,024,000.  The net operating loss carryforwards arose in fiscal 2004 primarily
as a result of a worthless stock deduction taken on the Company's March 31, 2003
federal  income  tax return  relating  to the sale of  substantially  all of the
assets of a domestic  subsidiary.  If not  utilized,  these  carryforwards  will
expire in fiscal years 2023 and 2024. The capital  losses arose from  $1,119,000
of losses on the sale of the Company's marketable securities and a $905,000 loss
on the disposition of a subsidiary.  Capital loss  carryforwards  of $1,010,000,
$972,000, and $42,000 expire at March 31, 2007, 2008, and 2009, respectively.

      A valuation allowance of $43,788,000 was recorded at March 31, 2005 due to
the uncertainly of whether the Company's operating loss carryforwards,  deferred
tax assets and capital loss carryforwards may ultimately be realized

      Deferred  income  taxes are  classified  within the  consolidated  balance
sheets based on the following breakdown:
                                                   ----------------------------
                                                             MARCH 31,
                                                   ----------------------------

                                                        2005             2004
                                                        ----             ----
     Net current deferred tax asset..............   $   4,977        $   3,662
     Net non-current deferred tax asset..........       6,122            6,388
     Net current deferred tax liability..........        (816)            (671)
     Net non-current deferred tax liability......        (739)          (1,294)
                                                   ----------------------------
          Net deferred tax asset.................   $   9,544        $   8,085
                                                   ============================

      The net current  deferred tax asset,  net current  deferred tax liability,
and net  non-current  deferred tax liability  are included in prepaid  expenses,
accrued liabilities, and other non-current liabilities, respectively.

      Income  before  income tax expense  and  cumulative  effect of  accounting
change includes foreign subsidiary income of $8,588,000, $3,687,000 and $649,000
for the years ended March 31, 2005,  2004, and 2003,  respectively.  As of March
31,  2005,  the Company had  unrecognized  deferred tax  liabilities  related to
approximately  $15  million  of  cumulative  undistributed  earnings  of foreign
subsidiaries.  These  earnings  are  considered  to be  permanently  invested in
operations   outside  the  United  States.   Determination   of  the  amount  of
unrecognized deferred U.S. income tax liability with respect to such earnings is
not practicable.

      The Company is in the process of reviewing the  provisions of the American
Jobs Creation Act of 2004. The American Jobs Creation Act has no material impact
on the operations of the Company for fiscal year 2005 and is expected to have no
material  impact on the  operations  of the Company for fiscal year 2006, as the
Company does not intend at this time to repatriate earnings to the United States
from foreign countries.


18.     RENTAL EXPENSE AND LEASE COMMITMENTS

      Rental  expense  for the years  ended  March 31,  2005,  2004 and 2003 was
$3,718,000,  $3,594,000,  and $3,109,000,  respectively.  The following  amounts
represent  future  minimum  payment  commitments  as of  March  31,  2005  under
non-cancelable operating leases extending beyond one year:

                                                      VEHICLES AND
     YEAR ENDED MARCH 31,           REAL PROPERTY       EQUIPMENT        TOTAL
     --------------------           -------------       ---------        -----
     2006......................      $      1,312      $     2,212      $  3,524
     2007......................             1,015            1,928         2,943
     2008......................             1,027            1,326         2,353
     2009......................               994              867         1,861
     2010......................               893              671         1,564


                                      F-28

<PAGE>


                          COLUMBUS MCKINNON CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)


19.    SUMMARY FINANCIAL INFORMATION

      The following  information sets forth the condensed  consolidating summary
financial  information  of the parent and  guarantors,  which  guarantee the 10%
Senior  Secured  Notes  and  the 8  1/2%  Senior  Subordinated  Notes,  and  the
nonguarantors.  The  guarantors  are wholly owned and the  guarantees  are full,
unconditional, joint and several.


As of and for the year ended March 31, 2005:
<TABLE>
<CAPTION>

                                                                                 NON
                                                    PARENT      GUARANTORS    GUARANTORS    ELIMINATIONS    CONSOLIDATED
                                               --------------------------------------------------------------------------
AS OF MARCH 31, 2005:                                                      (In  thousands)
Current assets:
<S>                                               <C>           <C>           <C>           <C>             <C>
     Cash.....................................    $    1,019    $     (697)   $    9,157    $        --     $     9,479
     Trade accounts receivable and unbilled
        revenues..............................        57,707           197        39,918             --          97,822
     Inventories..............................        33,651        18,919        26,028           (972)         77,626
     Net assets held for sale.................            --            --            --             --              --
     Prepaid expenses.........................         7,297           973         5,928             --          14,198
                                               --------------------------------------------------------------------------
        Total current assets..................        99,674        19,392        81,031           (972)        199,125
Net property, plant, and equipment............        25,107        12,847        19,283             --          57,237
Goodwill and other intangibles, net...........        90,027        57,287        39,971             --         187,285
Intercompany balances.........................        98,964      (102,189)      (70,216)        73,441              --
Other non-current assets......................        55,396       197,864        24,159       (240,195)         37,224
                                               --------------------------------------------------------------------------
        Total assets..........................    $  369,168    $  185,201    $   94,228    $  (167,726)    $   480,871
                                               ==========================================================================

Current liabilities...........................    $   50,323    $   14,450    $   33,153    $    (1,474)    $    96,452
Long-term debt, less current portion..........       259,520            --           763             --         260,283
Other non-current liabilities.................         7,898         8,199        26,272             --          42,369
                                               --------------------------------------------------------------------------
        Total liabilities.....................       317,741        22,649        60,188         (1,474)        399,104
Shareholders' equity..........................        51,427       162,552        34,040       (166,252)         81,767
                                               --------------------------------------------------------------------------
        Total liabilities and shareholders'
             equity...........................    $  369,168    $  185,201    $   94,228    $  (167,726)    $   480,871
                                               ==========================================================================

FOR THE YEAR ENDED MARCH 31, 2005:
Net sales.....................................    $  245,166    $  141,324    $  151,741    $   (23,479)    $   514,752
Cost of products sold.........................       188,499       110,455       113,369        (23,479)        388,844
                                               --------------------------------------------------------------------------
Gross profit..................................        56,667        30,869        38,372             --         125,908
                                               --------------------------------------------------------------------------
Selling, general and administrative expenses..        34,290        18,957        30,774             --          84,021
Restructuring charges.........................           782            --           128             --             910
Amortization of intangibles...................           242             3            67             --             312
                                               --------------------------------------------------------------------------
Income from operations........................        21,353        11,909         7,403             --          40,665
Interest and debt expense.....................        23,916         3,378           326             --          27,620
Other income, net.............................        (1,562)       (2,560)       (1,096)            --          (5,218)
                                               --------------------------------------------------------------------------
(Loss)  income  from   continuing   operations
before income tax (benefit) expense...........        (1,001)       11,091         8,173             --          18,263
Income tax (benefit) expense..................        (1,424)        1,487         2,133             --           2,196
                                               --------------------------------------------------------------------------
Income from continuous operations.............           423         9,604         6,040             --          16,067
Income from discontinued operations...........           643            --            --             --             643
                                               --------------------------------------------------------------------------
Net income....................................    $    1,066    $    9,604    $    6,040    $        --     $    16,710
                                               ==========================================================================


                                      F-29

<PAGE>


                          COLUMBUS MCKINNON CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

                                                                               NON
                                                  PARENT      GUARANTORS    GUARANTORS    ELIMINATIONS    CONSOLIDATED
                                               ---------------------------------------------------------------------------
FOR THE YEAR ENDED MARCH 31, 2005:
OPERATING ACTIVITIES:
Cash (used in) provided by operating
   activities.................................    $  (54,146)   $   64,479    $    6,828    $        --     $     17,161
INVESTING ACTIVITIES:
Proceeds from marketable securities, net......           705            --           609             --            1,314
Capital expenditures..........................        (3,718)         (610)       (1,597)            --           (5,925)
Proceeds from sale of  businesses  and surplus
real estate...................................         3,439         3,303            --             --            6,742
Net assets held for sale......................            --           375            --             --              375
                                               ---------------------------------------------------------------------------
Net  cash  provided  by  (used  in)  investing
   activities.................................           426         3,068          (988)            --            2,506
FINANCING ACTIVITIES:
Proceeds from issuance of common stock........           428            --            --             --              428
Net (payments) borrowings under revolving
   line-of-credit agreements..................          (219)           --          (904)            --           (1,123)
Repayment of debt.............................       (21,666)           --           (79)            --          (21,745)
Deferred financing costs incurred.............           (24)           --            --             --              (24)
Dividends paid................................        68,168       (68,000)         (168)            --               --
Other.........................................           562            --            --             --              562
                                               ---------------------------------------------------------------------------
Net cash (used in) provided by financing
   activities.................................        47,249       (68,000)       (1,151)            --          (21,902)
EFFECT OF EXCHANGE RATE CHANGES ON CASH.......          (134)           85            19             --              (30)
                                               ---------------------------------------------------------------------------
Net (used in) cash provided by
   continuing operations......................        (6,605)         (368)        4,708             --           (2,265)
NET CASH PROVIDED BY DISCONTINUED OPERATIONS..           643            --            --             --              643
                                               ---------------------------------------------------------------------------
Net change in cash and cash equivalents.......        (5,962)         (368)        4,708             --           (1,622)
                                               ---------------------------------------------------------------------------
Cash and cash equivalents at
     beginning of year........................         6,981          (329)        4,449             --           11,101
                                               ---------------------------------------------------------------------------
Cash and cash equivalents at end of year......    $    1,019    $     (697)   $    9,157    $        --     $      9,479
                                               ===========================================================================



As of and for the year ended March 31, 2004:

AS OF MARCH 31, 2004:
Current assets:
     Cash.....................................    $    6,981    $     (329)   $    4,449    $        --     $    11,101
     Trade accounts receivable and unbilled
        revenues..............................        55,335           (47)       34,246             --          89,534
     Inventories..............................        29,147        18,210        22,734           (972)         69,119
     Net assets held for sale.................         1,800           990            --             --           2,790
     Prepaid expenses.........................         8,383           691         6,412             --          15,486
                                               --------------------------------------------------------------------------
        Total current assets..................       101,646        19,515        67,841           (972)        188,030
Net property, plant, and equipment............        26,016        13,718        19,039             --          58,773
Goodwill and other intangibles, net...........        89,893        57,325        39,524             --         186,742
Intercompany balances.........................        41,127       (44,864)      (70,327)        74,064              --
Other non-current assets......................        57,222       198,664        24,134       (240,202)         39,818
                                               --------------------------------------------------------------------------
        Total assets..........................    $  315,904    $  244,358    $   80,211    $  (167,110)    $   473,363
                                               ==========================================================================

Current liabilities...........................    $   44,555    $   13,078    $   29,947    $      (851)    $    86,729
Long-term debt, less current portion..........       284,871            --           863             --         285,734
Other non-current liabilities.................         3,628        10,467        23,827             --          37,922
                                               --------------------------------------------------------------------------
        Total liabilities.....................       333,054        23,545        54,637           (851)        410,385
Shareholders' equity..........................       (17,150)      220,813        25,574       (166,259)         62,978
                                               --------------------------------------------------------------------------
        Total liabilities and shareholders'
             equity...........................    $  315,904    $  244,358    $   80,211    $  (167,110)    $   473,363
                                               ==========================================================================


                                      F-30


<PAGE>


                          COLUMBUS MCKINNON CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)


                                                                                 NON
                                                    PARENT      GUARANTORS    GUARANTORS    ELIMINATIONS    CONSOLIDATED
                                               --------------------------------------------------------------------------
FOR THE YEAR ENDED MARCH 31, 2004:
Net sales.....................................    $  226,631    $  114,987    $  124,116    $   (21,143)    $   444,591
Cost of products sold.........................       173,269        94,677        93,785        (21,986)        339,745
                                               --------------------------------------------------------------------------
Gross profit..................................        53,362        20,310        30,331            843         104,846
                                               --------------------------------------------------------------------------
Selling, general and administrative expenses..        35,046        12,854        25,457             --          73,357
Restructuring  charges........................         1,281            --           (42)            --           1,239
Amortization of intangibles...................           245             3           135             --             383
                                               --------------------------------------------------------------------------
Income from operations........................        16,790         7,453         4,781            843          29,867
Interest and debt expense.....................        28,390          (263)          729             --          28,856
Other (income) and expense, net...............           888       (12,573)       (1,456)         8,950          (4,191)
                                               --------------------------------------------------------------------------
(Loss) income from continuing operations
   before income tax (benefit) expense........       (12,488)       20,289         5,508         (8,107)          5,202
Income tax (benefit) expense..................        (1,306)        3,181         2,134             --           4,009
                                               --------------------------------------------------------------------------
Net (loss) income.............................    $  (11,182)   $   17,108    $    3,374    $    (8,107)    $     1,193
                                               ==========================================================================



FOR THE YEAR ENDED MARCH 31, 2004:
OPERATING ACTIVITIES:
Cash provided by (used in) operating
   activities.................................    $   19,359    $   (2,644)   $   18,623    $    (8,969)    $     26,369
INVESTING ACTIVITIES:
Proceeds from marketable securities, net......            --            --           110             --              110
Capital expenditures..........................        (2,635)         (700)         (284)            --           (3,619)
Proceeds from sale of businesses..............         4,015            --            --             --            4,015
Proceeds  from  sale of  property,  plant  and
   equipment..................................            --           387            --             --              387
Net assets held for sale......................            --         3,376            --             --            3,376
                                               ---------------------------------------------------------------------------
Net  cash  provided  by  (used  in)  investing
   activities.................................         1,380         3,063          (174)            --            4,269
FINANCING ACTIVITIES:
Proceeds from issuance of common stock........            --            --           (19)            19               --
Net (payments) borrowings under revolving
   line-of-credit agreements..................        (9,925)           --         3,033             --           (6,892)
Repayment of debt.............................      (115,147)           --       (10,617)            --         (125,764)
Proceeds from issuance of long term debt......       115,000            --            --             --          115,000
Deferred financing costs incurred.............        (4,432)           --            --             --           (4,432)
Dividends paid................................           174            --        (9,124)         8,950               --
Other.........................................           593            --            --             --              593
                                               ---------------------------------------------------------------------------
Net cash (used in) provided by financing
   activities.................................       (13,737)           --       (16,727)         8,969          (21,495)
EFFECT OF EXCHANGE RATE CHANGES ON CASH.......           (78)           72            21             --               15
                                               ---------------------------------------------------------------------------
Net change in cash and cash equivalents.......         6,924           491         1,743             --            9,158
Cash and cash equivalents at
     beginning of year........................            57          (820)        2,706             --            1,943
                                               ---------------------------------------------------------------------------
Cash and cash equivalents at end of year......    $    6,981    $     (329)   $    4,449    $        --     $     11,101
                                               ===========================================================================



                                      F-31


<PAGE>


                          COLUMBUS MCKINNON CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

For the year ended March 31, 2003:

                                                                                 NON
                                                    PARENT      GUARANTORS    GUARANTORS    ELIMINATIONS    CONSOLIDATED
                                               ---------------------------------------------------------------------------
FOR THE YEAR ENDED MARCH 31, 2003:
Net sales.....................................    $  231,404    $  124,218    $  116,619    $   (18,921)    $   453,320
Cost of products sold.........................       172,214       102,655        90,015        (18,898)        345,986
                                               ---------------------------------------------------------------------------
Gross profit..................................        59,190        21,563        26,604            (23)        107,334
                                               ---------------------------------------------------------------------------
Selling, general and administrative expenses..        36,826        13,853        23,332             --          74,011
Restructuring charges.........................         1,960            --         1,737             --           3,697
Amortization of intangibles...................           242         4,003             1             --           4,246
                                               ---------------------------------------------------------------------------
Income from operations........................        20,162         3,707         1,534            (23)         25,380
Interest and debt expense.....................        30,957           153           898             --          32,008
Other (income) and expense, net...............          (112)       (1,804)       (1,310)         1,077          (2,149)
                                               ---------------------------------------------------------------------------
(Loss) income from continuing operations
before income tax (benefit) expense...........       (10,683)        5,358         1,946         (1,100)         (4,479)
Income tax (benefit) expense..................        (3,627)        4,313           855             (9)          1,532
                                               ---------------------------------------------------------------------------
(Loss) income from continuing operations......        (7,056)        1,045         1,091         (1,091)         (6,011)
Cumulative effect of accounting change........            --        (1,930)       (6,070)            --          (8,000)
                                               ---------------------------------------------------------------------------
Net loss......................................    $   (7,056)   $     (885)   $   (4,979)   $    (1,091)    $   (14,011)
                                               ===========================================================================





FOR THE YEAR ENDED MARCH 31, 2003:
OPERATING ACTIVITIES:
Cash provided by (used in) operating
   activities.................................    $  32,288     $   (7,709)   $   (9,013)   $    (1,387)    $     14,179
INVESTING ACTIVITIES:
Purchase of marketable securities, net........         (672)            --            --             --             (672)
Capital expenditures..........................       (1,901)          (952)       (2,187)            --           (5,040)
Proceeds from sale of business................        1,108         16,154            --             --           17,262
Net assets held for sale......................           --          4,418            --             --            4,418
                                               ---------------------------------------------------------------------------
Net cash (used in) provided by investing             (1,465)        19,620        (2,187)            --           15,968
   activities.................................
FINANCING ACTIVITIES:
Proceeds from issuance of common stock........           --             --            16            (16)              --
Net (payments) borrowings under revolving
   line-of-credit agreements..................      (31,437)       (11,551)        9,858             --          (33,130)
Repayment of debt.............................         (564)            --          (831)            --           (1,395)
Payment of deferred financing costs...........       (7,823)            --          (365)            --           (8,188)
Dividends paid................................          234             --        (1,647)         1,413               --
Other.........................................          805             --            --             --              805
                                               ---------------------------------------------------------------------------
Net cash (used in) provided by financing
   activities.................................      (38,785)       (11,551)        7,031          1,397          (41,908)
EFFECT OF EXCHANGE RATE CHANGES ON CASH.......           (6)             8           140            (10)             132
                                               ---------------------------------------------------------------------------
Net cash (used in) provided by
   continuing operations......................       (7,968)           368        (4,029)            --          (11,629)
Net cash provided by discontinued operations..           --            504            --             --              504
                                               ---------------------------------------------------------------------------
Net change in cash and cash equivalents.......       (7,968)           872        (4,029)            --          (11,125)
Cash and cash equivalents at
   beginning of year..........................        8,024         (1,701)        6,745             --           13,068
                                               ---------------------------------------------------------------------------
Cash and cash equivalents at end of year          $      56     $     (829)   $    2,716    $        --     $      1,943
                                               ===========================================================================
</TABLE>



                                      F-32


<PAGE>


                          COLUMBUS MCKINNON CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)


20.    BUSINESS SEGMENT INFORMATION

      As a result of the way the Company  manages the business,  its  reportable
segments  are  strategic  business  units that  offer  products  with  different
characteristics.  The most defining  characteristic  is the extent of customized
engineering  required on a per-order  basis.  In addition,  the  segments  serve
different customer bases through differing methods of distribution.  The Company
has two  reportable  segments:  Products and Solutions.  The Company's  Products
segment sells hoists, industrial cranes, chain, attachments,  and other material
handling  products  principally  to third  party  distributors  through  diverse
distribution  channels,  and to a  lesser  extent  directly  to  end-users.  The
Solutions  segment sells engineered  material handling systems such as conveyors
and lift tables primarily to end-users in the consumer products,  manufacturing,
warehousing,  and, to a lesser extent, the steel, construction,  automotive, and
other industrial  markets.  The accounting policies of the segments are the same
as  those  described  in  the  summary  of  significant   accounting   policies.
Intersegment sales are not significant.  The Company evaluates performance based
on the operating earnings of the respective business units.

      Segment information as of and for the years ended March 31, 2005, 2004 and
2003 is as follows:

                                      ------------------------------------------
                                               YEAR ENDED MARCH 31, 2005
                                      ------------------------------------------
                                        PRODUCTS        SOLUTIONS        TOTAL
                                      ------------------------------------------
Sales to external customers.........   $  453,105       $  61,647      $ 514,752
Income from operations..............       39,392           1,273         40,665
Depreciation and amortization.......        8,092           1,079          9,171
Total assets........................      449,284          31,587        480,871
Capital expenditures................        4,203           1,722          5,925


                                      ------------------------------------------
                                               YEAR ENDED MARCH 31, 2004
                                      ------------------------------------------
                                        PRODUCTS        SOLUTIONS        TOTAL
                                      ------------------------------------------
Sales to external customers.........   $  394,160       $  50,431      $ 444,591
Income from operations..............       32,326          (2,459)        29,867
Depreciation and amortization.......        8,996           1,130         10,126
Total assets........................      446,069          27,294        473,363
Capital expenditures................        3,362             257          3,619

                                      ------------------------------------------
                                               YEAR ENDED MARCH 31, 2003
                                      ------------------------------------------

                                         PRODUCTS       SOLUTIONS        TOTAL
                                      ------------------------------------------
Sales to external customers.........   $  388,076       $  65,244      $ 453,320
Income from operations..............       25,700            (320)        25,380
Depreciation and amortization.......       13,731           1,072         14,803
Total assets........................      450,641          31,965        482,606
Capital expenditures................        3,914           1,126          5,040








                                      F-33



<PAGE>


                          COLUMBUS MCKINNON CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

      Financial  information  relating to the Company's operations by geographic
area is as follows:
                                  ----------------------------------------------
                                               YEAR ENDED MARCH 31,
                                  ----------------------------------------------
                                        2005            2004            2003
                                        ----            ----            ----
NET SALES:
United States....................  $    360,917    $    319,815    $    337,929
Europe  .........................       108,717          86,518          82,999
Canada                                   28,778          27,736          24,104
Other............................        16,340          10,522           8,288
                                  ----------------------------------------------
Total............................  $    514,752    $    444,591    $    453,320
                                  ==============================================

                                  ----------------------------------------------
                                             YEAR ENDED MARCH 31,
                                  ----------------------------------------------
                                        2005            2004            2003
                                        ----            ----            ----
TOTAL ASSETS:
United States....................  $    341,645    $    347,488    $    363,331
Europe...........................       115,241         105,120          98,248
Canada...........................        17,442          14,628          16,173
Other............................         6,543           6,127           4,854
                                  ----------------------------------------------
Total............................  $    480,871    $    473,363    $    482,606
                                  ==============================================

                                  ----------------------------------------------
                                             YEAR ENDED MARCH 31,
                                  ----------------------------------------------
                                        2005            2004            2003
                                        ----            ----            ----
LONG-LIVED ASSETS:
United States....................  $    185,518    $    187,202    $    196,156
Europe...........................        54,181          53,051          51,794
Canada...........................         2,672           3,283           4,479
Other............................         2,151           1,979           1,622
                                  ----------------------------------------------
Total............................  $    244,522    $    245,515    $    254,051
                                  ==============================================



      Sales by major product group are as follows:

                                  ----------------------------------------------
                                                YEAR ENDED MARCH 31,
                                  ----------------------------------------------
                                        2005            2004            2003
                                        ----            ----            ----
Hoists  .........................  $    227,789    $    197,400    $    202,262
Chain and forged attachments.....       127,300          110,681        105,518
Industrial cranes................        62,468           53,276         48,677
Other   .........................        97,195           83,234         96,863
                                  ----------------------------------------------
        Total....................  $    514,752    $     444,591   $   453,320
                                  ==============================================



                                      F-34

<PAGE>


                          COLUMBUS MCKINNON CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)


21.     SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

      Below is selected quarterly financial data for fiscal 2005 and 2004:
<TABLE>
<CAPTION>
                                           ----------------------------------------------------------------
                                                                 THREE MONTHS ENDED
                                           ----------------------------------------------------------------
                                                 JULY 4,        OCTOBER 3,      JANUARY 2,      MARCH 31,
                                                  2004             2004            2005           2005
                                                  ----             ----            ----           ----
<S>                                          <C>             <C>             <C>              <C>
Net sales................................    $    121,658    $     122,711   $     125,913    $   144,470
Gross profit.............................          31,451           29,943          29,999         34,515
Income from operations...................          11,156            9,896           9,456         10,157
Net income...............................    $      3,362    $       2,594   $       2,405    $     8,349
                                           ================================================================


Net income per share - basic.............    $      0.23     $       0.18    $       0.16     $     0.57
                                           ================================================================
Net income per share - diluted...........
                                             $      0.23     $       0.18    $       0.16     $     0.56
                                           ================================================================
</TABLE>


      Results for the quarter ended March 31, 2005 include a one-time,  non-cash
charge of $2,037,000  ($1,170,000 net of tax) relating to a defined benefit plan
at one of our  foreign  operations  and  $3,919,000  of  gains  from the sale of
surplus real estate.
<TABLE>
<CAPTION>

                                           ----------------------------------------------------------------
                                                                 THREE MONTHS ENDED
                                           ----------------------------------------------------------------
                                                JUNE 29,      SEPTEMBER 28,    DECEMBER 28,     MARCH 31,
                                                  2003            2003             2003           2004
                                                  ----            ----             ----           ----
<S>                                          <C>             <C>             <C>              <C>
Net sales................................    $    106,575    $     106,584   $     110,253    $   121,179
Gross profit.............................          25,898           25,067          24,558         29,323
Income from operations...................           7,266            7,167           5,651          9,783
Net income (loss)........................    $        499    $       1,500   $         705    $    (1,511)
                                           ================================================================
Net income (loss) per share - basic
 and diluted.............................    $      0.03     $       0.10    $       0.05     $    (0.10)
                                           ================================================================
</TABLE>



                                      F-35

<PAGE>


                          COLUMBUS MCKINNON CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)


22.    ACCUMULATED OTHER COMPREHENSIVE LOSS

      The components of accumulated other comprehensive loss are as follows:

<TABLE>
<CAPTION>
                                                                                    --------------------------------
                                                                                               MARCH 31,
                                                                                    --------------------------------
                                                                                          2005           2004
                                                                                    --------------------------------
<S>                                                                                   <C>            <C>
     Net unrealized investment gains - net of tax.................................    $     1,233    $     1,364
     Minimum pension liability adjustment - net of tax............................        (14,572)       (13,193)
     Foreign currency translation adjustment......................................          4,083          1,253
                                                                                    --------------------------------
     Accumulated other comprehensive loss.........................................    $    (9,256)   $   (10,576)
                                                                                    ================================
</TABLE>

      The deferred taxes associated with the items included in accumulated other
comprehensive   loss  were   $8,159,000   and  $8,061,000  for  2005  and  2004,
respectively.

      The activity by year related to  investments,  including  reclassification
adjustments for activity included in earnings is as follows (all items shown net
of tax):

<TABLE>
<CAPTION>
                                                                         -------------------------------------------
                                                                                    YEAR ENDED MARCH 31,
                                                                         -------------------------------------------
                                                                               2005          2004          2003
                                                                         -------------------------------------------
<S>                                                                        <C>           <C>           <C>
     Net unrealized investment gains (losses) at beginning of year......   $     1,364   $      (342)  $     2,069
        Unrealized holdings (losses) gains arising during the period....          (590)          496        (2,100)
        Reclassification adjustments for gains
         (losses) included in earnings..................................           459         1,210          (311)
                                                                         -------------------------------------------
     Net change in unrealized (losses) gains on investments.............          (131)        1,706        (2,411)
                                                                         -------------------------------------------
     Net unrealized investment gains (losses) at end of year............   $     1,233   $     1,364   $      (342)
                                                                         ===========================================
</TABLE>

      The  activity  by  year  related  to  derivatives  qualifying  as  hedges,
including  reclassification  adjustments for activity included in earnings is as
follows (all items shown net of tax):
<TABLE>
<CAPTION>

                                                                                    -----------------------------
                                                                                         YEAR ENDED MARCH 31,
                                                                                    -----------------------------
                                                                                         2005           2004
                                                                                         ----           ----
<S>                                                                                   <C>            <C>
     Derivatives qualifying as hedges at beginning of year........................    $       -      $   (191)
        Reclassification adjustments for losses included in earnings..............            -           198
        Change in fair value of derivative........................................            -            (7)
                                                                                    -----------------------------
        Net change in unrealized loss on derivatives
         qualifying as hedges.....................................................            -           191
                                                                                    -----------------------------
     Derivatives qualifying as hedges at end of year..............................    $       -       $     -
                                                                                    =============================
</TABLE>


                                      F-36


<PAGE>

                          COLUMBUS MCKINNON CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

23.     EFFECTS OF NEW ACCOUNTING PRONOUNCEMENTS

      In November 2004, the FASB issued SFAS No. 151,  "Inventory  Costs," as an
amendment  to ARB No.  43,  Chapter  4,  "Inventory  Pricing,"  to  clarify  the
accounting  for abnormal  amounts of idle facility  expense,  freight,  handling
costs and wasted materials (spoilage).  This Statement requires that these items
be recognized  as  current-period  charges and requires the  allocation of fixed
production overheads to inventory based on the normal capacity of the production
facilities. This Statement becomes effective for inventory costs incurred during
fiscal  years  beginning  after June 15,  2005.  The Company does not expect the
adoption of SFAS No. 151 to have a material impact on the Company's consolidated
financial statements.

      In December 2004, the Financial  Accounting  Standards Board (FASB) issued
SFAS No. 123 (revised 2004),  Share-Based  Payment,  which is a revision of FASB
Statement No. 123,  Accounting for Stock-Based  Compensation.  Statement  123(R)
supersedes  APB Opinion No. 25,  Accounting  for Stock Issued to Employees,  and
amends FASB Statement No. 95, Statement of Cash Flows.  Generally,  the approach
in  Statement  123(R) is similar to the approach  described  in  Statement  123.
However,  Statement  123(R)  requires  all  share-based  payments to  employees,
including  grants of employee  stock  options,  to be  recognized  in the income
statement  based on their  fair  values.  Pro forma  disclosure  is no longer an
alternative.

      Statement 123(R) was to be adopted for interim or annual periods beginning
after June 15,  2005.  On April  14th,  2005,  the SEC  announced  that it would
provide for a phased-in  implementation  process for FASB  statement No. 123(R).
The SEC is requiring that registrants adopt statement 123(R)'s fair value method
of accounting for share-based  payments to employees no later than the beginning
of the first  fiscal  year  beginning  after June 15,  2005.  We expect to adopt
123(R) in the first  quarter of Fiscal 2007.  Statement  123(R)  permits  public
companies to adopt its requirements using one of two methods:

     1.  A  "modified   prospective"   method  in  which  compensation  cost  is
         recognized   beginning  with  the  effective  date  (a)  based  on  the
         requirements of Statement  123(R) for all share-based  payments granted
         after the effective date and (b) based on the requirements of Statement
         123(R) for all share-based  payments  granted to employees prior to the
         effective  date  of  Statement  123(R)  that  remain  unvested  on  the
         effective date.

     2.  A "modified  retrospective"  method which includes the  requirements of
         the  modified  prospective  method  described  above,  but also permits
         entities  to  restate  based on  amounts  previously  recognized  under
         Statement  123 for  purposes  of pro forma  disclosures  either (a) all
         prior  periods  presented or (b) prior  interim  periods of the year of
         adoption.

The  Company  is still  evaluating  the  method  it plans to use when it  adopts
statement 123(R).

      As  permitted  by  Statement  123,  the  Company  currently  accounts  for
share-based payments to employees using Opinion 25's intrinsic value method and,
as  such,   recognizes  no   compensation   cost  for  employee  stock  options.
Accordingly,  adoption  of  Statement  123(R)'s  fair value  method will have an
impact on our  results  of  operations,  although  it will have no impact on our
overall financial position. The impact of adoption of 123(R) cannot be predicted
at this time because it will depend on levels of share based payments granted in
the future.  However,  had we adopted  Statement  123(R) in prior  periods,  the
impact of that standard would have  approximated  the impact of statement 123 as
described  in the  disclosure  of pro forma net income and earnings per share in
Note 2 to our consolidated financial statements.


                                      F-37

<PAGE>

<TABLE>
<CAPTION>

                          COLUMBUS MCKINNON CORPORATION

                 SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
                          MARCH 31, 2005, 2004 AND 2003
                              DOLLARS IN THOUSANDS

                                                                       ADDITIONS
                                                                --------------------------
                                                    BALANCE AT   CHARGED TO  CHARGED TO                         BALANCE AT
                                                    BEGINNING    COSTS AND      OTHER                             END OF
                   DESCRIPTION                      OF PERIOD     EXPENSES    ACCOUNTS         DEDUCTIONS         PERIOD
------------------------------------------------------------------------------------------------------------------------------
Year ended March 31, 2005: Deducted from asset accounts:
<S>                                                   <C>          <C>          <C>              <C>       <C>    <C>
     Allowance for doubtful accounts                  $  2,811     $ 2,191      $    --          $ 1,987   (1)    $  3,015
     Slow-moving and obsolete inventory                  5,878       1,182           --              647   (2)       6,413
     Deferred tax asset valuation allowance             48,223       1,175           --            5,610            43,788
                                                      --------     -------      -------          -------          --------
          Total                                       $ 56,912     $ 4,548      $    --          $ 8,244          $ 53,216
                                                      ========     =======      =======          =======          ========
   Reserves on balance sheet:
     Accrued general and product liability costs      $ 15,930     $ 5,780      $    --          $ 5,616   (3)    $ 16,094
                                                      ========     =======      =======          =======          ========

Year ended March 31, 2004: Deducted from asset accounts:
     Allowance for doubtful accounts                  $  2,743     $ 1,761      $    --          $ 1,693   (1)    $  2,811
     Slow-moving and obsolete inventory                  5,699       2,333         (126) (4)       2,028   (2)       5,878
     Deferred tax asset valuation allowance                 --      48,223           --               --            48,223
                                                      --------     -------      -------          -------          --------
          Total                                       $  8,442     $52,317      $  (126)         $ 3,721          $ 56,912
                                                      ========     =======      =======          =======          ========
   Reserves on balance sheet:
     Accrued general and product liability costs      $ 14,439     $ 5,398      $    --          $ 3,907   (3)    $ 15,930
                                                      ========     =======      =======          =======          ========

Year ended March 31, 2003: Deducted from asset accounts:
     Allowance for doubtful accounts                  $  2,337     $ 1,068      $   (78) (4)     $   584   (1)    $  2,743
     Slow-moving and obsolete inventory                  4,619       3,073           --            1,993   (2)       5,699
                                                      --------     -------      -------          -------          --------
          Total                                       $  6,956     $ 4,141      $   (78)         $ 2,577          $  8,442
                                                      ========     =======      =======          =======          ========
   Reserves on balance sheet:
     Accrued general and product liability costs      $ 16,013     $   447      $    --          $ 2,021   (3)    $ 14,439
                                                      ========     =======      =======          =======          ========

--------
(1) Uncollectible accounts written off, net of recoveries
(2) Obsolete inventory disposals
(3) Insurance  claims  and  expenses  paid
(4) Reserves  at date of disposal of subsidiary

</TABLE>


                                      F-38

<PAGE>


ITEM 9.          CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
                 FINANCIAL DISCLOSURES

     None.


ITEM 9A.         CONTROLS AND PROCEDURES

     MANAGEMENT'S EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

      As of March 31, 2005, an evaluation  was performed  under the  supervision
and with the  participation  of our  management,  including the Chief  Executive
Officer and Chief  Financial  Officer,  of the  effectiveness  of the design and
operation of our disclosure  controls and procedures.  Based on that evaluation,
our  management,  including  the Chief  Executive  Officer  and Chief  Financial
Officer, concluded that our disclosure controls and procedures were effective as
of March 31, 2005.  There were no changes in our  internal  controls or in other
factors during our fourth quarter ended March 31, 2005.

     MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

      Our management is responsible for  establishing  and maintaining  adequate
internal control over financial  reporting,  as such term is defined in Exchange
Act  Rules  13a-15(f)  and  15d-15(f).   Under  the  supervision  and  with  the
participation of our management, including our Chief Executive Officer and Chief
Financial  Officer,  we  conducted an  evaluation  of the  effectiveness  of our
internal  control  over  financial  reporting  as of March 31, 2005 based on the
framework in Internal  Control--Integrated  Framework issued by the Committee of
Sponsoring  Organizations  of the  Treadway  Commission  (COSO).  Based  on that
evaluation,  our management  concluded that our internal  control over financial
reporting was effective as of March 31, 2005.

      Management's  assessment of the effectiveness of our internal control over
financial  reporting as of March 31, 2005 has been audited by Ernst & Young LLP,
an  independent  registered  public  accounting  firm, as stated in their report
which is included herein.


             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


The Board of Directors and Shareholders of Columbus McKinnon Corporation

We  have  audited   management's   assessment,   included  in  the  accompanying
"Management's  Report  on  Internal  Control  Over  Financial  Reporting",  that
Columbus  McKinnon  Corporation  and  subsidiaries  (the  "Company")  maintained
effective internal control over financial  reporting as of March 31, 2005, based
on criteria established in Internal Control--Integrated  Framework issued by the
Committee  of  Sponsoring  Organizations  of the Treadway  Commission  (the COSO
criteria).  The Company's  management is responsible for  maintaining  effective
internal  control  over  financial  reporting  and  for  its  assessment  of the
effectiveness of internal control over financial  reporting.  Our responsibility
is to  express  an  opinion  on  management's  assessment  and an opinion on the
effectiveness of the company's  internal control over financial  reporting based
on our audit.

We conducted  our audit in accordance  with the standards of the Public  Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain  reasonable  assurance  about whether  effective
internal  control  over  financial  reporting  was  maintained  in all  material
respects. Our audit included obtaining an understanding of internal control over
financial reporting,  evaluating management's assessment, testing and evaluating
the design and operating  effectiveness of internal control, and performing such
other  procedures as we considered  necessary in the  circumstances.  We believe
that our audit provides a reasonable basis for our opinion.

A company's  internal control over financial  reporting is a process designed to
provide reasonable  assurance  regarding the reliability of financial  reporting
and the preparation of financial  statements for external purposes in accordance
with generally accepted accounting principles. A company's internal control over
financial  reporting  includes those policies and procedures that (1) pertain to
the  maintenance  of records that, in reasonable  detail,  accurately and fairly
reflect the  transactions  and  dispositions  of the assets of the company;  (2)
provide  reasonable  assurance  that  transactions  are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted
accounting  principles,  and that receipts and  expenditures  of the company are
being made only in accordance with authorizations of management and directors of
the company; and (3) provide reasonable assurance regarding prevention or timely
detection of  unauthorized  acquisition,  use, or  disposition  of the company's
assets that could have a material effect on the financial statements.


                                       29

<PAGE>

Because of its inherent  limitations,  internal control over financial reporting
may not prevent or detect misstatements.  Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate  because of changes in  conditions,  or that the degree of compliance
with the policies or procedures may deteriorate.

In our opinion,  management's  assessment that the Company maintained  effective
internal control over financial reporting as of March 31, 2005 is fairly stated,
in all material respects,  based on the COSO criteria. Also, in our opinion, the
Company  maintained,  in all material respects,  effective internal control over
financial reporting as of March 31, 2005, based on the COSO criteria.

We also have  audited,  in accordance  with the standards of the Public  Company
Accounting  Oversight Board (United States),  the consolidated balance sheets of
the  Company  as of  March  31,  2005 and  2004,  and the  related  consolidated
statements of operations,  shareholders'  equity, and cash flows for each of the
three years in the period ended March 31, 2005 and our report dated June 6, 2005
expressed an unqualified opinion thereon.


                                                /s/ Ernst & Young LLP



June 6, 2005
Buffalo, New York


ITEM 9B.         OTHER INFORMATION

     None.


                                    PART III

ITEM 10.         DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     The  information   regarding   Directors  and  Executive  Officers  of  the
Registrant will be included in a Proxy Statement to be filed with the Commission
prior  to July  29,  2005  and  upon the  filing  of such  Proxy  Statement,  is
incorporated by reference herein.

      The   charters   of   our   Audit   Committee,   Compensation   Committee,
Nomination/Succession  Committee and  Governance  Committee are available on our
website at WWW.CMWORKS.COM  and are available to any shareholder upon request to
the  Corporate  Secretary.  The  information  on the  Company's  website  is not
incorporated by reference into this Annual Report on Form 10-K.

      We have  adopted a code of ethics  that  applies to all of our  employees,
including our  principal  executive  officer,  principal  financial  officer and
principal accounting officer, as well as our directors.  Our code of ethics, the
Columbus  McKinnon  Corporation  Legal  Compliance & Business Ethics Manual,  is
available on our website at WWW.CMWORKS.COM. We intend to disclose any amendment
to, or waiver from,  the code of ethics that applies to our principal  executive
officer,  principal financial officer or principal  accounting officer otherwise
required to be disclosed  under Item 10 of Form 8-K by posting such amendment or
waiver, as applicable, on our website.


ITEM 11.         EXECUTIVE COMPENSATION

     The  information  regarding  Executive  Compensation  will be included in a
Proxy Statement to be filed with the Commission  prior to July 29, 2005 and upon
the filing of such Proxy Statement, is incorporated by reference herein.

ITEM 12.         SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The information  regarding  Security Ownership of Certain Beneficial Owners
and  Management  will be  included  in a Proxy  Statement  to be filed  with the
Commission  prior to July 29, 2005 and upon the filing of such Proxy  Statement,
is incorporated by reference herein.


                                       30

<PAGE>

ITEM 13.         CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     The information  regarding Certain  Relationships and Related  Transactions
will be included in a Proxy  Statement to be filed with the Commission  prior to
July 29, 2005 and upon the filing of such Proxy  Statement,  is  incorporated by
reference herein.

ITEM 14.         PRINCIPAL ACCOUNTANT FEES AND SERVICES

     The information  regarding  Principal  Accountant Fees and Services will be
included in a Proxy Statement to be filed with the Commission  prior to July 29,
2005 and upon the filing of such Proxy  Statement,  is incorporated by reference
herein.


                                     PART IV


ITEM 15.         EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
                 FORM 8-K.

(a)(1)   FINANCIAL STATEMENTS:

         The following consolidated financial statements  of  Columbus  McKinnon
         Corporation are included in Item 8:

         REFERENCE                                                      PAGE NO.
         ---------                                                      --------

         Report of Independent Registered Public Accounting Firm             F-2

         Consolidated balance sheets - March 31, 2005 and 2004               F-3

         Consolidated statements of operations - Years ended
           March 31, 2005, 2004 and 2003                                     F-4

         Consolidated statements of shareholders' equity - Years ended
           March 31, 2005, 2004 and 2003                                     F-5
         Consolidated statements of cash flows - Years ended
           March 31, 2005, 2004 and 2003                                     F-6

         Notes to consolidated financial statements                  F-7 to F-37


(a)(2)   FINANCIAL STATEMENT SCHEDULE:                                  PAGE NO.

         Schedule II - Valuation and qualifying accounts                    F-38

         All other  schedules  for  which  provision  is made in the  applicable
         accounting regulation of the Securities and Exchange Commission are not
         required  under  the  related  instructions  or  are  inapplicable  and
         therefore have been omitted.


(a)(3)   EXHIBITS:


     EXHIBIT
      NUMBER                        EXHIBIT
      ------                        -------
        3.1  Restated   Certificate   of   Incorporation   of   the   Registrant
             (incorporated   by  reference  to  Exhibit  3.1  to  the  Company's
             Registration  Statement No. 33-80687 on Form S-1 dated December 21,
             1995).

        3.2  Amended  By-Laws of the  Registrant  (incorporated  by reference to
             Exhibit 3 to the Company's Current Report on Form 8-K dated May 17,
             1999).

        4.1  Specimen  common share  certificate  (incorporated  by reference to
             Exhibit 4.1 to the Company's Registration Statement No. 33-80687 on
             Form S-1 dated December 21, 1995.)


                                       31

<PAGE>


        4.2  First  Amendment and Restatement of Rights  Agreement,  dated as of
             October 1, 1998, between Columbus McKinnon Corporation and American
             Stock Transfer & Trust Company,  as Rights Agent  (incorporated  by
             reference to Exhibit 4.2 to the Company's  Quarterly Report on Form
             10-Q for the quarterly period ended June 29, 2003).

        4.3  Indenture,  dated as of March 31,  1998,  among  Columbus  McKinnon
             Corporation,  the guarantors  named on the signature  pages thereto
             and  State  Street  Bank  and  Trust  Company,   N.A.,  as  trustee
             (incorporated by reference to Exhibit 4.1 to the Company's  Current
             Report on Form 8-K dated April 9, 1998).

        4.4  Supplemental Indenture among LICO, Inc.,  Automatic Systems,  Inc.,
             LICO Steel, Inc.,  Columbus McKinnon  Corporation,  Yale Industrial
             Products,  Inc., Mechanical Products, Inc., Minitec Corporation and
             State Street Bank and Trust Company,  N.A., as trustee, dated March
             31, 1998 (incorporated by reference to Exhibit 4.3 to the Company's
             Current Report on form 8-K dated April 9, 1998).

        4.5  Second Supplemental Indenture among Abell-Howe Crane,  Inc.,  LICO,
             Inc.,  Automatic Systems,  Inc. LICO Steel, Inc., Columbus McKinnon
             Corporation,  Yale  Industrial  Products Inc. and State Street Bank
             and Trust Company,  N.A., as trustee, dated as of February 12, 1999
             (incorporated  by reference to Exhibit 4.6 to the Company's  Annual
             Report on Form 10-K for the fiscal year ended March 31, 1999).

        4.6  Third  Supplemental  Indenture  among  G.L.  International,   Inc.,
             Gaffey, Inc., Handling Systems and Conveyors,  Inc., Larco Material
             Handling  Inc.,  Abell-Howe  Crane,  Inc.,  LICO,  Inc.,  Automatic
             Systems,  Inc., LICO Steel,  Inc.,  Columbus McKinnon  Corporation,
             Yale  Industrial  Products,  Inc.  and State  Street Bank and Trust
             Company,  N.A., as trustee, dated as of March 1, 1999 (incorporated
             by reference to Exhibit 4.7 to the Company's  Annual Report on Form
             10-K for the fiscal year ended March 31, 1999).

        4.7  Fourth Supplemental  Indenture among Washington  Equipment Company,
             G.L.  International,  Inc.,  Gaffey,  Inc.,  Handling  Systems  and
             Conveyors,  Inc., Larco Material  Handling Inc.,  Abell-Howe Crane,
             Inc., Automatic Systems,  Inc., LICO Steel, Inc., Columbus McKinnon
             Corporation,  Yale Industrial Products,  Inc. and State Street Bank
             and Trust Company,  N.A., as trustee,  dated as of November 1, 1999
             (incorporated  by  reference  to  Exhibit  10.2  to  the  Company's
             quarterly  report  on form  10-Q  for the  quarterly  period  ended
             October 3, 1999).

        4.8  Fifth Supplemental Indenture  among Columbus  McKinnon Corporation,
             Crane  Equipment & Service,  Inc.,  Automatic  Systems,  Inc., LICO
             Steel, Inc., Yale Industrial  Products,  Inc. and State Street Bank
             and Trust  Company,  N.A.,  as  trustee,  dated as of April 4, 2002
             (incorporated  by reference to Exhibit 4.8 to the Company's  Annual
             Report on Form 10-K for the fiscal year ended March 31, 2002).

        4.9  Sixth Supplemental  Indenture among Columbus  McKinnon Corporation,
             Audubon West,  Inc.,  Crane Equipment & Service,  Inc., LICO Steel,
             Inc., Yale Industrial  Products,  Inc., Audubon Europe S.a.r.l. and
             State Street Bank and Trust Company,  N.A., as trustee, dated as of
             August 5, 2002  (incorporated  by  reference  to Exhibit 4.9 to the
             Company's  Annual  Report on Form 10-K for the  fiscal  year  ended
             March 31, 2002).

       4.10  Indenture,  dated  as of July 22,  2003,  among  Columbus  McKinnon
             Corporation,  the guarantors  named on the signature  pages thereto
             and U.S. Bank Trust National Association,  as trustee (incorporated
             by reference to Exhibit 4.2 to the  Company's  Quarterly  Report on
             Form 10-Q for the quarterly period ended June 29, 2003).

       4.11  First Supplemental Indenture, dated as of September 19, 2003, among
             Columbus  McKinnon   Corporation,   the  guarantors  named  on  the
             signature  pages thereto and U.S. Bank Trust National  Association,
             as trustee  (incorporated by reference to Exhibit 4.13 to Amendment
             No. 1 to the Company's  Registration  Statement  No.  333-109730 on
             Form S-4/A dated November 7, 2003).

       4.12  Registration  Rights  Agreement  dated  as of July 15,  2003  among
             Columbus  McKinnon   Corporation,   the  guarantors  named  on  the
             signature  pages thereto,  Credit Suisse First Boston LLC and Fleet
             Securities,  Inc.  (incorporated by reference to Exhibit 4.1 to the
             Company's  Quarterly  Report on Form 10-Q for the quarterly  period
             ended June 29, 2003).


                                       32

<PAGE>


       10.1  Agreement by and among Columbus McKinnon Corporation Employee Stock
             Ownership Trust,  Columbus McKinnon  Corporation and Marine Midland
             Bank, dated November 2, 1995  (incorporated by reference to Exhibit
             10.6 to the Company's  Registration  Statement No. 33-80687 on Form
             S-1 dated December 21, 1995).

      #10.2  Columbus  McKinnon   Corporation   Employee  Stock  Ownership  Plan
             Restatement  Effective April 1, 1989  (incorporated by reference to
             Exhibit 10.23 to the Company's  Registration Statement No. 33-80687
             on Form S-1 dated December 21, 1995).

      #10.3  Amendment No. 1 to the Columbus McKinnon Corporation Employee Stock
             Ownership  Plan as Amended and Restated as of April 1, 1989,  dated
             March 2, 1995  (incorporated  by reference to Exhibit  10.24 to the
             Company's  Registration  Statement  No.  33-80687 on Form S-1 dated
             December 21, 1995).

      #10.4  Amendment No. 2 to the Columbus McKinnon Corporation Employee Stock
             Ownership Plan,  dated October 17, 1995  (incorporated by reference
             to Exhibit  10.38 to the  Company's  Annual Report on Form 10-K for
             the fiscal year ended March 31, 1997).

      #10.5  Amendment No. 3 to the Columbus McKinnon Corporation Employee Stock
             Ownership Plan, dated March 27, 1996  (incorporated by reference to
             Exhibit 10.39 to the  Company's  Annual Report on Form 10-K for the
             fiscal year ended March 31, 1997).

      #10.6  Amendment No. 4 of the Columbus McKinnon Corporation Employee Stock
             Ownership  Plan as Amended and Restated as of April 1, 1989,  dated
             September  30, 1996  (incorporated  by reference to Exhibit 10.1 to
             the  Company's  Quarterly  Report  on Form  10-Q for the  quarterly
             period ended September 30, 1996).

      #10.7  Amendment No. 5 to the Columbus McKinnon Corporation Employee Stock
             Ownership  Plan as Amended and Restated as of April 1, 1989,  dated
             August 28, 1997  (incorporated by reference to Exhibit 10.37 to the
             Company's  Annual  Report on Form 10-K for the  fiscal  year  ended
             March 31, 1998).

      #10.8  Amendment No. 6 to the Columbus McKinnon Corporation Employee Stock
             Ownership  Plan as Amended and Restated as of April 1, 1989,  dated
             June 24, 1998  (incorporated  by reference to Exhibit  10.38 to the
             Company's  Annual  Report on Form 10-K for the  fiscal  year  ended
             March 31, 1998).

      #10.9  Amendment No. 7 to the Columbus McKinnon Corporation Employee Stock
             Ownership  Plan as Amended and Restated as of April 1, 1989,  dated
             April 30, 2000  (incorporated  by reference to Exhibit 10.24 to the
             Company's  Annual  Report on Form 10-K for the  fiscal  year  ended
             March 31, 2000).

     #10.10  Amendment No. 8 to the Columbus McKinnon Corporation Employee Stock
             Ownership  Plan as Amended and Restated as of April 1, 1989,  dated
             March 26, 2002  (incorporated  by reference to Exhibit 10.30 to the
             Company's  Annual  Report on Form 10-K for the  fiscal  year  ended
             March 31, 2002).

     #10.11  Amendment No. 9 to the Columbus McKinnon Corporation Employee Stock
             Ownership  Plan as Amended and Restated as of April 1, 1989,  dated
             March 27, 2003  (incorporated  by reference to Exhibit 10.32 to the
             Company's  Annual  Report on Form 10-K for the  fiscal  year  ended
             March 31, 2003).

     #10.12  Amendment  No. 10 to the  Columbus  McKinnon  Corporation  Employee
             Stock  Ownership  Plan as Amended and Restated as of April 1, 1989,
             dated February 28, 2004 (incorporated by reference to Exhibit 10.12
             to the  Company's  Annual  Report on Form 10-K for the fiscal  year
             ended March 31, 2004).

     #10.13  Amendment  No. 11 to the  Columbus  McKinnon  Corporation  Employee
             Stock  Ownership  Plan as Amended and Restated as of April 1, 1989,
             dated December 19, 2003  (incorporated by reference to Exhibit 10.2
             to the  Company's  Quarterly  Report on Form 10-Q for the quarterly
             period ended December 28, 2003).

    *#10.14  Amendment  No. 12 to the  Columbus  McKinnon  Corporation  Employee
             Stock  Ownership  Plan as Amended and Restated as of April 1, 1989,
             dated March 17, 2005.


                                       33

<PAGE>

     #10.15  Columbus  McKinnon  Corporation  Personal  Retirement  Account Plan
             Trust Agreement,  dated April 1, 1987 (incorporated by reference to
             Exhibit 10.25 to the Company's  Registration Statement No. 33-80687
             on Form S-1 dated December 21, 1995).

     #10.16  Amendment No. 1 to the Columbus McKinnon Corporation Employee Stock
             Ownership Trust Agreement  (formerly known as the Columbus McKinnon
             Corporation  Personal  Retirement  Account  Plan  Trust  Agreement)
             effective  November 1, 1988  (incorporated  by reference to Exhibit
             10.26 to the Company's  Registration Statement No. 33-80687 on Form
             S-1 dated December 21, 1995).

     #10.17  Amendment and  Restatement of Columbus  McKinnon  Corporation  1995
             Incentive Stock Option Plan  (incorporated  by reference to Exhibit
             10.25 to the  Company's  Annual  Report on Form 10-K for the fiscal
             year ended March 31, 1999).

     #10.18  Second  Amendment  to  the  Columbus   McKinnon   Corporation  1995
             Incentive Stock Option Plan, as amended and restated  (incorporated
             by reference to Exhibit 10.2 to the Company's  Quarterly  Report on
             Form 10-Q for the quarterly period ended September 29, 2002).

     #10.19  Columbus McKinnon Corporation Restricted Stock Plan, as amended and
             restated  (incorporated  by  reference  to  Exhibit  10.28  to  the
             Company's  Registration  Statement  No.  33-80687 on Form S-1 dated
             December 21, 1995).

     #10.20  Second Amendment to the Columbus  McKinnon  Corporation  Restricted
             Stock  Plan  (incorporated  by  reference  to  Exhibit  10.3 to the
             Company's  Quarterly  Report on Form 10-Q for the quarterly  period
             ended September 29, 2002).

     #10.21  Amendment  and   Restatement  of  Columbus   McKinnon   Corporation
             Non-Qualified  Stock  Option Plan  (incorporated  by  reference  to
             Exhibit 10.27 to the  Company's  Annual Report on Form 10-K for the
             fiscal year ended March 31, 1999).

     #10.22  Columbus McKinnon Corporation Thrift [401(k)] Plan 1989 Restatement
             Effective  January 1, 1998  (incorporated  by  reference to Exhibit
             10.2  to the  Company's  Quarterly  Report  on  Form  10-Q  for the
             quarterly period ended December 27, 1998).

     #10.23  Amendment  No.  1 to the  1998  Plan  Restatement  of the  Columbus
             McKinnon  Corporation Thrift [401(k)] Plan, dated December 10, 1998
             (incorporated by reference to Exhibit 10.29 to the Company's Annual
             Report on Form 10-K for the fiscal year ended March 31, 1999).

     #10.24  Amendment  No.  2 to the  1998  Plan  Restatement  of the  Columbus
             McKinnon  Corporation  Thrift  [401 (k)]  Plan,  dated June 1, 2000
             (incorporated by reference to Exhibit 10.33 to the Company's Annual
             Report on Form 10-K for the fiscal year ended March 31, 2000).

     #10.25  Amendment  No.  3 to the  1998  Plan  Restatement  of the  Columbus
             McKinnon  Corporation  Thrift [401 (k)] Plan,  dated March 26, 2002
             (incorporated by reference to Exhibit 10.39 to the Company's Annual
             Report on Form 10-K for the fiscal year ended March 31, 2002).

     #10.26  Amendment  No.  4 to the  1998  Plan  Restatement  of the  Columbus
             McKinnon  Corporation  Thrift  [401(k)]  Plan,  dated May 10,  2002
             (incorporated  by  reference  to  Exhibit  10.4  to  the  Company's
             Quarterly  Report  on Form  10-Q  for the  quarterly  period  ended
             September 29, 2002).

     #10.27  Amendment  No.  5 to the  1998  Plan  Restatement  of the  Columbus
             McKinnon  Corporation Thrift [401(k)] Plan, dated December 20, 2002
             (incorporated  by  reference  to  Exhibit  10.1  to  the  Company's
             Quarterly  Report  on Form  10-Q  for the  quarterly  period  ended
             December 29, 2002).

     #10.28  Amendment  No.  6 to the  1998  Plan  Restatement  of the  Columbus
             McKinnon  Corporation  Thrift  [401(k)]  Plan,  dated May 22,  2003
             (incorporated by reference to Exhibit 10.46 to the Company's Annual
             Report on Form 10-K for the fiscal year ended March 31, 2003).


                                       34

<PAGE>

     #10.29  Amendment  No.  7 to the  1998  Plan  Restatement  of the  Columbus
             McKinnon  Corporation  Thrift  [401(k)] Plan,  dated April 14, 2004
             (incorporated by reference to Exhibit 10.28 to the Company's Annual
             Report on Form 10-K for the fiscal year ended March 31, 2004).

     #10.30  Amendment  No.  8 to the  1998  Plan  Restatement  of the  Columbus
             McKinnon  Corporation Thrift [401(k)] Plan, dated December 19, 2003
             (incorporated  by  reference  to  Exhibit  10.3  to  the  Company's
             Quarterly  Report  on Form  10-Q  for the  quarterly  period  ended
             December 28, 2003).

     #10.31  Amendment  No.  9 to the  1998  Plan  Restatement  of the  Columbus
             McKinnon  Corporation  Thrift  [401(k)] Plan,  dated March 16, 2004
             (incorporated by reference to Exhibit 10.30 to the Company's Annual
             Report on Form 10-K for the fiscal year ended March 31, 2004).

     #10.32  Amendment  No.  10 to the 1998  Plan  Restatement  of the  Columbus
             McKinnon  Corporation  Thrift  [401(k)]  Plan,  dated July 12, 2004
             (incorporated  by  reference  to  Exhibit  10.3  to  the  Company's
             Quarterly  Report on Form 10-Q for the quarterly  period ended July
             4, 2004).

    *#10.33  Amendment  No.  11 to  the 1998  Plan Restatement  of the  Columbus
             McKinnon Corporation Thrift [401(k)] Plan, dated March 31, 2005.

     #10.34  Columbus  McKinnon  Corporation  Thrift 401(k) Plan Trust Agreement
             Restatement  Effective August 9, 1994 (incorporated by reference to
             Exhibit 10.32 to the Company's  Registration Statement No. 33-80687
             on Form S-1 dated December 21, 1995).

     #10.35  Columbus  McKinnon  Corporation  Monthly  Retirement  Benefit  Plan
             Restatement  Effective April 1, 1998  (incorporated by reference to
             Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the
             quarterly period ended December 27, 1998).

     #10.36  Amendment  No.  1 to the  1998  Plan  Restatement  of the  Columbus
             McKinnon   Corporation   Monthly  Retirement  Benefit  Plan,  dated
             December 10, 1998  (incorporated  by reference to Exhibit  10.32 to
             the Company's  Annual Report on Form 10-K for the fiscal year ended
             March 31, 1999).

     #10.37  Amendment  No.  2 to the  1998  Plan  Restatement  of the  Columbus
             McKinnon Corporation Monthly Retirement Benefit Plan, dated May 26,
             1999  (incorporated  by reference to Exhibit 10.33 to the Company's
             Annual  Report on Form 10-K for the  fiscal  year  ended  March 31,
             1999).

     #10.38  Amendment  No.  3 to the  1998  Plan  Restatement  of the  Columbus
             McKinnon  Corporation  Monthly Retirement Benefit Plan, dated March
             26,  2002  (incorporated  by  reference  to  Exhibit  10.44  to the
             Company's  Annual  Report on Form 10-K for the  fiscal  year  ended
             March 31, 2002).

     #10.39  Amendment  No.  4 to the  1998  Plan  Restatement  of the  Columbus
             McKinnon   Corporation   Monthly  Retirement  Benefit  Plan,  dated
             December 20, 2002 (incorporated by reference to Exhibit 10.1 to the
             Company's  Quarterly  Report on Form 10-Q for the quarterly  period
             ended December 29, 2002).

     #10.40  Amendment  No.  5 to the  1998  Plan  Restatement  of the  Columbus
             McKinnon   Corporation   Monthly  Retirement  Benefit  Plan,  dated
             February 28, 2004  (incorporated  by reference to Exhibit  10.37 to
             the Company's  Annual Report on Form 10-K for the fiscal year ended
             March 31, 2004).

    *#10.41  Amendment  No. 6  to  the  1998 Plan  Restatement  of the  Columbus
             McKinnon  Corporation  Monthly Retirement Benefit Plan, dated March
             17, 2005.

     #10.42  Columbus McKinnon Corporation Monthly Retirement Benefit Plan Trust
             Agreement  Effective as of April 1, 1987 (incorporated by reference
             to  Exhibit  10.34  to the  Company's  Registration  Statement  No.
             33-80687 on Form S-1 dated December 21, 1995).

     #10.43  Form  of  Change  in  Control  Agreement as  entered  into  between
             Columbus McKinnon Corporation and each of Timothy T. Tevens, Derwin
             R. Gilbreath,  Robert R. Friedl,  Ned T. Librock,  Karen L. Howard,
             Joseph J. Owen,  Robert H.  Myers,  Jr.,  and  Timothy  R.  Harvey,
             (incorporated by reference to Exhibit 10.33 to the Company's Annual
             Report on Form 10-K for the fiscal year ended March, 31, 1998).


                                       35

<PAGE>

      10.44  Intercreditor  Agreement  dated as of July 22, 2003 among  Columbus
             McKinnon Corporation,  the subsidiary guarantors as listed thereon,
             Fleet Capital  Corporation,  as Credit  Agent,  and U.S. Bank Trust
             National  Association,  as Trustee  (incorporated  by  reference to
             Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the
             quarterly period ended June 29, 2003).

      10.45  Second Amended and Restated Credit and Security Agreement, dated as
             of November  21,  2002 and  amended  and  restated as of January 2,
             2004,  among  Columbus  McKinnon  Corporation,  as Borrower,  Larco
             Industrial Services Ltd., Columbus McKinnon Limited, the Guarantors
             Named  Herein,  the Lenders  Party Hereto From Time to Time,  Fleet
             Capital Corporation,  as Administrative Agent, Fleet National Bank,
             as  Issuing  Lender,   Congress  Financial  Corporation  (Central),
             Syndication  Agent,  Merrill Lynch  Capital,  a Division of Merrill
             Lynch Business Financial Services Inc., as Documentation Agent, and
             Fleet Securities,  Inc., as Arranger  (incorporated by reference to
             Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the
             quarterly period ended December 28, 2003).

     #10.46  Columbus  McKinnon   Corporation   Corporate   Management  Variable
             Compensation Plan (incorporated by reference to Exhibit 10.1 to the
             Company's  Quarterly  Report on Form 10-Q for the quarterly  period
             ended October 3, 2004).

      10.47  First  Amendment to that certain Second Amended and Restated Credit
             and Security  Agreement,  dated as of November 21, 2002 and amended
             and  restated  as of  January  2,  2004,  among  Columbus  McKinnon
             Corporation,  as Borrower, Larco Industrial Services Ltd., Columbus
             McKinnon  Limited,  the Guarantors From Time to Time Party Thereto,
             the Lenders From Time to Time Party Thereto,  Bank of America, N.A.
             as  Administrative  Agent for such  Lenders  and as Issuing  Lender
             dated April 29, 2005  (incorporated by reference to Exhibit 10.1 to
             the Company's Current Report on Form 8-K dated April 29, 2005).

      *21.1  Subsidiaries of the Registrant.

      *23.1  Consent of Ernst & Young LLP.

      *31.1  Certification of the principal  executive  officer pursuant to Rule
             13a-14(a) of the Securities Exchange Act of 1934, as amended.

      *31.2  Certification of the principal  financial  officer pursuant to Rule
             13a-14(a) of the Securities Exchange Act of 1934, as amended.

      *32.1  Certification of the principal  executive officer and the principal
             financial  officer  pursuant to Rule  13a-14(b)  of the  Securities
             Exchange Act of 1934,  as amended and 18 U.S.C.  Section  1350,  as
             adopted by  pursuant to Section  906 of the  Sarbanes-Oxley  Act of
             2002. The information contained in this exhibit shall not be deemed
             filed with the Securities and Exchange  Commission nor incorporated
             by reference in any registration statement foiled by the Registrant
             under the Securities Act of 1933, as amended.

-----------------
  *  Filed herewith
  #  Indicates a Management contract or compensation plan or arrangement

(b)      REPORTS ON FORM 8-K FOR THE QUARTER ENDED MARCH 31, 2005:

         1.  On February 16, 2005, the Registrant filed a Current Report on Form
         8-K  under  Items 2 and 9 with  respect  to the  sale/leaseback  of its
         Corporate headquarters.

         2.  On February 22, 2005, the Registrant filed a Current Report on Form
         8-K under Items 5 and 9 with respect to the  appointment of a new Chief
         Operating Officer.

         3.  On March 31, 2005,  the Registrant filed a  Current Report  on Form
         8-K under Items 2 and 9 with respect to the sale of surplus real estate
         in Virginia.

         4.  On May 2, 2005,  the Registrant  furnished a Current Report on Form
         8-K under Items 1, 2 and 9 relating to the  amendment of its  revolving
         credit facility.


                                       36

<PAGE>


                                   SIGNATURES

         Pursuant to the  requirements  of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.


Date:  June 8, 2005

                                   COLUMBUS MCKINNON CORPORATION

                                   By: /S/ TIMOTHY T. TEVENS
                                       -----------------------------------------
                                           Timothy T. Tevens
                                           President and Chief Executive Officer


         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
this  report has been  signed  below by the  following  persons on behalf of the
registrant and in the capacities and on the dates indicated.

         SIGNATURE                        TITLE                         DATE
         ---------                        -----                         ----

/S/ TIMOTHY T. TEVENS           President, Chief Executive          June 8, 2005
---------------------------        Officer and Director
     TIMOTHY T. TEVENS             (PRINCIPAL EXECUTIVE OFFICER)


/S/ ROBERT R. FRIEDL            Vice President - Finance            June 8, 2005
---------------------------        and Chief Financial Officer
    ROBERT R. FRIEDL               (PRINCIPAL FINANCIAL OFFICER AND
                                   PRINCIPAL ACCOUNTING OFFICER)


/S/ HERBERT P. LADDS, JR.       Chairman of the Board of            June 8, 2005
---------------------------        Directors
    HERBERT P. LADDS, JR.


/S/ CARLOS PASCUAL              Director                            June 8, 2005
---------------------------
    CARLOS PASCUAL


/S/ RICHARD H. FLEMING          Director                            June 8, 2005
---------------------------
    RICHARD H. FLEMING


/S/ ERNEST R. VEREBELYI         Director                            June 8, 2005
---------------------------
    ERNEST R. VEREBELYI


/S/ WALLACE W. CREEK            Director                            June 8, 2005
---------------------------
    WALLACE W. CREEK


/S/ LINDA A. GOODSPEED          Director                            June 8, 2005
---------------------------
    LINDA A. GOODSPEED


/S/ STEPHEN RABINOWITZ          Director                            June 8, 2005
---------------------------
    STEPHEN RABINOWITZ







                                       37