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, 2007

                         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 check mark if the registrant is a well-known  seasoned  issuer,
as defined in Rule 405 of the Securities Act. Yes [ ] No [ X ]

     Indicate by check mark if the  registrant  is not  required to file reports
pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes [ ] No [ X ]

     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 checkmark whether the registrant is a large accelerated  filer,
an accelerated filer, or a non-accelerated filer. See definition of "accelerated
filer and large accelerated filer" in Rule 12b-2 of the Act.

Large accelerated filer  [ ]   Accelerated filer [X]   Non-accelerated filer [ ]

     Indicate  by check mark  whether  the  registrant  is a shell  company  (as
defined in Rule 12b-2 of the Act). Yes [ ] No [X]

<PAGE>

     The aggregate  market value of the voting stock held by  non-affiliates  of
the Registrant as of September 30, 2006 was  approximately  $325 million,  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 April 30, 2007 was 18,831,787 shares.

                       DOCUMENTS INCORPORATED BY REFERENCE

     Portions of the Registrant's proxy statement for its 2007 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, 2007 are  incorporated  by reference  into Part III of this
report.

<PAGE>

                          COLUMBUS MCKINNON CORPORATION
                         2007 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 "Risk  Factors." 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, diverse 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
through organic growth and acquiring 14 businesses  between 1994 and 1999. These
acquisitions  have  significantly  broadened  our product lines and services and
expanded our  geographic,  reach  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  acquisitions  between  1994  and  1999 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),(2)            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 (3)                            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 (4)                           7.0          Cement kiln, anchor and buoy chain
October 1996            Yale (5)                           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
</TABLE>

The following is a summary of our divestitures and property sales which occurred
between  1998 and 2007 as we focus on our core  businesses  and  major  business
segments as well as reduce our operating costs.

(1)  In August 1998, we sold the Mechanical Products division of Yale.
(2)  In January 2002, we sold Handling  Systems & Conveyors,  Inc., a subsidiary
     of GL International.
(3)  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.
(4)  In February 2004, we sold the assets of the Lister Chain & Forge  division.
(5)  In January 2005, we sold a Chicago area property.
(6)  In March 2007,  we sold LARCO Inc., a  subsidiary  of Crane,  Equipment,  &
     Service, Inc.


OUR POSITION IN THE INDUSTRY

     The  broad,  global  material  handling  industry  includes  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  macro-economic  growth  drivers.
These drivers include:

     FAVORABLE INDUSTRY TRENDS.  The U.S.  industrial economy has improved since
2003 and the Eurozone  industrial  economy has improved  since 2005.  Industrial
capacity utilization currently exceeds 80% in both regions, generally indicative
of capital expansion and favorable industrial activity. Our business performance
is influenced by the state of the U.S. and Eurozone industrial economies.

                                       2
<PAGE>
     PRODUCTIVITY  ENHANCEMENT.  We believe  employers  respond  to  competitive
pressures  by seeking to  maximize  productivity  and  efficiency,  among  other
actions. 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 workplace  safety  regulations
such  as  the  Occupational  Safety  and  Health  Act  and  the  Americans  with
Disabilities  Act in the U.S.,  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.

     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 and alloy
and high strength carbon steel chain and  attachments in North America.  We have
developed our leading market  positions over our 132-year history by emphasizing
technological  innovation,  manufacturing  excellence  and  superior  after-sale
service.  Approximately  78% of our  domestic net sales for the year ended March
31, 2007 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 U.S. market leader:
<TABLE>
<CAPTION>
                                                                                                           PERCENTAGE OF
PRODUCT CATEGORY                                 U.S. MARKET SHARE          U.S. MARKET POSITION         DOMESTIC NET SALES
----------------                                 -----------------          --------------------         ------------------
<S>                                                     <C>                          <C>                           <C>
Powered Hoists (1)                                      50%                          #1                            28%
Manual Hoists & Trolleys (1)                            61%                          #1                            14%
Forged Attachments (1)                                  42%                          #1                            10%
Lifting and Sling Chains (1)                            66%                          #1                             8%
Hoist Parts (2)                                         60%                          #1                            10%
Mechanical Actuators (3)                                40%                          #1                             5%
Tire Shredders (4)                                      80%                          #1                             1%
Jib Cranes (5)                                          56%                          #1                             2%
                                                                                                                  ----
                                                                                                                   78%
                                                                                                                  ====
</TABLE>
-------------
(1)  Market share and market position data are internal  estimates  derived from
     survey  information  collected  and provided by our trade  associations  in
     2006.

(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  and to
     estimates of total market sales from a trade association in 2006.

(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 in 2006.

(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 in 2006.

     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,  product  development  and marketing costs over a larger sales base
and (iii) achieve  purchasing  efficiencies on common  materials used across our
product lines.
                                       3
<PAGE>
     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  SKU  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  globally.   We  enjoy
long-standing  relationships with, and are a preferred provider to, the majority
of our  largest  distributors  and  industrial  buying  groups.  There  has been
consolidation  among  distributors  of material  handling  equipment and we have
benefited from this consolidation by maintaining and enhancing our relationships
with our leading distributors, as well as forming new relationships.  We believe
our extensive 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 $198.5  million  (representing  34% of our total sales)  during the year
ended  March 31,  2007.  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  have  and  will  continue  to  generate
significant  operating  leverage due to the initiatives  summarized  below.  Our
operating leverage goal is for each incremental sales dollar to generate 20%-30%
of operating income.

          --   RATIONALIZATION AND CONSOLIDATION. During the last five years, we
               have  closed  10  manufacturing   plants  and  three  warehouses,
               generating  approximately  $14 million of annual cost savings and
               improving our fixed-variable cost relationship.

          --   LEAN   MANUFACTURING.   We  have  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.  We believe  continued  application  of lean
               manufacturing  tools  will  generate  benefits  for many years to
               come.

          --   INTERNATIONAL   EXPANSION.   Our   continued   expansion  of  our
               manufacturing facilities in China, Mexico and Hungary provides us
               with  another  cost  efficient   platform  to   manufacture   and
               distribute certain of our products and components. We now operate
               26  manufacturing  facilities in eight  countries,  with 27 stand
               alone sales and service  offices in 13 countries,  and nine stand
               alone warehouse facilities in five countries.

          --   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.

     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
controlling our costs,  improving our working capital  management,  and reducing
the capital intensity of our manufacturing  operations.  In the past five years,
we have  reduced  total debt by $178.3  million,  from $350.4  million to $172.1
million.

     EXPERIENCED  MANAGEMENT TEAM WITH 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 3% of our outstanding common stock.

                                       4
<PAGE>

OUR STRATEGY

     GROW OUR CORE  BUSINESS.  We  intend to  leverage  our  strong  competitive
advantages  to increase our market  shares  across all of our product  lines and
geographies by:



          --   LEVERAGING   OUR   STRONG   COMPETITIVE   POSITION.   Our  large,
               diversified,  global  customer base,  our extensive  distribution
               channels  and  our  close  relationships  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.

          --   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 material handling needs. Since fiscal 2004, we have had a
               dedicated  hoist  product  development  team  and  we  are in the
               process  of  forming a similar  group  for our  rigging  products
               (chain and forged  attachments)  in fiscal 2008.  The majority of
               the powered hoist  products under  development  are guided by the
               Federation  of  European  Manufacturing,  or  FEM,  standard.  We
               believe these FEM hoist products,  as well as other international
               design  products  will  facilitate  our  global  sales  expansion
               strategy  as well as  improve  our cost  competitiveness  against
               internationally made products imported into the U.S.

          --   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
$198.5 million comprised 34% of our net sales for the year ended March 31, 2007,
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 over 50 countries and
have our primary international facilities in Canada, Mexico, Germany, the United
Kingdom,  Denmark,  France,  Hungary  and  China.  In  addition  to new  product
introductions, we continue to expand our sales and service presence in the major
and developing  market areas of Europe,  Asia-Pacific  and Latin America through
our sales offices and warehouse facilities in Europe, China,  Thailand,  Brazil,
Uruguay  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,  China and  Hungary for  distribution  in Europe and
Asia-Pacific.  We have developed and are continuing to expand upon new hoist and
other  products in compliance  with FEM standards and  international  designs 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, China and Hungary. In furtherance of this objective,
we have undertaken the following:

          --   IMPLEMENTATION OF LEAN  MANUFACTURING.  We continuously  identify
               potential   efficiencies   in   our   operations   through   Lean
               Manufacturing,  initiated in fiscal 2002. Through fiscal 2007, we
               have instituted  Lean  Manufacturing  at our 16 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  since  initiating  lean  in  fiscal  2002,  we have
               reduced  inventories by  approximately  $31.7 million,  or 29.1%,
               improved  productivity  and achieved  significant  reductions  in
               product lead times.

          --   RATIONALIZATION  OF  FACILITIES.  During the last five years,  we
               have  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  and  we  periodically   investigate
               opportunities for further facility rationalization.

          --   LEVERAGING OF 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 control our operating costs,  increase our domestic
               organic  growth and increase  our  penetration  of  international
               markets,  we believe that we will  continue to realize  favorable
               operating  leverage.  Our  operating  leverage  goal is for  each
               incremental sales dollar to generate 20%-30% of operating income.
               We believe that such operating  leverage will result in increased
               operating  cash flow  available  for debt  reduction,  as well as
               investment in new products and new markets,  organically  and via
               acquisitions.

          --   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 have  other  initiatives  underway  to  further
               improve  other  routine  working  capital  components,  including
               accounts  payable,  all initiatives  driving toward our long-term
               goal of total working capital (excluding cash and debt) of 15% of
               latest 12 months'  revenues.  We  believe  our  improved  working
               capital management and increased productivity will further result
               in increased free cash flow.


     CONSIDER  POTENTIAL  DIVESTITURES  AND PURSUE  STRATEGIC  ACQUISITIONS  AND
ALLIANCES.   We  intend  to  challenge  the  long-term  fit  of  underperforming
businesses for potential  divestiture and redeployment of capital.  Further,  we
intend to pursue  synergistic  acquisitions  to complement  our organic  growth.
Priorities for such acquisitions include: 1) increasing international geographic
penetration,  particularly in the Asia-Pacific region, and 2) further broadening
our offering with  complementary  products  frequently used in conjunction  with
hoists.


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  applications.  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  primarily  through a  variety  of  commercial  distributors.  The  diverse
end-users of our products are in manufacturing  plants, power utility facilities
and warehouses,  on construction  sites, oil rigs,  ships and tractor  trailers.
Some of our products have farming, mining and logging applications, and we serve
a niche market for the entertainment industry.

     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,  lift tables and
light-rail systems.  The products and services of this segment have historically
been highly engineered,  built to order and primarily sold directly to end-users
for  specific  applications  in a variety of  industries.  We are  strategically
redirecting the material  handling systems business within this segment to focus
on more standardized  products and service, to reduce its volatility and improve
its  profitability and return on invested  capital.  Further,  we are evaluating
strategic alternatives relative to this business within the Solutions segment.

     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 2007, 2006 and 2005 is set forth below.



                                       6
<PAGE>

<TABLE>
<CAPTION>

                                                                  FISCAL YEARS ENDED MARCH 31,
                              -----------------------------------------------------------------------------------------------------
                                            2007                                2006                              2005
                              ----------------------------------    ------------------------------     ----------------------------
                                                       % OF                              % OF                              % OF
                                                       TOTAL                             TOTAL                             TOTAL
                                     AMOUNT            SALES            AMOUNT           SALES            AMOUNT           SALES
                                 ---------------    -----------     --------------    ------------    -------------    ------------
                                                                        (DOLLARS IN MILLIONS)
Net Sales
<S>                           <C>                      <C>        <C>                    <C>        <C>                   <C>
     Products.................$       527.1             89.4      $       493.9           88.8      $     453.1            88.0
     Solutions................         62.7             10.6               62.1           11.2             61.7            12.0
                                 ---------------    -----------     --------------    ------------    -------------    ------------
          Total...............$       589.8            100.0      $       556.0          100.0      $     514.8           100.0
                                 ===============    ===========     ==============    ============    =============    ============

                                                       % OF                              % OF                              % OF
                                                      SEGMENT                           SEGMENT                           SEGMENT
                                                      /TOTAL                            /TOTAL                            /TOTAL
                                     AMOUNT            SALES            AMOUNT           SALES           AMOUNT            SALES
                                 ---------------    -----------     --------------    ------------    -------------    ------------
Income from Operations
     Products.................$        71.5             13.6      $        55.9           11.3      $      39.4             8.7
     Solutions................         (3.0)            (4.8)               2.0            3.2              1.3             2.1
                                 ---------------    -----------     --------------    ------------    -------------    ------------
          Total...............$        68.5             11.6      $        57.9           10.4      $      40.7             7.9
                                 ===============    ===========     ==============    ============    =============    ============

</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 and has total assets of approximately  $527 million as of March 31,
2007. These products are typically  manufactured for stock or assembled to order
from  standard  components  and are sold through a variety of  distributors.  In
excess of 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 2007,  net
sales of the Products segment were approximately $527.1 million or approximately
89.4% of our net sales, of which  approximately  $372.8  million,  or 70.7% were
domestic and $154.3 million,  or 29.3% 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 2007 and 2006:
<TABLE>
<CAPTION>

                                                                                   FISCAL YEARS ENDED MARCH 31,
                                                                             ------------------------------------------
                                                                                    2007                   2006
                                                                             -------------------    -------------------
<S>                                                                                  <C>                    <C>
              Hoists.......................................................           54%                    52%
              Chain........................................................           14                     15
              Forged attachments...........................................           11                     12
              Industrial cranes............................................           13                     13
              Industrial components........................................            8                      8
                                                                             -------------------    -------------------
                                                                                     100%                   100%
</TABLE>

     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 numerous general industrial  applications,  as well as for use in the
construction,  energy,  mining,  entertainment and other markets. We also supply
hoist  trolleys,  driven  manually or by electric  motors,  for the  industrial,
consumer and OEM markets.

     We also currently  offer several lines 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.

     FORGED  ATTACHMENTS.  We 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 U.S. 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 U.S. crane  building and servicing  markets.  Crane builders
represent a specific  distribution  channel for electric wire rope hoists, chain
hoists and other crane  components.  We divested of our Larco  business in March
2007, which business provided cranes and service primarily to the steel industry
in southern Ontario, Canada.

     INDUSTRIAL  COMPONENTS.  Through our  Duff-Norton  division,  we design and
manufacture  industrial  components  such as  mechanical  and  electromechanical
actuators,  rotary unions and mechanical jacks for sale domestically and abroad.
Actuators are linear motion devices used in a variety of  industries,  including
the paper,  steel and  aerospace  industries.  Rotary  unions are  devices  that
transfer a liquid or gas from a fixed pipe or hose to a rotating drum,  cylinder
or other device.  Rotary  unions are used in a variety of  industries  including
pulp and paper, printing, textile and fabric manufacturing,  rubber and plastic.
Mechanical  jacks  are  heavy  duty  lifting  devices  used  in the  repair  and
maintenance of railroad equipment, locomotives and industrial machinery.

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 350 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 hoists, chain, forged attachments,  scissor lift
tables,  actuators,  hydraulic jacks,  hardware programs,  cranes and light-rail
systems.

     TARGET MARKETING. We are developing marketing literature to target specific
market sectors including  construction and energy.  This literature will display
our broad product offering  applicable to those sectors to enhance  awareness at
the end-user level within those sectors.

     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,  construction,  as well as
general  purpose  industrial and hardware shows. In fiscal 2007, we participated
in trade shows in the U.S., Canada, Mexico, Germany, the United Kingdom, France,
China and Brazil.

     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

                                       8
<PAGE>

(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.  Several  of our brand web sites  include
electronic  catalogs  of our  various  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.  The following  describes our distribution
channels:

     GENERAL DISTRIBUTION  CHANNELS.  Our global 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 distribute 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
service to end-users through our wholly owned crane builders (Abell-Howe, Gaffey
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 global 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,  internet and branch sales and a field sales force.  The
               customer  base served by catalog  houses such as W. W.  Grainger,
               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.

          --   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.

                                       9
<PAGE>

     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.

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 3M, Cummins Engine,  DuPont,  GTE,
General  Electric,  General Motors 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, 2007 was  approximately
$53.2 million  compared to  approximately  $53.6 million at March 31, 2006.  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

     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
customer  service  and  support  as well as product  availability,  performance,
functionality,  brand reputation, reliability and price. Other important factors
include distributor relationships and territory coverage.

     Major  competitors  with our  Products  segment for hoists are  Konecranes,
Demag Cranes & Components  and  Kito-Harrington;  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  Konecranes,  Demag Cranes & Components 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  workstation  and  facility-wide  material  handling
systems and in the design and  manufacture  of tire  shredders,  lift tables and
light-rail systems and has total assets of approximately $39 million as of March
31, 2007. Net sales of the Solutions  segment in fiscal 2007 were $62.7 million,
or 10.6% of our total net sales, of which $18.5 million,  or 29.5% were domestic
and $44.2 million, or 70.5% were  international.  The following table sets forth


                                       10
<PAGE>

certain  sales data for the  products  and  services of our  Solutions  segment,
expressed as a percentage of this segment's net sales for fiscal 2007 and 2006:
<TABLE>
<CAPTION>

                                                                                   FISCAL YEARS ENDED MARCH 31,
                                                                             -----------------------------------------
                                                                                    2007                  2006
                                                                             -------------------    ------------------
<S>                                                                                  <C>                   <C>
              Integrated material handling conveyor systems................           63%                   69%
              Tire Shredders...............................................           20                    15
              Lift tables..................................................           13                    12
              Light-rail systems...........................................            4                     4
                                                                             -------------------    ------------------
                                                                                     100%                  100%
</TABLE>

PRODUCTS AND SERVICES

     INTEGRATED  MATERIAL  HANDLING  CONVEYOR  SYSTEMS.   Through  our  Univeyor
business,  we have  historically  specialized  in designing  highly  customized,
computer-controlled  and automated powered roller conveyors for use in warehouse
operations and  distribution  systems.  We are  strategically  redirecting  this
business  to focus on more  standardized  products  and  service  to reduce  its
volatility  and  improve  its  profitability  and  return on  invested  capital.
Further, we are evaluating strategic alternatives relative to this business.

     TIRE  SHREDDERS.  We have developed and patented a line of heavy  equipment
that  shreds  worn  tires,  with the  byproducts  useful  for fuel and  recycled
products including aggregate filler, playgrounds,  sports surfaces,  landscaping
and other such applications, as well as scrap steel.

     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.  Introduced  in fiscal  2001,  light-rail  systems are
portable steel overhead beam  configurations  used at  workstations,  from which
hoists are frequently suspended.

SALES AND MARKETING

     The products and services of the  Solutions  segment are sold  primarily to
large sophisticated corporate end-users,  including Federal Express, John Deere,
Lego,  Lowe's,  United  Biscuits,  UPS and other industrial  companies,  systems
integrators  and  distributors.  Sales are generated by internal sales personnel
and rely  heavily on  engineer-to-engineer  interactions  with the customer or a
large systems  integrator.  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 tire  shredders,  scissor lift tables and light-rail  systems
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.

BACKLOG

     Revenues from our Solutions segment are generally  recognized within one to
six  months.  Our  backlog of orders at March 31,  2007 was  approximately  $9.6
million compared to approximately  $13.0 million at March 31, 2006. The decrease
is due to a  conscious  reduction  in orders  we're  willing to accept due to an
overly competitive market and pricing environment.

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, Gorbel, Moving, Schaffer, Southworth and Swisslog.

                                       11
<PAGE>

EMPLOYEES

     At March 31, 2007, we had 3,250 employees; 2,136 in the U.S./Canada, 210 in
Latin America, 571 in Europe and 333 in Asia. Approximately 766 of our employees
are  represented  under seven  separate U.S. or Canadian  collective  bargaining
agreements  which  terminate at various times between July 2007 and August 2010.
The contract which expires in July 2007 currently covers 11 employees.  There is
another  contract which expires in March 2008 and currently covers 43 employees.
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.  We  generally  seek to pass on
materials  price  increases to our  distribution  channel  partners and end-user
customers.  We will  continue  to monitor our costs and  reevaluate  our pricing
policies.  Our  ability  to pass on these  increases  is  determined  by  market
conditions.

MANUFACTURING

     We  manufacture  a  significant  percentage  of the  products  we sell.  We
complement our own  manufacturing  by outsourcing  components and finished goods
from an established global network of suppliers. We regularly upgrade our global
manufacturing  facilities and invest in tooling,  equipment and  technology.  In
2001, we began  implementing 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 as well as our crane-builder  customers.  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 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 2008.

     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, site  investigation
activities  are ongoing and it is not  possible to  determine  the costs of site
remediation,  if any,  but we  believe  any such  costs will not have a material
adverse effect on our operating results or financial condition.  We have filed a
lawsuit in federal district court against the persons we believe are responsible
for the past waste disposal activities. The purpose of the lawsuit is to recover
our  costs of  investigating  and  remediating  site  conditions  caused by such
activities.

                                       12
<PAGE>

     In addition,  we have notified the North Carolina Department of Environment
and Natural  Resources (the "DENR") of the presence of certain  contaminants  in
excess of regulatory standards at our Coffing Hoist facility in Wadesboro, North
Carolina.  We plan to file an  application  with the DENR to enter its voluntary
cleanup  program.  If  accepted,  we will be  required  to  investigate  and, if
appropriate,  remediate site conditions at the facility. At this early stage, we
do not have an estimate of likely  remediation costs, if any, but do not believe
that such costs would have a material adverse effect on our financial  condition
or operating results.

     We also  discovered  the  presence  of  certain  contaminants  in excess of
regulatory standards at out Damascus, Virginia hoist plant and have notified the
Virginia  Department  of  Environmental  Quality (the "DEQ").  We are  currently
investigating  the  possibility  of  applying to the DEQ to  participate  in its
voluntary cleanup program. Like the Wadesboro, North Carolina site, if accepted,
we  will  be  required  to  investigate  and,  if  appropriate,  remediate  site
conditions at the facility.  At this early stage,  we do not have an estimate of
likely  remediation costs, if any, but do not believe that such costs would have
a material adverse effect on our financial condition or operating results.

     For all of the currently  known  environmental  matters,  we have accrued a
total of $1.0 million as of March 31, 2007, 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.


ITEM 1A.          RISK FACTORS
                  ------------

     Columbus  McKinnon  is  subject  to a number  of risk  factors  that  could
negatively  affect our results from business  operations or cause actual results
to differ  materially  from those  projected or indicated in any forward looking
statement. Such factors include, but are not limited to, the following:

OUR BUSINESS IS CYCLICAL AND IS AFFECTED BY INDUSTRIAL ECONOMIC CONDITIONS.

     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 and the  impact of  divested
businesses resulted in a 24.2%  (approximately 10.3% due to divested businesses)
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 from fiscal 2005 and 2007. Our net sales
for fiscal 2007 were $589.8 million, up $145.2 million or 32.7% from fiscal 2004
sales.

     If the  current  economic  stability  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.

                                       13
<PAGE>
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 end-user  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 end-user
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 $179.2 million in fiscal year 2007) is generated
in foreign currencies,  including principally the euro, the Canadian dollar, and
the  Danish  Krone,  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.

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,
Hungary 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 2007,  approximately 34% 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,  China and
Hungary.  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
customer  service  and  support  as well as product  availability,  performance,
functionality,  brand reputation,  reliability and price. 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

                                       14
<PAGE>

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 OR OTHER
MATERIAL  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 and availability 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.  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.  During  historical rising cost
periods,  we were successful in adding and maintaining a surcharge to the prices
of our high steel content products or  incorporating  them into price increases,
with a goal of margin neutrality.  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.

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  with the  exception  of  Wolfgang
Wegener, our Vice President and Managing Director of Columbus McKinnon Europe.

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 1B.          UNRESOLVED STAFF COMMENTS
                  -------------------------

      None.


                                       15
<PAGE>

ITEM 2.           PROPERTIES
                  ----------

     We maintain  our  corporate  headquarters  in Amherst,  New York and, as of
March  31,  2007,  conducted  our  principal   manufacturing  at  the  following
facilities:
<TABLE>
<CAPTION>

                                                                                            SQUARE       OWNED OR      BUSINESS
LOCATION                              PRODUCTS/OPERATIONS                                   FOOTAGE       LEASED        SEGMENT
-----------------------------------   --------------------------------------------------  ------------  ------------  ------------
UNITED STATES:
<S>                                   <C>                                                     <C>         <C>           <C>
Muskegon, MI                          Hoists                                                  441,225     Owned         Products
Charlotte, NC                         Industrial components                                   243,750     Owned         Products
Wadesboro, NC                         Hoists                                                  186,057     Owned         Products
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                                       80,659     Owned         Products
Greensburg, IN                        Scissor lifts                                            70,000     Owned         Solutions
Chattanooga, TN                       Forged attachments                                       59,303     Owned         Products
Claremore, OK                         Cranes, light-rail crane systems                         42,000     Owned         Products
Lisbon, OH                            Hoists and below-the-hook tooling                        36,600     Owned         Products
Cleveland, TX                         Cranes                                                   35,000     Owned         Products
Tonawanda, NY                         Light-rail crane systems                                 35,000     Owned         Solutions
Sarasota, FL                          Tire shredders                                           24,954     Owned         Solutions


INTERNATIONAL:
Santiago, Tianguistenco, Mexico       Hoists and chain                                         91,000     Owned         Products
Arden, Denmark                        Project design, conveyors, Layer Picker, EmptiCon        71,500     Owned         Solutions
Velbert, Germany                      Hoists                                                   56,000     Leased        Products
Hangzhou, China                       Metal fabrication, textiles and textile
                                      strappings                                               37,000     Leased        Products
Chester, United Kingdom               Plate clamps                                             25,400     Owned         Products
Romeny-sur-Marne, France              Rotary unions                                            21,550     Owned         Products
Hangzhou, China                       Textile strappings                                       20,000     Leased        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
Hangzhou, China                       Hoists and hand pallet trucks                             7,200     Leased        Products
</TABLE>

     In addition, we have a total of 35 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.


                                       16
<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 April 30,  2007,  there  were 463  holders of record of our common
stock.

     We do not  currently  pay cash  dividends.  Our  current  credit  agreement
allows,  but limits our ability 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, 2005
     First Quarter................................. $     8.62   $    4.87
     Second Quarter................................       9.81        6.69
     Third Quarter.................................       9.38        6.80
     Fourth Quarter................................      14.31        8.20

YEAR ENDED MARCH 31, 2006
     First Quarter................................. $    13.82   $    8.35
     Second Quarter................................      25.15       10.70
     Third Quarter.................................      26.00       18.64
     Fourth Quarter................................      28.64       20.86

YEAR ENDED MARCH 31, 2007
     First Quarter................................. $    30.56   $   20.15
     Second Quarter................................      22.70       16.50
     Third Quarter.................................      25.00       17.11
     Fourth Quarter................................      25.71       20.65


     On April 30,  2007,  the  closing  price of our common  stock on the Nasdaq
Stock Market was $24.76 per share.


                                       17
<PAGE>

                                PERFORMANCE GRAPH

     The Performance Graph shown below compares the cumulative total shareholder
return on our common stock based on its market  price,  with the total return of
the S&P MidCap 400 Index and the Dow Jones  Industrial - Diversified  Index. The
comparison of total return assumes that a fixed  investment of $100 was invested
on March 31, 2002 in our common stock and in each of the  foregoing  indices and
further assumes the reinvestment of dividends. The stock price performance shown
on the graph is not necessarily indicative of future price performance.

                       [ILLUSTRATION OF PERFORMANCE GRAPH]

<TABLE>
<CAPTION>


                                             2002  2003  2004  2005  2006  2007
                                             ----  ----  ----  ----  ----  ----

<S>                                           <C>    <C>  <C>   <C>   <C>   <C>
Columbus McKinnon Corporation..............   100    13    60   106   210   175
S&P Midcap 400 Index.......................   100    77   114   126   153   166
Dow Jones US Industrial - Diversified Index   100    71    96   115   114   121

</TABLE>

                                       18
<PAGE>


ITEM 6.           SELECTED FINANCIAL DATA
                  -----------------------

     The  consolidated  balance  sheets  as of March  31,  2007 and 2006 and the
related  statements of operations,  cash flows and shareholders'  equity for the
three  years ended March 31, 2007 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,
                                                       -------------------------------------------------------------
                                                             2007        2006        2005        2004         2003
                                                         -----------  ---------   ---------   ----------   ---------
                                                               (AMOUNTS IN MILLIONS, EXCEPT PER SHARE DATA)
                                                       -------------------------------------------------------------
   STATEMENT OF OPERATIONS DATA:
<S>                                                    <C>          <C>        <C>         <C>           <C>
   Net sales                                           $     589.8  $   556.0  $    514.8  $     444.6   $     453.3
   Cost of products sold                                     425.2      408.4       388.9        339.8         346.0
                                                       -------------------------------------------------------------
   Gross profit                                              164.6      147.6       125.9        104.8         107.3
   Selling expenses                                           61.7       54.3        52.3         48.3          47.4
   General and administrative expenses                        34.1       33.6        31.7         25.0          26.6
   Restructuring charges (1)                                   0.1        1.6         0.9          1.2           3.7
   Write-off/amortization of intangibles (2)                   0.2        0.2         0.3          0.4           4.2
                                                       -------------------------------------------------------------
   Income from operations                                     68.5       57.9        40.7         29.9          25.4
   Interest and debt expense                                  16.5       24.7        27.6         28.9          32.0
   Other (income) and expense, net                            (1.9)       5.0        (5.2)        (4.2)         (2.1)
                                                       -------------------------------------------------------------
   Income (loss) before income taxes                          53.9       28.2        18.3          5.2          (4.5)
   Income tax (benefit) expense                               20.5      (30.9)        2.2          4.0           1.5
                                                       -------------------------------------------------------------
   Income (loss) from continuing operations                   33.4       59.1        16.1          1.2          (6.0)
   Income (loss) from discontinued operations (3)              0.7        0.7         0.6            -             -
   Cumulative effect of change in accounting
    principle (2)                                                -          -           -            -          (8.0)
                                                       -------------------------------------------------------------
   Net income (loss)                                   $      34.1  $    59.8  $     16.7  $       1.2   $     (14.0)
                                                       =============================================================
   Diluted earnings (loss) per share from continuing   $      1.76  $    3.56  $     1.09 $       0.08   $     (0.42)
    operations
   Basic earnings (loss) per share from continuing
    operations                                         $      1.80  $    3.69  $     1.10 $       0.08   $     (0.42)
   Weighted average shares outstanding - assuming
    dilution                                                  19.0       16.6        14.8         14.6          14.5
   Weighted average shares outstanding - basic                18.5       16.1        14.6         14.6          14.5

BALANCE SHEET DATA (AT END OF PERIOD):
   Total assets                                        $     565.6  $   566.0  $    480.9  $     473.4    $    482.6
   Total debt (4)                                            172.1      209.8       270.9        293.4         316.3
   Total shareholders' equity                                241.3      204.4        81.8         63.0          52.7

OTHER FINANCIAL DATA:
   Net cash provided by operating activities                  45.5       46.4        17.2         26.4          14.2
   Net cash provided by (used in) investing activities        (3.4)      (6.4)        3.1          4.3          16.0
   Net cash used in financing activities                     (39.9)      (4.2)      (21.9)       (21.5)        (41.9)
   Capital expenditures                                       10.7        8.4         5.9          3.6           5.0
   Cash dividends per common share                            0.00       0.00        0.00         0.00          0.00

</TABLE>

                                       19
<PAGE>
-------------

     (1)  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 2007, 2006,
          and 2005.  During fiscal 2004,  restructuring  charges of $1.2 million
          were recorded  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.
          Restructuring charges for fiscal 2003 related to the closure, merging,
          or significant reorganization of five facilities. These costs included
          $1.8 million of 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.

     (2)  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.

     (3)  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. Refer to Note 3 to our
          consolidated   financial  statements  for  additional  information  on
          Discontinued Operations.

     (4)  Total debt includes  long-term  debt,  including the current  portion,
          notes payable and subordinated debt.


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 workstation 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 132-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  activities include improving our
productivity  and  extending  our sales  activities  to the  European  and Asian
marketplaces.  We are executing those initiatives through our Lean Manufacturing
efforts 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, market expansion and renewed customer focus.

     We maintain a strong domestic market share with  significant  leading North
American  market  positions  in  hoists,  lifting  and sling  chain,  and forged
attachments.  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  the recent  introduction  of powered  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.  We have

                                       20
<PAGE>
recently   reorganized  our  management  team  to  align  with  these  strategic
initiatives.  These  investments in  international  markets and new products are
part of our focus on our greatest opportunities for growth.  Management believes
that the growth rate of total sales may  moderate in future  periods due to more
difficult  comparisons  with our fiscal  2007  periods and a slower rate of U.S.
economic  growth.  We  monitor  such  indicators  as  U.S.  Industrial  Capacity
Utilization,  which has been  increasing  since July 2003,  as an  indicator  of
anticipated  demand for our  product.  In  addition,  we continue to monitor the
potential  impact of global and domestic trends,  including energy costs,  steel
price fluctuations,  rising interest rates and activity in a variety of end-user
markets around the globe.

     Our  Lean  Manufacturing  efforts  continue  to  fundamentally  change  our
manufacturing  processes to be more  responsive  to customer  demand and improve
on-time  delivery  and  productivity.  From  2001 to  2004  under  our  facility
rationalization  program,  we  closed 13  facilities  and  consolidated  several
product lines.  During fiscal 2006,  certain families within our mechanical jack
line were  eliminated  and  several  smaller  sales  offices  were  closed  with
potential opportunity for further  rationalization.  We are evaluating strategic
alternatives  of  certain  other  businesses  performing  at  levels  below  the
corporate average,  including Univeyor,  our material handling systems business.
In March 2007, we sold one of our less strategic  businesses,  a specialty crane
manufacturer.   Additionally,   our  manipulator  and  specialty   marine  chain
businesses were sold in fiscal 2004. We sold two pieces of excess real estate in
fiscal 2007,  generating  $1.9  million of proceeds  which were used to pay down
debt.  During  fiscal  2006,  we completed  the sale and partial  leaseback of a
warehouse  in Ontario,  Canada at a $0.6  million gain as well as the sale of an
unused  parcel  of  land in  Charlotte,  North  Carolina.  Fiscal  2005  saw the
completion of the sale of a  Chicago-area  property  resulting in a $2.7 million
gain and the sale and partial leaseback of our corporate  headquarters  building
in Amherst,  New York at a $2.2 million gain, of which $1.0 million was recorded
in fiscal 2005 and the remainder is being  recognized  pro-rata over the life of
the 10-year leaseback period.

     Consistent  with most U.S.  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 $35 million in fiscal 2007 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  currently  utilize
approximately $35 million to $40 million of steel annually in a variety of forms
including rod, wire, bar,  structural and others.  We  continuously  monitor our
costs and  reevaluate our pricing  policies.  We continue to operate in a highly
competitive  business  environment in the markets and  geographies  served.  Our
performance  will be impacted by our ability to address a variety of  challenges
and  opportunities  in those markets and  geographies,  including trends towards
increased  utilization  of the global  labor force and the  expansion  of market
opportunities in Asia and other emerging markets.


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,           2007 VS. 2006          2006 VS. 2005
                                    ----------------------------           -------------          -------------
                                    2007         2006        2005        AMOUNT       %         AMOUNT       %
                                    ----         ----        ----        ------       -         ------       -

<S>                              <C>          <C>         <C>          <C>           <C>      <C>           <C>
Products segment.............    $  527.1     $  493.9    $  453.1     $    33.2     6.7      $    40.8     9.0
Solutions segment............        62.7         62.1        61.7           0.6     1.0            0.4     0.6
                                 --------     --------    --------     ---------  ------      ---------  ------
     Total net sales.........    $  589.8     $  556.0    $  514.8     $    33.8     6.1      $    41.2     8.0
                                 ========     ========    =========    =========              =========
</TABLE>

     During  fiscal  2007,  the  Company  saw  continued  strength  in the North
American  economy  as well as  increased  demand in  Europe.  This  growth was a
continuation of improvement in the industrial sector of North America and Europe
that began in fiscal 2005 through the current period. In addition,  sales growth
continues to be fostered by the expansion of international  selling efforts. Net
sales for fiscal 2007 of $589.8  increased by $33.8  million or 6.1% from fiscal
2006,  and net  sales  for  fiscal  2006 of $556.0  million  increased  by $41.2
million,  or 8.0%,  from  fiscal  2005.  The  Products  segment  for fiscal 2007
experienced a net sales  increase of 6.7% over the prior year.  The increase was
due to a combination  of increased  volume on the continued  growth of the North
American  industrial economy and robust business in our European markets as well
as price  increases  ($7.9  million).  Fiscal 2007 was impacted by the continued
weakness of the U.S. dollar relative to other currencies, particularly the euro,
and reported Products segment sales were favorably affected by $4.2 million. The
Products  segment for fiscal 2006  experienced a net sales increase of 9.0% over
the prior year. The increase was due to a combination of increased volume on the
continued  growth  of the North  American  industrial  economy  as well as price
increases ($17.8 million). Our fiscal 2007 Solutions segment net sales were flat
as increased  volume in our U.S.  operations  was offset by a downsizing  of our

                                       21
<PAGE>
European  material  handling systems business  resulting from our decision to be
more  selective in the projects we choose to accept due to a challenging  market
and  pricing  environment.  Foreign  currency  fluctuations  of the U.S.  dollar
relative to the Danish Krone resulted in a favorable impact of $2.0 million. For
fiscal 2006, our Solutions  segment net sales were flat as increased  volume was
offset by the  strengthening  U.S. dollar relative to the Danish Krone resulting
in an unfavorable impact of $0.9 million.

     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,
                             --------------------------------------------------------------
                                     2007                 2006                2005
                                     ----                 ----                ----
                                  AMOUNT       %       AMOUNT       %      AMOUNT      %
                                  ------       -       ------       -      ------      -
<S>                             <C>          <C>     <C>          <C>     <C>        <C>
Products segment............    $   159.2    30.2    $   138.1    28.0    $  117.1   25.8
Solutions segment...........          5.4     8.6          9.5    15.3         8.8   14.3
                                ---------     ---    ---------    ----    --------   ----
     Total gross profit.....    $   164.6    27.9    $   147.6    26.5    $  125.9   24.5
                                =========            =========            ========
</TABLE>

     Our gross  profit  margins  were  approximately  27.9%,  26.5% and 24.5% in
fiscal 2007, 2006 and 2005,  respectively.  The Products segment for fiscal 2007
and  fiscal  2006  continues  to see  improved  gross  margins  as a  result  of
operational  leverage  at  increased  volumes  from the prior  years  across all
businesses,  the  proportion  of that increase in our most  profitable  products
sales (hoists), and the impact of previous facility rationalization projects and
ongoing lean  manufacturing  activities.  The Solutions  segment's  gross profit
margins  decreased  in Fiscal 2007 as leverage on volume  increases  at our U.S.
operations  was  offset by  losses at our  European  material  handling  systems
business.  The European  systems  business losses were the result of performance
issues and cost overruns on certain projects,  a challenging pricing environment
and an unfavorable sales mix of projects.  The Solutions  segment's gross profit
margins  increased  in Fiscal  2006 as a result of a shift in product mix at our
European material handling systems business to more internally developed product
costs from resale  products,  increased volume at certain  facilities,  and some
rationalization cost savings.

     Selling  expenses  were $61.7  million,  $54.3 million and $52.3 million in
fiscal 2007, 2006 and 2005, respectively.  As a percentage of net sales, selling
expenses were 10.5%, 9.8% and 10.2% in fiscal 2007, 2006 and 2005, respectively.
The fiscal 2007 increase,  driven by our strategic growth initiatives,  includes
additional   salaries  ($2.5   million),   increased   advertising,   marketing,
warehousing  and  travel  ($1.4  million),  investments  in  new  markets  ($1.6
million),  translation  of foreign  currencies  ($1.1  million),  and commission
expense ($0.5 million).  The fiscal 2006 increase includes  additional  salaries
($1.2 million), increased advertising,  marketing,  warehousing and travel ($1.3
million),  and new market costs ($0.4  million)  offset by a decrease in foreign
pension costs ($0.4 million) and lower commission expense ($0.8 million).

     General and administrative  expenses were $34.1 million,  $33.6 million and
$31.7 million in fiscal 2007,  2006 and 2005,  respectively.  As a percentage of
net sales,  general  and  administrative  expenses  were 5.8%,  6.1% and 6.2% in
fiscal 2007,  2006 and 2005,  respectively.  Fiscal 2007  includes  increases in
salaries/personnel for new market investment ($1.3) million,  increased research
and  development  costs ($1.0  million),  and increased  healthcare  costs ($0.8
million) offset by lower variable compensation costs ($2.5 million).  The Fiscal
2006  increase  includes  increases  in  salaries/personnel  including  variable
compensation  ($3.0  million),  employee   development/professional  fees  ($0.7
million),  offset by lower  foreign  pension  costs  ($1.0  million),  decreased
external   Sarbanes-Oxley   Section  404  costs  ($0.9   million)  and  currency
translation ($0.2 million).

     Restructuring  charges of $0.1 million,  $1.6 million and $0.9 million,  or
0.0%,  0.3% and 0.2% of net sales in fiscal 2007,  2006 and 2005,  respectively,
were  primarily  attributable  to the  ongoing  organizational  rationalizations
occurring at the  company.  The fiscal 2007 charges  represent  severance  costs
related to the  reorganization  of our European  systems business ($0.3 million)
and  demolition  costs of the unused  portion of a facility ($0.2 million) being
expensed on an as-incurred basis,  offset by a recovery of a portion of previous
write-downs  ($0.4  million) on a vacant  facility  that was sold during  fiscal
2007.  The  fiscal  2006  charges  consist  of the cost of  removal  of  certain
environmentally  hazardous  materials ($0.6 million),  inventory  disposal costs
related to the rationalization of certain product families within our mechanical
jack lines ($0.4  million),  the ongoing  maintenance  costs of a  non-operating
facility  accrued  based on  anticipated  sale  date  ($0.3  million)  and other
facility  rationalization projects ($0.3 million). The fiscal 2005 restructuring
charges  consist of $0.5 million of costs  related to facility  rationalizations
being  expensed on an as incurred  basis as a result of the project timing being
subsequent  to the  adoption of SFAS No. 144.  Fiscal  2005 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.  The
remaining liability of as of March 31, 2007 relates to the accrued costs for the
removal of environmentally hazardous materials ($0.6 million).

                                       22
<PAGE>

     Write-off/amortization  of intangibles  was $0.2 million,  $0.2 million and
$0.3 million in fiscal 2007, 2006 and 2005, respectively.

     Interest  and debt  expense  was $16.4  million,  $24.7  million  and $27.6
million in fiscal 2007,  2006 and 2005,  respectively.  As a  percentage  of net
sales,  interest and debt expense was 2.8%,  4.4% and 5.4% in fiscal 2007,  2006
and 2005,  respectively.  The fiscal 2007 and 2006 decreases  primarily resulted
from lower debt levels as we continue to execute our strategy of debt  reduction
and increased financial flexibility.

     Other (income) and expense, net was ($1.9) million, $5.0 million and ($5.2)
million in fiscal 2007, 2006 and 2005,  respectively.  Fiscal 2007 includes $6.4
million  from  investment  and  interest  income and $0.5 million of gain from a
business  divestiture offset by $5.2 million of redemption costs associated with
the  repurchase of outstanding  senior secured notes.  Fiscal 2006 includes $9.2
million of redemption costs associated with the repurchase of outstanding senior
secured and senior  subordinated  notes against $3.1 million from investment and
interest income and $0.8 million of gains from sales of real estate. Fiscal 2005
includes  $3.7  million in gains from sales of real estate and $2.1 million from
investment and interest income, offset by $0.3 million of additional losses from
2004 business divestitures.

     Income taxes as a percentage  of income before income taxes for fiscal 2007
was 38.1%.  Income taxes as a percentage  of income before income taxes were not
reflective of U.S statutory rates in fiscal 2006 or 2005. A valuation  allowance
of $50.5 million existed at March 31, 2005 due to the uncertainly of whether our
U.S. federal net operating loss carryforwards ("NOLs"),  deferred tax assets and
capital loss  carryforwards  might  ultimately  be realized.  We utilized  $14.9
million of the U.S. federal NOLs in fiscal 2006 reducing the valuation allowance
by $5.2 million.  As a result of our increased  operating  performance  over the
past several  years,  we  reevaluated  the certainty as to whether our remaining
U.S. federal NOLs and other deferred tax assets may ultimately be realized. As a
result of the  determination  that it is more likely than not that nearly all of
the  remaining  deferred  tax  assets  will be  realized,  $38.6  million of the
remaining valuation allowance was reversed as of March 31, 2006. The fiscal 2005
effective tax rate varies due to the benefit  received from the  utilization  of
the domestic net operating loss carry-forwards that had been fully reserved, and
jurisdictional  mix. In that year,  income tax expense  primarily  resulted from
non-U.S. taxable income and state taxes on U.S. taxable income.


LIQUIDITY AND CAPITAL RESOURCES

     Cash and cash equivalents totaled $48,655 at March 31, 2007, an increase of
$3,057 from the March 31, 2006 balance of $45,598.

     Net cash provided by operating activities was $45.5 million,  $46.4 million
and $17.2 million in fiscal 2007, 2006 and 2005, respectively.  The $0.9 million
decrease in fiscal 2007  relative to fiscal 2006 was  primarily  due to stronger
operating performance in fiscal 2007 ($16.2 million) offset by increased working
capital  components  ($17.1 million).  Changes in net working capital include an
unfavorable  change of $4.8  million on  inventory  (resulting  from support for
upcoming new product launches,  a surge in demand for larger capacity equipment,
and timing of offshore  purchases) and an unfavorable change of $20.4 million in
accounts payable and accrued and non-current  liabilities (resulting from timing
of disbursements,  changing product liability  reserves,  and decreased variable
compensation accruals).  These were offset by a favorable change of $7.5 million
on accounts  receivables and unbilled  revenues as a result of better collection
efforts.  The $31.3 million  increase in fiscal 2006 relative to fiscal 2005 was
primarily due to stronger  operating  performance in fiscal 2006 ($19.9 million)
and improved working capital  components  ($11.4  million).  The working capital
changes  come from  favorable  changes in  inventory  ($9.3  million),  accounts
payable and accrued liabilities ($9.9 million), offset by unfavorable changes in
prepaids ($3.8 million) and accounts receivables ($4.1 million).

     Net cash (used) provided by investing activities was ($3.4) million, ($6.4)
million and $3.1 million in fiscal 2007, 2006 and 2005, respectively. The fiscal
2007 change in cash (used)  provided by  investing  activities  is the result of
increased capital  expenditures,  offset by increased  proceeds from the sale of
marketable  securities  and greater  proceeds from asset sales.  The fiscal 2006
change  in cash  (used)  provided  by  investing  activities  is the  result  of
increased  capital  expenditures and lower proceeds from asset sales. The fiscal
2007,  2006 and 2005  amounts  included  $5.4  million,  $2.1  million  and $7.1
million, respectively, from business and property divestitures.

     Net cash used in financing  activities was $39.9 million,  $4.2 million and
$21.9 million in fiscal 2007, 2006 and 2005, respectively.  Fiscal 2007 includes
$2.8 million of proceeds  from the exercise of employee  stock  options.  Fiscal
2006 includes  $56.6 million of proceeds from the November 2005 stock  offering,
$7.1 million from the exercise of employee  stock  options,  and $2.2 million of
tax benefit from the exercise of stock options.  The fiscal 2007,  2006 and 2005
amounts  included  $42.9  million,  $67.8  million  and  $22.9  million  of debt
repayment,  respectively. We also paid $2.8 million of financing costs in fiscal
2006 to effect the capital transaction previously described.

                                       23
<PAGE>

     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 includes cash  generation for debt  repayment.  The
business  plan  focuses  on  continued  implementation  of  lean  manufacturing,
improving working capital components,  including inventory  reductions,  and new
market and new product development.

     In March 2006, we entered into a Revolving credit facility,  which provides
availability  up to $75 million.  Provided there is no default,  the Company may
request an increase in the  availability of the Revolving  Credit Facility by an
amount not exceeding $50 million if all the Senior Secured 10% Notes (10% Notes)
have been repaid in full or will be repaid in full  contemporaneously  with such
increase,  or $25  million in the event that any 10% Notes  remain  outstanding,
subject to lender approval. The Revolving Credit Facility matures February 2010,
however the  maturity  date can be  extended  to February  2011 based on certain
conditions  related to  outstanding  balances and the  maturity  date of the 10%
Notes.

     At March 31,  2007,  the  Revolving  Credit  Facility was not drawn and the
available amount, net of outstanding letters of credit of $10.2 million, totaled
$64.8 million.  Interest is payable at a Eurodollar rate or a prime rate plus an
applicable  margin  determined by our leverage  ratio.  At our current  leverage
ratio, we qualify for the lowest applicable margin level,  which amounts to 87.5
basis  points for  Eurodollar  borrowings  and zero basis  points for prime rate
based  borrowings.  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.  The  corresponding
credit  agreement  associated with the Revolving  Credit Facility places certain
debt covenant restrictions on us, including certain financial requirements and a
limitation  on dividend  payments,  with which we were in compliance as of March
31, 2007.

     The  Senior  Secured  10% Notes  (10%  Notes)  issued on July 22,  2003 for
$115,000  amounted  to $22,125 as of March 31,  2007 and are due August 1, 2010.
The reduction resulted from purchases during fiscal 2006 and 2007. Provisions of
the  10%  Notes  include,  without  limitation,  restrictions  on  indebtedness,
restricted  payments,  asset  and  subsidiary  stock  sales,  liens,  and  other
restricted transactions.  The remaining 10% Notes are not entitled to redemption
at our option,  prior to August 1, 2007.  On and after August 1, 2007,  they are
redeemable at prices declining annually from 105% 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  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  secured  by a  second-priority
interest in all  domestic  inventory,  receivables,  equipment,  real  property,
subsidiary  stock  (limited to 65% for foreign  subsidiaries)  and  intellectual
property.  The 10% Notes are guaranteed by certain  existing and future domestic
subsidiaries and are not subject to any sinking fund requirements.

     The Senior  Subordinated 8 7/8% Notes (8 7/8% Notes) issued on September 2,
2005 amounted to $136,000 and are due November 1, 2013. Provisions of the 8 7/8%
Notes include,  without limitation,  restrictions on indebtedness,  asset sales,
and  dividends and other  restricted  payments.  Until  November 1, 2008, we may
redeem up to 35% of the outstanding notes at a redemption price of 108.875% with
the proceeds of equity offerings,  subject to certain restrictions.  On or after
November 1, 2009,  the 8 7/8% Notes are redeemable at the option of the Company,
in whole or in part, at prices  declining  annually from 104.438% to 100% on and
after  November 1, 2011.  In the event of a Change of Control (as defined in the
indenture  for such  notes),  each  holder of the 8 7/8% Notes may require us to
repurchase  all or a portion of such  holder's 8 7/8% Notes at a purchase  price
equal to 101% of the principal  amount thereof.  The 8 7/8% Notes are guaranteed
by certain existing and future domestic  subsidiaries and are not subject to any
sinking fund requirements.

     In November  2005,  we registered  an  additional  3,350,000  shares of our
common stock which were sold at $20.00 per share.  The number of shares  offered
by us was  3,000,000 and 350,000 were offered by a selling  shareholder.  We did
not receive  any  proceeds  from the sale of shares by the selling  shareholder.
This  secondary  stock  offering  increased  our weighted  average  common stock
outstanding  by 1.8 million for the year ended March 31,  2006. A portion of the
proceeds  received by us were used to redeem $47.6 million of our10% Notes.  The
repurchase of the 10% Notes occurred at a premium resulting in a pre-tax loss on
early  extinguishment of debt of $4.8 million.  As a result of the repurchase of
the  10%  Notes,   $1.1  million  of  pre-tax  deferred   financing  costs  were
written-off.  The net effect of these  items,  a $5.9  million  pre-tax  loss in
fiscal 2006, is shown as part of other (income) and expense, net. The balance of
the  proceeds  was  subsequently  used to  purchase  10%  Notes  in open  market
transactions.

     Unsecured and uncommitted  lines of credit are available to meet short-term
working  capital needs for our  subsidiaries  operating  outside of the U.S. The
lines of credit are available on an offering  basis,  meaning that  transactions
under  the  line of  credit  will be on such  terms  and  conditions,  including
interest rate,  maturity,  representations,  covenants and events of default, as
mutually agreed between our  subsidiaries and the local bank at the time of each

                                       24
<PAGE>

specific  transaction.  As of March 31, 2007,  significant  credit lines totaled
approximately $9,858 of which $7,894 was drawn.

     In addition to the above facilities,  our foreign subsidiaries have certain
fixed term bank loans. As of March 31, 2007, significant loans totaled $3,900 of
which $2,824 were secured loans.

CONTRACTUAL OBLIGATIONS

     The following  table reflects a summary of our  contractual  obligations in
millions of dollars as of March 31, 2007, by period of estimated payments due:
<TABLE>
<CAPTION>

                                                      FISCAL      FISCAL 2009-     FISCAL 2011-     MORE THAN
                                         TOTAL         2008        FISCAL 2010     FISCAL 2012     FIVE YEARS
                                         -----         ----        -----------     -----------     ----------
<S>                                    <C>            <C>           <C>              <C>             <C>
Long-term debt obligations (a).        $  162.5       $  0.3        $   0.4          $   23.5        $ 138.3
Operating lease obligations (b)            18.6          4.8            7.8               4.0            2.0
Purchase obligations (c) ......               -            -              -                 -              -
Interest obligations (d).......            87.5         14.4           28.8              25.1           19.2
Letter of credit obligations...            10.2         10.2              -                 -              -
Other    long-term     liabilities
reflected    on   the    Company's
balance sheet under GAAP (e)...            63.4          0.0           27.5              23.5           12.4
                                       --------       ------        -------          --------        -------
     Total.....................        $  342.2       $ 29.7        $  64.5          $   76.1        $ 171.9
                                       ========       ======        =======          ========        =======
</TABLE>

     (a)  As described in note 10 to our consolidated financial statements.
     (b)  As described in note 17 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 11/1/13.
     (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, improve productivity and
customer  responsiveness,  reduce  production  costs,  increase  flexibility  to
respond  effectively  to market  fluctuations  and changes,  meet  environmental
requirements,  enhance safety and promote  ergonomically  correct work stations.
Our capital expenditures for fiscal 2007, 2006 and 2005 were $10.7 million, $8.4
million and $5.9 million,  respectively.  Higher capital  expenditures in fiscal
2007 and 2006  were the  result  of new  product  development  and  productivity
enhancing  equipment  along with normal  maintenance  items.  We expect  capital
expenditure spending in fiscal 2008 to be in the range of $10-$12 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,  South
America and  Asia-Pacific.  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. With changes in worldwide
demand for steel and fluctuating scrap steel prices over the past several years,
we  experienced  fluctuations  in our  costs  that we have  reflected  as  price
increases and surcharges to our customers. We believe we have been successful in
instituting  surcharges  and  price  increases  to pass on these  material  cost
increases.  We will  continue  to monitor our costs and  reevaluate  our pricing
policies.

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


                                       25
<PAGE>
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  an  8%
subordinated note in the principal amount of $6.8 million payable over 10 years.
Due to the  uncertainty  of its  collection,  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, $0.7 million of income from discontinued operations was recorded in
fiscal 2007.  All interest and principal  payments  required under the note have
been made to date.

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 Note 11 to our fiscal 2007
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%, 5 3/4%, and 6% as of March 31,
2007,  2006 and 2005,  respectively,  are based on  long-term  bond  rates.  The
increase in the discount rate for fiscal 2007 resulted in a $4.3 decrease in the
projected  benefit  obligation  as of March 31,  2007.  The decrease in discount
rates  for  fiscal  2006 and 2005  resulted  in $3.9  million  and $3.0  million
increases in the projected  benefit  obligations  as of March 31, 2006 and 2005,
respectively.  The rate of return on plan assets  assumptions  of 7 1/2%, 7 1/2%
and 8 1/4% for the years ended March 31, 2007, 2006 and 2005, respectively,  are
based on the composition of the asset portfolios (approximately 61% equities and
39% fixed income at March 31, 2007) and their long-term  historical returns. The
actual assets  realized gains of $11.0 and $5.8 million in fiscal 2007 and 2006.
Our funded  status as of March 31, 2007 and 2006 was  negative by $28.8  million
and $33.9 million, or 20.6% and 25.3%,  respectively.  Our pension contributions
during  fiscal  2007  and  2006  were   approximately  $6.0  and  $7.8  million,
respectively.  The negative  funded status may result in future pension  expense
increases.  Pension  expense  for the March 31,  2008 fiscal year is expected to
approximate  $6.1  million,  which is down from the fiscal  2007  amount of $7.4
million  due  to an  increase  in  the  expected  return  on  assets  and  lower
amortization of unrecognized  losses.  The factors outlined above will result in
increases  in  funding   requirements  over  time,  unless  there  is  continued
significant   market   appreciation   in  the  asset  values.   Pension  funding
contributions  for the March 31, 2008  fiscal  year are  expected to increase by
approximately  $6.2  million  compared to fiscal 2006  including a $5.0  million
discretionary  contribution  above the minimum  amount  required  by ERISA.  The
discretionary  funding  decision  reflects  an  acceleration  to comply with the
Pension Protection Act of 2006. The compensation increase assumption of 3% as of
March  31,  2007 and 4% as of  March  31,  2006 and 2005 is based on  historical
trends.

     The healthcare  inflation  assumptions of 9%, 9 3/4% and 10 1/2% for fiscal
2007, 2006 and 2005,  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 14 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
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 formulas  applied to
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 formulas  applied to historical bad
debt  write-offs and credit memos issued,  assessing  potentially  uncollectible
customer accounts and analyzing the accounts receivable agings.
                                       26
<PAGE>

     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, 2007, we had $48.3
million of gross deferred tax assets before valuation  allowances.  As described
in Note 16 to the consolidated financial statements, $13.5 million of the assets
pertain to U.S.  federal  net  operating  loss  carryforwards  ("NOLs")  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 U.S.  federal  NOLs expire in 2023.  We reduced the  deferred tax
assets by $15.6  million as a result of  utilizing  U.S.  federal NOLs in fiscal
2007. As a result of our  increased  operating  performance  in the past several
years,  during  fiscal  2006 we  reevaluated  the  certainty  as to whether  our
remaining NOLs and other  deferred tax assets may  ultimately be realized.  As a
result of the determination  that it was more likely than not that nearly all of
the remaining deferred tax assets will be realized, a significant portion of the
remaining  valuation  allowance  was  reversed  in fiscal  2006.  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 could
be required to record a 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-type  contracts.  For  long-term  construction-type  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 June 2006,  the  Financial  Accounting  Standards  Board  (FASB)  issued
Interpretation  No. 48 (FIN 48),  "Accounting  for Uncertainty in Income Taxes".
FIN 48 is an  interpretation  of FASB Statement No. 109  "Accounting  for Income
Taxes" and must be adopted by us no later than April 1, 2007.  FIN 48 prescribes
a comprehensive model for recognizing,  measuring, presenting, and disclosing in
the financial  statements  uncertain tax positions that the company has taken or
expects to take in our tax returns.  We are required to apply the  provisions of
FIN 48 to all tax positions  upon initial  adoption with any  cumulative  effect
adjustment to be recognized as an adjustment to retained earnings as of April 1,
2007. FIN 48 is effective beginning in fiscal 2008 and is not expected to have a
material impact on our consolidated financial statements.

     In  September  2006,  the FASB issued  Statement  of  Financial  Accounting
Standards  (SFAS) No.  157,  "Fair  Value  Measurements,"  to define fair value,
establish a framework for  measuring  fair value in  accordance  with  generally
accepted  accounting  principles,   and  expand  disclosures  about  fair  value
measurements.  SFAS No. 157 will be effective for fiscal years  beginning  after
November 15, 2007.  The Company is assessing the impact the adoption of SFAS No.
157 will have on our consolidated financial position and results of operations.

     In September 2006, the FASB issued SFAS No. 158, "Employers' Accounting for
Defined  Benefit  Pension and Other  Postretirement  Plans, an amendment of FASB
Statements No. 87, 88, 106, and 132(R)" (SFAS 158). Among other items,  SFAS 158
requires  recognition  of the  overfunded or  underfunded  status of an entity's
defined  benefit  postretirement  plan as an asset or liability in the financial
statements,  requires the  measurement of defined  benefit  postretirement  plan
assets and obligations as of the end of the employer's fiscal year, and requires
recognition  of the funded  status of defined  benefit  postretirement  plans in
other comprehensive income. We adopted Statement 158 in fiscal 2007 as discussed
in footnote  11 to the  consolidated  financial  statements  included  elsewhere
within this Annual Report.


                                       27
<PAGE>

SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

     This report may include "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  disclosed in our periodic reports filed with the
Commission.  Consequently such forward-looking  statements should be regarded as
our current plans,  estimates and beliefs.  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 events.


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  2007,  28% 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, Hungary 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,  the Mexican peso and the Chinese yuan. 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 $0.8 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, 2007, we do not have any material swap agreements or similar financial
instruments  in place.  At March 31,  2007 and  2006,  approximately  97% of our
outstanding debt had fixed interest rates. At those dates, we had  approximately
$13.9 million and $6.4 million, respectively, of outstanding variable rate debt.
A 1%  fluctuation  in interest  rates in fiscal 2007 and 2006 would have changed
interest  expense on that outstanding  variable rate debt by approximately  $0.1
million for both years.

     Like many  industrial  manufacturers,  we are involved in  asbestos-related
litigation.   In  continually   evaluating   costs  relating  to  its  estimated
asbestos-related liability, we review, 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,  we have 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.  We 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.


                                       28
<PAGE>

     Based on actuarial  information,  we have  estimated  our  asbestos-related
aggregate  liability  through March 31, 2025 and March 31, 2037 to range between
$5.0 million and $14.0 million using  actuarial  parameters of continued  claims
for a period of 18 to 30 years. Our estimation of our asbestos-related aggregate
liability  that is probable and  estimable,  in accordance  with U.S.  generally
accepted  accounting  principles   approximates  $8.4  million  which  has  been
reflected as a liability in the  consolidated  financial  statements as of March
31, 2007. The increase in the recorded liability from the amount of $6.3 million
at March 31, 2006 is due to the  increase in  historical  data used to calculate
required  asbestos  liability  reserve levels.  The recorded  liability does not
consider the impact of any  potential  favorable  federal  legislation.  Of this
amount, management expects to incur asbestos liability payments of approximately
$0.3 million 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 our  financial
condition  or our  liquidity,  although the net  after-tax  effect of any future
liabilities recorded could be material to earnings in a future period.


                                       29
<PAGE>

ITEM 8.           FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

COLUMBUS MCKINNON CORPORATION

 Audited Consolidated Financial Statements as of March 31, 2007:
      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-13
         9.    Accrued Liabilities and Other Non-current Liabilities....    F-14
         10.   Debt.....................................................    F-15
         11.   Pensions and Other Benefit Plans.........................    F-17
         12.   Employee Stock Ownership Plan (ESOP).....................    F-21
         13.   Earnings per Share and Stock Plans.......................    F-22
         14.   Loss Contingencies.......................................    F-25
         15.   Restructuring Charges....................................    F-26
         16.   Income Taxes.............................................    F-27
         17.   Rental Expense and Lease Commitments.....................    F-29
         18.   Summary Financial Information............................    F-30
         19.   Business Segment Information.............................    F-34
         20.   Selected Quarterly Financial Data (unaudited)............    F-36
         21.   Accumulated Other Comprehensive Loss.....................    F-37
         22.   Effects of New Accounting Pronouncements.................    F-38


         Schedule II - Valuation and Qualifying Accounts................    F-39


                                      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 as of March 31, 2007 and 2006, and the related consolidated
statements of  operations,  shareholders'  equity and cash flows for each of the
three years in the period  ended March 31,  2007.  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  at March  31,  2007 and 2006 and the  consolidated  results  of its
operations  and its cash flows for each of the three  years in the period  ended
March  31,  2007,  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.

As discussed in Note 2 to the  consolidated  financial  statements,  on April 1,
2006 the Company changed its method of accounting for stock-based  compensation.
As discussed in Note 11 to the consolidated  financial statements,  on March 31,
2007 the Company changed its method of accounting for employee  retirement plans
and other postretirement benefits.

We also have  audited,  in accordance  with the standards of the Public  Company
Accounting  Oversight  Board  (United  States),  the  effectiveness  of Columbus
McKinnon Corporation's internal control over financial reporting as of March 31,
2007,  based on criteria  established in Internal  Control-Integrated  Framework
issued by the Committee of Sponsoring  Organizations of the Treadway  Commission
and our report dated May 25, 2007 expressed an unqualified opinion thereon.



                             /s/ Ernst & Young LLP

Buffalo, New York
May 25, 2007




                                      F-2
<PAGE>

                          COLUMBUS MCKINNON CORPORATION

                           CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>

                                                                                        ----------------------------------
                                                                                                    MARCH 31,
                                                                                        ----------------------------------
                                                                                              2007             2006
                                                                                              -----            -----
                                                                                             (IN THOUSANDS, EXCEPT
                                                                                                   SHARE DATA)
                                         ASSETS
 Current assets:
<S>                                                                                       <C>              <C>
        Cash and cash equivalents......................................................   $     48,655     $     45,598
        Trade accounts receivable, less allowance for doubtful accounts
            ($3,628 and $3,417, respectively)..........................................         97,269           95,726
        Unbilled revenues..............................................................         15,050           12,061
        Inventories....................................................................         77,179           74,845
      Prepaid expenses.................................................................         18,029           15,676
                                                                                        ----------------------------------
 Total current assets..................................................................        256,182          243,906
 Net property, plant, and equipment....................................................         55,231           55,132
 Goodwill, net.........................................................................        185,634          184,917
 Other intangibles, net................................................................            269            2,410
 Marketable securities.................................................................         28,920           27,596
 Deferred taxes on income..............................................................         34,460           46,065
 Other assets..........................................................................          4,942            6,018
                                                                                        ----------------------------------
 Total assets..........................................................................   $    565,638     $    566,044
                                                                                        ==================================

                          LIABILITIES AND SHAREHOLDERS' EQUITY
 Current liabilities:
      Notes payable to banks...........................................................   $      9,598     $      5,798
      Trade accounts payable...........................................................         35,896           39,311
      Accrued liabilities..............................................................         52,344           61,264
      Restructuring reserve............................................................            599              793
      Current portion of long-term debt................................................            297              127
                                                                                        ----------------------------------
 Total current liabilities.............................................................         98,734          107,293
 Senior debt, less current portion.....................................................         26,168           67,841
 Subordinated debt.....................................................................        136,000          136,000
 Other non-current liabilities.........................................................         63,411           50,489
                                                                                        ----------------------------------
 Total liabilities.....................................................................        324,313          361,623
 Shareholders' equity:
      Voting common stock; 50,000,000 shares authorized;
             18,825,312 and 18,575,454 shares issued...................................            188              185
      Additional paid-in capital.......................................................        174,654          170,081
      Retained earnings................................................................         85,237           51,152
      ESOP debt guarantee; 213,667 and 249,821 shares..................................         (3,417)          (3,996)
      Unearned restricted stock; 0 and 2,000 shares....................................              -              (22)
      Accumulated other comprehensive loss.............................................        (15,337)         (12,979)
                                                                                        ----------------------------------
 Total shareholders' equity............................................................        241,325          204,421
                                                                                        ----------------------------------
 Total liabilities and shareholders' equity............................................   $    565,638     $    566,044
                                                                                        ==================================

</TABLE>

                             See accompanying notes.


                                      F-3
<PAGE>

                          COLUMBUS MCKINNON CORPORATION

                      CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>

                                                                     -----------------------------------------------------------
                                                                                        YEAR ENDED MARCH 31,
                                                                     -----------------------------------------------------------
                                                                              2007               2006               2005
                                                                              ----               ----               ----
                                                                                          (IN THOUSANDS,
                                                                                      EXCEPT PER SHARE DATA)

<S>                                                                     <C>                <C>                <C>
 Net sales..........................................................    $     589,848      $     556,007      $     514,752
 Cost of products sold..............................................          425,248            408,385            388,844
                                                                     -----------------------------------------------------------
 Gross profit.......................................................          164,600            147,622            125,908
 Selling expenses...................................................           61,731             54,255             52,291
 General and administrative expenses................................           34,097             33,640             31,730
 Restructuring charges..............................................              133              1,609                910
 Amortization of intangibles........................................              183                249                312
                                                                     -----------------------------------------------------------
 Income from operations.............................................           68,456             57,869             40,665
 Interest and debt expense..........................................           16,430             24,667             27,620
 Cost of bond redemptions...........................................            5,188              9,201                191
 Investment income..................................................           (5,257)            (2,017)            (1,232)
 Other (income) and expense, net....................................           (1,825)            (2,136)            (4,177)
                                                                     -----------------------------------------------------------
 Income from continuing operations before income tax
      expense (benefit).............................................           53,920             28,154             18,263
 Income tax expense (benefit).......................................           20,539            (30,946)             2,196
                                                                     -----------------------------------------------------------
 Income from continuing operations..................................           33,381             59,100             16,067
 Income from discontinued operations (net of tax)...................              704                696                643
                                                                     -----------------------------------------------------------
 Net income.........................................................    $      34,085      $      59,796      $      16,710
                                                                     ===========================================================


 Average basic shares outstanding...................................           18,517             16,052             14,594
 Average diluted shares outstanding.................................           18,951             16,628             14,803
 Basic income per share:
      Income from continuing operations.............................    $        1.80      $        3.69      $        1.10
      Income from discontinued operations...........................             0.04               0.04               0.04
                                                                     -----------------------------------------------------------
      Basic income per share........................................    $        1.84      $        3.73      $        1.14
                                                                     ===========================================================

 Diluted income per share:
      Income from continuing operations.............................    $        1.76      $        3.56      $        1.09
      Income from discontinued operations...........................             0.04               0.04               0.04
                                                                     -----------------------------------------------------------
      Diluted income per share......................................    $        1.80      $        3.60      $        1.13
                                                                     ===========================================================

</TABLE>



                             See accompanying notes.


                                      F-4
<PAGE>

                          COLUMBUS MCKINNON CORPORATION

                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                 (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>

                                      COMMON     ADDI-      RETAINED                            ACCUMULATED
                                      STOCK      TIONAL     EARNINGS      ESOP      UNEARNED       OTHER         TOTAL
                                      ($.01     PAID-IN   (ACCUMULATED    DEBT     RESTRICTED  COMPREHENSIVE  SHAREHOLDERS'
                                    PAR VALUE)  CAPITAL     DEFICIT)   GUARANTEE     STOCK          LOSS         EQUITY
                                    ---------------------------------------------------------------------------------------
<S>                                  <C>        <C>        <C>         <C>          <C>         <C>            <C>
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
Change in net unrealized loss on
  investments, net of tax benefit
  of $70...........................         -          -           -            -          -            (131)       (131)
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
  shares...........................         -        428           -            -          -               -         428
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
Comprehensive income:
Net income 2006....................         -          -      59,796            -          -               -      59,796
Change in foreign currency
  translation adjustment...........         -          -           -            -          -          (1,846)     (1,846)
Change in net unrealized gain on
  investments, net of tax of $354..         -          -           -            -          -             658         658
Change in minimum pension
  liability adjustment, net of
  tax benefit of $1,681............         -          -           -            -          -          (2,535)     (2,535)
                                                                                                                ----------
Total comprehensive income.........                                                                               56,073
Common stock issued, 3,000,000
  shares...........................        30     56,589           -            -          -               -      56,619
Stock options exercised, 626,282
  shares...........................         6      7,143           -            -          -               -       7,149
Tax benefit from exercise of
  stock  options...................         -      2,154           -            -          -               -       2,154
Earned 34,874 ESOP shares..........         -         95           -          558          -               -         653
Restricted common stock
  granted, 1,000 shares............         -         22           -            -        (22)              -           -
Earned portion of restricted shares         -          -           -            -          6               -           6
                                    ---------------------------------------------------------------------------------------
Balance at March 31, 2006..........  $    185   $170,081   $  51,152   $   (3,996)  $    (22)   $    (12,979)  $ 204,421
Comprehensive income:
Net income 2007....................         -          -      34,085            -          -               -      34,085
Change in foreign currency
  translation adjustment...........         -          -           -            -          -           4,093       4,093
Change in net unrealized gain on
  investments, net of tax benefit
  of $1,006........................         -          -           -            -          -          (1,869)     (1,869)
Change in pension liability, prior
  to adoption of SFAS 158, net of
  tax of $3,830....................         -          -           -            -          -           5,758       5,758
                                                                                                                 ---------
Total comprehensive income........                                                                                42,067
Adjustment to initially apply
  SFAS 158, net of tax benefit
  of $6,906........................         -          -           -            -          -         (10,340)    (10,340)
Stock compensation - directors.....         -        180           -            -          -               -         180
Stock options exercised, 240,468
  shares...........................         3      2,598           -            -          -               -       2,601
Stock compensation expense.........         -      1,255           -            -         22               -       1,277
Tax benefit from exercise of
  stock  options...................         -        311           -            -          -               -         311
Earned 36,154 ESOP shares..........         -        229           -          579          -               -         808
                                    ---------------------------------------------------------------------------------------
Balance at March 31, 2007..........  $    188   $174,654   $  85,237   $   (3,417)  $      -    $    (15,337)  $ 241,325
                                    =======================================================================================

</TABLE>

                             See accompanying notes.


                                      F-5
<PAGE>


                          COLUMBUS MCKINNON CORPORATION

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>

                                                                          ------------------------------------------------
                                                                                         YEAR ENDED MARCH 31,
                                                                          ------------------------------------------------
                                                                                   2007            2006           2005
                                                                                   ----            ----           ----
                                                                                         (IN THOUSANDS)
 OPERATING ACTIVITIES:
<S>                                                                          <C>             <C>             <C>
 Income from continuing operations.......................................    $     33,381    $     59,100    $    16,067
 Adjustments to reconcile income from continuing
    operations to net cash provided by operating activities:
      Depreciation and amortization......................................           8,289           8,824          9,171
      Deferred income taxes..............................................          12,438         (36,968)          (971)
      (Gain) loss on divestitures........................................            (504)             87            330
      Gain on sale of real estate/investments............................          (5,373)         (2,100)        (4,632)
      Loss on early retirement of bonds..................................           4,263           7,083             40
      Amortization/write-off of deferred financing costs.................           1,603           3,297          1,575
      Stock-based compensation...........................................           1,457               -              -
      Changes in operating assets and liabilities
         net of effects of business divestitures:
           Trade accounts receivable and  unbilled revenues..............          (3,521)        (11,025)        (6,896)
           Inventories...................................................          (2,260)          2,518         (6,834)
           Prepaid expenses..............................................          (2,132)         (2,026)         1,796
           Other assets..................................................             921             207             10
           Trade accounts payable........................................          (3,849)          6,099          3,192
           Accrued and non-current liabilities...........................             782          11,267          4,313
                                                                          ------------------------------------------------
 Net cash provided by operating activities...............................          45,495          46,363         17,161
                                                                          ------------------------------------------------
 INVESTING ACTIVITIES:
 Proceeds from sale of marketable securities.............................          36,853          15,913         19,342
 Purchases of marketable securities......................................         (35,686)        (16,801)       (18,028)
 Capital expenditures....................................................         (10,653)         (8,430)        (5,925)
 Proceeds from sale of facilities and surplus real estate................           2,813           2,091          6,742
 Proceeds from sale of businesses........................................           2,574               -              -
 Proceeds from net assets held for sale..................................               -               -            375
 Proceeds from discontinued operations note receivable...................             704             857            643
                                                                          ------------------------------------------------
 Net cash (used) provided by investing activities........................          (3,395)         (6,370)         3,149
                                                                          ------------------------------------------------
 FINANCING ACTIVITIES:
 Proceeds from issuance of common stock..................................               -          56,619              -
 Proceeds from exercise of stock options.................................           2,601           7,149            428
 Payments under revolving line-of-credit agreements......................         (62,930)        (47,669)      (345,664)
 Borrowings under revolving line-of-credit agreements....................          65,975          49,030        344,541
 Repayment of debt.......................................................         (45,964)       (205,167)       (21,745)
 Proceeds from issuance of long-term debt................................               -         136,000              -
 Payment of deferred financing costs.....................................            (449)         (2,877)           (24)
 Tax benefit from exercise of stock options..............................             311           2,154              -
 Change in ESOP debt guarantee...........................................             579             558            562
                                                                          ------------------------------------------------
 Net cash used by financing activities...................................         (39,877)         (4,203)       (21,902)
 EFFECT OF EXCHANGE RATE CHANGES ON CASH.................................             834             329            (30)
                                                                          ------------------------------------------------
 Net change in cash and cash equivalents.................................           3,057          36,119         (1,622)
 Cash and cash equivalents at beginning of year..........................          45,598           9,479         11,101
                                                                          ------------------------------------------------
 Cash and cash equivalents at end of year................................    $     48,655    $     45,598    $     9,479
                                                                          ================================================
 Supplementary cash flows data:
      Interest paid......................................................    $     17,221    $     26,565    $    28,133
      Income taxes paid, net.............................................    $      5,712    $      5,035    $     2,029

</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
2007, approximately 66% 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  $3,779,000,  $3,343,000,  and  $2,521,000 in fiscal 2007,  2006, and 2005,
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  24% of the  Company's  employees  are  represented  by seven
separate domestic and Canadian collective  bargaining agreements which terminate
at various  times  between  July 2007 and August 2010.  Approximately  2% of the
labor  force is covered by  collective  bargaining  agreements  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
derivatives  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 Board (FASB) Statement of Financial Accounting
Standards (SFAS) No. 52, "Foreign Currency  Translation." 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 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 and expense,  net. There was
approximately  a $225,000  loss, a $100,000  loss and a $200,000 gain on foreign
currency transactions in fiscal 2007, 2006 and 2005, respectively.

   GOODWILL

     Goodwill is not amortized but is  periodically  tested for  impairment,  in
accordance with the provisions of SFAS No. 142,  "Goodwill and Other  Intangible
Assets."  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,  "Disclosures  about
Segments of an Enterprise  and Related  Information."  The Products  segment was
subdivided into three  reporting units and the Solutions  segment was subdivided
into two reporting units.  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.  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  60% of  inventories  at March  31,  2007  (58% in 2006)  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 investment income. 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
investment income 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)

   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/REVISIONS

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

   RESEARCH AND DEVELOPMENT

     Research and  development  costs as defined in SFAS No. 2,  "Accounting for
Research and  Development  Costs" for the years ended March 31,  2007,  2006 and
2005 were $2,887,000, $1,614,000 and $1,289,000, respectively and are classified
as  general  and  administrative  expense  in  the  consolidated  statements  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.


   SALE-LEASEBACK TRANSACTIONS

     On January 28, 2005, the Company sold its corporate  headquarters  property
and 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.


                                      F-9
<PAGE>

                          COLUMBUS MCKINNON CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)


   SHIPPING AND HANDLING COSTS

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

   STOCK-BASED COMPENSATION

     Effective  April 1, 2006,  the Company  adopted SFAS  123(R),  "Share-Based
Payment," applying the modified  prospective method. This Statement requires all
equity-based payments to employees,  including grants of employee stock options,
to be recognized in the statement of earnings based on the grant date fair value
of the award. Under the modified  prospective method, the Company is required to
record equity-based  compensation  expense for all awards granted after the date
of  adoption  and  for  the  unvested  portion  of  previously   granted  awards
outstanding as of the date of adoption.  The adoption of SFAS 123(R) resulted in
$1,230 of non-deductible  incentive stock option expense in the year ended March
31, 2007. Stock compensation expense is included in cost of goods sold, selling,
and general and administrative  expense. The Company uses a straight-line method
of attributing the value of stock-based compensation expense, subject to minimum
levels of expense, based on vesting.

     Prior to April 1, 2006,  the Company  accounted  for the stock option 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 was 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  Company's net income and earnings per share as if the fair value based
method  had  been  applied  to all  outstanding  and  unvested  awards  for  the
comparable prior years is as follows:
<TABLE>
<CAPTION>

                                                                      YEAR ENDED MARCH 31,
                                                                  2006                   2005
                                                           ---------------------   -------------------
<S>                                                           <C>                    <C>
   Net income, as reported................................    $     59,796           $    16,710
   Deduct: Total stock-based employee
     compensation expense determined under
     fair value based method for all awards,
     net of related tax effects...........................            (577)               (1,135)
                                                           ---------------------   -------------------
   Net income, pro forma..................................    $     59,219           $    15,575
                                                           =====================   ===================

   Basic income per share:
   As reported............................................    $       3.73           $      1.14
                                                           =====================   ===================
   Pro forma..............................................    $       3.69           $      1.07
                                                           =====================   ===================

   Diluted income per share:
   As reported............................................    $       3.60           $      1.13
                                                           =====================   ===================
   Pro forma..............................................    $       3.56           $      1.05
                                                           =====================   ===================
</TABLE>

     In November 2005, the Financial  Accounting  Standards  Board (FASB) issued
Staff Position ("FSP") FAS 123(R)-3,  "Transition Election Related to Accounting
for the Tax Effects of Share-Based Payment Awards." FSP FAS 123(R)-3 provides an
alternative transition method for establishing the beginning balance of the pool
of  excess  tax  benefits  available  to  absorb  tax  deficiencies   recognized
subsequent to the adoption of SFAS No.  123(R) (the "APIC  Pool").  Effective in
the fourth quarter of fiscal 2007, the Company  elected to adopt the alternative
transition  method provided in FSP FAS 123(R)-3 for  establishing  the beginning
balance of the APIC Pool. This method consists of a computational component that
establishes   a  beginning   balance  of  the  APIC  Pool  related  to  employee
compensation  and a simplified  method  ("short-cut  method") to  determine  the
subsequent  impact on the APIC Pool of employee awards that are fully vested and
outstanding upon the adoption of SFAS No. 123(R).

     See Note 13 for further discussion of stock-based compensation.


                                      F-10
<PAGE>

                          COLUMBUS MCKINNON CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

   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.

   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,
                                                 ------------------------------
                                                       2007            2006
                                                       ----            ----
       Balance at beginning of year.............   $    2,132      $      832
       Accrual for warranties issued............        3,770           4,658
       Warranties settled.......................       (4,639)         (3,358)
                                                 ------------------------------
       Balance at end of year...................   $    1,263      $    2,132
                                                 ==============================


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 eight years
beginning  August  2004.  Due  to  the  uncertainty  surrounding  the  financial
viability  of the  debtor,  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.  The gross
value of the note as of March 31, 2007 is approximately $4,300,000.


4.    UNBILLED REVENUES AND EXCESS BILLINGS

                                                    ----------------------------
                                                              MARCH 31,
                                                    ----------------------------
                                                          2007           2006
                                                          ----           ----
       Costs incurred on uncompleted contracts..... $     50,014    $    52,615
       Estimated earnings..........................       12,119         15,361
                                                    ----------------------------
       Revenues earned to date.....................       62,133         67,976
       Less billings to date.......................       48,042         56,331
                                                    ----------------------------
                                                    $     14,091    $    11,645
                                                    ============================

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

                                                    ----------------------------
                                                              MARCH 31,
                                                    ----------------------------
                                                          2007           2006
                                                          ----           ----
       Unbilled revenues........................... $     15,050     $   12,061
       Accrued liabilities.........................         (959)          (416)
                                                    ----------------------------
                                                    $     14,091     $   11,645
                                                    ============================

                                      F-11
<PAGE>

                          COLUMBUS MCKINNON CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

5.    INVENTORIES

     Inventories consisted of the following:

                                                  ------------------------------
                                                              MARCH 31,
                                                  ------------------------------
                                                         2007            2006
                                                         ----            ----
      At cost--FIFO basis:
           Raw materials.........................   $    45,006     $    41,134
           Work-in-process.......................         9,050          12,199
           Finished goods........................        36,606          33,424
                                                  ------------------------------
                                                         90,662          86,757
      LIFO cost less than FIFO cost..............       (13,483)        (11,912)
                                                  ------------------------------
      Net inventories............................   $    77,179     $    74,845
                                                  ==============================


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 14). In  accordance  with SFAS No.
115,  "Accounting for Certain  Investments in Debt and Equity  Securities,"  the
Company reviews its marketable  securities for declines in market value that may
be considered other than temporary.  The Company considers 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.  Based on our review as of March
31, 2007, no unrealized losses represent an other than temporary impairment.

     The  following is a summary of  available-for-sale  securities at March 31,
2007:
<TABLE>
<CAPTION>

                                                       GROSS           GROSS      ESTIMATED
                                                     UNREALIZED     UNREALIZED       FAIR
                                           COST        GAINS           LOSSES       VALUE
                                     --------------------------------------------------------
<S>                                    <C>           <C>            <C>          <C>
      Government securities..........  $   24,926    $      37      $      22    $   24,941
      Equity securities..............       3,960           31             12         3,979
                                     --------------------------------------------------------
                                       $   28,886    $      68      $      34    $   28,920
                                     ========================================================
</TABLE>

     The net gain related to sales of marketable  securities totaled $4,360,000,
$1,436,000 and $706,000 in fiscal 2007, 2006 and 2005, respectively.

     The  following is a summary of  available-for-sale  securities at March 31,
2006:
<TABLE>
<CAPTION>

                                                       GROSS           GROSS      ESTIMATED
                                                     UNREALIZED      UNREALIZED      FAIR
                                           COST        GAINS           LOSSES       VALUE
                                     --------------------------------------------------------
<S>                                    <C>           <C>            <C>          <C>
      Government securities..........  $   10,859    $     150      $      25    $   10,984
      Equity securities..............      13,828        3,013            229        16,612
                                     --------------------------------------------------------
                                       $   24,687    $   3,163      $     254    $   27,596
                                     ========================================================
</TABLE>

     As of March 31, 2006, in accordance  with SFAS 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
$78,000 and $280,000 for the years ended March 31, 2006 and 2005,  respectively,
classified  within other (income) and expense,  net. The above schedule reflects
the reduced cost bases.


                                      F-12
<PAGE>

                          COLUMBUS MCKINNON CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)


     Net  unrealized  gain included in the balance sheet  amounted to $34,000 at
March 31, 2007 and  $2,909,000  at March 31, 2006.  The amounts,  net of related
income taxes of $12,000 and $1,018,000 at March 31, 2007 and 2006, 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,
                                                                ---------------------------
                                                                     2007          2006
                                                                     ----          ----
<S>                                                               <C>           <C>
      Land and land improvements..............................    $   5,036     $   4,564
      Buildings...............................................       29,657        33,755
      Machinery, equipment, and leasehold improvements........      104,479       102,485
      Construction in progress................................        2,277         1,736
                                                                ---------------------------
                                                                    141,449       142,540
      Less accumulated depreciation...........................       86,218        87,408
                                                                ---------------------------
      Net property, plant, and equipment......................    $  55,231     $  55,132
                                                                ===========================
</TABLE>

      Depreciation expense was $8,106,000, $8,575,000, and $8,859,000 for the
years ended March 31, 2007, 2006 and 2005, respectively.


8.    GOODWILL AND INTANGIBLE ASSETS

     As  discussed  in Note 2,  goodwill is not  amortized  but is  periodically
tested for  impairment,  in  accordance  with the  provisions  of  Statement  of
Financial  Accounting  Standards (SFAS) No. 142,  "Goodwill and Other Intangible
Assets."  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,  "Disclosures  about
Segments of an Enterprise  and Related  Information."  The Products  segment was
subdivided into three  reporting units and the Solutions  segment was subdivided
into two reporting units.

     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.

     No impairment charges were recorded during fiscal 2007, 2006 or 2005.

     All  goodwill  reported in fiscal 2007 and 2006 was related to the products
segment.  A summary of changes in goodwill during the years ended March 31, 2007
and 2006 is as follows:

    Balance at March 31, 2005.........................     $   185,443
    Currency translation..............................            (526)
                                                         ----------------
    Balance at March 31, 2006.........................     $   184,917
    Currency translation..............................             717
                                                         ----------------
    Balance at March 31, 2007.........................     $   185,634
                                                         ================


                                      F-13
<PAGE>

                          COLUMBUS MCKINNON CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)


     Other intangibles, net consists of the following:

                                                ---------------------------
                                                          MARCH 31,
                                                ---------------------------
                                                     2007           2006
                                                     ----           ----
      Intangible pension assets................   $       -      $   2,148
      Patents and other, net...................         269            262
                                                ---------------------------
      Other intangibles, net...................   $     269      $   2,410
                                                ===========================

     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
$98,000, $74,000, $52,000, $33,000, and 12,000, respectively.


9.    ACCRUED LIABILITIES AND OTHER NON-CURRENT LIABILITIES

     Consolidated accrued liabilities of the Company consisted of the following:

                                                      --------------------------
                                                                MARCH 31,
                                                      --------------------------
                                                           2007          2006
                                                           ----          ----
      Accrued payroll................................  $    17,302    $   18,736
      Accrued pension cost...........................          245         5,987
      Interest payable...............................        5,408         6,199
      Accrued workers compensation...................        3,000         2,959
      Accrued income taxes payable...................        7,723         6,493
      Accrued postretirement benefit obligation......        1,456         1,620
      Accrued health insurance.......................        3,466         2,891
      Accrued general and product liability costs....        4,000         4,000
      Other accrued liabilities......................        9,744        12,379
                                                      --------------------------
                                                       $    52,344    $   61,264
                                                      ==========================

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

                                                      --------------------------
                                                                MARCH 31,
                                                      --------------------------
                                                           2007          2006
                                                           ----          ----
      Accumulated postretirement benefit obligation..  $     9,015    $    4,856
      Accrued general and product liability costs....       17,078        16,969
      Accrued pension cost...........................       28,531        20,284
      Accrued workers compensation...................        6,104         5,383
      Other non-current liabilities..................        2,683         2,997
                                                      --------------------------
                                                       $    63,411    $   50,489
                                                      ==========================



                                      F-14
<PAGE>

                          COLUMBUS MCKINNON CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

10.   DEBT

     Consolidated long-term debt of the Company consisted of the following:
<TABLE>
<CAPTION>

                                                                                 ----------------------------
                                                                                            MARCH 31,
                                                                                 ----------------------------
                                                                                      2007          2006
                                                                                      ----          ----
<S>                                                                                <C>           <C>
      Revolving Credit Facility due February 22, 2010...........................   $        -    $        -
      10% Senior Secured Notes due August 1, 2010  with interest
         payable in semi-annual installments ...................................       22,125        67,384
      Other senior debt.........................................................        4,340           584
                                                                                 ----------------------------
      Total senior debt.........................................................       26,465        67,968
      8 7/8% Senior Subordinated Notes due November 1, 2013 with interest
         payable in semi-annual installments....................................      136,000       136,000
                                                                                 ----------------------------
      Total.....................................................................      162,465       203,968
      Less current portion......................................................          297           127
                                                                                 ----------------------------
                                                                                   $  162,168    $  203,841
                                                                                 ============================
</TABLE>

     In March,  2006,  the Company  amended and  expanded its  revolving  credit
facility. The Revolving Credit Facility provides availability up to a maximum of
$75,000,000.  Provided there is no default, the Company may on a one-time basis,
request an increase in the  availability of the Revolving  Credit Facility by an
amount not exceeding $50,000,000 if all Senior Secured Notes have been repaid in
full  or  will be  repaid  in full  contemporaneously  with  such  increase,  or
$25,000,000  in the event  that any Senior  Secured  Notes  remain  outstanding,
subject  to lender  approval.  The  unused  Revolving  Credit  Facility  totaled
$64,800,000,  net of  outstanding  borrowings of $0 and  outstanding  letters of
credit of $10,200,000. Interest on the revolver is payable at varying Eurodollar
rates based on LIBOR or prime plus a spread  determined  by our  leverage  ratio
amounting  to 87.5 or 0 basis  points,  respectively,  at March  31,  2007.  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  September 2, 2005,  the Company  issued  $136,000,000  of 8 7/8% Senior
Subordinated Notes (8 7/8% Notes) due November 1, 2013. Proceeds from the 8 7/8%
Notes and cash on hand were used for the repayment of  previously  existing debt
instruments  resulting in a $3,330,000  pre-tax loss on early  extinguishment of
debt in fiscal 2006.

     On July 22, 2003,  the Company  issued  $115,000,000  of 10% Senior Secured
Notes (10% Notes) due August 1, 2010.  Proceeds from this offering were used for
the repayment of previously existing debt instruments.

     During  fiscal 2006,  the Company  used a portion of the proceeds  from its
stock offering (see Note 13) to repurchase  $47,616,000 of the  outstanding  10%
Notes.  The  repurchase  of the 10% Notes  occurred at a premium  resulting in a
pre-tax loss on early  extinguishment of debt of $4,786,000.  As a result of the
repurchase of the 10% Notes,  $1,085,000 of pre-tax deferred financing costs was
written-off.  The net effect of these  items was a  $5,871,000  pre-tax  loss in
fiscal 2006.

     During fiscal 2007, the Company used cash on hand to repurchase $45,259,000
of the  outstanding  10% Notes.  The  repurchase of the 10% Notes  occurred at a
premium  resulting  in a  pre-tax  loss  on  early  extinguishment  of  debt  of
$4,263,000.  As a result of the repurchase of the 10% Notes, $925,000 of pre-tax
deferred  financing costs was  written-off.  The net effect of these items was a
$5,188,000 pre-tax loss in fiscal 2007.

     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, 2007.


                                      F-15
<PAGE>

                          COLUMBUS MCKINNON CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

     Provisions of the 8 7/8% Notes include, without limitation, restrictions on
indebtedness,  asset sales, and dividends and other restricted  payments.  Until
November 1, 2008, the Company may redeem up to 35% of the outstanding notes at a
redemption price of 108.875% with the proceeds of equity  offerings,  subject to
certain  restrictions.  The 8 7/8%  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 7/8% Notes  agreement) to 100% on and after  November
1, 2011.  In the event of a Change of Control (as defined in the  indenture  for
such notes), each holder of the 8 7/8% Notes may require us to repurchase all or
a portion of such holder's 8 7/8% Notes at a purchase price equal to 101% of the
principal  amount thereof.  The 8 7/8% Notes are guaranteed by certain  existing
and  future  domestic  subsidiaries  and are not  subject  to any  sinking  fund
requirements.

     Provisions of the 10% Notes include,  without  limitation,  restrictions on
liens,  indebtedness,  asset sales, and dividends and other restricted payments.
The remaining  10% Notes are not entitled to redemption at our option,  prior to
August 1, 2007.  On and after August 1, 2007,  they are  redeemable  at a prices
declining  annually  from 105% 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 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
$23,563,000 and $144,160,000,  respectively,  based on quoted market prices, the
total of which is more than their aggregate carrying amount of $158,125,000.

     The  principal  payments  scheduled  to be made as of March 31, 2007 on the
above debt, for the next five annual periods subsequent thereto,  are as follows
(in thousands):

                    2008          $     297
                    2009                194
                    2010                168
                    2011             23,342
                    2012                134
                    Thereafter      138,330

INTERNATIONAL LINES OF CREDIT AND LOANS

     Unsecured and uncommitted  lines of credit are available to meet short-term
working  capital  needs for our  subsidiaries  operating  outside  of the United
States.  The lines of credit are  available on an offering  basis,  meaning that
transactions  under the line of  credit  will be on such  terms and  conditions,
including  interest  rate,  maturity,  representations,  covenants and events of
default,  as mutually agreed between our  subsidiaries and the local bank at the
time of each  specific  transaction.  As of March 31, 2007,  significant  credit
lines totaled approximately $9,858 of which $7,894 was drawn.

     In addition to the above facilities,  our foreign subsidiaries have certain
fixed term bank loans. As of March 31, 2007, significant loans totaled $3,900 of
which $2,824 were secured loans.


                                      F-16
<PAGE>

                          COLUMBUS MCKINNON CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

11.   PENSIONS AND OTHER BENEFIT PLANS

     The Company  provides  retirement  and  pension  plans,  including  defined
benefit and defined  contribution  plans,  and  postretirement  benefit plans to
certain  employees.  Effective March 31, 2007, the Company adopted SFAS No. 158,
"Employers'  Accounting  for Defined  Benefit  Pension and Other  Postretirement
Plans,  an amendment  of FASB  Statements  No. 87, 88, 106,  and 132(R),"  which
required  the   recognition  in  pension  and  other   postretirement   benefits
obligations and  accumulated  other  comprehensive  income of actuarial gains or
losses, prior service costs or credits and transition assets or obligations that
had previously  been deferred under the reporting  requirements  of SFAS No. 87,
SFAS No. 106 and SFAS No.  132(R).  This  statement  also  requires an entity to
measure a defined  benefit  postretirement  plan's assets and  obligations  that
determine its funded status as of the end of the  employers'  fiscal year.  This
requirement is effective for fiscal years ending after December 15, 2008.

PENSION 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,
                                                                                        ----------------------------------
                                                                                               2007             2006
                                                                                               ----             ----
      Change in benefit obligation:
<S>                                                                                        <C>              <C>
           Benefit obligation at beginning of year.....................................    $   134,148      $   120,634
           Service cost................................................................          4,147            4,004
           Interest cost...............................................................          7,608            7,213
             Actuarial loss............................................................             22            7,003
           Benefits paid...............................................................         (6,346)          (4,860)
           Foreign exchange rate changes...............................................             42              154
                                                                                        ----------------------------------
           Benefit obligation at end of year...........................................    $   139,621      $   134,148
                                                                                        ==================================

      Change in plan assets:
           Fair value of plan assets at beginning of year..............................    $   100,206      $    91,323
           Actual gain on plan assets..................................................         10,989            5,795
           Employer contribution.......................................................          5,960            7,816
           Benefits paid...............................................................         (6,346)          (4,860)
           Foreign exchange rate changes...............................................             36              132
                                                                                        ----------------------------------
           Fair value of plan assets at end of year....................................    $   110,845      $   100,206
                                                                                        ==================================

           Funded status ..............................................................    $   (28,776)     $   (33,942)
           Unrecognized actuarial loss.................................................         27,918           35,282
           Unrecognized prior service cost.............................................          2,213            2,148
                                                                                        ----------------------------------
           Net amount recognized.......................................................    $     1,355      $     3,488
                                                                                        ==================================

      Amounts recognized in the consolidated balance sheets are as follows:
                                                                                        ----------------------------------
                                                                                                    MARCH 31,
                                                                                        ----------------------------------
                                                                                               2007             2006
                                                                                               ----             ----
           Intangible asset............................................................    $         -      $     2,148
           Accrued liabilities.........................................................           (245)          (5,987)
           Other non-current liabilities...............................................        (28,531)         (20,284)
           Deferred tax effect of accumulated other comprehensive loss.................         12,059           11,038
           Accumulated other comprehensive loss........................................         18,072           16,573
                                                                                        ----------------------------------
           Net amount recognized.......................................................    $     1,355      $     3,488
                                                                                        ==================================
</TABLE>

     In fiscal 2008, an estimated net loss of $1,485,000  and prior service cost
of  $330,000  for the  defined  benefit  pension  plans will be  amortized  from
accumulated other comprehensive income to net periodic benefit cost.

                                      F-17
<PAGE>
                          COLUMBUS MCKINNON CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

<TABLE>
<CAPTION>
     Net periodic pension cost included the following components:
                                                                           ---------------------------------------------
                                                                                        YEAR ENDED MARCH 31,
                                                                           ---------------------------------------------
                                                                                  2007          2006          2005
                                                                                  ----          ----          ----
<S>                                                                            <C>           <C>           <C>
      Service costs--benefits earned during the period.....................    $   4,147     $   4,004     $   4,285
      Interest cost on projected benefit obligation.......................         7,608         7,213         6,719
      Expected return on plan assets......................................        (7,244)       (6,753)       (6,666)
      Net amortization....................................................         2,773         2,518         4,033
      Curtailment/settlement loss.........................................           156             -             -
                                                                           ---------------------------------------------
      Net periodic pension cost...........................................     $   7,440     $   6,982     $   8,371
                                                                           =============================================
</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  fiscal  2007  curtailment  and  settlement  losses  are the  result  of the
restructuring of one of our facilities in Canada.

     Information for pension plans with a projected benefit obligation in excess
of plan assets is as follows:
<TABLE>
<CAPTION>
                                                        ----------------------------------
                                                                   MARCH 31,
                                                        ----------------------------------
                                                               2007             2006
                                                               ----             ----
<S>                                                        <C>              <C>
           Projected benefit obligation.................   $   139,621      $   134,148
           Fair value of plan assets....................       110,845          100,206
</TABLE>

     Information  for pension plans with an  accumulated  benefit  obligation in
excess of plan assets is as follows:
<TABLE>
<CAPTION>
                                                        ----------------------------------
                                                                   MARCH 31,
                                                        ----------------------------------
                                                               2007             2006
                                                               ----             ----
<S>                                                        <C>              <C>
           Accumulated benefit obligation...............   $   124,508      $   126,196
           Fair value of plan assets....................       105,345          100,206
</TABLE>

     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:
<TABLE>
<CAPTION>
                                                                                  MARCH 31,
                                                            --------------------------------------------------------
                                                                 2007          2006         2005           2004
                                                            --------------------------------------------------------
<S>                                                              <C>           <C>          <C>            <C>
      Discount rate........................................      6.00%         5.75%        6.00%          6.25%
      Expected long-term rate of return on plan assets.....      7.50          7.50         8.25           8.40
      Rate of compensation increase........................      3.00          4.00         4.00           4.00
</TABLE>

     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:
<TABLE>
<CAPTION>
                                                                                  MARCH 31,
                                                            --------------------------------------------------------
                                                               TARGET                             ACTUAL
                                                            ---------------            -----------------------------
                                                                2008                        2007          2006
                                                            ---------------            -----------------------------
<S>                                                              <C>                         <C>           <C>
      Equity securities....................................       70%                         62%           56%
      Fixed income.........................................       30                          38            44
                                                            ---------------            -----------------------------
      Total plan assets....................................      100%                        100%          100%
                                                            ===============            =============================
</TABLE>

                                      F-18
<PAGE>

                          COLUMBUS MCKINNON CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

     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  major  US and  international
equity indexes 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  will be  transferred  from fixed  income into
equity  securities,  as well as reallocation of remaining  assets to achieve the
desired balance during fiscal 2008.

     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 $12,208,000 to its pension plans in fiscal 2008.

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

                2008                $    5,485
                2009                     5,971
                2010                     6,567
                2011                     7,195
                2012                     8,038
                2013-2017               51,099

POSTRETIREMENT BENEFIT PLANS

     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.

     The  Company's  postretirement  health  benefit  plans are not funded.  The
following  sets  forth a  reconciliation  of benefit  obligation  and the funded
status of the plan:
<TABLE>
<CAPTION>
                                                                                    ----------------------------------
                                                                                                 MARCH 31,
                                                                                    ----------------------------------
                                                                                            2007            2006
                                                                                            ----            ----
      Change in benefit obligation:
<S>                                                                                    <C>             <C>
           Benefit obligation at beginning of year.................................    $    12,221     $    12,927
           Service cost............................................................              3               6
           Interest cost...........................................................            658             751
           Actuarial (gain) loss...................................................           (193)            601
           Benefits paid...........................................................         (2,218)         (2,064)
                                                                                    ----------------------------------
              Benefit obligation at end of year....................................    $    10,471     $    12,221
                                                                                    ==================================

           Funded status ..........................................................    $   (10,471)    $   (12,221)
           Unrecognized actuarial loss.............................................          5,138           5,745
                                                                                    ----------------------------------
           Net amount recognized...................................................    $    (5,333)    $    (6,476)
                                                                                    ==================================
</TABLE>

                                      F-19
<PAGE>

                          COLUMBUS MCKINNON CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)


     Amounts recognized in the consolidated balance sheets are as follows:
<TABLE>
<CAPTION>
                                                                                    ----------------------------------
                                                                                                 MARCH 31,
                                                                                    ----------------------------------
                                                                                            2007            2006
                                                                                            ----            ----
<S>                                                                                    <C>             <C>
           Accrued liabilities.....................................................    $    (1,456)    $    (1,620)
           Other non-current liabilities...........................................         (9,015)         (4,856)
           Deferred tax effect of accumulated other comprehensive loss.............          2,055               -
           Accumulated other comprehensive loss....................................          3,083               -
                                                                                    ----------------------------------
           Net amount recognized...................................................    $    (5,333)    $    (6,476)
                                                                                    ==================================
</TABLE>

     In fiscal 2008, an estimated  net loss of $384,000 for the defined  benefit
postretirement  health  care  plans will be  amortized  from  accumulated  other
comprehensive income to net periodic benefit cost.

     Net periodic postretirement benefit cost included the following:
<TABLE>
<CAPTION>
                                                                               --------------------------------------
                                                                                        YEAR ENDED MARCH 31,
                                                                               --------------------------------------
                                                                                    2007        2006        2005
                                                                                    ----        ----        ----
<S>                                                                                <C>         <C>         <C>
      Service cost--benefits attributed to service during the period...........    $    3      $    6      $   17
      Interest cost...........................................................        658         751         834
      Amortization of plan net losses.........................................        414         411         460
                                                                               --------------------------------------
           Net periodic postretirement benefit cost...........................     $1,075      $1,168      $1,311
                                                                               ======================================
</TABLE>

     For measurement  purposes,  healthcare costs were assumed to increase 8.25%
in fiscal  2008,  grading down over time to 5% in six years.  The discount  rate
used in determining the accumulated  postretirement benefit obligation was 6.00%
and 5.75% as of March 31, 2007 and 2006, respectively.

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

                2008                $       1,456
                2009                        1,384
                2010                        1,269
                2011                        1,255
                2012                        1,182
                2013-2017                   4,674


     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........          $      35           $     (32)
           Effect on postretirement obligation............................                628                (570)
</TABLE>

ADOPTION OF NEW ACCOUNTING STANDARD

     Effective  March 31, 2007,  the Company  adopted SFAS No. 158,  "Employers'
Accounting  for Defined  Benefit  Pension  and Other  Postretirement  Plans,  an
amendment of FASB  Statements  No. 87, 88, 106, and 132(R),"  which required the
recognition  in  pension  and  other  postretirement  benefits  obligations  and
accumulated  other  comprehensive  income of  actuarial  gains or losses,  prior
service  costs  or  credits  and  transition  assets  or  obligations  that  had
previously  been deferred under the reporting  requirements of SFAS No. 87, SFAS
No. 106 and SFAS No.  132(R).  The following  table  reflects the effects of the
adoption of SFAS No. 158 on our consolidated balance sheet as of March 31, 2007:


                                      F-20
<PAGE>

                          COLUMBUS MCKINNON CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
<TABLE>
<CAPTION>

                                                                  BEFORE             SFAS 158           AFTER
                                                              APPLICATION OF         ADOPTION       APPLICATION OF
                                                                 SFAS 158          ADJUSTMENTS        SFAS 158
     Assets:                                                  --------------       -----------      --------------
<S>                                                             <C>                <C>                <C>
      Other intangibles, net................................    $    2,482         $   (2,213)        $      269
      Deferred taxes on income..............................        27,554              6,906             34,460
         Total assets.......................................       560,945              4,693            565,638

      Liabilities and Shareholder's Equity
      Accrued liabilities...................................        58,683             (6,339)            52,344
      Other non-current liabilities.........................        42,039             21,372             63,411
          Total liabilities.................................       309,280             15,033            324,313
      Accumulated other comprehensive loss..................        (4,997)           (10,340)           (15,337)
          Total liabilities and shareholder's equity........       560,945              4,693            565,638
</TABLE>

OTHER BENEFIT PLANS

     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 $1,650,000,  $1,476,000 and $673,000 for the years ended March 31,
2007, 2006 and 2005, 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 $808,000,  $653,000  and  $296,000 in fiscal 2007,  2006 and 2005,
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,  2007  and  2006,   694,751  and  723,618  of  ESOP  shares,
respectively,  were  allocated or  available  to be  allocated to  participants'
accounts.  At March 31,  2007 and 2006,  213,667 and 249,821 of ESOP shares were
pledged as collateral to guarantee the ESOP term loans.

     The fair market value of unearned ESOP shares at March 31, 2007 amounted to
$4,784,000.


                                      F-21
<PAGE>

                          COLUMBUS MCKINNON CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)


13. 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" (SFAS 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  following  table  sets  forth the  computation  of basic  and  diluted
earnings per share:
<TABLE>
<CAPTION>

                                                                      --------------------------------------------
                                                                                   YEAR ENDED MARCH 31,
                                                                      --------------------------------------------
                                                                             2007          2006           2005
                                                                             ----          ----           ----
      Numerator for basic and diluted earnings per share:
<S>                                                                     <C>           <C>            <C>
         Income from continuing operations...........................   $    33,381   $    59,100    $    16,067
         Income from discontinued operations.........................           704           696            643
                                                                      --------------------------------------------
           Net income ...............................................   $    34,085   $    59,796    $    16,710
                                                                      ============================================

      Denominators:
         Weighted-average common stock outstanding-
           denominator for basic EPS.................................        18,517        16,052         14,594
         Effect of dilutive employee stock options...................           434           576            209
                                                                      --------------------------------------------
         Adjusted weighted-average common stock
           outstanding and assumed conversions-
           denominator for diluted EPS...............................        18,951        16,628         14,803
                                                                      ============================================
</TABLE>

     The  weighted-average  common  stock  outstanding  shown  above  is  net of
unallocated  ESOP shares  (see Note 12).  The  increase in the  weighted-average
common stock  outstanding  is the result of the issuance of 3,000,000  shares in
fiscal 2006 and the exercising of stock options.

   STOCK PLANS

     Effective  April 1, 2006,  the Company  adopted SFAS  123(R),  "Share-Based
Payment," applying the modified  prospective method. This Statement requires all
equity-based payments to employees,  including grants of employee stock options,
to be recognized in the statement of earnings based on the grant date fair value
of the award. Under the modified  prospective method, the Company is required to
record equity-based  compensation  expense for all awards granted after the date
of  adoption  and  for  the  unvested  portion  of  previously   granted  awards
outstanding as of the date of adoption.  The adoption of SFAS 123(R) resulted in
$1,230,000 of  non-deductible  incentive  stock option expense in the year ended
March 31, 2007.  Stock  compensation  expense is included in cost of goods sold,
selling,   and  general  and   administrative   expense.   The  Company  uses  a
straight-line  method  of  attributing  the  value of  stock-based  compensation
expense, subject to minimum levels of expense, based on vesting.

LONG TERM INCENTIVE PLAN

     Effective  July 31,  2006,  the  shareholders  of the Company  approved the
adoption of our Long Term Incentive  Plan (LTIP).  The total number of shares of
common  stock  with  respect to which  awards  may be granted  under the plan is
850,000.  The LTIP was  designed  as an omnibus  plan and awards may  consist of
non-qualified stock options, incentive stock options, stock appreciation rights,
restricted stock, restricted stock units, or stock bonuses. A maximum of 600,000
shares may be awarded as  restricted  stock,  restricted  stock units,  or stock
bonuses.

     During  fiscal 2007, a total of 9,390 shares of stock and 7,200  restricted
stock units were granted under the LTIP to the Company's non-executive directors
as part of their  annual  compensation.  The  weighted  average fair value grant
price of those  shares and units was $19.17.  The expense  related to the shares
and   restricted   stock  units  for  fiscal  2007  was  $180,000  and  $40,000,
respectively.

     As of March 31, 2007, there were 833,410 shares available for future grants
under the Long Term Incentive Plan.


                                      F-22
<PAGE>

                          COLUMBUS MCKINNON CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

STOCK OPTION PLANS

     Existing prior to the adoption of the LTIP, 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, 2007, 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.

     A summary of option  transactions  during each of the three fiscal years in
the period ended March 31, 2007 is as follows:
<TABLE>
<CAPTION>

                                                                                   WEIGHTED-AVERAGE
                                                                                       REMAINING
                                                                WEIGHTED-AVERAGE   CONTRACTUAL LIFE     AGGREGATE
                                              SHARES             EXERCISE PRICE        (IN YEARS)    INTRINSIC VALUE
                                        ----------------------------------------------------------------------------
<S>                                             <C>               <C>                     <C>           <C>
    Outstanding at March 31, 2004......         1,229,850         $      13.77
       Granted.........................           741,500                 6.41
       Exercised.......................           (52,000)                8.25
       Cancelled.......................          (116,550)               13.82
                                        ----------------------------------------------------------------------------
    Outstanding at March 31, 2005......         1,802,800         $      10.89
       Granted.........................            45,000                21.61
       Exercised.......................          (626,282)               11.41
       Cancelled.......................           (89,400)                7.76
                                        ----------------------------------------------------------------------------
    Outstanding at March 31, 2006......         1,132,118         $      11.28
       Granted.........................            70,000                22.41
       Exercised.......................          (240,468)               10.82
       Cancelled.......................           (30,500)                9.85
                                        ----------------------------------------------------------------------------
    Outstanding at March 31, 2007......           931,150         $      12.28            5.8           $   9,576
                                        ============================================================================
    Exercisable at March 31, 2007......           561,150         $      13.15            4.5           $   5,252
                                        ============================================================================
</TABLE>

     We calculated  intrinsic value for those options that had an exercise price
lower  than the  market  price of our common  shares as of March 31,  2007.  The
aggregate  intrinsic  value  of  outstanding  options  as of March  31,  2007 is
calculated  as the  difference  between  the  exercise  price of the  underlying
options and the market price of our common  shares for the 884,050  options that
were  in-the-money  at that date. The aggregate  intrinsic  value of exercisable
options  as of March  31,  2007 is  calculated  as the  difference  between  the
exercise  price of the  underlying  options  and the market  price of our common
shares for the 544,050  exercisable options that were in-the-money at that date.
The  Company's  closing  stock price was $22.39 as of March 31, 2007.  The total
intrinsic  value of stock  options  exercised  was  $3,434,000,  $6,487,000  and
$248,000 during fiscal 2007, 2006 and 2005, respectively.  As of March 31, 2007,
there are 132,600 options available for future grants under the two stock option
plans.

     The fair value of shares  that  vested was  $3.87,  $4.01 and $4.64  during
fiscal 2007, 2006 and 2005, respectively.

     Cash  received  from  option   exercises  under  all  share-based   payment
arrangements  during fiscal 2007 was  $2,601,000.  Proceeds from the exercise of
stock options under stock option plans are credited to common stock at par value
and the excess is credited to additional paid-in capital.

     As of March 31, 2007, $1,461,000 of unrecognized  compensation cost related
to non-vested stock options is expected to be recognized over a weighted-average
period of approximately 3 years.


                                      F-23
<PAGE>

                          COLUMBUS MCKINNON CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)


     Exercise prices for options  outstanding as of March 31, 2007,  ranged from
$5.46 to $29.00.  The following table provides certain  information with respect
to stock options outstanding at March 31, 2007:
<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.....................           542,100              $    6.93                   6.3
           $10.01 to $20.00..................           102,350                  14.36                   7.6
           $20.01 to $30.00..................           286,700                  21.66                   4.3
                                               -------------------------------------------------------------------------
                                                        931,150              $   12.28                   5.8
                                               =========================================================================
</TABLE>

     The following  table  provides  certain  information  with respect to stock
options exercisable at March 31, 2007:
<TABLE>
<CAPTION>

                                                                            STOCK OPTIONS         WEIGHTED-AVERAGE
                       RANGE OF EXERCISE PRICES                              OUTSTANDING           EXERCISE PRICE
                       ------------------------                              -----------           --------------
<S>                                                                               <C>                 <C>
            Up to $10.00............................................              308,350             $       7.94
           $10.01 to $20.00.........................................               49,850                    12.86
           $20.01 to $30.00.........................................              202,950                    21.13
                                                                           --------------             ------------
                                                                                  561,150             $      13.15
                                                                           ==============             ============
</TABLE>

     The fair value of stock options  granted was estimated on the date of grant
using a Black-Scholes  option pricing model. 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.  The  weighted-average  fair value of the  options was
$12.93,  $12.13 and $3.45 for options granted during fiscal 2007, 2006 and 2005,
respectively. The following table provides the weighted-average assumptions used
to value stock options granted during fiscal 2007, 2006 and 2005:

<TABLE>
<CAPTION>
                                                        YEAR ENDED          YEAR ENDED         YEAR ENDED
                                                      MARCH 31, 2007      MARCH 31, 2006     MARCH 31, 2005
                                                    ----------------------------------------------------------
Assumptions:
<S>                                                       <C>                  <C>                <C>
     Risk-free interest rate....................              4.9 %              4.5 %              4.9 %
     Dividend yield--Incentive Plan..............             0.0 %              0.0 %              0.0 %
     Volatility factor..........................              0.593              0.615              0.569
     Expected life--Incentive Plan...............         5.5 years            5 years            5 years
</TABLE>

     To determine expected  volatility,  the Company uses historical  volatility
based on daily  closing  prices of its Common Stock over periods that  correlate
with the expected terms of the options  granted.  The risk-free rate is based on
the United States  Treasury yield curve at the time of grant for the appropriate
term of the  options  granted.  Expected  dividends  are based on the  Company's
history and expectation of dividend payouts.  The expected term of stock options
is based on vesting schedules, expected exercise patterns and contractual terms.

RESTRICTED STOCK

     Also existing  prior to the adoption of the LTIP,  the Company  maintains a
Restricted   Stock  Plan.   The  Company   charges   compensation   expense  and
shareholders'  equity for the market value of shares ratably over the restricted
period.  Grantees  that remain  continuously  employed  with the Company  become
vested in their  shares five years after the date of the grant.  As of March 31,
2007,  there were 48,000 shares available for future grants under the Restricted
Stock Plan.


                                      F-24
<PAGE>

                          COLUMBUS MCKINNON CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

     During the Fiscal 2007, no shares of restricted  stock were granted.  As of
March 31, 2007,  there are 2,000 shares of restricted  stock  outstanding with a
weighted  average  fair value  grant  price of $16.25.  The  expense  related to
restricted stock was $7,000,  $6,000 and $35,000 for fiscal 2007, 2006 and 2005,
respectively.

14.    LOSS CONTINGENCIES

     From  time to time,  the  Company  is named a  defendant  in legal  actions
arising out of the normal course of business.  The Company is not a party to any
pending legal proceeding other than ordinary,  routine litigation  incidental to
our  business.  The Company does not believe that any of our pending  litigation
will have a material impact on its business.

     GENERAL AND PRODUCT LIABILITY-- During fiscal 2006, the Company reevaluated
the predictability of future cash flows associated with its self-insured product
liability and asbestos  reserves and concluded that future cash payments related
to reserves for  nonasbestos  claims could no longer be discounted  due to their
underlying  uncertainty.  Reserves for asbestos claims continue to be discounted
at a risk free rate.  This  change in estimate  resulted  in a reduction  in the
discount recorded by the company of approximately  $1,578,000 ($0.09 diluted EPS
impact for fiscal 2006).  The gross  reserves as of March 31, 2007 and 2006 were
$23,438,000  and  $23,329,000,   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,
                                                                 ---------------------------------------------------
                                                                       2007             2006            2005
                                                                       ----             ----            ----
<S>                                                                  <C>              <C>             <C>
      Accrued general and product liability, beginning of year..     $ 20,969         $ 16,094        $ 15,930
      Add impact of change in discount estimate.................            -            1,578               -
      Add provision for claims..................................        4,343            6,342           5,780
      Deduct payments for claims................................       (4,234)          (3,045)         (5,616)
                                                                 ---------------------------------------------------
      Accrued general and product liability, end of year........     $ 21,078         $ 20,969        $ 16,094
                                                                 ===================================================
</TABLE>

     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 2007.

     Along with other manufacturing companies, the Company is subject to various
federal, state and local laws relating to the protection of the environment.  To
address  the  requirements  of such laws,  the  Company  has adopted a corporate
environmental  protection  policy which provides that all of its owned or leased
facilities  shall,  and all of its  employees  have the duty to, comply with all
applicable  environmental regulatory standards, and the Company has initiated an
environmental auditing program for our facilities to ensure compliance with such
regulatory   standards.    The   Company   has   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
the Company to incur  expenditures in order to ensure  environmental  regulatory
compliance.  However, the Company is not aware of any environmental condition or
any operation at any of its facilities, either individually or in the aggregate,
which would cause  expenditures  having a material adverse effect on its results
of  operations,  financial  condition  or cash flows and,  accordingly,  has not
budgeted any material  capital  expenditures  for  environmental  compliance for
fiscal 2008.

     Like  many   industrial   manufacturers,   the   Company  is   involved  in
asbestos-related  litigation.  In continually  evaluating  costs relating to its
estimated  asbestos-related  liability, the Company reviews, among other things,
the incidence of past and recent claims, the historical case dismissal rate, the
mix of the claimed  illnesses and occupations of the plaintiffs,  its recent and
historical  resolution of the cases, the number of cases pending against it, the
status and  results of  broad-based  settlement  discussions,  and the number of
years such activity might continue. Based on this

                                      F-25
<PAGE>

                         COLUMBUS MCKINNON CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

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, 2025 and March 31, 2037
to range  between  $5,000,000  and  $14,000,000  using  actuarial  parameters of
continued claims for a period of 18 to 30 years. The Company's estimation of its
asbestos-related   aggregate  liability  that  is  probable  and  estimable,  in
accordance  with U.S.  generally  accepted  accounting  principles  approximates
$8,400,000 which has been reflected as a liability in the consolidated financial
statements as of March 31, 2007. The increase in the recorded liability from the
amount of $6,300,000 at March 31, 2006 is due to the increase in historical data
used to calculate  required  asbestos  liability  reserve  levels.  The recorded
liability  does not  consider  the  impact of any  potential  favorable  federal
legislation. This liability may fluctuate based on the uncertainty in the number
of future claims that will be filed and the cost to resolve those claims,  which
may be influenced  by a number of factors,  including the outcome of the ongoing
broad-based  settlement  negotiations,  defensive  strategies,  and the  cost to
resolve  claims  outside the  broad-based  settlement  program.  Of this amount,
management  expects  to  incur  asbestos  liability  payments  of  approximately
$325,000 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.


15.    RESTRUCTURING CHARGES

     The Company  analyzes its global  capacity  requirements in accordance with
its ongoing cost savings and consolidation efforts. As a result,  facilities are
closed or significantly reorganized and production operations are transferred to
other  facilities  within the same  reporting  segment,  to better utilize their
available capacity. During fiscal 2007, the Company recorded restructuring costs
of $543,000 for severance and the maintenance of non-operating  facilities being
held for sale which are expensed on an as incurred basis in accordance with SFAS
No. 146  "Accounting  for Costs  Associated  with Exit or Disposal  Activities."
$519,000  and $24,000 of these costs are related to the  Solutions  and Products
segments,  respectively.  The  completion  of the  sale of a  previously  closed
facility  resulted in the reversal of $410,000 of  restructuring  charges within
the Products segment,  including $216,000 of gain on the sale of a non-operating
property that had been written down in previous years. The liability as of March
31,  2007  consists  primarily  of  environmental  remediation  costs which were
accrued in accordance with SFAS No. 143.

     During fiscal 2006, the Company recorded  restructuring costs of $1,609,000
related to  environmental  remediation  charges,  inventory  disposal costs, and
facility costs as a result of the continued closure,  merging and reorganization
of the  Company.  $1,000,000  and  $600,000  of these  costs are  related to the
Products and Solutions segments,  respectively.  The charges primarily relate to
the cost of removal of certain environmentally hazardous materials in accordance
with SFAS No. 143,  "Accounting  for Asset  Retirement  Obligations"  and FIN 47
($600,000)  and inventory  disposal  related to the  rationalization  of certain
product families within our mechanical jacks line  ($400,000).  In addition,  we
have accrued  additional costs of maintenance of a non-operating  facility based
on anticipated sale date  ($300,000).  The costs associated with the disposal of
this facility were originally accrued as a result of the restructuring occurring
prior to the adoption of SFAS No. 146, "Accounting for the Costs Associated with
Exit or Disposal  Activities."  As of March 31, 2006,  the  liability  primarily
consisted  of  costs  associated  with  the  preparation  and  maintenance  of a
non-operating facility and environmental remediation costs which were accrued in
accordance  with SFAS No. 143. The Company had one facility that was  completely
closed and prepared for disposal.

     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 SFAS No. 146. As of
March 31, 2005, the liability  primarily  consisted of costs associated with the
preparation

                                      F-26
<PAGE>

                          COLUMBUS MCKINNON CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)


and maintenance of a non-operating facility prior to disposal which were accrued
prior to the adoption of SFAS No. 146. 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.

     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, 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
      Fiscal 2006 restructuring charges.........................................         358        1,251        1,609
      Cash payments.............................................................        (315)        (645)        (960)
                                                                                 -----------------------------------------
      Reserve at March 31, 2006.................................................    $     59     $    734     $    793
      Fiscal 2007 restructuring charges.........................................         289          254          543
      Cash payments.............................................................        (348)        (195)        (543)
      Restructuring charge reversal.............................................           -         (410)        (410)
      Gain on sale of a non-operating facility..................................           -          216          216
                                                                                 -----------------------------------------
      Reserve at March 31, 2007.................................................    $      -     $    599     $    599
                                                                                 =========================================

</TABLE>

16.    INCOME TAXES

     The provision for income taxes differs from the amount computed by applying
the  statutory  federal  income tax rate to income  from  continuing  operations
before income tax expense. The sources and tax effects of the difference were as
follows:
<TABLE>
<CAPTION>
                                                                            ----------------------------------------------
                                                                                         YEAR ENDED MARCH 31,
                                                                            ----------------------------------------------
                                                                                  2007           2006           2005
                                                                                  ----           ----           ----
<S>                                                                           <C>            <C>            <C>
      Expected tax at 35%..................................................   $    18,872    $     9,854    $     6,617
      State income taxes net of federal benefit............................           910            705            363
      Foreign taxes greater (less) than statutory provision................           961             41           (579)
      Permanent items......................................................           171            370              -
      Valuation allowance..................................................             -        (44,237)        (4,435)
      Other................................................................          (375)         2,321            230
                                                                            ----------------------------------------------
      Actual tax provision (benefit).......................................   $    20,539    $   (30,946)   $     2,196
                                                                            ==============================================

      The provision for income tax expense (benefit) consisted of the following:
                                                                            ----------------------------------------------
                                                                                         YEAR ENDED MARCH 31,
                                                                            ----------------------------------------------
                                                                                  2007           2006           2005
                                                                                  ----           ----           ----
      Current income tax expense (benefit):
           United States Federal...........................................   $     1,228    $       856    $      (426)
           State taxes.....................................................         1,401          1,084            559
           Foreign.........................................................         5,472          4,082          3,034
      Deferred income tax expense (benefit):
           United States...................................................        13,831        (37,099)             -
           Foreign.........................................................        (1,393)           131           (971)
                                                                            ----------------------------------------------
                                                                              $    20,539    $   (30,946)   $     2,196
                                                                            ==============================================
</TABLE>


                                      F-27
<PAGE>
                          COLUMBUS MCKINNON CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

     The Company applies the liability  method of accounting for income taxes as
required by SFAS  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,
                                                                                       -----------------------------------
                                                                                               2007              2006
                                                                                               ----              ----
      Deferred tax assets:
<S>                                                                                       <C>               <C>
         Federal net operating loss carryforwards.....................................    $     13,484      $     29,075
         State net operating loss carryforwards.......................................           2,064             3,564
         Employee benefit plans.......................................................          12,343             9,518
         Asset reserves...............................................................           1,711             2,384
         Insurance reserves...........................................................           7,372             7,283
         Accrued vacation and incentive costs.........................................           2,131             1,980
         Other........................................................................           9,237             6,337
         Valuation allowance..........................................................          (2,064)           (3,564)
                                                                                       -----------------------------------
           Gross deferred tax assets                                                            46,278            56,577
                                                                                       -----------------------------------
      Deferred tax liabilities:
         Inventory reserves...........................................................          (2,068)           (3,398)
         Property, plant, and equipment...............................................          (2,407)           (2,822)
                                                                                       -----------------------------------
           Gross deferred tax liabilities.............................................          (4,475)           (6,220)
                                                                                       -----------------------------------
              Net deferred tax assets.................................................    $     41,803      $     50,357
                                                                                       ===================================
</TABLE>

     As of March 31,  2007,  the Company had U.S.  federal  net  operating  loss
carryforwards of approximately $38,527,000. 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.

     Deferred income taxes are classified within the consolidated balance sheets
based on the following breakdown:
<TABLE>
<CAPTION>

                                                                                       -----------------------------------
                                                                                                     MARCH 31,
                                                                                       -----------------------------------
                                                                                               2007              2006
                                                                                               ----              ----
<S>                                                                                        <C>               <C>
      Net current deferred tax asset..................................................     $   8,669         $   6,513
      Net non-current deferred tax asset..............................................        34,460            46,065
      Net current deferred tax liability..............................................             -            (1,189)
      Net non-current deferred tax liability..........................................        (1,326)           (1,032)
                                                                                       -----------------------------------
           Net deferred tax asset.....................................................     $  41,803         $  50,357
                                                                                       ===================================
</TABLE>

     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 from  continuing  operations  before  income tax  expense  (benefit)
includes foreign  subsidiary  income of $10,067,000,  $13,034,000 and $8,588,000
for the years ended March 31, 2007,  2006, and 2005,  respectively.  As of March
31,  2007,  the Company had  unrecognized  deferred tax  liabilities  related to
approximately  $20  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.

     There were 136,511 and 581,064  shares of common stock were issued  through
the  exercise  of  non-qualified  stock  options  or through  the  disqualifying
disposition  of incentive  stock options in the years ended March 31, 2007,  and
2006,  respectively.  The tax  benefit to the Company  from these  transactions,
which is credited to  additional  paid-in  capital  rather than  recognized as a
reduction of income tax expense,  was $311,000 and  $2,154,000 in 2007 and 2006,
respectively.  This tax benefit  has also been  recognized  in the  consolidated
balance sheet as an increase in deferred tax assets.

                                      F-28
<PAGE>

                          COLUMBUS MCKINNON CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)


17.     RENTAL EXPENSE AND LEASE COMMITMENTS

     Rental  expense  for the  years  ended  March 31,  2007,  2006 and 2005 was
$4,483,000,  $3,914,000,  and $3,718,000,  respectively.  The following  amounts
represent  future  minimum  payment  commitments  as of  March  31,  2007  under
non-cancelable operating leases extending beyond one year:
<TABLE>
<CAPTION>

                                                                  VEHICLES AND
      YEAR ENDED MARCH 31,                     REAL PROPERTY        EQUIPMENT          TOTAL
      --------------------                     -------------        ---------          -----
<S>                                             <C>                <C>               <C>
      2008.................................     $      1,731       $     3,040       $  4,771
      2009.................................            1,595             2,733          4,328
      2010.................................            1,195             2,260          3,455
      2011.................................              946             1,633          2,579
      2012.................................              391             1,050          1,441

</TABLE>


                                      F-29
<PAGE>

                          COLUMBUS MCKINNON CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)


18.    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  7/8%  Senior  Subordinated  Notes,  and  the
nonguarantors.  The  guarantors  are wholly owned and the  guarantees  are full,
unconditional, joint and several.

<TABLE>
<CAPTION>
As of and for the year ended March 31, 2007:

                                                                                 NON
                                                    PARENT      GUARANTORS    GUARANTORS    ELIMINATIONS    CONSOLIDATED
                                               --------------------------------------------------------------------------
 AS OF MARCH 31, 2007:
 Current assets:
<S>                                               <C>           <C>           <C>           <C>             <C>
      Cash....................................    $   18,366    $   (1,162)   $   31,451    $         -     $    48,655
      Trade accounts receivable and unbilled
         revenues.............................        64,849            45        47,425              -         112,319
      Inventories.............................        34,548        17,175        27,616         (2,160)         77,179
      Prepaid expenses........................         6,237         2,707         9,085              -          18,029
                                               --------------------------------------------------------------------------
         Total current assets.................       124,000        18,765       115,577         (2,160)        256,182
 Net property, plant, and equipment...........        24,662        11,508        19,061              -          55,231
 Goodwill and other intangibles, net..........        88,703        57,037        40,163              -         185,903
 Intercompany balances........................        66,971       (77,385)      (63,602)        74,016               -
 Other non-current assets.....................        93,609       194,922        29,647       (249,856)         68,322
                                               --------------------------------------------------------------------------
         Total assets.........................    $  397,945    $  204,847    $  140,846    $  (178,000)    $   565,638
                                               ==========================================================================

 Current liabilities..........................    $   36,388    $   15,376    $   48,120    $    (1,150)    $    98,734
 Long-term debt, less current portion.........       158,125             -         4,043              -         162,168
 Other non-current liabilities................        27,646        11,143        24,622              -          63,411
                                               --------------------------------------------------------------------------
         Total liabilities....................       222,159        26,519        76,785         (1,150)        324,313
 Shareholders' equity.........................       175,786       178,328        64,061       (176,850)        241,325
                                               --------------------------------------------------------------------------
         Total liabilities and shareholders'
              equity..........................    $  397,945    $  204,847    $  140,846    $  (178,000)    $   565,638
                                               ==========================================================================

 FOR THE YEAR ENDED MARCH 31, 2007:
 Net sales....................................    $  287,223    $  170,633    $  179,235    $   (47,243)    $   589,848
 Cost of products sold........................       210,020       127,691       134,985        (47,448)        425,248
                                               --------------------------------------------------------------------------
 Gross profit.................................        77,203        42,942        44,250            205         164,600
                                               --------------------------------------------------------------------------
 Selling, general and administrative expenses.        42,503        17,490        35,835              -          95,828
 Restructuring charges........................          (137)            -           270              -             133
 Amortization of intangibles..................           109             3            71              -             183
                                               --------------------------------------------------------------------------
 Income from operations.......................        34,728        25,449         8,074            205          68,456
 Interest and debt expense....................        12,154         3,948           328              -          16,430
 Other (income) and expense, net..............         4,860          (913)       (5,841)             -          (1,894)
                                               --------------------------------------------------------------------------
 Income from continuing operations  before
    income tax expense (benefit)..............        17,714        22,414        13,587            205          53,920
 Income tax expense (benefit).................         7,506         8,916         4,197            (80)         20,539
                                               --------------------------------------------------------------------------
 Income from continuous operations............        10,208        13,498         9,390            285          33,381
 Income from discontinued operations..........           704             -             -              -             704
                                               --------------------------------------------------------------------------
 Net income...................................    $   10,912    $   13,498    $    9,390    $       285     $    34,085
                                               ==========================================================================



                                      F-30
<PAGE>


                          COLUMBUS MCKINNON CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

                                                                                NON
                                                    PARENT      GUARANTORS    GUARANTORS    ELIMINATIONS    CONSOLIDATED
                                               --------------------------------------------------------------------------
 FOR THE YEAR ENDED MARCH 31, 2007:
 OPERATING ACTIVITIES:
 Cash provided (used) by operating activities.    $   41,024    $      925    $   (1,667)   $     5,213     $    45,495
 INVESTING ACTIVITIES:
 Sales of marketable securities, net..........             -             -         1,167              -           1,167
 Capital expenditures.........................        (6,319)       (1,099)       (3,235)             -         (10,653)
 Proceeds from sale of businesses  and surplus
    real estate...............................         1,906         2,970           511              -           5,387
 Proceeds from discontinued operations note
    receivable................................           704             -             -              -             704
                                               --------------------------------------------------------------------------
 Net  cash  (used)   provided   by   investing
    activities................................        (3,709)        1,871        (1,557)             -          (3,395)
 FINANCING ACTIVITIES:
 Proceeds from exercise of stock options......         2,601           (15)       13,489        (13,474)          2,601
 Net borrowings under revolving line-of-credit
    agreements................................             -             -         3,045              -           3,045
 (Repayment) borrowing of debt................       (49,522)            -         3,558              -         (45,964)
 Deferred financing costs incurred............          (449)            -             -              -            (449)
 Dividends paid...............................             -        (2,324)       (5,937)         8,261               -
 Other........................................           890             -             -              -             890
                                               --------------------------------------------------------------------------
 Net cash (used) provided by financing
    activities................................       (46,480)       (2,339)       14,155         (5,213)        (39,877)
 EFFECT OF EXCHANGE RATE CHANGES ON CASH......             -          (158)          992              -             834
                                               --------------------------------------------------------------------------
 Net change in cash and cash equivalents......        (9,165)          299        11,923              -           3,057
 Cash and cash equivalents at
    beginning of year.........................        27,531        (1,461)       19,528              -          45,598
                                               --------------------------------------------------------------------------
 Cash and cash equivalents at end of year.....    $   18,366    $   (1,162)   $   31,451    $         -     $    48,655
                                               ==========================================================================



As of and for the year ended March 31, 2006:

 AS OF MARCH 31, 2006:
 Current assets:
      Cash....................................    $   27,531    $   (1,461)   $   19,528    $         -     $    45,598
      Trade accounts receivable and unbilled
         revenues.............................        60,808           157        46,822              -         107,787
      Inventories.............................        32,708        18,177        26,325         (2,365)         74,845
      Prepaid expenses........................         4,777         1,446         8,903            550          15,676
                                               --------------------------------------------------------------------------
         Total current assets.................       125,824        18,319       101,578         (1,815)        243,906
 Net property, plant, and equipment...........        24,651        11,703        18,778              -          55,132
 Goodwill and other intangibles, net..........        89,808        58,036        39,483              -         187,327
 Intercompany balances........................        92,325       (93,637)      (73,697)        75,009               -
 Other non-current assets.....................        96,548       197,328        25,939       (240,136)         79,679
                                               --------------------------------------------------------------------------
         Total assets.........................    $  429,156    $  191,749    $  112,081    $  (166,942)    $   566,044
                                               ==========================================================================

 Current liabilities..........................    $   48,146    $   15,368    $   43,306    $       473     $   107,293
 Long-term debt, less current portion.........       203,384             -           457              -         203,841
 Other non-current liabilities................        16,305         8,676        25,508              -          50,489
                                               --------------------------------------------------------------------------
         Total liabilities....................       267,835        24,044        69,271            473         361,623
 Shareholders' equity.........................       161,321       167,705        42,810       (167,415)        204,421
                                               --------------------------------------------------------------------------
         Total liabilities and shareholders'
              equity..........................    $  429,156    $  191,749    $  112,081    $  (166,942)    $   566,044
                                               ==========================================================================


                                      F-31
<PAGE>

                          COLUMBUS MCKINNON CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)


                                                                                 NON
                                                    PARENT      GUARANTORS    GUARANTORS    ELIMINATIONS    CONSOLIDATED
                                               --------------------------------------------------------------------------
 FOR THE YEAR ENDED MARCH 31, 2006:
 Net sales....................................    $  268,570    $  152,181    $  163,787    $   (28,531)    $   556,007
 Cost of products sold........................       200,639       114,042       120,842        (27,138)        408,385
                                               --------------------------------------------------------------------------
 Gross profit.................................        67,931        38,139        42,945         (1,393)        147,622
                                               --------------------------------------------------------------------------
 Selling, general and administrative expenses.        40,811        16,003        31,081              -          87,895
 Restructuring charges........................         1,635             -           (26)             -           1,609
 Amortization of intangibles..................           179             3            67              -             249
                                               --------------------------------------------------------------------------
 Income from operations.......................        25,306        22,133        11,823         (1,393)         57,869
 Interest and debt expense....................        19,558         4,876           233              -          24,667
 Other (income) and expense, net..............         8,055            20        (3,027)             -           5,048
                                               --------------------------------------------------------------------------
 (Loss)  income  from  continuing   operations
    before income tax (benefit) expense.......        (2,307)       17,237        14,617         (1,393)         28,154
 Income tax (benefit) expense.................       (37,950)        2,912         4,263           (171)        (30,946)
                                               --------------------------------------------------------------------------
 Income from continuous operations............        35,643        14,325        10,354         (1,222)         59,100
 Income from discontinued operations..........           696             -             -              -             696
                                               --------------------------------------------------------------------------
 Net income...................................    $   36,339    $   14,325    $   10,354    $    (1,222)    $    59,796
                                               ==========================================================================



 FOR THE YEAR ENDED MARCH 31, 2006:
 OPERATING ACTIVITIES:
 Cash provided by operating activities........    $   26,358    $    8,418    $   11,587    $         -     $    46,363
 INVESTING ACTIVITIES:
 Purchases of marketable securities, net......             -             -          (888)             -            (888)
 Capital expenditures.........................        (4,759)         (800)       (2,871)             -          (8,430)
 Proceeds from sale of businesses  and surplus
    real estate...............................             -           468         1,623              -           2,091
 Proceeds from discontinued operations note
    receivable................................           857             -             -              -             857
                                               --------------------------------------------------------------------------
 Net cash used by investing activities........        (3,902)         (332)       (2,136)             -          (6,370)
 FINANCING ACTIVITIES:
 Proceeds from issuance of common stock.......        56,619             -             -              -          56,619
 Proceeds from exercise of stock options......         7,149             -             -              -           7,149
 Net borrowings under revolving line-of-credit
    agreements................................           240             -         1,121              -           1,361
 Repayment of debt............................      (204,832)            -          (335)             -        (205,167)
 Proceeds from issuance of long-term debt.....       136,000             -             -              -         136,000
 Deferred financing costs incurred............        (2,877)            -             -              -          (2,877)
 Dividends paid...............................         9,067        (8,854)         (213)             -               -
 Other........................................         2,712             -             -              -           2,712
                                               --------------------------------------------------------------------------
 Net cash provided (used) by financing
    activities................................         4,078        (8,854)          573              -          (4,203)
 EFFECT OF EXCHANGE RATE CHANGES ON CASH......             -             4           325              -             329
                                               --------------------------------------------------------------------------
 Net change in cash and cash equivalents......        26,534          (764)       10,349              -          36,119
 Cash and cash equivalents at
    beginning of year.........................           997          (697)        9,179              -           9,479
                                               --------------------------------------------------------------------------
 Cash and cash equivalents at end of year.....    $   27,531    $   (1,461)   $   19,528    $         -     $    45,598
                                               ==========================================================================


                                      F-32
<PAGE>


                          COLUMBUS MCKINNON CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

For the year ended March 31, 2005:

                                                                                 NON
                                                    PARENT      GUARANTORS    GUARANTORS    ELIMINATIONS    CONSOLIDATED
                                               --------------------------------------------------------------------------
 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
                                               ==========================================================================





 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
 Proceeds from discontinued operations note
    receivable................................           643             -             -              -             643
                                               --------------------------------------------------------------------------
 Net  cash   provided   (used)  by   investing
    activities................................         1,069         3,068          (988)             -           3,149
 FINANCING ACTIVITIES:
 Proceeds from exercise of stock options......           428             -             -              -             428
 Net payments 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 provided (used) by financing
    activities................................        47,249       (68,000)       (1,151)             -         (21,902)
 EFFECT OF EXCHANGE RATE CHANGES ON CASH......          (134)           85            19              -             (30)
                                               --------------------------------------------------------------------------
 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
                                               ==========================================================================
</TABLE>


                                      F-33
<PAGE>

                          COLUMBUS MCKINNON CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)


19.    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.
<TABLE>
<CAPTION>

     Segment  information as of and for the years ended March 31, 2007, 2006 and
2005 is as follows:
                                                                         -------------------------------------------------
                                                                                      YEAR ENDED MARCH 31, 2007
                                                                         -------------------------------------------------
                                                                               PRODUCTS         SOLUTIONS        TOTAL
<S>                                                                           <C>               <C>            <C>
 Sales to external customers............................................      $  527,089        $  62,759      $ 589,848
 Income (loss) from operations..........................................          71,478           (3,022)        68,456
 Depreciation and amortization..........................................           7,431              858          8,289
 Total assets...........................................................         526,660           38,978        565,638
 Capital expenditures...................................................          10,399              254         10,653


                                                                         -------------------------------------------------
                                                                                      YEAR ENDED MARCH 31, 2006
                                                                         -------------------------------------------------
                                                                               PRODUCTS         SOLUTIONS        TOTAL
 Sales to external customers............................................      $  493,896        $  62,111      $ 556,007
 Income from operations.................................................          55,849            2,020         57,869
 Depreciation and amortization..........................................           7,805            1,019          8,824
 Total assets...........................................................         530,600           35,444        566,044
 Capital expenditures...................................................           7,931              499          8,430

                                                                         -------------------------------------------------
                                                                                      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

</TABLE>


                                      F-34
<PAGE>

                          COLUMBUS MCKINNON CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
<TABLE>
<CAPTION>

     Financial  information  relating to the Company's  operations by geographic
area is as follows:
                                                                         -------------------------------------------------
                                                                                      YEAR ENDED MARCH 31,
                                                                         -------------------------------------------------
                                                                                 2007            2006            2005
                                                                                 ----            ----            ----
 NET SALES:
<S>                                                                         <C>             <C>             <C>
 United States..........................................................    $    424,696    $    394,657    $    360,917
 Europe.................................................................         121,908         112,868         108,717
 Canada                                                                           26,757          30,492          28,778
 Other..................................................................          16,487          17,990          16,340
                                                                         -------------------------------------------------
 Total..................................................................    $    589,848    $    556,007    $    514,752
                                                                         =================================================

                                                                         -------------------------------------------------
                                                                                      YEAR ENDED MARCH 31,
                                                                         -------------------------------------------------
                                                                                 2007            2006            2005
                                                                                 ----            ----            ----
 TOTAL ASSETS:
 United States..........................................................    $    394,923    $    411,199    $    341,645
 Europe.................................................................         143,712         123,694         115,241
 Canada.................................................................          15,222          20,444          17,442
 Other..................................................................          11,781          10,707           6,543
                                                                         -------------------------------------------------
 Total..................................................................    $    565,638    $    566,044    $    480,871
                                                                         =================================================

                                                                         -------------------------------------------------
                                                                                      YEAR ENDED MARCH 31,
                                                                         -------------------------------------------------
                                                                                 2007            2006            2005
                                                                                 ----            ----            ----
 LONG-LIVED ASSETS:
 United States..........................................................    $    182,160    $    184,448    $    185,518
 Europe.................................................................          55,444          53,357          54,181
 Canada.................................................................               -           1,869           2,672
 Other..................................................................           3,530           2,785           2,151
                                                                         -------------------------------------------------
 Total..................................................................    $    241,134    $    242,459    $    244,522
                                                                         =================================================



     Sales by major product group are as follows:

                                                                         -------------------------------------------------
                                                                                      YEAR ENDED MARCH 31,
                                                                         -------------------------------------------------
                                                                                 2007            2006            2005
                                                                                 ----            ----            ----
 Hoists.................................................................    $    284,494    $    258,082    $    227,789
 Chain and forged attachments...........................................         134,850         134,301         127,300
 Industrial cranes......................................................          67,003          61,967          62,468
 Other..................................................................         103,501         101,657          97,195
                                                                         -------------------------------------------------
 Total..................................................................    $    589,848    $    556,007    $    514,752
                                                                         =================================================
</TABLE>


                                      F-35
<PAGE>

                          COLUMBUS MCKINNON CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)


20.     SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

     Below is selected quarterly financial data for fiscal 2007 and 2006:

<TABLE>
<CAPTION>

                                           ----------------------------------------------------------------
                                                                 THREE MONTHS ENDED
                                           ----------------------------------------------------------------
                                                  JULY 2,         OCTOBER 1,     DECEMBER 31,    MARCH 31,
                                                   2006             2006            2006           2007
                                                   ----             ----            ----           ----
<S>                                          <C>             <C>             <C>              <C>
 Net sales................................   $    146,694    $     144,225   $     142,044    $   156,885
 Gross profit.............................         42,283           39,017          38,623         44,677
 Income from operations...................         17,780           16,104          14,896         19,676
 Net income...............................   $      5,572    $       8,314   $       9,126    $    11,073
                                           ================================================================


 Net income per share - basic.............   $       0.30    $        0.45   $        0.49    $      0.60
                                           ================================================================
 Net income per share - diluted...........   $       0.29    $        0.44   $        0.48    $      0.58
                                           ================================================================

     Results  include  pre-tax  losses  on  early   extinguishment  of  debt  of
$4,583,000,  $359,000 and $246,000 for the quarters ended July 2, 2006, December
31, 2006 and March 31, 2007 respectively.

                                           ----------------------------------------------------------------
                                                                 THREE MONTHS ENDED
                                           ----------------------------------------------------------------
                                                  JULY 3,         OCTOBER 2,      JANUARY 1,     MARCH 31,
                                                   2005             2005            2006           2006
                                                   ----             ----            ----           ----
 Net sales................................   $    140,877    $     134,712   $     133,322    $   147,096
 Gross profit.............................         36,543           35,158          34,931         40,990
 Income from operations...................         14,622           13,267          13,114         16,866
 Net income...............................   $      7,322    $       3,263   $       1,413    $    47,798
                                           ================================================================


 Net income per share - basic.............   $       0.50    $        0.22   $        0.09    $      2.63
                                           ================================================================

 Net income per share - diluted...........   $       0.49    $        0.21   $        0.08    $      2.53
                                           ================================================================
</TABLE>


     Results  include  pre-tax  losses  on  early   extinguishment  of  debt  of
$3,341,000,  $4,950,000  and $920,000 for the  quarters  ended  October 2, 2005,
January 1, 2006 and March 31, 2006 respectively.

     Net  income  includes  tax  benefit  due to  the  reversal  of a  valuation
allowance of $38,571,000 for the quarter ended March 31, 2006.


                                      F-36
<PAGE>

                          COLUMBUS MCKINNON CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)


21.    ACCUMULATED OTHER COMPREHENSIVE LOSS

     The components of accumulated other comprehensive loss are as follows:
<TABLE>
<CAPTION>

                                                                                    --------------------------------
                                                                                                MARCH 31,
                                                                                    --------------------------------
                                                                                           2007           2006
                                                                                    --------------------------------
<S>                                                                                   <C>            <C>
      Net unrealized investment gains - net of tax.................................   $        22    $     1,891
      Adjustment to pension liability- net of tax..................................       (18,606)       (17,107)
      Adjustment to other postretirement obligations - net of tax..................        (3,083)             -
      Foreign currency translation adjustment......................................         6,330          2,237
                                                                                    --------------------------------
      Accumulated other comprehensive loss.........................................   $   (15,337)      $(12,979)
                                                                                    ================================
</TABLE>

     The  adjustment to pension  liability in fiscal 2007 includes an adjustment
of  $(7,257,000),  net of  tax,  and  the  adjustment  to  other  postretirement
obligations includes an adjustment of $(3,083,000),  net of tax, relating to the
initial adoption of SFAS No. 158. Refer to Note 11.

     The deferred taxes associated with the items included in accumulated  other
comprehensive   loss  were   $14,102,000  and  $9,486,000  for  2007  and  2006,
respectively.  As a result of the  recording of a deferred  tax asset  valuation
allowance in fiscal 2005, the Company recorded as an offsetting entry a $534,000
charge in the minimum pension liability component of other comprehensive income.
With the reversal of that valuation  allowance in fiscal 2006 (see Note 16), the
Company  recorded  the  reversal of the  valuation  allowance  as a reduction of
income taxes in the statement of  operations.  This is in  accordance  with FASB
Statement  No. 109,  "Accounting  for Income  Taxes," even though the  valuation
allowance was initially  established by a charge against  comprehensive  income.
This amount will remain indefinitely as a component of minimum pension liability
adjustment.

     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,
                                                                         -------------------------------------------
                                                                                2007          2006          2005
                                                                         -------------------------------------------
<S>                                                                        <C>           <C>           <C>
      Net unrealized investment gains at beginning of year..............   $     1,891   $     1,233   $     1,364
         Unrealized holdings gains arising during the period............         2,491         1,591           328
         Reclassification adjustments for (gains)
           included in earnings.........................................        (4,360)         (933)         (459)
                                                                         -------------------------------------------
      Net change in unrealized gains on investments.....................        (1,869)          658          (131)
                                                                         -------------------------------------------
      Net unrealized investment gains at end of year....................   $        22   $     1,891   $     1,233
                                                                         ===========================================

</TABLE>

                                      F-37
<PAGE>

                          COLUMBUS MCKINNON CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

22.     EFFECTS OF NEW ACCOUNTING PRONOUNCEMENTS

     In June 2006,  the  Financial  Accounting  Standards  Board  (FASB)  issued
Interpretation  No. 48 (FIN 48),  "Accounting  for Uncertainty in Income Taxes".
FIN 48 is an  interpretation  of FASB Statement No. 109  "Accounting  for Income
Taxes" and must be adopted  by the  Company no later than April 1, 2007.  FIN 48
prescribes a comprehensive  model for recognizing,  measuring,  presenting,  and
disclosing in the financial  statements uncertain tax positions that the company
has taken or  expects  to take in the  Company's  tax  returns.  The  Company is
required to apply the  provisions  of FIN 48 to all tax  positions  upon initial
adoption with any cumulative effect adjustment to be recognized as an adjustment
to retained  earnings as of April 1, 2007.  FIN 48 was  effective  beginning  in
fiscal  2008 and did not have a material  impact on the  Company's  consolidated
financial statements.

     In  September  2006,  the FASB issued  Statement  of  Financial  Accounting
Standards  (SFAS) No.  157,  "Fair  Value  Measurements,"  to define fair value,
establish a framework for  measuring  fair value in  accordance  with  generally
accepted  accounting  principles,   and  expand  disclosures  about  fair  value
measurements.  SFAS No. 157 will be effective for fiscal years  beginning  after
November 15, 2007.  The Company is assessing the impact the adoption of SFAS No.
157 will have on the Company's  consolidated  financial  position and results of
operations.

     In September 2006, the FASB issued SFAS No. 158, "Employers' Accounting for
Defined  Benefit  Pension and Other  Postretirement  Plans, an amendment of FASB
Statements No. 87, 88, 106, and 132(R)" (SFAS 158). Among other items,  SFAS 158
requires  recognition  of the  overfunded or  underfunded  status of an entity's
defined  benefit  postretirement  plan as an asset or liability in the financial
statements  and requires  recognition  of the funded  status of defined  benefit
postretirement  plans in  other  comprehensive  income.  We  adopted  all of the
required provisions of Statement 158 in fiscal 2007 as discussed in footnote 11.
This   statement   also  requires  an  entity  to  measure  a  defined   benefit
postretirement plan's assets and obligations that determine its funded status as
of the end of the  employers'  fiscal year.  This  requirement  is effective for
fiscal  years ending  after  December 15, 2008.  The Company does not expect the
adoption  of  this  requirement  to  have a  material  impact  on the  Company's
consolidated financial statements.


                                      F-38
<PAGE>

<TABLE>
<CAPTION>

                          COLUMBUS MCKINNON CORPORATION

                 SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
                          MARCH 31, 2007, 2006 AND 2005
                              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, 2007: Deducted from asset accounts:
<S>                                                 <C>           <C>          <C>              <C>               <C>
      Allowance for doubtful accounts               $  3,417      $  1,359     $      -         $  1,148  (1)     $  3,628
      Slow-moving and obsolete inventory               7,635         2,754         (240) (4)       1,306  (2)        8,843
      Deferred tax asset valuation allowance           6,301             -            -            4,237             2,064
                                                    --------      --------     --------         --------          --------
           Total                                    $ 17,353      $  4,113     $   (240)        $  6,691          $ 14,535
                                                    ========      ========     ========         ========          ========
    Reserves on balance sheet:
      Accrued general and product liability costs   $ 20,969      $  4,343     $      -         $  4,234  (3)     $ 21,078
                                                    ========      ========     ========         ========          ========

 Year ended March 31, 2006: Deducted from asset accounts:
      Allowance for doubtful accounts               $  3,015      $  1,628     $      -         $  1,226  (1)     $  3,417
      Slow-moving and obsolete inventory               6,413         2,617            -            1,395  (2)        7,635
      Deferred tax asset valuation allowance          50,538       (38,571)           -            5,666             6,301
                                                    --------      --------     --------         --------          --------
           Total                                    $ 59,966      $(34,326)    $      -         $  8,287          $ 17,353
                                                    ========      ========     ========         ========          ========
    Reserves on balance sheet:
      Accrued general and product liability costs   $ 16,094      $  7,920     $      -         $  3,045  (3)     $ 20,969
                                                    ========      ========     ========         ========          ========

 Year ended March 31, 2005: Deducted from asset accounts:
      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          55,456         1,175            -            6,093            50,538
                                                    --------      --------     --------         --------          --------
           Total                                    $ 64,145      $  4,548     $      -         $  8,727          $ 59,966
                                                    ========      ========     ========         ========          ========
    Reserves on balance sheet:
      Accrued general and product liability costs   $ 15,930      $  5,780     $      -         $  5,616  (3)     $ 16,094
                                                    ========      ========     ========         ========          ========

--------
(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-39

<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, 2007, 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,  2007.  There were no changes in our internal  controls or in other  factors
during our fourth quarter ended March 31, 2007.

     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, 2007 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, 2007.

     Management's  assessment of the  effectiveness of our internal control over
financial  reporting as of March 31, 2007 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  maintained  effective  internal  control  over  financial
reporting  as of March 31,  2007,  based on  criteria  established  in  Internal
Control--Integrated   Framework   issued   by  the   Committee   of   Sponsoring
Organizations of the Treadway Commission (the COSO criteria).  Columbus McKinnon
Corporation'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.

                                       30
<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  Columbus  McKinnon  Corporation
maintained  effective internal control over financial  reporting as of March 31,
2007, is fairly stated,  in all material  respects,  based on the COSO criteria.
Also, in our opinion,  Columbus McKinnon Corporation maintained, in all material
respects,  effective  internal control over financial  reporting as of March 31,
2007, 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
Columbus  McKinnon  Corporation and  subsidiaries as of March 31, 2007 and 2006,
and the related consolidated statements of operations, shareholders' equity, and
cash flows for each of the three  years in the period  ended  March 31,  2007 of
Columbus  McKinnon  Corporation and  subsidiaries,  and our report dated May 25,
2007 expressed an unqualified opinion thereon.

                                               /s/ Ernst & Young LLP

Buffalo, New York
May 25, 2007




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,  2007  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, 2007 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, 2007 and upon the filing of such Proxy  Statement,
is incorporated by reference herein.

ITEM 13.          CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
                  ----------------------------------------------

                                       31
<PAGE>

     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, 2007 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,
2007 and upon the filing of such Proxy  Statement,  is incorporated by reference
herein.


                                     PART IV
                                     -------


ITEM 15.          EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
                  ------------------------------------------

(1)  FINANCIAL STATEMENTS:
     ---------------------

     The  following  consolidated  financial  statements  of  Columbus  McKinnon
Corporation are included in Item 8:
<TABLE>
<CAPTION>

     REFERENCE                                                                                             PAGE NO.
     ---------                                                                                             --------
<S>                                                                                                        <C>
      Report of Independent Registered Public Accounting Firm                                              F-2

      Consolidated balance sheets - March 31, 2007 and 2006                                                F-3

      Consolidated statements of operations - Years ended March 31, 2007, 2006 and 2005                    F-4

      Consolidated statements of shareholders' equity - Years ended March 31, 2007, 2006 and 2005          F-5

      Consolidated statements of cash flows - Years ended March 31, 2007, 2006 and 2005                    F-6

      Notes to consolidated financial statements                                                           F-7 to F-38


(2)  FINANCIAL STATEMENT SCHEDULE:                                                                         PAGE NO.
     -----------------------------                                                                         --------
          Schedule II - Valuation and qualifying accounts                                                  F-39

          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.
</TABLE>


(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.)


                                       32
<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  Seventh  Supplemental  Indenture among Columbus McKinnon  Corporation,
          Crane  Equipment & Service,  Inc.,  Yale  Industrial  Products,  Inc.,
          Audubon Europe S.a.r.l.  and U.S. Bank National Trust Association,  as
          trustee,  dated as of August 30, 2005  (incorporated  by  reference to
          Exhibit  4.1 to the  Company's  Quarterly  Report on Form 10-Q for the
          quarterly period ended October 2, 2005).

    4.11  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).

    4.12  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).


                                       33
<PAGE>

    4.13  Indenture  among  Columbus   McKinnon   Corporation,   Audubon  Europe
          S.a.r.l.,  Crane Equipment & Service,  Inc., Yale Industrial Products,
          Inc..  and U.S. Bank National  Association.,  as trustee,  dated as of
          September  2, 2005  (incorporated  by  reference to Exhibit 4.5 to the
          Company's  Registration  Statement  No.  33-129142  on Form S-3  dated
          October 19, 2005).

    4.14  Registration  Rights  Agreement among Columbus  McKinnon  Corporation,
          Audubon  Europe  S.a.r.l.,  Crane  Equipment  &  Service,  Inc.,  Yale
          Industrial Products,  Inc., and Credit Suisse First Boston LLC, acting
          on behalf of itself and as Representative  of the Initial  Purchasers,
          dated as of  September 2, 2005  (incorporated  by reference to Exhibit
          4.6 to the Company's  Registration Statement No. 33-129142 on Form S-3
          dated October 19, 2005).

    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).

                                       34
<PAGE>

  #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  (incorporated  by  reference  to Exhibit  10.14 to the
          Company's  Annual  Report on Form 10-K for the fiscal year ended March
          31, 2005).

  #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).

                                       35
<PAGE>

  #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).

  #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  (incorporated
          by reference to Exhibit 10.33 to the  Company's  Annual Report on Form
          10-K for the fiscal year ended March 31, 2005).

  #10.34  Amendment No. 12 to the 1998 Plan Restatement of the Columbus McKinnon
          Corporation   Thrift   [401(k)]   Plan,   dated   December   27,  2005
          (incorporated  by reference to Exhibit 10.34 to the  Company's  Annual
          Report on Form 10-K for the fiscal year ended March 31, 2006).

 *#10.35  Amendment No. 13 to the 1998 Plan Restatement of the Columbus McKinnon
          Corporation Thrift [401(k)] Plan, dated December 21, 2006.

  #10.36  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).

  #10.37  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).

  #10.38  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).

  #10.39  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).

  #10.40  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).

  #10.41  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).

                                       36
<PAGE>

  #10.42  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).

  #10.43  Amendment No. 6 to the 1998 Plan Restatement of the Columbus  McKinnon
          Corporation  Monthly  Retirement  Benefit  Plan,  dated March 17, 2005
          (incorporated  by reference to Exhibit 10.41 to the  Company's  Annual
          Report on Form 10-K for the fiscal year ended March 31, 2005).

  #10.44  Amendment No. 7 to the 1998 Plan Restatement of the Columbus  McKinnon
          Corporation  Monthly  Retirement Benefit Plan, dated December 28, 2005
          (incorporated  by reference to Exhibit 10.43 to the  Company's  Annual
          Report on Form 10-K for the fiscal year ended March 31, 2006).

  #10.45  Amendment No. 8 to the 1998 Plan Restatement of the Columbus  McKinnon
          Corporation  Monthly  Retirement Benefit Plan, dated December 28, 2005
          (incorporated by reference to Exhibit 10.1 to the Company's  Quarterly
          Report on Form 10-Q for the quarterly period ended December 31, 2006).

  #10.46  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).

  #10.47  Form of Change in Control  Agreement as entered into between  Columbus
          McKinnon  Corporation  and  each  of  Timothy  T.  Tevens,  Derwin  R.
          Gilbreath,  Karen L. Howard, Joseph J. Owen, Richard A. Steinberg, 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).

 *#10.48  Employment agreement with Wolfgang Wegener dated December 31, 1996.

   10.49  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).

   10.50  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).

  #10.51  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).

  #10.52  Columbus   McKinnon   Corporation   2006  Long  Term   Incentive  Plan
          (incorporated  by  reference  to  Appendix A to the  definitive  Proxy
          Statement for the Annual Meeting of Stockholders of Columbus  McKinnon
          Corporation held on July 31, 2006).

  #10.53  Columbus   McKinnon   Corporation    Executive   Management   Variable
          Compensation  Plan  (incorporated  by  reference  to Appendix B to the
          definitive  Proxy  Statement for the Annual Meeting of Stockholders of
          Columbus McKinnon Corporation held on July 31, 2006).

   10.54  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

                                       37
<PAGE>

          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).

   10.55  Second  amendment,  dated as of August 5, 2005, 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 (as
          amended by that certain First Amendment to that certain Second Amended
          and  Restated  Credit and  Security  Agreement,  dated as of April 29,
          2005, and as further modified and supplemented and in effect from time
          to time, the "Credit Agreement"), among Columbus McKinnon Corporation,
          a corporation  organized under the laws of New York (the  "Borrower"),
          Larco Industrial Services Ltd., a business corporation organized under
          the laws of the  Province of Ontario,  Columbus  McKinnon  Limited,  a
          business   corporation   organized  under  the  laws  of  Canada,  the
          Guarantors  from time to time party thereto,  the Lenders from time to
          time party thereto  (collectively,  the  "Lenders"),  Bank of America,
          N.A.,  as  Administrative  Agent for such Lenders (the "Agent") and as
          Issuing  Lender  (incorporated  by  reference  to Exhibit  10.1 to the
          Company's Quarterly Report on Form 10-Q dated October 2, 2005).

   10.56  Third  amendment,  dated as of August 22, 2005, 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 (as
          amended by that certain First Amendment to that certain Second Amended
          and  Restated  Credit and  Security  Agreement,  dated as of April 29,
          2005, by that certain Second  Amendment to that certain Second Amended
          and  Restated  Credit and  Security  Agreement,  dated as of August 5,
          2005, and as further modified and supplemented and in effect from time
          to time, the "Credit Agreement"), among Columbus McKinnon Corporation,
          a corporation  organized under the laws of New York (the  "Borrower"),
          Larco Industrial Services Ltd., a business corporation organized under
          the laws of the  Province of Ontario,  Columbus  McKinnon  Limited,  a
          business   corporation   organized  under  the  laws  of  Canada,  the
          Guarantors  from time to time party thereto,  the Lenders from time to
          time party thereto  (collectively,  the  "Lenders"),  Bank of America,
          N.A.,  as  Administrative  Agent for such Lenders (the "Agent") and as
          Issuing  Lender  (incorporated  by  reference  to Exhibit  10.2 to the
          Company's Quarterly Report on Form 10-Q dated October 2, 2005).

   10.57  Fourth amendment, dated as of October 17, 2005, 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,  and
          amended by that certain First Amendment to the Credit Agreement, dated
          as of April 29,  2005,  and by that  certain  Second  Amendment to the
          Credit  Agreement,  dated as of August 5,  2005,  and by that  certain
          Third Amendment to the Credit  Agreement,  dated as of August 22, 2005
          (as further amended,  supplemented or otherwise  modified from time to
          time, the "Credit  Agreement"),  among Columbus  McKinnon  Corporation
          (the "Borrower"),  Larco Industrial  Services Ltd.,  Columbus McKinnon
          Limited,  the Guarantors named therein, the lending institutions party
          thereto,  and Bank of  America,  N.A.,  as  Administrative  Agent  and
          Issuing Lender.  Capitalized  terms used herein and not defined herein
          shall have the  meanings  ascribed  thereto  in the  Credit  Agreement
          (incorporated by reference to Exhibit 10.3 to the Company's  Quarterly
          Report on Form 10-Q dated October 2, 2005).

   10.58  Third Amended and Restated Credit and Security Agreement,  dated as of
          March 16, 2006 among Columbus McKinnon  Corporation,  as the Borrower,
          Bank of America, N.A., as Administrative Agent and Issuing Lender, and
          Other  Lenders Party Hereto,  and Bank of America  Securities  LLC, as
          Arranger  (incorporated by reference to Exhibit 10.53 to the Company's
          Annual Report on Form 10-K for the fiscal year ended March 31, 2006).

  *10.59  First  amendment,  dated  as of  January 8, 2007 to that certain Third
          Amended and Restated Credit and Security Agreement,  dated as of March
          16, 2006 among Columbus McKinnon Corporation, as the Borrower, Bank of
          America,  N.A., as Administrative  Agent and Issuing Lender, and Other
          Lenders Party Hereto, and Bank of America Securities LLC, as Arranger.

   *21.1  Subsidiaries of the Registrant.

   *23.1  Consent of Independent Registered Public Accounting Firm.

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

                                       38
<PAGE>

   *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


                                       39
<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:  May 31, 2007

                                       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.
<TABLE>
<CAPTION>

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

<S>                                            <C>                                                      <C>
    /S/    TIMOTHY T. TEVENS                   President, Chief Executive Officer and                   May 31, 2007
------------------------------------               Director (PRINCIPAL EXECUTIVE OFFICER)
    TIMOTHY T. TEVENS


    /S/   KAREN L. HOWARD                      Vice President - Finance and Chief                       May 31, 2007
------------------------------------               Financial Officer
    KAREN L. HOWARD                                (PRINCIPAL FINANCIAL OFFICER AND
                                                   PRINCIPAL ACCOUNTING OFFICER)

    /S/   ERNEST R. VEREBELYI                  Chairman of the Board of Directors                       May 31, 2007
------------------------------------
    ERNEST R. VEREBELYI


                                               Director                                                 May 31, 2007
------------------------------------
    CARLOS PASCUAL


    /S/   RICHARD H. FLEMING                   Director                                                 May 31, 2007
------------------------------------
    RICHARD H. FLEMING


    /S/   NICHOLAS T. PINCHUK                  Director                                                 May 31, 2007
------------------------------------

    NICHOLAS T. PINCHUK

    /S/   WALLACE W. CREEK                     Director                                                 May 31, 2007
------------------------------------
    WALLACE W. CREEK


    /S/   LINDA A. GOODSPEED                   Director                                                 May 31, 2007
------------------------------------
    LINDA A. GOODSPEED


    /S/   STEPHEN RABINOWITZ                   Director                                                 May 31, 2007
------------------------------------
    STEPHEN RABINOWITZ

</TABLE>


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