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, 2004

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

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

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

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

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

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

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

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

     Indicate  by  checkmark  whether the  registrant  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
Registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No[ ]

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

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

     The aggregate  market value of the voting stock held by  non-affiliates  of
the Registrant as of September 30, 2003 was $55,947,637,  based upon the closing
price of the  Company's  common  shares as quoted on the Nasdaq  Stock Market on
such date. The number of shares of the Registrant's  common stock outstanding as
of May 31, 2004 was 14,896,172 shares.

                       DOCUMENTS INCORPORATED BY REFERENCE

     Portions of the Registrant's proxy statement for its 2004 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, 2004 are  incorporated  by reference  into Part III of this
report.

<PAGE>

                          COLUMBUS MCKINNON CORPORATION
                         2004 ANNUAL REPORT ON FORM 10-K


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


                                     PART I
                                     ------

ITEM 1.      BUSINESS.

GENERAL

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

THE BUILDING OF OUR BUSINESS

   Founded in 1875,  we have grown to our current  leadership  position  through
organic  growth and also as the result of the 14  businesses  we acquired  since
February 1994. We have  developed our leading market  position over our 125-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,  end-user
markets and our customer base. Our senior management has substantial  experience
in the acquisition and  integration of businesses,  aggressive cost  management,
efficient  manufacturing  techniques  and  global  operations,  all of which are
critical to our  long-term  growth  strategy.  We have a proven  track record of
acquiring  complementary   businesses  and  product  lines,   integrating  their
activities  into  our  organization,   and  aggressively   managing  their  cost
structures to improve  operating  efficiencies.  The history of our Products and
Solutions   acquisitions  since  1994  is  outlined  below  (purchase  price  in
millions):


                                       1

<PAGE>

<TABLE>
<CAPTION>

  DATE OF
ACQUISITION      ACQUIRED COMPANY                 PURCHASE PRICE    PRODUCTS/SERVICES
-------------    ---------------------------      --------------    -----------------
<S>   <C>                                            <C>
April 1999      Washington Equipment Company         $     6.4     Overhead cranes
March 1999      GL International (1)                      20.6     Overhead cranes
January 1999    Camlok/Tigrip                             10.6     Plate clamps, crane scales
December 1998   Gautier                                    2.9     Rotary unions, swivel joints
August 1998     Abell-Howe Crane                           7.0     Overhead cranes
March 1998      ASI (2)                                  155.0     Design and manufacture of custom
                                                                      conveyor systems
January 1998    Univeyor                                  15.0     Design and manufacture of powered
                                                                      roller conveyor systems
December 1996   Lister (4)                                 7.0     Cement kiln chain
October 1996    Yale (3)                                 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>

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


OUR POSITION IN THE INDUSTRY

   The U.S.  material  handling industry is generally divided into the following
sectors:

            o  overhead material handling and lifting devices;
            o  continuous materials movement;
            o  wheeled handling devices;
            o  pallets, containers and packaging;
            o  storage equipment and shop furniture;
            o  automation systems and robots; and
            o  services and unbundled software.

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

   We believe that the demand for our products and services will increase in the
future as a result of several favorable trends. These trends include:

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

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


                                       2

<PAGE>

     o  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

     o  COMPREHENSIVE PRODUCT LINE AND STRONG BRAND NAME RECOGNITION. We believe
we offer the most  comprehensive  product  lines in the  markets  we serve.  The
breadth of product lines enables us to provide a "one-stop  shop" to many of our
distributors who are looking to consolidate  their suppliers.  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.
We believe that our strong brand name  recognition has created  customer loyalty
and helps us maintain existing business, as well as capture additional business.

     o  LEADING MARKET POSITION AND REPUTATION.  We are the largest manufacturer
of hoists and alloy and high strength  carbon steel chain in North  America.  We
have  developed  our  leading  market  position  over our  125-year  history  by
emphasizing  technological  innovation,  manufacturing  excellence  and superior
after-sale service.  Over 65% of our domestic net sales in fiscal 2004 were from
product  categories  in which we believe we hold the leading  market  share.  We
believe that the strength of our established products and brands and our leading
market position 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.

     o  LOW-COST  MANUFACTURING   CAPABILITY.  We  believe  we  are  a  low-cost
manufacturer  and we will continue to consolidate our  manufacturing  operations
and reduce our manufacturing costs through the following initiatives:

          -    RATIONALIZATION AND CONSOLIDATION.  In fiscal 2002 through fiscal
               2004,  we conducted  projects to close  manufacturing  plants and
               warehouses,  as more fully  described in Our Strategy on the next
               page of this document.

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

          -    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 our  manufacture of hoists
               and cranes, resulting in reduced costs.

          -    INTERNATIONAL   EXPANSION.   Our   continued   expansion  of  our
               manufacturing  facilities in China and Mexico, along with opening
               additional  sales  offices in Europe,  South  America and the Far
               East,  provides  us  with  another  cost  efficient  platform  to
               manufacture and distribute certain of our products.

     o  DISTRIBUTION  CHANNEL  DIVERSITY AND STRENGTH.  Our products are sold to
over 20,000 general and specialty  distributors and OEMs, as well as to over 100
consumer outlets. We enjoy long-standing relationships with, and are a preferred
provider  to, the majority of our largest  distributors  and  industrial  buying
groups.  Over the past decade,  there has been significant  consolidation  among
distributors  of  material  handling  equipment.  We have  benefited  from  this
consolidation  and have  maintained  and  enhanced  our  relationships  with our
leading  distributors,  as well as formed  new  relationships.  We  believe  our
extensive North American distribution channels provide a significant competitive
advantage and allow us to  effectively  market new product line  extensions  and
promote cross-selling.

     o  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.

     o  EXPERIENCED MANAGEMENT TEAM. Our senior management team provides a depth
and continuity of experience in the material handling industry, with our top six
executives possessing  an average of approximately  15 years of  experience with


                                       3

<PAGE>

us. 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 STRATEGY

     o  REDUCE  OUR OPERATING  COSTS.  Our  objective  is to  remain a  low-cost
producer.  We continuously  seek ways to reduce our operating costs and increase
our  manufacturing  productivity.  In  furtherance  of this  objective,  we have
undertaken the following:

          -    RATIONALIZATION OF FACILITIES.  Consolidating acquired operations
               is an integral part of our acquisition  strategy.  In fiscal 2002
               through   fiscal  2004,  we  conducted   projects  to  close  ten
               manufacturing  plants and three warehouses,  consolidate a number
               of similar product lines and standardize certain component parts.
               All of those  projects are complete  and  properties  relating to
               those  closures have been sold or are currently in the process of
               being marketed.

          -    IMPLEMENTATION  OF LEAN  MANUFACTURING.  Through  fiscal 2004, we
               have instituted Lean Manufacturing at 15 of our major facilities,
               an initiative which we began in fiscal 2002. Through fiscal 2004,
               largely  as a result of our Lean  Manufacturing  initiatives,  we
               recaptured  approximately  164,000  square feet of  manufacturing
               floor area and  consolidated  an additional  920,000  square feet
               from closed facilities.  Additionally,  we reduced inventories by
               approximately $40 million,  or 36.5%,  improved  productivity and
               achieved   significant   reductions   in  product   lead   times.
               Specifically  in fiscal 2004, we improved  inventory turns by 20%
               to 5.3 times at March 31, 2004 from 4.4 times at March 31,  2003.
               Our Lean  Manufacturing  initiative  complements  our strategy of
               integrating and consolidating our manufacturing facilities.

          -    LEVERAGE  PURCHASING  POWER.  The  Columbus  McKinnon  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.

     o  INCREASE OUR DOMESTIC ORGANIC  GROWTH.  We intend to use our competitive
advantages to increase our domestic and international market share across all of
our product lines through the following initiatives:

          -    LEVERAGE  STRONG  COMPETITIVE  POSITION.  Our  large  diversified
               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.
               Additionally,      we     continue     to      implement      our
               CraneMart(TM)initiative  launched in 1999 to build an  integrated
               North American  network of independent  and  company-owned  crane
               builders.  CraneMart(TM)participants  purchase  our  products and
               parts  for  incorporation  in  their  products  as  well  as  for
               distribution and are provided a full range of services, including
               best pricing,  parts distribution  rights,  technical support and
               shared resources.

          -    INTRODUCE  NEW  PRODUCTS.  We continue to expand our  business by
               developing new material handling products and services and expand
               the breadth of our product lines to address customer needs.  Over
               the past three years, we developed over 100 new or  cross-branded
               products,  representing  approximately $35 million in fiscal 2004
               revenues.  During fiscal 2004, we  established a dedicated  hoist
               new product  development team. The majority of the hoist products
               currently  under  development  by this  team  are  guided  by the
               standards    established    by   the   Federation   of   European
               Manufacturers,  or FEM. We believe these FEM hoist  products will
               facilitate our global sales expansion strategy as well as improve
               our cost competitiveness against U.S. imports. Recent new product
               introductions include:

                  o     light-weight high speed industrial air hoists;
                  o     a variety of new forged lifting attachments;
                  o     global wire rope hoists used in overhead cranes;
                  o     hand hoists and lever tools  manufactured at our Chinese
                        plants; and
                  o     top-running  and underhung  end-trucks used in the crane
                        builder industry.

     o  INCREASE OUR PENETRATION OF  INTERNATIONAL  MARKETS.  Our  international
sales of  $158.6  million  comprised  36% of our net sales in  fiscal  2004,  as
compared to $154.2  million,  or 26% of our net sales in fiscal 1999. We sell to
distributors in  approximately  50 countries and have our primary  international
facilities in Canada, Mexico,  Germany, the United Kingdom,  Denmark, France and
China.  In  addition  to  new  product  introductions,  we  intend  to  increase
international sales and enhance margins by:

                                       4
<PAGE>

          -    EXPANDING OUR SALES AND SERVICE  PRESENCE.  We continue to expand
               our sales and  service  presence  in the  major  market  areas of
               Europe,  Asia and South  America  through  our sales  offices and
               warehouse facilities in Europe, Thailand, Brazil and Mexico.

          -    INCREASING SALES AND IMPROVING MARGINS. We intend to increase our
               sales and improve our margins by  manufacturing  and  exporting a
               broader array of high quality,  low-cost  products and components
               from our  facilities in Mexico and China.  We are  developing new
               hoist  products in  compliance  with FEM standards to enhance our
               global  distribution  and we have sales offices in Europe,  South
               America and the Far East.

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

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

          -    REDUCE WORKING  CAPITAL.  We believe that our Lean  Manufacturing
               activities  are  facilitating   inventory  reduction,   improving
               product  lead  times  and  increasing  our  productivity.   Since
               initiating our Lean activities,  we've reduced inventory by $39.8
               million and improved turns from 3.8 times to 5.3 times, or 39.5%.
               Specifically  in  fiscal  2004,  we  realized  approximately  20%
               improvement from 4.4 times at March 31, 2003.

          -    PURSUE   SELECTED   DIVESTITURES.   Our   strategy   is  to  exit
               non-strategic  businesses  that  (i) are not  integrated,  either
               operationally  or through sales and  marketing,  with the rest of
               our Company;  (ii) have market  channels and customers  different
               from the  business of our core  Products  segment;  or (iii) have
               had,  and are  expected to  continue to have,  low returns on our
               investment of financial and management resources. For example, in
               fiscal 2004 and 2003, we sold our Positech, Lister Chain & Forge,
               ASI and LICO Steel businesses after determining that they did not
               meet our  criteria for  continuing  investment.  We  periodically
               review our  businesses  and are  currently  evaluating  strategic
               alternatives  for certain of our  businesses.  In the  aggregate,
               these businesses  generated fiscal 2004 sales and EBITDA of $82.4
               million  and  $2.5  million,   respectively.  The  proceeds  from
               divestitures  will provide  additional  liquidity and improve the
               flexibility of our capital structure.

OUR SEGMENTS

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

   Our Products segment  designs,  manufactures and distributes a broad range of
material handling products for various industrial  applications and for consumer
use.  Products in this segment include a wide variety of electric,  lever,  hand
and air-powered hoists; hoist trolleys; industrial crane systems such as bridge,
gantry and jib cranes;  alloy,  carbon steel and kiln chain;  closed-die  forged
attachments, such as hooks, shackles, logging tools and loadbinders;  industrial
components, such as mechanical and electromechanical actuators, mechanical jacks
and rotary unions;  and below-the-hook  special purpose lifters.  These products
are  typically  manufactured  for  stock or  assembled  to order  from  standard
components  and are sold  through a variety of  commercial  distributors  and to
end-users.  The  end-users of our products are in  manufacturing  plants,  power
utility facilities and warehouses. Some of our products have farming, mining and
logging  applications,  and we  serve  a  niche  market  for  the  entertainment
industry.  We also sell some of our  products to the consumer  market  through a
variety of retailers and  wholesalers.  In February 2004, we divested our Lister
business  which  manufactured  anchor  and  buoy  chain  primarily  for the U.S.
government.

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

   Note 20 to our consolidated  financial  statements included elsewhere in this
annual  report  provides   information  related  to  our  business  segments  in
accordance with generally accepted  accounting  principles in the United States.
Summary  information  concerning our business segments for fiscal 2002, 2003 and
2004 is set forth below.

                                       5
<PAGE>

<TABLE>
<CAPTION>
                                                                     FISCAL YEARS ENDED MARCH 31,
                                          ----------------------------------------------------------------------------------
                                                     2002                        2003                       2004
                                                     ----                        ----                       ----
                                                                        (DOLLARS IN MILLIONS)
                                                        % OF TOTAL                 % OF TOTAL                 % OF TOTAL
                                              AMOUNT       SALES           AMOUNT     SALES           AMOUNT     SALES
                                              ------       -----           ------     -----           ------     -----
    NET SALES
<S>                                           <C>          <C>             <C>         <C>            <C>         <C>
       Products.........................      $404.7       84.3            $388.1      85.6           $394.2      88.7
       Solutions........................        75.3       15.7              65.2      14.4             50.4      11.3
                                                ----       ----              ----      ----             ----      ----
          Total.........................      $480.0      100.0            $453.3     100.0           $444.6     100.0
                                              ======      =====            ======     =====           ======     =====


                                                           % OF                       % OF                        % OF
                                                          SEGMENT                    SEGMENT                     SEGMENT
                                              AMOUNT       SALES           AMOUNT     SALES           AMOUNT      SALES
                                              ------       -----           ------     -----           ------      -----
    INCOME FROM OPERATIONS BEFORE
     RESTRUCTURING CHARGES AND
     AMORTIZATION
       Products.........................       $47.0       11.6             $33.6       8.7            $33.5       8.5
       Solutions........................         1.7        2.2              (0.3)     (0.4)            (2.0)     (4.0)
                                                 ---        ---             -----      -----           -----      -----
          Total.........................       $48.7       10.1             $33.3       7.4            $31.5       7.1
                                               =====                        =====                      =====
</TABLE>


PRODUCTS SEGMENT

    PRODUCTS

      Our Products  segment  primarily  designs,  manufactures and distributes a
broad range of material handling,  lifting and positioning  products for various
applications  in  industry  and  for  consumer  use  and  has  total  assets  of
approximately  $446.1  million as of March 31, 2004, of which $185.0  million is
goodwill.  These products are typically  manufactured  for stock or assembled to
order from standard  components and are sold through a variety of  distributors.
Approximately  75% of our Products segment net sales is derived from the sale of
products that we sell at a unit price of less than $5,000.  In fiscal 2004,  net
sales of the Products segment were approximately $394.2 million or approximately
88.7% of our net sales, of which  approximately  $267.5 million,  or 67.9%, were
domestic and $126.7 million, or 32.1%, 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 2003 and 2004:


                                        FISCAL YEARS ENDED MARCH 31,
                                ---------------------------------------------
                                         2003                   2004
                                         ----                   ----

Hoists                                    52%                    50%
Chain                                     16                     16
Forged attachments                        11                     12
Industrial cranes                         13                     14
Industrial components                      8                      8
                                          --                     --
                                         100%                   100%
                                         ===                    ===

     o    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
          generally range from  one-eighth of a ton to 100 tons.  These products
          are  sold  under  our  Budgit,  Chester,  CM,  Coffing,  Little  Mule,
          Shaw-Box,  Yale and other recognized  trademarks.  Our hoists are sold
          for use in a variety of general  industrial  applications,  as well as
          for use in the construction, entertainment, power generation and other
          markets. We also supply hoist trolleys, driven manually or by electric
          motors, for the industrial, consumer and OEM markets.

          We offer a line of  custom-designed  below-the-hook  tooling,  clamps,
          textile  strappings  and pallet  trucks.  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.  Pallet  trucks are manual  devices used for
          across-the-floor material handling, frequently in warehouse settings.


                                       6
<PAGE>

     o    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.  We  previously  manufactured  and sold  anchor and buoy chain
          through our Lister Chain & Forge  division  which was sold in February
          2004.

     o    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.

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

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

   SALES AND MARKETING

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

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

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

     o    TRADE SHOW PARTICIPATION.  Trade shows are central to the promotion of
          our products,  and we participate  in more than 30 regional,  national
          and international trade shows each year. Shows in which we participate
          range from global events held in Germany to local  "markets" and "open
          houses" organized by individual hardware and industrial  distributors.
          We also  attend  specialty  shows for the  entertainment,  rental  and
          safety  markets,  as well as general  purpose  industrial and consumer
          hardware  shows. In fiscal 2004, we participated in trade shows in the
          U.S., Canada, France, Mexico, Germany, England and Brazil.

     o    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

                                       7
<PAGE>
          at the officer and director levels of numerous  industry  associations
          including  the  following:   ISMA  (Industrial  Supply   Manufacturers
          Association),  AWRF  (Associated Wire Rope  Fabricators),  PTDA (Power
          Transmission and Distributors  Association),  SCRA (Specialty Carriers
          and Riggers Association),  WSTDA (Web Sling and Tie Down Association),
          MHI   (Material   Handling   Institute),   HMI  (Hoist   Manufacturers
          Institute),  CMAA (Crane Manufacturers  Association of America),  ESTA
          (Entertainment  Services and Technology  Association),  NACM (National
          Association  of  Chain   Manufacturers),   AHMA   (American   Hardware
          Manufacturers Association),  ARA (American Rental Association) and IDA
          (Industrial Distributors Association).

     o    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.

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

   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 summarizes our distribution
channels:

     o    GENERAL  DISTRIBUTION  CHANNELS.  Our  general  distribution  channels
          consist of:

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

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

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

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

     o    SPECIALTY  DISTRIBUTION  CHANNELS. Our specialty distribution channels
          consist of:

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

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

          -    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 discos.

                                       8
<PAGE>


     o    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.

     o    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 United  States and Canadian
               Navies and Coast Guards,  that purchase  primarily  load securing
               chain and forged attachments.

     o    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.

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

   CUSTOMER SERVICE AND TRAINING

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

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

   BACKLOG

     Our Products segment backlog of orders at March 31, 2004 was  approximately
$45.3 million  compared to  approximately  $41.7 million at March 31, 2003.  The
March 31, 2003 backlog  included $6.2 million  relating to our Lister  business,
which was  divested in  February  2004.  Our orders for  standard  products  are
generally  shipped within one week. Orders for products that are manufactured to
customers'  specifications  are generally  shipped  within four to twelve weeks.
Given the short  product  lead times,  we do not believe  that the amount of our
Products segment backlog of orders is a reliable indication of our future sales.

   COMPETITION

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

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

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


                                       9
<PAGE>

SOLUTIONS SEGMENT

     The Solutions segment is engaged  primarily in the design,  fabrication and
installation  of integrated  work station and  facility-wide  material  handling
systems  and  in  the  manufacture  and   distribution  of   operator-controlled
manipulators,   lift  tables  and  tire   shredders  and  has  total  assets  of
approximately $27.3 million as of March 31, 2004, of which none is goodwill. Net
sales of the Solutions segment in fiscal 2004 were approximately  $50.4 million,
or  approximately  11.3% of our total net sales,  of which  approximately  $18.5
million,  or 36.7%, were domestic and approximately $31.9 million, or 63.3% were
international.  We are currently evaluating  strategic  alternatives for certain
businesses  within this segment.  The  following  table sets forth certain sales
data for the  products  and services of our  Solutions  segment,  expressed as a
percentage of this segment's net sales for fiscal 2003 and 2004:

                                                    FISCAL YEARS ENDED MARCH 31,
                                                    ----------------------------
                                                      2003                2004
                                                      ----                ----
          Integrated material handling
             conveyor systems                          50%                 57%
          Lift tables                                  13                  15
          Light-rail systems and manipulators          15                  13
          Steel erection                               12                   -
          Other                                        10                  15
                                                       --                   -
                                                      100%                100%
                                                      ====                ====

   PRODUCTS AND SERVICES

     o    INTEGRATED  MATERIAL  HANDLING  CONVEYOR  SYSTEMS.  Conveyors  are  an
          important  component of many  material  handling  systems,  reflecting
          their  high   functionality  for  transporting   material   throughout
          manufacturing  and  warehouse  facilities.  We specialize in designing
          computer-controlled  and automated powered roller conveyors for use in
          warehouse operations and distribution systems. In fiscal 2002 and 2003
          we executed a revenue growth  strategy by developing our  capabilities
          to function as a turnkey  integrator  of  material  handling  systems,
          while continuing to provide the conveyors required for the systems.

     o    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.

     o    LIGHT-RAIL  SYSTEMS  AND  MANIPULATORS.  Introduced  in  fiscal  2001,
          light-rail  systems are portable  steel  overhead beam  configurations
          used at workstations,  from which hoists are frequently suspended.  We
          previously manufactured two lines of sophisticated operator-controlled
          manipulators  under the names  Positech and Conco.  These products are
          articulated  mechanical arms with  specialized end tooling designed to
          perform lifting, rotating,  turning, tilting, reaching and positioning
          tasks in a manufacturing process. That manipulator business,  known as
          our Positech division, was sold in February 2004.

   SALES AND MARKETING

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

   CUSTOMER SERVICE AND TRAINING

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



                                       10

<PAGE>

   BACKLOG

     Revenues from our Solutions segment are generally  recognized within one to
six  months.  Our  backlog of orders at March 31,  2004 was  approximately  $9.2
million compared to approximately $10.5 million at March 31, 2003. The March 31,
2003 backlog included $0.9 million relating to our Positech business,  which was
divested in February 2004.

   COMPETITION

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


EMPLOYEES

     At March 31,  2004,  we had  2,716  employees;  1,983 in the  U.S.,  126 in
Canada,  129 in Mexico  and 478 in Europe  and  Asia.  Approximately  670 of our
employees  are  represented  under seven  separate  U.S. or Canadian  collective
bargaining  agreements  which  terminate at various  times between July 2004 and
March 2008. The contract which expires July 2004 currently covers 11 associates.
We believe that our relationship with our employees is good.


RAW MATERIALS AND COMPONENTS

     Our  principal  raw  materials  and  components  are steel,  consisting  of
structural  steel,  processed steel bar, forging bar steel,  steel rod and wire,
steel pipe and tubing and tool steel; electric motors;  bearings; gear reducers;
castings; and electro-mechanical components. These commodities are all available
from multiple  sources.  We purchase most of these raw materials and  components
from a limited  number of strategic  and  preferred  suppliers  under  long-term
agreements  which are negotiated on a company-wide  basis through our Purchasing
Council to take advantage of volume discounts. As the steel industry is cyclical
and steel prices can fluctuate significantly, beginning in approximately January
2004 we have  seen  significant  cost  increases  in  certain  types of steel in
certain  markets.  We generally seek to pass on materials price increases to our
distribution  channel  partners  and end user  customers,  although a lag period
often exists.  We instituted price increases for our chain and forged attachment
products  effective  April 1, 2004 and for the  majority  of our hoist  products
effective  May 1, 2004. In addition,  we initiated  price  surcharges  beginning
March 18, 2004 on certain products,  and increased some of those and added price
surcharges to other products  effective May 3, 2004. We will continue to monitor
our costs and reevaluate our price surcharges on a monthly basis. Our ability to
pass on these increases is determined by market conditions.


MANUFACTURING

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

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


ENVIRONMENTAL AND OTHER GOVERNMENTAL REGULATION

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



                                       11

<PAGE>

regulatory  standards,  it is possible that  situations  will arise from time to
time  requiring  us to  incur  expenditures  in order  to  ensure  environmental
regulatory compliance.  However, we are not aware of any environmental condition
or  any  operation  at  any of our  facilities,  either  individually  or in the
aggregate,  which would cause  expenditures  having a material adverse effect on
our results of operations,  financial condition or cash flows and,  accordingly,
have not budgeted any material capital expenditures for environmental compliance
for fiscal 2005.

      Certain federal and state laws,  sometimes  referred to as Superfund laws,
require certain  companies to remediate sites that are contaminated by hazardous
substances. These laws apply to sites owned or operated by a company, as well as
certain  off-site areas for which a company may be jointly and severally  liable
with other companies or persons.  The required  remedial  activities are usually
performed in the context of administrative or judicial  enforcement  proceedings
brought by regulatory authorities. We have been identified by the New York State
Department of Environmental Conservation, or NYSDEC, along with other companies,
as a potentially  responsible  party,  or PRP, at the Frontier  Chemical Site in
Pendleton,  New York, a site listed on NYSDEC's Registry. From 1958 to 1977, the
Pendleton  Site had been operated as a commercial  waste  treatment and disposal
facility.  We sent waste-pickling liquor generated at our facility in Tonawanda,
New York, to the  Pendleton  Site during the period from  approximately  1969 to
1977, and we  participated  with other PRPs in conducting the remediation of the
Pendleton  Site under a consent  order with NYSDEC.  Construction  in connection
with the  remediation  has been  completed  and this project is currently in its
operations and  maintenance  phase.  As a result of a negotiated cost allocation
among the participating PRPs, we have paid our pro rata share of the remediation
construction  costs  and  accrued  our  share  of  the  ongoing  operations  and
maintenance costs. As of March 31, 2004, we have paid approximately $1.0 million
in remediation and ongoing  operations and maintenance costs associated with the
Pendleton  Site.  The  participating  PRPs have  identified and commenced a cost
recovery action against a number of other parties who sent hazardous  substances
to the Pendleton Site. Full settlements have been reached with all defendants in
the cost  recovery  action.  All  settlement  payments  in  connection  with the
Pendleton Site  litigation  have been made, and we have received $0.2 million as
our share of the  settlement  proceeds.  We have also  entered into a settlement
agreement  with one of our  insurance  carriers in the amount of $0.7 million in
connection  with the  Pendleton  Site and have  received  payment in full of the
settlement amount.

      We are  investigating  past waste  disposal  activities  at a facility  in
Cleveland, Texas, operated by our subsidiary, Crane Equipment and Service, Inc.,
and we plan to apply to the Texas Commission on Environmental  Quality for entry
into its Voluntary Cleanup Program in connection with the site. At this time, it
is not  possible  to  determine  the costs of future site  investigation  or, if
necessary,  remediation,  but we believe any such costs will not have a material
adverse effect on our operating results or financial condition.

      For all of the currently known  environmental  matters,  we have accrued a
total of approximately $0.3 million as of March 31, 2004, 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. To our knowledge, 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.


                                       12

<PAGE>

ITEM 2.      PROPERTIES.

      We maintain our corporate  headquarters  in Amherst,  New York and conduct
our principal manufacturing at the following facilities:

<TABLE>
<CAPTION>
                                                                                                OWNED OR    BUSINESS
     LOCATION                           PRODUCTS/OPERATIONS                  SQUARE FOOTAGE      LEASED      SEGMENT
     --------                           -------------------                  --------------      ------      -------
UNITED STATES:
<S>                                     <C>                                      <C>             <C>         <C>
  Muskegon, MI                          Hoists                                   500,000          Owned      Products
  Charlotte, NC                         Industrial components                    250,000          Owned      Products
  Tonawanda, NY                         Light-rail crane systems                 187,600          Owned      Solutions
  Wadesboro, NC                         Hoists                                   180,000          Owned      Products
  Lexington, TN                         Chain                                    153,200          Owned      Products
  Cedar Rapids, IA                      Forged attachments                       100,000          Owned      Products
  Eureka, IL                            Cranes                                    91,300          Owned      Products
  Damascus, VA                          Hoists                                    87,400          Owned      Products
  Chattanooga, TN                       Forged attachments                        77,000          Owned      Products
  Greensburg, IN                        Scissor lifts                             60,000          Owned      Solutions
  Lisbon, OH                            Hoists                                    37,000          Owned      Products
  Cleveland, TX                         Cranes                                    35,000          Owned      Products
  Chattanooga, TN                       Forged attachments                        33,000          Owned      Products
  Sarasota, FL                          Tire shredders                            25,000          Owned      Solutions

INTERNATIONAL:
  Santiago, Tianguistenco, Mexico       Hoists and chain                          85,000          Owned      Products
  Arden, Denmark                        Project design and conveyors              70,500          Owned      Solutions
  Velbert, Germany                      Hoists                                    56,000         Leased      Products
  Chester, United Kingdom               Plate clamps                              47,900         Leased      Products
  Stoney Creek, Ontario, Canada         Cranes                                    42,400          Owned      Products
  Hangzhou, China                       Metal fabrication, textiles and           37,000         Leased      Products
                                           textile strappings
  Chester, United Kingdom               Plate clamps                              25,400          Owned      Products
  Romeny-sur-Marne, France              Rotary unions                             21,600          Owned      Products
  Hangzhou, China                       Textile strappings                        20,000         Leased      Products
  Arden, Denmark                        Project construction                      19,500         Leased      Solutions
  Vierzon, France                       Hoists                                    14,000         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 $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.



                                       13

<PAGE>


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

     Not applicable.



































































                                       14

<PAGE>


                                     PART II
                                     -------


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

     Our common  stock is traded on the  Nasdaq  Stock  Market  under the symbol
"CMCO."  As of May 31,  2004,  there  were 557  holders  of record of our common
stock.

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

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

<TABLE>
<CAPTION>

                                                               PRICE RANGE OF        DIVIDEND
                                                                COMMON STOCK        PER SHARE
                                                          ----------------------   ----------
                                                              HIGH         LOW
                                                              ----         ---

<S>                                                       <C>          <C>         <C>
        YEAR ENDED MARCH 31, 2002
           First Quarter...............................   $   11.25    $    6.96   $    0.07
           Second Quarter..............................       10.40         9.36        0.07
           Third Quarter...............................       10.15         7.45        0.00
           Fourth Quarter..............................       12.80         9.31        0.00

        YEAR ENDED MARCH 31, 2003
           First Quarter...............................   $   13.67    $    6.95   $    0.00
           Second Quarter..............................        9.08         4.90        0.00
           Third Quarter ..............................        5.38         3.30        0.00
           Fourth Quarter .............................        3.90         1.40        0.00

        YEAR ENDED MARCH 31, 2004
           First Quarter...............................   $   2.72     $   1.30    $    0.00
           Second Quarter..............................       4.84         2.31         0.00
           Third Quarter...............................       7.80         4.58         0.00
           Fourth Quarter..............................       11.72        6.35         0.00


</TABLE>


     On June 10, 2004,  the last  reported sale price of our common stock on the
Nasdaq Stock Market was $5.28 per share.










                                       15


<PAGE>


ITEM 6.      SELECTED FINANCIAL DATA.

     The  consolidated  balance  sheets  as of March  31,  2004 and 2003 and the
related  statements of operations,  cash flows and shareholders'  equity for the
three  years ended March 31, 2004 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,
                                                                       ----------------------------
                                                             2004       2003       2002       2001       2000
                                                             ----       ----       ----       ----       ----
                                                              (AMOUNTS IN MILLIONS, EXCEPT PER SHARE DATA)
----------------------------------------------------------------------------------------------------------------
STATEMENT OF OPERATIONS DATA (1):
<S>                                                    <C>           <C>        <C>          <C>       <C>
   Net sales                                              $   444.6  $   453.3  $   480.0  $   586.2  $   609.2
   Cost of products sold                                      339.7      346.0      359.5      426.7      436.8
                                                          -----------------------------------------------------
   Gross profit                                               104.8      107.3      120.5      159.5      172.4
   Selling expenses                                            48.3       47.4       43.5       48.4       48.7
   General and administrative expenses                         25.0       26.6       28.3       34.3       40.5
   Restructuring charges                                        1.2        3.7        9.6          -          -
   Write-off/amortization of intangibles (2)                    0.4        4.2       11.0       11.0       11.4
                                                          -----------------------------------------------------
   Income from operations                                      29.9       25.4       28.1       65.8       71.8
   Interest and debt expense                                   28.9       32.0       29.4       36.3       33.4
   Other (income) and expense, net                             (4.2)      (2.1)       2.4       (2.2)      (1.3)
                                                          -----------------------------------------------------
   Income (loss) before income taxes                            5.2       (4.5)      (3.7)      31.7      39.7
   Income tax expense                                           4.0        1.5        2.3       16.8      17.6
                                                          -----------------------------------------------------
   Income (loss) from continuing operations                     1.2       (6.0)      (6.0)      14.9       22.1
   Income (loss) from discontinued operations                     -          -       (7.9)       0.3       (5.0)
   Loss on disposition of discontinued operations                 -          -     (121.4)         -          -
                                                          -----------------------------------------------------
   Total income (loss) from discontinued operations               -          -     (129.3)       0.3       (5.0)
   Cumulative effect of change in accounting
    principle (2)                                                 -       (8.0)         -          -          -
                                                          -----------------------------------------------------
   Net income (loss)                                      $     1.2  $   (14.0) $  (135.3)  $   15.2  $    17.1
                                                          =====================================================
   Diluted earnings (loss) per share from continuing
    operations                                            $    0.08  $   (0.42) $   (0.41)  $   1.04  $    1.55
   Basic earnings (loss) per share from continuing
    operations                                            $    0.08  $   (0.42) $   (0.41)  $   1.04  $    1.57
   Weighted average shares outstanding - assuming
    dilution                                                   14.6       14.5       14.4       14.3       14.2
   Weighted average shares outstanding - basic                 14.6       14.5       14.4       14.3       14.1

BALANCE SHEET DATA (AT END OF PERIOD):
   Total assets (3)                                       $   473.4  $   482.6  $   524.3   $  722.4  $   731.8
   Total debt                                                 287.9      314.1      347.9      407.0      413.8
   Total shareholders' equity                                  63.0       52.7       71.6      207.9      203.5

OTHER FINANCIAL DATA:
   Net cash provided by operating activities                   26.4       14.2       49.8       38.3       44.3

   Net cash provided by (used in) investing activities          4.3       16.0       (1.6)      (7.2)     (18.7)

   Net cash used in financing activities                      (21.5)     (41.9)     (48.5)     (19.5)     (24.2)

   Capital expenditures                                         3.6        5.0        4.7       10.2        7.9
   Cash dividends per common share                             0.00       0.00       0.14       0.28       0.28

</TABLE>



                                       16

<PAGE>

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

(1)  Statement of  Operations  data  represent  our  continuing  operations  and
     reflect the May 2002 sale of  substantially  all of the assets of ASI.  The
     financial  statements of all periods presented have been restated to remove
     ASI results from the  continuing  operations  data.  Refer to Note 3 to our
     consolidated  financial statements for more information on the Discontinued
     Operations.

(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)  Total  assets  includes  net  assets of  discontinued  operations  of $21.5
     million,  $163.5 million and $152.6 million as of March 31, 2002,  2001 and
     2000, respectively.


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

     Founded in 1875, we have grown to our current  leadership  position through
organic  growth and also as the result of the 14 businesses we acquired  between
February 1994 and April 1999. We have developed our leading market position over
our 125-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. We continue to further
integrate the operations of the acquired businesses with our previously existing
businesses.  The current phase of the ongoing  integration  of these  businesses
includes improving our productivity,  further reducing our excess  manufacturing
capacity and extending our cross-selling activities to the European marketplace.
This  phase is in  process  through  our Lean  Manufacturing  efforts,  facility
rationalization  program and European sales initiatives.  Our Lean Manufacturing
efforts  are  fundamentally  changing  our  manufacturing  processes  to be more
responsive to customer demand, resulting in significant inventory reductions and
improving on-time delivery and productivity. For example, we realized nearly 40%
inventory  turn  improvement  to 5.3 times at March  31,  2004 from 3.8 times at
March 31, 2001.  Specifically  in fiscal  2004,  we realized  approximately  20%
improvement  from 4.4 times at March 31, 2003. Over the past three years,  under
our  facility   rationalization  program,  we  have  closed  13  facilities  and
consolidated  several  product  lines,  with potential  opportunity  for further
rationalization.   Also,  as  previously  reported,   we  have  been  undergoing
assessments  for  possible  divestiture  of several  less-strategic  businesses,
including  most of our  Solutions  segment  and  certain  businesses  within our
Products segment. Two businesses were sold in fiscal 2004 and four others remain
as possible divestiture candidates.  Furthermore, we are selling real properties
that resulted from our facility rationalization projects. These divestitures may
result in gains or losses.  To further  expand our global  sales,  we have begun
introducing  certain of our products through our existing European  distribution
network that historically have been distributed only in North America.

     Many of the U.S.  industrial  sectors  that we serve have been  impacted by
soft  economic   conditions  since  mid-1998.   These  conditions   deteriorated
significantly  in our  fiscal  2001  fourth  quarter  and  continued  to decline
throughout  fiscal  2002  and  2003,  negatively  impacting  our net  sales  and
financial  performance.  We began to see some stabilization and then very modest
improvement in the latter half of fiscal 2004.  While reaching a historical high
of $609.2  million  in fiscal  2000,  our net sales  dropped  by 18.1% to $480.0
million in fiscal 2002, by an additional  5.6% to $453.3  million in fiscal 2003
and by an  additional  1.9% to $444.6  million in fiscal 2004,  primarily due to
this downturn in the business cycle. Despite these economic conditions and their
impact on our  operating  results,  we  maintained  our  leading  market  share,
generated  positive  cash flow from  operations  and business  divestitures  and
repaid $59.7  million,  $34.5  million and $17.7 million of debt in fiscal 2002,
2003 and 2004, respectively.


                                       17
<PAGE>

     We continue to be cautiously optimistic that the economic environment as it
impacts our Company is modestly  improving.  We monitor such  indicators as U.S.
Industrial  Capacity  Utilization  and  Industrial  Production  which  have been
steadily  increasing  since July 2003.  We sell our products  domestically  to a
cross-section  of  business  sectors,  spanning  the  breadth of  primarily  the
industrial  contributors to the U.S. gross domestic  product.  These sectors are
impacted  by these  indicators  in varying  degrees  and at various  points in a
business  cycle.  We will  continue to monitor  these  indicators  to assess the
impact  on  our  future  business.   In  addition,  to  enhance  future  revenue
opportunities,   we  are   increasing   our  sales  and  marketing   efforts  in
international  markets and  investing  in new  products  and services as further
described in Item 1 of this Annual Report  within the section  described as "Our
Strategy".

     On the cost side we, like many  companies,  have been  challenged  over the
past several years with  significantly  increased costs for fringe benefits such
as health insurance, workers compensation insurance and pension. Combined, those
benefits cost us almost $30 million in fiscal 2004 and we work  dilingently with
our  advisors  to balance  cost  control  with the need to  provide  competitive
benefits  packages  for our  associates.  Another  cost  area of  focus is steel
pricing. We utilize approximately $20-$25 million of steel annually in a variety
of forms  including rod,  wire,  bar,  structural and others.  With increases in
worldwide demand for steel and significant  increases in scrap steel prices,  we
have  experienced  increases  in our  costs  that we  have  reflected  as  price
increases  and  surcharges to our  customers.  Our  surcharges  went into effect
beginning  March 18,  2004 and  currently  affect  most of our chain and  forged
attachment products.  We continue to monitor steel costs and potential surcharge
requirements on a monthly basis.

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,      2004 VS. 2003         2003 VS. 2002
                                  ----------------------------      -------------         -------------
                                  2004       2003       2002        AMOUNT      %         AMOUNT       %
                                  ----       ----       ----        ------      -         ------       -
<S>                              <C>        <C>        <C>          <C>      <C>         <C>        <C>
Products segment.............    $394.2     $388.1     $404.7       $ 6.1      1.6       $(16.6)     (4.1)
Solutions segment............      50.4       65.2       75.3       (14.8)   (22.7)       (10.1)    (13.4)
                                   ----       ----       ----       ------   ------      ------    ------
     Total net sales.........    $444.6     $453.3     $480.0       $(8.7)    (1.9)      $(26.7)     (5.6)
                                 ======     ======     ======       ======               ======
</TABLE>

     Sales in recent years were  affected by the  downturn in the general  North
American and European  economies and the industrial  sectors in particular.  Net
sales in fiscal 2004 of $444.6 million decreased by $8.7 million,  or 1.9%, from
fiscal  2003,  and net sales in fiscal 2003 of $453.3  million  decreased  $26.7
million, or 5.6%, from fiscal 2002. Our Products segment net sales improved 1.6%
in fiscal 2004 as we saw  stabilization  by mid-2004 and  improvement of 7.4% in
the latter half of the fiscal year. Fiscal 2003 Products segment was marked with
a 4.1% decline,  primarily due to decreased  unit sales  resulting from the soft
U.S.  industrial  markets.  Both  fiscal  2004 and  2003  were  impacted  by the
weakening U.S. dollar relative to other  currencies,  particularly the euro, and
reported  Products  segment sales were  favorably  affected by $11.3 million and
$4.6 million in fiscal 2004 and 2003,  respectively.  Our Solutions  segment net
sales  decreased  22.7%  and 13.4% in fiscal  2004 and 2003,  respectively.  The
declines in fiscal 2004 and 2003 were  primarily  due to soft U.S.  and European
industrial  markets,  particularly  affecting  purchasing  decisions for capital
goods.  The  fiscal  2004  decline  was  further  impacted  by  the  March  2003
divestiture of our steel  erection  business,  which  generated $7.9 million and
$17.7 million of revenues in fiscal 2003 and 2002, respectively.

     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,
                             --------------------------------------------------------------
                                      2004                2003                2002
                                      ----                ----                ----
                                AMOUNT      %       AMOUNT      %       AMOUNT      %
                                ------      -       ------      -       ------      -
<S>                              <C>      <C>        <C>      <C>       <C>       <C>
Products segment............     $99.2    25.2       $98.7    25.4      $109.3    27.0
Solutions segment...........       5.6    11.1         8.6    13.2        11.2    14.9
                                   ---    ----         ---    ----        ----    ----
     Total gross profit.....    $104.8    23.6      $107.3    23.7      $120.5    25.1
                                ======              ======              ======
</TABLE>


                                       18
<PAGE>

Our gross profit  margins were  approximately  23.6%,  23.7% and 25.1% in fiscal
2004, 2003 and 2002,  respectively.  The Products segment reflected a stabilized
gross profit  margin in fiscal 2004 as the revenues  stabilized  during the year
and costs were closely monitored.  The decrease in Products segment gross profit
margin for  fiscal  2003  was primarily  the result  of  economic  and inventory
reduction factors. The Product segment's gross profit margin decreased in fiscal
2003 due to the following  factors:  i) our price  increase  implementation  was
delayed  eight  months  until  August  2002 due to  economic  market  conditions
(approximately  $2.0  million  impact);  ii) cost  increases,  particularly  for
employee benefits such as health insurance,  workers compensation  insurance and
pension and also general property insurance (approximately $1.4 million impact);
iii) pricing  pressure,  especially on our capital-type  products such as cranes
(approximately  $1.5 million impact);  iv) the 4.1% decline in net sales and the
resulting  decrease in absorption of fixed  production  costs;  v) production at
levels lower than sales levels to reduce  inventories and the resulting  further
decrease in absorption of fixed production costs; vi) production  inefficiencies
at our facilities impacted by facility  rationalization  activities;  and vii) a
$2.5  million  reclassification  of certain  crane  builder  expenses to cost of
products  sold from  general and  administrative  expenses in fiscal  2003.  The
Solutions  segment's  gross  profit  margins  decreased  in fiscal 2004 and 2003
primarily due to the 22.7% and 13.4%  declines in net sales,  respectively,  and
resulting  decease in absorption of fixed production costs,  increased  employee
benefits costs as described above and an increase in larger integrated solutions
projects which carry a lower gross profit margin overall.

      Selling  expenses were $48.3  million,  $47.4 million and $43.5 million in
fiscal 2004, 2003 and 2002, respectively.  As a percentage of net sales, selling
expenses were 10.9%, 10.5% and 9.1% in fiscal 2004, 2003 and 2002, respectively.
The fiscal  2004 and 2003  increases  include  $2.2  million  and $1.8  million,
respectively,  resulting  from the  weakening  of the U.S.  dollar  relative  to
foreign currencies, particularly the euro, upon translation of foreign operating
results  into U.S.  dollars  for  reporting  purposes.  The fiscal 2004 and 2003
increases  also include $0.4 million and $0.9 million,  respectively,  resulting
from  reclassification  of certain  crane  builder  expenses  from  general  and
administrative  expenses in fiscal 2003 to improve  reporting  consistency.  The
fiscal  2003  increase  further  includes  $0.5  million  for  investing  in new
geographic  markets and other increases for employee  benefits costs,  catalogs,
and commissions in certain markets, partially offset by cost control measures.

      General and administrative  expenses were $25.0 million, $26.6 million and
$28.2 million in fiscal 2004,  2003 and 2002,  respectively.  As a percentage of
net sales,  general  and  administrative  expenses  were 5.6%,  5.9% and 5.9% in
fiscal  2004,  2003  and  2002,  respectively.  Much of the  expense  reductions
resulted from general discretionary cost control measures.  Partially offsetting
those savings,  fiscal 2004 was unfavorably  impacted by $1.2 million  resulting
from the  translation  of foreign  currencies  into the weaker  U.S.  dollar for
reporting purposes and also included $0.8 million higher bad debt expenses.  The
fiscal 2003  expenses  were  favorably  impacted by a $0.8 million  reduction in
product  liability  expense  due  to  reassessment  of  self-insurance  exposure
relative to certain  claims and the  reclassification  of $3.4  million of crane
builder  expenses  into cost of products sold or selling  expense.  These fiscal
2003 favorable  results were partially  offset by $1.2 million for  professional
fees for special projects to improve the Company's organization structure,  $1.1
million for a business  divested in March 2003,  $0.8  million for  intercompany
exchange losses and $0.5 million for increased bad debt expenses.

      Restructuring  charges of $1.2 million,  $3.7 million and $9.6 million, or
0.3%,  0.8% and 2.0% of net sales in fiscal 2004,  2003 and 2002,  respectively,
were  primarily  attributable  to the closure or significant  reorganization  of
thirteen manufacturing or warehouse facilities.  During fiscal 2004, we recorded
restructuring  charges of $1.2 million related to various  employee  termination
benefits and facility  costs as a result of our continued  closure,  merging and
reorganization  and  completion  of two open  projects  from  fiscal  2003.  The
following facilities were closed, merged or significantly  reorganized beginning
in fiscal 2003: Abingdon, VA; Tonawanda,  NY; Cobourg,  Ontario,  Canada; Forest
Park, IL; and Reform,  AL.  Excluding the Tonawanda  facility,  these operations
were  included  within  our  Products  segment,  and were  relocated  into other
existing Products segment facilities. Fiscal 2003 charges included exit costs of
$1.8 million for severance relating to approximately 215 employees, $1.0 million
of lease termination,  facility wind-down,  preparation for sale and maintenance
of  non-operating  facilities  prior to disposal  and $0.9  million for facility
closure  costs on projects  begun in 2002.  Three of the five 2003 projects were
completed  as  planned  in the  fourth  quarter  of fiscal  2003  while two were
completed by the second quarter of fiscal 2004. The remaining  liability of $0.4
million for fiscal 2003-2004  projects relates to the ongoing  maintenance costs
of the non-operating facilities.

      The following facilities were closed, merged or significantly  reorganized
beginning in fiscal 2002: Houma, LA; Woodland, CA; Romeoville, IL; Forrest City,
AR;  Monterrey,  Mexico;  Hobro,  Denmark;  Atlanta,  GA; and Richmond,  British
Columbia,  Canada.  All  operations  except for the Hobro facility were included
within our  Products  segment,  and all  activities  were  relocated  into other
existing company facilities within their respective  segments.  Charges included
exit costs of $2.4 million for severance relating to approximately 250 employees
and $7.2 million of lease termination,  facility wind-down, preparation for sale
and maintenance of non-operating  facilities prior to disposal.  Included in the
restructuring  charges was  approximately  $8.3  million to terminate a facility

                                       19

<PAGE>

lease, resulting in the purchase of the property with an estimated fair value of
approximately  $2.3 million which was recorded as an offset to the restructuring
charges. Due to changes in the real estate market and a reassessment of the fair
value of the property, the net asset held for sale was adjusted downward by $0.5
million  as a  further  restructuring  charge  during  fiscal  2003.  All of the
projects were completed as planned  during fiscal 2002. The remaining  liability
of $0.2 million relates to the ongoing  maintenance  costs of the  non-operating
facility.

     Each  rationalization  project was  analyzed  based on our capacity and the
cost  structure of the specific  facilities  relative to others.  As a result of
these rationalization projects we expect to achieve approximately $13 million to
$15 million of annualized  savings  primarily in cost of products sold including
facility fixed costs and employee costs, of which  approximately  $8 million and
$11  million  was  realized  during  fiscal  2003  and  2004,  respectively.  We
anticipate that our restructuring charges for fiscal 2005 in connection with our
ongoing facility rationalization and reorganization  initiatives will be between
$0.4 million and $0.7 million.

     Write-off/amortization  of intangibles  was $0.4 million,  $4.2 million and
$11.0 million in fiscal 2004, 2003 and 2002, respectively. Fiscal 2003 reflected
a $4.0 million  goodwill  write-off in the fourth quarter relating to impairment
under  Statement of Financial  Accounting  Standard (SFAS) No. 142 "Goodwill and
Other  Intangible  Assets," which  pronouncement  eliminated the  requirement to
amortize  goodwill and  indefinite-lived  intangible  assets beginning in fiscal
2003 but added new  impairment  testing  rules.  The fiscal 2002 amount  relates
primarily to non tax-deductible goodwill amortization.

     Interest  and debt  expense  was $28.9  million,  $32.0  million  and $29.4
million in fiscal 2004,  2003 and 2002,  respectively.  As a  percentage  of net
sales,  interest and debt expense was 6.5%,  7.1% and 6.1% in fiscal 2004,  2003
and 2002,  respectively.  The fiscal 2004 decrease primarily resulted from lower
debt  levels.  The fiscal 2003  increase  included a $1.2  million  write-off of
deferred  financing costs  associated with the Company's former credit facility,
which was replaced with a new credit  arrangement in November 2002, a portion of
which carried higher  effective  interest rates than the Company's former credit
facility.

     Other (income) and expense, net was ($4.2) million, ($2.1) million and $2.5
million in fiscal 2004, 2003 and 2002,  respectively.  The income in fiscal 2004
included  $5.7 million  from asset sales and $1.9 million from an interest  rate
swap partially offset by $3.9 million of losses upon business divestitures.  The
income in fiscal 2003  included  $5.3  million from asset sales offset by a $2.2
million unrealized, non-cash,  mark-to-market loss recognized within our captive
insurance company's  securities  portfolio and a $1.3 million loss on a business
divestiture.  The unrealized loss within the securities portfolio was recognized
since it was  deemed  to be other  than  temporary  in  nature,  resulting  from
unrealized  losses that existed  longer than a six month period.  The expense in
fiscal  2002   similarly   included  a  $2.8   million   unrealized,   non-cash,
mark-to-market  loss  recognized  on marketable  securities  held by our captive
insurance  subsidiary,  a $1.5 million loss on a business divestiture and a $1.8
million gain on asset sales.

     Income  taxes as a  percentage  of  income  before  income  taxes  were not
reflective of U.S statutory  rates in fiscal 2004, 2003 or 2002 primarily due to
the impact of non-deductible goodwill  amortization/write-off in fiscal 2003 and
2002 and also due to varying tax  jurisdiction  rates on low or negative  pretax
income, and the existence of losses for which no tax benefit has been recorded.

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

LIQUIDITY AND CAPITAL RESOURCES

     In November 2002, we refinanced our credit facilities.  The new arrangement
replaced our previous  revolving credit facility that was scheduled to mature on
March 31, 2003. The new arrangement  consisted of a Revolving Credit Facility, a
Term Loan and a Senior Second Secured Term Loan. The Revolving  Credit  Facility
currently provides availability up to a maximum of $50 million through March 31,
2007. Availability based on the underlying collateral at March 31, 2004 amounted
to $48.9 million.  The unused Revolving Credit Facility totaled $39.7 million at
March  31,  2004  with no  borrowings  outstanding  but  with  $9.2  million  of
outstanding  letters of credit.  Interest is payable at varying Eurodollar rates
based on LIBOR or prime plus spreads determined by our leverage ratio, amounting
to 275 or 150 basis points applied to each, respectively, at March 31, 2004.

     The Term Loan requires quarterly $0.5 million payments with the balance due
on March 31, 2007.  At March 31, 2004,  $7.8 million was  outstanding  under the
Term Loan. Interest is payable at varying Eurodollar rates based on LIBOR plus a
spread determined by our leverage ratio,  amounting to 325 basis points at March
31, 2004 (4.37%).

     The  Revolving  Credit  Facility  and Term Loan are  secured  by all of our
domestic  tangible and intangible  assets (limited to 65% for stock ownership of
foreign subsidiaries).

                                       20
<PAGE>

     In July 2003,  we issued  $115.0  million of 10% Senior  Secured  Notes due
August 1, 2010 which remain  outstanding  at March 31, 2004.  Proceeds from this
offering were used for the repayment in full of a then outstanding senior second
secured term loan ($66.8  million),  the  repurchase  of $35.7 million of Senior
Subordinated  8 1/2% Notes at a discount  ($30.1  million),  the  repayment of a
portion of the  outstanding  Revolving  Credit  Facility  ($10.0  million),  the
repayment of a portion of the Term Loan ($3.9 million), the payment of financing
costs  ($2.8  million)  and the  payment of  accrued  interest  ($1.4  million).
Provisions of the 10% Notes include, without limitation,  restrictions on liens,
indebtedness, asset sales, and dividends and other restricted payments. The 10%
Notes are  redeemable at our option,  in whole or in part,  at prices  declining
annually from the Make-Whole  Price (as defined in the Indenture for the Notes).
In the event of a Change of Control (as  defined),  each holder of the 10% Notes
may require us to  repurchase  all or a portion of such  holder's 10% Notes at a
purchase price equal to 101% of the principal amount thereof.  The 10% Notes are
guaranteed  by certain  existing and future  domestic  subsidiaries  and are not
subject to any sinking fund requirements.  The 10% Notes are also secured,  in a
second lien position, by all domestic inventory,  receivables,  equipment,  real
property,  subsidiary  stock  (limited  to 65%  for  foreign  subsidiaries)  and
intellectual property.

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

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

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

     At March 31, 2004, our Senior Subordinated 8 1/2% Notes issued on March 31,
1998 and due March 31, 2008 amounted to $164.1  million,  net of original  issue
discount. Interest is payable semi-annually based on an effective rate of 8.45%,
considering  $1.9  million  of  proceeds  from rate  hedging  in  advance of the
placement.   Provisions  of  the  8  1/2%  Notes  include,  without  limitation,
restrictions  on  liens,  indebtedness,  asset  sales  and  dividends  and other
restricted payments. Prior to April 1, 2003, the 8 1/2% Notes were redeemable at
our  option,  in whole or in part,  at the  Make-Whole  Price (as defined in the
Indenture  for the Notes).  On or after April 1, 2003,  they are  redeemable  at
prices  declining  annually  from 104.25% to 100% on and after April 1, 2006. In
the event of a Change of Control (as  defined),  each holder of the 8 1/2% Notes
may require us to repurchase all or a portion of such holder's 8 1/2% Notes at a
purchase price equal to 101% of the principal  amount thereof.  The 8 1/2% Notes
are guaranteed by certain existing and future domestic  subsidiaries and are not
subject to any sinking fund requirements.

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

     Net cash provided by operating activities was $26.4 million,  $14.2 million
and  $49.8  million  in  fiscal  2004,  2003 and  2002,  respectively.  Overall,
operating assets net of liabilities provided cash of $8.8 million,  $4.0 million
and $28.3 million in fiscal 2004, 2003 and 2002, respectively. The $12.2 million
increase in fiscal 2004  relative to fiscal 2003 was  primarily  due to stronger
operating  performance  in fiscal 2004 and income tax refunds of $12.5  million.
The $35.6  million  decrease in fiscal  2003  relative to fiscal 2002 was due to
weaker operating  performance in fiscal 2003 and to working capital changes.  In
particular,  trade accounts  receivable and  inventories  provided cash of $10.2
million  in fiscal  2003  compared  to $33.5  million  in fiscal  2002 and trade
accounts  payable  used $4.8  million of cash in fiscal 2003 but  provided  $3.7
million of cash in fiscal 2002.

                                       21

<PAGE>

     Net cash  provided  by  investing  activities  was $4.3  million  and $16.0
million in fiscal 2004 and 2003, respectively,  and used in investing activities
was $1.6 million in fiscal 2002. The fiscal 2004, 2003 and 2002 amounts included
$7.8 million,  $21.7 million and $4.9 million,  respectively,  from business and
property divestitures.

     Net cash used in financing activities was $21.5 million,  $41.9 million and
$48.5  million  in fiscal  2004,  2003 and  2002,  respectively.  Those  amounts
included  $17.7  million,  $34.5 million and $46.7 million of debt  repayment in
fiscal 2004, 2003 and 2002,  respectively,  as well as $2.0 million of dividends
paid in fiscal  2002.  We also paid $4.4  million and $8.2  million of financing
costs in fiscal 2004 and 2003, respectively,  to effect the capital transactions
previously described.

CONTRACTUAL OBLIGATIONS

     The following  table reflects a summary of our  contractual  obligations in
millions of dollars as of March 31, 2004, by period of estimated payments due:

<TABLE>
<CAPTION>
                                                             FISCAL      FISCAL 2006-     FISCAL 2008-     MORE THAN
                                              TOTAL           2005        FISCAL 2007     FISCAL 2009     FIVE YEARS
                                              -----           ----        -----------     -----------     ----------
<S>                                            <C>            <C>            <C>            <C>             <C>
       Long-term debt obligations (a).         $287.9         $2.2           $6.1           $164.3          $115.3
       Operating lease obligations (b)           12.6          3.8            4.9              2.9             1.0
       Purchase obligations (c) ......              -            -              -                -               -
       Interest obligations (d).......          129.3         25.8           51.2             37.0            15.3
       Letter of credit obligations...            9.2          7.5            1.7                -               -
       Other long-term liabilities
       reflected on the Company's
       balance sheet under GAAP (e)...           37.9          2.9           22.8              9.2             3.0
                                               ------        -----          -----           ------          ------
            Total.....................         $476.9        $42.1          $86.7           $213.3          $134.6
                                               ======        =====          =====           ======          ======
</TABLE>
      (a)   As described in note 10 to our consolidated financial statements.
      (b)   As described in note 18 to our consolidated financial statements.
      (c)   We  have  no  purchase  obligations   specifying  fixed  or  minimum
            quantities to be purchased.  We estimate that, at any given point in
            time,  our open purchase  orders to be executed in the normal course
            of business approximate $40 million.
      (d)   Estimated  for our Term Loan due 3/31/07,  Senior  Secured Notes due
            8/1/10 and Senior Subordinated Notes due 3/31/08.
      (e)   As described in note 9 to our consolidated financial statements.

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

CAPITAL EXPENDITURES

      In  addition  to  keeping  our  current   equipment  and  plants  properly
maintained, we are committed to replacing, enhancing and upgrading our property,
plant and equipment to support new product development, reduce production costs,
increase  flexibility to respond effectively to market fluctuations and changes,
meet  environmental  requirements,  enhance  safety  and  promote  ergonomically
correct work stations.  Further, our facility  rationalization  program underway
over the past three years reduced our annual  capital  expenditure  requirements
and also provided for transfers of equipment from the rationalized facilities to
other operating  facilities.  Our capital expenditures for fiscal 2004, 2003 and
2002 were  $3.6  million,  $5.0  million  and $4.8  million,  respectively.  The
decreased spending throughout the period reflects a deferral of certain projects
due to soft  market  conditions,  as well as reduced  needs  resulting  from our
facility  rationalization  program.  We expect capital  expenditure  spending to
increase modestly in fiscal 2005, to $4.0-$6.0 million.

INFLATION AND OTHER MARKET CONDITIONS

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



                                       22

<PAGE>

SEASONALITY AND QUARTERLY RESULTS

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

DISCONTINUED OPERATIONS

     In May 2002,  we completed  the  divestiture  of  substantially  all of the
assets  of ASI  which  comprised  the  principal  business  unit  in our  former
Solutions - Automotive  segment.  Proceeds from this sale included cash of $15.9
million and an 8%  subordinated  note in the  principal  amount of $6.8  million
payable over 10 years.

     Accordingly,  the ASI operation was reflected as discontinued operations in
our financial  statements and all prior financial statements have been restated.
The loss from  discontinued  operations  was $7.9 million and in fiscal 2002 and
the loss on the disposition of the  discontinued  operations was $121.5 million,
both reflected in our fiscal 2002 consolidated statement of operations.

     Cash  provided by (used in)  discontinued  operations  was $0.5 million and
($0.3)  million  in  fiscal  2003  and  2002,  respectively,  as  shown  on  our
consolidated statements of cash flows.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

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

     PENSION  AND  OTHER  POSTRETIREMENT  BENEFITS.  The  determination  of  the
obligations and expense for pension and postretirement  benefits is dependent on
our selection of certain  assumptions  that are used by actuaries in calculating
such amounts.  Those assumptions are disclosed in Notes 11 and 13, respectively,
to our  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 1/4%, 6 3/4% and 7 1/4% as of
March 31, 2004, 2003 and 2002, respectively,  are based on long-term bond rates.
The decrease in discount rates for fiscal 2004 and 2003 resulted in $7.0 million
and $5.6 million increases in the projected benefit  obligations as of March 31,
2004 and 2003,  respectively.  The rate of return on plan assets  assumptions of
8.4%,  8 1/2% and 8 7/8% for the  years  ended  March 31,  2004,  2003 and 2002,
respectively,   are  based  on  the   composition   of  the   asset   portfolios
(approximately  55%  equities  and 45% fixed income at March 31, 2004) and their
long-term  historical returns.  The actual assets realized gains of $9.8 million
in  fiscal  2004  but  sustained  losses  of  $(8.4)  million  in  fiscal  2003.
Accordingly,  our funded  status as of March 31,  2004 and 2003 was  negative by
$30.3 million and $31.1 million,  or 27.3% and 32.2%,  respectively.  To improve
our funded status, we increased our pension  contributions during fiscal 2004 by
$4.0 million over fiscal 2003.  Accordingly,  our accrued pension cost decreased
by $3.6 million as of March 31, 2004 as compared to March 31, 2003. The negative
funded status may result in future pension expense increases.  However,  pension
expense for the March 31, 2005  fiscal  year is expected to  approximate  fiscal
2004   expense.   These  factors  will  also  result  in  increases  in  funding
requirements   over  time,   unless  there  is  continued   significant   market
appreciation in the asset values. However, pension funding contributions for the
March 31,  2005 fiscal year are  expected  to  decrease  by  approximately  $1.5
million compared to fiscal 2004. The compensation  increase  assumption of 4% as
of March 31, 2004, 2003 and 2002 is based on historical trends.

     The  healthcare  inflation  assumptions of 12%, 12% and 9% for fiscal 2004,
2003 and 2002, respectively are based on anticipated trends. Healthcare costs in
the United States have increased  substantially  over the last several years. If
this trend  continues,  the cost of  postretirement  healthcare will increase in
future years.

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


                                       23
<PAGE>

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

     LONG-LIVED ASSETS.  Property,  plants 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, 2004, the Company
had $56.3 million of total net deferred tax assets before valuation  allowances.
As described in Note 17 to the consolidated financial statements,  $39.7 million
of the assets  pertain to net  operating  loss  carryforwards  and the remainder
relate principally to liabilities  including  employee benefit plans,  insurance
reserves,  accrued  vacation  and  incentive  costs and also to asset  valuation
reserves such as inventory  obsolescence reserves and bad debt reserves. The net
operating  loss  carryforwards  expire in 2023.  A valuation  allowance of $48.2
million was  recorded at March 31,  2004 due to the  uncertainty  of whether the
Company's net operating loss carryforwards, capital loss carryforwards and other
deferred  tax assets may  ultimately  be  realized.  Our  ability to realize our
deferred  tax assets is  primarily  dependent on  generating  sufficient  future
taxable income. If we do not generate sufficient taxable income, we would record
an additional valuation allowance.

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

EFFECTS OF NEW ACCOUNTING PRONOUNCEMENTS

     The Emerging Issues Task Force (EITF) reached a consensus on EITF Issue No.
03-01,  "The Meaning of  Other-Than-Temporary  Impairment and Its Application to
Certain Investments" (EITF 03-01) in November 2003. EITF 03-01 provides guidance
on  other-than-temporary  impairments  and its  application  to debt and  equity
investments  and applies to investments in debt and marketable  securities  that
are accounted for under Statement of Financial  Accounting  Standards (SFAS) No.
115 "Accounting  for Certain  Investments in Debt and Equity  Securities."  EITF
03-01 requires additional  disclosure of investments with unrealized losses. The
requirements  are effective for fiscal years ending after  December 15, 2003 and
accordingly  we  have  reflected  those  expanded  disclosures  in note 6 to our
consolidated financial statements.

     The  Financial  Accounting  Standards  Board  (FASB)  issued  SFAS No.  132
(revised 2003),  "Employers' Disclosures about Pensions and Other Postretirement
Benefits"  (FAS  132R) in  December  2003.  SFAS No.  132R  requires  additional
disclosure regarding certain aspects of pension plans including, but not limited
to, asset and investment strategy,  expected employer contributions and expected
benefit payments. The disclosure requirements of SFAS No. 132R are effective for
financial  statements of periods ending after December 15, 2003 and  accordingly
we have  reflected  those expanded  disclosures  in note 11 to our  consolidated
financial statements.

FACTORS AFFECTING OUR OPERATING RESULTS

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

     Many of the  end-users of our products are in highly  cyclical  industries,
such as general manufacturing and construction, that are sensitive to changes in
general economic conditions. Their demand for our products, and thus our results

                                       24
<PAGE>

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.  Since the fourth quarter of fiscal 2001,
for example,  we  experienced  significantly  reduced  demand for our  products,
generally as a result of the global economic slowdown,  and more specifically as
a result of the dramatic  decline in capital goods spending in the industries in
which our  end-users  operate.  These lower  levels of demand  resulted in a 24%
decline in net sales from fiscal 2001 to fiscal 2004, from approximately  $586.2
million to approximately $444.6 million. This decline in net sales resulted in a
55% decline in our income from  operations during the same period.  In addition,
our fiscal 2002 annual price  increase  implementation,  scheduled  for December
2001,  was  delayed for eight  months due to weak  economic  conditions.  During
fiscal 2004, we began to see stabilization  and modest  improvement in sales and
operating profitability in the latter half of the year.

     If  there  is  further  deterioration  in  the  general  economy  or in the
industries we serve, our business, results of operations and financial condition
could be further  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.

IF DEMAND FOR OUR PRODUCTS DETERIORATES FURTHER, THE COST SAVING EFFORTS WE HAVE
IMPLEMENTED MAY NOT BE SUFFICIENT TO ACHIEVE THE BENEFITS WE EXPECT.

     In  fiscal  2004,  we  continued  our  facility  rationalization  and  Lean
manufacturing programs in an ongoing effort to reduce our cost structure. If the
economy does not continue to improve or  deteriorates  further,  our sales could
continue to decline.  If sales are lower than our expectations,  our cost saving
programs  may not  achieve  the  benefits  we  expect.  We may be forced to take
additional  cost  savings  steps that could  result in  additional  charges  and
materially affect our ability to compete or implement our business strategies.

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

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

WE ARE SUBJECT TO CURRENCY FLUCTUATIONS FROM OUR INTERNATIONAL SALES.

     Our products are sold in many countries  around the world.  Thus, a portion
of our revenues  (approximately $124.8 million in fiscal year 2004) is generated
in foreign currencies,  including  principally the euro and the Canadian dollar,
while a portion of the costs incurred to generate those revenues are incurred in
other  currencies.  Since  our  financial  statements  are  denominated  in U.S.
dollars,  changes in currency  exchange rates between the U.S.  dollar and other
currencies  have had, and will continue to have,  an impact on our earnings.  We
currently  do not have  exchange  rate  hedges in place to reduce the risk of an
adverse  currency  exchange  movement.  Currency  fluctuations  may  impact  our
financial performance in the future.

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

     We have  operations  and  assets  located  outside  of the  United  States,
primarily in Canada, Mexico,  Germany, the United Kingdom,  Denmark,  France and
China. In addition, we import a portion of our hoist product line from China and
Japan,  and sell our  products  to  distributors  located  in  approximately  50
countries. In fiscal year 2004,  approximately 36% of our net sales were derived
from non-U.S. markets. These international operations are subject to a number of
special  risks,  in addition to the risks of our  domestic  business,  including
currency  exchange rate  fluctuations,  differing  protections  of  intellectual
property,  trade barriers,  labor unrest,  exchange controls,  regional economic
uncertainty,  differing (and possibly more stringent) labor regulation,  risk of
governmental  expropriation,  domestic and foreign customs and tariffs,  current
and changing  regulatory  environments,  difficulty  in  obtaining  distribution
support, difficulty in staffing and managing widespread operations,  differences
in the availability and terms of financing,  political  instability and risks of
increases in taxes.  Also,  in some foreign  jurisdictions  we may be subject to
laws limiting the right and ability of entities  organized or operating  therein
to pay dividends or remit  earnings to  affiliated  companies  unless  specified
conditions are met. These factors may adversely affect our future profits.

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

                                       25
<PAGE>

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

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

     The greater  financial  resources or the lower amount of debt of certain of
our  competitors may enable them to commit larger amounts of capital in response
to changing market conditions.  Certain competitors may also have the ability to
develop product or service  innovations that could put us at a disadvantage.  In
addition,  some of our  competitors  have  achieved  substantially  more  market
penetration  in certain of the markets in which we operate.  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.

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

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

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

     The principal raw material used in our specialty  chain,  forging and crane
building operations is steel. We utilize  approximately $20-$25 million of steel
annually in a variety of forms including rod, wire, bar,  structural and others.
The steel  industry as a whole is highly  cyclical,  and at times pricing can be
volatile  due to a number of  factors  beyond  our  control,  including  general
economic  conditions,  labor  costs,  competition,  import  duties,  tariffs and
currency  exchange  rates.  Recently,  the market  price of steel has  increased
significantly.  This volatility can significantly affect our raw material costs.
In an environment of increasing raw material prices, competitive conditions will
determine how much of the steel price increases we can pass on to our customers.
To the  extent  we are  unable  to pass on  sufficient  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.

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

                                       26
<PAGE>

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.

WE COULD PURSUE SELECTED DIVESTITURES WHICH WOULD IMPACT FUTURE SALES, OPERATING
RESULTS, FINANCIAL POSITION AND CASH FLOWS.

     Our  strategy is to exit  businesses  that (i) are not  integrated,  either
operationally or through sales and marketing, with the rest of our Company; (ii)
have market  channels  and  customers  different  from the  business of our core
Products  segment;  (iii)  are  not  designated  as  recipients  of  significant
investment of corporate  resources in the foreseeable  future; or (iv) have had,
and are expected to continue to have, low returns on our investment of financial
and management resources.  For example, in fiscal 2004, we sold our Positech and
Lister Chain & Forge  businesses  and in fiscal  2003,  we sold our ASI and LICO
Steel  businesses  after  determining  that they did not meet our  criteria  for
continuing  investment.  We periodically review our businesses and are currently
evaluating  strategic  alternatives  for  certain  of  our  businesses.  In  the
aggregate,  these  businesses  generated  fiscal  2004 sales and EBITDA of $82.4
million  and  $2.5  million,  respectively.  Divestiture  of some or all of such
businesses would affect future sales, operating results,  financial position and
cash flows.

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   2004,   approximately   28.1%  of  our  net  sales  were  from
manufacturing plants and sales offices in foreign jurisdictions.  We manufacture
our products in the United States,  Mexico,  China, Denmark, the United Kingdom,
France and Germany and sell our products and solutions in over 50 countries. Our
results of  operations  could be affected by factors  such as changes in foreign
currency  rates or weak economic  conditions in foreign  markets.  Our operating
results are exposed to  fluctuations  between the U.S.  dollar and the  Canadian
dollar,  European  currencies and the Mexican peso.  For example,  when the U.S.
dollar  strengthens  against the Canadian dollar, the value of our net sales and
net income  denominated in Canadian dollars  decreases when translated into U.S.
dollars  for  inclusion  in our  consolidated  results.  We are also  exposed to
foreign  currency  fluctuations in relation to purchases  denominated in foreign
currencies.  Our foreign  currency  risk is mitigated  since the majority of our
foreign  operations'  net  sales  and  the  related  expense   transactions  are
denominated  in the same currency so therefore a  significant  change in foreign
exchange rates would likely have a very minor impact on net income. For example,
a 10%  decline  in the rate of  exchange  between  the euro and the U.S.  dollar
impacts net income by approximately $0.3 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,  2004,  we do not have  any  swap  agreements  or  similar  financial
instruments  in place.  At March 31, 2004 and 2003,  approximately  95% and 98%,
respectively,  of our outstanding  debt had fixed interest rates,  including the
effect of an interest  rate swap that was in place at March 31,  2003.  At those
dates, we had  approximately  $14.3 million and $6.6 million,  respectively,  of
outstanding  variable rate debt. A 1%  fluctuation  in interest  rates in fiscal
2003 and 2002 would have changed interest  expense on that outstanding  variable
rate debt by approximately $0.1 million and $0.6 million, respectively.

     Like most industrial  manufacturers,  we are involved with asbestos-related
litigation. In continually evaluating our 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, our recent and historical resolution of the cases, the number
of cases pending  against us, 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  our share of the  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

                                       27
<PAGE>

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.

     Our actuaries have estimated our  asbestos-related  liability to range from
$2.8 million to $12.3 million through approximately March 31, 2034. The estimate
of our  asbestos-related  liability that is probable and estimable  through 2012
ranges from  $2.8-$4.0  million as of March 31, 2004.  The range of probable and
estimable  liability  reflects  uncertainty  in the number of future claims that
will be filed and the cost to resolve those claims, which may be influenced by a
number of factors, including the outcome of the ongoing broad-based settlement
negotiations,  defensive strategies,  and the cost to resolve claims outside the
broad-based  settlement  program.  We have  concluded that no amount within that
range is more  likely  than any other,  and  therefore  we have  reflected  $3.0
million as a liability in our  consolidated  financial  statements in accordance
with generally accepted accounting  principles.  The recorded liability does not
consider the impact of any potential  favorable federal  legislation such as the
"FAIR Act." Of this amount,  we expect to incur asbestos  liability  payments of
approximately  $0.2  million  over the next 12  months.  Because  payment of the
liability  is likely to extend over many years,  we believe  that the  potential
additional  costs for claims  will not have a material  after-tax  effect on the
financial condition of the Company or its liquidity,  although the net after-tax
effect of any future  liabilities  recorded  could be  material to earnings in a
future period.































































                                       28

<PAGE>


ITEM 8.           FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

COLUMBUS MCKINNON CORPORATION

Audited Consolidated Financial Statements as of March 31, 2004:
     Report of Independent Registered Public Accounting Firm............     F-2
     Consolidated Balance Sheets........................................     F-3
     Consolidated Statements of Operations..............................     F-4
     Consolidated Statements of Shareholders' Equity....................     F-5
     Consolidated Statements of Cash Flows..............................     F-6
     Notes to Consolidated Financial Statements
        1.    Description of Business...................................     F-7
        2.    Accounting Principles and Practices.......................     F-7
        3.    Discontinued Operations...................................    F-11
        4.    Unbilled Revenues and Excess Billings.....................    F-11
        5.    Inventories...............................................    F-12
        6.    Marketable Securities.....................................    F-12
        7.    Property, Plant, and Equipment............................    F-13
        8.    Goodwill and Intangible Assets............................    F-14
        9.    Accrued Liabilities and Other Non-current Liabilities.....    F-16
        10.   Debt......................................................    F-16
        11.   Retirement Plans..........................................    F-19
        12.   Employee Stock Ownership Plan (ESOP)......................    F-21
        13.   Postretirement Benefit Obligation.........................    F-21
        14.   Earnings per Share and Stock Plans........................    F-22
        15.   Loss Contingencies........................................    F-25
        16.   Restructuring Charges.....................................    F-26
        17.   Income Taxes..............................................    F-27
        18.   Rental Expense and Lease Commitments......................    F-29
        19.   Summary Financial Information.............................    F-30
        20.   Business Segment Information..............................    F-34
        21.   Selected Quarterly Financial Data (unaudited).............    F-36
        22.   Accumulated Other Comprehensive Loss......................    F-37
        23.   Effects of New Accounting Pronouncements..................    F-38



















                                       F-1

<PAGE>


             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors
Columbus McKinnon Corporation

     We have audited the  accompanying  consolidated  balance sheets of Columbus
McKinnon Corporation as of March 31, 2004 and 2003, and the related consolidated
statements of operations,  shareholders'  equity, and cash flows for each of the
three years in the period  ended March 31,  2004.  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,  based on our audits, the financial  statements referred to
above present  fairly,  in all material  respects,  the  consolidated  financial
position of Columbus  McKinnon  Corporation  at March 31, 2004 and 2003, and the
consolidated  results of its operations and its cash flows for each of the three
years in the period  ended March 31, 2004,  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,  effective
April 1, 2002,  the Company  adopted the  provisions  of  Statement of Financial
Accounting Standards No. 142, "Goodwill and Other Intangible Assets".


                                             /S/    ERNST & YOUNG LLP

Buffalo, New York
May 12, 2004











                                      F-2


<PAGE>

<TABLE>
<CAPTION>

                          COLUMBUS MCKINNON CORPORATION

                           CONSOLIDATED BALANCE SHEETS

                                                                                        ---------------------------------
                                                                                                    MARCH 31,
                                                                                        ----------------------------------
                                                                                              2004             2003
                                                                                              ----             ----
                                                                                             (IN THOUSANDS, EXCEPT
                                                                                                   SHARE DATA)
                                        ASSETS
Current assets:
<S>                                                                                       <C>              <C>
     Cash and cash equivalents.........................................................   $     11,101     $      1,943
     Trade accounts receivable, less allowance for doubtful accounts
        ($2,811 and $2,743, respectively)..............................................         84,374           79,335
     Unbilled revenues.................................................................          5,160            8,861
     Inventories.......................................................................         69,119           78,613
     Net assets held for sale..........................................................          2,790            1,800
     Prepaid expenses..................................................................         15,486           10,819
                                                                                        ----------------------------------
Total current assets...................................................................        188,030          181,371
Net property, plant, and equipment.....................................................         58,773           67,295
Goodwill, net..........................................................................        184,994          184,921
Other intangibles, net.................................................................          7,969           10,208
Marketable securities..................................................................         25,355           21,898
Deferred taxes on income...............................................................          6,388           15,245
Other assets...........................................................................          1,854            1,668
                                                                                        ----------------------------------
Total assets...........................................................................   $    473,363     $    482,606
                                                                                        ==================================

                         LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
     Notes payable to banks............................................................   $      5,471     $      2,245
     Trade accounts payable............................................................         30,076           28,654
     Accrued liabilities...............................................................         48,416           36,540
     Restructuring reserve.............................................................            561            2,331
     Current portion of long-term debt.................................................          2,205           15,213
                                                                                        ----------------------------------
Total current liabilities..............................................................         86,729           84,983
Senior debt, less current portion......................................................        121,603           99,123
Subordinated debt......................................................................        164,131          199,734
Other non-current liabilities..........................................................         37,922           46,059
                                                                                        ----------------------------------
Total liabilities......................................................................        410,385          429,899
Shareholders' equity:
     Voting common stock; 50,000,000 shares authorized;
            14,896,172 shares issued...................................................            149              149
     Additional paid-in capital........................................................        103,914          104,412
     Accumulated deficit...............................................................        (25,354)         (26,547)
     ESOP debt guarantee; 319,802 and 356,851 shares...................................         (5,116)          (5,709)
     Unearned restricted stock; 24,096 and 38,997 shares...............................            (39)            (208)
     Accumulated other comprehensive loss..............................................        (10,576)         (19,390)
                                                                                        ----------------------------------
Total shareholders' equity.............................................................         62,978           52,707
                                                                                        ----------------------------------
Total liabilities and shareholders' equity.............................................   $    473,363     $    482,606
                                                                                        ==================================
</TABLE>


                             See accompanying notes.




                                      F-3

<PAGE>


<TABLE>
<CAPTION>
                          COLUMBUS MCKINNON CORPORATION

                      CONSOLIDATED STATEMENTS OF OPERATIONS

                                                                     -----------------------------------------------------------
                                                                                        YEAR ENDED MARCH 31,
                                                                     -----------------------------------------------------------
                                                                            2004               2003               2002
                                                                            ----               ----               ----
                                                                                          (IN THOUSANDS,
                                                                                      EXCEPT PER SHARE DATA)

<S>                                                                     <C>                <C>                <C>
Net sales...........................................................    $     444,591      $     453,320      $     480,028
Cost of products sold...............................................          339,745            345,986            359,551
                                                                     -----------------------------------------------------------
Gross profit........................................................          104,846            107,334            120,477
Selling expenses....................................................           48,331             47,400             43,522
General and administrative expenses.................................           25,026             26,611             28,245
Restructuring charges...............................................            1,239              3,697              9,569
Write-off/amortization of intangibles...............................              383              4,246             11,013
                                                                     -----------------------------------------------------------
Income from operations..............................................           29,867             25,380             28,128
Interest and debt expense...........................................           28,856             32,008             29,381
Other (income) and expense, net.....................................           (4,191)            (2,149)             2,464
                                                                     -----------------------------------------------------------
Income (loss) from continuing operations before
   income tax expense and cumulative effect of
   accounting change................................................            5,202             (4,479)            (3,717)
Income tax expense..................................................            4,009              1,532              2,301
                                                                     -----------------------------------------------------------
Income (loss) from continuing operations before
   cumulative effect of accounting change...........................            1,193             (6,011)            (6,018)
                                                                     -----------------------------------------------------------
Loss from discontinued operations...................................                -                  -             (7,873)
Loss on disposition of discontinued operations......................                -                  -           (121,475)
                                                                     -----------------------------------------------------------
Total loss from discontinued operations.............................                -                  -           (129,348)
                                                                     -----------------------------------------------------------
Net income (loss) before cumulative effect of
   accounting change................................................            1,193             (6,011)          (135,366)
Cumulative effect of change in accounting principle.................                -             (8,000)                 -
                                                                     -----------------------------------------------------------
Net income (loss)...................................................    $       1,193      $     (14,011)     $    (135,366)
                                                                     ===========================================================


Average basic shares outstanding....................................           14,553             14,496             14,414
Average diluted shares outstanding..................................           14,554             14,496             14,414
Basic and diluted (loss) income per share:
     Income (loss) from continuing operations.......................    $       0.08       $      (0.42)      $      (0.41)
     Loss from discontinued operations..............................               -                  -              (0.55)
     Loss on disposition of discontinued operations.................               -                  -              (8.43)
     Cumulative effect of accounting change.........................               -              (0.55)                 -
                                                                     -----------------------------------------------------------
     Basic and diluted income (loss) per share......................    $       0.08       $      (0.97)      $      (9.39)
                                                                     ===========================================================

</TABLE>


                             See accompanying notes.




                                      F-4


<PAGE>

<TABLE>
<CAPTION>

                          COLUMBUS MCKINNON CORPORATION

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

                                      COMMON     ADDI-      RETAINED                            ACCUMULATED
                                      STOCK      TIONAL     EARNINGS      ESOP      UNEARNED       OTHER         TOTAL
                                      ($.01     PAID-IN   (ACCUMULATED    DEBT     RESTRICTED  COMPREHENSIVE  SHAREHOLDERS'
                                    PAR VALUE)  CAPITAL     DEFICIT)   GUARANTEE     STOCK     INCOME (LOSS)     EQUITY
                                    ---------------------------------------------------------------------------------------
<S>                                   <C>        <C>        <C>         <C>          <C>         <C>            <C>
Balance at March 31, 2001..........   $    149   $105,418   $ 124,806   $   (7,527)  $   (955)   $    (14,027)  $ 207,864
Comprehensive loss:
Net loss 2002......................          -          -    (135,366)           -          -               -    (135,366)
Change in foreign currency
  translation adjustment...........          -          -           -            -          -             216         216
Net unrealized gain on
investments, net                             -          -           -            -          -           2,168       2,168
  of tax expense of $1,445.........
Net unrealized loss on derivatives
  qualifying as hedges, net of
  tax benefit of $282..............          -          -           -            -          -            (424)       (424)
Change in minimum pension
  liability adjustment, net of
  tax benefit of $1,285............          -          -           -            -          -          (1,927)     (1,927)
                                                                                                                ---------
Total comprehensive loss..........                                                                               (135,333)
Earned 86,939 ESOP shares..........          -       (169)          -        1,013          -               -         844
Earned portion and adjustment of
    restricted shares..............          -       (329)          -            -        541               -         212
Common dividends declared
  $0.14 per share..................          -          -      (1,976)           -          -               -      (1,976)
                                    ---------------------------------------------------------------------------------------
Balance at March 31, 2002..........   $    149   $104,920   $ (12,536)  $   (6,514)  $   (414)   $    (13,994)  $  71,611
Comprehensive loss:
Net loss 2003......................          -          -     (14,011)           -          -               -     (14,011)
Change in foreign currency
  Translation adjustment...........          -          -           -            -          -           7,453       7,453
Net unrealized loss on
investments, net                             -          -           -            -          -          (2,411)     (2,411)
  of tax benefit of $1,564.........
Net change in unrealized loss
  on derivatives qualifying as
  hedges, net of tax of $155.......          -          -           -            -          -             233         233
Change in minimum pension
  liability adjustment, net of
  tax benefit of $7,115............          -          -           -            -          -         (10,671)    (10,671)
                                                                                                                ---------
Total comprehensive loss..........                                                                                (19,407)
Earned 61,003 ESOP shares..........          -       (464)          -          805          -               -         341
Earned portion and adjustment of
    restricted shares..............          -        (44)          -            -        206               -         162
                                    ---------------------------------------------------------------------------------------
Balance at March 31, 2003..........   $    149   $104,412   $ (26,547)  $   (5,709)  $   (208)   $    (19,390)  $  52,707
Comprehensive income:
Net income 2004....................          -          -       1,193            -          -               -       1,193
Change in foreign currency
  translation adjustment...........          -          -           -            -          -           6,389       6,389
Net unrealized gain on
investments, net                             -          -           -            -          -           1,706       1,706
  of tax benefit of $918...........
Net change in unrealized loss
  on derivatives qualifying as
  hedges, net of tax of $127.......          -          -           -            -          -             191         191
Change in minimum pension
  liability adjustment, net of
  tax benefit of $352..............          -          -           -            -          -             528         528
                                                                                                                ---------
Total comprehensive income........                                                                                 10,007
Earned 37,049 ESOP shares..........          -       (393)          -          593          -               -         200
Earned portion and adjustment of
    restricted shares..............          -       (105)          -            -        169               -          64
                                    ---------------------------------------------------------------------------------------
Balance at March 31, 2004..........   $    149   $103,914   $ (25,354)  $   (5,116)  $    (39)   $    (10,576)  $  62,978
                                    =======================================================================================

</TABLE>

                             See accompanying notes.




                                      F-5

<PAGE>


                          COLUMBUS MCKINNON CORPORATION

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>

                                                                          --------------------------------------------------
                                                                                        YEAR ENDED MARCH 31,
                                                                          --------------------------------------------------
                                                                                 2004             2003           2002
                                                                                 ----             ----           ----
                                                                                          (IN THOUSANDS)
OPERATING ACTIVITIES:
<S>                                                                          <C>               <C>             <C>
Net income (loss) from continuing operations.............................    $      1,193      $    (6,011)    $  (6,018)
Adjustments to reconcile net income (loss) from continuing    operations
to net cash provided by operating activities:
     Depreciation and amortization.......................................          10,126           14,803        22,462
     Deferred income taxes...............................................           6,413             (713)          166
     Loss on divestitures................................................           3,875            1,357             -
     (Gain) loss on sale of real estate/investments......................          (5,143)          (1,949)        2,757
     Gain on early retirement of 2008 bonds..............................          (5,590)               -             -
     Amortization/write-off of deferred financing costs..................           6,613            3,696             -
     Other...............................................................              67           (1,045)        2,177
     Changes in operating assets and liabilities
        net of effects of business divestitures:
          Trade accounts receivable and  unbilled revenues...............           1,140           (1,214)       14,644
          Inventories....................................................           8,351           11,379        18,876
          Prepaid expenses...............................................          (1,332)          (2,891)       (1,276)
          Other assets...................................................            (181)           3,915         1,328
          Trade accounts payable.........................................            (976)          (4,820)        3,677
          Accrued and non-current liabilities............................           1,813           (2,328)       (8,996)
                                                                          --------------------------------------------------
Net cash provided by operating activities of continuing operations.......          26,369           14,179        49,797
                                                                          --------------------------------------------------
INVESTING ACTIVITIES:
Sale (purchase) of marketable securities, net............................             110             (672)       (1,794)
Capital expenditures.....................................................          (3,619)          (5,040)       (4,753)
Proceeds from sale of businesses.........................................           4,015           17,262           890
Proceeds from sale of property, plant, and equipment.....................             387                -         1,750
Proceeds from net assets held for sale...................................           3,376            4,418         2,280
                                                                          --------------------------------------------------
Net cash provided by (used in) investing activities of continuing
   operations............................................................           4,269           15,968        (1,627)
                                                                          --------------------------------------------------
FINANCING ACTIVITIES:
Payments under revolving line-of-credit agreements.......................        (332,218)        (282,211)     (167,300)
Borrowings under revolving line-of-credit agreements.....................         325,326          249,081       123,622
Repayment of debt........................................................        (125,764)          (1,395)       (3,047)
Proceeds from issuance of long-term debt.................................         115,000                -             -
Payment of deferred financing costs......................................          (4,432)          (8,188)         (794)
Dividends paid ..........................................................               -                -        (1,976)
Change in ESOP debt guarantee............................................             593              805         1,013
                                                                          --------------------------------------------------
Net cash used in financing activities of continuing operations...........         (21,495)         (41,908)      (48,482)
EFFECT OF EXCHANGE RATE CHANGES ON CASH..................................              15              132          (306)
                                                                          --------------------------------------------------
Net cash (used in) provided by continuing operations.....................           9,158          (11,629)         (618)
NET CASH PROVIDED BY (USED IN) DISCONTINUED OPERATIONS...................               -              504          (329)
                                                                          --------------------------------------------------
Net change in cash and cash equivalents..................................           9,158          (11,125)          947
Cash and cash equivalents at beginning of year...........................           1,943           13,068        14,015
                                                                          --------------------------------------------------
Cash and cash equivalents at end of year.................................    $     11,101      $     1,943     $  13,068
                                                                          ==================================================
Supplementary cash flows data:
     Interest paid.......................................................    $     30,002      $    30,867     $  29,887
     Income taxes (received) paid........................................    $     (9,683)     $    (4,197)    $   3,262

</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
2004,  approximately  64% of sales were to customers in the United  States.  The
operations  of  Automatic   Systems,   Inc.  (ASI)  have  been  reflected  as  a
discontinued  operation and as more fully described in Note 3, the  consolidated
financial  statements  for all periods  presented  have been restated to reflect
this change.


2.   ACCOUNTING PRINCIPLES AND PRACTICES


   ADVERTISING

      Costs  associated  with  advertising are expensed in the year incurred and
are  included in selling  expense in the  statement of  operations.  Advertising
expenses were $2,406,000,  $2,932,000,  and $2,531,000 in fiscal 2004, 2003, and
2002, 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 2004 and March 2008.  Approximately  0.4% of the
labor force is covered by a  collective  bargaining  agreement  that will expire
within one year.

   CONSOLIDATION

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

   DERIVATIVES AND FINANCIAL INSTRUMENTS

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

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


                                       F-7

<PAGE>

                          COLUMBUS MCKINNON CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)


   FOREIGN CURRENCY TRANSLATIONS

      The Company translates foreign currency financial  statements as described
in Financial  Accounting Standards (FAS) No. 52. Under this method, all items of
income and expense are translated to U.S.  dollars at average exchange rates for
the year.  All assets and  liabilities  are  translated  to U.S.  dollars at the
year-end  exchange  rate.  Gains or  losses  on  translations  are  recorded  in
accumulated  other  comprehensive  income  (loss)  in the  shareholders'  equity
section of the balance sheet. The functional currency is the foreign currency in
which the foreign  subsidiaries  conduct their  business.  Gains and losses from
foreign currency  transactions are reported in other (income) and expense,  net.
There was an approximate $0.6 and $0.8 million loss on transactions with foreign
subsidiaries in fiscal 2004 and fiscal 2003, respectively. The amount for fiscal
2002 was not significant.

   GOODWILL

      On April 1, 2002, the Company  adopted  Statement of Financial  Accounting
Standards (SFAS) No. 142, "Goodwill and Other Intangible Assets," which requires
that goodwill no longer be amortized,  but reviewed for  impairment on an annual
basis,  or more  frequently if indicators of impairment  exist, at the reporting
unit level.  Identifiable  intangible assets acquired in a business  combination
are amortized over their useful lives unless their useful lives are  indefinite,
in which case those intangible assets are tested for impairment annually and not
amortized until their lives are determined to be finite.

      Under SFAS No. 142, goodwill impairment is deemed to exist if the net book
value of a reporting unit exceeds its estimated fair value.  The fair value of a
reporting  unit is  determined  using a discounted  cash flow  methodology.  The
Company's  reporting units are determined based upon whether discrete  financial
information is available and regularly reviewed,  whether those units constitute
a business,  and the extent of economic  similarities  between  those  reporting
units for purposes of aggregation.  As a result of this analysis,  the reporting
units  identified  under SFAS No. 142 were at the component  level, or one level
below the  reporting  segment  level as defined under SFAS No. 131. The Products
and Solutions  segments were each subdivided  into three  reporting  units. As a
result of adopting  SFAS No. 142, the Company  ceased  amortization  of goodwill
beginning  April 1, 2002.  See Note 8 for further  discussion  of  goodwill  and
intangible assets.

   INVENTORIES

      Inventories  are  valued  at  the  lower  of  cost  or  market.   Cost  of
approximately  55% of  inventories  at March  31,  2004  (56% in 2003)  has been
determined  using  the  LIFO  (last-in,   first-out)  method.   Costs  of  other
inventories have been determined using the FIFO (first-in, first-out) or average
cost method. FIFO cost approximates replacement cost.

   MARKETABLE SECURITIES

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

      The marketable  securities are carried as long-term  assets since they are
held for the  settlement  of a portion of the  Company's  general  and  products
liability  insurance claims filed through CM Insurance  Company,  Inc., a wholly
owned captive insurance subsidiary.




                                      F-8

<PAGE>

                          COLUMBUS MCKINNON CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)


   NET ASSETS HELD FOR SALE

      At March 31, 2004 and 2003,  net assets held for sale includes  $2,790,000
and  $1,800,000,  respectively,  as the  carrying  value of closed  and  vacated
facilities which are currently for sale.

   PROPERTY, PLANT, AND EQUIPMENT

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

   RECLASSIFICATION

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

   RELATED PARTY TRANSACTIONS

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

   RESEARCH AND DEVELOPMENT

      Research  and  development  costs as  defined  in FAS No. 2, for the years
ended March 31, 2004, 2003 and 2002 were $1,625,000,  $1,239,000 and $1,328,000,
respectively  and are  classified as general and  administrative  expense in the
statement of operations.

   REVENUE RECOGNITION AND CONCENTRATION OF CREDIT RISK

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

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




                                      F-9


<PAGE>

                          COLUMBUS MCKINNON CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)


   SHIPPING AND HANDLING COSTS

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

   STOCK BASED EMPLOYEE COMPENSATION

      At March 31, 2004, the Company has two stock-based  employee  compensation
plans in effect, which are described more fully in Note 14. The Company accounts
for these plans under the recognition  and measurement  principles of Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" (APB
25) and related  Interpretations.  No stock based employee  compensation cost is
reflected  in net  income,  as all  options  granted  under  these  plans had an
exercise price equal to the market value of the  underlying  common stock on the
date of grant and the number of options  granted was fixed.  The following table
illustrates  the effect on net income and  earnings per share if the Company had
applied the fair value  recognition of SFAS No. 123  "Accounting for Stock-Based
Compensation", to stock-based employee compensation:

<TABLE>
<CAPTION>
                                                                  -----------------------------------------------
                                                                               YEAR ENDED MARCH 31,
                                                                  -----------------------------------------------
                                                                         2004            2003           2002
                                                                  -----------------------------------------------
<S>                                                                <C>             <C>             <C>
  Net income (loss), as reported..............................     $     1,193     $   (14,011)    $  (135,366)
     Deduct: Total stock based employee compensation
     expenses determined under fair value based method
     for all awards, net of related tax effects...............            (504)         (1,019)         (1,331)
                                                                  -----------------------------------------------
     Net income (loss), pro forma.............................     $       689     $   (15,030)    $  (136,697)
                                                                  ===============================================

  Basic and diluted income (loss) per share:
     As reported..............................................     $      0.08     $     (0.97)    $      (9.39)
                                                                  ===============================================
     Pro forma................................................     $      0.05     $     (1.04)    $      (9.48)
                                                                  ===============================================
</TABLE>

   USE OF ESTIMATES

      The  preparation  of financial  statements  in conformity  with  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,
                                                       -------------------------
                                                          2004          2003
                                                          ----          ----
          Balance at beginning of year................ $     482     $     567
          Accrual for warranties issued...............     2,634         2,172
          Warranties settled..........................    (2,227)       (2,257)
                                                       ------------------------
          Balance at end of year...................... $     889     $     482
                                                       =======================

                                      F-10

<PAGE>

                          COLUMBUS MCKINNON CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)


3.   DISCONTINUED OPERATIONS

      In May 2002, the Company sold  substantially all of the assets of 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 over 10
years.  The note has been recorded at the estimated net  realizable  value.  The
measurement  date  for  this  discontinued   operation  was  January  21,  2002.
Accordingly,  the impact of the  prospective  transaction  has been  recorded in
fiscal 2002. The Company recorded an after-tax loss of $121,475,000 or $8.43 per
diluted  share and  reflected  ASI as a  discontinued  operation  in the  fourth
quarter of fiscal 2002.  The  impairment  loss  included  closing costs from the
transaction and estimated  operating losses of the  discontinued  operation from
April 1, 2002 through May 10, 2002, the date of the sale.  The  impairment  loss
was due primarily to the write-off of $104,000,000 of goodwill and a $17,475,000
loss  related  to the  write-off  of the  remaining  net assets in excess of the
selling price. The consolidated  financial  statements and related notes for all
periods  presented  have been  restated,  where  applicable,  to reflect the ASI
business as a discontinued operation.

      In accordance with Emerging Issues Task Force (EITF) 87-24, "Allocation of
Interest to  Discontinued  Operations,"  the Company  allocated  interest to the
discontinued  operations  based upon the net  principal  amount of debt that was
paid down with the proceeds from the sale of such operation. This resulted in an
interest allocation of approximately $905,000 for the year ended March 31, 2002.

      Operating results of discontinued operations were as follows:
<TABLE>
<CAPTION>
                                                                             ---------------
                                                                                 MARCH 31,
                                                                             ---------------
                                                                                    2002
                                                                             ---------------
<S>                                                                          <C>
     Net revenue............................................................ $    137,070
                                                                             ---------------
     Loss before income taxes...............................................       (9,350)
     Income tax benefit.....................................................       (1,477)
                                                                             ---------------
     Loss from operations of discontinued business..........................       (7,873)
     Loss on disposal of business (net of tax benefit of $9,464)............     (121,475)
                                                                             ---------------
     Loss from discontinued operations...................................... $   (129,348)
                                                                             ===============
     Diluted loss per share from discontinued operations.................... $      (8.98)
                                                                             ===============
</TABLE>


4.   UNBILLED REVENUES AND EXCESS BILLINGS

                                                       -------------------------
                                                              MARCH 31,
                                                       -------------------------
                                                           2004         2003
                                                           ----         ----
          Costs incurred on uncompleted contracts......$   23,891    $   29,532
          Estimated earnings...........................      8,339        9,016
                                                       -------------------------
          Revenues earned to date......................     32,230       38,548
          Less billings to date........................     27,681       29,980
                                                       -------------------------
                                                       $    4,549    $    8,568
                                                       =========================

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

                                                       -------------------------
                                                               MARCH 31,
                                                       -------------------------
                                                           2004         2003
                                                           ----         ----
     Unbilled revenues................................ $    5,160    $    8,861
     Accrued liabilities..............................       (611)         (293)
                                                       -------------------------
                                                       $    4,549    $    8,568
                                                       =========================


                                      F-11

<PAGE>


                          COLUMBUS MCKINNON CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)


5.   INVENTORIES

      Inventories consisted of the following:

                                                 ----------------------------
                                                           MARCH 31,
                                                 ----------------------------
                                                      2004          2003
                                                      ----          ----
     At cost--FIFO basis:
          Raw materials.......................   $   34,657    $   42,707
          Work-in-process.....................       10,169        10,361
          Finished goods......................       31,205        33,072
                                                 ---------------------------
                                                     76,031        86,140
     LIFO cost less than FIFO cost............       (6,912)       (7,527)
                                                 ---------------------------
     Net inventories..........................   $   69,119    $   78,613
                                                 ===========================


6.   MARKETABLE SECURITIES

      Marketable  securities  are held for the  settlement  of a portion  of the
Company's  general and products  liability  insurance  claims filed  through the
Company's subsidiary, CM Insurance Company, Inc. (see Notes 2 and 15).



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

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

      The aggregate fair value of investments and unrealized losses on available
for sale  securities  in an  unrealized  loss  position at March 31, 2004 are as
follows:

                                                 AGGREGATE       UNREALIZED
                                                 FAIR VALUE        LOSSES
                                                 ------------------------------

      Equity securities in a loss
        position for less than 12 months         $    2,153     $      137
      Equity securities in a loss
        position for more than 12 months              2,154            134
                                                 ------------------------------
                                                 $    4,307     $      271
                                                 ==============================

      The net gain or (loss) related to sales of marketable  securities  totaled
$1,861,000  $(478,000),   and  $(3,909,000)  in  fiscal  2004,  2003  and  2002,
respectively.



                                      F-12

<PAGE>

                          COLUMBUS MCKINNON CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)


      The following is a summary of  available-for-sale  securities at March 31,
2003:
                                                 GROSS       GROSS     ESTIMATED
                                              UNREALIZED  UNREALIZED      FAIR
                                     COST        GAINS      LOSSES       VALUE
                                   ---------------------------------------------
     Government securities.........$   7,379   $     483   $       -   $   7,862
     Equity securities.............   15,045         152       1,161      14,036
                                   ---------------------------------------------
                                   $  22,424   $     635   $   1,161   $  21,898
                                   =============================================

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

     The amortized cost and estimated  fair value of debt and equity  securities
at March 31, 2004, by contractual maturity, are shown below:

                                                                   ESTIMATED
                                                                     FAIR
                                                      COST          VALUE
                                                   -------------------------
                                                          (IN THOUSANDS)
     Due in one year or less.................      $    2,293     $    2,293
     Due in one to five years................           1,507          1,594
     Due in five to ten years................           2,153          2,388
     Due after ten years.....................             921          1,039
                                                   -------------------------
                                                        6,874          7,314
     Equity securities.......................          16,383         18,041
                                                   -------------------------
                                                   $   23,257     $   25,355
                                                   =========================

      Net  unrealized  gain or loss included in the balance sheet  amounted to a
$2,098,000  gain at March 31, 2004 and a $526,000  loss at March 31,  2003.  The
amounts,  net of related  income taxes of $734,000 and  $(184,000)  at March 31,
2004 and 2003,  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:

                                                           ---------------------
                                                                 MARCH 31,
                                                           ---------------------
                                                              2004        2003
                                                              ----        ----
     Land and land improvements..........................  $   5,554   $   5,745
     Buildings...........................................     32,541      34,036
     Machinery, equipment, and leasehold improvements....     96,809     103,782
     Construction in progress............................      1,509       3,033
                                                           ---------------------
                                                             136,413     146,596
     Less accumulated depreciation.......................     77,640      79,301
                                                           ---------------------
     Net property, plant, and equipment..................  $  58,773   $  67,295
                                                           =====================

      Depreciation   expense  from   continuing   operations   was   $9,743,000,
$10,557,000,  and $11,449,000 for the years ended March 31, 2004, 2003 and 2002,
respectively.


                                      F-13

<PAGE>

                          COLUMBUS MCKINNON CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)


8.   GOODWILL AND INTANGIBLE ASSETS

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

      Under SFAS No. 142, goodwill impairment is deemed to exist if the net book
value of a reporting unit exceeds its estimated fair value.  The fair value of a
reporting  unit is  determined  using a discounted  cash flow  methodology.  The
Company's  reporting units are determined based upon whether discrete  financial
information is available and regularly reviewed,  whether those units constitute
a business,  and the extent of economic  similarities  between  those  reporting
units for purposes of aggregation.  As a result of this analysis,  the reporting
units  identified  under SFAS No. 142 were at the component  level, or one level
below the  reporting  segment  level as defined under SFAS No. 131. The Products
and Solutions segments were each subdivided into three reporting units.

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

      During the fourth quarter of fiscal 2003, the Company performed its annual
impairment review and recorded an additional charge of $4,000,000 resulting from
the decline in the fair value of one of its reporting  units,  which is recorded
as a component of operating income in the accompanying consolidated statement of
operations as part of write-off/amortization of intangibles.

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

      No impairment charges were recorded during fiscal 2004.

      A summary of changes in goodwill during the years ended March 31, 2004 and
2003 by business segment is as follows:

<TABLE>
<CAPTION>
                                                              PRODUCTS      SOLUTIONS        TOTAL
                                                             ----------------------------------------
<S>                  <C> <C>                                 <C>            <C>            <C>
    Balance at March 31, 2002..............................  $  165,295     $   30,360     $  195,655
    Allocation upon adoption of SFAS No. 142...............      24,290        (24,290)             -
    Currency translation...................................       1,266              -          1,266
    Cumulative effect of accounting change.................      (1,930)        (6,070)        (8,000)
    Fourth quarter impairment charge.......................      (4,000)             -         (4,000)
                                                             ----------------------------------------
    Balance at March 31, 2003..............................  $  184,921     $        -     $  184,921
    Currency translation...................................         725              -            725
    Divestitures...........................................        (652)             -           (652)
                                                             ----------------------------------------
    Balance at March 31, 2004..............................  $  184,994     $        -     $  184,994
                                                             ========================================
</TABLE>
      No reclassification of identifiable  intangible assets apart from goodwill
was necessary as a result of adoption of SFAS No. 142.


                                      F-14

<PAGE>

                          COLUMBUS MCKINNON CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)


      Other  intangibles,  all subject to amortization with the exception of the
intangible  assets  related to the  Company's  pension  plans,  consisted of the
following:

<TABLE>
<CAPTION>
                                                                             -------------------------
                                                                                     MARCH 31,
                                                                             -------------------------
                                                                                2004           2003
                                                                                ----           ----
<S>                                                                          <C>            <C>
     Gross deferred financing costs......................................... $   14,834     $   10,983
     Accumulated amortization of deferred financing costs...................     (8,613)        (2,610)
                                                                             -------------------------
        Deferred financing costs, net.......................................      6,221          8,373
        Intangible pension assets...........................................      1,320          1,501
        Patents and other, net..............................................        428            334
                                                                             -------------------------
     Other intangibles, net................................................. $    7,969     $   10,208
                                                                             =========================

</TABLE>


        During fiscal 2004, the Company incurred  approximately  $4.4 million of
deferred  financing  costs,  of which  $3.9  million  related  to its 10% Senior
Secured  Notes.  The Company  wrote off  approximately  $4.9 million of deferred
financing  costs  related to the former  term loan and  recorded  that charge as
interest and debt expense.

      During fiscal 2003,  the Company  incurred  approximately  $8.2 million of
deferred financing costs, of which $6.3 million related to its refinanced credit
facility. The Company wrote off approximately $1.2 million of deferred financing
costs related to the former credit facility and recorded that charge as interest
and debt expense.

      Based on the current amount of intangible  assets subject to amortization,
the estimated  amortization  expense for each of the  succeeding  three years is
estimated to be $1,420,000  including $100,000 of amortization  reflected on the
amortization  of  intangibles  line and $1,320,000 of  amortization  of deferred
financing  costs shown on the interest and debt expense line on the statement of
operations.  Amortization  expense for the fourth and fifth  succeeding  year is
estimated to be $1,065,000 and $590,000,  respectively,  including  $100,000 and
$0, respectively,  of amortization  reflected on the amortization of intangibles
line and  $965,000  and  $590,000,  respectively,  of  amortization  of deferred
financing  costs shown on the interest and debt expense line on the statement of
operations.

      The  following  table  presents  the  consolidated  results of  operations
adjusted as though the adoption of SFAS No. 142 occurred as of April 1, 2001.

<TABLE>
<CAPTION>
                                                                                                YEAR ENDED
                                                                                        ----------------------------
                                                                                              MARCH 31, 2002
                                                                                        ----------------------------
<S>                                                                                          <C>
    Reported loss from continuing operations................................................ $        (6,018)
    Goodwill amortization add-back, net of tax..............................................          10,208
                                                                                             ---------------
    Adjusted income from continuing operations.............................................. $         4,190
                                                                                             ===============

    Reported loss from continuing operations per share - basic and diluted.................. $         (0.41)
    Goodwill amortization add-back..........................................................            0.70
                                                                                             ---------------
    Adjusted income from continuing operations per share - basic and diluted................ $          0.29
                                                                                             ===============

</TABLE>


                                      F-15


<PAGE>


                          COLUMBUS MCKINNON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)


9.   ACCRUED LIABILITIES AND OTHER NON-CURRENT LIABILITIES

      Consolidated accrued liabilities of the Company consisted the following:

                                                          ----------------------
                                                                MARCH 31,
                                                          ----------------------
                                                            2004         2003
                                                            ----         ----
     Accrued payroll..................................... $  10,188    $  12,033
     Accrued pension cost................................     7,869        4,355
     Interest payable....................................     8,970       10,116
     Accrued workers compensation........................     5,220        4,615
     Accrued income taxes payable........................     4,062            -
     Accrued postretirement benefit obligation...........     2,250            -
     Accrued health insurance............................     2,100        2,080
     Other accrued liabilities...........................     7,757        3,341
                                                          ----------------------
                                                          $  48,416    $  36,540
                                                          ======================


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

                                                          ----------------------
                                                                  MARCH 31,
                                                          ----------------------
                                                            2004         2003
                                                            ----         ----
     Accumulated postretirement benefit obligation....... $   5,840    $   9,108
     Accrued general and product liability costs.........    15,930       14,439
     Accrued pension cost................................    14,591       22,037
     Other non-current liabilities.......................     1,561          475
                                                          ----------------------
                                                          $  37,922    $  46,059
                                                          ======================


10.  DEBT

      Consolidated debt of the Company consisted of the following:

<TABLE>
<CAPTION>

                                                                                          ----------------------------
                                                                                                   MARCH 31,
                                                                                          ----------------------------
                                                                                              2004            2003
                                                                                              ----            ----
<S>                                                                                       <C>             <C>
     Revolving Credit Facility due March 31, 2007........................................ $          -    $     10,232
     Term Loan requiring quarterly payments of $500
        with balance due March 31, 2007..................................................        7,821          32,908
     10% Senior Secured Notes due August 1, 2010  with interest
        payable in semi-annual installments .............................................      115,000               -
     Previous Senior Secured Term Loan repaid and retired July 2003......................            -          70,000
     Other senior debt...................................................................          987           1,196
                                                                                          ----------------------------
     Total senior debt...................................................................      123,808         114,336
     8 1/2% Senior Subordinated Notes due March 31, 2008 with interest
        payable in semi-annual installments at 8.45% effective rate, recorded
        net of unamortized discount of $169 ($266 at March 31, 2003).....................      164,131         199,734
                                                                                          ----------------------------
     Total...............................................................................      287,939         314,070
     Less current portion................................................................        2,205          15,213
                                                                                          ----------------------------
                                                                                          $    285,734    $    298,857
                                                                                          ============================

</TABLE>


      On November 21, 2002, the Company  refinanced its credit  facilities.  The
new arrangement  consisted of a Revolving  Credit  Facility,  a Term Loan, and a
Senior Second Secured Term Loan.


                                      F-16


<PAGE>

                          COLUMBUS MCKINNON CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)


      The Revolving Credit Facility provides availability up to a maximum of $50
million.  Availability  based on the  underlying  collateral  at March 31,  2004
amounted to $48.9 million.  The unused  Revolving  Credit Facility totaled $39.7
million,  net of outstanding  borrowings of $0.0 million and outstanding letters
of credit of $9.2 million. Interest is payable at varying Eurodollar rates based
on LIBOR or prime  plus a spread  determined  by the  Company's  leverage  ratio
amounting to 275 or 150 basis  points,  respectively,  at March,  31, 2004.  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 Term Loan requires quarterly payments of $500,000 with the balance due
at March 31,  2007.  Interest  is payable at varying  Eurodollar  rates based on
LIBOR plus a spread determined by the Company's  leverage ratio amounting to 325
basis  points at March,  31,  2004  (4.37%).  The Term  Loan is  secured  by all
domestic  inventory,  receivables,  equipment,  real property,  subsidiary stock
(limited to 65% for foreign subsidiaries) and intellectual property.

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

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

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

      The corresponding  credit agreements  associated with the Revolving Credit
Facility  and the Term Loan place  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 Mach 31, 2004.

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

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



                                      F-17


<PAGE>

                          COLUMBUS MCKINNON CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)


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

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

      The carrying  amount of the Company's  revolving  credit facility and term
loan  approximates  the fair value based on current market rates.  The Company's
Senior  Secured Notes and Senior  Subordinated  Notes have an  approximate  fair
market value of $121,900,000  and  $154,442,000,  respectively,  based on quoted
market  prices  which  is  less  than  their   aggregate   carrying   amount  of
$279,131,000.

      The  principal  payments  scheduled to be made as of March 31, 2004 on the
above debt, for the next five annual periods subsequent thereto,  are as follows
(in thousands):


                2005                           $       2,205
                2006                                   2,182
                2007                                   3,944
                2008                                 164,229
                2009                                      95






















                                      F-18


<PAGE>

                          COLUMBUS MCKINNON CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)


11.  RETIREMENT PLANS

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

<TABLE>
<CAPTION>
                                                                                        ----------------------------
                                                                                                 MARCH 31,
                                                                                        ----------------------------
                                                                                            2004             2003
                                                                                            ----             ----
     Change in benefit obligation:
<S>                                                                                     <C>              <C>
          Benefit obligation at beginning of year...................................... $    96,562      $    88,181
          Service cost.................................................................       3,921            3,760
          Interest cost................................................................       6,711            6,294
            Actuarial loss.............................................................       7,919            2,606
          Benefits paid................................................................      (4,248)          (4,279)
                                                                                        ----------------------------
          Benefit obligation at end of year............................................ $   110,865      $    96,562
                                                                                        ============================

     Change in plan assets:
          Fair value of plan assets at beginning of year............................... $    65,428      $    72,495
          Actual gain (loss) on plan assets............................................       9,787           (8,366)
          Employer contribution........................................................       9,597            5,578
          Benefits paid................................................................      (4,248)          (4,279)
                                                                                        ----------------------------
          Fair value of plan assets at end of year..................................... $    80,564      $    65,428
                                                                                        ============================

          Funded status ............................................................... $   (30,301)     $   (31,134)
          Unrecognized actuarial loss..................................................      29,829           27,958
          Unrecognized prior service cost..............................................       1,320            1,501
                                                                                        ----------------------------
          Net amount recognized........................................................ $       848      $    (1,675)
                                                                                        ============================

      Amounts recognized in the consolidated balance sheets are as follows:
                                                                                        ----------------------------
                                                                                                MARCH 31,
                                                                                        ----------------------------
                                                                                           2004            2003
                                                                                           ----            ----
          Intangible asset............................................................. $     1,320      $     1,501
          Accrued liabilities..........................................................      (7,869)          (4,008)
          Other non-current liabilities................................................     (14,591)         (22,037)
          Deferred tax effect of accumulated other comprehensive loss..................       8,795            9,148
          Accumulated other comprehensive loss.........................................      13,193           13,721
                                                                                        ----------------------------
          Net amount recognized........................................................ $       848      $    (1,675)
                                                                                        ============================
</TABLE>

<TABLE>
<CAPTION>

      Net periodic pension cost included the following components:
                                                                           ----------------------------------------
                                                                                     YEAR ENDED MARCH 31,
                                                                           ----------------------------------------
                                                                              2004           2003           2002
                                                                              ----           ----           ----
<S>                                                                        <C>            <C>            <C>
     Service costs--benefits earned during the period......................$    3,921     $    3,760     $    4,111
     Interest cost on projected benefit obligation........................      6,711          6,294          6,230
     Expected return on plan assets.......................................     (5,404)        (6,026)        (6,676)
     Net amortization.....................................................      1,978            299            213
                                                                           ----------------------------------------
     Net periodic pension cost............................................ $    7,206     $    4,327     $    3,878
                                                                           ========================================
</TABLE>


      The  accumulated  benefit  obligation  for all defined  benefit  plans was
$102,528,000 and $91,258,000 as of March 31, 2004 and 2003, respectively.


                                      F-19

<PAGE>

                          COLUMBUS MCKINNON CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)


      Information  for pension  plans with a  projected  benefit  obligation  in
excess of plan assets is as follows:
                                                       ------------------------
                                                              MARCH 31,
                                                       ------------------------
                                                          2004          2003
                                                          ----          ----
          Projected benefit obligation................ $  110,865    $   97,007
          Fair value of plan assets...................     80,564        65,428

      Information  for pension plans with an accumulated  benefit  obligation in
excess of plan assets is as follows:
                                                       ------------------------
                                                               MARCH 31,
                                                       ------------------------
                                                          2004          2003
                                                          ----          ----
          Accumulated benefit obligation.............. $  102,528    $   91,258
          Fair value of plan assets...................     80,564        65,428

      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,
                                                            --------------------------------------------------------
                                                                2004          2003          2002          2001
                                                            --------------------------------------------------------
<S>                                                              <C>           <C>           <C>           <C>
     Discount rate........................................       6.25%         6.75%         7.25%         7.50%
     Expected long-term rate of return on plan assets.....       8.40          8.50          8.88          8.88
     Rate of compensation increase........................       4.00          4.00          4.00          4.50
</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:
                                                      MARCH 31,
                                      ------------------------------------------
                                         TARGET                  ACTUAL
                                      ------------        ---------------------
                                          2005               2004       2003
                                      ------------        ---------------------
     Equity securities..............       60                 55%        50%
     Fixed income...................       40                 45         50
                                      ------------        ---------------------
     Total plan assets..............      100%               100%       100%
                                      ============        =====================

      The Company has an  investment  objective  for domestic  pension  plans to
adequately  provide  for both the growth  and  liquidity  needed to support  all
current and future benefit payment  obligations.  The investment  strategy is to
invest in a  diversified  portfolio  of assets which are expected to satisfy the
aforementioned  objective and produce both  absolute and risk  adjusted  returns
competitive  with a  benchmark  that is a blend of the S&P 500 and an  aggregate
bond  fund.  The shift to the  targeted  allocation  is the  result of some plan
assets governed by collective  bargaining contracts to be transferred from fixed
income into equity securities during fiscal 2005.

      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 $7,716,000 to its domestic pension plans in fiscal 2005.

      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 $635,000,  $1,430,000 and $1,790,000 for the years ended March 31,
2004, 2003 and 2002, respectively.


                                      F-20

<PAGE>

                          COLUMBUS MCKINNON CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)


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 $200,000,  $341,000  and  $844,000 in fiscal 2004,  2003 and 2002,
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,  2004  and  2003,  836,949  and  941,321  of  ESOP  shares,
respectively,  were  allocated or  available  to be  allocated to  participants'
accounts.  At March 31,  2004 and 2003,  319,802 and 356,851 of ESOP shares were
pledged as collateral to guarantee the ESOP term loans.

      The fair market value of unearned  ESOP shares at March 31, 2004  amounted
to $2,450,000.


13.  POSTRETIREMENT BENEFIT OBLIGATION

      The Company sponsors defined benefit postretirement health care plans that
provide  medical and life insurance  coverage to certain  domestic  retirees and
their dependents.  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.  In
accordance  with FAS No. 132  "Employers'  Disclosures  about Pensions and Other
Postretirement  Benefits," the following sets forth a reconciliation  of benefit
obligations and the funded status of the plan:
                                                        ------------------------
                                                               MARCH 31,
                                                        ------------------------
                                                           2004         2003
                                                           ----         ----
     Change in benefit obligation:
          Benefit obligation at beginning of year....   $  13,800    $   12,538
          Service cost...............................          11            13
          Interest cost..............................         869           832
          Actuarial loss.............................       3,692         2,390
          Benefits paid..............................      (2,388)       (1,973)
                                                        ------------------------
             Benefit obligation at end of year.......   $  15,984    $  13,800
                                                        ========================

          Funded status .............................   $ (15,984)   $  (13,800)
          Unrecognized actuarial loss................       7,894         4,845
          Unrecognized prior service gain............           -          (153)
                                                        ------------------------
          Net amount recognized in accrued and
             other non-current liabilities...........   $  (8,090)   $   (9,108)
                                                        ========================



                                      F-21

<PAGE>

                          COLUMBUS MCKINNON CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)


      Net periodic postretirement benefit cost included the following:

<TABLE>
<CAPTION>
                                                                              --------------------------------------
                                                                                       YEAR ENDED MARCH 31,
                                                                              --------------------------------------
                                                                                 2004          2003          2002
                                                                                 ----          ----          ----
<S>                                                                           <C>           <C>           <C>
     Service cost--benefits attributed to service during the period.......... $      11     $      13     $      82
     Interest cost...........................................................       869           832           891
     Amortization of prior service gain......................................      (153)         (154)         (807)
     Amortization of plan net losses.........................................       643           209           162
     Curtailment gain........................................................         -             -        (1,307)
                                                                              --------------------------------------
          Net periodic postretirement benefit cost (credit).................. $   1,370     $     900     $    (979)
                                                                              ======================================
</TABLE>

      For measurement purposes,  healthcare costs were assumed to increase 12.0%
in fiscal 2005,  grading down over time to 5% in seven years.  The discount rate
used in determining the accumulated  postretirement benefit obligation was 6.25%
and 6.75% as of March 31, 2004 and 2003, respectively.

      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.........          $      43           $     (40)
          Effect on postretirement obligation.............................                803                (728)
</TABLE>

      During  fiscal  2002,  the  company  closed  the  Forrest  City,  Arkansas
production  facility (see Note 16). As a result of the closure,  the size of the
workforce  reduction resulted in the application of curtailment  accounting with
respect to the  postretirement  benefit plan. The curtailment gain resulted from
the acceleration of the unrecognized prior service gain.

      On December  28, 2003,  the Medicare  Prescription  Drug  Improvement  and
Modernization  Act of 2003 was  enacted  that  introduces  a  prescription  drug
benefit  under  Medicare as well as a subsidy to sponsors of retiree  healthcare
benefit  plans.  In March  2004,  the FASB  issued  Staff  Position No FAS 106-2
"Accounting  and Disclosure  Requirements  Related to the Medicare  Prescription
Drug Improvement and Modernization Act of 2003 ("FSP No 106-2")," which provides
accounting   guidance  on  how  to  account  for  the  effects  of  the  Act  on
postretirement  plans. The provisions of FSP No. 106-2 are effective for periods
beginning  after June 15, 2004. Any measures of the  accumulated  postretirement
benefit obligation or net periodic postretirement benefit costs in the Company's
financial statements do not reflect the effect of the Act.


14.  EARNINGS PER SHARE AND STOCK PLANS

   EARNINGS PER SHARE

      The Company calculates  earnings per share in accordance with Statement of
Financial  Accounting  Standards  No. 128,  "Earnings  per Share" (FAS No. 128).
Basic earnings per share excludes any dilutive effects of options, warrants, and
convertible securities. Diluted earnings per share includes any dilutive effects
of stock  options.  The effect of dilutive  employee  stock options has not been
included  for the  years  ended  March 31,  2003 and 2002  since  this  would be
antidilutive as a result of the Company's net losses.


                                      F-22

<PAGE>

                          COLUMBUS MCKINNON CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)


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

<TABLE>
<CAPTION>
                                                                      ---------------------------------------------
                                                                                  YEAR ENDED MARCH 31,
                                                                      ---------------------------------------------
                                                                          2004            2003            2002
                                                                          ----            ----            ----
<S>                                                                   <C>             <C>             <C>
     Numerator for basic and diluted earnings per share:
        Income (loss) from continuing operations..................... $      1,193    $     (6,011)   $     (6,018)
        Total loss from discontinued operations......................            -               -        (129,348)
        Loss from cumulative effect of change in
          accounting principle.......................................            -          (8,000)              -
                                                                      --------------------------------------------
          Net income (loss) ......................................... $      1,193    $    (14,011)   $   (135,366)
                                                                      ============================================

     Denominators:
        Weighted-average common stock outstanding--
          denominator for basic EPS..................................         14,553        14,496          14,414
        Effect of dilutive employee stock options....................              1             -               -
                                                                      --------------------------------------------
        Adjusted weighted-average common stock
          outstanding and assumed conversions--
          denominator for diluted EPS................................         14,554        14,496          14,414
                                                                      ============================================

</TABLE>


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

      The Company maintains two stock option plans, a Non-Qualified Stock Option
Plan  (Non-Qualified  Plan) and an Incentive Stock Option Plan (Incentive Plan).
Under the Non-Qualified  Plan,  options may be granted to officers and other key
employees  of the Company as well as to  non-employee  directors  and  advisors.
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, 2004 is as follows:
                                                                WEIGHTED-AVERAGE
                                                SHARES           EXERCISE PRICE
                                            ------------------------------------
   Balance at March 31, 2001.............        671,535         $      19.46
      Granted............................        762,000                10.07
      Cancelled..........................        (27,375)               21.06
                                            ------------------------------------
   Balance at March 31, 2002.............      1,406,160         $      14.34
      Cancelled..........................        (94,410)               18.31
                                            ------------------------------------
   Balance at March 31, 2003.............      1,311,750         $      14.05
      Granted............................         45,000                 6.92
      Cancelled..........................       (126,900)               14.28
                                            ------------------------------------
   Balance at March 31, 2004.............      1,229,850         $      13.77
                                            ====================================

      A summary of exercisable and available for grant options is as follows:

                                              ----------------------------------
                                                     YEAR ENDED MARCH 31,
                                              ----------------------------------
                                                 2004         2003        2002
                                                 ----         ----        ----
     Exercisable at end of year..............   851,425      653,887     394,153
     Available for grant at end of year......   752,650      670,750      76,340




                                      F-23

<PAGE>

                          COLUMBUS MCKINNON CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)


      Exercise prices for options  outstanding as of March 31, 2004, ranged from
$6.92 to $29.00.  The following table provides certain  information with respect
to stock options outstanding at March 31, 2004:

<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.....................              683,950           $    9.77                    7.6
          $10.01 to $20.00..................              194,100               14.63                    3.9
          $20.01 to $30.00..................              351,800               21.06                    5.0
                                               -------------------------------------------------------------------------
                                                        1,229,850           $   13.77                    6.2
                                               =========================================================================

</TABLE>


      The following  table provides  certain  information  with respect to stock
options exercisable at March 31, 2004:

                                                STOCK OPTIONS   WEIGHTED-AVERAGE
                   RANGE OF EXERCISE PRICES      OUTSTANDING     EXERCISE PRICE
                   ------------------------      -----------    ----------------
           Up to $10.00.......................     325,213        $      9.95
          $10.01 to $20.00....................     174,412              14.98
          $20.01 to $30.00....................     351,800              21.06
                                                 -----------    ----------------
                                                   851,425        $     15.57
                                                 ===========    ================

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

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


      For purposes of pro forma  disclosures,  the  estimated  fair value of the
options is amortized to expense over the  options'  vesting  period.  No options
were  granted in fiscal 2003.  The fair value for issued  options in fiscal 2004
and 2002 was estimated at the date of grant using a Black-Scholes option pricing
model with the following weighted-average assumptions:

                                          YEAR ENDED              YEAR ENDED
                                        MARCH 31, 2004          MARCH 31, 2002
                                       ----------------        ----------------
Assumptions:
   Risk-free interest rate...........        4.5 %                   4.5 %
   Dividend yield--Incentive Plan....        0.0 %                   0.0 %
   Volatility factor.................        0.567                   0.444
   Expected life--Incentive Plan.....      5 years                 5 years

      The  weighted-average  fair value of options  granted in 2004 and 2002 was
$3.68 and $4.66 per share, respectively.






                                      F-24

<PAGE>

                          COLUMBUS MCKINNON CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)


      The Company maintains a Restricted Stock Plan, under which the Company had
49,000  shares  reserved  for  issuance at March 31, 2004 and 2003.  The Company
charges  unearned  compensation,  a component of shareholders'  equity,  for the
market value of shares,  as they are issued.  It is then ratably  amortized over
the  restricted  period.  Grantees  who remain  continuously  employed  with the
Company  become  vested in their  shares five years after the date of the grant.
There were 1,000 shares  issued  during the year ended March 31, 2003. No shares
were issued during the year ended March 31, 2004 or 2002.


15.  LOSS CONTINGENCIES

      GENERAL AND  PRODUCT  LIABILITY--$15,810,000  of the  accrued  general and
product liability costs which are included in other  non-current  liabilities at
March 31, 2004  ($14,314,000 at March 31, 2003) are the actuarial  present value
of  estimated  reserves  based on an amount  determined  from loss  reports  and
individual cases filed with the Company and an amount, based on experience,  for
losses incurred but not reported.  The accrual in these  consolidated  financial
statements was determined by applying a discount  factor based on interest rates
customarily  used in the insurance  industry,  between  5.27% and 6.63%,  to the
undiscounted reserves of $19,535,000 and $17,700,000 at March 31, 2004 and 2003,
respectively.  This liability is funded by investments in marketable  securities
(see Notes 2 and 6).

      Along  with  other  manufacturing  companies,  we are  subject  to various
federal, state and local laws relating to the protection of the environment.  To
address the requirements of such laws, we have adopted a corporate environmental
protection  policy  which  provides  that all of our owned or leased  facilities
shall,  and all of our employees  have the duty to,  comply with all  applicable
environmental  regulatory  standards,  and we have  initiated  an  environmental
auditing  program for our facilities to ensure  compliance  with such regulatory
standards.  We have also established  managerial  responsibilities  and internal
communication channels for dealing with environmental compliance issues that may
arise in the course of our  business.  Because of the  complexity  and  changing
nature of  environmental  regulatory  standards,  it is possible that situations
will  arise from time to time  requiring  us to incur  expenditures  in order to
ensure  environmental  regulatory  compliance.  However, we are not aware of any
environmental  condition  or any  operation  at any  of our  facilities,  either
individually  or in the  aggregate,  which  would  cause  expenditures  having a
material  adverse  effect on our results of operations,  financial  condition or
cash flows and, accordingly, have not budgeted any material capital expenditures
for environmental compliance for fiscal 2005.

      Like  most   industrial   manufacturers,   the   Company  is  involved  in
asbestos-related   litigation.   In   continually   evaluating   its   estimated
asbestos-related  liability,  the  Company  reviews,  among  other  things,  the
incidence of past and recent claims, the historical case dismissal rate, the mix
of the claimed  illnesses  and  occupations  of the  plaintiffs,  its recent and
historical  resolution of the cases, the number of cases pending against it, the
status and  results of  broad-based  settlement  discussions,  and the number of
years such  activity  might  continue.  Based on this  review,  the  Company has
estimated its share of liability to defend and resolve probable asbestos-related
personal injury claims. This estimate is highly uncertain due to the limitations
of the available data and the  difficulty of forecasting  with any certainty the
numerous variables that can affect the range of the liability.  The Company will
continue to study the variables in light of additional  information  in order to
identify  trends that may become evident and to assess their impact on the range
of liability that is probable and estimable.



                                      F-25

<PAGE>

                          COLUMBUS MCKINNON CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)


      Our actuaries have estimated our asbestos-related  liability to range from
$2.8  million  to $12.3  million  through  approximately  March  31,  2034.  The
Company's  estimate  of its  asbestos-related  liability  that is  probable  and
estimable  through  fiscal 2012 ranges from $2.8  million to $4.0  million as of
March  31,  2004.  The  range  of  probable  and  estimable  liability  reflects
uncertainty  in the number of future  claims  that will be filed and the cost to
resolve those claims, which may be influenced by a number of factors,  including
the  outcome  of the  ongoing  broad-based  settlement  negotiations,  defensive
strategies,  and the cost to resolve claims outside the  broad-based  settlement
program.  The Company  has  concluded  that no amount  within that range is more
likely than any other,  and therefore has reflected  $3.0 million as a liability
in the consolidated  financial  statements in accordance with generally accepted
accounting  principles.  The recorded  liability does not consider the impact of
any  potential  favorable  federal  legislation  such as the "FAIR Act". Of this
amount, management expects to incur asbestos liability payments of approximately
$0.2 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 the  financial
condition of the Company or its liquidity,  although the net after-tax effect of
any future  liabilities  recorded  could be  material  to  earnings  in a future
period.


16.  RESTRUCTURING CHARGES

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

      During  fiscal  2004,  the Company  recorded  restructuring  costs of $1.2
million related to various employee termination benefits and facility costs as a
result of the continued  closure,  merging and reorganization of the Company and
completion of the two open  projects from fiscal 2003.  $0.8 and $0.4 million of
these costs are related to the Products and  Solutions  segments,  respectively.
Approximately  130 employees were  terminated at the various  facilities.  As of
March  31,  2004,  the  liability  consists  of  severance  payments  and  costs
associated  with the preparation  and  maintenance of  non-operating  facilities
prior to  disposal  which were  accrued  prior to the  adoption  of SFAS No. 146
"Accounting for Costs Associated with Exit or Disposal  Activities."  Currently,
we anticipate  that our  restructuring  charges for fiscal 2005 related to these
plans to be between $0.4 and $0.7 million  strictly  related to facility  costs.
The Company has two  facilities  that are  completely  closed and  prepared  for
disposal and are recorded as assets held for sale.

      During  fiscal  2003,  the Company  recorded  restructuring  costs of $3.7
million related to various employee termination benefits and facility costs as a
result  of the  decision  to  close,  merge  or  significantly  reorganize  five
manufacturing  facilities.  Three of the five projects were completed as planned
in the fourth  quarter of 2003 while two  others  were  completed  in the second
quarter of fiscal 2004. All of these costs are related to the Products  segment,
with the exception of approximately  $0.1 million.  Approximately  215 employees
were  to be  terminated  at  the  various  facilities.  As of  March  31,  2003,
approximately  one half of the  terminations  had  occurred  with the  remaining
terminations  completed  in fiscal  2004.  The  liability  as of March 31,  2003
consisted of severance  payments and costs  associated  with the preparation and
maintenance of  non-operating of facilities prior to disposal which were accrued
prior to the adoption of SFAS No. 146 "Accounting for Costs Associated with Exit
or Disposal Activities".




                                      F-26

<PAGE>

                          COLUMBUS MCKINNON CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

      During  fiscal  2002,  the Company  recorded  restructuring  costs of $9.6
million related to various employee and contractual  terminations as a result of
the decision to close two manufacturing facilities. All of the costs are related
to the Products segment. Included in the restructuring charges was approximately
$8.3  million to  terminate  a facility  lease,  resulting  in the  purchase  of
property with an estimated  fair value of  approximately  $2.3 million which was
recorded as an offset to the restructuring  charges. The $2.3 million fair value
of the property was classified as net assets  available for sale as of March 31,
2002.  Due to changes in the real estate market and a  reassessment  of the fair
value of the property,  the net asset held for sale was adjusted by $0.5 million
as  a  further  restructuring  charge  during  fiscal  2003.  Approximately  250
employees were to be terminated at the Company's hoist manufacturing facility in
Forrest City,  Arkansas and chain  manufacturing  facility in Richmond,  British
Columbia,  Canada  when  those  facilities  were  closed in the third and fourth
quarter of fiscal 2002, respectively. As of March 31, 2002, substantially all of
the terminations had occurred and the remaining liability consisted of severance
payments  and  costs  associated  with the  operation  of the  facilities  until
disposal.  In  addition  to those  facilities,  the  Company  closed,  merged or
restructured  three smaller  facilities and three  warehouse  facilities  during
fiscal 2002.

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

<TABLE>
<CAPTION>
                                     -------------------------------------------------------------------------------
                                      FISCAL 2002 PROJECTS        FISCAL 2003 PROJECTS       FISCAL 2004      TOTAL
                                     -------------------------------------------------------------------------------
                                     EMPLOYEE       FACILITY     EMPLOYEE      FACILITY      EMPLOYEE
                                      RELATED       CLOSURE       RELATED       CLOSURE       RELATED
                                     -------------------------------------------------------------------------------
<S>                                  <C>           <C>           <C>           <C>           <C>           <C>
     Reserve at March 31, 2001.....  $       -     $       -     $       -     $       -     $       -     $       -
     Fiscal 2002 restructuring
       Charges.....................      2,400         7,169             -             -             -         9,569
     Cash payments.................     (1,750)       (9,170)            -             -             -       (10,920)
     Reclassification to net
       assets held for sale........          -         2,300             -             -             -         2,300
                                     -------------------------------------------------------------------------------
     Reserve at March 31, 2002 ....        650           299             -             -             -           949
     Fiscal 2003 restructuring
       charges.....................          -           857         1,789         1,051             -         3,697
     Cash payments.................       (650)         (296)         (867)           (2)            -        (1,815)
     Write-down of non-operating
       property....................          -          (500)            -             -             -          (500)
                                     -------------------------------------------------------------------------------
     Reserve at March 31, 2003.....  $       -     $     360     $     922     $   1,049     $       -     $   2,331
     Fiscal 2004 restructuring
       charges.....................          -             -          (318)          234         1,323         1,239
     Cash payments.................          -          (151)         (558)       (1,092)       (1,208)       (3,009)
                                     -------------------------------------------------------------------------------
     Reserve at March 31, 2004.....  $       -     $     209     $      46     $     191     $     115     $     561
                                     ===============================================================================
</TABLE>


17.  INCOME TAXES

      The  provision  for  income  taxes  differs  from the amount  computed  by
applying the statutory  federal income tax rate to income (loss) from continuing
operations before income tax expense and cumulative effect of accounting change.
The sources and tax effects of the difference were as follows:
<TABLE>
<CAPTION>
                                                                            -----------------------------------------
                                                                                      YEAR ENDED MARCH 31,
                                                                            -----------------------------------------
                                                                               2004           2003           2002
                                                                               ----           ----           ----
<S>                  <C>                                                    <C>            <C>            <C>
     Expected tax at 35%................................................... $     1,821    $    (1,568)   $    (1,301)
     State income taxes net of federal benefit.............................         614            715            501
     Nondeductible goodwill write-off/amortization.........................           -          1,398          2,752
     Foreign taxes greater than statutory provision........................         905            632            922
     Benefit of worthless stock deduction..................................     (44,815)             -              -
     Research and development credit.......................................      (1,058)             -         (1,031)
     Valuation allowance...................................................      46,974          1,249              -
     Other.................................................................        (432)          (894)           458
                                                                            -----------------------------------------
     Actual tax provision.................................................. $     4,009    $     1,532    $     2,301
                                                                            =========================================
</TABLE>

                                      F-27

<PAGE>

                          COLUMBUS MCKINNON CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)


      The provision for income tax expense consisted of the following:
<TABLE>
<CAPTION>
                                                                            -----------------------------------------
                                                                                      YEAR ENDED MARCH 31,
                                                                            -----------------------------------------
                                                                                2004           2003           2002
                                                                                ----           ----           ----
     Current income tax expense (benefit):
<S>                                                                         <C>            <C>            <C>
          United States Federal..........................................   $       147    $    (6,148)   $      (198)
          State taxes....................................................           928          1,099          1,012
          Foreign........................................................         2,779          1,083          1,483
     Deferred income tax expense (benefit):
          United States..................................................           880          5,715           (317)
          Foreign........................................................          (725)          (217)           321
                                                                            -----------------------------------------
                                                                            $     4,009    $     1,532    $     2,301
                                                                            =========================================
</TABLE>

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

                                                       ------------------------
                                                              MARCH 31,
                                                       ------------------------
                                                          2004           2003
                                                          ----           ----
     Deferred tax assets:
        Net operating loss carryforwards............  $   39,741     $        -
        Employee benefit plans......................       9,629         11,471
        Asset reserves..............................       2,835          5,496
        Insurance reserves..........................       5,022          4,122
        Accrued vacation and incentive costs........       2,090          2,106
        Capital loss carryforwards..................         869          1,249
        Other.......................................       4,607          3,777
        Valuation allowance.........................     (48,223)        (1,249)
                                                      -------------------------
          Gross deferred tax assets                       16,570         26,972
                                                      -------------------------
     Deferred tax liabilities:
        Inventory reserves..........................      (3,577)        (4,264)
        Property, plant, and equipment..............      (4,908)        (5,425)
                                                      -------------------------
          Gross deferred tax liabilities............      (8,485)        (9,689)
                                                      -------------------------
             Net deferred tax assets................  $    8,085     $   17,283
                                                      =========================

      As of  March  31,  2004,  the  Company  had  federal  net  operating  loss
carryforwards  of approximately  $113,540,000 and capital loss  carryforwards of
$2,484,000.  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 ASI (see  Note 3). If not
utilized,  these  carryforwards  will expire in fiscal years 2023 and 2024.  The
capital  losses  arose from  $1,579,000  of losses on the sale of the  Company's
marketable  securities  and a $905,000 loss on the  disposition of a subsidiary.
Capital loss carryforwards of $1,470,000,  $972,000, and $42,000 expire at March
31, 2007, 2008, and 2009, respectively. A valuation allowance of $48,223,000 was
recorded  at March 31,  2004 due to the  uncertainly  of whether  the  Company's
operating loss carryforwards, deferred tax assets and capital loss carryforwards
may ultimately be realized

      Deferred  income  taxes are  classified  within the  consolidated  balance
sheets based on the following breakdown:
                                                         -----------------------
                                                                MARCH 31,
                                                         -----------------------
                                                            2004          2003
                                                            ----          ----
     Net current deferred tax asset...................   $   3,662     $   2,038
     Net non-current deferred tax asset...............       6,388        15,245
     Net current deferred tax liability...............        (671)            -
     Net non-current deferred tax liability...........      (1,294)            -
                                                         -----------------------
          Net deferred tax asset......................   $   8,085     $  17,283
                                                         =======================

                                      F-28

<PAGE>

                          COLUMBUS MCKINNON CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)


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

      Income  before  income tax expense  and  cumulative  effect of  accounting
change includes foreign subsidiary income of $3,687,000, $649,000 and $2,436,000
for the years ended March 31, 2004,  2003, and 2002,  respectively.  As of March
31,  2004,  the Company had  unrecognized  deferred tax  liabilities  related to
approximately  $17  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.


18.  RENTAL EXPENSE AND LEASE COMMITMENTS

      Rental  expense  for the years  ended  March 31,  2004,  2003 and 2002 was
$3,594,000,  $3,109,000,  and $3,225,000,  respectively.  The following  amounts
represent  future  minimum  payment  commitments  as of  March  31,  2004  under
non-cancelable operating leases extending beyond one year (in thousands):

<TABLE>
<CAPTION>

                                                                    VEHICLES AND
     YEAR ENDED MARCH 31,                          REAL PROPERTY      EQUIPMENT          TOTAL
     --------------------                          -------------      ---------          -----
<S>  <C>                                            <C>              <C>              <C>
     2005.......................................    $      1,525     $      2,239     $      3,764
     2006.......................................           1,034            1,705            2,739
     2007.......................................             779            1,384            2,163
     2008.......................................             687              952            1,639
     2009.......................................             647              601            1,248

</TABLE>






























                                      F-29

<PAGE>

                                       COLUMBUS McKINNON CORPORATION

                          NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)


19.  Summary Financial Information

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


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

<TABLE>
<CAPTION>

                                                  Parent     Guarantors  Nonguarantors  Eliminations  Consolidated
                                               -------------------------------------------------------------------
As of March 31, 2004:                                                    (In thousands)

Current assets:
<S>                                            <C>           <C>           <C>           <C>           <C>
     Cash..................................... $    6,981    $     (329)   $    4,449    $        -    $   11,101
     Trade accounts receivable and unbilled
        revenues..............................     55,335           (47)       34,246             -        89,534
     Inventories..............................     29,147        18,210        22,734          (972)       69,119
     Net assets held for sale.................      1,800           990             -             -         2,790
     Prepaid expenses.........................      8,383           691         6,412             -        15,486
                                               -------------------------------------------------------------------
        Total current assets..................    101,646        19,515        67,841          (972)      188,030
Net property, plant, and equipment............     26,016        13,718        19,039             -        58,773
Goodwill and other intangibles, net...........     96,114        57,325        39,524             -       192,963
Intercompany balances.........................     41,127       (44,864)      (70,327)       74,064             -
Other non-current assets......................     51,001       198,664        24,134      (240,202)       33,597
                                               -------------------------------------------------------------------
        Total assets.......................... $  315,904    $  244,358    $   80,211    $ (167,110)   $  473,363
                                               ===================================================================

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



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


                                      F-30

<PAGE>

                                                     COLUMBUS McKINNON CORPORATION

                                        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)


                                                  Parent     Guarantors  Nonguarantors  Eliminations  Consolidated
                                               -------------------------------------------------------------------
For the Year Ended March 31, 2004:
Operating activities:
Cash provided by (used in) operating
   activities................................. $   19,359    $   (2,644)   $   18,623    $   (8,969)   $   26,369
Investing activities:
Proceeds from marketable securities, net......          -             -           110             -           110
Capital expenditures..........................     (2,635)         (700)         (284)            -        (3,619)
Proceeds from sale of businesses..............      4,015             -             -             -         4,015
Proceeds from sale of property, plant and
   equipment..................................          -           387             -             -           387
Net assets held for sale......................          -         3,376             -             -         3,376
                                               -------------------------------------------------------------------
Net cash provided by (used in) investing
activities....................................      1,380         3,063          (174)            -         4,269
Financing activities:
Proceeds from issuance of common stock........          -             -           (19)           19             -
Net (payments) borrowings under revolving
   line-of-credit agreements..................     (9,925)            -         3,033             -        (6,892)
Repayment of debt.............................   (115,147)            -       (10,617)            -      (125,764)
Proceeds from issuance of long term debt......    115,000             -             -             -       115,000
Deferred financing costs incurred.............     (4,432)            -             -             -        (4,432)
Dividends paid................................        174             -        (9,124)        8,950             -
Other.........................................        593             -             -             -           593
                                               -------------------------------------------------------------------
Net cash (used in) provided by financing
   activities.................................    (13,737)            -       (16,727)        8,969       (21,495)
Effect of exchange rate changes on cash.......        (78)           72            21             -            15
                                               -------------------------------------------------------------------
Net change in cash and cash equivalents.......      6,924           491         1,743             -         9,158
Cash and cash equivalents at
   beginning of year..........................         57          (820)        2,706             -         1,943
                                               -------------------------------------------------------------------
Cash and cash equivalents at end of year...... $    6,981    $     (329)   $    4,449    $        -    $   11,101
                                               ===================================================================



As of and for the year ended March 31, 2003:

As of March 31, 2003:
Current assets:
     Cash..................................... $       56    $     (829)   $    2,716    $        -    $    1,943
     Trade accounts receivable and unbilled
        revenues..............................     54,255           (81)       34,022             -        88,196
     Inventories..............................     38,126        19,667        21,792          (972)       78,613
     Net assets held for sale.................      1,800             -             -             -         1,800
     Other current assets.....................      5,000         1,439         4,380             -        10,819
                                               -------------------------------------------------------------------
        Total current assets..................     99,237        20,196        62,910          (972)      181,371
Net property, plant, and equipment............     31,761        16,551        18,983             -        67,295
Goodwill and other intangibles, net...........     98,853        57,364        38,912             -       195,129
Intercompany balances.........................     48,807       (75,044)      (47,860)       74,097             -
Other non-current assets......................    207,288       172,822        32,199      (373,498)       38,811
                                               -------------------------------------------------------------------
        Total assets.......................... $  485,946    $  191,889    $  105,144    $ (300,373)   $  482,606
                                               ===================================================================

Current liabilities........................... $   42,193    $    8,613    $   24,763    $     (818)   $   74,751
Long-term debt, less current portion..........    297,690             -        11,399             -       309,089
Other non-current liabilities.................     27,786        14,034         4,239             -        46,059
                                               -------------------------------------------------------------------
        Total liabilities.....................    367,669        22,647        40,401          (818)      429,899
Shareholders' equity..........................    118,277       169,242        64,743      (299,555)       52,707
                                               -------------------------------------------------------------------
        Total liabilities and shareholders
             equity........................... $  485,946    $  191,889    $  105,144    $ (300,373)   $  482,606
                                               ===================================================================


                                      F-31

<PAGE>

                                                     COLUMBUS McKINNON CORPORATION

                                        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)


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



For the Year Ended March 31, 2003:
Operating activities:
Cash provided by (used in) operating
   activities................................. $   32,288    $   (7,709)   $   (9,013)   $   (1,387)   $   14,179
Investing activities:
Purchase of marketable securities, net........       (672)            -             -             -          (672)
Capital expenditures..........................     (1,901)         (952)       (2,187)            -        (5,040)
Proceeds from sale of business................      1,108        16,154             -             -        17,262
Net assets held for sale......................          -         4,418             -             -         4,418
                                               -------------------------------------------------------------------
Net cash (used in) provided by investing
   activities.................................     (1,465)       19,620        (2,187)            -        15,968
Financing activities:
Proceeds from issuance of common stock........          -             -            16           (16)            -
Net (payments) borrowings under revolving
   line-of-credit agreements..................    (31,437)      (11,551)        9,858             -       (33,130)
Repayment of debt.............................       (564)            -          (831)            -        (1,395)
Payment of deferred financing costs...........     (7,823)            -          (365)            -        (8,188)
Dividends paid................................        234             -        (1,647)        1,413             -
Other.........................................        805             -             -             -           805
                                               -------------------------------------------------------------------
Net cash (used in) provided by financing
   activities.................................    (38,785)       (11,551)       7,031         1,397       (41,908)
Effect of exchange rate changes on cash.......         (6)            8           140           (10)          132
                                               -------------------------------------------------------------------
Net cash (used in) provided by
   continuing perations.......................     (7,968)          368        (4,029)            -       (11,629)
Net cash provided by discontinued operations..          -           504             -             -           504
                                               -------------------------------------------------------------------
Net change in cash and cash equivalents.......     (7,968)          872        (4,029)            -       (11,125)
Cash and cash equivalents at
   beginning of year..........................      8,024        (1,701)        6,745             -        13,068
                                               -------------------------------------------------------------------
Cash and cash equivalents at end of year...... $       56    $     (829)   $    2,716    $        -    $    1,943
                                               ===================================================================




                                      F-32

<PAGE>

                                                     COLUMBUS McKINNON CORPORATION

                                        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)


For the year ended March 31, 2002:

                                                  Parent     Guarantors  Nonguarantors  Eliminations  Consolidated
                                               -------------------------------------------------------------------
For the Year Ended March 31, 2002:
Net sales..................................... $  222,957    $  170,265    $  107,944    $  (21,138)   $  480,028
Cost of products sold.........................    164,150       134,031        82,533       (21,163)      359,551
                                               -------------------------------------------------------------------
Gross profit..................................     58,807        36,234        25,411            25       120,477
                                               -------------------------------------------------------------------
Selling, general and administrative expenses..     34,539        17,163        20,065             -        71,767
Restructuring charges.........................      9,416             -           153             -         9,569
Amortization of intangibles...................      2,140         6,461         2,412             -        11,013
                                               -------------------------------------------------------------------
Income from operations........................     12,712        12,610         2,781            25        28,128
Interest and debt expense.....................     28,869             -           512             -        29,381
Other (income) and expense, net...............      4,773        (2,076)         (233)            -         2,464
                                               -------------------------------------------------------------------
Income (loss) from continuing operations
   before income tax expense..................    (20,930)       14,686         2,502            25        (3,717)
Income tax expense............................     (6,838)        7,419         1,710            10         2,301
                                               -------------------------------------------------------------------
(Loss) income from continuing operations......    (14,092)        7,267           792            15        (6,018)
Loss on discontinued operations...............          -        (7,873)            -             -        (7,873)
Loss on disposal of discontinued operations...          -      (121,475)            -             -      (121,475)
                                               -------------------------------------------------------------------
Net (loss) income............................. $  (14,092)   $ (122,081)   $      792    $       15    $ (135,366)
                                               ===================================================================



For the Year Ended March 31, 2002:
Operating activities:
Cash provided by (used in) operating
   activities................................. $   63,500    $  (17,965)   $    5,914    $   (1,652)   $   49,797
Investing activities:
Purchase of marketable securities, net........     (1,794)            -             -             -        (1,794)
Capital expenditures..........................     (6,923)        3,162          (992)            -        (4,753)
Proceeds from sale of business................        890             -             -             -           890
Proceeds from sale of property, plant and
   equipment..................................          -             -         1,750             -         1,750
Net assets held for sale......................          -         2,280             -             -         2,280
                                               -------------------------------------------------------------------
Net cash (used in) provided by investing
   activities.................................     (7,827)        5,442           758             -        (1,627)
Financing activities:
Net (payments) borrowings under revolving
   line-of-credit agreements..................    (56,200)       13,016          (494)            -       (43,678)
Repayment of debt.............................       (851)            -        (2,196)            -        (3,047)
Dividends paid................................     (1,808)            -        (1,820)        1,652        (1,976)
Other.........................................        219             -             -             -           219
                                               -------------------------------------------------------------------
Net cash (used in) provided by financing
   activities.................................    (58,640)       13,016        (4,510)        1,652       (48,482)
Effect of exchange rate changes on cash.......        (26)            -          (280)            -          (306)
                                               -------------------------------------------------------------------
Net cash provided by (used in) continuing
   operations.................................     (2,993)          493         1,882             -          (618)
Net cash used in discontinued operations......          -          (329)            -             -          (329)
                                               -------------------------------------------------------------------
Net change in cash and cash equivalents.......     (2,993)          164         1,882             -          (947)
Cash and cash equivalents at
    beginning of year.........................     11,017        (1,865)        4,863             -        14,015
                                               -------------------------------------------------------------------
Cash and cash equivalents at end of year...... $    8,024    $   (1,701)   $    6,745    $        -    $   13,068
                                               ===================================================================


</TABLE>


                                      F-33

<PAGE>

                          COLUMBUS MCKINNON CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)


20.  BUSINESS SEGMENT INFORMATION

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


      Segment information as of and for the years ended March 31, 2004, 2003 and
2002 is as follows:

<TABLE>
<CAPTION>
                                                                         ----------------------------------------------
                                                                                    YEAR ENDED MARCH 31, 2004
                                                                         ----------------------------------------------
                                                                           PRODUCTS        SOLUTIONS          TOTAL
                                                                           --------        ---------          -----
<S>                                                                      <C>              <C>              <C>
Sales to external customers............................................  $    394,160     $     50,431     $    444,591
Operating income before restructuring charges
   and amortization....................................................        33,511           (2,022)          31,489
Depreciation and amortization..........................................         8,996            1,130           10,126
Total assets...........................................................       446,069           27,294          473,363
Capital expenditures...................................................         3,362              257            3,619


                                                                         -------------------------------------------------
                                                                                    YEAR ENDED MARCH 31, 2003
                                                                         -------------------------------------------------
                                                                           PRODUCTS        SOLUTIONS          TOTAL
                                                                           --------        ---------          -----
Sales to external customers............................................  $    388,076     $     65,244     $    453,320
Operating income before restructuring charges
   and amortization....................................................        33,593             (270)          33,323
Depreciation and amortization..........................................        13,731            1,072           14,803
Total assets...........................................................       450,641           31,965          482,606
Capital expenditures...................................................         3,914            1,126            5,040

                                                                         -------------------------------------------------
                                                                                    YEAR ENDED MARCH 31, 2002
                                                                         -------------------------------------------------
                                                                             PRODUCTS      SOLUTIONS          TOTAL
                                                                             --------      ---------          -----
Sales to external customers............................................. $    404,731     $     75,297     $    480,028
Operating income before restructuring charges
   and amortization.....................................................       47,045            1,665           48,710
Depreciation and amortization...........................................       19,515            2,947           22,462
Total assets............................................................      438,294           64,504          502,798
Capital expenditures....................................................        3,904              849            4,753

</TABLE>

                                      F-34

<PAGE>

                          COLUMBUS MCKINNON CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)


      The  following  provides  a  reconciliation  of  operating  income  before
restructuring  charges and amortization to consolidated income before income tax
expense:

<TABLE>
<CAPTION>
                                                                            -------------------------------------------
                                                                                       YEAR ENDED MARCH 31,
                                                                            -------------------------------------------
                                                                               2004            2003            2002
                                                                               ----            ----            ----
Operating income before restructuring charges and
<S>                                                                         <C>             <C>             <C>
   amortization.........................................................    $    31,489     $    33,323     $    48,710
Restructuring charges...................................................         (1,239)         (3,697)         (9,569)
Amortization of intangibles.............................................           (383)         (4,246)        (11,013)
Interest and debt expense...............................................        (28,856)        (32,008)        (29,381)
Other income and (expense)..............................................          4,191           2,149          (2,464)
                                                                            -------------------------------------------
Income (loss) from continuing operations before
   income tax expense...................................................    $     5,202     $    (4,479)    $    (3,717)
                                                                            ===========================================

      Financial  information  relating to the Company's operations by geographic
area is as follows:
                                                                            -------------------------------------------
                                                                                      YEAR ENDED MARCH 31,
                                                                            -------------------------------------------
                                                                                2004            2003            2002
                                                                                ----            ----            ----
NET SALES:
United States...........................................................    $   319,815     $   337,929     $   374,070
Europe..................................................................         86,518          82,999          70,097
Canada..................................................................         27,736          24,104          29,340
Other...................................................................         10,522           8,288           6,521
                                                                            -------------------------------------------
Total...................................................................    $   444,591     $   453,320     $   480,028
                                                                            ===========================================


                                                                            -------------------------------------------
                                                                                      YEAR ENDED MARCH 31,
                                                                            -------------------------------------------
                                                                                2004            2003            2002
                                                                                ----            ----            ----
TOTAL ASSETS:
United States...........................................................    $   347,488     $   363,331     $   388,669
Europe..................................................................        105,120          98,248          92,541
Canada..................................................................         14,628          16,173          17,071
Other...................................................................          6,127           4,854           4,517
                                                                            -------------------------------------------
Assets of continuing operations.........................................        473,363         482,606         502,798
Assets of discontinued operations.......................................              -               -          21,497
                                                                            -------------------------------------------
Total...................................................................    $   473,363     $   482,606     $   524,295
                                                                            ===========================================

                                                                            -------------------------------------------
                                                                                      YEAR ENDED MARCH 31,
                                                                            -------------------------------------------
                                                                                2004            2003            2002
                                                                                ----            ----            ----
LONG-LIVED ASSETS:
United States...........................................................    $   193,423     $   204,529     $   211,699
Europe..................................................................         53,051          51,794          54,154
Canada..................................................................          3,283           4,479           4,266
Other...................................................................          1,979           1,622           1,424
                                                                            -------------------------------------------
Total...................................................................    $   251,736     $   262,424     $   271,543
                                                                            ===========================================
</TABLE>





                                      F-35

<PAGE>

                          COLUMBUS MCKINNON CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)


21.  SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

      As a result of the adoption of SFAS 142, as of April 1, 2002,  the Company
recorded a goodwill impairment charge of $8 million ($0.55 per share - basic and
diluted).  The amount of the charge was determined in September 2002,  which was
within the permissible  six-month  period  following  adoption of SFAS 142. Also
under the provisions of SFAS 142, the charge is retroactively recorded as of the
date of adoption of SFAS 142.  This results in a difference in the first quarter
net income, as compared to the net income  previously  reported in the quarterly
Form  10-Q  filed for the  first  quarter  of  Fiscal  2003.  The net  income as
previously reported was $3,499,000.  The impairment charge results in a restated
net loss of $4,501,000  ($0.15 loss per share - basic and diluted) for the first
quarter of Fiscal 2003

      Below  is  selected  quarterly  financial  data for  fiscal  2004 and 2003
including the restated  amounts for the three months ended June 30, 2002 for the
cumulative effect of change in accounting principle:

<TABLE>
<CAPTION>

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

                                             ------------------------------------------------------------
Net income (loss) per share - basic and .
diluted..................................    $      0.03     $       0.10    $       0.05     $    (0.10)
                                             ============================================================


                                             ------------------------------------------------------------
                                                                  THREE MONTHS ENDED
                                             ------------------------------------------------------------
                                               JUNE 30,      SEPTEMBER 29,   DECEMBER 29,       MARCH 31,
                                                 2002            2002            2002             2003
                                                 ----            ----            ----             ----
Net sales................................    $    113,891    $     113,238   $     107,384    $   118,807
Gross profit.............................          27,630           26,573          26,299         26,832
Income (loss) from operations............           9,474            8,539           8,008           (641)
Income (loss) from continuing operations.           3,499            1,015          (2,473)        (8,052)
Cumulative effect of change in
   accounting principle..................          (8,000)               -               -              -
Net (loss) income........................    $     (4,501)   $       1,015   $      (2,473)   $    (8,052)
                                             ============================================================

Net (loss) income per share - basic anddiluted:
   Continuing operations.................    $      0.24     $       0.07    $      (0.17)    $    (0.55)
   Cumulative effect of change...........          (0.55)            -               -              -
                                             ------------------------------------------------------------
   Net (loss) income.....................    $     (0.31)    $       0.07    $      (0.17)    $    (0.55)
                                             ============================================================


</TABLE>


                                      F-36

<PAGE>

                          COLUMBUS MCKINNON CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)


22.  ACCUMULATED OTHER COMPREHENSIVE LOSS

      The components of accumulated other comprehensive loss are as follows:

<TABLE>
<CAPTION>
                                                                                      ------------------------
                                                                                             MARCH 31,
                                                                                      ------------------------
                                                                                         2004           2003
                                                                                      ------------------------
<S>                                                                                   <C>           <C>
     Net unrealized investment gains (losses) - net of tax........................    $    1,364    $     (342)
     Derivatives qualifying as hedges - net of tax................................             -          (191)
     Minimum pension liability adjustment - net of tax............................       (13,193)      (13,721)
     Foreign currency translation adjustment......................................         1,253        (5,136)
                                                                                      ------------------------
     Accumulated other comprehensive loss.........................................    $  (10,576)   $  (19,390)
                                                                                      ========================

</TABLE>

      The deferred taxes associated with the items included in accumulated other
comprehensive   loss  were   $8,061,000   and  $9,459,000  for  2004  and  2003,
respectively.

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

<TABLE>
<CAPTION>
                                                                           --------------------------------------
                                                                                    YEAR ENDED MARCH 31,
                                                                           --------------------------------------
                                                                              2004          2003          2002
                                                                           --------------------------------------
<S>                                                                        <C>           <C>           <C>
     Net unrealized investment gains (losses) at beginning of year......   $     (342)   $    2,069    $      (99)
        Unrealized holdings gains (losses) arising during the period....          496        (2,100)        4,513
        .........................Reclassification adjustments for gains
         (losses) included in earnings..................................        1,210          (311)       (2,345)
                                                                           --------------------------------------
     Net change in unrealized gains (losses) on investments.............        1,706        (2,411)        2,168
                                                                           --------------------------------------
     Net unrealized investment gains (losses) at end of year............   $    1,364    $     (342)   $    2,069
                                                                           ======================================

</TABLE>


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

<TABLE>
<CAPTION>
                                                                                      ------------------------
                                                                                         YEAR ENDED MARCH 31,
                                                                                      ------------------------
                                                                                         2004          2003
                                                                                         ----          ----
<S>                                                                                   <C>           <C>
     Derivatives qualifying as hedges at beginning of year........................    $     (191)   $     (424)
        Reclassification adjustments for losses included in earnings..............           198           666
        Change in fair value of derivative........................................            (7)         (433)
                                                                                      ------------------------
        Net change in unrealized loss on derivatives
         qualifying as hedges.....................................................           191           233
                                                                                      ------------------------
     Derivatives qualifying as hedges at end of year..............................    $        -    $     (191)
                                                                                      ========================

</TABLE>


                                      F-37

<PAGE>

                          COLUMBUS MCKINNON CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)


23.  EFFECTS OF NEW  ACCOUNTING  PRONOUNCEMENTS

      The Emerging  Issues Task Force  (EITF)  reached a consensus on EITF Issue
No. 03-01, "The Meaning of  Other-Than-Temporary  Impairment and Its Application
to Certain  Investments"  (EITF  03-01) in November  2003.  EITF 03-01  provides
guidance on  other-than-temporary  impairments  and its  application to debt and
equity investments and applies to investments in debt and marketable  securities
that are accounted for under Statement of Financial  Accounting Standards (SFAS)
No. 115,  "Accounting  for Certain  Investments in Debt and Equity  Securities."
EITF 03-01 requires additional disclosure of investments with unrealized losses.
See Note 6 for additional discussion.  The requirements are effective for fiscal
years ending after December 15, 2003.  The Company has expanded its  disclosures
based on this EITF.

      The  Financial  Accounting  Standards  Board  (FASB)  issued  SFAS No. 132
(revised 2003),  "Employers' Disclosures about Pensions and Other Postretirement
Benefits"  (FAS  132R) in  December  2003.  SFAS No.  132R  requires  additional
disclosure regarding certain aspects of pension plans including, but not limited
to, asset and investment strategy,  expected employer contributions and expected
benefit payments. The disclosure requirements of SFAS No. 132R are effective for
financial  statements of periods ending after December 15, 2003. See Note 11 for
required disclosures. The Company has modified its disclosures as required.











































                                      F-38


<PAGE>

                          COLUMBUS MCKINNON CORPORATION

<TABLE>
<CAPTION>

                 SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
                          MARCH 31, 2004, 2003 AND 2002
                              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, 2004: Deducted from asset accounts:
<S>                                                   <C>          <C>          <C>              <C>              <C>
     Allowance for doubtful accounts                  $  2,743     $ 1,761      $    --          $ 1,693   (1)    $  2,811
     Slow-moving and obsolete inventory                  5,699       2,333         (126) (4)       2,028   (2)       5,878
                                                      --------     -------      --------         -------          --------
          Total                                       $  8,442     $ 4,094      $  (126)         $ 3,721          $  8,689
                                                      ========     =======      ========         =======          ========
   Reserves on balance sheet:
     Accrued general and product liability costs      $ 14,439     $ 5,398      $    --          $ 3,907   (3)    $ 15,930
                                                      ========     =======      =======          =======          ========

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

Year ended March 31, 2002: Deducted from asset accounts:
     Allowance for doubtful accounts                  $  2,305     $ 1,399      $    --          $ 1,367   (1)    $  2,337
     Slow-moving and obsolete inventory                  3,787       3,331          (15) (4)       2,484   (2)       4,619
                                                      --------     -------      --------         -------          --------
          Total                                       $  6,092     $ 4,730      $   (15)         $ 3,851          $  6,956
                                                      ========     =======      ========         =======          ========
   Reserves on balance sheet:
     Accrued general and product liability costs      $ 15,388     $ 2,563      $    --          $ 1,938   (3)    $ 16,013
                                                      ========     =======      =======          =======          ========

</TABLE>


--------
(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


















                                      F-39

<PAGE>


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

     None.


ITEM 9A.     CONTROLS AND PROCEDURES.

      As of March 31, 2004, 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,  2004.  Furthermore,  there  were no  significant  changes  in our
internal  controls or in other factors during our fourth quarter ended March 31,
2004.


                                    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,  2004  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, 2004 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, 2004 and upon the filing of such Proxy  Statement,
is incorporated by reference herein.

ITEM 13.     CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

     The information  regarding Certain  Relationships and Related  Transactions
will be included in a Proxy  Statement to be filed with the Commission  prior to
July 29, 2004 and upon the filing of such Proxy  Statement,  is  incorporated by
reference herein.

                                     PART IV
                                     -------

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,
2004 and upon the filing of such Proxy  Statement,  is incorporated by reference
herein.


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

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


                                       29

<PAGE>

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

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

    Report of Independent Registered Public Accounting Firm                  F-2

    Consolidated balance sheets - March 31, 2004 and 2003                    F-3

    Consolidated statements of operations - Years ended
       March 31, 2004, 2003 and 2002                                         F-4

    Consolidated statements of shareholders' equity - Years
       ended March 31, 2004, 2003 and 2002                                   F-5
    Consolidated statements of cash flows - Years ended
       March 31, 2004, 2003 and 2002                                         F-6

    Notes to consolidated financial statements                       F-7 to F-39


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

         Schedule II - Valuation and qualifying accounts                    F-40

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


(a)(3)   EXHIBITS:
         ---------


  EXHIBIT
  NUMBER                                   EXHIBIT
  ------                                   -------

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

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

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

        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).

                                       30

<PAGE>

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

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

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

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

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

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

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

       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).

                                       31
<PAGE>

      #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.

     #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  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).

     #10.15  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).

     #10.16  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).

     #10.17  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).

     #10.18  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).

     #10.19  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).

     #10.20  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).

                                       32

<PAGE>

     #10.21  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).

     #10.22  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).

     #10.23  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).

     #10.24  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).

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

     #10.26  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).

     #10.27  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).

    *#10.28  Amendment No. 7  to the  1998  Plan  Restatement  of  the  Columbus
             McKinnon Corporation Thrift [401(k)] Plan, dated April 14, 2004.

     #10.29  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).

    *#10.30  Amendment  No. 9 to  the  1998  Plan  Restatement of  the  Columbus
             McKinnon Corporation Thrift [401(k)] Plan, dated March 16, 2004.

     #10.31  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).

     #10.32  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).

     #10.33  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).

     #10.34  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).

     #10.35  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).

     #10.36  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).

                                       33

<PAGE>

    *#10.37  Amendment  No. 5 to  the  1998  Plan  Restatement  of the  Columbus
             McKinnon   Corporation   Monthly  Retirement  Benefit  Plan,  dated
             February 28, 2004.

     #10.38  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).

     #10.39  Form of  Change  in  Control  Agreement  as  entered  into  between
             Columbus McKinnon Corporation and each of Timothy T. Tevens, Robert
             L.  Montgomery,  Jr.,  Ned T.  Librock,  Karen L.  Howard,  Lois H.
             Demler,   Timothy  R.   Harvey,   John   Hansen  and  Neal   Wixson
             (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).

     #10.40  Columbus   McKinnon    Corporation    Corporate    Incentive   Plan
             (incorporated  by  reference  to  Exhibit  10.1  to  the  Company's
             Quarterly  Report on Form 10-Q for the quarterly  period ended July
             1, 2001).

      10.41  Asset  Purchase  Agreement  dated as of May 10,  2002 by and  among
             Automatic  Systems,  Inc.,  Columbus  McKinnon  Corporation and ASI
             Acquisition Corp  (incorporated by reference to Exhibit 10.1 to the
             Company's Current Report on Form 8-K dated May 29, 2002).

      10.42  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).

      10.43  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).

      *21.1  Subsidiaries of the Registrant.

      *23.2  Consent of Ernst & Young LLP.

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

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

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

-----------------
 * Filed herewith
** To be filed by amendment
#   Indicates a Management contract or compensation plan or arrangement


(b) REPORTS ON FORM 8-K FOR THE QUARTER ENDED MARCH 31, 2004:


                                       34

<PAGE>

         1. On March 4, 2004, the Registrant  filed a Current Report on Form 8-K
         under Items 2 and 7 with respect to the sale of its Lister Division.

         2. On February 3, 2004, the  Registrant  filed a Current Report on Form
         8-K  under  Items 2 and 7 with  respect  to the  sale  of its  Positech
         Division.

         3. On January 21, 2004,  the  Registrant  furnished a Current Report on
         Form 8-K under Items 7 and 12 relating to its financial results for the
         quarter ended December 28, 2003.

































































                                       35


<PAGE>


                                   SIGNATURES

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


Date:  June 22, 2004

                                        COLUMBUS MCKINNON CORPORATION

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


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



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

/S/ TIMOTHY T. TEVENS          President, Chief Executive          June 22, 2004
--------------------------       Officer and Director
    TIMOTHY T. TEVENS            (PRINCIPAL EXECUTIVE OFFICER)



/S/ ROBERT R. FRIEDL           Vice President - Finance and        June 22, 2004
--------------------------       Chief Financial Officer
    ROBERT R. FRIEDL             (PRINCIPAL FINANCIAL OFFICER
                                  AND PRINCIPAL ACCOUNTING OFFICER)

/S/ HERBERT P. LADDS, JR.      Chairman of the Board               June 22, 2004
--------------------------       of Directors
    HERBERT P. LADDS, JR.


/S/ CARLOS PASCUAL             Director                            June 22, 2004
--------------------------
    CARLOS PASCUAL


/S/ RICHARD H. FLEMING         Director                            June 22, 2004
--------------------------
    RICHARD H. FLEMING


/S/ ERNEST R. VEREBELYI        Director                            June 22, 2004
--------------------------
    ERNEST R. VEREBELYI


/S/ WALLACE W. CREEK           Director                            June 22, 2004
--------------------------
    WALLACE W. CREEK