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, 2006

                         COMMISSION FILE NUMBER 0-27618

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

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

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

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

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

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

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

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


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

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

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

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

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

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

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

<PAGE>

     The aggregate  market value of the voting stock held by  non-affiliates  of
the Registrant as of September 30, 2005 was  approximately  $315 million,  based
upon the closing  price of the  Company's  common shares as quoted on the Nasdaq
Stock Market on such date. The number of shares of the Registrant's common stock
outstanding as of May 31, 2006 was 18,708,522 shares.

                       DOCUMENTS INCORPORATED BY REFERENCE

     Portions of the Registrant's proxy statement for its 2006 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, 2006 are  incorporated  by reference  into Part III of this
report.



<PAGE>

                          COLUMBUS MCKINNON CORPORATION
                         2006 ANNUAL REPORT ON FORM 10-K

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

                                     PART I
                                     ------

ITEM 1.           BUSINESS

GENERAL

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


THE BUILDING OF OUR BUSINESS

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



                                       1
<PAGE>

<TABLE>
<CAPTION>

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

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


OUR POSITION IN THE INDUSTRY

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

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

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

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

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


                                       2
<PAGE>


     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.

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

OUR COMPETITIVE STRENGTHS

     LEADING MARKET POSITIONS. We are a leading manufacturer of hoists and alloy
and high strength  carbon steel chain in North  America.  We have  developed our
leading market positions over our 131-year history by emphasizing  technological
innovation,   manufacturing   excellence   and  superior   after-sale   service.
Approximately  74% of our  domestic  net sales for the year ended March 31, 2006
were from product  categories  in which we believe we hold the number one market
share. We believe that the strength of our  established  products and brands and
our leading market positions provide us with significant competitive advantages,
including  preferred  supplier status with a majority of our largest  customers.
Our  large  installed  base of  products  also  provides  us with a  significant
competitive  advantage in selling our products to existing  customers as well as
providing repair and replacement parts.

     The following table  summarizes the product  categories where we believe we
are the market leader:
<TABLE>
<CAPTION>

                                                                                                           PERCENTAGE OF
PRODUCT CATEGORY                                 U.S. MARKET SHARE          U.S. MARKET POSITION         DOMESTIC NET SALES
----------------                                 -----------------          --------------------         ------------------
<S>            <C>                                      <C>                          <C>                           <C>
Powered Hoists (1)                                      53%                          #1                            27%
Manual Hoists & Trolleys (1)                            66%                          #1                            14%
Forged Attachments (1)                                  46%                          #1                            10%
Lifting and Sling Chains (1)                            59%                          #1                             6%
Hoist Parts (2)                                         60%                          #1                             9%
Mechanical Actuators (3)                                40%                          #1                             5%
Tire Shredders (4)                                      80%                          #1                             2%
Jib Cranes (5)                                          45%                          #1                             1%
                                                                                                                 -----
                                                                                                                   74%
-------------
     (1)  Market share and market position data are internal  estimates  derived
          from  survey   information   collected   and  provided  by  our  trade
          associations.

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

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

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

     (5)  Market share and market position are internal  estimates  derived from
          both the number of bids we win as a percentage  of the total  projects
          for which we submit bids and from  estimates of our  competitors'  net
          sales based on their relative position in distributor catalogues.
</TABLE>

     COMPREHENSIVE  PRODUCT LINES AND STRONG BRAND NAME RECOGNITION.  We believe
we offer the most  comprehensive  product lines in the markets we serve.  We are
the only major supplier of material  handling  equipment  offering full lines of
hoists,  chain and  attachments.  Our  capability  as a full-line  supplier  has
allowed us to (i) provide our customers  with  "one-stop  shopping" for material
handling equipment,  which meets some customers' desires to reduce the number of
their  supply  relationships  in order to lower their costs,  (ii)  leverage our
engineering,  research and  development  and marketing costs over a larger sales
base and (iii) achieve  purchasing  efficiencies on common materials used across
our product lines.


                                       3
<PAGE>


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

     DISTRIBUTION CHANNEL DIVERSITY AND STRENGTH.  Our products are sold to over
20,000  general and  specialty  distributors  and OEMs.  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.

     EXPANDING   INTERNATIONAL   MARKETS.   We  have  significantly   grown  our
international  sales since becoming a public company in 1996. Our  international
sales have grown from $34.3 million  (representing 16% of total sales) in fiscal
1996 to $198.3  million  (representing  36% of our total sales)  during the year
ended  March 31,  2006.  This growth has  occurred  primarily  in Europe,  South
America and Asia-Pacific where we have recently opened additional sales offices.
Our  international  business has  provided  us, and we believe will  continue to
provide  us,  with  significant  growth  opportunities  and new  markets for our
products.

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

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

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

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

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

     --   INTERNATIONAL  EXPANSION. Our continued expansion of our manufacturing
          facilities in China and Mexico provides us with another cost efficient
          platform to manufacture and distribute certain of our products. We now
          operate 26 manufacturing facilities in nine countries,  with 26 stand
          alone sales and service offices in 12 countries,  and nine stand alone
          warehouse facilities in five countries.

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

     LONG HISTORY OF FREE CASH FLOW GENERATION AND  SIGNIFICANT  DEBT REDUCTION.
We have consistently  generated  positive free cash flow (which we define as net
cash provided by operating activities less capital  expenditures) by continually
reducing our costs,  increasing our inventory  turnover and reducing the capital
intensity of our  manufacturing  operations.  From the  beginning of fiscal 2004
through fiscal 2006, we have reduced total debt by $106.5  million,  from $316.3
million to $209.8  million,  which includes  application of $47.6 million of net
proceeds from our November 2005 secondary offering.



                                       4
<PAGE>


     EXPERIENCED  MANAGEMENT TEAM WITH SIGNIFICANT EQUITY OWNERSHIP.  Our senior
management  team  provides a depth and  continuity of experience in the material
handling industry.  Our management has experience in aggressive cost management,
balance sheet  management,  efficient  manufacturing  techniques,  acquiring and
integrating  businesses and global operations,  all of which are critical to our
long-term  growth.  Our  directors and executive  officers,  as a group,  own an
aggregate of approximately 7% of our outstanding common stock.

OUR STRATEGY

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

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

     --   INTRODUCING NEW AND CROSS-BRANDED  PRODUCTS. We continue to expand our
          business by developing new material handling products and services and
          expanding the breadth of our product lines to address  customer needs.
          Over  the  past  three  years,  we  have  developed  over  100  new or
          cross-branded  products,  representing  approximately $27.5 million in
          fiscal 2006  revenues.  During fiscal 2004, we established a dedicated
          hoist product  development  team.  The majority of the hoist  products
          under   development   are  guided  by  the   Federation   of  European
          Manufacturing,  or FEM, standard.  We believe these FEM hoist products
          will facilitate our global sales expansion strategy as well as improve
          our  cost  competitiveness   against   internationally  made  products
          imported into the U.S.

          Recent new product introductions include:

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

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

     CONTINUE  TO GROW IN  INTERNATIONAL  MARKETS.  Our  international  sales of
$198.3 million comprised 36% of our net sales for the year ended March 31, 2006,
as compared to $34.3 million,  or 16% of our net sales, in fiscal 1996, the year
we became a public  company.  We sell to  distributors  in over 50 countries and
have our primary international facilities in Canada, Mexico, Germany, the United
Kingdom, Denmark, France and China. In addition to new product introductions, we
continue to expand our sales and service  presence in the major  market areas of
Europe,  Asia-Pacific  and South America through our sales offices and warehouse
facilities  in  Europe,  Thailand,  Brazil,  Uruguay  and  Mexico.  We intend to
increase  our sales by  manufacturing  and  exporting  a  broader  array of high
quality,  low-cost  products and  components  from our  facilities in Mexico and
China for  distribution  in Europe and  Asia-Pacific.  We have developed and are
continuing to expand upon new hoist products in compliance with FEM standards to
enhance our global distribution.

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


                                       5
<PAGE>


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

     --   IMPLEMENTATION  OF  LEAN  MANUFACTURING.  We  expect  to  continue  to
          identify  potential   efficiencies  in  our  operations  through  Lean
          Manufacturing  initiated in fiscal 2002.  Through fiscal 2006, we have
          instituted Lean Manufacturing at 16 of our major facilities  resulting
          in the recapture of approximately 164,000 square feet of manufacturing
          floor area and the consolidation of an additional  920,000 square feet
          from closed facilities.  Additionally,  we have reduced inventories by
          approximately  $34.1  million,  or 31.3%,  improved  productivity  and
          achieved significant  reductions in product lead times.  Specifically,
          in fiscal 2006 and 2005, we improved  inventory  turns by 7.5% to 5.7x
          for the fourth quarter of fiscal 2006 from 5.3x for the fourth quarter
          of fiscal 2004. Our Lean Manufacturing initiative has complemented our
          strategy of rationalizing our manufacturing facilities.

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

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

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

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

     --   SALE OF EXCESS REAL ESTATE. As a result of our Lean  Manufacturing and
          plant  rationalization  initiatives,  we have  identified  excess real
          estate to be sold.  During fiscal 2006, we generated $2.1 million from
          such real estate sales. The proceeds of such sales have been, and will
          continue to be, used to repay our outstanding debt.


OUR SEGMENTS

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

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

     Our Solutions segment is engaged  primarily in the design,  fabrication and
installation  of integrated  workstation  and  facility-wide  material  handling
systems and in the design and manufacture of tire  shredders.  This segment also
included our Positech  manipulator business which was divested in February 2004.
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.


                                       6
<PAGE>

     Note 20 to our consolidated  financial statements included elsewhere herein
provides  information  related to our business  segments in accordance with U.S.
generally accepted accounting  principles.  Summary  information  concerning our
business segments for fiscal 2006, 2005 and 2004 is set forth below.

<TABLE>
<CAPTION>

                                                                  FISCAL YEARS ENDED MARCH 31,
                              -----------------------------------------------------------------------------------------------------
                                            2006                                2005                              2004
                              ---------------------------------     -----------------------------     -----------------------------
                                                      % OF                               % OF                              % OF
                                                      TOTAL                              TOTAL                             TOTAL
                                      AMOUNT          SALES            AMOUNT            SALES            AMOUNT           SALES
                                 ---------------    ----------     ---------------    -----------     -------------    ------------
                                                                     (DOLLARS IN MILLIONS)
Net Sales
<S>                           <C>                     <C>       <C>                     <C>        <C>                   <C>
     Products.................$       493.9            88.8     $       453.1            88.0      $     394.2            88.7
     Solutions.................        62.1            11.2              61.7            12.0             50.4            11.3
                                 ---------------    ----------     ---------------    -----------     -------------    ------------
          Total...............$       556.0           100.0     $       514.8           100.0      $     444.6           100.0
                                 ===============    ==========     ===============    ===========     =============    ============

                                                       % OF                              % OF                              % OF
                                                      SEGMENT                           SEGMENT                           SEGMENT
                                                      /TOTAL                            /TOTAL                            /TOTAL
                                     AMOUNT            SALES            AMOUNT           SALES            AMOUNT           SALES
                                 ---------------    ----------     ---------------    -----------     -------------    ------------
Income from Operations
     Products.................$        55.9            11.3     $        39.4             8.7      $      32.3             8.2
     Solutions.................         2.0             3.2               1.3             2.1             (2.4)           (4.9)
                                 ---------------    ----------     ---------------    -----------     -------------    ------------
          Total...............$        57.9            10.4     $        40.7             7.9      $      29.9             6.7
                                 ===============    ==========     ===============    ===========     =============    ============

</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  $530.6 million as of March 31, 2006. 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 2006,  net sales of the Products  segment
were  approximately  $493.9 million or approximately  88.8% of our net sales, of
which  approximately  $342.5 million, or 69.4% were domestic and $151.4 million,
or 30.6% 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 2006 and 2005:

                                                  FISCAL YEARS ENDED MARCH 31,
                                                  ----------------------------
                                                      2006            2005
                                                  ------------    ------------
              Hoists........................           52%             50%
              Chain.........................           15              16
              Forged attachments............           12              12
              Industrial cranes.............           13              14
              Industrial components.........            8               8
                                                  ------------    ------------
                                                      100%            100%

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


                                       7
<PAGE>

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

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

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

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

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

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

SALES AND MARKETING

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

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

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

     TRADE SHOW  PARTICIPATION.  Trade shows are central to the promotion of our
products,   and  we  participate   in  more  than  30  regional,   national  and
international  trade shows each year.  Shows in which we participate  range from
global events held in Germany to local "markets" and "open houses"  organized by
individual hardware and industrial distributors.  We also attend specialty shows
for the  entertainment,  rental and safety  markets,  as well as general purpose
industrial and consumer hardware shows. In fiscal 2006, we participated in trade
shows in the U.S., Canada,  Mexico,  Germany, the United Kingdom,  France, China
and Brazil.


                                       8
<PAGE>


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

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

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

DISTRIBUTION AND MARKETS

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

     GENERAL DISTRIBUTION  CHANNELS.  Our general distribution  channels consist
of:

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

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

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

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

     SPECIALTY   DISTRIBUTION  CHANNELS.  Our  specialty  distribution  channels
consist of:

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

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


                                       9
<PAGE>

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

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

     OEM/GOVERNMENT DISTRIBUTION CHANNELS. This channel consists of:

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

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

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

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

CUSTOMER SERVICE AND TRAINING

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

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

BACKLOG

     Our Products segment backlog of orders at March 31, 2006 was  approximately
$53.6 million  compared to  approximately  $42.3 million at March 31, 2005.  Our
orders for standard  products are generally  shipped within one week. Orders for
products  that are  manufactured  to  customers'  specifications  are  generally
shipped within four to twelve weeks.  Given the short product lead times,  we do
not  believe  that the  amount of our  Products  segment  backlog of orders is a
reliable indication of our future sales.

COMPETITION

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

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


                                       10
<PAGE>



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

SOLUTIONS SEGMENT

     The Solutions segment is engaged  primarily in the design,  fabrication and
installation  of integrated  work station and  facility-wide  material  handling
systems  and in the  manufacture  and  distribution  of  lift  tables  and  tire
shredders and has total assets of $35.4 million as of March 31, 2006.  Net sales
of the  Solutions  segment in fiscal  2006 were $62.1  million,  or 11.2% of our
total net  sales,  of which  $15.1  million,  or 24.4% were  domestic  and $47.0
million,  or 75.6% were  international.  The following  table sets forth certain
sales data for the products and services of our Solutions segment,  expressed as
a percentage of this segment's net sales for fiscal 2006 and 2005:

                                                    FISCAL YEARS ENDED MARCH 31,
                                                    ----------------------------
                                                        2006            2005
                                                    ------------    ------------
   Integrated material handling conveyor systems..       69%             70%
   Lift tables....................................       12              13
   Light-rail systems.............................        4               4
   Other..........................................       15              13
                                                    ------------    ------------
                                                        100%            100%

PRODUCTS AND SERVICES

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

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

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

SALES AND MARKETING

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

CUSTOMER SERVICE AND TRAINING

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


                                       11
<PAGE>


BACKLOG

     Revenues from our Solutions segment are generally  recognized within one to
six  months.  Our backlog of orders at March 31,  2006 was  approximately  $13.0
million compared to approximately $9.6 million at March 31, 2005.

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, 2006, our continuing operations had 3,081 employees;  1,957 in
the U.S., 122 in Canada, 159 in Mexico/South America and 843 in Europe and Asia.
Approximately  698 of our employees are represented under seven separate U.S. or
Canadian  collective  bargaining  agreements  which  terminate at various  times
between  August 2006 and May 2009.  The  contract  which  expires in August 2006
currently  covers  137  employees.  Preliminary  informal  negotiations  for  an
extension of this agreement have begun.  There is another contract which expires
in  March  2007  and  currently  covers  156  employees.  We  believe  that  our
relationship with our employees is good.

RAW MATERIALS AND COMPONENTS

     Our  principal  raw  materials  and  components  are steel,  consisting  of
structural  steel,  processed steel bar, forging bar steel,  steel rod and wire,
steel pipe and tubing and tool steel; electric motors;  bearings; gear reducers;
castings; and electro-mechanical components. These commodities are all available
from multiple  sources.  We purchase most of these raw materials and  components
from a limited  number of strategic  and  preferred  suppliers  under  long-term
agreements  which are negotiated on a company-wide  basis through our Purchasing
Council to take advantage of volume discounts. As the steel industry is cyclical
and steel prices can fluctuate significantly, beginning in approximately January
2004 we saw  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 believe we have been successful in instituting  surcharges and
price  increases to pass on these material cost  increases.  We will continue to
monitor our costs and  reevaluate our pricing  policies.  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  crane-builder  customers.  We believe  this  vertical
integration results in lower production costs, greater manufacturing flexibility
and higher product quality, and reduces our reliance on outside suppliers.


                                       12
<PAGE>

ENVIRONMENTAL AND OTHER GOVERNMENTAL REGULATION

     Like most manufacturing companies, we are subject to various federal, state
and local laws  relating to the  protection of the  environment.  To address the
requirements of such laws, we have adopted a corporate environmental  protection
policy which provides that all of our owned or leased  facilities shall, and all
of our  employees  have the duty to,  comply with all  applicable  environmental
regulatory  standards,  and we have initiated an environmental  auditing program
for our facilities to ensure compliance with such regulatory standards.  We have
also established managerial responsibilities and internal communication channels
for dealing with environmental compliance issues that may arise in the course of
our business. We have made and could be required to continue to make significant
expenditures  to  comply  with  environmental   requirements.   Because  of  the
complexity and changing  nature of  environmental  regulatory  standards,  it is
possible  that  situations  will arise from time to time  requiring  us to incur
additional expenditures in order to ensure environmental  regulatory compliance.
However, we are not aware of any environmental condition or any operation at any
of our facilities,  either  individually or in the aggregate,  which would cause
expenditures  having a material  adverse  effect on our  results of  operations,
financial  condition  or cash  flows and,  accordingly,  have not  budgeted  any
material capital expenditures for environmental compliance for fiscal 2007.

     Certain  environmental  laws, such as the U.S.  federal  Superfund laws and
similar  state  statutes,  can impose  liability on current or former  owners or
operators  of a site,  or on parties who  disposed  of waste at a site,  for the
entire cost of cleaning up a site  contaminated by hazardous  substances.  These
costs may be assessed regardless of whether the party owned or operated the site
at the time of the releases or the lawfulness of the original disposal activity.
The  required  remedial  activities  are  usually  performed  in the  context of
administrative  or  judicial  enforcement   proceedings  brought  by  regulatory
authorities, or in the context of voluntary cleanup agreements entered into with
such regulatory authorities. We could incur substantial costs, including cleanup
costs  and  third-party   claims,   as  a  result  of  liabilities   under  such
environmental  laws. For example,  we have been identified by the New York State
Department of Environmental Conservation, or NYSDEC, along with other companies,
as a potentially  responsible  party,  or PRP, at the Frontier  Chemical Site in
Pendleton,  New York, a site listed on NYSDEC's  Registry of Inactive  Hazardous
Waste Disposal sites. From 1958 to 1977, the Pendleton Site had been operated as
a commercial  waste  treatment  and disposal  facility.  We sent waste  pickling
liquor  generated at our facility in Tonawanda,  New York, to the Pendleton Site
during the period from  approximately  1969 to 1977,  and we  participated  with
other PRPs in conducting  the  remediation of the Pendleton Site under a consent
order with NYSDEC.  Construction  in connection  with the  remediation  has been
completed and this project is currently in its operations and maintenance phase.
As a result of a negotiated cost  allocation  among the  participating  PRPs, we
have paid our pro rata share of the remediation  construction  costs and accrued
our share of the ongoing operations and maintenance costs. As of March 31, 2006,
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 have  entered into a voluntary  agreement  with the Texas  Commission  on
Environmental   Quality  to   investigate   and,   as   appropriate,   remediate
environmental   conditions  at  this  site.  At  this  time  site  investigation
activities  are ongoing and it is not  possible to  determine  the costs of site
remediation,  if any,  but we  believe  any such  costs will not have a material
adverse effect on our operating results or financial condition.  We have filed a
lawsuit in federal district court against the persons we believe are responsible
for the past waste disposal activities. The purpose of the lawsuit is to recover
our  costs of  investigating  and  remediating  site  conditions  caused by such
activities.

     For all of the currently  known  environmental  matters,  we have accrued a
total of $0.8 million as of March 31, 2006, which, in our opinion, is sufficient
to  deal  with  such  matters.   Further,   our  management  believes  that  the
environmental  matters known to, or anticipated by, us should not,  individually
or in the aggregate,  have a material adverse effect on our operating results or
financial  condition.   However,  there  can  be  no  assurance  that  potential
liabilities  and  expenditures  associated with unknown  environmental  matters,
unanticipated   events,  or  future  compliance  with   environmental  laws  and
regulations will not have a material adverse effect on us.

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


                                       13
<PAGE>

AVAILABLE INFORMATION

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


ITEM 1A.          RISK FACTORS

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

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

     Many of the  end-users of our products are in highly  cyclical  industries,
such as general manufacturing and construction, that are sensitive to changes in
general economic conditions. Their demand for our products, and thus our results
of  operations,  is  directly  related  to the  level  of  production  in  their
facilities,  which changes as a result of changes in general economic conditions
and other factors beyond our control.  In fiscal 2003 and 2004, for example,  we
experienced significantly reduced demand for our products, generally as a result
of the  global  economic  slowdown,  and more  specifically  as a result  of the
dramatic  decline in  capital  goods  spending  in the  industries  in which our
end-users  operate.  These lower levels of demand resulted in a 24.2% decline in
net sales  from  fiscal  2001 to fiscal  2004,  from  $586.2  million  to $444.6
million.  This decline in net sales  resulted in a 54.6%  decrease in our income
from operations during the same period.  We have seen a significant  improvement
in demand for our  products  in fiscal  2005 and 2006.  Our net sales for fiscal
2006 were $556.0 million, up $111.4 million or 25.1% from fiscal 2004 sales.

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

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

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

WE ARE SUBJECT TO CURRENCY FLUCTUATIONS FROM OUR INTERNATIONAL SALES.

     Our products are sold in many countries  around the world.  Thus, a portion
of our revenues  (approximately $161.4 million in fiscal year 2006) 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.



                                       14
<PAGE>


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

     We have  operations  and  assets  located  outside  of the  United  States,
primarily in Canada, Mexico,  Germany, the United Kingdom,  Denmark,  France and
China. In addition, we import a portion of our hoist product line from Asia, and
sell our products to  distributors  located in  approximately  50 countries.  In
fiscal year 2006,  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.

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

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

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

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

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


                                       15
<PAGE>

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

     The principal raw material  used in our chain,  forging and crane  building
operations is steel.  The steel industry as a whole is highly  cyclical,  and at
times  pricing can be volatile  due to a number of factors  beyond our  control,
including general economic conditions, labor costs, competition,  import duties,
tariffs and currency  exchange  rates.  During  2004,  the market price of steel
increased  significantly  but has  stabilized,  or even  decreased in some steel
categories  during 2005 and 2006. This volatility can  significantly  affect our
raw material  costs.  In an  environment  of  increasing  raw  material  prices,
competitive  conditions  will determine how much of the steel price increases we
can pass on to our  customers.  During 2004 through 2006, we were  successful in
adding and  maintaining  a  surcharge  to the  prices of our high steel  content
products or incorporating them as price increases, reflecting the increased cost
of steel. In the future,  to the extent we are unable to pass on any steel price
increases to our customers, our profitability could be adversely affected.

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.  Effective  August 4, 2005,  our former Chief
Financial Officer,  Robert R. Friedl, resigned as an employee of the company. We
have not entered into employment  agreements  with any of our senior  management
personnel.

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

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


ITEM 1B.          UNRESOLVED STAFF COMMENTS

      None.



                                       16
<PAGE>


ITEM 2.    PROPERTIES

     We maintain  our  corporate  headquarters  in Amherst,  New York and, as of
March  31,  2006,  conducted  our  principal   manufacturing  at  the  following
facilities:
<TABLE>
<CAPTION>

                                                                                            SQUARE       OWNED OR      BUSINESS
LOCATION                              PRODUCTS/OPERATIONS                                   FOOTAGE       LEASED        SEGMENT
-----------------------------------   --------------------------------------------------  ------------  ------------  ------------
UNITED STATES:
<S>                                   <C>                                                     <C>       <C>           <C>
Muskegon, MI                          Hoists                                                  441,225   Owned         Products
Charlotte, NC                         Industrial components                                   243.750   Owned         Products
Wadesboro, NC                         Hoists                                                  186,057   Owned         Products
Lexington, TN                         Chain                                                   175,700   Owned         Products
Cedar Rapids, IA                      Forged attachments                                      100,000   Owned         Products
Eureka, IL                            Cranes                                                   91,300   Owned         Products
Damascus, VA                          Hoists                                                   90,338   Owned         Products
Chattanooga, TN                       Forged attachments                                       77,000   Owned         Products
Greensburg, IN                        Scissor lifts                                            70,000   Owned         Solutions
Lisbon, OH                            Hoists                                                   36,600   Owned         Products
Cleveland, TX                         Cranes                                                   35,000   Owned         Products
Tonawanda, NY                         Light-rail crane systems                                 35,000   Owned         Solutions
Chattanooga, TN                       Forged attachments                                       33,000   Owned         Products
Sarasota, FL                          Tire shredders                                           24,954   Owned         Solutions


INTERNATIONAL:
Santiago, Tianguistenco, Mexico       Hoists and chain                                         85,000   Owned         Products
Velbert, Germany                      Hoists                                                   72,200   Leased        Products
Arden, Denmark                        Project design and conveyors                             71,500   Owned         Solutions
Hangzhou, China                       Hoists and hand pallet trucks                            50,000   Leased        Products
Stoney Creek, Ontario, Canada         Cranes                                                   44,255   Owned         Products
Hangzhou, China                       Metal fabrication, textiles and textile
                                      strappings                                               37,000   Leased        Products
Hangzhou, China                       Textile strappings                                       30,000   Leased        Products
Chester, United Kingdom               Plate clamps                                             28,100   Leased        Products
Romeny-sur-Marne, France              Rotary unions                                            21,550   Owned         Products
Arden, Denmark                        Project construction                                     19,500   Leased        Solutions
Velbert, Germany                      Hoists                                                   12,800   Leased        Products
Szekesfeher, Hungary                  Textiles and textile strappings                          10,000   Leased        Products
</TABLE>

     In addition, we have a total of 35 sales offices,  distribution centers and
warehouses. We believe that our properties have been adequately maintained,  are
in  generally  good  condition  and are  suitable  for our business as presently
conducted. We also believe our existing facilities provide sufficient production
capacity for our present needs and for our anticipated  needs in the foreseeable
future.  Upon the  expiration of our current  leases,  we believe that either we
will be able to  secure  renewal  terms or enter  into  leases  for  alternative
locations at market terms.


ITEM 3.           LEGAL PROCEEDINGS

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

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

     None.


                                       17
<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,  2006,  there  were 488  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 allows, but limits our ability to pay
dividends.  We may reconsider or revise this policy from time to time based upon
conditions then existing, including, without limitation, our earnings, financial
condition,  capital requirements,  restrictions under credit agreements or other
conditions our Board of Directors may deem relevant.

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

                                                          PRICE RANGE OF
                                                           COMMON STOCK
                                                           ------------
                                                         HIGH         LOW
                                                         ----         ---
YEAR ENDED MARCH 31, 2004
     First Quarter................................. $     2.72   $    1.30
     Second Quarter................................       4.84        2.31
     Third Quarter.................................       7.80        4.58
        Fourth Quarter.............................      11.72        6.35

YEAR ENDED MARCH 31, 2005
     First Quarter................................. $     8.62   $    4.87
     Second Quarter................................       9.81        6.69
        Third Quarter..............................       9.38        6.80
     Fourth Quarter................................      14.31        8.20

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


     On May 31, 2006,  the closing price of our common stock on the Nasdaq Stock
Market was $26.30 per share.


                                       18
<PAGE>


ITEM 6.           SELECTED FINANCIAL DATA

     The  consolidated  balance  sheets  as of March  31,  2006 and 2005 and the
related  statements of operations,  cash flows and shareholders'  equity for the
three  years ended March 31, 2006 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,
                                                       -------------------------------------------------------------
                                                            2006        2005        2004        2003         2002
                                                         -----------  ---------   ---------   ----------   ---------
                                                               (AMOUNTS IN MILLIONS, EXCEPT PER SHARE DATA)
                                                       -------------------------------------------------------------
   STATEMENT OF OPERATIONS DATA (1):
<S>                                                    <C>          <C>        <C>         <C>           <C>
   Net sales                                           $     556.0  $   514.8  $    444.6  $     453.3   $     480.0
   Cost of products sold                                     408.4      388.9       339.8        346.0         359.5
                                                       -------------------------------------------------------------
   Gross profit                                              147.6      125.9       104.8        107.3         120.5
   Selling expenses                                           54.3       52.3        48.3         47.4          43.5
   General and administrative expenses                        33.6       31.7        25.0         26.6          28.3
   Restructuring charges (2)                                   1.6        0.9         1.2          3.7           9.6
   Write-off/amortization of intangibles (3)                   0.2        0.3         0.4          4.2          11.0
                                                       -------------------------------------------------------------
   Income from operations                                     57.9       40.7        29.9         25.4          28.1
   Interest and debt expense                                  24.7       27.6        28.9         32.0          29.4
   Other (income) and expense, net                             5.0       (5.2)       (4.2)        (2.1)          2.4
                                                       -------------------------------------------------------------
   Income (loss) before income taxes                          28.2       18.3         5.2         (4.5)         (3.7)
   Income tax (benefit) expense                              (30.9)       2.2         4.0          1.5           2.3
                                                       -------------------------------------------------------------
   Income (loss) from continuing operations                   59.1       16.1         1.2         (6.0)         (6.0)
   Income (loss) from discontinued operations (1)              0.7        0.6          --           --          (7.9)
   Loss on disposition of discontinued operations (1)           --         --          --           --        (121.4)
                                                       -------------------------------------------------------------
   Total income (loss) from discontinued operations           59.8        0.6          --           --        (129.3)
   Cumulative effect of change in accounting
    principle (3)                                               --         --          --         (8.0)           --
                                                       -------------------------------------------------------------
   Net income (loss)                                   $      59.8  $    16.7  $      1.2  $     (14.0)  $    (135.3)
                                                       =============================================================
   Diluted earnings (loss) per share from continuing   $      3.56  $    1.09  $     0.08  $     (0.42)  $     (0.41)
    operations
   Basic earnings (loss) per share from continuing
    operations                                         $      3.69  $    1.10  $     0.08  $     (0.42)  $     (0.41)
   Weighted average shares outstanding - assuming
    dilution                                                  16.6       14.8        14.6         14.5          14.4
   Weighted average shares outstanding - basic                16.1       14.6        14.6         14.5          14.4

BALANCE SHEET DATA (AT END OF PERIOD):
   Total assets (4)                                    $     566.0  $   480.9  $    473.4  $     482.6   $     524.3
   Total debt (5)                                            209.8      270.9       293.4        316.3         350.4
   Total shareholders' equity                                204.4       81.8        63.0         52.7          71.6

OTHER FINANCIAL DATA:
   Net cash provided by operating activities                  48.5       17.2        26.4         14.2          49.8
   Net cash provided by (used in) investing activities        (6.4)       3.1         4.3         16.0          (1.6)
  Net cash used in financing activities                       (6.4)     (21.9)      (21.5)       (41.9)        (48.5)
   Capital expenditures                                        8.4        5.9         3.6          5.0           4.7
   Cash dividends per common share                            0.00       0.00        0.00         0.00          0.14

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


                                       19
<PAGE>

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

     (2)  Refer to "Results of Operations" in "Item 7.  Management's  Discussion
          and Analysis of Results of Operation  and Financial  Condition"  for a
          discussion of the restructuring  charges related to fiscal 2006, 2005,
          and  2004.  Restructuring  charges  for  fiscal  2003  related  to the
          closure,  merging,  or significant  reorganization of five facilities.
          These  costs   included   $1.8  million  of   severance   relating  to
          approximately  215  employees,  $1.0  million  of  lease  termination,
          facility   wind-down,   preparation   for  sale  and   maintenance  of
          non-operating  facilities  prior  to  disposal  and $0.9  million  for
          facility  closure  costs on  projects  begun  in  2002.  Restructuring
          charges for 2002  include  exit costs of $2.4  million  for  severance
          relating to  approximately  250  employees  and $7.2  million of lease
          termination,  facility  wind-down,  and  maintenance of  non-operating
          facilities prior to disposal.  Included in the  restructuring  charges
          was  approximately   $8.3  million  to  terminate  a  facility  lease,
          resulting in the purchase of the property with an estimated fair value
          of  approximately  $2.3 million which was recorded as an offset to the
          restructuring charges.

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

     (4)  Total assets  include net assets of  discontinued  operations of $21.5
          million as of March 31, 2002.

     (5)  Total debt includes  long-term  debt,  including the current  portion,
          notes payable and subordinated debt.
</TABLE>


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

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

EXECUTIVE OVERVIEW

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

     Founded in 1875, we have grown to our current  leadership  position through
organic  growth and also as the result of the 14 businesses we acquired  between
February 1994 and April 1999. We have developed our leading market position over
our 131-year  history by  emphasizing  technological  innovation,  manufacturing
excellence  and  superior  after-sale  service.  In addition,  the  acquisitions
significantly  broadened  our  product  lines  and  services  and  expanded  our
geographic  reach,  end-user  markets  and  customer  base.  Integration  of the
operations of the acquired businesses with our previously existing businesses is
substantially  complete.   Ongoing  integration  of  these  businesses  includes
improving our productivity,  further reducing our excess manufacturing  capacity
and extending our sales  activities to the European and Asian  marketplaces.  We
are executing those initiatives through our Lean Manufacturing efforts, facility
rationalization  program, new product development and expanded sales activities.
Shareholder value will be enhanced through continued emphasis on the improvement
of  the  fundamentals  including  manufacturing  efficiency,  cost  containment,
efficient capital investment, market expansion and renewed customer focus.

                                       20
<PAGE>

     We maintain a strong domestic market share with  significant  leading North
American  market  positions  in  hoists,  lifting  and sling  chain,  and forged
attachments.  To broaden our product  offering in markets where we have a strong
competitive  position as well as to facilitate  penetration  into new geographic
markets,  we  have  heightened  our new  product  development  activities.  This
includes development of hoist lines in accordance with international  standards,
to complement our current offering of hoist products designed in accordance with
U.S.  standards.  To further expand our global sales, we are introducing certain
of our products that  historically  have been  distributed only in North America
and also  introducing new products  through our existing  European  distribution
network. Furthermore, we are working to build a distribution network in China to
capture an  anticipated  growing demand for material  handling  products as that
economy continues to industrialize.  These investments in international  markets
and new products are part of our focus on our greatest opportunities for growth.
International  sales  increased  3.7% from  approximately  $191,300  to $198,300
during  fiscal 2006 and overall sales  increased  8.0% over the same period last
year.  Management  believes  that the growth rate of total sales may moderate in
future periods due to more difficult  comparisons  with our fiscal 2006 periods.
We monitor such indicators as U.S.  Industrial Capacity  Utilization,  which has
been  increasing  since July 2003.  In  addition,  we  continue  to monitor  the
potential impact of global and domestic  trends,  including rising energy costs,
steel price fluctuations, rising interest rates and uncertainty in some end-user
markets around the globe.

     Our Lean Manufacturing efforts are fundamentally changing our manufacturing
processes  to be more  responsive  to  customer  demand  and  improving  on-time
delivery and productivity.  From 2001 to 2004 under our facility rationalization
program, we closed 13 facilities and consolidated  several product lines. During
fiscal 2006,  certain  families  within our mechanical jack line were eliminated
and several  smaller sales offices were closed with  potential  opportunity  for
further  rationalization.  We also continue to undergo  assessments for possible
divestiture of several less-strategic  businesses. Our manipulator and specialty
marine  chain  businesses  were sold in  fiscal  2004 and two  others  remain as
possible  divestiture  candidates,  our  conveyor  business  which  comprises  a
majority of our  Solutions  segment and a specialty  crane  business  within our
Products  segment.  During  fiscal  2006,  we  completed  the sale  and  partial
leaseback of warehouse in Ontario,  Canada at a $0.6 million gain as well as the
sale of an unused parcel of land in Charlotte,  North Carolina.  Fiscal 2005 saw
the  completion  of the  sale of a  Chicago-area  property  resulting  in a $2.7
million gain and the sale and partial  leaseback of our  corporate  headquarters
building in Amherst,  New York at a $2.2 million gain, of which $1.0 million was
recorded in fiscal 2005 and the remainder is being recognized  pro-rata over the
life of the 10-year leaseback period.  Additionally during 2005, we sold a small
parcel  of land in  Virginia.  We will  continue  to sell  surplus  real  estate
resulting from our facility  rationalization projects and those sales may result
in gains or losses.

     Consistent  with most  companies,  over the past several years we have been
facing  significantly  increased  costs  for  fringe  benefits  such  as  health
insurance,  workers compensation insurance and pension. Combined, those benefits
cost us over $35 million in fiscal 2006 and we work  diligently  to balance cost
control with the need to provide competitive  employee benefits packages for our
associates.  Another cost area of focus is steel. We utilize  approximately  $35
million to $40 million of steel  annually in a variety of forms  including  rod,
wire, bar,  structural and others.  With increases in worldwide demand for steel
and  fluctuating  scrap steel prices,  we experienced  fluctuations in our costs
that we reflected as price increases and surcharges to our customers. We believe
we have been successful in instituting surcharges and price increases to pass on
these  material  cost  increases.  We will  continue  to  monitor  our costs and
reevaluate our pricing policies.


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,           2006 VS. 2005          2005 VS. 2004
                                  ----------------------------           -------------          -------------
                                  2006         2005        2004         AMOUNT       %         AMOUNT        %
                                  ----         ----        ----         ------       -         ------        -

<S>                              <C>          <C>         <C>          <C>           <C>      <C>           <C>
Products segment.............    $  493.9     $  453.1    $  394.2     $    40.8     9.0      $    58.9     14.9
Solutions segment............        62.1         61.7        50.4           0.4     0.6           11.3     22.4
                                 --------     --------    --------     ---------  ------      ---------   ------
     Total net sales.........    $  556.0     $  514.8    $  444.6     $    41.2     8.0      $    70.2     15.8
                                 ========     ========    ========     =========              =========

</TABLE>

                                       21
<PAGE>


     Fiscal 2006 saw continued  improvement  in the  industrial  sector of North
America and Europe  which began in fiscal 2005  compared to the  downturn in the
general  North  American and European  economies and the  industrial  sectors in
particular  that had been  occurring  through  fiscal 2004.  In addition,  sales
growth was fostered by the expansion of international selling efforts. Net sales
for fiscal 2006 of $556.0  increased by $41.2  million or 8.0% from fiscal 2005,
and net sales for fiscal 2005 of $514.8 million  increased by $70.2 million,  or
15.8%,  from fiscal 2004. The Products segment for fiscal 2006 experienced a net
sales  increase  of  9.0%  over  the  prior  year.  The  increase  was  due to a
combination  of increased  volume on the continued  growth of the North American
industrial  economy as well as price  increases  ($17.8  million).  The Products
segment for fiscal 2005 experienced a net sales increase of 14.9% over the prior
year.  The  increase  was due to a  combination  of  higher  volume as the North
American industrial economy recovered as well as price increases ($19.7 million)
including surcharges specifically in response to rising steel costs. Fiscal 2005
was  impacted  by the  weakening  U.S.  dollar  relative  to  other  currencies,
particularly  the euro,  and  reported  Products  segment  sales were  favorably
affected by $6.2 million.  For fiscal 2006, our Solutions segment net sales were
flat as increased volume was offset by the strengthening U.S. dollar relative to
the Danish Krone resulting in an unfavorable impact of $0.9 million.  For fiscal
2005, our Solutions  segment net sales  increased 22.4% as a result of increased
volume in Europe at our conveyor business.

     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,
                             --------------------------------------------------------------
                                      2006                 2005                2004
                                      ----                 ----                ----
                                  AMOUNT       %       AMOUNT       %       AMOUNT     %
                                  ------       -       ------       -       ------     -

<S>                             <C>          <C>     <C>          <C>     <C>        <C>
Products segment............    $   138.1    28.0    $   117.1    25.8    $   99.2   25.2
Solutions segment...........          9.5    15.3          8.8    14.3         5.6   11.1
                                ---------    ----    ---------    ----    --------   ----
     Total gross profit.....    $   147.6    26.5    $   125.9    24.5    $  104.8   23.6
                                =========            =========            ========
</TABLE>

     Our gross  profit  margins  were  approximately  26.5%,  24.5% and 23.6% in
fiscal 2006, 2005 and 2004,  respectively.  The Products segment for fiscal 2006
and  fiscal  2005  continues  to see  improved  gross  margins  as a  result  of
operational leverage at increased volumes from the prior years and the impact of
previous facility  rationalization  projects and lean manufacturing  activities.
The  Solutions  segment's  gross  profit  margins  increased in Fiscal 2006 as a
result of a shift in  product  mix at our  European  conveyor  business  to more
internally  developed  product costs from resale  products,  increased volume at
certain  facilities,  and  some  rationalization  cost  savings.  The  Solutions
segment's  gross  profit  margins  increased  in Fiscal  2005 as a result of the
recovery of European markets which led to increased volume for one division,  as
well as the divestiture of a poor performing,  non-strategic business at the end
of fiscal 2004.

     Selling  expenses  were $54.3  million,  $52.3 million and $48.3 million in
fiscal 2006, 2005 and 2004, respectively.  As a percentage of net sales, selling
expenses were 9.8%, 10.2% and 10.9% in fiscal 2006, 2005 and 2004, respectively.
The fiscal 2006 increase includes additional salaries ($1.2 million),  increased
advertising,  marketing,  warehousing and travel ($1.3 million),  and new market
costs  ($0.4  million)  offset by a decrease  in  foreign  pension  costs  ($0.4
million) and lower  commission  expense ($0.8  million).  Fiscal 2005 includes a
$1.2 million  increase  resulting from the weakening of the U.S. dollar relative
to  foreign  currencies,  particularly  the euro,  upon  translation  of foreign
operating  results into U.S.  dollars for reporting  purposes.  Fiscal 2005 also
includes  increases related to variable costs associated with the increase sales
volume, mainly commissions ($1.3 million), increased foreign pension costs ($0.5
million) and increased investments in international markets ($0.5 million).

     General and administrative  expenses were $33.6 million,  $31.7 million and
$25.0 million in fiscal 2006,  2005 and 2004,  respectively.  As a percentage of
net sales,  general  and  administrative  expenses  were 6.1%,  6.2% and 5.6% in
fiscal 2006,  2005 and 2004,  respectively.  The Fiscal 2006  increase  includes
increases in salaries/personnel  including variable compensation ($3.0 million),
employee  development/professional  fees ($0.7 million), offset by lower foreign
pension costs ($1.0  million),  decreased  external  Sarbanes-Oxley  Section 404
savings ($0.9  million) and currency  translation  ($0.2  million).  Fiscal 2005
increases  include  variable  compensation  ($2.3  million),   compliance  costs
associated  with  Sarbanes-Oxley  Section  404  implementation  ($1.4  million),
increasing  foreign  pension  costs  ($1.2  million),   translation  of  foreign
currencies into the weaker U.S. dollar for reporting purposes ($0.7 million) and
increases in bad debt reserves  based on increased  accounts  receivable  levels
($0.5 million).

     Restructuring  charges of $1.6 million,  $0.9 million and $1.2 million,  or
0.3%,  0.2% and 0.3% of net sales in fiscal 2006,  2005 and 2004,  respectively,
were  primarily  attributable  to the  ongoing  organizational  rationalizations
occurring at the company. The fiscal 2006 charges consist of the cost of removal
of  certain  environmentally  hazardous  materials  ($0.6  million),   inventory
disposal costs related to the rationalization of certain product families within
our mechanical jack lines ($0.4  million),  the ongoing  maintenance  costs of a

                                       22
<PAGE>

non-operating facility accrued based on anticipated sale date ($0.3 million) and
other  facility   rationalization  projects  ($0.3  million).  The  fiscal  2005
restructuring  charges  consist  of $0.5  million of costs  related to  facility
rationalizations  being  expensed  on an as  incurred  basis as a result  of the
project  timing being  subsequent  to the adoption of SFAS No. 144.  Fiscal 2005
also  included  $0.3  million of  write-down  on the net  realizable  value of a
facility based on changes in market  conditions  and a  reassessment  of its net
realizable value. 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 remaining  liability of as of March 31,
2006  relates  to the  accrued  costs  for the  removal  of the  environmentally
hazardous  materials  ($0.5  million)  and the  ongoing  maintenance  costs of a
non-operating facility ($0.3 million).

     Write-off/amortization  of intangibles  was $0.2 million,  $0.3 million and
$0.4 million in fiscal 2006, 2005 and 2004, respectively.

     Interest  and debt  expense  was $24.7  million,  $27.6  million  and $28.9
million in fiscal 2006,  2005 and 2004,  respectively.  As a  percentage  of net
sales,  interest and debt expense was 4.4%,  5.4% and 6.5% in fiscal 2006,  2005
and 2004,  respectively.  The fiscal 2006 and 2005 decreases  primarily resulted
from lower debt levels as we continue to execute our strategy of debt  reduction
and increasing our financial flexibility.

     Other (income) and expense, net was $5.0 million, ($5.2) million and ($4.2)
million in fiscal 2006, 2005 and 2004,  respectively.  Fiscal 2006 includes $9.2
million of redemption costs associated with the repurchase of outstanding senior
secured and senior  subordinated  notes,  offset by $3.1 million from investment
and interest income and $0.8 million of gains from sales of real estate.  Fiscal
2005 includes $3.7 million in gains from sales of real estate, $2.1 million from
investment and interest income, offset by $0.3 million of additional losses from
2004 business divestitures. The income in fiscal 2004 included $5.7 million from
asset sales and $1.9 million from an interest rate swap partially offset by $3.9
million of losses upon business divestitures.

     Income  taxes as a  percentage  of  income  before  income  taxes  were not
reflective  of U.S  statutory  rates in fiscal  2006,  2005 or 2004. A valuation
allowance of $50.5 million  existed at March 31, 2005 due to the  uncertainly of
whether our U.S. federal net operating loss carryforwards ("NOLs"), deferred tax
assets and capital loss carryforwards might ultimately be realized.  We utilized
$14.9  million of the U.S.  federal NOLs in fiscal 2006  reducing the  valuation
allowance by $5.2 million.  As a result of our increased  operating  performance
over the past several  years,  we  reevaluated  the  certainty as to whether our
remaining  U.S.  federal NOLs and other  deferred tax assets may  ultimately  be
realized.  As a result of the determination that it is more likely than not that
nearly all of the remaining deferred tax assets will be realized,  $38.6 million
of the  remaining  valuation  allowance  was reversed as of March 31, 2006.  The
fiscal  2005  effective  tax rate varies due to the  benefit  received  from the
utilization  of the domestic net operating  loss  carry-forwards  that had fully
reserved  and  jurisdictional  mix.  Income tax expense  primarily  results from
non-U.S.  taxable income and state taxes on U.S. taxable income. The fiscal 2004
effective tax rate varies due to jurisdictional  mix and the existence of losses
at certain subsidiaries for which no benefit was recorded.


LIQUIDITY AND CAPITAL RESOURCES

     In March 2006, we amended and expanded our revolving credit  facility.  The
Revolving Credit Facility currently provides availability up to a maximum of $75
million with an opportunity for expansion up to $125 million. At March 31, 2006,
the unused Revolving  Credit Facility totaled $64.8 million,  net of outstanding
borrowings of $0.0 million and  outstanding  letters of credit of $10.2 million.
Interest on the revolver is payable at varying  Eurodollar  rates based on LIBOR
or prime plus a spread  determined by our leverage  ratio  amounting to 100 or 0
basis points, respectively,  at March 31, 2006. The Revolving Credit Facility is
secured  by all  domestic  inventory,  receivables,  equipment,  real  property,
subsidiary  stock  (limited to 65% for foreign  subsidiaries)  and  intellectual
property.

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


                                       23
<PAGE>


     In September  2005,  we issued $136  million of 8 7/8% Senior  Subordinated
Notes (8 7/8% Notes) due  November 1, 2013.  Proceeds  from the 8 7/8% Notes and
cash on hand  were  used to  repurchase  all of the  outstanding  8 1/2%  Senior
Subordinated  Notes (8 1/2% Notes).  The repurchase of the 8 1/2% Notes occurred
at a premium resulting in a pre-tax loss on early extinguishment of debt of $2.3
million.  As a result of the  repurchase  of the 8 1/2% Notes,  $0.9  million of
pre-tax deferred financing costs and $0.1 million of the original issue discount
were written-off.  The net effect of these items, a $3.3 million pre-tax loss in
fiscal 2006, is shown as part of other (income) and expense,  net. Provisions of
the 8 7/8% Notes include,  without  limitation,  restrictions  on  indebtedness,
asset sales,  and dividends and other  restricted  payments.  Until  November 1,
2008, we may redeem up to 35% of the outstanding  notes at a redemption price of
108.875% with the proceeds of equity offerings, subject to certain restrictions.
The 8 7/8% Notes are  redeemable  at the  option of us, in whole or in part,  at
prices  declining  annually from the Make-Whole  Price (as defined in the 8 7/8%
Notes agreement) to 100% on and after November 1, 2011. In the event of a Change
of Control (as defined in the  indenture  for such notes),  each holder of the 8
7/8% Notes may require us to repurchase all or a portion of such holder's 8 7/8%
Notes at a purchase price equal to 101% of the principal  amount thereof.  The 8
7/8% Notes are guaranteed by certain  existing and future domestic  subsidiaries
and are not subject to any sinking fund requirements.

     In July 2003,  we issued  $115.0  million of 10% Senior  Secured  Notes due
August 1, 2010 of which $67.8  million  remain  outstanding  at March 31,  2006.
During  April and May of 2006,  the  Company  repurchased  an  additional  $32.1
million of the  outstanding  10% Senior Secured Notes,  resulting in a remaining
balance of $35.7 million. The proceeds from the 10% Notes 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  in fiscal  2004 of the 8 1/2%  Senior  Subordinated  Notes
occurred  at a  discount  resulting  in a $5.6  million  pre-tax  gain on  early
extinguishment  of debt.  As a result  of the  repayment  of the  Senior  Second
Secured Term Loan and a portion of the Term Loan and 8 1/2% Senior  Subordinated
Notes,  $4.9 million of pre-tax  deferred  financing  costs were  written-off in
fiscal 2004. The net effect of these two items, a $0.7 million  pre-tax gain, is
shown as part of other (income) and expense, net.

     The  corresponding  credit  agreement  associated with the Revolving Credit
Facility  places certain debt covenant  restrictions  on us,  including  certain
financial  requirements  and a restriction on dividend  payments,  with which we
were in compliance as of March 31, 2006.

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

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

     Net cash provided by operating activities was $48.5 million,  $17.2 million
and $26.4 million in fiscal 2006, 2005 and 2004, respectively. The $31.3 million
increase in fiscal 2006  relative to fiscal 2005 was  primarily  due to stronger
operating  performance  in fiscal  2006 ($19.9  million)  and  improved  working
capital  components  ($11.4  million).  The working  capital  changes  come from


                                       24
<PAGE>

favorable  changes in inventory  ($9.3  million),  accounts  payable and accrued
liabilities  ($9.9  million),  offset by  unfavorable  changes in prepaids ($3.8
million) and accounts  receivables ($4.1 million).  The $9.2 million decrease in
fiscal  2005  relative to fiscal 2004 was  primarily  due to stronger  operating
performance in fiscal 2005 ($4.0 million)  offset by changes in working  capital
components  ($13.2  million).  The working  capital  changes come from favorable
changes  in  prepaids/other   ($3.3  million),   accounts  payable  and  accrued
liabilities  ($6.7  million),  offset by  unfavorable  changes  in and  accounts
receivables ($8.0 million) and inventory ($15.2 million).

     Net cash (used) provided by investing  activities was ($6.4) million,  $3.1
million and $4.3 million in fiscal 2006, 2005 and 2004, respectively. The fiscal
2006 change in cash (used)  provided by  investing  activities  is the result of
increased  capital  expenditures and lower proceeds from asset sales. The fiscal
2005 change in cash (used)  provided by investing  activities  is primarily  the
result of increased capital expenditures. The fiscal 2006, 2005 and 2004 amounts
included  $2.1  million,  $7.1  million  and $7.8  million,  respectively,  from
business and property divestitures.

     Net cash used in financing  activities was $6.4 million,  $21.9 million and
$21.5  million in fiscal  2006,  2005 and 2004,  respectively.  The decrease for
fiscal 2006 was the result of $56.6  million of proceeds  from the November 2005
stock offering and $7.0 million from the exercise of employee stock options. The
fiscal 2006,  2005 and 2004 amounts  included $67.8  million,  $22.9 million and
$17.7  million of debt  repayment,  respectively.  We also paid $2.8 million and
$4.4 million of financing costs in fiscal 2006 and 2004, 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, 2006, by period of estimated payments due:
<TABLE>
<CAPTION>

                                                      FISCAL      FISCAL 2008-     FISCAL 2010-     MORE THAN
                                        TOTAL          2007        FISCAL 2009     FISCAL 2011     FIVE YEARS
                                        -----          ----        -----------     -----------     ----------
<S>                                    <C>            <C>           <C>              <C>             <C>
Long-term debt obligations (a).        $  204.0       $  0.1        $   0.2          $   67.4        $ 136.3
Operating lease obligations (b)            13.3          3.4            5.6               3.5            0.8
Purchase obligations (c) ......              --           --             --                --             --
Interest obligations (d).......           119.8         18.8           37.6              32.2           31.2
Letter of credit obligations...            10.2         10.2             --                --             --
Other    long-term     liabilities
reflected    on   the    Company's
balance sheet under GAAP (e)...            50.7          0.0           29.0              20.0            1.7
                                       --------       ------        -------          --------        -------
     Total.....................        $  398.0       $ 32.5        $  72.4          $  123.1        $ 170.0
                                       ========       ======        =======          ========        =======

     (a)  As described in note 10 to our consolidated financial statements.
     (b)  As described in note 18 to our consolidated financial statements.
     (c)  We have no purchase obligations specifying fixed or minimum quantities
          to be purchased.  We estimate  that,  at any given point in time,  our
          open  purchase  orders to be executed in the normal course of business
          approximate $40 million.
     (d)  Estimated  for  our  Senior   Secured  Notes  due  8/1/10  and  Senior
          Subordinated  Notes due  11/1/13.
     (e)  As described in note 9 to our consolidated financial statements.
</TABLE>

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
between fiscal 2002-2004 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 2006, 2005 and
2004 were $8.4  million,  $5.9 million and $3.6  million,  respectively.  Higher
capital  expenditures  in fiscal  2006 and 2005 were the  result of new  product
development and productivity  enhancing  equipment along with normal maintenance
items. We expect capital expenditure  spending in fiscal 2007 to be in the range
of $8-$10 million.

                                       25
<PAGE>

INFLATION AND OTHER MARKET CONDITIONS

     Our costs are affected by  inflation  in the U.S.  economy and, to a lesser
extent, in foreign economies including those of Europe,  Canada,  Mexico and the
Pacific Rim. We do not believe that general  inflation has had a material effect
on our results of operations over the periods presented primarily due to overall
low  inflation  levels over such  periods and our ability to  generally  pass on
rising costs through annual price  increases and surcharges.  However,  employee
benefits  costs  such  as  health  insurance,  workers  compensation  insurance,
pensions  as well  as  energy  and  business  insurance  have  exceeded  general
inflation levels. In the future, we may be further affected by inflation that we
may not be able to pass on as price increases.  With changes in worldwide demand
for steel and  fluctuating  scrap steel prices over the past several  years,  we
experienced  fluctuations in our costs that we have reflected as price increases
and  surcharges  to our  customers.  We  believe  we  have  been  successful  in
instituting  surcharges  and  price  increases  to pass on these  material  cost
increases.  We will  continue  to monitor our costs and  reevaluate  our pricing
policies.

SEASONALITY AND QUARTERLY RESULTS

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

DISCONTINUED OPERATIONS

     In May 2002,  we completed  the  divestiture  of  substantially  all of the
assets  of ASI  which  comprised  the  principal  business  unit  in our  former
Solutions - Automotive  segment.  Proceeds from this sale included cash of $15.9
million and an 8%  subordinated  note in the  principal  amount of $6.8  million
payable  over  10  years.  Due  to the  uncertainty  surrounding  the  financial
viability of the new  organization,  the note has been recorded at the estimated
net realizable value of $0. Principal payments received on the note are recorded
as income from discontinued operations at the time of receipt. Accordingly, $0.7
million of income from discontinued  operations was recorded in fiscal 2006. All
interest and principal payments required under the note have been made to date.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

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

     PENSION  AND  OTHER  POSTRETIREMENT   BENEFITS.The   determination  of  the
obligations and expense for pension and postretirement  benefits is dependent on
our selection of certain  assumptions  that are used by actuaries in calculating
such amounts.  Those assumptions are disclosed in Notes 11 and 13, respectively,
to our fiscal 2006  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 5 3/4%, 6%, 6 1/4% as of March 31,
2006,  2005 and 2004,  respectively,  are based on  long-term  bond  rates.  The
decrease in discount rates for fiscal 2006 and 2005 resulted in $3.9 million and
$3.0 million increases in the projected benefit obligations as of March 31, 2006
and 2005, respectively. The rate of return on plan assets assumptions of 7 1/2%,
8 1/4% and 8.4% for the years ended March 31, 2006, 2005 and 2004, respectively,
are based on the composition of the asset portfolios (approximately 56% equities
and 44% fixed income at March 31, 2006) and their long-term  historical returns.
The actual  assets  realized  gains of $6.8 and $5.5  million in fiscal 2006 and
2005.  Our funded  status as of March 31,  2006 and 2005 was  negative  by $33.9
million  and  $29.3  million,  or 25.3% and  24.3%,  respectively.  Our  pension
contributions  during  fiscal  2006 and 2005  were  approximately  $7.8 and $9.7
million,  respectively.  The negative funded status may result in future pension
expense  increases.  Pension  expense  for the March  31,  2007  fiscal  year is
expected to approximate $7.8 million, which is up from the fiscal 2006 amount of
$7.0  million.  The factors  outlined  above will result in increases in funding
requirements   over  time,   unless  there  is  continued   significant   market
appreciation in the asset values. However, pension funding contributions for the
March 31,  2007 fiscal year are  expected  to  decrease  by  approximately  $1.8
million compared to fiscal 2006. The compensation  increase  assumption of 4% as
of March 31, 2006, 2005 and 2004 is based on historical trends.


                                       26
<PAGE>

     The healthcare inflation  assumptions of 9 3/4%, 10 1/2% and 12% for fiscal
2006, 2005 and 2004,  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.

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

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

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

     DEFERRED TAX ASSET VALUATION ALLOWANCE.  As of March 31, 2006, we had $56.7
million  of total net  deferred  tax  assets  before  valuation  allowances.  As
described in Note 17 to the consolidated financial statements,  $29.1 million of
the assets pertain to U.S. federal net operating loss carryforwards ("NOLs") and
the remainder  relate  principally to  liabilities  including  employee  benefit
plans,  insurance  reserves,  accrued  vacation and incentive  costs and also to
asset valuation  reserves such as inventory  obsolescence  reserves and bad debt
reserves.  The U.S.  federal  NOLs expire in 2023.  We reduced the  deferred tax
assets by $5.2  million as a result of  utilizing  U.S.  federal  NOLs in fiscal
2006. As a result of our increased  operating  performance over the past several
years,  we reevaluated  the certainty as to whether our remaining NOLs and other
deferred tax assets may ultimately be realized. As a result of the determination
that it is more likely than not that nearly all of the  remaining  deferred  tax
assets  will be  realized,  a  significant  portion of the  remaining  valuation
allowance  was reversed in fiscal 2006.  Our ability to realize our deferred tax
assets is primarily dependent on generating sufficient future taxable income. If
we do not generate  sufficient  taxable income, we could be required to record a
valuation allowance.

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


EFFECTS OF NEW ACCOUNTING PRONOUNCEMENTS

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


                                       27
<PAGE>

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

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

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

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

     We are still  evaluating the method we plan to use when we adopt  statement
123(R).

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

     In May 2005,  the FASB issued SFAS No. 154,  "Accounting  Changes and Error
Corrections" which replaces APB Opinion No. 20,  "Accounting  Changes," and SFAS
No. 3, "Reporting Accounting Changes in Interim Financial  Statements." SFAS No.
154  changes  the  requirements  for and  reporting  of a change  in  accounting
principle.  This Statement becomes  effective for changes in accounting  methods
during  fiscal years  beginning  after  December 15, 2005.  We do not expect the
adoption of SFAS No. 154 will have a material impact on our consolidated results
of operations and financial condition.


ITEM 7A.          QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

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

     In fiscal  2006,  29% 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


                                       28
<PAGE>

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 $0.5 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, 2006, we do not have any material swap agreements or similar financial
instruments  in place.  At March 31, 2006 and 2005,  approximately  97% and 96%,
respectively,  of our outstanding debt had fixed interest rates. At those dates,
we  had  approximately  $6.4  million  and  $11.4  million,   respectively,   of
outstanding  variable rate debt. A 1%  fluctuation  in interest  rates in fiscal
2006 and 2005 would have changed interest  expense on that outstanding  variable
rate debt by approximately $0.1 million for both years.

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

     Based on actuarial  information,  we have  estimated  our  asbestos-related
aggregate  liability  through March 31, 2031 and March 31, 2082 to range between
$5.5 million and $19.0 million using  actuarial  parameters of continued  claims
for a period of 25 to 76 years. Our estimation of our asbestos-related aggregate
liability  that is probable and  estimable,  in accordance  with U.S.  generally
accepted accounting  principles,  is through March 31, 2031 and ranges from $5.5
million  to $6.5  million  as of March  31,  2006.  The  range of  probable  and
estimable  liability  reflects  uncertainty  in the number of future claims that
will be filed and the cost to resolve those claims, which may be influenced by a
number of factors,  including the outcome of the ongoing broad-based  settlement
negotiations,  defensive strategies,  and the cost to resolve claims outside the
broad-based  settlement program.  Based on the underlying actuarial information,
we have  reflected  $6.3  million as a liability in the  consolidated  financial
statements in accordance with U.S. generally accepted accounting principles. The
increase in the recorded  liability from the amount of $4.8 million at March 31,
2005 is due to a change  in  actuarial  parameters  used to  calculate  required
asbestos  liability reserve levels. The recorded liability does not consider the
impact of any potential favorable federal legislation such as the "FAIR Act". Of
this  amount,  management  expects  to  incur  asbestos  liability  payments  of
approximately  $0.5  million  over the next 12  months.  Because  payment of the
liability  is likely to extend over many  years,  management  believes  that the
potential  additional costs for claims will not have a material after-tax effect
on our financial  condition or our liquidity,  although the net after-tax effect
of any future  liabilities  recorded  could be  material to earnings in a future
period.


                                       29
<PAGE>


ITEM 8.           FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

COLUMBUS MCKINNON CORPORATION

 Audited Consolidated Financial Statements as of March 31, 2006:
      Report of Independent Registered Public Accounting Firm..........      F-2
      Consolidated Balance Sheets......................................      F-3
      Consolidated Statements of Operations............................      F-4
      Consolidated Statements of Shareholders' Equity..................      F-5
      Consolidated Statements of Cash Flows............................      F-6
      Notes to Consolidated Financial Statements
         1.    Description of Business.................................      F-7
         2.    Accounting Principles and Practices.....................      F-7
         3.    Discontinued Operations.................................     F-11
         4.    Unbilled Revenues and Excess Billings...................     F-11
         5.    Inventories.............................................     F-12
         6.    Marketable Securities...................................     F-12
         7.    Property, Plant, and Equipment..........................     F-13
         8.    Goodwill and Intangible Assets..........................     F-14
         9.    Accrued Liabilities and Other Non-current Liabilities...     F-15
         10.   Debt....................................................     F-16
         11.   Retirement Plans........................................     F-18
         12.   Employee Stock Ownership Plan (ESOP)....................     F-20
         13.   Postretirement Benefit Obligation.......................     F-20
         14.   Earnings per Share and Stock Plans......................     F-22
         15.   Loss Contingencies......................................     F-24
         16.   Restructuring Charges...................................     F-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
         24.   Subsequent Events.......................................     F-39

         Schedule II - Valuation and Qualifying Accounts...............     F-40




                                      F-1
<PAGE>



             Report of Independent Registered Public Accounting Firm


The Board of Directors and Shareholders of Columbus McKinnon Corporation

We have  audited  the  accompanying  consolidated  balance  sheets  of  Columbus
McKinnon  Corporation  and  subsidiaries  as of March 31, 2006 and 2005, and the
related consolidated  statements of operations,  shareholders'  equity, and cash
flows for each of the three years in the period ended March 31, 2006. Our audits
also included the financial  statement  schedule listed in the Index at Item 15.
These financial  statements and schedule are the responsibility of the Company's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements and schedule based on our audits.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects,  the consolidated financial position of Columbus McKinnon
Corporation and  subsidiaries  at March 31, 2006 and 2005, and the  consolidated
results of their  operations and their cash flows for each of the three years in
the period ended March 31, 2006,  in  conformity  with U.S.  generally  accepted
accounting  principles.  Also, in our opinion,  the related financial  statement
schedule, when considered in relation to the basic financial statements taken as
a whole,  presents  fairly in all material  respects the  information  set forth
therein.

We also have  audited,  in accordance  with the standards of the Public  Company
Accounting  Oversight  Board  (United  States),  the  effectiveness  of Columbus
McKinnon Corporation's internal control over financial reporting as of March 31,
2006,  based on criteria  established in Internal  Control-Integrated  Framework
issued by the Committee of Sponsoring  Organizations of the Treadway  Commission
and our report dated June 1, 2006 expressed an unqualified opinion thereon.

                              /s/ Ernst & Young LLP
June 1, 2006
Buffalo, New York




                                      F-2
<PAGE>


                          COLUMBUS MCKINNON CORPORATION

                           CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>

                                                                                        ----------------------------------
                                                                                                    MARCH 31,
                                                                                        ----------------------------------
                                                                                              2006             2005
                                                                                              ----             ----
                                                                                             (IN THOUSANDS, EXCEPT
                                                                                                   SHARE DATA)
                                         ASSETS
 Current assets:
<S>                                                                                       <C>              <C>
        Cash and cash equivalents......................................................   $     45,598     $      9,479
        Trade accounts receivable, less allowance for doubtful accounts
            ($3,417 and $3,015, respectively)..........................................         95,726           88,974
        Unbilled revenues..............................................................         12,061            8,848
        Inventories....................................................................         74,845           77,626
      Prepaid expenses.................................................................         15,676           14,198
                                                                                        ----------------------------------
 Total current assets..................................................................        243,906          199,125
 Net property, plant, and equipment....................................................         55,132           57,237
 Goodwill, net.........................................................................        184,917          185,443
 Other intangibles, net................................................................          2,410            1,842
 Marketable securities.................................................................         27,596           24,615
 Deferred taxes on income..............................................................         46,065            6,122
 Other assets..........................................................................          6,018            6,487
                                                                                        ----------------------------------
 Total assets..........................................................................   $    566,044     $    480,871
                                                                                        ==================================

                          LIABILITIES AND SHAREHOLDERS' EQUITY
 Current liabilities:
      Notes payable to banks...........................................................   $      5,798     $      4,839
      Trade accounts payable...........................................................         39,311           33,688
      Accrued liabilities..............................................................         61,264           52,328
      Restructuring reserve............................................................            793              144
      Current portion of long-term debt................................................            127            5,819
                                                                                        ----------------------------------
 Total current liabilities.............................................................        107,293           96,818
 Senior debt, less current portion.....................................................         67,841          115,735
 Subordinated debt.....................................................................        136,000          144,548
 Other non-current liabilities.........................................................         50,489           42,003
                                                                                        ----------------------------------
 Total liabilities.....................................................................        361,623          399,104
 Shareholders' equity:
      Voting common stock; 50,000,000 shares authorized;
             18,575,454 and 14,948,172 shares issued...................................            185              149
      Additional paid-in capital.......................................................        170,081          104,078
      Retained earnings (accumulated deficit)..........................................         51,152           (8,644)
      ESOP debt guarantee; 249,821 and 284,695 shares..................................         (3,996)          (4,554)
      Unearned restricted stock; 2,000 and 1,000 shares................................            (22)              (6)
      Accumulated other comprehensive loss.............................................        (12,979)          (9,256)
                                                                                        ----------------------------------
 Total shareholders' equity............................................................        204,421           81,767
                                                                                        ----------------------------------
 Total liabilities and shareholders' equity............................................   $    566,044     $    480,871
                                                                                        ==================================

</TABLE>

                             See accompanying notes.


                                      F-3
<PAGE>



                          COLUMBUS MCKINNON CORPORATION

                      CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                                     -----------------------------------------------------------
                                                                                        YEAR ENDED MARCH 31,
                                                                     -----------------------------------------------------------
                                                                               2006               2005               2004
                                                                               ----               ----               ----
                                                                                          (IN THOUSANDS,
                                                                                      EXCEPT PER SHARE DATA)

<S>                                                                     <C>                <C>                <C>
 Net sales..........................................................    $     556,007      $     514,752      $     444,591
 Cost of products sold..............................................          408,385            388,844            339,745
                                                                     -----------------------------------------------------------
 Gross profit.......................................................          147,622            125,908            104,846
 Selling expenses...................................................           54,255             52,291             48,331
 General and administrative expenses................................           33,640             31,730             25,026
 Restructuring charges..............................................            1,609                910              1,239
 Amortization of intangibles........................................              249                312                383
                                                                     -----------------------------------------------------------
 Income from operations.............................................           57,869             40,665             29,867
 Interest and debt expense..........................................           24,667             27,620             28,856
 Other (income) and expense, net....................................            5,048             (5,218)            (4,191)
                                                                     -----------------------------------------------------------
 Income from continuing operations before income tax
         (benefit) expense..........................................           28,154             18,263              5,202
 Income tax (benefit) expense.......................................          (30,946)             2,196              4,009
                                                                     -----------------------------------------------------------
 Income from continuing operations..................................           59,100             16,067              1,193
 Income from discontinued operations (net of tax)...................              696                643                  -
                                                                     -----------------------------------------------------------
 Net income.........................................................    $      59,796      $      16,710      $       1,193
                                                                     ===========================================================


 Average basic shares outstanding...................................           16,052             14,594             14,553
 Average diluted shares outstanding.................................           16,628             14,803             14,554
 Basic income per share:
      Income from continuing operations.............................    $        3.69      $        1.10      $        0.08
      Income from discontinued operations...........................             0.04               0.04                  -
                                                                     -----------------------------------------------------------
      Basic income per share........................................    $        3.73      $        1.14      $        0.08
                                                                     ===========================================================

 Diluted income per share:
      Income from continuing operations.............................    $        3.56      $        1.09      $        0.08
      Income from discontinued operations...........................             0.04               0.04                  -
                                                                     -----------------------------------------------------------
      Diluted income per share......................................    $        3.60      $        1.13      $        0.08
                                                                     ===========================================================

</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          LOSS         EQUITY
                                    ----------------------------------------------------------------------------------------
<S>                                   <C>        <C>        <C>         <C>          <C>         <C>            <C>
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 of tax of $918..         --         --          --           --         --           1,706       1,706
Net change in unrealized loss
  on derivatives qualifying as
  hedges, net of tax of $127.......         --         --          --           --         --             191         191
Change in minimum pension
  liability adjustment, net of
  tax of $352......................         --         --          --           --         --             528         528
                                                                                                                  ---------
Total comprehensive income.........                                                                                10,007
Earned 37,049 ESOP shares..........         --       (393)         --          593         --              --         200
Earned portion and adjustment of
  restricted shares................         --       (105)         --           --        169              --          64
                                    ----------------------------------------------------------------------------------------
Balance at March 31, 2004..........   $    149   $103,914   $ (25,354)  $   (5,116)  $    (39)   $    (10,576)  $  62,978
Comprehensive income:
Net income 2005....................         --         --      16,710           --         --              --      16,710
Change in foreign currency
  translation adjustment...........         --         --          --           --         --           2,830       2,830
Net unrealized loss on
  investments, net of tax benefit
  of $70...........................         --         --          --           --         --            (131)       (131)
Change in minimum pension
  liability adjustment, net of
  tax benefit of $27...............         --         --          --           --         --          (1,379)     (1,379)
                                                                                                                  ---------
Total comprehensive income.........                                                                                18,030
Earned 35,108 ESOP shares..........         --       (266)         --          562         --              --         296
Stock options exercised, 52,000
  shares...........................         --        428          --           --         --              --         428
Earned portion of restricted shares         --          2          --           --         33              --          35
                                    ----------------------------------------------------------------------------------------
Balance at March 31, 2005..........   $    149   $104,078   $  (8,644)  $   (4,554)  $     (6)   $     (9,256)  $  81,767
Comprehensive income:
Net income 2006....................         --         --      59,796           --         --              --      59,796
Change in foreign currency
  translation adjustment...........         --         --          --           --         --          (1,846)     (1,846)
Net unrealized gain on
  investments, net of tax of $354..         --         --          --           --         --             658         658
Change in minimum pension
  liability adjustment, net of
  tax benefit of $1,681............         --         --          --           --         --          (2,535)     (2,535)
                                                                                                                  ---------
Total comprehensive income.........                                                                                56,073
Common stock issued, 3,000,000
  shares...........................         30     56,589          --           --         --              --      56,619
Stock options exercised, 626,282
  shares...........................          6      7,143          --           --         --              --       7,149
Tax benefit from exercise of
  stock  options...................         --      2,154          --           --         --              --       2,154
Earned 34,874 ESOP shares..........         --         95          --          558         --              --         653
Restricted common stock
  granted, 1,000 shares............         --         22          --           --        (22)             --          --
Earned portion of restricted shares         --         --          --           --          6              --           6
                                    ----------------------------------------------------------------------------------------
Balance at March 31, 2006..........   $    185   $170,081   $  51,152   $   (3,996)  $    (22)   $    (12,979)  $ 204,421
                                    ========================================================================================

</TABLE>

                             See accompanying notes.


                                      F-5
<PAGE>

<TABLE>
<CAPTION>

                          COLUMBUS MCKINNON CORPORATION

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                                          ------------------------------------------------
                                                                                        YEAR ENDED MARCH 31,
                                                                          ------------------------------------------------
                                                                                   2006           2005            2004
                                                                                   ----           ----            ----
                                                                                              (IN THOUSANDS)
 OPERATING ACTIVITIES:
<S>                                                                          <C>             <C>             <C>
 Income from continuing operations.......................................    $     59,100    $     16,067    $     1,193
 Adjustments to reconcile income from continuing
    operations to net cash provided by operating activities:
      Depreciation and amortization......................................           8,824           9,171         10,126
      Deferred income taxes..............................................         (36,968)           (971)         6,413
      Loss on divestitures...............................................              87             330          3,875
      Gain on sale of real estate/investments............................          (2,100)         (4,632)        (5,143)
      Loss (gain) on early retirement of bonds...........................           7,083              40         (5,590)
      Amortization/write-off of deferred financing costs.................           3,297           1,575          6,613
      Tax benefit from exercise of stock options.........................           2,154              --             --
      Other..............................................................              --              --             67
      Changes in operating assets and liabilities
         net of effects of business divestitures:
           Trade accounts receivable and  unbilled revenues..............         (11,025)         (6,896)         1,140
           Inventories...................................................           2,518          (6,834)         8,351
           Prepaid expenses..............................................          (2,026)          1,796         (1,332)
           Other assets..................................................             207              10           (181)
           Trade accounts payable........................................           6,099           3,192           (976)
           Accrued and non-current liabilities...........................          11,267           4,313          1,813
                                                                          ------------------------------------------------
 Net cash provided by operating activities...............................          48,517          17,161         26,369
                                                                          ------------------------------------------------
 INVESTING ACTIVITIES:
 (Purchase) sale of marketable securities, net...........................            (888)          1,314            110
 Capital expenditures....................................................          (8,430)         (5,925)        (3,619)
 Proceeds from sale of facilities and surplus real estate................           2,091           6,742          4,015
 Proceeds from sale of property, plant, and equipment....................              --              --            387
 Proceeds from net assets held for sale..................................              --             375          3,376
 Proceeds from discontinued operations note receivable - revised.........             857             643             --
                                                                          ------------------------------------------------
 Net cash (used) provided by investing activities........................          (6,370)          3,149          4,269
                                                                          ------------------------------------------------
 FINANCING ACTIVITIES:
 Proceeds from issuance of common stock..................................          56,619              --             --
 Proceeds from exercise of stock options.................................           7,149             428             --
 Payments under revolving line-of-credit agreements......................         (47,669)       (345,664)      (332,218)
 Borrowings under revolving line-of-credit agreements....................          49,030         344,541        325,326
 Repayment of debt.......................................................        (205,167)        (21,745)      (125,764)
 Proceeds from issuance of long-term debt................................         136,000              --        115,000
 Payment of deferred financing costs.....................................          (2,877)            (24)        (4,432)
 Change in ESOP debt guarantee...........................................             558             562            593
                                                                          ------------------------------------------------
 Net cash used in financing activities...................................          (6,357)        (21,902)       (21,495)
 EFFECT OF EXCHANGE RATE CHANGES ON CASH.................................             329             (30)            15
                                                                          ------------------------------------------------
 Net change in cash and cash equivalents.................................          36,119          (1,622)         9,158
 Cash and cash equivalents at beginning of year..........................           9,479          11,101          1,943
                                                                          ------------------------------------------------
 Cash and cash equivalents at end of year................................    $     45,598    $      9,479    $    11,101
                                                                          ================================================
 Supplementary cash flows data:
      Interest paid......................................................    $     26,565    $     28,133    $    30,002
      Income taxes paid (received), net..................................    $      5,035    $      2,029    $    (9,683)

</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
2006, approximately 64% of sales were to customers in the United States.


2.    ACCOUNTING PRINCIPLES AND PRACTICES

   ADVERTISING

     Costs associated with advertising are expensed in the year incurred and are
included in selling expense in the statement of operations. Advertising expenses
were  $3,343,000,  $2,521,000,  and  $2,406,000 in fiscal 2006,  2005, and 2004,
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  23% of the  Company's  employees  are  represented  by seven
separate domestic and Canadian collective  bargaining agreements which terminate
at various  times  between  August 2006 and May 2009.  Approximately  10% of the
labor  force is covered by  collective  bargaining  agreements  that will expire
within one year.

   CONSOLIDATION

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

   DERIVATIVES AND FINANCIAL INSTRUMENTS

     Derivative  instruments held by the Company that have high correlation with
the underlying exposure and are highly effective in offsetting  underlying price
movements are designated as hedges.  Accordingly,  gains and losses from changes
in derivatives fair values are deferred until the underlying  transaction occurs
at which point they are then  recognized  in the statement of  operations.  When
derivatives  are not designated as hedges,  the gains and losses from changes in
fair value are recorded currently in the statement of operations.  All 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 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  $100,000 loss,  $200,000 gain and $600,000 loss on  transactions
with foreign subsidiaries in fiscal 2006, 2005 and fiscal 2004, respectively.

   GOODWILL

     Goodwill is not amortized but is  periodically  tested for  impairment,  in
accordance  with the provisions of Statement of Financial  Accounting  Standards
(SFAS) No. 142, "Goodwill and Other Intangible  Assets." Goodwill  impairment is
deemed to exist if the net book value of a reporting  unit exceeds its estimated
fair value.  The fair value of a reporting unit is determined using a discounted
cash flow methodology.  The Company's  reporting units are determined based upon
whether  discrete  financial  information  is available and regularly  reviewed,
whether  those  units  constitute  a  business,   and  the  extent  of  economic
similarities  between those reporting  units for purposes of  aggregation.  As a
result of this analysis,  the reporting units identified under SFAS No. 142 were
at the  component  level,  or one level  below the  reporting  segment  level as
defined  under SFAS No. 131.  The  Products  segment was  subdivided  into three
reporting  units and the  Solutions  segment was  subdivided  into two reporting
units.  Identifiable  intangible  assets acquired in a business  combination are
amortized over their useful lives unless their useful lives are  indefinite,  in
which case those  intangible  assets are tested for impairment  annually and not
amortized until their lives are determined to be finite.  See Note 8 for further
discussion of goodwill and intangible assets.

   INVENTORIES

     Inventories   are  valued  at  the  lower  of  cost  or  market.   Cost  of
approximately  58% of  inventories  at March  31,  2006  (57% in 2005)  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 the  Company's  general  and  products  liability
insurance  claims  filed  through CM  Insurance  Company,  Inc.,  a wholly owned
captive insurance subsidiary.



                                      F-8
<PAGE>

                          COLUMBUS MCKINNON CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

   PROPERTY, PLANT, AND EQUIPMENT

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

   RECLASSIFICATION/REVISIONS

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

     In 2006, the Company has disclosed the investing portions of the cash flows
attributable to its discontinued  operations within the investing section of the
consolidated statements of cash flows, whereas in prior years they were reported
as a separate component on the consolidated statements of cash flows.

   RESEARCH AND DEVELOPMENT

     Research and development costs as defined in FAS No. 2, for the years ended
March  31,  2006,  2005 and 2004 were  $1,614,000,  $1,289,000  and  $1,625,000,
respectively  and are  classified as general and  administrative  expense in the
consolidated statements of operations.

   REVENUE RECOGNITION AND CONCENTRATION OF CREDIT RISK

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

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



                                      F-9
<PAGE>


                          COLUMBUS MCKINNON CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

   SALE-LEASEBACK TRANSACTIONS

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

   SHIPPING AND HANDLING COSTS

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

   STOCK-BASED COMPENSATION

     At March 31, 2006, 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,
                                                                  -----------------------------------------------
                                                                         2006           2005            2004
                                                                  -----------------------------------------------

<S>                                                                <C>            <C>             <C>
  Net income, as reported.....................................     $    59,796    $    16,710     $     1,193
     Deduct: Total stock based employee compensation
     expenses determined under fair value based method
     for all awards, net of related tax effects...............            (577)        (1,135)           (504)
                                                                  -----------------------------------------------
     Net income, pro forma....................................     $    59,219    $    15,575     $       689
                                                                  ===============================================

  Basic income per share:
     As reported..............................................     $      3.73    $      1.14     $      0.08
                                                                  ===============================================
     Pro forma................................................     $      3.69    $      1.07     $      0.05
                                                                  ===============================================

  Diluted income per share:
     As reported..............................................     $      3.60    $      1.13     $      0.08
                                                                  ===============================================
     Pro forma................................................     $      3.56    $      1.05     $      0.05
                                                                  ===============================================
</TABLE>

   USE OF ESTIMATES

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



                                      F-10
<PAGE>


                          COLUMBUS MCKINNON CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)


   WARRANTIES

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

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

                                               ---------------------------------
                                                           MARCH 31,
                                               ---------------------------------
                                                        2006            2005
                                                        ----            ----
           Balance at beginning of year.......     $      832      $      889
           Accrual for warranties issued......          4,658           2,475
           Warranties settled.................         (3,358)         (2,532)
                                               ---------------------------------
           Balance at end of year.............     $    2,132      $      832
                                               =================================


3.    DISCONTINUED OPERATIONS

     In May 2002, the Company sold  substantially all of the assets of Automatic
Systems,  Inc.  (ASI).  The ASI business was the principal  business unit in the
Company's   former  Solutions  -  Automotive   segment.   The  Company  received
$20,600,000  in cash and an 8%  subordinated  note in the  principal  amount  of
$6,800,000  which is payable at a rate of $214,000  per quarter over eight years
beginning  August  2004.  Due  to  the  uncertainty  surrounding  the  financial
viability of the new  organization,  the note has been recorded at the estimated
net realizable value of $0. Principal payments received on the note are recorded
as income from discontinued  operations at the time of receipt. All interest and
principal  payments  required  under the note have been made to date.  The gross
value of the note as of March 31, 2006 is approximately $5,100,000.


4.    UNBILLED REVENUES AND EXCESS BILLINGS

                                                           --------------------
                                                                 MARCH 31,
                                                           --------------------
                                                              2006       2005
                                                              ----       ----
        Costs incurred on uncompleted contracts........... $  52,615   $ 34,154
        Estimated earnings................................    15,361     11,498
                                                           --------------------
        Revenues earned to date...........................    67,976     45,652
        Less billings to date.............................    56,331     37,133
                                                           --------------------
                                                           $  11,645   $  8,519
                                                           ====================

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

                                                           --------------------
                                                                 MARCH 31,
                                                           --------------------
                                                              2006       2005
                                                              ----       ----
      Unbilled revenues................................... $  12,061   $  8,848
      Accrued liabilities.................................      (416)      (329)
                                                           --------------------
                                                           $  11,645   $  8,519
                                                           ====================


                                      F-11
<PAGE>


                          COLUMBUS MCKINNON CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

5.    INVENTORIES

     Inventories consisted of the following:

                                                  -----------------------------
                                                             MARCH 31,
                                                  -----------------------------
                                                       2006             2005
                                                       ----             ----
      At cost--FIFO basis:
           Raw materials.........................  $   41,134       $   42,283
           Work-in-process.......................      12,199           10,238
           Finished goods........................      33,424           35,800
                                                  -----------------------------
                                                       86,757           88,321
      LIFO cost less than FIFO cost..............     (11,912)         (10,695)
                                                  -----------------------------
      Net inventories............................  $   74,845       $   77,626
                                                  =============================


6.    MARKETABLE SECURITIES

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

     The  following is a summary of  available-for-sale  securities at March 31,
2006:
<TABLE>
<CAPTION>
                                                                              GROSS           GROSS        ESTIMATED
                                                                            UNREALIZED     UNREALIZED        FAIR
                                                                COST          GAINS          LOSSES          VALUE
                                                            ----------------------------------------------------------
<S>                                                          <C>           <C>             <C>           <C>
      Government securities................................  $   10,859    $       150     $       25    $    10,984
      Equity securities....................................      13,828          3,013            229         16,612
                                                            ----------------------------------------------------------
                                                             $   24,687    $     3,163     $      254    $    27,596
                                                            ==========================================================
</TABLE>

     As of March 31, 2006, in accordance  with 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
$78,000 for the year ended March 31, 2006,  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, 2006
are as follows:
<TABLE>
<CAPTION>

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

<S>                                                                             <C>                   <C>
       Equity securities held for less than 12 months in a loss position        $     1,553           $       154
       Equity securities held for more than 12 months in a loss position              1,012                    75
                                                                           ---------------------------------------------
                                                                                $     2,565           $       229
                                                                           =============================================
</TABLE>

     The net gain related to sales of marketable  securities totaled $1,436,000,
$706,000 and $1,861,000 in fiscal 2006, 2005 and 2004, 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,
2005:

<TABLE>
<CAPTION>
                                                                                GROSS           GROSS        ESTIMATED
                                                                              UNREALIZED     UNREALIZED        FAIR
                                                                  COST          GAINS          LOSSES          VALUE
                                                            ------------------------------------------------------------
<S>                                                            <C>           <C>             <C>           <C>
      Government securities................................    $    7,967    $       251     $        -    $     8,218
      Equity securities....................................        14,751          2,076            430         16,397
                                                            ------------------------------------------------------------
                                                               $   22,718    $     2,327     $      430    $    24,615
                                                            ============================================================
</TABLE>

     As of March 31, 2005, in accordance  with FAS No. 115, the Company  reduced
the cost bases of certain equity  securities  since it was  determined  that the
unrealized losses on those securities were other than temporary in nature.  This
determination  resulted in the  recognition  of a pre-tax  charge to earnings of
$280,000 and $110,000 for the years ended March 31, 2005 and 2004, respectively,
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, 2006, by contractual maturity, are shown below:

                                                                       ESTIMATED
                                                                          FAIR
                                                              COST       VALUE
                                                          ----------------------
      Due in one year or less............................  $   5,064  $   5,068
      Due in one to five years...........................      2,008      2,015
      Due in five to ten years...........................      3,787      3,901
                                                          ----------------------
                                                              10,859     10,984
      Equity securities..................................     13,828     16,612
                                                          ----------------------
                                                           $  24,687  $  27,596
                                                          ======================

     Net unrealized gain included in the balance sheet amounted to $2,909,000 at
March 31, 2006 and  $1,897,000  at March 31, 2005.  The amounts,  net of related
income  taxes  of   $1,018,000   and  $664,000  at  March  31,  2006  and  2005,
respectively,  are reflected as a component of accumulated  other  comprehensive
loss within shareholders' equity.


7.    PROPERTY, PLANT, AND EQUIPMENT

     Consolidated property, plant, and equipment of the Company consisted of the
following:
<TABLE>
<CAPTION>

                                                                                           ---------------------------
                                                                                                    MARCH 31,
                                                                                           ---------------------------
                                                                                                2006          2005
                                                                                                ----          ----
<S>                                                                                          <C>           <C>
      Land and land improvements.........................................................    $   4,564     $   5,183
      Buildings..........................................................................       33,755        33,991
      Machinery, equipment, and leasehold improvements...................................      102,485        99,147
      Construction in progress...........................................................        1,736         2,089
                                                                                           ---------------------------
                                                                                               142,540       140,410
      Less accumulated depreciation......................................................       87,408        83,173
                                                                                           ---------------------------
      Net property, plant, and equipment.................................................    $  55,132     $  57,237
                                                                                           ===========================
</TABLE>

     Depreciation  expense was  $8,575,000,  $8,859,000,  and $9,743,000 for the
years ended March 31, 2006, 2005 and 2004, respectively.


                                      F-13
<PAGE>


                          COLUMBUS MCKINNON CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

8.    GOODWILL AND INTANGIBLE ASSETS

     As  discussed  in Note 2,  goodwill is not  amortized  but is  periodically
tested for  impairment,  in  accordance  with the  provisions  of  Statement  of
Financial  Accounting  Standards (SFAS) No. 142,  "Goodwill and Other Intangible
Assets."  Goodwill  impairment  is  deemed  to exist if the net book  value of a
reporting unit exceeds its estimated  fair value.  The fair value of a reporting
unit is  determined  using a discounted  cash flow  methodology.  The  Company's
reporting units are determined based upon whether discrete financial information
is available and regularly reviewed,  whether those units constitute a business,
and the  extent of  economic  similarities  between  those  reporting  units for
purposes of  aggregation.  As a result of this  analysis,  the  reporting  units
identified  under SFAS No. 142 were at the component  level,  or one level below
the reporting  segment level as defined under SFAS No. 131. The Products segment
was  subdivided  into  three  reporting  units  and the  Solutions  segment  was
subdivided into two reporting units.

     Identifiable  intangible  assets  acquired  in a business  combination  are
amortized over their useful lives unless their useful lives are  indefinite,  in
which case those  intangible  assets are tested for impairment  annually and not
amortized until their lives are determined to be finite.

     No impairment charges were recorded during fiscal 2006, 2005 or 2004.

     A summary of changes in goodwill  during the years ended March 31, 2006 and
2005 by business segment is as follows:
<TABLE>
<CAPTION>

                                                              PRODUCTS       SOLUTIONS        TOTAL
                                                           -------------------------------------------
<S>                                                         <C>            <C>            <C>
    Balance at March 31, 2004.............................  $   184,994    $         -    $   184,994
    Currency translation..................................          449              -            449
                                                           -------------------------------------------
    Balance at March 31, 2005.............................  $   185,443    $         -    $   185,443
    Currency translation..................................         (526)             -           (526)
                                                           -------------------------------------------
    Balance at March 31, 2006.............................  $   184,917    $         -    $   184,917
                                                           ===========================================
</TABLE>



     Other intangibles, net consists of the following:

                                                             -------------------
                                                                   MARCH 31,
                                                             -------------------
                                                                2006      2005
                                                                ----      ----
      Intangible pension assets.............................  $  2,148  $  1,537
      Patents and other, net................................       262       305
                                                             -------------------
      Other intangibles, net................................  $  2,410  $  1,842
                                                             ===================

     Only the patents and other,  net is subject to  amortization.  Based on the
current amount of patents and other, net, the estimated amortization expense for
each of the succeeding five years is expected to be $100,000,  $75,000, $50,000,
$28,000, and 9,000, respectively.



                                      F-14
<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 of the following:

                                                        ------------------------
                                                                 MARCH 31,
                                                        ------------------------
                                                             2006          2005
                                                             ----          ----
      Accrued payroll..................................  $  18,736    $  15,895
      Accrued pension cost.............................      5,987        4,325
      Interest payable.................................      6,199        8,097
      Accrued workers compensation.....................      2,959        2,959
      Accrued income taxes payable.....................      6,493        4,237
      Accrued postretirement benefit obligation........      1,620        2,100
      Accrued health insurance.........................      2,891        2,550
      Accrued general and product liability costs......      4,000        3,500
      Other accrued liabilities........................     12,379        8,665
                                                        ------------------------
                                                         $  61,264    $  52,328
                                                        ========================


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

                                                        ------------------------
                                                                 MARCH 31,
                                                        ------------------------
                                                             2006          2005
                                                             ----          ----
      Accumulated postretirement benefit obligation....  $   4,856    $   5,273
      Accrued general and product liability costs......     16,969       12,594
      Accrued pension cost.............................     20,285       18,637
      Accrued workers compensation.....................      5,383        3,134
      Other non-current liabilities....................      2,996        2,365
                                                        ------------------------
                                                         $  50,489    $  42,003
                                                        ========================


                                      F-15
<PAGE>

                          COLUMBUS MCKINNON CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

10.    DEBT

     Consolidated debt of the Company consisted of the following:

<TABLE>
<CAPTION>
                                                                                           -------------------------------
                                                                                                       MARCH 31,
                                                                                           -------------------------------
                                                                                                 2006           2005
                                                                                                 ----           ----
<S>                                                                                          <C>            <C>
      Revolving Credit Facility due February 22, 2010.....................................   $          -   $          -
      Previous Term Loan repaid and retired April 2005....................................              -          5,819
      10% Senior Secured Notes due August 1, 2010  with interest
         payable in semi-annual installments .............................................         67,384        115,000
      Other senior debt...................................................................            584            735
                                                                                           -------------------------------
      Total senior debt...................................................................         67,968        121,554
      8 7/8% Senior Subordinated Notes due November 1, 2013 with interest
         payable in semi-annual installments..............................................        136,000              -
      8 1/2% Senior Subordinated Notes repaid and retired in October 2005.................              -        144,548
                                                                                           -------------------------------
      Total...............................................................................        203,968        266,102
      Less current portion................................................................            127          5,819
                                                                                           -------------------------------
                                                                                             $    203,841   $    260,283
                                                                                           ===============================
</TABLE>

     On March 16, 2006,  the Company  amended and expanded its revolving  credit
facility. The Revolving Credit Facility provides availability up to a maximum of
$75,000,000.  Provided there is no default, the Company may on a one-time basis,
request an increase in the  availability of the Revolving  Credit Facility by an
amount not exceeding $50,000,000 if all Senior Secured Notes have been repaid in
full  or  will be  repaid  in full  contemporaneously  with  such  increase,  or
$25,000,000 in the event that any Senior Secured Notes remain  outstanding.  The
unused  Revolving  Credit  Facility  totaled  $64,800,000,  net  of  outstanding
borrowings of $0 and outstanding  letters of credit of $10,200,000.  Interest on
the revolver is payable at varying Eurodollar rates based on LIBOR or prime plus
a spread  determined by our leverage  ratio  amounting to 100 or 0 basis points,
respectively, at March 31, 2006. The Revolving Credit Facility is secured by all
domestic  inventory,  receivables,  equipment,  real property,  subsidiary stock
(limited to 65% for foreign subsidiaries) and intellectual property.

     On  September 2, 2005,  the Company  issued  $136,000,000  of 8 7/8% Senior
Subordinated Notes (8 7/8% Notes) due November 1, 2013. Proceeds from the 8 7/8%
Notes and cash on hand were used to  repurchase  all of the  outstanding  8 1/2%
Senior  Subordinated  Notes (8 1/2% Notes).  The  repurchase of the 8 1/2% Notes
occurred at a premium  resulting  in a pre-tax loss on early  extinguishment  of
debt of $2,298,000.  As a result of the repurchase of the 8 1/2% Notes, $922,000
of pre-tax deferred  financing costs and $110,000 of the original issue discount
were  written-off.  The net effect of these items, a $3,330,000  pre-tax loss in
fiscal 2006, is shown as part of other (income) and expense, net.

     On July 22, 2003,  the Company  issued  $115,000,000  of 10% Senior Secured
Notes (10% Notes) due August 1, 2010.  Proceeds from this offering were used for
the repayment of various  outstanding debt instruments  including the repurchase
of $35,700,000 of the 8 1/2% Notes at a discount  ($30,060,000).  The redemption
in  fiscal  2004 of the 8 1/2%  Notes  occurred  at a  discount  resulting  in a
$5,640,000  pre-tax  gain on early  extinguishment  of debt.  As a result of the
repayment  of the various  outstanding  debt  instruments  including  the 8 1/2%
Notes, $4,925,000 of pre-tax deferred financing costs were written-off in fiscal
2004.  The net effect of these two items,  a $715,000  pre-tax gain, is shown as
part of other (income) and expense, net.

     During  fiscal 2006,  the Company  used a portion of the proceeds  from its
stock offering (see Note 14) to repurchase  $47,616,000 of the  outstanding  10%
Notes.  The  repurchase  of the 10% Notes  occurred at a premium  resulting in a
pre-tax loss on early  extinguishment of debt of $4,786,000.  As a result of the
repurchase of the 10% Notes,  $1,085,000 of pre-tax deferred financing costs was
written-off.  The net effect of these items, a $5,871,000 pre-tax loss in fiscal
2006, is shown as part of other (income) and expense, net.

     During  April  and May of  2006,  the  Company  repurchased  an  additional
$32,128,000 of the outstanding 10% Notes (see Note 24).


                                      F-16
<PAGE>

                          COLUMBUS MCKINNON CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)


     The  corresponding  credit  agreement  associated with the Revolving Credit
Facility  places certain debt covenant  restrictions  on the Company,  including
certain  financial  requirements  and a restriction on dividend  payments,  with
which the Company was in compliance as of March 31, 2006.

     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 $40,000,000 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  $93,500,000 of fixed-rate debt (10%) to variable-rate  debt (LIBOR plus
578.2 basis points) through August 2008 and $57,500,000 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 $1,900,000  was recognized
as other income as a result of changes in the fair value of the swap.

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

     Provisions of the 10% Notes include,  without  limitation,  restrictions on
liens,  indebtedness,  asset sales, and dividends and other restricted payments.
The 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 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
$74,207,000 and $142,800,000,  respectively,  based on quoted market prices, the
total of which is more than their aggregate carrying amount of $203,384,000.

     The  principal  payments  scheduled  to be made as of March 31, 2006 on the
above debt, for the next five annual periods subsequent thereto,  are as follows
(in thousands):

          2007          $    127
          2008               117
          2009                53
          2010                33
          2011            67,411



                                      F-17
<PAGE>


                          COLUMBUS MCKINNON CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

11.    RETIREMENT PLANS


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

                                                                                        ----------------------------------
                                                                                                     MARCH 31,
                                                                                        ----------------------------------
                                                                                              2006              2005
                                                                                              ----              ----
      Change in benefit obligation:
<S>                                                                                        <C>              <C>
           Benefit obligation at beginning of year.....................................    $   120,634      $   110,865
           Service cost................................................................          4,004            4,285
           Interest cost...............................................................          7,213            6,718
           Actuarial loss..............................................................          7,003            2,888
           Benefits paid...............................................................         (4,860)          (4,410)
           Foreign exchange rate changes...............................................            154              288
                                                                                        ----------------------------------
           Benefit obligation at end of year...........................................    $   134,148      $   120,634
                                                                                        ==================================

      Change in plan assets:
           Fair value of plan assets at beginning of year..............................    $    91,323      $    80,564
           Actual gain on plan assets..................................................          5,795            5,250
           Employer contribution.......................................................          7,816            9,673
           Benefits paid...............................................................         (4,860)          (4,410)
           Foreign exchange rate changes...............................................            132              246
                                                                                        ----------------------------------
           Fair value of plan assets at end of year....................................    $   100,206      $    91,323
                                                                                        ==================================

           Funded status ..............................................................    $   (33,942)     $   (29,311)
           Unrecognized actuarial loss.................................................         35,282           29,744
           Unrecognized prior service cost.............................................          2,148            1,537
                                                                                        ----------------------------------
           Net amount recognized.......................................................    $     3,488      $     1,970
                                                                                        ==================================

      Amounts recognized in the consolidated balance sheets are as follows:
                                                                                        ----------------------------------
                                                                                                   MARCH 31,
                                                                                        ----------------------------------
                                                                                              2006              2005
                                                                                              ----              ----
           Intangible asset............................................................    $     2,148      $     1,537
           Accrued liabilities.........................................................         (5,987)          (4,325)
           Other non-current liabilities...............................................        (20,284)         (18,637)
           Deferred tax effect of accumulated other comprehensive loss.................         11,038            8,823
           Accumulated other comprehensive loss........................................         16,573           14,572
                                                                                        ----------------------------------
           Net amount recognized.......................................................    $     3,488      $     1,970
                                                                                        ==================================
</TABLE>

      Net periodic pension cost included the following components:
<TABLE>
<CAPTION>
                                                                           ------------------------------------------------
                                                                                        YEAR ENDED MARCH 31,
                                                                           ------------------------------------------------
                                                                                 2006             2005           2004
                                                                                 ----             ----           ----
<S>                                                                           <C>              <C>            <C>
      Service costs--benefits earned during the period....................    $    4,004       $    4,285     $    3,921
      Interest cost on projected benefit obligation.......................         7,213            6,719          6,711
      Expected return on plan assets......................................        (6,753)          (6,666)        (5,404)
      Net amortization....................................................         2,518            4,033          1,978
                                                                           ------------------------------------------------
      Net periodic pension cost...........................................    $    6,982       $    8,371     $    7,206
                                                                           ================================================
</TABLE>

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

     The  accumulated  benefit  obligation  for all  defined  benefit  plans was
$126,196,000 and $113,486,000 as of March 31, 2006 and 2005, respectively.

                                      F-18
<PAGE>

                          COLUMBUS MCKINNON CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)


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

                                                      --------------------------
                                                               MARCH 31,
                                                      --------------------------
                                                            2006         2005
                                                            ----         ----
           Projected benefit obligation..............  $   134,148  $   120,634
           Fair value of plan assets.................      100,206       91,323

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

                                                      --------------------------
                                                               MARCH 31,
                                                      --------------------------
                                                            2006         2005
                                                            ----         ----
           Accumulated benefit obligation............  $   126,196  $   113,486
           Fair value of plan assets.................      100,206       91,323

     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,
                                                            --------------------------------------------------------
                                                                2006          2005          2004          2003
                                                            --------------------------------------------------------
<S>                                                              <C>           <C>           <C>           <C>
      Discount rate........................................      5.75%         6.00%         6.25%         6.75%
      Expected long-term rate of return on plan assets.....      7.50          8.25          8.40          8.50
      Rate of compensation increase........................      4.00          4.00          4.00          4.00
</TABLE>

     The  expected  rate of  return on plan  asset  assumptions  are  determined
considering historical averages and real returns on each asset class.

     The Company's  retirement  plan target and actual asset  allocations are as
follows:
<TABLE>
<CAPTION>

                                                                                  MARCH 31,
                                                            --------------------------------------------------------
                                                               TARGET                             ACTUAL
                                                            ---------------            -----------------------------
                                                                2007                        2006          2005
                                                            ---------------            -----------------------------
<S>                                                               <C>                         <C>           <C>
      Equity securities....................................       70%                         56%           55%
      Fixed income.........................................       30                          44            45
                                                            ---------------            -----------------------------
      Total plan assets....................................      100%                        100%          100%
                                                            ===============            =============================
</TABLE>

     The Company has an  investment  objective  for  domestic  pension  plans to
adequately  provide  for both the growth  and  liquidity  needed to support  all
current and future benefit payment  obligations.  The investment  strategy is to
invest in a  diversified  portfolio  of assets which are expected to satisfy the
aforementioned  objective and produce both  absolute and risk  adjusted  returns
competitive  with a  benchmark  that is a blend of the S&P 500 and an  aggregate
bond fund.  The shift to the targeted  allocation is the result of  management's
re-evaluation  of its investment  allocation.  The targeted  allocation  will be
accomplished  as some plan assets  governed by collective  bargaining  contracts
will be  transferred  from  fixed  income  into  equity  securities,  as well as
reallocation  of remaining  assets to achieve the desired  balance during fiscal
2007.

     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 $5,987,000 to its pension plans in fiscal 2007.


                                      F-19
<PAGE>

                          COLUMBUS MCKINNON CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

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


          2007                     $     5,079
          2008                           6,174
          2009                           5,888
          2010                           6,487
          2011                           7,084
          2012-2016                     46,221

     The Company also sponsors defined contribution plans covering substantially
all   domestic   employees.   Participants   may  elect  to   contribute   basic
contributions. These plans provide for employer contributions based primarily on
employee participation.  The Company recorded a charge for such contributions of
approximately  $1,476,000,  $673,000  and $635,000 for the years ended March 31,
2006, 2005 and 2004, respectively.


12.    EMPLOYEE STOCK OWNERSHIP PLAN (ESOP)

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

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

     Substantially  all  of  the  Company's  domestic  non-union  employees  are
participants in the ESOP.  Contributions  to the plan result from the release of
collateralized  shares as debt service payments are made.  Compensation  expense
amounting  to $653,000,  $296,000  and  $200,000 in fiscal 2006,  2005 and 2004,
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,  2006  and  2005,   723,618  and  795,791  of  ESOP  shares,
respectively,  were  allocated or  available  to be  allocated to  participants'
accounts.  At March 31,  2006 and 2005,  249,821 and 284,695 of ESOP shares were
pledged as collateral to guarantee the ESOP term loans.

     The fair market value of unearned ESOP shares at March 31, 2006 amounted to
$6,728,000.


13.    POSTRETIREMENT BENEFIT OBLIGATION

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


                                      F-20
<PAGE>

                          COLUMBUS MCKINNON CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

     On  December  8, 2003,  Congress  passed the  Medicare  Prescription  Drug,
Improvement,  and Modernization Act of 2003 ("Medicare Act"). In March 2004, the
FASB issued Staff Position No FAS 106-2 "Accounting and Disclosure  Requirements
Related to the Medicare  Prescription  Drug Improvement and Modernization Act of
2003 ("FSP No 106-2")," which provides accounting guidance on how to account for
the  effects  of  the  Medicare  Act  on   postretirement   plans  that  provide
prescription drug benefits.  The Medicare Act also requires certain  disclosures
regarding the effect of the subsidy provided by the Medicare Act.  Additionally,
FSP 106-2 provides two transition methods - retroactive to the date of enactment
or prospective from the date of adoption. The Company elected to adopt FAS 106-2
and apply the  prospective  transition  method in the  second  quarter of fiscal
2005. The accumulated post retirement benefit obligation decreased $2,339,000 as
of July 4,  2004 and net  periodic  postretirement  benefit  cost  decreased  by
$225,000 for fiscal 2005. As a result of delays in filing the required paperwork
to receive the  prescription  drug benefits  under the Medicare Act, the benefit
obligation  has been  adjusted  at March 31,  2006 to reflect an increase in the
liability that will be charged to net periodic  postretirement benefit cost over
the average  remaining  service  period of the  participants.  The Company still
expects to file the  required  paperwork  at some point in the future to receive
the  benefit.  The impact of the delayed  filing was not material to the benefit
obligation at March 31, 2006 or net periodic postretirement benefit cost for the
year end March 31, 2006.

     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
obligation and the funded status of the plan:

<TABLE>
<CAPTION>
                                                                                    ----------------------------------
                                                                                               MARCH 31,
                                                                                    ----------------------------------
                                                                                         2006             2005
                                                                                         ----             ----
      Change in benefit obligation:
<S>                                                                                    <C>             <C>
           Benefit obligation at beginning of year.................................    $    12,927     $    15,984
           Service cost............................................................              6              17
           Interest cost...........................................................            751             834
           Amendment...............................................................              -          (2,339)
           Actuarial loss..........................................................            601             460
           Benefits paid...........................................................         (2,064)         (2,029)
                                                                                    ----------------------------------
              Benefit obligation at end of year....................................    $    12,221     $    12,927
                                                                                    ==================================

           Funded status ..........................................................    $   (12,221)    $   (12,927)
           Unrecognized actuarial loss.............................................          5,745           5,554
                                                                                    ----------------------------------
           Net amount recognized in accrued and other non-current liabilities......    $    (6,476)    $    (7,373)
                                                                                    ==================================
</TABLE>


     Net periodic postretirement benefit cost included the following:
<TABLE>
<CAPTION>
                                                                               ---------------------------------------
                                                                                         YEAR ENDED MARCH 31,
                                                                               ---------------------------------------
                                                                                   2006         2005         2004
                                                                                   ----         ----         ----
<S>                                                                                <C>         <C>          <C>
      Service cost--benefits attributed to service during the period..........     $    6      $   17       $   11
      Interest cost...........................................................        751         834          869
      Amortization of prior service gain......................................          -           -         (153)
      Amortization of plan net losses.........................................        411         460          643
                                                                               ---------------------------------------
           Net periodic postretirement benefit cost...........................     $1,168      $1,311       $1,370
                                                                               =======================================
</TABLE>

     For measurement  purposes,  healthcare costs were assumed to increase 9% in
fiscal 2007, grading down over time to 5% in seven years. The discount rate used
in determining the accumulated  postretirement  benefit obligation was 5.75% and
6.00% as of March 31, 2006 and 2005, respectively.



                                      F-21
<PAGE>

                          COLUMBUS MCKINNON CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

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

          2007                     $     1,620
          2008                           1,529
          2009                           1,441
          2010                           1,323
          2011                           1,315
          2012-2016                      5,250


     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........          $      40           $     (36)
           Effect on postretirement obligation............................                724                (656)
</TABLE>

14. EARNINGS PER SHARE AND STOCK PLANS

   EARNINGS PER SHARE

     The Company  calculates  earnings per share in accordance with Statement of
Financial  Accounting  Standards  No. 128,  "Earnings  per Share" (FAS No. 128).
Basic earnings per share excludes any dilutive effects of options, warrants, and
convertible securities. Diluted earnings per share includes any dilutive effects
of stock options.

     The  following  table  sets  forth the  computation  of basic  and  diluted
earnings per share:
<TABLE>
<CAPTION>

                                                                      -----------------------------------------------------
                                                                                        YEAR ENDED MARCH 31,
                                                                      -----------------------------------------------------
                                                                            2006             2005              2004
                                                                            ----             ----              ----
      Numerator for basic and diluted earnings per share:
<S>                                                                     <C>              <C>               <C>
         Income from continuing operations...........................   $       59,100   $       16,067    $        1,193
         Income from discontinued operations.........................              696              643                 -
                                                                      -----------------------------------------------------
           Net income ...............................................   $       59,796   $       16,710    $        1,193
                                                                      =====================================================

      Denominators:
         Weighted-average common stock outstanding--
           denominator for basic EPS.................................           16,052           14,594            14,553
         Effect of dilutive employee stock options...................              576              209                 1
                                                                      -----------------------------------------------------
         Adjusted weighted-average common stock
           outstanding and assumed conversions--
           denominator for diluted EPS...............................           16,628           14,803            14,554
                                                                      =====================================================
</TABLE>

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

     During fiscal 2006, the Company  registered an additional  3,350,000 shares
of its common  stock  which were sold at $20.00 per share.  The number of shares
offered by the  Company was  3,000,000  and  350,000  were  offered by a selling
shareholder. The Company did not receive any proceeds from the sale of shares by
the selling  shareholder.  This stock offering  increased the Company's weighted
average common stock  outstanding by 1,134,000 shares for fiscal 2006. A portion
of the  proceeds  received  by the  Company  were  used  to  redeem  $47,616,000
principal  amount of the Company's  outstanding  10% Senior Secured  Notes.  The
balance of the proceeds is available  for other  general  corporate  purposes to
advance the Company's  strategy of global  growth,  additional  debt  repayment,
investments and acquisitions.


                                      F-22
<PAGE>
                         COLUMBUS MCKINNON CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

   STOCK PLANS

     The Company maintains two stock option plans, a Non-Qualified  Stock Option
Plan  (Non-Qualified  Plan) and an Incentive Stock Option Plan (Incentive Plan).
Under the Non-Qualified  Plan,  options may be granted to officers and other key
employees of the Company as well as to non-employee  directors and advisors.  As
of March 31,  2006,  no  options  have been  granted to  non-employees.  Options
granted under the  Non-Qualified  and Incentive Plans become  exercisable over a
four-year  period at the rate of 25% per year  commencing one year from the date
of grant at an exercise  price of not less than 100% of the fair market value of
the  common  stock  on  the  date  of  grant.   Any  option  granted  under  the
Non-Qualified plan may be exercised not earlier than one year from the date such
option is granted.  Any option granted under the Incentive Plan may be exercised
not earlier  than one year and not later than 10 years from the date such option
is granted.

     A summary of option  transactions  during each of the three fiscal years in
the period ended March 31, 2006 is as follows:
<TABLE>
<CAPTION>
                                                                                                  WEIGHTED-AVERAGE
                                                                               SHARES              EXERCISE PRICE
                                                                      --------------------------------------------------
<S>                                                                             <C>                   <C>
    Balance at March 31, 2003.......................................            1,311,750             $      14.05
       Granted......................................................               45,000                     6.92
       Cancelled....................................................             (126,900)                   14.28
                                                                      --------------------------------------------------
    Balance at March 31, 2004.......................................            1,229,850             $      13.77
       Granted......................................................              741,500                     6.41
       Exercised....................................................              (52,000)                    8.25
       Cancelled....................................................             (116,550)                   13.82
                                                                      --------------------------------------------------
    Balance at March 31, 2005.......................................            1,802,800             $      10.89
       Granted......................................................               45,000                    21.61
       Exercised....................................................             (626,282)                   11.41
       Cancelled....................................................              (89,400)                    7.76
                                                                      --------------------------------------------------
    Balance at March 31, 2006.......................................            1,132,118             $      11.28
                                                                      ==================================================
</TABLE>

     A summary of exercisable and available for grant options is as follows:
<TABLE>
<CAPTION>
                                                                            ----------------------------------------------
                                                                                          YEAR ENDED MARCH 31,
                                                                            ----------------------------------------------
                                                                                    2006           2005           2004
                                                                                    ----           ----           ----
<S>                                                                               <C>            <C>            <C>
      Exercisable at end of year...........................................       605,243        926,050        851,425
      Available for grant at end of year...................................       172,100        127,700        752,650
</TABLE>

     Exercise prices for options  outstanding as of March 31, 2006,  ranged from
$5.46 to $29.00.  The following table provides certain  information with respect
to stock options outstanding at March 31, 2006:
<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......................          702,000               $    6.91                   7.3
           $10.01 to $20.00..................          175,568                   14.32                   4.9
           $20.01 to $30.00..................          254,550                   21.25                   4.1
                                               -------------------------------------------------------------------------
                                                     1,132,118               $   11.28                   6.2
                                               =========================================================================
</TABLE>

     The following  table  provides  certain  information  with respect to stock
options exercisable at March 31, 2006:
<TABLE>
<CAPTION>

                                                                            STOCK OPTIONS           WEIGHTED-AVERAGE
                       RANGE OF EXERCISE PRICES                              OUTSTANDING             EXERCISE PRICE
                       ------------------------                              -----------             --------------
<S>                                                                               <C>                 <C>
           Up to $10.00.............................................              276,375             $       8.95
           $10.01 to $20.00.........................................              119,318                    14.51
           $20.01 to $30.00.........................................              209,550                    21.18
                                                                           --------------             ------------
                                                                                  605,243             $      14.28
                                                                           ==============             ============
</TABLE>

                                      F-23
<PAGE>

                          COLUMBUS MCKINNON CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

     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. The fair value
for issued  options in fiscal 2006,  2005 and 2004 was  estimated at the date of
grant  using  a   Black-Scholes   option   pricing   model  with  the  following
weighted-average assumptions:
<TABLE>
<CAPTION>

                                                      YEAR ENDED          YEAR ENDED         YEAR ENDED
                                                    MARCH 31, 2006      MARCH 31, 2005     MARCH 31, 2004
                                                   -------------------------------------------------------
Assumptions:
<S>                                                      <C>                 <C>                <C>
     Risk-free interest rate....................         4.5 %               4.9 %              4.5 %
     Dividend yield--Incentive Plan.............         0.0 %               0.0 %              0.0 %
     Volatility factor..........................         0.615               0.569              0.567
     Expected life--Incentive Plan..............       5 years             5 years            5 years
</TABLE>

     The  weighted-average  fair value of options granted in 2006, 2005 and 2004
was $12.13, $3.45 and $3.68 per share, respectively.

     The Company  maintains a Restricted Stock Plan, under which the Company had
48,000 and 49,000  shares  reserved  for  issuance  at March 31,  2006 and 2005,
respectively.   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  that  remain
continuously  employed with the Company become vested in their shares five years
after the date of the grant.  1,000  shares  were  issued  during the year ended
March 31, 2006.  No shares were issued  during the years ended March 31, 2005 or
2004.

15.    LOSS CONTINGENCIES

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

     GENERAL AND PRODUCT  LIABILITY--  During the fourth quarter of fiscal 2006,
the Company  reevaluated the predictability of future cash flows associated with
its  self-insured  product  liability and asbestos  reserves and concluded  that
future cash payments related to reserves for nonasbestos  claims could no longer
be discounted due to their underlying uncertainty.  Reserves for asbestos claims
continue to be discounted at a risk free rate. This change in estimate  resulted
in a  reduction  in the  discount  recorded  by  the  company  of  approximately
$1,578,000  ($0.09 diluted EPS impact for fiscal 2006). The gross reserves as of
March 31, 2006 and 2005 were  $23,329,000 and  $19,653,000,  respectively.  This
liability is funded by investments in marketable securities (see Notes 2 and 6).


                                      F-24
<PAGE>

                          COLUMBUS MCKINNON CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

     The following table provides a  reconciliation  of the beginning and ending
balances for accrued general and product liability:
<TABLE>
<CAPTION>

                                                                 ---------------------------------------------------
                                                                                     YEAR ENDED MARCH 31,
                                                                 ---------------------------------------------------
                                                                       2006             2005             2004
                                                                       ----             ----             ----
<S>                                                                  <C>              <C>             <C>
      Accrued general and product liability, beginning of year..     $ 16,094         $ 15,930        $ 14,439
      Add impact of change in discount estimate.................        1,578                -               -
      Add provision for claims..................................        6,342            5,780           5,398
      Deduct payments for claims................................       (3,045)          (5,616)         (3,907)
                                                                 ---------------------------------------------------
      Accrued general and product liability, end of year........     $ 20,969         $ 16,094        $ 15,930
                                                                 ===================================================
</TABLE>

     The per  occurrence  limits on our  self-insurance  for general and product
liability  coverage to Columbus  McKinnon were $2,000,000 from inception through
fiscal 2003 and  $3,000,000 for fiscal 2004 and  thereafter.  In addition to the
per  occurrence  limits,  the  Company's  coverage is also  subject to an annual
aggregate  limit,  applicable to losses only. These limits range from $2,000,000
to $6,000,000 for each policy year from inception through fiscal 2006.

     Along with other manufacturing companies, the Company is subject to various
federal, state and local laws relating to the protection of the environment.  To
address  the  requirements  of such laws,  the  Company  has adopted a corporate
environmental  protection  policy which provides that all of its owned or leased
facilities  shall,  and all of its  employees  have the duty to, comply with all
applicable  environmental regulatory standards, and the Company has initiated an
environmental auditing program for our facilities to ensure compliance with such
regulatory   standards.    The   Company   has   also   established   managerial
responsibilities   and   internal   communication   channels  for  dealing  with
environmental  compliance  issues that may arise in the course of our  business.
Because  of the  complexity  and  changing  nature of  environmental  regulatory
standards, it is possible that situations will arise from time to time requiring
the Company to incur  expenditures in order to ensure  environmental  regulatory
compliance.  However, the Company is not aware of any environmental condition or
any operation at any of its facilities, either individually or in the aggregate,
which would cause  expenditures  having a material adverse effect on its results
of  operations,  financial  condition  or cash flows and,  accordingly,  has not
budgeted any material  capital  expenditures  for  environmental  compliance for
fiscal 2007.

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

     Based  on   actuarial   information,   the   Company  has   estimated   its
asbestos-related  aggregate  liability through March 31, 2031 and March 31, 2082
to range  between  $5,500,000  and  $19,000,000  using  actuarial  parameters of
continued claims for a period of 25 to 76 years. The Company's estimation of its
asbestos-related   aggregate  liability  that  is  probable  and  estimable,  in
accordance with U.S. generally accepted accounting principles,  is through March
31, 2031 and ranges from  $5,500,000  to  $6,500,000  as of March 31, 2006.  The
range of probable and estimable liability reflects  uncertainty in the number of
future claims that will be filed and the cost to resolve those claims, which may
be  influenced  by a number of  factors,  including  the  outcome of the ongoing
broad-based  settlement  negotiations,  defensive  strategies,  and the  cost to
resolve  claims  outside  the  broad-based  settlement  program.  Based  on  the
underlying  actuarial  information,  the Company has  reflected  $6,300,000 as a
liability in the  consolidated  financial  statements  in  accordance  with U.S.
generally accepted accounting principles. The increase in the recorded liability
from the amount of  $4,800,000 at March 31, 2005 is due to a change in actuarial
parameters used to calculate  required asbestos  liability  reserve levels.  The
recorded  liability  does not  consider  the impact of any  potential  favorable
federal  legislation such as the "FAIR Act." Of this amount,  management expects
to incur asbestos liability payments of approximately  $500,000 over the next 12
months.  Because  payment of the  liability is likely to extend over many years,
management believes that the potential additional costs for claims will not have
a material  after-tax  effect on the  financial  condition of the Company or its
liquidity,  although the net after-tax effect of any future liabilities recorded
could be material to earnings in a future period.

16.    RESTRUCTURING CHARGES

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

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

     During fiscal 2005, the Company  recorded  restructuring  costs of $910,000
related to various employee  termination benefits and facility costs as a result
of the continued closure,  merging and  reorganization of the Company.  $600,000
and $300,000 of these costs are related to the Products and Solutions  segments,
respectively.  The charges  primarily  relate to the  maintenance  of facilities
being  expensed on an as incurred  basis in accordance  with SFAS No. 146. As of
March 31, 2005, the liability  primarily  consisted of costs associated with the
preparation and maintenance of a non-operating  facility prior to disposal which
were  accrued  prior to the adoption of SFAS No. 146. Due to changes in the real
estate market and a  reassessment  of the fair value of the property,  the asset
was written-down by $300,000 during fiscal 2005.

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

                                      F-26
<PAGE>

                          COLUMBUS MCKINNON CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

     The  following  provides  a  reconciliation  of  the  activity  related  to
restructuring reserves:
<TABLE>
<CAPTION>

                                                                                 ---------------------------------------
                                                                                  EMPLOYEE     FACILITY        TOTAL
<S>                                                                                 <C>          <C>          <C>
      Reserve at March 31, 2003.................................................    $    922     $  1,409     $  2,331
      Fiscal 2004 restructuring charges.........................................       1,005          234        1,239
      Cash payments.............................................................      (1,766)      (1,243)      (3,009)
                                                                                 ---------------------------------------
      Reserve at March 31, 2004.................................................    $    161     $    400     $    561
      Fiscal 2005 restructuring charges.........................................          81          829          910
      Cash payments.............................................................        (226)        (801)      (1,027)
      Write-down of non-operating property......................................           -         (300)        (300)
                                                                                 ---------------------------------------
      Reserve at March 31, 2005.................................................    $     16     $    128     $    144
      Fiscal 2006 restructuring charges.........................................         358        1,251        1,609
      Cash payments.............................................................        (315)        (645)        (960)
                                                                                 ---------------------------------------
      Reserve at March 31, 2006.................................................    $     59     $    734     $    793
                                                                                 =======================================
</TABLE>


17.    INCOME TAXES

     The provision for income taxes differs from the amount computed by applying
the  statutory  federal  income tax rate to income  from  continuing  operations
before income tax expense. The sources and tax effects of the difference were as
follows:
<TABLE>
<CAPTION>

                                                                            ----------------------------------------------
                                                                                         YEAR ENDED MARCH 31,
                                                                            ----------------------------------------------
                                                                                 2006           2005           2004
                                                                                 ----           ----           ----
<S>                                                                           <C>            <C>            <C>
      Expected tax at 35%..................................................   $     9,854    $     6,617    $     1,821
      State income taxes net of federal benefit............................           705            363            614
      Foreign taxes greater (less) than statutory provision................            41           (579)           905
      Permanent items......................................................           370              -              -
      Benefit of worthless stock deduction.................................             -              -        (44,815)
      Research and development credit......................................             -              -         (1,058)
      Valuation allowance..................................................       (44,237)        (4,435)        46,974
      Other................................................................         2,321            230           (432)
                                                                            ----------------------------------------------
      Actual tax (benefit) provision.......................................   $   (30,946)   $     2,196    $     4,009
                                                                            ==============================================

      The provision for income tax (benefit) expense consisted of the following:
                                                                            ----------------------------------------------
                                                                                         YEAR ENDED MARCH 31,
                                                                            ----------------------------------------------
                                                                                 2006           2005           2004
                                                                                 ----           ----           ----
      Current income tax expense (benefit):
           United States Federal...........................................   $       856    $      (426)   $       147
           State taxes.....................................................         1,084            559            928
           Foreign.........................................................         4,082          3,034          2,779
      Deferred income tax (benefit) expense:
           United States...................................................       (37,099)             -            880
           Foreign.........................................................           131           (971)          (725)
                                                                            ----------------------------------------------
                                                                              $   (30,946)   $     2,196    $     4,009
                                                                            ==============================================

</TABLE>



                                      F-27
<PAGE>


                          COLUMBUS MCKINNON CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

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

<TABLE>
<CAPTION>
                                                                                       -----------------------------------
                                                                                                    MARCH 31,
                                                                                       -----------------------------------
                                                                                               2006             2005
                                                                                               ----             ----
      Deferred tax assets:
<S>                                                                                       <C>               <C>
         Federal net operating loss carryforwards.....................................    $     29,075      $     34,292
         State net operating loss carryforwards.......................................           6,301             6,750
         Employee benefit plans.......................................................           9,518             7,929
         Asset reserves...............................................................           2,384             2,596
         Insurance reserves...........................................................           7,283             6,558
         Accrued vacation and incentive costs.........................................           1,980             2,077
         Capital loss carryforwards...................................................               -               708
         Other........................................................................           6,337             6,543
         Valuation allowance..........................................................          (6,301)          (50,538)
                                                                                       -----------------------------------
           Gross deferred tax assets                                                            56,577            16,915
                                                                                       -----------------------------------
      Deferred tax liabilities:
         Inventory reserves...........................................................          (3,398)           (3,050)
         Property, plant, and equipment...............................................          (2,822)           (4,321)
                                                                                       -----------------------------------
           Gross deferred tax liabilities.............................................          (6,220)           (7,371)
                                                                                       -----------------------------------
              Net deferred tax assets.................................................    $     50,357      $      9,544
                                                                                       ===================================
</TABLE>


     As of March 31,  2006,  the Company had U.S.  federal  net  operating  loss
carryforwards of approximately $83,070,000. The net operating loss carryforwards
arose in fiscal 2004 primarily as a result of a worthless  stock deduction taken
on the Company's  March 31, 2003 federal income tax return  relating to the sale
of substantially  all of the assets of a domestic  subsidiary.  If not utilized,
these carryforwards will expire in fiscal years 2023 and 2024.

     A valuation  allowance of $50,538,000  existed at March 31, 2005 due to the
uncertainly of whether the Company's operating loss carryforwards,  deferred tax
assets and capital loss carryforwards might ultimately be realized. We were able
to utilize  $14,906,000 of the federal  operating loss  carryforwards  in fiscal
2006 which reduced the  valuation  allowance by  $5,217,000.  As a result of the
increased operating  performance of the Company over the past several years, the
Company  reevaluated  the  certainty as to whether the  Company's  remaining net
operating  loss  carryforwards  and other  deferred tax assets may ultimately be
realized.  As a result of the determination that it is more likely than not that
all of the remaining  deferred tax assets will be realized with the exception of
state net operating loss  carryforwards,  a significant portion of the remaining
valuation allowance was reversed in fiscal 2006.

     Deferred income taxes are classified within the consolidated balance sheets
based on the following breakdown:

                                                     --------------------------
                                                               MARCH 31,
                                                     --------------------------
                                                         2006          2005
                                                         ----          ----
      Net current deferred tax asset................  $   6,513      $   4,977
      Net non-current deferred tax asset............     46,065          6,122
      Net current deferred tax liability............     (1,189)          (816)
      Net non-current deferred tax liability........     (1,032)          (739)
                                                     --------------------------
           Net deferred tax asset...................  $  50,357      $   9,544
                                                     ==========================

     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.


                                      F-28
<PAGE>


                          COLUMBUS MCKINNON CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

     Income from  continuing  operations  before  income tax  (benefit)  expense
includes foreign subsidiary income of $13,034,000, $8,588,000 and $3,687,000 for
the years ended March 31, 2006,  2005, and 2004,  respectively.  As of March 31,
2006,  the  Company  had  unrecognized   deferred  tax  liabilities  related  to
approximately  $24  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.

     In the year  ended  March 31,  2006,  581,064  shares of common  stock were
issued  through  the  exercise  of  non-qualified  stock  options or through the
disqualifying  disposition of incentive stock options.  The total tax benefit to
the Company from these  transactions,  which is credited to  additional  paid-in
capital  rather  than  recognized  as a  reduction  of income tax  expense,  was
$2,154,000  in  2006.   This  tax  benefit  has  also  been  recognized  in  the
consolidated balance sheet as a reduction of deferred income taxes payable.

     The Company  reviewed the  provisions  of the American Jobs Creation Act of
2004. The American Jobs Creation Act had no material impact on the operations of
the Company for fiscal year 2006.

18.     RENTAL EXPENSE AND LEASE COMMITMENTS

     Rental  expense  for the  years  ended  March 31,  2006,  2005 and 2004 was
$3,914,000,  $3,718,000,  and $3,594,000,  respectively.  The following  amounts
represent  future  minimum  payment  commitments  as of  March  31,  2006  under
non-cancelable operating leases extending beyond one year:

                                                     VEHICLES AND
      YEAR ENDED MARCH 31,        REAL PROPERTY        EQUIPMENT         TOTAL
      --------------------        -------------        ---------         -----
      2007....................     $      1,279       $     2,156       $  3,435
      2008....................            1,333             1,645          2,978
      2009....................            1,267             1,305          2,572
      2010....................            1,108               975          2,083
      2011....................              704               676          1,380



                                      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  7/8%  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, 2006:
<TABLE>
<CAPTION>

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

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

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



                                      F-30
<PAGE>


                          COLUMBUS MCKINNON CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

                                                                                  NON
                                                    PARENT      GUARANTORS    GUARANTORS    ELIMINATIONS    CONSOLIDATED
                                               --------------------------------------------------------------------------
 FOR THE YEAR ENDED MARCH 31, 2006:
 OPERATING ACTIVITIES:
 Cash provided by operating activities........    $   28,512    $    8,418    $   11,587    $        --     $    48,517
 INVESTING ACTIVITIES:
 Purchases of marketable securities, net......            --            --          (888)            --            (888)
 Capital expenditures.........................        (4,759)         (800)       (2,871)            --          (8,430)
 Proceeds from sale of businesses  and surplus
    real estate...............................            --           468         1,623             --           2,091
 Proceeds from discontinued operations note
    receivable - revised......................           857            --            --             --             857
                                               --------------------------------------------------------------------------
 Net cash used in investing activities........        (3,902)         (332)       (2,136)            --          (6,370)
 FINANCING ACTIVITIES:
 Proceeds from issuance of common stock.......        56,619            --            --             --          56,619
 Proceeds from exercise of stock options......         7,149            --            --             --           7,149
 Net borrowings under revolving line-of-credit
    agreements................................           240            --         1,121             --           1,361
 Repayment of debt............................      (204,832)           --          (335)            --        (205,167)
 Proceeds from issuance of long-term debt.....       136,000            --            --             --         136,000
 Deferred financing costs incurred............        (2,877)           --            --             --          (2,877)
 Dividends paid...............................         9,067        (8,854)         (213)            --              --
 Other........................................           558            --            --             --             558
                                               --------------------------------------------------------------------------
 Net cash provided by (used in) financing
    activities................................         1,924        (8,854)          573             --          (6,357)
 EFFECT OF EXCHANGE RATE CHANGES ON CASH......            --             4           325             --             329
                                               --------------------------------------------------------------------------
 Net change in cash and cash equivalents......        26,534          (764)       10,349             --          36,119
 Cash and cash equivalents at
      beginning of year.......................           997          (697)        9,179             --           9,479
                                               --------------------------------------------------------------------------
 Cash and cash equivalents at end of year.....    $   27,531    $   (1,461)   $   19,528    $        --     $    45,598
                                               ==========================================================================



As of and for the year ended March 31, 2005:

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

 Current liabilities..........................    $   47,189    $   14,450    $   36,653    $    (1,474)    $    96,818
 Long-term debt, less current portion.........       259,520            --           763             --         260,283
 Other non-current liabilities................        11,032         8,199        22,772             --          42,003
                                               --------------------------------------------------------------------------
         Total liabilities....................       317,741        22,649        60,188         (1,474)        399,104
 Shareholders' equity.........................        51,427       162,552        34,040       (166,252)         81,767
                                               --------------------------------------------------------------------------
         Total liabilities and shareholders'
              equity..........................    $  369,168    $  185,201    $   94,228    $  (167,726)    $   480,871
                                               ==========================================================================


                                      F-31
<PAGE>

                          COLUMBUS MCKINNON CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)


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



 FOR THE YEAR ENDED MARCH 31, 2005:
 OPERATING ACTIVITIES:
 Cash (used in) provided by operating
    activities................................    $  (54,146)   $   64,479    $    6,828    $        --     $    17,161
 INVESTING ACTIVITIES:
 Proceeds from marketable securities, net.....           705            --           609             --           1,314
 Capital expenditures.........................        (3,718)         (610)       (1,597)            --          (5,925)
 Proceeds from sale of businesses  and surplus
    real estate...............................         3,439         3,303            --             --           6,742
 Net assets held for sale.....................            --           375            --             --             375
 Proceeds from discontinued operations note
    receivable - revised......................           643            --            --             --             643
                                               --------------------------------------------------------------------------
 Net  cash  provided  by (used  in)  investing
    activities................................         1,069         3,068          (988)            --           3,149
FINANCING ACTIVITIES:
 Proceeds from exercise of stock options......           428            --            --             --             428
 Net payments under revolving line-of-credit
    agreements................................          (219)           --          (904)            --          (1,123)
 Repayment of debt............................       (21,666)           --           (79)            --         (21,745)
 Deferred financing costs incurred............           (24)           --            --             --             (24)
 Dividends paid...............................        68,168       (68,000)         (168)            --              --
 Other........................................           562            --            --             --             562
                                               --------------------------------------------------------------------------
 Net cash provided by (used in) financing
    activities................................        47,249       (68,000)       (1,151)            --         (21,902)
 EFFECT OF EXCHANGE RATE CHANGES ON CASH......          (134)           85            19             --             (30)
                                               --------------------------------------------------------------------------
 Net change in cash and cash equivalents......        (5,962)         (368)        4,708             --          (1,622)
 Cash and cash equivalents at
      beginning of year.......................         6,981          (329)        4,449             --          11,101
                                               --------------------------------------------------------------------------
 Cash and cash equivalents at end of year.....    $    1,019    $     (697)   $    9,157    $        --     $     9,479
                                               ==========================================================================



                                      F-32
<PAGE>


                          COLUMBUS MCKINNON CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

For the year ended March 31, 2004:

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





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

</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 the operating earnings of the respective business units.

     Segment  information as of and for the years ended March 31, 2006, 2005 and
2004 is as follows:

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


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

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



                                      F-34
<PAGE>


                          COLUMBUS MCKINNON CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

     Financial  information  relating to the Company's  operations by geographic
area is as follows:
<TABLE>
<CAPTION>

                                                                         -------------------------------------------------
                                                                                        YEAR ENDED MARCH 31,
                                                                         -------------------------------------------------
                                                                                2006            2005            2004
                                                                                ----            ----            ----
 NET SALES:
<S>                                                                         <C>             <C>             <C>
 United States..........................................................    $    394,657    $    360,917    $    319,815
 Europe.................................................................         112,868         108,717          86,518
 Canada.................................................................          30,492          28,778          27,736
 Other..................................................................          17,990          16,340          10,522
                                                                         -------------------------------------------------
 Total..................................................................    $    556,007    $    514,752    $    444,591
                                                                         =================================================

                                                                         -------------------------------------------------
                                                                                        YEAR ENDED MARCH 31,
                                                                         -------------------------------------------------
                                                                                2006            2005            2004
                                                                                ----            ----            ----
 TOTAL ASSETS:
 United States..........................................................    $    411,199    $    341,645    $    347,488
 Europe.................................................................         123,694         115,241         105,120
 Canada.................................................................          20,444          17,442          14,628
 Other..................................................................          10,707           6,543           6,127
                                                                         -------------------------------------------------
 Total..................................................................    $    566,044    $    480,871    $    473,363
                                                                         =================================================

                                                                         -------------------------------------------------
                                                                                        YEAR ENDED MARCH 31,
                                                                         -------------------------------------------------
                                                                                2006            2005            2004
                                                                                ----            ----            ----
 LONG-LIVED ASSETS:
 United States..........................................................    $    184,448    $    185,518    $    187,202
 Europe.................................................................          53,357          54,181          53,051
 Canada.................................................................           1,869           2,672           3,283
 Other..................................................................           2,785           2,151           1,979
                                                                         -------------------------------------------------
 Total..................................................................    $    242,459    $    244,522    $    245,515
                                                                         =================================================



      Sales by major product group are as follows:

                                                                         -------------------------------------------------
                                                                                      YEAR ENDED MARCH 31,
                                                                         -------------------------------------------------
                                                                                2006            2005            2004
                                                                                ----            ----            ----
 Hoists  ...............................................................    $    258,082    $    227,789    $    197,400
 Chain and forged attachments...........................................         134,301         127,300         110,681
 Industrial cranes......................................................          61,967          62,468          53,276
 Other..................................................................         101,657          97,195          83,234
                                                                         -------------------------------------------------
         Total..........................................................    $    556,007    $    514,752    $    444,591
                                                                         =================================================

</TABLE>

                                      F-35
<PAGE>


                          COLUMBUS MCKINNON CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)


21.     SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

     Below is selected quarterly financial data for fiscal 2006 and 2005:

<TABLE>
<CAPTION>

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


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

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


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

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

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


 Net income per share - basic.............   $       0.23    $        0.18   $        0.16    $      0.57
                                           ================================================================

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


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


                                      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,
                                                                                    --------------------------------
                                                                                         2006           2005
                                                                                    --------------------------------
<S>                                                                                   <C>            <C>
      Net unrealized investment gains - net of tax.................................   $     1,891    $     1,233
      Minimum pension liability adjustment - net of tax............................       (17,107)       (14,572)
      Foreign currency translation adjustment......................................         2,237          4,083
                                                                                    --------------------------------
      Accumulated other comprehensive loss.........................................   $   (12,979)   $    (9,256)
                                                                                    ================================
</TABLE>

     The deferred taxes associated with the items included in accumulated  other
comprehensive   loss  were   $9,486,000   and  $8,159,000  for  2006  and  2005,
respectively.  As a result of the  recording of a deferred  tax asset  valuation
allowance in fiscal 2005, the Company recorded as an offsetting entry a $534,000
charge in the minimum pension liability component of other comprehensive income.
With the reversal of that valuation  allowance in fiscal 2006 (see Note 17), the
Company  recorded  the  reversal of the  valuation  allowance  as a reduction of
income taxes in the statement of  operations.  This is in  accordance  with FASB
Statement  No. 109,  "Accounting  for Income  Taxes," even though the  valuation
allowance was initially  established by a charge against  comprehensive  income.
This amount will remain indefinitely as a component of minimum pension liability
adjustment.

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

                                                                         -------------------------------------------
                                                                                     YEAR ENDED MARCH 31,
                                                                         -------------------------------------------
                                                                             2006          2005          2004
                                                                         -------------------------------------------
<S>                                                                        <C>           <C>           <C>
      Net unrealized investment gains (losses) at beginning of year.....   $     1,233   $     1,364   $      (342)
         Unrealized holdings gains arising during the period............         1,591           328         2,916
         Reclassification adjustments for (gains)
           included in earnings.........................................          (933)         (459)       (1,210)
                                                                         -------------------------------------------
      Net change in unrealized gains (losses) on investments............           658          (131)        1,706
                                                                         -------------------------------------------
      Net unrealized investment gains at end of year....................   $     1,891   $     1,233   $     1,364
                                                                         ===========================================
</TABLE>


                                      F-37
<PAGE>


                          COLUMBUS MCKINNON CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

23.     EFFECTS OF NEW ACCOUNTING PRONOUNCEMENTS

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

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

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

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

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

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

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

     In May 2005,  the FASB issued SFAS No. 154,  "Accounting  Changes and Error
Corrections" which replaces APB Opinion No. 20,  "Accounting  Changes," and SFAS
No. 3, "Reporting Accounting Changes in Interim Financial  Statements." SFAS No.
154  changes  the  requirements  for and  reporting  of a change  in  accounting
principle.  This Statement becomes  effective for changes in accounting  methods
during  fiscal years  beginning  after  December 15, 2005.  The Company does not
expect the adoption of SFAS No. 154 will have a material impact on the Company's
consolidated results of operations and financial condition.


                                      F-38
<PAGE>

                          COLUMBUS MCKINNON CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

24.   SUBSEQUENT EVENTS

     During April and May of 2006,  the Company  repurchased  $32,128,000 of the
outstanding  10% Senior Secured Notes.  The repurchase of the 10% Notes occurred
at a premium  resulting  in a pre-tax  loss on early  extinguishment  of debt of
$3,194,000.  As a  result  of the  repurchase  of the 10%  Notes,  approximately
$671,000 of pre-tax deferred financing costs was written-off.  The net effect of
these items,  a $3,865,000  pre-tax loss will be shown as part of other (income)
and expense, net for the first quarter of fiscal 2007.


                                      F-39
<PAGE>
<TABLE>
<CAPTION>

                          COLUMBUS MCKINNON CORPORATION

                 SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
                          MARCH 31, 2006, 2005 AND 2004
                              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, 2006: Deducted from asset accounts:
<S>                                                 <C>          <C>           <C>               <C>       <C>    <C>
      Allowance for doubtful accounts               $  3,015     $    1,628    $     --          $ 1,226   (1)    $  3,417
      Slow-moving and obsolete inventory               6,413          2,617          --            1,395   (2)       7,635
      Deferred tax asset valuation allowance          50,538        (38,571)         --            5,666             6,301
                                                    --------     ----------    --------          -------          --------
           Total                                    $ 59,966     $  (34,326)   $     --          $ 8,287          $ 17,353
                                                    ========     ==========    ========          =======          ========
    Reserves on balance sheet:
      Accrued general and product liability costs   $ 16,094     $    7,920    $     --          $ 3,045   (3)    $ 20,969
                                                    ========     ==========    ========          =======          ========

 Year ended March 31, 2005: Deducted from asset accounts:
      Allowance for doubtful accounts               $  2,811     $    2,191    $     --          $ 1,987   (1)    $  3,015
      Slow-moving and obsolete inventory               5,878          1,182          --              647   (2)       6,413
      Deferred tax asset valuation allowance          55,456          1,175          --            6,093            50,538
                                                    --------     ----------    --------          -------          --------
           Total                                    $ 64,145     $    4,548    $     --          $ 8,727          $ 59,966
                                                    ========     ==========    ========          =======          ========
    Reserves on balance sheet:
      Accrued general and product liability costs   $ 15,930     $    5,780    $     --          $ 5,616   (3)    $ 16,094
                                                    ========     ==========    ========          =======          ========

 Year ended March 31, 2004: Deducted from asset accounts:
      Allowance for doubtful accounts               $  2,743     $    1,761    $     --          $ 1,693   (1)    $  2,811
      Slow-moving and obsolete inventory               5,699          2,333        (126) (4)       2,028   (2)       5,878
      Deferred tax asset valuation allowance              --         55,456          --               --            55,456
                                                    --------     ----------    --------          -------          --------
           Total                                    $  8,442     $   59,550    $   (126)         $ 3,721          $ 64,145
                                                    ========     ==========    ========          =======          ========
    Reserves on balance sheet:
      Accrued general and product liability costs   $ 14,439     $    5,398    $     --          $ 3,907   (3)    $ 15,930
                                                    ========     ==========    ========          =======          ========
</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-40
<PAGE>

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

      None.


ITEM 9A.          CONTROLS AND PROCEDURES

     MANAGEMENT'S EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

     As of March 31, 2006, 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,  2006.  There were no changes in our internal  controls or in other  factors
during our fourth quarter ended March 31, 2006.

     MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

     Our management is responsible for  establishing  and  maintaining  adequate
internal control over financial  reporting,  as such term is defined in Exchange
Act  Rules  13a-15(f)  and  15d-15(f).   Under  the  supervision  and  with  the
participation of our management, including our Chief Executive Officer and Chief
Financial  Officer,  we  conducted an  evaluation  of the  effectiveness  of our
internal  control  over  financial  reporting  as of March 31, 2006 based on the
framework in Internal  Control--Integrated  Framework issued by the Committee of
Sponsoring  Organizations  of the  Treadway  Commission  (COSO).  Based  on that
evaluation,  our management  concluded that our internal  control over financial
reporting was effective as of March 31, 2006.

     Management's  assessment of the  effectiveness of our internal control over
financial  reporting as of March 31, 2006 has been audited by Ernst & Young LLP,
an  independent  registered  public  accounting  firm, as stated in their report
which is included herein.


             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


The Board of Directors and Shareholders of Columbus McKinnon Corporation


We  have  audited   management's   assessment,   included  in  the  accompanying
Management's Report on Internal Control Over Financial Reporting,  that Columbus
McKinnon Corporation and subsidiaries maintained effective internal control over
financial  reporting  as of March 31,  2006,  based on criteria  established  in
Internal  Control--Integrated  Framework  issued by the  Committee of Sponsoring
Organizations of the Treadway Commission (the COSO criteria).  Columbus McKinnon
Corporation's  management is  responsible  for  maintaining  effective  internal
control over financial  reporting and for its assessment of the effectiveness of
internal control over financial  reporting.  Our responsibility is to express an
opinion on management's  assessment and an opinion on the  effectiveness  of the
company's internal control over financial reporting based on our audit.

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

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


                                       30
<PAGE>

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

In our  opinion,  management's  assessment  the  Columbus  McKinnon  Corporation
maintained  effective internal control over financial  reporting as of March 31,
2006, is fairly stated,  in all material  respects,  based on the COSO criteria.
Also, in our opinion,  Columbus McKinnon Corporation maintained, in all material
respects,  effective  internal control over financial  reporting as of March 31,
2006, based on the COSO criteria.

We also have  audited,  in accordance  with the standards of the Public  Company
Accounting  Oversight Board (United States),  the consolidated balance sheets of
Columbus  McKinnon  Corporation and  subsidiaries as of March 31, 2006 and 2005,
and the related consolidated statements of operations, shareholders' equity, and
cash flows for each of the three  years in the period  ended  March 31,  2006 of
Columbus  McKinnon  Corporation and  subsidiaries,  and our report dated June 1,
2006 expressed an unqualified opinion thereon.


                                         /s/ Ernst & Young LLP


June 1, 2006
Buffalo, New York



ITEM 9B.          OTHER INFORMATION

     None.


                                    PART III
                                    --------

ITEM 10.          DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     The  information   regarding   Directors  and  Executive  Officers  of  the
Registrant will be included in a Proxy Statement to be filed with the Commission
prior  to July  29,  2006  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, 2006 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, 2006 and upon the filing of such Proxy  Statement,
is incorporated by reference herein.


                                       31
<PAGE>

ITEM 13.          CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     The information  regarding Certain  Relationships and Related  Transactions
will be included in a Proxy  Statement to be filed with the Commission  prior to
July 29, 2006 and upon the filing of such Proxy  Statement,  is  incorporated by
reference herein.

ITEM 14.          PRINCIPAL ACCOUNTANT FEES AND SERVICES

     The information  regarding  Principal  Accountant Fees and Services will be
included in a Proxy Statement to be filed with the Commission  prior to July 29,
2006 and upon the filing of such Proxy  Statement,  is incorporated by reference
herein.


                                     PART IV
                                     -------


ITEM 15.          EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(1)  FINANCIAL STATEMENTS:

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

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

      Report of Independent Registered Public Accounting Firm                F-2

      Consolidated balance sheets - March 31, 2006 and 2005                  F-3

      Consolidated statements of operations - Years ended
        March 31, 2006, 2005 and 2004                                        F-4

      Consolidated statements of shareholders' equity - Years ended
        March 31, 2006, 2005 and 2004                                        F-5

      Consolidated statements of cash flows - Years ended
        March 31, 2006, 2005 and 2004                                        F-6

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


(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.


(3)      EXHIBITS:


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

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

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

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


                                       32
<PAGE>


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

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

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

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

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

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

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

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

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

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

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



                                       33
<PAGE>


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

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

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

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

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

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

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

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

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

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

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

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

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



                                       34
<PAGE>



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

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

     #10.14 Amendment No. 12 to the Columbus McKinnon Corporation Employee Stock
            Ownership  Plan as Amended and  Restated as of April 1, 1989,  dated
            March 17, 2005  (incorporated  by reference to Exhibit  10.14 to the
            Company's Annual Report on Form 10-K for the fiscal year ended March
            31, 2005).

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

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

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

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

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

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

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

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

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

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

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


                                       35
<PAGE>


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

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

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

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

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

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

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

     #10.33 Amendment  No.  11 to the  1998  Plan  Restatement  of the  Columbus
            McKinnon  Corporation  Thrift  [401(k)]  Plan,  dated March 31, 2005
            (incorporated  by reference to Exhibit 10.33 to the Company's Annual
            Report on Form 10-K for the fiscal year ended March 31, 2005).

    *#10.34 Amendment  No. 12  to  the 1998  Plan  Restatement  of the  Columbus
            McKinnon Corporation Thrift [401(k)] Plan, dated December 27, 2005.

     #10.35 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).

     #10.36 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).

     #10.37 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).

     #10.38 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).

     #10.39 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).


                                       36
<PAGE>

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

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

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

    *#10.43 Amendment  No.  7 to the  1998  Plan  Restatement  of  the  Columbus
            McKinnon Corporation Monthly Retirement Benefit Plan, dated December
            28, 2005.

     #10.44 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).

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

      10.46 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).

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

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

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

      10.50 Second amendment, dated as of August 5, 2005, to that certain Second
            Amended and  Restated  Credit and  Security  Agreement,  dated as of
            November 21, 2002 and amended and restated as of January 2, 2004 (as
            amended by that  certain  First  Amendment  to that  certain  Second
            Amended and  Restated  Credit and  Security  Agreement,  dated as of
            April 29,  2005,  and as further  modified and  supplemented  and in
            effect from time to time,  the "Credit  Agreement"),  among Columbus
            McKinnon Corporation,  a corporation organized under the laws of New
            York (the  "Borrower"),  Larco Industrial  Services Ltd., a business
            corporation  organized  under the laws of the  Province  of Ontario,
            Columbus McKinnon Limited,  a business  corporation  organized under
            the laws of Canada,  the Guarantors from time to time party thereto,
            the Lenders from time to time party


                                       37
<PAGE>

            thereto  (collectively,  the "Lenders"),  Bank of America,  N.A., as
            Administrative  Agent for such Lenders (the  "Agent") and as Issuing
            Lender  (incorporated  by reference to Exhibit 10.1 to the Company's
            Quarterly Report on Form 10-Q dated October 2, 2005).

      10.51 Third amendment, dated as of August 22, 2005, to that certain Second
            Amended and  Restated  Credit and  Security  Agreement,  dated as of
            November 21, 2002 and amended and restated as of January 2, 2004 (as
            amended by that  certain  First  Amendment  to that  certain  Second
            Amended and  Restated  Credit and  Security  Agreement,  dated as of
            April 29,  2005,  by that certain  Second  Amendment to that certain
            Second Amended and Restated Credit and Security Agreement,  dated as
            of August 5, 2005, and as further  modified and  supplemented and in
            effect from time to time,  the "Credit  Agreement"),  among Columbus
            McKinnon Corporation,  a corporation organized under the laws of New
            York (the  "Borrower"),  Larco Industrial  Services Ltd., a business
            corporation  organized  under the laws of the  Province  of Ontario,
            Columbus McKinnon Limited,  a business  corporation  organized under
            the laws of Canada,  the Guarantors from time to time party thereto,
            the  Lenders  from time to time  party  thereto  (collectively,  the
            "Lenders"),  Bank of America, N.A., as Administrative Agent for such
            Lenders  (the  "Agent")  and  as  Issuing  Lender  (incorporated  by
            reference to Exhibit 10.2 to the Company's  Quarterly Report on Form
            10-Q dated October 2, 2005).

      10.52 Fourth  amendment,  dated as of October 17,  2005,  to that  certain
            Second Amended and Restated Credit and Security Agreement,  dated as
            of November 21, 2002 and amended and restated as of January 2, 2004,
            and amended by that certain First Amendment to the Credit Agreement,
            dated as of April 29, 2005, and by that certain Second  Amendment to
            the  Credit  Agreement,  dated as of  August  5,  2005,  and by that
            certain Third Amendment to the Credit Agreement,  dated as of August
            22, 2005 (as further  amended,  supplemented  or otherwise  modified
            from time to time, the "Credit Agreement"),  among Columbus McKinnon
            Corporation  (the  "Borrower"),   Larco  Industrial  Services  Ltd.,
            Columbus McKinnon Limited, the Guarantors named therein, the lending
            institutions   party  thereto,   and  Bank  of  America,   N.A.,  as
            Administrative  Agent and  Issuing  Lender.  Capitalized  terms used
            herein  and not  defined  herein  shall have the  meanings  ascribed
            thereto  in the  Credit  Agreement  (incorporated  by  reference  to
            Exhibit 10.3 to the  Company's  Quarterly  Report on Form 10-Q dated
            October 2, 2005).

     *10.53 Third Amended and Restated Credit and Security  Agreement,  dated as
            of March  16,  2006  among  Columbus  McKinnon  Corporation,  as the
            Borrower, Bank of America, N.A., as Administrative Agent and Issuing
            Lender,  and  Other  Lenders  Party  Hereto,  and  Bank  of  America
            Securities LLC, as Arranger.

      *21.1 Subsidiaries of the Registrant.

      *23.1 Consent of Ernst & Young LLP.

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

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

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

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


                                       38
<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 7, 2006

                                   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 7, 2006
-------------------------         Officer and Director
    TIMOTHY T. TEVENS             (PRINCIPAL EXECUTIVE OFFICER)


/S/ KAREN L. HOWARD            Vice President - Finance            June 7, 2006
-------------------------         and Chief Financial Officer
    KAREN L. HOWARD               (PRINCIPAL FINANCIAL OFFICER AND
                                  PRINCIPAL ACCOUNTING OFFICER)


/S/ ERNEST R. VEREBELYI        Chairman of the Board of Directors  June 7, 2006
-------------------------
    ERNEST R. VEREBELYI


/S/ CARLOS PASCUAL             Director                            June 7, 2006
-------------------------
    CARLOS PASCUAL


/S/ RICHARD H. FLEMING         Director                            June 7, 2006
-------------------------
    RICHARD H. FLEMING


/S/ HERBERT P. LADDS, JR.      Director                            June 7, 2006
-------------------------
    HERBERT P. LADDS, JR.


/S/ WALLACE W. CREEK           Director                            June 7, 2006
-------------------------
    WALLACE W. CREEK


/S/ LINDA A. GOODSPEED         Director                            June 7, 2006
-------------------------
    LINDA A. GOODSPEED


/S/ STEPHEN RABINOWITZ         Director                            June 7, 2006
-------------------------
    STEPHEN RABINOWITZ



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