What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2022-05-25 compared with 2021-05-26 · 452 added, 504 removed, 1456 unchanged (40% of the section changed)

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(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Valuation of Goodwill

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As discussed in Notes 2 and 9 of the consolidated financial statements, goodwill is qualitatively assessed and quantitatively tested, when necessary, for impairment at least annually at the reporting unit level.

For its fiscal 2021 annual impairment test, the Company qualitatively tested goodwill impairment for the Rest of Products reporting unit which had goodwill of $321.5 million.

Auditing management's qualitative assessment for goodwill impairment for the Rest of Products reporting unit was complex and highly judgmental due to the significant judgments required in evaluating whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount.

For its fiscal 2022 annual impairment test, the Company qualitatively tested goodwill impairment.

Auditing management's qualitative assessment for goodwill impairment was complex and highly judgmental due to the significant judgments required in evaluating whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount.

In particular, the qualitative assessment requires management to assess the totality of events and circumstances such as macroeconomic conditions, industry and market conditions, overall financial performance, as well as other drivers of fair value and make judgments, on the basis of the weight of evidence, about the significance of all identified events and circumstances in the context of determining whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount.

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We evaluated the evidence of these conditions and trends that had been gathered by management by agreeing the financial data presented by management to underlying financial records, as well as comparing market conditions and expected trends to economic and industry data.

We also inspected evidence about other relevant entity-specific events such as changes in management, key personnel, strategy, or customers, or litigation and qualitatively assessed the impact of those events on the fair value of the Company’s Rest of Products reporting unit.

In addition, we analyzed trends in the Company’s stock price to identify changes in the indicated fair value of the Company and compared the Company’s stock quotes to quoted market price from other independent sources, and we analyzed the Company’s weighted average cost of capital and compared it to the weighted average cost of capital used by management in its most recent quantitative test.

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We involved a specialist to assist with our procedures and to develop an independent range of asbestos-related product liability reserves, which we compared to the Company’s recorded amount.

Accounting for Acquisitions

Description of the Matter As discussed in Note 3 of the consolidated financial statements, during fiscal year 2022, the Company completed the acquisition of Dorner Mfg.

(“Dorner”), for which the consideration was $481.0 million.

The purchase price has been allocated to the assets acquired and liabilities assumed as of the date of acquisition.

The excess consideration of $287.1 million has been recorded as goodwill as of March 31, 2022.

The identifiable intangible assets acquired include customer relationships of $137.0 million, technology of $45.0 million, and trade names of $8.0 million.

Auditing the Company’s accounting for the acquisition involved subjective auditor judgement due to the significant estimation uncertainty in the Company’s determination of the fair values of the acquired intangible assets.

The Company used discounted cash flow methods to estimate the fair value of acquired intangible assets.

The significant assumptions used to estimate the value of the intangible assets included royalty rate, revenue growth rate, customer attrition rate, and discount rate.

The significant assumptions related to estimating the fair value of the acquired intangible assets above are forward looking and could be affected by future economic market conditions .

How We Addressed the Matter in Our Audit

We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the Company’s accounting for the acquisition.

Our audit procedures included, among others, testing controls over the valuation of acquired intangible assets, including the valuation models and underlying assumptions used to develop such estimates.

To test the fair value of the acquired intangible assets, we performed audit procedures that included, among others, evaluating the appropriateness of valuation methodologies, and testing the significant assumptions used in the models, as described above, including the completeness and accuracy of the underlying data.

We compared the significant assumptions to current industry, market, and economic trends, to the historical results of the acquired business and to other guidelines companies within the same industry.

We involved our valuation specialists to assist in our evaluation of the methodology and certain significant assumptions used by the Company.

/s/ Ernst & Young LLP

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Accrued liabilities 118,187 110,816

Current portion of long-term debt 4,450 4,450

Current portion of long-term debt and finance lease obligations 40,551 4,450

Total current liabilities 249,619 183,859

Term loan and revolving credit facility 244,504 246,856

Term loan and finance lease obligations 470,675 244,504

Other non-current liabilities 192,610 191,920

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Interest and debt expense 20,126 12,081 14,234

Cost of debt refinancing 14,803 — —

Investment (income) loss, net ( 46 ) ( 1,693 ) ( 891 )

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Other (income) expense, net ( 1,122 ) 20,850 839

Income from continuing operations before income tax expense 10,076 77,156 52,898

Income before income tax expense 38,446 10,076 77,156

Income tax expense 8,786 970 17,484

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Other post retirement obligations adjustments, net of taxes of $ 48 , $( 12 ), and $( 35 )

( 153 ) 38 104

Split-dollar life insurance arrangement adjustments, net of taxes of $( 45 ), $( 24 ), and $( 17 )

Change in derivatives qualifying as hedges, net of taxes of $( 39 ), $( 8 ), and $( 565 )

96 1,602 ( 1,037 )

Total other comprehensive income (loss) 10,087 54,364 ( 31,298 )

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Dividends declared — — ( 5,690 ) — ( 5,690 )

Change in accounting principle — — 888 — 888

Change in foreign currency translation adjustment — — — ( 9,004 ) ( 9,004 )

Change in net unrealized gain on investments, net of tax of — — — ( 883 ) ( 883 )

Change in derivatives qualifying as hedges, net of tax of $( 565 )

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Change in derivatives qualifying as hedges, net of tax of $( 8 )

— — — 1,602 1,602

Change in pension liability and postretirement obligations, net of tax of $( 13,297 )

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— — — 16,312 16,312

Issuance of 4,312,500 shares of common stock in May 2021 offering at $ 48.00 per share, net of issuance costs of $ 8,340

43 198,662 — — 198,705

Stock compensation - directors — 959 — — 959

19 unchanged sentences

Amortization of deferred financing costs 1,703 2,646 2,655

Loss (gain) on hedging instruments 853 — —

Cost of debt refinancing 14,803 — —

Loss on sales of businesses — — 176

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Net (payments) proceeds from the sales of businesses — — ( 214 )

Payment of restricted cash to former owner — — ( 294 )

Purchase of businesses, net of cash acquired (See Note 3) ( 539,778 ) — —

Net cash provided by (used for) investing activities ( 554,311 ) ( 5,548 ) ( 9,962 )

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Fees paid for revolver extension — ( 826 ) —

Proceeds from issuance of long-term debt 725,000 — —

Proceeds from equity offering 207,000 — —

Fees related to debt and equity offering ( 26,184 ) — —

Cash inflows from hedging activities 19,417 — —

Cash outflows from hedging activities ( 20,206 ) — —

Payment of dividends ( 6,562 ) ( 5,733 ) ( 5,670 )

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Description of Business

Columbus McKinnon Corporation ("the Company") is a leading worldwide designer, manufacturer, and marketer of hoists, actuators, rigging tools, digital power control systems, motion control products, and other technologies, systems, and services that efficiently and ergonomically move, lift, position, and secure materials.

Key products include hoists, rigging tools, digital power control systems, actuators, elevator application drive systems, and explosion-protected hoists.

The Company is focused on commercial and industrial applications that require safety and productivity in moving material.

Columbus McKinnon Corporation ("the Company") is a leading worldwide designer, manufacturer, and marketer of intelligent motion solutions that efficiently and ergonomically move, lift, position, and secure materials.

Key products include hoists, crane components, precision conveyor systems, accumulation tables, rigging tools, light rail workstations, and digital power and motion control systems.

The Company is focused on commercial and industrial applications that require the safety and quality provided by its superior design and engineering know-how.

The Company’s targeted market verticals include general industrial, construction and infrastructure, mining, oil & gas, energy, aerospace, transportation, automotive, heavy equipment manufacturing, and entertainment.

The Company’s material handling products are sold globally, principally to third party distributors through diverse distribution channels and, to a lesser extent, directly to end-users.

The Company’s products are sold globally, principally to third party distributors and crane builders through diverse distribution channels and, to a lesser extent, directly to end-users.

During fiscal 2022, approximately 59 % of sales were to customers in the United States .

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Advertising expenses were $ 2,410,000 , $ 999,000 , and $ 1,648,000 in fiscal 2022, 2021, and 2020, respectively.

The decrease in fiscal 2021 was due to reduced spending including fewer trade shows expenses as a result of COVID-19.

The increase in fiscal 2022 was due to increased spending as business returns to pre-pandemic COVID-19 levels as well as the acquisitions of Dorner and Garvey.

Cash and Cash Equivalents

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Approximately 6 % of the Company’s employees are represented by two separate U.S.

collective bargaining agreements which expire in June 2021 and September 2021.

collective bargaining agreements which expire in May 2024 and September 2024.

We also have various labor agreements with our non-U.S.

employees that we negotiate from time to time.

Consolidation

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Foreign Currency Translations

The Company translates foreign currency financial statements as described in Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 830, “Foreign Currency Matters.” Under this method, all items of income and expense are translated to U.S.

dollars at average exchange rates during 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

The Company translates for eign currency financial statements as described in Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 830, “Foreign Currency Matters.” Under this me thod, all items of income

COLUMBUS McKINNON CORPORATION

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(tabular amounts in thousands, except share data)

in the shareholders’ equity section of the balance sheet.

and expense are translated to U.S.

dollars at average exchange rates during 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.

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The Company’s reporting units are determined based upon whether discrete financial information is available and reviewed regularly, whether those units constitute a business, and the extent of economic similarities and interdependencies between those reporting units for purposes of aggregation.

The Company’s reporting units identified under ASC Topic 350-20-35-33 are at the component level, or one level below the reporting segment level as defined under ASC Topic 280-10-50-10 “Segment Reporting – Disclosure.” As of March 31, 2021, the Company’s one segment is subdivided into two reporting units.

The Company’s reporting units identified under ASC Topic 350-20-35-33 are at the component level, or one level below the reporting segment level as defined under ASC Topic 280-10-50-10 “Segment Reporting – Disclosure.” As of March 31, 2022, the Company’s one segment is subdivided into three reporting units.

Further, the Company adopted ASU No.

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The discount rates utilized for each reporting unit reflect the Company's assumptions of marketplace participants' cost of capital and risk assumptions, both specific to the reporting unit and overall in the economy.

The Company performed its qualitative assessment as of February 28, 2021 and determined that the quantitative goodwill impairment test was not required for the Rest of Products and Duff-Norton reporting units.

Based on various conditions in the current fiscal year, such as financial performance, macroeconomic conditions, and other company specific events, it was determined that the Rest of Products and Duff-Norton's reporting unit's fair value was not more likely than not less than its applicable carrying value.

The Company performed its qualitative assessment as of February 28, 2022 and determined that the quantitative goodwill impairment test was not required for the Rest of Products, Duff-Norton and Precision Conveyance reporting units.

Based on various conditions in the current fiscal year, such as financial performance, macroeconomic conditions, and other company specific events, it was determined that the Rest of Products, Duff-Norton's and Prevision Conveyance reporting units fair value were not more likely than not less than its applicable carrying value.

See Note 9 for further discussion of goodwill and intangible assets.

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The fair values are determined in accordance with ASC 820.

In assessing long-lived assets for an impairment loss, assets are grouped with other assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities.

Asset grouping requires a significant amount of judgment.

Accordingly, facts and circumstances will influence how asset groups are determined for

COLUMBUS McKINNON CORPORATION

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(tabular amounts in thousands, except share data)

impairment testing.

Asset grouping requires a significant amount of judgment.

Accordingly, facts and circumstances will influence how asset groups are determined for impairment testing.

In assessing long-lived assets for impairment, management considered the Company’s product line portfolio, customers and related commercial agreements, labor agreements and other factors in grouping assets and liabilities at the lowest level for which identifiable cash flows are independent.

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Interest and dividend income are also included in Investment (income) loss on 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.

The marketable securities are not available for general working capital purposes.

COLUMBUS McKINNON CORPORATION

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(tabular amounts in thousands, except share data)

The marketable securities are not available for general working capital purposes.

Property, Plant, and Equipment

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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.

Accounts receivables 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.

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2016-13, “Financial Instruments - Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments," discussed in Note 21 and effective in fiscal 2021, the Company has updated its existing allowance for doubtful accounts policy to comply with the new standard.

Measurement of Credit Losses on Financial Instruments," effective in fiscal 2021, the Company has updated its existing allowance for doubtful accounts policy to comply with the new standard.

Shipping and Handling Costs

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See Note 15 for further discussion of stock-based compensation.

All leases are reviewed for operating or finance classification at their inception.

Rent expense for leases that contain scheduled rent increases is recognized on a straight-line basis over the lease term.

As described in Note 18, the Company adopted ASC

COLUMBUS McKINNON CORPORATION

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(tabular amounts in thousands, except share data)

842, "Leases," effective April 1, 2019 whereas leases with terms greater than twelve months are recorded on the balance sheet as a right-of-use ("ROU") asset and corresponding lease liability.

All leases are reviewed for operating or finance classification at their inception.

Rent expense for leases that contain scheduled rent increases is recognized on a straight-line basis over the lease term.

As described in Note 18, the Company adopted ASC 842, "Leases," effective April 1, 2019 whereas leases with terms greater than twelve months are recorded on the balance sheet as a right-of-use ("ROU") asset and corresponding lease liability.

Refer to Note 18 for further details.

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Acquisitions & Disposals

As part of our business strategy, in the first quarter of fiscal 2019 the Company started the process to sell its Tire Shredder business, its crane builder business, Crane Equipment and Service Inc., and Stahlhammer Bommern GmbH, its European forging business acquired in 2014 (the "Sold Businesses") as they were no longer considered part of the core business or a strategic fit with the Company's long-term growth and operational objectives.

On December 28, 2018, the Company sold its Tire Shredder business and recognized a gain.

On February 28, 2019, the Company sold the remaining two businesses, Crane Equipment and Service Inc.

and Stahlhammer Bommern GmbH, and recognized a loss.

As such, there are no remaining businesses which meet the criteria as being held for sale in accordance with ASC 360-10-45-9, "Property, Plant, and Equipment." The businesses were not deemed a strategic shift or significant to be considered discontinued operations.

When businesses or asset groups meet the criteria as held for sale, they are recorded at the lesser of their carrying value or fair value less cost to sell.

The Company recognized a gain on the sale of its Tire Shredder business in the amount of $ 1,059,000 during the twelve months ending March 31, 2019.

The Company recognized a loss on Crane Equipment and Service Inc.

and Stahlhammer Bommern GmbH in the amount of $ 26,731,000 during the twelve months ended March 31, 2019.

The loss of $ 26,731,000 recognized during fiscal 2019 includes an impairment loss on the Sold Businesses in the amount of $ 27,753,000 .

The impairment loss included a $ 6,174,000 reduction to goodwill, a $ 1,872,000 reduction to other intangible assets, a $ 12,830,000 reduction to property, plant, and equipment, and a $ 6,877,000 reduction to inventory.

Both the gain and loss on sale of business were recorded in Net loss on sales of businesses, including impairment on the Consolidated Statements of Operations and was determined based on the selling price less carrying value, described further in Note 5.

Additionally, net sales and pre-tax income (loss) before recognized gain or loss on sales for the three Sold Businesses was $ 34,195,000 and $ 3,623,000 for the twelve months ended March 31, 2019.

In the twelve months ending March 31, 2020, the Company recognized an additional loss of $ 176,000 as a result of a final working capital adjustment.

COLUMBUS McKINNON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(tabular amounts in thousands, except share data)

As part of its Blueprint for Growth 2.0 strategy, the Company is consolidating its manufacturing footprint.

The Company previously announced in fiscal 2019 the closure of its Salem, Ohio facility.

In fiscal 2020 the Company announced its plans to consolidate its hoist manufacturing facility in Lisbon, Ohio with its Wadesboro, North Carolina and Damascus, Virginia facilities in fiscal 2021.

The Salem, Ohio facility consolidation was completed during the first quarter of fiscal 2020 and the Lisbon, Ohio consolidation was completed during the nine months ended December 31, 2020.

In total $ 1,797,000 , $ 2,958,000 , and $ 1,473,000 are included in Cost of products sold on the Consolidated Statements of Operations during the twelve months ended March 31, 2021, 2020, and 2019 respectively, related to the consolidation of the Salem and Lisbon facilities.

Costs incurred include accelerated depreciation, accelerated lease costs, severance and other payroll related costs, costs to relocate inventory and machinery and equipment, and a payment of a previously recorded tax credit that will be refunded to the state.

Further, the Company closed one of its facilities located in France and consolidated these operations into one of its German facilities.

During the twelve months ended March 31, 2021, $ 815,000 of costs are included in Cost of products sold, $ 327,000 in General and administrative expenses, and $ 94,000 included in Selling expenses on the Consolidated Statements of Operations related to this consolidation, which primarily are severance and legal costs.

During fiscal 2021, the Company sold one of its owned manufacturing facilities in China as a result of its plan to consolidate two of its Hangzhou, China manufacturing facilities into one and reorganize its Asia Pacific operations.

The Company received cash in the amount of 45 million RMB (approximately $ 6,363,000 ) from the buyer to purchase the facility which resulted in a gain of $ 2,638,000 , of which $ 2,189,000 is included in Cost of products sold and $ 449,000 is included in General and administrative expenses on the Consolidated Statements of Operations during the twelve months ended March 31, 2021.

$ 1,455,000 of costs are included in General and administrative expenses and $ 296,000 are included in Selling expenses on the Consolidated Statements of Operations during the twelve months ended March 31, 2020 related to this consolidation.

Acquisitions - subsequent to March 31, 2021

On April 7, 2021, the Company completed its acquisition of Dorner Mfg.

("Dorner") for $ 485,000,000 on a cash-free, debt-free basis with a working capital adjustment.

("Dorner") for $ 481,012,000 .

Dorner, headquartered in Hartland, WI, is a leading automation solutions company providing unique, patented technologies in the design, application, manufacturing and integration of high-precision conveying systems.

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Dorner is a leading supplier to the life sciences, food processing, and consumer packaged goods markets as well as the faster growing industrial automation and e-commerce sectors.

Acquisition expenses incurred by the Company total $ 3,951,000 through March 31, 2021 and have been recorded in General and administrative expenses.

The results of Dorner included in the Company’s consolidated financial statements from the date of acquisition are Net sales and Income from operations of $ 132,014,000 and $ 12,451,000 for the year ended March 31, 2022.

Dorner's Income from operations for the year ended March 31, 2022 includes $ 218,000 in integration related severance costs, which have been included in General and administrative expenses and acquisition related inventory amortization of $ 2,981,000 , which has been included in Cost of products sold.

In addition, the Company incurred acquisition integration and deal expenses in the amount of $ 8,908,000 in the year ended March 31, 2022, which are included in General and administrative expenses.

The Company also incurred $ 970,000 in costs related to a transaction bonus that was paid 45 days after the acquisition date to key personnel of which $ 521,000 has been recorded as part of Cost of products sold, $ 350,000 has been recorded as part of Selling expenses, $ 74,000 has been recorded as

COLUMBUS McKINNON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(tabular amounts in thousands, except share data)

part of General and administrative expenses, and $ 25,000 has been recorded as part of Research and development expenses in the year ended March 31, 2022.

To finance the Dorner acquisition, on April 7, 2021 the Company entered into a $ 750,000,000 credit facility ("First Lien Facilities") with JPMorgan Chase Bank, N.A.

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Proceeds from the Bridge Facility were used, among other things, to finance the purchase price for the Dorner acquisition, pay related fees, expenses and transaction costs, and refinance the Company's borrowings under its prior Term Loan and Revolver.

The key terms of the First Lien Facility are as follows:

1) Bridge Facility:

An aggregate $ 650,000,000 Bridge Facility which requires quarterly principal amortization of 0.25% with the remaining principal due at maturity date.

In addition, if the Company has Excess Cash Flow (ECF) as defined in the Credit Agreement, the ECF Percentage of the Excess Cash Flow for each fiscal year minus optional prepayments of the Loans (except

prepayments of Revolving Loans that are not accompanied by a corresponding permanent reduction of Revolving Commitments) pursuant to Section 2.10(a) of the Credit Agreement other than to the extent that any such prepayment is funded with the proceeds of Funded Debt, shall be applied toward the prepayment of the Bridge Facility.

The ECF Percentage is defined as 50% stepping down to 25% or 0% based on the achievement of specified Secured Leverage Ratios as of the last day of such fiscal year.

An aggregate $ 100,000,000 secured revolving facility which includes sublimits for the issuance of standby letters of credit, swingline loans and multi-currency borrowings in certain specified foreign currencies.

See Note 12, Debt, for further details on the Company's new debt agreement and subsequent equity offering.

The purchase price has been allocated to the assets acquired and liabilities assumed as of the date of acquisition.

The excess consideration of $ 287,141,000 has been recorded as goodwill as of March 31, 2022.

The identifiable intangible assets acquired include customer relationships of $ 137,000,000 , technology of $ 45,000,000 , and trade names of $ 8,000,000 .

The weighted average life of the acquired identifiable intangible assets subject to amortization was estimated at 15 years at the time of acquisition.

Approximately $ 8,000,000 of goodwill arising as a result of the acquisition is deductible for tax purposes.

The assignment of purchase consideration to the assets acquired and liabilities assumed is as follows (in thousands):

Working Capital 20,218

Property, plant, and equipment, net 26,104

Intangible assets 190,000

Other assets 658

Other liabilities ( 896 )

Finance lease liabilities ( 14,582 )

Deferred and other taxes, net ( 35,689 )

Goodwill 287,141

Total $ 481,012

See Note 5 for assumptions used in determining the fair values of the intangible assets acquired.

The following unaudited pro forma financial information presents the combined results of operations as if the acquisition of Dorner had occurred as of April 1, 2020.

The pro forma information includes certain adjustments, including depreciation and amortization expense, interest expense, and certain other adjustments, together with related income tax effects.

The pro forma amounts may not be indicative of the results that actually would have been achieved had the acquisition of Dorner occurred as of April 1, 2020 and are not necessarily indicative of future results of the combined companies (in thousands):

Net sales $ 906,555 $ 762,955

Net income (loss) $ 29,660 $ ( 9,743 )

On December 1, 2021, the Company completed its acquisition of Garvey Corporation ("Garvey") for $ 67,731,000 including $ 907,000 in cash acquired, subject to an adjustment for working capital, cash and indebtedness and a $ 2,000,000 contingent payment that only becomes payable if (a) the EBITDA target set forth in the Purchase Agreement for the twelve-month period commencing on the month immediately following closing is achieved and (b) a specific current executive of Garvey remains employed with Garvey until at least March 31, 2023.

The Company financed the acquisition by borrowing $ 75,000,000 utilizing the Accordion feature under its existing Term Loan B, discussed in Note 12.

Garvey is a leading accumulation systems solutions company providing unique, patented systems for the automation of production processes whose products complement those of Dorner.

The transaction was accounted for using the acquisition method and, accordingly, the results of the acquired

COLUMBUS McKINNON CORPORATION

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3) Fees and Interest Rates:

Commitment fees and interest rates are determined on the basis of either a Eurocurrency rate or a Base rate plus an applicable margin, which is based upon the Company's Total Leverage Ratio (as defined in the Credit Agreement) in the case of Revolver loans.

4) Prepayments:

Provisions permitting a Borrower to voluntarily prepay either the Bridge Facility or Revolver in whole or in part at any time, and provisions requiring certain mandatory prepayments of the Bridge Facility or Revolver on the occurrence of certain events which will permanently reduce the commitments under the Credit Agreement, each without premium or penalty, subject to reimbursement of certain costs of the Lenders.

A prepayment premium of 1% of the principal amount of the First Lien Term Facility is required if the prepayment is associated with a Repricing Transaction and it were to occur within the first six months following the closing date.

5) Covenants:

Provisions containing covenants required of the Corporation and its subsidiaries including various affirmative and negative financial and operational covenants.

The key financial covenant is triggered only on any date when any Extension of Credit under the Revolving Facility is outstanding (excluding any Letters of Credit) (the “Covenant Trigger”), and prohibits the Total Leverage Ratio for the Reference Period ended on such date from exceeding (i) 6.75:1.00 as of any date of determination prior to June 30, 2021, (ii) 5.75:1.00 as of any date of determination on June 30, 2021 and thereafter but prior to June 30, 2022, (iii) 4.75:1.00 as of any date of determination on June 30, 2022 and thereafter but prior to June 30, 2023 and (iv)

3.50:1.00 as of any date of determination on June 30, 2023 and thereafter.

6) Collateral:

Obligations under the First Lien Facilities are secured by liens on substantially all assets of the Company and its material domestic subsidiaries.

Debt and equity issuance costs were no t material in fiscal 2021.

In the first quarter of fiscal 2022, the Company expects to incur $ 6,272,000 in debt extinguishment costs, of which $ 5,946,000 relates to the Company's prior Term Loan and $ 326,000 relates to the Company's prior Revolver.

These costs will be classified as Cost of debt refinancing in the Consolidated Statements of Operations.

Further, in fiscal 2022 the Company expects to record $ 5,432,000 in deferred financing costs on the First Lien Term Facility, which will be amortized over seven years.

The Company expects to record $ 4,027,000 in deferred financings costs on the New Revolver, of which $ 3,050,000 is related to the new Revolver and $ 977,000 is carried over from the Company's prior Revolver as certain Revolver lenders increased their borrowing capacity.

These balances will be amortized over five years and classified in Other assets since no funds are expected to be drawn on the New Revolver in the first quarter of fiscal 2022.

In addition to the debt borrowing described above, the Company commenced an underwritten public offering of 4,312,500 shares of its common stock at a price of $ 48.00 per share for total gross proceeds of $ 207,000,000 .

The Company used all of the net proceeds from the equity offering to repay in part outstanding borrowings under its Bridge Facility.

The equity offering closed on May 4, 2021.

Following the repayment, the Bridge Facility was refinanced with a Term Loan B facility.

The terms of the Term Loan B facility are similar to the terms for the Bridge Facility with the exception of the limits related to the financial covenants which are triggered only on any date when any Extension of Credit under the Revolving Facility is outstanding.

The Term Loan B prohibits the Total Leverage Ratio on such date from exceeding (i) 6.75:1.00 as of any date of determination prior to June 30, 2021, (ii) 5.50:1.00 as of any date of determination on June 30, 2021 and thereafter but prior to June 30, 2022, (iii) 4.50:1.00 as of any date of determination on June 30, 2022 and thereafter but prior to June 30, 2023 and (iv) 3.50:1.00 as of any date of determination on June 30, 2023 and thereafter.

Fees paid on the portion of the First Lien Facilities that were associated with the Bridge Facility are expected to be expensed as part of Cost of debt refinancing in the Consolidated Statements of Operations in the amount of $ 8,531,000 in the first quarter of fiscal 2022.

Lastly, purchase accounting allocations are not complete at this time.

The Company has identified intangible assets and expects to record balances related to trade names, technology, customer relationships, and goodwill.

Further, pro forma financial information presenting the combined results of operations as if the acquisitions had occurred as of April 1, 2020 has not been disclosed because it is deemed impracticable to do so.

This is due to the initial accounting for the business combination is incomplete at this time.

business have been included in the Company's results of operations from the acquisition date.

As the Company has determined that the acquisition is not material to its existing operations, certain disclosures, including pro forma financial information, have not been included.

In connection with the acquisition, the Company incurred $ 376,000 of integration and deal expenses, which are included in General and administrative expenses.

The purchase price has been preliminarily allocated to the assets acquired and liabilities assumed as of the date of acquisition.

The excess consideration of $ 41,216,000 has been preliminarily recorded as goodwill as of March 31, 2022.

The identifiable intangible assets acquired include customer relationships of $ 8,200,000 , engineered drawings of $ 4,670,000 , trademarks of $ 3,610,000 , patent of $ 2,440,000 , backlog of $ 2,100,000 and non-compete agreement of $ 330,000 .

The weighted average life of the acquired identifiable intangible assets subject to amortization was estimated at 10 years at the time of acquisition.

All of the goodwill arising as a result of the acquisition is deductible for tax purposes.

The allocation of the purchase price to the assets acquired and liabilities assumed of Garvey is not complete as of March 31, 2022 as the Company is continuing to gather information regarding Garvey's contingent liabilities and intangible assets.

The preliminary assignment of purchase consideration to the assets acquired and liabilities assumed is as follows (in thousands):

Working Capital 1,709

Property, plant, and equipment, net 3,072

Intangible assets 21,350

Other assets 1,382

Other liabilities ( 1,905 )

Goodwill 41,216

Total $ 67,731

As part of its Blueprint for Growth 2.0 strategy, the Company is consolidating its manufacturing footprint.

The Company previously announced in fiscal 2019 the closure of its Salem, Ohio facility.

In fiscal 2020 the Company announced its plans to consolidate its hoist manufacturing facility in Lisbon, Ohio with its Wadesboro, North Carolina and Damascus, Virginia facilities in fiscal 2021.

The Salem, Ohio facility consolidation was completed during the first quarter of fiscal 2020 and the Lisbon, Ohio consolidation was completed during the third quarter of fiscal 2021.

In total $ 1,797,000 and $ 2,958,000 are included in Cost of products sold on the Consolidated Statements of Operations during the twelve months ended March 31, 2021 and 2020 respectively, related to the consolidation of the Salem and Lisbon facilities.

During fiscal 2022, the Company sold its former manufacturing facility in Lisbon, Ohio for $ 461,000 .

This resulted in a gain of $ 375,000 which is included in Cost of products sold on the Consolidated Statements of Operations.

Further, the Company closed one of its facilities located in France and consolidated these operations into one of its German facilities during fiscal 2021.

COLUMBUS McKINNON CORPORATION

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Other performance obligations included in a contract (such as drawings, owner’s manuals, and training services) are immaterial in the context of the contract and are not recognized as a separate performance obligation.

Reconciliation of contract balances

COLUMBUS McKINNON CORPORATION

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(tabular amounts in thousands, except share data)

Reconciliation of contract balances

The Company records a contract liability when cash is received prior to recording revenue.

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Other revenue recognized from customer advances ( 43,569 ) ( 21,177 )

Customer advances recorded from Dorner and Garvey acquisitions 14,750 —

Other (1) ( 578 ) 735

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In accordance with ASC 606, the Company is required to disaggregate revenue into categories that depict how economic factors affect the nature, amount, timing and uncertainty of revenue and cash flows.

The following table illustrates the disaggregation of revenue by product grouping for the year ending March 31, 2021 (in thousands):

The following table illustrates the disaggregation of revenue by product grouping for the years ending March 31, 2022 and 2021 (in thousands):

Twelve Months Ended Twelve Months Ended

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Crane Solutions 339,400 298,135

Precision Conveyors Products 144,587 —

Engineered Products 87,604 79,989

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Crane solutions products include:

wire rope hoists, drives and controls, crane kits and components, and workstations.

wire rope hoists, drives and controls, crane kits and

COLUMBUS McKINNON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(tabular amounts in thousands, except share data)

components, and workstations.

Engineered products include:

linear and mechanical actuators, lifting tables, rail projects, and actuations systems.

Precision conveyor products include:

low profile, flexible chain, large scale, sanitary and vertical elevation conveyor systems, as well as pallet system conveyors and accumulation systems.

The All other product grouping includes miscellaneous revenue.

Practical expedients

COLUMBUS McKINNON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(tabular amounts in thousands, except share data)

Incremental costs to obtain a contract incurred by the Company primarily relate to sales commissions for contracts with a duration of one year or less.

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Accounts Receivable:

In June 2016, the FASB issued ASU No.

2016-13, “Financial Instruments - Credit Losses (Topic 326):

Effective April 1, 2020, the Company adopted “Financial Instruments - Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”).

The standard changes the methodology for measuring credit losses on financial instruments and the timing of when such losses are recorded.

The Company adopted this standard effective April 1, 2020 under the modified retrospective method whereas comparative period information is not restated.

The adoption of this standard did not have a significant impact on the Company’s consolidated financial statements, therefore no cumulative effect or catch up adjustment to the opening balance of retained earnings was recorded.

Additionally, the Company identified and implemented appropriate changes to its allowance for doubtful accounts policy and internal controls to support reporting and disclosures.

Under ASU 2016-13, the Company is required to remeasure expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions and reasonable forecasts.

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In response to COVID-19, the Company continues to monitor the impact that COVID-19 is having on our customers and their outstanding receivable balances and is taking preventative measures, such as reducing credit limits and increasing bad debt expense, as necessary

The following table illustrates the balance and related activity for the allowance for doubtful accounts that is deducted from accounts receivable to present the net amount expected to be collected in the twelve months ending March 31, 2021 (in thousands):

Allowance for doubtful accounts March 31, 2021

The following table illustrates the balance and related activity for the allowance for doubtful accounts that is deducted from accounts receivable to present the net amount expected to be collected in the year ending March 31, 2022 and March 31, 2021 (in thousands):

Allowance for doubtful accounts March 31, 2022 March 31, 2021

April 1, beginning balance $ 5,686 $ 5,056

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Less uncollectible accounts written off, net of recoveries ( 1,955 ) ( 1,973 )

Allowance recorded from acquisitions 227 —

Other (1) ( 170 ) 192

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ASC Topic 820-10-35-37 establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available.

Observable inputs are inputs that market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the Company.

Unobservable inputs are inputs that reflect the Company's assumptions about the valuation techniques that market participants would use in pricing the asset or liability developed based on the best

Observable inputs are inputs that market participants would use in pricing the asset or liability developed based on market data

COLUMBUS McKINNON CORPORATION

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(tabular amounts in thousands, except share data)

information available in the circumstances.

obtained from sources independent of the Company.

Unobservable inputs are inputs that reflect the Company's assumptions about the valuation techniques that market participants would use in pricing the asset or liability developed based on the best information available in the circumstances.

The hierarchy is separated into three levels based on the reliability of inputs as follows:

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Cross currency swap liability ( 13,895 ) — ( 13,895 ) —

Cross currency swap asset 1,750 — 1,750 —

Disclosed at fair value:

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Fiscal 2022 Non-Recurring Measurements

There were no assets and liabilities measured at fair value on a non-recurring basis in Fiscal 2021.

Assets and liabilities that were measured on a non-recurring basis during fiscal 2022 include assets and liabilities acquired in connection with the acquisitions of Dorner on April 7, 2021 and Garvey on December 1, 2021, described in Note 3.

The estimated fair values allocated to the assets acquired and liabilities assumed relied upon fair value measurements based primarily on Level 3 inputs.

The valuation techniques used to allocate fair values to working capital items;

property, plant, and equipment;

and identifiable intangible assets included the cost approach, market approach, and other income approaches.

For identifiable intangible assets these techniques included the multi-period excess earnings approach, the relief from royalty approach, and other income approaches.

The valuation techniques relied on a number of inputs which included the cost and condition of property, plant, and equipment and forecasted net sales and income.

For the Dorner acquisition, significant valuation inputs included an attrition rate of 10.0 % for customer relationships, an estimated royalty rate of 5.0 % for technology, a royalty rate of 1.0 % for trademark and trade names, and a weighted average cost of capital of 11.0 %.

For the Garvey acquisition, significant valuation inputs included an attrition rate of 33.0 % for customer relationships, an estimated engineering cost per hour of $ 37.50 for engineered drawings, royalty rates ranging from 0.75 % to 1.5 % for trademarks and trade names, a royalty rate of 4.5 % for patents, and a weighted average cost of capital of 13.6 %.

Fiscal 2021 Non-Recurring Measurements

The fair value of the net assets of the Company’s Rest of Products and Duff-Norton reporting units were calculated on a non-recurring basis in fiscal 2020.

These measurements have been used to quantitatively test goodwill for impairment on an annual basis under the provisions of ASC Topic 350-20-35-1 “Intangibles, Goodwill and Other – Goodwill Subsequent Measurement.” In fiscal 2021, the qualitative approach was used to determine if goodwill and indefinite-lived trademarks were impaired, and therefore, no non-recurring fair value measures were required in the analysis.

The fiscal 2020 goodwill impairment test consisted of determining the fair values of the Rest of Products and Duff-Norton reporting units on a quantitative basis.

The fair value for the Company’s reporting units cannot be determined using readily available quoted Level 1 inputs or Level 2 inputs that are observable in active markets.

Therefore, the Company used a blended discounted cash flow and market-based valuation model to estimate the fair value using Level 3 inputs.

To estimate the fair values of the Rest of Products and Duff-Norton reporting units, the Company used significant estimates and judgmental factors.

The key estimates and factors used in the discounted cash flow valuation include revenue growth rates and profit margins based on internal forecasts, terminal value, and the weighted-average cost of capital used to discount future cash flows.

The estimates used are disclosed below:

There were no assets and liabilities measured at fair value on a non-recurring basis in Fiscal 2021.

COLUMBUS McKINNON CORPORATION

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(tabular amounts in thousands, except share data)

Rest of Products Reporting Unit Duff-Norton Reporting Unit

Compound annual growth rate 1.91 % 5.68 %

Terminal value growth rate 3.0 % 3.5 %

Weighted-average cost of capital 11.7 % 12.2 %

We further test our indefinite-lived intangible asset balance of $ 47,857,000 consisting of trademarks on our recent acquisitions on an annual basis for impairment.

The methodology used to value trademarks is the relief from royalty method.

The recorded book value of these trademarks in excess of the calculated fair value results in impairment.

The key estimate used in this calculation consists of an overall royalty rate applied to the sales covered by the trademark.

After performing this analysis, we determined that the fair value of these trademarks exceeded their book values, and as such, other impairment was recorded.

Inventories consisted of the following:

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Net inventories $ 172,139 $ 111,488

There were LIFO liquidations resulting in $ 1,640,000 and $ 2,805,000 of additional income in fiscal 2021 and 2020 income, respectively.

The acquisitions of Dorner and Garvey contributed $ 19,941,000 and $ 4,470,000 , respectively, to the increase in inventory since March 31, 2021.

There were LIFO liquidations resulting in $ 620,000 and $ 1,640,000 of additional income in fiscal 2022 and 2021, respectively.

Marketable Securities and Other Investments

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The Company's marketable securities are recorded at their fair value, with unrealized changes in market value realized within Investment (income) loss on the Consolidated Statements of Operations.

The impact on earnings for unrealized gains and losses was a gain of $ 727,000 , a loss of $ 143,000 , and a loss of $ 183,000 in fiscal years 2021, 2020, and 2019, respectively.

The impact on earnings for unrealized gains and losses was a loss of $ 370,000 , a gain of $ 727,000 , and a loss of $ 143,000 in fiscal years 2022, 2021, and 2020, respectively.

Consistent with prior periods, the estimated fair value is based on quoted prices at the balance sheet dates.

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The marketable securities are not available for general working capital purposes.

Net realized gains related to sales of marketable securities were $ 85,000 , $ 50,000 , and $ 201,000 in fiscal years 2021, 2020, and 2019, respectively, and are included in Investment (income) loss in the Consolidated Statements of Operations.

Net realized gains related to sales of marketable securities were no t material in fiscal 2022.

They were $ 85,000 , and $ 50,000 in fiscal years 2021 and 2020, respectively, and are included in Investment (income) loss in the Consolidated Statements of Operations.

The Company owns a 49 % ownership interest in Eastern Morris Cranes Company Limited ("EMC"), a limited liability company organized and existing under the laws and regulations of the Kingdom of Saudi Arabia.

The Company's ownership

The Company's ownership represents an equity investment in a strategic customer of STAHL serving the Kingdom of Saudi Arabia.

The investment's carrying value is presented in Other assets in the Consolidated Balance Sheets in the amount of $ 2,765,000 and $ 3,040,000 as of March 31, 2022 and March 31, 2021, respectively, and has been accounted for as an equity method investment.

The investment value was increased for the Company's ownership percentage of income earned by EMC in the amount of $ 212,000 and $ 715,000 in the twelve months ended March 31, 2022 and March 31, 2021, respectively, and is recorded in Investment (income) loss on the Consolidated Statement of Operations.

Additionally, the investment value decreased in the amount of $ 163,000 and increased in the amount of $ 213,000 due to the effect of currency translation in the twelve months ended March 31, 2022 and March 31, 2021, respectively.

Further, in the twelve months ended March 31, 2022 and March 31, 2021, EMC distributed cash dividends which the Company received 49 % of pursuant to its ownership interest.

The investment value was decreased for the Company's share of EMC's cash dividend in the amount of $ 324,000 and $ 1,290,000 in the twelve months ended March 31, 2022 and March 31, 2021, respectively, as they were determined to be a return of the Company's investment.

Dividends are included in investing activities on the Consolidated Statements of Cash Flows in the amount of

COLUMBUS McKINNON CORPORATION

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(tabular amounts in thousands, except share data)

represents an equity investment in a strategic customer of STAHL serving the Kingdom of Saudi Arabia.

The investment's carrying value is presented in Other assets in the Consolidated Balance Sheets in the amount of $ 3,040,000 and $ 3,402,000 as of March 31, 2021 and March 31, 2020, respectively, and has been accounted for as an equity method investment.

The investment value was increased for the Company's ownership percentage of income earned by EMC in the amount of $ 715,000 and $ 778,000 in the twelve months ended March 31, 2021 and March 31, 2020, respectively, and is recorded in Investment (income) loss on the Consolidated Statement of Operations.

Additionally, the investment value increased in the amount of $ 213,000 due to the effect of currency translation.

Further, in the twelve months ended March 31, 2021, EMC distributed a cash dividend which the Company received 49 % of pursuant to its ownership interest.

The investment value was decreased for the Company's share of EMC's cash dividend in the amount of $ 1,290,000 in the twelve months ended March 31, 2021 as it was determined to be a return of the Company's investment.

A portion of the dividend is included in investing activities on the Consolidated Statements of Cash Flows in the amount of $ 587,000 , to the extent the distribution received exceeded cumulative equity in earnings, under the cumulative earnings approach.

$ 324,000 and $ 587,000 in the twelve months ended March 31, 2022 and March 31, 2021, respectively, as the distribution exceeded cumulative equity in earnings, under the cumulative earnings approach.

The balance of the cash dividend is included in operating activities on the Consolidated Statement of Cash Flows under the cumulative earnings approach.

9 unchanged sentences

Net property, plant, and equipment $ 97,926 $ 74,753

The acquisitions of Dorner and Garvey contributed $ 23,387,000 and $ 2,955,000 , respectively, to the increase in property, plant, and equipment since March 31, 2021.

Depreciation expense was $ 16,639,000 , $ 15,530,000 , and $ 16,184,000 for the years ended March 31, 2022, 2021, and 2020, respectively.

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The Company’s reporting units identified under ASC Topic 350-20-35-33 are at the component level, or one level below the operating segment level as defined under ASC Topic 280-10-50-10 “Segment Reporting – Disclosure.” The Company has two reporting units as of March 31, 2021, both of which have goodwill.

The Duff-Norton reporting unit (which designs, manufactures, and sources mechanical and electromechanical actuators and rotary unions) had goodwill of $ 9,699,000 and $ 9,593,000 at March 31, 2021 and 2020, respectively, and the Rest of Products reporting unit (representing the hoist, chain, and forgings, digital power control systems, and distribution businesses) had goodwill of $ 321,477,000 and $ 310,086,000 at March 31, 2021 and 2020, respectively.

The Company’s reporting units identified under ASC Topic 350-20-35-33 are at the component level, or one level below the operating segment level as defined under ASC Topic 280-10-50-10 “Segment Reporting – Disclosure.” The Company has three reporting units as of March 31, 2022 and two reporting units as of March 31, 2021.

The new reporting unit, Precision Conveyance, was established as a result of the Dorner acquisition in fiscal 2022.

The Duff-Norton reporting unit (which designs, manufactures, and sources mechanical and electromechanical actuators and rotary unions) had goodwill of $ 9,699,000 at March 31, 2022 and 2021, respectively.

The Rest of Products reporting unit (representing the hoist, chain, and forgings, digital power control systems, and distribution businesses) had goodwill of $ 310,793,000 and $ 321,477,000 at March 31, 2022 and 2021, respectively.

The Precision Conveyance reporting unit (which represents high-precision conveying systems) had goodwill of $ 328,357,000 at March 31, 2022.

The goodwill associated with the acquisition of Garvey, as described in Note 3, is included the Precision Conveyance reporting unit.

COLUMBUS McKINNON CORPORATION

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We performed the qualitative assessment as of February 28, 2021 and determined that it is not more likely than not that the fair value of the Rest of Products and Duff-Norton reporting units are less than their carrying value.

We performed the qualitative assessment as of February 28, 2022 and determined that it is not more likely than not that the fair value of the Rest of Products, Duff-Norton and Precision Conveyance reporting units are less than their carrying value.

Further, other economic and business factors do not indicate that the fair value of our reporting units have declined since the last quantitative test.

As a result, the quantitative goodwill impairment test was not required for the Rest of Products and Duff-Norton reporting units.

As a result, the quantitative goodwill impairment test was not required for the Rest of Products, Duff-Norton and Precision Conveyance reporting units.

In accordance with ASC Topic 350-30-35, indefinite-lived intangible assets that are not subject to amortization shall be tested for impairment annually or more frequently if events or circumstances indicate that it is more likely than not that an asset is impaired.

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Balance at March 31, 2021

Acquisition of Dorner (Refer to Note 3) 287,141

Acquisition of Garvey (Refer to Note 3) 41,216

Currency translation ( 10,684 )

Balance at March 31, 2022

Goodwill is recognized net of accumulated impairment losses of $ 113,174,000 as of both March 31, 2021 and 2020.

There were no goodwill impairment losses recorded in fiscal 2021 and fiscal 2020, and $ 6,174,000 recorded in 2019, respectively.

The goodwill impairment in fiscal 2019 was the result of classifying a business as held for sale.

The held for sale classification required the Company to assign a portion of goodwill from the Rest of Products reporting unit to the held for sale business based on its relative fair value and to record the assets and liabilities of the businesses held for sale at the lower of its carrying amount or fair value less cost to sell.

Based on this analysis, the Company recorded a $6,174,000 goodwill impairment charge at the time the business was classified as held for sale.

Identifiable intangible assets at March 31, 2021 are summarized as follows (in thousands):

Goodwill is recognized net of accumulated impairment losses of $ 113,174,000 as of both March 31, 2022 and 2021, respectively.

Identifiable intangible assets acquired in a business combination are amortized over their estimated useful lives.

COLUMBUS McKINNON CORPORATION

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(tabular amounts in thousands, except share data)

Identifiable intangible assets at March 31, 2022 are summarized as follows (in thousands):

Amount Accumulated

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Total amortization expense was $ 25,283,000 , $ 12,623,000 , and $ 12,942,000 for fiscal 2022, 2021, and 2020, respectively.

The increase in amortization expense is the result of the Dorner and Garvey acquisitions and related intangible assets acquired.

Based on the current amount of intangible assets, the estimated amortization expense for each of the succeeding five years is expected to be approximately $ 26,600,000 .

On April 7, 2021, the Company completed the acquisition of Dorner.

The Company expects the acquisition to result in a material amount of goodwill and other intangible assets.

Please refer to Note 3 for additional details on this acquisition.

Derivative Instruments

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This intercompany loan is related to the acquisition of STAHL.

As of March 31, 2021, the notional amount of this derivatives was $ 159,520,000 , and the contract matures on January 31, 2022.

As of March 31, 2022, the notional amount of this derivative was $ 137,650,000 , and the contract matures on March 31, 2028.

During fiscal 2022, the Company modified the cross currency swap by extending it to fiscal year 2028, matching the intercompany loan.

The Company has concluded that the transaction to modify the cross currency swap, as well as the modified swap, maintained hedge accounting.

The modified cross currency swap is considered to have an other than insignificant financing element.

As such, its cash flows are classified within financing activities in the Statement of Cash Flows.

From its March 31, 2022 balance of AOCL, the Company expects to reclassify approximately $ 128,000 out of AOCL, and into foreign currency exchange loss (gain), during the next 12 months based on the contractual payments due under this intercompany loan.

The Company has foreign currency forward agreements that are designated as cash flow hedges to hedge a portion of forecasted inventory purchases denominated in foreign currencies.

The notional amount of those derivatives is $ 6,457,000 and all contracts mature by March 31, 2022.

From its March 31, 2021 balance of AOCL, the Company expects to reclassify approximately $ 57,000 out of AOCL during the next 12 months based on the underlying transactions of the sales of the goods purchased.

As of March 31, 2022, the notional amount of these derivatives was $ 6,959,000 , and all contracts mature by March 31, 2023.

From its March 31, 2022 balance of AOCL, the Company expects to reclassify approximately $ 191,000 out of AOCL during the next 12 months based on the expected sales of the goods purchased.

The Company's policy is to maintain a capital structure that is comprised of 50-70% of fixed rate long-term debt and 30-50% of variable rate long-term debt.

The Company has two interest rate swap agreements in which the Company receives interest at a variable rate and pays interest at a fixed rate.

The Company has three interest rate swap agreements in which the Company receives interest at a variable rate and pays interest at a fixed rate.

The third interest rate swap agreement was entered into in fiscal year 2022 as a result of the additional debt from the Dorner and Garvey acquisitions.

These interest rate swap agreements are designated as cash flow hedges to hedge changes in interest expense due to changes in the variable interest rate of the senior secured term loan.

The amortizing interest rate swaps mature by December 31, 2023 and had a total notional amount of $ 119,820,000 as of March 31, 2021.

The amortizing interest rate swaps mature by February 28, 2025 and had a total notional amount of $ 300,747,000 as of March 31, 2022.

The effective portion of the changes in fair values of the interest rate swaps is reported in AOCL and will be reclassified to interest expense over the life of the swap agreements.

From its March 31, 2022 balance of AOCL, the Company expects to reclassify approximately $ 389,000 out of AOCL, and into interest expense, during the next 12 months.

The following is the effect of derivative instruments on the consolidated statements of operations for the years ended March 31, 2021, 2020, and 2019 (in thousands):

COLUMBUS McKINNON CORPORATION

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(tabular amounts in thousands, except share data)

The following is the effect of derivative instruments on the consolidated statements of operations for the years ended March 31, 2022, 2021, and 2020 (in thousands):

Derivatives Designated as Cash Flow

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Hedging Instruments Balance Sheet Location 2022 2021

Foreign exchange contracts Prepaid expenses and other $ — $ 318

Foreign exchange contracts Accrued Liabilities $ ( 217 ) $ ( 83 )

Interest rate swap Prepaid expenses and other 859 —

Interest rate swap Other Assets 4,512 —

Interest rate swap Accrued Liabilities ( 1,371 ) ( 1,185 )

Interest rate swap Other non current liabilities ( 387 ) ( 872 )

Cross currency swap Prepaid expenses and other — 1,750

Cross currency swap Accrued liabilities ( 170 ) ( 13,895 )

23 unchanged sentences

$ 192,610 $ 191,920

For the year ended March 31, 2021, the Accrued general and product liability costs are presented gross of estimated recoveries of $ 8,052,000 .

For the years ended March 31, 2022 and March 31, 2021, the Accrued general and product liability costs are presented gross of estimated recoveries of $ 9,160,000 and $ 8,052,000 , respectively.

Refer to Note 16 for additional information.

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On January 31, 2017 the Company entered into a Credit Agreement ("Credit Agreement") and $ 545,000,000 of debt facilities ("Facilities") in connection with the STAHL acquisition.

The Facilities consist of a Revolving Facility ("Revolver") in the

The Facilities consist of a Revolving Facility ("Revolver") in the amount of $ 100,000,000 and a $ 445,000,000 1st Lien Term Loan ("Term Loan").

The Term Loan had a seven -year term maturing in 2024.

On August 26, 2020, the Company entered into a Second Amendment to the Credit Agreement (as amended by the First Amended Credit Agreement, dated as of February 26, 2018).

The Second Amended Credit Agreement extended the $ 100,000,000 secured Revolver which was originally set to expire on January 31, 2022 to August 25, 2023.

COLUMBUS McKINNON CORPORATION

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(tabular amounts in thousands, except share data)

amount of $ 100,000,000 and a $ 445,000,000 1st Lien Term Loan ("Term Loan").

The Term Loan has a seven -year term maturing in 2024.

On February 26, 2018, the Company amended the Credit Agreement (known as the "First Amended Credit Agreement").

The First Amended Credit Agreement has the same terms mentioned above except for a reduction in interest rates.

The applicable rate for the repriced term loan was reduced from 3.00 % to 2.50 %.

The Company accounted for the First Amended Credit Agreement as a debt modification, therefore, debt repricing fees incurred in fiscal 2018 were expensed as General and Administrative expenses and the deferred financing fees incurred as part of the Credit Agreement (discussed below) remain unchanged.

On August 26, 2020, the Company entered into a Second Amendment (known as the "Second Amended Credit Agreement") to the Credit Agreement (as amended by the First Amended Credit Agreement).

The First Amended Credit Agreement extends the $ 100,000,000 secured Revolver which was originally set to expire on January 31, 2022 to August 25, 2023.

At March 31, 2021 the Company has not drawn from the Revolver.

The key terms of the agreement are as follows:

An aggregate $ 445,000,000 1st Lien Term Loan which requires quarterly principal amortization of 0.25% with the remaining principal due at maturity date.

In addition, if the Company has Excess Cash Flow ("ECF") as defined in the Credit Agreement, the ECF Percentage of the Excess Cash Flow for such fiscal year minus optional prepayment of the Loans (except prepayments of Revolving Loans that are not accompanied by a corresponding permanent reduction of Revolving Commitments) pursuant to Section 2.10(a) of the Credit Agreement other than to the extent that any such prepayment is funded with the proceeds of Funded Debt, shall be applied toward the prepayment of the Term Loan.

The ECF Percentage is defined as 50% stepping down to 25% or 0% based on the Secured Leverage Ratio as of the last day of the fiscal year.

As discussed in Note 3, the Company completed its acquisition of Dorner on April 7, 2021 and entered into a $ 750,000,000 First Lien Facility with JPMorgan Chase Bank, PNC Capital Markets LLC, and Wells Fargo Securities LLC.

The First Lien Facilities consist of a Revolving Facility in an aggregate amount of $ 100,000,000 and a $ 650,000,000 Bridge Facility.

In addition to the debt borrowing described above, the Company commenced and completed an underwritten public offering of 4,312,500 shares of its common stock at a price of $ 48.00 per share for total gross proceeds of $ 207,000,000 .

The Company used all of the net proceeds from the equity offering to repay part of its outstanding borrowings under its Bridge Facility.

The equity offering closed on May 4, 2021.

Following the repayment of outstanding borrowings under the Bridge Facility, the Bridge Facility was refinanced with a syndicated Term Loan B facility on May 14, 2021.

The key terms of the Term Loan B facility are as follows:

1) Term Loan B:

An aggregate $ 450,000,000 Term Loan B facility, which requires quarterly principal amortization of 0.25% with the remaining principal due at the maturity date.

In addition, if the Company has Excess Cash Flow (ECF) as defined in the Credit Agreement for the First Lien Facility (the “Credit Agreement”), the ECF Percentage of the Excess Cash Flow for each fiscal year minus optional prepayments of the Loans (except prepayments of Revolving Loans that are not accompanied by a corresponding permanent reduction of Revolving Commitments) pursuant to Section 2.10(a) of the Credit Agreement other than to the extent that any such prepayment is funded with the proceeds of Funded Debt, shall be applied toward the prepayment of the Term Loan B facility.

The ECF Percentage is defined as 50% stepping down to 25% or 0% based on the achievement of specified Secured Leverage Ratios as of the last day of such fiscal year.

Further, the Company may draw additional Incremental Facilities (referred to as an "Accordion") by executing and delivering to JPMorgan Chase Bank, N.A.

an Increased Facility Activation Notice specifying the amount of such increase requested.

Lenders shall have no obligation to participate in any increase unless they agree to do so in their sole discretion.

3) Fees and Interest Rates:

Commitment fees and interest rates are determined on the basis of either a Eurocurrency rate or a Base rate plus an applicable margin based upon the Company's Total Leverage Ratio (as defined in the Credit Agreement).

4) Prepayments:

Provisions permitting a Borrower to voluntarily prepay either the Term Loan or Revolver in whole or in part at any time, and provisions requiring certain mandatory prepayments of the Term Loan or Revolver on the occurrence of certain events which will permanently reduce the commitments under the Credit Agreement, each without premium or penalty, subject to reimbursement of certain costs of the Lenders.

A prepayment premium of 1% of the principal amount of the First Lien Term Loans is required if the prepayment is associated with a Repricing Transaction and it were to occur within the first twelve months.

Provisions containing covenants required of the Corporation and its subsidiaries including various affirmative and negative financial and operational covenants.

The key financial covenant is triggered only on any date when any Extension of Credit under the Revolving Facility is outstanding (excluding any Letters of Credit) (the “Covenant Trigger”), and permits the Total Leverage Ratio for the Reference Period ended on such date to not exceed (i) 4.50:1.00 as of any date of determination prior to December 31, 2017, (ii) 4.00:1.00 as of any date of determination on December 31, 2017 and thereafter but prior to December 31, 2018, (iii) 3.50:1.00 as of any date of determination on December 31, 2018 and thereafter but prior to December 31, 2019 and (iv) 3.00:1.00 as of any date of determination on December 31, 2019 and thereafter.

As there is no amount drawn on the Revolver as of March 31, 2021 the requirement to comply with the covenant is not triggered.

Had we been required to determine the covenant ratio we would have been in compliance with the covenant provisions as of March 31, 2021 and 2020.

The Facility is secured by all U.S.

inventory, receivables, equipment, real property, certain subsidiary stock (limited to 65% of non-U.S.

subsidiaries) and intellectual property.

The Credit Agreement allows the declaration of dividends, but limits our ability to pay dividends.

Provisions permitting a Borrower to voluntarily prepay either the Term Loan B facility or Revolver in whole or in part at any time, and provisions requiring certain mandatory prepayments of the Term Loan B facility or Revolver on the occurrence of certain events which will permanently reduce the commitments under the Credit Agreement, each without premium or penalty, subject to reimbursement of certain costs of the Lenders.

5) Covenants:

Provisions containing covenants required of the Company and its subsidiaries including various affirmative and negative financial and operational covenants.

The key financial covenant is triggered only on any date when any Extension of Credit under the New Revolving Credit Facility is outstanding (excluding any Letters of Credit) (the “Covenant Trigger”), and prohibits the Total Leverage Ratio for the Reference Period ended on such date from exceeding (i) 6.75:1.00 as of any date of determination prior to June 30, 2021, (ii) 5.50:1.00 as of any date of determination on June 30, 2021 and thereafter but prior to June 30, 2022, (iii) 4.50:1.00 as of any date of determination on June 30, 2022 and thereafter but prior to June 30, 2023 and (iv) 3.50:1.00 as of any date of determination on June 30, 2023 and thereafter.

6) Collateral:

Obligations under the First Lien Facilities are secured by liens on substantially all assets of the Company and its material domestic subsidiaries.

In fiscal 2022, the Company incurred $ 14,803,000 in debt extinguishment costs of which $ 5,946,000 relates to the Company's prior Term Loan, $ 326,000 relates to the Company's prior Revolver, and $ 8,531,000 relates to fees paid on the portion of the First Lien Facilities that were associated with the Bridge Facility, all of which were incurred in the first quarter of fiscal 2022.

These costs are classified as Cost of debt refinancing in the Condensed Consolidated Statements of Operations.

COLUMBUS McKINNON CORPORATION

1 unchanged sentence

(tabular amounts in thousands, except share data)

The First Lien Facilities consist of a Revolving Facility in an aggregate amount of $ 100,000,000 and a $ 650,000,000 First Lien Term Facility (Bridge Facility).

The Company subsequently used proceeds from an equity offering to repay $ 198,720,000 of the Bridge Facility.

The Bridge Facility was refinanced and replaced with a Term Loan B facility.

Refer to Note 3 for key terms of the credit agreement which go into effect in fiscal 2022.

The outstanding balance of the Term Loan was $ 254,900,000 and $ 259,350,000 as of March 31, 2021 and 2020, respectively.

The Company made $ 4,450,000 of principal payment on the Term Loan during fiscal 2021 and $ 51,113,000 of principal payment on the Term Loan during fiscal 2020.

The Company is obligated to make $ 4,450,000 of principal payments over the next 12 months.

As previously discussed, in response to COVID-19 the Company took all appropriate measures to protect the cash flow and liquidity of the Company.

As such, only the required principal amount has been recorded within the current portion of long-term debt on the Company's Consolidated Balance Sheet with the remaining balance recorded as long-term debt.

There was $ 0 outstanding on the Revolving Credit Facility and $ 17,302,000 outstanding letters of credit as of March 31, 2021.

Further, in the first quarter of fiscal 2022, the Company recorded $ 5,432,000 in deferred financing costs on the First Lien Term Facility, which will be amortized over seven years.

The Company recorded $ 4,027,000 in deferred financings costs on the New Revolving Credit Facility, of which $ 3,050,000 is related to the New Revolving Credit Facility and $ 977,000 is carried over from the Company's prior Revolver as certain Revolver lenders increased their borrowing capacity.

These balances will be amortized over five years and are classified in Other assets since no funds were drawn on the New Revolving Credit Facility.

Also discussed in Note 3, the Company completed its acquisition of Garvey on November 30, 2021 and borrowed additional funds in accordance with the Accordion feature under its existing Term Loan B to increase the principal amount of the Term Loan B facility by $ 75,000,000 .

Proceeds from the Accordion were used, among other things, to finance the purchase price for the Garvey acquisition, and pay related fees, expenses, and transaction costs.

No material amendment to the terms of the Term Loan B facility or the First Lien Facility was necessary for the Company to exercise this Accordion feature.

In the third quarter of fiscal 2022, the Company recorded $ 892,000 in deferred financing costs on the Accordion, which will be amortized over the remaining life of the Term Loan B.

The outstanding principal balance of the Term Loan B facility was $ 502,560,000 as of March 31, 2022, which includes $ 75,000,000 in principal balance from the Accordion exercised in the third quarter of fiscal 2022 and the outstanding balance of the Term Loan was $ 254,900,000 as of March 31, 2021.

The Company made $ 22,440,000 of principal payment on the Term Loan B during fiscal 2022 and $ 4,450,000 of principal payment on the Term Loan during fiscal 2021.

The Company is obligated to make $ 5,260,000 of principal payments on the Term Loan B facility over the next 12 months plus applicable ECF payments, if required, however, plans to pay down approximately $ 40,000,000 in principal payments in total during such 12 month period.

This amount has been recorded within the current portion of long term debt on the Company's Condensed Consolidated Balance Sheet with the remaining balance recorded as long term debt.

There were no outstanding borrowings and $ 17,151,000 outstanding letters of credit issued against the New Revolving Credit Facility as of March 31, 2022.

The outstanding letters of credit at March 31, 2022 consisted of $ 849,000 in commercial letters of credit and $ 16,302,000 of standby letters of credit.

The gross balance of deferred financing costs on the term loan was $ 14,690,000 as of March 31, 2021 and 2020.

The gross balance of deferred financing costs on the Term Loan B facility was $ 6,323,000 , which includes $ 892,000 from the Accordion exercise, as of March 31, 2022, and $ 14,690,000 on the prior Term Loan as of March 31, 2021, respectively.

The accumulated amortization balances were $ 898,000 and $ 8,744,000 as of March 31, 2022 and 2021, respectively.

The gross balance of deferred financing costs associated with the Revolving Credit Facility is included in Other assets is $ 3,615,000 as of March 31, 2021 and $ 2,789,000 as of March 31, 2020.

The gross balance of deferred financing costs associated with the New Revolving Credit Facility was $ 4,027,000 as of March 31, 2022 and the prior Revolver was $ 3,615,000 as of March 31, 2021, which are included in Other assets on the Condensed Consolidated Balance Sheet.

The accumulated amortization balance is $ 805,000 and $ 2,313,000 as of March 31, 2022 and March 31, 2021, respectively.

These balances are classified in Other assets since no funds were drawn on the Revolving Credit Facility as of March 31, 2021 and March 31, 2020.

The principal payments obligated to be made as of March 31, 2021 on the Term Loan are as follows:

The principal payments obligated to be made under the Term Loan B facility entered into during fiscal 2022 in connection with the Dorner acquisition are $ 4,500,000 per year, plus a required excess cash flow sweep as defined in the agreement.

The principal payments obligated to be made as of March 31, 2022 on the Term Loan B facility are as follows:

Thereafter 481,520

In connection with Dorner acquisition, the Company recorded a finance lease for a manufacturing facility in Hartland, WI under a 23 year lease agreement, which terminates in 2035.

The outstanding balance on the finance lease obligation is $ 14,084,000 as of March 31, 2022 of which $ 544,000 has been recorded within the Current portion of long term debt and the remaining balance recorded within Term loan and finance lease obligations on the Company's Condensed Consolidated Balance Sheet.

See Note 18, Leases , for further details.

COLUMBUS McKINNON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(tabular amounts in thousands, except share data)

Lines of Credit and Loans

5 unchanged sentences

The Company provides retirement plans, including defined benefit and defined contribution plans, and other postretirement benefit plans to certain employees.

The Company applies ASC Topic 715 “Compensation – Retirement Benefits,” which

COLUMBUS McKINNON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(tabular amounts in thousands, except share data)

required the recognition in pension and other postretirement benefits obligations and accumulated other comprehensive income of actuarial gains or losses, prior service costs or credits and transition assets or obligations that had previously been deferred.

The Company applies ASC Topic 715 “Compensation – Retirement Benefits,” which required the recognition in pension and other postretirement benefits obligations and accumulated other comprehensive income of actuarial gains or losses, prior service costs or credits and transition assets or obligations that had previously been deferred.

This statement also requires an entity to measure a defined benefit postretirement plan’s assets and obligations that determine its funded status as of the end of the fiscal year.

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The total settlement charge of $ 19,038,000 was recorded in Other (income) expense, net on the Statements of Operations during the twelve months ending March 31, 2021.

The remaining surplus of the terminated plan was $ 3,910,000 as of March 31, 2021 and will be used, as prescribed in the applicable regulations, to fund obligations associated with the Company's U.S.

defined contribution plans.

Amounts recognized in the consolidated balance sheets are as follows:

The remaining surplus of the terminated plan is $ 2,176,000 and

COLUMBUS McKINNON CORPORATION

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(tabular amounts in thousands, except share data)

$ 3,910,000 as of March 31, 2022 and 2021, respectively, and will be used, as prescribed in the applicable regulations, to fund obligations associated with the Company's U.S.

defined contribution plans.

Amounts recognized in the consolidated balance sheets are as follows:

Other assets $ 5,208 $ 427

3 unchanged sentences

Net amount recognized $ ( 55,759 ) $ ( 66,623 )

Other assets are presented separately from pension liabilities for pension plans that are overfunded.

Other assets are presented separately from pension liabilities for pension plans that are over funded.

Other assets decreased in the current year due to the pension settlement, described above.

22 unchanged sentences

Interest crediting rates used in cash balance pension plans 1.05 % 1.10 % 2.25 %

The expected rates of return on plan asset assumptions are determined considering long-term historical averages and real returns on each asset class.

COLUMBUS McKINNON CORPORATION

1 unchanged sentence

(tabular amounts in thousands, except share data)

The expected rates of return on plan asset assumptions are determined considering long-term historical averages and real returns on each asset class.

The Company’s retirement plan target and actual asset allocations are as follows:

4 unchanged sentences

Total plan assets 100 % 100 % 100 %

Investments allocated to fixed income decreased as of March 31, 2021 due to the pension settlement, described above, since the plan was fully funded and invested in fixed income securities.

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.

1 unchanged sentence

Within the table above, cash equivalents are categorized as fixed income as they earn lower returns than equity securities which includes alternative real estate funds (shown in the fair value tables below).

Subsequent to March 31, 2022, the Company amended the glide path for the Monthly Retirement Benefit plan ("MRB") as a result of its funded status.

The MRB plan’s assets of $ 146,592,000 are now allocated 81 % to fixed income securities and 19 % to equity securities.

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 plans to contribute the minimum amount required (approximately $ 5,215,000 ) to its pension plans in fiscal 2022 as a response to COVID-19 but will reassess later in the fiscal year and increase contributions if economic conditions improve.

The Company plans to contribute the minimum amount required (approximately $ 5,077,000 ) to its pension plans in fiscal 2023.

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

9 unchanged sentences

The life insurance plan is noncontributory.

COLUMBUS McKINNON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(tabular amounts in thousands, except share data)

The Company’s postretirement health benefit plans are not funded.

The following sets forth a reconciliation of benefit obligation and the funded status of the plan:

Change in benefit obligation:

Benefit obligation at beginning of year $ 1,887 $ 2,348

Interest cost 46 71

Actuarial gain ( 313 ) ( 340 )

Benefits paid ( 232 ) ( 192 )

Benefit obligation at end of year $ 1,388 $ 1,887

Funded status $ ( 1,388 ) $ ( 1,887 )

Unrecognized actuarial gain ( 1,467 ) ( 1,417 )

Net amount recognized $ ( 2,855 ) $ ( 3,304 )

Amounts recognized in the consolidated balance sheets are as follows:

Accrued liabilities $ ( 193 ) $ ( 270 )

Other non-current liabilities ( 1,195 ) ( 1,617 )

Accumulated other comprehensive gain, before tax ( 1,467 ) ( 1,417 )

Net amount recognized $ ( 2,855 ) $ ( 3,304 )

In fiscal 2021, net periodic postretirement benefit cost included the following:

Year Ended March 31,

2021 2020 2019

Interest cost $ 46 $ 71 $ 92

Net amortization ( 263 ) ( 205 ) ( 156 )

Net periodic postretirement benefit cost $ ( 217 ) $ ( 134 ) $ ( 64 )

For measurement purposes, healthcare costs are assumed to increase 6.00 % in fiscal 2022, grading down over time to 4.5 % in 2029.

The discount rate used in determining the accumulated postretirement benefit obligation was 2.52 % and 3.17 % as of March 31, 2021 and 2020, respectively.

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

2027-2031 454

The net periodic postretirement benefit cost for fiscal 2022 was $ 187,000 and the liability at March 31, 2022 is $ 1,196,000 with $ 1,013,000 included in Other non-current liabilities and $ 183,000 included in Accrued liabilities in the Consolidated Balance Sheet.

The Company has collateralized split-dollar life insurance arrangements with two of its former officers.

2 unchanged sentences

The net periodic pension cost for fiscal 2022 was $ 132,000 and the liability at March 31, 2022 is $ 4,645,000 with $ 4,452,000 included in Other non-current liabilities and $ 193,000 included in Accrued liabilities in the Consolidated Balance Sheet.

The cash surrender

The cash surrender value of the policies is $ 3,590,000 and $ 3,496,000 at March 31, 2022 and 2021, respectively.

The balance is included in Other assets in the consolidated balance sheet.

COLUMBUS McKINNON CORPORATION

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(tabular amounts in thousands, except share data)

value of the policies is $ 3,496,000 and $ 3,346,000 at March 31, 2021 and 2020, respectively.

The balance is included in Other assets in the consolidated balance sheet.

Other Benefit Plans

3 unchanged sentences

The Company recorded a charge for such contributions of approximately $ 4,540,000 , $ 4,063,000 , and $ 5,239,000 for the years ended March 31, 2022, 2021, and 2020, respectively which are included in Cost of Products Sold, Selling Expenses, and General and Administrative Expenses within the Consolidated Statements of Operations.

The Company expects its contributions for the defined contribution plans in future years to be higher than contributions in fiscal 2021 as the Company temporarily paused contributions to a portion of U.S.

employees' defined contributions plans in response to COVID-19.

In the first quarter of fiscal 2022 contributions have resumed.

Fair Values of Plan Assets

45 unchanged sentences

Fair value of Level 3 fixed income securities at the beginning of the year was $ 1,169,000 .

During fiscal 2021 fixed income securities earned investment return of $ 6,000 and had disbursements of $ 4,340,000 , which includes liquidations and termination of one of the Company's pension plans, resulting in an ending balance of $ 1,169,000 .

During fiscal 2022 fixed income securities earned investment return of $ 21,000 and had disbursements of $ 30,000 resulting in an ending balance of $ 1,160,000 .

These fixed income securities consist primarily of insurance contracts which are carried at their liquidation value based on actuarial calculations and the terms of the contracts.

27 unchanged sentences

The weighted-average common stock outstanding shown above is net of unallocated ESOP shares (see Note 14).

In fiscal 2022, the Company issued 4,312,500 shares of common stock raising $ 198,720,000 net of fees in connection with the Dorner acquisition which was completed in April.

In May of fiscal 2022, the Company issued 4,312,500 shares of common stock raising $ 198,705,000 net of fees in connection with the Dorner acquisition.

Refer to Note 3 for additional details of this transaction.

4 unchanged sentences

The total number of shares of common stock with respect to which awards may be granted under the 2016 LTIP were increased by 2,500,000 as a result of the June 2019 amendment.

Shares not previously authorized for issuance under any of the prior stock plans and any shares not issued or subject to outstanding awards under the prior stock plans are still available for issuance.

Shares not previously authorized for issuance under any of the prior stock plans, and shares not issued or subject to outstanding awards under the prior stock plans are still available for issuance.

Details of the shares granted under these plans are discussed below.

1 unchanged sentence

Stock based compensation expense was $ 11,246,000 , $ 8,022,000 , and $ 4,507,000 for fiscal 2022, 2021, and 2020, respectively.

The lower stock based compensation expense in fiscal 2020 is primarily related to shares that were forfeited when the Company's Chief Executive Officer (CEO) resigned on January 10, 2020.

The lower stock based compensation expense in fiscal 2020 is primarily related to shares that were forfeited when the Company's prior Chief Executive Officer (CEO) resigned on January 10, 2020.

The forfeiture resulted in the reversal of $ 1,981,000 in stock compensation expense during fiscal 2020 recorded as a reduction to General and administrative expenses.

4 unchanged sentences

The Company recognized compensation expense for stock option awards and unvested restricted share awards that vest based on time or market parameters straight-line over the requisite service period for vesting of the award.

Long Term Incentive Plan

COLUMBUS McKINNON CORPORATION

1 unchanged sentence

(tabular amounts in thousands, except share data)

Long Term Incentive Plan

Under the 2016 LTIP, t he total number of shares of common stock with respect to which awards may be granted under the plan is 2,500,000 in addition to shares not previously authorized for issuance under any of the prior stock plans and any shares not issued or subject to outstanding awards under the prior stock plans.

As of March 31, 2021, 2,252,000 shares remain for future grants.

As of March 31, 2022, 1,799,000 shares remain available for future grants.

The 2016 LTIP was designed as an omnibus plan and awards may consist of non-qualified stock options, incentive stock options, stock appreciation rights, restricted stock, restricted stock units, or stock bonuses.

6 unchanged sentences

Prior to fiscal 2021, options outstanding under the 2016 LTIP generally become exercisable over a 4-year period at a rate of 25 % per year commencing one year from the date of grant and have an exercise price of not less than 100 % of the fair market value of the common stock on the date of grant.

For fiscal 2021, options outstanding under the 2016 LTIP generally become exercisable over a 3-year period at a rate of 33% per year commencing one year from the date of grant and have an exercise price of not less than 100 % of the fair market value of the common stock on the date of grant.

For fiscal 2021 and fiscal 2022, options outstanding under the 2016 LTIP generally become exercisable over a 3-year period at a rate of 33 % per year commencing one year from the date of grant and have an exercise price of not less than 100 % of the fair market value of the common stock on the date of grant.

A summary of option transactions during each of the three fiscal years in the period ended March 31, 2022 is as follows:

3 unchanged sentences

Outstanding at April 1, 2019

834,777 23.52 7.04 $ 9,602

Granted 171,515 35.16

2 unchanged sentences

Outstanding at March 31, 2020

526,794 26.53 6.93 $ 1,518

Granted 242,178 26.74

2 unchanged sentences

Outstanding at March 31, 2021

657,814 27.45 7.29 $ 16,652

Granted 159,643 54.06

2 unchanged sentences

Outstanding at March 31, 2022

679,785 33.82 7.08 $ 15,294

Exercisable at March 31, 2022

322,218 $ 26.64 5.69 $ 10,190

The Company calculated intrinsic value for those options that had an exercise price lower than the market price of our common shares as of March 31, 2022.

18 unchanged sentences

$30.01 to $40.00 216,117 $ 34.79 7.09

$40.01 to $50.00 6,365 $ 49.36 9.13

$50.01 to $60.00 150,049 $ 54.26 9.04

679,785 $ 33.82 7.08

6 unchanged sentences

$30.01 to $40.00 111,122 35.73

$40.01 to $50.00 — —

$50.01 to $60.00 1,518 54.26

322,218 $ 26.64

5 unchanged sentences

The following table provides the weighted-average assumptions used to value stock options granted during fiscal 2022, 2021, and 2020:

2021 Year Ended

2020 Year Ended

Risk-free interest rate 0.35 % 0.23 % 2.23 %

3 unchanged sentences

To determine expected volatility, the Company uses historical volatility based on daily closing prices of its Common Stock over periods that correlate with the expected terms of the options granted.

The risk-free rate is based on the United States Treasury yield curve at the time of grant for the appropriate term of the options granted.

Expected dividends are based on the Company's history and expectation of dividend payouts.

The expected term of stock options is based on vesting schedules, expected exercise patterns and contractual terms.

The risk-free rate is based on the United States Treasury

COLUMBUS McKINNON CORPORATION

1 unchanged sentence

(tabular amounts in thousands, except share data)

yield curve at the time of grant for the appropriate term of the options granted.

Expected dividends are based on the Company's history and expectation of dividend payouts.

The expected term of stock options is based on vesting schedules, expected exercise patterns and contractual terms.

Restricted Stock Units

1 unchanged sentence

Prior to fiscal 2021, restricted stock units for employees vest ratably based on service one-quarter after each of years one, two, three, and four.

For fiscal 2021, restricted stock units for employees vest ratably based on service one-third after each of years one, two, and three.

For fiscal 2021 and 2022, restricted stock units for employees vest ratably based on service one-third after each of years one, two, and three.

A summary of the restricted stock unit awards granted under the Company’s LTIP plan as of March 31, 2022 is as follows:

2 unchanged sentences

Unvested at April 1, 2019

230,197 $ 30.22

Granted 151,351 38.40

2 unchanged sentences

Unvested at March 31, 2020

212,721 $ 35.20

Granted 195,181 29.16

2 unchanged sentences

Unvested at March 31, 2021

269,789 $ 32.41

Granted 133,082 49.98

2 unchanged sentences

Unvested at March 31, 2022

244,736 $ 39.86

Total unrecognized compensation cost related to unvested restricted stock units as of March 31, 2022 is $ 4,724,000 and is expected to be recognized over a weighted average period of 1.6 years.

4 unchanged sentences

This expense is recognized ratably over the three year period that these shares are restricted.

Fiscal 2018 performance shares granted vest pursuant to a performance condition based upon the Company’s Consolidated Net Sales.

During fiscal 2019, the Company determined that the fiscal year 2018 performance shares were earned based on the performance condition being met.

Fiscal 2019 performance shares granted vest pursuant to a performance condition based upon the Company’s Consolidated EBITDA margin for the twelve months ended March 31, 2020.

2 unchanged sentences

During fiscal 2021, the Company determined that this performance condition would not be met.

Fiscal 2021 performance shares granted vest pursuant to a performance condition based upon the Company’s Consolidated EBITDA margin for the twelve months ended March 31, 2023.

Fiscal 2021 performance shares granted vest pursuant to a performance condition based upon the Company’s Consolidated Return on Invested Capital ("ROIC") for the twelve months ended March 31, 2023.

At this time the Company believes the March 31, 2023 performance condition will be met.

Fiscal 2022 performance shares granted vest pursuant to a performance condition based upon the Company’s Consolidated ROIC for the twelve months ended March 31, 2024.

At this time the Company believes the March 31, 2024 performance condition will be met.

COLUMBUS McKINNON CORPORATION

5 unchanged sentences

Unvested at April 1, 2019

153,386 $ 23.11

Granted 38,585 37.67

1 unchanged sentence

Unvested at March 31, 2020

66,720 $ 32.36

Granted 83,164 25.97

Vested ( 23,201 ) 25.28

Forfeited ( 3,451 ) 25.28

Unvested at March 31, 2021

123,232 $ 29.58

Granted 41,322 52.01

2 unchanged sentences

Unvested at March 31, 2022

138,032 $ 35.35

The Company had $ 1,968,000 in unrecognized compensation costs related to the unvested performance share awards as of March 31, 2022.

13 unchanged sentences

Accrued general and product liability costs are actuarially estimated reserves based on amounts determined from loss reports, individual cases filed with the Company, and an amount for losses incurred but not reported.

The aggregate amounts of reserves were $ 21,227,000 (gross of estimated insurance recoveries of $ 8,052,000 ) and $ 11,944,000 of which $ 17,727,000 and $ 8,444,000 are included in Other non current liabilities and $ 3,500,000 in Accrued liabilities for both years as of March 31, 2021 and 2020, respectively.

The aggregate amounts of reserves were $ 22,575,000 (gross of estimated insurance recoveries of $ 9,160,000 ) and $ 21,227,000 (gross of estimated insurance recoveries of $ 8,052,000 ) of which $ 18,675,000 and $ 17,727,000 are included in Other non current liabilities and $ 3,900,000 and $ 3,500,000 in Accrued liabilities as of March 31, 2022 and 2021, respectively.

The liability for accrued general and product liability costs are funded by investments in marketable securities (see Notes 2 and 7).

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

COLUMBUS McKINNON CORPORATION

1 unchanged sentence

(tabular amounts in thousands, except share data)

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

Year Ended March 31,

10 unchanged sentences

These limits range from $ 2,000,000 to $ 6,000,000 for each policy year from inception through fiscal 2022.

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 utilizes an environmental auditing program for its 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 its 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 2021.

We have entered a voluntary environmental cleanup program in certain states where we operate and believe that our current reserves are sufficient to remediate these locations.

For all of the currently known environmental matters, we have accrued as of March 31, 2021, a total of $ 777,000 which, in our opinion, is sufficient to deal with such matters.

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 to have 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 2021.

The Company also purchases excess general and product liability insurance up to an aggregate $ 75,000,000 limit.

Like many industrial manufacturers, the Company is involved in asbestos-related litigation.

3 unchanged sentences

The Company will continue to study the variables in light of additional information in order to identify trends that may become evident and to assess their impact on the range of liability that is probable and estimable.

Based on actuarial information, the Company has estimated its asbestos-related aggregate liability including related legal costs to range between $ 5,400,000 and $ 9,700,000 , net of insurance recoveries, using actuarial parameters of continued claims for a period of 37 years from March 31, 2021.

Based on actuarial information, the Company has estimated its net asbestos-related aggregate liability including related legal costs to range between $ 5,800,000 and $ 10,600,000 , net of insurance recoveries, using actuarial parameters of continued claims for a period of 37 years from March 31, 2022.

The Company has estimated its asbestos-related aggregate liability that is probable and estimable, net of insurance recoveries, in accordance with U.S.

generally accepted accounting principles to be $ 6,956,000 .

The Company has reflected this liability gross of insurance recoveries of $ 8,052,000 as a liability in the consolidated financial statements as of March 31, 2021.

The recorded liability does not consider the impact of any potential favorable federal

COLUMBUS McKINNON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(tabular amounts in thousands, except share data)

generally accepted accounting principles approximates $ 7,836,000 .

The Company has reflected the liability gross of insurance recoveries of $ 9,160,000 as a liability in the consolidated financial statements as of March 31, 2022.

The recorded liability does not consider the impact of any potential favorable federal legislation.

This liability will fluctuate based on the uncertainty in the number of future claims that will be filed and the cost to resolve those claims, which may be influenced by a number of factors, including the outcome of the ongoing broad-based settlement negotiations, defensive strategies, and the cost to resolve claims outside the broad-based settlement program.

3 unchanged sentences

The Company had been engaged in a legal action against the insurance carriers for those policies to recover past expenses and future costs incurred.

The Company came to an agreement with the insurance carriers to settle its case against them for recovery of a portion of past and future asbestos-related legal defense costs.

The Company came to an agreement with the insurance carriers to settle its case against them for recovery of a portion of past costs and future costs for asbestos-related legal defense costs.

The agreement was finalized during the quarter ended September 30, 2020.

The terms of the settlement require the carriers to pay gross defense costs prior to retro-premiums of 65% for future asbestos-related defense costs subject to an annual cap of $ 1,650,000 for claims covered by the settlement.

The reimbursement net of retro-premiums is approximately 47% which resulted in a $ 1,830,000 increase to the Company's asbestos liability during the year ended March 31, 2021.

In addition, the insurance carriers are required to reimburse the Company for past defense costs through the date of the settlement amounting to $ 3,006,000 .

Of this amount, $ 2,842,000 has been paid prior to March 31, 2021 with the remaining expected to be paid in the next quarter.

The reimbursement for past cost is recorded net of a contingent legal fee of $ 1,500,000 which was paid in fiscal 2021.

Further, the insurance carriers accept 100% coverage for indemnity costs related to all covered cases.

The reimbursement net of retro-premiums is approximately 47% which resulted in a $ 1,830,000 increase to the Company's asbestos liability during the second quarter of fiscal 2021.

COLUMBUS McKINNON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(tabular amounts in thousands, except share data)

In addition, the insurance carriers were required to reimburse the Company for past defense costs through the date of the settlement amounting to $ 3,006,000 which was paid during the second quarter of fiscal 2021.

The reimbursement for past cost was recorded net of a contingent legal fee of $ 1,500,000 which was paid in the third quarter of fiscal 2021.

Further, the insurance carriers are expected to cover 100% of indemnity costs related to all covered cases.

Estimates of the future cost sharing have been included in the loss reserve calculation as of March 31, 2022 and 2021.

The Company has recorded a receivable for the estimated future cost sharing in Other assets in the Balance Sheet at March 31, 2021 in the amount of $ 8,052,000 , which offsets its asbestos reserves.

The Company has recorded a receivable for the estimated future cost sharing in Other assets in the Balance Sheet in the amount of $ 9,160,000 and $8,052,000, which offsets its asbestos reserves, at March 31, 2022 and 2021, respectively.

Product Liability

The Company is also involved in other unresolved legal actions that arise in the normal course of business.

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generally accepted accounting principles approximates $ 4,951,000 , which has been reflected as a liability in the consolidated financial statements as of March 31, 2022.

In some cases, we cannot reasonably estimate a range of loss because there is insufficient information regarding the matter.

In some cases, the Company cannot reasonably estimate a range of loss because there is insufficient information regarding the matter.

Management believes that the potential additional costs for claims will not have a material effect on the financial condition of the Company or its liquidity, although the effect of any future liabilities recorded could be material to earnings in a future period.

The following loss contingencies relate to the Company's Magnetek subsidiary:

Product Liability

In addition, one of the Company's subsidiaries, Magnetek, Inc.

("Magnetek") has been named, along with multiple other defendants, in asbestos-related lawsuits associated with business operations previously acquired but which are no longer owned.

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The Company aggressively seeks dismissal from these proceedings.

Based on actuarial information, the asbestos related liability including legal costs is estimated to be approximately $ 565,000 which has been reflected as a liability in the consolidated financial statements at March 31, 2021.

The asbestos-related liability including legal costs is estimated to be approximately $ 562,000 and $ 565,000 , which has been reflected as a liability in the consolidated financial statements at March 31, 2022 and 2021, respectively.

Litigation-Other

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(the “Power-One China Subsidiary”).

The tax authority in Arezzo, Italy, issued a notice of audit report in September 2010 wherein it asserted that the Power-One China Subsidiary had its administrative headquarters in Italy with fiscal residence in Italy and, therefore, is subject to taxation in Italy.

In November 2010, the tax authority issued a notice of tax assessment for the period of July 2003 to

COLUMBUS McKINNON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(tabular amounts in thousands, except share data)

June 2004, alleging that taxes of approximately $ 2,200,000 (Euro 1,900,000) were due in Italy on taxable income earned by the Power-One China Subsidiary during this period.

In addition, the assessment alleges potential penalties together with interest in the amount of approximately $ 3,000,000 (Euro 2,600,000) for the alleged failure of the Power-One China Subsidiary to file its Italian tax return.

The tax authority in Arezzo, Italy, issued a notice of audit report in September 2010 wherein it asserted that the Power-One China Subsidiary had its administrative headquarters in Italy and therefore it should be considered resident in Italy and subject to taxation in Italy.

In November 2010, the tax authority issued a notice of tax assessment for the period of July 2003 to June 2004, alleging that taxes of approximately $ 2,100,000 (Euro 1,900,000), plus interest, were due in Italy on taxable income earned by the Power-One China Subsidiary during this period.

In addition, the assessment alleges potential penalties in the amount of approximately $ 2,400,000 (Euro 2,200,000) for the alleged failure of the Power-One China Subsidiary to file its Italian tax return.

The Power-One China Subsidiary filed its response with the provincial tax commission of Arezzo, Italy in January 2011.

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The Regional Tax Commission of Florence heard the appeal of the tax assessment dismissal for the period of July 2003 to June 2004 and thereafter issued its ruling finding in favor of the tax authority.

Magnetek believes the court’s decision was based upon erroneous interpretations of the applicable law and appealed the ruling to the Italian Supreme Court in April 2015.

The tax authority in Arezzo, Italy also issued a tax inspection report in January 2011 for the periods July 2002 to June 2003 and July 2004 to December 2006 claiming that the Power-One China Subsidiary failed to file Italian tax returns for the reported periods.

In August 2012, the tax authority in Arezzo, Italy issued notices of tax assessment for the periods July 2002 to June 2003 and July 2004 to December 2006, alleging that taxes of approximately $ 7,900,000 (Euro 6,700,000) were due in Italy on taxable income earned by the Power-One China Subsidiary together with an allegation of potential penalties in the amount of approximately $ 3,300,000 (Euro 2,800,000) for the alleged failure of the Power-One China Subsidiary to file its Italian tax returns.

On June 3, 2015, the Tax Court ruled in favor of the Power-One China Subsidiary dismissing the tax assessments for the periods of July 2002 to June 2003 and July 2004 to December 2006.

On July 27, 2015, the tax authority filed an appeal of the Tax Court's ruling of June 3, 2015.

In May 2016, the Regional Tax Court of Florence rejected the appeal of the tax authority and at the same time canceled the notices of assessment for the fiscal years of 2004/2005 and 2005/2006.

The tax authority had up to six months to appeal the decision.

In December 2016, Magnetek was served by the Italian Revenue Service with two appeals to the Italian Supreme Court regarding the two positive judgments on the tax assessments for the fiscal periods 2004/2005 and 2005/2006.

In March 2017, the tax authority rejected the appeal of the assessment for 2005/2006 fiscal year.

The tax authority had until October 2017 to appeal this decision.

In October 2017, Magnetek was served by the Italian Revenue Service with an appeal to the Italian Supreme Court against the positive judgment on the tax assessment for fiscal year 2005/2006.

In November 2017 Magnetek filed a memorandum with the Italian Revenue Service and the Italian Supreme Court in response to the appeal made by the tax authority.

In February 2018 an appeal hearing was held at the Regional Tax Court of Florence regarding the Italian tax authority's claim for taxes due for fiscal 2002/2003.

In October 2018 Magnetek was served by the Italian Revenue Service with an appeal to the Italian Supreme Court against the positive judgment on the tax assessment for fiscal year 2002/2003.

In November 2018 Magnetek filed a memorandum with the Italian Supreme Court in response to the appeal made by the tax authority.

The Company believes it will be successful and does not expect to incur a liability related to these assessments.

Environmental Matters

From time to time, Magnetek has taken action to bring certain facilities associated with previously owned businesses into compliance with applicable environmental laws and regulations.

Upon the subsequent sale of certain businesses, Magnetek agreed to indemnify the buyers against environmental claims associated with the divested operations, subject to certain conditions and limitations.

Remediation activities, including those related to indemnification obligations, did not involve material expenditures during fiscal year 2021.

Magnetek has also been identified by the United States Environmental Protection Agency and certain state agencies as a potentially responsible party for cleanup costs associated with alleged past waste disposal practices at several previously utilized, owned or leased facilities and offsite locations.

Its remediation activities as a potentially responsible party were not material in fiscal year 2021.

Although the materiality of future expenditures for environmental activities may be affected by the level and type of contamination, the extent and nature of cleanup activities required by governmental authorities, the nature of Magnetek's alleged connection to the contaminated sites, the number and financial resources of other potentially responsible parties, the availability of indemnification rights against third parties, and the identification of additional contaminated sites, Magnetek's estimated share of liability, if any, for environmental remediation, including its indemnification obligations, is not expected to be material.

In 1986, Magnetek acquired the stock of Universal Manufacturing Corporation (“Universal”) from a predecessor of Fruit of the Loom (“FOL”), and the predecessor agreed to indemnify Magnetek against certain environmental liabilities arising from pre-

Magnetek believed the court’s decision was based upon erroneous interpretations of the applicable law and appealed the ruling to the Italian Supreme Court in April 2015.

In April 2022 the Supreme Court upheld the appeal in favor of Power-One.

The tax authority in Arezzo, Italy also issued a tax inspection report in January 2011 for the periods July 2002 to June 2003 (fiscal period 2002/2003) and July 2004 to December 2006 (fiscal periods 2004/2005 and 2005/2006) claiming that the Power-One China Subsidiary failed to file Italian tax returns for the reported periods.

In August 2012, the tax authority in Arezzo, Italy issued four notices of tax assessment for the periods July 2002 to June 2003 and July 2004 to December 2006, alleging that taxes of approximately $ 7,400,000 (Euro 6,700,000) were due in Italy on taxable income earned by the Power-One China Subsidiary together with an allegation of potential penalties in the amount of approximately $ 3,100,000 (Euro 2,800,000) for the alleged failure of the Power-One China Subsidiary to file its Italian tax returns.

On June 3, 2015, the Tax Court, with four judgements, ruled in favor of the Power-One China Subsidiary dismissing the tax assessments for the periods of July 2002 to

COLUMBUS McKINNON CORPORATION

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acquisition activities at a facility in Bridgeport, Connecticut.

Environmental liabilities covered by the indemnification agreement included completion of additional cleanup activities, if any, at the Bridgeport facility and defense and indemnification against liability for potential response costs related to offsite disposal locations.

Magnetek's leasehold interest in the Bridgeport facility was assigned to the buyer in connection with the sale of Magnetek's transformer business in June 2001.

FOL, the successor to the indemnification obligation, filed a petition for Reorganization under Chapter 11 of the Bankruptcy Code in 1999 and Magnetek filed a proof of claim in the proceeding for obligations related to the environmental indemnification agreement.

Magnetek believes that FOL had substantially completed the clean-up obligations required by the indemnification agreement prior to the bankruptcy filing.

In November 2001, Magnetek and FOL entered into an agreement involving the allocation of certain potential tax benefits and Magnetek withdrew its claims in the bankruptcy proceeding.

Magnetek further believes that FOL's obligation to the state of Connecticut was not discharged in the reorganization proceeding.

In January 2007, the Connecticut Department of Environmental Protection (“DEP”) requested parties, including Magnetek, to submit reports summarizing the investigations and remediation performed to date at the site and the proposed additional investigations and remediation necessary to complete those actions at the site.

DEP requested additional information relating to site investigations and remediation.

Magnetek and the DEP agreed to the scope of the work plan in November 2010.

The Company has recorded a liability of $ 377,000 , included in the amount specified above, related to the Bridgeport facility, representing the best estimate of future site investigation costs and remediation costs which are expected to be incurred in the future.

The Company has recorded total liabilities of $ 523,000 for all environmental matters related to Magnetek in the consolidated financial statements as of March 31, 2021 on an undiscounted basis.

June 2003 and July 2004 to December 2006.

On July 27, 2015, the tax authority filed four appeals of the Tax Court's ruling of June 3, 2015.

In May 2016, the Regional Tax Court of Florence rejected the appeals of the tax authority and at the same time canceled the notices of assessment for the fiscal years of 2004/2005 and 2005/2006.

The tax authority had up to six months to appeal the decisions.

In December 2016, the Power-One China Subsidiary was served by the Italian Revenue Agency with two appeals to the Italian Supreme Court regarding the two positive judgments on the tax assessments for the fiscal periods 2004/2005 and 2005/2006.

In February 2017 the Power-One China Subsidiary filed two memorandum before the Italian Supreme Court in response to the appeals made by the tax authority against the positive judgments on the tax assessments for fiscal years 2004/2005 and 2005/2006.

In March 2017, the Regional Tax Court of Florence rejected the appeal of the assessment for 2006 fiscal year (period July 2006-December 2006).

The tax authority had until October 2017 to appeal this decision.

In October 2017, the Power-One China Subsidiary was served by the Italian Revenue Agency with an appeal to the Italian Supreme Court against the positive judgment on the tax assessment for fiscal year 2006.

In November 2017 the Power-One China Subsidiary filed a memorandum before the Italian Supreme Court in response to the appeal made by the tax authority against the positive judgment on the tax assessment for fiscal year 2006.

In February 2018 an appeal hearing was held at the Regional Tax Court of Florence regarding the Italian tax authority's claim for taxes due for fiscal year 2002/2003.

In March 2018, the Regional Tax Court of Florence rejected the appeal of the assessment for 2002/2003 fiscal year.

In October 2018 the Power-One China Subsidiary was served by the Italian Revenue Agency with an appeal to the Italian Supreme Court against the positive judgment on the tax assessment for fiscal year 2002/2003.

In November 2018 the Power-One China Subsidiary filed a memorandum with the Italian Supreme Court in response to the appeal made by the tax authority.

In April 2022 the Supreme Court filed judgments concerning the tax assessments for fiscal years 2002/2003 and 2006.

The Supreme Court upheld the appeals of the Italian Tax Authority and remitted the proceedings back to the Regional Tax Court for a new evaluation of the substance of the dispute.

The proceedings should be resumed before the Regional Tax Court within six months from the filing of the judgements.

The Company believes it will be successful and does not expect to incur a liability related to these assessments.

In September of 2017, Magnetek received a request for defense and indemnification from Monsanto Company, Pharmacia, LLC, and Solutia, Inc.

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and (2) lawsuits brought by municipalities and municipal entities claiming that Monsanto should be responsible for a variety of damages due to the presence of PCBs in bodies of water in those municipalities and/or in water treated by those municipal entities.

Monsanto claims to be entitled to defense and indemnification from Magnetek under a so-called “Special Undertaking” apparently executed by Universal in January of 1972, which purportedly required Universal to defend and indemnify Monsanto from liabilities “arising out of or in connection with the receipt, purchase, possession, handling, use, sale or disposition of” PCBs by Universal.

Monsanto claims to be entitled to defense and indemnification from Magnetek under a so-called “Special Undertaking” apparently executed by Magnetek's predecessor Universal Manufacturing ("Universal") in January of 1972, which purportedly required Universal to defend and indemnify Monsanto from liabilities “arising out of or in connection with the receipt, purchase, possession, handling, use, sale or disposition of” PCBs by Universal.

Magnetek has declined Monsanto’s tender, and believes that it has meritorious legal and factual defenses to the demands made by Monsanto.

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Magnetek intends to continue to vigorously prosecute its declaratory judgment action and to defend against Monsanto’s action against it.

We cannot reasonably estimate a potential range of loss with respect to Monsanto’s tender because there is insufficient information regarding the underlying matters.

The Company cannot reasonably estimate a potential range of loss with respect to Monsanto’s tender because there is insufficient information regarding the underlying matters.

Management believes, however, that the potential additional legal costs related to such matters will not have a material effect on the financial condition of the Company or its liquidity, although the effect of any future liabilities recorded could be material to earnings in a future period.

The Company had previously filed suit against Travelers in District Court seeking coverage under insurance policies in the name of Magnetek’s predecessor Universal Manufacturing.

The Company had previously filed suit against Travelers in District Court seeking coverage under insurance policies in the name of Universal.

In July 2019, the District Court ruled that Travelers is obligated to defend Magnetek under these policies in connection with Magnetek’s litigation against Monsanto.

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Travelers moved for a reconsideration of the order which was denied in September 2020 and in March 2021 Traveler’s window to appeal the court order closed.

As a result, the Company recorded a receivable for approximately $ 900,000 as of March 31, 2021 in past defense

As a result, the Company recorded a receivable for approximately $ 900,000 as of March 31, 2021 for past defense costs which are to be reimbursed.

COLUMBUS McKINNON CORPORATION

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costs which are to be reimbursed.

The receivable has been reflected as a reduction to Cost of products sold in fiscal 2021.

The receivable was subsequently paid in full in April 2021.

The Company is also engaged in similar coverage litigation against Transportation Insurance Company in the Circuit Court of Cook County, Illinois.

receivable was reflected as a reduction to Cost of products sold in the fourth quarter of fiscal 2021.

The receivable was paid in full in April 2021.

The Company is also engaged in similar insurance coverage litigation against Transportation Insurance Company in the Circuit Court of Cook County, Illinois.

The Company has sought a ruling that Transportation Insurance Company is also obligated to reimburse Magnetek’s defense costs to date and fund its defense costs moving forward.

That motion is not yet fully briefed.

On December 22, 2017, the President of the United States signed into law the Tax Cuts and Jobs Act (“Tax Reform Act” or “the Act”).

The legislation significantly changed U.S.

tax law by, among other things, lowering corporate income tax rates, assessing a one-time transition tax on a deemed repatriation of non-previously taxed earnings of foreign subsidiaries, and implementing a territorial tax system.

While the Tax Reform Act provides for a territorial tax system, beginning in 2018, it includes two new U.S.

tax base erosion provisions, the global intangible low-taxed income (“GILTI”) provisions and the base-erosion and anti-abuse tax (“BEAT”) provisions.

The Act also provides for the foreign-derived intangible income (“FDII”) deduction for corporations that derive gross income from export activities

The GILTI provisions require the Company to include in its U.S.

income tax return any foreign subsidiary earnings in excess of an allowable return on the foreign subsidiary’s tangible assets.

For the years ended March 31, 2021, 2020, and 2019, the Company has not recorded material tax expense related to GILTI provisions.

The Company has elected to account for GILTI tax in the period in which it is incurred, and therefore has not provided any deferred tax impacts of GILTI in its consolidated financial statements for the years ended March 31, 2021, 2020, and 2019.

The BEAT provisions in the Tax Reform Act eliminate the deduction of certain base-erosion payments made to related foreign corporations, and impose a minimum tax if greater than regular tax.

The BEAT tax had no impact on the Company's consolidated financial statements for the years ended March 31, 2021, 2020, and 2019.

The FDII provisions of the Act provide an incentive to domestic corporations in the form of a lower tax rate on income derived from tangible and intangible products and services in foreign markets.

This lower tax rate is accomplished via an additional tax deduction based on a percentage of qualifying sales.

The FDII deduction provided the Company an additional tax benefit of $ 0 , $ 1,029,000 , and $ 945,000 in the years ended March 31, 2021, 2020, and 2019, respectively.

SAB 118 measurement period adjustments

On December 22, 2017, the SEC staff issued Staff Accounting Bulletin No.

118 (“SAB 118”) to address the application of U.S.

GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the Tax Reform Act.

We applied the guidance in SAB 118 when accounting for the enactment-date effects of the Act in 2017 and throughout 2018.

At December 31, 2017, we had not completed our accounting for all of the enactment-date income tax effects of the Act under ASC 740, Income Taxes, for the following aspects:

remeasurement of deferred tax assets and liabilities and one-time transition tax.

As of December 31, 2018, we completed our accounting for all of the enactment-date income tax effects of the Act, the impacts of which are summarized below.

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 differences were as follows: