What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2023-05-25 compared with 2022-05-25 · 287 added, 296 removed, 1612 unchanged (27% of the section changed)

52 unchanged sentences

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

Valuation of Goodwill for the Precision Conveyance Reporting Unit

Description of the Matter At March 31, 2023, the Company’s goodwill was $664.6 million.

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 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.

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 goodwill impairment review process.

Our procedures included, among others, testing management’s review and assessment of the qualitative factors considered in its evaluation.

To test the Company’s qualitative assessment for goodwill impairment, we performed audit procedures that included, among others, inspecting the analysis prepared by management and evaluating the evidence gathered by management in support of its assessment of the events and circumstances discussed above.

We considered the results of management’s most recent quantitative test as well as events that have occurred since that test was performed.

We compared forecasts utilized by management in its most recent quantitative test to actual results.

We inspected and analyzed other third-party evidence about, among other things, macroeconomic conditions and their expected trends, long-term growth rates, as well as industry and market conditions and their expected trends.

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 reporting units.

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.

The goodwill associated with the Precision Conveyance reporting unit amounted to $327.9 million as of March 31, 2023.

As discussed in Notes 2 and 9 of the consolidated financial statements, goodwill is quantitatively tested, for impairment at least annually, or more frequently if circumstances warrant, at the reporting unit level.

In its quantitative test, the Company applied a discounted cash flow method to estimate the fair value of its reporting unit which incorporated various assumptions, the most significant being projected revenue growth rates, EBITDA margins, the terminal growth rate and the discount rate.

Auditing management’s annual goodwill impairment assessment was complex and highly judgmental due to the significant estimation required to determine the fair value of the Precision Conveyance reporting unit.

The fair value estimate for the Precision Conveyance reporting unit was sensitive to significant assumptions inherent in the Company’s discounted estimated future cash flows, in particular changes in the projected revenue growth rates, EBITDA margins, terminal growth rate and the discount rate, which are affected by expectations about future market or economic 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 goodwill impairment review process, including controls over management’s review of the significant assumptions described above.

To test the estimated fair value of the Company’s Precision Conveyance reporting unit, we performed audit procedures with the assistance of our valuation professionals that included, among others, assessing the methodology used and testing the significant assumptions discussed above and the underlying data used in the impairment analysis.

We compared the significant assumptions used by management to current industry and economic trends and evaluated the effects of changes to the Company’s customer base or product mix and other factors on the significant assumptions.

We assessed the historical accuracy of management’s revenue forecasts and performed sensitivity analyses of significant assumptions to evaluate the changes in the fair value of the reporting unit that would result from changes in the assumptions.

We considered the relationship between the aggregate fair value of the Company’s reporting units and the Company’s market capitalization as of the annual impairment testing date.

Product Liabilities and Related Legal Costs

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We inspected analyses prepared by the Company to support the current forecasts of defense costs and dismissal ratios.

We inspected correspondence from the Company’s internal counsel as to the number and status of outstanding claims asserted and correspondence from external counsel to evaluate the information provided by management.

We inspected correspondence from the Company’s internal counsel as to the number and status of outstanding claims asserted and correspondence from external counsel to corroborate the information provided by management.

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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28,611,721 and 28,517,333 shares issued and outstanding

Treasury Stock ( 1,001 ) —

Additional paid-in capital 515,797 506,074

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Research and development expenses 20,935 15,351 12,405

Net loss on sales of businesses, including impairment — — 176

Amortization of intangibles 26,001 25,283 12,623

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(In thousands, except share data)

($0.01 par value) Additional

($0.01 par value) Treasury Stock Additional

Capital Retained

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Balance at April 1, 2020

$ 238 $ — $ 287,256 $ 290,441 $ ( 114,350 ) $ 463,585

Net income 2021

— — — 9,106 — 9,106

Dividends declared — — — ( 5,745 ) — ( 5,745 )

10 unchanged sentences

— — ( 1,156 ) — — ( 1,156 )

Balance at March 31, 2020 $ 238 $ 287,256 $ 290,441 $ ( 114,350 ) $ 463,585

Balance, March 31, 2021 $ 240 $ — $ 296,093 $ 293,802 $ ( 59,986 ) $ 530,149

Net income 2022

— — — 29,660 — 29,660

Dividends declared — — — ( 7,119 ) — ( 7,119 )

1 unchanged sentence

Change in derivatives qualifying as hedges, net of tax of $( 39 )

— — — — 77 77

Change in pension liability and postretirement obligations, net of tax of $( 5,279 )

— — — — 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

4 unchanged sentences

1 — ( 2,581 ) — — ( 2,580 )

Balance at March 31, 2021 $ 240 $ 296,093 $ 293,802 $ ( 59,986 ) $ 530,149

Balance, March 31, 2022 $ 285 $ — $ 506,074 $ 316,343 $ ( 49,899 ) $ 772,803

Net income 2023

— — — 48,429 — 48,429

Dividends declared — — — ( 8,014 ) — ( 8,014 )

1 unchanged sentence

Change in derivatives qualifying as hedges, net of tax of $( 2,636 )

Change in pension liability and postretirement obligations, net of tax of $( 5,279 )

— — — — 7,886 7,886

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

Change in pension liability and postretirement obligations, net of tax of $( 3,735 )

— — — — 8,243 8,243

3 unchanged sentences

Stock compensation expense — — 9,231 — — 9,231

Treasury stock purchased, 31,085 shares

— ( 1,001 ) — — — ( 1,001 )

Restricted stock units released, 93,315 shares, net of shares withheld for minimum statutory tax obligation

1 — ( 1,415 ) — — ( 1,414 )

Balance at March 31, 2022 $ 285 $ 506,074 $ 316,343 $ ( 49,899 ) $ 772,803

Balance, March 31, 2023 $ 286 $ ( 1,001 ) $ 515,797 $ 356,758 $ ( 38,043 ) $ 833,797

See accompanying notes.

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Cost of debt refinancing — 14,803 —

Loss on sales of businesses — — 176

Loss on retirement of fixed asset 175 — —

Non-cash pension settlement expense (See Note 13) — — 19,038

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Proceeds from sale of fixed assets — — 446

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

Purchase of businesses, net of cash acquired (See Note 3) ( 1,616 ) ( 539,778 ) —

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Payments under line-of-credit agreements — — ( 25,000 )

Purchases of treasury stock ( 1,001 ) — —

Repayment of debt ( 40,550 ) ( 477,846 ) ( 4,450 )

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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 targeted market verticals include general industrial, construction and infrastructure, mining, oil & gas, energy, aerosp ace, transportation, automotive, heavy equipment manufacturing, and entertainment.

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.

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Advertising expenses were $ 2,342,000 , $ 2,410,000 , and 999,000 in fiscal 2023, 2022, and 2021, respectively.

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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Equity Method Investment

The Company has an investment in Eastern Morris Cranes Company Limited ("EMC") whose principal activity is to manufacture various electrical overhead traveling cranes.

The Company has an investment 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, whose principal activity is to manufacture various electrical overhead traveling cranes.

This investment represents a minority ownership interest that is accounted for under the equity method of accounting since the Company has significant influence over the investee.

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Foreign Currency Translations

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

dollars at average exchange rates during the year.

All assets and liabilities are translated to

COLUMBUS McKINNON CORPORATION

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(tabular amounts in thousands, except share data)

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.

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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 reporting segment level as defined under ASC Topic 280-10-50-10 “Segment Reporting – Disclosure.” As of March 31, 2023, the Company’s one segment is subdivided into three reporting units.

Further, the Company adopted ASU No.

2017-04, "Simplifying the Test for Goodwill Impairment (Topic 350)," in fiscal 2018, therefore, is no longer required to compare the implied fair value of goodwill with its carrying value amount as part of step two of the goodwill test.

An impairment charge is the amount by which the carrying value is greater than the reporting unit's fair value.

An impairment charge is recorded if the carrying value is greater than the reporting unit's fair value.

When the Company evaluates the potential for goodwill impairment, it assesses a range of qualitative factors including, but not limited to, macroeconomic conditions, industry conditions, the competitive environment, changes in the market for its products and services, regulatory and political developments, entity specific factors such as strategy and changes in key personnel, and overall financial performance.

If, after completing this assessment, it is determined that it is more likely than not that the fair value of a reporting unit is less than its carrying value or if economic or other business factors indicate that the fair value of our reporting units may have declined since our last quantitative test, the Company performs a quantitative test.

To perform the quantitative impairment test, the Company uses the discounted cash flow method and a market-based valuation model to estimate the fair value of the reporting units.

The discounted cash flow method incorporates various assumptions, the most significant being projected revenue growth rates, operating profit margins and cash flows, the terminal growth rate, and the discount rate.

The Company projects revenue growth rates, operating margins and cash flows based on each reporting unit's current business, expected developments, and operational strategies over a five-year period.

In order to perform the quantitative impairment tests for the Rest of Products, Precision Conveyance and Duff Norton reporting units, the Company uses the discounted cash flow method to estimate fair value.

The discounted cash flow method incorporates various assumptions, the most significant being projected revenue growth rates, EBITDA margins and cash flows, the terminal growth rate, and the weighted-average cost of capital.

The Company projects discounted cash flows based on each reporting unit's current business, expected developments, and operational strategies over a five to seven-year period.

In estimating the terminal growth rates, the Company considers its historical and projected results, as well as the economic environment in which its reporting units operate.

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, 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.

The weighted-average cost of capital 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, 2023 and determined that the quantitative goodwill impairment test was required for the Rest of Products, Duff-Norton and Precision Conveyance reporting units.

Based on results of the quantitative impairment test for the reporting units, the Company determined the fair value was not less than its carrying value.

Refer to Note 5 for valuation techniques and significant inputs and Note 9 for further discussion of goodwill and intangibles.and intangible assets.

Impairment of Long-Lived Assets

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The fair values are determined in accordance with ASC 820.

COLUMBUS McKINNON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(tabular amounts in thousands, except share data)

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.

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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.

In assessing long-lived assets for impairment, management considered the Company’s product line

COLUMBUS McKINNON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(tabular amounts in thousands, except share data)

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.

The Company considers projected future undiscounted cash flows, trends and other factors in its assessment of whether impairment conditions exist.

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In determining fair value of long-lived assets, management uses management estimates, discounted cash flow calculations, and appraisals where necessary.

There were no impairments recorded related to long-lived assets in the current year.

There were no indicators of impairment related to long-lived assets in the current year.

Intangible Assets

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

After performing a qualitative assessment as of February 28, 2022, it was determined that the trademarks were not impaired.

After performing a qualitative assessment we determined that economic factors indicate that the fair value of our indefinite-lived intangible assets may have declined since our last quantitative test.

We performed the quantitative test as of February 28, 2023 and determined that the trademarks were not impaired.

Refer to Note 9 for further details.

Inventories are valued at the lower of cost and net realizable value.

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Research and Development

Consistent with prior periods, the Company continues to account for R&D expenses in accordance with the provisions of ASC 730 and are expensed as incurred.

Consistent with prior periods, the Company continues to account for research and development expenses in accordance with the provisions of ASC 730 and are expensed as incurred.

Revenue Recognition, Accounts Receivable, and Concentration of Credit Risk

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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.

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The specific terms and conditions of those warranties vary depending upon the product sold and the country in which the Company sold the product.

As noted in the Revenue Recognition note (Note 4), the Company offers standard warranties which are typically 12 months in duration for standard products and 24 to 36 months for custom engineered products.

As noted in Note 4 to the financial statements, the Company offers standard warranties which are typically 12 months in duration for standard products and 24 to 36 months for custom engineered products.

These are assurance-type warranties that do not qualify as separate performance obligations under ASC 606.

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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

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(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.

the year ended March 31, 2022.

In addition, the Company incurred immaterial acquisition and deal costs in the year ended March 31, 2023.

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.

("JPMorgan Chase Bank"), PNC Capital Markets LLC, and Wells Fargo Securities LLC.

("JPMorgan Chase Bank"), PNC Capital Markets LLC ("PNC"), and Wells Fargo Securities LLC ("Wells Fargo").

The First Lien Facilities consist of a revolving facility (the “New Revolving Credit Facility”) in an aggregate amount of $ 100,000,000 and a $ 650,000,000 First Lien Term Facility ("Bridge Facility").

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.

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

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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.

On December 1, 2021, the Company completed its acquisition of Garvey Corporation ("Garvey") for $ 67,347,000 including $ 907,000 in cash acquired, after an adjustment for working capital finalized in fiscal 2023 for $ 1,616,000 , and subject to 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.

During the December 31, 2022 quarter, the EBITDA target measurement period was completed.

Garvey's actual EBITDA exceeded the projected EBITDA as of the opening Balance Sheet.

As such, the Company recorded an adjustment for $ 1,230,000 which increased the contingent consideration liability and general and administrative expenses during December 2022.

As both targets were met at March 31, 2023, the Company will pay the contingent consideration in early fiscal 2024.

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

The transaction was accounted for using the acquisition method and, accordingly, the results of the acquired 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 in the year ended March 31, 2022.

In addition, the Company incurred immaterial acquisition and deal costs in the year ended March 31, 2023.

COLUMBUS McKINNON CORPORATION

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(tabular amounts in thousands, except share data)

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

The excess consideration of $ 40,832,000 has been recorded as goodwill, a decrease of $ 384,000 from March 31, 2022 relating to an adjustment for the contingent payment of $ 2,000,000 to reclassify it as part of Prepaid expenses and other assets on the Consolidated Balance Sheet and an increase of $ 1,616,000 related to the working capital adjustment.

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 .

1 unchanged sentence

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):

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

Working Capital 1,709

5 unchanged sentences

Total $ 67,347

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.

Acquisitions - subsequent to March 31, 2023

On April 26, 2023, the Company announced that it has executed a definitive agreement to acquire montratec, a leading automation solutions company that designs and develops intelligent automation and transport systems for interlinking industrial production and logistics processes.

montratec provides its modular, intelligent monorail transport systems for the electric vehicle (EV), semiconductor, electronics, life sciences, aerospace and other industries.

The all-cash transaction is expected to be valued at approximately $ 110,000,000 million at closing using current exchange rates plus an earnout in an amount expected not to exceed $ 14,000,000 million based on EBITDA performance.

The transaction is expected to close by May 31, 2023, subject to typical closing conditions requirements.

Acquisition expenses incurred by the Company were immaterial through March 31, 2023 and have been recorded in General and administrative expenses.

To finance the montratec acquisition, the Company expanded its New Revolving Credit Facility by $ 75 million.

The Company has drawn on the expanded New Revolving Credit facility to initially fund the acquisition on May 31, 2023.

In addition, the Company plans to raise approximately $ 50 million in additional debt by June 30, 2023 through the securitization of certain of the Company's U.S.

customer accounts receivable balances.

The Company intends to use these proceeds to partially repay borrowings under its New Revolving Credit Facility.

As part of its operations strategy, the Company is consolidating its manufacturing footprint.

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.

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 has been refunded to the state.

The Lisbon, Ohio consolidation was completed during the third quarter of fiscal 2021.

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.

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 in fiscal 2021.

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

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.

COLUMBUS McKINNON CORPORATION

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The Company sells standard products to customers utilizing purchase orders.

Payment terms for these types of contracts generally require payment within 30-60 days.

Payment terms for these types of contracts generally require payment within 30 to 60 days.

Each standard product is deemed to be a single performance obligation and the amount of revenue recognized is based on the negotiated price.

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(1) Other includes the impact of foreign currency translation

During the twelve months ended March 31, 2022, revenue was recognized prior to the right to invoice the customer which resulted in a contract asset balance in the amount of $ 2,410,000 and $ 8,559,000 as of March 31, 2022 and March 31, 2021, respectively.

Revenue was recognized prior to the right to invoice the customer which resulted in a contract asset balance in the amount of $ 2,944,000 and $ 2,410,000 as of March 31, 2023 and March 31, 2022, respectively.

Contract assets are included in Prepaid expenses and other assets on the Consolidated Balance Sheets.

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The following table illustrates the disaggregation of revenue by product grouping for the years ending March 31, 2023, 2022 and 2021 (in thousands):

Twelve Months Ended Twelve Months Ended

Net Sales by Product Grouping March 31, 2022 March 31, 2021

Year Ended March 31,

Net Sales by Product Grouping 2023 2022 2021

Industrial Products $ 330,295 $ 334,866 $ 271,414

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Due to the short-term nature of such accounts receivable, the estimated amount of accounts receivable that may not be collected is based on aging of the accounts receivable balances.

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 year ending March 31, 2023 and March 31, 2022 (in thousands):

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

Allowance for doubtful accounts 2023 2022

April 1, beginning balance $ 5,717 $ 5,686

10 unchanged sentences

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

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

COLUMBUS McKINNON CORPORATION

1 unchanged sentence

(tabular amounts in thousands, except share 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 information available in the circumstances.

information available in the circumstances.

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

28 unchanged sentences

Foreign exchange contracts 97 — 97 —

Interest rate swap liability 3,613 — 3,613 —

Cross currency swap liability ( 8,713 ) — ( 8,713 ) —

Interest rate swap 10,475 — 10,475 —

Cross currency swap ( 2,102 ) — ( 2,102 ) —

Disclosed at fair value:

17 unchanged sentences

Foreign exchange contracts ( 217 ) — ( 217 ) —

Interest rate swap asset ( 2,057 ) — ( 2,057 ) —

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

Interest rate swap 3,613 — 3,613 —

Cross currency swap ( 8,713 ) — ( 8,713 ) —

Disclosed at fair value:

1 unchanged sentence

The Company did not have any non-financial assets and liabilities that are recognized at fair value on a recurring basis.

At March 31, 2022, the term loan and revolving credit facility have been recorded at carrying value which approximates fair value.

At March 31, 2023, the Term Loan and New Revolving Credit Facility have been recorded at carrying value which approximates fair value.

Market gains, interest, and dividend income on marketable securities are recorded in investment (income) loss.

2 unchanged sentences

Fiscal 2023 Non-Recurring Measurements

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

These measurements have been used to 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.”

The Fiscal 2023 goodwill impairment test consisted of determining the fair values of the Rest of Products, Precision Conveyor 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 weighted 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, Precision Conveyor 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 and the weighted-average cost of capital used to discount future cash flows.

The estimates used are disclosed below:

Rest of Products Reporting Unit Precision Conveyor Reporting Unit Duff-Norton Reporting Unit

Compound annual growth rate 6.73 % 9.82 % 9.14 %

Terminal value growth rate 3.0 % 3.0 % 3.5 %

Weighted-average cost of capital 11.8 % 13.2 % 10.4 %

We further test our indefinite-lived intangible asset balance of $ 46,338,000 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

COLUMBUS McKINNON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(tabular amounts in thousands, except share data)

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.

Fiscal 2022 Non-Recurring Measurements

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.

7 unchanged sentences

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

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

COLUMBUS McKINNON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(tabular amounts in thousands, except share data)

Inventories consisted of the following:

6 unchanged sentences

Net inventories $ 179,359 $ 172,139

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 $ 162,000 and $ 620,000 of additional income in fiscal 2023 and 2022, respectively.

1 unchanged sentence

In accordance with ASU 2016-01 "Financial Instruments - Overall (Subtopic 825-10):

Recognition and Measurement of Financial Assets and Financial Liabilities," adopted by the Company on April 1, 2018, all equity investments in unconsolidated entities (other than those accounted for using the equity method of account) are measured at fair value through earnings.

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 loss of $ 370,000 , a gain of $ 727,000 , and a loss of $ 143,000 in fiscal years 2022, 2021, and 2020, respectively.

Recognition and Measurement of Financial Assets and Financial Liabilities," all equity investments in unconsolidated entities (other than those accounted for using the equity method of account) are measured at fair value through earnings.

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

The impact on earnings for unrealized gains and losses was a loss of $ 296,000 , a loss of $ 370,000 , and a gain of $ 727,000 in fiscal years 2023, 2022, and 2021, respectively.

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

The cost of securities is based on the specific identification method.

Interest and dividend income are included in Investment (income) loss in the Consolidated Statements of Operations.

Interest and dividend income are included in Investment (income) loss, net in the Consolidated Statements of Operations.

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.

1 unchanged sentence

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

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.

COLUMBUS McKINNON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(tabular amounts in thousands, except share data)

Net realized gains related to sales of marketable securities were no t material in fiscal 2023 and 2022, respectively, and $ 85,000 in 2021, 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.

1 unchanged sentence

The investment's carrying value is presented in Other assets in the Consolidated Balance Sheets in the amount of $ 2,752,000 and $ 2,765,000 as of March 31, 2023 and March 31, 2022, 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.

The investment value was increased for the Company's ownership percentage of income earned by EMC in the amount of $ 365,000 and $ 212,000 in the twelve months ended March 31, 2023 and March 31, 2022, respectively, and is recorded in Investment (income) loss, net on the Consolidated Statement of Operations.

Additionally, the investment value decreased in the amount of $ 67,000 and $ 163,000 due to the effect of currency translation in the twelve months ended March 31, 2023 and March 31, 2022, respectively.

Further, in the twelve months ended March 31, 2023 and March 31, 2022, 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 $ 313,000 and $ 324,000 in the twelve months ended March 31, 2023 and March 31, 2022, 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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(tabular amounts in thousands, except share data)

$ 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.

Dividends are included in investing activities on the Consolidated Statements of Cash Flows in the amount of $ 313,000 and $ 324,000 in the twelve months ended March 31, 2023 and March 31, 2022, 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 $ 94,360 $ 97,926

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 $ 15,946,000 , $ 16,639,000 , and $ 15,530,000 for the years ended March 31, 2023, 2022, and 2021, respectively.

5 unchanged sentences

Goodwill impairment is deemed to exist if the net book value of a reporting unit exceeds its estimated fair value.

The fair value of a reporting unit is determined using a discounted cash flow methodology.

The fair value of a reporting unit is calculated using the discounted cash flow method.

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 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.

The Company’s reporting units identified under ASC Topic 350-20-35-33

COLUMBUS McKINNON CORPORATION

1 unchanged sentence

(tabular amounts in thousands, except share data)

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, 2023 and March 31, 2022.

The Rest of Products reporting unit (representing the hoist, chain, and forgings, digital power control systems, and distribution businesses) had goodwill of $ 306,988,000 and $ 310,793,000 at March 31, 2023 and 2022, respectively.

The Precision Conveyance reporting unit (which represents high-precision conveying systems) had goodwill of $ 327,942,000 and $ 328,357,000 at March 31, 2023 and March 31, 2022.

Fiscal 2023 Annual Goodwill and Intangible Asset Impairment Test

2 unchanged sentences

To perform the quantitative impairment test, the Company uses the discounted cash flow method to estimate the fair value of the reporting units.

The Company projects revenue growth rates, operating margins and cash flows based on each reporting unit's current business, expected developments, and operational strategies over a five-year period.

The Company projects discounted cash flows based on each reporting unit's current business, expected developments, and operational strategies over a five to seven-year period.

In estimating the terminal growth rates, the Company considers its historical and projected results, as well as the economic environment in which its reporting units operate.

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, Duff-Norton and Precision Conveyance reporting units.

The weighted-average cost of capital 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.

We performed the qualitative assessment as of February 28, 2023 and determined that the quantitative test should be performed for the Rest of Products, Duff-Norton and Precision Conveyance reporting units.

We also performed sensitivities and other analysis and determined that goodwill is not impaired as of February 28, 2023 for the Rest of Products, Duff-Norton and Precision Conveyance reporting units.

Please refer to Note 5 for a discussion of the key assumptions used in the quantitative assessment.

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.

5 unchanged sentences

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

After performing a qualitative assessment as of February 28, 2022, it was determined that the trademarks were not impaired.

After performing a qualitative assessment as of February 28, 2023, we determined that economic factors indicate that the fair value of our indefinite-lived intangible assets may have declined since our last quantitative test.

We performed the quantitative test as of February 28, 2023 and determined that the trademarks were not impaired.

COLUMBUS McKINNON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(tabular amounts in thousands, except share data)

A summary of changes in goodwill during the years ended March 31, 2023 and 2022 is as follows:

Balance at April 1, 2021

Currency translation 11,497

Balance at March 31, 2021

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

2 unchanged sentences

Balance at March 31, 2022 648,849

Working capital adjustment for Garvey (Refer to Note 3) 1,616

Garvey contingent payment reclassification (Refer to Note 3) ( 2,000 )

Currency translation ( 3,836 )

Balance at March 31, 2023

Goodwill is recognized net of accumulated impairment losses of $ 113,174,000 as of both March 31, 2023 and 2022, respectively.

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

COLUMBUS McKINNON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(tabular amounts in thousands, except share data)

Identifiable intangible assets at March 31, 2023 are summarized as follows (in thousands):

20 unchanged sentences

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 .

Based on the current amount of intangible assets, the estimated amortization expense for each of the succeeding five years is expected to be approximately $ 26,000,000 , excluding the potential acquisition of montratec which is expected to close on May 31, 2023.

COLUMBUS McKINNON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(tabular amounts in thousands, except share data)

Derivative Instruments

11 unchanged sentences

The Company has derivative contracts with three counterparties as of March 31, 2023.

COLUMBUS McKINNON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(tabular amounts in thousands, except share data)

The Company's agreements with its counterparties contain provisions pursuant to which the Company could be declared in default of its derivative obligations.

14 unchanged sentences

From its March 31, 2023 balance of AOCL, the Company expects to reclassify approximately $ 68,000 out of AOCL during the next 12 months based on the expected sales of the goods purchased.

COLUMBUS McKINNON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(tabular amounts in thousands, except share data)

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.

5 unchanged sentences

From its March 31, 2023 balance of AOCL, the Company expects to reclassify approximately $ 5,450,000 out of AOCL, and into interest expense, during the next 12 months.

COLUMBUS McKINNON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(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):

The following is the effect of derivative instruments on the Consolidated Statements of Operation for the years ended March 31, 2023, 2022, and 2021 (in thousands):

Derivatives Designated as Cash Flow

11 unchanged sentences

2021 Cross currency swap $ ( 7,793 ) Foreign currency exchange loss (gain) $ ( 7,268 )

Derivatives Not Designated as

Hedging Instruments (Foreign

Exchange Contracts)

Location of Gain or (Loss) Recognized in

Income on Derivatives

Gain or (Loss)

Recognized in

2022 Foreign currency exchange loss (gain) $ —

2021 Foreign currency exchange loss (gain) $ —

2020 Foreign currency exchange loss (gain) $ 17

The following is information relative to the Company’s derivative instruments in the Consolidated Balance Sheets as of March 31, 2023 and 2022 (in thousands):

2 unchanged sentences

Hedging Instruments Balance Sheet Location 2023 2022

Foreign exchange contracts Other Assets $ 136 $ —

Foreign exchange contracts Accrued Liabilities ( 39 ) ( 217 )

3 unchanged sentences

Interest rate swap Other non current liabilities — ( 387 )

Cross currency swap Prepaid expenses and other 168 —

Cross currency swap Accrued liabilities — ( 170 )

31 unchanged sentences

Total debt, less current portion $ 418,052 $ 457,135

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.

On January 31, 2017 the Company entered into a Credit Agreement (the "Previous 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 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.

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

The Second Amended Credit

COLUMBUS McKINNON CORPORATION

1 unchanged sentence

(tabular amounts in thousands, except share data)

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.

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

As discussed in Note 3, the Company completed its acquisition of Dorner on April 7, 2021 and entered into the First Lien Facilities with JPMorgan Chase Bank, PNC and Wells Fargo.

The First Lien Facilities consist of the New Revolving Credit Facility and the Bridge Facility.

2 unchanged sentences

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.

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

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

1 unchanged sentence

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.

In addition, if the Company has Excess Cash Flow ("ECF") as defined in the Credit Agreement for the First Lien Facilities (the “First Lien Facilities 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 First Lien Facilities 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.

4 unchanged sentences

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 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.

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 First Lien Facilities Credit Agreement, each without premium or penalty, subject to reimbursement of certain costs of the Lenders.

5) Covenants:

3 unchanged sentences

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.

In fiscal 2022, the Company incurred $ 14,803,000 in debt extinguishment costs of which $ 5,946,000 related to the Company's prior Term Loan, $ 326,000 related to the Company's prior Revolver, and $ 8,531,000 related 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.

COLUMBUS McKINNON CORPORATION

1 unchanged sentence

(tabular amounts in thousands, except share data)

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.

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

There were no similar expenses incurred in fiscal 2023.

Further, in the first quarter of fiscal 2022, the Company recorded $ 5,432,000 in deferred financing costs on the Bridge 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.

2 unchanged sentences

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.

No material amendment to the terms of the Term Loan B facility or the First Lien Facilities 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 outstanding principal balance of the Term Loan B facility was $ 462,560,000 as of March 31, 2023, 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 B was $ 502,560,000 as of March 31, 2022.

The Company made $ 40,000,000 and $ 22,440,000 of principal payments on the Term Loan B during fiscal 2023 and fiscal 2022, respectively.

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.

This 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 were no outstanding borrowings and $ 15,104,000 outstanding letters of credit issued against the New Revolving Credit Facility as of March 31, 2023.

The outstanding letters of credit at March 31, 2023 consisted of $ 183,000 in commercial letters of credit and $ 14,921,000 of standby letters of credit.

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 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, 2023, and 2022.

The accumulated amortization balances were $ 1,815,000 and $ 898,000 as of March 31, 2023 and 2022, respectively.

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 gross balance of deferred financing costs associated with the New Revolving Credit Facility was $ 4,027,000 as of March 31, 2023, and 2022, respectively, which are included in Other assets on the Consolidated Balance Sheet.

The accumulated amortization balance is $ 1,611,000 and 805,000 as of March 31, 2023 and March 31, 2022, respectively.

2 unchanged sentences

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.

The outstanding balance on the finance lease obligation is $ 13,541,000 as of March 31, 2023 of which $ 604,000 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 Consolidated Balance Sheet.

See Note 18, Leases , for further details.

7 unchanged sentences

In addition, unsecured lines of $ 12,933,000 were available for bank guarantees issued in the normal course of business of which $ 12,596,000 was utilized.

Subsequent event

In April of 2023 the Company announced that it entered into an agreement to acquire montratec.

The acquisition is expected to close on May 31, 2023.

To finance the montratec acquisition, the Company expanded its existing $ 100 million New Revolving Credit Facility by $ 75 million.

The Company has drawn on the expanded New Revolving Credit facility to initially fund the acquisition on May 31, 2023.

In addition, the Company plans to raise approximately $ 50 million in additional debt by June 30, 2023 through the securitization of certain of the Company's U.S.

customer accounts receivable balances.

The Company intends to use these proceeds to partially repay borrowings under its New Revolving Credit Facility.

Please refer to Note 3 of the financial statements for additional information related to the montratec acquisition.

Pensions and Other Benefit Plans

2 unchanged sentences

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.

COLUMBUS McKINNON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(tabular amounts in thousands, except share data)

Pension Plans

8 unchanged sentences

Benefits paid ( 23,980 ) ( 23,200 )

Settlement — ( 53,499 )

Foreign exchange rate changes ( 2,151 ) ( 5,295 )

5 unchanged sentences

Benefits paid ( 23,980 ) ( 23,200 )

Settlement — ( 53,499 )

Foreign exchange rate changes ( 399 ) 17

8 unchanged sentences

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 is $ 2,176,000 and

COLUMBUS McKINNON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(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.

There was no remaining asset surplus from the terminated plan as of March 31, 2023.

The remaining surplus of $ 2,176,000 as of March 31, 2022, was used, as prescribed in the applicable regulations, to fund obligations associated with the Company's U.S.

defined contribution plans.

6 unchanged sentences

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.

COLUMBUS McKINNON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(tabular amounts in thousands, except share data)

Net periodic pension cost included the following components:

Year Ended March 31,

2023 2022 2021

20 unchanged sentences

Interest crediting rates used in cash balance pension plans 4.04 % 1.05 % 1.10 %

COLUMBUS McKINNON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(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.

6 unchanged sentences

The Company has an investment objective for domestic pension plans to adequately provide for both the growth and liquidity needed to support all current and future benefit payment obligations.

The Company's policy is to de-risk the portfolio by increasing liability-hedging investments as the pension liability funded status increases, which is known as the glide path method.

The Company's policy is to de-risk the portfolio by increasing liability-hedging investments as the pension liability funded status increases, which is known as the glide path

COLUMBUS McKINNON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(tabular amounts in thousands, except share data)

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 $ 5,077,000 ) to its pension plans in fiscal 2023.

The Company plans to contribute approximately $ 6,839,000 to its pension plans in fiscal 2024.

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

16 unchanged sentences

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

COLUMBUS McKINNON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(tabular amounts in thousands, except share data)

Other Benefit Plans

6 unchanged sentences

The Company’s investment policy is to use its glide-path method to de-risk the portfolio by increasing liability-hedging investments as the pension liability funded status increases.

COLUMBUS McKINNON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(tabular amounts in thousands, except share data)

The fair values of the Company’s defined benefit plans’ consolidated assets by asset category as of March 31 were as follows:

19 unchanged sentences

(1) Reflects the net asset value (NAV) practical expedient used to approximate fair value.

COLUMBUS McKINNON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(tabular amounts in thousands, except share data)

Measured at NAV (1) Quoted Prices

17 unchanged sentences

We are not aware of any significant restrictions on the issuances or redemption of shares of these funds.

COLUMBUS McKINNON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(tabular amounts in thousands, except share data)

Fair value of Level 3 fixed income securities at the beginning of the year was $ 1,160,000 .

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.

Significant inputs in determining the fair value for these contracts include company contributions, contract disbursements, and stated interest rates.

Gains and losses on these contracts are recognized as part of net periodic pension cost and recorded as part of cost of sales, selling, or general and administrative expense.

During fiscal 2023 these Level 3 investments were liquidated and invested in the Company's other pension assets.

Employee Stock Ownership Plan ("ESOP")

11 unchanged sentences

For the years ended March 31, 2023 and 2022, an additional 179,000 and 120,000 , respectively, in contingently issuable shares were not included in the computation of diluted earnings per share because a performance condition had not yet been met.

COLUMBUS McKINNON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(tabular amounts in thousands, except share data)

The following table sets forth the computation of basic and diluted earnings per share (share data presented in thousands):

8 unchanged sentences

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

During fiscal 2023, the Company repurchased 31,000 shares of its common stock at an aggregate cost of $ 1,001,000 in accordance with the Company's previously adopted share repurchase program.

The value of the shares purchased are reflected as Treasury stock on the Company's Consolidated Balance Sheet as of March 31, 2023.

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.

2 unchanged sentences

This Statement requires all equity-based payments to employees, including grants of employee stock options, to be recognized in the statement of earnings based on the grant date fair value of the award.

Under the modified prospective method, the Company is required to record equity-based compensation expense for all awards granted after the date of adoption and for the unvested portion of previously granted awards outstanding as of the date of adoption.

COLUMBUS McKINNON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(tabular amounts in thousands, except share data)

modified prospective method, the Company is required to record equity-based compensation expense for all awards granted after the date of adoption and for the unvested portion of previously granted awards outstanding as of the date of adoption.

The Company grants share based compensation to eligible participants under the 2016 Long Term Incentive Plan, as Amended and Restated in June 2019 ("2016 LTIP").

4 unchanged sentences

Stock based compensation expense was $ 10,425,000 , $ 11,246,000 , and $ 8,022,000 for fiscal 2023, 2022, and 2021, respectively.

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.

Stock compensation expense is included in cost of products sold, selling, general and administrative, and research and development expenses depending on the nature of the service of the employee receiving the award.

3 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.

COLUMBUS McKINNON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(tabular amounts in thousands, except share data)

Long Term Incentive Plan

9 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 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.

For fiscal 2021, 2022 and 2023, 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.

COLUMBUS McKINNON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(tabular amounts in thousands, except share data)

A summary of option transactions during each of the three fiscal years in the period ended March 31, 2023 is as follows:

25 unchanged sentences

The Company's closing stock price was $ 37.16 as of March 31, 2023.

COLUMBUS McKINNON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(tabular amounts in thousands, except share data)

The total intrinsic value of stock options exercised was $ 360,000 , $ 2,513,000 , and $ 1,749,000 during fiscal 2023, 2022, and 2021, respectively.

14 unchanged sentences

975,171 $ 34.54 7.13

COLUMBUS McKINNON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(tabular amounts in thousands, except share data)

The following table provides certain information with respect to stock options exercisable at March 31, 2023:

19 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

COLUMBUS McKINNON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(tabular amounts in thousands, except share data)

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

4 unchanged sentences

For fiscal 2021, 2022, and 2023 restricted stock units for employees vest ratably based on service one-third after each of years one, two, and three.

COLUMBUS McKINNON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(tabular amounts in thousands, except share data)

A summary of the restricted stock unit awards granted under the Company’s LTIP plan as of March 31, 2023 is as follows:

25 unchanged sentences

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.

During fiscal 2020, the Company determined that the fiscal year 2019 performance shares were earned based on the performance condition being met.

Fiscal 2020 performance shares granted vest pursuant to a performance condition based upon the Company’s Consolidated EBITDA margin for the twelve months ended March 31, 2021.

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

During fiscal 2023, the Company determined that the performance condition on its fiscal 2021 performance shares would not be fully met.

The Company has adjusted its stock-based compensation expense accordingly in fiscal 2023.

Fiscal 2022 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, 2024.

11 unchanged sentences

Granted 83,164 25.97

Vested ( 23,201 ) 25.28

Forfeited ( 3,451 ) 25.28

7 unchanged sentences

Granted 67,606 33.03

Vested ( 18,296 ) 36.43

Forfeited ( 26,633 ) 35.26

5 unchanged sentences

The weighted average fair value grant price of those shares was $ 28.91 , $ 43.73 , and $ 33.32 for fiscal 2023, 2022, and 2021, respectively.

The expense related to the shares for fiscal 2022 was $ 959,000 and $ 540,000 and $ 460,000 for fiscal years 2021 and 2020.

The expense related to the shares was $ 1,194,000 , $ 959,000 and 540,000 for fiscal 2023, 2022 and 2021, respectively.

On March 20, 2023, the Company's Board of Directors approved payment of a quarterly dividend of $ 0.07 per common share, representing an annual dividend rate of $ 0.28 per share.

2 unchanged sentences

On March 26, 2019, the Board of Directors approved a new stock repurchase program authorizing the repurchase of up to $ 20 million of the Company's common stock.

No repurchases were made during the fiscal years ended March 31, 2022 or 2021.

The Company repurchased 31,000 shares of its common stock at an aggregate cost of $ 1,001,000 in accordance with this plan during the fiscal year ended March 31, 2023.

No repurchases were made during the fiscal year ended March 31, 2022.

Loss Contingencies

40 unchanged sentences

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 second quarter of fiscal 2021.

COLUMBUS McKINNON CORPORATION

1 unchanged sentence

(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.

29 unchanged sentences

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.

In April 2022, the Italian 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 $ 7,300,000 (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 $ 3,000,000 (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

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 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

COLUMBUS McKINNON CORPORATION

1 unchanged sentence

(tabular amounts in thousands, except share data)

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.

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.

10 unchanged sentences

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.

Further, in July 2022, the Supreme Court filed judgments concerning the tax assessments for the fiscal periods 2004/2005 and 2005/2006.

In all four judgments, 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.

In December 2022 the Power One China Subsidiary resumed the proceedings concerning the tax assessments for fiscal years 2002/2003 and 2006 before the Regional Tax Court.

A hearing was held before the Regional Tax Court in April 2023 and in May the court ruled in favor of the Company.

This decision can be appealed through December 2023.

In March 2023 the Power One China Subsidiary resumed the proceedings concerning the tax assessments for fiscal years 2004/2005 and 2005/2006 before the Regional Tax Court with hearings expected later in fiscal 2024.

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

15 unchanged sentences

Travelers moved for reconsideration and had sought discovery from Magnetek and Monsanto in connection with that motion.

On September 22, 2020, the Court issued an order denying the motion to reconsider and denying the motion to compel discovery from Magnetek.

The result was that the Court’s prior order granting Magnetek partial summary judgment and requiring Travelers’ to reimburse Magnetek’s defense costs to date and fund its defense costs moving forward was now binding, subject to Travelers right to appeal.

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 for past defense costs which are to be reimbursed.

On September 22, 2020, the Court issued an order denying the motion to reconsider and denying

COLUMBUS McKINNON CORPORATION

1 unchanged sentence

(tabular amounts in thousands, except share data)

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 motion to compel discovery from Magnetek.

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.

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

20 unchanged sentences

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 2024.

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:

COLUMBUS McKINNON CORPORATION

1 unchanged sentence

(tabular amounts in thousands, except share data)

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:

Year Ended March 31,

4 unchanged sentences

Foreign taxes at rates other than statutory federal rate 1,757 1,027 287

Employee benefits 1,207 ( 202 ) ( 67 )

US Tax on foreign earnings 1,257 845 352

Permanent items ( 190 ) ( 1,161 ) ( 107 )

2 unchanged sentences

Other 285 ( 114 ) ( 545 )

Tax audit adjustments (2) 2,523 — —

Unremitted earnings 720 — —

Return to provision adjustment 2,454 ( 77 ) —

Actual tax provision expense $ 26,046 $ 8,786 $ 970

(1) For fiscal 2022, permanent items include a net GILTI inclusion of $ 265,000 and Subpart F income of $ 580,000 .

For fiscal 2020, permanent items include a net GILTI inclusion of $ 525,000 and a FDII deduction of $ 1,029,000

(2) For fiscal 2022 the valuation allowance represents normal current year activity driven by certain foreign jurisdictions and for fiscal 2020, represents the reversal of a valuation allowance on certain foreign tax credits offset by increases in valuation allowances required in certain foreign jurisdictions.

(3) For Fiscal 2022 Federal tax credits include research and development credits of $ 700,000 .

For fiscal 2021, Federal tax credits include research and development credits of $ 700,000 .

For fiscal 2020, Federal tax credits include research and development credits of $ 800,000 and minimum tax credits of $ 1,103,000 .

(4) For Fiscal 2022 Other primarily relates to the FY21 NOL generated and related carryback benefit of $ 908,000 .

For fiscal 2021, Other primarily relates to adjustments for previously estimated tax expenses.

(1) Fiscal year 2022 and 2021 table amounts have been adjusted to be consistent with individual rate reconciling items disclosed for fiscal 2023.

(2) For fiscal 2023, the Company settled income tax assessments related to tax periods prior to the Company's acquisition of STAHL.

In accordance with the tax indemnification clause of the share purchase agreement, the Company received full reimbursement from STAHL’s prior owner which was recorded as a gain in Other (income) expense, net.

The provision for income tax expense (benefit) consisted of the following:

22 unchanged sentences

Equity compensation 4,552 3,927

Capitalized Research and Development Costs 6,976 2,003

Interest Carryforwards 3,271 3,795

Other 1,073 2,596

7 unchanged sentences

Net deferred tax assets (liabilities) $ ( 43,964 ) $ ( 39,332 )

The net deferred tax liability increased in fiscal 2022 primarily as a result of the acquisition of Dorner in Q1 of FY22.

The gross amount of the Company’s deferred tax assets were $ 87,178,000 and $ 86,634,000 at March 31, 2022 and 2021, respectively.

The valuation allowance includes $ 2,070,000 and $ 4,322,000 primarily related to foreign net operating losses at March 31, 2023 and 2022, respectively.

A valuation allowance of $ 1,820,000 was established in fiscal 2023 for separate state net operating losses.

The remaining valuation allowance primarily relates to foreign tax credits which the Company believes it will not utilize of $ 12,088,000 and $ 11,825,000 for the years ended March 31, 2023 and 2022, respectively.

The Company’s foreign subsidiaries have net operating loss carryforwards of $ 2,943,000 that expire in periods ranging from five years to indefinite.

Federal net operating losses of $ 13,752,000 arose from the acquisition of Dorner and have no expiration date.

Federal net operating losses of $ 69,900,000 arose from the acquisition of Magnetek and have expiration dates ranging from 2023 through 2035 and are subject to certain limitations under U.S.

Federal net operating losses from the acquisition of Dorner were fully utilized in fiscal 2023.

Federal net operating losses of $ 61,465,000 remaining from the acquisition of Magnetek, have expiration dates ranging from 2024 through 2035, and are subject to certain limitations under U.S.

The state net operating losses of $ 81,406,000 have expiration dates ranging from 2024 through 2042.

5 unchanged sentences

Net non-current deferred tax liabilities are included in other non-current liabilities.

Income before income tax expense includes foreign subsidiary income of $ 48,399,000 , $ 42,127,000 , and $ 30,894,000 for the years ended March 31, 2023, 2022, and 2021, respectively.

Historically, we have asserted that the unremitted earnings of most of our foreign subsidiaries were indefinitely reinvested in the jurisdiction in which they were earned.

However, as of March 31,

COLUMBUS McKINNON CORPORATION

1 unchanged sentence

(tabular amounts in thousands, except share data)

Income before income tax expense includes foreign subsidiary income of $ 42,127,000 , $ 30,894,000 , and $ 37,577,000 for the years ended March 31, 2022, 2021, and 2020, respectively.

As of March 31, 2022, the Company had approximately $ 115,000,000 of undistributed earnings of foreign subsidiaries.

These earnings are considered to be permanently invested in operations outside the U.S.

Determination of the amount of unrecognized tax liability with respect to such earnings is not practicable.

2023, the Company has determined that certain foreign amounts, which can be distributed tax efficiently, are no longer permanently reinvested where earned.

As of March 31, 2023 a tax liability of approximately $ 720,000 has been accrued for taxes that would be incurred upon repatriation of the earnings that are not permanently reinvested.

We continue to be permanently reinvested in the unremitted earnings of our other foreign subsidiaries, which total $ 90,525,000 , and outside basis differences other than unremitted earnings.

It is not practicable to calculate the amount of unrecognized deferred tax related to these basis differences.

Changes in the Company’s uncertain income tax positions, excluding the related accrual for interest and penalties, are as follows:

1 unchanged sentence

Beginning balance $ 414 $ 141 $ 132

Reductions for prior year tax positions — — ( 802 )

Additions for prior year tax positions — 281 —

4 unchanged sentences

$ 411,000 of the unrecognized tax benefits as of March 31, 2023 would impact the effective tax rate if recognized.

The Company anticipates that certain unrecognized tax benefits will change due to the settlement of audits in certain foreign jurisdictions prior to March 31, 2024.

The Company and its subsidiaries file income tax returns in the U.S., various state, local, and foreign jurisdictions.

2 unchanged sentences

The Company has a current tax examination in Germany for fiscal years 2012 to 2014.

The Company anticipates that certain unrecognized tax benefits will change due to the settlement of audits in certain foreign jurisdictions prior to March 31, 2023.

The Inflation Reduction Act was enacted in fiscal year 2023 and includes the implementation of a new 15 % minimum tax on book income of certain large corporations, an excise tax on stock buybacks, and various tax credits and incentives for energy and clean climate initiatives, among other provisions.

The Company has evaluated the Act and does not expect its provisions to have a material impact to the Company's consolidated financial statements.

Nature of leases

19 unchanged sentences

The following table presents the weighted average remaining lease term and discount rate as of March 31, 2023 and March 31, 2022, respectively:

March 31, 2022 March 31, 2021

Weighted-average remaining lease term (in years)

5 unchanged sentences

Amounts recognized on the financial statements

The following table illustrates the balance sheet classification for ROU assets and lease liabilities as of March 31, 2022 and March 31, 2021, respectively (in thousands):

March 31, 2022 March 31, 2021

The following table illustrates the balance sheet classification for lease assets and liabilities as of March 31, 2023 and March 31, 2022, respectively (in thousands):

Operating leases:

8 unchanged sentences

Total finance liabilities $ 13,541 $ 14,084

(1) Included in the operating ROU asset balance are leases held by Dorner and Garvey in the amount of $ 1,035,000 and $ 1,318,000 , respectively, as of March 31, 2022.

Operating lease expense of $ 9,197,000 , $ 9,101,000 and $ 9,175,000 for the fiscal years ending March 31, 2023, 2022, and 2021, respectively, is included in Income from operations on the Consolidated Statements of Operations.

Short-term lease expense, sublease income, and variable lease expenses are no t material for the fiscal year ending March 31, 2023, 2022, and 2021, respectively.

Finance lease expense of $ 984,000 for the fiscal year ending March 31, 2022, is included in Income from operations on the Consolidated Statements of Operations, and $ 634,000 is included in Interest and debt expense for the fiscal year ending March 31, 2022, on the Company's Consolidated Statements of Operations related to the finance lease.

Finance lease expense of $ 1,001,000 and $ 984,000 for the fiscal years ending March 31, 2023 and 2022, is included in Income from operations on the Consolidated Statements of Operations, and $ 621,000 and $ 634,000 and is included in Interest and debt expense for the fiscal years ending March 31, 2023 and 2022, on the Company's Consolidated Statements of Operations related to the finance lease.

Other lease disclosures

13 unchanged sentences

March 31, 2022

March 31, 2021

Cash paid for amounts included in the measurement of operating lease liabilities $ 8,872 $ 9,059 $ 8,909

125 unchanged sentences

Effects of New Accounting Pronouncements

Topics adopted in fiscal 2022

In December 2019, the FASB issued ASU No.

2019-12, "Simplifying the Accounting for Income Taxes" (Topic 740).

The standard clarifies, among other topics, that the effects of an enacted change in tax law on taxes currently payable or refundable for the current year be reflected in the computation of the annual effective tax rate in the first interim period that includes the enactment date of the new legislation.

The Company adopted this standard effective April 1, 2021 and the standard did not have a material impact on the financial statements for the year ended March 31, 2022.

Topics not yet adopted

In March 2022, the FASB issued ASU 2022 No.

2022-01, "Derivative and Hedging (Topic 815):

Fair Value Hedging - Portfolio Layer Method." The ASU clarified the guidance in ASC 815 on fair value hedge accounting of interest rate risk for portfolios of financial assets.

The ASU amends the guidance in ASU 2017-123 (released on August 28, 2017) that, among other things, established the “portfolio layer” method for making the fair value hedge accounting for these portfolios more accessible.

The ASU is effective for fiscal years beginning after December 15, 2022, including interim periods within those years, with early adoption permitted.

The amendments should be applied prospectively to business combinations occurring on or after the effective date of the amendments.

We are currently evaluating the impact the standard will have on our consolidated financial statements.

In December 2022, the FASB issued ASU 2022-06, " Reference Rate Reform (Topic 848):

Deferral of the Sunset Date of Topic 848 " from December 31, 2022 to December 31, 2024, which is superseding the date from ASU No.

2020-04, " Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting ." This ASU is elective and is relief to all entities, subject to meeting certain criteria, that have contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform.

Optional expedients are provided for contract modification accounting under topics such as debt, leases, and derivatives.

The optional amendments are effective for all entities as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020 through December 31, 2024.

We are currently evaluating the impact the standard will have on our consolidated financial statements if we chose to elect.

In October 2021, the FASB issued ASU No.

3 unchanged sentences

The amendments should be applied prospectively to business combinations occurring on or after the effective date of the amendments.

We are currently evaluating the impact the standard will have on our consolidated financial statements.

COLUMBUS McKINNON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(tabular amounts in thousands, except share data)

In March 2020, the FASB issued ASU No.

2020-04, "Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting." The ASU is elective and is relief to all entities, subject to meeting certain criteria, that have contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform.

Optional expedients are provided for contract modification accounting under topics such as debt, leases, and derivatives.

The optional amendments are effective for all entities as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020 through December 31, 2022.

We are currently evaluating the impact the standard will have on our consolidated financial statements if we chose to elect.

As described above, the Company announced that it has executed a definitive agreement to acquire montratec, which is expected to close during the first quarter of fiscal 2024.

As part of our purchase accounting procedures, we will plan to implement this standard.

COLUMBUS McKINNON CORPORATION

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(2) Insurance claims and expenses paid

Changes in and Disagreements with Accountants on Accounting and Financial Disclosures

Changes in and Disagreements With Accountants on Accounting and Financial Disclosure

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data