What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2024-05-29 compared with 2023-05-25 · 329 added, 344 removed, 1555 unchanged (30% of the section changed)

Financial Statements and Supplemental Data.

Financial Statements and Supplementary Data.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

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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.

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, 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 compared the significant assumptions used by management to current industry and economic trends and evaluated the effects of expanding into new markets 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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Auditing management's estimate of its reserves for asbestos-related product liabilities is complex and highly judgmental due to the significant estimation and judgment required in determining the ultimate outcomes of the cases asserted against the Company and in determining the ultimate costs for the Company to defend against such claims.

In particular, the estimated product liability reserve is sensitive to significant assumptions such as case dismissal rates, the number of years case activity might continue, legal and other costs to defend claims.

In particular, the estimated asbestos-related product liability reserve is sensitive to significant assumptions such as case dismissal rates, the number of years case activity might continue, legal and other costs to defend claims.

The cost to defend claims takes into consideration the extent to which insurance carriers, under pre-existing insurance policies and pursuant to a legal settlement, are covering future indemnity payments and sharing in payment of future legal defense costs.

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 product liability estimation process.

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 asbestos-related product liability estimation process.

Our procedures included, among others, testing management’s review of significant assumptions used for purposes of calculating the estimated liability.

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We have served as the Company’s auditor since at least 1917, but we are unable to determine the specific year.

Buffalo, New York

Charlotte, North Carolina

COLUMBUS McKINNON CORPORATION

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Total current liabilities 261,761 241,657

Term loan and finance lease obligations 430,988 470,675

Term loan, AR securitization facility and finance lease obligations 479,566 430,988

Other non-current liabilities 202,555 192,013

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Split-dollar life insurance arrangement adjustments, net of taxes of $( 426 ), $( 73 ), and $( 45 )

1,386 251 180

Change in derivatives qualifying as hedges, net of taxes of $ 1,111 , $( 2,636 ), and $( 39 )

( 3,305 ) 7,886 77

Total other comprehensive income (loss) ( 1,634 ) 11,856 10,087

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(In thousands, except share data)

($0.01 par value) Treasury Stock Additional

($ 0.01 par value)

Treasury Stock Additional

Capital Retained

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— — — — 16,312 16,312

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

43 — 198,662 — — 198,705

Stock compensation - directors — — 959 — — 959

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— — — — 8,243 8,243

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 — — 1,194 — — 1,194

2 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

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Stock compensation expense — — 10,865 — — 10,865

Treasury stock purchased, 31,085 shares

— ( 1,001 ) — — — ( 1,001 )

Restricted stock units released, 125,329 shares, net of shares withheld for minimum statutory tax obligation

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Cost of debt refinancing — — 14,803

Cost of debt repricing 958 — —

Loss on retirement of fixed asset — 175 —

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Dividend received from equity method investment 144 313 324

Proceeds from sale of fixed assets — — 446

Purchase of businesses, net of cash acquired (See Note 3) ( 108,145 ) ( 1,616 ) ( 539,778 )

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Proceeds from issuance of common stock 1,600 713 2,655

Borrowings under line-of-credit agreements — — 25,000

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

Fees paid for debt repricing ( 958 ) — —

Purchases of treasury stock — ( 1,001 ) —

Repayment of debt ( 60,604 ) ( 40,550 ) ( 477,846 )

Fees paid for revolver extension — — ( 826 )

Fees paid for borrowing on long-term debt ( 2,859 ) — —

Proceeds from issuance of long-term debt 120,000 — 725,000

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

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

collective bargaining agreements which expire in September 2024 and May 2027.

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

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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.

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.

In order to perform the quantitative impairment tests for the Rest of Products, Precision Conveyance and Linear Motion Products 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.

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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.

The Company performed its qualitative assessment as of February 29, 2024 for all three reporting units and determined that a quantitative goodwill impairment test was required for the Precision Conveyance reporting unit.

Based on results of both the qualitative and 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.

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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 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.

After performing a qualitative assessment as of February 29, 2024, it was determined that the trademarks were not impaired.

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

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

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

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

COLUMBUS McKINNON CORPORATION

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(tabular amounts in thousands, except share data)

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

Property, Plant, and Equipment

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Revenue Recognition, Accounts Receivable, and Concentration of Credit Risk

The Company adopted ASC 606, "Revenue from Contracts with Customers," in fiscal 2019.

Revenue from contracts with customers for standard products is recognized when legal title and significant risk and rewards has transferred to the customer, which is generally at the time of shipment.

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

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

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

Refer to Note 18 for further details.

COLUMBUS McKINNON CORPORATION

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(tabular amounts in thousands, except share data)

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

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

Refer to Note 18 for further details.

Use of Estimates

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Acquisitions & Disposals

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

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

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

The acquisition of Dorner accelerates the Company’s shift to intelligent motion and serves as a platform to expand capabilities in advanced, higher technology automation solutions.

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

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

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

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

The Company also incurred $ 970,000 in costs related to a transaction bonus that was paid 45 days after the acquisition date to key personnel of which $ 521,000 has been recorded as part of Cost of products sold, $ 350,000 has been recorded as part of Selling expenses, $ 74,000 has been recorded as part of General and administrative expenses, and $ 25,000 has been recorded as part of Research and development expenses in

COLUMBUS McKINNON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

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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 ("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 (as defined below).

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

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

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

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

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

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

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

Working Capital 20,218

Property, plant, and equipment, net 26,104

Intangible assets 190,000

Other assets 658

Other liabilities ( 896 )

Finance lease liabilities ( 14,582 )

Deferred and other taxes, net ( 35,689 )

Goodwill $ 287,141

Total $ 481,012

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

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 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.

On May 31, 2023, the Company completed its acquisition of montratec GmbH ("montratec") for $ 115,721,000 , including $ 7,576,000 in cash acquired, a $ 540,000 working capital settlement, and a contingent payment that becomes payable if a certain EBITDA level for the twelve-month period ended December 31, 2023 is achieved as set forth in the purchase agreement for montratec.

As of March 31, 2024, the company determined the contingent liability to be $ 6,680,000 , a decrease of $ 11,675,000 from the prior quarter as the amount expected to be paid in fiscal 2025 has been finalized with the prior owners.

This liability has been established in the opening balance sheet for montratec.

The Company initially financed the acquisition by borrowing $ 117,000,000 on its Amended and Restated Revolving Credit Facility, but later repaid the amount borrowed on the Amended and Restated Revolving Credit Facility by borrowing an additional $ 120,000,000 .

Utilizing the Accordion feature under the Company's existing Term Loan B, the Company borrowed $ 75,000,000 and another $ 45,000,000 was borrowed through a new credit agreement secured by the Company's U.S.

accounts receivable balances.

Refer to Note 12 for additional details on the Company's debt agreements.

montratec is a leading automation solutions Company that designs and develops intelligent automation and transport systems for interlinking industrial production and logistics processes.

montratec product offerings complement the Company's previous acquisitions of both Dorner Mfg.

("Dorner") and Garvey Corporation ("Garvey"), and furthers the Company's shift to intelligent motion and serves as a platform to expand capabilities in advanced, higher technology automation solutions.

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

montratec results have been included in the Company's results of operations from the acquisition date and the Company incurred and $ 3,211,000 of acquisition and deal related costs classified as part of General and administrative expenses in the year ended March 31, 2024.

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

The excess consideration of $ 66,566,000 has been recorded as goodwill, a decrease of $ 12,377,000 from the amount preliminarily allocated to goodwill as of December 31, 2023 due to a decrease of $ 11,675,000 for the contingent liability described above.

Other assets as well as Other current and non current liabilities increased as lease adjustments were finalized for $ 1,535,000 .

Additionally, other current and non current liabilities changed $ 702,000 related to a refinement in the

COLUMBUS McKINNON CORPORATION

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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 .

calculation of deferred taxes.

The identifiable intangible assets acquired include customer relationships valued at $ 33,470,000 , a trade name valued at $ 2,915,000 , and technology valued at $ 16,196,000 .

The weighted average life of the acquired identifiable intangible assets subject to amortization was estimated at 14 years at the time of acquisition.

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

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

Of the $ 66,566,000 goodwill recorded from the acquisition, $ 7,531,000 is deductible for tax purposes.

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

Working capital 4,523

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Intangible assets 52,581

Contingent liability (see above) ( 6,680 )

Other assets 7,239

Other liabilities ( 1,905 )

Other non current liabilities ( 18,241 )

Goodwill 66,566

Total $ 115,721

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 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.

COLUMBUS McKINNON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

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Revenue & Receivables

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Variable consideration is included in the transaction price if, in the Company’s judgment, it is probable that a significant future reversal of cumulative revenue under the contract will not occur.

Any estimates, including the effect of the constraint on variable consideration, are evaluated at each reporting period for any changes.

Any estimates, including the effect of the constraint on variable

COLUMBUS McKINNON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

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consideration, are evaluated at each reporting period for any changes.

In applying this guidance, the Company also considers whether any significant financing components exist.

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Examples of control are using the asset to produce goods or services, enhancing the value of other assets, settling liabilities, and holding or selling the asset.

For over time recognition, ASC 606 requires the Company to select a single revenue recognition method for the performance obligation that faithfully depicts the Company’s performance in transferring control of

COLUMBUS McKINNON CORPORATION

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the goods and services.

The guidance allows entities to choose between either an input method or an output method to measure progress toward complete satisfaction of a performance obligation.

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The promised services (such as inspection, commissioning, and installation) are essential in order for the delivered product to operate as intended on the customer’s site and the services are therefore highly interrelated with product functionality.

COLUMBUS McKINNON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

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For most custom engineered products contracts, the Company determined that while there is no alternative use for the custom engineered products, the Company does not have an enforceable right to payment (which must include a reasonable profit margin) for performance completed to date in order to meet the over time revenue recognition criteria.

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

COLUMBUS McKINNON CORPORATION

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Reconciliation of contract balances

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Other revenue recognized from customer advances ( 55,311 ) ( 40,444 )

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

Customer advances recorded from acquisition 3,866 —

Other (1) ( 7 ) ( 274 )

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We expect to recognize approximately 53 % of these sales over the next twelve months .

COLUMBUS McKINNON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

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Disaggregated revenue

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Crane solutions products include:

wire rope hoists, drives and controls, crane kits and

COLUMBUS McKINNON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

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components, and workstations.

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

Engineered products include:

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Accounts Receivable:

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

The Company records credit losses in accordance with “Financial Instruments - Credit Losses (Topic 326):

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

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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.

COLUMBUS McKINNON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

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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, 2024 and March 31, 2023 (in thousands):

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Less uncollectible accounts written off, net of recoveries ( 1,079 ) ( 3,056 )

Allowance recorded from acquisitions — 227

Allowance recorded from acquisition 64 —

Other (1) ( 3 ) ( 96 )

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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

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information available in the circumstances.

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

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

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Therefore, even when market assumptions are not readily available, assumptions are required to reflect those that market participants would use in pricing the asset or liability at the measurement date.

COLUMBUS McKINNON CORPORATION

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The Company primarily uses readily observable market data in conjunction with internally developed discounted cash flow valuation models when valuing its derivative portfolio and, consequently, the fair value of the Company’s derivatives is based on Level 2 inputs.

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Term loan $ ( 479,351 ) $ — $ ( 479,351 ) $ —

COLUMBUS McKINNON CORPORATION

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AR Securitization facility $ ( 45,000 ) $ — $ ( 45,000 ) $ —

Fair value measurements at reporting date using

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

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

At March 31, 2024, the Term Loan and Amended and Restated Revolving Credit Facility have been recorded at carrying value which approximates fair value.

In fiscal 2024, the Company also borrowed an additional $ 45,000,000 under a new credit agreement secured by the Company's U.S.

accounts receivable balances (the "AR Securitization Facility").

COLUMBUS McKINNON CORPORATION

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Securitization Facility has been recorded at carrying value which approximates fair value.

Refer to Note 12 for additional information regarding the Company's long-term debt.

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

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Fiscal 2024 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.

As described in Note 9, the fair value of the net assets of the Company’s Precision Conveyor reporting unit was calculated on a non-recurring basis in Fiscal 2024.

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 Fiscal 2024 goodwill impairment test consisted of determining the fair value of the Precision Conveyor reporting unit 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.

To estimate the fair value of the Precision Conveyor reporting unit, the Company used significant estimates and judgmental factors.

The key estimates and factors used in the discounted cash flow valuation include revenue growth rates, EBITDA margins and cash flows 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

Precision Conveyor Reporting Unit

Compound annual growth rate 13.0 %

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Weighted-average cost of capital 13.2 %

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

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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.

In addition to the Company's quantitative goodwill test, assets and liabilities were preliminarily recorded at fair value on a non-recurring basis in Fiscal 2024 in connection with the acquisition of montratec described in Note 3.

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

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

property, plant, and equipment;

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

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

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

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

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

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

Significant valuation inputs included an attrition rate of 10.0 % for customer relationships, an estimated royalty rate of 5.0 % for technology, a royalty rate of 1.0 % for trademark and trade names, and a weighted average cost of capital of 12.5 %.

Fiscal 2023 Non-Recurring Measurements

The fair value of the net assets of the Company’s Rest of Products, Precision Conveyor and Linear Motion Products reporting units were calculated on a non-recurring basis in Fiscal 2023.

The Fiscal 2023 goodwill impairment test consisted of determining the fair values of the Rest of Products, Precision Conveyor and Linear Motion Products 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 Linear Motion Products reporting units, the Company used significant estimates and judgmental factors.

The key estimates and factors used in the discounted cash flow

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(tabular amounts in thousands, except share data)

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 Linear Motion Reporting Unit

Compound annual growth rate 6.7 % 9.8 % 9.1 %

Terminal value growth rate 3.0 % 3.0 % 3.5 %

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

Inventories consisted of the following:

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

The impact on earnings for unrealized gains and losses was a gain of $ 317,000 , and losses of $ 296,000 and $ 370,000 in fiscal years 2024, 2023, and 2022, respectively.

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

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

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.

Net realized gains related to sales of marketable securities were $ 212,000 in fiscal 2024 and were not material in fiscal 2023 and 2022, respectively, and are included in Investment (income) loss in the Consolidated Statements of Operations.

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

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The investment value was increased for the Company's ownership percentage of income earned by EMC in the amount of $ 890,000 and $ 365,000 in the twelve months ended March 31, 2024 and March 31, 2023, 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.

Additionally, the investment value decreased in the amount of

COLUMBUS McKINNON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(tabular amounts in thousands, except share data)

$ 18,000 and $ 67,000 due to the effect of currency translation in the twelve months ended March 31, 2024 and March 31, 2023, respectively.

Further, in the twelve months ended March 31, 2024 and March 31, 2023, EMC distributed cash dividends which the Company received 49 % of pursuant to its ownership interest.

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Net property, plant, and equipment $ 106,395 $ 94,360

The acquisition of montratec contributed $ 7,478,000 to the increase in property, plant, and equipment since March 31, 2023.

Depreciation expense was $ 16,549,000 , $ 15,946,000 , and $ 16,639,000 for the years ended March 31, 2024, 2023, and 2022, respectively.

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Goodwill and Intangible Assets

As discussed in Note 2, goodwill is not amortized but is tested for impairment at least annually, in accordance with the provisions of ASC Topic 350-20-35-1.

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 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

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(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 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, 2023 and 2022, respectively.

The Company has three reporting units as of March 31, 2024 and March 31, 2023.

The Linear Motion Products reporting unit (which designs, manufactures, and sources mechanical and electromechanical actuators and rotary unions) had goodwill of $ 9,699,000 at March 31, 2024 and 2023, respectively.

The Rest of Products reporting unit (representing the hoist, chain, and forgings, digital power control systems, and distribution businesses) had goodwill of $ 304,760,000 and $ 306,988,000 at March 31, 2024 and 2023, respectively.

The Precision Conveyance reporting unit (which represents high-precision conveying systems) had goodwill of 395,875,000 and $ 327,942,000 at March 31, 2024 and March 31, 2023.

The goodwill associated with the fiscal 2024 acquisition of montratec, as described in Note 3, is included in the Precision Conveyance reporting unit.

Fiscal 2024 Annual Goodwill and Intangible Asset Impairment Test

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

To perform the

COLUMBUS McKINNON CORPORATION

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(tabular amounts in thousands, except share data)

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

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.

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

We performed the qualitative assessment as of February 29, 2024 for all three reporting units and determined that the quantitative test was required for the Precision Conveyance reporting unit.

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

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

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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, 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)

After performing a qualitative assessment as of February 29, 2024, we determined that the trademarks were not impaired.

A summary of changes in goodwill during the years ended March 31, 2024 and 2023 is as follows:

Balance at April 1, 2022

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

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

Working capital adjustment for Garvey $ 1,616

Garvey contingent payment reclassification $ ( 2,000 )

Currency Translation $ ( 3,836 )

Balance at March 31, 2023 644,629

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

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

Acquisition of montratec (Refer to Note 3) 66,566

Currency translation ( 861 )

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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, 2024 are summarized as follows (in thousands):

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Total amortization expense was $ 29,396,000 , $ 26,001,000 , and $ 25,283,000 for fiscal 2024, 2023, and 2022, respectively.

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

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

The increase in amortization expense in fiscal 2024 is the result of the montratec acquisition 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 $ 30,020,000 .

Derivative Instruments

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The Company has derivative contracts with three counterparties as of March 31, 2024.

COLUMBUS McKINNON CORPORATION

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(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.

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As of March 31, 2024, the notional amount of this derivative was $ 93,910,000 , and the contract matures on March 31, 2028.

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

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

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

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

From its March 31, 2024 balance of AOCL, the Company expects to reclassify approximately $ 148,000 out of AOCL, and into foreign currency exchange loss (gain), during the next 12 months based on the contractual payments due under this intercompany loan.

2 unchanged sentences

From its March 31, 2024 balance of AOCL, the Company expects to reclassify approximately $ 71,000 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.

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

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

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

The amortizing interest rate swaps mature by February 28, 2025 and had a total notional amount of $ 273,591,000 as of March 31, 2023.

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

The most recent interest rate swap agreement was entered into in fiscal 2024 as a result of the additional debt from the montratec acquisition.

The Company modified its historical interest rate swaps from London Inter-Bank Offered Rate ("LIBOR") to Secured Overnight Financing Rate ("SOFR") in the first quarter of fiscal 2024.

This modification had no impact on the Company's hedge accounting and hedge designation.

These interest rate swap agreements are designated as cash flow hedges to hedge changes in interest expense due to changes in the variable interest rate of the Company's variable interest debt.

The amortizing interest rate swaps mature by April 30, 2028 and had a total notional amount of $ 346,434,000 as of March 31, 2024.

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

From its March 31, 2024 balance of AOCL, the Company expects to reclassify approximately $ 5,644,000 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 Operation for the years ended March 31, 2024, 2023, and 2022 (in thousands):

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Hedging Instruments Balance Sheet Location 2024 2023

Foreign exchange contracts Prepaid expenses and other $ 56 $ —

Foreign exchange contracts Other Assets — 136

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Cross currency swap Prepaid expenses and other 199 168

Cross currency swap Accrued liabilities — ( 170 )

Cross currency swap Other non current liabilities ( 2,541 ) ( 2,270 )

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Current ROU lease liabilities 8,723 7,966

Cross currency swap — 170

Other accrued liabilities 39,828 32,543

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Consolidated long-term debt of the Company consisted of the following:

Term loan 462,560 502,560

Term loan B $ 477,560 $ 462,560

AR Securitization 45,000 —

Unamortized deferred financing costs, net ( 5,261 ) ( 4,508 )

2 unchanged sentences

Total debt, less current portion $ 467,299 $ 418,052

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 Previous Credit Agreement (as amended by the First Amended Credit Agreement, dated as of February 26, 2018).

The Second Amended Credit

The Company entered into the First Lien Facilities with JPMorgan Chase Bank, PNC and Wells Fargo in connection with its Fiscal 2022 acquisition of Dorner.

The First Lien Facilities consisted of the Amended and Restated Revolving Credit Facility and the Bridge Facility.

COLUMBUS McKINNON CORPORATION

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(tabular amounts in thousands, except share data)

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.

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

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

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

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

6) Collateral:

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

In fiscal 2022, the Company incurred $ 14,803,000 in debt extinguishment costs of which $ 5,946,000 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.

During fiscal 2024, the Company amended its Amended and Restated Revolving Credit Facility increasing the size of the Amended and Restated Revolving Credit Facility by $ 75,000,000 to a total of $ 175,000,000 .

The Company incurred fees of $ 801,000 in this transaction which have been deferred and will be amortized over the remaining term of the Amended and Restated Revolving Credit Facility.

The Company borrowed against the expanded Amended and Restated Revolving Credit Facility in May of fiscal 2024 to initially fund the montratec acquisition as described in Note 3.

These borrowings were fully repaid in fiscal 2024

The Company borrowed additional funds in accordance with the Accordion feature under its existing Term Loan B facility by $ 75,000,000 in both fiscals 2022 and 2024.

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

Proceeds from the second Accordion were used, among other things, to repay borrowings on the Amended and Restated Revolving Credit Facility.

No material amendment to the terms of the Term Loan B facility or the First Lien Facilities were necessary for the Company to

COLUMBUS McKINNON CORPORATION

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(tabular amounts in thousands, except share data)

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.

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

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

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

No material amendment to the terms of the Term Loan B facility or the First Lien 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 $ 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.

utilize the Accordion feature.

The Company recorded $ 892,000 in deferred financing costs on the first Accordion in Fiscal 2022 and $ 1,522,000 on the second Accordion in Fiscal 2024, both of which will be amortized over the remaining life of the Term Loan B.

The Company borrowed against the expanded Amended and Restated Revolving Credit Facility in May of fiscal 2024 to initially fund the montratec acquisition as described in Note 3.

Further, the Company borrowed an additional $ 45,000,000 under a new credit agreement secured by the Company's U.S accounts receivable balances (the "AR Securitization Facility").

The total U.S accounts receivable balances which secure the AR Securitization Facility total $ 74,590,000 as of March 31, 2024.

The Company used the proceeds from the second $ 75,000,000 Accordion borrowing and the $ 45,000,000 AR Securitization Facility to fully repay borrowings on the Amended and Restated Revolving Credit Facility prior to June 30, 2023.

The Key terms of the new AR Securitization Facility are as follows:

• The AR Securitization Facility Agreement provides for revolving loans to be made up to a maximum principal amount of $ 55,000,000 of which $ 45,000,000 was drawn as of March 31, 2024.

• The AR Securitization Facility borrowings bear interest at a floating rate equal to a one-month secured overnight funding rate (SOFR) plus 10 basis points of credit spread adjustment, plus 110 basis points.

• The AR Securitization Facility borrowings are secured by the Company's U.S.

accounts receivables totaling $ 74,590,000 at March 31, 2024.

• The AR Securitization Facility Agreement contains customary events of default (referred to as “Amortization Events.”)

• Amounts drawn under the AR Securitization Facility may remain outstanding until the maturity date of the AR Securitization Facility on June 19, 2026.

Prior to the maturity date, the Company is only required to repay principal to the extent necessary to maintain borrowing base compliance, unless an Amortization Event occurs.

As of March 31, 2024, there have been no Amortization Events triggered in the AR Securitization Facility.

The Company has both the ability and intent to have the AR Securitization Facility remain outstanding for the next 12 months.

As such, the Company has classified the full $ 45,000,000 outstanding borrowings under the AR Securitization Facility as long-term debt at March 31, 2024 demonstrated above.

In addition to the above, the Company amended the variable interest component of its Term Loan B and Amended and Restated Revolving Credit Facility to transition from LIBOR to SOFR.

On March 18, 2024, Columbus McKinnon Corporation entered into a Fourth Amendment (the “Fourth Amendment”) to the Amended and Restated Credit Agreement, dated as of May 14, 2021, by and among the Company, Columbus McKinnon EMEA GmbH, the lenders from time to time party thereto, JPMorgan Chase Bank, N.A., as administrative agent, and the other agents parties thereto, as amended (the “Credit Agreement”).

The Fourth Amendment reduces the interest rate margin applicable under the Term Loan B by 25 basis points for both term SOFR borrowings and base rate borrowings and eliminates the Term SOFR Adjustment on the term loan B only which varied based on the interest period selected.

After giving effect to the repricing, the applicable interest rate margins for the Term Loan B are 2.50 % for term SOFR borrowings and 1.50 % for base rate borrowings.

The Company has accounted for the Fourth Amendment as a debt modification, therefore, debt repricing fees incurred in fiscal 2024 were expensed as general and administrative expenses and the deferred financing fees incurred as part of the Term Loan B (discussed below) remain unchanged.

The outstanding principal balance of the Term Loan B facility was $ 477,560,000 as of March 31, 2024, which includes $ 75,000,000 in principal balance from the Accordion exercised in the first quarter of fiscal 2024 as described above, and the outstanding balance of the Term Loan B was $ 462,560,000 as of March 31, 2023.

The Company made $ 60,000,000 and $ 40,000,000 of principal payments on the Term Loan B during fiscal 2024 and fiscal 2023, respectively.

1 unchanged sentence

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, 2023, and 2022.

COLUMBUS McKINNON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(tabular amounts in thousands, except share data)

There were no outstanding borrowings and $ 15,368,000 outstanding letters of credit issued against the Amended and Restated Revolving Credit Facility as of March 31, 2024.

The outstanding letters of credit at March 31, 2024 consisted of $ 15,368,000 of standby letters of credit.

The gross balance of deferred financing costs on the Term Loan B facility was $ 7,845,000 and $ 6,323,000 as of March 31, 2024 and 2023, respectively.

The increase of $ 1,522,000 in fiscal 2024 relates to the Accordion exercise described above.

The accumulated amortization balances were $ 2,971,000 and $ 1,815,000 as of March 31, 2024 and 2023, respectively.

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 gross balance of deferred financing costs associated with the AR Securitization Facility was $ 536,000 with an accumulated amortization balance of $ 149,000 as of March 31, 2024.

The gross balance of deferred financing costs associated with the Amended and Restated Revolving Credit Facility was $ 4,828,000 as of March 31, 2024 and $ 4,027,000 as of March 31, 2023, respectively, which are included in Other assets on the Consolidated Balance Sheet.

The increase in the deferred financing costs in Fiscal 2024 are related to fees incurred to increase the facility as described above.

The accumulated amortization balance is $ 2,655,000 and $ 1,611,000 as of March 31, 2024 and March 31, 2023, respectively.

The principal payments obligated to be made as of March 31, 2023 on the Term Loan B facility are as follows:

The principal payments obligated to be made as of March 31, 2024 on the Term Loan B facility and AR Securitization are as follows:

2027 $ 49,976

Thereafter $ 457,656

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 $ 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.

The outstanding balance on the finance lease obligation is $ 12,937,000 as of March 31, 2024 of which $ 670,000 has been recorded within the Current portion of long term debt and the remaining balance recorded within Term loan, AR securitization facility and finance lease obligations on the Company's Consolidated Balance Sheet.

See Note 18, Leases , for further details.

COLUMBUS McKINNON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(tabular amounts in thousands, except share data)

Lines of Credit and Loans

3 unchanged sentences

In addition, unsecured lines of $ 13,945,000 were available for bank guarantees issued in the normal course of business of which $ 11,261,000 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

15 unchanged sentences

Benefits paid ( 22,650 ) ( 23,980 )

Settlement ( 20,510 ) —

Foreign exchange rate changes ( 331 ) ( 2,151 )

5 unchanged sentences

Benefits paid ( 22,650 ) ( 23,980 )

Settlement ( 20,510 ) —

Foreign exchange rate changes ( 4 ) ( 399 )

3 unchanged sentences

Net amount recognized $ ( 52,204 ) $ ( 51,374 )

During fiscal 2021, the Company settled the liabilities for one of its U.S.

pension plans through a combination of (i) lump sum payments to eligible participants who elected to receive them and (ii) the purchase of annuity contracts for participants who did not elect lump sums.

The lump sum payments were paid during the quarter ended June 30, 2020 and resulted in a settlement charge of $ 2,722,000 which was recorded in Other (income) expense, net on the Consolidated Statements of Operations.

During the quarter ended September 30, 2020, the Company purchased annuity contracts to settle the remaining liabilities of the terminated plan.

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.

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.

During fiscal 2024, the Company terminated both of its Canadian pension plans and began the process to terminate one of its U.S.

pension plans.

plan, lump sum payments were made to eligible participants who elected to receive them.

The lump sum payments were paid during the third and fourth quarters of fiscal 2024.

These lump sum payments along with the overall termination of the two Canadian plans resulted in a settlement charge of $ 4,984,000 which was recorded in Other (income) expense, net on the Consolidated Statements of Operations.

The Company expects to complete the termination of the U.S.

plan in fiscal year 2025.

Amounts recognized in the consolidated balance sheets are as follows:

59 unchanged sentences

The life insurance plan is noncontributory.

The net periodic postretirement benefit cost for fiscal 2023 was $ 158,000 and the liability at March 31, 2023 is $ 997,000 with $ 826,000 included in Other non-current liabilities and $ 171,000 included in Accrued liabilities in the Consolidated Balance Sheet.

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

Under these arrangements, the Company pays certain premium costs on life insurance policies for the former officers.

The net periodic postretirement benefit income for fiscal 2024 was $ 146,000 and the liability at March 31, 2024 is $ 847,000 with $ 695,000 included in Other non-current liabilities and $ 152,000 included in Accrued liabilities in the Consolidated Balance Sheet.

The Company has collateralized split-dollar life insurance arrangement with one of its former officers.

Under this arrangement, the Company pays certain premium costs on life insurance policy for the former officer.

Upon the later of the death of the former officer and their spouse, the Company will receive all of the premiums paid to-date.

8 unchanged sentences

Fair Values of Plan Assets

The Company classified its investments within the categories of equity securities, fixed income securities, alternative real estate, and cash equivalents, as the Company’s management bases its investment objectives and decisions from these four categories.

The Company classified its investments within the categories of equity securities, fixed income securities, common collective trusts, alternative real estate, and cash equivalents, as the Company’s management bases its investment objectives and decisions from these four categories.

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.

6 unchanged sentences

Fixed income securities 81,890 76,701

Common collective trusts 98,117 116,477

Alternative real estate — 8,565

11 unchanged sentences

Fixed income securities — 81,890 — — 81,890

Alternative real estate 8,565 — — — 8,565

Common collective trusts 98,117 — — — 98,117

Cash equivalents — 4,319 — — 4,319

9 unchanged sentences

Fixed income securities — 76,701 — — 76,701

Common collective trusts 116,477 — — — 116,477

Alternative real estate 8,565 — — — 8,565

2 unchanged sentences

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

Level 1 securities consist of mutual funds with quoted market prices.

The Level 2 fixed income securities are investments in a combination of funds whose underlying investments are in a variety of fixed income securities including foreign and domestic corporate bonds, securities issued by the U.S.

government, U.S.

and foreign government obligations, and other similar fixed income investments.

The fair values of the underlying investments in these funds are generally based on independent broker dealer bids, or by comparison to other debt securities having similar durations, yields, and credit ratings.

The fair values of these funds are determined based on their net asset values which are published daily.

Level 1 securities consist of mutual funds, domestic corporate bonds, securities issued by the U.S.

government other similar fixed income investments with quoted market prices.

NAV is used as a practical expedient to estimate fair value.

NAV is based on the fair value of the underlying investments held by the fund less its liability based on published daily rate.

This practical expedient is not used when it is determined to be probable that the fund will sell the investment for an amount different from the reported NAV.

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

2 unchanged sentences

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

Level 2 fixed income securities fair values of the underlying investments are generally based on independent broker dealer bids, or by comparison to other debt securities having similar durations, yields, and credit ratings.

Employee Stock Ownership Plan ("ESOP")

23 unchanged sentences

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.

Refer to Note 3 for additional details of this transaction.

The Company records stock-based compensation in accordance with ASC Topic 718, “Compensation – Stock Compensation,” applying the modified prospective method.

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

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

COLUMBUS McKINNON CORPORATION

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(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").

19 unchanged sentences

Stock Option Plans

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, 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.

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

73 unchanged sentences

The Company granted restricted stock units under the 2016 LTIP during fiscal 2024, 2023, and 2022 to employees as well as to the Company’s non-executive directors as part of their annual compensation.

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

For fiscal 2022, 2023, and 2024 restricted stock units for employees vest ratably based on service one-third after each of years one, two, and three.

28 unchanged sentences

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

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

Fiscal 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.

During fiscal 2023, the Company determined that the performance condition on its fiscal 2022 performance shares would not be fully met.

The Company has adjusted its stock-based compensation expense accordingly in fiscal 2024.

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.

Fiscal 2023 performance shares granted vest pursuant to a performance condition based upon the Company’s Consolidated ROIC for the twelve months ended March 31, 2025.

At this time, the Company believes the March 31, 2025 performance condition will be met.

15 unchanged sentences

Granted 67,606 33.03

Vested ( 18,296 ) 36.43

Forfeited ( 26,633 ) 35.26

2 unchanged sentences

Granted 73,453 36.58

Vested ( 39,720 ) 35.95

Forfeited ( 33,838 ) 28.66

17 unchanged sentences

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

The aggregate amounts of reserves were $ 21,103,000 (gross of estimated insurance recoveries of $ 8,272,000 ) and $ 22,575,000 (gross of estimated insurance recoveries of $ 9,160,000 ) of which $ 16,203,000 and $ 18,675,000 are included in Other non current liabilities and $ 4,900,000 and $ 3,900,000 in Accrued liabilities as of March 31, 2023 and 2022, respectively.

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

The aggregate amounts of reserves were $ 19,988,000 (gross of estimated insurance recoveries of $ 7,637,000 ) and $ 21,103,000 (gross of estimated insurance recoveries of $ 8,272,000 ) of which $ 15,388,000 and $ 16,203,000 are included in Other non current liabilities and $ 4,600,000

COLUMBUS McKINNON CORPORATION

1 unchanged sentence

(tabular amounts in thousands, except share data)

and $ 4,900,000 in Accrued liabilities as of March 31, 2024 and 2023, respectively.

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

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

29 unchanged sentences

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

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

The terms of the settlement require the carriers to pay

COLUMBUS McKINNON CORPORATION

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(tabular amounts in thousands, except share data)

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.

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

1 unchanged sentence

The Company has recorded a receivable for the estimated future cost sharing in Other assets in the Balance Sheet in the amount of $ 7,637,000 and $ 8,272,000 , which offsets its asbestos reserves, at March 31, 2024 and 2023, respectively.

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

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

During Magnetek's ownership, none of the businesses produced or sold asbestos-containing products.

For such claims, Magnetek is uninsured and either contractually indemnified against liability, or contractually obligated to defend and indemnify the purchaser of these former business operations.

The Company aggressively seeks dismissal from these proceedings.

The asbestos-related liability including legal costs is estimated to be approximately $ 842,000 and $ 663,000 , which has been reflected as a liability in the consolidated financial statements at March 31, 2024 and 2023, respectively.

Product Liability

4 unchanged sentences

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

In April of fiscal 2025, a trial involving a product liability claim against the Company resulted in a jury verdict demanding the Company to pay approximately $ 3,000,000 in damages.

The Company along with its attorneys believes it will be successful in overturning this verdict and that payment of the damages is not probable.

As such the Company has not accrued the damages at March 31, 2024.

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

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

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

During Magnetek's ownership, none of the businesses produced or sold asbestos-containing products.

For such claims, Magnetek is uninsured and either contractually indemnified against liability, or contractually obligated to defend and indemnify the purchaser of these former business operations.

The Company aggressively seeks dismissal from these proceedings.

The asbestos-related liability including legal costs is estimated to be approximately $ 663,000 and $ 562,000 , which has been reflected as a liability in the consolidated financial statements at March 31, 2023 and 2022, respectively.

Litigation-Other

13 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 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 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

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

COLUMBUS McKINNON CORPORATION

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(tabular amounts in thousands, except share data)

canceled the notices of assessment for the fiscal years of 2004/2005 and 2005/2006.

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

In 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 $ 7,200,000 (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, 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 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.

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

1 unchanged sentence

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

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

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

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

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

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

1 unchanged sentence

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

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

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.

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.

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

The tax authority appealed this decision on December 6, 2023, and the Company filed the relevant counter claims in January of 2024.

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.

The hearing was held in February 2024 where the court upheld the assessments.

The Company is appealing the judgment and expects the Supreme court to reverse the judgment of the lower court as they have previously with the 2002/2003 and 2006 assessments.

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

5 unchanged sentences

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

Magnetek is vigorously defending against those demands and has commenced litigation to, among other things, declare the Special Undertaking void and unenforceable.

Monsanto has, in turn, commenced an action to enforce the Special Undertaking.

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

Magnetek is vigorously defending against those demands and commenced litigation in New Jersey to, among other things, declare the Special Undertaking void and unenforceable.

Monsanto has, in turn, commenced an action to enforce the Special Undertaking in Missouri and joined five additional companies as co-defendants in that Missouri action.

COLUMBUS McKINNON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(tabular amounts in thousands, except share data)

The New Jersey action was recently dismissed in favor of the Missouri action.

Magnetek has appealed that decision and intends to continue to vigorously prosecute its New Jersey declaratory judgment action, and to defend against Monsanto’s action against it.

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

4 unchanged sentences

The Court also held that Travelers prior settlements with other insureds under the policies did not cut off or release Magnetek's rights under the policies.

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

COLUMBUS McKINNON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(tabular amounts in thousands, except share data)

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.

Travelers moved for reconsideration which motion was denied.

Travelers is currently defending the Company in its litigation with Monsanto.

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

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

That motion is not yet fully briefed.

That suit is presently stayed due to the bankruptcy of Velsicol Chemical, LLC, a third-party indemnitor of TIC and Travelers.

Environmental Matters

14 unchanged sentences

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

The Company has recorded a liability of $ 218,000 , included in the amount specified above, related to the Bridgeport facility, representing the best estimate of future site investigation costs and remediation costs which are expected to be incurred in the future.

The Company has recorded a liability of $ 449,000 , included in the amount specified above, related to the Bridgeport facility,

COLUMBUS McKINNON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(tabular amounts in thousands, except share data)

representing the best estimate of future site investigation costs and remediation costs which are expected to be incurred in the future.

For all of the currently known environmental matters, the Company has accrued as of March 31, 2024 a total of $ 727,000 which, in our opinion, is sufficient to deal with such matters.

The Company is not aware of any environmental condition or any operation at any of its facilities, either individually or in the aggregate, which would cause expenditures to have a material adverse effect on its results of operations, financial condition or cash flows and, accordingly, has not budgeted any material capital expenditures for environmental compliance for fiscal 2024.

United States income before income tax expense was $ 20,464,000 , $ 26,076,000 , and ($ 3,681,000 ) for the years ended March 31, 2024, 2023, and 2022, respectively.

Income before income tax expense also includes foreign subsidiary income of $ 41,063,000 , $ 48,399,000 , and $ 42,127,000 for the years ended March 31, 2024, 2023, and 2022, respectively.

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(tabular amounts in thousands, except share data)

Year Ended March 31,

5 unchanged sentences

Employee benefits 1,347 1,207 ( 202 )

US benefit on foreign derived income ( 686 ) ( 477 ) ( 205 )

US Tax on foreign earnings 757 1,257 845

10 unchanged sentences

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.

For fiscal 2024, the Company collected tax refunds related to a period prior to the Company's acquisition of STAHL.

In accordance with the tax indemnification clause of the share purchase agreement, the Company will reimburse STAHL’s prior owner which was recorded as an loss in Other (income) expense, net.

(3) For fiscal 2024, the Company wrote off $ 1,142,000 of tax attributes as a result of legal entity simplification.The tax attributes had an associated valuation allowance of $ 1,142,000 which was also written off in fiscal 2024.

(4) For fiscal 2024, a tax impact of $ 525,000 from non-deductible transaction costs was incurred as part of the montratec GmbH acquisition.

COLUMBUS McKINNON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(tabular amounts in thousands, except share data)

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

9 unchanged sentences

$ 14,902 $ 26,046 $ 8,786

COLUMBUS McKINNON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(tabular amounts in thousands, except share data)

The Company applies the liability method of accounting for income taxes as required by ASC Topic 740, “Income Taxes.” The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities are as follows:

20 unchanged sentences

The valuation allowance includes $ 989,000 and $ 2,070,000 primarily related to foreign net operating losses at March 31, 2024 and 2023, respectively.

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

The valuation allowance also includes $ 2,091,000 and $ 1,788,000 for separate state net operating losses at March 31, 2024 and 2023, respectively.

The remaining valuation allowance primarily relates to foreign tax credits which the Company believes it will not utilize of $ 12,076,000 and $ 12,088,000 for the years ended March 31, 2024 and 2023, 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 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.

The Company’s foreign subsidiaries have tax-effected net operating loss carryforwards of $ 4,246,000 that expire in periods ranging from five years to indefinite.

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

Federal net operating loss carryforwards of $ 56,088,000 remain from the acquisition of Magnetek, have expiration dates ranging from 2025 through

COLUMBUS McKINNON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(tabular amounts in thousands, except share data)

2035, and are subject to certain limitations under U.S.

State net operating losses of $ 69,412,000 either have indefinite carryforward periods or have expiration dates ranging from 2025 through 2042.

The federal tax credits have expiration dates ranging from 2028 to 2034.

Included in the Other deferred tax asset category above are $ 1,251,000 of state tax credit carryforwards.

These state tax credit carryforwards have expiration dates ranging from 2026 to 2038.

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

3 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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(tabular amounts in thousands, except share data)

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, 2024, the Company has determined that certain foreign amounts, which can be distributed tax efficiently, are not permanently reinvested where earned.

As of March 31, 2024 a tax liability of approximately $ 925,000 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.

$ 75,848,000 of unremitted earnings of other subsidiaries and outside basis differences other than unremitted earnings are intended to be permanently reinvested.

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

8 unchanged sentences

$ 411,000 of the unrecognized tax benefits as of March 31, 2024 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.

It is reasonably possible that the amount of unrecognized tax benefits could change in the next 12 months, however an estimate of the change cannot be made.

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

1 unchanged sentence

With few exceptions, the Company is no longer subject to tax examinations by tax authorities in the United States for tax years prior to March 31, 2021 and in Germany for tax years prior to March 31, 2012.

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

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

In addition, the tax authorities have also started an examination for fiscal years 2015 through 2018.

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.

The Company has evaluated the Act and its provisions did not have a material impact to the Company's consolidated financial statements for fiscal 2024.

On December 15, 2022, the European Union (EU) Member States formally adopted the EU’s Pillar Two Directive, which generally provides for a minimum effective tax rate of 15%, as established by the Organization for Economic Co-operation and Development (OECD) Pillar Two Framework.

A significant number of other countries are expected to also implement similar legislation with varying effective dates in the future.

The Company will be subject to legislation beginning in the fiscal year 2025.

The Company is continuing to evaluate the potential impact on future periods of the Pillar Two Framework, pending legislative adoption by additional individual countries.

COLUMBUS McKINNON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(tabular amounts in thousands, except share data)

Nature of leases

37 unchanged sentences

Total finance liabilities $ 12,937 $ 13,541

(1) Included in the operating ROU asset balance are leases held by montratec in the amount of $ 5,390,000 respectively, as of March 31, 2024.

Operating lease expense of $ 12,550,000 , $ 9,197,000 and $ 9,101,000 for the fiscal years ending March 31, 2024, 2023, and 2022, 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, 2024, 2023, and 2022, respectively.

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.

Finance lease expense of $ 1,001,000 for both fiscal years ending March 31, 2024 and 2023, is included in Income from operations on the Consolidated Statements of Operations, and $ 597,000 and $ 621,000 and is included in Interest and debt expense for the fiscal years ending March 31, 2024 and 2023, on the Company's Consolidated Statements of Operations related to the finance lease.

Other lease disclosures

Future maturities of leases as of March 31, 2024, were as follows (in thousands):

Operating Leases Finance Lease

Operating Leases Finance Leases

2025 $ 12,681 1,237

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Net sales to external customers are attributed to geographic areas based upon the location from which the product was shipped from the Company to the customer.

COLUMBUS McKINNON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(tabular amounts in thousands, except share data)

Year Ended March 31,

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Total $ 1,825,945 $ 1,698,455 $ 1,685,707

COLUMBUS McKINNON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(tabular amounts in thousands, except share data)

Year Ended March 31,

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Total $ 1,013,540 $ 936,240 $ 906,555

COLUMBUS McKINNON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(tabular amounts in thousands, except share data)

Accumulated Other Comprehensive Loss

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The stranded tax effect related to the other post retirement obligations component was not material.

COLUMBUS McKINNON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(tabular amounts in thousands, except share data)

As a result of the recording of a deferred tax asset valuation allowance in fiscal 2011, the Company recorded as an offsetting entry a $ 7,605,000 stranded tax effect in the minimum pension liability component, $ 935,000 stranded tax effect in the other post retirement obligations component and a $ 747,000 stranded tax effect in the split dollar life insurance arrangement component of other comprehensive income.

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Ending balance net of tax $ ( 10,696 ) $ ( 32,785 ) $ 3,804 $ ( 39,677 )

COLUMBUS McKINNON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(tabular amounts in thousands, except share data)

March 31, 2023

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Ending balance net of tax $ ( 12,800 ) $ ( 32,352 ) $ 7,109 $ ( 38,043 )

COLUMBUS McKINNON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(tabular amounts in thousands, except share data)

Details of amounts reclassified out of accumulated other comprehensive loss for the year ended March 31, 2024 are as follows (in thousands):

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(See Note 13 — Pensions and Other Benefit Plans for additional details.)

COLUMBUS McKINNON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(tabular amounts in thousands, except share data)

Details of amounts reclassified out of accumulated other comprehensive loss for the year ended March 31, 2023 are as follows (in thousands):

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(See Note 13 — Pensions and Other Benefit Plans for additional details.)

COLUMBUS McKINNON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(tabular amounts in thousands, except share data)

Effects of New Accounting Pronouncements

Topics not yet adopted

Topics recently adopted

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

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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.

The Company modified its interest rate swap contracts during the quarter to transition from LIBOR to SOFR.

The adoption of this update did not have a material impact on the Company’s consolidated financial statements.

In October 2021, the FASB issued ASU No.

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

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.

The Company adopted this standard effective April 1, 2023 and applied it in the purchase accounting for montratec.

The adoption did not have a material impact on the Company's consolidated financial statements.

Topics Not Yet Adopted

We consider the applicability and impact of all ASUs.

In December 2023, the FASB issued ASU No.

2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures.

The ASU is intended to provide increased transparency about income tax information through improvements to income tax disclosures related to the rate reconciliation and income taxes paid.

The Company is currently assessing the impact this ASU will have on the footnotes of its annual financial statements.

ASUs not listed were assessed and determined to be either not applicable, or had or are expected to have an immaterial impact on our financial statements and related disclosures.

COLUMBUS McKINNON CORPORATION

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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