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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

For the fiscal year ended March 31, 2003

Commission file number 0-27618

COLUMBUS McKINNON CORPORATION

(Exact name of Registrant as specified in its charter)

140 John James Audubon Parkway

Amherst, New York 14228-1197

(Address of principal executive offices, including zip code)

(716) 689-5400

(Registrant’s telephone number, including area code)

Securities pursuant to section 12(b) of the Act:

NONE

Securities registered pursuant to Section 12(g) of the Act:

Common Stock, $0.01 Par Value (and rights attached thereto)

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

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

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

The aggregate market value of the voting stock held by non-affiliates of the Registrant as of September 30, 2002 was $62,738,392, based upon the closing price of the Company’s common shares as quoted on the Nasdaq National Market on such date. The number of shares of the Registrant’s common stock outstanding as of May 31, 2003 was: 14,896,172 shares.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Registrant’s proxy statement for its 2003 Annual Meeting of Shareholders to be filed with the Securities and Exchange Commission pursuant to Regulation 14A not later than 120 days after the end of the Registrant’s fiscal year ended March 31, 2003 are incorporated by reference into Part III of this report.

COLUMBUS McKINNON CORPORATION

2003 Annual Report on Form 10-K

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

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PART I

Item 1.    Business.

General

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

The Building of Our Business

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

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Our Position in the Industry

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

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

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

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

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

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

•    Outsourcing of Material Handling Project Design and Management.    More of our distributor partners and end-user customers are outsourcing non-core business functions to improve productivity and cost efficiency. This has created opportunities for us to assume the project design, management and implementation responsibilities for both workstation and facility-wide material handling systems.

•    Workforce Diversity.    The percentages of women, disabled and older persons in the work force and the tasks they perform are continuing to increase. Our products enable many workplace tasks to be performed safely, efficiently and with less physical stress. We believe that increasing diversity in the workforce will continue to increase demand for our products.

Our Competitive Strengths

•    Comprehensive Product Line and Strong Brand Name Recognition.    We believe we offer the most comprehensive product lines in the markets we serve. The breadth of product lines enables us to provide a “one-stop shop” to many of our distributors who are looking to consolidate their suppliers. In addition, our brand names, including Budgit, Chester, CM, Coffing, Duff-Norton, Little Mule, Shaw-Box and Yale, are among the most recognized and respected in the industry. We believe that our strong brand name recognition has created customer loyalty and helps us maintain existing business, as well as capture additional business.

•    Leading Market Position and Reputation.    We are the largest manufacturer of hoists, alloy and high strength carbon steel chain and operator-controlled manipulators in North America. We have developed our

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leading market position over our 125-year history by emphasizing technological innovation, manufacturing excellence and superior after-sale service. Over 60% of our domestic net sales in fiscal 2003 were from product categories in which we believe we hold the leading market share. We believe that the strength of our established products and brands and our leading market position provide us with significant competitive advantages, including preferred supplier status with a majority of our largest customers. Our large installed base of products also provides us with a significant competitive advantage in selling our products to existing customers as well as providing repair and replacement parts.

•    Low-Cost Manufacturing Capability.    We believe we are a low-cost manufacturer and we will continue to consolidate our manufacturing operations and reduce our manufacturing costs through the following initiatives:

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

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

•    Experienced Management Team.    Our senior management team provides a depth and continuity of experience in the material handling industry, with our top six executives possessing an average of 19 years of experience with us. Our management has experience in aggressive cost management, balance sheet management, efficient manufacturing techniques, acquiring and integrating businesses and global operations, all of which are critical to our long-term growth.

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Our Strategy

•    Reduce Our Operating Costs.    Our objective is to remain a low-cost producer. We continuously seek ways to reduce our operating costs and increase our manufacturing productivity. In furtherance of this objective, we have undertaken the following:

•    Increase Our Domestic Organic Growth.    We intend to use our competitive advantages to increase our domestic and international market share across all of our product lines through the following initiatives:

•    Increase Our Penetration of International Markets.    Our international sales comprised 32.8% of our net sales in fiscal 2003 and grew at a compounded annual rate of 6.7%, from $107.5 million in fiscal 1998 to $148.4 million in fiscal 2003. We sell to distributors in approximately 50 countries and have international manufacturing facilities in Mexico, Germany, the United Kingdom, Denmark, France and China. In addition to new product introductions, we intend to increase international sales and enhance margins by:

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•    Pursue Selected Divestitures.    Our strategy is to exit businesses that (i) are not integrated, either operationally or through sales and marketing, with the rest of our Company; (ii) have market channels and customers different from the business of our core Products segment; (iii) are not designated as recipients of significant investment of corporate resources in the foreseeable future; or (iv) have had, and are expected to continue to have, low returns on our investment of financial and management resources. For example, in fiscal 2003, we sold our ASI and LICO Steel businesses after determining that they did not meet our criteria for continuing investment. We periodically review our businesses and are currently evaluating strategic alternatives for our Duff-Norton, Societe D’Exploitation des Raccords Gautier, Positech, American Lifts, Lister Chain & Forge, CM Shredder, Larco Industrial Services and Univeyor businesses. In the aggregate, these businesses generated fiscal 2003 sales and EBITDA of $98.3 million and $5.0 million, respectively. The proceeds from divestitures will provide additional liquidity and improve the flexibility of our capital structure.

Our Segments

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

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

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

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Note 20 to our consolidated financial statements included elsewhere in this annual report provides information related to our business segments in accordance with generally accepted accounting principles. Summary information concerning our business segments for fiscal 2001, 2002 and 2003 is set forth below.

Products Segment

Products

Our Products segment primarily designs, manufactures and distributes a broad range of material handling, lifting and positioning products for various applications in industry and for consumer use and has total assets of approximately $450.6 million as of March 31, 2003. These products are typically manufactured for stock or assembled to order from standard components and are sold through a variety of distributors. Approximately 75% of our Products segment net sales is derived from the sale of products that we sell at a unit price of less than $5,000. In fiscal 2003, net sales of the Products segment were approximately $388.1 million or approximately 85.6% of our net sales, of which approximately $281.2 million, or 72.5%, were domestic and $106.9 million, or 27.5%, were international. The following table sets forth certain sales data for the products of our Products segment, expressed as a percentage of net sales of this segment for fiscal 2002 and 2003:

•    Hoists.    We manufacture a variety of electric chain hoists, electric wire rope hoists, hand-operated hoists, lever tools and air-powered balancers and hoists. Load capacities for our hoist product lines range from

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

We offer a line of custom-designed, below-the-hook tooling, clamps, pallet trucks and textile strappings. Below-the-hook tooling and clamps are specialized lifting apparatus used in a variety of lifting activities performed in conjunction with hoist and chain applications. Pallet trucks are manual devices used for across-the-floor material handling, frequently in warehouse settings. Textile strappings are below-the-hook attachments, frequently used in conjunction with hoists.

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

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

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

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

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

Sales and Marketing

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

•    Factory-Direct Field Sales and Customer Service.    We sell our products through our direct sales forces of more than 125 salespersons and through independent sales agents worldwide. Our sales are further supported

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by our more than 230 company-trained customer service correspondents and sales application engineers. We compensate our sales force through a combination of base salary and a commission plan based on top line sales and a pre-established sales quota.

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

•    Trade Show Participation.    Trade shows are central to the promotion of our products, and we participate in more than 40 regional, national and international trade shows each year. Shows in which we participate range from global events held in Germany to local “markets” and “open houses” organized by individual hardware and industrial distributors. We also attend specialty shows for the entertainment, rental and safety markets, as well as general purpose industrial and consumer hardware shows. In fiscal 2003, we participated in trade shows in the U.S., Canada, France, Mexico, Germany, England and Brazil.

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

•    Product Standards and Safety Training Classes.    We conduct on-site training programs worldwide for distributors and end-users to promote and reinforce the attributes of our products and their safe use and operation in various material handling applications.

•    Web Sites.    In addition to our main corporate web site at www.cmworks.com, we currently sponsor an additional 23 brand specific web sites and sell hand pallet trucks on one of these sites. Our web site at www.cmindustrial.com currently includes electronic catalogs of CM brand hoist and chain products and list prices. Current and potential customers can browse through our diverse product offering or search for specific products by name or classification code and obtain technical product specifications. We continue to add additional product catalogs, maintenance manuals, advertisements and customer service information on our various web sites. Many of the web sites allow distributors to search for personalized pricing information, order status and product serial number data.

Distribution and Markets

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

•    General Distribution Channels.    Our general distribution channels consist of:

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

•    Specialty Distribution Channels.    Our specialty distribution channels consist of:

•    Service-After-Sale Distribution Channel.    Service-after-sale distributors include our authorized network of 13 chain repair service stations and over 350 hoist service and repair stations. This service network is designed for easy parts and service access for our large installed base of hoists and related equipment in North America.

•    OEM/Government Distribution Channels.    This channel consists of:

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

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

Customer Service and Training

We maintain customer service departments staffed by trained personnel for all of our Products segment sales divisions, and regularly schedule product and service training schools for all customer service

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

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

Backlog

Our Products segment backlog of orders at March 31, 2003 was approximately $41.7 million compared to approximately $41.3 million at March 31, 2002. Our orders for standard products are generally shipped within one week. Orders for products that are manufactured to customers’ specifications are generally shipped within four to twelve weeks. Given the short product lead times, we do not believe that the amount of our Products segment backlog of orders is a reliable indication of our future sales.

Competition

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

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

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

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Solutions Segment

The Solutions segment is engaged primarily in the design, fabrication and installation of integrated work station and facility-wide material handling systems and in the manufacture and distribution of operator-controlled manipulators, lift tables and tire shredders and has total assets of approximately $32.0 million as of March 31, 2003. Net sales of the Solutions segment in fiscal 2003 were approximately $65.2 million, or approximately 14.4% of our total net sales, of which approximately $30.9 million, or 47.4%, were domestic and approximately $34.3 million, or 52.6% were international. The following table sets forth certain sales data for the products and services of our Solutions segment, expressed as a percentage of this segment’s net sales for fiscal 2002 and 2003:

Products and Services

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

•    Steel Erection.    Through our LICO Steel operation, we erected structural steel in commercial buildings. This business was divested in March 2003. We primarily acted as a subcontractor in the construction of manufacturing plants and warehouse facilities in the Kansas City area.

•    Manipulators and Light-Rail Systems.    We manufacture two lines of sophisticated operator-controlled manipulators under the names Positech and Conco. These products are articulated mechanical arms with specialized end tooling designed to perform lifting, rotating, turning, tilting, reaching and positioning tasks in a manufacturing process. We can offer custom-designed hydraulic, pneumatic, and electric manipulators utilizing various models and size configurations for a wide variety of applications where the user requires multi-axial movement in a harsh or repetitive environment. Introduced in fiscal 2001, light-rail systems are portable steel overhead beam configurations used at workstations, from which hoists are frequently suspended.

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

Sales and Marketing

The products and services of the Solutions segment are sold primarily to large sophisticated corporate end-users, including Federal Express, UPS, United Biscuits, Lego, John Deere, Lowe’s and other industrial companies, systems integrators and distributors. In the sale of our integrated material handling conveyor systems, we act as a prime contractor with turnkey responsibility or as a supplier working closely with the customer’s general contractor. Sales are generated by internal sales personnel and rely heavily on engineer-to-engineer interactions with the customer. The process of generating client contract awards for integrated conveyor systems

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generally entails receiving a request-for-quotation from customers and undergoing a competitive bidding process. The Solutions segment also sells manipulators, light-rail systems and scissor lift tables through its internal sales force and through specialized independent distributors and manufacturers representatives.

Customer Service and Training

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

Backlog

Revenues from our Solutions segment are generally recognized within one to six months. Our backlog of orders at March 31, 2003 was approximately $12.9 million compared to approximately $15.0 million at March 31, 2002.

Competition

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

Employees

At March 31, 2003, our continuing operations had 2,934 employees; 2,122 in the U.S., 183 in Canada, 121 in Mexico and 508 in Europe and Asia. Approximately 700 of our employees are represented under nine separate U.S. or Canadian collective bargaining agreements which terminate at various times between June 2003 and April 2007. The contract which expires June 2003 pertains to a facility that will be closing by the termination date. We believe that our relationship with our employees is good.

Raw Materials and Components

Our principal raw materials and components are steel, consisting of structural steel, processed steel bar, forging bar steel, steel rod and wire, steel pipe and tubing and tool steel; electric motors; bearings; gear reducers; castings; and electro-mechanical components. These commodities are all available from multiple sources. We purchase most of these raw materials and components from a limited number of strategic and preferred suppliers under long-term agreements which are negotiated on a company-wide basis through our Purchasing Council to take advantage of volume discounts. Although the steel industry is cyclical and steel prices can fluctuate, we have not been significantly impacted in recent years by increases in steel prices including the effect of U.S. Steel tariffs enacted in 2002. We generally seek to pass on materials price increases to our customers, although a lag period often exists. Our ability to pass on these increases is determined by competitive conditions.

Manufacturing

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

Our manufacturing operations are highly integrated. Although raw materials and some components such as motors, bearings, gear reducers, castings and electro-mechanical components, are purchased, our vertical

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

Environmental and Other Governmental Regulation

Like most manufacturing companies, we are subject to various federal, state and local laws relating to the protection of the environment. To address the requirements of such laws, we have adopted a corporate environmental protection policy which provides that all of our owned or leased facilities shall, and all of our employees have the duty to, comply with all applicable environmental regulatory standards, and we have initiated an environmental auditing program for our facilities to ensure compliance with such regulatory standards. We have also established managerial responsibilities and internal communication channels for dealing with environmental compliance issues that may arise in the course of our business. Because of the complexity and changing nature of environmental regulatory standards, it is possible that situations will arise from time to time requiring us to incur expenditures in order to ensure environmental regulatory compliance. However, we are not aware of any environmental condition or any operation at any of our facilities, either individually or in the aggregate, which would cause expenditures having a material adverse effect on our results of operations, financial condition or cash flows and, accordingly, have not budgeted any material capital expenditures for environmental compliance for fiscal 2004.

Certain federal and state laws, sometimes referred to as Superfund laws, require certain companies to remediate sites that are contaminated by hazardous substances. These laws apply to sites owned or operated by a company, as well as certain off-site areas for which a company may be jointly and severally liable with other companies or persons. The required remedial activities are usually performed in the context of administrative or judicial enforcement proceedings brought by regulatory authorities. We have been identified by the New York State Department of Environmental Conservation, or NYSDEC, along with other companies, as a potentially responsible party, or PRP, at the Frontier Chemical Site in Pendleton, New York, a site listed on NYSDEC’s Registry. From 1958 to 1977, the Pendleton Site had been operated as a commercial waste treatment and disposal facility. We sent waste pickling liquor generated at our facility in Tonawanda, New York, to the Pendleton Site during the period from approximately 1969 to 1977, and we participated with other PRPs in conducting the remediation of the Pendleton Site under a consent order with NYSDEC. Construction in connection with the remediation has been completed and this project is currently in its operations and maintenance phase. As a result of a negotiated cost allocation among the participating PRPs, we have paid our pro rata share of the remediation construction costs and accrued our share of the ongoing operations and maintenance costs. As of March 31, 2003, we have paid approximately $1.0 million in remediation and ongoing operations and maintenance costs associated with the Pendleton Site. The participating PRPs have identified and commenced a cost recovery action against a number of other parties who sent hazardous substances to the Pendleton Site. Full settlements have been reached with all defendants in the cost recovery action. All settlement payments in connection with the Pendleton Site litigation have been made, and we have received $0.2 million as our share of the settlement proceeds. We have also entered into a settlement agreement with one of our insurance carriers in the amount of $0.7 million in connection with the Pendleton Site and have received payment in full of the settlement amount.

For all of the currently known environmental matters, we have accrued a total of approximately $0.3 million as of March 31, 2003, which, in our opinion, is sufficient to deal with such matters. Further, our management believes that the environmental matters known to, or anticipated by, us should not, individually or in the aggregate, have a material adverse effect on our operating results or financial condition. However, there can be no assurance that potential liabilities and expenditures associated with unknown environmental matters, unanticipated events, or future compliance with environmental laws and regulations will not have a material adverse effect on us.

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

Available Information

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

Item 2.    Properties.

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

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

Item 3.    Legal Proceedings.

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

Item 4.    Submission of Matters to a Vote of Security Holders.

Not applicable.

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PART II

Item 5.    Market for the Company’s Common Stock and Related Security Holder Matters.

Our common stock is traded on the Nasdaq National Market under the symbol “CMCO.” As of May 31, 2003, there were 495 holders of record of our common stock.

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

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

On June 27, 2003, the last reported sale price of our common stock on the Nasdaq National Market was $2.36 per share.

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Item 6.    Selected Financial Data.

The consolidated balance sheets as of March 31, 2002 and 2003 and the related statements of operations, cash flows and shareholders’ equity for the three years ended March 31, 2003 and notes thereto appear elsewhere in this annual report. The selected consolidated financial data presented below should be read in conjunction with, and are qualified in their entirety by “Management’s Discussion and Analysis of Results of Operations and Financial Condition,” our consolidated financial statements and the notes thereto and other financial information included elsewhere in this annual report.

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Item 7.    Management’s Discussion and Analysis of Results of Operations and Financial Condition.

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

Overview

We are a leading manufacturer and marketer of hoists, cranes, chain, conveyors, material handling systems, lift tables and component parts serving a wide variety of commercial and industrial end markets. Our products are used to efficiently and ergonomically move, lift, position or secure objects and loads. Our Products segment sells a wide variety of powered and manually operated wire rope and chain hoists, industrial crane systems,

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chain, hooks and attachments, actuators and rotary unions. Our Solutions segment designs, manufactures, and installs application-specific material handling systems and solutions for end-users to improve work station and facility-wide work flow.

Founded in 1875, we have grown to our current size and leadership position largely as the result of the 14 businesses we acquired between February 1994 and April 1999. These acquisitions have significantly broadened our product lines and services and expanded our geographic reach, end-user markets and customer base. As a result of these acquisitions and internal growth, our revenues have increased from approximately $209.8 million in fiscal 1996, the year of our initial public offering, to approximately $453.3 million in fiscal 2003.

The operations of our acquired businesses continue to be integrated with our existing businesses. We converted nearly all of our acquired North American businesses onto our computer system which integrates all of our applications from order entry to production planning to accounting, facilitating company-wide information flow. Further acquisition integration activities included cost reductions resulting from internally supplying chain and forged attachments to acquired hoist businesses, consolidating purchasing efforts through our Purchasing Council, reducing duplicative sales and marketing activities, eliminating redundant administrative headcount and consolidating treasury and accounts receivable functions. Our acquisition integration activities also included revenue enhancements through cross-selling of products between existing and acquired businesses. The current phase of the integration of these businesses includes reducing our excess manufacturing capacity and improving our productivity. This phase is in progress through our facility rationalization program and Lean Manufacturing efforts.

The latter phase of these integration activities was delayed for a period of approximately two years, from early 1999 through early 2001, due to difficulties encountered with the assimilation of our 1998 ASI acquisition. Substantially all of the assets of that business, which formerly comprised our Solutions—Automotive segment, were sold in May 2002. ASI did not prove to be a good fit for us mainly because of the highly volatile nature of its business, its significant dependence on the auto industry and its heavy use of working capital. Despite the fact that the loss associated with that disposition increased our financial leverage, the proceeds furthered our efforts to reduce debt and future interest expense, which has recently been one of our primary objectives.

Many of the U.S. industrial sectors that we serve have been impacted by soft economic conditions since mid-1998. These conditions deteriorated significantly in our fiscal 2001 fourth quarter and continued to decline throughout fiscal 2002 and most of fiscal 2003, impacting our net sales and financial performance. After reaching a historical high of $609.2 million in fiscal 2000, our net sales declined 3.8% to $586.2 million in fiscal 2001, and further by 18.1% to $480.0 million in fiscal 2002 and by an additional 5.6% to $453.3 million in fiscal 2003, primarily due to this downturn in the business cycle. Despite these economic conditions and their impact on our operating results, we maintained our leading market share, generated positive cash flow from operations and repaid $6.4 million, $59.7 million and $34.5 million of debt in fiscal 2001, 2002 and 2003, respectively. Our positive cash flow was favorably impacted by our Lean Manufacturing efforts, which began in fiscal 2002. These efforts are fundamentally changing our manufacturing processes, resulting in significant inventory reductions and improving on-time delivery and productivity.

Results of Operations

Net sales of our Products and Solutions segments, in millions of dollars and with percentage changes for each segment, were as follows:

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Sales fluctuations during the periods were primarily due to the downturn in the general North American economy and the industrial sectors in particular. Net sales in fiscal 2003 of $453.3 million decreased by $26.7 million, or 5.6%, from fiscal 2002, and net sales in fiscal 2002 of $480.0 million decreased $106.2 million, or 18.1%, from fiscal 2001. Our Products segment net sales declined 4.1% and 15.5% in fiscal 2003 and 2002, respectively, primarily due to decreased unit sales resulting from the soft U.S. industrial markets, offset by $4.6 million of foreign currency translation gains in fiscal 2003 and including $1.5 million of foreign currency translation losses in fiscal 2002. Our Solutions segment net sales decreased 13.4% and 29.8% in fiscal 2003 and 2002, respectively. The declines in fiscal 2003 and 2002 were primarily due to soft U.S. industrial markets. The fiscal 2002 decline was further impacted by our decision to exit our domestic general contracting business, which had net sales of $1.4 million and $21.0 million in fiscal 2002 and 2001, respectively.

Gross profit of the Products and Solutions segments, in millions of dollars and as a percentage of total segment net sales, was as follows:

Our gross profit margins were approximately 23.7%, 25.1% and 27.2% in fiscal 2003, 2002 and 2001, respectively. The decreases in gross profit margin for fiscal 2003 and 2002 were primarily the result of economic and inventory reduction factors. The Product segment’s gross profit margin decreased in fiscal 2003 due to the following factors: i) our price increase implementation was delayed eight months until August 2002 due to economic market conditions (approximately $2.0 million impact); ii) cost increases, particularly for employee benefits such as health insurance, workers compensation insurance and pension and also general property insurance (approximately $1.4 million impact); iii) pricing pressure, especially on our capital-type products such as cranes (approximately $1.5 million impact); iv) the 4.1% decline in net sales and the resulting decrease in absorption of fixed production costs; v) production at levels lower than sales levels to reduce inventories and the resulting further decrease in absorption of fixed production costs; vi) production inefficiencies at our facilities impacted by facility rationalization activities; and vii) a $2.5 million reclassification of certain crane builder expenses to cost of products sold from general and administrative expenses in fiscal 2003. The gross profit margin in our Products segment decreased in fiscal 2002 due to the 15.5% decrease in net sales and resulting decrease in production cost absorption, the lack of a general price increase to offset inflationary costs, especially insurance costs, and a $3.8 million reclassification of certain crane builder expenses to cost of products sold from general and administrative expenses in fiscal 2002. The Solutions segment’s gross profit margin decreased in fiscal 2003 primarily due to the 13.4% decline in net sales and resulting decease in absorption of fixed production costs, increased employee benefits costs as described above and an increase in larger integrated solutions projects which carry a lower gross profit margin overall. The gross profit margin in our Solutions segment increased in fiscal 2002 despite the 29.8% decrease in net sales and the resulting decrease in production cost absorption. This increase was primarily attributable to weak margins in fiscal 2001.

Selling expenses were $47.4 million, $43.5 million and $48.4 million in fiscal 2003, 2002 and 2001, respectively. As a percentage of net sales, selling expenses were 10.5%, 9.1% and 8.3% in fiscal 2003, 2002 and 2001, respectively. The fiscal 2003 increase includes $1.8 million resulting from the strength of the U.S. dollar relative to European currencies upon translation of European operating results into U.S. dollars for reporting purposes, $0.9 million resulting from reclassification of certain crane builder expenses from general and administrative expenses in fiscal 2003 to improve reporting consistency, $0.5 million for investing in new geographic markets and other cost increases for employee benefits costs, catalogs, and commissions in certain markets, partially offset by cost control measures. The fiscal 2002 reduction reflects cost control efforts due to

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soft economic conditions as well as the variable nature of some expenses, particularly commissions, travel expenses and sales office costs.

General and administrative expenses were $26.6 million, $28.2 million and $34.3 million in fiscal 2003, 2002 and 2001, respectively. As a percentage of net sales, general and administrative expenses were 5.9%, 5.9% and 5.8% in fiscal 2003, 2002 and 2001, respectively. The expense reductions resulted from general discretionary cost control measures, $0.8 million reduction in product liability expense due to reassessment of self-insurance exposure relative to certain claims and the reclassification of $3.4 million and $3.8 million of crane builder expenses into cost of products sold or selling expense in fiscal 2003 and 2002, respectively, partially offset by $1.2 million in fiscal 2003 for professional fees for special projects to improve the Company’s organization structure, $0.8 million in fiscal 2003 for intercompany exchange losses, $0.5 million in fiscal 2003 for increased accounts receivable write-offs; and fiscal 2002 included sales office expansions into new geographic regions.

Restructuring charges of $3.7 million and $9.6 million, or 0.8% and 2.0% of net sales in fiscal 2003 and 2002, respectively, were attributable to the closure or significant reorganization of thirteen manufacturing or warehouse facilities. The following facilities were closed, merged or significantly reorganized beginning in fiscal 2003: Abingdon, VA; Tonawanda, NY; Cobourg, Ontario, Canada; Forest Park, IL; and Reform, AL. All operations except for the Tonawanda facility were included within our Products segment, and all activities were relocated into other existing company facilities within their respective segments. Charges include exit costs of $1.8 million for severance relating to approximately 215 employees and $1.0 million of lease termination, facility wind-down, preparation for sale and maintenance of non-operating facilities prior to disposal. Three of the five projects were completed as planned in the fourth quarter while two are on schedule to be completed by the second quarter of fiscal 2004.

The following facilities were closed, merged or significantly reorganized beginning in fiscal 2002: Houma, LA; Woodland, CA; Romeoville, IL; Forrest City, AR; Monterrey, Mexico; Hobro, Denmark; Atlanta, GA; and Richmond, British Columbia, Canada. All operations except for the Hobro facility were included within our Products segment, and all activities were relocated into other existing company facilities within their respective segments. Charges include exit costs of $2.4 million for severance relating to approximately 250 employees and $7.2 million of lease termination, facility wind-down, preparation for sale and maintenance of non-operating facilities prior to disposal. Included in the restructuring charges was approximately $8.3 million to terminate a facility lease, resulting in the purchase of the property with an estimated fair value of approximately $2.3 million which was recorded as an offset to the restructuring charges. Due to changes in the real estate market and a reassessment of the fair value of the property, the net asset held for sale was adjusted by $0.5 million as a further restructuring charge during fiscal 2003. In addition, costs for ongoing maintenance of the non-operating facility was reassessed in fiscal 2003 resulting in an additional $0.4 million restructuring charge. All of the projects were completed as planned during fiscal 2002. The remaining liability relates to the ongoing maintenance costs of the non-operating facility.

Each project was analyzed based on our capacity and the cost structure of the specific facilities relative to others. As a result of these rationalization projects we expect to achieve approximately $13 million to $15 million of annualized savings primarily in cost of products sold including facility fixed costs and employee costs, of which approximately $8 million has been realized during fiscal 2003 and approximately $11 million is anticipated in fiscal 2004. We anticipate that our restructuring charges for fiscal 2004 in connection with our ongoing facility rationalization and reorganization initiatives will be between $2 million and $5 million.

Write-off/amortization of intangibles was $4.2 million, $11.0 million and $11.0 million in fiscal 2003, 2002 and 2001, respectively. Fiscal 2003 reflected a $4.0 million goodwill write-off in the fourth quarter relating to impairment under Statement of Financial Accounting Standard (SFAS) No. 142 “Goodwill and Other Intangible Assets,” which pronouncement eliminated the requirement to amortize goodwill and indefinite-lived intangible assets beginning in fiscal 2003 but added new impairment testing rules. The fiscal 2002 and 2001 amounts relate primarily to non-tax deductible goodwill amortization.

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Interest and debt expense was $32.0 million, $29.4 million and $36.3 million in fiscal 2003, 2002 and 2001, respectively. As a percentage of net sales, interest and debt expense was 7.1%, 6.1% and 6.2% in fiscal 2003, 2002 and 2001, respectively. The fiscal 2003 increase included a $1.2 million write-off of deferred financing costs associated with the Company’s former credit facility, which was replaced with a new credit arrangement in November 2002, a portion of which carries higher effective interest rates than the Company’s former credit facility. The fiscal 2002 decrease was the result of a paydown of senior bank debt of $59.7 million and a reduction in interest rates.

Other (income) and expense, net was ($2.1) million, $2.5 million and ($2.2) million in fiscal 2003, 2002 and 2001, respectively. The income in fiscal 2003 included a $2.5 million gain on the sale of assets held for sale, a $2.8 million realized gain on certain marketable securities held by our captive insurance company for settlement of a portion of our general and products liability claims, offset by a $2.2 million unrealized, non-cash, mark-to- market loss recognized within that same securities portfolio and a $1.3 million loss on the March 2003 sale of a small subsidiary. The unrealized loss within the securities portfolio was recognized since it was deemed to be other than temporary in nature, resulting from unrealized losses that existed longer than a six month period. The expense in fiscal 2002 similarly included a $2.8 million unrealized, non-cash, mark-to-market loss recognized on marketable securities held by our captive insurance subsidiary, a $1.5 million loss on the January 2002 sale of a small subsidiary, and a $1.8 million gain on the sale of assets held for sale. The fiscal 2001 income is primarily due to net realized gains on the sale of marketable securities by our captive insurance subsidiary as described above.

Income taxes as a percentage of income before income taxes were not meaningful in fiscal 2003 or 2002 and were 52.9% in fiscal 2001. The fiscal 2001 percentage reflects the effect of non-deductible goodwill amortization resulting from business acquisitions, offset by the impact of tax credits and other tax items.

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

Liquidity and Capital Resources

In November 2002, we refinanced our credit facilities. The new arrangement replaced our previous revolving credit facility that was scheduled to mature on March 31, 2003. The new arrangement consists of a Revolving Credit Facility, a Term Loan and a Senior Second Secured Term Loan. The Revolving Credit Facility provides availability up to a maximum of $57 million through March 31, 2007. Availability based on the underlying collateral at March 31, 2003 amounted to $56.5 million, of which $6.3 million was blocked and designated for repayment of the term loans. The unused Revolving Credit Facility totaled $36.1 million at that date, net of outstanding borrowings of $10.2 million, outstanding letters of credit of $7.1 million and other reserve holdbacks of $3.1 million. Interest is payable at varying Eurodollar rates based on LIBOR or prime plus a spread determined by our leverage ratio, amounting to 275 or 150 basis points, respectively, at March 31, 2003 (4.13% or 5.75%).

The Term Loan, which is also due on March 31, 2007 and is prepayable without penalty, amortizes quarterly over a seven-year amortization period beginning April 1, 2003, in quarterly installments of $1,179,000. At March 31, 2003, $32.9 million was outstanding under the Term Loan. Interest is payable at varying Eurodollar rates based on LIBOR plus a spread determined by our leverage ratio, amounting to 325 basis points at March 31, 2003 (4.63%).

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

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As of March 31, 2003, $70 million was outstanding on the Senior Second Secured Term Loan, of which $60 million is due on May 21, 2007 and $10 million is due on November 21, 2007. That facility has no scheduled amortization and is prepayable at our option without penalty, upon approval by our Term Loan lenders and subject to an availability block and excess availability requirements under our Revolving Credit Facility. Interest is payable at 11.5% in the first year and increases annually for the three succeeding years at a rate of 0.5% per year. In addition, payment in kind interest is also due annually at a rate of 1.25% through May 1, 2003 and 3.0% thereafter. Payment in kind interest is payable in cash on each anniversary date of the debt instrument. If certain repayment thresholds are met under the Term Loan or the Senior Second Secured Term Loan prior to December 31, 2003, the payment in kind interest rate would revert back to 1.25%. The Senior Second Secured Term Loan is also subject to a 1.0% annual fee. This facility is secured by a secondary interest in all of our tangible and intangible assets in the U.S. and Canada (limited to 65% for stock ownership of foreign subsidiaries).

The Revolving Credit Agreement, Term Loan and Senior Second Secured Term Loan place certain debt covenant restrictions on us, including financial requirements and a restriction on dividend payments. Effective June 5, 2003, the credit agreements were amended to modify one of the covenant restrictions and to provide more flexibility, increasing the payment in kind rate to 3% and placing a $12.5 million permanent availability block against the Revolving Credit Facility.

Our senior subordinated 8½% Notes issued on March 31, 1998 amounted to $199.5 million, net of original issue discount of $0.5 million, and are due March 31, 2008. Interest is payable semi-annually based on an effective rate of 8.45%, considering $1.9 million of proceeds from rate hedging in advance of the placement. Provisions of the 8½% Notes include, without limitation, restrictions on liens, indebtedness, asset sales and dividends and other restricted payments. Prior to April 1, 2003, the 8½% Notes were redeemable at our option, in whole or in part, at the Make-Whole Price (as defined in the Indenture for the Notes). On or after April 1, 2003, they are redeemable at prices declining annually from 104.25% to 100% on and after April 1, 2006. In the event of a Change of Control (as defined), each holder of the 8½% Notes may require us to repurchase all or a portion of such holder’s 8½% Notes at a purchase price equal to 101% of the principal amount thereof. The 8½% Notes are not subject to any sinking fund requirements.

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

On April 1, 2001, we adopted SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities,” as amended, which requires companies to carry all derivatives on the balance sheet at fair value. Our use of derivative instruments is limited to cash flow hedges, as defined in SFAS No. 133, of certain interest rate risks. In order to provide interest rate risk protection, we entered into an interest rate swap agreement in June 2001 to effectively convert $40 million of variable rate debt to fixed rate debt. The $40 million interest rate swap agreement matures in June 2003.

Net cash provided by operating activities was $14.2 million, $49.8 million and $38.3 million in fiscal 2003, 2002 and 2001, respectively. The $35.6 million decrease in fiscal 2003 relative to fiscal 2002 was due to weaker operating performance in fiscal 2003 and to working capital changes. In particular, trade accounts receivable and inventories provided cash of $10.2 million in fiscal 2003 compared to $33.5 million in fiscal 2002 and trade accounts payable used $4.8 million of cash in fiscal 2003 but provided $3.7 million of cash in fiscal 2002. The $11.5 million increase in fiscal 2002 was the result of a fiscal 2002 reduction in working capital components, especially inventory, despite decreased income from continuing operations. Operating assets net of liabilities provided cash of $4.0 million in fiscal 2003, provided cash of $28.3 million in fiscal 2002 and used cash of $0.6 million in fiscal 2001.

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Net cash provided by investing activities was $16.0 million in fiscal 2003 and used in investing activities was $1.6 million and $7.2 million in fiscal 2002 and 2001, respectively. The fiscal 2003 amount included $17.3 million of proceeds from business divestitures. The fiscal 2003, 2002 and 2001 amounts included $4.4 million, $2.3 million and $5.0 million, respectively, of proceeds from sales of a portion of land included in net assets held for sale.

Net cash used in financing activities was $41.9 million, $48.5 million and $19.5 million in fiscal 2003, 2002 and 2001, respectively. Those amounts included $34.5 million, $46.7 million and $16.0 million of debt repayment in fiscal 2003, 2002 and 2001, respectively, as well as $2.0 million $4.0 million of dividends paid in fiscal 2002 and 2001, respectively. We also paid $8.2 million of financing costs in fiscal 2003 to amend our prior credit agreements and to effect the refinancing of our debt in November 2002.

Capital Expenditures

In addition to keeping our current equipment and plants properly maintained, we are committed to replacing, enhancing and upgrading our property, plant and equipment to reduce production costs, increase flexibility to respond effectively to market fluctuations and changes, meet environmental requirements, enhance safety and promote ergonomically correct work stations. Further, our facility rationalization program currently in progress reduces our annual capital expenditure requirements and also provides for transfers of equipment from the rationalized facilities to other operating facilities. Our capital expenditures for fiscal 2003, 2002 and 2001 were $5.0 million, $4.8 million and $10.2 million, respectively. The decreased spending in fiscal 2003 and 2002 reflects a deferral of certain projects due to soft market conditions, as well as reduced needs resulting from our facility rationalization program. The higher level of spending in fiscal 2001 also reflects the effect of our decision to purchase real estate that was previously leased.

Inflation and Other Market Conditions

Our costs are affected by inflation in the U.S. economy and, to a lesser extent, in foreign economies including those of Europe, Canada, Mexico and the Pacific Rim. We do not believe that general inflation has had a material effect on our results of operations over the periods presented primarily due to overall low inflation levels over such periods and our ability to generally pass on rising costs through annual price increases. However, employee benefits costs such as health insurance, workers compensation insurance, pensions as well as energy and business insurance have exceeded general inflation levels. In the future, we may be further affected by inflation that we may not be able to pass on as price increases.

Seasonality and Quarterly Results

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

Discontinued Operations

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

Accordingly, the ASI operation was reflected as discontinued operations in our financial statements and all prior financial statements have been restated. The income (loss) from discontinued operations was ($7.9) million and $0.3 million in fiscal 2002 and 2001, respectively. The fluctuations were primarily due to the volatility of the

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automobile industry and the ASI operation’s dependence on certain significant customers. The loss on the sale of the discontinued operations was $121.5 million and was reflected in our fiscal 2002 statement of operations.

Cash used by discontinued operations was $0.3 million and $1.1 million in fiscal 2002 and 2001, respectively.

Critical Accounting Policies and Estimates

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

Pension and Other Postretirement Benefits.    The determination of the obligations and expense for pension and postretirement benefits is dependent on our selection of certain assumptions that are used by actuaries in calculating such amounts. Those assumptions are disclosed in Notes 11 and 13, respectively, to our consolidated financial statements and include the discount rates, expected long-term rate of return on plan assets and rates of future increases in compensation and healthcare costs.

The pension discount rate assumptions of 6 ¾% and 7 ½% as of March 31, 2003 and 2002, respectively, are based on long-term bond rates. The decrease in discount rate for fiscal 2003 resulted in a $0.5 million increase in the projected benefit obligation as of March 31, 2003. The rate of return on plan assets assumptions of 8 ½% and 8 ⁵/8% for the year ended March 31, 2003 and 2002, respectively, are based on the composition of the asset portfolios (approximately 55% equities and 45% fixed income) and their long-term historical returns. The actual assets sustained losses of $8.1 million and $4.3 million in fiscal 2003 and 2002, respectively, contributing to an unrecognized actuarial loss of $28.0 million as of March 31, 2003. These factors contributed to a $16.9 million increase in accrued pension cost as of March 31, 2003 compared to March 31, 2002 with a $10.7 million offset to the minimum pension liability adjustment within shareholders’ equity and a $7.1 million increase in the associated deferred tax asset. The unrecognized actuarial loss will result in future pension expense increases. Pension expense for the March 31, 2004 fiscal year is expected to increase by approximately $2.3 million over fiscal 2003. These factors will also result in increases in funding requirements over time, unless there is significant market appreciation in the asset values. However, pension funding contributions for the March 31, 2004 fiscal year are expected to decrease by approximately $1.2 million compared to fiscal 2003. The compensation increase assumption of 4% as of March 31, 2003 and 2002 is based on historical trends.

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

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

Inventory and Accounts Receivable Reserves.    Slow-moving and obsolete inventory reserves are judgmentally determined based on historical and expected future usage within a reasonable timeframe. We reassess trends and usage on a regular basis and if we identify changes we revise our estimated allowances. Allowances for doubtful accounts and credit memo reserves are also judgmentally determined based on historical

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bad debt write-offs and credit memos issued, assessing potentially uncollectible customer accounts and analyzing the accounts receivable agings.

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

Deferred Tax Asset Valuation Allowance.    As of March 31, 2003, the Company had $28.2 million of total gross deferred tax assets. As described in Note 17 to the consolidated financial statements, these assets relate principally to liabilities including employee benefit plans, insurance reserves, accrued vacation and incentive costs and also to asset valuation reserves such as inventory obsolescence reserves and bad debt reserves and to capital loss carryforwards. A valuation allowance of $1.2 million was recorded at March 31, 2003 due to the uncertainty of whether the Company’s capital loss carryforwards may ultimately be realized ($1.5 million resulted from the disposition of several subsidiaries and expires at March 31, 2007; $2.1 million resulted from the sale of the Company’s equity investments and expires at March 31, 2008). Our ability to realize our deferred tax assets is primarily dependent on generating sufficient future taxable income. If we do not generate sufficient taxable income, we would record an additional valuation allowance.

Effects of New Accounting Pronouncements

The Financial Accounting Standards Board (“FASB”) issued SFAS No. 141, “Business Combinations” in June 2001. SFAS No. 141 eliminates the pooling-of-interests method of accounting for business combinations and modifies the application of the purchase accounting method. The elimination of the pooling-of-interests method is effective for transactions initiated after June 30, 2001. The adoption of this statement did not have an impact on our consolidated financial statements.

The FASB also issued SFAS No. 142, “Goodwill and Other Intangible Assets” in June of 2001. SFAS No. 142 eliminates the current requirement to amortize goodwill and indefinite-lived intangible assets, addresses the amortization of intangible assets with a defined life and the impairment testing and recognition for goodwill and intangible assets. SFAS No. 142 applies to goodwill and intangible assets arising from transactions completed before and after the effective date. This statement was adopted as of April 1, 2002, resulting in an $8.0 million transition charge reflected as the cumulative effect of a change in accounting principle and we stopped amortizing goodwill in fiscal 2003. During the fourth quarter of fiscal 2003, we recorded a $4.0 million goodwill write-off due to impairment within one of our reporting units, recorded within income from operations. The impairment was the result of a deterioration in the fair value of that business unit.

The FASB issued SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” in August 2001. SFAS No. 144 supersedes SFAS No. 121, “Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of,” and the accounting and reporting provisions of APB Opinion No. 30, “Reporting the Results of Operations—Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions.” The statement, while retaining many of the fundamental recognition and measurement provisions of SFAS No. 121, changes the criteria to be met to classify an asset as held-for-sale as well as the grouping of long-lived assets and liabilities that represent the unit of accounting for a long-lived asset to be held and used. SFAS No. 144 was effective for our fiscal year beginning April 1, 2002 and had no impact on our fiscal 2003 consolidated financial statements.

The FASB issued SFAS No. 146 “Accounting for Costs Associated with Exit or Disposal Activities” in June 2002. The statement nullifies Emerging Issues Task Force (EITF) Issue No. 94-3 “Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring).” The statement changes the requirements for recognition of a liability for a cost associated with

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an exit or disposal activity. Under EITF 94-3, a liability for an exit cost as defined was recognized at the date of an entity’s commitment to an exit plan. Under SFAS No. 146, a liability for an exit cost or disposal activity is recognized when the liability is incurred. SFAS No. 144 is effective for exit or disposal activities that were initiated after December 31, 2002. This statement resulted in the delayed recognition of approximately $0.7 million of restructuring charges associated with our rationalization and reorganization projects that were in progress during the fourth quarter of fiscal 2003 and will be completed in fiscal 2004.

Factors Affecting Our Operating Results

Our business is cyclical and is affected by industrial economic conditions, and we are currently experiencing substantially reduced demand for our products.

Many of the end-users of our products are in highly cyclical industries, such as general manufacturing and construction, that are sensitive to changes in general economic conditions. Their demand for our products, and thus our results of operations, is directly related to the level of production in their facilities, which changes as a result of changes in general economic conditions and other factors beyond our control. In fiscal years 2002 and 2003, for example, we experienced significantly reduced demand for our products, generally as a result of the global economic slowdown, and more specifically as a result of the dramatic decline in capital goods spending in the industries in which our end-users operate. These lower levels of demand resulted in a 23% decline in net sales from fiscal 2001 to fiscal 2003, from approximately $586.2 million to approximately $453.3 million. This decline in net sales resulted in a 61% decline in our income from operations during the same period. We have not seen a significant improvement in demand for our products in 2003. In addition, our annual price increase implementation, scheduled for December 2001, was delayed for eight months due to weak economic conditions.

If the current downturn continues or if there is further deterioration in the general economy or in the industries we serve, our business, results of operations and financial condition could be further adversely affected. In addition, the cyclical nature of our business could at times also adversely affect our liquidity and ability to borrow under our revolving credit facility.

If demand for our products deteriorates further, the cost saving efforts we have implemented may not be sufficient to achieve the benefits we expect.

In fiscal 2003, we continued our facility rationalization and Lean manufacturing programs in an ongoing effort to reduce our cost structure. If the economy does not improve or deteriorates further, our sales could continue to decline. If sales are lower than our expectations, our cost saving programs may not achieve the benefits we expect. We may be forced to take additional cost savings steps that could result in additional charges and materially affect our ability to compete or implement our business strategies.

We rely in large part on independent distributors for sales of our products.

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

We are subject to currency fluctuations from our international sales.

Our products are sold in many countries around the world. Thus, a portion of our revenues (approximately $141.2 million in fiscal year 2003) is generated in foreign currencies, including principally the euro and the

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Canadian dollar, while a portion of the costs incurred to generate those revenues are incurred in other currencies. Since our financial statements are denominated in U.S. dollars, changes in currency exchange rates between the U.S. dollar and other currencies have had, and will continue to have, an impact on our earnings. We currently do not have exchange rate hedges in place to reduce the risk of an adverse currency exchange movement. Currency fluctuations may impact our financial performance in the future.

Our international operations pose certain risks that may adversely impact sales and earnings.

We have operations and assets located outside of the United States, primarily in Canada, Mexico, Germany, Denmark, France and China. In addition, we import a portion of our hoist product line from China and Japan, and sell our products to distributors located in approximately 50 countries. In fiscal year 2003, approximately 31% of our net sales were derived from non-U.S. markets. These international operations are subject to a number of special risks, in addition to the risks of our domestic business, including currency exchange rate fluctuations, differing protections of intellectual property, trade barriers, labor unrest, exchange controls, regional economic uncertainty, differing (and possibly more stringent) labor regulation, risk of governmental expropriation, domestic and foreign customs and tariffs, current and changing regulatory environments, difficulty in obtaining distribution support, difficulty in staffing and managing widespread operations, differences in the availability and terms of financing, political instability and risks of increases in taxes. Also, in some foreign jurisdictions we may be subject to laws limiting the right and ability of entities organized or operating therein to pay dividends or remit earnings to affiliated companies unless specified conditions are met. These factors may adversely affect our future profits.

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

Our business is highly competitive and increased competition could reduce our sales, earnings and profitability.

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

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

Our products involve risks of personal injury and property damage, which exposes us to potential liability.

Our business exposes us to possible claims for personal injury or death and property damage resulting from the products that we sell. We maintain insurance through a combination of self-insurance retentions and excess insurance coverage. We monitor claims and potential claims of which we become aware and establish accrued

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liability reserves for the self-insurance amounts based on our liability estimates for such claims. We cannot give any assurance that existing or future claims will not exceed our estimates for self-insurance or the amount of our excess insurance coverage. In addition, we cannot give any assurance that insurance will continue to be available to us on economically reasonable terms or that our insurers would not require us to increase our self-insurance amounts. Claims brought against us that are not covered by insurance or that result in recoveries in excess of insurance coverage could have a material adverse effect on our results and financial condition.

Our future operating results may be affected by fluctuations in steel prices. We may not be able to pass on increases in raw material costs to our customers.

The principal raw material used in our specialty chain, forging and crane building operations is steel. The steel industry as a whole is highly cyclical, and at times pricing can be volatile due to a number of factors beyond our control, including general economic conditions, labor costs, competition, import duties, tariffs and currency exchange rates. Recently, the market price of steel has increased significantly. This volatility can significantly affect our raw material costs. In an environment of increasing raw material prices, competitive conditions will determine how much of the steel price increases we can pass on to our customers. To the extent we are unable to pass on any price increases to our customers, our profitability could be adversely affected.

We depend on our senior management team and the loss of any member could adversely affect our operations.

Our success is dependent on the management and leadership skills of our senior management team. The loss of any of these individuals or an inability to attract, retain and maintain additional personnel could prevent us from implementing our business strategy. We cannot assure you that we will be able to retain our existing senior management personnel or to attract additional qualified personnel when needed. We have not entered into employment agreements with any of our senior management personnel.

We are subject to various environmental laws which may require us to expend significant capital and incur substantial cost.

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

We could pursue selected divestitures which would impact future sales, operating results, financial position and cash flows.

Our strategy is to exit businesses that (i) are not integrated, either operationally or through sales and marketing, with the rest of our Company; (ii) have market channels and customers different from the business of our core Products segment; (iii) are not designated as recipients of significant investment of corporate resources in the foreseeable future; or (iv) have had, and are expected to continue to have, low returns on our investment of financial and management resources. For example, in fiscal 2003, we sold our ASI and LICO Steel businesses

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after determining that they did not meet our criteria for continuing investment. We periodically review our businesses and are currently evaluating strategic alternatives for our Duff-Norton, Societe D’Exploitation des Raccords Gautier, Positech, American Lifts, Lister Chain & Forge, CM Shredder, Larco Industrial Services and Univeyor businesses. In the aggregate, these businesses generated fiscal 2003 sales and EBITDA of $98.3 million and $5.0 million, respectively. Divestiture of some or all of such businesses would affect future sales, operating results, financial position and cash flows.

Item 7A.    Quantitative and Qualitative Disclosures About Market Risk.

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

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

In fiscal 2003, approximately 25.5% of our net sales were from manufacturing plants and sales offices in foreign jurisdictions. We manufacture our products in the United States, Canada, Germany, Denmark, the United Kingdom, Mexico, France and China and sell our products and solutions in over 50 countries. Our results of operations could be affected by factors such as changes in foreign currency rates or weak economic conditions in foreign markets. Our operating results are exposed to fluctuations between the U.S. dollar and the Canadian dollar, European currencies and the Mexican peso. For example, when the U.S. dollar strengthens against the Canadian dollar, the value of our net sales and net income denominated in Canadian dollars decreases when translated into U.S. dollars for inclusion in our consolidated results. We are also exposed to foreign currency fluctuations in relation to purchases denominated in foreign currencies. Our foreign currency risk is mitigated since the majority of our foreign operations’ net sales and the related expense transactions are denominated in the same currency so therefore a significant change in foreign exchange rates would likely have a very minor impact on net income. In addition, the majority of our export sale transactions are denominated in U.S. dollars. Accordingly, we currently have not invested in derivative instruments, such as foreign exchange contracts, to hedge foreign currency transactions.

We control risk related to changes in interest rates by structuring our debt instruments with a combination of fixed and variable interest rates and by periodically entering into financial instrument transactions as appropriate. At March 31, 2003, we had one interest rate swap agreement in effect which converts $40 million of variable rate debt to fixed rate debt. This swap agreement matures in June 2003 and will not be renewed. We do not have any other swap agreements or similar financial instruments in place. Including the effect of our existing swap agreement, at March 31, 2003 and 2002, approximately 98% and 68%, respectively,of our outstanding debt had fixed interest rates. At those dates, we had approximately $6.6 million and $110.7 million, respectively, of outstanding variable rate debt. A 1% fluctuation in interest rates in fiscal 2003 and 2002 would have changed interest expense on that outstanding variable rate debt by approximately $0.6 million and $1.4 million, respectively.

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Item 9.    Changes in and Disagreements with Accountants on Accounting and Financial Disclosures.

None.

PART III

Item 10.    Directors and Executive Officers of the Registrant.

The information regarding Directors and Executive Officers of the Registrant will be included in a Proxy Statement to be filed with the Commission prior to July 29, 2003 and upon the filing of such Proxy Statement, is incorporated by reference herein.

Item 11.    Executive Compensation.

The information regarding Executive Compensation will be included in a Proxy Statement to be filed with the Commission prior to July 29, 2003 and upon the filing of such Proxy Statement, is incorporated by reference herein.

Item 12.    Security Ownership of Certain Beneficial Owners and Management.

The information regarding Security Ownership of Certain Beneficial Owners and Management will be included in a Proxy Statement to be filed with the Commission prior to July 29, 2003 and upon the filing of such Proxy Statement, is incorporated by reference herein.

Item 13.    Certain Relationships and Related Transactions.

The information regarding Certain Relationships and Related Transactions will be included in a Proxy Statement to be filed with the Commission prior to July 29, 2003 and upon the filing of such Proxy Statement, is incorporated by reference herein.

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PART IV

Item 14.    Controls and Procedures.

Within 90 days before the filing date of this annual report, we carried out an evaluation, under the supervision and with the participation of our management, including, our chief executive officer and our chief financial officer, of the effectiveness of our “disclosure controls and procedures” (as defined in the Securities Exchange Act of 1934, Rule 13a-14(c)). Based upon that evaluation, our management, including our chief executive officer and chief financial officer, concluded that our disclosure controls and procedures were effective to ensure that information required to be disclosed by us in the reports we file or submit under the Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. There have been no significant changes in our internal controls or in other factors that could significantly affect these controls subsequent to the date we conducted this evaluation.

Item 15.    Exhibits, Financial Statement Schedules, and Reports on Form 8-K.

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

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

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