UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

FORM 10-K
☒ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)

For the fiscal year ended March 31, 20202022


or
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



Commission file number 0-27618001-34362
_________________

COLUMBUS McKINNON CORPORATIONCORPORATION
(Exact name of Registrant as specified in its charter)

New York16-0547600
(State of Incorporation)(I.R.S. Employer Identification Number)

205 Crosspoint Parkway
Getzville, Buffalo, New York14068
(Address of principal executive offices, including zip code)

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

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.01 par value per shareCMCONASDAQNasdaq Global Select Market

Securities registered pursuant to Section 12(b) of the Act: None.

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.   Yes  ☐☒   No   ☒☐
 
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act.   Yes  ☐   No  ☒
 
Indicate by checkmark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒  No ☐
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒  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    ☒.

Indicate by checkmark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” “large accelerated filer” and “smaller reporting company”company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer
☒   
Accelerated filer☐Non-accelerated filer☐Smaller reporting company☐Emerging Growth Company☐
If an Emerging Growth Company,emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o   
     
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).        Yes ☐   No ☒
 
The aggregate market value of the voting stock held by non-affiliates of the Registrant as of September 30, 20192021 (the second fiscal quarter in which this Form 10-K relates) was approximately $859 million,$1.4 billion, based upon the closing price of the Company’s common shares as quoted on the Nasdaq Stock Market on such date. The number of shares of the Registrant’s common stock outstanding as of May 22, 202023, 2022 was 23,786,36328,550,590 shares.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Registrant’s proxy statement for its 20202022 Annual Meeting of Shareholders to be filed with the Securities and Exchange Commission ("SEC") pursuant to Regulation 14A not later than 120 days after the end of the Registrant’s fiscal year ended March 31, 20202022 are incorporated by reference into Part III of this report.


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COLUMBUS McKINNON CORPORATION
 
20202022 Annual Report on Form 10-K
 
This annual reportAnnual Report on Form 10-K contains “forward-looking statements” within the meaning of Section 27A of the Private Securities Litigation Reform Act of 1995.1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. 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, including the impact of the COVID-19 pandemic, 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 “Risk Factors.” WeFactors” and our other publicly available SEC filings. All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by these cautionary factors and to others contained throughout this report. Some of these statements can be identified by the use of forward-looking words likesuch as “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 are based on our current expectations. Except as required by applicable law, 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. OurActual events or our actual operating results could differ materially from those predicted, anticipated, or implied in these forward-looking statements, and any other events anticipated in the forward-looking statements may not actually occur.


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TABLE OF CONTENTS
Part I
Item 1.Business
4
Item 1A.
1011
Item 1B.
1418
Item 2.   Properties
19
Item 3.   
1620
Item 4.
1620
Part II           
Item 5.
1721
Item 6.  Selected Financial Data
21
Item 7.   
2021
Item 7A
3129
Item 8.
3331
Item 9.   
9287
Item 9A.
9287
Item 9B.
9490
Part III.Item 9C.
90
Part III.
Item 10.
9490
Item 11.
9490
Item 12.
9490
Item 13.
9490
Item 14.
9490
Part IV
Item 15 
9591


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PART I

Item 1.        Business
 
General

Columbus McKinnon Corporation ("Columbus McKinnon" or the "Company") is a leading worldwide designer, manufacturer and marketer of intelligent motion control products, technologies, automated systemssolutions that move the world forward and services thatimprove lives by efficiently and ergonomically move, lift, positionmoving, lifting, positioning and securesecuring materials. Key products include hoists, crane components, actuators,precision conveyor systems, rigging tools, light rail workstations and digital power and motion control systems. These are highly relevant, professional-grade solutions that solve customers’ critical material handling requirements.

The Company is focused on commercial and industrial applications that require the safety, reliability and quality provided by its superior design and engineering know-how. Our products are used for mission critical industrial applications where we have established, trusted brands with significant customer retention. Our targeted market verticals include general industries, transportation, energy and utilities, process industries, industrial automation, construction and infrastructure, mining, oil & gas, energy, aerospace, transportation, automotive, heavy equipmentfood and beverage, entertainment, life sciences, consumer packaged goods and e-commerce/supply chain/warehousing.

On April 7, 2021, the Company completed its acquisition of Dorner Mfg. Corp. ("Dorner"). Dorner, headquartered in Hartland, Wisconsin, is a leading automation solutions company providing unique, patented technologies in the design, application, manufacturing and entertainment.integration of high-precision conveying systems. The acquisition of Dorner accelerates the Company’s shift to intelligent motion and serves as a platform to expand capabilities in advanced, higher technology automation solutions. Dorner is a leading supplier to the stable life sciences, food processing, and consumer packaged goods markets as well as the high growth industrial automation and e-commerce sectors. The addition of Dorner provides attractive complementary adjacencies including sortation and asynchronous conveyance systems. Dorner offers a broad range of precision conveying systems to our product offerings, which include low profile, flexible chain, large scale, sanitary and vertical elevation conveyor systems, as well as pallet system conveyors.

In addition, on December 1, 2021, the Company completed its acquisition of Garvey Corporation ("Garvey"), which further expanded its precision conveyance offerings. Garvey is a leading accumulation systems solutions company providing unique, patented systems for the automation of production processes whose products complement those of Dorner. The acquisitions of Dorner and Garvey accelerate the Company’s shift to intelligent motion and serves as a platform to expand capabilities in advanced, higher technology automation solutions.

In the U.S.,United States, we are the market leader for hoists, and material handling digital power control systems and precision conveyors, our principal linelines of products, as well asand have strong market positions with certain chain, forged fittings, and actuator products. Additionally, in Europe, we believe we are the market leader for manual hoists and a market leader in the heavy load, rail and niche custom applications for actuation. We have achieved this leadership position through strategic acquisitions, our extensive, diverse, and well-established distribution channels and our commitment to product innovation and quality. We believe the substantial breadth of our product offering and expansivebroad distribution channels in the United States and Europe provide us a strategic advantage in our markets. Additionally, we believe we are the market leader for manual hoist and actuator products in Europe. Our market leadership and strong brands enable us to sell more products than our competition through our extensive distribution channels in the U.S. and Europe. The acquisition of STAHL CraneSystems ("STAHL") in fiscal 2017, which is well renowned for its custom engineering lifting solutions and hoisting technology, advanced our position as a global leader in the production of explosion-protected hoists. STAHL serves independent crane builders and Engineering Procurement and Construction ("EPC") firms, providing products to a variety of end markets including automotive, general manufacturing, oil and gas, steel and concrete, power generation, as well as process industries such as chemical and pharmaceuticals.

OurWe initiated our Blueprint for Growth Strategy is a three-phased strategy to increase the earnings power of the Company and transform us into a growth-oriented industrial technology company. The goal of our strategy is to increase our earnings power and expand EBITDA margins, as well as improve our Return on Invested Capital.in early fiscal 2018. It originally had three phases. In Phase I,1, which began early inwas completed during fiscal 2018, waswe focused on attaining operational control and instilling a performance-based culture to drive results.

We completedresults, which included reorganizing the business into three product groups. Phase I during fiscal 2018. In doing so, we believe we grew market shareII, which began in the U.S. and achieved $6 millionlatter half of synergies related tofiscal 2018, included simplifying the STAHL acquisition. In addition, we introduced several new products incorporating smart hoist technologies and repaid $60 million of our long-term debt.

We began Phase II of the strategy in November 2017. This phase utilizesbusiness with our 80/20 process, which focuses on business simplification, improving our operational excellence, and ramping the growth engine by investing in new product development and a digital platform to grow profitably. Investment in R&D will advance our smart hoist technology and enhance our customers’ digital experience so we can capitalize onThrough the automation megatrend. Research and development costs were $11,310,000, $13,491,000, and $13,617,000 in fiscal years 2020, 2019, and 2018, respectively.

In addition to restructuring our organization to simplify our business,simplification process, we identified three businesses in our portfolio that were not a fit with our product offerings and strategy.strategy that represented approximately $38 million in revenue in fiscal 2018. By Marchthe end of fiscal 2019, the Company had completed the divestiture ofwe divested these three businesses. The Tire Shredder business was sold in December 2018. The remaining two businesses which were sold in February 2019, included Crane Equipment and Service, Inc. and Stahlhammer Bommern GmbH. During fiscal 2020, the Company reduced its manufacturing footprint by completingcompleted the closure of one manufacturing facility in Ohio, which provided $2 million in cost savings in fiscal 2020. During fiscal 2020, the Company began to further reduce its manufacturing footprint by initiating the closure and began consolidation of itsour remaining facility in Ohio into our remainingother U.S. facilities.facilities, which was completed in fiscal 2021. Similarly, one of our manufacturing facilities in China was closed during fiscal 2020 and its operations were consolidated into our other manufacturing facility in China.

A small operation in France was closed during fiscal 2021. The annual savings from these factory consolidations is approximately $8.3 million. Simplification with the 80/20 process and other operational efficiencies implemented enabled the consolidations without reducing our ability to serve our customers and address demand. Phase III of the strategy iswas centered on evolving the business


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model including optimizing our current product portfolio as well as pursuing acquisitions to advance our transformation into a leading industrial technologyintelligent motion solutions company. The Dorner and Garvey transactions are examples of these types of acquisitions.

We have since evolved our Blueprint for Growth strategy to version 2.0 in order to accelerate our pivot to growth with an emphasis on broadening our expertise in intelligent motion solutions for material handling. Our Blueprint for Growth 2.0 strategy is focused on delivering above market growth through organic and inorganic initiatives as well as improved financial performance, which we believe drives shareholder value creation. The strategy is underpinned with the Columbus McKinnon Business System, ("CMBS") that provides the discipline, processes and core competencies necessary to scale our business. At the core of CMBS are our people and our values.

With CMBS as the foundation, we are well positioned to execute the Core Growth Framework of our Blueprint for Growth 2.0 strategy. The Framework defines four parallel paths for Columbus McKinnon’s growth and provides clear organic and strategic initiatives. Our Core Growth framework includes:

•Strengthening the Core which is a foundational path focused on initiatives that will strengthen competencies and improve our competitive position within our existing share of our Serviceable Addressable Market (”SAM”). Initiatives include further developing commercial and product management competencies and improving our digital tools for a better, more efficient customer experience.

•Growing the Core is a path that is focused on taking greater marker share, both organically and through acquisitions, within our SAM. We are making progress on this path with product localization, new product development and advancements in automation and aftermarket support for our distributors.

•Expanding the Core is a path that is focused on improved channel access and geographic expansion. Here we expand beyond our SAM into the broader Total Addressable Market (“TAM”). This involves building out our presence both geographically and in new verticals with expanded offerings, which we expect we can accomplish organically as well as with acquisitions.

•Reimagining the core is a more transformational path that rethinks our TAM and targets strategic expansion beyond our existing TAM. As we think more broadly about material handling and increasing trends in intelligent motion, not just lifting, but solutions for how materials move throughout customer environments, there are some compelling ideas that emerge. The Dorner and Garvey acquisitions are examples of reimagining Columbus McKinnon’s core, which added an additional $5 billion to our TAM, with the specialty conveying microsegment growing at an estimated 6% to 8% rate annually.

The strategy is geared toward investing in new products that solve our customers’ tough problems and expanding into new platforms that provide intelligent motion solutions for material handling, such as precision conveyance capabilities. We believe the acquisitions of Magnetek, Inc.Dorner and STAHLGarvey establish a platform for expansion supported by new product development, a fragmented competitive landscape and complementary adjacencies. It also allows Dorner and Garvey to expand geographically by having access to our efforts to leverage their technology are well alignedglobal footprint and provides us with our transformation efforts. We have demonstrated our ability to acquire companies and achieve significant synergies and growth. As we begin Phase IIIan entry point into a pipeline of our strategy, we will look for acquisitions that advance our position as a “lifting specialist” or further our technologyadditional acquisition opportunities in “smart movement”.the fragmented precision conveying industry.

Our legacy Lifting business is cyclical in nature and sensitive to changes in general economic conditions, including changes in industrial capacity utilization, industrial production, and general economic activity indicators, like GDP growth. Both U.S. and Eurozone capacity utilization and the ISM Production Index are leading market indicators for our Company. Like many global companies, we are being affected by the Novel Coronavirus ("COVID-19"). While the severity and duration of this global pandemic is not known at this time, we are seeking


to take all appropriate measures to protect the cash flow and liquidity of the Company. This includes reducing our cost base, reducing working capital needs, and reducing capital expenditures. We have a flexible capital structure composed of a Credit Agreement that includes a Term Loan that requires quarterly principal payments of $1.1 million, and a $100 million Revolving Credit Facility ("Revolver"). Under the Credit Agreement, in addition to other affirmative and negative covenants, we have a financial covenant whereby the total net leverage ratio cannot exceed 3.00: 1.00 and is only tested at the end of the relevant reference period (quarter end) when the Revolver is outstanding. While the Revolver was undrawn as of March 31, 2020 and did not apply, had we been required to determine the covenant ratio we would have been in compliance with the covenant provisions. Subsequent to March 31, 2020, the Company drew $25 million from the Revolver for liquidity and working capital purposes, demonstrating that it has a supportive bank group.

Business Description
ASC Topic 280 “Segment Reporting” establishes the standards for reporting information about operating segments in financial statements. We provide our products and services through one operating and reportable segment.
 
We design, manufacture, and distribute a broad range of material handling products for various applications. Products include a wide variety of electric, air-powered, lever, and hand hoists, hoist trolleys, explosion-protected hoists, winches, and aluminum work stations; alloy and carbon steel chain; forged attachments, such as hooks, shackles, textile slings, clamps, and load binders; mechanical and electromechanical actuators and rotary unions; and below-the-hook special purpose lifters; power and motion control systems, such as AC and DC drive systems, radio remote controls, push button pendant stations, brakes, and collision avoidance and power delivery subsystems. TheseThe fiscal 2022 acquisitions of Dorner and Garvey expand our product offerings to include a broad range of highly engineered, precision conveying solutions. Our products are typically manufactured for stock or assembled to order from standard components, and are sold primarily through a variety of commercial distributors and, to a lesser extent, directly to end-users. Our STAHL subsidiary brings market leadership with independent crane builders and EPC firms. The diverse end-users of our products are in a variety of industries including manufacturing, power generation and distribution, utilities, wind power, warehouses, commercial construction, oil and gas exploration and refining, petrochemical, marine, ship building, transportation and heavy-duty trucking, agriculture, logging and mining. The acquisitions


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of Dorner and Garvey expand the Company's reach to include the stable life sciences, food processing and consumer packaged goods markets and high growth industrial automation and e-commerce sectors. We also serve a niche market for the entertainment industry, including permanent and traveling concerts, live theater, and sporting venues.

Products
 
Of our fiscal 20202022 sales, $442,623,000,$532,830,000, or 55%59%, were U.S. and $366,539,000$373,725,000 or 45%41% were non-U.S. The following table sets forth certain sales data for our products, expressed as a percentage of net sales for fiscal 20202022 and 2019:2021:
 
 Fiscal Years Ended March 31, Fiscal Years Ended March 31,
 2020 2019 20222021
Hoists 64% 62%Hoists48 %61 %
Chain and rigging tools 9
 10
High-precision conveying systemsHigh-precision conveying systems16 — 
Digital power control and delivery systems 12
 11
Digital power control and delivery systems11 12 
Actuators and rotary unions 10
 9
Actuators and rotary unions9 11 
Chain and rigging toolsChain and rigging tools9 7 
Industrial cranes 2
 4
Industrial cranes5 6 
Elevator application drive systems 3
 3
Elevator application drive systems2 3 
Other —
 1
 100% 100% 100 %100 %
 
Hoists -We manufacture a wide variety of electric chain hoists, electric wire rope hoists, hand-operated hoists, winches, lever tools, and air-powered hoists. Load capacities for our hoist product lines range from one-eighth of a ton to nearly 140275 tons with the acquisition of STAHL. These products are sold under our Budgit, Chester, CM, Coffing, Little Mule, Pfaff, Shaw-Box, STAHL, Yale, STAHL, and other recognized brands. Our hoists are sold for use in numerous general industrial applications, as well as for use in the construction, energy and utilities, steel and metals processing, mining, food services,transportation, entertainment, and other markets. We also supply hoist trolleys, driven manually or by electric motors, thatwhich are used in conjunction with hoists.

We also offer several lines of standard and custom-designed, below-the-hook tooling, clamps, and textile strappings. Below-the-hook tooling, textile, and chain slings and associated forgings, and clamps are specialized lifting apparatus used in a variety of lifting activities performed in conjunction with hoisting or lifting applications.


STAHL primarily manufacturesWe also manufacture explosion-protected hoists and custom engineered hoists, including wire rope and manual and electric chain hoists. Our STAHL branded products are sold to a variety of end markets including automotive, general manufacturing, oil and gas, steel and concrete, power generation as well as process industries such as chemical and pharmaceuticals.

ChainHigh-precision conveying systems – Our fiscal 2022 acquisitions of Dorner and Rigging Tools- We manufacture alloyGarvey expanded our product offerings to include high-precision, specialty conveyor system solutions. These conveyor systems range from build to order modular standard systems to highly engineered customer solutions. These products offer customers high quality and carbon steel chain for various industrialreliable solutions that enhance productivity and consumer applications. U.S. 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-AlloyTM 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.profitability.
We produce a broad line of alloy and carbon steel closed-die forged chain attachments, including hooks, shackles, Hammerloks
TM, and master links. These forged attachments are used in chain, wire rope, and textile rigging applications in a variety of industries, including transportation, mining, construction, marine, logging, petrochemical, and agriculture.

In addition, we manufacture carbon steel forged and stamped products, such as load binders, logging tools, and other securing devices, for sale to the industrial and logging markets through industrial distributors, hardware distributors, mass merchandiser outlets, and Original Equipment Manufacturers ("OEMs").
Digital Power Control and Delivery Systems - Through our Magnetek brand, we are a leading provider of innovative power control and delivery systems and solutions for overhead material handling applications used in a number of diverse industries, including aerospace, automotive, steel, aluminum, paper, logging, mining, ship loading, nuclear power plants, and heavy movable structures. We are a major supplier in North America of power and motion control systems, which include AC and DC drive systems, radio remote controls, push button pendant stations, brakes, and collision avoidance and power delivery subsystems. While we sell primarily to OEMs of overhead cranes and hoists, we spend a great deal of effort understanding the needs of end users to gain specification. We can combine our products with engineered services to provide complete customer-specific systemssystem solutions.

We are also a leading independent supplier of AC and DC digital motion control systems for underground coal mining equipment. Our systems are used in coal hauling vehicles, shuttle cars, scoops, and other heavy mining equipment.

Actuators and Rotary Unions -Through our Duff-Norton and Pfaff brands, we design and manufacture industrial components such as mechanical and electromechanical actuators and rotary unions. Actuators are linear motion devices used in a variety of industries, including the transportation, paper, steel, energy, aerospace, and many other commercial industries. Rotary unions are devices that transfer a liquid or gas from a fixed pipe or hose to a rotating drum, cylinder or other device. Rotary unions are used in a variety of industries including pulp and paper, printing, textile and fabric manufacturing, rubber, and plastic.


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Chain and Rigging Tools - We manufacture alloy and carbon steel chain for various industrial and consumer applications. U.S. federal regulations require the use of alloy chain for overhead lifting applications because of its strength and wear characteristics. A line of our alloy chain is sold under the Herc-AlloyTM 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 produce a broad line of alloy and carbon steel closed-die forged chain attachments, including hooks, shackles, HammerloksTM, and master links. These forged attachments are used in chain, wire rope, and textile rigging applications in a variety of industries, including transportation, mining, construction, marine, logging, petrochemical, and agriculture.

In addition, we manufacture carbon steel forged and stamped products, such as load binders, logging tools, and other securing devices, for sale to the industrial and logging markets through industrial distributors, hardware distributors, mass merchandiser outlets, and original equipment manufacturers ("OEMs").
Industrial Cranes - We manufacture and market under our Unified Industries brand overhead aluminum light rail workstations primarily used in automotive and other industrial applications. We also manufacture crane components and crane kits through our STAHL branded products.

Elevator Application Drive Systems - Through our Magnetek brand we also design, build, sell, and support elevator application-specific drive products that efficiently deliver power used to control motion, primarily in high-rise, high-speed elevator applications. We are recognized as an industry leader for DC high-performance elevator drives, as well as for AC drives used with low- and high-performance traction elevators, due to our extensive application expertise and product reliability. Our elevator product offerings are comprised of highly integrated subsystems and drives, sold mainly to elevator OEMs. In addition, our product options include a number of regenerative controls for both new building installations and elevator modernization projects that help building owners save energy.
 
Distribution and Markets
 
OurWe sell our products and solutions through various distribution channels include a variety of commercial distributors. In addition, we sell aluminum light rail systems as well asand direct to certain motion technology products directly to end-users.end users. The following describes our global distribution channels:
 
General Distribution Channels -  Our global general distribution channels consist of:

—     Industrial distributors that serve local or regional industrial markets and sell a variety of products for maintenance repair, operating, and production, or MROP, applications through their own direct sales force.
 
— Rigging shops that are distributors with expertise in rigging, lifting, positioning, and load securing. Most rigging shops assemble and distribute chain, wire rope and synthetic slings, and distribute manual hoists and attachments, chain slings, and other products.
—     Rigging shops that are distributors with expertise in rigging, lifting, positioning, and load securing. Most rigging shops assemble and distribute chain, wire rope and synthetic slings, and distribute manual hoists and attachments, chain slings, and other products.
 

—     Independent crane builders that design, build, install, and service overhead crane and light-rail systems for general industry and also distribute a wide variety of hoists and crane components. We sell electric wire rope hoists and chain hoists as well as crane components, such as end trucks, trolleys, drives, and electrification systems to crane builders.
— Independent crane builders that design, build, install, and service overhead crane and light-rail systems for general industry and also distribute a wide variety of hoists and crane components. We sell electric wire rope hoists and chain hoists as well as crane components, such as end trucks, trolleys, drives, and electrification systems to crane builders.
 
Specialty Distribution Channels -  Our global specialty distribution channels consist of:

—     
National and regional distributors that market a variety of MROP supplies, including material handling products, either exclusively through large, nationally distributed catalogs, or through a combination of catalog, internet, and branch sales and a field sales force.

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

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

Pfaff International Direct -
  Our German-based Pfaff business markets
—     Material handling specialists and sells mostintegrators that design and assemble systems incorporating hoists, overhead rail systems, trolleys, scissor lift tables, manipulators, air balancers, jib arms, and other material handling products to provide end-users with solutions to their material handling problems.

—     Entertainment equipment distributors that design, supply, and install a variety of its actuators directly to end-users, providing an additional method to marketmaterial handling and rigging equipment for us in the European region.concerts, theaters, ice shows, sporting events, convention centers, and night clubs.



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Service-After-Sale Distribution Channel - Service-after-sale distributors include our authorized network of 23 chain repair service stations and over 227229 certified hoist service and repair stations globally. This service network is designed for easy parts and service access for our large installed base of hoists and related equipment in that region.
 
OEM/Government Distribution Channels - This channel consists of:
 
— OEMs that supply various component parts directly to other industrial manufacturers as well as private branding and packaging of our traditional products for material handling, lifting, positioning, and special purpose applications.
—     OEMs that supply various component parts directly to other industrial manufacturers as well as private branding and packaging of our traditional products for material handling, lifting, positioning, and special purpose applications.

— Government agencies, including the U.S. and Canadian Navies and Coast Guards, that primarily purchase load securing chain and forged attachments. We also provide our products to the U.S. and other governments for a variety of military applications.
—     Government agencies, including the U.S. and Canadian Navies and Coast Guards, that primarily purchase load securing chain and forged attachments. We also provide our products to the U.S. and other governments for a variety of military applications.

Independent Crane Builders and Engineering Procurement and Construction ("EPC") firms - In addition to the Distribution Channels mentioned above, we sell explosion-protected hoists and custom engineered non-standard hoists to independent crane builders and EPC firms. Independent crane builders are lifting solution developers and final crane assemblers that source hoists as components. EPC firms are responsible for project management or construction management of production facilities that purchase lifting solutions from crane and hoist builders.

Backlog
 
Our backlog of orders at March 31, 20202022 was approximately $131,030,000$309,052,000, including $60,223,000 of backlog related to the Dorner and Garvey acquisitions, compared to approximately $161,456,000$171,698,000 at March 31, 2019.2021. The decreaseincrease is a result of declining industrialgrowing order rates as markets globallyrecover from COVID-19, backlog related to the acquired businesses, as well as higher than normal backlog due to COVID-19 and changing foreign currency rates.supply chain challenges. Our orders for standard products are generally shipped within one week. Orders for products that are manufactured to customer specifications are generally shipped within four to twelve weeks. Given the short product lead times, we do not believe that the amount of our backlog of orders is a reliable indication of our future sales. Fluctuations in backlog can reflect the project-oriented nature of certain aspects of our business.

Competitive Conditions
 
The material handling industryand precision conveyance industries remains fragmented. We face competition from a wide range of regional, national, and international manufacturers globally. In addition, we often compete with individual operating units of larger, highly diversified companies.

The principal competitive factors affecting our business include customer service and support as well as product availability, performance, functionality, brand reputation, reliability, and price. Other important factors include distributor relationships and territory coverage.coverage as well as the robustness of our digital tools which impacts the customer experience.


We believe we have leading U.S. market share in various products categories including hoists, trolleys and components, AC and DC material handling drives, screw jacks, and elevator DC drives. These product categories represent 66%represented 53% of our U.S. net sales.sales for fiscal 2022.

Major competitors for hoists are Konecranes, which acquired Terex's Material Handling and Port Solutions business segment, and Kito (and its U.S. subsidiary Harrington); for chain are Campbell Chain, Peerless Chain Company (acquired by Kito), and American Chain and Cable Company; for digital power control systems are Konecranes, Power Electronics International, Inc., Cattron Group InternationalHoldings (a division of HarborHarbour Group), Conductix-Wampfler (a division of Delachaux Group), Control Techniques (a division of Emerson Electric)Nidec Corporation), OMRON Corporation, KEB GmbH, and Fujitec; for forged attachments are The Crosby Group, and Brewer Tichner Company and Chicago Hardware and Fixture Company; and for actuators and rotary unions are Deublin, Joyce-Dayton, and Nook Industries.Industries, a division of Altra Industrial Motion Corp.; and for precision conveyors and accumulators are FlexLink, Bosch Rexroth AG, MK North America, Inc., Duravant, Nercon Eng. & Mfg. Inc and Arrowhead Systems.
 
EmployeesHuman Capital Management
Headquartered in Buffalo, New York, Columbus McKinnon’s global footprint includes offices and manufacturing facilities in more than 24 countries across North America, Latin America, Europe, the Middle East, Africa and Asia. At March 31, 2020,2022, we had 2,9973,224 employees globally. Approximately 8%6% of our employees are represented under threetwo separate U.S. collective bargaining agreements whichthat expire April 2021,in May 2021,2024 and September 2021.2024. We also have various labor agreements with our non-U.S. employees whichthat we negotiate from time to time. We have good relationships with our employees and positive, productive


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relationships with our unions. TheWe believe the risk of employee or union led disruption in production is remote. The acquisitions of Dorner and Garvey in fiscal 2022 added approximately 596 employees to our global workforce and five primary manufacturing facilities.

Successful execution of our strategy is dependent on attracting, developing, and retaining key employees and members of
our management team, which we achieve through the following:

•We always begin with people and values at the center of all that we do and at the heart of our corporate social responsibility efforts. The Company’s people and the behaviors they display define our success, including integrity, respect and teamwork. Many of our material social factors, including Employee Health and Safety, Training and Development, Talent Recruitment and Retention, Diversity, Equity and Inclusion, and Community Involvement, are directly connected to our commitment to people and values. Our people enable us to grow, and our values ensure we grow responsibly and sustainably.
•The Company places the highest priority on workplace safety. We feel it is critical to ensure our most valuable assets, our employees, have a safe environment to work in every day. “Connect safety to everything you do” highlights the importance of safety to our culture. As a permanent agenda item at all management meetings, safety comes first. For fiscal 2022, the Company had an overall safety incident rate of 0.70 (number of injuries and illnesses multiplied by 200,000, divided by hours worked). This figure excludes our fiscal 2022 acquisitions of Dorner and Garvey which will be incorporated in Fiscal 2023.
•We are committed to embracing diversity, equity and inclusion and making it a part of everything we do. We know the positive impact diverse and inclusive teams have on our business, employees, customers, and communities around the world. We are dedicated to building a company that future generations can be proud of and a team that embraces diversity and appreciates differences across the enterprise. We have embedded diversity, equity and inclusion into the People and Values framework of the Columbus McKinnon Business System. We are working to create an environment of inclusion. We launched a series of virtual training modules around diversity, inclusion and unconscious bias. We have updated our core value “Win as a team” to specifically address embracing diversity.

As part of our response to the COVID-19 pandemic, we implemented strict safety protocols at our sites, as recommended by medical and public health experts. We continue to have regular communication with employees to keep them abreast of the corporate-wide expectations and posted signage throughout our facilities reminds our associates of the new heightened safety protocols, including frequent cleaning and increased sanitization efforts to keep our employees safe. Associates where possible are being brought back to the office in a hybrid working model, increasing site collaboration while maintaining flexibility.

We also recognize our corporate responsibility to advance our Environmental Social and Governance (“ESG”) efforts and to be held accountable for making progress. We are making significant investments in our people and systems to enable meaningful progress in areas including, but not limited to, environmental stewardship, safety for our employees, workplace diversity and inclusion, connecting with our communities, and strong governance and risk management. We are taking deliberate steps to fully integrate ESG into our enterprise strategy, our business system, and our daily actions.

In fiscal 2022, we made it a priority to articulate our Purpose - Together we create intelligent motion solutions that move the world forward and improve lives.

In addition, we also set the following objectives for fiscal 2022:
•Make significant investments in forward advancement of ESG (People & Technology enablers);
•Perform extensive data collection and analysis to identify areas for improvement;
•Build upon our baseline year ESG metrics;
•Build upon our legacy products and commitment to customers, while also growing through acquisitions;
•Launch our CMCO Cares platform, a more formal and centralized process for corporate giving and community involvement; and
•Be more transparent with internal and external stakeholders through communications and public disclosures.

As we look forward to fiscal 2023 and beyond, we have additional plans that will continue to move our ESG initiatives forward. We continue to collect and analyze data to set realistic, yet challenging goals. We expect to publish several of these goals in our next Corporate Social Responsibility Report.

Raw Materials and Components
 
Our principal raw materialsmaterial and components arecomponent purchases aggregated to approximately $368 million in fiscal 2022 (or 62% of Cost of product sold in fiscal 2022) and included steel, consisting of rod, wire, bar, structural, and other forms of steel; electric motors; bearings; gear reducers; castings; steel and aluminum enclosures and wire harnesses; electro-mechanical componentscomponents;


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conveyors; accumulators and standard variable drives. 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 whichthat are negotiated on a company-wideCompany-wide basis through our global purchasing group to take advantage of volume discounts.group. Generally, as we experience fluctuations in our costs, we reflect themthese increases in costs as price increases to our customers with the goal of being margin neutral. In addition,Currently, as a result of the recent trade tariff actions with China, the Company determined its fiscal 2020 exposure for tariffsglobal supply chain challenges, we are experiencing higher raw material costs. To date, we have successfully raised prices several times globally to be approximately $2,500,000 which resulted inour customers to cover these increased cost of products sold. The Company is monitoring the impact of tariffsraw material costs and is actively working to mitigate this impact through material productivity actions and pricing strategies. For all other raw materials and components, our ability to pass on these increases is determined by market conditions.  Although raw materials and some components (such as motors, bearings, gear reducers, steel and aluminum enclosures and wire harnesses, castings, electro-mechanical components, and standard variable drives) are purchased, our vertical integration enables us to produce many of the components used in the manufacturing of our products.protect gross margins. 
 
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 shallmust comply, and all of our employees have the duty to comply, with all applicable environmental regulatory standards, and we have initiated an environmental auditing program for our facilities to ensure compliance with such regulatory standards. We have also established managerial responsibilities and internal communication channels for dealing with environmental compliance issues that may arise in the course of our business. We have made, and could be required to continue to make, significant expenditures to comply with environmental requirements. Because of the complexity and changing nature of environmental regulatory standards, it is possible that situations will arise from time to time requiring us to incur additional expenditures 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.
We have been a part of the Pendleton Site PRP Group since about 1993.  Many years ago, we sent pickle liquor wastes from Tonawanda, NY to the Pendleton Site for treatment and disposal.  The Pendleton Site PRP Group signed an Order on Consent with the NYS DEC in 1996 and the cleanup was concluded in the early 2000s.  The Order on Consent required a post-construction operation and maintenance period of 30 years and we are required to pay our share of the costs associated with the operation and maintenance period.  Our share of these costs is 13.4% and reserves on the books are sufficient to cover these costs for the remainder of the operations and maintenance period.

In 1986, Magnetek acquired the stock of Universal Manufacturing Corporation (“Universal”) from a predecessor of Fruit of the Loom (“FOL”), and the predecessor agreed to indemnify Magnetek against certain environmental liabilities arising from pre-acquisition activities at a facility in Bridgeport, Connecticut. Environmental liabilities covered by the indemnification agreement included completion of additional cleanup activities, if any, at the Bridgeport facility and defense and indemnification against liability for potential response costs related to offsite disposal locations. Magnetek's leasehold interest in the Bridgeport facility

was assigned to the buyer in connection with the sale of Magnetek's transformer business in June 2001. FOL, the successor to the indemnification obligation, filed a petition for Reorganization under Chapter 11 of the Bankruptcy Code in 1999 and Magnetek filed a proof of claim in the proceeding for obligations related to the environmental indemnification agreement. Magnetek believes that FOL had substantially completed the clean-up obligations required by the indemnification agreement prior to the bankruptcy filing. In November 2001, Magnetek and FOL entered into an agreement involving the allocation of certain potential tax benefits and Magnetek withdrew its claims in the bankruptcy proceeding. FOL's obligation to the state of Connecticut was not discharged in the reorganization proceeding.

In January 2007, the Connecticut Department of Environmental Protection (“DEP”) requested parties, including Magnetek, to submit reports summarizing the investigations and remediation performed to date at the site and the proposed additional investigations and remediation necessary to complete those actions at the site. The DEP then requested additional information relating to site investigations and remediation. Magnetek and the DEP agreed to the scope of the work plan in November 2010. The Company has implemented the work plan and has recorded a liability of $352,000 as of March 31, 2020 related to the Bridgeport facility, representing the best estimate of future site investigation costs and remediation costs which are expected to be incurred in the future.

For all of the currently known environmental matters, we have accrued as of March 31, 2020 a total of $1,143,000 which, in our opinion, is sufficient to deal with such matters. Further, we believe 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.

In September of 2017, Magnetek received a request for defense and indemnification from Monsanto Company, Pharmacia, LLC, and Solutia, Inc. (collectively, “Monsanto”) with respect to: (1) lawsuits brought by plaintiffs claiming that Monsanto manufactured polychlorinated biphenyls ("PCBs"), exposure to which allegedly caused injury to plaintiffs; (2) lawsuits brought by municipalities and municipal entities claiming that Monsanto should be responsible for a variety of damages due to the presence of PCBs in bodies of water in those municipalities and/or in water treated by those municipal entities.  Monsanto claims to be entitled to defense and indemnification from Magnetek under a so-called “Special Undertaking” apparently executed by Universal in January of 1972, which purportedly required Universal to defend and indemnify Monsanto from liabilities “arising out of or in connection with the receipt, purchase, possession, handling, use, sale or disposition of” PCBs by Universal.
Magnetek has declined Monsanto’s tender, and believes that it has meritorious legal and factual defenses to the demands made by Monsanto.  Magnetek is vigorously defending against those demands and has commenced litigation to, among other things, declare the Special Undertaking void and unenforceable.  Monsanto has, in turn, commenced an action to enforce the Special Undertaking.  Magnetek intends to continue to vigorously prosecute its declaratory judgment action and to defend against Monsanto’s action against it.  As of March 31, 2020, the Company has recorded $100,000 for legal costs related to this matter. We cannot reasonably estimate a potential range of loss with respect to Monsanto’s tender because there is insufficient information regarding the underlying matters.  Management believes, however, that the potential additional costs related to such matters, if any, will not have a material effect on the financial condition of the Company or its liquidity, although the effect of any future liabilities recorded could be material to earnings in a future period.

Our operations are also governed by many other laws and regulations, including those relating to workplace safety and worker health, principally OSHA in the U.S. and others outside the U.S. and regulations thereunder. We believe that we are in substantial 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, financial condition, or liquidity.

See Note 16 to our March 31, 2022 consolidated financial statements included in Item 8 of this Form 10-K for more information on our matters involving litigation.

Available Information

Our internet address is www.columbusmckinnon.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.SEC. The content on any website referred to in this Annual Report on Form 10-K (“Form 10-K”) is not incorporated by reference into this Form 10-K, unless expressly noted otherwise.




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Item 1A.    Risk Factors
 
Columbus McKinnon is subject to a number of risk factorsrisks that could negatively affect our business, financial condition or results from business operations or cause our actual results to differ materially from those projected or indicated in any forward-looking statement. Such factors include,You should carefully consider the risks described below, as well as the other information contained in this Annual Report on Form 10-K in evaluating your investment in us. The risks and uncertainties described below are those that we have identified as material, but are not limitedthe only risks and uncertainties facing Columbus McKinnon. This list is not all-inclusive or necessarily in order of importance. Our business could also be affected by additional risks that are not presently known to the following:us or that we currently consider to be immaterial.
 
Adverse changes in global economic conditions may negatively affect our industry, business, and results of operations.Business Risks
Our industry is affected by changes in economic conditions outside our control, which can result in a general decrease in product demand from our customers. Such economic developments, like Brexit or the China trade wars, may affect our business in a number of ways. Reduced demand may drive us and our competitors to offer products at promotional prices, which would have a negative impact on our profitability. In addition, the tightening of credit in financial markets may adversely affect the ability of our customers and suppliers to obtain financing for significant purchases and operations and could result in a decrease in, or cancellation of, orders for our products. If demand for our products slows down or decreases, we will not be able to maintain our revenue and we may run the risk of failing to satisfy the financial and other restrictive covenants to which we are subject under our existing indebtedness. Reduced revenue as a result of decreased demand may also reduce our planned growth and otherwise hinder our ability to improve our performance in connection with our long-term strategy.
The risk related to Novel Coronavirus ("COVID-19") could adversely affect our business.

Our business has been and may continue to be materially and adversely impacted by the effects of the COVID-19. In addition to global macroeconomic effects, the COVID-19 outbreak and any other related adverse public health developments will cause disruption to our domestic and international operations and sales activities. The continued operation of our facilities is subject to local laws and regulations. While all of our facilities have been deemed essential under applicable law there is no guarantee this will continue. Our third-party manufacturers, suppliers, third-party distributors, sub-contractors and customers have been and will be disrupted by worker absenteeism, quarantines and restrictions on their employees’ ability to work, office and factory closures, disruptions to ports and other shipping infrastructure, border closures, or other travel or health-related restrictions. Depending on the magnitude of such effects on our manufacturing operations or the operations of our suppliers, third-party distributors, or sub-contractors, our supply chain, manufacturing and product shipments could be delayed, which could adversely affect our business, operations, and customer relationships. In addition, the COVID-19 or other disease outbreaks will in the short-run and may over the longer term adversely affect the economies and financial markets of many countries, resulting in an economic downturn that will affect demand for our products and impact our operating results. In addition, a prolonged disruption from COVID-19 could result in a requirement to record additional reserves against accounts receivable and inventories and impairments of goodwill, intangible assets, and other long lived assets which could have a material impact on our results of operations. There can be no assurance that any decrease in sales resulting from the COVID-19 will be offset by increased sales in subsequent periods. Although the magnitude of the impact of the COVID-19 outbreak on our business and operations remains uncertain, the continued spread of the COVID-19 or the occurrence of other epidemics and the imposition of related public health measures and travel and business restrictions will adversely impact our business, financial condition, operating results and cash flows.

Changes in the method of determining the London Interbank Offered Rate ("LIBOR"), or the replacement of LIBOR with an alternative reference rate, may adversely affect interest rates.

On July 27, 2017, the United Kingdom’s Financial Conduct Authority, which regulates LIBOR, announced that it intends to phase out LIBOR by the end of 2021. The interest rate on the Company’s Term Loan and Revolver have a variable component that is based on LIBOR. It is unclear whether new methods of calculating LIBOR will be established if it continues to exist after 2021, or whether different benchmark rates used to price indebtedness will develop. In the future, we may need to renegotiate our Term Loan and Revolver or incur other indebtedness, and the phase-out of LIBOR may negatively impact the terms of such indebtedness. In addition, the overall financial market may be disrupted as a result of the phase-out or replacement of LIBOR. Disruption in the financial market could have a material adverse effect on our financial position, results of operations, and liquidity.

Our business is cyclical and is affected by industrial economic and macroeconomic conditions.

Many of the end-users of our products are in highly cyclical industries, such as manufacturing, power generation and distribution, commercial construction, oil and gas exploration and refining, transportation, agriculture, logging, and mining 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 economicmacroeconomic conditions, including, among others, movements in interest rates, inflation, changes in currency exchange rates and higher fuel and other energy costs, and other factors beyond our control. control, and is vulnerable to economic downturns. Decreased capital and maintenance spending by these customers could have a material adverse effect on the demand for our products and our business, financial condition, and results of operations. In particular, higher interest rates could result in decreased demand for our products from end-users, which would have a material adverse effect on our business and results of operations, and concurrently result in higher interest expense related to borrowings under our credit facilities. In addition, inflation can also result in higher interest rates and negatively impact our results of operation. With inflation, the costs of capital increases, and the purchasing power of our and our end users’ cash resources declines, which can negatively affect demand from our customers. Current or future efforts by the government to stimulate the economy may increase the risk of significant inflation, which could have a direct and indirect adverse impact on our business and results of operations.If there is deterioration in the general economy or in the industries we serve, our business, results of operations, and financial condition could be materially adversely affected. Furthermore, even if demand for our products improves, it is difficult to predict whether any improvement represents a long-term improving trend or the extent or timing of improvement. There can be no assurance that historically improving cycles are representative of actual future demand.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.


Our business, particularly with respect to our material handling and precision conveyance products, is highly competitive and subject to consolidation of competitors. Increased competition could reduce our sales, earnings, and profitability.

The principal markets that we serve within the material handling industryand precision conveyance industries are fragmented and highly competitive. Competition is based primarily on customer service and support as well as product availability, performance, functionality, brand reputation, reliability, and price. 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, through consolidation, some of our competitors have achieved substantially moregreater market penetration in certain of the markets in which we operate.operate than we have been able to achieve. If we are unable to compete successfully against other manufacturers of material handling equipment and precision conveyors, 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 or product developments 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 growth strategy depends on successful integration of acquisitions.

Acquisitions are a key part of our growth strategy. Our historical growth has depended, and our future growth is likely to depend, on our ability to successfully execute our acquisition strategy, and the successful integration of acquired businesses, including Dorner and Garvey, into our existing business. Such a strategy involves the potential risks inherent in assessing the value, strengths, weaknesses, contingent or other liabilities, and potential profitability of acquisition candidates and in


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integrating the operations of acquired companies. In addition, any acquisitions of businesses with foreign operations or sales may increase our exposure to risks inherent in doing business outside the United States.

We intend to continue to seek additional acquisition opportunities in accordance with our acquisition strategy, both to expand into new markets and to enhance our position in existing markets throughout the world. If we are unable to successfully integrate acquired businesses, including Dorner and Garvey, into our existing business or expand into new markets, our sales and earnings growth could be reduced. Furthermore, the failure to achieve the anticipated synergies of our recent significant acquisitions or recognize the anticipated market opportunities or integration from our recent acquisitions, could have a material adverse effect on our business, financial condition and results of operations.

The COVID-19 pandemic has, and may in the future continue to, adversely affect our business.

We have been, and may continue in future periods to be, materially and adversely impacted by the effects of the COVID-19 pandemic. In addition to global macroeconomic effects, the COVID-19 pandemic and any other related adverse public health developments have caused, and are expected to continue to cause, disruption to both our domestic and international operations and sales activities. The continued operation of our facilities is subject to local laws and regulations. While all of our facilities have been deemed essential under applicable law, there is no guarantee this will continue. Although we have thus far had no significant operating disruptions due to the pandemic, like all companies, the apparent increased contagiousness of the Omicron variant poses risk to the availability of our workforce. Our third-party manufacturers, suppliers, distributors, sub-contractors and customers have been, and may in the future continue to be, disrupted by worker absenteeism, quarantines and restrictions on their employees’ ability to work, office and factory closures, disruptions to ports and other shipping infrastructure, border closures, and other travel or health-related restrictions. Depending on the magnitude of such effects on our manufacturing operations or the operations of our suppliers, third-party distributors, or sub-contractors, our supply chain, manufacturing and product shipments have been, and in the future may continue to be, delayed, which could adversely affect our business, operations, and customer relationships. In addition, COVID-19 or other disease outbreaks have in the short-run and may over the longer term adversely affect the economies and financial markets of many countries and have caused inflationary pressures in the U.S. and elsewhere, which could result in an economic downturn that could affect demand for our products and impact our operating results. There can be no assurance that any decrease in sales resulting from the COVID-19 pandemic will be offset by increased sales in subsequent periods. Although the magnitude of the impact of the COVID-19 pandemic on our business and operations remains uncertain, the continued spread of the COVID-19 or the occurrence of other epidemics and the imposition of related public health measures and travel and business restrictions has, and may in the future continue to, adversely impact our business, financial condition, operating results and cash flows.

Our future operating results may be affected by price fluctuations and trade tariffs on steel, aluminum, and other raw materials purchased to manufacture our products. We may not be able to pass on increases in raw material costs to our customers.

The primary raw materials used in our chain, forging and crane building operations are steel, aluminum, and other raw materials such as motors, electrical and electronic components, castings and machined parts and components. The industries that produce these critical components and materials are also themselves highly cyclical and at times pricing and availability 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. This volatility can significantly affect our raw material costs. In an environment of increasing raw material prices and trade tariffs, competitive conditions will determine how much of the price increases we can pass on to our customers. In the future, to the extent we are unable to pass on any steel, aluminum, or other raw material price increases to our customers, our profitability could be adversely affected.

If critical components or raw materials used to manufacture our products become scarce or unavailable, then we may incur delays in manufacturing and delivery of our products, which has damaged, and could continue to damage, our business, results of operations and financial condition.

Due to increased demand across a range of industries, the global supply chain for certain critical components and raw materials used in the manufacture of our products has experienced significant constraints in recent periods. Particularly, the markets for motors, computer chips, and other components are experiencing increased demand, creating substantial uncertainty regarding the availability of key components and raw materials used to manufacture our products. The COVID-19 pandemic has also contributed to and exacerbated these constraints. This constrained supply environment has adversely affected, and could further affect, availability, lead times and cost of components and raw material, and has impacted, and could continue to impact, our ability to respond to accelerated or quick-turn delivery requests from customers, or meet customer demand and product delivery dates for our end customers where we cannot timely secure adequate supply of these components and raw materials. Moreover, if any of our suppliers become financially unstable, or otherwise unable or unwilling to provide us with raw materials or components, we may have to find new suppliers. It may take several months to locate alternative suppliers, if required, or to


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redesign our products to accommodate components from different suppliers. We cannot predict if we will be able to obtain replacement components within the timeframes that we require at an acceptable cost, if at all. In addition, we have experienced, and may continue to experience, significant delays in receiving shipments of key component and raw materials and in shipping our completed products to customers. We have incurred, and may continue to incur, additional shipping and delivery costs to seek to expedite the delivery of critical components and raw materials.

In an effort to mitigate these risks, in some cases, we have incurred higher costs to secure available inventory, or have extended or placed non-cancellable purchase commitments with suppliers, which introduces inventory risk if our forecasts and assumptions prove inaccurate. While we may attempt to recover the increased costs through price increases to our customers, we may be unable to mitigate the effect on our results of operations. We have also multi-sourced and pre-ordered components and raw materials inventory in some cases in an effort to reduce the impact of the adverse supply chain conditions we have experienced. Despite our attempts to mitigate the impact on our business, these constrained supply conditions are expected to adversely impact our costs of goods sold. Limits on manufacturing availability or capacity or delays in production or delivery of components or raw materials due to COVID-related restrictions could further delay or inhibit our ability to obtain supply of components and raw materials and produce finished goods. There can be no assurance that the impacts of the COVID-19 pandemic on the supply chain will not continue, or worsen, in the future. These supply chain constraints and their related challenges could result in shortages, increased material costs or use of cash, engineering design changes, and delays in new product introductions, each of which could adversely impact our growth, gross margin and financial results. These types of negative financial impacts on our business may become more acute as supply chain pressures increase.
We rely in large part on independent distributors for sales of our products.
For the most part, we depend on independent distributors to sell our products and provide service and aftermarket support to our end-user customers. Distributors play a significant role in determining which of our products are stocked at their locations, and hence are most readily accessible to aftermarket buyers, and the price at which these products are sold. Almost all of the distributors with whom we transact business offer competitive products and services to our end-user customers. For the most part, we do not have written agreements with our distributors. 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.

The future results of our Company will suffer if we do not effectively manage our expanded operations following the Dorner and Garvey acquisitions.

Since the completion of the acquisition of Dorner and Garvey, the size of our business has increased significantly beyond its pre-acquisition size. Our future success depends, in part, on our ability to manage the Dorner and Garvey businesses, which will pose substantial challenges for management, including challenges related to the management and monitoring of our operations and associated increased costs and complexity. There can be no assurances that the Dorner business or the Garvey business will be successful or that we will realize the benefits anticipated from the acquisition of those businesses.

We are currently integrating the operations of Dorner and Garvey into the Company. As part of the integration plan for Dorner and Garvey, we have incurred, and anticipate that we will continue to incur, certain non-recurring charges in connection with this integration, including costs for:

•employee retention, redeployment, relocation or severance; and
•integration, including of people, technology, operations, marketing, and systems and processes;

however, we cannot identify the exact timing, nature and amount of all such charges. These integration costs will be charged as an expense in the period incurred. Although we believe that the elimination of duplicative costs, as well as the realization of other efficiencies related to the integration of the businesses, will offset incremental transaction and acquisition-related costs over time, this net benefit may not be achieved in the near term, or at all.

Our future success depends, in part, on our ability to continue to attract, develop, engage and retain qualified employees.

Because of the complex nature of many of our products and services, we are generally dependent on an educated and highly skilled workforce, including our engineering talent and our sales professionals. Failure to attract, develop, engage and retain qualified employees, whether as a result of an insufficient number of qualified applicants, difficulty in recruiting new employees, or inadequate resources to train, integrate and retain qualified employees, could impair our ability to execute our business strategy, and could adversely affect our business, financial condition, results of operations or cash flows. The importance of recruiting and retaining qualified employees has only become more acute during the COVID-19 pandemic as


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labor shortages have occurred in many of the regions in which we have operations. Low rates of unemployment in key geographic areas in which we operate may lead to high rates of turnover and loss of critical talent, which could in turn lead to higher labor costs.

Financial Risks

Changes in the method of determining the London Interbank Offered Rate ("LIBOR"), or the replacement of LIBOR with an alternative reference rate, may adversely affect interest rates.

On July 27, 2017, the United Kingdom’s Financial Conduct Authority, which regulates LIBOR, announced that it intends to phase out LIBOR by the end of 2021, although on November 30, 2020 it announced that it had extended the period in which it will continue to publish certain LIBOR tenors, including three-month LIBOR, to June 30, 2023. It is unclear if at that time LIBOR will cease to exist or if new methods of calculating LIBOR will be established such that it continues to exist after June 30, 2023, or whether different benchmark rates used to price indebtedness will develop. The Alternative Reference Rates Committee, a group of market participants convened by the U.S. Federal Reserve Board and the Federal Reserve Bank of New York, has recommended the Secured Overnight Financing Rate (“SOFR”), a rate calculated based on repurchase agreements backed by treasury securities, as its recommended alternative benchmark rate to replace LIBOR. At this time, it is not known whether or when SOFR or other alternative reference rates will attain market traction as replacements for LIBOR. Any new benchmark rate will likely not replicate LIBOR exactly. The interest rate on the Company’s Term Loan B and revolving credit facility have a variable component that is based on LIBOR. The phase-out of LIBOR may negatively impact the terms of our outstanding indebtedness. In addition, the overall financial market may be disrupted as a result of the phase-out or replacement of LIBOR. Disruption in the financial market could have a material adverse effect on our financial position, results of operations, and liquidity.

In connection with the completion of the acquisitions of Dorner and Garvey, our indebtedness has increased significantly. Our indebtedness could limit our cash flow available for operations and our flexibility.

In connection with the completion of the acquisition of Dorner and Garvey, our indebtedness has increased significantly. In connection with the Dorner acquisition, we incurred debt of $450,000,000 under the Term Loan B, following our equity offering of $207,000,000 in May 2021. Additionally, in connection with the completion of the Garvey acquisition, the Company incurred another $75,000,000 of Term Loan B indebtedness through the exercise of an accordion feature under the terms of our existing credit agreement. As of March 31, 2022, we had approximately $100,000,000 available for borrowing under the revolving credit facility (after deducting approximately $17,151,000 of letters of credit outstanding as of March 31, 2022).

The degree to which we are leveraged could have important consequences to our shareholders, including the following:

•we may have greater difficulty satisfying our obligations with respect to our indebtedness;
•we must dedicate a substantial portion of our cash flow from operations to the payment of principal and interest on our indebtedness, reducing the funds available for our operations;
•our ability to obtain additional financing in the future for working capital, capital expenditures, acquisitions or other purposes may be impaired;
•we may be limited in our ability to make additional acquisitions or pay dividends on our common stock;
•our flexibility in planning for, or reacting to, changes in the markets in which we compete may be limited;
•we may be at a competitive disadvantage relative to our competitors with less indebtedness;
•we may be rendered more vulnerable to general adverse economic and industry conditions;
•our credit ratings may be downgraded; and
•we are exposed to increased interest rate risk given that a portion of our indebtedness obligations are at variable interest rates.

Dorner and Garvey were each previously a private company and were not required to comply with the Sarbanes-Oxley Act of 2002, as amended (“Sarbanes-Oxley”).

Sarbanes-Oxley requires public companies to have and maintain effective internal control over financial reporting to provide reasonable assurance regarding the reliability of financial reporting and preparation of financial statements and to have management report on the effectiveness of those controls on an annual basis (and have its independent public accountants attest annually to the effectiveness of such internal controls). As private companies, Dorner and Garvey were not required to comply with the requirements of Sarbanes-Oxley.



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In connection with the completed acquisitions of Dorner and Garvey, we have been implementing our Sarbanes-Oxley procedures regarding internal controls over financial reporting. This process has required a significant amount of time from our management and other personnel, and has required, and will continue to require, us to expend a significant amount of financial resources, which is likely to increase our compliance costs. We will be required to assess Dorner's and Garvey's internal controls over financial reporting beginning one year after the date of the acquisition.

Our operations outside the U.S. pose certain risks that may adversely impact sales and earnings.
We have operations and assets located outside of the United States, primarily in China, Mexico, Germany, the United Kingdom, France,Hungary, Malaysia and Hungary. InRussia. In addition, we import a portion of our hoist product line from Asia and sell our products to distributors located in approximately 50 countries. In our fiscal year ended March 31, 2020,2022, approximately 45%41% of our net sales were derived from non-U.S. markets. These non-U.S. operations are subject to a number of special risks, in addition to the risks of our U.S. business, 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, U.S. 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 components in lower cost countries, such as China, Mexico, Hungary and Hungary.Malaysia. 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.

Other risks of doing business in international markets include the increased risks and burdens of complying with different legal and regulatory standards, difficulties in managing and staffing foreign operations, recruiting and retaining talented direct sales personnel, limitations on the repatriation of funds and fluctuations of foreign exchange rates, varying levels of internet technology adoption and infrastructure and our ability to enforce contracts and our intellectual property rights in foreign jurisdictions. Additionally, there are risks associated with fundamental changes to international markets, such as those that may occur as a result of the United Kingdom's withdrawal fromRussian invasion of Ukraine.

In addition, in connection with Russia’s invasion of Ukraine, the U.S. has imposed, and is likely to impose material additional, financial and economic sanctions and export controls against Russia and certain Russian organizations and individuals, with similar actions either implemented or planned by the European Union ("Brexit"). Brexitand the U.K. and other jurisdictions. While the Company’s business operations relating to Russia constitute an immaterial part of the Company’s overall business, we may decide to, or be required to, exit from our operations in Russia in their entirety, which could result in a loss of revenues currently earned from our Russian operations (approximately $2,174,000 for the fiscal year ended March 31, 2022) or may necessitate the need to incur a bad debt reserve or an asset write-off related to our Russian operations. Furthermore, there is no guarantee that the current Russian invasion of Ukraine will not draw military intervention from other countries or further retaliation from Russia, which, in turn, could lead to a much larger conflict. If such escalation should occur, supply chain, trade routes and markets currently served by the Company could be adversely affected. In addition, a further escalation could disrupt the supply of oil and natural gas in Europe, impacting our ability to operate our European manufacturing facilities, which, in turn, could materially adversely affect global economicthe Company’s business operations and market conditions and could contribute to volatility in the foreign exchange markets, which we may be unable to effectively manage.financial performance.

In addition, our success in international expansion could be limited by barriers to international expansion such as adverse tax consequences and export controls. If we cannot manage these risks effectively, the costs of doing business in some international markets may be prohibitive or our costs may increase disproportionately to our revenue.

We are subject to currency fluctuations from our sales outside the U.S.
Our strategy dependsproducts are sold in many countries around the world. Thus, a portion of our revenues (approximately $373,725,000 in our fiscal year ended March 31, 2022) are generated in foreign currencies, including principally the Euro, the British Pound, the Canadian Dollar, the South African Rand, the Brazilian Real, the Mexican Peso, and the Chinese Yuan, and while much of the costs incurred to generate those revenues are incurred in the same currency, a portion is 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, a currency translation impact on successful integrationour earnings. Currency fluctuations may impact our financial performance in the future.




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Table of acquisitions.Contents
 
Acquisitions
We are subject to debt covenant restrictions.
Our Term Loan B Facility and revolving credit facility contain a key partfinancial leverage covenant, which will only be tested if any extensions of credit (other than letters of credit) are outstanding under the revolving credit facility at the end of any fiscal quarter, and other restrictive covenants. A significant decline in our operating income or cash generating ability could cause us to violate our leverage covenant in our bank credit facilities. Other material adverse changes in our business could also cause us to be in default of our growth strategy. Our historical growth has depended, anddebt covenants. Any breach of any such covenants or restrictions would result in a default under such agreement that could result in our future growth is likely to depend on our ability to successfully implement our acquisition strategy, and the successful integration of acquired businesses into our existing business. We intend to continue to seek additional acquisition opportunities in accordance with our acquisition strategy, both to expand into new markets and to enhance our position in existing markets throughout the world. If we arebeing unable to successfully integrate acquired businesses intoborrow under our existing businessbank credit facilities and would permit the lenders to declare all borrowings under such agreement to be immediately due and payable and, through cross-default provisions, could entitle other lenders to accelerate their loans to us. In such an event, the Company would need to modify or expand into new markets, our sales and earnings growth could be reduced.restructure all or a portion of its indebtedness. Depending on prevailing economic conditions at the time, the Company might find it difficult to modify or restructure the debt on attractive terms, or at all.


Legal Risks

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. selland to potential warranty, contractual or other claims. These product liability risks are inherent in the design, manufacture and sale of our products. Our products are complex and may contain defects, errors, or experience failures or unsatisfactory performance, due to any number of issues, including issues in materials, design, fabrication, packaging and/or use within a system or item of equipment. Further, because of the complexity of our products, defects or errors might only be detected when the products are in use. Development of new products increases complexity and adds risk to manufacturing reliability, and increases the likelihood of product defects or errors.In addition, defects in our products could result in failure to achieve market acceptance, a shifting of business to our competitors, and litigation or regulatory action against us, and could harm our reputation or the reputation of the various brands under which we sell our products, our relationships with customers and our ability to attract new customers, as well as the perceptions of our brands. Other potential adverse impacts of product defects include shipment delays, write-offs of property, plant and equipment and intangible assets, and losses on unfavorable purchase commitments.

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

In addition, like many industrial manufacturers, we are also involved in asbestos-related litigation. In continually evaluating costs relating to our estimated asbestos-related liability, we review, among other things, the incidence of past and recent claims, the historical case dismissal rate, the mix of the claimed illnesses and occupations of the plaintiffs, our recent and historical resolution of the cases, the number of cases pending against us, the status and results of broad-based settlement discussions, and the number of years such activity might continue. Based on this review, we estimate our share of liability to defend and resolve probable asbestos related personal injury claims. This estimate is highly uncertain due to the limitations of the available data and the difficulty of forecasting with any certainty the numerous variables that can affect the range of the liability. We continue to study the variables in light of additional information in order to identify trends that may become evident and to assess their impact on the range of liability that is probable and estimable. We believe that the potential additional costs for claims will not have a material effect on the financial condition of the Company or its liquidity, although the effect of any future liabilities recorded could be material to earnings in a future period. See Note 16 to our March 31, 20202022 consolidated financial statements included in Item 8 of this Form 10-K.
As indicated above, our self-insurance coverage is provided through our captive insurance subsidiary. The reserves of our captive insurance subsidiary are subject to periodic adjustments based upon actuarial evaluations, which adjustments impact our overall results of operations.operations and financial condition. These periodic adjustments can be favorable or unfavorable.
We are subject to currency fluctuations from our sales outside the U.S.
Our products are sold in many countries around the world. Thus, a portion of our revenues (approximately $366,539,000 in our fiscal year ended March 31, 2020) are generated in foreign currencies, including principally the Euro, the British Pound, the Canadian Dollar, the South African Rand, the Brazilian Real, the Mexican Peso, and the Chinese Yuan, and while much of the costs incurred to generate those revenues are incurred in the same currency, a portion is 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, a currency translation impact on our earnings. Currency fluctuations may impact our financial performance in the future.
Our future operating results may be affected by price fluctuations and trade tariffs on steel, aluminum, and other raw materials purchased to manufacture our products. We may not be able to pass on increases in raw material costs to our customers.

The primary raw materials used in our chain, forging and crane building operations are steel, aluminum, and other raw materials such as motors, electrical and electronic components, castings and machined parts and components. These industries are highly cyclical and at times pricing and availability 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. This volatility can significantly affect our raw material costs. In an environment of increasing raw material prices and trade tariffs, competitive conditions will determine how much of the price increases we can pass on to our customers. In the future, to the extent we are unable to pass on any steel, aluminum, or other raw material price increases to our customers, our profitability could be adversely affected.
We rely in large part on independent distributors for sales of our products.
For the most part, we depend on independent distributors to sell our products and provide service and aftermarket support to our end-user customers. Distributors play a significant role in determining which of our products are stocked at their locations, and hence are most readily accessible to aftermarket buyers, and the price at which these products are sold. Almost all of the distributors with whom we transact business offer competitive products and services to our end-user customers. For the most part, we do not have written agreements with our distributors. 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 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


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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, operations, or liquidity.
We may face claims of infringement on the intellectual property of others, or others may infringe upon our intellectual property.

Our future success depends in part on our ability to prevent others from infringing on our proprietary rights, as well as our ability to operate without infringing upon the proprietary rights of others. We may be required at times to take legal action to protect our proprietary rights and, despite our best efforts, we may be sued for infringing on the patentintellectual property rights of others. PatentIntellectual property-related litigation is costly and, even if we prevail, the cost of such litigation could adversely affect our financial condition. In addition, we could be adversely affected financially should we be judged to have infringed upon the intellectual property of others.

We rely on subcontractors or suppliers to perform their contractual obligations.
Some of our contracts involve subcontracts with other companies upon which we rely to perform a portion of the services we must provide to our customers. There is a risk that we may have disputes with our subcontractors, including disputes regarding the quality and timeliness of work performed by our subcontractor or customer concerns about the subcontractor. Failure by our subcontractors to satisfactorily provide on a timely basis the agreed-upon supplies or perform the agreed upon services may materially and adversely impact our ability to perform our obligations as the prime contractor. A delay in our ability to obtain components and equipment parts from our suppliers may affect our ability to meet our customers' needs and may have an adverse effect upon our profitability.
We are subject to debt covenant restrictions.General Risks

Adverse changes in global economic conditions may negatively affect our industry, business, and results of operations.
Our revolvingindustry is affected by changes in economic conditions outside our control, which can result in a general decrease in product demand from our customers. Such economic developments, like inflationary pressures in the U.S. and elsewhere, the China trade wars and the war in Ukraine may affect our business in a number of ways. Reduced demand may drive us and our competitors to offer products at promotional prices, which would have a negative impact on our profitability. In addition, the tightening of credit facilityin financial markets may adversely affect the ability of our customers and Term Loan containsuppliers to obtain financing for significant purchases and operations and could result in a decrease in, or cancellation of, orders for our products. If demand for our products slows down or decreases, we will not be able to maintain our revenue and we may run the risk of failing to satisfy the financial leverage covenant and other restrictive covenants. A significant declinecovenants to which we are subject under our existing indebtedness. Reduced revenue as a result of decreased demand may also reduce our planned growth and otherwise hinder our ability to improve our performance in connection with our operating incomelong-term strategy.

Climate change, or cash generatinglegal, regulatory or market measures to address climate change, may materially adversely affect our financial condition and business operations.

Climate change resulting from increased concentrations of greenhouse gases in the atmosphere could present risks to our future operations from natural disasters and extreme weather conditions, such as hurricanes, tornadoes, earthquakes, wildfires, droughts or flooding. Such extreme weather conditions could pose physical risks to our facilities and disrupt operation of our supply chain and may impact operational costs. The impacts of climate change on global water resources may result in water scarcity, which could in the future impact our ability could cause us to violateaccess sufficient quantities of water in certain locations and result in increased costs.

Concern over climate change will likely result in new legal or regulatory requirements designed to reduce greenhouse gas emissions and mitigate the effects of climate change. Further, our leverage covenantcustomers and the markets we serve may impose emissions


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reduction or other environmental standards and requirements. As a result, we may experience increased compliance burdens and operational costs and raw material sourcing, manufacturing operations and the distribution of our products may be adversely affected. Moreover, we may not be able to timely meet these requirements due to the required level of capital investment or technological advancement. While we have been committed to continuous improvements to meet anticipated regulations and preferences, there can be no assurance that our commitments will be successful, that our products will be accepted by the market, that proposed regulations will not have a negative competitive impact or that economic returns will reflect our investments in our bank credit facility. Other material adverse changes in our business couldnew product development. There also cause uscontinues to be in defaulta lack of consistent climate legislation, which creates economic and regulatory uncertainty. These factors may impact the demand for our debt covenants. This could result inproducts, obsolescence of certain products and adversely affect our being unable to borrow under our bank credit facility or being obliged to refinance and renegotiate the termsresults of our indebtedness.operations.

Our business operations may be adversely affected by information technology systems interruptions or intrusion.

We depend on various information technologiestechnology systems throughout our companyCompany to administer, store, and support multiple business activities.activities, including to process the data we collect, store and use in connection with our business. If these systems are damaged, cease to function properly, or are subject to cyber-security attacks, such as those involving unauthorized access, malicious software and/or other intrusions, we could experience production downtimes, operational delays, other detrimental impacts on our operations or ability to provide products and services to our customers, the compromising of confidential or otherwise protected information, destruction or corruption of data, security breaches, other manipulation or improper use of our systems or networks, financial losses from remedial actions, loss of business or potential liability, and/or damage to our reputation. Our information technology systems may be damaged or cease to function properly due to any number of causes, such as catastrophic events, power outages and security breaches (including destructive malware such as ransomware) resulting in unauthorized access or cyber-attacks. As the breadth and complexity of our information technology systems continue to grow, including as a result of the increasing reliance on, and use of, mobile technologies and cloud-based services, and as more of our employees are working remotely during the COVID-19 pandemic, the risk of security incidents and cyberattacks has increased. While we attempt to mitigate these risks by employing a number of measures, including employee training, technical security controls, and maintenance of backup and protective systems, our systems, networks, products, and services remain potentially vulnerable to known or unknown cybersecurity threats, any of which could have a material adverse effect on our business, financial condition or results of operations. Furthermore, cybersecurity threats are constantly expanding and evolving, becoming increasingly sophisticated and complex, increasing the difficulty of detecting and defending against them and maintaining effective security measures and protocols.

We are also subject to a variety of laws and regulations in the United States, Europe and around the world, as well as contractual obligations, regarding data privacy, security and protection. These laws and regulations continue to evolve, are increasing in complexity and number and increasingly conflict among the various countries in which we operate, which has resulted in greater compliance risk and cost for us. Any failure or perceived failure by us, or any third parties with which we do business, to comply with our posted privacy policies, changing consumer expectations, evolving laws, rules and regulations, industry standards, or contractual obligations to which we or such third parties are or may become subject, may result in actions or other claims against us by governmental entities or private actors, the expenditure of substantial costs, time and other resources or the incurrence of significant fines, penalties or other liabilities. In addition, any such action, particularly to the extent we were found to be guilty of violations or otherwise liable for damages, could damage our reputation and adversely affect our business, financial condition and results of operations. In addition, our liability insurance, which includes cyber insurance, might not be sufficient in type or amount to cover us against claims related to security incidents, cyberattacks and other related incidents.

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 management team, including our senior management team. The loss of any of these individuals or an inability to attract, retain, and maintain additional personnel, especially in a post-COVID job market, 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.



Mark D. Morelli, our former President and CEO, resigned effective January 10, 2020. Our employment agreement with Mr. Morelli was terminated on January 10, 2020 in connection with his resignation. The Board of Directors began an external search for his replacement. Subsequent to his resignation, Richard H. Fleming, Chairman of the Board, was named Interim CEO until a replacement is hired. On May 14, 2020, the Company announced that David J. Wilson has been named President and CEO effective June 1, 2020. The Company has entered into an Employment Agreement and Change in Control agreement with Mr. Wilson which was filed on Form 8-K on May 14, 2020. During the CEO transition, the Company has continued to execute its Blueprint for Growth Strategy and expects to do so going forward.


Item 1B.    Unresolved Staff Comments 

None.



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Item 2.        Properties
 
We maintain our corporate headquarters in Getzville,Buffalo, New York (an owned property) and, as of March 31, 2020,2022, conducted our principal manufacturing at the following facilities:

LocationProducts/OperationsSquare
Footage		Owned or
Leased
1Künzelsau, GermanyHoists345,000 Leased
2Wadesboro, NCHoists180,000 Owned
3Lexington, TNChain164,000 Owned
4Charlotte, NCActuators and Rotary Unions146,000 Leased
5Menomonee Falls, WIPower control systems144,000 Leased
Tennessee forging operation:
6Chattanooga, TNForged attachments81,000 Owned
7Chattanooga, TNForged attachments59,000 Owned
8Hartland, WIPrecision Conveyors125,000 Leased
9Wuppertal, GermanyHoists124,000 Leased
10Kissing, GermanyHoists, winches, and actuators107,000 Leased
11Damascus, VAHoists97,000 Owned
12Hangzhou, ChinaHoists82,000 Owned
13Brighton, MIOverhead light rail workstations71,000 Leased
14Hammonton, NJAccumulation Tables58,000 Leased
15Chester, EnglandPlate clamps56,000 Owned
16Santiago Tianguistenco, MexicoHoists54,000 Owned
17Bayan Lepas, MalaysiaPrecision Conveyors40,000 Leased
18Jülich, GermanyPrecision Conveyors29,000 Owned
19Szekesfehervar, HungaryTextiles and textile strappings24,000 Leased
20Zapopan, MexicoPrecision Conveyors20,000 Leased
  Location Products/Operations 
Square
Footage
 
Owned or
Leased
1 Kunzelsau, Germany Hoists 345,000
 Leased
2 Wadesboro, NC Hoists 180,000
 Owned
3 Lexington, TN Chain 164,000
 Owned
4 Charlotte, NC Actuators and Rotary Unions 146,000
 Leased
5 Menomonee Falls, WI Power control systems 144,000
 Leased
  Tennessee forging operation:      
6 Chattanooga, TN Forged attachments 81,000
 Owned
7 Chattanooga, TN Forged attachments 59,000
 Owned
8 Wuppertal, Germany Hoists 124,000
 Leased
9 Kissing, Germany Hoists, winches, and actuators 107,000
 Leased
10 Damascus, VA Hoists 97,000
 Owned
11 Hangzhou, China Hoists 82,000
 Owned
12 Brighton, MI Overhead light rail workstations 71,000
 Leased
13 Chester, England Plate clamps 56,000
 Owned
14 Santiago Tianguistenco, Mexico Hoists 54,000
 Owned
15 Szekesfehervar, Hungary Textiles and textile strappings 24,000
 Leased
16 Romeny-sur-Marne, France Rotary unions 22,000
 Owned

In addition, we have a total of 4948 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.





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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 product liability insurance against risks arising out of the use of our products sold to customers through our wholly owned New York State captive insurance subsidiary of which we are the sole policy holder.  The per occurrence limits on the self-insurance for general and product liability coverage were $2,000,000 from inception through fiscal 2003 and $3,000,000 for fiscal 2004 and thereafter. In addition to the per occurrence limits, our coverage is also subject to an annual aggregate limit, applicable to losses only. These limits range from $2,000,000 to $6,000,000 for each policy year from inception through fiscal 2020.2022. We obtain additional insurance coverage from independent insurers to cover potential losses in excess of these limits.

Like many industrial manufacturers, we are also involved in asbestos-related litigation. In continually evaluating costs relating to our estimated asbestos-related liability, we review, among other things, the incidence of past and recent claims, the historical case dismissal rate, the mix of the claimed illnesses and occupations of the plaintiffs, our recent and historical resolution of the cases, the number of cases pending against us, the status and results of broad-based settlement discussions, and the number of years such activity might continue. Because this liability is likely to extend over many years, management believes that the potential additional costs for claims will not have a material effect on the financial condition of the Company or its liquidity, although the effect of any future liabilities recorded could be material to earnings in a future period. 

The Company believes that a share of its previously incurred asbestos-related expenses and future asbestos-related expenses are covered by pre-existing insurance policies. The Company has been engaged in a legal action against the insurance carriers for those policies to recover past expenses and future costs incurred. In March of fiscal 2020, the Company came to a tentative agreement with the insurance carriers to settle its case against them for recovery of past and cost-sharing for future asbestos-related legal defense costs. The settlement is subject to mutual agreement of the terms and conditions in a coverage in place agreement.  The terms of the tentative settlement require the carriers to pay gross defense costs prior to retro-premiums of 65% for future asbestos-related defense costs subject to an annual cap of $1,650,000 for claims covered by the tentative settlement. In addition, a payout of approximately $2,650,000 is expected to be received for past defense costs which will be reduced by contingent legal costs. Further, it is expected that the insurance carriers will accept coverage for indemnity on all covered cases. Estimates of the future cost sharing have been included in the loss reserve calculation as of March 31, 2020. The settlement is expected to be finalized in fiscal 2021. Prior to the settlement agreement, during fiscal 2020 and fiscal 2019, the Company received settlement payments of $381,000 and $484,000, respectively, net of legal fees related to the insurance recovery, from its insurance carriers as partial reimbursement for asbestos-related expenses.  These partial payments have been recorded as gains in cost of products sold.

See Note 16 to our March 31, 20202022 consolidated financial statements included in Item 8 of this Form 10-K for more information on our matters involving litigation.


Item 4.        Mine Safety Disclosures.

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 Global Select Market under the symbol ‘‘CMCO.” As of April 30, 2020,2022, there were 354329 holders of record of our common stock.

During fiscal 2020,2022, the Company declared quarterly cash dividends totaling $5,690,000.$7,119,000. On March 24, 2020,21, 2022, the Company's Board of Directors declared a regular quarterly dividendsdividend of $0.06$0.07 per common share. The dividend was paid on May 14, 202016, 2022 to shareholders of record onas of May 4, 20206, 2022 and totaled approximately $1,430,000.$2,000,000.

Our current credit agreement allows for the declaration and payment of dividends, but limitssubject to specified limitation as set forth in our ability to pay dividends.credit agreement. 



PERFORMANCE GRAPH

The Performance Graph shown below compares the cumulative total shareholder return on our common stock based on its market price, with the total return of the S&P SmallCap 600 Index, and the Dow Jones U.S. Diversified Industrials.Industrials Index.  The comparison of total return assumes that a fixed investment of $100 was invested on March 31, 20152017 in our common stock and in each of the foregoing indices and further assumes the reinvestment of dividends.  The stock price performance shown on the graph is not necessarily indicative of future price performance.


a5yearcumulativetotalreturn.jpgcmco-20220331_g1.jpg




Item 6.        Selected Financial DataReserved.

The consolidated balance sheets as of March 31, 2020 and 2019, and the related consolidated statements of operations, cash flows, and shareholders’ equity for each of the three years ended March 31, 2020 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.



21
   
  (In million's, except per share data)
  2020 2019 2018 2017 (4) 2016
Statements of Operations Data:          
Net sales $809.2
 $876.3
 $839.4
 $637.1
 $597.1
Cost of products sold (1) 526.0
 571.3
 554.4
 444.2
 411.5
Gross profit 283.2
 305.0
 285.0
 192.9
 185.6
Selling expenses 91.1
 97.9
 102.0
 77.3
 72.9
General and administrative expenses (1) (2) 77.9
 83.6
 85.6
 72.1
 62.9
Research and development expenses (2) 11.3
 13.5
 13.6
 10.5
 7.4
Impairment of intangible asset —
 —
 —
 1.1
 —
Net loss on sales of businesses, including impairment 0.2
 25.7
 —
 —
 —
Amortization of intangibles 12.9
 14.9
 15.6
 8.1
 5.0
Income (loss) from operations 89.8
 69.4
 68.2
 23.8
 37.4
Interest and debt expense 14.2
 17.1
 19.7
 11.0
 7.9
Cost of debt refinancing —
 —
 —
 1.3
 —
Other (income) and expense, net (1) (1.6) (0.6) (1.2) (1.5) (2.1)
Income (loss) before income taxes 77.2
 52.9
 49.7
 13.0
 31.6
Income tax expense (benefit) 17.5
 10.3
 27.6
 4.0
 12.0
Net income (loss) $59.7
 $42.6
 $22.1
 $9.0
 $19.6
           
Basic earnings (loss) per share $2.53
 $1.83
 $0.97
 $0.44
 $0.98
Diluted earnings (loss) per share $2.50
 $1.80
 $0.95
 $0.43
 $0.96
Weighted average shares outstanding – basic 23.6
 23.3
 22.8
 20.6
 20.1
Weighted average shares outstanding – assuming dilution 23.9
 23.7
 23.3
 20.9
 20.3
           
Balance Sheet Data (at end of period):        
  
Total assets (5) $1,093.3
 $1,061.6
 $1,142.4
 $1,113.8
 $772.9
Total debt (3) 251.3
 300.3
 363.3
 421.3
 267.6
Total debt, net of cash and cash equivalents 136.9
 229.2
 300.3
 343.7
 216.0
Total shareholders’ equity 463.6
 431.2
 408.2
 341.4
 286.3
           
Other Data:          
Net cash provided by operating activities 106.8
 79.5
 69.7
 60.5
 52.6
Net cash provided by (used in) investing activities (10.0) 2.5
 (32.6) (224.0) (203.2)
Net cash provided by (used in) financing activities (51.6) (67.8) (59.5) 190.7
 137.0
Capital expenditures (9.4) (12.3) (14.5) (14.4) (22.3)
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(1)The Company adopted ASU 2017-07 in the first quarter of fiscal 2019. The service cost component of net periodic benefit cost above is recorded in Cost of products sold, Selling expense, and General and administrative expenses while the remaining components are recorded to Other (income) expense, net. The prior year amounts have been reclassified to provide comparable presentation in line with the guidance in ASU 2017-07 based on amounts previously disclosed for the various components of net periodic pension cost (benefit).

(2)Beginning in fiscal 2018, the Company reclassified research and development expenses previously recorded in general and administrative expense into a separate line item on the consolidated statements of operations. All prior periods presented above have been revised to reflect this presentation. Please refer to Note 2 of the Company's financial statements for additional information regarding research and development expenses.

(3)Total debt includes all debt, including the current portion, notes payable, term loan, and subordinated debt.

(4)The Company acquired STAHL in fiscal 2017 which was deemed to be a significant acquisition.

(5)Beginning in fiscal 2020, the Company recorded a $38,125,000 right-of-use lease asset in adopting ASU No. 2016-02, "Leases (Topic 842)."


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 Item 8 of this annual report.Form 10-K.

EXECUTIVE OVERVIEW

The Company is a leading worldwide designer, manufacturer and marketer of intelligent motion solutions, including motion control products, technologies, automated systems and services, that efficiently and ergonomically move, lift, position and secure materials. KeyOur key products include hoists, crane components, precision conveyors, actuators, rigging tools, light rail work stationsworkstations, and digital power and motion control systems. WeThese are focused on commercial and industrial applicationshighly relevant, professional-grade solutions that require the safety and quality provided by our superior design and engineering know-how.solve customers’ critical material handling requirements.

Founded in 1875, we have grown to our current size and leadership position through organic growth and acquisitions. We developed our leading market position over our 145-year147-year history by emphasizing technological innovation, manufacturing excellence and superior customer service. In addition, acquisitions significantly broadened our product lines and services and expanded our geographic reach, end-user markets and customer base. In accordance with our Blueprint for Growth 2.0 Strategy, we are simplifying the business utilizing our 80/20 process, improving our operational excellence, and ramping the growth engine by investing in new product development and a digital platform to grow profitably. ShareholderWe believe shareholder value will be enhanced by expanding EBITDA margins and return on invested capital ("ROIC").

Our revenue base is geographically diverse with approximately 45%41% derived from customers outside the U.S. for the year ended March 31, 2020. Our expansion within the European market with the acquisition of STAHL further expands our geographic diversity.2022. We believe this will help balancediversity balances the impact of changes that will occur in local economies, as well as benefitbenefits the Company from growth inby providing access to growing emerging markets. We monitor both U.S. and Eurozone Industrial Capacity Utilization statistics as well as the ISM Production Index as indicators of anticipated demand for our products. In addition, we continue to monitor the potential impact of other global and U.S. trends including, industrial production, trade tariffs, raw material cost inflation, interest rates, foreign currency exchange rates, and activity of end-user markets around the globe.

From a strategic perspective, we are leveraging our recent acquisitions and investing in new products as we focus on our greatest opportunities for growth. We maintain a strong North American market share with significant leading market positions in hoists, lifting and sling chain, forged attachments, actuators, and digital power and motion control systems for the material handling industry. We seek to maintain and enhance our market share by focusing our sales and marketing activities toward select North American and global market sectors including general industrial, utility, energy, automotive, heavy OEM, entertainment, and construction and infrastructure.

In March 2021, the Company announced that it had entered into a definitive agreement to acquire Dorner. The acquisition of Dorner closed on April 7, 2021. Dorner, headquartered in Hartland, Wisconsin, is a leading automation solutions company providing unique, patented technologies in the design, application, manufacturing and integration of high-precision conveying systems. Dorner is a leading supplier to the stable life sciences, food processing, and consumer packaged goods markets as well as the high growth industrial automation and e-commerce sectors. The addition of Dorner provides attractive complementary adjacencies including sortation and asynchronous conveyance systems.

Further, on December 1, 2021, the Company completed its acquisition of Garvey. Garvey is a leading accumulation systems solutions company providing unique, patented systems for the automation of production processes whose products complement those of Dorner. The acquisitions of Dorner and Garvey accelerate the Company’s shift to intelligent motion and serve as a platform to expand capabilities in advanced, higher technology automation solutions.

Regardless of the economic climate and point in the economic cycle, we constantly explore ways to increase operating margins as well as further improve our productivity and competitiveness. We have specific initiatives to reduce quote lead-times, improve on-time deliveries, reduce warranty costs, and improve material and factory productivity. The initiatives are being driven by the implementation of our business operating system, E-PAS™.CMBS. We are working to achieve these strategic initiatives through business simplification, operational excellence, and profitable growth initiatives. We believe these initiatives will enhance future operating margins.

We continuously monitor market pricesOur principal raw materials and components purchases were approximately $368 million in fiscal 2022 (or 62% of steel. We purchase approximately $25,000,000 to $30,000,000Cost of product sold) and include steel, annually in a varietyconsisting of forms including rod, wire, bar, structural, and other forms of steel. Generally, as we experience fluctuations insteel; electric motors; bearings; gear reducers; castings; steel and aluminum enclosures and wire harnesses; electro-mechanical components; and standard variable drives and controls. 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 agreements which are negotiated on a company-wide basis through our costs, we reflect them as price increases to our customers with the goal of being margin neutral. However,global purchasing group. Currently, as a result of the recent trade tariff actionsglobal supply chain challenges, we are experiencing higher raw material costs and availability issues for select raw materials and components. To date, we have raised prices to our


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customers to cover these increased raw material costs and are working with China, the Company determined its fiscal 2020 exposure for tariffsour supply base to be approximately $2,500,000 which resulted in increased costprioritize shipments and improve availability of products sold. The Company is monitoring the impact of tariffs and is actively working to mitigate this impact through material productivity actions and pricing strategies.key components.

We operate in a highly competitive and global business environment. The Company is moving from its past as an industrial company to a top-tier intelligent motion company. We face a variety of opportunities in thosehave refocused our Company on faster growing markets as demonstrated by the Dorner and geographies, includingGarvey acquisitions. We are benefiting from increased trends toward increasingfor safety, industrial automation, manufacturing on-shoring and workforce productivity of the global labor force and the expansion of market opportunities in Asia and other emerging markets. While we execute ourinitiatives. Our long-term growth strategy we areis supported by our strong free cash flow as well as our liquidity position and flexible debt structure.

Like many global companies, we are being affected by COVID-19. While the severity and duration of this global pandemic is not known at this time, we are seeking to take all appropriate measures to protect the cash flow and liquidity of the Company. This includes reducing our cost base, reducing working capital needs, and reducing capital expenditures. We have a flexible capital structure composed of a Credit Agreement that includes a Term Loan that requires quarterly principal payments of $1.1 million and a $100 million Revolver. Subsequent to March 31, 2020, the Company drew $25 million from the Revolver for liquidity and working capital purposes demonstrating it has a strong, supportive bank group.


RESULTS OF OPERATIONS

The following discussion is a comparison between fiscal 2022 and fiscal 2021 results. For a discussion of our results of operations for fiscal 2021 compared to fiscal 2020, please refer to Item 7 of Part II, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended March 31, 2021, which was filed with the SEC on May 26, 2021.

Fiscal 20202022 Compared to 20192021

Fiscal 20202022 sales were $809,162,000, a decrease$906,555,000, an increase of 7.7%39.5%, or $67,120,000$256,913,000 compared with fiscal 20192021 sales of $876,282,000.$649,642,000. Sales for the fiscal year were negativelypositively impacted by $34,195,000 in$144,587,000 of incremental sales infrom the previous year from sold businessesDorner and $32,951,000 in decreasedGarvey acquisitions as well as increased sales volume offset by $13,169,000 inof $89,955,000 and price increases.  Unfavorableincreases of $20,002,000.  Favorable foreign currency translation decreasedalso increased sales by $13,143,000.$2,369,000.

Our grossGross profit was $283,186,000$315,730,000 and $304,997,000$220,225,000 or 35.0%34.8% and 34.8%33.9% of net sales in fiscal 20202022 and 2019,2021, respectively.  The fiscal 2020 decrease2022 increase in gross profit of $21,811,000$95,505,000 or 7.2%43.4% is the result of $14,069,000 in decreased volume, $7,053,000 inthe Dorner and Garvey acquisitions, which added $53,627,000 of gross profit from sold businesses, $3,461,000net of acquisition related costs, $30,746,00 in decreasedhigher sales volume, $10,551,000 in higher productivity and unfavorablenet of other manufacturing costs, $1,327,000 in costs incurred to consolidate the Salem and Lisbon Ohio facilities, $778,000 in increased tariffs, $751,000 in increased severance costs, and $622,000 in increased product liability costs. These decreases were offset by $10,338,000cost increases, $5,953,000 of price increases net of material inflation and $382,000 received$2,671,000 in prior year factory closure costs which did not recur. These increases were offset by $3,045,000 in increased product liability costs, $2,627,000 in increased tariffs costs, $2,189,000 from insurance settlement.a gain recorded in the prior year for a building sold in China classified as Cost of products sold that did not recur, and $776,000 in increased severance costs in fiscal 2022. The translation of foreign currencies had a $4,470,000 unfavorable$594,000 favorable impact on gross profit for the year ended March 31, 2020.2022.

Selling expenses were $91,054,000$99,187,000 and $97,925,000,$76,907,000, or 11.3%10.9% and 11.2%11.8% of net sales in fiscal years 20202022 and 2019.2021. Selling expenses were lowerexpense increased $15,161,000 as a result of $1,468,000 incurred in fiscal 2020 relatedthe Dorner and Garvey acquisitions. The remaining increase is due to sold businesses. In addition, we had $804,000 in lower advertising expenses,$550,000 in reduced U.S. warehouse rent expense, $331,000 lower incentive compensation, and $453,000 invariable selling costs incurredas the Company continues to consolidaterecover from the Salem and Lisbon Ohio facilities classified as selling expense. These decreases were offset by $299,000 in current year severance costs. Additionally, foreignCOVID-19 pandemic. Foreign currency translation had a $1,765,000 favorable$304,000 unfavorable impact on selling expenses. The remainder of the decrease is due to lower sales volume. 
 
General and administrative expenses were $77,880,000$102,128,000 and $83,567,000$76,035,000 or 9.6%11.3% and 9.5%11.7% of net sales in fiscal 20202022 and 2019,2021, respectively. The fiscal 2020 decrease inincrease is primarily due to the Dorner and Garvey acquisitions adding $10,596,000 of ongoing general and administrative expenses was primarilycosts and $5,625,000 of acquisition deal costs. In addition, general and administrative costs increased $4,868,000 due to $7,540,000 of lowerhigher incentive compensation and stock based compensation expense including $1,981,000 in stock compensation expense that was reversed in the third quarter of fiscal 2020 for shares that were forfeited upon our Chief Executive Officer's resignation, $1,564,000 from sold businesses, and a $697,000 net reduction in legal costs related to an insurance recovery legal action. The decrease in general and administrative expense was partially offset by $1,528,000 in increased bed debt expenses, $1,455,000 in costs incurred to close a plant in the Asia Pacific region and reorganize the business, $635,000 in tax professional services fees primarily related to a legal entity restructuring, $624,000 in increased medical and benefit expenses, $436,000 of occupancy costs for our center of excellence in North Carolina, and $352,000 in increased environmental costs.expense. Foreign currency translation had a $1,036,000 favorable$238,000 unfavorable impact on general and administrative expenses.

Research and development expenses were $11,310,000$15,351,000 and $13,491,000$12,405,000 in fiscal 20202022 and 2019,2021, respectively. As a percentage of consolidated net sales, research and development expenses were 1.4%1.7% and 1.5%1.9% in fiscal 20202022 and 2019.2021. The reductionincrease in research and development expenses is largelyprimarily due to lower professional services$1,722,000 of acquisition and other expenses. $277,000 of the decreaseacquisition related costs and $456,000 in higher incentive compensation and stock based compensation expense. Foreign currency translation had a $15,000 unfavorable impact on research and development expenses is from sold businesses.expenses.

A Net loss on sales of businesses, including impairment in the amount of $176,000 was recorded as a result of a final working capital adjustment in the year ended March 31, 2020 from businesses that were sold in fiscal 2019.
Amortization of intangibles remained relatively consistent at $12,942,000were $25,283,000 and $14,900,000$12,623,000 in fiscal 20202022 and 2019, respectively. The decrease is primarily2021, respectively, with the increase related to foreign currency translation.new intangible assets recorded from the Dorner and Garvey acquisition.
Interest and debt expense was $14,234,000$20,126,000 and $17,144,000$12,081,000 in fiscal 20202022 and 2019, respectively, and primarily2021, respectively. The increase is related to higher interest rates as well as higher average borrowing outstanding as a decreaseresult of the Dorner and Garvey acquisitions.

The Company incurred $14,803,000 in interestCost of debt refinancing in fiscal 2022 as a result of the Dorner acquisition and debt expense on the Company's Term Loan duerelated refinancing as described in Note 12 to lower average borrowings outstanding during theour March 31, 2022 consolidated financial statements. There were no similar expenses incurred in fiscal 2020 period.2021.


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Investment income of $891,000$46,000 and $727,000,$1,693,000, in fiscal 20202022 and 2019,2021, respectively, related to earnings on marketable securities held in the Company’s wholly owned captive insurance subsidiary and the Company's equity method investment in EMC, described in Note 7.7 to our March 31, 2022 consolidated financial statements.

Foreign currency exchange resulted in a gain of $1,514,000 and loss of $843,000$1,574,000 and $941,000 in fiscal 20202022 and 2019,2021, respectively, as a result of foreign currency volatility related to foreign currency denominated sales and purchases and intercompany debt.

Other income was $1,122,000 in fiscal 2022 and other expense was $839,000$20,850,000 in fiscal 2020 and other income was $716,0002021. The decrease in expense is primarily related to a $19,038,000 settlement charge as a result of the termination of one of the Company's U.S. pension plans in fiscal 2019. This includes components of pension expense (all except service costs,2021 as described in Note 13) and various non-operating income and expense related activities.13 to our March 31, 2022 consolidated financial statements.



Income tax expense as a percentage of income from continuing operations before income tax expense was 22.7%22.9% and 19.5%9.6% in fiscal 20202022 and 2019,2021, respectively. Typically these percentages vary from the U.S. statutory rate of 21% primarily due to varying effective tax rates at the Company's foreign subsidiaries and the jurisdictional mix of taxable income for these subsidiaries.

Fiscal 2019 Compared to 2018

Fiscal 2019 sales were $876,282,000, an increase of 4.4%, or $36,863,000 compared with fiscal 2018 sales of $839,419,000. Sales for the year were positively impacted by $39,761,000 due to increased sales volume and $10,628,000 by price increases, offset by $5,957,000 in prior year sales from sold businesses. Unfavorable foreign currency translation decreased sales by $7,569,000.

Our gross profit was $304,997,000 and $285,061,000 or 34.8% and 34.0% of net sales in fiscal 2019 and 2018, respectively.  The fiscal 2019 increase in gross profit of $19,936,000 or 7.0% is the result of $12,986,000 in increased volume, $8,573,000 in increased productivity and favorable manufacturing costs, $6,476,000 of price increases net of material inflation, and $1,078,000 in decreased product liability costs. These increases were offset by a prior year insurance settlement for $2,362,000 which did not reoccur in the current year, $1,717,000 in increased tariffs, $1,473,000 in costs incurred to consolidate the Salem, Ohio facility, and $1,223,000 in gross profit from sold businesses. The translation of foreign currencies had a $2,423,000 unfavorable impact on gross profit for the year ended March 31, 2019.

Selling expenses were $97,925,000 and $101,956,000 or 11.2% and 12.1% of net sales in fiscal years 2019 and 2018. Selling expenses from sold businesses decreased selling expenses by $346,000 in fiscal 2019. Additionally, foreign currency translation had a $1,016,000 favorable impact on selling expenses. The remaining decrease is largely due to lower warehouse and personnel costs.

General and administrative expenses were $83,567,000 and $85,605,000 or 9.5% and 10.2% of net sales in fiscal 2019 and 2018, respectively. The fiscal 2019 decrease was due to a $7,031,000 net reduction of STAHL integration costs that are classified as general and administrative expense, a $1,666,000 net decrease in legal costs for an insurance recovery legal action, a $300,000 net reduction in legal costs for a former subsidiary of Magnetek involved in a litigation matter, and $619,000 in debt repricing fees incurred in the prior year. These decreases were offset by higher incentive compensation and stock compensation expense of $1,347,000, $2,317,000 in costs incurred to execute the Company's Blueprint for Growth Strategy, and increased environmental remediation accruals of $585,000. The remaining increases in general and administrative expenses relates to investments in various initiatives and general inflation. Foreign currency translation had a $495,000 favorable impact on general and administrative expenses.

Research and development expenses were $13,491,000 and $13,617,000 in fiscal 2019 and 2018, respectively. As a percentage of consolidated net sales, research and development expenses were 1.5% and 1.6% in fiscal 2019 and 2018. The decrease is attributable to prior year expenses incurred by the sold business in the amount of $119,000.

A Net loss on sales of businesses in the amount of $25,672,000 was recorded in the year ended March 31, 2019. Included in the Net loss on sales of businesses is a loss on Crane Equipment and Service Inc. and Stahlhammer Bommern GmbH in the amount of $26,731,000, offset by a gain on the sale of the Tire Shredder business in the amount of $1,059,000 during the twelve months ended March 31, 2019. Included in the Net loss on sales of businesses were impairment charges of $27,753,000 recorded in fiscal 2019.
Amortization of intangibles remained relatively consistent at $14,900,000 and $15,552,000 in fiscal 2019 and 2018, respectively. The decrease is primarily related to foreign currency translation.
Interest and debt expense was $17,144,000 and $19,733,000 in fiscal 2019 and 2018, respectively, and primarily related to a decrease in interest and debt expense on the Company's Term Loan due to a lower average borrowings outstanding during the fiscal 2019 period.
Investment income of $727,000 and $157,000, in fiscal 2019 and 2018, respectively, related to earnings on marketable securities held in the Company’s wholly owned captive insurance subsidiary and the Company's equity method investment in EMC, described in Note 7. In accordance with ASU 2016-01, investment income for fiscal 2019 included net unrealized gains of marketable securities of $183,000.

Foreign currency exchange loss was $843,000 and $1,539,000 in fiscal 2019 and 2018, respectively, as a result of foreign currency volatility related to foreign currency denominated sales and purchases and intercompany debt.



Other income, net, was $716,000 and $2,469,000 in fiscal 2019 and 2018, respectively. This includes components of pension expense (all except service costs, described in Note 13) and various non-operating income and expense related activities.

Income tax expense as a percentage of income from continuing operations before income tax expense was 19.5% and 55.6% in fiscal 2019 and 2018, respectively. These percentages vary from the U.S. statutory rate primarily due to varying effective tax rates at the Company's foreign subsidiaries, and the jurisdictional mix of taxable income for these subsidiaries. The effectiveIn fiscal 2021 the tax rate for fiscal 2019 was affected favorablyprimarily reduced by 6.26.9 percentage points by certain favorable permanent adjustments,primarily due to federal tax credits including generationresearch and utilization of certain foreign tan credits, and by 2.8 percentage points by the reduction of the Company's one-time transitiondevelopment tax on earnings of certain foreign subsidiaries to zero. These favorable effects were offset unfavorably by 7.6 percentage points related to certain non-deductible losses on the sale of businesses.credits.




LIQUIDITY AND CAPITAL RESOURCES

Cash, cash equivalents, and restricted cash totaled $114,700,000, $71,343,000,$115,640,000 and $63,565,000$202,377,000, at March 31, 2020, 2019,2022 and 2018,2021, respectively.
 
Cash flow from operating activities

Net cash provided by operating activities was $106,795,000, $79,499,000,$48,881,000 and $69,661,000$98,890,000 in fiscal 2020, 2019,2022, and 2018,2021, respectively. In fiscal 2020,2022, net income of $59,672,000$29,660,000 and non-cash adjustments to net income of $51,188,000 contributed$76,266,000 were the most to cash provided by operating activities as welllargest contributors. Of the non-cash adjustments, $41,924,000 was Depreciation and amortization and $14,803,000 was Cost of debt refinancing as a decreaseresult of the Dorner acquisition. Net working capital increases reduced operating cash flows by $45,859,000, which included an increase of $40,201,000 in inventories as the Company increased inventory due to current supply chain constraints and an increase in trade accounts receivable of $15,752,000,$18,988,000 attributable to strong fourth quarter sales. This was partially offset by an increase in trade accounts payable of $8,110,000, and a decrease in trade accounts receivable of $2,899,000. The increase in cash was partially offset by a decrease in accrued expenses and$12,681,000. In addition non-current liabilities of $27,693,000.decreased by $11,211,000. The decrease in inventory is due to the Company's initiatives to increase cash flow and improve inventory turns. The decrease in accrued expenses and non-current liabilities primarily consists of the fiscal 2019 annual incentive plan payments offset by fiscal 2020 incentive plan accruals, $10,967,000 in pension plan contributions, and $8,593,000$9,059,000 in cash paid for amounts included in the measurement of operating lease liabilities.liabilities for fiscal 2022.

In fiscal 2019, net income of $42,577,000 and non-cash adjustments to net income of $66,436,000 contributed the most to cash provided by operating activities as well as an increase in trade accounts payable of $3,881,000. The increase in cash was offset by an increase in inventory of $15,411,000, an increase in trade accounts receivable of $11,328,000, and a decrease in accrued expenses and non-current liabilities of $6,759,000. The increase in inventory is due to the Company's initiatives to improve inventory availability. The net decrease in non-current liabilities is largely due to pension plan contributions of $11,018,000.

Cash flow from investing activities

Net cash (used) provided byused for investing activities was $(9,962,000), $2,486,000,$554,311,000 and $(32,592,000)$5,548,000 in fiscal 2020, 2019,2022 and 2018,2021, respectively. In fiscal 2020,2022, the most significant use of cash in investing activities was $9,432,000$539,778,000 to purchase Dorner and Garvey, net of cash acquired, as well as $13,104,000 in capital expenditures followed by $367,000 in net cash purchases of marketable equity securities.expenditures.

In fiscal 2019, the most significant source of cash provided by investing activities was $14,230,000 in cash received from the Sold Businesses, offset by $12,288,000 in capital expenditures. The Company also received $662,000 in net cash proceeds from the sale of marketable equity securities.

Cash flow from by financing activities

Net cash usedprovided by (used for) financing activities was $51,551,000, $67,778,000,$420,700,000 and $59,502,000$(10,189,000) in fiscal 2020, 2019,2022 and 2018,2021, respectively. In fiscal 2020,2022, the most significant usessources of cash were $51,113,000$725,000,000 in repayments on our Term Loangross proceeds from the issuance of long term debt and dividends paid$207,000,000 in gross proceeds from an equity offering, which were used to fund the amount $5,670,000, offset by $5,232,000 in net inflows from stock related transactions, which includes proceeds of $6,000,000 from stock options exercised.

In fiscal 2019, the most significant usesDorner and Garvey acquisitions. These sources of cash were $65,088,000offset by $477,846,000 in repayments on our Term Loanof debt, $26,184,000 in fees related to the debt and equity offering, and dividends paid in the amount of $4,652,000, offset by $1,962,000$6,562,000. As noted in Note 8 of the financial statements, during the second quarter of fiscal 2022, the Company modified its cross currency swap and interest rate swap. As such, the associated cash flows from hedging activities are classified as financing activities in the Statement of Cash Flows, which resulted in a net inflows from stock related transactions, which included proceedscash outflow of $4,152,000 from stock options exercised.$789,000.

We believe that our cash on hand, cash flows, and borrowing capacity under our New Revolving Creditnew First Lien Facility will be sufficient to fund our ongoing operations and budgeteddebt obligations, and capital expenditures for at least the next twelve months. This belief is dependent upon successful execution of our current business plan and effective working capital utilization. No material restriction existsrestrictions exist in accessing cash held by our non-U.S. subsidiaries. Additionally we expect to meet our U.S. funding needs without repatriating non-U.S. cash and incurring incremental U.S. taxes.  As of March 31, 2020, $69,360,0002022, $75,284,000 of cash and cash equivalents were held by foreign subsidiaries.

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


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amount of $100,000,000 and a $445,000,000 1st Lien Term Loan ("Term Loan"). The Term Loan has a seven-year term maturing in 2024 and the Revolver has a five-year term maturing in 2022. At March 31,2024. On August 26, 2020, the Company has not drawnentered into a Second Amendment to the Credit Agreement (as amended by the First Amended Credit Agreement, dated as of February 26, 2018). The Second Amended Credit Agreement extended the $100,000,000 secured Revolver which was originally set to expire on January 31, 2022 to August 25, 2023.

As discussed in Note 3, the Company completed its acquisition of Dorner on April 7, 2021 and entered into a $750,000,000 First Lien Facility with JPMorgan Chase Bank, PNC Capital Markets LLC, and Wells Fargo Securities LLC. The First Lien Facilities consist of a Revolving Facility in an aggregate amount of $100,000,000 and a $650,000,000 Bridge Facility. Proceeds from the Bridge Facility were used, among other things, to finance the purchase price for the Dorner acquisition, pay related fees, expenses and transaction costs, and refinance the Company's borrowings under its prior Term Loan and Revolver.

In addition to the debt borrowing described above, the Company commenced and completed an underwritten public offering of 4,312,500 shares of its common stock at a price of $48.00 per share for total gross proceeds of $207,000,000. The Company used all of the net proceeds from the equity offering to repay part of its outstanding borrowings under its Bridge Facility. The equity offering closed on May 4, 2021. Following the repayment of outstanding borrowings under the Bridge Facility, the Bridge Facility was refinanced with a syndicated Term Loan B facility on May 14, 2021.

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

1) Term Loan:Loan B: An aggregate $445,000,000 1st Lien$450,000,000 Term Loan B facility, which requires quarterly principal amortization of 0.25% with the remaining principal due at the maturity date. In addition, if the Company has Excess Cash Flow ("ECF")(ECF) as defined in the Credit Agreement for the First Lien Facility (the “Credit Agreement”), the ECF Percentage of the Excess Cash Flow for sucheach fiscal year minus optional prepayment


prepayments of the Loans (except prepayments of Revolving Loans that are not accompanied by a corresponding permanent reduction of Revolving Commitments) pursuant to Section 2.10(a) of the Credit Agreement other than to the extent that any such prepayment is funded with the proceeds of Funded Debt, shall be applied toward the prepayment of the Term Loan.Loan B facility. The ECF Percentage is defined as 50% stepping down to 25% or 0% based on the achievement of specified Secured Leverage RatioRatios as of the last day of thesuch fiscal year. Further, the Company may draw additional Incremental Facilities (referred to as an "Accordion") by executing and delivering to JPMorgan Chase Bank, N.A. an Increased Facility Activation Notice specifying the amount of such increase requested. Lenders shall have no obligation to participate in any increase unless they agree to do so in their sole discretion.

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

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

4) Prepayments: Provisions permitting a Borrower to voluntarily prepay either the Term Loan B facility or Revolver in whole or in part at any time, and provisions requiring certain mandatory prepayments of the Term Loan B facility or Revolver on the occurrence of certain events which will permanently reduce the commitments under the Credit Agreement, each without premium or penalty, subject to reimbursement of certain costs of the Lenders. A prepayment premium of 1% of the principal amount of the First Lien Term Loans is required if the prepayment is associated with a Repricing Transaction and it were to occur within the first twelve months.

5) Covenants: Provisions containing covenants required of the CorporationCompany and its subsidiaries including various affirmative and negative financial and operational covenants. The key financial covenant is triggered only on any date when any Extension of Credit under the New Revolving Credit Facility is outstanding (excluding any Letters of Credit) (the “Covenant Trigger”), and permitsprohibits the Total Leverage Ratio for the Reference Period ended on such date to not exceedfrom exceeding (i) 4.50:6.75:1.00 as of any date of determination prior to December 31, 2017,June 30, 2021, (ii) 4.00:5.50:1.00 as of any date of determination on December 31, 2017June 30, 2021 and thereafter but prior to December 31, 2018,June 30, 2022, (iii) 4.50:1.00 as of any date of determination on June 30, 2022 and thereafter but prior to June 30, 2023 and (iv) 3.50:1.00 as of any date of determination on December 31, 2018June 30, 2023 and thereafter but prior to December 31, 2019 and (iv) 3.00:1.00 as of any date of determination on December 31, 2019 and thereafter. As there is no amount drawn on

6) Collateral: Obligations under the Revolver as of March 31, 2020 the requirement to comply with the covenant is not triggered. Had we been required to determine the covenant ratio we would have been in compliance with the covenant provisions as of March 31, 2020 and 2019.

The Facility isFirst Lien Facilities are secured by liens on substantially all U.S. inventory, receivables, equipment, real property, certain subsidiary stock (limited to 65% of non-U.S. subsidiaries) and intellectual property. The Credit Agreement allows, but limits our ability to pay dividends.

On February 26, 2018, the Company amended the Credit Agreement (known as the "Amended Credit Agreement"). The Amended Credit Agreement has the same terms mentioned above except for a reduction in interest rates. The applicable rate for the repriced term loan was reduced from 3.00% to 2.50%. The Company accounted for the Amended Credit Agreement as a debt modification, therefore, debt repricing fees incurred in fiscal 2018 were expensed as General and Administrative expenses and the deferred financing fees incurred as part of the Credit Agreement (discussed below) remain unchanged.

The outstanding balance of the Term Loan was $259,350,000 and $310,463,000 as of March 31, 2020 and 2019, respectively. The Company made $51,113,000 of principal payments on the Term Loan during fiscal 2020 and $65,000,000 of principal payments on the Term Loan during fiscal 2019 which is more than the minimum required principal payment the Company is obligated to make. In response to COVID-19 the Company is seeking to take all appropriate measures to protect the cash flow and liquidityassets of the Company and plansits material domestic subsidiaries.

In fiscal 2022, the Company incurred $14,803,000 in debt extinguishment costs of which $5,946,000 relates to make minimum required principal payments of $4,450,000 over the next 12 months. As such, onlyCompany's prior Term Loan, $326,000 relates to the required principal amount has been recorded withinCompany's prior Revolver, and $8,531,000 relates to fees paid on the current portion of long-term debt on the Company's Consolidated Balance SheetFirst Lien Facilities that were associated with the remaining balance recordedBridge Facility, all of which were incurred in the first quarter of fiscal 2022. These costs are classified as long-term debt.Cost of debt refinancing in the Condensed Consolidated Statements of Operations.

There was $0 outstanding on


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Further, in the Revolving Credit Facility and $16,752,000 outstanding lettersfirst quarter of credit as of March 31, 2020. The outstanding letters of credit at March 31, 2020 consisted of $898,000 in commercial letters of credit and $15,854,000 of standby letters of credit. Subsequent to March 31, 2020,fiscal 2022, the Company drew $25,000,000 from the Revolver for liquidity and working capital purposes demonstrating it has a supportive bank group.

The gross balance ofrecorded $5,432,000 in deferred financing costs on the term loan was $14,690,000 as of March 31, 2020 and 2019.First Lien Term Facility, which will be amortized over seven years. The accumulated amortization balances were $6,645,000 and $4,547,000 as of March 31, 2020 and 2019, respectively.

The gross balance ofCompany recorded $4,027,000 in deferred financingfinancings costs associated withon the New Revolving Credit Facility, of which $3,050,000 is included in Other assetsrelated to the New Revolving Credit Facility and $977,000 is $2,789,000carried over from the Company's prior Revolver as of March 31, 2020 and March 31, 2019. The accumulated amortization balance is $1,766,000 and $1,209,000 as of March 31, 2020 and March 31, 2019 respectively.certain Revolver lenders increased their borrowing capacity. These balances will be amortized over five years and are classified in Other assets since no funds were drawn on the New Revolving Credit Facility.

Also discussed in Note 3, the Company completed its acquisition of Garvey on November 30, 2021 and borrowed additional funds in accordance with the Accordion feature under its existing Term Loan B to increase the principal amount of the Term Loan B facility by $75,000,000. Proceeds from the Accordion were used, among other things, to finance the purchase price for the Garvey acquisition, pay related fees, expenses, and transaction costs. No material amendment to the terms of the Term Loan B facility or the First Lien Facility was necessary for the Company to exercise this Accordion feature.

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

The outstanding principal balance of the Term Loan B facility was $502,560,000 as of March 31, 2022, which includes $75,000,000 in principal balance from the Accordion exercised in the third quarter of fiscal 2022 and the outstanding balance of the Term Loan was $254,900,000 as of March 31, 2021. The Company made $22,440,000 of principal payment on the Term Loan B during fiscal 2022 and $4,450,000 of principal payment on the Term Loan during fiscal 2021. The Company is obligated to make $5,260,000 of principal payments on the Term Loan B facility over the next 12 months plus applicable ECF payments, if required, however, plans to pay down approximately $40,000,000 in principal payments in total during such 12 month period. This amount has been recorded within the current portion of long term debt on the Company's Condensed Consolidated Balance Sheet with the remaining balance recorded as long term debt.

There were no outstanding borrowings and $17,151,000 outstanding letters of credit issued against the New Revolving Credit Facility as of March 31, 2022. The outstanding letters of credit at March 31, 2022 consisted of $849,000 in fiscal 2020commercial letters of credit and 2019.$16,302,000 of standby letters of credit.



The gross balance of deferred financing costs on the Term Loan B facility was $6,323,000, which includes $892,000 from the Accordion exercise, as of March 31, 2022, and $14,690,000 on the prior Term Loan as of March 31, 2021, respectively. The accumulated amortization balances were $898,000 and $8,744,000 as of March 31, 2022 and 2021, respectively.

The gross balance of deferred financing costs associated with the New Revolving Credit Facility was $4,027,000 as of March 31, 2022 and the prior Revolver was $3,615,000 as of March 31, 2021, which are included in Other assets on the Condensed Consolidated Balance Sheet. The accumulated amortization balance is $805,000 and $2,313,000 as of March 31, 2022 and March 31, 2021, respectively.  

In connection with Dorner acquisition, the Company recorded a finance lease for a manufacturing facility in Hartland, WI under a 23 year lease agreement which terminates in 2035. The outstanding balance on the finance lease obligation is $14,084,000 as of March 31, 2022 of which $544,000 has been recorded within the Current portion of long term debt and the remaining balance recorded within Term loan and finance lease obligations on the Company's Condensed Consolidated Balance Sheet. See Note 18, Leases, for further details.

Non-U.S. Lines of Credit and Loans

Unsecured and uncommitted lines of credit are available to meet short-term working capital needs for certain of our subsidiaries operating outside of the U.S. The lines of credit are available on an offering basis, meaning that transactions under the line of credit will be on such terms and conditions, including interest rate, maturity, representations, covenants, and events of default, as mutually agreed between our subsidiaries and the local bank at the time of each specific transaction. As of March 31, 2020,2022, unsecured credit lines totaled approximately $2,428,000,$2,434,000, of which $0 was drawn. In addition, unsecured lines of $14,160,000$12,503,000 were available for bank guarantees issued in the normal course of business of which $9,958,000$9,135,000 was utilized.

CONTRACTUAL OBLIGATIONS

The following table reflects a summary of our contractual obligations in millions of dollars as of March 31, 2020, by period of estimated payments due:
  Total 
Fiscal
2021
 
Fiscal
 2022-
Fiscal 2023
 
Fiscal
 2024-
Fiscal 2025
 
More
 Than
Five Years
Long-term debt obligations (a) $259.4
 $4.5
 $8.9
 $246.0
 $—
Operating lease obligations (b) 43.9
 8.3
 14.6
 8.9
 12.1
Purchase obligations (c) —
 —
 —
 —
 —
Interest obligations (d) 40.8
 10.4
 20.3
 10.1
 —
Letter of credit obligations 16.8
 14.4
 2.4
 —
 —
Bank guarantees 10.0
 10.0
 —
 —
 —
Uncertain tax positions 0.2
 0.2
 —
 —
 —
Other long-term liabilities reflected on the Company’s balance sheet under GAAP 195.9
 —
 70.7
 60.4
 64.8
Total $567.0
 $47.8
 $116.9
 $325.4
 $76.9

(a)As described in Note 12 to consolidated financial statements. Subsequent to March 31, 2020, the Company drew $25 million from the Revolver.
(b)As described in Note 18 to consolidated financial statements.
(c)We have no purchase obligations specifying fixed or minimum quantities to be purchased. We estimate that, at any given point in time, our cancelable open purchase orders to be executed in the normal course of business approximate $78 million.
(d)Estimated for our Term Loan and Revolving Credit Facility and interest rate swaps as described in Note 10 and Note 12 to our consolidated financial statements. Calculated using a Eurocurrency rate of 1.45% plus an applicable margin of 2.50%.

We have no additional off-balance sheet obligations that are not reflected above.

CAPITAL EXPENDITURES

In addition to keeping our current equipment and plants properly maintained, we are committed to replacing, enhancing and upgrading our property, plant and equipment to support new product development, improve productivity and customer responsiveness, reduce production costs, increase flexibility to respond effectively to market fluctuations and changes, meet environmental requirements, enhance safety and enhance safety.promote ergonomically correct work stations. Our capital expenditures for fiscal 2020, 2019,2022 and 20182021 were $9,432,000, $12,288,000,$13,104,000 and $14,515,000$12,300,000, respectively. Excluded from fiscal 20202022 capital expenditures is $365,000, $227,000,


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$329,000 and $0$730,000, in property, plant and equipment purchases included in accounts payable at March 31, 2020, 2019,2022 and 2018,2021, respectively. We expect capital expenditure spending in fiscal 2021 of approximately $15,000,000, excluding acquisitions and strategic alliances.2023 to range from $25,000,000 to $30,000,000.

INFLATION AND OTHER MARKET CONDITIONS

Our costs are affected by inflation in the U.S. economy and, to a lesser extent, in non-U.S. economies including those of Europe, Canada, Mexico, South America, and Asia-Pacific. We do not believe that general inflation has had a material effect on our results of operations over the periods presented primarilydespite rising inflation due to overall low inflation levels over such periods and our ability to generally pass on rising costs through annual price increases. However, increasesWe are currently experiencing higher raw material, freight, and logistics costs than we have seen in U.S. employee benefits costs such as health insurance and workers compensation insurancerecent years, which we have exceeded general inflation levels.been able to recover with pricing actions. In the future, we may be further affected by inflation that we may not be able to pass on as price increases.  With changes in worldwide demand for steel and fluctuating scrap steel


prices over the past several years, we experienced fluctuations in our costs that we have reflected as pricethese cost increases to our customers.  We believe we have been successful in instituting price increases to pass on these material cost increases.  We will continue to monitor our costs and reevaluate our pricing policies.

SEASONALITY AND QUARTERLY RESULTS

Our quarterlyQuarterly results may be materially affected by the timing of large customer orders, periods of high vacation and holiday concentrations, legal settlements, gains or losses in our portfolio of marketable securities, restructuring charges, and other costs attributable to plan closures as well asfavorable or unfavorable foreign currency translation, divestitures and acquisitions. Therefore, ourthe operating results for any particular fiscal quarter are not necessarily indicative of results for any subsequent fiscal quarter or for the full fiscal year.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires us to make estimates and assumptions that affect the amounts reported in our consolidated financial statements and accompanying notes. We continually evaluate the estimates and their underlying assumptions, which form the basis for making judgments about the carrying value of our assets and liabilities. Actual results inevitably will differ from those estimates. If interpreted differently under different conditions or circumstances, changes in our estimates could result in material changes to our reported results.  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 our consolidated financial statements.

Insurance Reserves.  Our accrued general and product liability reserves as described in Note 16 to 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. These actuarial estimates are subject to a high degree of uncertainty due to a variety of factors, including extended lag time in the reporting and resolution of claims, trends or changes in claim settlement patterns, insurance industry practices, and legal interpretations. Changes to these estimates could result in material changes to the amount of expense and liabilities recorded in our financial statements. Further, actual costs could differ significantly from the estimated amounts.  Adjustments to estimated reserves are recorded in the period in which the change in estimate occurs.  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.

Goodwill and indefinite-lived intangible asset impairment testing.  Our goodwill balance of $319,679,000$648,849,000 as of March 31, 20202022 is subject to impairment testing. We test goodwill for impairment at least annually, as of the end of February, and more frequently whenever events occur or circumstances change that indicate there may be impairment. These events or circumstances could include a significant long-term adverse change in the business climate, poor indicators of operating performance, or a sale or disposition of a significant portion of a reporting unit.

We test goodwill at the reporting unit level, which is one level below our operating segment. We identify our reporting units by assessing whether the components of our operating segment constitute businesses for which discrete financial information is available and segment management regularly reviews the operating results of those components. We also aggregate components that have similar economic characteristics into single reporting units (for example, similar products and / or services, similar long-term financial results, product processes, classes of customers, or in circumstances where the components share assets or other resources and have other economic interdependencies). The Company has twoWe have three reporting units, both of which have goodwill. The Duff-Norton, and Rest of Products reporting unitsand Precision Conveyance, and have goodwill totaling $9,593,000,$9,699,000, $310,793,000, and $310,086,000,$328,357,000, respectively, at March 31, 2020.2022. The Precision Conveyance group is new in fiscal 2022 with the acquisitions of Dorner and Garvey (refer to Note 3).

Annual Goodwill Impairment Test

When we evaluate the potential for goodwill impairment, we assess a range of qualitative factors including, but not limited to, macroeconomic conditions, industry conditions, the competitive environment, changes in the market for our products and services, regulatory and political developments, entity specific factors such as strategy, and changes in key personnel and


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overall financial performance. If, after completing this assessment, it is determined that it is more likely than not that the fair value of a reporting unit is less than its carrying value, we proceed to a quantitative impairment test. We also proceed to the quantitative model when economic or other business factors indicate that the fair value of our reporting units may have declined since our last quantitative test. We performed the qualitative assessment as of February 29, 202028, 2022 and determined that the quantitative test should be performed for the Rest of Products and Duff-Norton reporting units due to volatility in our stock price and uncertainty in the global economic environment caused by COVID-19. We also performed sensitivities and other analysis and determined it iswas not more likely than not that goodwill is not impaired as of March 31, 2020.



Rest of Products Reporting Unit

In order to perform the quantitative impairment test for the Rest of Products reporting unit, we use the discounted cash flow method and comparable market method to estimate fair value. The discounted cash flow method incorporates various assumptions, the most significant being projected revenue growth rates, operating profit margins and cash flows, the terminal growth rate and the discount rate. Management projects revenue growth rates, operating margins and cash flows based on each reporting unit’s current business, expected developments and operational strategies over a five-year period. In estimating the terminal growth rate, we consider our historical and projected results, as well as the economic environment in which the reporting unit operates. The discount rates utilized for each reporting unit reflect management’s assumptions of marketplace participants’ cost of capital and risk assumptions, both specific to the reporting unit and overall in the economy. The comparable market method estimates fair value based on prices obtained in actual transactions. The method consists of examining selling prices for comparable assets. After studying the selling prices, value adjustments are made for any dissimilarities.

Testing goodwill for impairment under the quantitative method described above requires us to estimate fair value of the reporting unit using significant estimates and judgmental factors. The compound annual growth rate for revenue during the first five years of our projections was approximately 1.91% for the Rest of Products reporting unit. The terminal value was calculated assuming a projected growth rate of 3.0% after five years . These rates reflect our estimate of long-term growth into perpetuity and approximate the long-term gross domestic product growth expected on a global basis as well as our normal annual price increases. The estimated weighted-average cost of capital for the reporting units was determined to be 11.7% for the Rest of Products reporting unit. This was estimated based upon an analysis of similar companies and their debt to equity mix, their related volatility and the size of their market capitalization. We also consider any additional risk of the Rest of Products reporting unit achieving its forecast, and adjust the weighted-average cost of capital applied when determining the reporting unit’s estimated fair value. Future changes in these estimates and assumptions could materially affect the results of our goodwill impairment tests. For example, a decline in the terminal growth rate by 50 basis points would decrease fair market value by $8,280,000 and an increase in the weighted-average cost of capital by 100 basis points would result in a decrease in fair market value by $26,270,000 for the Rest of Products reporting unit. Even with such changes, the fair value of the reporting unit would be greater than its net book value aseach of February 29, 2020, therefore indicating no impairment.

Duff-Norton Reporting Reporting Unit

Similar to the Rest of Products reporting unit, we use the discounted cash flow method and comparable market method to estimate fair value for the Duff-Norton reporting unit. The discounted cash flow method incorporates various assumptions, the most significant being projected revenue growth rates, operating profit margins and cash flows, the terminal growth rate and the discount rate. Management projects revenue growth rates, operating margins and cash flows based on each reporting unit’s current business, expected developments and operational strategies over a five-year period. In estimating the terminal growth rate, we consider our historical and projected results, as well as the economic environment in which the reporting unit operates. The discount rates reflect management’s assumptions of marketplace participants’ cost of capital and risk assumptions, both specific to the reporting unit and overall in the economy. The comparable market method estimates fair value based on prices obtained in actual transactions. The method consists of examining selling prices for comparable assets. After studying the selling prices, value adjustments are made for any dissimilarities.

Testing goodwill for impairment under the quantitative method described above requires us to estimate fair value of the reporting unit using significant estimates and judgmental factors. The compound annual growth rate for revenue during the first five years of our projections was approximately 5.68% for the Duff-Norton reporting unit. The terminal value was calculated assuming a projected growth rate of 3.5% after five years. These rates reflect our estimate of long-term growth into perpetuity and approximate the long-term gross domestic product growth expected on a global basis as well as our normal annual price increases. The estimated weighted-average cost of capital for the reporting units was determined to be 12.2%less than that its applicable carrying value. Accordingly, we did not perform the quantitative goodwill impairment test for the Duff-Norton reporting unit. This was estimated initially based on the Company's consolidated weighted-average cost of capital and increased for additional market risk. We also consider any additional risk of the Duff-Norton reporting unit achieving its forecast, and adjust the weighted-average cost of capital applied when determining the reporting unit’s estimated fair value. Future changes in these estimates and assumptions could materially affect the results of our goodwill impairment tests. For example, a decline in the terminal growth rate by 50 basis points would decrease fair market value by $2,446,000 and an increase in the weighted-average cost of capital by 100 basis points would result in a decrease in fair market value by $6,929,000 for the Duff-Norton reporting unit. Even with such changes, the fair value of the reporting unit would be greater than its net book value as of February 29, 2020, therefore indicating no impairment.units during fiscal 2022.

We further test our indefinite-lived intangible asset balance of $46,670,000$46,721,000 consisting of trademarks on our recentfor acquisitions on an annual basis for impairment. The methodology usedprior to value trademarksfiscal 2022. Similar to goodwill, we first assess various qualitative factors in the analysis. If, after completing this assessment, it is the relief from royalty method. The recorded book value of these trademarks in excess of the calculated fair value results in impairment. The key estimate used in this calculation


consists of an overall royalty rate applied to the sales covered by the trademark. After performing this analysis, we determined that it is more likely than not that the fair value of an indefinite-lived intangible asset is less than its carrying value, we proceed to a quantitative impairment test. We performed the qualitative assessment as of February 28, 2022 and determined that it was not more likely than not that the fair value of each of our indefinite-lived intangible assets was less than that its applicable carrying value.

Purchase Price Allocations for Business Combinations. During the fiscal year ended March 31, 2022, we completed two business combination for a total purchase price of $548,743,000. Under purchase accounting, we recorded assets and liabilities at fair value as of the acquisition dates. We identified and assigned value to trademarks and trade names, customer relationships, favorable supply agreements, backlog, and technology. We estimated the useful lives over which these intangible assets would be amortized. Valuations of these assets were performed largely using discounted cash flow models and estimates of replacement cost. These valuations support the conclusion that identifiable intangible assets had a preliminary value of $211,350,000. The resulting goodwill was $328,357,000.

Assigning value to intangible assets requires estimates used in projecting relevant future cash flows and estimates of replacement costs, in addition to estimating useful lives of such assets. Further estimates include an attrition rate for customer relationships, royalty rates for technology, trademarks, exceeded their book values, and as such, no other impairment was recorded.patents, and a weighted average cost of capital assumption.




Effects of New Accounting Pronouncements

Information regarding the effects of new accounting pronouncements is included in Note 2221 to the accompanying consolidated financial statements included in Item 8 of this March 31, 2020 10-K report.Form 10-K.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995

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This report may include “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, facility consolidations and other restructurings, our asbestos-related liability, the integration of acquisitions, and other factors disclosed in our periodic reports filed with the Commission. Consequently such forward-looking statements should be regarded as our current plans, estimates and beliefs. 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 events.


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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 costs are affected by inflation in the U.S. economy and, to a lesser extent, in non-U.S. economies including those of Europe, Canada, Mexico, South America, and Asia-Pacific. We do not believe that general inflation has hadGenerally, as we experience fluctuations in our costs, we reflect these increases in costs as price increases to our customers with the goal of being margin neutral. Currently, as a result of supply chain challenges, we are experiencing higher raw 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,costs. Further, increases in U.S. employee benefits costs such as health insurance and workers compensation insurance have exceeded general inflation levels. In the future, we may be further affected by inflation that we may not be able to pass on as price increases. With changes in worldwide demand for steel and fluctuating scrap steel prices over the past several years, we experienced fluctuations in ourthese increased costs that we have reflectedon as price increases to our customers. We believeHowever, we have been successful in the past, and we expect to be successful in the future, in instituting price increases to pass on these material cost increases. The companyCompany is exposed to trade tariffs with China. The Company monitors the impact of tariffs and actively works to mitigate this impact through material productivity actions and pricing strategies. We will continue to monitor our costs and reevaluate our pricing policies.

We have been, and may continue in future periods to be, materially and adversely impacted by the effects of COVID-19.the COVID-19 pandemic. In addition to global macroeconomic effects, the COVID-19 outbreakpandemic and any other related adverse public health developments willhave caused, and are expected to continue to cause, disruption to both our domestic and international operations and sales activities. The continued operation of our facilities is subject to local laws and regulations. While all of our facilities have been deemed essential under applicable law, there is no guarantee this will continue. Currently,Although we have thus far had no significant operating disruptions due to the pandemic, like all companies, the apparent increased contagiousness of the Omicron variant and subsequent variants poses risk to the availability of our Brighton, Michigan and Santiago, Mexico facilities are not operating.workforce. Our third-party manufacturers, suppliers, third-party distributors, sub-contractors and customers have been, and willmay in the future continue to be, disrupted by worker absenteeism, quarantines and restrictions on their employees’ ability to work, office and factory closures, disruptions to ports and other shipping infrastructure, border closures, orand other travel or health-related restrictions. Depending on the magnitude of such effects on our manufacturing operations or the operations of our suppliers, third-party distributors, or sub-contractors, our supply chain, manufacturing and product shipments couldhave been, and in the future may continue to be, delayed, which could adversely affect our business, operations, and customer relationships. In addition, COVID-19 or other disease outbreaks willhave in the short-run and may over the longer term adversely affect the economies and financial markets of many countries resultingand have caused inflationary pressures in the U.S. and elsewhere, which could result in an economic downturn that willcould affect demand for our products and impact our operating results. There can be no assurance that any decrease in sales resulting from the COVID-19 pandemic will be offset by increased sales in subsequent periods. Although the magnitude of the impact of the COVID-19 outbreakpandemic on our business and operations remains uncertain, the continued spread of the COVID-19 or the occurrence of other epidemics and the imposition of related public health measures and travel and business restrictions willhas, and may in the future continue to, adversely impact our business, financial condition, operating results and cash flows.

In fiscal 2020, 45%2022, 41% of our net sales were from manufacturing plants and sales offices in foreign jurisdictions. We manufacture our products in the United States, China, Germany, United Kingdom, Hungary, Mexico, and FranceMalaysia and sell our products in approximately 50over 100 countries. Our results of operations could be affected by factors such as changes in foreign currency rates or weak economic conditions in foreign markets. With our fiscal year 2017 acquisition of STAHL, we have an increased presence in the United Arab Emirates, with total assets of approximately $10,000,000.$4,800,000. Our operating results are exposed to fluctuations between the U.S. Dollar and the Canadian Dollar, European currencies, the South African Rand, the Mexican Peso, the Brazilian Real, and the Chinese Yuan. For example, when the U.S. dollar weakens against the Euro, the value of our net sales and net income denominated in Euros increases 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, which reduces the impact of a significant change in foreign exchange rates on net income.  For example, a 10% change in the value of the U.S. dollar in relation to our most significant foreign currency exposures would have had an impact of approximately $3,900,000$4,200,000 on our income from operations. In addition, the majority of our export sale transactions are denominated in U.S. dollars. We believe that our exposure to the Russia and Ukraine conflict is not significant, as our entity in Russia had income from operations of $400,000 in fiscal year 2022 and had total assets of approximately $1,000,000 as of March 31, 2022.

The Company has a cross currency swap agreement that is designated as a cash flow hedge to hedge changes in the value of an intercompany loan to a foreign subsidiary due to changes in foreign exchange rates. This intercompany loan is related to the acquisition of STAHL. As of March 31, 2020,2022, the notional amount of this derivative was $181,390,000,$137,650,000, and the contract matures on JanuaryMarch 31, 2022.2028. During fiscal 2022, the Company modified the cross currency swap by extending it to fiscal year 2028, matching the intercompany loan. The Company has concluded that the transaction to modify the cross currency swap, as


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well as the modified swap, maintained hedge accounting. The modified cross currency swap is considered to have an other than insignificant financing element. As such, its cash flows are classified within financing activities in the Statement of Cash Flows. From its March 31, 20202022 balance of AOCL, the Company expects to reclassify approximately $1,312,000$128,000 out of AOCL, and into foreign currency exchange loss (gain), during the next 12 months based on the contractual payments due under this intercompany loan.

The Company has foreign currency forward agreements that are designated as cash flow hedges to hedge a portion of forecasted inventory purchases denominated in foreign currencies. TheAs of March 31, 2022, the notional amount of thosethese derivatives is $8,422,000was $6,959,000, and all contracts


mature by DecemberMarch 31, 2020.2023. From its March 31, 20202022 balance of AOCL, the Company expects to reclassify approximately $264,000$191,000 out of AOCL during the next 12 months based on the underlying transactions of theexpected sales of the goods purchased.

The Company's policy is to maintain a capital structure that is comprised of 50-70% of fixed rate long-term debt and 30-50% of variable rate long-term debt. The Company has twothree interest rate swap agreements in which the Company receives interest at a variable rate and pays interest at a fixed rate. The third interest rate swap agreement was entered into in fiscal year 2022 as a result of the additional debt from the Dorner and Garvey acquisitions. These interest rate swap agreements are designated as cash flow hedges to hedge changes in interest expense due to changes in the variable interest rate of the senior secured term loan. The amortizing interest rate swaps mature by December 31, 2023February 28, 2025 and had a total notional amount of $158,490,000$300,747,000 as of March 31, 2020.2022. The effective portion of the changes in fair values of the interest rate swaps is reported in AOCL and will be reclassified to interest expense over the life of the swap agreements. From its March 31, 20202022 balance of AOCL, the Company expects to reclassify approximately $1,066,000$389,000 out of AOCL, and into interest expense, during the next 12 months.



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Item 8.        Financial Statements and Supplemental Data.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
 
Columbus McKinnon Corporation

Audited Consolidated Financial Statements as of March 31, 2020:2022:
32
35
36
37
38
39
 
1
Description of Business
40
2
Accounting Principles and Practices
40
3
Acquisitions & Disposals
44
4
Revenue & Receivables
46
5
Fair Value Measurements
50
6
Inventories
52
7
Marketable Securities and Other Investments
53
8
Property, Plant, and Equipment
54
9
Goodwill and Intangible Assets
54
10
Derivative Instruments
56
11
Accrued Liabilities and Other Non-current Liabilities
59
12
Debt
59
13
Pensions and Other Benefit Plans
62
14
Employee Stock Ownership Plan ("ESOP")
66
15
Earnings per Share and Stock Plans
66
16
Loss Contingencies
71
17
Income Taxes
75
18
Leases
78
19
Business Segment Information
80
20
Accumulated Other Comprehensive Loss
82
21
Effects of New Accounting Pronouncements
84
   
86


31
Report of Independent Registered Public Accounting Firm
34
Consolidated Balance Sheets
37
Consolidated Statements of Operations
38
Consolidated Statements of Comprehensive Income
39
Consolidated Statements of Shareholders’ Equity
40
Consolidated Statements of Cash Flows
41
Notes to Consolidated Financial Statements 
1Description of Business
42
2Accounting Principles and Practices
42
3Disposals
46
4Revenue Recognition
47
5Fair Value Measurements
50
6Inventories
53
7Marketable Securities and Other Investments
53
8Property, Plant, and Equipment
54
9Goodwill and Intangible Assets
54
10Derivative Instruments
56
11Accrued Liabilities and Other Non-current Liabilities
59
12Debt
60
13Pensions and Other Benefit Plans
62
14Employee Stock Ownership Plan ("ESOP")
69
15Earnings per Share and Stock Plans
69
16Loss Contingencies
74
17Income Taxes
78
18Leases
82
19Business Segment Information
84
20Selected Quarterly Financial Data (unaudited)
85
21Accumulated Other Comprehensive Loss
86
22Effects of New Accounting Pronouncements
88
   
Schedule II – Valuation and Qualifying Accounts.
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Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors of Columbus McKinnon Corporation

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Columbus McKinnon Corporation (the Company) as of March 31, 20202022 and 2019,2021, the related consolidated statements of operations, comprehensive income, shareholders' equity and cash flows for each of the three years in the period ended March 31, 2020,2022, and the related notes and financial statement schedule listed in the Index at Item 15(2) (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at March 31, 20202022 and 2019,2021, and the results of its operations and its cash flows for each of the three years in the period ended March 31, 2020,2022, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of March 31, 2020,2022, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated May 27, 2020,25, 2022, expressed an unqualified opinion thereon.

Adoption of New Accounting Standards

As discussed in Note 2 to the consolidated financial statements, the Company changed its method for recognizing revenue as a result of the adoption of Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers (Topic 606), and the amendments in ASUs 2015-14, 2016-08, 2016-10 and 2016-12 effective April 1, 2018. As discussed in Note 2 to the consolidated financial statements, the Company changed its method for accounting for leases as a result of the adoption of ASU No. 2016-02, Leases (Topic 842), as amended, effective April 1, 2019.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.











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Valuation of Goodwill
Description of the Matter
At March 31, 2020,2022, the Company’s goodwill was $319.7$648.8 million. As discussed in Notes 2 and 9 of the consolidated financial statements, goodwill is qualitatively testedassessed and quantitatively tested, when necessary, for impairment at least annually at the reporting unit level. For its fiscal 20202022 annual impairment test, the Company quantitativelyqualitatively tested goodwill impairment for the Rest of Products reporting unit which had goodwill of $310.1 million. In its quantitative test, the Company applied a discounted cash flow method to estimate the fair value of its reporting unit which incorporated various assumptions, the most significant being projected revenue growth rates, operating profit margins and cash flows, the terminal growth rate and the discount rate.impairment.

Auditing management’s annualmanagement's qualitative assessment for goodwill impairment test was complex and highly judgmental due to the significant estimationjudgments required to determinein evaluating whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. In particular, the Restqualitative assessment requires management to assess the totality of Products reporting unit. Theevents and circumstances such as macroeconomic conditions, industry and market conditions, overall financial performance, as well as other drivers of fair value estimate forand make judgments, on the Restbasis of Productsthe weight of evidence, about the significance of all identified events and circumstances in the context of determining whether it is more likely than not that the fair value of a reporting unit was sensitive to significant assumptions inherent in the Company’s discounted estimated future cash flows, in particular changes in the projected revenue growth rates and the discount rate, which are affected by expectations about future market or economic conditions.is less than its carrying amount.

How We Addressed the Matter in Our Audit
We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s goodwill impairment review process, including controls overprocess. Our procedures included, among others, testing management’s review and assessment of the significant assumptions described above.
qualitative factors considered in its evaluation.

To test the estimated fair value of the Company’s Rest of Products reporting unit,qualitative assessment for goodwill impairment, we performed audit procedures with the assistance of our valuation professionals that included, among others, assessinginspecting the methodology usedanalysis prepared by management and testingevaluating the significant assumptionsevidence gathered by management in support of its assessment of the events and circumstances discussed above andabove. We considered the underlying data used in the impairment analysis.results of management’s most recent quantitative test as well as events that have occurred since that test was performed. We compared forecasts utilized by management in its most recent quantitative test to actual results. We inspected and analyzed other third-party evidence about, among other things, macroeconomic conditions and their expected trends, long-term growth rates, as well as industry and market conditions and their expected trends. We evaluated the significant assumptions usedevidence of these conditions and trends that had been gathered by management by agreeing the financial data presented by management to currentunderlying financial records, as well as comparing market conditions and expected trends to economic and industry data. We also inspected evidence about other relevant entity-specific events such as changes in management, key personnel, strategy, or customers, or litigation and economic trends and evaluated the effects of changes to the Company’s business model, customer base or product mix and other factors on the significant assumptions. Wequalitatively assessed the historical accuracyimpact of management’s revenue forecasts and performed sensitivity analyses of significant assumptions to evaluatethose events on the changes in the fair value of the reporting unit that would result from changes in the assumptions. We considered the relationship between the aggregate fair value of the Company’s reporting units andunits.

In addition, we analyzed trends in the Company’s market capitalization asstock price to identify changes in the indicated fair value of the annual impairment testing date.
Company and compared the Company’s stock quotes to quoted market price from other independent sources, and we analyzed the Company’s weighted average cost of capital and compared it to the weighted average cost of capital used by management in its most recent quantitative test.
Product Liabilities and Related Legal Costs
Description of the Matter
At March 31, 20202022 the Company’s liability for asbestos-related product liability claims and related legal costs was $4.8$7.8 million. As discussed in Note 16 to the consolidated financial statements, the Company is involved in asbestos-related litigation the cost of which is paid through a wholly-owned captive insurance company.

Auditing management's estimate of its reserves for asbestos-related product liabilities is complex and highly judgmental due to the significant estimation and judgment required in determining the ultimate outcomes of the cases asserted against the Company and in determining the ultimate costs for the Company to defend against such claims. In particular, the estimated product liability reserve is sensitive to significant assumptions such as case dismissal rates, the number of years case activity might continue, legal and other costs to defend claims. The cost to defend claims takes into consideration the extent to which insurance carriers, under pre-existing insurance policies and pursuant to a pending legal settlement, are covering future indemnity payments and sharing in payment of future legal defense costs.


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How We Addressed the Matter in Our Audit
We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s product liability estimation process. Our procedures included, among others, testing management’s review of significant assumptions used for purposes of calculating the estimated liability.


To test the estimated liability for asbestos-related product liability claims, we performed audit procedures that included, among others, testing the completeness and accuracy of the asbestos-related claims data underlying the estimated liability. We compared forecasts of legal defense costs and dismissal ratios utilized by management in prior year reserve estimates to actual defense costs incurred and the actual ratios of asbestos claims asserted to claims dismissed. We inspected analyses prepared by the Company to support the current forecasts of defense costs and dismissal ratios. We inspected correspondence from the Company’s internal counsel as to the number and status of outstanding claims asserted and the pending legal settlement with insurance carriers and correspondence from external counsel to corroborateevaluate the information provided by management. We involved a specialist to assist with our procedures and to develop an independent range of asbestos-related product liability reserves, which we compared to the Company’s recorded amount.
Accounting for Acquisitions
Description of the Matter
As discussed in Note 3 of the consolidated financial statements, during fiscal year 2022, the Company completed the acquisition of Dorner Mfg. Corp. (“Dorner”), for which the consideration was $481.0 million. The purchase price has been allocated to the assets acquired and liabilities assumed as of the date of acquisition. The excess consideration of $287.1 million has been recorded as goodwill as of March 31, 2022. The identifiable intangible assets acquired include customer relationships of $137.0 million, technology of $45.0 million, and trade names of $8.0 million.

Auditing the Company’s accounting for the acquisition involved subjective auditor judgement due to the significant estimation uncertainty in the Company’s determination of the fair values of the acquired intangible assets. The Company used discounted cash flow methods to estimate the fair value of acquired intangible assets. The significant assumptions used to estimate the value of the intangible assets included royalty rate, revenue growth rate, customer attrition rate, and discount rate. The significant assumptions related to estimating the fair value of the acquired intangible assets above are forward looking and could be affected by future economic market conditions.
How We Addressed the Matter in Our Audit

We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the Company’s accounting for the acquisition. Our audit procedures included, among others, testing controls over the valuation of acquired intangible assets, including the valuation models and underlying assumptions used to develop such estimates.

To test the fair value of the acquired intangible assets, we performed audit procedures that included, among others, evaluating the appropriateness of valuation methodologies, and testing the significant assumptions used in the models, as described above, including the completeness and accuracy of the underlying data. We compared the significant assumptions to current industry, market, and economic trends, to the historical results of the acquired business and to other guidelines companies within the same industry. We involved our valuation specialists to assist in our evaluation of the methodology and certain significant assumptions used by the Company.




/s/ Ernst & Young LLP
We have served as the Company’s auditor since at least 1917, but we are unable to determine the specific year.
Buffalo, New York
May 27, 202025, 2022



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COLUMBUS McKINNON CORPORATION

CONSOLIDATED BALANCE SHEETS
 
 March 31, March 31,
 2020 2019 20222021
 (In thousands, except share data) (In thousands, except share data)
ASSETS  
  
ASSETS  
Current assets:  
  
Current assets:  
Cash and cash equivalents $114,450
 $71,093
Cash and cash equivalents$115,390 $202,127 
Trade accounts receivable, less allowance for doubtful accounts ($5,056 and $3,264, respectively) 123,743
 129,157
Trade accounts receivable, less allowance for doubtful accounts ($5,717 and $5,686, respectively)Trade accounts receivable, less allowance for doubtful accounts ($5,717 and $5,686, respectively)147,515 105,464 
Inventories 127,373
 146,263
Inventories172,139 111,488 
Prepaid expenses and other 17,180
 16,075
Prepaid expenses and other31,545 22,763 
Total current assets 382,746
 362,588
Total current assets466,589 441,842 
Net property, plant, and equipment 79,473
 87,303
Net property, plant, and equipment97,926 74,753 
Goodwill 319,679
 322,816
Goodwill648,849 331,176 
Other intangibles, net 217,962
 232,940
Other intangibles, net390,788 213,362 
Marketable securities 7,322
 7,028
Marketable securities10,294 7,968 
Deferred taxes on income 26,281
 27,707
Deferred taxes on income2,313 20,080 
Other assets 59,809
 21,189
Other assets68,948 61,251 
Total assets $1,093,272
 $1,061,571
Total assets$1,685,707 $1,150,432 
LIABILITIES AND SHAREHOLDERS’ EQUITY    
LIABILITIES AND SHAREHOLDERS’ EQUITY 
Current liabilities:    
Current liabilities: 
Trade accounts payable $57,289
 $46,974
Trade accounts payable$90,881 $68,593 
Accrued liabilities 93,585
 99,304
Accrued liabilities118,187 110,816 
Current portion of long-term debt 4,450
 65,000
Current portion of long-term debt and finance lease obligationsCurrent portion of long-term debt and finance lease obligations40,551 4,450 
Total current liabilities 155,324
 211,278
Total current liabilities249,619 183,859 
Term loan and revolving credit facility 246,856
 235,320
Term loan and finance lease obligationsTerm loan and finance lease obligations470,675 244,504 
Other non-current liabilities 227,507
 183,814
Other non-current liabilities192,610 191,920 
Total liabilities 629,687
 630,412
Total liabilities912,904 620,283 
Shareholders’ equity:    
Shareholders’ equity: 
Voting common stock: 50,000,000 shares authorized; 23,771,620 and 23,391,101 shares issued and outstanding 238
 234
Voting common stock: 50,000,000 shares authorized; 28,517,333 and 23,984,299 shares issued and outstandingVoting common stock: 50,000,000 shares authorized; 28,517,333 and 23,984,299 shares issued and outstanding285 240 
Additional paid-in capital 287,256
 277,518
Additional paid-in capital506,074 296,093 
Retained earnings 290,441
 236,459
Retained earnings316,343 293,802 
Accumulated other comprehensive loss (114,350) (83,052)Accumulated other comprehensive loss(49,899)(59,986)
Total shareholders’ equity 463,585
 431,159
Total shareholders’ equity772,803 530,149 
Total liabilities and shareholders’ equity $1,093,272
 $1,061,571
Total liabilities and shareholders’ equity$1,685,707 $1,150,432 
 
See accompanying notes.



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COLUMBUS McKINNON CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS
 
 Year Ended March 31, Year Ended March 31,
 2020 2019 2018202220212020
 (In thousands, except per share data) (In thousands, except per share data)
Net sales $809,162
 $876,282
 $839,419
Net sales$906,555 $649,642 $809,162 
Cost of products sold 525,976
 571,285
 554,358
Cost of products sold590,825 429,417 525,976 
Gross profit 283,186
 304,997
 285,061
Gross profit315,730 220,225 283,186 
Selling expenses 91,054
 97,925
 101,956
Selling expenses99,187 76,907 91,054 
General and administrative expenses 77,880
 83,567
 85,605
General and administrative expenses102,128 76,035 77,880 
Research and development expenses 11,310
 13,491
 13,617
Research and development expenses15,351 12,405 11,310 
Net loss on sales of businesses, including impairment 176
 25,672
 —
Net loss on sales of businesses, including impairment— — 176 
Amortization of intangibles 12,942
 14,900
 15,552
Amortization of intangibles25,283 12,623 12,942 
Income from operations 89,824
 69,442
 68,331
Income from operations73,781 42,255 89,824 
Interest and debt expense 14,234
 17,144
 19,733
Interest and debt expense20,126 12,081 14,234 
Cost of debt refinancingCost of debt refinancing14,803 — — 
Investment (income) loss, net (891) (727) (157)Investment (income) loss, net(46)(1,693)(891)
Foreign currency exchange loss (gain), net (1,514) 843
 1,539
Foreign currency exchange loss (gain), net1,574 941 (1,514)
Other (income) expense, net 839
 (716) (2,469)Other (income) expense, net(1,122)20,850 839 
Income from continuing operations before income tax expense 77,156
 52,898
 49,685
Income before income tax expenseIncome before income tax expense38,446 10,076 77,156 
Income tax expense 17,484
 10,321
 27,620
Income tax expense8,786 970 17,484 
Net income $59,672
 $42,577
 $22,065
Net income$29,660 $9,106 $59,672 
      
Average basic shares outstanding 23,619
 23,276
 22,841
Average basic shares outstanding28,040 23,897 23,619 
Average diluted shares outstanding 23,855
 23,660
 23,335
Average diluted shares outstanding28,401 24,173 23,855 
      
Basic income per share $2.53
 $1.83
 $0.97
Basic income per share$1.06 $0.38 $2.53 
      
Diluted income per share $2.50
 $1.80
 $0.95
Diluted income per share$1.04 $0.38 $2.50 
      
Dividends declared per common share $0.24
 $0.21
 $0.17
Dividends declared per common share$0.25 $0.24 $0.24 
 
See accompanying notes.



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COLUMBUS McKINNON CORPORATION
 
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

  March 31,
  2020 2019 2018
  (In thousands)
Net income $59,672
 $42,577
 $22,065
Other comprehensive income (loss), net of tax: 

  
  
Foreign currency translation adjustments (9,004) (16,708) 21,717
Pension liability adjustments, net of taxes of $8,062, $2,242 and $(4,981) (24,051) (5,711) 12,047
Other post retirement obligations adjustments, net of taxes of $(35), $(126), and $(153) 104
 475
 484
Split-dollar life insurance arrangement adjustments, net of taxes of $(17), $(18), and $(70) 51
 69
 206
Change in derivatives qualifying as hedges, net of taxes of $(565), $469, and $(1,519) 1,602
 (1,037) 3,563
Change in investments: 

  
  
Unrealized holding (loss) gain arising during the period, net of taxes of $0, $0, and $(124) —
 —
 189
Net change in unrealized gain (loss) on investments —
 —
 189
Total other comprehensive income (loss) (31,298) (22,912) 38,206
Comprehensive income $28,374
 $19,665
 $60,271
 March 31,
 202220212020
 (In thousands)
Net income$29,660 $9,106 $59,672 
Other comprehensive income (loss), net of tax:  
Foreign currency translation adjustments(6,303)12,583 (9,004)
Pension liability adjustments, net of taxes of $(5,282), $(13,261) and $8,06216,286 41,571 (24,051)
Other post retirement obligations adjustments, net of taxes of $48, $(12), and $(35)(153)38 104 
Split-dollar life insurance arrangement adjustments, net of taxes of $(45), $(24), and $(17)180 76 51 
Change in derivatives qualifying as hedges, net of taxes of $(39), $(8), and $(565)77 96 1,602 
Total other comprehensive income (loss)10,087 54,364 (31,298)
Comprehensive income$39,747 $63,470 $28,374 
 
See accompanying notes.



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COLUMBUS McKINNON CORPORATION

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(In thousands, except share data)
 Common
Stock
($0.01 par value)		Additional
 Paid-in
Capital		Retained
Earnings		Accumulated
Other
 Comprehensive
 Loss		Total
Shareholders’
Equity
Balance at April 1, 2019$234 $277,518 $236,459 $(83,052)$431,159 
Net income 2020— — 59,672 — 59,672 
Dividends declared— — (5,690)— (5,690)
Change in foreign currency translation adjustment— — — (9,004)(9,004)
Change in derivatives qualifying as hedges, net of tax of $(565)— — — 1,602 1,602 
Change in pension liability and postretirement obligations, net of tax of $8,010— — — (23,896)(23,896)
Stock compensation - directors— 460 — — 460 
Stock options exercised, 296,027 shares3 5,997 — — 6,000 
Stock compensation expense— 4,047 — — 4,047 
Restricted stock units released, 82,861 shares, net of shares withheld for minimum statutory tax obligation1 (766)— — (765)
Balance at March 31, 2020$238 $287,256 $290,441 $(114,350)$463,585 
Net income 2021— — 9,106 — 9,106 
Dividends declared— — (5,745)— (5,745)
Change in foreign currency translation adjustment— — — 12,583 12,583 
Change in derivatives qualifying as hedges, net of tax of $(8)— — — 96 96 
Change in pension liability and postretirement obligations, net of tax of $(13,297)— — — 41,685 41,685 
Stock compensation - directors— 540 — — 540 
Stock options exercised, 97,398 shares2 1,971 — — 1,973 
Stock compensation expense— 7,482 — — 7,482 
Restricted stock units released, 115,281 shares, net of shares withheld for minimum statutory tax obligation— (1,156)— — (1,156)
Balance at March 31, 2021$240 $296,093 $293,802 $(59,986)$530,149 
Net income 2022— — 29,660 — 29,660 
Dividends declared— — (7,119)— (7,119)
Change in foreign currency translation adjustment— — — (6,302)(6,302)
Change in derivatives qualifying as hedges, net of tax of $(39)— — — 77 77 
Change in pension liability and postretirement obligations, net of tax of $(5,279)— — — 16,312 16,312 
Issuance of 4,312,500 shares of common stock in May 2021 offering at $48.00 per share, net of issuance costs of $8,34043 198,662 — — 198,705 
Stock compensation - directors— 959 — — 959 
Stock options exercised, 105,132 shares1 2,654 — — 2,655 
Stock compensation expense— 10,287 — — 10,287 
Restricted stock units released, 115,402 shares, net of shares withheld for minimum statutory tax obligation1 (2,581)— — (2,580)
Balance at March 31, 2022$285 $506,074 $316,343 $(49,899)$772,803 
  
Common
Stock
($0.01 par value)
 
Additional
 Paid-in
Capital
 
Retained
Earnings
 
Accumulated
Other
 Comprehensive
 Loss
 
Total
Shareholders’
Equity
Balance at April 1, 2017 $226
 $258,853
 $179,735
 $(97,464) $341,350
Net income 2018 —
 —
 22,065
 —
 22,065
Dividends declared —
 —
 (3,903) —
 (3,903)
Change in foreign currency translation adjustment —
 —
 —
 21,717
 21,717
Change in net unrealized gain on investments, net of tax of $(124) —
 —
 —
 189
 189
Change in derivatives qualifying as hedges, net of tax of $(1,519) —
 —
 —
 3,563
 3,563
Change in pension liability and postretirement obligations, net of tax of $(5,205) —
 —
 —
 12,737
 12,737
Stock compensation - directors —
 430
 —
 —
 430
Stock options exercised, 363,091 shares 4
 6,328
 —
 —
 6,332
Stock compensation expense —
 5,156
 —
 —
 5,156
Restricted stock units released, 116.775 shares, net of shares withheld for minimum statutory tax obligation —
 (1,407) —
 —
 (1,407)
Balance at March 31, 2018 $230
 $269,360
 $197,897
 $(59,258) $408,229
Net income 2019 —
 —
 42,577
 —
 42,577
Dividends declared —
 —
 (4,903) —
 (4,903)
Change in accounting principle —
 —
 888
 —
 888
Change in foreign currency translation adjustment —
 —
 —
 (16,708) (16,708)
Change in net unrealized gain on investments, net of tax of —
 —
 —
 (883) (883)
Change in derivatives qualifying as hedges, net of tax of $469 —
 —
 —
 (1,037) (1,037)
Change in pension liability and postretirement obligations, net of tax of $2,097 —
 —
 —
 (5,166) (5,166)
Stock compensation - directors —
 430
 —
 —
 430
Stock options exercised, 187,907 shares 4
 4,148
 —
 —
 4,152
Stock compensation expense —
 5,768
 —
 —
 5,768
Restricted stock units released, 157,715 shares, net of shares withheld for minimum statutory tax obligation —
 (2,188) —
 —
 (2,188)
Balance at March 31, 2019 $234
 $277,518
 $236,459
 $(83,052) $431,159
Net income 2020 —
 —
 59,672
 —
 59,672
Dividends declared —
 —
 (5,690) —
 (5,690)
Change in foreign currency translation adjustment —
 —
 —
 (9,004) (9,004)
Change in derivatives qualifying as hedges, net of tax of $(565) —
 —
 —
 1,602
 1,602
Change in pension liability and postretirement obligations, net of tax of $8,010 —
 —
 —
 (23,896) (23,896)
Stock compensation - directors —
 460
 —
 —
 460
Stock options exercised, 296,027 shares 3
 5,997
 —
 —
 6,000
Stock compensation expense —
 4,047
 —
 —
 4,047
Restricted stock units released, 82,861 shares, net of shares withheld for minimum statutory tax obligation 1
 (766) —
 —
 (765)
Balance at March 31, 2020 $238
 $287,256
 $290,441
 $(114,350) $463,585

 See accompanying notes.



38
Table of Contents

COLUMBUS McKINNON CORPORATION

 CONSOLIDATED STATEMENTS OF CASH FLOWS
 Year ended March 31, Year ended March 31,
 2020 2019 2018 202220212020
Operating activities: (In thousands)Operating activities:(In thousands)
Net income $59,672
 $42,577
 $22,065
Net income$29,660 $9,106 $59,672 
Adjustments to reconcile net income to net cash provided by (used for) operating activities:  
  
  
Adjustments to reconcile net income to net cash provided by (used for) operating activities:   
Depreciation and amortization 29,126
 32,675
 36,136
Depreciation and amortization41,924 28,153 29,126 
Deferred income taxes and related valuation allowance 7,364
 (958) 19,968
Deferred income taxes and related valuation allowance(1,969)(8,704)7,364 
Net loss (gain) on sale of real estate, investments and other (563) 194
 47
Net loss (gain) on sale of real estate, investments and other136 (1,594)(563)
Cost of debt repricing/refinancing —
 —
 619
Net loss on sales of businesses, including impairment 176
 25,672
 —
Stock-based compensationStock-based compensation11,246 8,022 4,507 
Amortization of deferred financing costs 2,655
 2,655
 2,681
Amortization of deferred financing costs1,703 2,646 2,655 
Stock-based compensation 4,507
 6,198
 5,586
Loss (gain) on hedging instrumentsLoss (gain) on hedging instruments853 — — 
Cost of debt refinancingCost of debt refinancing14,803 — — 
Loss on sales of businessesLoss on sales of businesses— — 176 
Non-cash pension settlement expense (See Note 13)Non-cash pension settlement expense (See Note 13)— 19,038 — 
Gain on sale of building (See Note 3)Gain on sale of building (See Note 3)(375)(2,638)— 
Non-cash lease expense 7,923
 —
 —
Non-cash lease expense7,945 7,447 7,923 
Changes in operating assets and liabilities, net of effects of business acquisitions and divestitures:  
    
Changes in operating assets and liabilities, net of effects of business acquisitions and divestitures:  
Trade accounts receivable 2,899
 (11,328) (9,308)Trade accounts receivable(18,988)21,472 2,899 
Inventories 15,752
 (15,411) (12,249)Inventories(40,201)20,659 15,752 
Prepaid expenses and other (3,857) (128) 1,727
Prepaid expenses and other(47)(5,128)(3,857)
Other assets 724
 231
 3,338
Other assets25 874 724 
Trade accounts payable 8,110
 3,881
 3,833
Trade accounts payable12,681 10,343 8,110 
Accrued liabilities (14,304) 6,397
 11,918
Accrued liabilities696 (3,174)(14,304)
Non-current liabilities (13,389) (13,156) (16,700)Non-current liabilities(11,211)(7,632)(13,389)
Net cash provided by (used for) operating activities 106,795
 79,499
 69,661
Net cash provided by (used for) operating activities48,881 98,890 106,795 
Investing activities:  
  
  
Investing activities:   
Proceeds from sales of marketable securities 5,380
 3,266
 653
Proceeds from sales of marketable securities4,434 5,111 5,380 
Purchases of marketable securities (5,747) (2,604) (327)Purchases of marketable securities(7,130)(4,945)(5,747)
Capital expenditures (9,432) (12,288) (14,515)Capital expenditures(13,104)(12,300)(9,432)
Proceeds from sale of equipment and real estate 51
 176
 —
Proceeds from sale of building, net of transaction costsProceeds from sale of building, net of transaction costs461 5,453 — 
Proceeds from insurance reimbursementProceeds from insurance reimbursement482 100 — 
Dividend received from equity method investmentDividend received from equity method investment324 587 — 
Proceeds from sale of fixed assetsProceeds from sale of fixed assets— 446 51 
Net (payments) proceeds from the sales of businesses (214) 14,230
 —
Net (payments) proceeds from the sales of businesses— — (214)
Net payment to former STAHL owner —
 —
 (14,750)
Payment of restricted cash to former owner —
 (294) (294)
Cash paid for equity investment —
 —
 (3,359)
Purchase of businesses, net of cash acquired (See Note 3)Purchase of businesses, net of cash acquired (See Note 3)(539,778)— — 
Net cash provided by (used for) investing activities (9,962) 2,486
 (32,592)Net cash provided by (used for) investing activities(554,311)(5,548)(9,962)
Financing activities:  
  
  
Financing activities:   
Proceeds from issuance of common stock 6,000
 4,152
 6,332
Proceeds from issuance of common stock2,655 1,973 6,000 
Borrowings under line-of-credit agreementsBorrowings under line-of-credit agreements— 25,000 — 
Payments under line-of-credit agreementsPayments under line-of-credit agreements— (25,000)— 
Repayment of debtRepayment of debt(477,846)(4,450)(51,113)
Fees paid for revolver extensionFees paid for revolver extension— (826)— 
Proceeds from issuance of long-term debtProceeds from issuance of long-term debt725,000 — — 
Proceeds from equity offeringProceeds from equity offering207,000 — — 
Fees related to debt and equity offeringFees related to debt and equity offering(26,184)— — 
Cash inflows from hedging activitiesCash inflows from hedging activities19,417 — — 
Cash outflows from hedging activitiesCash outflows from hedging activities(20,206)— — 
Payment of dividends (5,670) (4,652) (3,658)Payment of dividends(6,562)(5,733)(5,670)
Repayment of debt (51,113) (65,088) (60,144)
Fees related to debt repricing/refinancing and equity offerings —
 —
 (619)
Other (768) (2,190) (1,413)Other(2,574)(1,153)(768)
Net cash provided by (used for) financing activities (51,551) (67,778) (59,502)Net cash provided by (used for) financing activities420,700 (10,189)(51,551)
Effect of exchange rate changes on cash (1,925) (6,429) 7,569
Effect of exchange rate changes on cash(2,007)4,524 (1,925)
Net change in cash and cash equivalents 43,357
 7,778
 (14,864)Net change in cash and cash equivalents(86,737)87,677 43,357 
Cash, cash equivalents, and restricted cash at beginning of year 71,343
 63,565
 78,429
Cash, cash equivalents, and restricted cash at beginning of year202,377 114,700 71,343 
Cash, cash equivalents, and restricted cash at end of year $114,700
 $71,343
 $63,565
Cash, cash equivalents, and restricted cash at end of year$115,640 $202,377 $114,700 
Supplementary cash flows data:  
  
  
Supplementary cash flows data:   
Interest paid $11,555
 $14,411
 $18,914
Interest paid$18,823 $9,451 $11,555 
Income taxes paid, net of refunds $11,601
 $4,840
 $706
Income taxes paid, net of refunds$9,767 $10,186 $11,601 
Property, plant and equipment purchases included in trade accounts payable $365
 $227
 $—
Property, plant and equipment purchases included in trade accounts payable$329 $730 $365 
Restricted cash presented in Other assets $250
 $250
 $—
Restricted cash presented in Other assets$250 $250 $250 
See accompanying notes.



39
Table of Contents

COLUMBUS McKINNON CORPORATION
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
(tabular amounts in thousands, except share data)


1.     Description of Business
 
Columbus McKinnon Corporation ("the Company") is a leading worldwide designer, manufacturer, and marketer of hoists, actuators, rigging tools, digital power control systems,intelligent motion control products, and other technologies, systems, and servicessolutions that efficiently and ergonomically move, lift, position, and secure materials. Key products include hoists, crane components, precision conveyor systems, accumulation tables, rigging tools, light rail workstations, and digital power and motion control systems, actuators, elevator application drive systems, and explosion-protected hoists.systems. The Company is focused on commercial and industrial applications that require the safety and productivity in moving material.quality provided by its superior design and engineering know-how. The Company’s targeted market verticals include general industrial, construction and infrastructure, mining, oil & gas, energy, aerospace, transportation, automotive, heavy equipment manufacturing, and entertainment.

The Company’s material handling products are sold globally, principally to third party distributors and crane builders through diverse distribution channels and, to a lesser extent, directly to end-users. During fiscal 2020,2022, approximately 55%59% of sales were to customers in the United States.


2.     Accounting Principles and Practices
  
Advertising
 
Costs associated with advertising are expensed as incurred and are included in Selling expense in the Consolidated Statements of Operations. Advertising expenses were $1,648,000, $2,452,000,$2,410,000, $999,000, and $2,683,000$1,648,000 in fiscal 2022, 2021, and 2020, 2019,respectively. The increase in fiscal 2022 was due to increased spending as business returns to pre-pandemic COVID-19 levels as well as the acquisitions of Dorner and 2018, respectively.Garvey.

Cash and Cash Equivalents
 
The Company considers as cash equivalents all highly liquid investments with an original maturity of three months or less.

Concentrations of Labor
 
Approximately 8%6% of the Company’s employees are represented by 32 separate U.S. collective bargaining agreements which expire April 2021,in May 2021,2024 and September 2021.2024. We also have various labor agreements with our non-U.S. employees that we negotiate from time to time.
 
Consolidation
 
These consolidated financial statements include the accounts of the Company and its global subsidiaries; all significant intercompany accounts and transactions have been eliminated.

Equity Method Investment
 
The Company has an investment in Eastern Morris Cranes Company Limited ("EMC") whose principal activity is to manufacture various electrical overhead traveling cranes. This investment represents a minority ownership interest that is accounted for under the equity method of accounting since the Company has significant influence over the investee. As a result, the Company records its portion of the gains and losses incurred by this entity in Investment (income) loss in the Consolidated Statements of Operations.  

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


40
COLUMBUS McKINNON CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(tabular amounts in thousands, except share data)

and expense are translated to U.S. dollars at average exchange rates during the year. All assets and liabilities are translated to U.S. dollars at the year-end exchange rate. Gains or losses on translations are recorded in accumulated other comprehensive loss in the shareholders’ equity section of the balance sheet. The functional currency is the foreign currency in which the foreign subsidiaries conduct their business.  Gains and losses from foreign currency transactions are reported in foreign currency exchange loss (gain).
 
COLUMBUS McKINNON CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(tabular amounts in thousands, except share data)


Goodwill
 
Goodwill is not amortized but is tested for impairment at least annually, or more frequently if indicators of impairment exist, in accordance with the provisions of ASC Topic 350-20-35-1. Goodwill impairment is deemed to exist if the net book value of a reporting unit exceeds its estimated fair value. The fair value of a reporting unit is determined using a discounted cash flow methodology. The Company’s reporting units are determined based upon whether discrete financial information is available and reviewed regularly, whether those units constitute a business, and the extent of economic similarities and interdependencies between those reporting units for purposes of aggregation.  The Company’s reporting units identified under ASC Topic 350-20-35-33 are at the component level, or one level below the reporting segment level as defined under ASC Topic 280-10-50-10 “Segment Reporting – Disclosure.”  As of March 31, 2020,2022, the Company’s 1 segment is subdivided into 23 reporting units. Further, the Company adopted ASU No. 2017-04, "Simplifying the Test for Goodwill Impairment (Topic 350)," in fiscal 2018, therefore, is no longer required to compare the implied fair value of goodwill with its carrying value amount as part of step two of the goodwill test. An impairment charge is the amount by which the carrying value is greater than the reporting unit's fair value.

When the Company evaluates the potential for goodwill impairment, it assesses a range of qualitative factors including, but not limited to, macroeconomic conditions, industry conditions, the competitive environment, changes in the market for its products and services, regulatory and political developments, entity specific factors such as strategy and changes in key personnel, and overall financial performance. If, after completing this assessment, it is determined that it is more likely than not that the fair value of a reporting unit is less than its carrying value or if economic or other business factors indicate that the fair value of our reporting units may have declined since our last quantitative test, the Company performs a quantitative test.

To perform the quantitative impairment test, the Company uses the discounted cash flow method and a market-based valuation model to estimate the fair value of the reporting units. The discounted cash flow method incorporates various assumptions, the most significant being projected revenue growth rates, operating profit margins and cash flows, the terminal growth rate, and the discount rate. The Company projects revenue growth rates, operating margins and cash flows based on each reporting unit's current business, expected developments, and operational strategies over a five-year period. In estimating the terminal growth rates, the Company considers its historical and projected results, as well as the economic environment in which its reporting units operate. The discount rates utilized for each reporting unit reflect the Company's assumptions of marketplace participants' cost of capital and risk assumptions, both specific to the reporting unit and overall in the economy.

The Company performed its qualitative assessment as of February 29, 202028, 2022 and determined that the quantitative goodwill impairment test was not required for both the Rest of Products, Duff-Norton and Precision Conveyance reporting unit and the Duff-Norton reporting unit due to economic conditions at the time of the analysis.units. Based on resultsvarious conditions in the current fiscal year, such as financial performance, macroeconomic conditions, and other company specific events, it was determined that the Rest of the quantitative impairment test for the bothProducts, Duff-Norton's and Prevision Conveyance reporting units the Company determined the fair value waswere not more likely than not less than its applicable carrying value. Refer to Note 5 for valuation techniques and significant inputs andSee Note 9 for further details.discussion of goodwill and intangible assets.

Impairment of Long-Lived Assets

The Company assesses impairment of its long-lived assets in accordance with the provisions of ASC Topic 360 “Property, Plant, and Equipment.” This statement requires long-lived assets, such as property and equipment and purchased intangibles subject to amortization, to be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset group to estimated undiscounted future cash flows expected to be generated by the asset group over its remaining useful life. If the carrying amount of an asset group exceeds its estimated future cash flows, an impairment charge is recognized equal to the amount by which the carrying amount of the asset group exceeds the fair value of the asset group. The fair values are determined in accordance with ASC 820.



41
COLUMBUS McKINNON CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(tabular amounts in thousands, except share data)

In assessing long-lived assets for an impairment loss, assets are grouped with other assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. Asset grouping requires a significant amount of judgment. Accordingly, facts and circumstances will influence how asset groups are determined for impairment testing. In assessing long-lived assets for impairment, management considered the Company’s product line portfolio, customers and related commercial agreements, labor agreements and other factors in grouping assets and liabilities at the lowest level for which identifiable cash flows are independent. The Company considers projected future undiscounted cash flows, trends and other factors in its assessment of whether impairment conditions exist. While the Company believes that its estimates of future cash flows are reasonable, different assumptions regarding such factors as future production volumes, customer pricing, economics,
COLUMBUS McKINNON CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(tabular amounts in thousands, except share data)


and productivity and cost initiatives, could significantly affect its estimates. In determining fair value of long-lived assets, management uses management estimates, discounted cash flow calculations, and appraisals where necessary. There were 0no impairments recorded related to long-lived assets in the current year.

Intangible Assets

At acquisition, the Company estimates and records the fair value of purchased intangible assets which primarily consist of trade names, customer relationships, and technology.  The fair values are estimated based on management’s assessment as well as independent third party appraisals.  Such valuations may include a discounted cash flow of anticipated revenues resulting from the acquired intangible asset.

Amortization of intangible assets with finite lives is recognized over their estimated useful lives using an amortization method that reflects the pattern in which the economic benefits of the intangible assets are consumed or otherwise realized.  The straight line method is used for customer relationships.  As a result of the negligible attrition rate in our customer base, the difference between the straight line method and attrition method is not considered significant.  The estimated useful lives for our intangible assets range from 1 to 25 years.

Similar to goodwill, indefinite-lived intangible assets (including trademarks on our acquisitions) are tested for impairment on an annual basis. When the Company evaluates the potential for impairment of intangible assets, it assesses a range of qualitative factors including, but not limited to, macroeconomic conditions, industry conditions, the competitive environment, changes in the market for its products and services, regulatory and political developments, entity specific factors such as strategy and changes in key personnel, and overall financial performance. If, after completing this assessment, it is determined that it is more likely than not that the fair value of an indefinite-lived intangible asset is greater than its carrying value, we conclude that the indefinite-lived intangible asset is not impaired. If, after completing this assessment, it is determined that it is more likely than not that the fair value of an indefinite-lived intangible asset is less than its carrying value or if economic or other business factors indicate that the fair value of our indefinite-lived intangible assets may have declined since our last quantitative test, the Company performs a new quantitative test. The methodology used to value trademarks is the relief from royalty method. The recorded book value of these trademarks in excess of the calculated fair value triggers an impairment. The key estimate used in this calculation consists of an overall royalty rate applied to the sales covered by the trademark. After performing a qualitative assessment we determined that economic factors indicate that the fair value of our indefinite-lived intangible assets may have declined since our last quantitative test. We performed the quantitative test as of February 29, 2020 and28, 2022, it was determined that the trademarks were not impaired. Refer to Note 9 for further details.

Inventories
 
Inventories are valued at the lower of cost and net realizable value. Cost of approximately 36%35% of inventories at March 31, 20202022 and 39% at March 31, 20192021 have been determined using the LIFO (last-in, first-out) method. Costs of other inventories have been determined using the FIFO (first-in, first-out) or average cost method. FIFO cost approximates replacement cost. Costs in inventory include components for direct labor and overhead costs.
 
Marketable Securities
 
The Company’s marketable securities, which consist of equity and fixed income securities, are recorded at fair value. Under ASU 2016-01 all equity investments (including certain fixed income securities) in unconsolidated entities are measured at fair value through earnings. Therefore, gains and losses on marketable securities are realized within Investment (income) loss on the Consolidated Statements of Operations. Estimated fair value is based on published trading values at the balance sheet dates. The cost of securities sold is based on the specific identification method. Interest and dividend income are also included in Investment (income) loss on the Consolidated Statements of Operations.
 


42
COLUMBUS McKINNON CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(tabular amounts in thousands, except share data)

The marketable securities are carried as long-term assets since they are held for the settlement of the Company’s general and products liability insurance claims filed through CM Insurance Company, Inc., a wholly owned captive insurance subsidiary.  The marketable securities are not available for general working capital purposes.


Property, Plant, and Equipment
COLUMBUS McKINNON CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(tabular amounts in thousands, except share data)


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

Research and Development
 
With the acquisitions of Magnetek in September 2015 and STAHL CraneSystems (“STAHL”) in January 2017, research and development ("R&D") costs factor more prominently into the Company's cost structure. Therefore, R&D costs are presented on the Consolidated Statement of Operations in order to provide transparency into these costs. Consistent with prior periods, the Company continues to account for R&D expenses in accordance with the provisions of ASC 730 and are expensed as incurred.
 
Revenue Recognition, Accounts Receivable, and Concentration of Credit Risk
 
The Company adopted ASC 606, "Revenue from Contracts with Customers," in fiscal 2019. Revenue from contracts with customers for standard products is recognized when legal title and significant risk and rewards has transferred to the customer, which is generally at the time of shipment. This is the point in time when control is deemed to transfer to the customer. The Company also sells custom engineered products and services which are contracts that are typically completed within one quarter but can extend beyond one year in duration. The Company generally recognizes revenue for customer engineered products upon satisfaction of its performance obligation under the contract which typically coincides with project completion which is when the products and services are controlled by the customer. Control is typically achieved at the later of when legal title and significant risk and rewards have transferred to the customer or the customer has accepted the asset. For both standard products and custom engineered products, the transaction price is based upon the price stated in either the purchase order or contract. Refer to Note 4 for further details.

Additionally, the Company performs ongoing credit evaluations of its customers’ financial condition, but generally does not require collateral to support customer receivables. The credit risk is controlled through credit approvals, limits, and monitoring procedures. Accounts receivablereceivables are reported at net realizable value and do not accrue interest. The Company establishes an allowance for doubtful accounts based upon factors surrounding the credit risk of specific customers, historical trends, and other factors. Accounts receivable are charged against the allowance for doubtful accounts once all collection efforts have been exhausted.  The Company does not routinely permit customers to return product. However, sales returns are permitted in specific situations and typically include a restocking charge or the purchase of additional product. As a result of ASU No. 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments," discussed in Note 22 and effective in fiscal 2021, the Company is currently updatinghas updated its existing allowance for doubtful accounts policy to comply with the new standard.
 
Shipping and Handling Costs
 
Shipping and handling costs are a component of cost of products sold.

Stock-Based Compensation

The Company records stock-based compensation in accordance with ASC Topic 718, “Compensation – Stock Compensation.” This standard requires all equity-based payments to employees, including grants of employee stock options, to be recognized in the Consolidated Statements of Operations based on the grant date fair value of the award.  Stock compensation expense is included in Cost of products sold, Selling, and General and administrative expense depending on the nature of the service of the employee receiving the award.  The Company uses a straight-line method of attributing the value of stock compensation expense, subject to minimum levels of expense, based on vesting. See Note 15 for further discussion of stock-based compensation.




43
COLUMBUS McKINNON CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(tabular amounts in thousands, except share data)

Leases

All leases are reviewed for operating or finance classification at their inception. Rent expense for leases that contain scheduled rent increases is recognized on a straight-line basis over the lease term. As described in Note 18, the Company adopted ASC 842, "Leases," effective April 1, 2019 whereas leases with terms greater than twelve months are recorded on the balance sheet as a right-of-use ("ROU") asset and corresponding lease liability. Refer to Note 18 for further details.

COLUMBUS McKINNON CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(tabular amounts in thousands, except share data)


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

Warranties

The Company offers warranties for certain products it sells. The specific terms and conditions of those warranties vary depending upon the product sold and the country in which the Company sold the product. As noted in the Revenue Recognition note (Note 4), the Company offers standard warranties which are typically 12 months in duration for standard products and 24 to 36 months for custom engineered products. These are assurance-type warranties that do not qualify as separate performance obligations under ASC 606. The Company estimates the costs that may be incurred under its standard warranties, based largely upon actual warranty repair costs history, and records a liability in the amount of such costs in the month that revenue is recognized. The resulting accrual balance is reviewed during the year. Factors that affect the Company’s warranty liability include the number of units sold, historical and anticipated rate of warranty claims, and cost per claim. Changes in the Company’s product warranty accrual are as follows:

 March 31,
 20222021
Balance at beginning of year$3,328 $3,581 
Accrual for warranties issued1,274 2,319 
Warranties settled(2,538)(2,778)
Foreign currency translation109 206 
Balance at end of year$2,173 $3,328 
  March 31,
  2020
2019
Balance at beginning of year $3,634
 $3,791
Accrual for warranties issued 2,723
 3,405
Warranties settled (2,548) (3,625)
Warranties on Sold Businesses (Note 3) —
 (66)
Foreign currency translation (228) 129
Balance at end of year $3,581

$3,634



3.    Acquisitions & Disposals

As partAcquisitions

On April 7, 2021, the Company completed its acquisition of our business strategy, BlueprintDorner Mfg. Corp. ("Dorner") for Growth,$481,012,000. Dorner, headquartered in Hartland, WI, is a leading automation solutions company providing unique, patented technologies in the first quarterdesign, application, manufacturing and integration of fiscal 2019high-precision conveying systems. The acquisition of Dorner accelerates the Company’s shift to intelligent motion and serves as a platform to expand capabilities in advanced, higher technology automation solutions. Dorner is a leading supplier to the life sciences, food processing, and consumer packaged goods markets as well as the faster growing industrial automation and e-commerce sectors.

The results of Dorner included in the Company’s consolidated financial statements from the date of acquisition are Net sales and Income from operations of $132,014,000 and $12,451,000 for the year ended March 31, 2022. Dorner's Income from operations for the year ended March 31, 2022 includes $218,000 in integration related severance costs, which have been included in General and administrative expenses and acquisition related inventory amortization of $2,981,000, which has been included in Cost of products sold.

In addition, the Company started the process to sell its Tire Shredder business, its crane builder business, Crane Equipmentincurred acquisition integration and Service Inc., and Stahlhammer Bommern GmbH, its European forging business acquired in 2014 (the "Sold Businesses") as they were no longer considered part of the core business or a strategic fit with the Company's long-term growth and operational objectives. On December 28, 2018, the Company sold its Tire Shredder business and recognized a gain. On February 28, 2019, the Company sold the remaining two businesses, Crane Equipment and Service Inc. and Stahlhammer Bommern GmbH, and recognized a loss. As such, there are no remaining businesses which meet the criteria as being held for sale in accordance with ASC 360-10-45-9, "Property, Plant, and Equipment." The businesses were not deemed a strategic shift or significant to be considered discontinued operations.

When businesses or asset groups meet the criteria as held for sale, they are recorded at the lesser of their carrying value or fair value less cost to sell. The Company recognized a gain on the sale of its Tire Shredder businessdeal expenses in the amount of $1,059,000 during the twelve months ending March 31, 2019, a $44,000 decrease from the third quarter as a result of a final working capital adjustment. The Company recognized a loss on Crane Equipment and Service Inc., and Stahlhammer Bommern GmbH$8,908,000 in the amount of $26,731,000 during the twelve monthsyear ended March 31, 2019,2022, which is $1,022,000 less thanare included in General and administrative expenses. The Company also incurred $970,000 in costs related to a transaction bonus that was paid 45 days after the third quarter estimate primarilyacquisition date to key personnel of which $521,000 has been recorded as a resultpart of an increase in the previously estimated selling price for oneCost of the businesses. The recognized lossproducts sold, $350,000 has been recorded as part of $26,731,000 recognized during fiscal 2019 includes an impairment loss on the Sold Businesses in the amount of $27,753,000 which wasSelling expenses, $74,000 has been recorded through December 31, 2018. The impairment loss included a $6,174,000 reduction to goodwill, a $1,872,000 reduction to other intangible assets, a $12,830,000 reduction to property, plant, and equipment, and a $6,877,000 reduction to inventory. Both the gain and loss on sale of business were recorded in Net loss on sales of businesses, including impairment on the Consolidated Statements of Operations and was determined based on the selling price less carrying value, described further in Note 5. Additionally, net sales and pre-tax income (loss) before recognized gain or loss on sales for the three Sold Businesses was $34,195,000 and $3,623,000 for the twelve months ended March 31, 2019 and $38,299,000 and $1,373,000 for the twelve months ended March 31, 2018, respectively. In the twelve months ending March 31, 2020, the Company recognized an additional loss of $176,000 as a result of a final working capital adjustment.


44
COLUMBUS McKINNON CORPORATION
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
 
(tabular amounts in thousands, except share data)


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

To finance the Dorner acquisition, on April 7, 2021 the Company entered into a $750,000,000 credit facility ("First Lien Facilities") with JPMorgan Chase Bank, N.A. ("JPMorgan Chase Bank"), PNC Capital Markets LLC, and Wells Fargo Securities LLC. The First Lien Facilities consist of a Revolving Facility (the “New Revolving Credit Facility”) in an aggregate amount of $100,000,000 and a $650,000,000 First Lien Term Facility ("Bridge Facility"). Proceeds from the Bridge Facility were used, among other things, to finance the purchase price for the Dorner acquisition, pay related fees, expenses and transaction costs, and refinance the Company's borrowings under its prior Term Loan and Revolver. See Note 12, Debt,for further details on the Company's new debt agreement and subsequent equity offering.

The purchase price has been allocated to the assets acquired and liabilities assumed as of the date of acquisition. The excess consideration of $287,141,000 has been recorded as goodwill as of March 31, 2022. The identifiable intangible assets acquired include customer relationships of $137,000,000, technology of $45,000,000, and trade names of $8,000,000. The weighted average life of the acquired identifiable intangible assets subject to amortization was estimated at 15 years at the time of acquisition. Approximately $8,000,000 of goodwill arising as a result of the acquisition is deductible for tax purposes.

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

Cash$8,058 
Working Capital20,218 
Property, plant, and equipment, net26,104 
Intangible assets190,000 
Other assets658 
Other liabilities(896)
Finance lease liabilities(14,582)
Deferred and other taxes, net(35,689)
Goodwill287,141 
Total$481,012 

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

The following unaudited pro forma financial information presents the combined results of operations as if the acquisition of Dorner had occurred as of April 1, 2020. The pro forma information includes certain adjustments, including depreciation and amortization expense, interest expense, and certain other adjustments, together with related income tax effects. The pro forma amounts may not be indicative of the results that actually would have been achieved had the acquisition of Dorner occurred as of April 1, 2020 and are not necessarily indicative of future results of the combined companies (in thousands):

 March 31,
20222021
Net sales$906,555 $762,955 
Net income (loss)$29,660 $(9,743)

On December 1, 2021, the Company completed its acquisition of Garvey Corporation ("Garvey") for $67,731,000 including $907,000 in cash acquired, subject to an adjustment for working capital, cash and indebtedness and a $2,000,000 contingent payment that only becomes payable if (a) the EBITDA target set forth in the Purchase Agreement for the twelve-month period commencing on the month immediately following closing is achieved and (b) a specific current executive of Garvey remains employed with Garvey until at least March 31, 2023. The Company financed the acquisition by borrowing $75,000,000 utilizing the Accordion feature under its existing Term Loan B, discussed in Note 12. Garvey is a leading accumulation systems solutions company providing unique, patented systems for the automation of production processes whose products complement those of Dorner. The transaction was accounted for using the acquisition method and, accordingly, the results of the acquired


45
COLUMBUS McKINNON CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(tabular amounts in thousands, except share data)

business have been included in the Company's results of operations from the acquisition date. As the Company has determined that the acquisition is not material to its existing operations, certain disclosures, including pro forma financial information, have not been included. In connection with the acquisition, the Company incurred $376,000 of integration and deal expenses, which are included in General and administrative expenses.

The purchase price has been preliminarily allocated to the assets acquired and liabilities assumed as of the date of acquisition. The excess consideration of $41,216,000 has been preliminarily recorded as goodwill as of March 31, 2022. The identifiable intangible assets acquired include customer relationships of $8,200,000, engineered drawings of $4,670,000, trademarks of $3,610,000, patent of $2,440,000, backlog of $2,100,000 and non-compete agreement of $330,000. The weighted average life of the acquired identifiable intangible assets subject to amortization was estimated at 10 years at the time of acquisition. All of the goodwill arising as a result of the acquisition is deductible for tax purposes. The allocation of the purchase price to the assets acquired and liabilities assumed of Garvey is not complete as of March 31, 2022 as the Company is continuing to gather information regarding Garvey's contingent liabilities and intangible assets.

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

Cash$907 
Working Capital1,709 
Property, plant, and equipment, net3,072 
Intangible assets21,350 
Other assets1,382 
Other liabilities(1,905)
Goodwill41,216 
Total$67,731 

Disposals

As part of its businessBlueprint for Growth 2.0 strategy, the Company is consolidating its manufacturing footprint. The Company previously announced in fiscal 2019 the closure of its Salem, Ohio facility. In fiscal 2020 the Company announced that itits plans to consolidate its hoist manufacturing facility in Lisbon, Ohio with its Wadesboro, North Carolina and Damascus, Virginia facilities in fiscal 2021. The Salem, Ohio facility consolidation was completed during the first quarter of fiscal 2020.2020 and the Lisbon, Ohio consolidation was completed during the third quarter of fiscal 2021. In total $2,958,000$1,797,000 and $1,473,000$2,958,000 are included in Cost of products sold on the Consolidated Statements of Operations during the twelve months ended March 31, 20202021 and 2019,2020 respectively, related to the consolidation of the LisbonSalem and SalemLisbon facilities. Costs incurred include accelerated depreciation, accelerated lease costs, severance and other payroll related costs, costs to relocate inventory and machinery and equipment, and a potential refundpayment of a previously recorded tax credit which may need to bethat has been refunded to the state.

During fiscal 2022, the Company sold its former manufacturing facility in Lisbon, Ohio for $461,000. This resulted in a gain of $375,000 which is included in Cost of products sold on the Consolidated Statements of Operations.
TheDuring fiscal 2021, the Company also announced during fiscal 2020sold one of its owned manufacturing facilities in China as a result of its plan to consolidate two of its Hangzhou, China manufacturing facilityfacilities into one and reorganize its Asia Pacific operations. $1,455,000 areThe Company received cash in the amount of 45 million RMB (approximately $6,363,000) from the buyer to purchase the facility which resulted in a gain of $2,638,000, of which $2,189,000 is included in Cost of products sold and $449,000 is included in General and administrative expenses on the Consolidated Statements of Operations in fiscal 2021.
Further, the Company closed one of its facilities located in France and $296,000consolidated these operations into one of its German facilities during fiscal 2021. During the twelve months ended March 31, 2021, $815,000 of costs are included in Cost of products sold, $327,000 in General and administrative expenses, and $94,000 included in Selling expenses on the Consolidated Statements of Operations during the twelve months ended March 31, 2020 related to this consolidation.consolidation, which primarily are severance and legal costs.




46
COLUMBUS McKINNON CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(tabular amounts in thousands, except share data)

4.    Revenue Recognition& Receivables

Revenue Recognition:

The core principle under ASC 606 is for revenue to be recognized when a customer obtains control of promised goods or services in an amount that reflects the consideration we expect to receive in exchange for those goods or services. To achieve this core principle, the Company applies the following five steps:

1) Identifying contracts with customers

A contract with a customer exists when (i) the Company enters into an enforceable contract with a customer that defines each party’s rights regarding the goods or services to be transferred and identifies the related payment terms, (ii) the contract has commercial substance, and (iii) the Company determines that collection of substantially all consideration for goods and services that are transferred is probable based on the customer’s intent and ability to pay the promised consideration.

2) Identify the performance obligations in the contract

Performance obligations promised in a contract are identified based on the products and services that will be transferred to the customer that are both capable of being distinct, whereby the customer can benefit from the good or service either on its own or together with other available resources, and are distinct in the context of the contract, whereby the transfer of the good or service is separately identifiable from other promises in the contract. To the extent a contract includes multiple promised goods and services, the Company must apply judgment to determine whether promised goods and services are capable of being distinct and distinct in the context of the contract. If these criteria are not met, the promised goods and services are accounted for as a combined performance obligation.

3) Determine the transaction price

The transaction price is determined based on the consideration to which the Company will be entitled in exchange for transferring products and services to the customer. To the extent the transaction price includes variable consideration, the Company estimates the amount of variable consideration that should be included in the transaction price utilizing either the expected value method or the most likely amount method depending on the nature of the variable consideration. Variable consideration is included in the transaction price if, in the Company’s judgment, it is probable that a significant future reversal of cumulative revenue under the contract will not occur. Any estimates, including the effect of the constraint on variable consideration, are evaluated at each reporting period for any changes. In applying this guidance, the Company also considers whether any significant financing components exist.

4) Allocate the transaction price to the performance obligations in the contract

If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. Contracts that contain multiple performance obligations require an allocation of the transaction price to each performance obligation on a relative standalone selling price basis unless the transaction price is variable and meets the criteria to be allocated entirely to a performance obligation or to a distinct service that forms part of a single performance obligation.
COLUMBUS McKINNON CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(tabular amounts in thousands, except share data)



5) Recognize revenue when or as the Company satisfies a performance obligation

The Company determines whether it satisfies performance obligations either over time or at a point in time. Revenue is recognized over time if either 1) the customer simultaneously receives and consumes the benefits provided by the entity’s performance, 2) the entity’s performance creates or enhances an asset that the customer controls as the asset is created or enhanced, or 3) the entity’s performance does not create an asset with an alternative use to the entity and the entity has an enforceable right to payment for performance completed to date. If the entity does not satisfy a performance obligation over time, the related performance obligation is satisfied at a point in time by transferring the control of a promised good or service to a customer. Examples of control are using the asset to produce goods or services, enhancing the value of other assets, settling liabilities, and holding or selling the asset. For over time recognition, ASC 606 requires the Company to select a single revenue recognition method for the performance obligation that faithfully depicts the Company’s performance in transferring control of


47
COLUMBUS McKINNON CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(tabular amounts in thousands, except share data)

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

Performance obligations

The Company has contracts with customers for standard products and custom engineered products and determines when and how to recognize revenue for each performance obligation based on the nature and type of contract following the five steps above.

Revenue from contracts with customers for standard products is recognized when legal title and significant risk and rewards has transferred to the customer, which is generally at the time of shipment. This is the point in time when control is deemed to transfer to the customer. The Company sells standard products to customers utilizing purchase orders. Payment terms for these types of contracts generally require payment within 30-60 days. Each standard product is deemed to be a single performance obligation and the amount of revenue recognized is based on the negotiated price. The transaction price for standard products is based on the price reflected in each purchase order. Sales incentives are offered to customers who purchase standard products and include offers such as volume-based discounts, rebates for priority customers, and discounts for early cash payments. These sales incentives are accounted for as variable consideration included in the transaction price. Accordingly, the Company reduces revenue for these incentives in the period which the sale occurs and is based on the most likely amount method for estimating the amount of consideration the Company expects to receive. These sales incentive estimates are updated each reporting information as additional information becomes available.

The Company also sells custom engineered products and services which are contracts that are typically completed within one quarter but can extend beyond one year in duration. For custom engineered products, the transaction price is based upon the price stated in the contract. Variable consideration has not been identified as a significant component of transaction price for custom engineered products and services. The Company generally recognizes revenue for custom engineered products upon satisfaction of its performance obligation under the contract which typically coincides with project completion which is when the products and services are controlled by the customer. Control is typically achieved at the later of when legal title and significant risk and rewards have transferred to the customer or the customer has accepted the asset. These contracts often require either up front or installment payments. These types of contracts are generally accounted for as one performance obligation as the products and services are not separately identifiable. The promised services (such as inspection, commissioning, and installation) are essential in order for the delivered product to operate as intended on the customer’s site and the services are therefore highly interrelated with product functionality.

For most custom engineered products contracts, the Company determined that while there is no alternative use for the custom engineered products, the Company does not have an enforceable right to payment (which must include a reasonable profit margin) for performance completed to date in order to meet the over time revenue recognition criteria. Therefore, revenue is recognized at a point in time (when the contract is complete). For custom engineered products contracts that contain an enforceable right to payment (including reasonable profit margin) the Company satisfies the performance obligation over time and recognizes revenue based on the extent of progress towards completion of the performance obligation. The cost-to-cost measure of progress is an appropriate measure of progress toward satisfaction of performance obligations as this measure most accurately depicts the progress of work performed and transfer of control to the customers. Under the cost-to-cost measure of progress, the extent of progress toward completion is measured based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligation. Revenues are recognized proportionally as costs are incurred.

COLUMBUS McKINNON CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(tabular amounts in thousands, except share data)


Sales and other taxes collected with revenue are excluded from revenue, consistent with the previous revenue standard. Shipping and handling costs incurred prior to shipment are considered activities required to fulfill the Company’s promise to transfer goods, and do not qualify as a separate performance obligation. Additionally, the Company offers standard warranties which are typically 12 months in duration for standard products and 24 to 36 months for custom engineered products. These types of warranties are included in the purchase price of the product and are deemed to be assurance-type warranties which are not accounted for as a separate performance obligation. Other performance obligations included in a contract (such as drawings, owner’s manuals, and training services) are immaterial in the context of the contract and are not recognized as a separate performance obligation.





48
COLUMBUS McKINNON CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(tabular amounts in thousands, except share data)

Reconciliation of contract balances

The Company records a contract liability when cash is received prior to recording revenue. Some standard contracts require a down payment while most custom engineered contracts require installment payments. Installment payments for the custom engineered contracts typically require a portion due at inception while the remaining payments are due upon completion of certain performance milestones. For both types of contracts, these contract liabilities, referred to as customer advances, are recorded at the time payment is received and are included in Accrued liabilities on the Consolidated Balance Sheets. When the related performance obligation is satisfied, the contract liability is released into revenue.

The following table illustrates the balance and related activity for customer advances in fiscal 20202022 and 20192021 (in thousands):
Customer advances (contract liabilities)Customer advances (contract liabilities)Customer advances (contract liabilities)
March 31,March 31,
2020
201920222021
Beginning balance$11,501
 $15,909
Beginning balance$15,373 $10,796 
Additional customer advances received36,058
 39,868
Additional customer advances received51,850 35,815 
Revenue recognized from customer advances included in the beginning balance(11,501) (15,909)Revenue recognized from customer advances included in the beginning balance(15,373)(10,796)
Other revenue recognized from customer advances(25,037) (27,247)Other revenue recognized from customer advances(43,569)(21,177)
Customer deposits on Sold Businesses (Note 3)—
 (139)
Customer advances recorded from Dorner and Garvey acquisitionsCustomer advances recorded from Dorner and Garvey acquisitions14,750 — 
Other (1)(225) (981)Other (1)(578)735 
Ending balance$10,796
 $11,501
Ending balance$22,453 $15,373 
    
(1) Other includes the impact of foreign currency translation

During the twelve months ended March 31, 2020,2022, revenue was recognized prior to the right to invoice the customer which resulted in a contract asset balance in the amount of $2,361,000$2,410,000 and $8,559,000 as of March 31, 2020.2022 and March 31, 2021, respectively. Contract assets are included in Prepaid expenses and other assets on the Consolidated Balance Sheets. Contract assets were not material as

Remaining Performance Obligations

As of March 31, 2019.2022, the aggregate amount of the transaction price allocated to the performance obligations that are unsatisfied (or partially unsatisfied) was approximately $1,918,000. We expect to recognize approximately 81% of these sales over the next twelve months.

Disaggregated revenue

In accordance with ASC 606, the Company is required to disaggregate revenue into categories that depict how economic factors affect the nature, amount, timing and uncertainty of revenue and cash flows. The following table illustrates the disaggregation of revenue by product grouping for the yearyears ending March 31, 20202022 and 2021 (in thousands):

 Twelve Months EndedTwelve Months Ended
Net Sales by Product GroupingMarch 31, 2020March 31, 2019
Industrial Products$353,155
$385,639
Crane Solutions371,974
374,249
Engineered Products83,977
82,222
All other56
34,172
Total$809,162
$876,282

Twelve Months EndedTwelve Months Ended
Net Sales by Product GroupingMarch 31, 2022March 31, 2021
Industrial Products$334,866 $271,414 
Crane Solutions339,400 298,135 
Precision Conveyors Products144,587 — 
Engineered Products87,604 79,989 
All other98 104 
Total$906,555 $649,642 

Industrial products include: manual chain hoists, electrical chain hoists, rigging/clamps, industrial winches, hooks, shackles, and other forged attachments. Crane solutions products include: wire rope hoists, drives and controls, crane kits and


49
COLUMBUS McKINNON CORPORATION
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
 
(tabular amounts in thousands, except share data)


Industrial products include: manual chain hoists, electrical chain hoists, rigging/ clamps, industrial winches, hooks, shackles, and other forged attachments. Crane solutions products include: wire rope hoists, drives and controls, crane kits and components, and workstations. Engineered products include: linear and mechanical actuators, lifting tables, rail projects, and actuations systems. Precision conveyor products include: low profile, flexible chain, large scale, sanitary and vertical elevation conveyor systems, as well as pallet system conveyors and accumulation systems. The All other product grouping includes miscellaneous revenue and the businesses divested in fiscal 2019. The prior year net sales have been reclassified to be consistent with the current period presentation.revenue.

Practical expedients

Incremental costs to obtain a contract incurred by the Company primarily relate to sales commissions for contracts with a duration of one year or less. Therefore, these costs are expensed as incurred and are recorded in Selling Expenses on the Consolidated Statements of Operations.

Unsatisfied performance obligations for contracts with an expected length of one year or less are not disclosed. Further, revenue from contracts with customers do not include a significant financing component as payment is generally expected within one year from when the performance obligation is controlled by the customer.

Accounts Receivable:

Effective April 1, 2020, the Company adopted “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”). Under ASU 2016-13, the Company is required to remeasure expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions and reasonable forecasts. In addition to these factors, the Company establishes an allowance for doubtful accounts based upon the credit risk of specific customers, historical trends, and other factors. Accounts receivable are charged against the allowance for doubtful accounts once all collection efforts have been exhausted. Due to the short-term nature of such accounts receivable, the estimated amount of accounts receivable that may not be collected is based on aging of the accounts receivable balances. In response to COVID-19, the Company continues to monitor the impact that COVID-19 is having on our customers and their outstanding receivable balances and is taking preventative measures, such as reducing credit limits and increasing bad debt expense, as necessary

The following table illustrates the balance and related activity for the allowance for doubtful accounts that is deducted from accounts receivable to present the net amount expected to be collected in the year ending March 31, 2022 and March 31, 2021 (in thousands):
Allowance for doubtful accountsMarch 31, 2022March 31, 2021
April 1, beginning balance$5,686 $5,056 
Bad debt expense1,929 2,411 
Less uncollectible accounts written off, net of recoveries(1,955)(1,973)
Allowance recorded from acquisitions227 — 
Other (1)(170)192 
March 31, ending balance$5,717 $5,686 

(1) Other includes the impact of foreign currency translation

5.     Fair Value Measurements

ASC Topic 820 “Fair Value Measurements and Disclosures” establishes the standards for reporting financial assets and liabilities and nonfinancial assets and liabilities that are recognized or disclosed at fair value on a recurring basis (at least annually). Under these standards, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e. the "exit price") in an orderly transaction between market participants at the measurement date.

ASC Topic 820-10-35-37 establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability developed based on market data


50
COLUMBUS McKINNON CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(tabular amounts in thousands, except share data)

obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company's assumptions about the valuation techniques that market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. The hierarchy is separated into three levels based on the reliability of inputs as follows:
 
Level 1 - Valuations based on quoted prices in active markets for identical assets or liabilities that the Company has the ability to access.  Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these products does not entail a significant degree of judgment.

Level 2 - Valuations based on quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly, involving some degree of judgment.

Level 3 - Valuations based on inputs that are unobservable and significant to the overall fair value measurement. The degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3.

The availability of observable inputs can vary and is affected by a wide variety of factors, including the type of asset/liability, whether the asset/liability is established in the marketplace, and other characteristics particular to the transaction.  To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value
COLUMBUS McKINNON CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(tabular amounts in thousands, except share data)


hierarchy. In such cases, for disclosure purposes the level in the fair value hierarchy within which the fair value measurement in its entirety falls is determined based on the lowest level input that is significant to the fair value measurement in its entirety.

Fair value is a market-based measure considered from the perspective of a market participant rather than an entity-specific measure. Therefore, even when market assumptions are not readily available, assumptions are required to reflect those that market participants would use in pricing the asset or liability at the measurement date.

The Company primarily uses readily observable market data in conjunction with internally developed discounted cash flow valuation models when valuing its derivative portfolio and, consequently, the fair value of the Company’s derivatives is based on Level 2 inputs. The carrying amount of the Company's annuity contract is recorded at net asset value of the contract and, consequently, its fair value is based on Level 2 inputs and is included in other assets on the Company's Consolidated Balance Sheet. The Company uses quoted prices in an inactive market when valuing its term loan and, consequently, the fair value is based on Level 2 inputs.
The following table provides information regarding financial assets and liabilities measured or disclosed at fair value on a recurring basis:

  Fair value measurements at reporting date using
  Quoted prices in
active markets for
identical assets		Significant
other observable
inputs		Significant
 unobservable
inputs
DescriptionAt March
31, 2022		(Level 1)(Level 2)(Level 3)
Assets/(Liabilities)
Measured at fair value:		    
Marketable securities$10,294 $10,294 $— $— 
Annuity contract1,884 — 1,884 — 
Derivative assets (liabilities):
  Foreign exchange contracts(217)— (217)— 
  Interest rate swap liability3,613 — 3,613 — 
  Cross currency swap liability(8,713)— (8,713)— 
Disclosed at fair value:   
Term loan$(497,534)$— $(497,534)$— 
    Fair value measurements at reporting date using
    
Quoted prices in
active markets for
identical assets
 
Significant
other observable
inputs
 
Significant
 unobservable
inputs
Description 
At March
31, 2020
 (Level 1) (Level 2) (Level 3)
Assets/(Liabilities)
Measured at fair value:
        
Marketable securities $7,322
 $7,322
 $—
 $—
Annuity contract 2,059
 —
 2,059
 —
Derivative assets (liabilities):        
  Foreign exchange contracts 285
 —
 285
 —
  Interest rate swap liability (3,296) —
 (3,296) —
  Cross currency swap liability (5,254) —
 (5,254) —
  Cross currency swap asset 1,750
 —
 1,750
 —
         
Disclosed at fair value:    
  
  
Term loan $(239,899) $—
 $(239,899) $—


51
COLUMBUS McKINNON CORPORATION
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
 
(tabular amounts in thousands, except share data)


    Fair value measurements at reporting date using
    
Quoted prices in
active markets for
identical assets
 
Significant
other observable
inputs
 
Significant
 unobservable
inputs
Description 
At March
31, 2019
 (Level 1) (Level 2) (Level 3)
Assets/(Liabilities)
Measured at fair value:
        
Marketable securities $7,028
 $7,028
 $—
 $—
Annuity contract 2,285
 —
 2,285
 —
Derivative assets (liabilities): 


 


 


 


  Foreign exchange contracts (70) —
 (70) —
  Interest rate swap asset 1,213
 —
 1,213
 —
  Cross currency swap liability (16,184) —
 (16,184) —
  Cross currency swap asset 2,476
 —
 2,476
 —
    

 

 

Disclosed at fair value:  
  
  
  
Term loan $(310,463) $—
 $(310,463) $—

  Fair value measurements at reporting date using
  Quoted prices in
active markets for
identical assets		Significant
other observable
inputs		Significant
 unobservable
inputs
DescriptionAt March
31, 2021		(Level 1)(Level 2)(Level 3)
Assets/(Liabilities)
Measured at fair value:		    
Marketable securities$7,968 $7,968 $— $— 
Annuity contract2,025 — 2,025 — 
Derivative assets (liabilities):0000
  Foreign exchange contracts(83)— (83)— 
  Interest rate swap asset(2,057)— (2,057)— 
  Cross currency swap liability(13,895)— (13,895)— 
Disclosed at fair value:    
Term loan$(254,581)$— $(254,581)$— 

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

At March 31, 2020,2022, the term loan and revolving credit facility have been recorded at carrying value which approximates fair value.

Market gains, interest, and dividend income on marketable securities are recorded in investment (income) loss.  Changes in the fair value of derivatives are recorded in foreign currency exchange (gain) loss or other comprehensive income (loss), to the extent that the derivative qualifies as a hedge under the provisions of ASC Topic 815. Interest and dividend income on marketable securities are measured based upon amounts earned on their respective declaration dates.  

Fiscal 20202022 Non-Recurring Measurements

The fair value of the net assets of the Company’s Rest of ProductsAssets and Duff-Norton reporting unitsliabilities that were calculatedmeasured on a non-recurring basis. These measurements have been used to test goodwill for impairmentbasis during fiscal 2022 include assets and liabilities acquired in connection with the acquisitions of Dorner on an annual basis under the provisions of ASC Topic 350-20-35-1 “Intangibles, GoodwillApril 7, 2021 and Other – Goodwill Subsequent Measurement.”

Garvey on December 1, 2021, described in Note 3. The fiscal 2020 goodwill impairment test consisted of determining theestimated fair values ofallocated to the Rest of Productsassets acquired and Duff-Norton reporting units on a quantitative basis. Theliabilities assumed relied upon fair value for the Company’s reporting units cannot be determined using readily available quoted Level 1 inputs or Level 2 inputs that are observable in active markets. Therefore, the Company used a blended discounted cash flow and market-based valuation model to estimate the fair value usingmeasurements based primarily on Level 3 inputs. To estimate theThe valuation techniques used to allocate fair values ofto working capital items; property, plant, and equipment; and identifiable intangible assets included the Rest of Productscost approach, market approach, and Duff-Norton reporting units,other income approaches. For identifiable intangible assets these techniques included the Company used significant estimates and judgmental factors. The key estimates and factors used in the discounted cash flow valuation include revenue growth rates and profit margins based on internal forecasts, terminal value, and the weighted-average cost of capital used to discount future cash flows. The estimates used are disclosed below:
 Rest of Products Reporting UnitDuff-Norton Reporting Unit
Compound annual growth rate1.91%5.68%
Terminal value growth rate3.0%3.5%
Weighted-average cost of capital11.7%12.2%



We further test our indefinite-lived intangible asset balance of $46,670,000 consisting of trademarks on our recent acquisitions on an annual basis for impairment. The methodology used to value trademarks ismulti-period excess earnings approach, the relief from royalty method.approach, and other income approaches. The recordedvaluation techniques relied on a number of inputs which included the cost and condition of property, plant, and equipment and forecasted net sales and income.

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

For the Garvey acquisition, significant valuation inputs included an attrition rate of 33.0% for customer relationships, an estimated engineering cost per hour of $37.50 for engineered drawings, royalty rates ranging from 0.75% to 1.5% for trademarks and trade names, a royalty rate of 4.5% for patents, and a weighted average cost of capital of 13.6%.
Fiscal 2021 Non-Recurring Measurements

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





52
COLUMBUS McKINNON CORPORATION
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
 
(tabular amounts in thousands, except share data)


book value of these trademarks in excess of the calculated fair value results in impairment. The key estimate used in this calculation consists of an overall royalty rate applied to the sales covered by the trademark. After performing this analysis, we determined that the fair value of these trademarks exceeded their book values, and as such, other impairment was recorded.


6.     Inventories
 
Inventories consisted of the following:

 March 31,
 20222021
At cost—FIFO basis:  
Raw materials$129,015 $79,981 
Work-in-process28,093 23,067 
Finished goods36,661 27,201 
 193,769 130,249 
LIFO cost less than FIFO cost(21,630)(18,761)
Net inventories$172,139 $111,488 
  March 31,
  2020 2019
At cost—FIFO basis:    
Raw materials $85,452
 $88,786
Work-in-process 25,876
 32,547
Finished goods 33,216
 40,523
  144,544

161,856
LIFO cost less than FIFO cost (17,171) (15,593)
Net inventories $127,373

$146,263

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

There were LIFO liquidations resulting in $2,805,000$620,000 and $109,000$1,640,000 of additional income in fiscal 20202022 and 2019 income,2021, respectively.

7.     Marketable Securities and Other Investments
 
In accordance with ASU 2016-01 "Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities," adopted by the Company on April 1, 2018, all equity investments in unconsolidated entities (other than those accounted for using the equity method of accounts)account) are measured at fair value through earnings. The Company's marketable securities are recorded at their fair value, with unrealized changes in market value realized within Investment (income) loss on the Consolidated Statements of Operations. The Company adopted this standard on a modified retrospective basis. A cumulative effect adjustment of $888,000 was recorded on April 1, 2018 to the beginning balance of Retained Earnings with an offset to Accumulated Other Comprehensive Loss. The impact on earnings for unrealized gains and losses was a loss of $370,000, a gain of $727,000, and a loss of $143,000 in fiscal years 2022, 2021, and $183,000 in the twelve months ended March 31, 2020, and March 31, 2019, respectively.

Consistent with prior periods, the estimated fair value is based on quoted prices at the balance sheet dates. The cost of securities is based on the specific identification method. Interest and dividend income are included in Investment (income) loss in the Consolidated Statements of Operations.

Marketable securities are carried as long-term assets since they are held for the settlement of the Company’s general and products liability insurance claims filed through CM Insurance Company, Inc. ("CMIC"), a wholly owned captive insurance subsidiary. The marketable securities are not available for general working capital purposes.

Net realized gains related to sales of marketable securities were $50,000, $201,000,not material in fiscal 2022. They were $85,000, and $0$50,000 in fiscal years 2020, 2019,2021 and 2018,2020, respectively, and are included in Investment (income) loss in the Consolidated Statements of Operations.

On December 21, 2017, theThe Company purchasedowns a 49% ownership interest in Eastern Morris Cranes Company Limited ("EMC"), a limited liability company organized and existing under the laws and regulations of the Kingdom of Saudi Arabia. The Company's ownership represents an equity investment in a strategic customer of STAHL serving the Kingdom of Saudi Arabia. The investment's carrying value is presented in Other assets in the Consolidated Balance Sheets in the amount of $3,402,000$2,765,000 and $3,602,000$3,040,000 as of March 31, 20202022 and March 31, 2019,2021, respectively, and has been accounted for as an equity method investment. The investment value was increased for the Company's ownership percentage of income earned by EMC in the amount of $778,000$212,000 and $449,000$715,000 in the twelve months ended March 31, 20202022 and March 31, 2019,2021, respectively, and is recorded in Investment (income) loss on the Consolidated Statement of Operations. Additionally, the investment value decreased in the amount of $163,000 and increased in the amount of $213,000 due to the effect of currency translation in the twelve months ended March 31, 2022 and March 31, 2021, respectively. Further, in the twelve months ended March 31, 2020,2022 and March 31, 2021, EMC distributed a cash dividenddividends which the Company received 49% of pursuant to its ownership interest. The investment value was decreased for the Company's share of EMC's cash dividend in the amount of $324,000 and $1,290,000 in the twelve months ended March 31, 2022 and March 31, 2021, respectively, as they were determined to be a return of the Company's investment. Dividends are included in investing activities on the Consolidated Statements of Cash Flows in the amount of


53
COLUMBUS McKINNON CORPORATION
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
 
(tabular amounts in thousands, except share data)


share of EMC's cash dividend in the amount of $924,000$324,000 and $587,000 in the twelve months ended March 31, 20202022 and March 31, 2021, respectively, as it was determined to be a return on the Company's investment.distribution exceeded cumulative equity in earnings, under the cumulative earnings approach. The balance of the cash dividend is included in operating activities on the Consolidated Statement of Cash Flows under the cumulative earnings approach. The March 31, 20202022 and 20192021 trade accounts receivable balances due from EMC are $4,166,000$4,133,000 and $2,986,000,$2,250,000, respectively, and are comprised of amounts due for the sale of goods and services in the ordinary course of business.


8.     Property, Plant, and Equipment
 
Consolidated property, plant, and equipment of the Company consisted of the following:

 March 31,
 20222021
Land and land improvements$5,610 $4,787 
Buildings57,549 39,941 
Machinery, equipment, and leasehold improvements249,793 229,161 
Construction in progress14,248 14,188 
 327,200 288,077 
Less accumulated depreciation229,274 213,324 
Net property, plant, and equipment$97,926 $74,753 
  March 31,
  2020 2019
Land and land improvements $4,985
 $5,105
Buildings 39,930
 39,121
Machinery, equipment, and leasehold improvements 228,140

230,754
Construction in progress 12,950
 12,242
  286,005

287,222
Less accumulated depreciation 206,532

199,919
Net property, plant, and equipment $79,473

$87,303
The acquisitions of Dorner and Garvey contributed $23,387,000 and $2,955,000, respectively, to the increase in property, plant, and equipment since March 31, 2021.

Depreciation expense was $16,184,000, $17,775,000,$16,639,000, $15,530,000, and $20,584,000$16,184,000 for the years ended March 31, 2020, 2019,2022, 2021, and 2018,2020, respectively.

Gross property, plant, and equipment includes capitalized software costs of $37,864,000$39,752,000 and $37,832,000$38,925,000 at March 31, 20202022 and 2019,2021, respectively. Accumulated depreciation includes accumulated amortization on capitalized software costs of $22,962,000$29,000,000 and $20,225,000$27,207,000 at March 31, 20202022 and 2019,2021, respectively. Amortization expense on capitalized software costs was $2,937,000, $3,045,000,$2,399,000, $3,639,000, and $3,151,000$2,937,000 during the years ended March 31, 2020, 2019,2022, 2021, and 2018,2020, respectively.


9.     Goodwill and Intangible Assets

As discussed in Note 2, goodwill is not amortized but is tested for impairment at least annually, in accordance with the provisions of ASC Topic 350-20-35-1.  Goodwill impairment is deemed to exist if the net book value of a reporting unit exceeds its estimated fair value.  The fair value of a reporting unit is determined using a discounted cash flow methodology.  The Company’s reporting units are determined based upon whether discrete financial information is available and reviewed regularly, whether those units constitute a business, and the extent of economic similarities and interdependencies between those reporting units for purposes of aggregation.  The Company’s reporting units identified under ASC Topic 350-20-35-33 are at the component level, or one level below the operating segment level as defined under ASC Topic 280-10-50-10 “Segment Reporting – Disclosure.” AtThe Company has 3 reporting units as of March 31, 2018, the Company had four reporting units. Two of these reporting units were sold in connection with the Sold Businesses described in Note 3. As such, the Company has2022 and 2 reporting units as of March 31, 2020, both2021. The new reporting unit, Precision Conveyance, was established as a result of which have goodwill.the Dorner acquisition in fiscal 2022. The Duff-Norton reporting unit (which designs, manufactures, and sources mechanical and electromechanical actuators and rotary unions) had goodwill of $9,593,000 and $9,611,000$9,699,000 at March 31, 20202022 and 2019, respectively, and the2021, respectively. The Rest of Products reporting unit (representing the hoist, chain, and forgings, digital power control systems, and distribution businesses) had goodwill of $310,086,000$310,793,000 and $313,205,000$321,477,000 at March 31, 20202022 and 2019,2021, respectively. The Precision Conveyance reporting unit (which represents high-precision conveying systems) had goodwill of $328,357,000 at March 31, 2022. The goodwill associated with the acquisition of Garvey, as described in Note 3, is included the Precision Conveyance reporting unit.




54
COLUMBUS McKINNON CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(tabular amounts in thousands, except share data)

Fiscal 20202022 Annual Goodwill and Intangible Asset Impairment Test

When we evaluate the potential for goodwill impairment, we assess a range of qualitative factors including, but not limited to, macroeconomic conditions, industry conditions, the competitive environment, changes in the market for our products and services, regulatory and political developments, entity specific factors such as strategy and changes in key personnel, and overall financial performance. If, after completing this assessment, it is determined that it is more likely than not that the fair value of a reporting unit is less than its carrying value or if economic or other business factors indicate that the fair value of our reporting units may
COLUMBUS McKINNON CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(tabular amounts in thousands, except share data)


have declined since our last quantitative test, we proceed to a quantitative impairment test. To perform the quantitative impairment test, the Company uses the discounted cash flow method to estimate the fair value of the reporting units. The discounted cash flow method incorporates various assumptions, the most significant being projected revenue growth rates, operating profit margins and cash flows, the terminal growth rate, and the discount rate. The Company projects revenue growth rates, operating margins and cash flows based on each reporting unit's current business, expected developments, and operational strategies over a five-year period. In estimating the terminal growth rates, the Company considers its historical and projected results, as well as the economic environment in which its reporting units operate. The discount rates utilized for each reporting unit reflect the Company's assumptions of marketplace participants' cost of capital and risk assumptions, both specific to the reporting unit and overall in the economy.

We performed the qualitative assessment as of February 29, 202028, 2022 and determined that it is not more likely than not that the fair value of the Rest of Products, Duff-Norton and Precision Conveyance reporting units are less than their carrying value. Further, other economic and business factors do not indicate that the fair value of our reporting units have declined since the last quantitative test. As a result, the quantitative goodwill impairment test should be performedwas not required for the Rest of Products, Duff-Norton and Duff-NortonPrecision Conveyance reporting units due to volatility in our stock price and uncertainty in the global economic environment caused by COVID-19. We also performed sensitivities and other analysis and determined it is more likely than not that goodwill is not impaired as of March 31, 2020.units.

In accordance with ASC Topic 350-30-35, indefinite-lived intangible assets that are not subject to amortization shall be tested for impairment annually or more frequently if events or circumstances indicate that it is more likely than not that an asset is impaired. Similar to goodwill, we first assess various qualitative factors in the analysis. If, after completing this assessment, it is determined that it is more likely than not that the fair value of an indefinite-lived intangible asset is greater than its carrying value, we conclude that the indefinite-lived intangible asset is not impaired. If, after completing this assessment, it is determined that it is more likely than not that the fair value of an indefinite-lived intangible asset is less than its carrying value or if economic or other business factors indicate that the fair value of our indefinite-lived intangible assets may have declined since our last quantitative test, the Company performs a new quantitative test. The methodology used to value trademarks is the relief from royalty method. The recorded book value of these trademarks in excess of the calculated fair value triggers an impairment. The key estimate used in this calculation consists of an overall royalty rate applied to the sales covered by the trademark. After performing a qualitative assessment we determined that economic factors indicate that the fair value of our indefinite-lived intangible assets may have declined since our last quantitative test. We performed the quantitative test as of February 29, 2020 and28, 2022, it was determined that the trademarks were not impaired.

Fiscal 2019 Interim Goodwill Impairment Test

During the first quarter of fiscal 2019, the Company classified the assets and liabilities of certain businesses as held for sale. These businesses were sold later in the year which is described in Note 3. As a result of this classification, the Company determined an indicator of impairment existed and was required to perform an interim goodwill impairment test on the Rest of Products goodwill reporting unit. The net assets of the Rest of Products reporting unit were measured on a non-recurring basis in order to perform a quantitative goodwill impairment test. The interim quantitative goodwill impairment test for Rest of Products did not indicate that goodwill was impaired.

The held for sale classification described above further required the Company to assign a portion of goodwill to the business that was a part of the Rest of Products reporting unit being sold based on its relative fair value and to record the assets and liabilities of the businesses held for sale at the lower of their carrying amount or fair value less cost to sell. Based on this analysis, the Company recorded a $6,174,000 goodwill impairment charge at the time the businesses were classified as held for sale.

A summary of changes in goodwill during the years ended March 31, 20202022 and 20192021 is as follows:

Balance at April 1, 2018$347,434
Interim Goodwill Impairment$(6,174)
Currency translation(18,444)
Balance at March 31, 2019$322,816
Currency translation(3,137)
Balance at March 31, 2020$319,679

Balance at April 1, 2020$319,679 
Currency translation11,497 
Balance at March 31, 2021$331,176 
Acquisition of Dorner (Refer to Note 3)287,141 
Acquisition of Garvey (Refer to Note 3)41,216 
Currency translation(10,684)
Balance at March 31, 2022$648,849 

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

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




55
COLUMBUS McKINNON CORPORATION
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
 
(tabular amounts in thousands, except share data)


Goodwill is recognized net of accumulated impairment losses of $113,174,000 as of both March 31, 2020 and 2019. There were no goodwill impairment losses recorded in fiscal 2020 and $6,174,000 and $0 recorded in 2019 and 2018, respectively. The goodwill impairment recorded in fiscal 2019 relates to the 2019 interim goodwill impairment test described above and in Note 5.

Identifiable intangible assets at March 31, 20202022 are summarized as follows (in thousands):

 Gross
Carrying 
Amount		Accumulated
Amortization
 
Net
Trademark$19,529 $(5,032)$14,497 
Indefinite-lived trademark46,721 — 46,721 
Customer relationships325,431 (71,202)254,229 
Acquired technology96,433 (21,789)74,644 
Other3,476 (2,779)697 
Balance at March 31, 2022$491,590 $(100,802)$390,788 
  
Gross
Carrying 
Amount
 
Accumulated
Amortization
 
 
Net
Trademark $6,016
 $(4,238) $1,778
Indefinite-lived trademark 46,670
 —
 46,670
Customer relationships 179,882
 (44,216) 135,666
Acquired technology 46,669
 (13,306) 33,363
Other 3,143
 (2,658) 485
Balance at March 31, 2020 $282,380
 $(64,418) $217,962

Identifiable intangible assets at March 31, 20192021 were as follows (in thousands):

 Gross
 Carrying
 Amount		Accumulated
 Amortization
 
Net
Trademark$6,377 $(4,760)$1,617 
Indefinite-lived trademark47,857 — 47,857 
Customer relationships188,447 (55,785)132,662 
Acquired technology46,843 (16,021)30,822 
Other3,259 (2,855)404 
Balance at March 31, 2021$292,783 $(79,421)$213,362 
  
Gross
 Carrying
 Amount
 
Accumulated
 Amortization
 
 
Net
Trademark $6,212
 $(4,138) $2,074
Indefinite-lived trademark 46,981
 —
 46,981
Customer relationships 182,328
 (35,344) 146,984
Acquired technology 46,715
 (10,412) 36,303
Other 3,254
 (2,656) 598
Balance at March 31, 2019 $285,490
 $(52,550) $232,940


Customer relationships with a gross carrying amount of $2,815,000 and accumulated amortization of $957,000 were written off during fiscal 2019, in connection with the loss on the Sold Businesses discussed in Note 3. Further, other intangible assets with a gross carrying amount of $226,000 and accumulated amortization of $211,000 were also written off during fiscal 2019 as a result of the loss on the Sold Businesses.

The Company’s intangible assets that are considered to have finite lives are amortized over the period in which the assets are expected to generate future cash flows.  Identifiable intangible assets acquired in a business combination are amortized over their estimated useful lives. The weighted-average amortization periods are 1514 years for trademarks, 1817 years for customer relationships, 1816 years for acquired technology, 5 years for other, and 1817 years in total. Trademarks with a book value of $46,670,000$46,721,000 have an indefinite useful life and are therefore not being amortized.

Total amortization expense was $12,942,000, $14,900,000,$25,283,000, $12,623,000, and $15,552,000$12,942,000 for fiscal 2022, 2021, and 2020, 2019,respectively.  The increase in amortization expense is the result of the Dorner and 2018, respectively.Garvey acquisitions and related intangible assets acquired. Based on the current amount of intangible assets, the estimated amortization expense for each of the succeeding five years is expected to be approximately $12,400,000.$26,600,000.



10.     Derivative Instruments

The Company uses derivative instruments to manage selected foreign currency and interest rate exposures. The Company does not use derivative instruments for speculative trading purposes. All derivative instruments must be recorded on the balance sheet at fair value. For derivatives designated as cash flow hedges, the effective portion of changes in the fair value of the derivative is recorded as accumulated other comprehensive gain (loss), or “AOCL,” and is reclassified to earnings when the underlying transaction has an impact on earnings. The ineffective portion of changes in the fair value of the foreign currency forward agreements is reported in foreign currency exchange loss (gain) in the Company’s consolidated statement of operations. The ineffective portion
COLUMBUS McKINNON CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(tabular amounts in thousands, except share data)


of changes in the fair value of the interest rate swap agreements is reported in interest expense. For derivatives not designated as cash flow hedges, all changes in market value are recorded as a foreign currency exchange (gain) loss in the Company’s consolidated statements of operations. The cash flow effects of derivatives are reported within net cash provided by operating activities.

The Company is exposed to credit losses in the event of non-performance by the counterparties on its financial instruments. The counterparties have investment grade credit ratings. The Company anticipates that these counterparties will be able to fully satisfy their obligations under the contracts. The Company has derivative contracts with 3 counterparties as of March 31, 2020.2022.



56
COLUMBUS McKINNON CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(tabular amounts in thousands, except share data)

The Company's agreements with its counterparties contain provisions pursuant to which the Company could be declared in default of its derivative obligations.  As of March 31, 2020,2022, the Company had not posted any collateral related to these agreements. If the Company had breached any of these provisions as of March 31, 2020,2022, it could have been required to settle its obligations under these agreements at amounts which approximate the March 31, 20202022 fair values reflected in the table below. During the year ended March 31, 2020,2022, the Company was not in default of any of its derivative obligations.

As of March 31, 20202022 and 2019,2021, the Company had no derivatives designated as net investments or fair value hedges in accordance with ASC Topic 815, “Derivatives and Hedging.”

The Company has a cross currency swap agreement that is designated as a cash flow hedge to hedge changes in the value of an intercompany loan to a foreign subsidiary due to changes in foreign exchange rates. This intercompany loan is related to the acquisition of STAHL. As of March 31, 2020,2022, the notional amount of this derivativesderivative was $181,390,000,$137,650,000, and the contract matures on JanuaryMarch 31, 2022.2028. During fiscal 2022, the Company modified the cross currency swap by extending it to fiscal year 2028, matching the intercompany loan. The Company has concluded that the transaction to modify the cross currency swap, as well as the modified swap, maintained hedge accounting. The modified cross currency swap is considered to have an other than insignificant financing element. As such, its cash flows are classified within financing activities in the Statement of Cash Flows. From its March 31, 20202022 balance of AOCL, the Company expects to reclassify approximately $1,312,000$128,000 out of AOCL, and into foreign currency exchange loss (gain), during the next 12 months based on the contractual payments due under this intercompany loan.

The Company has foreign currency forward agreements that are designated as cash flow hedges to hedge a portion of forecasted inventory purchases denominated in foreign currencies. TheAs of March 31, 2022, the notional amount of thosethese derivatives is $8,422,000was $6,959,000, and all contracts mature by DecemberMarch 31, 2020.2023. From its March 31, 20202022 balance of AOCL, the Company expects to reclassify approximately $264,000$191,000 out of AOCL during the next 12 months based on the underlying transactions of theexpected sales of the goods purchased.

The Company's policy is to maintain a capital structure that is comprised of 50-70% of fixed rate long-term debt and 30-50% of variable rate long-term debt. The Company has twothree interest rate swap agreements in which the Company receives interest at a variable rate and pays interest at a fixed rate. The third interest rate swap agreement was entered into in fiscal year 2022 as a result of the additional debt from the Dorner and Garvey acquisitions. These interest rate swap agreements are designated as cash flow hedges to hedge changes in interest expense due to changes in the variable interest rate of the senior secured term loan. The amortizing interest rate swaps mature by December 31, 2023February 28, 2025 and had a total notional amount of $158,490,000$300,747,000 as of March 31, 2020.2022. The effective portion of the changes in fair values of the interest rate swaps is reported in AOCL and will be reclassified to interest expense over the life of the swap agreements. From its March 31, 20202022 balance of AOCL, the Company expects to reclassify approximately $1,066,000$389,000 out of AOCL, and into interest expense, during the next 12 months.




57
COLUMBUS McKINNON CORPORATION
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
 
(tabular amounts in thousands, except share data)



The following is the effect of derivative instruments on the consolidated statements of operations for the years ended March 31, 2020, 2019,2022, 2021, and 20182020 (in thousands):
Derivatives Designated as Cash Flow  
Hedges		Type of InstrumentAmount of Gain or (Loss) Recognized in Other Comprehensive Income (Loss) on Derivatives (Effective Portion)Location of Gain or
(Loss) Recognized
in Income on
Derivatives		Amount of Gain or (Loss) Reclassified from AOCL into Income (Effective Portion)
March 31,   
2022Foreign exchange contracts$(193)Cost of products sold$(60)
2022Interest rate swap$2,567 Interest expense$(2,020)
2022Cross currency swap$3,548 Foreign currency exchange loss (gain)$7,925 
2021Foreign exchange contracts$(238)Cost of products sold$83 
2021Interest rate swap$(521)Interest expense$(1,463)
2021Cross currency swap$(7,793)Foreign currency exchange loss (gain)$(7,268)
2020Foreign exchange contracts$303 Cost of products sold$40 
2020Interest rate swap$(3,185)Interest expense$242 
2020Cross currency swap$7,654 Foreign currency exchange loss (gain)$2,888 
Derivatives Designated as Cash Flow  
Hedges
 Type of InstrumentAmount of Gain or (Loss) Recognized in Other Comprehensive Income (Loss) on Derivatives (Effective Portion) 
Location of Gain or
(Loss) Recognized
in Income on
Derivatives
 Amount of Gain or (Loss) Reclassified from AOCL into Income (Effective Portion)
March 31,       
2020 Foreign exchange contracts$303
 Cost of products sold $40
2020 Interest rate swap$(3,185) Interest expense $242
2020 Cross currency swap$7,654
 Foreign currency exchange loss (gain) $2,888
        
2019 Foreign exchange contracts$(24) Cost of products sold $(16)
2019 Interest rate swap$(1,275) Interest expense $765
2019 Cross currency swap$18,242
 Foreign currency exchange loss (gain) $17,231
        
2018 Foreign exchange contracts$(219) Cost of products sold $(196)
2018 Interest rate swap$1,339
 Interest expense $(1,879)
2018 Cross currency swap$(24,838) Foreign currency exchange loss (gain) $(25,206)
 
Derivatives Not Designated as
 Hedging Instruments (Foreign
Exchange Contracts)
 
Location of Gain or (Loss) Recognized in
Income on Derivatives
Amount of
Gain or (Loss)
Recognized in
 Income on
 Derivatives
March 31,  
2022Foreign currency exchange loss (gain)$— 
2021Foreign currency exchange loss (gain)$— 
2020Foreign currency exchange loss (gain)$17 


The following is information relative to the Company’s derivative instruments in the consolidated balance sheets as of March 31, 2022 and 2021 (in thousands):
Fair Value of Asset (Liability)
March 31,
Derivatives Designated as
Hedging Instruments		Balance Sheet Location20222021
Foreign exchange contractsAccrued Liabilities$(217)$(83)
Interest rate swapPrepaid expenses and other859 — 
Interest rate swapOther Assets4,512 — 
Interest rate swapAccrued Liabilities(1,371)(1,185)
Interest rate swapOther non current liabilities(387)(872)
Cross currency swapAccrued liabilities(170)(13,895)
Cross currency swapOther non current liabilities(8,543)— 
 
 
Derivatives Not Designated as
 Hedging Instruments (Foreign
Exchange Contracts)
 
 
Location of Gain or (Loss) Recognized in
Income on Derivatives
 
Amount of
Gain or (Loss)
Recognized in
 Income on
 Derivatives
March 31,    
2020 Foreign currency exchange loss (gain) $17
2019 Foreign currency exchange loss (gain) $13
2018 Foreign currency exchange loss (gain) $(11)



58
COLUMBUS McKINNON CORPORATION
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
 
(tabular amounts in thousands, except share data)



The following is information relative to the Company’s derivative instruments in the consolidated balance sheets as of March 31, 2020 and 2019 (in thousands):

    
Fair Value of Asset (Liability)
March 31,
Derivatives Designated as
Hedging Instruments
 Balance Sheet Location 2020 2019
Foreign exchange contracts Prepaid expenses and other $318
 $43
Foreign exchange contracts Accrued Liabilities (33) (96)
Interest rate swap Prepaid expenses and other —
 743
Interest rate swap Other Assets —
 470
Interest rate swap Accrued Liabilities (1,402) —
Interest rate swap Other non current liabilities (1,894) —
Cross currency swap Prepaid expenses and other 1,750
 2,476
Cross currency swap Accrued liabilities —
 (774)
Cross currency swap Other non current liabilities (5,254) (15,410)

    Fair Value of Asset (Liability)
    March 31,
Derivatives Not Designated as
Hedging Instruments
 Balance Sheet Location 2020 2019
Foreign exchange contracts Accrued Liabilities —
 (17)



11.     Accrued Liabilities and Other Non-current Liabilities
 
Consolidated accrued liabilities of the Company consisted of the following:  

 March 31,
 20222021
Accrued payroll$38,984 $29,871 
Accrued income taxes payable11,797 9,938 
Accrued health insurance2,246 1,677 
Accrued general and product liability costs3,900 3,500 
Customer advances, deposits, and rebates22,908 15,643 
Current ROU lease liabilities7,965 7,673 
Cross currency swap170 13,895 
Other accrued liabilities30,217 28,619 
 $118,187 $110,816 
  March 31,
  2020 2019
Accrued payroll $29,966
 $36,946
Accrued income taxes payable 11,889
 12,864
Accrued health insurance 2,018
 2,806
Accrued general and product liability costs 3,500
 3,500
Customer advances, deposits, and rebates 13,507
 14,922
Current ROU lease liabilities 6,924
 —
Other accrued liabilities 25,781
 28,266
  $93,585
 $99,304

COLUMBUS McKINNON CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(tabular amounts in thousands, except share data)



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

 March 31,
 20222021
Accumulated postretirement benefit obligation$1,013 $1,195 
Accrued general and product liability costs18,675 17,727 
Accrued pension cost86,674 114,911 
Cross currency swap8,543 — 
Deferred income tax41,645 17,600 
Non-current ROU lease liabilities23,711 27,321 
Other non-current liabilities12,349 13,166 
 $192,610 $191,920 
  March 31,
  2020 2019
Accumulated postretirement benefit obligation $1,617
 $2,022
Accrued general and product liability costs 8,444
 9,186
Accrued pension cost 149,524
 127,373
Cross currency swap 5,254
 15,410
Deferred income tax 18,213
 20,082
Non-current ROU lease liabilities 31,629
 —
Other non-current liabilities 12,826
 9,741
  $227,507
 $183,814


For the years ended March 31, 2022 and March 31, 2021, the Accrued general and product liability costs are presented gross of estimated recoveries of $9,160,000 and $8,052,000, respectively. Refer to Note 16 for additional information.

12.     Debt
 
Consolidated long-term debt of the Company consisted of the following:

 March 31,
 20222021
Term loan502,560 254,900 
Unamortized deferred financing costs, net(5,425)(5,946)
Total debt497,135 248,954 
Less: current portion40,000 4,450 
Total debt, less current portion$457,135 $244,504 

  March 31,
  2020 2019
Term loan 259,350
 310,463
Unamortized deferred financing costs, net (8,044) (10,143)
Total debt 251,306

300,320
Less: current portion 4,450
 65,000
Total debt, less current portion $246,856

$235,320

On January 31, 2017 the Company entered into a Credit Agreement ("Credit Agreement") and $545,000,000 of debt facilities ("Facilities") in connection with the STAHL acquisition. The Facilities consist of a Revolving Facility ("Revolver") in the amount of $100,000,000 and a $445,000,000 1st Lien Term Loan ("Term Loan"). The Term Loan hashad a seven-yearseven-year term maturing in 2024 and the Revolver has a five-year term maturing in 2022. At March 31,2024. On August 26, 2020, the Company has not drawnentered into a Second Amendment to the Credit Agreement (as amended by the First Amended Credit Agreement, dated as of February 26, 2018). The Second Amended Credit Agreement extended the $100,000,000 secured Revolver which was originally set to expire on January 31, 2022 to August 25, 2023.


59
COLUMBUS McKINNON CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(tabular amounts in thousands, except share data)


As discussed in Note 3, the Company completed its acquisition of Dorner on April 7, 2021 and entered into a $750,000,000 First Lien Facility with JPMorgan Chase Bank, PNC Capital Markets LLC, and Wells Fargo Securities LLC. The First Lien Facilities consist of a Revolving Facility in an aggregate amount of $100,000,000 and a $650,000,000 Bridge Facility. Proceeds from the Bridge Facility were used, among other things, to finance the purchase price for the Dorner acquisition, pay related fees, expenses and transaction costs, and refinance the Company's borrowings under its prior Term Loan and Revolver.

In addition to the debt borrowing described above, the Company commenced and completed an underwritten public offering of 4,312,500 shares of its common stock at a price of $48.00 per share for total gross proceeds of $207,000,000. The Company used all of the net proceeds from the equity offering to repay part of its outstanding borrowings under its Bridge Facility. The equity offering closed on May 4, 2021. Following the repayment of outstanding borrowings under the Bridge Facility, the Bridge Facility was refinanced with a syndicated Term Loan B facility on May 14, 2021.

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

1) Term Loan:Loan B: An aggregate $445,000,000 1st Lien$450,000,000 Term Loan B facility, which requires quarterly principal amortization of 0.25% with the remaining principal due at the maturity date. In addition, if the Company has Excess Cash Flow ("ECF")(ECF) as defined in the Credit Agreement for the First Lien Facility (the “Credit Agreement”), the ECF Percentage of the Excess Cash Flow for sucheach fiscal year minus optional prepaymentprepayments of the Loans (except prepayments of Revolving Loans that are not accompanied by a corresponding permanent reduction of Revolving Commitments) pursuant to Section 2.10(a) of the Credit Agreement other than to the extent that any such prepayment is funded with the proceeds of Funded Debt, shall be applied toward the prepayment of the Term Loan.Loan B facility. The ECF Percentage is defined as 50% stepping down to 25% or 0% based on the achievement of specified Secured Leverage RatioRatios as of the last day of thesuch fiscal year. Further, the Company may draw additional Incremental Facilities (referred to as an "Accordion") by executing and delivering to JPMorgan Chase Bank, N.A. an Increased Facility Activation Notice specifying the amount of such increase requested. Lenders shall have no obligation to participate in any increase unless they agree to do so in their sole discretion.

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

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

COLUMBUS McKINNON CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(tabular amounts in thousands, except share data)


4) Prepayments: Provisions permitting a Borrower to voluntarily prepay either the Term Loan B facility or Revolver in whole or in part at any time, and provisions requiring certain mandatory prepayments of the Term Loan B facility or Revolver on the occurrence of certain events which will permanently reduce the commitments under the Credit Agreement, each without premium or penalty, subject to reimbursement of certain costs of the Lenders. A prepayment premium of 1% of the principal amount of the First Lien Term Loans is required if the prepayment is associated with a Repricing Transaction and it were to occur within the first twelve months.

5) Covenants: Provisions containing covenants required of the CorporationCompany and its subsidiaries including various affirmative and negative financial and operational covenants. The key financial covenant is triggered only on any date when any Extension of Credit under the New Revolving Credit Facility is outstanding (excluding any Letters of Credit) (the “Covenant Trigger”), and permitsprohibits the Total Leverage Ratio for the Reference Period ended on such date to not exceedfrom exceeding (i) 4.50:6.75:1.00 as of any date of determination prior to December 31, 2017,June 30, 2021, (ii) 4.00:5.50:1.00 as of any date of determination on December 31, 2017June 30, 2021 and thereafter but prior to December 31, 2018,June 30, 2022, (iii) 4.50:1.00 as of any date of determination on June 30, 2022 and thereafter but prior to June 30, 2023 and (iv) 3.50:1.00 as of any date of determination on December 31, 2018June 30, 2023 and thereafter butthereafter.

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

In fiscal 2022, the Company incurred $14,803,000 in debt extinguishment costs of which $5,946,000 relates to the Company's prior Term Loan, $326,000 relates to December 31, 2019the Company's prior Revolver, and (iv) 3.00:1.00 as of any date of determination on December 31, 2019 and thereafter. As there is no amount drawn$8,531,000 relates to fees paid on the Revolver as of March 31, 2020 the requirement to comply with the covenant is not triggered. Had we been required to determine the covenant ratio we would have been in compliance with the covenant provisions as of March 31, 2020 and 2019.

The Facility is secured by all U.S. inventory, receivables, equipment, real property, certain subsidiary stock (limited to 65% of non-U.S. subsidiaries) and intellectual property. The Credit Agreement allows the declaration of dividends, but limits our ability to pay dividends.

On February 26, 2018, the Company amended the Credit Agreement (known as the "Amended Credit Agreement"). The Amended Credit Agreement has the same terms mentioned above except for a reduction in interest rates. The applicable rate for the repriced term loan was reduced from 3.00% to 2.50%. The Company accounted for the Amended Credit Agreement as a debt modification, therefore, debt repricing fees incurred in fiscal 2018 were expensed as General and Administrative expenses and the deferred financing fees incurred as partportion of the Credit Agreement (discussed below) remain unchanged.

The outstanding balance of the Term Loan was $259,350,000 and $310,463,000 as of March 31, 2020 and 2019, respectively. The Company made $51,113,000 of principal payment on the Term Loan during fiscal 2020 and $65,000,000 of principal payment on the Term Loan during fiscal 2019. The Company is obligated to make $4,450,000 of principal payments over the next 12 months. As previously discussed, in response to COVID-19 the Company is seeking to take all appropriate measures to protect the cash flow and liquidity of the Company. As such, only the required principal amount has been recorded within the current portion of long-term debt on the Company's Consolidated Balance Sheet with the remaining balance recorded as long-term debt.

There was $0 outstanding on the Revolving Credit Facility and $16,752,000 outstanding letters of credit as of March 31, 2020. The outstanding letters of credit at March 31, 2020 consisted of $898,000 in commercial letters of credit and $15,854,000 of standby letters of credit. Subsequent to March 31, 2020, the Company drew $25,000,000 from the Revolver for liquidity and working capital purposes.

The gross balance of deferred financing costs on the term loan was $14,690,000 as of March 31, 2020 and 2019. The accumulated amortization balancesFirst Lien Facilities that were $6,645,000 and $4,547,000 as of March 31, 2020 and 2019, respectively.

The gross balance of deferred financing costs associated with the Revolving CreditBridge Facility, is includedall of which were incurred in Other assets is $2,789,000 asthe first quarter of March 31, 2020 and March 31, 2019. The accumulated amortization balance is $1,766,000 and $1,209,000 as of March 31, 2020 and March 31, 2019 respectively.fiscal 2022. These balancescosts are classified as Cost of debt refinancing in Other assets since no funds were drawn on the Revolving Credit Facility in fiscal 2020 and 2019.Condensed Consolidated Statements of Operations.



60
COLUMBUS McKINNON CORPORATION
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
 
(tabular amounts in thousands, except share data)

Further, in the first quarter of fiscal 2022, the Company recorded $5,432,000 in deferred financing costs on the First Lien Term Facility, which will be amortized over seven years. The Company recorded $4,027,000 in deferred financings costs on the New Revolving Credit Facility, of which $3,050,000 is related to the New Revolving Credit Facility and $977,000 is carried over from the Company's prior Revolver as certain Revolver lenders increased their borrowing capacity. These balances will be amortized over five years and are classified in Other assets since no funds were drawn on the New Revolving Credit Facility.

Also discussed in Note 3, the Company completed its acquisition of Garvey on November 30, 2021 and borrowed additional funds in accordance with the Accordion feature under its existing Term Loan B to increase the principal amount of the Term Loan B facility by $75,000,000. Proceeds from the Accordion were used, among other things, to finance the purchase price for the Garvey acquisition, and pay related fees, expenses, and transaction costs. No material amendment to the terms of the Term Loan B facility or the First Lien Facility was necessary for the Company to exercise this Accordion feature.

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

The outstanding principal balance of the Term Loan B facility was $502,560,000 as of March 31, 2022, which includes $75,000,000 in principal balance from the Accordion exercised in the third quarter of fiscal 2022 and the outstanding balance of the Term Loan was $254,900,000 as of March 31, 2021. The Company made $22,440,000 of principal payment on the Term Loan B during fiscal 2022 and $4,450,000 of principal payment on the Term Loan during fiscal 2021. The Company is obligated to make $5,260,000 of principal payments on the Term Loan B facility over the next 12 months plus applicable ECF payments, if required, however, plans to pay down approximately $40,000,000 in principal payments in total during such 12 month period. This amount has been recorded within the current portion of long term debt on the Company's Condensed Consolidated Balance Sheet with the remaining balance recorded as long term debt.

There were 0 outstanding borrowings and $17,151,000 outstanding letters of credit issued against the New Revolving Credit Facility as of March 31, 2022. The outstanding letters of credit at March 31, 2022 consisted of $849,000 in commercial letters of credit and $16,302,000 of standby letters of credit.

The gross balance of deferred financing costs on the Term Loan B facility was $6,323,000, which includes $892,000 from the Accordion exercise, as of March 31, 2022, and $14,690,000 on the prior Term Loan as of March 31, 2021, respectively. The accumulated amortization balances were $898,000 and $8,744,000 as of March 31, 2022 and 2021, respectively.

The gross balance of deferred financing costs associated with the New Revolving Credit Facility was $4,027,000 as of March 31, 2022 and the prior Revolver was $3,615,000 as of March 31, 2021, which are included in Other assets on the Condensed Consolidated Balance Sheet. The accumulated amortization balance is $805,000 and $2,313,000 as of March 31, 2022 and March 31, 2021, respectively.  

The principal payments obligated to be made as of March 31, 20202022 on the Term Loan B facility are as follows:

20214,450
20224,450
20234,450
2024246,000
Thereafter—
 $259,350

2023$5,260 
20245,260
20255,260
20265,260
Thereafter481,520
 $502,560 

In connection with Dorner acquisition, the Company recorded a finance lease for a manufacturing facility in Hartland, WI under a 23 year lease agreement, which terminates in 2035. The outstanding balance on the finance lease obligation is $14,084,000 as of March 31, 2022 of which $544,000 has been recorded within the Current portion of long term debt and the remaining balance recorded within Term loan and finance lease obligations on the Company's Condensed Consolidated Balance Sheet. See Note 18, Leases, for further details.




61
COLUMBUS McKINNON CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(tabular amounts in thousands, except share data)

Non-U.S. Lines of Credit and Loans

Unsecured and uncommitted lines of credit are available to meet short-term working capital needs for certain of our subsidiaries operating outside of the U.S. The lines of credit are available on an offering basis, meaning that transactions under the line of credit will be on such terms and conditions, including interest rate, maturity, representations, covenants, and events of default, as mutually agreed between our subsidiaries and the local bank at the time of each specific transaction. As of March 31, 2020,2022, unsecured credit lines totaled approximately $2,428,000,$2,434,000, of which $0 was drawn. In addition, unsecured lines of $14,160,000$12,503,000 were available for bank guarantees issued in the normal course of business of which $9,958,000$9,135,000 was utilized.

13.     Pensions and Other Benefit Plans
    
The Company provides retirement plans, including defined benefit and defined contribution plans, and other postretirement benefit plans to certain employees. The Company applies ASC Topic 715 “Compensation – Retirement Benefits,” which required the recognition in pension and other postretirement benefits obligations and accumulated other comprehensive income of actuarial gains or losses, prior service costs or credits and transition assets or obligations that had previously been deferred. This statement also requires an entity to measure a defined benefit postretirement plan’s assets and obligations that determine its funded status as of the end of the fiscal year.

COLUMBUS McKINNON CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(tabular amounts in thousands, except share data)


Pension Plans
 
The Company provides defined benefit pension plans to certain employees. The Company uses March 31 as the measurement date. The following provides a reconciliation of benefit obligation, plan assets, and funded status of the plans:

 March 31,
 20222021
Change in benefit obligation:  
Benefit obligation at beginning of year$404,841 $459,866 
Service cost980 1,092 
Interest cost10,130 11,527 
Actuarial (gain) loss(30,482)3,729 
Benefits paid(23,200)(24,492)
Settlement— (53,499)
Foreign exchange rate changes(5,295)6,618 
Benefit obligation at end of year$356,974 $404,841 
Change in plan assets:  
Fair value of plan assets at beginning of year$286,678 $313,366 
Actual gain (loss) on plan assets3,048 49,582 
Employer contribution5,442 1,316 
Benefits paid(23,200)(24,492)
Settlement— (53,499)
Foreign exchange rate changes17 405 
Fair value of plan assets at end of year$271,985 $286,678 
Funded status$(84,989)$(118,163)
Unrecognized actuarial loss29,230 51,540 
Net amount recognized$(55,759)$(66,623)
  March 31,
  2020 2019
Change in benefit obligation:    
Benefit obligation at beginning of year $446,397
 $462,284
Service cost 1,139
 1,078
Interest cost 14,759
 15,526
Actuarial (gain) loss 26,193
 4,074
Benefits paid (26,852) (27,068)
Foreign exchange rate changes (1,770) (9,497)
Benefit obligation at end of year $459,866
 $446,397
     
Change in plan assets:  
  
Fair value of plan assets at beginning of year $321,902
 $326,745
Actual gain (loss) on plan assets 7,512
 11,333
Employer contribution 10,967
 11,018
Benefits paid (26,852) (27,068)
Foreign exchange rate changes (163) (126)
Fair value of plan assets at end of year $313,366
 $321,902
     
Funded status $(146,500) $(124,495)
Unrecognized actuarial loss 105,878
 73,836
Net amount recognized $(40,622) $(50,659)


Amounts recognized in the consolidated balance sheets are as follows:
  March 31,
  2020 2019
Other assets $6,587
 $6,424
Accrued liabilities (3,563) (3,546)
Other non-current liabilities (149,524) (127,373)
Accumulated other comprehensive loss, before tax 105,878
 73,836
Net amount recognized $(40,622) $(50,659)

Other assets are presented separately from pensionDuring fiscal 2021, the Company settled the liabilities asfor one of the Company'sits U.S. plans is overfunded.

In fiscal 2021, an estimated net loss of $3,516,000 and no prior service costs for the defined benefit pension plans will be amortized from accumulated other comprehensive lossthrough a combination of (i) lump sum payments to eligible participants who elected to receive them and (ii) the purchase of annuity contracts for participants who did not elect lump sums. The lump sum payments were paid during the quarter ended June 30, 2020 and resulted in a settlement charge of $2,722,000 which was recorded in Other (income) expense, net periodic benefit cost.on the Consolidated Statements of Operations. During the quarter ended September 30, 2020, the Company purchased annuity contracts to settle the remaining liabilities of the terminated plan. The total settlement charge of $19,038,000 was recorded in Other (income) expense, net on the Statements of Operations during the twelve months ending March 31, 2021. The remaining surplus of the terminated plan is $2,176,000 and


62
COLUMBUS McKINNON CORPORATION
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
 
(tabular amounts in thousands, except share data)


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

Amounts recognized in the consolidated balance sheets are as follows:        
 March 31,
 20222021
Other assets$5,208 $427 
Accrued liabilities(3,523)(3,679)
Other non-current liabilities(86,674)(114,911)
Accumulated other comprehensive loss, before tax29,230 51,540 
Net amount recognized$(55,759)$(66,623)
Other assets are presented separately from pension liabilities for pension plans that are over funded. Other assets decreased in the current year due to the pension settlement, described above.

Net periodic pension cost included the following components:

 202220212020
Service costs—benefits earned during the period$980 $1,092 $1,139 
Interest cost on projected benefit obligation10,130 11,527 14,759 
Expected return on plan assets(13,037)(12,787)(15,887)
Net amortization1,457 3,234 2,279 
Settlement— 19,038 — 
Net periodic pension cost (benefit)$(470)$22,104 $2,290 
  2020 2019 2018
Service costs—benefits earned during the period $1,139
 $1,078
 $2,580
Interest cost on projected benefit obligation 14,759
 15,526
 16,488
Expected return on plan assets (15,887) (18,454) (21,483)
Net amortization 2,279
 2,339
 3,083
Curtailment —
 —
 5
Other —
 —
 17
Net periodic pension cost (benefit) $2,290
 $489
 $690


The Company adopted ASU 2017-07 in the fiscal 2019. The service cost component of net periodic benefit cost above is recorded in Cost of products sold, Selling expense, and General and administrative expenses within the Consolidated Statements of Operations, while the remaining components are recorded to Other (income) expense, net. Fiscal 2018 amounts have been reclassified to provide comparable presentation in line with the guidance in ASU 2017-07 based on amounts previously disclosed for the various components of net periodic pension cost (benefit).

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

 March 31,
 20222021
Projected benefit obligation$211,307 $401,870 
Fair value of plan assets121,110 283,280 
  March 31,
  2020 2019
Projected benefit obligation $410,181
 $395,202
Fair value of plan assets 257,093
 264,211


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

 March 31,
 20222021
Accumulated benefit obligation$207,612 $396,673 
Fair value of plan assets121,110 283,280 
  March 31,
  2020 2019
Accumulated benefit obligation $401,918
 $389,509
Fair value of plan assets 254,508
 264,211


Unrecognized gains and losses are amortized through March 31, 20202022 on a straight-line basis over the average remaining service period of active participants. Starting in fiscal 2016, the Company changed the amortization period of its largest plan to the average remaining lifetime of inactive participants, as a significant portion of the plan population is now inactive. This change increases the amortization period of the unrecognized gains and losses.

The weighted-average assumptions in the following table represent the rates used to develop the actuarial present value of the projected benefit obligation for the year listed and also net periodic pension cost for the following year:

 202220212020
Discount rate3.35 %2.62 %2.79 %
Expected long-term rate of return on plan assets4.70 %4.60 %5.01 %
Rate of compensation increase on active plans2.76 %2.76 %2.76 %
Interest crediting rates used in cash balance pension plans1.05 %1.10 %2.25 %
  2020 2019 2018
Discount rate 2.79% 3.42% 3.49%
Expected long-term rate of return on plan assets 5.01% 5.77% 6.77%
Rate of compensation increase on active plans 0.59% 0.61% 0.39%


63
COLUMBUS McKINNON CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(tabular amounts in thousands, except share data)


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

COLUMBUS McKINNON CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(tabular amounts in thousands, except share data)


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

 TargetActual
 202320222021
Equity securities23%-13%34%45%
Fixed income securities77%-87%66%55%
Total plan assets100%100%100%
  Target Actual
  2021 2020 2019
Equity securities 40-30% 33% 35%
Fixed income 60-70% 67% 65%
Total plan assets 100% 100% 100%


The Company has an investment objective for domestic pension plans to adequately provide for both the growth and liquidity needed to support all current and future benefit payment obligations. The Company's policy is to de-risk the portfolio by increasing liability-hedging investments as the pension liability funded status increases, which is known as the glide path method. Within the table above, cash equivalents are categorized as fixed income as they earn lower returns than equity securities which includes alternative real estate funds (shown in the fair value tables below). Subsequent to March 31, 2022, the Company amended the glide path for the Monthly Retirement Benefit plan ("MRB") as a result of its funded status. The MRB plan’s assets of $146,592,000 are now allocated 81% to fixed income securities and 19% to equity securities.

The Company’s funding policy with respect to the defined benefit pension plans is to contribute annually at least the minimum amount required by the Employee Retirement Income Security Act of 1974 (ERISA). Additional contributions may be made to minimize PBGC premiums. The Company plans to contribute the minimum amount required (approximately $4,945,000)$5,077,000) to its pension plans in fiscal 2021 as a response to COVID-19 but will reassess later in the fiscal year and increase contributions if economic conditions improve.2023.

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

2023$23,451 
202423,368 
202523,278 
202623,267 
202723,294 
2028-2032110,539 
2021$26,943
202227,052
202327,312
202427,189
202526,965
2026-2030131,220


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

COLUMBUS McKINNON CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(tabular amounts in thousands, except share data)


The Company’s postretirement health benefit plans are not funded. The following sets forth a reconciliation of benefit obligation and the funded status of the plan:

  March 31,
  2020 2019
Change in benefit obligation:    
Benefit obligation at beginning of year $2,348
 $3,284
Interest cost 71
 92
Actuarial gain (340) (778)
Benefits paid (192) (250)
Benefit obligation at end of year $1,887
 $2,348
     
Funded status $(1,887) $(2,348)
Unrecognized actuarial gain (1,417) (1,282)
Net amount recognized $(3,304) $(3,630)


Amounts recognized in the consolidated balance sheets are as follows:

  March 31,
  2020 2019
Accrued liabilities $(270) $(326)
Other non-current liabilities (1,617) (2,022)
Accumulated other comprehensive gain, before tax (1,417) (1,282)
Net amount recognized $(3,304) $(3,630)


In fiscal 2021, an estimated gain of $207,000 for the defined benefit postretirement health care plans will be amortized from accumulated other comprehensive loss to net periodic benefit cost. In fiscal 2020, net periodic postretirement benefit cost includedfor fiscal 2022 was $187,000 and the following:

  Year Ended March 31,
  2020 2019 2018
Interest cost $71
 $92
 $126
Net amortization (205) (156) (5)
Net periodic postretirement benefit cost $(134) $(64) $121


For measurement purposes, healthcare costs are assumed to increase 5.75% in fiscal 2021, grading down over time to 5.0% in four years. The discount rate used in determining the accumulated postretirement benefit obligation was 3.17% and 3.63% as ofliability at March 31, 20202022 is $1,196,000 with $1,013,000 included in Other non-current liabilities and 2019, respectively.$183,000 included in Accrued liabilities in the Consolidated Balance Sheet.

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

2021$274
2022245
2023225
2024206
2025186
2026-2030631

COLUMBUS McKINNON CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(tabular amounts in thousands, except share data)



Assumed medical claims cost trend rates have an effect on the amounts reported for the health care plans. A one-percentage point change in assumed health care cost trend rates would have the following effects

  
One Percentage
Point Increase
 
One Percentage
Point Decrease
Effect on total of service and interest cost components $3
 $(3)
Effect on postretirement obligation 78
 (71)


The Company has collateralized split-dollar life insurance arrangements with two of its former officers.  Under these arrangements, the Company pays certain premium costs on life insurance policies for the former officers.  Upon the later of the death of the former officer and their spouse, the Company will receive all of the premiums paid to-date.  The net periodic pension cost for fiscal 20202022 was $145,000$132,000 and the liability at March 31, 20202022 is $4,631,000$4,645,000 with $4,494,000$4,452,000 included in Other non-current liabilities and $137,000$193,000 included in Accrued liabilities in the Consolidated Balance Sheet.  The cash surrender value of the policies is $3,346,000$3,590,000 and $3,207,000$3,496,000 at March 31, 20202022 and 2019,2021, respectively.  The balance is included in Other assets in the consolidated balance sheet.
 



64
COLUMBUS McKINNON CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(tabular amounts in thousands, except share data)

Other Benefit Plans

The Company also sponsors defined contribution plans covering substantially all domestic employees and certain international employees. Participants may elect to contribute basic contributions. These plans provide for employer contributions based on employee eligibility and participation. The Company recorded a charge for such contributions of approximately $5,239,000, $5,260,000,$4,540,000, $4,063,000, and $4,198,000$5,239,000 for the years ended March 31, 2020, 2019,2022, 2021, and 2018,2020, respectively which are included in Cost of Products Sold, Selling Expenses, and General and Administrative Expenses within the Consolidated Statements of Operations. The Company expects its contributions for the defined contribution plans in future years to remain comparable to its fiscal 2020 contributions.

Fair Values of Plan Assets

The Company classified its investments within the categories of equity securities, fixed income securities, alternative real estate, and cash equivalents, as the Company’s management bases its investment objectives and decisions from these four categories.  The Company’s investment policy is to use its glide-path method to de-risk the portfolio by increasing liability-hedging investments as the pension liability funded status increases.

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

  March 31,
  2020 2019
Asset categories:    
Equity securities $94,336
 $103,017
Fixed income securities 199,613
 205,957
Alternative real estate 9,401
 9,978
Cash equivalents 10,016
 2,950
Total $313,366
 $321,902

 March 31,
 20222021
Asset categories:  
Equity securities$80,020 $116,468 
Fixed income securities178,155 155,553 
Alternative real estate11,849 12,863 
Cash equivalents1,961 1,794 
Total$271,985 $286,678 
 




COLUMBUS McKINNON CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(tabular amounts in thousands, except share data)


The fair values of our defined benefit plans’ consolidated assets were determined using the fair value hierarchy of inputs described in Note 5. The fair values by category of inputs as of March 31, 20202022 and March 31, 20192021 were as follows:

  Measured at NAV (1) 
Quoted Prices
in Active
Markets for
Identical Assets
 
Significant other
observable
Inputs
 
Significant
unobservable
Inputs
  
As of March 31, 2020:   (Level 1) (Level 2) (Level 3) Total
Asset categories:          
Equity securities $42,252
 $52,084
 $—
 $—
 $94,336
Fixed income securities 30,598
 24,014
 139,498
 5,503
 199,613
Alternative real estate 4,195
 5,206
 —
 —
 9,401
Cash equivalents —
 10,016
 —
 —
 10,016
Total $77,045
 $91,320
 $139,498
 $5,503
 $313,366

 Measured at NAV (1)Quoted Prices
in Active
Markets for
Identical Assets		Significant other
observable
Inputs		Significant
unobservable
Inputs		 
As of March 31, 2022:(Level 1)(Level 2)(Level 3)Total
Asset categories: 
Equity securities$33,321 $46,699 $— $— $80,020 
Fixed income securities26,312 17,013 133,670 1,160 178,155 
Alternative real estate11,849 — — — 11,849 
Cash equivalents— 1,961 — — 1,961 
Total$71,482 $65,673 $133,670 $1,160 $271,985 
(1) Reflects the net asset value (NAV) practical expedient used to approximate fair value.

  Measured at NAV (1) 
Quoted Prices
in Active
Markets for
Identical Assets
 
Significant other
observable
Inputs
 
Significant
unobservable
Inputs
  
As of March 31, 2019:   (Level 1) (Level 2) (Level 3) Total
Asset categories:          
Equity securities $43,314
 $59,703
 $—
 $—
 $103,017
Fixed income securities 45,713
 602
 153,941
 5,701
 205,957
Alternative real estate 7,161
 2,817
 —
 —
 9,978
Cash equivalents —
 2,950
 —
 —
 2,950
Total $96,188

$66,072

$153,941

$5,701
 $321,902


65
COLUMBUS McKINNON CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(tabular amounts in thousands, except share data)

 Measured at NAV (1)Quoted Prices
in Active
Markets for
Identical Assets		Significant other
observable
Inputs		Significant
unobservable
Inputs		 
As of March 31, 2021:(Level 1)(Level 2)(Level 3)Total
Asset categories:    
Equity securities$52,710 $63,758 $— $— $116,468 
Fixed income securities25,198 7,115 122,071 1,169 155,553 
Alternative real estate12,862 1 — — 12,863 
Cash equivalents— 1,794 — — 1,794 
Total$90,770 $72,668 $122,071 $1,169 $286,678 
(1) Reflects the net asset value (NAV) practical expedient used to approximate fair value.
 
Level 1 securities consist of mutual funds with quoted market prices.

The Level 2 fixed income securities are investments in a combination of funds whose underlying investments are in a variety of fixed income securities including foreign and domestic corporate bonds, securities issued by the U.S. government, U.S. and foreign government obligations, and other similar fixed income investments. The fair values of the underlying investments in these funds are generally based on independent broker dealer bids, or by comparison to other debt securities having similar durations, yields, and credit ratings. The fair values of these funds are determined based on their net asset values which are published daily.  We are not aware of any significant restrictions on the issuances or redemption of shares of these funds

Fair value of Level 3 fixed income securities at the beginning of the year was $5,701,000.$1,169,000. During fiscal 20202022 fixed income securities earned investment return of $113,000$21,000 and had disbursements of $311,000, which includes liquidations,$30,000 resulting in an ending balance of $5,503,000.$1,160,000.  These fixed income securities consist primarily of insurance contracts which are carried at their liquidation value based on actuarial calculations and the terms of the contracts.  Significant inputs in determining the fair value for these contracts include company contributions, contract disbursements, and stated interest rates.  Gains and losses on these contracts are recognized as part of net periodic pension cost and recorded as part of cost of sales, selling, or general and administrative expense.



14.     Employee Stock Ownership Plan (ESOP)
 
Effective January 1, 2012 the ESOP was closed to new hires.  Prior to this date, substantially all of the Company’s U.S. non-union employees were participants in the ESOP. Additionally, during the year ended March 31, 2015 the final loan payment was made by the ESOP to the Company and there was no compensation expense recorded in fiscal years 2020, 2019,2022, 2021, or 2018.2020.

At March 31, 20202022 and 2019, 234,0002021, 190,000 and 280,000216,000 of ESOP shares, respectively, were allocated or available to be allocated to participants’ accounts. There are no shares of collateralized common stock related to the ESOP loan outstanding at March 31, 20202022 and no ESOP shares were pledged as collateral to guarantee the ESOP term loans.
 

15.     Earnings per Share and Stock Plans
 
Earnings per Share
 
The Company calculates earnings per share in accordance with ASC Topic 260, “Earnings per Share.”  Basic earnings per share exclude any dilutive effects of options, warrants, and convertible securities. Diluted earnings per share include any dilutive effects of stock options, unvested restricted stock units, unvested performance shares, and unvested restricted stock.  Stock options and performance shares with respect to 196,000156,000 and 128,000244,000 common shares were not included in the computation of diluted earnings per share for fiscal 20202022 and 2019,2021, respectively, because they were antidilutive. For the years ended March 31, 20202022 and 2019,2021, an additional 40,000120,000 and 153,000,105,000, respectively, in contingently issuable shares were not included in the computation of diluted earnings per share because a performance condition had not yet been met.


66
COLUMBUS McKINNON CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(tabular amounts in thousands, except share data)

 
The following table sets forth the computation of basic and diluted earnings per share (share data presented in thousands):
 
  Year Ended March 31,
Numerator for basic and diluted earnings per share: 2020 2019 2018
Net income $59,672
 $42,577
 $22,065
       
Denominators:  
  
  
Weighted-average common stock outstanding— denominator for basic EPS 23,619
 23,276
 22,841
Effect of dilutive employee stock options, RSU's and performance shares 236
 384
 494
       
Adjusted weighted-average common stock outstanding and assumed conversions— denominator for diluted EPS 23,855
 23,660
 23,335

 Year Ended March 31,
Numerator for basic and diluted earnings per share:202220212020
Net income$29,660 $9,106 $59,672 
Denominators:   
Weighted-average common stock outstanding— denominator for basic EPS28,040 23,897 23,619 
Effect of dilutive employee stock options, RSU's and performance shares361 276 236 
Adjusted weighted-average common stock outstanding and assumed conversions— denominator for diluted EPS28,401 24,173 23,855 
 
The weighted-average common stock outstanding shown above is net of unallocated ESOP shares (see Note 14).

DuringIn May of fiscal 2018,2022, the Company adopted ASU No. 2016-09, "Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting" (ASU No. 2016-09). Among other modifications to accounting for stock based compensation, this ASU requires that assumed proceeds from excess tax benefits and deficiencies are no longer included in the calculationissued 4,312,500 shares of weighted-average diluted common stock outstanding and are recorded as income tax expense or benefitraising $198,705,000 net of fees in connection with the statement of operations.Dorner acquisition. Refer to Note 173 for the impact the adoption had on the Company's financial statements.additional details of this transaction.

Stock Plans

The Company records stock-based compensation in accordance with ASC Topic 718, “Compensation – Stock Compensation,” applying the modified prospective method. This Statement requires all equity-based payments to employees, including grants of employee stock options, to be recognized in the statement of earnings based on the grant date fair value of the award. Under the modified prospective method, the Company is required to record equity-based compensation expense for all awards granted after the date of adoption and for the unvested portion of previously granted awards outstanding as of the date of adoption.

The Company grants share based compensation to eligible participants under the 2016 Long Term Incentive Plan, as Amended and Restated in June 2019 ("2016 LTIP").  The total number of shares of common stock with respect to which awards may be granted under the 2016 LTIP were increased by 2,500,000 as a result of the June 2019 amendment. Shares not previously
COLUMBUS McKINNON CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(tabular amounts in thousands, except share data)


authorized for issuance under any of the prior stock plans, and any shares not issued or subject to outstanding awards under the prior stock plans are still available for issuance. Details of the shares granted under these plans are discussed below.
Prior to the adoption of the 2016 LTIP, the Company granted stock awards under the 2010 Long Term Incentive Plan and the 2006 Long Term Incentive Plan, collectively referred to as the “Prior Stock Plans.”  

Stock based compensation expense was $4,507,000, $6,198,000,$11,246,000, $8,022,000, and $5,586,000$4,507,000 for fiscal 2020, 2019,2022, 2021, and 2018,2020, respectively.  The decrease inlower stock based compensation expense in fiscal 2020 is primarily related to shares that were forfeited when the Company's prior Chief Executive Officer (CEO) resigned on January 10, 2020. The forfeiture resulted in the reversal of $1,981,000 in stock compensation expense during fiscal 2020 recorded as a reduction to General and administrative expenses.

Stock compensation expense is included in cost of products sold, selling, general and administrative, and research and development expenses depending on the nature of the service of the employee receiving the award. The Company recognizes expense for all share–based awards over the service period, which is the shorter of the period until the employees’ retirement eligibility dates or the service period for the award, for awards expected to vest.  Accordingly, expense is generally reduced for estimated forfeitures.  ASC Topic 718 requires forfeitures to be estimated at the time of grant and revised if necessary, in subsequent periods if actual forfeitures differ from those estimates.

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





67
COLUMBUS McKINNON CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(tabular amounts in thousands, except share data)

Long Term Incentive Plan

Under the 2016 LTIP, the total number of shares of common stock with respect to which awards may be granted under the plan is 2,500,000 in addition to shares not previously authorized for issuance under any of the prior stock plans and any shares not issued or subject to outstanding awards under the prior stock plans.  As of March 31, 2020, 3,033,0002022, 1,799,000 shares remain available for future grants. The 2016 LTIP was designed as an omnibus plan and awards may consist of non-qualified stock options, incentive stock options, stock appreciation rights, restricted stock, restricted stock units, or stock bonuses.

Under the 2016 LTIP, the granting of awards to employees may take the form of options, restricted shares, and performance shares. The Compensation Committee of our Board of Directors determines the number of shares, the term, the frequency and date, the type, the exercise periods, any performance criteria pursuant to which awards may be granted, and the restriction and other terms and conditions of each grant in accordance with terms of the Plan.

In connection with the acquisition of Magnetek, the Company agreed to continue the 2014 Stock Incentive Plan of Magnetek, Inc. (the "Magnetek Stock Plan"). In doing so, the Company has available under the Magnetek Stock Plan 164,461 of the Company's shares which can be granted to certain employees as stock-based compensation.
 
Stock Option Plans

OptionsPrior to fiscal 2021, options outstanding under the 2016 LTIP generally become exercisable over a four-year4-year period at a rate of 25% per year commencing one year from the date of grant and have an exercise price of not less than 100% of the fair market value of the common stock on the date of grant. For fiscal 2021 and fiscal 2022, options outstanding under the 2016 LTIP generally become exercisable over a 3-year period at a rate of 33% per year commencing one year from the date of grant and have an exercise price of not less than 100% of the fair market value of the common stock on the date of grant.

COLUMBUS McKINNON CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(tabular amounts in thousands, except share data)


A summary of option transactions during each of the three fiscal years in the period ended March 31, 20202022 is as follows:
 SharesWeighted-
average
Exercise Price per share		Weighted-
average
Remaining
Contractual
Life (in years)		Aggregate
Intrinsic
Value
Outstanding at April 1, 2019834,777 23.52 7.04$9,602 
Granted171,515 35.16   
Exercised(296,027)20.26   
Cancelled(183,471)31.01   
Outstanding at March 31, 2020526,794 26.53 6.93$1,518 
Granted242,178 26.74   
Exercised(97,398)20.24   
Cancelled(13,760)31.85   
Outstanding at March 31, 2021657,814 27.45 7.29$16,652 
Granted159,643 54.06   
Exercised(105,132)25.24   
Cancelled(32,540)31.71   
Outstanding at March 31, 2022679,785 33.82 7.08$15,294 
Exercisable at March 31, 2022322,218 $26.64 5.69$10,190 
  Shares 
Weighted-
average
Exercise Price per share
 
Weighted-
average
Remaining
Contractual
Life (in years)
 
Aggregate
Intrinsic
Value
Outstanding at April 1, 2017 1,063,894
 19.10
 6.98 $6,477
Granted 227,783
 24.33
    
Exercised (363,091) 17.43
    
Cancelled (6,136) 19.83
    
Outstanding at March 31, 2018 922,450
 21.04
 7.56 $13,654
Granted 133,743
 38.70
    
Exercised (187,907) 22.09
    
Cancelled (33,509) 23.94
    
Outstanding at March 31, 2019 834,777
 23.52
 7.04 $9,602
Granted 171,515
 35.16
    
Exercised (296,027) 20.26
    
Cancelled (183,471) 31.01
    
Outstanding at March 31, 2020 526,794
 26.53
 6.93 $1,518
Exercisable at March 31, 2020 225,337
 $22.67
 5.74 $858


The Company calculated intrinsic value for those options that had an exercise price lower than the market price of our common shares as of March 31, 2020.2022. The aggregate intrinsic value of outstanding options as of March 31, 20202022 is calculated as the difference between the exercise price of the underlying options and the market price of our common shares for the 302,505523,000 options that were in-the-money at that date. The aggregate intrinsic value of exercisable options as of March 31, 20202022 is calculated as the difference between the exercise price of the underlying options and the market price of our common shares for the 177,251321,000 exercisable options that were in-the-money at that date. The Company's closing stock price was $25.00$42.40 as of March 31, 2020. The total intrinsic value of stock options exercised was $5,438,000, $3,577,000, and $5,851,000 during fiscal 2020, 2019, and 2018, respectively.

The grant date fair value of options that vested was $7.43, $7.36, and $7.42 during fiscal 2020, 2019, and 2018, respectively.

As of March 31, 2020, $1,961,000 of unrecognized compensation cost related to non-vested stock options is expected to be recognized over a weighted-average period of approximately 2.6 years.

Exercise prices for options outstanding as of March 31, 2020, ranged from $13.43 to $38.70. The following table provides certain information with respect to stock options outstanding at March 31, 2020:



68
  
Stock Options
Outstanding
 
Weighted-average
Exercise Price
 
Weighted-average
Remaining
Contractual Life
Range of Exercise Prices      
$10.01 to 20.00 152,666
 $15.56
 5.64
$20.01 to 30.00 177,705
 $24.89
 6.20
$30.01 to $40.00 196,423
 $36.59 8.61
  526,794
 $26.53
 6.93

COLUMBUS McKINNON CORPORATION
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
 
(tabular amounts in thousands, except share data)

31, 2022. The total intrinsic value of stock options exercised was $2,513,000, $1,749,000, and $5,438,000 during fiscal 2022, 2021, and 2020, respectively.

The grant date fair value of options that vested was $11.19, $9.15, and $7.43 during fiscal 2022, 2021, and 2020, respectively.

As of March 31, 2022, $2,537,000 of unrecognized compensation cost related to non-vested stock options is expected to be recognized over a weighted-average period of approximately 1.6 years.

Exercise prices for options outstanding as of March 31, 2022, ranged from $13.43 to $54.26. The following table provides certain information with respect to stock options outstanding at March 31, 2022:
 Stock Options
Outstanding		Weighted-average
Exercise Price		Weighted-average
Remaining
Contractual Life
Range of Exercise Prices   
$10.01 to 20.0071,378 $15.23 3.98
$20.01 to 30.00235,876 $25.17 6.69
$30.01 to $40.00216,117 $34.79 7.09
$40.01 to $50.006,365 $49.36 9.13
$50.01 to $60.00150,049$54.26 9.04
 679,785 $33.82 7.08

The following table provides certain information with respect to stock options exercisable at March 31, 2020:2022:

Range of Exercise PricesStock Options
Exercisable
Weighted- average
Exercise Price per share
$10.01 to 20.0071,378 $15.23 
$20.01 to 30.00138,200 24.93 
$30.01 to $40.00111,122 35.73 
$40.01 to $50.00— — 
$50.01 to $60.001,518 54.26 
 322,218 $26.64 
Range of Exercise Prices 
Stock Options
Exercisable
 
Weighted- average
Exercise Price per share
$10.01 to $20.00 89,764
 $15.85
$20.01 to $30.00 115,353
 25.19
$30.01 to $40.00 20,220
 38.58
  225,337
 $22.67


The fair value of stock options granted was estimated on the date of grant using a Black-Scholes option pricing model. The Black-Scholes option valuation model was developed for use in estimating the fair value of traded options which have no vesting restrictions and are fully transferable. In addition, option valuation models require the input of subjective assumptions including the expected stock price volatility. Because the Company’s employee stock options have characteristics significantly different from those of traded options, and because changes in the subjective input assumptions can materially affect the fair value estimate, in management’s opinion, the existing models do not necessarily provide a reliable single measure of the fair value of its employee stock options. The weighted-average grant date fair value of the options was $12.39, $13.56,$17.71, $8.46, and $7.66$12.39 for options granted during fiscal 2020, 2019,2022, 2021, and 2018,2020, respectively. The following table provides the weighted-average assumptions used to value stock options granted during fiscal 2020, 2019,2022, 2021, and 2018:2020:

 
Year Ended
March 31,
2022
Year Ended
March 31,
2021
Year Ended
March 31,
2020
Assumptions:   
Risk-free interest rate0.35 %0.23 %2.23 %
Dividend yield0.44 %0.90 %0.68 %
Volatility factor0.3720.3800.372
Expected life5.5 years5.5 years5.5 years
  
Year Ended
March 31,
2020
 
Year Ended
March 31,
2019
 
Year Ended
March 31,
2018
Assumptions:      
Risk-free interest rate 2.23% 2.64% 1.42%
Dividend yield 0.68% 0.52% 0.66%
Volatility factor 0.372
 0.352
 0.343
Expected life 5.5 years
 5.5 years
 5.5 years


To determine expected volatility, the Company uses historical volatility based on daily closing prices of its Common Stock over periods that correlate with the expected terms of the options granted. The risk-free rate is based on the United States Treasury


69
COLUMBUS McKINNON CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(tabular amounts in thousands, except share data)

yield curve at the time of grant for the appropriate term of the options granted. Expected dividends are based on the Company's history and expectation of dividend payouts. The expected term of stock options is based on vesting schedules, expected exercise patterns and contractual terms.

Restricted Stock Units

The Company granted restricted stock units under the 2016 LTIP during fiscal 2020, 2019,2022, 2021, and 20182020 to employees as well as to the Company’s non-executive directors as part of their annual compensation.  RestrictedPrior to fiscal 2021, restricted stock units for employees vest ratably based on service one-quarter after each of years one, two, three, and four. For fiscal 2021 and 2022, restricted stock units for employees vest ratably based on service one-third after each of years one, two, and three.

COLUMBUS McKINNON CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(tabular amounts in thousands, except share data)


A summary of the restricted stock unit awards granted under the Company’s LTIP plan as of March 31, 20202022 is as follows:

  Shares 
Weighted-average
Grant Date
Fair Value per share
Unvested at April 1, 2017 370,256
 $19.32
Granted 136,935
 29.38
Vested (157,448) 20.39
Forfeited (12,954) 17.99
Unvested at March 31, 2018 336,789
 $22.62
Granted 116,942
 37.90
Vested (211,932) 22.66
Forfeited (11,602) 25.18
Unvested at March 31, 2019 230,197
 $30.22
Granted 151,351
 38.40
Vested (106,792) 31.09
Forfeited (62,035) 31.61
Unvested at March 31, 2020 212,721
 $35.20

 SharesWeighted-average
Grant Date
Fair Value per share
Unvested at April 1, 2019230,197 $30.22 
Granted151,351 38.40 
Vested(106,792)31.90 
Forfeited(62,035)31.61 
Unvested at March 31, 2020212,721 $35.20 
Granted195,181 29.16 
Vested(125,150)31.85 
Forfeited(12,963)34.74 
Unvested at March 31, 2021269,789 $32.41 
Granted133,082 49.98 
Vested(138,407)35.71 
Forfeited(19,728)35.41 
Unvested at March 31, 2022244,736 $39.86 
 
Total unrecognized compensation cost related to unvested restricted stock units as of March 31, 20202022 is $4,954,000$4,724,000 and is expected to be recognized over a weighted average period of 2.41.6 years.  The fair value of restricted stock units that vested during the year ended March 31, 20202022 and 20192021 was $3,320,000$4,943,000 and $4,802,000,$3,986,000, respectively.

Performance Shares

The Company granted performance shares under the 2016 LTIP during fiscal 2020, 2019,2022, 2021, and 2018.2020. Performance based shares are recognized as compensation expense based upon their grant date fair value and to the extent it is probable that the performance conditions will be met.  This expense is recognized ratably over the three year period that these shares are restricted. Fiscal 2017 performance shares granted vest pursuant to a performance condition based upon the Company’s Consolidated Net Sales. During fiscal 2019, the Company determined that the fiscal year 2017 performance shares would not vest due to the performance condition not being met. Fiscal 2018 performance shares granted vest pursuant to a performance condition based upon the Company’s Consolidated Net Sales. During fiscal 2019, the Company determined that the fiscal year 2018 performance shares were earned based on the performance condition being met.

Fiscal 2019 performance shares granted vest pursuant to a performance condition based upon the Company’s Consolidated EBITDA margin for the twelve months ended March 31, 2020. During fiscal 2020, the Company determined that the fiscal year 2019 performance shares were earned based on the performance condition being met. Fiscal 2020 performance shares granted vest pursuant to a performance condition based upon the Company’s Consolidated EBITDA margin for the twelve months ended March 31, 2021. During fiscal 2021, the Company determined that this performance condition would not be met. Fiscal 2021 performance shares granted vest pursuant to a performance condition based upon the Company’s Consolidated Return on Invested Capital ("ROIC") for the twelve months ended March 31, 2023. At this time we believe it is probable thatthe Company believes the March 31, 20212023 performance condition will be met. Fiscal 2022 performance shares granted vest pursuant to a performance condition based upon the Company’s Consolidated ROIC for the twelve months ended March 31, 2024. At this time the Company believes the March 31, 2024 performance condition will be met.



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(tabular amounts in thousands, except share data)


A summary of the performance shares transactions during each of the three fiscal years in the period ended March 31, 20202022 is as follows:

SharesWeighted-average
Grant Date
Fair Value per share
Unvested at April 1, 2019153,386 $23.11 
Granted38,585 37.67 
Forfeited(125,251)22.67 
Unvested at March 31, 202066,720 $32.36 
Granted83,164 25.97 
Vested(23,201)25.28 
Forfeited(3,451)25.28 
Unvested at March 31, 2021123,232 $29.58 
Granted41,322 52.01 
Vested(18,296)36.43 
Forfeited(8,226)30.25 
Unvested at March 31, 2022138,032 $35.35 
  Shares 
Weighted-average
Grant Date
Fair Value per share
Unvested at April 1, 2017 118,853
 $18.92
Granted 49,221
 25.28
Forfeited (41,504) 24.94
Unvested at March 31, 2018 126,570
 $19.42
Granted 34,695
 36.43
Forfeited (7,879) 22.40
Unvested at March 31, 2019 153,386
 $23.11
Granted 38,585
 37.67
Forfeited (125,251) 22.67
Unvested at March 31, 2020 66,720
 $32.36

The Company had $1,335,000$1,968,000 in unrecognized compensation costs related to the unvested performance share awards as of March 31, 2020.2022.

Directors Stock

During fiscal 2020, 2019,2022, 2021, and 2018,2020, a total of 11,768, 10,031,21,928, 16,209, and 16,66711,768 shares of stock, respectively, were granted under the 2016 LTIP to the Company’s non-executive directors as part of their annual compensation. The weighted average fair value grant price of those shares was $39.09, $41.88,$43.73, $33.32, and $25.80$39.09 for fiscal 2020, 2019,2022, 2021, and 2018,2020, respectively. The expense related to the shares for fiscal 20202022 was $460,000$959,000 and $430,000$540,000 and $460,000 for fiscal years 20182021 and 2019.2020.

Shareholder Rights PlanDividends

On March 29, 2018 the Company announced that its Board of Directors had amended the Company's Shareholder Rights Plan, which accelerated the expiration of the Company's preferred share purchase rights to March 31, 2018. Prior to its expiration, preferred share purchase right holders could exercise their rights if a person or group acquired 20% or more of the Company’s common shares or announced a tender offer for 20% or more of the common shares.

Dividends

On March 24, 202021, 2022, the Company's Board of Directors approved payment of a quarterly dividend of $0.06$0.07 per common share, representing an annual dividend rate of $0.24$0.28 per share. The dividend was paid on May 14, 202016, 2022 to shareholders of record on May 4, 20206, 2022 and totaled approximately $1,430,000.$2,000,000.

Stock Repurchase Plan

On March 26, 2019, the Board of Directors approved a new stock repurchase program authorizing the repurchase of up to $20 million of the Company's common stock. NaNNo repurchases were made during the fiscal years ended March 31, 20202022 or 2019.2021.

16.     Loss Contingencies

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


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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(tabular amounts in thousands, except share data)


Accrued general and product liability costs are actuarially estimated reserves based on amounts determined from loss reports, individual cases filed with the Company, and an amount for losses incurred but not reported. The aggregate amounts of reserves were $11,944,000$22,575,000 (gross of estimated insurance recoveries of $9,160,000) and $12,686,000$21,227,000 (gross of estimated insurance recoveries of $8,052,000) of which $8,444,000$18,675,000 and $9,185,000$17,727,000 are included in Other non current liabilities and $3,900,000 and $3,500,000 in Accrued liabilities for both years as of March 31, 20202022 and 2019,2021, respectively.  The liability for accrued general and product liability costs are funded by investments in marketable securities (see Notes 2 and 7).
 



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(tabular amounts in thousands, except share data)

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

 Year Ended March 31,
 202220212020
Accrued general and product liability, beginning of year$21,227 $11,944 $12,686 
Estimated insurance recoveries1,109 8,052 — 
Add provision for claims6,648 4,634 3,233 
Deduct payments for claims(6,409)(3,403)(3,975)
Accrued general and product liability, end of year$22,575 $21,227 $11,944 
Estimated insurance recoveries(9,160)(8,052)— 
Net accrued general and product liability, end of year$13,415 $13,175 $11,944 
  Year Ended March 31,
  2020 2019 2018
Accrued general and product liability, beginning of year $12,686
 $13,582
 $13,335
Add provision for claims 3,233
 2,887
 3,965
Deduct payments for claims (3,975) (3,783) (3,718)
Accrued general and product liability, end of year $11,944
 $12,686
 $13,582


The per occurrence limits on the self-insurance for general and product liability coverage to Columbus McKinnon through its wholly-owned captive insurance company were $2,000,000 from inception through fiscal 2003 and $3,000,000 for fiscal 2004 and thereafter. In addition to the per occurrence limits, the Company’s coverage is also subject to an annual aggregate limit, applicable to losses only. These limits range from $2,000,000 to $6,000,000 for each policy year from inception through fiscal 2020.

Along with other manufacturing companies, the Company is subject to various federal, state, and local laws relating to the protection of the environment. To address the requirements of such laws, the Company has adopted a corporate environmental protection policy which provides that all of its owned or leased facilities shall, and all of its employees have the duty to, comply with all applicable environmental regulatory standards, and the Company utilizes an environmental auditing program for its facilities to ensure compliance with such regulatory standards.2022. The Company has also established managerial responsibilitiespurchases excess general and internal communication channels for dealing with environmental compliance issues that may arise in the course of its business. Because of the complexity and changing nature of environmental regulatory standards, it is possible that situations will arise from timeproduct liability insurance up to time requiring the Company to incur expenditures in order to ensure environmental regulatory compliance. However, the Company is not aware of any environmental condition or any operation at any of its facilities, either individually or in thean aggregate which would cause expenditures having a material adverse effect on its results of operations, financial condition or cash flows and, accordingly, has not budgeted any material capital expenditures for environmental compliance for fiscal 2020.$75,000,000 limit.

We have entered a voluntary environmental cleanup program in certain states where we operate and believe that our current reserves are sufficient to remediate these locations. For all of the currently known environmental matters, we have accrued as of March 31, 2020, a total of $1,143,000 which, in our opinion, is sufficient to deal with such matters. The Company is not aware of any environmental condition or any operation at any of its facilities, either individually or in the aggregate, which would cause expenditures to have a material adverse effect on its results of operations, financial condition or cash flows and, accordingly, has not budgeted any material capital expenditures for environmental compliance for fiscal 2020.Asbestos

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

Based on actuarial information, the Company has estimated its net asbestos-related aggregate liability including related legal costs to range between $3,800,000$5,800,000 and $6,900,000$10,600,000, net of insurance recoveries, using actuarial parameters of continued claims for a period of 37 years from March 31, 2020.2022.  The Company's estimation ofCompany has estimated its asbestos-related aggregate liability that is probable and estimable, net of insurance recoveries, in accordance with U.S.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(tabular amounts in thousands, except share data)


generally accepted accounting principles approximates $4,753,000, which$7,836,000. The Company has been reflected the liability gross of insurance recoveries of $9,160,000 as a liability in the consolidated financial statements as of March 31, 2020.2022. The recorded liability does not consider the impact of any potential favorable federal legislation. This liability will fluctuate based on the uncertainty in the number of future claims that will be filed and the cost to resolve those claims, which may be influenced by a number of factors, including the outcome of the ongoing broad-based settlement negotiations, defensive strategies, and the cost to resolve claims outside the broad-based settlement program. Of this amount, management expects to incur asbestos liability payments of approximately $2,000,000$2,400,000 over the next 12 months. Because payment of the liability is likely to extend over many years, management believes that the potential additional costs for claims will not have a material effect on the financial condition of the Company or its liquidity, although the effect of any future liabilities recorded could be material to earnings in a future period.

The Company believes that aA share of itsthe Company's previously incurred asbestos-related expenses and future asbestos-related expenses are covered by pre-existing insurance policies. The Company hashad been engaged in a legal action against the insurance carriers for those policies to recover past expenses and future costs incurred. In March of fiscal 2020, theThe Company came to a tentativean agreement with the insurance carriers to settle its case against them for recovery of a portion of past costs and cost-sharingfuture costs for future asbestos-related legal defense costs. The settlement is subject to mutual agreement ofwas finalized during the terms and conditions in a coverage in place agreement.quarter ended September 30, 2020. The terms of the tentative settlement require the carriers to pay gross defense costs prior to retro-premiums of 65% for future asbestos-related defense costs subject to an annual cap of $1,650,000 for clamsclaims covered by the tentative settlement. The reimbursement net of retro-premiums is approximately 47% which resulted in a $1,830,000 increase to the Company's asbestos liability during the second quarter of fiscal 2021.



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(tabular amounts in thousands, except share data)

In addition, a payout of approximately $2,650,000 is expectedthe insurance carriers were required to be receivedreimburse the Company for past defense costs through the date of the settlement amounting to $3,006,000 which will be reduced bywas paid during the second quarter of fiscal 2021. The reimbursement for past cost was recorded net of a contingent legal costs.fee of $1,500,000 which was paid in the third quarter of fiscal 2021. Further, it is expected that the insurance carriers will accept coverage forare expected to cover 100% of indemnity oncosts related to all covered cases. Estimates of the future cost sharing have been included in the loss reserve calculation as of March 31, 2020. The settlement is expected to be finalized in fiscal2022 and 2021. During fiscal 2020 and fiscal 2019, the Company received settlement payments of $381,000 and $484,000, respectively, net of legal fees, from its insurance carriers as partial reimbursement for asbestos-related expenses.  These partial payments have been recorded as gains in cost of products sold.

The Company is also involvedhas recorded a receivable for the estimated future cost sharing in other unresolved legal actions that ariseOther assets in the normal course of business. The most prevalent of these unresolved actions involve disputes related to product design, manufacture and performance liability. The Company's estimation of its product-related aggregate liability that is probable and estimable, in accordance with U.S. generally accepted accounting principles approximates $6,423,000, which has been reflected as a liabilityBalance Sheet in the consolidated financial statements asamount of $9,160,000 and $8,052,000, which offsets its asbestos reserves, at March 31, 2020. In some cases, we cannot reasonably estimate a range of loss because there is insufficient information regarding the matter.  Management believes that the potential additional costs for claims will not have a material effect on the financial condition of the Company or its liquidity, although the effect of any future liabilities recorded could be material to earnings in a future period.2022 and 2021, respectively.

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

Product Liability

The Company is also involved in other unresolved legal actions that arise in the normal course of business. The most prevalent of these unresolved actions involve disputes related to product design, manufacture and performance liability. The Company's estimation of its product-related aggregate liability that is probable and estimable, in accordance with U.S. generally accepted accounting principles approximates $4,951,000, which has been reflected as a liability in the consolidated financial statements as of March 31, 2022. In some cases, the Company cannot reasonably estimate a range of loss because there is insufficient information regarding the matter.  Management believes that the potential additional costs for claims will not have a material effect on the financial condition of the Company or its liquidity, although the effect of any future liabilities recorded could be material to earnings in a future period.

In addition, one of the Company's subsidiaries, Magnetek, Inc. ("Magnetek") has been named, along with multiple other defendants, in asbestos-related lawsuits associated with business operations previously acquired but which are no longer owned. During Magnetek's ownership, none of the businesses produced or sold asbestos-containing products. For such claims, Magnetek is uninsured and either contractually indemnified against liability, or contractually obligated to defend and indemnify the purchaser of these former business operations.  The Company aggressively seeks dismissal from these proceedings. Based on actuarial information, the asbestos relatedThe asbestos-related liability including legal costs is estimated to be approximately $768,000$562,000 and $565,000, which has been reflected as a liability in the consolidated financial statements at March 31, 2020.2022 and 2021, respectively.

Litigation-Other

In October 2010, Magnetek received a request for indemnification from Power-One, Inc. ("Power-One") for an Italian tax matter arising out of the sale of Magnetek's power electronics business to Power-One in October 2006. With a reservation of rights, Magnetek affirmed its obligation to indemnify Power-One for certain pre-closing taxes.  The sale included an Italian company, Magnetek, S.p.A., and its wholly owned subsidiary, Magnetek Electronics (Shenzhen) Co. Ltd. (the “Power-One China Subsidiary”). The tax authority in Arezzo, Italy, issued a notice of audit report in September 2010 wherein it asserted that the Power-One China Subsidiary had its administrative headquarters in Italy with fiscal residenceand therefore it should be considered resident in Italy and therefore, is subject to taxation in Italy.  In November 2010, the tax authority issued a notice of tax assessment for the period of July 2003 to June 2004, alleging that taxes of approximately $2,100,000 (Euro 1,900,000), plus interest, were due in Italy on taxable income earned by the Power-One China Subsidiary during this period.  In addition, the assessment alleges potential penalties together with interest in the amount of approximately $2,900,000$2,400,000 (Euro 2,600,000)2,200,000) for the alleged failure of the Power-One China Subsidiary to file its Italian tax
COLUMBUS McKINNON CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(tabular amounts in thousands, except share data)


return.  The Power-One China Subsidiary filed its response with the provincial tax commission of Arezzo, Italy in January 2011. A hearing before the Tax Court was held in July 2012 on the tax assessment for the period of July 2003 to June 2004. In September 2012, the Tax Court ruled in favor of the Power-One China Subsidiary dismissing the tax assessment for the period of July 2003 to June 2004. In February 2013, the tax authority filed an appeal of the Tax Court's September 2012 ruling. The Regional Tax Commission of Florence heard the appeal of the tax assessment dismissal for the period of July 2003 to June 2004 and thereafter issued its ruling finding in favor of the tax authority. Magnetek believesbelieved the court’s decision was based upon erroneous interpretations of the applicable law and appealed the ruling to the Italian Supreme Court in April 2015. In April 2022 the Supreme Court upheld the appeal in favor of Power-One.

The tax authority in Arezzo, Italy also issued a tax inspection report in January 2011 for the periods July 2002 to June 2003 (fiscal period 2002/2003) and July 2004 to December 2006 (fiscal periods 2004/2005 and 2005/2006) claiming that the Power-One China Subsidiary failed to file Italian tax returns for the reported periods. In August 2012, the tax authority in Arezzo, Italy issued four notices of tax assessment for the periods July 2002 to June 2003 and July 2004 to December 2006, alleging that taxes of approximately $7,500,000$7,400,000 (Euro 6,700,000) were due in Italy on taxable income earned by the Power-One China Subsidiary together with an allegation of potential penalties in the amount of approximately $3,100,000 (Euro 2,800,000) for the alleged failure of the Power-One China Subsidiary to file its Italian tax returns. On June 3, 2015, the Tax Court, with four judgements, ruled in favor of the Power-One China Subsidiary dismissing the tax assessments for the periods of July 2002 to


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(tabular amounts in thousands, except share data)

June 2003 and July 2004 to December 2006. On July 27, 2015, the tax authority filed an appealfour appeals of the Tax Court's ruling of June 3, 2015. In May 2016, the Regional Tax Court of Florence rejected the appealappeals of the tax authority and at the same time canceled the notices of assessment for the fiscal years of 2004/2005 and 2005/2006. The tax authority had up to six months to appeal the decision.decisions. In December 2016, Magnetekthe Power-One China Subsidiary was served by the Italian Revenue ServiceAgency with two appeals to the Italian Supreme Court regarding the two positive judgments on the tax assessments for the fiscal periods 2004/2005 and 2005/2006. In February 2017 the Power-One China Subsidiary filed two memorandum before the Italian Supreme Court in response to the appeals made by the tax authority against the positive judgments on the tax assessments for fiscal years 2004/2005 and 2005/2006. In March 2017, the tax authorityRegional Tax Court of Florence rejected the appeal of the assessment for 2005/2006 fiscal year.year (period July 2006-December 2006). The tax authority had until October 2017 to appeal this decision. In October 2017, Magnetekthe Power-One China Subsidiary was served by the Italian Revenue ServiceAgency with an appeal to the Italian Supreme Court against the positive judgment on the tax assessment for fiscal year 2005/2006. In November 2017 Magnetekthe Power-One China Subsidiary filed a memorandum with the Italian Revenue Service andbefore the Italian Supreme Court in response to the appeal made by the tax authority.authority against the positive judgment on the tax assessment for fiscal year 2006. In February 2018 an appeal hearing was held at the Regional Tax Court of Florence regarding the Italian tax authority's claim for taxes due for fiscal year 2002/2003. In March 2018, the Regional Tax Court of Florence rejected the appeal of the assessment for 2002/2003 fiscal year. In October 2018 Magnetekthe Power-One China Subsidiary was served by the Italian Revenue ServiceAgency with an appeal to the Italian Supreme Court against the positive judgment on the tax assessment for fiscal year 2002/2003. In November 2018 Magnetekthe Power-One China Subsidiary filed a memorandum with the Italian Supreme Court in response to the appeal made by the tax authority. In April 2022 the Supreme Court filed judgments concerning the tax assessments for fiscal years 2002/2003 and 2006. The Supreme Court upheld the appeals of the Italian Tax Authority and remitted the proceedings back to the Regional Tax Court for a new evaluation of the substance of the dispute. The proceedings should be resumed before the Regional Tax Court within six months from the filing of the judgements.

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

In September of 2017, Magnetek received a request for defense and indemnification from Monsanto Company, Pharmacia, LLC, and Solutia, Inc. (collectively, “Monsanto”) with respect to: (1) lawsuits brought by plaintiffs claiming that Monsanto manufactured polychlorinated biphenyls ("PCBs"), exposure to which allegedly caused injury to plaintiffs; and (2) lawsuits brought by municipalities and municipal entities claiming that Monsanto should be responsible for a variety of damages due to the presence of PCBs in bodies of water in those municipalities and/or in water treated by those municipal entities.  Monsanto claims to be entitled to defense and indemnification from Magnetek under a so-called “Special Undertaking” apparently executed by Magnetek's predecessor Universal Manufacturing ("Universal") in January of 1972, which purportedly required Universal to defend and indemnify Monsanto from liabilities “arising out of or in connection with the receipt, purchase, possession, handling, use, sale or disposition of” PCBs by Universal.
Magnetek has declined Monsanto’s tender, and believes that it has meritorious legal and factual defenses to the demands made by Monsanto.  Magnetek is vigorously defending against those demands and has commenced litigation to, among other things, declare the Special Undertaking void and unenforceable.  Monsanto has, in turn, commenced an action to enforce the Special Undertaking.  Magnetek intends to continue to vigorously prosecute its declaratory judgment action and to defend against Monsanto’s action against it.  The Company cannot reasonably estimate a potential range of loss with respect to Monsanto’s tender because there is insufficient information regarding the underlying matters.  Management believes, however, that the potential additional legal costs related to such matters will not have a material effect on the financial condition of the Company or its liquidity, although the effect of any future liabilities recorded could be material to earnings in a future period.

The Company had previously filed suit against Travelers in District Court seeking coverage under insurance policies in the name of Universal.  In July 2019, the District Court ruled that Travelers is obligated to defend Magnetek under these policies in connection with Magnetek’s litigation against Monsanto.  The Court held that Monsanto’s claims against Magnetek fall within the insuring agreement of the Travelers policies and that none of the policy exclusions precluded the possibility of coverage.  The Court also held that Travelers prior settlements with other insureds under the policies did not cut off or release Magnetek’s rights under the policies. Travelers moved for reconsideration and had sought discovery from Magnetek and Monsanto in connection with that motion. On September 22, 2020, the Court issued an order denying the motion to reconsider and denying the motion to compel discovery from Magnetek. The result was that the Court’s prior order granting Magnetek partial summary judgment and requiring Travelers’ to reimburse Magnetek’s defense costs to date and fund its defense costs moving forward was now binding, subject to Travelers right to appeal. Travelers moved for a reconsideration of the order which was denied in September 2020 and in March 2021 Traveler’s window to appeal the court order closed. As a result, the Company recorded a receivable for approximately $900,000 as of March 31, 2021 for past defense costs which are to be reimbursed. The


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(tabular amounts in thousands, except share data)

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

The Company is also engaged in similar insurance coverage litigation against Transportation Insurance Company in the Circuit Court of Cook County, Illinois.  The Company has sought a ruling that Transportation Insurance Company is also obligated to reimburse Magnetek’s defense costs to date and fund its defense costs moving forward.  That motion is not yet fully briefed.

Environmental Matters
From time to time, Magnetek has taken action to bring certain facilities associated
Along with previously owned businesses into compliance with applicable environmental laws and regulations. Uponother manufacturing companies, the subsequent sale of certain businesses, Magnetek agreed to indemnify the buyers against environmental claims associated with the divested operations,Company is subject to certain conditionsvarious federal, state, and limitations. Remediation activities, including those relatedlocal laws relating to indemnification obligations, did not involve material expenditures during fiscal year 2020.

Magnetekthe protection of the environment. To address the requirements of such laws, the Company has also been identified by the United States Environmental Protection Agency and certain state agencies asadopted a potentially responsible party for cleanup costs associated with alleged past waste disposal practices at several previously utilized,corporate environmental protection policy which provides that all of its owned or leased facilities shall, and offsite locations. Its remediation activities asall of its employees have the duty to, comply with all applicable environmental regulatory standards, and the Company utilizes an environmental auditing program for its facilities to ensure compliance with such regulatory standards.  The Company has also established managerial responsibilities and internal communication channels for dealing with environmental compliance issues that may arise in the course of its business. Because of the complexity and changing nature of environmental regulatory standards, it is possible that situations will arise from time to time requiring the Company to incur expenditures in order to ensure environmental regulatory compliance. However, the Company is not aware of any environmental condition or any operation at any of its facilities, either individually or in the aggregate, which would cause expenditures having a potentially responsible party werematerial adverse effect on its results of operations, financial condition or cash flows and, accordingly, has not budgeted any material in fiscal year 2020. Although the materiality of futurecapital expenditures for environmental activities may be affected by the level and type of contamination, the extent and nature of cleanup activities required by governmental authorities, the nature of Magnetek's alleged connection to the contaminated sites, the number and financial resources of other potentially responsible parties, the availability of indemnification rights against third parties, and the identification of additional contaminated sites, Magnetek's estimated share of liability, if any,compliance for environmental remediation, including its indemnification obligations, is not expected to be material.fiscal 2022.

In 1986, Magnetek acquired the stock of Universal Manufacturing Corporation (“Universal”) from a predecessor of Fruit of the Loom (“FOL”), and the predecessor agreed to indemnify Magnetek against certain environmental liabilities arising from pre-acquisition activities at a facility in Bridgeport, Connecticut. Environmental liabilities covered by the indemnification agreement included completion of additional cleanup activities, if any, at the Bridgeport facility and defense and indemnification against liability for potential response costs related to offsite disposal locations. Magnetek's leasehold interest in the Bridgeport facility was assigned to the buyer in connection with the sale of Magnetek's transformer business in June 2001. FOL, the successor to the indemnification obligation, filed a petition for Reorganization under Chapter 11 of the Bankruptcy Code in 1999 and Magnetek filed a proof of claim in the proceeding for obligations related to the environmental indemnification agreement. Magnetek believes
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(tabular amounts in thousands, except share data)


that FOL had substantially completed the clean-up obligations required by the indemnification agreement prior to the bankruptcy filing. In November 2001, Magnetek and FOL entered into an agreement involving the allocation of certain potential tax benefits and Magnetek withdrew its claims in the bankruptcy proceeding. Magnetek further believes that FOL's obligation to the state of Connecticut was not discharged in the reorganization proceeding.

In January 2007, the Connecticut Department of Environmental Protection (“DEP”) requested parties, including Magnetek, to submit reports summarizing the investigations and remediation performed to date at the site and the proposed additional investigations and remediation necessary to complete those actions at the site. DEP requested additional information relating to site investigations and remediation. Magnetek and the DEP agreed to the scope of the work plan in November 2010. The Company has recorded a liability of $352,000,$323,000, included in the amount specified above, related to the Bridgeport facility, representing the best estimate of future site investigation costs and remediation costs which are expected to be incurred in the future.

TheFor all of the currently known environmental matters, the Company has recorded total liabilities of $464,000 for all environmental matters related to Magnetek in the consolidated financial statementsaccrued as of March 31, 2020 on an undiscounted basis.

In September2022 a total of 2017, Magnetek received a request for defense and indemnification from Monsanto$822,000 which, in our opinion, is sufficient to deal with such matters. The Company Pharmacia, LLC, and Solutia, Inc. (collectively, “Monsanto”) with respect to: (1) lawsuits brought by plaintiffs claiming that Monsanto manufactured polychlorinated biphenyls ("PCBs"), exposure to which allegedly caused injury to plaintiffs; and (2) lawsuits brought by municipalities and municipal entities claiming that Monsanto should be responsible for a varietyis not aware of damages due to the presenceany environmental condition or any operation at any of PCBs in bodies of water in those municipalities and/its facilities, either individually or in water treated by those municipal entities.  Monsanto claimsthe aggregate, which would cause expenditures to be entitled to defense and indemnification from Magnetek under a so-called “Special Undertaking” apparently executed by Universal in January of 1972, which purportedly required Universal to defend and indemnify Monsanto from liabilities “arising out of or in connection with the receipt, purchase, possession, handling, use, sale or disposition of” PCBs by Universal.
Magnetek has declined Monsanto’s tender, and believes that it has meritorious legal and factual defenses to the demands made by Monsanto.  Magnetek is vigorously defending against those demands and has commenced litigation to, among other things, declare the Special Undertaking void and unenforceable.  Monsanto has, in turn, commenced an action to enforce the Special Undertaking.  Magnetek intends to continue to vigorously prosecute its declaratory judgment action and to defend against Monsanto’s action against it.  We cannot reasonably estimate a potential range of loss with respect to Monsanto’s tender because there is insufficient information regarding the underlying matters.  Management believes, however, that the potential additional legal costs related to such matters will not have a material adverse effect on theits results of operations, financial condition of the Company or its liquidity, although the effect ofcash flows and, accordingly, has not budgeted any future liabilities recorded could be material to earnings in a future period.capital expenditures for environmental compliance for fiscal 2023.

As of March 31, 2020 the Company has recorded a reserve of $100,000 for legal costs incurred to date and expected to be incurred related to this matter. The Company previously filed suit against Travelers in District Court seeking coverage under insurance policies in the name of Magnetek’s predecessor Universal Manufacturing.  In July 2019, the District Court ruled that Travelers is obligated to defend Magnetek under these policies in connection with Magnetek’s litigation against Monsanto.  The Court held that Monsanto’s claims against Magnetek fall within the insuring agreement of the Travelers policies and that none of the policy exclusions precluded the possibility of coverage.  The Court also held that Travelers prior settlements with other insureds under the policies did not cut off or release Magnetek’s rights under the policies.  Travelers has moved for reconsideration and has sought discovery from Magnetek and Monsanto in connection with that motion, which is not yet decided, and will have a right of appeal after that motion is decided. Subject to any appeal, Travelers will be required to reimburse Magnetek’s defense costs to date, and fund its defense costs moving forward.

The Company is also engaged in similar coverage litigation against Transportation Insurance Company in the Circuit Court of Cook County, Illinois.  The Company has sought a ruling that Transportation Insurance Company is also obligated to reimburse Magnetek’s defense costs to date, and fund its defense costs moving forward.  That motion is not yet fully briefed.


75
17.     Income Taxes
On December 22, 2017, the President of the United States signed into law the Tax Cuts and Jobs Act (“Tax Reform Act” or “the Act”). The legislation significantly changed U.S. tax law by, among other things, lowering corporate income tax rates, assessing a one-time transition tax on a deemed repatriation of non-previously taxed earnings of foreign subsidiaries, and implementing a territorial tax system.

COLUMBUS McKINNON CORPORATION
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
 
(tabular amounts in thousands, except share data)


While the Tax Reform Act provides for a territorial tax system, beginning in 2018, it includes two new U.S. tax base erosion provisions, the global intangible low-taxed income (“GILTI”) provisions and the base-erosion and anti-abuse tax (“BEAT”) provisions. The Act also provides for the foreign-derived intangible income (“FDII”) deduction for corporations that derive gross income from export activities

The GILTI provisions require the Company to include in its U.S. income tax return any foreign subsidiary earnings in excess of an allowable return on the foreign subsidiary’s tangible assets. The Company recorded $525,000 and $0 additional income tax expense as a result of GILTI for the years ended March 31, 2020 and 2019, respectively. The Company has elected to account for GILTI tax in the period in which it is incurred, and therefore has not provided any deferred tax impacts of GILTI in its consolidated financial statements for the years ended March 31, 2020 and 2019.

The BEAT provisions in the Tax Reform Act eliminate the deduction of certain base-erosion payments made to related foreign corporations, and impose a minimum tax if greater than regular tax. The BEAT tax had no impact on the Company's consolidated financial statements for the years ended March 31, 2020 and 2019.

The FDII provisions of the Act provide an incentive to domestic corporations in the form of a lower tax rate on income derived from tangible and intangible products and services in foreign markets. This lower tax rate is accomplished via an additional tax deduction based on a percentage of qualifying sales. The FDII deduction provided the Company an additional tax benefit of $1,029,000 and $945,000 in the years ended March 31, 2020 and 2019, respectively.

SAB 118 measurement period adjustments

On December 22, 2017, the SEC staff issued Staff Accounting Bulletin No. 118 (“SAB 118”) to address the application of U.S. GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the Tax Reform Act.

We applied the guidance in SAB 118 when accounting for the enactment-date effects of the Act in 2017 and throughout 2018. At December 31, 2017, we had not completed our accounting for all of the enactment-date income tax effects of the Act under ASC 740,17.     Income Taxes for the following aspects: remeasurement of deferred tax assets and liabilities and one-time transition tax. As of December 31, 2018, we completed our accounting for all of the enactment-date income tax effects of the Act, the impacts of which are summarized below.
One-time transition tax
The one-time transition tax is based on our total post-1986 earnings and profits ("E&P"), the tax on which we previously substantially deferred from U.S. income taxes under U.S. law. We recorded a provisional amount for our one-time transition tax liability for each of our foreign subsidiaries, resulting in a transition tax liability of $1,500,000 at March 31, 2018.
Upon further analysis of the Act, Notices and regulations issued and proposed by the U.S. Department of the Treasury and the Internal Revenue Service, we finalized our calculations of the transition tax liability during the quarter ended December 31, 2018. We decreased our March 31, 2018 provisional amount of $1,500,000 to zero, the effect of which is included as a component of income tax expense in fiscal 2019.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act") was enacted in response to the COVID-19 pandemic. Other tax jurisdictions have enacted similar legislation. The Company is currently evaluating the impact of the CARES Act and other, similar, legislation, but at present does not expect that the provision of the legislation would result in a material income tax benefit.
Deferred tax assets and liabilities
As of December 31, 2017 we remeasured certain deferred tax assets and liabilities based on the rates at which they were expected to reverse in the future (which was generally 21%), by recording a provisional amount of $16,128,000. Based upon further analysis completed during the measurement period, we reduced this estimate by $26,000 during the year ended March 31, 2018. No further adjustments were made to this provisional amount during the measurement period.


COLUMBUS McKINNON CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(tabular amounts in thousands, except share data)


The provision for income taxes differs from the amount computed by applying the statutory federal income tax rate to income from continuing operations before income tax expense. The sources and tax effects of the differences were as follows:
 
 Year Ended March 31,
 202220212020
Statutory federal income tax rate21.00 %21.00 %21.00 %
Expected tax at statutory rate$8,109 $2,116 $16,203 
State income taxes net of federal benefit759 (450)1,397 
Foreign taxes at rates other than statutory federal rate779 287 1,102 
Permanent items (1)(270)178 266 
Valuation allowance (2)300 84 (1,184)
Federal tax credits (3)(700)(700)(1,903)
Other (4)(191)(545)1,603 
Actual tax provision expense$8,786 $970 $17,484 
  Year Ended March 31,
  2020 2019 2018
Statutory federal income tax rate (1) 21.00% 21.00% 31.55%
Expected tax at statutory rate $16,203
 $11,108
 $15,676
Effect of Tax Reform Act (2), (3) —
 (1,500) 17,602
State income taxes net of federal benefit 1,397
 1,728
 (37)
Foreign taxes at rates other than statutory federal rate 1,102
 (145) (2,667)
Net loss on sale of businesses (5) —
 4,041
 —
Permanent items (8), (9) 266
 (1,694) (2,220)
Valuation allowance (4), (6) (1,184) 13,190
 (104)
Foreign tax credits (4) —
 (15,371) —
Federal tax credits (7) (1,903) (1,376) (612)
Other 1,603
 340
 (18)
Actual tax provision expense $17,484
 $10,321
 $27,620


(1) For fiscal 2018, represents the blended rate2022, permanent items include a net GILTI inclusion of 35 percent for the first three quarters$265,000 and Subpart F income of the$580,000. For fiscal year2020, permanent items include a net GILTI inclusion of $525,000 and 21 percent for the fourth quarter.a FDII deduction of $1,029,000
(2) For fiscal 2018, represents2022 the discrete expense of the one-time transition tax ($1,500,000) and the remeasurement of our net U.S. deferred tax assets at the new lower U.S. corporate income tax rate ($16,102,000).
(3) For fiscal 2019, represents the discrete benefit of the reduction of the one-time transition tax of $1,500,000 recorded in fiscal 2018 to zero.
(4) For fiscal 2019, primarily represents foreign tax credits generated by the one-time transition tax calculation and valuation allowance as the Company believes their utilization is uncertain.
(5) For fiscal 2019, represents losses on sales of businesses that are not deductiblenormal current year activity driven by certain foreign jurisdictions and for income tax purposes.
(6) For fiscal 2020, represents the reversal of a valuation allowance on certain foreign tax credits offset by increases in valuation allowances required in certain foreign jurisdiction.jurisdictions.
(7)(3) For Fiscal 2022 Federal tax credits include research and development credits of $700,000. For fiscal 2021, Federal tax credits include research and development credits of $700,000. For fiscal 2020, Federal tax credits include research and development credits of $800,000 and minimum tax credits.credits of $1,103,000.
(8) (4) For Fiscal 2022 Other primarily relates to the FY21 NOL generated and related carryback benefit of $908,000. For fiscal 2019, permanent items include a FDII deduction of $945,000.2021, Other primarily relates to adjustments for previously estimated tax expenses.
(9) For fiscal 2020, permanent items include a net GILTI inclusion of $525,000 and a FDII deduction of $1,029,000.

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

 Year Ended March 31,
 202220212020
Current income tax expense (benefit):   
United States Federal$(2,482)$810 $(2,491)
State taxes571 618 626 
Foreign12,666 8,246 11,984 
Deferred income tax expense (benefit):
United States1,139 (5,996)7,827 
Foreign(3,108)(2,708)(462)
 $8,786 $970 $17,484 
  Year Ended March 31,
  2020 2019 2018
Current income tax expense (benefit):      
United States Federal $(2,491) $(1,663) $1,109
State taxes 626
 394
 402
Foreign 11,984
 12,548
 6,141
Deferred income tax expense (benefit):      
United States 7,827
 5,873
 21,177
Foreign (462) (6,831) (1,209)
  $17,484
 $10,321
 $27,620





76
COLUMBUS McKINNON CORPORATION
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
 
(tabular amounts in thousands, except share data)


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

  March 31,
  2020 2019
Deferred tax assets:    
Federal net operating loss carryforwards $18,091
 $21,990
State and foreign net operating loss carryforwards 7,142
 8,069
Employee benefit plans 31,471
 27,955
Insurance reserves 3,216
 3,204
Accrued vacation and incentive costs 3,218
 4,766
Federal tax credit carryforwards 11,922
 17,685
ASC 842 Lease Liability 9,048
 —
Equity compensation 1,974
 2,285
Other 7,319
 4,449
Valuation allowance (15,036) (16,881)
Deferred tax assets after valuation allowance 78,365
 73,522
Deferred tax liabilities:    
Property, plant, and equipment (1,962) (2,429)
ASC 842 Right-of-Use Asset (8,938) —
Intangible assets (59,397) (63,468)
Total deferred tax liabilities (70,297)
(65,897)
Net deferred tax assets (liabilities) $8,068

$7,625

 March 31,
 20222021
Deferred tax assets:  
Federal net operating loss carryforwards$17,567 $16,038 
State and foreign net operating loss carryforwards10,075 7,404 
Employee benefit plans16,625 24,692 
Insurance reserves3,609 3,488 
Accrued vacation and incentive costs3,682 3,061 
Federal tax credit carryforwards12,427 13,238 
ASC 842 Lease Liability10,872 8,623 
Equity compensation3,927 2,782 
Other8,394 7,308 
Valuation allowance(16,147)(15,103)
Deferred tax assets after valuation allowance71,031 71,531 
Deferred tax liabilities:
Property, plant, and equipment(4,917)(1,889)
ASC 842 Right-of-Use Asset(10,130)(8,446)
Intangible assets(95,316)(58,716)
Total deferred tax liabilities(110,363)(69,051)
Net deferred tax assets (liabilities)$(39,332)$2,480 
 
The net deferred tax assetliability increased in fiscal 20202022 primarily as a result of an increase is accrued employee benefits and the amortizationacquisition of certain intangible assets, offset by the utilizationDorner in Q1 of federal and state net operating losses and certain tax credits.FY22.

The gross amount of the Company’s deferred tax assets were $93,401,000$87,178,000 and $90,403,000$86,634,000 at March 31, 20202022 and 2019,2021, respectively.

The valuation allowance includes $2,696,000, $2,372,000,$4,322,000 and $3,837,000$2,896,000 primarily related to foreign net operating losses at March 31, 2020, 2019,2022 and 2018,2021, respectively. The remaining valuation allowance primarily relates to foreign tax credits which the Company believes it will not utilize of $11,825,000 and $11,900,000 for the years ended March 31, 2022 and 2021, respectively. The Company’s foreign subsidiaries have net operating loss carryforwards of $4,299,000 that expire in periods ranging from five years to indefinite.

The federalFederal net operating losses of $13,752,000 arose from the acquisition of Dorner and have no expiration date. Federal net operating losses of $69,900,000 arose from the acquisition of Magnetek and have expiration dates ranging from 20212023 through 2035 and are subject to certain limitations under U.S. tax law. The state net operating losses of $112,184,000 have expiration dates ranging from 20202023 through 2038.2042.  The federal tax credits have expiration dates ranging from 20322028 to indefinite.2042.

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

  March 31,
  2020 2019
Net non-current deferred tax assets $26,281
 $27,707
Net non-current deferred tax liabilities (18,213) (20,082)
Net deferred tax assets (liabilities) $8,068
 $7,625

 March 31,
 20222021
Net non-current deferred tax assets$2,313 $20,080 
Net non-current deferred tax liabilities(41,645)(17,600)
Net deferred tax assets (liabilities)$(39,332)$2,480 

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



77
COLUMBUS McKINNON CORPORATION
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
 
(tabular amounts in thousands, except share data)


Income from continuing operations before income tax expense includes foreign subsidiary income of $37,577,000, $14,362,000,$42,127,000, $30,894,000, and $25,144,000$37,577,000 for the years ended March 31, 2020, 2019,2022, 2021, and 2018,2020, respectively. As of March 31, 2020,2022, the Company had approximately $137,000,000$115,000,000 of undistributed earnings of foreign subsidiaries. These earnings are considered to be permanently invested in operations outside the U.S. with the exception of the current earnings from one foreign subsidiary. Any repatriation of these amounts would not be expected to result in a material increase to income tax expense due to the one-time transition tax and the new U.S. territorial tax system. Determination of the amount of unrecognized deferred U.S. income tax liability with respect to such earnings is not practicable.
 
During fiscal 2018, the Company adopted ASU No. 2016-09. There were shares of common stock issued through restricted stock units, the exercise of non-qualified stock options, or through the disqualifying disposition of incentive stock options in the years ended March 31, 2020 and 2019. The tax effect to the Company from these share transactions during fiscal 2020 and 2019 was a reduction to income tax expense of ($169,000) and ($1,129,000), respectively.

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

 202220212020
Beginning balance$141 $132 $936 
Reductions for prior year tax positions— — (802)
Additions for prior year tax positions281 — — 
Foreign currency translation(8)9 (2)
Ending balance$414 $141 $132 
  2020 2019 2018
Beginning balance $936
 $592
 $975
Additions for tax positions of the current year —
 550
 444
Reductions for prior year tax positions (802) (141) —
Foreign currency translation (2) (65) 20
Lapses in statutes of limitation —
 —
 (847)
Ending balance $132
 $936

$592


The Company had $46,000$62,000, $57,000, and $38,000$46,000 accrued for the payment of interest and penalties at March 31, 20202022, 2021, and 2019,2020 respectively. The Company recognizes interest expense or penalties related to uncertain tax positions as a part of income tax expense in its consolidated statements of operations.

All$414,000 of the unrecognized tax benefits as of March 31, 20202022 would impact the effective tax rate if recognized.

The Company and its subsidiaries file income tax returns in the U.S., various state, local, and foreign jurisdictions. The Internal Revenue Service has completed an examination of the Company’s U.S. income tax returns for fiscal 2015 resulting in no adjustments. The Company has no current U.S. income tax examinations or audits.

The Company’s major tax jurisdictions are the United States and Germany.  With few exceptions, the Company is no longer subject to tax examinations by tax authorities in the United States for tax years prior to March 31, 20162018 and in Germany for tax years prior to March 31, 2012. The Company has a current tax examination in Germany for fiscal years 2012 to 2014.

The Company anticipates that totalcertain unrecognized tax benefits will change due to the settlement of audits in certain foreign jurisdictions prior to March 31, 2021.2023.


18.     Leases

Transition

In February 2016, the FASB issued ASU No. 2016-02, "Leases (Topic 842)" ("ASC 842"). ASC 842 requires the recognition of lease ROU assets and lease liabilities by lessees for those leases classified as operating leases and additional disclosures regarding the nature of the Company's leases, significant judgments made, and amounts recognized in the financial statements relating to those leases. The Company adopted this standard effective April 1, 2019 under the modified retrospective method whereas comparative period information is not restated. In addition, the Company elected the package of practical expedients which permits the Company to not reassess whether existing contracts are or contain leases, to not reassess the lease classification of any existing leases, and to not reassess initial direct costs for any existing leases. The Company also elected the practical expedient to not


separate lease and non-lease components for all classes of underlying assets and made an accounting policy election to not record leases with an initial term of twelve months or less on the balance sheet for all classes of underlying assets.

As a result of the adoption of ASC 842, the Company recognized an initial operating lease ROU assets of $35,553,000 on April 1, 2019 with a corresponding lease liability of the same amount. The standard did not materially impact the Company's Consolidated Statement of Operations or the Consolidated Statements of Cash Flows for the fiscal year ending March 31, 2020.

Nature of leases

The Company's leases are classified as operating leases and consist of manufacturingCompany’s lease arrangements generally include real estate (manufacturing facilities, sales offices, distribution centers, warehouses,warehouses), vehicles, and equipment. For leases with terms greater than twelve months, atAt the inception of an arrangement, the Company determines whether the arrangement is or contains a lease based on the unique facts and circumstances present. At lease commencement, the Company recognizesevaluates whether the arrangement is a finance or operating lease, and accounts for it accordingly. Operating leases are included in other assets, other current liabilities, and other liabilities on the Company’s Consolidated Balance Sheet. Finance leases are included in net property, plant, and equipment, current portion of long-term debt and finance lease obligation, and the remaining balance is recorded within term loan and finance lease obligations on the Consolidated Balance Sheet.

Leases with a term greater than one year are recognized on the Consolidated Balance Sheet as right-of-use (“ROU”) assets, lease obligations, and, if applicable, long-term lease obligations in the financial statement line items above. The Company has elected not to recognize leases with terms of one year or less on the Consolidated Balance Sheet. Lease obligations and their corresponding ROU asset and a lease liability. The initial lease liability is recognized atassets are recorded based on the present value of remaining lease payments over the expected lease term. Leases with an initial termAs the interest rate implicit in lease contracts is generally not readily determinable, the Company uses its estimated incremental borrowing rate in determining the present value of twelve months or less are not recordedlease payments. The incremental borrowing rate is determined based on the Company's Consolidated Balance Sheet.Company’s recent debt issuances, lease term, and the currency in which lease payments are made. The Company recognizes lease expense for operating leases on a straight-line basis over the lease term. Additionally, because the Company has elected to not separate lease and non-lease components, variable costs also include payments to the landlord for common area maintenance, real estate taxes, insurance, and other operating expenses.



78
Table of Contents

The Company's leases have lease terms ranging from 1 to 1523 years, some of which include options to extend or terminate the lease. The exercise of lease renewal options is at the Company’s sole discretion. When deemed reasonably certain of exercise, the renewal options are included in the determination of the lease term. The Company’s lease agreements do not contain material residual value guarantees or any material restrictive covenants.

The Company recorded a finance lease for a manufacturing facility in Hartland, WI that has a 23 year lease term which terminates in 2035 as a result of the Dorner acquisition. As of March 31, 2020,2022, the Company does not have any significant additional operating leases that have not yet commenced.

Significant assumptions or judgmentsInputs:

The discount rate implicit within each lease is generally not readily determinable, therefore, the Company uses its estimated incremental borrowing rate in determining the present value of lease payments. The incremental borrowing rate is determined based on the Company’s recent debt issuances, lease term, and the currency in which lease payments are made.

The following table presents the weighted average remaining lease term and discount rate:rate as of March 31, 2022 and March 31, 2021, respectively:
March 31, 2022March 31, 2021
Weighted-average remaining lease term (in years)
     Operating leases5.515.99
     Finance leases13.58— 
Weighted-average discount rate
     Operating leases3.78 %3.86 %
     Finance leases4.51 %— %
March 31, 2020
Weighted-average remaining lease term (in years)6.74
Weighted-average discount rate4.05%


Amounts recognized on the financial statements

The following table illustrates the balance sheet classification for ROU assets and lease liabilities as of March 31, 20202022 and March 31, 2021, respectively (in thousands):
March 31, 2022March 31, 2021
Operating leases:
Other assets (1)$30,809 $34,181 
Accrued liabilities7,965 7,673 
Other non current liabilities23,711 27,321 
Total operating liabilities$31,676 $34,994 
Finance leases:
Net property, plant, and equipment$13,525 $— 
Current portion of long-term debt and finance lease obligation544 — 
Term loan and finance lease obligations13,540 — 
Total finance liabilities$14,084 $— 
 Balance sheet classificationMarch 31, 2020
AssetsOther assets$38,125
   
CurrentAccrued liabilities6,924
Non-currentOther non current liabilities31,629
Total liabilities $38,553

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

Operating lease expense of $9,101,000, $9,175,000 and $8,869,000 for the fiscal yearyears ending March 31, 2022, 2021, and 2020, respectively, is included in incomeIncome from operations on the Consolidated Statements of Operations. Short-term lease expense, sublease income, and variable lease expenses are not material for the fiscal year ending March 31, 2020. Rental2022, 2021, and 2020, respectively. Finance lease expense of $984,000 for the fiscal year ending March 31, 2022, is included in Income from operations on the Consolidated Statements of Operations, and $634,000 is included in Interest and debt expense for the years endedfiscal year ending March 31, 2019 and 2018 was $12,248,000 and $13,020,000, respectively, under ASC 840 (prior2022, on the Company's Consolidated Statements of Operations related to the adoptionfinance lease.



79
Table of ASC 842).Contents






Other lease disclosures

AtFuture maturities of leases as of March 31, 2020, the maturities of operating lease liabilities2022, were as follows (in thousands):
Year:Operating LeasesFinance Lease
2023$8,847 $1,166 
20245,977 1,200 
20255,505 1,236 
20264,421 1,274 
20273,427 1,312 
Thereafter6,511 13,008 
Total undiscounted lease payments$34,688 $19,196 
Less: imputed interest$3,012 $5,112 
Present value of lease liabilities$31,676 $14,084 
Year:March 31, 2020
2021$8,285
20227,756
20236,853
20244,662
20254,190
Thereafter12,136
Total undiscounted lease payments$43,882
Less: imputed interest$5,329
Present value of lease liabilities$38,553


Supplemental cash flow information related to operating leases is as follows (in thousands):
Year ended
March 31, 2022
Year ended
March 31, 2021
Cash paid for amounts included in the measurement of operating lease liabilities$9,059 $8,909 
Cash paid for amounts included in the measurement of finance lease liabilities$1,132 $— 
ROU assets obtained in exchange for new operating lease liabilities$5,364 $2,866 
ROU assets obtained in exchange for new finance lease liabilities$14,582 $— 
 
Year ended
March 31, 2020
Cash paid for amounts included in the measurement of operating lease liabilities$8,593
ROU assets obtained in exchange for new operating lease liabilities$10,589




19.     Business Segment Information
 
ASC Topic 280, “Segment Reporting,” establishes the standards for reporting information about operating segments in financial statements. The Company has one operating and reportable segment for both internal and external reporting purposes.

Financial information relating to the Company’s operations by geographic area is as follows:

 Year Ended March 31,
 202220212020
Net sales:   
United States$548,620 $348,986 $450,242 
Germany188,134 164,380 175,492 
Europe, Middle East, and Africa (Excluding Germany)108,678 90,415 121,600 
Canada16,719 15,443 21,984 
Asia Pacific17,680 13,829 14,193 
Latin America26,724 16,589 25,651 
Total$906,555 $649,642 $809,162 
  Year Ended March 31,
  2020 2019 2018
Net sales:      
United States $450,242
 $485,969
 $455,483
Germany 175,492
 196,055
 195,807
Europe, Middle East, and Africa (Excluding Germany) 121,600
 127,453
 120,887
Canada 21,984
 22,206
 20,672
Asia Pacific 14,193
 17,749
 19,082
Latin America 25,651
 26,850
 27,488
Total $809,162
 $876,282

$839,419

Note: Net sales to external customers are attributed to geographic areas based upon the location from which the product was shipped from the Company to the customer.
  Year Ended March 31,
  2020 2019 2018
Total assets:  
  
  
United States $518,914
 $496,580
 $477,712
Germany 438,210
 429,859
 514,244
Europe, Middle East, and Africa (Excluding Germany) 86,638
 85,680
 99,598
Canada 9,979
 8,688
 7,469
Asia Pacific 20,314
 22,129
 23,630
Latin America 19,217
 18,635
 19,793
Total $1,093,272
 $1,061,571

$1,142,446
  Year Ended March 31,
  2020 2019 2018
Long-lived assets:  
  
  
United States $272,816
 $282,456
 $293,576
Germany 327,420
 342,150
 409,827
Europe, Middle East, and Africa 9,561
 10,163
 11,356
Canada 1,192
 1,319
 1,172
Asia Pacific 4,928
 5,781
 6,847
Latin America 1,197
 1,190
 1,499
Total $617,114
 $643,059
 $724,277

Note: Long-lived assets include net property, plant, and equipment, goodwill, and other intangibles, net.

Sales by major product group are as follows: Year Ended March 31,
  2020 2019 2018
Hoists $520,217
 $546,924
 $532,925
Chain and rigging tools 68,666
 89,215
 79,884
Industrial cranes 16,058
 30,967
 35,071
Actuators and rotary unions 77,957
 77,719
 71,525
Digital power control and delivery systems 100,658
 98,187
 84,565
Elevator application drive systems 25,606
 25,548
 24,423
Other —
 7,722
 11,026
Total $809,162
 $876,282
 $839,419


On December 28, 2018, the Company sold its Tire Shredder business, and on February 28, 2019, the Company sold Crane Equipment and Service Inc. and Stahlhammer Bommern GmbH. In fiscal year 2019, these businesses accounted for chain and rigging tools sales of $12,289,000, industrial cranes sales of $14,184,000, and other sales of $7,722,000.80

COLUMBUS McKINNON CORPORATION
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
 
(tabular amounts in thousands, except share data)


 Year Ended March 31,
 202220212020
Total assets:   
United States$1,105,956 $540,184 $518,914 
Germany422,671 435,638 438,210 
Europe, Middle East, and Africa (Excluding Germany)85,678 125,262 86,638 
Canada15,651 8,647 9,979 
Asia Pacific18,575 19,326 20,314 
Latin America37,176 21,375 19,217 
Total$1,685,707 $1,150,432 $1,093,272 
20.     Selected Quarterly Financial Data (Unaudited)

Below is selected quarterly financial data for fiscal 2020 and 2019:

  Three Months Ended
  June 30, 2019 September 30, 2019 December 31, 2019 March 31, 2020
Net sales $212,712
 $207,609
 $199,355
 $189,486
Gross profit 75,612
 73,493
 67,872
 66,209
Income from operations 27,043
 25,231
 20,886
 16,664
Net income (loss) $18,579
 $16,599
 $15,250
 $9,244
         
         
Net income (loss) per share – basic $0.79
 $0.70
 $0.64
 $0.39
         
Net income (loss) per share – diluted $0.78
 $0.69
 $0.63
 $0.39


  Three Months Ended
  June 30, 2018 September 30, 2018 December 31, 2018 March 31, 2019
Net sales $224,992
 $217,142
 $217,415
 $216,733
Gross profit 79,647
 75,900
 73,405
 76,045
Income from operations 13,503
 24,825
 6,646
 24,468
Net income (loss) $7,706
 $15,912
 $(782) $19,741
         
         
Net income (loss) per share – basic $0.33
 $0.68
 $(0.03) $0.84
         
Net income (loss) per share – diluted $0.33
 $0.67
 $(0.03) $0.83


 Year Ended March 31,
 202220212020
Long-lived assets:   
United States$811,276 $269,061 $272,816 
Germany312,288 336,606 327,420 
Europe, Middle East, and Africa (Excluding Germany)7,416 8,359 9,561 
Canada1,446 1,395 1,192 
Asia Pacific2,574 2,235 4,928 
Latin America2,563 1,635 1,197 
Total$1,137,563 $619,291 $617,114 

Note: Long-lived assets include net property, plant, and equipment, goodwill, and other intangibles, net.

Sales by major product group are as follows:Year Ended March 31,
 202220212020
Hoists$432,524 $394,682 $492,126 
High Precision Conveyors144,587 — — 
Chain and rigging tools83,461 47,557 68,666 
Industrial cranes43,482 37,025 44,149 
Actuators and rotary unions84,999 75,458 77,957 
Digital power control and delivery systems98,445 74,943 100,658 
Elevator application drive systems19,057 19,977 25,606 
Total$906,555 $649,642 $809,162 





81
COLUMBUS McKINNON CORPORATION
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
 
(tabular amounts in thousands, except share data)


21.20.     Accumulated Other Comprehensive Loss
 
The components of accumulated other comprehensive loss is as follows:

  March 31,
  2020 2019
Foreign currency translation adjustment – net of tax $(34,359) $(25,355)
Pension liability – net of tax (79,651) (55,601)
Postretirement obligations – net of tax 1,950
 1,847
Split-dollar life insurance arrangements – net of tax (1,340) (1,391)
Derivatives qualifying as hedges – net of tax (950) (2,552)
Accumulated other comprehensive loss $(114,350) $(83,052)

 March 31,
 20222021
Foreign currency translation adjustment – net of tax$(28,080)$(21,776)
Pension liability – net of tax(21,794)(38,081)
Postretirement obligations – net of tax1,836 1,989 
Split-dollar life insurance arrangements – net of tax(1,084)(1,264)
Derivatives qualifying as hedges – net of tax(777)(854)
Accumulated other comprehensive loss$(49,899)$(59,986)
 
The deferred taxes related to the adjustments associated with the items included in accumulated other comprehensive loss, net of deferred tax asset valuation allowances, were $7,445,000, $2,566,000,$(5,780,000), $(13,305,000), and $(6,848,000)$7,445,000 for fiscal 2020, 2019,2022, 2021, and 20182020 respectively.  Refer to Note 17 for discussion of the deferred tax asset valuation allowance.  In the period subsequent to our initial recording of the valuation allowance in fiscal 2011, increases and decreases to both the deferred tax assets associated with items in accumulated other comprehensive loss, and the valuation allowance, have been recorded as offsets to comprehensive income.

As a result of the Tax Cuts and Jobs Act as described in Note 17,(the "Act"), the Company recorded as an offsetting entry a $(9,477,000)$(7,251,000) stranded tax effect in the minimum pension liability component and a $(194,000) stranded tax effect in the split dollar life insurance arrangement component of other comprehensive income in fiscal 2018. The stranded tax effect related to the other post retirement obligations component was not material.

As a result of the recording of a deferred tax asset valuation allowance in fiscal 2011, the Company recorded as an offsetting entry a $10,006,000$7,605,000 stranded tax effect in the minimum pension liability component, $935,000 stranded tax effect in the other post retirement obligations component and a $747,000 stranded tax effect in the split dollar life insurance arrangement component of other comprehensive income. With the reversal of that valuation allowance in fiscal 2013, the Company recorded the reversal of the valuation allowance as a reduction of income taxes in the consolidated statement of operations.

As a result of the recording of a deferred tax asset valuation allowance in fiscal 2005, the Company recorded as an offsetting entry a $534,000$406,000 stranded tax effect in the minimum pension liability component of other comprehensive income. With the reversal of that valuation allowance in fiscal 2006, the Company recorded the reversal of the valuation allowance as a reduction of income taxes in the consolidated statement of operations.

The stranded tax effects described above are in accordance with ASC Topic 740, “Income Taxes” even though the impact of the act and the deferred tax asset valuation allowance described above were initially established as an adjustment to comprehensive income. This amount will remain indefinitely as a component of accumulated other comprehensive loss. As described

Changes in Note 22, the Company is evaluating the impact ASU 2018-02 will have accumulated other comprehensive income. Refer to Note 22 for additional information.income by component are as follows (in thousands):

 March 31, 2022
 Retirement ObligationsForeign CurrencyChange in Derivatives Qualifying as HedgesTotal
Beginning balance net of tax$(37,356)$(21,776)$(854)(59,986)
Other comprehensive income (loss) before reclassification15,398 (6,303)5,922 15,017 
Amounts reclassified from other comprehensive loss to net income915 — (5,845)(4,930)
Net current period other comprehensive (loss) income16,313 (6,303)77 10,087 
Ending balance net of tax$(21,043)$(28,079)$(777)$(49,899)



82
COLUMBUS McKINNON CORPORATION
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
 
(tabular amounts in thousands, except share data)


 March 31, 2021
 Retirement ObligationsForeign CurrencyChange in Derivatives Qualifying as HedgesTotal
Beginning balance net of tax$(79,041)$(34,359)$(950)(114,350)
Other comprehensive income (loss) before reclassification24,999 12,583 (8,552)29,030 
Amounts reclassified from other comprehensive loss to net income16,686 — 8,648 25,334 
Net current period other comprehensive (loss) income41,685 12,583 96 54,364 
Ending balance net of tax$(37,356)$(21,776)$(854)$(59,986)

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

  Year Ended March 31,
  2020 2019 2018
Net unrealized investment gain (loss) at beginning of year $—
 $888
 $699
Unrealized holdings gain (loss) arising during the period —
 —
 189
Reclassification adjustments for gain included in earnings —
 —
 —
Adoption of ASU 2016-01 —
 (888) —
Net change in unrealized gain (loss) on investments —
 (888) 189
Net unrealized investment gain at end of year $—
 $—
 $888



Changes inDetails of amounts reclassified out of accumulated other comprehensive income by componentloss for the year ended March 31, 20202022 are as follows (in thousands):

Details of AOCL ComponentsAmount reclassified from AOCLAffected line item on consolidated statement of operations
Net pension amount unrecognized 
 $1,237 (1)
 1,237 Total before tax
 (322)Tax benefit
 $915 Net of tax
Change in derivatives qualifying as hedges 
 $85 Cost of products sold
2,868 Interest expense
(11,250)Foreign currency
 (8,297)Total before tax
 2,452 Tax benefit
 $(5,845)Net of tax
(1)These accumulated other comprehensive loss components are included in the computation of net periodic pension cost. (See Note 13 — Pensions and Other Benefit Plans for additional details.)
  March 31, 2020
   Retirement Obligations Foreign Currency Change in Derivatives Qualifying as Hedges Total
Beginning balance net of tax  $(55,145) $(25,355) $(2,552) (83,052)
Other comprehensive income (loss) before reclassification  (25,449) (9,004) 4,772
 (29,681)
Amounts reclassified from other comprehensive loss to net income  1,553
 —
 (3,170) (1,617)
Net current period other comprehensive (loss) income  (23,896) (9,004) 1,602
 (31,298)
Ending balance net of tax  $(79,041) $(34,359) $(950) $(114,350)





83
COLUMBUS McKINNON CORPORATION
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
 
(tabular amounts in thousands, except share data)



Details of amounts reclassified out of accumulated other comprehensive loss for the year ended March 31, 20202021 are as follows (in thousands):

Details of AOCL ComponentsAmount reclassified from AOCLAffected line item on consolidated statement of operations
Net pension amount unrecognized 
 $22,009 (1)
 22,009 Total before tax
 (5,323)Tax benefit
 $16,686 Net of tax
Change in derivatives qualifying as hedges 
 $(90)Cost of products sold
1,585 Interest expense
7,874 Foreign currency
 9,369 Total before tax
 (721)Tax benefit
 $8,648 Net of tax

(1)These accumulated other comprehensive loss components are included in the computation of net periodic pension cost. (See Note 13 — Pensions and Other Benefit Plans for additional details.)


Details of AOCL Components Amount reclassified from AOCL Affected line item on consolidated statement of operations
Net pension amount unrecognized  
  
  $2,074
 (1)
  2,074
 Total before tax
  (521) Tax benefit
  $1,553
 Net of tax
     
Change in derivatives qualifying as hedges    
  $(54) Cost of products sold
  (327) Interest expense
  (3,907) Foreign currency
  (4,288) Total before tax
  1,118
 Tax benefit
  $(3,170) Net of tax

(1)These accumulated other comprehensive loss components are included in the computation of net periodic pension cost. (See Note 13 — Pensions and Other Benefit Plans for additional details.)


22.21.     Effects of New Accounting Pronouncements

ASU 2016-02 (Topic 842) - AdoptedTopics adopted in fiscal 20202022

In MarchDecember 2019, the FASB issued ASU No. 2019-01, "Codification Improvements: Leases2019-12, "Simplifying the Accounting for Income Taxes" (Topic 842)740). The standard clarifies, among other topics, that the effects of an enacted change in tax law on taxes currently payable or refundable for the current year be reflected in the computation of the annual effective tax rate in the first interim period that includes the enactment date of the new legislation. The Company adopted this standard effective April 1, 2021 and the standard did not have a material impact on the financial statements for the year ended March 31, 2022.

Topics not yet adopted

In March 2022, the FASB issued ASU 2022 No. 2022-01, "Derivative and Hedging (Topic 815): Fair Value Hedging - Portfolio Layer Method." The ASU clarifies transition disclosure requirements, specifically that entities are not subject toclarified the transition disclosure requirementsguidance in ASC 250 related to the effect815 on incomefair value hedge accounting of an accounting change on certain interim period information.interest rate risk for portfolios of financial assets. The ASU wasamends the guidance in ASU 2017-123 (released on August 28, 2017) that, among other things, established the “portfolio layer” method for making the fair value hedge accounting for these portfolios more accessible. The ASU is effective for fiscal years beginning after December 15, 2018, and2022, including interim periods within those years, with early adoption permitted no earlier than whenpermitted. The amendments should be applied prospectively to business combinations occurring on or after the entity adopts ASC 842.effective date of the amendments. We are currently evaluating the impact the standard will have on our consolidated financial statements.

In December 2018,October 2021, the FASB issued ASU No. 2018-20, "Narrow-Scope Improvements2021-08, "Business Combinations (Topic 805): Accounting for Lessors (Topic 842).Contract Assets and Contract Liabilities from Contracts with Customers." The ASU gives lessors electionsamends ASC 805 to accountrequire acquiring entities to apply Topic 606 to recognize and measure contract assets and contract liabilities in a business combination and is intended to improve the accounting for the following under the new lease standard: sales taxes and other similar taxes collected from lessees, lessor costs paid directly by a lessee, and recognition of variable payments foracquired revenue contracts with leasecustomers in a business combination by addressing diversity in practice and nonlease components.inconsistency. The ASU wasis effective for fiscal years beginning after December 15, 2018, and2022, including interim periods within those years, with early adoption permitted no earlier than whenpermitted. The amendments should be applied prospectively to business combinations occurring on or after the entity adopts ASC 842.

In July 2018, the FASB issued ASU No. 2018-11, "Leases (Topic 842): Targeted Improvements." Under the ASU, entities may elect not to recast the comparative periods presented when transitioning to ASC 842 and lessors may elect not to separate lease and nonlease components when certain conditions are met. The ASU was effective for fiscal years beginning after December 15, 2018, and interim periods within those years, with early adoption permitted no earlier than when the entity adopts ASC 842.

In July 2018, the FASB issued ASU No. 2018-10, "Codification Improvements to Topic 842." Under the ASU, various aspects within ASC 842 were improved, such as the rate implicit in the lease, lessee's reassessment of lease classification, lease term and purchase option, as well as many others aspectsdate of the guidance. The ASU is effective whenamendments. We are currently evaluating the entity adopts ASC 842.impact the standard will have on our consolidated financial statements.



84
COLUMBUS McKINNON CORPORATION
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
 
(tabular amounts in thousands, except share data)


In February 2016, the FASB issued ASU No. 2016-02, "Leases (Topic 842)." This standard requires all leases with durations greater than twelve months to be recognized on the balance sheet as right-of-use ("ROU") assets and leases liabilities. The standard also requires additional disclosures about leasing arrangements and requires a modified retrospective transition approach for existing leases, whereby the standard will be applied to the earliest year presented. The Company adopted this standard and all related standards effective April 1, 2019. Refer to Note 18 (Leases) for the transition impact and further details.

Other Topics adopted in fiscal 2020

In July 2019, the FASB issued ASU No. 2019-07, "Codification Updates to SEC Sections." The standard aligns the guidance in various SEC sections of the codification with the requirements of certain SEC final rules. The standard became effective upon issuance and the standard did not have a material impact on the financial statements for the twelve months ended March 31, 2020.

In June 2018, the FASB issued ASU No. 2018-07, "Improvements to Nonemployee Share-Based Payment Accounting (Topic 550 and 718)." The standard simplifies the accounting for share-based payments granted to nonemployees for goods and services. Under the ASU, most of the guidance on such payments to nonemployees (accounted for under ASC 550) would be aligned with the requirements for share-based payments granted to employees (accounted for under ASC 718). The Company adopted this standard effective April 1, 2019 and the standard did not have a material impact on the financial statements for the twelve months ended March 31, 2020.

In February 2018, the FASB issued ASU No. 2018-02, "Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income." This ASU amends ASC 220, Income Statement — Reporting Comprehensive Income, to allow a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act. The Company adopted this standard effective April 1, 2019 and did not make the election to reclassify the income tax effects of the Tax Cuts and Jobs Act from accumulated other comprehensive income to retained earnings.

In August 2017, the FASB issued ASU No. 2017-12, "Targeted Improvements to Accounting for Hedging Activities (Topic 815)." The standard better aligns an entity’s financial reporting for hedging relationships with risk management activities and reduces the complexity for the application of hedge accounting. For example, the ASU continues to require an initial prospective quantitative hedge effectiveness assessment and documentation at hedge inception. However, if certain criteria are met, entities can elect to subsequently perform prospective and retrospective effectiveness assessments qualitatively, unless facts and circumstances change, and the hedge effectiveness assessment generally does not need to be completed until the first quarterly hedge effectiveness assessment date (i.e., up to three months). The new standard also removes the concept of separately measuring and reporting hedge ineffectiveness and requires a company to present the earnings effect of the hedging instrument, including any ineffectiveness, in the same income statement line item in which the earnings effect of the hedged item is reported. The Company adopted this standard effective April 1, 2019 and the standard did not have a material impact on the financial statements for the twelve months ended March 31, 2020. The Company adopted the guidance on the modified retrospective basis and did not recognize a cumulative effect adjustment upon adoption as the Company had not recognized ineffectiveness on any of the hedging instruments existing as of the date of adoption.

Other Topics not yet adopted

In March 2020, the FASB issued ASU No. 2020-04, "Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting." The ASU is elective and is relief to all entities, subject to meeting certain criteria, that have contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. Optional expedients are provided for contract modification accounting under topics such as debt, leases, and derivatives. The optional amendments are effective for all entities as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020 through December 31, 2022. We are currently evaluating the impact the standard will have on our consolidated financial statements if we chose to elect.

In March 2020, the FASB issued ASU No. 2020-03, "Codification Improvements to Financial Instruments." The ASU makes narrow-scope improvements to various aspects of the financial instruments guidance, including the current expected credit losses CECL) standard issued in 2016. Certain issues (topics) in the standard are effective upon issuance and did not have a material impact on our consolidated financial statements. The two issues that pertain to CECL are effective when the Company adopts ASU 2016-13 (fiscal 2021, discussed below).

COLUMBUS McKINNON CORPORATION


85
Table of Contents
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(tabular amounts in thousands, except share data)



In December 2019, the FASB issued ASU No. 2019-12, "Simplifying the Accounting for Income Taxes" (Topic 740). The standard clarifies, among other topics, that the effects of an enacted change in tax law on taxes currently payable or refundable for the current year be reflected in the computation of the annual effective tax rate in the first interim period that includes the enactment date of the new legislation. The standard is effective for fiscal years, and interim periods within those years, beginning after December 15, 2020. Early adoption is permitted for fiscal years, and interim periods within those years. We are currently evaluating the impact the standard will have on our consolidated financial statements.

In November 2019, the FASB issued ASU No. 2019-11, "Codification Improvements to Topic 326: Financial Instruments - Credit Losses." The ASU allows, among other aspects, companies to make accounting policy elections to simplify certain aspects of the presentation and measurement of accrued interest on receivables as well as certain practical expedients for disclosure of accrued interest and financial assets secured by collateral maintenance provisions. The ASU is effective when the entity adopts ASU 2016-13, which is fiscal 2021 for the Company.

In May 2019, the FASB issued ASU No. 2019-05, "Financial Instruments - Credit Losses (Topic 326): Targeted Transition Relief." The ASU allows companies to elect, upon adoption of ASU 2016-13, the fair value option on financial instruments that were previously recorded at amortized cost and are within the scope of ASC 326-20 if the instruments are eligible for the fair value option under ASC 825-10. The ASU is effective when the entity adopts ASU 2016-13.

In November 2018, the FASB issued ASU No. 2018-19, "Codification Improvements to Topic 326: Financial Instruments - Credit Losses." The ASU changes the effective date of ASU 2016-13, Financial Instruments - Credit Losses, to fiscal years beginning after December 15, 2019, including interim periods within those fiscal years.

In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”). The standard changes the methodology for measuring credit losses on financial instruments and the timing of when such losses are recorded. ASU 2016-13 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2019. The Company has made significant progress on its implementation plan and is on track to adopt this standard effective fiscal 2021. We are currently updating our existing allowance for doubtful accounts policy and enhancing our controls in order to comply with the new standard and expect the impact to consolidated financial statement to be immaterial. However, the Company is monitoring the impact that COVID-19 is having on our customers and their outstanding receivable balances and is taking preventative measures, such as tightening credit limits and increasing bad debt expense, as necessary.

In August 2018, the FASB issued ASU No. 2018-14, "Disclosure Framework - Changes to the Disclosure Requirements for Defined Benefit Plan (Topic 715)." The ASU amends ASC 715 to add, remove, and clarify disclosure requirements related to defined benefit pension and other postretirement plans such as a narrative description describing the reasons for significant gains and losses affecting the benefit obligation for the period and the removal of disclosing amounts in accumulated other comprehensive income expected to be recognized as part of net periodic benefit cost over the next year. The ASU is effective for fiscal years beginning after December 15, 2020 with early adoption permitted. We anticipate this standard will change the disclosures in the Net Periodic Benefit Cost footnote in the Company's Form 10-K upon adoption.

In August 2018, the FASB issued ASU No. 2018-13, "Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement (Topic 820)." The ASU changes the fair value measurement disclosure requirements including new, eliminated, and modified disclosure requirements of ASC 820. For instance, the ASU requires the addition of disclosures for Level 3 fair value measurements with unrealized gains and losses included in other comprehensive income and disclosure of the range of the weighted average used to develop significant unobservable inputs for Level 3 measurements. The ASU is effective for fiscal years beginning after December 15, 2019, and interim periods within those years, with early adoption permitted for any eliminated or modified disclosures. We anticipate this standard will modify the disclosures in the Derivative Instruments footnote upon adoption.




COLUMBUS McKINNON CORPORATION

SCHEDULE II—Valuation and qualifying accounts
March 31, 2020, 2019,2022, 2021, and 20182020
Dollars in thousands

  Additions   
 
 
 
Description
Balance at
Beginning
of Period
Charged
to Costs
and
Expenses
Charged
to Other
Accounts		Acquisition/DivestitureDeductions Balance
at End of
Period
Year ended March 31, 2022:       
Deducted from asset accounts:       
Allowance for doubtful accounts$5,686 $1,929 $(170)$227 $1,955 (1)$5,717 
Deferred tax asset valuation allowance15,103 242 255 547 —  16,147 
Total$20,789 $2,171 $85 $774 $1,955  $21,864 
Reserves on balance sheet:      
Accrued general and product liability costs, net of insurance recoveries$13,175 $6,648 $— $— $6,409 (2)$13,414 
Year ended March 31, 2021:       
Deducted from asset accounts:       
Allowance for doubtful accounts$5,056 $2,411 $192 $— $1,973 (1)$5,686 
Deferred tax asset valuation allowance15,036 84 (17)— —  15,103 
Total$20,092 $2,495 $175 $— $1,973  $20,789 
Reserves on balance sheet:      
Accrued general and product liability costs, net of insurance recoveries$11,944 $4,634 $— $— $3,403 (2)$13,175 
Year ended March 31, 2020:       
Deducted from asset accounts:       
Allowance for doubtful accounts$3,264 $3,115 $(69)$— $1,254 (1)$5,056 
Deferred tax asset valuation allowance16,881 (1,184)(661)— —  15,036 
Total$20,145 $1,931 $(730)$— $1,254  $20,092 
Reserves on balance sheet:      
Accrued general and product liability costs, net of insurance recoveries$12,686 $3,033 $— $— $3,775 (2)$11,944 
    Additions     
 
 
 
Description
 
Balance at
Beginning
of Period
 
Charged
to Costs
and
Expenses
 
Charged
to Other
Accounts
Acquisition/Divestiture Deductions  
Balance
at End of
Period
Year ended March 31, 2020:            
Deducted from asset accounts:            
Allowance for doubtful accounts $3,264
 $3,115
 $(69)$—
 $1,254
(1) $5,056
Deferred tax asset valuation allowance 16,881
 (1,184) (661)—
 —
  15,036
Total $20,145
 $1,931
 $(730)$—
 $1,254
  $20,092
Reserves on balance sheet:  
  
  
 
  
  

Accrued general and product liability costs $12,686
 $3,033
 $—
$—
 $3,775
(2) $11,944
Year ended March 31, 2019:  
  
  
 
  
   
Deducted from asset accounts:            
Allowance for doubtful accounts $3,520
 $784
 $(112)$(26) $902
(1) $3,264
Deferred tax asset valuation allowance 4,671
 13,190
 (848)(132) —
  16,881
Total $8,191
 $13,974
 $(960)$(158) $902
  $20,145
Reserves on balance sheet:  
  
  
 
  
  

Accrued general and product liability costs $13,582
 $2,887
 $—
$—
 $3,783
(2) $12,686
Year ended March 31, 2018:  
  
  
 
  
   
Deducted from asset accounts:  
  
  
 
  
   
Allowance for doubtful accounts $2,676
 $1,184
 $153
$—
 $493
(1) $3,520
Deferred tax asset valuation allowance 4,585
 (104) 190
—
 —
  4,671
Total $7,261
 $1,080
 $343
$—
 $493
  $8,191
Reserves on balance sheet:  
  
  
 
  
  

Accrued general and product liability costs $13,335
 $3,965
 $—
$—
 $3,718
(2) $13,582
_________________
(1)Uncollectible accounts written off, net of recoveries
(2)Insurance claims and expenses paid

(1)Uncollectible accounts written off, net of recoveries

(2)Insurance claims and expenses paid



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

None.

Item 9A.    Controls and Procedures

Management’s Evaluation of Disclosure Controls and Procedures

As of March 31, 2020,2022, an evaluation was performed under the supervision and with the participation of our management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on that evaluation, our management, including the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of March 31, 2020.2022. 

Management’s Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f). Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control--Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (COSO). Based on that evaluation, our management concluded that our internal control over financial reporting was effective as of March 31, 2020.2022.

The effectiveness of the Company’s internal control over financial reporting as of March 31, 20202022 has been audited by Ernst & Young LLP, an independent registered public accounting firm, as stated in their report which is included herein.

The Company acquired 100% of the outstanding common shares of Dorner Mfg. Corp. ("Dorner") on April 7, 2021 and of Garvey Corporation ("Garvey") on December 1, 2021. Both acquisitions were excluded from management’s annual report on internal control over financial reporting as of March 31, 2022. The results of Dorner and Garvey are included in the Company's fiscal 2022 consolidated financial statements and constituted $628,658,000 and $546,025,000 of total assets and net assets, respectively, as of March 31, 2022, and $144,587,000 and $12,046,000 of net sales and net income, respectively, for the fiscal year then ended.

Our management, including the CEOChief Executive Officer and CFO,Chief Financial Officer, does not expect that our disclosure controls or our internal control over financial reporting will prevent or detect all error and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Further, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of controls effectiveness to future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.

Changes in Internal Control over Financial Reporting

There have been no changes in internal control over financial reporting during the three months ended March 31, 20202022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.






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Report of Independent Registered Public Accounting Firm


To the Shareholders and the Board of Directors of Columbus McKinnon Corporation

Opinion on Internal Control over Financial Reporting

We have audited Columbus McKinnon Corporation’s internal control over financial reporting as of March 31, 2020,2022, based on criteria established in Internal Control-IntegratedControl—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Columbus McKinnon Corporation (the Company) maintained, in all material respects, effective internal control over financial reporting as of March 31, 2020,2022, based on the COSO criteria.

As indicated in the accompanying Management’s Report on Internal Control Over Financial Reporting, management’s assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of Dorner Manufacturing Corporation and Garvey Corporation, both of which are included in the March 31, 2022 consolidated financial statements of the Company and constituted 37% and 71% of total and net assets, respectively, as of March 31, 2022, and 16% and 41% of revenues and net income, respectively for the year then ended. Our audit of internal control over financial reporting of the Company also did not include an evaluation of the internal control over financial reporting of Dorner Manufacturing Corporation and Garvey Corporation.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets as of March 31, 20202022 and 2019,2021, the related consolidated statements of operations, comprehensive income, shareholders' equity and cash flows for each of the three years in the period ended March 31, 2020,2022, and the related notes and financial statement schedule listed in the Index at Item 15(2) and our report dated May 27, 202025, 2022 expressed an unqualified opinion thereon.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management's Report on Internal Control overOver Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.




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Definition and Limitations of Internal Control Over Financial Reporting

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

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


/s/ Ernst & Young LLP

Buffalo, New York
May 27, 202025, 2022



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Item 9B.    Other Information

None.

Item 9C.    Disclosures Regarding Foreign Jurisdictions that Prevent Inspections

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 Securities and Exchange Commission (the "SEC") prior to July 31, 20202022 and upon the filing of such Proxy Statement, is incorporated by reference herein.

The charters of our Audit Committee, Compensation and Succession Committee, and Governance and Nomination Committee are available on our website at www.columbusmckinnon.com and are available to any shareholder upon request to the Corporate Secretary. The information on the Company's website is not incorporated by reference into this Annual Report on Form 10-K.

We have adopted a code of ethics that applies to all of our employees, including our principal executive officer, principal financial officer and principal accounting officer, as well as our directors.  Our code of ethics, the Columbus McKinnon Corporation Legal Compliance & Business Ethics Manual, is available on our website at www.columbusmckinnon.com. We intend to disclose any amendment to, or waiver from, the code of ethics that applies to our principal executive officer, principal financial officer or principal accounting officer otherwise required to be disclosed under Item 105.05 of Form 8-K by posting such amendment or waiver, as applicable, on our website.

Item 11.        Executive Compensation

The information regarding Executive Compensation will be included in a Proxy Statement to be filed with the Commission prior to July 31, 20202022 and upon the filing of such Proxy Statement, is incorporated by reference herein.

Item 12.        Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The information regarding Security Ownership of Certain Beneficial Owners and Management and regarding equity compensation plan incorporation will be included in a Proxy Statement to be filed with the Commission prior to July 31, 20202022 and upon the filing of such Proxy Statement, is incorporated by reference herein.

Item 13.        Certain Relationships and Related Transactions, and Director Independence

The information regarding Certain Relationships and Related Transactions will be included in a Proxy Statement to be filed with the Commission prior to July 31, 20202022 and upon the filing of such Proxy Statement, is incorporated by reference herein.

Item 14.        Principal Accountant Fees and Services

The information regarding Principal Accountant Fees and Services will be included in a Proxy Statement to be filed with the Commission prior to July 31, 20202022 and upon the filing of such Proxy Statement, is incorporated by reference herein.





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PART IV

Item 15.        Exhibits and Financial Statement Schedules

(1)Financial Statements:
(1)Financial Statements:

The following consolidated financial statements of Columbus McKinnon Corporation are included in Item 8:
ReferencePage No.
Report of Independent Registered Public Accounting Firm (PCAOB ID: 42)
3432
Consolidated Balance Sheets - March 31, 20202022 and 20192021
3735
Consolidated Statements of Operations – Years ended March 31, 2020, 2019,2022, 2021, and 20182020
3836
Consolidated Statements of Comprehensive Income – Years ended March 31, 2020, 2019,2022, 2021, and 20182020
3937
Consolidated Statements of Shareholders’ Equity – Years ended March 31, 2020, 2019,2022, 2021, and 20182020
4038
Consolidated Statements of Cash Flows – Years ended March 31, 2020, 2019,2022, 2021, and 20182020
4139
Notes to consolidated financial statements
4240

(2)Financial Statement Schedule:Page No.
Schedule II - Valuation and qualifying accounts
9186
All other schedules for which provision is made in the applicable accounting regulation of the Securities and Exchange Commission are not required under the related instructions or are inapplicable and therefore have been omitted.

(3)Exhibits:
(3)Exhibits:
Exhibit

Number
 
Exhibit

3.1
2.1

Restated CertificateAgreement and Plan of IncorporationMerger among Columbus McKinnon Corporation, Dorner Merger Sub Inc., Precision Blocker, Inc., and Precision TopCo LP (as representative of the Registrantcompany equityholders) (incorporated by reference to Exhibit 3.1 to the Company’s Registration Statement No. 33-80687 on Form S-1 dated December 21, 1995).
3.2

Amended By-Laws of the Registrant (incorporated by reference to Exhibit 3.110.1 to the Company’s Current Report on Form 8-K dated March 28, 2013)1, 2021).
3.32.2

Stock Purchase Agreement, dated November 3, 2021, among Columbus McKinnon Corporation, Garvey Corporation, William J. Garvey, The Mark Garvey Residuary Trust and Thomas G. Garvey III (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K dated November 4, 2021).
*3.1
Restated Certificate of Incorporation of the Registrant.
3.2
Certificate of Amendment to the Restated Certificate of Incorporation of Columbus McKinnon Corporation, dated as of May 18, 2009 (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K dated May 18, 2009).
3.43.3

Certificate of Amendment to the Restated Certificate of Incorporation of Columbus McKinnon, dated as of March 29, 2018 (incorporated by reference to Exhibit 3.4 to the Company’s Current Report on Form 8-K dated March 29, 2018).
3.4
Seventh Amended and Restated By-Laws of the Registrant (incorporated by reference to Exhibit 3.53.1 to the Company’s Current Report on Form 8-K dated March 29, 2018)November 8, 2021).
4.1
Specimen common share certificate (incorporated by reference to Exhibit 4.1 to the Company’s Registration Statement No. 33-80687 on Form S-1 dated December 21, 1995.)1995).


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#10.1
4.2

Agreement by and amongDescription of Securities of Columbus McKinnon Corporation Employee Stock Ownership Trust, Columbus McKinnon Corporation and Marine Midland Bank, dated November 2, 1995registered under Section 12 of the Securities Exchange Act of 1934, as amended (incorporated by reference to Exhibit 10.6 to the Company’s Registration Statement No. 33-80687 on Form S-1 dated December 21, 1995).
#10.2
Columbus McKinnon Corporation Employee Stock Ownership Plan Restatement Effective April 1, 1989 (incorporated by reference to Exhibit 10.23 to the Company’s Registration Statement No. 33-80687 on Form S-1 dated December 21, 1995).


#10.3
Amendment No. 1 to the Columbus McKinnon Corporation Employee Stock Ownership Plan as Amended and Restated as of April 1, 1989, dated March 2, 1995 (incorporated by reference to Exhibit 10.24 to the Company’s Registration Statement No. 33-80687 on Form S-1 dated December 21, 1995).
#10.4
Amendment No. 2 to the Columbus McKinnon Corporation Employee Stock Ownership Plan, dated October 17, 1995 (incorporated by reference to Exhibit 10.384.2 to the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 1997)2021).
#10.5#10.1
Amendment No. 3 to the Columbus McKinnon Corporation Employee Stock Ownership Plan, dated March 27, 1996 (incorporated by reference to Exhibit 10.39 to the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 1997).
#10.6
Amendment No. 4 of the Columbus McKinnon Corporation Employee Stock Ownership Plan as Amended and Restated as of April 1, 1989, dated September 30, 1996 (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 1996).
#10.7
Amendment No. 5 to the Columbus McKinnon Corporation Employee Stock Ownership Plan as Amended and Restated as of April 1, 1989, dated August 28, 1997 (incorporated by reference to Exhibit 10.37 to the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 1998).
#10.8
Amendment No. 6 to the Columbus McKinnon Corporation Employee Stock Ownership Plan as Amended and Restated as of April 1, 1989, dated June 24, 1998 (incorporated by reference to Exhibit 10.38 to the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 1998).
#10.9
Amendment No. 7 to the Columbus McKinnon Corporation Employee Stock Ownership Plan as Amended and Restated as of April 1, 1989, dated April 30, 2000 (incorporated by reference to Exhibit 10.24 to the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2000).
#10.10
Amendment No. 8 to the Columbus McKinnon Corporation Employee Stock Ownership Plan as Amended and Restated as of April 1, 1989, dated March 26, 2002 (incorporated by reference to Exhibit 10.30 to the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2002).
#10.11

Amendment No. 9 to the Columbus McKinnon Corporation Employee Stock Ownership Plan as Amended and Restated as of April 1, 1989, dated March 27, 2003 (incorporated by reference to Exhibit 10.32 to the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2003).
#10.12
Amendment No. 10 to the Columbus McKinnon Corporation Employee Stock Ownership Plan as Amended and Restated as of April 1, 1989, dated February 28, 2004 (incorporated by reference to Exhibit 10.12 to the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2004).
#10.13
Amendment No. 11 to the Columbus McKinnon Corporation Employee Stock Ownership Plan as Amended and Restated as of April 1, 1989, dated December 19, 2003 (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended December 28, 2003).
#10.14
Amendment No. 12 to the Columbus McKinnon Corporation Employee Stock Ownership Plan as Amended and Restated as of April 1, 1989, dated March 17, 2005 (incorporated by reference to Exhibit 10.14 to the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2005).
#10.15

Amendment No. 13 to the Columbus McKinnon Corporation Employee Stock Ownership Plan as Amended and Restated as of April 1, 1989, dated December 19, 2008 (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended December 28, 2008).
#10.16
Columbus McKinnon Corporation Personal Retirement Account Plan Trust Agreement, dated April 1, 1987 (incorporated by reference to Exhibit 10.25 to the Company’s Registration Statement No. 33-80687 on Form S-1 dated December 21, 1995).
#10.17
Second Amendment to the Columbus McKinnon Corporation Restricted Stock Plan (incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 29, 2002).
#10.18
Columbus McKinnon Corporation Thrift [401(k)] Plan 1989 Restatement Effective January 1, 1998 (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended December 27, 1998).
#10.19
Amendment No. 1 to the 1998 Plan Restatement of the Columbus McKinnon Corporation Thrift [401(k)] Plan, dated December 10, 1998 (incorporated by reference to Exhibit 10.29 to the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 1999).
#10.20
Amendment No. 2 to the 1998 Plan Restatement of the Columbus McKinnon Corporation Thrift [401 (k)] Plan, dated June 1, 2000 (incorporated by reference to Exhibit 10.33 to the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2000).
#10.21
Amendment No. 3 to the 1998 Plan Restatement of the Columbus McKinnon Corporation Thrift [401 (k)] Plan, dated  March 26, 2002 (incorporated by reference to Exhibit 10.39 to the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2002).
#10.22
Amendment No. 4 to the 1998 Plan Restatement of the Columbus McKinnon Corporation Thrift [401(k)] Plan, dated May 10, 2002 (incorporated by reference to Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 29, 2002).


#10.23
Amendment No. 5 to the 1998 Plan Restatement of the Columbus McKinnon Corporation Thrift [401(k)] Plan, dated December 20, 2002 (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended December 29, 2002).
#10.24
Amendment No. 6 to the 1998 Plan Restatement of the Columbus McKinnon Corporation Thrift [401(k)] Plan, dated May 22, 2003 (incorporated by reference to Exhibit 10.46 to the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2003).
#10.25
Amendment No. 7 to the 1998 Plan Restatement of the Columbus McKinnon Corporation Thrift [401(k)] Plan, dated April 14, 2004 (incorporated by reference to Exhibit 10.28 to the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2004).
#10.26
Amendment No. 8 to the 1998 Plan Restatement of the Columbus McKinnon Corporation Thrift [401(k)] Plan, dated December 19, 2003 (incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended December 28, 2003).
#10.27
Amendment No. 9 to the 1998 Plan Restatement of the Columbus McKinnon Corporation Thrift [401(k)] Plan, dated March 16, 2004 (incorporated by reference to Exhibit 10.30 to the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2004).
#10.28
Amendment No. 10 to the 1998 Plan Restatement of the Columbus McKinnon Corporation Thrift [401(k)] Plan, dated July 12, 2004 (incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended July 4, 2004).
#10.29
Amendment No. 11 to the 1998 Plan Restatement of the Columbus McKinnon Corporation Thrift [401(k)] Plan, dated March 31, 2005 (incorporated by reference to Exhibit 10.33 to the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2005).
#10.30
Amendment No. 12 to the 1998 Plan Restatement of the Columbus McKinnon Corporation Thrift [401(k)] Plan, dated December 27, 2005 (incorporated by reference to Exhibit 10.34 to the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2006).
#10.31
Amendment No. 13 to the 1998 Plan Restatement of the Columbus McKinnon Corporation Thrift [401(k)] Plan, dated December 21, 2006 (incorporated by reference to Exhibit 10.35 to the Company’s Annual Report on Form 10-K for the fiscal year ended March, 31, 2007).
#10.32#10.2

Amendment No. 14 to the 1998 Plan Restatement of the Columbus McKinnon Corporation Thrift [401(k)] Plan, dated December 21, 2007 (incorporated by reference to Exhibit 10.36 to the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2008).
#10.33

Amendment No. 15 to the 1998 Plan Restatement of the Columbus McKinnon Corporation Thrift [401(k)] Plan, dated January 29, 2009 (incorporated by reference to Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended December 28, 2008).
#10.34
Columbus McKinnon Corporation Thrift 401(k) Plan Trust Agreement Restatement Effective August 9, 1994 (incorporated by reference to Exhibit 10.32 to the Company’s Registration Statement No. 33-80687 on Form S-1 dated December 21, 1995).
#10.35
Columbus McKinnon Corporation Monthly Retirement Benefit Plan Restatement Effective April 1, 1998 (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended December 27, 1998).
#10.36
Amendment No. 1 to the 1998 Plan Restatement of the Columbus McKinnon Corporation Monthly Retirement Benefit Plan, dated December 10, 1998 (incorporated by reference to Exhibit 10.32 to the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 1999).
#10.37
Amendment No. 2 to the 1998 Plan Restatement of the Columbus McKinnon Corporation Monthly Retirement Benefit Plan, dated May 26, 1999 (incorporated by reference to Exhibit 10.33 to the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 1999).
#10.38
Amendment No. 3 to the 1998 Plan Restatement of the Columbus McKinnon Corporation Monthly Retirement Benefit Plan, dated March 26, 2002 (incorporated by reference to Exhibit 10.44 to the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2002).
#10.39
Amendment No. 4 to the 1998 Plan Restatement of the Columbus McKinnon Corporation Monthly Retirement Benefit Plan, dated December 20, 2002 (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended December 29, 2002).
#10.40
Amendment No. 5 to the 1998 Plan Restatement of the Columbus McKinnon Corporation Monthly Retirement Benefit Plan, dated February 28, 2004 (incorporated by reference to Exhibit 10.37 to the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2004).
#10.41
Amendment No. 6 to the 1998 Plan Restatement of the Columbus McKinnon Corporation Monthly Retirement Benefit Plan, dated March 17, 2005 (incorporated by reference to Exhibit 10.41 to the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2005).


#10.42
Amendment No. 7 to the 1998 Plan Restatement of the Columbus McKinnon Corporation Monthly Retirement Benefit Plan, dated December 28, 2005 (incorporated by reference to Exhibit 10.43 to the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2006).
#10.43
Amendment No. 8 to the 1998 Plan Restatement of the Columbus McKinnon Corporation Monthly Retirement Benefit Plan, dated December 28, 2005 (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended December 31, 2006).
#10.44

Amendment No. 9 to the 1998 Plan Restatement of the Columbus McKinnon Corporation Monthly Retirement Benefit Plan, dated April 21, 2008 (incorporated by reference to Exhibit 10.47 to the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2008).
#10.45

Amendment No. 10 to the 1998 Plan Restatement of the Columbus McKinnon Corporation Monthly Retirement Benefit Plan, dated December 19, 2008 (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended December 28, 2008).
#10.46
Columbus McKinnon Corporation Monthly Retirement Benefit Plan Trust Agreement Effective as of April 1, 1987 (incorporated by reference to Exhibit 10.34 to the Company’s Registration Statement No. 33-80687 on Form S-1 dated December 21, 1995).
#10.47
Form of Change in Control Agreement as entered into between Columbus McKinnon Corporation and certain of its executive officers.officers (incorporated by reference to Exhibit 10.3310.2 to the Company'sCompany’s Annual Report on Form 10-K for the fiscal year ended March 31, 1998)2021).
#10.48#10.3
Form of Omnibus Code Section 409A Compliance Policy as entered into between Columbus McKinnon Corporation and certain of its executive officers. (incorporated by reference to Appendix to the definitive Proxy Statement for the Annual Meeting of Stockholders of Columbus McKinnon Corporation held on July 31, 2006).
#10.49#10.4

Columbus McKinnon Corporation Employee Stock Ownership Plan, restated effective as of April 1, 2015, as amended by Amendment to the Company’s non-qualified deferred compensation plan,No. 1 thereto effective January 1, 2013.as of April 15, 2015 (incorporated by reference to Exhibit 5.0210.4 to the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2021)..
#10.5
Columbus McKinnon Corporation Deferred Compensation Plan Adoption Agreement, effective as of January 1, 2013 (incorporated by reference to Exhibit 10.5 to the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2021).
#10.6
Amendment No. 1, dated as of January 9, 2018, to the Columbus McKinnon Corporation Deferred Compensation Plan Adoption Agreement (incorporated by reference to Exhibit 10.6 to the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2021)..
#10.7
Amendment No. 2, dated as of August 23, 2018, to the Columbus McKinnon Corporation Deferred Compensation Plan Adoption Agreement (incorporated by reference to Exhibit 10.7 to the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2021).
#10.8
Columbus McKinnon Corporation 2010 Long Term Incentive Plan, effective July 26, 2010 (incorporated by reference to Exhibit 4.1 to the Company’s Registration Statement on Form S-8 filed on August 12, 2010).
#10.9
The 2014 Stock Incentive Plan of Magnetek, Inc. (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on July 19, 2012)dated September 16, 2015).
#10.50#10.10

Columbus McKinnon Corporation 2016 Long Term Incentive Plan, as amended and restated effective August 3,June 5, 2019 (incorporated by reference to Appendix A to the Company’s definitive Proxy Statement for the Annual Meeting of Shareholders held on July 22, 2019).
#10.11
Amendment No. 1 to the Columbus McKinnon Corporation 2016 Long Term Incentive Plan, as amended and restated effective June 5, 2019 (incorporated by reference to Exhibit 4.1 of10.2 to the Company’s S-8 filedQuarterly Report on August 3, 2016, as amended June 5, 2019.Form 10-Q for the quarterly period ended September 30, 2021).
#10.51#10.12

Form of Time-Based Restricted Stock Unit Award Agreement for the Columbus McKinnon Corporation 2016 Long Term Incentive Plan (incorporated by reference to Exhibit 10.11 to the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2021).
Credit
#10.13
Form of Nonqualified Stock Option Award Agreement for the Columbus McKinnon Corporation 2016 Long Term Incentive Plan (incorporated by reference to Exhibit 10.12 to the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2021).
#10.14
Form of Performance Stock Unit Award Agreement for the Columbus McKinnon Corporation 2016 Long Term Incentive Plan (incorporated by reference to Exhibit 10.13 to the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2021).
#10.15
Employment agreement dated January 31, 2017.effective May 11, 2020 between Columbus McKinnon Corporation and David J. Wilson (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed on January 31, 2017)dated May 11, 2020).
*21.1#10.16

Change in Control Agreement effective May 11, 2020 between Columbus McKinnon Corporation and David J. Wilson (incorporated by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K dated May 11, 2020).
#10.17
Employment Agreement Amendment effective June 1, 2020 between Columbus McKinnon Corporation and David J. Wilson (incorporated by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K dated June 3, 2020).
10.18
Amended and Restated Credit Agreement, dated May 14, 2021, by and among Columbus McKinnon Corporation and the other parties thereto (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K dated May 14, 2021).
*21.1
Subsidiaries of the Registrant.
*23.1

Consent of Independent Registered Public Accounting Firm.
*31.1

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


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*31.2

Certification of the principal financial officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended.
*32.1

Certification of the principal executive officer and the principal financial officer pursuant to Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended and 18 U.S.C. Section 1350, as adopted by pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.  The information contained in this exhibit shall not be deemed filed with the Securities and Exchange Commission nor incorporated by reference in any registration statement foiled by the Registrant under the Securities Act of 1933, as amended.
*101
The financial statements from the Company’s Annual Report on Form 10-K for the twelve months ended March 31, 20202022 formatted in iXBRL
*101.INS
XBRL Instance Document
*101.SCH
XBRL Taxonomy Extension Schema Document
*101.CAL
XBRL Taxonomy Extension Calculation Linkbase Document
*101.DEF
XBRL Taxonomy Extension Definition Linkbase Document
*101.LAB
XBRL Taxonomy Extension Label Linkbase Document
*101.PRE
XBRL Taxonomy Extension Presentation Linkbase Document
*104
Cover Page Interactive Data File (the cover page XBRL tags are embedded within the Inline XBRL document)


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



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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date:May 27, 202025, 2022
COLUMBUS McKINNON CORPORATION
By:/s/  Richard H. FlemingDavid J. Wilson
Richard H. FlemingDavid J. Wilson
Chief Executive Officer
(Principal Executive Officer)



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Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
 


SignatureTitleDate
/s/  David J. Wilson
President, Chief Executive Officer and Director (Principal Executive Officer)
May 25, 2022
David J. Wilson
/s/   Gregory P. Rustowicz
Senior Vice President - Finance and Chief Financial Officer
(Principal Financial Officer and Principal Accounting Officer)
May 25, 2022
Gregory P. Rustowicz
/s/   Richard H. FlemingChairman of the Board of DirectorsMay 25, 2022
Richard H. Fleming
Signature/s/ Chad R. AbrahamTitleDirectorDateMay 25, 2022
/s/   Richard H. FlemingChad R. Abraham
Chief Executive Officer and Chairman of the Board of Directors (Principal Executive Officer)
May 27, 2020
Richard H. Fleming
/s/   Gregory P. Rustowicz
Vice President and Chief Financial Officer
(Principal Financial Officer)
May 27, 2020
Gregory P. Rustowicz
/s/   Jeanne Beliveau-DunnDirectorMay 27, 2020
Jeanne Beliveau-Dunn
/s/ Aziz S. AghiliDirectorMay 27, 202025, 2022
Aziz S. Aghili
/s/   Jeanne Beliveau-DunnDirectorMay 25, 2022
Jeanne Beliveau-Dunn
/s/   Gerald G. ColellaDirectorMay 25, 2022
Gerald G. Colella
/s/  Michael DastoorDirectorMay 25, 2022
Michael Dastoor
/s/   Liam G. McCarthyDirectorMay 27, 202025, 2022
Liam G. McCarthy
/s/   Heath A. MittsDirectorMay 27, 202025, 2022
Heath A. Mitts


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/s/   Nicholas T. PinchukDirectorMay 27, 202025, 2022
Nicholas T. Pinchuk
/s/   Kathryn V. RoedelDirectorMay 27, 202025, 2022
Kathryn V. Roedel
/s/   R. Scott TrumbullDirectorMay 27, 2020
R. Scott Trumbull
/s/   Ernest R. VerebelyiChairman EmeritusMay 27, 2020
Ernest R. Verebelyi


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