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

EXECUTIVE OVERVIEW

We are a leading manufacturer and marketer of hoists, cranes, actuators, chain, attachments, lift tables and tire shredders serving a wide variety of commercial and industrial end-user markets. Our products are used to efficiently and ergonomically move, lift, position or secure objects and loads. We sell a wide variety of powered and manually operated wire rope and chain hoists, industrial crane systems, chain, hooks and attachments, actuators and rotary unions.

Founded in 1875, we have grown to our current size and leadership position through organic growth and the acquisition of 14 businesses between February 1994 and April 1999 as well as another in October 2008. We have developed our leading market position over our 134-year history by emphasizing technological innovation, manufacturing excellence and superior after-sale service. In addition, the acquisitions significantly broadened our product lines and services and expanded our geographic reach, end-user markets and customer base. Ongoing operations include improving our productivity and increased penetration of the European, Latin American, and Asian marketplaces. We have been investing in our Lean efforts across the company, new product development and expanded sales and marketing activities. Shareholder value will be enhanced through continued emphasis on the improvement of the fundamentals including new product development, market expansion, manufacturing efficiency, cost containment, efficient capital investment and a high degree of customer satisfaction.

We are investing in international markets and new products in execution of our strategy and 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 and actuators. We seek to maintain and enhance our market share by expanding our sales and marketing activities directed toward selected North American and global sectors including entertainment, energy, construction, mining and food processing. Our fiscal 2009 acquisition of Pfaff is enhancing our European hoist market penetration as well as strengthening our global actuator offering. Further, we continue to invest in emerging market penetration, including the regions of eastern Europe, Latin America and Asia. We complement these activities with continued investments in new product development, particularly products with global reach.

We are also looking for opportunities for growth via acquisitions or joint ventures. The focus of our acquisition strategy centers on opportunities for international revenue growth and product line expansion in alignment with our existing core offering.

While we are cognizant of our need to strategically invest in our future, we are also currently focused on liquidity preservation and cost management given the broad impact of the worldwide credit market turmoil and economic downturn. We monitor such indicators as U.S. Industrial Capacity Utilization as an indicator of anticipated demand for our product in the U.S. That statistic currently stands at its lowest point reported by the Federal Reserve Board. In addition, we continue to monitor leading indicators of the potential impact of global trends, including energy costs, steel price fluctuations, changing interest rates, currency impact and activity in a variety of end-user markets around the globe.

In light of the current economic climate and in accordance with our manufacturing strategy, subsequent to March 31, 2009, we have commenced with a plan to rationalize our North American hoist and rigging operations to improve efficiency, control costs and facilitate future growth. The execution of the plan is contingent upon successful bargaining unit negotiations with the labor unions at each facility. The process currently involves closing two manufacturing facilities and significantly downsizing a third facility beginning in the second quarter of fiscal 2010 and continuing through fiscal 2011 resulting in a reduction of 500,000 square feet of manufacturing space and generating annual savings estimated at approximately $8-$10 million. The cost of the restructuring is expected to approximate $8-$10 million with 80% of the total charges occurring in fiscal year 2010.

Additionally, we have specific initiatives related to improved customer satisfaction, reduction of defects, shortened lead times, improved inventory turns and on-time deliveries, reduction of warranty costs, and improved working capital utilization. The initiatives are being driven by the continued implementation of our Lean efforts which are fundamentally changing our business processes to be more responsive to customer demand and improving on-time delivery and productivity. In addition to Lean, we are working to achieve these strategic initiatives through product simplification, the creation of centers of excellence, and improved supply chain management.

We continue to operate in a highly competitive and global business environment. Accordingly, we face a variety of challenges and opportunities in those markets and geographies, including trends towards increased utilization of the global labor force and the expansion of market opportunities in Asia and other emerging markets.

RESULTS OF OPERATIONS

Fiscal 2009 sales were $606.7 million, up 2.2%, or $12.9 million compared with fiscal 2008. Fiscal 2009 was marked by growth in the first half of the year followed by a significant decline in sales and orders received as a result of the rapid and severe contraction in industrial markets worldwide. Our Pfaff acquisition contributed $43.5 million to our sales growth for fiscal 2009 with the remaining business being down 5.1%, or $30.6 million. Fiscal 2009 was impacted by the recovery of the U.S. dollar relative to other currencies in the latter half of the year, particularly the euro, and reported sales were unfavorably affected by $3.6 million. Net sales for fiscal 2008 of $593.8 million increased by $43.3 million or 7.9% from fiscal 2007. During fiscal 2008, the Company saw continued strength in the North American economy as well as increased demand in Europe, Latin America and Asia. This growth was a continuation of improvement in the industrial sector that began in fiscal 2005 through the first half of fiscal 2009. Sales growth also continued to be fostered by the expansion of international selling efforts. The 2008 increase was due to a combination of increased volume on the continued growth of the global industrial economy and international market share gains as well as price increases ($10.1 million). Fiscal 2008 was impacted by the continued weakness of the U.S. dollar relative to other currencies, particularly the euro, and reported sales were favorably affected by $11.3 million.

Our gross profit margins were 28.6%, 31.3% and 29.9% in fiscal 2009, 2008 and 2007, respectively. Despite higher revenue, the fiscal 2009 margins were impacted by higher material, freight, and utility costs in the second and third quarters, one time accounting charges associated with the Pfaff acquisition primarily related to the fair value write-up of inventory in the third quarter, as well as underabsorption of costs in the fiscal 2009 fourth quarter due to the rapid and significant decline in sales. Fiscal 2008 and fiscal 2007 saw continued improvement in gross margins as a result of operational leverage at increased volumes from the prior years across all businesses, the proportion of that increase in our most profitable products sales (hoists), and the impact of previous facility rationalization projects and ongoing Lean activities.

Selling expenses were $72.6 million, $69.8 million and $59.4 million in fiscal 2009, 2008 and 2007, respectively. As a percentage of net sales, selling expenses were 12.0%, 11.8% and 10.8% in fiscal 2009, 2008 and 2007, respectively. The fiscal 2009 increase was a result of the addition of the Pfaff business ($6.7 million) and continued investments in our strategic growth initiatives offset by lower commissions/incentives ($2.0 million), marketing and travel expense ($1.0 million) as a result of and in response to the economic slowdown, and translation of foreign currencies ($0.8 million). The fiscal 2008 increase includes additional salaries ($1.9 million), increased advertising, marketing, and travel ($2.4 million), investments in new markets ($2.3 million), translation of foreign currencies ($2.3 million), and a one-time commission expense associated with a particularly large sale in our tire shredder business ($1.5 million).

General and administrative expenses were $37.7 million, $34.0 million and $30.7 million in fiscal 2009, 2008 and 2007, respectively. As a percentage of net sales, general and administrative expenses were 6.2%, 5.7% and 5.6% in fiscal 2009, 2008 and 2007, respectively. The fiscal 2009 increase was a result of the addition of the Pfaff business ($4.3 million), increased credit and collection reserves ($1.3 million), increased fees for professional services ($0.6 million) and increased research and development costs ($0.4 million), offset by lower benefit costs including annual incentive plans ($2.5 million) and foreign currency translation ($0.3 million). Fiscal 2008 includes increases in personnel costs for new market investment and organizational capacity expansion ($1.6 million), increased research and development costs ($0.5 million), and translation of foreign currencies ($1.2 million).

Restructuring charges of $1.9 million, $0.8 million and ($0.1) million, or 0.3%, 0.1% and 0.0% of net sales were recorded in fiscal 2009, 2008 and 2007, respectively. The 2009 charges are primarily severance related to company-wide staff reduction efforts in response to the decline in economic conditions during the third and fourth quarters. The fiscal 2008 charges consist of demolition costs of the unused portion of a facility ($0.8 million) being expensed on an as-incurred basis. The fiscal 2007 charges represent demolition costs of the unused portion of the facility referenced above ($0.2 million) being expensed on an as-incurred basis, offset by a recovery of a portion of previous write-downs ($0.4 million) on a vacant facility that was sold during fiscal 2007.

In the fourth quarter of 2009, we recorded an impairment charge of $107.0 million associated with goodwill. Based on impairment testing performed as of February 22, 2009, we determined that impairment existed for goodwill related to our rest of products reporting unit. Refer to Critical Accounting Policies and Note 9 to our consolidated financial statements for additional information on Impairment of Long-Lived Assets.

Amortization of intangibles was $1.0 million, $0.1 million and $0.2 million in fiscal 2009, 2008 and 2007, respectively. The 2009 increase is attributable to amortization of definite-lived intangible assets recorded in connection with the Pfaff acquisition.

Interest and debt expense was $13.1 million, $13.6 million and $15.9 million in fiscal 2009, 2008 and 2007, respectively. As a percentage of net sales, interest and debt expense was 2.2%, 2.3% and 2.9% in fiscal 2009, 2008 and 2007, respectively. The fiscal 2008 decrease primarily resulted from lower debt levels as we continued to execute our strategy of debt reduction and increased financial flexibility.

We incurred ($0.2) million, $1.8 million, and $5.2 million in fiscal 2009, 2008, and 2007, respectively, related to redemption (gain) costs associated with the repurchase of outstanding long-term debt.

We recorded ($2.9) million, $1.2 million, and $5.3 million of investment (loss) income related to marketable securities held in the Company's wholly owned captive insurance subsidiary in fiscal 2009, 2008, and 2007, respectively. The 2009 loss includes $4.0 million related to unrealized losses on securities that were determined to be other than temporary in nature. Refer to Note 7 to our consolidated financial statements for additional information on Marketable Securities.

Other income and expense, net was $4.3 million, $3.2 million and $1.8 million in fiscal 2009, 2008 and 2007, respectively. Fiscal 2009 includes $3.0 million of foreign currency exchange loss, a $3.3 million gain from a litigation settlement, $1.4 million in gains from property sales, and $2.3 million of interest income. Fiscal 2008 includes $2.2 million of investment and interest income and $0.6 million from product line/real estate sales. Fiscal 2007 includes $1.2 million of interest income and $0.5 million of gain from a business divestiture.

After adjusting income from continuing operations for the $107.0 million impairment charge, none of which is deductible for tax purposes, income taxes as a percentage of income from continuing operations before income taxes for fiscal 2009, 2008 and 2007 were 36.8%, 32.7% and 36.4%, respectively. The effective rate in fiscal 2008 was favorably impacted by a reduction in the valuation allowance related to state net operating losses and changes in deferred state tax rates.

LIQUIDITY AND CAPITAL RESOURCES

Cash and cash equivalents totaled $39.2 million at March 31, 2009, a decrease of $36.8 million from the March 31, 2008 balance of $76.0 million. In October of 2008, approximately $52.8 million of cash on hand was used for the acquisition of Pfaff.

Net cash provided by operating activities was $60.2 million, $59.6 million and $45.5 million in fiscal 2009, 2008 and 2007, respectively. The $0.6 million increase in fiscal 2009 relative to fiscal 2008 was primarily due to weaker operating performance in fiscal 2009 ($29.5 million) and an increase cash used by discontinued operations ($1.6) offset by higher cash from working capital components ($31.7 million). Changes in net working capital include favorable changes of $27.7 in accounts receivable, $10.8 in inventory, and an unfavorable change in accounts payable of $15.0 million all as a result of the declining volume of business. In addition, there were favorable changes of $2.3 million in prepayments (foreign tax payments) and $2.8 in accrued and non-current liabilities (lower funding of pension liabilities). The $14.1 million increase in fiscal 2008 relative to fiscal 2007 was primarily due to stronger operating performance in fiscal 2008 ($11.4 million) and improved cash flows from discontinued operations ($5.8) offset by unfavorable working capital components ($3.1 million). Changes in net working capital include favorable changes of $2.7 in prepayments and $9.6 in accounts payable (resulting from timing of disbursements and increased volume of business) offset by an unfavorable change of $7.3 million in inventory (resulting from support for an increase in new product launches and new market penetration) and an unfavorable change of $7.4 million in accrued and non-current liabilities (as a result of increased funding of pension liabilities).

Net cash used by investing activities was $65.5 million, $8.6 million and $3.4 million in fiscal 2009, 2008 and 2007, respectively. The fiscal 2009 increase in cash used of $56.9 million included $52.8 million for the acquisition of Pfaff and less proceeds from property sales. The fiscal 2008 change in cash used by investing activities is the result of increased capital expenditures and net purchases of marketable securities offset by increased proceeds from the sale of properties and assets. The fiscal 2009, 2008 and 2007 amounts included $1.6 million, $5.5 million and $4.9 million, respectively, from business, property and asset divestitures.

Net cash used by financing activities was $22.5 million, $28.6 million and $39.9 million in fiscal 2009, 2008 and 2007, respectively. The decrease in cash used by financing activities for 2009 compared to 2008 was due to less debt repayment from continuing operations of $21.5 million offset by an additional $14.2 million of payments by the Company on outstanding debt of its divested business, Univeyor. The decrease in cash used by financing activities for 2008 compared to 2007 was due to less debt repayment from continuing operations of $18.5 million offset by $6.6 of less cash used by the financing activities of the Company's divested business, Univeyor. Fiscal 2009, 2008 and 2007 include $0.4, $1.4 million and $2.6 million, respectively, of proceeds from the exercise of employee stock options.

In March 2006, we entered into a Revolving credit facility, which provides availability up to $75 million. Provided there is no default, the Company may request an increase in the availability of the Revolving Credit Facility by an amount not exceeding $50 million, subject to lender approval. The Revolving Credit Facility matures February 2011.

We believe that our cash on hand, cash flows, and borrowing capacity under our recently amended Revolving Credit Facility will be sufficient to fund our ongoing operations, restructuring activities and budgeted capital expenditures for at least the next twelve months. This belief is dependent upon no further deterioration in the economy and successful execution of our current business plan which focuses on opportunities to consolidate our manufacturing footprint in North America, continued implementation of Lean, and improving working capital utilization, specifically inventory management. On May 19, 2009, the credit facility was amended to increase the amount of restructuring charges to be excluded from the fixed charge coverage ratio. As part of the amendment, certain senior subordinated note repurchases were also excluded from the fixed charge coverage ratio covenant calculation.

At March 31, 2009, the Revolving Credit Facility was not drawn and the available amount, net of outstanding letters of credit of $10.5 million, totaled $64.5 million. Interest is payable at a Eurodollar rate or a prime rate plus an applicable margin determined by our leverage ratio. At our current leverage ratio, we qualify for the lowest applicable margin level, which amounts to 87.5 basis points for Eurodollar borrowings and zero basis points for prime rate based borrowings. The Revolving Credit Facility is secured by all U.S. inventory, receivables, equipment, real property, subsidiary stock (limited to 65% for foreign subsidiaries) and intellectual property. The corresponding credit agreement associated with the Revolving Credit Facility places certain debt covenant restrictions on us, including certain financial requirements and a limitation on dividend payments, with which we were in compliance as of March 31, 2009.

The Senior Subordinated 8 7/8% Notes (8 7/8% Notes) issued on September 2, 2005 amounted to $124.9 million at March 31, 2009 and are due November 1, 2013. Provisions of the 8 7/8% Notes include, without limitation, restrictions on indebtedness, asset sales, and dividends and other restricted payments. On or after November 1, 2009, the 8 7/8% Notes are redeemable at the option of the Company, in whole or in part, at prices declining annually from 104.438% to 100% on and after November 1, 2011. In the event of a Change of Control (as defined in the indenture for such notes), each holder of the 8 7/8% Notes may require us to repurchase all or a portion of such holder's 8 7/8% Notes at a purchase price equal to 101% of the principal amount thereof. The 8 7/8% Notes are guaranteed by certain existing and future U.S. subsidiaries and are not subject to any sinking fund requirements.

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, 2009, significant unsecured credit lines totaled approximately $7.0 million, of which $4.3 million was drawn.

In addition to the above facilities, our foreign subsidiaries have certain secured credit lines. As of March 31, 2009, significant secured credit lines totaled $2.9, of which $0.4 million was drawn.

CONTRACTUAL OBLIGATIONS

The following table reflects a summary of our contractual obligations in
millions of dollars as of March 31, 2009, by period of estimated payments due:

                                              Fiscal        Fiscal 2011-      Fiscal 2013-       More Than
                                Total          2010         Fiscal 2012        Fiscal 2014      Five Years
Long-term debt obligations
(a)                           $   133.1     $      1.2     $          2.3     $       126.9     $       2.7
Operating lease obligations
(b)                                 9.6            4.0                4.5               0.9             0.2
Purchase obligations (c)             --             --                 --                --              --
Interest obligations (d)           56.0           12.0               24.0              18.8             1.2
Letter of credit
obligations                        10.5           10.5                 --                --              --
Uncertain tax positions             3.5            0.2                3.3                --              --
Other long-term liabilities
reflected on the Company's
balance sheet under GAAP
(e)                                86.9             --               30.1              31.1            25.7
Total                         $   299.6     $     27.9     $         64.2     $       177.7     $      29.8

(a) As described in Note 11 to our consolidated financial statements.

(b) As described in Note 18 to our 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 open purchase orders to be executed in the normal course of business approximate $40 million.

(d) Estimated for our Senior Subordinated Notes due 11/1/13 and our capital lease obligations.

(e) As described in Note 10 to our consolidated financial statements. Additionally, we intend to contribute approximately $18.3 million to our pension plans in fiscal 2010.

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 promote ergonomically correct work stations. Our capital expenditures for fiscal 2009, 2008 and 2007 were $12.2 million, $12.5 million and $10.5 million, respectively. Higher capital expenditures in fiscal 2009 and 2008 were the result of new product development and productivity enhancing equipment along with normal maintenance items. We expect capital expenditure spending in fiscal 2010 to be in the range of $10-$11 million.

INFLATION AND OTHER MARKET CONDITIONS

Our costs are affected by inflation in the U.S. economy and, to a lesser extent, in foreign economies including those of Europe, Canada, Mexico, 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 primarily due to overall low inflation levels over such periods and our ability to generally pass on rising costs through annual price increases and surcharges. However, employee benefits costs such as health insurance, workers compensation insurance, pensions as well as energy and business insurance have exceeded general inflation levels. In the future, we may be further affected by inflation that we may not be able to pass on as price increases. 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 price increases and surcharges to our customers. We believe we have been successful in instituting surcharges and 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 quarterly results may be materially affected by the timing of large customer orders, periods of high vacation and holiday concentrations, restructuring charges and other costs attributable to our facility rationalization program, divestitures, acquisitions and the magnitude of rationalization integration costs. Therefore, our operating results for any particular fiscal quarter are not necessarily indicative of results for any subsequent fiscal quarter or for the full fiscal year.

DISCONTINUED OPERATIONS

As part of our continuing evaluation of its businesses, the Company determined that its integrated material handling conveyor systems business (Univeyor A/S) no longer provided a strategic fit with its long-term growth and operational objectives. On July 25, 2008, the Company completed the sale of Univeyor A/S, which business represented the majority of our former Solutions segment. In accordance with the provisions of Financial Accounting Standards Board ("FASB") Statement of Financial Accounting Standards ("SFAS") No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets" the results of operations of the Univeyor business have been classified as discontinued operations in the consolidated balance sheets, statements of operations and statements of cash flows presented herein.

In connection with the sale of Univeyor A/S on July 25, 2008, the Company used cash on hand to repay $15.2 million in amounts outstanding on Univeyor's lines of credit and fixed term bank debt.

In May 2002, we completed the divestiture of substantially all of the assets of ASI which comprised at the time the principal business unit in our former Solutions - Automotive segment. Proceeds from this sale included an 8% subordinated note in the principal amount of $6.8 million payable over 10 years. Due to the uncertainty of its collection, the note has been recorded at its estimated net realizable value of $0. Principal payments received on the note are recorded as income from discontinued operations at the time of receipt. Accordingly, $0.5 million of income from discontinued operations was recorded in fiscal 2009, net of tax. All interest and principal payments required under the note have been made to date.

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. We have identified below the accounting policies involving estimates that are critical to our financial statements. Other accounting policies are more fully described in note 2 of notes to our consolidated financial statements.

Pension and Other Postretirement Benefits. The determination of the obligations and expense for pension and postretirement benefits is dependent on our selection of certain assumptions that are used by actuaries in calculating such . . .