SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                    Form 10-Q
               QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934


                  For the quarterly period ended July 31, 2000


Commission              Registrant; State of Incorporation;         IRS EMPLOYER
File Number             Address; and Telephone Number         Identification No.

333-52529               MMH HOLDINGS, INC.                            39-1716155
                        (a Delaware Corporation
                        315 W. Forest Hill Avenue
                        Oak Creek, Wisconsin 53154
                        (414) 764-6200

333-52527               MORRIS MATERIAL HANDLING, INC.                39-1924039
                        (a Delaware Corporation)
                        315 W. Forest Hill Avenue
                        Oak Creek, Wisconsin 53154
                        (414) 764-6200


Indicate  by check mark  whether  the  registrants  (1) have  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
registrants  were required to file such  reports),  and (2) have been subject to
such filing requirements for the past 90 days.

                                                       Yes  X    No

Indicate the number of shares  outstanding  of each of the  issuers'  classes of
common stock, as of the latest practicable date (October 31, 2000):

MMH Holdings, Inc.                Nonvoting common stock,  $.01 Par Value, 4,350
                                  shares outstanding.  Voting common stock, $.01
                                  Par Value, 10,169 shares outstanding.

Morris Material Handling, Inc.    Common stock, $.01 Par Value, 100 shares
                                  outstanding.  MMH Holdings, Inc. holds all of
                                  the outstanding common stock of Morris
                                  Material Handling, Inc.

<PAGE>


                               MMH HOLDINGS, INC.
                         MORRIS MATERIAL HANDLING, INC.

                                      INDEX

Introduction                                                                   3

Part I -Financial Information:

     Item 1. Financial Statements

     MMH Holdings, Inc.
           Condensed Balance Sheets                                            4
           Condensed Statements of Operations and Comprehensive Income (Loss)  5
           Condensed Statements of Cash Flows                                  6
           Statements of Preferred Stock and Shareholders'Equity               7

     Morris Material Handling, Inc.
           Condensed Balance Sheets                                            8
           Condensed Statements of Operations and Comprehensive Income (Loss)  9
           Condensed Statements of Cash Flows                                 10
           Statements of Shareholder's Equity                                 11

     Notes to Financial Statements of
            MMH Holdings, Inc. and
            Morris MaterialHandling, Inc.                                     12


     Item 2. Management's Discussion and Analysis of
             Financial Condition and Results of Operations of
             MMH Holdings, Inc. and Morris Material
             Handling, Inc.                                                   34

     Item 3. Quantitative and Qualitative Disclosures about Market Risk       46

     Part II - Other Information:

     Item 1.   Legal Proceedings                                              47
     Item 2.   Changes in Securities                                          47
     Item 3.   Defaults upon Senior Securities                                47
     Item 4.   Submission of Matters to a Vote of Security Holders            47
     Item 5.   Other Information                                              47
     Item 6.   Exhibits and Reports on Form 8-K                               47


                                       2

<PAGE>



Introduction

MMH  Holdings,  Inc.  ("Holdings")  is  a  holding  company  whose  sole  direct
subsidiary is Morris Material Handling,  Inc. ("MMH"),  which, together with its
operating subsidiaries,  is a manufacturer,  distributor and service provider of
"through-the-air"  material  handling  equipment  with  operations in the United
States, United Kingdom, South Africa, Singapore,  Canada,  Australia,  Thailand,
Chile and  Mexico.  Unless the context  requires  otherwise,  references  to the
"Company" in this combined 10-Q are to Holdings, MMH, its subsidiaries and their
predecessors.

This combined Form 10-Q is separately filed by MMH Holdings,  Inc. and by Morris
Material Handling,  Inc. The unaudited interim financial statements presented in
this combined  report  (collectively,  the "Financial  Statements")  include the
financial  statements of Holdings,  as well as separate financial statements for
MMH.  Information  contained herein relating only to Holdings or MMH is filed by
Holdings or MMH as the case may be, on its own behalf.

Certain  sections  of this Form 10-Q,  including  "Management's  Discussion  and
Analysis of Financial  Condition  and Results of  Operations,"  contain  various
forward looking  statements  within the meaning of Section 21E of the Securities
Exchange  Act of 1934,  which  represent  management's  expectations  or beliefs
concerning  future  events.  Holdings and MMH caution that those  statements are
further qualified by important factors that could cause actual results to differ
from those in the forward  looking  statements.  Factors that might cause such a
difference  include,   without  limitation,   general  economic  conditions  and
competition in the markets in which the Registrants'  operations are located and
are detailed  herein under  "Management's  Discussion  and Analysis of Financial
Condition and Results of  Operations - Cautionary  Factors."  Consequently,  all
forward-looking  statements  made  herein  are  qualified  by  these  cautionary
statements.  There  can be no  assurance  that the  actual  results,  events  or
developments referenced herein will occur or be realized.

                                        3

<PAGE>


                               MMH HOLDINGS, INC.
                  (Debtors - in Possession as of May 17, 2000)
                            CONDENSED BALANCE SHEETS
                             (Dollars in Thousands)
<TABLE>

                     ASSETS                                 LIABILITIES AND SHAREHOLDERS' EQUITY

<CAPTION>

                              July 31,    October 31,                                                        July 31,    October 31,
                               2000          1999                                                            2000           1999
                              --------    -----------                                                        --------    -----------
                             (Unaudited)                                                                   (Unaudited)
<S>                          <C>            <C>          <C>                                                <C>             <C>
Current Assets                                           Liabilities Not Subject to Compromise
  Cash and cash equivalents  $  2,785       $  3,929       Current Liabilities
  Accounts receivable-net      57,196         64,481         Short-term notes payable and current
  Inventories                  35,901         39,994          portion of long-term obligations (Note 9)     $    116        $   383
  Other current assets          7,566          7,842         Junior DIP Facility (Note 9)                     31,252              -
                             --------       --------         Revolving Credit Facility Borrowings (Note 9)         -         27,925
                              103,448        116,246         Term Loans (Note 9)                                   -         52,225
                             --------       --------         Acquisition Facility Line Borrowings (Note 9)         -         12,430
                                                             Senior Notes (Note 9)                                 -        200,000
Property, Plant and                                          Bank overdrafts                                     998          1,367
  Equipment                                                  Trade accounts payable                           13,110         26,757
                                                             Employee compensation and benefits                6,990          8,020
  Land and improvements         3,300          3,349         Advance payments and progress billings           11,592          8,336
  Buildings                    22,572         23,235         Accrued warranties                                1,865          1,821
  Machinery and equipment      43,427         45,219         Accrued interest                                    762          1,804
                              -------        -------         Income taxes payable                              1,561          2,205
                               69,299         71,803         Other current liabilities                         5,354          9,791
                                                                                                            --------       --------
  Less accumulated                                                                                            73,600        353,064
   depreciation               (33,370)       (30,829)
                              -------        -------       Other Long-Term Obligations                           624          2,784
                               35,929         40,974       Other Long-Term Liabilities                           239          1,307
                              -------        -------     Liabilities Subject to Compromise (Note 5)          295,483              -
                                                         Minority Interest                                        71            504
                                                         Commitments and Contingencies (Note 10)
Other Assets
  Goodwill                     22,500         42,844     Manditorily Redeemable Preferred Stock              118,642        108,245
  Debt financing costs         14,781         16,398     Shareholders' Equity                               (302,433)      (239,068)
  Other                         9,568         10,374                                                        --------      ---------
                              -------        -------                                                        $186,226      $ 226,836
                               46,849         69,616                                                        ========      =========
                              -------        -------


                             $186,226      $ 226,836
                             ========      =========

</TABLE>

     The  accompanying  notes are an integral  part of the financial statements.

                                       4


<PAGE>


                               MMH HOLDINGS, INC.
                  (Debtors - in - Possesion as of May 17, 2000)

            CONDENSED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
                                   (UNAUDITED)
                             (Dollars in Thousands)


                              For the Three Months         For the Nine Months
                                 Ended July 31,               Ended July 31,
                                2000         1999            2000        1999
                              --------      --------       --------    --------

Revenues
   Equipment and Part Sales   $ 50,420      $ 59,490       $154,020    $166,985
   Service Sales                15,045        13,219         44,369      45,493
                              --------      --------       --------    --------
    Net Sales                   65,465        72,709        198,389     212,478
    Other Income - Net               -           453              -         600
                              --------      --------       --------    --------
                                65,465        73,162        198,389     213,078


Cost of Sales                   54,084        52,210        155,639     157,266
Selling, General and
 Administrative Expenses        17,982        18,298         53,943      53,585
Impairment Loss on Long -
     Lived Assets               16,009             -         16,009           -

Reorganization Items             3,008             -          5,198           -
                              --------      --------       --------    --------
Operating Income (Loss)        (25,618)        2,654        (32,400)      2,227
Gain on Sale of a Business           -             -          6,380           -
Loss on Disposal of
   Fixed Assets                  (830)             -           (830)          -
Interest Expense - Net          (3,888)       (7,521)       (19,254)    (21,952)
                              --------      --------       --------    --------
Loss Before Income Taxes and
    Minority Interest          (30,336)       (4,867)       (46,104)    (19,725)
Provision for Income Taxes        (226)         (576)        (2,261)     (1,641)
Minority Interest                  215            13            242          40
                              --------      --------       --------    --------
Net Loss                       (30,347)       (5,430)       (48,123)    (21,326)
Foreign Currency Translation
  Adjustments                   (1,667)         (869)        (3,945)     (2,246)
                              --------      --------       --------    --------
Comprehensive Loss            $(32,014)     $ (6,299)      $(52,068)   $(23,572)
                              ========      ========       ========    ========

   The  accompanying  notes are an integral  part of the financial statements.


                                       5


<PAGE>


<TABLE>
                               MMH HOLDINGS, INC.
                 (Debtors - in - Possession as of May 17, 2000)
                       CONDENSED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)
                             (Dollars in Thousands)

<CAPTION>

                                                          For the Nine Months
                                                              Ended July
                                                                  31,
                                                       ------------------------
                                                          2000           1999
                                                       ----------      ---------
<S>                                                <C>           <C>
Operating Activities
    Net Loss                                            $(48,123)      $(21,326)
    Add (deduct) - items not affecting
     cash provided by operating activities:
       DIP financing fees                                    950              -
       Depreciation and amortization                       7,004          6,057
       Amortization of debt financing costs                1,761          1,603
       Deferred income taxes - net                             -             41
       Gain on sale of business                           (6,380)             -
       Impairment loss on long-lived assets               16,009              -
       Loss on disposal of fixed assets                      830              -
       Other                                                (242)           (40)
    Changes in working capital, excluding the
    effects of acquisition opening balance sheets
       Accounts receivable                                 5,183         18,212
       Inventories                                         2,122             34
       Other current assets                                   28         (3,762)
       Trade accounts payable and bank overdrafts         (1,369)       (10,512)
       Advance payments and progress billings              3,134            366
       Accrued interest                                   11,359          4,243
       Other current liabilities                             747         (7,103)
Net cash used for operating activities, including       --------       --------
 reorganization items                                     (6,987)       (12,187)
                                                        --------       --------
Investment and Other Transactions
    Fixed asset additions - net                           (1,033)        (4,012)
    Capitalized software                                    (890)        (2,196)
    Acquisition of businesses - net of cash
      acquired       -                                         -         (5,070)
    Net proceeds on divestiture of business                9,115              -
    Net Issuance of loans to senior management                 -            (80)
    Other - net                                               30           (570)
Net cash provided by (used for) investment and          --------       --------
     other transactions                                    7,222        (11,928)
                                                        --------       --------
Financing Activities
    Changes in short-term debt and notes payable              (9)           (22)
    Proceeds from DIP and Junior DIP borrowings           31,352              -
    Repayment of DIP borrowings                             (100)             -
    Net (repayments of)/proceeds from Revolving
     Credit Facility borrowings                           (7,279)        24,058
    Repayment of Term Loans                              (21,079)        (1,388)
    Proceeds from/(repayments of) Acquisition
     Facility Line borrowings                             (2,867)         1,235
    Repayments of long-term debt                            (117)          (120)
    Payment of DIP financing fees                           (950)             -
    Payment of  fees for amendment of Credit
      Facility                                              (226)             -
                                                        --------       --------
Net cash provided by (used for) financing
  activities                                              (1,275)        23,763
                                                        --------       --------
Effect of Exchange Rate Changes on Cash and
     Cash Equivalents                                       (104)           (29)
                                                        --------       --------
Increase (decrease) in Cash and Cash Equivalents          (1,144)          (381)
Cash and Cash Equivalents
    Beginning of Period                                    3,929          2,534
                                                        --------       --------
    End of Period                                       $  2,785       $  2,153
                                                        ========       ========
The accompanying notes are an integral  part of the financial statements.

</TABLE>

                                       6


<PAGE>



<TABLE>
                                                          MMH HOLDINGS, INC.
                                            (Debtors - in - Possession as of May 17, 2000)
                                        STATEMENTS OF PREFERRED STOCK AND SHAREHOLDERS' EQUITY
                                                FOR THE NINE MONTHS ENDED JULY 31, 2000
                                                             (UNAUDITED)
                                                        (Dollars in Thousands)

<CAPTION>
                                                       Preferred Stock
                               -----------------------------------------------------------------
                                     Series A              Series B               Series C                          Common Stock
                               --------------------  --------------------  ---------------------                -------------------
                                 Shares    Carrying    Shares    Carrying    Shares     Carrying                  Shares       Par
                               Outstanding  Value    Outstanding  Value    Outstanding   Value        Total     Outstanding   Value
                               ----------- --------  ----------- --------  -----------  --------      -----     -----------   -----
<S>                               <C>      <C>           <C>      <C>         <C>       <C>         <C>           <C>          <C>

Balance at October 31, 1999       68,741   $67,443       5,750    $5,808      34,633    $34,994     $108,245      12,099       $ -
Net loss
Change in foreign currency
   translation
Preferred stock dividends          6,187     6,187         528       528       3,247      3,247        9,962
Issuance of non-voting common                                                                                      2,420
   shares
Amortization of preferred                      435                                                       435
   stock discount
Other
                                 -------   -------      ------    ------      ------    -------     --------      ------       ---
Balance at July 31, 2000          74,928   $74,065       6,278    $6,336      37,880    $38,241     $118,642      14,519       $ -
                                 =======   =======      ======    ======      ======    =======     ========      ------       ===
</TABLE>


<TABLE>
<CAPTION>


                                  Parent        Accumulated
                                Investment/         Other                      Total
                                Additional      Comprehensive    Retained   Shareholders'
                              Paid-in-Capital       Loss         Earnings      Equity
                              ---------------   -------------    --------   -------------
<S>                           <C>               <C>             <C>           <C>

Balance at October 31, 1999   $(121,860)          $(3,428)      $(113,780)   $(239,068)
Net loss                                                          (48,123)     (48,123)
Change in foreign currency
   translation                                     (3,945)                      (3,945)
Preferred stock dividends                                          (9,962)      (9,962)
Issuance of non-voting common
   shares
Amortization of preferred
   stock discount                                                    (435)        (435)
Other                              (900)                                          (900)
                              ---------           -------       ---------    ---------
Balance at July 31, 2000      $(122,760)          $(7,373)      $(172,300)   $(302,433)
                              =========           =======       =========    =========
</TABLE>

   The  accompanying  notes are an integral  part of the financial statements.

                                       7

<PAGE>



<TABLE>

                                                    MORRIS MATERIAL HANDLING, INC.
                                            (Debtors - in - Possession as of May 17, 2000)
                                                       CONDENSED BALANCE SHEETS
                                                        (Dollars in Thousands)

<CAPTION>
                        ASSETS                                             LIABILITIES AND SHAREHOLDER'S EQUITY
                        ------                                             ------------------------------------
                                 July 31,   October 31,                                                    July 31,   October 31,
                                   2000        1999                                                         2000         1999
                                ---------   -----------                                                   ---------   -----------
                               (Unaudited)                                                               (Unaudited)
<S>                              <C>         <C>         <C>                                                <C>         <C>

Current Assets                                           Liabilities Not Subject to Compromise
 Cash and cash equivalents       $  2,785    $  3,929     Current Liabilities
 Accounts receivable-net           57,196      64,481      Short-term notes payable and current
 Inventories                       35,901      39,994      portion of long-term obligations (Note 9)      $    116      $    383
 Other current assets               7,566       7,842      Junior DIP Facility (Note 9)                     31,252             -
                                 --------    --------      Revolving Credit Facility Borrowings (Note 9)         -        27,925
                                  103,448     116,246      Term Loans (Note 9)                                   -        52,225
                                 --------    --------      Acquisition Facility Line Borrowings (Note 9)                  12,430
                                                           Senior Notes (Note 9)                                 -       200,000
Property, Plant and Equipment                              Bank overdrafts                                     998         1,367
 Land and improvements              3,300       3,349      Trade accounts payable                           13,110        26,757
 Buildings                         22,572      23,235      Employee compensation and benefits                6,990         8,020
 Machinery and equipment           43,427      45,219      Advance payments and progress billings           11,592         8,336
                                 --------    --------      Accrued warranties                                1,865         1,821
                                   69,299      71,803      Accrued interest                                    762         1,804
                                 --------    --------      Income taxes payable                              1,561         2,205
 Less accumulated depreciation    (33,370)    (30,829)     Other current liabilities                         5,354         9,791
                                 --------    --------                                                       --------    --------
                                   35,929      40,974                                                       73,600       353,064
                                 --------    --------
Other Assets
 Goodwill                          22,500      42,844      Other Long-Term Obligations                         624         2,784
 Debt financing costs              14,781      16,398      Other Long-Term Liabilities                         239         1,307
 Other                              9,568      10,374     Liabilities Subject to Compromise (Note 5)       295,483             0
                                 --------    --------     Minority Interest                                     71           504
                                   46,849      69,616     Commitments and Contingencies (Note 10)
                                 --------    --------     Shareholders' Equity                            (183,791)     (130,823)
                                                                                                          --------      --------
                                 $186,226    $226,836                                                     $186,226      $226,836
                                 ========    ========                                                     ========      ========

                       The accompanying notes are an integral part of the financial statements.
</TABLE>


                                       8

<PAGE>



                         MORRIS MATERIAL HANDLING, INC.
                 (Debtors - in - Possession as of May 17, 2000)
            CONDENSED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
                                   (UNAUDITED)
                             (Dollars in Thousands)


<TABLE>
<CAPTION>
                                   For the Three Months      For the Nine Months
                                       Ended July 31,        Ended July 31,
                                   2000        1999        2000           1999
                                  -------     --------    --------     --------
<S>                               <C>         <C>         <C>          <C>

Revenues
   Equipment and Part Sales      $ 50,420     $ 59,490    $154,020     $166,985
      Service Sales                15,045       13,219      44,369       45,493
                                 --------     --------    --------     --------
      Net Sales                    65,465       72,709     198,389      212,478
      Other Income - Net                -          453           -          600
                                 --------     --------    --------     --------
                                   65,465       73,162     198,389      213,078

Cost of Sales                      54,084       52,210     155,639      157,266
Selling, General and
   Administrative Expenses         17,982       18,298      53,943       53,585
Impairment Loss on Long -
   Lived Assets                    16,009            -      16,009            -
Reorganization Items                3,008            -       5,198            -
                                 --------     --------    --------     --------
Operating Income (loss)           (25,618)       2,654     (32,400)       2,227
Gain on Sale of a Business              -            -       6,380            -
Loss on Disposal of Fixed Assets     (830)           -        (830)           -
Interest Expense - Net             (3,888)      (7,521)    (19,254)     (21,952)
                                 --------     --------    --------     --------
Loss Before Income Taxes and
      Minority Interest           (30,336)      (4,867)    (46,104)     (19,725)
Provision for Income Taxes           (226)        (576)     (2,261)      (1,641)
Minority Interest                     215            13        242           40
                                 --------     --------    --------     --------
Net Loss                          (30,347)      (5,430)    (48,123)     (21,326)
Foreign Currency
 Translation Adjustments           (1,667)        (869)     (3,945)      (2,246)
                                 --------     --------    --------     --------
Comprehensive Loss               $(32,014)    $ (6,299)   $(52,068)    $(23,572)
                                 ========     ========    ========     ========
</TABLE>


     The accompanying notes are an integral part of the financial statements.


                                       9


<PAGE>

<TABLE>
                         MORRIS MATERIAL HANDLING, INC.
                 (Debtors - in - Possession as of May 17, 2000)
                       CONDENSED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)
                             (Dollars in Thousands)

<CAPTION>
                                                          For the Nine Months
                                                             Ended July 31,
                                                        -----------------------
                                                          2000           1999
                                                        --------       --------
<S>                                                     <C>            <C>
Operating Activities
      Net Loss                                          $(48,123)      $(21,326)
      Add (deduct) - items not affecting
      cash provided by
       operating activities:
         DIP financing fees                                  950              -
         Depreciation and amortization                     7,004          6,057
         Amortization of debt financing costs              1,761          1,603
         Deferred income taxes - net                           -             41
         Gain on sale of business                         (6,380)             -
         Impairment loss on long-lived assets             16,009              -
         Loss on disposal of fixed assets                    830              -
         Other                                              (242)           (40)
Changes in working capital, excluding the
effects of acquisition opening balance sheets:
         Accounts receivable                               5,183         18,212
         Inventories                                       2,122             34
         Other current assets                                 28         (3,762)
         Trade accounts payable and
         bank overdrafts                                  (1,369)       (10,512)
         Advance payments and progress
         billings                                          3,134            366
         Accrued interest                                 11,359          4,243
         Other current liabilities                           747         (7,103)
                                                        --------       --------
Net cash used for operating activities,
         including reorganization items                   (6,987)       (12,187)
                                                        --------       --------
Investment and Other Transactions
      Fixed asset additions - net                         (1,033)        (4,012)
      Capitalized software                                  (890)        (2,196)
      Acquisition of businesses - net of
          cash acquired                                        -         (5,070)
      Net proceeds on divestiture of business              9,115              -
      Net Issuance of loans to senior management               -            (80)
      Other - net                                             30           (570)
                                                        --------       --------
Net cash provided by (used for) investment
      and other transactions                               7,222        (11,928)
                                                        --------       --------
Financing Activities
 Changes in short-term debt and notes payable                 (9)           (22)
 Proceeds from DIP and Junior DIP borrowings              31,352              -
 Repayments of DIP borrowings                               (100)             -
 Net (repayments of)/proceeds from
   Revolving Credit Facility borrowings                   (7,279)        24,058
 Repayment of Term Loans                                 (21,079)        (1,388)
 Proceeds from/(repayments of) Acquisition
   Facility Line borrowings                               (2,867)         1,235
 Repayments of long-term debt                               (117)          (120)
 Payment of DIP financing fees                              (950)             -
 Payment of  fees for amendment of Credit
     Facility                                               (226)             -
                                                        --------       --------
Net cash provided by (used for) financing
     activities                                           (1,275)        23,763
                                                        --------       --------
Effect of Exchange Rate Changes on
 Cash and Cash Equivalents                                  (104)           (29)
                                                        --------       --------
Increase (decrease) in Cash and Cash
 Equivalents                                              (1,144)          (381)
Cash and Cash Equivalents
    Beginning of Period                                    3,929          2,534
                                                        --------       --------
      End of Period                                     $  2,785       $  2,153
                                                        ========       ========
     The  accompanying  notes are an integral part of the financial statements.

</TABLE>

                                       10

<PAGE>


<TABLE>

                         MORRIS MATERIAL HANDLING, INC.
                 (Debtors - in - Possession as of May 17, 2000)
                       STATEMENTS OF SHAREHOLDER'S EQUITY
                     FOR THE NINE MONTHS ENDED JULY 31, 2000
                                   (UNAUDITED)
                             (Dollars in Thousands)

<CAPTION>

                                   Common Stock               Parent          Accumulated
                              ----------------------        Investment/         Other                            Total
                                Shares          Par         Additional      Comprehensive      Retained      Shareholders'
                              Outstanding      Value      Paid-in-Capital        Loss          Earnings         Equity
                              -----------      -----      ---------------   -------------      --------      -------------
<S>                               <C>          <C>           <C>               <C>               <C>           <C>
Balance at October 31, 1999       100                        $(33,392)         $(3,428)        $ (94,003)     $(130,823)

Net loss                                                                                         (48,123)       (48,123)
Change in foreign currency                                                      (3,945)                          (3,945)
  translation
Other                                                            (900)                                             (900)
                                  ---          ---           --------         ---------        ---------      ---------
Balance at July 31, 2000          100          $--           $(34,292)        $ (7,373)        $(142,126)     $(183,791)
                                  ===          ===           ========         =========        =========      =========
</TABLE>


    The  accompanying  notes are an integral  part of the financial statements.


                                       11


<PAGE>


                               MMH HOLDINGS, INC.
                               ------------------

                         MORRIS MATERIAL HANDLING, INC.
                         ------------------------------

                  (Debtors- in - Possession as of May 17, 2000)
                  ---------------------------------------------

                          NOTES TO FINANCIAL STATEMENTS
                          -----------------------------

                                    UNAUDITED
                                    ---------


(DOLLAR AMOUNTS IN THOUSANDS UNLESS INDICATED)

Note 1 - Reorganization under Chapter 11
----------------------------------------

On May 17, 2000, MMH Holdings, Inc. ("Holdings"), Morris Material Handling, Inc.
and their domestic operating  subsidiaries  (collectively,  the "Debtors") filed
voluntary  petitions for reorganization  under Chapter 11 of the U.S. Bankruptcy
Code (the  "Bankruptcy  Code") in the  United  States  Bankruptcy  Court for the
District of Delaware (the  "Bankruptcy  Court").  The Debtors'  Chapter 11 cases
have been consolidated for the purpose of joint administration under case number
00-2027(SLR).   The  Debtors  are  currently   operating  their   businesses  as
debtors-in-possession  pursuant  to the  Bankruptcy  Code.  No trustee  has been
appointed.  An  official  committee  of  unsecured  creditors  (the  "Creditors'
Committee")  was appointed by the office of the United States Trustee on May 30,
2000.  Pursuant to the Bankruptcy Code,  actions to collect certain  prepetition
indebtedness of the Debtors and other obligations against the Debtors may not be
enforced.  These  claims are  reflected  in the  balance  sheet as  "liabilities
subject to compromise".  In addition, under the Bankruptcy Code, the Debtors may
assume or reject executory contracts and unexpired leases. Additional claims may
arise from such rejection, and from the determination by the court (or agreed by
the parties in interest) to allow claims for  contingencies  and other  disputed
amounts.  However,  the Debtors have not yet completed their review of all their
prepetition executory contracts and leases for assumption or rejection. See also
Note 5, Liabilities Subject to Compromise, and Note 9, Indebtedness.

The Debtors  received  approval  from the  Bankruptcy  Court to pay or otherwise
honor certain of their prepetition  obligations,  including the authority to pay
employee wages and maintain their employee benefit programs.

The Debtors have the  exclusive  right,  pursuant to an order of the  Bankruptcy
Court, until December 15, 2000, to file a plan or plans of reorganization.  Such
period can be  extended  from time to time during the  pendancy of the  Debtors'
bankruptcy cases at the discretion of the Bankruptcy  Court.  Subject to certain
exceptions  set  forth  in  the  Bankruptcy  Code,   acceptance  of  a  plan  of
reorganization  requires  approval of the Bankruptcy  Court and the  affirmative
vote  (i.e.,  more than 50% of the  number  and at least  66-2/3%  of the dollar
amount,  both based on claims  actually  voted) of each class of creditors whose
claims are impaired by the plan. Alternatively,  absent the requisite approvals,
a debtor may seek  Bankruptcy  Court approval of its  reorganization  plan under
"cramdown" provisions of the Bankruptcy Code, assuming certain tests are met. If
a debtor fails to submit a plan of reorganization  within the exclusivity period
prescribed or any extensions thereof, any creditor or equity holder will be free
to  file  a plan  of  reorganization  with  the  Bankruptcy  Court  and  solicit
acceptances thereof.

The  Bankruptcy  Court set September 20, 2000 as the last date  creditors  could
file proof of claims against the Debtors.  There may be differences  between the
amounts  recorded in the Debtors'  schedules  and financial  statements  and the
amounts  claimed by their  respective  creditors.  Litigation may be required to
resolve such disputes.

The  Debtors  will  continue  to incur  significant  costs  associated  with the
reorganization.  The  amount of these  expenses,  which are  being  expensed  as
incurred,  is expected to significantly affect results while the Debtors operate
under Chapter 11. See Note 4, Reorganization Items.

Currently,  it is not  possible to predict  the length of time the Debtors  will
operate  under the  protection  of  Chapter  11, the  outcome of the  Chapter 11
proceedings in general,  or the effect of the proceedings on the business of the
Company or on the interests of the various creditors and security holders.

Under the Bankruptcy Code, postpetition  liabilities and prepetition liabilities
(i.e.,  liabilities  subject to  compromise)  of the Debtors  must be  satisfied
before  shareholders of the Debtors can receive any  distribution.  The ultimate
recovery to the Debtors' shareholders,  if any, will not be determined until the
end of the case when the fair value of the  Debtors'  assets is

                                       12

<PAGE>

compared to the  liabilities  and claims  against the  Debtors.  The Debtors and
their  professional   advisors  are  in  the  process  of  analyzing   strategic
alternatives and developing a plan of reorganization  for the Debtors.  Based on
the  Debtors'  analysis of scheduled  and filed claims and the  valuation of the
Company,  a  determination  will be made as to the  payment  of  claims  and the
distribution of value, if any, to the Debtors' shareholders.

Note 2 - Basis of Presentation
------------------------------

General.  These  consolidated  interim  financial  statements  should be read in
conjunction  with the combined  1999 Annual  Report on Form 10-K of Holdings and
the Company. In the opinion of management, all adjustments, normal and recurring
in nature,  necessary  for a fair  presentation  of results  of  operations  and
financial  position have been included in the  accompanying  balance  sheets and
statements  of  operations.  The  results of  operations  for the three and nine
months  ended July 31,  2000 are not,  however,  necessarily  indicative  of the
results which may be expected for fiscal 2000.

Recapitalization.  On January 28, 1998, Harnischfeger  Industries,  Inc. ("HII")
reached  an  agreement  with  MHE  Investments,  Inc.  ("MHE  Investments"),  an
affiliate  of  Chartwell  Investments  Inc.  ("Chartwell"),  for the  sale of an
approximately  80 percent common ownership  interest in HII's Material  Handling
Equipment Business (the "MHE Business").  As more fully described in Note 3, the
resulting transactions (the "Recapitalization"),  which closed on March 30, 1998
(the  "Recapitalization  Closing"),  led to a significant  change in the capital
structure  and a  reorganization  of the  underlying  legal  entities of the MHE
Business. As a result of the Recapitalization,  Holdings, a pre-existing company
engaged  in the  MHE  Business,  became  an  indirect  holding  company  for the
operating  entities  engaged  in the MHE  Business.  Specifically,  MMH, a newly
formed  wholly-owned  direct  subsidiary  of  Holdings,  directly or  indirectly
acquired the various  operating  entities engaged in the MHE Business.  Holdings
was  recapitalized in order to effect the redemption of certain shares of common
stock of Holdings held by Harnischfeger  Corporation ("HarnCo").  As a result of
the  reorganization of the legal entities of the MHE Business,  Holdings and MMH
became the successor  companies to the MHE Business.  The transactions have been
accounted for as a recapitalization  and accordingly,  the financial  statements
presented herewith reflect the underlying historical accounting basis of the MHE
Business.

Chapter 11 Filing. The accompanying  consolidated  interim financial  statements
have been prepared on a going concern basis,  which  contemplates  continuity of
operations, realization of assets and liquidation of liabilities in the ordinary
course of business and do not reflect any  adjustments  that might result if the
Debtors are unable to continue as a going  concern.  As a result of the Debtors'
Chapter  11  filings,   however,   such  matters  are  subject  to   significant
uncertainty,  although the Debtors intend to file a plan of reorganization  with
the  Bankruptcy  Court.  Continuing on a going concern basis is dependent  upon,
among  other  things,  the  Debtors'   formulation  of  an  acceptable  plan  of
reorganization, the success of future business operations, and the generation of
sufficient  cash from  operations  and  financing  sources to meet the  Debtors'
obligations.  The accompanying  consolidated interim financial statements do not
reflect:  (i) the  realizable  value of assets on a  liquidation  basis or their
availability  to  satisfy  liabilities,  (ii)  aggregate  prepetition  liability
amounts  that may be allowed  for claims or  contingencies,  or their  status or
priority,  (iii) the effect of any changes to the Debtors' capital  structure or
in the  Debtors'  business  operations  as the  result  of an  approved  plan of
reorganization; or (iv) adjustments to the carrying value of assets or liability
amounts that may be necessary as the result of actions by the Bankruptcy Court.

The  Company's   consolidated   financial  statements  have  been  presented  in
conformity with the AlCPA's Statement of Position 90-7,  "Financial Reporting By
Entities In  Reorganization  Under the Bankruptcy  Code" ("SOP 90-7").  SOP 90-7
requires a segregation  of  liabilities  subject to compromise by the Bankruptcy
Court as of the bankruptcy  filing date and  identification  of all transactions
and events that are directly associated with the reorganization of the Debtors.

Impairment Loss on Long-Lived Assets. The Company assesses the carrying value of
goodwill at each  balance  sheet date.  Consistent  with  Statement of Financial
Accounting  Standards  ("SFAS")  No.  121,  "Accounting  for the  Impairment  of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of," such assessments
include, as appropriate,  a comparison of (a) the estimated future nondiscounted
cash flows, excluding interest, anticipated to be generated during the remaining
amortization  period of the goodwill to (b) the net carrying  value of goodwill.
Based upon the continued  negative trends in the operating  results of non-North
American  businesses  and shortfalls in actual third quarter  operating  results
compared  with  estimates  developed  during  the  second  quarter,   management
concluded that future operating cash flows,  excluding interest, did not support
the recoverability of recorded goodwill over the remaining  amortization period.
Accordingly,  the Company assessed the fair value of the related  businesses and
wrote-off the remaining  unamortized  goodwill balances related to its non-North
American operations of approximately $16.0 million in the third quarter.

                                       13

<PAGE>

Note 3 - Recapitalization Transaction
-------------------------------------

The   Recapitalization   was  effectuated  pursuant  to  the  January  28,  1998
Recapitalization  Agreement among MHE  Investments,  HarnCo and certain of HII's
affiliates. Pursuant to this agreement, HarnCo and other HII affiliates effected
a number  of  transactions  which  resulted  in  Holdings  owning,  directly  or
indirectly, the equity interests of all of the operating entities engaged in the
MHE  Business.  Holdings,  in turn,  formed MMH as a wholly owned  subsidiary to
directly or indirectly hold the various  operating  entities  engaged in the MHE
Business.

The principal  transactions  effected as part of the  Recapitalization  were the
following:  (i) MHE  Investments  acquired (x) 7,907 shares of Holdings'  common
stock  for  $25.1  million  and (y)  $28.9  million  liquidation  preference  of
Holdings'  12 1/2%  Series C Junior  Voting  Exchangeable  Preferred  Stock (the
"Series C Junior Voting Preferred  Stock") from HarnCo;  (ii) Holdings  redeemed
certain  shares of its common stock and Series C Junior Voting  Preferred  Stock
held by HarnCo for $287 million in cash (including a $5 million  prepayment of a
potential  post-closing  redemption  price  adjustment) and  approximately  $4.8
million liquidation preference of Holdings' 12 1/4% Series B Junior Exchangeable
Preferred  Stock  (the  "Series B Junior  Preferred  Stock");  and (iii)  HarnCo
retained 2,261 shares of Holdings' common stock.

To finance the  Recapitalization,  Holdings  sold $60 million of Series A Units,
consisting  of $57.7  million  liquidation  preference of Holdings' 12% Series A
Senior Exchangeable  Preferred Stock (the "Series A Senior Preferred Stock") and
$2.3 million of Holdings'  non-voting common stock, to institutional  investors.
In  addition,  MMH  issued  (the "Note  Offering")  $200  million  of  aggregate
principal  amount of its 9 1/2% senior notes due 2008 (the  "Senior  Notes") and
entered  into  a  senior  secured  credit  facility  (the  "Prepetition   Credit
Facility")  (see Note 9). The  Prepetition  Credit  Facility  consisted of a $70
million  Revolving  Credit Facility (the  "Revolving  Credit  Facility"),  a $30
million  acquisition  facility (the  "Acquisition  Facility") and $55 million in
term loans. MMH used a portion of the $200 million  aggregate  proceeds from the
Note Offering and $55 million aggregate borrowings under the New Credit Facility
to redeem certain of its common shares from Holdings and pay Holdings a dividend
which  redemption and dividend totaled $233.8 million.  Holdings,  in turn, used
the proceeds from this redemption, together with the proceeds of the sale of the
Series A Units, to finance the cash portion of the redemption price for HarnCo's
shares.  The  remainder of the proceeds was used by Holdings and MMH (i) to make
loans to senior  management to acquire  indirect  equity  interests in Holdings,
(ii) to fund  certain  transaction  fees and  expenses  and  (iii)  for  general
corporate purposes.

At July 31, 2000, MHE Investments owned  approximately 54.5% of the common stock
of Holdings  and $37.9  million  liquidation  preference  of the Series C Junior
Voting Preferred Stock and HarnCo owned  approximately 15.6% of the common stock
of  Holdings  and $6.3  million  liquidation  preference  of the Series B Junior
Preferred Stock. Certain indirect equity holders in MHE Investments own, through
Martin Crane L.L.C.,  approximately  25.0% of the common stock of Holdings.  The
remaining equity  interests are held by  institutional  investors and consist of
non-voting stock representing approximately 4.9% of the outstanding common stock
of Holdings  and $74.9  million  liquidation  preference  of the Series A Senior
Preferred Stock.

Note 4 - Reorganization Items
-----------------------------

Reorganization  expenses are comprised of items of income, expense, gain or loss
that were  realized or incurred by the Debtors as a result of their  decision to
reorganize  under Chapter 11 of the Bankruptcy  Code.  During the three and nine
months ended July 31, 2000,  reorganization  expenses,  including  certain costs
incurred  by the  Company  prior to May 17,  2000  related to its  restructuring
efforts, were as follows:

                                             Three months          Nine Months
                                                 ended                ended
                                             July 31, 2000        July 31, 2000
                                             -------------        -------------

      Professional fees                          $1,858               $4,048
      DIP financing costs                           950                  950
      Accrued retention plan costs                  200                  200
                                                 ------               ------
                                                 $3,008               $5,198
                                                 ======               ======

                                       14

<PAGE>

Note 5 - Liabilities Subject to Compromise
------------------------------------------

The  principal  categories  of  claims  classified  as  liabilities  subject  to
compromise under  reorganization  proceedings are identified  below. All amounts
below may be subject to future adjustment  depending on Bankruptcy Court action,
further   developments  with  respect  to  disputed  claims,  or  other  events.
Additional  prepetition claims may arise from rejection of additional  executory
contracts  or  unexpired  leases  by the  Debtors.  Under  a  confirmed  plan of
reorganization,  prepetition  claims  may be  paid  and  discharged  at  amounts
substantially   less  than  their  allowed  amounts.   Unless  the  Debtors  are
substantively  consolidated  under a confirmed plan or plans of  reorganization,
payment of  prepetition  claims of each  Debtor may  substantially  differ  from
payment of prepetition claims of other Debtors.


On a  consolidated  basis,  recorded  liabilities  subject to  compromise  under
Chapter 11 proceedings consisted of the following:


                                                                   July 31, 2000
                                                                   -------------

Trade accounts payable                                                 $ 11,572
Accrued interest expense, as of May 16, 2000                             12,419
Senior notes, at 9.5% due April 1, 2008                                 200,000
Bank term loan (Term Loan A) at LIBOR plus 3.5% (10.22% at
July 31, 2000) due  in quarterly installments through March 2003         10,154
Bank term loan (Term Loan B) at LIBOR plus 3.5% (10.22% at
July 31, 2000) due in quarterly installments through March 2005          20,973
Bank acquisition  loan (in combined draws), at LIBOR plus
3.5% (10.22% at July 31, 2000) due in eight quarterly installments
  beginning June 2003 through March 2005                                  4,563
Acquistions  term loan (Sponsor  Loan),  at Eurodollar
plus 6.0% (12.72% at July 31, 2000) due in eight quarterly
  installments beginning June 2003 through March 2005                     5,000
Bank  revolving  credit  loan,  at LIBOR plus 3.5% (10.22% at
July 31, 2000) due March 2003                                            20,647
Deferred payments for purchases of companies, due in annual
installments through 2006                                                 1,910
Long-term capital leases with various expiration dates                       20
Industrial revenue bonds, at 6.2% due in annual installments
through June 2007                                                           319
Income taxes payable                                                      2,035
Royalty fee and credit support fee payable to HII                         3,246
Other                                                                     2,625
                                                                       --------
                                                                       $295,483
                                                                       ========

Pursuant to SOP 90-7,  certain of the amounts  included above represent  secured
claims  about  which  there  is  uncertainty  as to  whether  the  liability  is
undersecured, or will be impaired under a reorganization plan or plans.

As a result of the bankruptcy  filings,  principal and interest payments may not
be made on  prepetition  debt  without  Bankruptcy  Court  approval  or  until a
reorganization  plan or plans defining the repayment  terms have been confirmed.
Interest due under the Prepetition  Credit Facility is being paid by the Debtors
as "adequate protection" pursuant to an order of the Bankruptcy Court. The total
interest on unsecured  prepetition debt that was not paid or charged to earnings
for the  period  from May 17,  2000 to July 31,  2000  was  $4.1  million.  Such
interest is not being  accrued  since it is not probable that it will be treated
as an allowed  claim.  The Bankruptcy  Code  generally  disallows the payment of
interest that accrues postpetition with respect to unsecured claims.

Note 6 - Liquidity and Capital Resources
----------------------------------------

On May 17, 2000, Holdings,  MMH and their domestic operating  subsidiaries filed
voluntary  petitions for reorganization  under Chapter 11 of the U.S. Bankruptcy
Code.  See  Note 1,  Reorganization  under  Chapter  11.  On May 18,  2000,  the
Bankruptcy   Court  entered  an  order   approving   $10.0  million  in  interim
debtor-in-possession  financing  to the Debtors and  authorizing  the Debtors to
utilize their  collections in the operation of their business.  This $10 million
amount  represented  the initial  portion  under a commitment  by the lenders to
provide $35 million in  financing  (including  a letter of credit  facility)  in
connection with the Debtors' Chapter 11 cases. The complete $35 million facility
(which was subsequently reduced by agreement of the

                                       15
<PAGE>


parties to $25 million) was  approved by the  Bankruptcy  Court on June 15, 2000
(see Note 9). This  facility has an initial  maturity  date of December 1, 2000,
which date, absent a default, shall be automatically  extendable to June 1, 2001
if a sale of the Debtors  shall not have been  consummated  prior to December 1,
2000.

The Company  believes that the filing  provides the Debtors with the opportunity
to restructure its indebtedness.  The Company plans to continue to implement its
cost  savings  initiatives  to bring  costs in line  with  market  requirements.
Although  management  believes that no material adverse effects have occurred to
date,  disruption of operations relating to the Chapter 11 reorganization  could
adversely affect the Debtors'  relationships  with their  creditors,  customers,
suppliers or employees.

Note 7 - Acquisitions
---------------------

During  the nine  months  ended  July 31,  2000,  the  Company  did not make any
acquisitions.  During the nine months ended July 31, 1999, the Company completed
one acquisition  with an aggregate  purchase price of $3.1 million,  net of cash
acquired,  including  approximately  $1.0 million  financed by the seller.  This
acquisition was related to the Company's  aftermarket business and was accounted
for as a purchase  transaction  with the  purchase  price  allocated to the fair
value of specific assets acquired and liabilities assumed. Resultant goodwill of
$1.8 million is being  amortized over 40 years.  This  acquisition was partially
financed by the seller,  resulting  in a deferred  purchase  price which will be
paid in 2004 and 2005.

During the nine months ended July 31, 1999,  the Company made final  payments of
$1.5 million related to two 1998  acquisitions.  In addition,  with respect to a
1995  acquisition,  the Company was required to make a contingent  consideration
payment of $1.4 million in the nine months ended July 31, 1999. Additionally,  a
payment of $100 was made in each of the nine month  periods  ended July 31, 2000
and 1999  toward a fiscal  1998  purchase  which was  partially  financed by the
seller.  On a pro forma basis,  the fiscal 1999  acquisition was not material to
results of  operations  reported  for the nine  months  ended July 31,  1999 and
accordingly, such information is not presented.

Note 8 - Inventories
--------------------

Inventories consisted of the following:

                                                July 31,          October 31,
                                                  2000               1999
                                               ---------          -----------

Raw material                                   $   3,740           $   8,771
Work-in-process                                   13,846              20,166
Finished parts                                    24,374              18,116
                                               ---------           ---------
                                                  41,960              47,053
Less excess of current cost over
   stated LIFO value                              (6,059)             (7,059)
                                               ---------           ---------
                                               $  35,901           $  39,994
                                               =========           =========

Note 9 - Indebtedness
---------------------

On   June   15,   2000,   the   Bankruptcy   Court   approved   a  $35   million
Debtor-in-Possession  Facility ("DIP Facility") (which was subsequently  reduced
by agreement of the parties to $25  million) and  authorized  the Debtors to use
their  collections in the operations of their  business.  The DIP and Junior DIP
Facilities  contain a number of covenants  that,  among other things,  limit the
Debtors'  ability  to create or assume  liens,  consolidate  or merge with other
entities,  create, incur, or assume additional indebtedness,  dispose of certain
assets and make capital  expenditures.  The DIP and Junior DIP  Facilities  also
require  the  Debtors to comply  with  certain  financial  ratios and  borrowing
condition  tests  based on  monthly  measurements  of the latest  twelve  months
results of operations.  The first  measurement  date is December 31, 2000.  Cash
collected by the Company is used to repay the Term Loans,  the Revolving  Credit
Facility  Borrowings and the Acquisition  Facility Line Borrowings on a pro-rata
basis and these amounts are re-loaned to the Company under a Junior DIP Facility
up to $38  million.  The Junior DIP Facility is junior to the DIP  Facility.  At
July 31, 2000, $31.3 million in borrowings are outstanding  under the Junior DIP
Facility and are classified as current  obligations in the July 31, 2000 balance
sheet.

                                       16

<PAGE>

The DIP and Junior DIP  Facilities  benefit  from  superpriority  administrative
claim status and senior and junior  liens as provided  for under the  Bankruptcy
Code.  Under the Bankruptcy  Code, a superpriority  claim is senior to unsecured
prepetition claims and all other administrative expenses incurred in the Chapter
11 case. Borrowings under the DIP Facility are priced at the Alternate Base Rate
of the Post-Petition  Agent under the DIP Facility plus 1.5% or, at the Debtors'
option,  LIBOR plus 3 1/2%.  This DIP Facility has an initial  maturity  date of
December  1,  2000,  which  date,  absent  a  default,  shall  be  automatically
extendable  to  June 1,  2001  if a sale of the  Debtors  shall  not  have  been
consummated prior to December 1, 2000.  Borrowings under the Junior DIP Facility
are priced at the Alternate Base Rate of the  Post-Petition  Agent under the DIP
Facility plus 2.0% or, at the Debtors'  option,  LIBOR plus 3 1/2%.  This Junior
DIP Facility  matures on the earlier of the initial maturity date of December 1,
2000, which date, absent a default, shall be automatically extendable to June 1,
2001 if a sale of the Debtors shall not have been consummated  prior to December
1, 2000, or upon confirmation of a plan of reorganization.

The principal sources of liquidity for the Company's operating requirements have
been cash flows from operations and borrowings under the DIP Facility and Junior
DIP  Facility.  While  the  Company  expects  that  such  sources  will  provide
sufficient working capital to operate its businesses, there can be no assurances
that such sources will prove to be sufficient.

Immediately prior to the bankruptcy  filings,  the Company's UK subsidiary had a
short-term  bank credit line with an outstanding  balance of $1.9 million.  This
credit  line  was  converted  to the  Revolving  Credit  Facility  borrowing  in
conjunction with the bankruptcy.

Note 10 - Commitments and Contingencies
---------------------------------------

To secure the performance of sales contracts related to MMH operations,  MMH was
contingently  liable to financial  institutions  and others for the following at
July 31,  2000:  (i) $8.1  million of  outstanding  letters of credit and surety
bonds under the Prepetition  Credit  Facility,  (ii) $3.3 million under a surety
arrangement for outstanding  surety bonds and (iii) $4.1 million of surety bonds
with other  institutions.  Prior to the  Recapitalization  Closing,  HII and its
affiliates ("HII Group")  provided credit support for the MHE Business.  As part
of the  Recapitalization,  HII  agreed  to  maintain  in  place  credit  support
(including   letters  of  credit  and  surety   bonds)  in   existence   at  the
Recapitalization  Closing  and  the  Company  agreed  to  reimburse  HII for any
payments made by the HII Group with respect to such credit support.  At July 31,
2000,  approximately  $11.2  million  of HII Group  letters of credit and surety
bonds remained outstanding.

As of the Recapitalization Closing, HarnCo retained certain income and other tax
liabilities relating to the MHE Business, all environmental liabilities relating
to  previously  shared  facilities,  any  liabilities  for  which  HarnCo or its
affiliates  have been named as potentially  responsible  parties with respect to
Superfund sites, and any liabilities  arising in connection with claims alleging
exposure to asbestos  (to the extent there is  insurance  coverage  therefor) in
connection  with  the  MHE  Business  prior  to  the  Recapitalization  Closing.
Additionally,  HarnCo retained all liability for medical and disability  benefit
claims  for  then   current   United   States   employees   made  prior  to  the
Recapitalization  Closing and all claims with  respect to any of the HII benefit
plans for former United States employees.

HarnCo has been and is  currently  a defendant  to a number of asbestos  related
lawsuits  and will likely be named in future such  actions.  Most suits  involve
multiple  defendants  including  asbestos  manufacturers.   MMH  has  agreed  to
indemnify HarnCo and its affiliates with respect to any liabilities in excess of
insurance  arising  in  connection  with  past and  future  asbestos  litigation
relating to the MHE Business.  HII's  insurance  program  included  coverage for
asbestos related claim activity through 1986, when coverage for asbestos related
claims ceased to be available.  HII's insurer has provided first dollar coverage
for policy periods through 1976. During the 1977 to 1985 policy periods, HII had
a variety of policies,  with  retention  levels  ranging from  $100,000 to $15.0
million and total  coverage  limits ranging from $12.5 million to $50.0 million.
To date,  HII's  insurer has paid all  indemnification  liabilities  relating to
asbestos  claims (which  amounts have not been material to the MHE Business) but
there can be no assurance  such insurers will continue to do so in the future or
that there will be  insurance  coverage for such  claims.  In  addition,  policy
primary  aggregate  levels were exhausted in certain years,  which would require
the  participation  of excess  insurers  for future  claim  activity.  Given its
experience to date with such claims,  the Company  believes that its exposure to
asbestos related claims is not material, but there can be no assurance that such
liability will not in fact be material.

All of the Company's  agreements  and  arrangements  with HII and its affiliates
(including  those  referred  to above and those  relating  to the  provision  of
services  and  materials  by HII and its  affiliates  to the  Company)  could be
materially  adversely  affected  by the  fact  that on June 7,  1999  (the  "HII
Petition  Date"),  HII and certain of its United  States  affiliates  (including
HarnCo) filed voluntary  petitions for relief under Chapter 11 of the Bankruptcy
Code in the United  States  Bankruptcy  Court for the District of Delaware  (the
"HII  Bankruptcy").  Certain provisions of the Bankruptcy Code allow a debtor to
avoid,  delay  and/or  reduce its  contractual  and other  obligations  to third
parties.  There can be no assurance that HII and its affiliates will not

                                       17
<PAGE>

attempt to utilize such provisions to cease  performance  under their agreements
with the Company. The inability of the Company to receive the benefits of one or
more of these agreements or the termination of ongoing  arrangements between the
Company and affiliates of HII could  materially  adversely  affect the Company's
operations and financial  performance.  In the event that any of the liabilities
retained by HII and its  affiliates  remain  unsatisfied  as of the HII Petition
Date, the Company's right to indemnification for any such amounts it has paid on
behalf of HII and its affiliates may also be avoided, delayed or reduced.

Each of HII and certain of its  affiliates on the one hand,  and the Company and
certain of its affiliates,  on the other hand, have  receivables and payables to
the other which may be affected by the HII Bankruptcy.

On October 28, 1996, a strong windstorm caused significant damage to the Belview
container-handling   terminal  at  the  Port  of  Waterford   in  Ireland.   One
container-handling  crane sold by the Company's  United  Kingdom  subsidiary was
destroyed  and another was  seriously  damaged.  The two cranes were sold to the
Waterford  Harbour  Commissioners  in 1992 and  commissioned for use in 1993. On
October 19, 1998, the Waterford Harbour  Commissioners  wrote to the Company and
provided a notice of arbitration,  asserting breach of contract,  negligence and
breach of duty against the  Company's  United  Kingdom  subsidiary in connection
with the  destroyed and damaged  cranes.  The  Waterford  Harbour  Commissioners
claimed direct damages of IR(pound)8.5  million ($10.1 million based on exchange
rates  at July  31,  2000)  and  unspecified  consequential  damages.  The  port
operator,  Bell Lines,  Limited,  filed a similar  claim  against the  Company's
United  Kingdom  subsidiary  in October  1999,  asserting  unspecified  damages.
Management  intends to  vigorously  defend both  matters.  One of the  Company's
insurance  carriers  has agreed to provide  defense  coverage for one of the two
cranes  involved in the accident and limited  indemnification  if the Company is
unsuccessful  in  defending  the  claims.  The  Company  and its United  Kingdom
subsidiary  have  initiated  litigation  in the Milwaukee  County  Circuit Court
against Ace American Insurance Company, AON Risk Services, Inc. of Illinois, and
National  Union Fire  Insurance  Company of  Pittsburgh,  Pennsylvania,  seeking
additional insurance coverage for defense and indemnification obligations. While
the  Company  believes  that it will obtain a  favorable  resolution  (either by
successfully defending the claim or by obtaining insurance coverage thereon), no
assurances  can be made as to the final outcome of the claims.  If the Company's
United Kingdom subsidiary is found liable for the claims and is unable to obtain
insurance  coverage  therefore,  there could be a material adverse effect on the
Company's operations and financial performance. Based upon the current status of
this matter, no related liability has been accrued at July 31, 2000.

The Company is a party to various other litigation  matters,  including  product
liability  and other claims,  which are normal in the course of its  operations.
Also,  as a  normal  part of its  operations,  the  Company  undertakes  certain
contractual  obligations  and warranties in connection with the sale of products
or services.  Although  the outcome of these  matters  cannot be predicted  with
certainty, management believes that the resolution of such matters will not have
a material adverse effect on the consolidated  results of operations,  financial
position or cash flows of the Company.

Under the terms of the Recapitalization Agreement, HarnCo retained all liability
for the only two open  environmental  clean-up  claims brought against HarnCo in
the Milwaukee,  Wisconsin  area. The Company and its management are not aware of
any  other  material  environmental  clean-up  claim  which  is  pending  or  is
threatened  against the  Company,  but there can be no  assurance  that any such
claim will not be asserted  against the Company in the future.  In addition,  as
noted above,  the Company's  right to  indemnification  against  HarnCo for such
liabilities  may be avoided,  delayed or reduced as a result of HarnCo's  filing
for bankruptcy protection.

As  a  result  of  the  Company's   bankruptcy   filing  described  in  Note  1,
Reorganization  under  Chapter  11,  litigation  against  the  Company  and  its
subsidiaries which filed bankruptcy is stayed.

Note 11 - Segment Information
-----------------------------

The Company adopted SFAS No. 131, " Disclosures  about Segments of an Enterprise
and Related  Information"  during the fiscal year ended  October 31,  1999.  The
prior year's third quarter  segment  information has been restated to conform to
the  current  year  presentation.  Pursuant  to SFAS No.  131,  the  Company has
identified  its reportable  segments  based on the Company's  method of internal
reporting  which is utilized by its chief  operating  decision-maker,  the Chief
Executive Officer. The reportable operating segments are as follows:

     o Equipment and  Aftermarket - Americas
     o Equipment and  Aftermarket - Other
     o Distribution and Service - North America
     o Engineered  Products and Automation - Europe

                                       18

<PAGE>


     o Equipment  and  Aftermarket - Europe
     o Equipment and  Aftermarket - Asia Pacific
     o Equipment and Aftermarket - South Africa

Each segment has a manager who is directly  accountable to and maintains regular
contact with the Chief Executive Officer.  The Company evaluates  performance of
its segments based on operating  income,  determined on a basis  consistent with
amounts reported in the consolidated financial statements.

The Equipment and  Aftermarket - Americas  segment  designs and  manufactures  a
comprehensive line of engineered and standard overhead cranes,  hoists and other
component  products and repair parts at the Company's  facilities located in Oak
Creek and Windsor, Wisconsin. This segment also modernizes products manufactured
by both the Company and its competitors.  This segment is the main  manufacturer
of the replacement parts sold by the Company's  Distribution and Service - North
America segment as well as the  manufacturer of component  products used in that
segment's standard cranes.  Repair parts and component products are purchased by
the Distribution and Service - North America segment at list price less standard
intercompany discounts.

The  Equipment  and   Aftermarket  -  Other  segment  is  the  Company's   brake
manufacturing operation in Canada. Approximately 35% of this segment's sales are
to other Company segments. The Company sold this operation in December 1999.

The  Distribution  and  Service  -  North  America  segment  is the  network  of
Company-owned  locations in key industrial markets in North America. The network
is the platform for the  Company's  sales  activities,  serving as  distribution
centers for its original  equipment and  replacement  parts as well as the focal
point for service  activities.  Some of the distribution  centers also fabricate
and assemble standard cranes using components  manufactured by the Equipment and
Aftermarket - Americas and the Equipment and Aftermarket - Europe segments.

The  Engineered  Products  and  Automation  -  Europe  segment  focuses  on  the
manufacture  of highly  engineered  ship-to-shore  and gantry  cranes for use in
container  handling and  automated  warehouse  units at the  Company's  facility
located  in  Loughborough,  England,  and  provides  software  support  for  the
automated warehouse units installed at customer locations.

The Equipment and  Aftermarket - Europe  segment  consists of standard crane and
hoist manufacturing in the Loughborough, England facility as well as the network
of Company-owned  distribution  centers in key industrial  markets in the United
Kingdom.  The Equipment and Aftermarket - Europe segment  provides  services for
the Engineered  Products and Automation  segment at prices consistent with those
charged to external  customers.  In addition,  this segment  distributes  hoists
through Distribution and Service - North America and Equipment and Aftermarket -
Asia  Pacific  and South  Africa at prices  consistent  with  those  charged  to
external customers.

The Equipment and Aftermarket - Asia Pacific and South Africa  segments  operate
in a manner similar to the Distribution  and Service North America segment.  The
Asia Pacific segment includes operations in Australia,  Singapore,  Thailand and
Saudi Arabia.

Within North America,  certain centrally  incurred costs such as insurance costs
and computer  charges are  allocated to  operating  segments  based upon various
methods of  allocation.  In the United  Kingdom,  utilities,  property taxes and
insurance  costs are  allocated  to the segments  based upon varying  allocation
methods. Domestically, costs related to centralized accounting, marketing, human
resources, and IT functions are not allocated. Internationally,  these costs, as
well as amortization of goodwill,  are allocated amongst individual  segments in
the nine months ended July 31, 2000,  however, in the same period in fiscal year
1999, no allocation was done.

As  discussed  above,  the  Company  assessed  the fair  value of its  non-North
American  businesses  and,  as a result,  wrote-off  the  remaining  unamortized
goodwill  balances related to these  operations in the third quarter.  The total
write-off  of  approximately  $16.0  million  was  allocated  to the  applicable
segments as follows:  $10.0  million to  Eliminations  and Other - Europe,  $0.8
million to Equipment &  Aftermarket - South Africa and $5.2 million to Equipment
& Aftermarket - Asia Pacific.

                                       19

<PAGE>


                               MMH HOLDINGS, INC.
                         MORRIS MATERIAL HANDLING, INC.
                 (Debtors - in - Possession as of May 17, 2000)
                               Operating Segments
                     For the Nine Months Ended July 31, 2000
<TABLE>

<CAPTION>
                                                                        SALES
                                                    -----------------------------------------------
                                                                                                       Operating Income
                                                     External         Intercompany         Total             (Loss)
                                                     --------         ------------         -----       -----------------

<S>                                                 <C>                 <C>               <C>             <C>
       Equipment & Aftermarket - Americas            $ 22,512           $37,817           $ 60,329       $   (132)
          Equipment & Aftermarket - Other                 423               111                534             (4)
                                                     --------           -------           --------       --------
            Total Equipment & Aftermarket              22,935            37,928             60,863           (136)
   Distribution & Service - North America             130,363               645            131,008          6,050
                     Eliminations & Other                   -           (38,573)           (38,573)           161
                                                     --------           -------           --------       --------
                           Total Americas             153,298                 -            153,298          6,075
                                                     --------           -------           --------       --------
Engineered Products & Automation - Europe               6,005                32              6,037         (1,697)
         Equipment & Aftermarket - Europe              23,021             4,119             27,140         (1,638)
                     Eliminations & Other                   -              (652)              (652)       (13,569)
                                                     --------           -------           --------       --------
                             Total Europe              29,026             3,499             32,525        (16,904)
   Equipment & Aftermarket - South Africa               6,801                 -              6,801         (1,334)
   Equipment & Aftermarket - Asia Pacific               9,264                 -              9,264         (6,024)
                     Eliminations & Other                   -              (961)              (961)             -
                                                     --------           -------           --------       --------
                      Total International              45,091             2,538             47,629        (24,262)
                                                     --------           -------           --------       --------
               Corporate and Eliminations                   -            (2,538)            (2,538)       (14,213)
                                                     --------           -------           --------       --------

                             Consolidated            $198,389           $     -           $198,389       $(32,400)
                                                     ========           =======           ========       ========

</TABLE>

                                       20

<PAGE>



<TABLE>

                                                          MMH HOLDINGS, INC.
                                                    MORRIS MATERIAL HANDLING, INC.
                                            (Debtors - in - Possession as of May 17, 2000)
                                                          Operating Segments
                                               For the Three Months Ended July 31, 2000

<CAPTION>
                                                                        SALES
                                                    -----------------------------------------------
                                                                                                       Operating Income
                                                     External         Intercompany         Total             (Loss)
                                                     --------         ------------         -----       -----------------

<S>                                                   <C>               <C>               <C>               <C>
       Equipment & Aftermarket - Americas             $ 5,195           $13,493           $18,688          $   (625)
          Equipment & Aftermarket - Other                   -                 -                 -                 -
                                                      -------           -------           -------          --------
            Total Equipment & Aftermarket               5,195            13,493            18,688              (625)
   Distribution & Service - North America              45,478               312            45,790             1,251
                     Eliminations & Other                   0           (13,805)          (13,805)               56
                                                      -------           -------           -------          --------
                           Total Americas              50,673                 0            50,673               682
                                                      -------           -------           -------          --------

Engineered Products & Automation - Europe               1,938                27             1,965              (209)
         Equipment & Aftermarket - Europe               8,107             1,294             9,401            (1,213)
                     Eliminations & Other                   -              (213)             (213)          (11,576)
                                                      -------           -------           -------          --------
                             Total Europe              10,045             1,108            11,153           (12,998)
   Equipment & Aftermarket - South Africa               2,149                 0             2,149            (1,000)
   Equipment & Aftermarket - Asia Pacific               2,598                 0             2,598            (5,572)
                     Eliminations & Other                   0              (434)             (434)                -
                                                      -------           -------           -------          --------
                      Total International              14,792               674            15,466           (19,570)
                                                      -------           -------           -------          --------
               Corporate and Eliminations                   0              (674)             (674)           (6,730)
                                                      -------           -------           -------          --------

                             Consolidated             $65,465           $     -           $65,465          $(25,618)
                                                      =======           =======           =======          ========


</TABLE>

                                      21

<PAGE>


<TABLE>


                                                          MMH HOLDINGS, INC.
                                                    MORRIS MATERIAL HANDLING, INC.
                                            (Debtors - in - Possession as of May 17, 2000)
                                                          Operating Segments
                                                For the Nine Months Ended July 31, 1999


<CAPTION>
                                                                        SALES
                                                    -----------------------------------------------
                                                                                                       Operating Income
                                                     External         Intercompany         Total             (Loss)
                                                     --------         ------------         -----       -----------------

<S>                                                  <C>                 <C>              <C>               <C>
       Equipment & Aftermarket - Americas            $ 38,402            $39,057          $ 77,459          $ 4,733
          Equipment & Aftermarket - Other               2,759              1,510             4,269            1,045
                                                     --------            -------          --------          -------
            Total Equipment & Aftermarket              41,161             40,567            81,728            5,778
   Distribution & Service - North America             118,219              3,558           121,777            7,620
                     Eliminations & Other                   0            (44,125)          (44,125)            (176)
                                                     --------            -------          --------          -------
                           Total Americas             159,380                  0           159,380           13,222
                                                     --------            -------          --------          -------

Engineered Products & Automation - Europe               8,323                 97             8,420            1,262
         Equipment & Aftermarket - Europe              24,420              5,202            29,622              994
                     Eliminations & Other                   -             (1,153)           (1,153)          (2,923)
                                                     --------            -------          --------          -------
                             Total Europe              32,743              4,146            36,889           (3,191)
   Equipment & Aftermarket - South Africa              10,510                  0            10,510              231
   Equipment & Aftermarket - Asia Pacific               9,845                  0             9,845             (212)
                     Eliminations & Other                   0             (1,088)           (1,088)            (351)
                                                     --------            -------          --------          -------
                      Total International              53,098              3,058            56,156           (3,523)
                                                     --------            -------          --------          -------
               Corporate and Eliminations                   0             (3,058)           (3,058)          (7,472)
                                                     --------            -------          --------          -------

                             Consolidated            $212,478            $     -          $212,478          $ 2,227
                                                     ========            =======          ========          =======
</TABLE>


                                       22

<PAGE>


<TABLE>



                                                          MMH HOLDINGS, INC.
                                                    MORRIS MATERIAL HANDLING, INC.
                                            (Debtors - in - Possession as of May 17, 2000)
                                                          Operating Segments
                                               For the Three Months Ended July 31, 1999

<CAPTION>
                                                                        SALES
                                                    -----------------------------------------------
                                                                                                       Operating Income
                                                     External        Intercompany          Total             (Loss)
                                                     --------        ------------          -----       -----------------

<S>                                                  <C>               <C>                <C>               <C>
       Equipment & Aftermarket - Americas            $12,747           $13,992            $26,739           $2,703
          Equipment & Aftermarket - Other                642               801              1,443              267
                                                     -------           -------            -------           ------
            Total Equipment & Aftermarket             13,389            14,793             28,182            2,970

   Distribution & Service - North America             42,061             1,268             43,329            3,363
                     Eliminations & Other                  0           (16,061)           (16,061)            (293)
                                                     -------           -------            -------           ------
                           Total Americas             55,450                 0             55,450            6,040
                                                     -------           -------            -------           ------

Engineered Products & Automation - Europe              3,337              (310)             3,027               (7)
         Equipment & Aftermarket - Europe              7,085             2,044              9,129              633
                     Eliminations & Other                  -              (214)              (214)          (1,308)
                                                     -------           -------            -------           ------
                             Total Europe             10,422             1,520             11,942             (682)
   Equipment & Aftermarket - South Africa              3,332                 0              3,332                7
   Equipment & Aftermarket - Asia Pacific              3,505                 0              3,505                9
                     Eliminations & Other                  0              (375)              (375)            (115)
                                                     -------           -------            -------           ------
                      Total International             17,259             1,145             18,404             (781)
                                                     -------           -------            -------           ------
               Corporate and Eliminations                  0            (1,145)            (1,145)          (2,605)
                                                     -------           -------            -------           ------

                             Consolidated            $72,709           $     -            $72,709           $2,654
                                                     =======           =======            =======           ======

</TABLE>


                                       23
<PAGE>


Note 12 - Divestiture
---------------------

On December 16, 1999,  the Company  completed  the sale of the  Company's  brake
manufacturing operation (the "Brake Business") located in Mississauga,  Ontario,
Canada,  for a net  sale  price  of $6.8  million  after  deduction  of  certain
transaction-related  items,  including taxes. During the first quarter of fiscal
year 2000, the Brake Business contributed $0.5 million in sales and no operating
income to the Company's results.

In accordance with the Prepetition Credit Facility, the Company was permitted to
apply half of the net proceeds of the sale of the Brake Business (which amounted
to $3.4  million)  to  general  corporate  purposes,  which  the  Company  would
otherwise have been required to use to prepay indebtedness under the Prepetition
Credit Facility. After consummation of the sale, the Company repaid $3.1 million
of the  outstanding  term loans ($2.4  million of which was applied to the final
scheduled  principal  payment  obligation  with  respect to the term  loans) and
repaid $0.3 million on the Acquisition  Facility. A pre-tax gain of $6.4 million
was recognized on this transaction.

Note 13 - Workforce Reductions
------------------------------

During the third quarter ended July 31, 2000, the Company  announced a workforce
reduction  program of approximately 84 hourly and salary positions at its United
States and  United  Kingdom  operations.  The  program  was  primarily  aimed at
streamlining  its  production  base,  improving  efficiency  and  enhancing  its
competitiveness.  Termination  benefits  accrued  and  charged to expense in the
third  quarter  totaled  $1.5  million.  Termination  benefits  paid and charged
against the  liability as of July 31, 2000,  were $0.6  million.  The  remaining
severance  benefits  are  anticipated  to be paid  primarily  during  the fourth
quarter of 2000 and the first quarter of 2001.

The Company also  recorded  $0.4 million and $0.9 million of expense  during the
third and fourth quarters of 1999 as a result of  restructuring of the Company's
operations.

Note 14 - Supplemental Condensed Financial Information
------------------------------------------------------

In connection with the Recapitalization,  MMH, a direct wholly-owned  subsidiary
of  Holdings,  issued  Senior  Notes  that are  guaranteed  by  certain of MMH's
subsidiaries (the "Guarantor Subsidiaries").  Each of the Guarantor Subsidiaries
is a wholly-owned subsidiary,  directly or indirectly, of MMH and the guarantees
are full, unconditional and joint and several. Both Holdings and MMH are holding
companies  with no material  operating  assets.  All of the  Company's  business
operations  are conducted  through  subsidiaries  of MMH and  accordingly,  both
Holdings and MMH are  dependent  on the  operating  subsidiaries  of MMH to fund
their cash needs,  including  debt service and tax  obligations.  The  Guarantor
Subsidiaries  include the domestic operating  subsidiaries which filed voluntary
petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code in the
United States Bankruptcy Court for the District of Delaware (See Note 1).

Separate  financial  statements of the Guarantor  Subsidiaries are not presented
because  management has determined that they would not be material to investors.
The following  supplemental  financial information sets forth the balance sheet,
statement of operations and cash flow information for the Guarantor Subsidiaries
and  for  MMH's  other  subsidiaries  (the  "Non-Guarantor  Subsidiaries").  The
supplemental  financial  information  reflects the  investments of the Guarantor
Subsidiaries  in the  Non-Guarantor  Subsidiaries  using  the  equity  method of
accounting. For purposes of this presentation, it is assumed that, historically,
all of the assets of the MHE Business were  wholly-owned by subsidiaries of MMH,
which  is an  entity  that  was  formed  by  Holdings  in  connection  with  the
Recapitalization and accordingly, the historical financial statements of MMH and
Holdings are identical following completion of the Recapitalization.

                                       24


<PAGE>

<TABLE>


                               MMH HOLDINGS, INC.
                 (Debtors - in - Possession as of May 17, 2000)
                             SUPPLEMENTAL CONDENSED
                           CONSOLIDATING BALANCE SHEET
                                  JULY 31, 2000
                                   (UNAUDITED)
                             (Dollars in Thousands)

<CAPTION>
                                                                 Non-                                             Consolidated
                                              Guarantor       Guarantor     Morris Material                      Morris Material
                                             Subsidiaries    Subsidiaries    Handling, Inc.     Eliminations     Handling, Inc.
                                             ------------    ------------   ---------------     ------------     ---------------

<S>                                         <C>             <C>             <C>                 <C>              <C>
ASSETS
Current Assets
    Cash and cash equivalents               $       586     $       274     $    1,925          $         -      $     2,785
    Accounts receivable - net                    54,190           3,006              -                    -           57,196
    Intercompany accounts receivable             21,180             119         20,234              (41,533)               -
    Inventories                                  34,222           1,679              -                    -           35,901
    Other current assets                          7,081             185            300                    -            7,566
                                            -----------     -----------     ----------          -----------      -----------
                                                117,259           5,263         22,459              (41,533)         103,448
                                            -----------     -----------     ----------          -----------      -----------
Property, Plant and Equipment - net              33,583           2,346              -                    -           35,929
                                            -----------     -----------     ----------          -----------      -----------
Other Assets
    Goodwill                                     22,500               -              -                    -           22,500
    Debt financing costs                            -                 -         14,781                    -           14,781
    Noncurrent intercompany receivable            5,064               -         77,281              (82,345)               -
    Investment in affiliates                     (5,049)              -         29,205              (24,156)               -
    Other                                         8,890               -            678                    -            9,568
                                            -----------     -----------     ----------          -----------      -----------
                                                 31,405               -        121,945             (106,501)          46,849
                                            -----------     -----------     ----------          -----------      -----------
                                            $   182,247     $     7,609     $  144,404          $  (148,034)     $   186,226
                                            ===========     ===========     ==========          ===========      ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities Not Subject to Compromise
    Current Liabilities
       Current portion of long-term
         obligations                                 78              38              -                    -      $       116
       Junior DIP Facility                            -               -         31,252                    -           31,252
       New Credit Facility borrowings                 -               -              -                    -                -
       Term loans                                     -               -              -                    -                -
       Acquisition Facility borrowings                -                              -                    -                -
       Senior Notes                                   -               -              -                    -                -
       Bank overdrafts                              177             821              -                    -              998
       Trade accounts payable                    12,139             971              -                    -           13,110
       Intercompany accounts payable             20,353           4,082         17,098              (41,533)               -
       Advance payments and progress
         billings                                11,592               -              -                    -           11,592
       Accrued interest                               9               -            753                    -              762
       Other current liabilities                 12,797           1,069          1,904                    -           15,770
                                            -----------     -----------     ----------          -----------      -----------
                                                 57,145           6,981         51,007              (41,533)          73,600
                                            -----------     -----------     ----------          -----------      -----------

    Other Long-Term Debt                             82             542              -                    -              624
    Noncurrent Intercompany Payable              77,281           5,064              -              (82,345)               -
    Other Long Term Liabilities                      36               -            203                    -              239
                                            -----------     -----------     ----------          -----------      -----------
                                                134,544          12,587         51,210             (123,878)          74,463
Liabilities Subject to Compromise                18,498               -        276,985                    -          295,463
Minority Interest                                     -               -              -                   71               71
Manditorily Redeemable Preferred Stock                -               -              -                    -                -
Shareholders' Equity                             29,205          (4,978)      (183,791)             (24,227)        (183,791)
                                            -----------     -----------     ----------          -----------      -----------
                                            $   182,247     $     7,609     $  144,404          $  (148,034)     $   186,226
                                            ===========     ===========     ==========          ===========      ===========

                                                                            Consolidated
                                            MMH Holdings,                   MMH Holdings,
                                                Inc.        Eliminations        Inc.
                                            -------------   ------------    -------------
<S>                                         <C>             <C>             <C>
ASSETS
Current Assets
    Cash and cash equivalents               $         -     $         -     $    2,785
    Accounts receivable - net                         -               -         57,196
    Intercompany accounts receivable                  -               -              -
    Inventories                                       -               -         35,901
    Other current assets                              -               -          7,566
                                            -----------     -----------     ----------
                                                      -               -        103,448
                                            -----------     -----------     ----------
Property, Plant and Equipment - net                   -               -         35,929
                                            -----------     -----------     ----------
Other Assets
    Goodwill                                          -               -         22,500
    Debt financing costs                              -               -         14,781
    Noncurrent intercompany receivable                -               -              -
    Investment in affiliates                   (183,791)        183,791              -
    Other                                             -               -          9,568
                                            -----------     -----------     ----------
                                               (183,791)        183,791         46,849
                                            -----------     -----------     ----------
                                            $  (183,791)    $   183,791     $  186,226
                                            ===========     ===========     ==========

LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities Not Subject to Compromise
    Current Liabilities
       Current portion of long-term
        obligations                         $        -      $         -     $      116
       Junior DIP Facility                           -                -         31,252
       New Credit Facility borrowings                -                -              -
       Term loans                                    -                -              -
       Acquisition Facility borrowings               -                -              -
       Senior Notes                                  -                -              -
       Bank overdrafts                               -                -            998
       Trade accounts payable                        -                -         13,110
       Intercompany accounts payable                 -                -              -
       Advance payments and progress
         billings                                    -                -         11,592
       Accrued interest                              -                -            762
       Other current liabilities                     -                -         15,770
                                            ----------      -----------     ----------
                                                     -                -         73,600
                                            ----------      -----------     ----------

    Other Long-Term Debt                                                           624
    Noncurrent Intercompany Payable                                                  -
    Other Long Term Liabilities                                                    239
                                            ----------      -----------     ----------
                                                     -                -         74,463
Liabilities Subject to Compromise                    -                -        295,483
Minority Interest                                    -                -             71
Manditorily Redeemable Preferred Stock         118,642                -        118,642
Shareholders' Equity                          (302,433)         183,791       (302,433)
                                            ----------      -----------     ----------
                                            $ (183,791)     $   183,791     $  186,226
                                            ==========      ===========     ==========
</TABLE>

                                       25
<PAGE>


                               MMH HOLDINGS, INC.
                      (Debtors - in - Possession as of May
                        17, 2000) SUPPLEMENTAL CONDENSED
                           CONSOLIDATING BALANCE SHEET
                                OCTOBER 31, 1999
                             (Dollars in Thousands)
<TABLE>

<CAPTION>
                                                                Non                                              Consolidated
                                             Guarantor       Guarantor     Morris Material                      Morris Material
                                            Subsidiaries    Subsidiaries    Handling, Inc.     Eliminations     Handling, Inc.
                                            ------------    ------------   ---------------     ------------     ---------------

<S>                                         <C>             <C>             <C>                 <C>              <C>
ASSETS
Current Assets
    Cash and cash equivalents               $     2,325             104     $    1,500          $         -      $     3,929
    Accounts receivable - net                    60,163           4,318              -                    -           64,481
    Intercompany accounts receivable             20,057               -         13,204              (33,261)               -
    Inventories                                  37,892           2,102              -                    -           39,994
    Other current assets                          6,509             533            800                    -            7,842
                                            -----------     -----------    -----------          -----------      -----------
                                                126,946           7,057         15,504              (33,261)         116,246
                                            -----------     -----------    -----------          -----------      -----------
Property, Plant and Equipment                    38,294           2,680              -                    -           40,974
                                            -----------     -----------    -----------          -----------      -----------
Other Assets
    Goodwill                                     40,010           2,834              -                    -           42,844
    Debt financing costs                              -               -         16,398                    -           16,398
    Noncurrent intercompany receivable            5,161               -         83,891              (89,052)               -
    Investment in affiliates                     (1,527)              -         64,899              (63,372)               -
    Other                                         9,758               -            616                    -           10,374
                                            -----------     -----------    -----------          -----------      -----------
                                                 53,402           2,834        165,804             (152,424)          69,616
                                            -----------     -----------    -----------          -----------      -----------
                                            $   218,642     $    12,571     $  181,308          $  (185,685)     $   226,836
                                            ===========     ===========    ===========          ===========      ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
    Current Liabilities
       Current portion of long-term         $       342     $        41    $         -          $         -      $       383
         obligations
       New Credit Facility borrowings               425               -         27,500                    -           27,925
       Term loans                                     -               -         52,225                    -           52,225
       Acquisition Facility borrowings                -               -         12,430                    -           12,430
       Senior Notes                                   -               -        200,000                    -          200,000
       Bank overdrafts                              139           1,228              -                    -            1,367
       Trade accounts payable                    25,562           1,195              -                    -           26,757
       Intercompany accounts payable             13,204           4,153         15,904              (33,261)               -
       Advance payments and progress              8,336               -              -                    -            8,336
       Accrued interest                              18               -          1,786                    -            1,804
       Other current liabilities                 18,602           1,221          2,014                    -           21,837
                                            -----------     -----------    -----------          -----------      -----------
                                                 66,628           7,838        311,859              (33,261)         353,064
                                            -----------     -----------    -----------          -----------      -----------

    Other Long-Term Debt                          2,189             595              -                    -            2,784
    Noncurrent Intercompany Payable              83,891           5,161              -              (89,052)               -
    Other Long-Term Liabilities                   1,035               -            272                    -            1,307

Minority Interest                                     -               -              -                  504              504
Manditorily Redeemable Preferred Stock                -               -              -                    -                -
Shareholders' Equity                             64,899          (1,023)      (130,823)             (63,876)        (130,823)
                                            -----------     -----------    -----------          -----------      -----------
                                            $   218,642     $    12,571    $   181,308          $  (185,685)     $   226,836
                                            ===========     ===========    ===========          ===========      ===========

                                                                           Consolidated
                                            MMH Holdings,                  MMH Holdings,
                                                Inc.        Eliminations       Inc.
                                            -------------   ------------   -------------
<S>                                         <C>             <C>            <C>
ASSETS
Current Assets
    Cash and cash equivalents               $         -     $         -    $     3,929
    Accounts receivable - net                         -               -         64,481
    Intercompany accounts receivable                  -               -              -
    Inventories                                       -               -         39,994
    Other current assets                              -               -          7,842
                                            -----------     -----------    -----------
                                                      -               -        116,246
                                            -----------     -----------    -----------
Property, Plant and Equipment                         -               -         40,974
                                            -----------     -----------    -----------
Other Assets
    Goodwill                                          -               -         42,844
    Debt financing costs                              -               -         16,398
    Noncurrent intercompany receivable                -               -              -
    Investment in affiliates                   (130,823)        130,823              -
    Other                                             -               -         10,374
                                            -----------     -----------    -----------
                                               (130,823)        130,823         69,616
                                            -----------     -----------    -----------
                                            $  (130,823)    $   130,823    $   226,836
                                            ===========     ===========    ===========

LIABILITIES AND SHAREHOLDERS' EQUITY
    Current Liabilities
       Current portion of long-term
        obligations                         $         -               -    $       383
       New Credit Facility borrowings                 -               -         27,925
       Term loans                                     -               -         52,225
       Acquisition Facility borrowings                -               -         12,430
       Senior Notes                                   -               -        200,000
       Bank overdrafts                                -               -          1,367
       Trade accounts payable                         -               -         26,757
       Intercompany accounts payable                  -               -              -
       Advance payments and progress                  -               -          8,336
       Accrued interest                               -               -          1,804
       Other current liabilities                      -               -         21,837
                                            -----------     -----------    -----------
                                                      -               -        353,064
                                            -----------     -----------    -----------

    Other Long-Term Debt                              -               -          2,784
    Noncurrent Intercompany Payable                   -               -              -
    Other Long-Term Liabilities                       -               -          1,307

Minority Interest                                     -               -            504
Manditorily Redeemable Preferred Stock          108,245               -        108,245
Shareholders' Equity                           (239,068)        130,823       (239,068)
                                            -----------     -----------    -----------
                                            $  (130,823)    $   130,823    $   226,836
                                            ===========     ===========    ===========
</TABLE>

                                       26
<PAGE>



                               MMH HOLDINGS, INC.
                 (Debtors - in - Possession as of May 17, 2000)
          SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
                                   (UNAUDITED)
                             (Dollars in Thousands)
<TABLE>

<CAPTION>
                                                                 FOR THE NINE MONTHS ENDED JULY 31, 2000
                                            ---------------------------------------------------------------------------------------
                                                                 Non-                                             Consolidated
                                             Guarantor       Guarantor     Morris Material                       Morris Material
                                            Subsidiaries    Subsidiaries    Handling, Inc.      Eliminations      Handling, Inc.
                                            ------------    ------------   ---------------      ------------     --------------
<S>                                         <C>             <C>            <C>                  <C>              <C>
Revenues
   Equipment and Parts                      $   148,515     $     6,210    $         -          $      (705)     $   154,020
   Service                                       41,038           3,331              -                                44,369
                                            -----------     -----------    -----------          -----------      -----------
   Net Sales                                    189,553           9,541              -                 (705)         198,389
   Other Income - net                                 -               -              -                    -                -
                                            -----------     -----------    -----------          -----------      -----------
                                                189,553           9,541              -                 (705)         198,389
Cost of Sales                                   148,948           7,396              -                 (705)         155,639
Selling, General
 and Administrative expenses                     48,591           3,028          2,324                    -           53,943
Imparirment Loss on Long-Lived Assets            13,392           2,617              -                    -           16,009
Reorganization Items                              4,248               -            950                    -            5,198
                                            -----------     -----------    -----------          -----------      -----------
Operating Income (Loss)                         (25,626)         (3,500)        (3,274)                   -          (32,400)
Gain on sale of business                              -               -          6,380                    -            6,380
Loss on disposal of fixed assets                   (830)              -              -                    -             (830)
Interest Expense - Net
  Affiliates                                     (4,230)           (258)         4,488                    -                -
  Third party                                      (347)           (183)       (18,724)                   -          (19,254)
                                            -----------     -----------    -----------          -----------      -----------

Income (Loss) Before Income Taxes,
  Equity in Earnings
(Loss) of Subsidiaries and Minority
  Interest                                      (31,033)         (3,941)       (11,130)                   -          (46,104)
Benefit (Provision) for Income Taxes               (778)            (83)        (1,400)                   -           (2,261)
Equity in Earnings (Loss) of Subsidiaries        (3,782)              -        (35,593)              39,375                -
Minority Interest                                     -               -              -                  242              242
                                            -----------     -----------    -----------          -----------      -----------
Net Income (Loss)                           $   (35,593)    $    (4,024)   $   (48,123)         $    39,617      $   (48,123)
                                            ===========     ===========    ===========          ===========      ===========

                                                                           Consolidated
                                            MMH Holdings,                  MMH Holdings,
                                                Inc.        Eliminations       Inc.
                                            -------------   ------------   -------------
<S>                                         <C>             <C>            <C>
Revenues
   Equipment and Parts                                                     $   154,020
   Service                                                                      44,369
                                            -----------     -----------    -----------
   Net Sales                                          -               -        198,389
   Other Income - net                                 -               -              -
                                            -----------     -----------    -----------
                                                      -               -        198,389
Cost of Sales                                         -               -        155,639
Selling, General
 and Administrative expenses                          -               -         53,943
Imparirment Loss on Long-Lived Assets                 -               -         16,009
Reorganization Items                                  -               -          5,198
                                            -----------     -----------    -----------
Operating Income (Loss)                               -               -        (32,400)
Gain on sale of business                              -               -          6,380
Loss on disposal of fixed assets                      -               -           (830)
Interest Expense - Net
  Affiliates                                          -               -              -
  Third party                                         -               -        (19,254)
                                            -----------     -----------    -----------

Income (Loss) Before Income Taxes,
  Equity in Earnings
(Loss) of Subsidiaries and Minority
  Interest                                            -               -        (46,104)
Benefit (Provision) for Income Taxes                  -               -         (2,261)
Equity in Earnings (Loss) of Subsidiaries       (48,123)         48,123              -
Minority Interest                                     -               -            242
                                            -----------     -----------    -----------
Net Income (Loss)                           $   (48,123)    $    48,123    $   (48,123)
                                            ===========     ===========    ===========
</TABLE>

<TABLE>

                                                                 FOR THE THREE MONTHS ENDED JULY 31, 2000
                                            ---------------------------------------------------------------------------------------
                                                                Non-                                             Consolidated
                                             Guarantor       Guarantor     Morris Material                      Morris Material
                                            Subsidiaries    Subsidiaries    Handling, Inc.     Eliminations     Handling, Inc.
                                            ------------    ------------   ---------------     ------------     ---------------

<S>                                         <C>             <C>            <C>                 <C>              <C>
Revenues
   Equipment and Parts                      $    48,232     $     2,368                       $        (180)     $    50,420
   Service                                       14,169             876                                               15,045
                                            -----------     -----------    -----------          -----------      -----------
   Net Sales                                     62,401           3,244              -                 (180)          65,465
   Other Income - net                                 -               -              -                    -                -
                                            -----------     -----------    -----------          -----------      -----------
                                                 62,401           3,244              -                 (180)          65,465
Cost of Sales                                    51,687           2,577              -                 (180)          54,084
Selling, General
 and Administrative expenses                     16,020           1,211            751                    -           17,982
Imparirment Loss on Long-Lived Assets            13,392           2,617              -                    -           16,009
Reorganization Items                              2,058               -            950                    -            3,008
                                            -----------     -----------    -----------          -----------      -----------
Operating Income (Loss)                         (20,756)         (3,161)        (1,701)                   -          (25,618)
Gain on sale of business                              -               -              -                    -                -
Loss on disposal of fixed assets                   (830)              -              -                    -             (830)
Interest Expense - Net
  Affiliates                                     (1,252)            (81)         1,333                    -                -
  Third party                                       (77)            (48)        (3,763)                   -           (3,888)
                                            -----------     -----------    -----------          -----------      -----------

Income (Loss) Before Income Taxes,
  Equity in Earnings
(Loss) of Subsidiaries and Minority
  Interest                                      (22,915)         (3,290)        (4,131)                   -          (30,336)
Benefit (Provision) for Income Taxes               (226)              -              -                    -             (226)
Equity in Earnings (Loss) of Subsidiaries        (3,075)              -        (26,216)              29,291                -
Minority Interest                                     -               -              -                  215              215
                                            -----------     -----------    -----------          -----------      -----------
Net Income (Loss)                           $   (26,216)    $    (3,290)   $   (30,347)         $    29,506      $   (30,347)
                                            ===========     ===========    ===========          ===========      ===========

                                                                           Consolidated
                                            MMH Holdings,                  MMH Holdings,
                                                Inc.        Eliminations       Inc.
                                            -------------   ------------   -------------
<S>                                         <C>             <C>            <C>
Revenues
   Equipment and Parts                                                     $    50,420
   Service                                                                      15,045
                                            -----------     -----------    -----------
   Net Sales                                          -               -         65,465
   Other Income - net                                 -               -              -
                                            -----------     -----------    -----------
                                                      -               -         65,465
Cost of Sales                                         -               -         54,084
Selling, General
 and Administrative expenses                          -               -         17,982
Imparirment Loss on Long-Lived Assets                 -               -         16,009
Reorganization Items                                  -               -          3,008
                                            -----------     -----------    -----------
Operating Income (Loss)                               -               -        (25,618)
Gain on sale of business                              -               -              -
Loss on disposal of fixed assets                      -               -           (830)
Interest Expense - Net
  Affiliates                                          -               -              -
  Third party                                         -               -         (3,888)
                                            -----------     -----------    -----------

Income (Loss) Before Income Taxes,
  Equity in Earnings
(Loss) of Subsidiaries and Minority
  Interest                                            -               -        (30,336)
Benefit (Provision) for Income Taxes                  -               -           (226)
Equity in Earnings (Loss) of Subsidiaries       (30,347)         30,347              -
Minority Interest                                     -               -            215
                                            -----------     -----------    -----------
Net Income (Loss)                           $   (30,347)    $    30,347    $   (30,347)
                                            ===========     ===========    ===========
</TABLE>

                                       27

<PAGE>

                               MMH HOLDINGS, INC.
                 (Debtors - in - Possession as of May 17, 2000)
          SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
                                   (UNAUDITED)
                             (Dollars in Thousands)
<TABLE>

<CAPTION>
                                                                 FOR THE NINE MONTHS ENDED JULY 31, 1999
                                            ---------------------------------------------------------------------------------------
                                                                Non-                                             Consolidated
                                             Guarantor       Guarantor     Morris Material                      Morris Material
                                            Subsidiaries    Subsidiaries    Handling, Inc.     Eliminations     Handling, Inc.
                                            ------------    ------------   ---------------     ------------     ---------------

<S>                                         <C>             <C>            <C>                 <C>              <C>
Revenues
   Net Sales                                $   200,730     $    12,347    $         -         $      (599)     $   212,478
   Other Income - net                               600               -              -                   -              600
                                            -----------     -----------    -----------         -----------      -----------
                                                201,330          12,347              -                (599)         213,078
Cost of Sales                                   148,388           9,477              -                (599)         157,266
Selling, General
 and Administrative expenses                     49,340           2,743          1,502                   -           53,585
                                            -----------     -----------    -----------         -----------      -----------
Operating Income (Loss)                           3,602             127         (1,502)                  -            2,227
Interest (Expense) Income - net
  Affiliates                                     (4,719)           (281)         5,000                   -                -
  Third party                                      (542)           (342)       (21,068)                  -          (21,952)
                                            -----------     -----------    -----------         -----------      -----------
Loss Before Income Taxes,
  Equity in Earnings
(Loss) of Subsidiaries and Minority
  Interest                                       (1,659)           (496)       (17,570)                  -          (19,725)
Provision for Income Taxes                       (1,641)              -              -                   -           (1,641)
Equity in Earnings (Loss) of Subsidiaries          (456)              -         (3,756)              4,212                -
Minority Interest                                     -               -              -                  40               40
                                            -----------     -----------    -----------         -----------      -----------
Net Income (Loss)                           $    (3,756)    $      (496)   $   (21,326)        $     4,252      $   (21,326)
                                            ===========     ===========    ===========         ===========      ===========

                                                                           Consolidated
                                            MMH Holdings,                  MMH Holdings,
                                                Inc.        Eliminations       Inc.
                                            -------------   ------------   -------------
<S>                                         <C>             <C>            <C>

Revenues
   Net Sales                                $         -     $         -    $   212,478
   Other Income - net                                 -               -            600
                                            -----------     -----------    -----------
                                                      -               -        213,078
Cost of Sales                                         -               -        157,266
Selling, General
 and Administrative expenses                          -               -         53,585
                                            -----------     -----------    -----------
Operating Income (Loss)                               -               -          2,227
Interest (Expense) Income - net
  Affiliates                                          -               -              -
  Third party                                         -               -        (21,952)
                                            -----------     -----------    -----------
Loss Before Income Taxes,
  Equity in Earnings
(Loss) of Subsidiaries and Minority
  Interest                                            -               -        (19,725)
Provision for Income Taxes                            -               -         (1,641)
Equity in Earnings (Loss) of Subsidiaries       (21,326)         21,326              -
Minority Interest                                     -               -             40
                                            -----------     -----------    -----------
Net Income (Loss)                           $   (21,326)    $    21,326    $   (21,326)
                                            ===========     ===========    ===========

</TABLE>

<TABLE>
                                                                 FOR THE THREE MONTHS ENDED JULY 31, 1999
                                            ---------------------------------------------------------------------------------------
                                                                Non-                                             Consolidated
                                             Guarantor       Guarantor     Morris Material                      Morris Material
                                            Subsidiaries    Subsidiaries    Handling, Inc.     Eliminations     Handling, Inc.
                                            ------------    ------------   ---------------     ------------     ---------------

<S>                                         <C>             <C>            <C>                 <C>              <C>
Revenues
   Net Sales                                $    69,016     $     3,940     $        -         $      (247)     $    72,709
   Other Income - net                               453               -              -                   -              453
                                            -----------     -----------     ----------         -----------      -----------
                                                 69,469           3,940              -                (247)          73,162
Cost of Sales                                    49,386           3,071              -                (247)          52,210
Selling, General
 and Administrative expenses                     16,554             917            827                   -           18,298
                                            -----------     -----------     ----------         -----------      -----------
Operating Income (Loss)                           3,529             (48)          (827)                  -            2,654
Interest (Expense) Income - net
  Affiliates                                     (1,545)            (89)         1,634                   -                -
  Third party                                      (237)           (102)        (7,182)                  -           (7,521)
                                            -----------     -----------     ----------         -----------      -----------
Loss Before Income Taxes,
  Equity in Earnings
(Loss) of Subsidiaries and Minority
  Interest                                        1,747            (239)        (6,375)                  -           (4,867)
Provision for Income Taxes                         (576)              -              -                   -             (576)
Equity in Earnings (Loss) of Subsidiaries          (226)              -            945                (719)               -
Minority Interest                                     -               -              -                  13               13
                                            -----------     -----------     ----------         -----------      -----------
Net Income (Loss)                           $       945     $      (239)    $   (5,430)        $      (706)     $    (5,430)
                                            ===========     ===========     ==========         ===========      ===========

                                                                 FOR THE THREE MONTHS ENDED JULY 31, 1999
                                            ---------------------------------------------------------------------------------------
                                                                           Consolidated
                                            MMH Holdings,                  MMH Holdings,
                                                Inc.        Eliminations       Inc.
                                            -------------   ------------   -------------
<S>                                         <C>             <C>            <C>

Revenues
   Net Sales                                $         -     $         -    $    72,709
   Other Income - net                                 -               -            453
                                            -----------     -----------    -----------
                                                      -               -         73,162
Cost of Sales                                         -               -         52,210
Selling, General
 and Administrative expenses                          -               -         18,298
                                            -----------     -----------    -----------
Operating Income (Loss)                               -               -          2,654
Interest (Expense) Income - net
  Affiliates                                          -               -              -
  Third party                                         -               -         (7,521)
                                            -----------     -----------    -----------
Loss Before Income Taxes,
  Equity in Earnings
(Loss) of Subsidiaries and Minority
  Interest                                            -               -         (4,867)
Provision for Income Taxes                            -               -           (576)
Equity in Earnings (Loss) of Subsidiaries        (5,430)          5,430              -
Minority Interest                                     -               -             13
                                            -----------     -----------    -----------
Net Income (Loss)                           $    (5,430)    $     5,430    $    (5,430)
                                            ===========     ===========    ===========

</TABLE>

                                       28

<PAGE>

                               MMH HOLDINGS, INC.
                 (Debtors - in - Possession as of May 17, 2000)
            SUPPLEMENTAL CONDENSED COMBINING STATEMENT OF CASH FLOWS
                    FOR THE NINE MONTHS ENDED JULY 31, 2000
                                   (UNAUDITED)
                             (Dollars in Thousands)
<TABLE>

<CAPTION>
                                                                     Non-                                             Consolidated
                                                  Guarantor       Guarantor     Morris Material                      Morris Material
                                                 Subsidiaries    Subsidiaries    Handling, Inc.     Eliminations     Handling, Inc.
                                                 ------------    ------------   ---------------     ------------     ---------------

<S>                                              <C>             <C>            <C>                 <C>              <C>
Operating Activities
   Net income (Loss)                             $   (35,593)    $    (4,024)   $  (48,123)         $    39,617      $   (48,123)
   Add (deduct)-items not affecting cash
     provided by operating acitvities:
   DIP financing fees                                      -               -           950                    -              950
   Depreciation and amortization                       6,757             226            21                    -            7,004
   Amortization of debt finacing costs                     -               -         1,761                    -            1,761
   Equity in loss of subsidiaries                      3,782               -        35,593              (39,375)               -
   Gain on sale of business                                -               -        (6,380)                   -           (6,380)
   Impairment loss on long-lived assets               13,392           2,617             -                    -           16,009
   Loss on disposal of fixed assets                      830               -             -                    -              830
   Other                                                   -               -             -                 (242)            (242)
   Changes in working capital, excluding
     effects of acquisition opening
     balance sheets:
   Accounts receivable                                 4,205             978             -                    -            5,183
   Inventories                                         1,850             272             -                    -            2,122
   Other current assets                                 (831)            359           500                    -               28
   Trade accounts payable and bank
     overdrafts                                       (1,000)           (369)            -                    -           (1,369)
   Accrued interest                                        8               -        11,351                    -           11,359
   Other current liabilities                           1,670             (25)        2,236                    -            3,881
                                                 -----------     -----------    ----------          -----------      -----------
   Net cash provided by (used for)
     operating activities                             (4,930)             34        (2,091)                   -           (6,987)
                                                 -----------     -----------    ----------          -----------      -----------
Investment and Other Transactions
   Fixed asset additions - net                        (1,021)            (12)            -                    -           (1,033)
   Capitalized software                                 (890)              -             -                    -             (890)
   Net proceeds on divestiture of business             9,115               -             -                    -            9,115
   Other - net                                           328            (191)         (107)                   -               30
                                                 -----------     -----------    ----------          -----------      -----------
   Net cash used for investment and other
     transactions                                      7,532            (203)         (107)                   -            7,222
                                                 -----------     -----------    ----------          -----------      -----------
Financing Activites
   Changes in short-term debt and
     notes payable                                        34             (43)            -                    -               (9)
   Proceeds from DIP and Junior DIP
     borrowings                                            -               -        31,352                    -           31,352
   Repayment of DIP borrowings                             -               -          (100)                   -             (100)
   Proceeds from/(Repayments of)
     Revolving Credit Facility borrowings               (425)              -        (6,854)                   -           (7,279)
   Repayments of Term Loans                                -               -       (21,079)                   -          (21,079)
   Repayments of Acquisition Facility
     Line borrowings                                       -               -        (2,867)                   -           (2,867)
   Distribution to parent                             (3,752)            405         3,347                    -                -
   Repayments of long-term debt                         (117)              -             -                    -             (117)
   Payment of DIP financing fees                           -                          (950)                   -             (950)
   Payment of fees for amendment of
     Credit Facility                                       -               -          (226)                   -             (226)
                                                 -----------     -----------    ----------          -----------      -----------
   Net cash provided by (used for)
     financing activities                             (4,260)            362         2,623                    -           (1,275)
                                                 -----------     -----------    ----------          -----------      -----------
Effect of Exchange Rate Changes on Cash
   and Cash Equivalents                                  (81)            (23)            -                    -             (104)
                                                 -----------     -----------    ----------          -----------      -----------
Increase(Decrease) in Cash and Cash
   Equivalents                                        (1,739)            170           425                    -           (1,144)
Cash and Cash Equivalents
   Beginning of Period                                 2,325             104         1,500                    -            3,929
                                                 -----------     -----------    ----------          -----------      -----------
   End of Period                                 $       586     $       274    $    1,925          $         -      $     2,785
                                                 ===========     ===========    ==========          ===========      ===========
<PAGE>

<CAPTION>
                                                                                Consolidated
                                                 MMH Holdings,                  MMH Holdings,
                                                     Inc.        Eliminations       Inc.
                                                 -------------   ------------   -------------

<S>                                              <C>             <C>            <C>
Operating Activities
   Net Income (Loss)                             $   (48,123)    $    48,123    $   (48,123)
   Add (deduct)-items not affecting cash
     provided by operating activities:
   DIP financing fees                                                                   950
   Depreciation and amortization                           -               -          7,004
   Amortization of debt financing costs                    -               -          1,761
   Equity in loss of subsidiaries                     48,123         (48,123)             -
   Gain on sale of business                                -               -         (6,380)
   Impairment loss on long-lived assets                    -               -         16,009
   Loss on disposal of fixed assets                        -               -            830
   Other                                                   -               -           (242)
   Changes in working capital, excluding
     effects of acquisition opening
     balance sheets:
   Accounts receivable                                     -               -          5,183
   Inventories                                             -               -          2,122
   Other current assets                                    -               -             28
   Trade accounts payable and bank overdrafts              -               -         (1,369)
   Accrued interest                                        -               -         11,359
   Other current liabilities                               -               -          3,881
                                                 -----------     -----------    -----------
   Net cash provided by (used for)
     operating activities                                  -               -         (6,987)
                                                 -----------     -----------    -----------
Investment and Other Transactions
   Fixed asset additions - net                             -               -         (1,033)
   Capitalized software                                    -               -           (890)
   Net proceeds on divestiture of busines                  -               -          9,115
   Other - net                                             -               -             30
                                                 -----------     -----------    -----------
   Net cash used for investment and other
     transactions                                          -               -          7,222
                                                 -----------     -----------    -----------
Financing Activites
   Changes in short-term debt and
     notes payable                                         -               -             (9)
   Proceeds from DIP and Junior DIP
     borrowings                                            -               -         31,352
   Repayment of DIP borrowings                             -               -           (100)
   Proceeds from/(Repayments of)
     Revolving Credit Facility borrowings                  -               -         (7,279)
   Repayments of Term Loans                                -               -        (21,079)
   Repayments of Acquisition Facility
     Line borrowings                                       -               -         (2,867)
   Distribution to parent                                  -               -              -
   Repayments of long-term debt                            -               -           (117)
   Payment of DIP financing fees                           -               -           (950)
   Payment of fees for amendment of
     Credit Facility                                       -               -           (226)
                                                 -----------     -----------    -----------
   Net cash provided by (used for)
     financing activities                                  -               -         (1,275)
                                                 -----------     -----------    -----------
Effect of Exchange Rate Changes on Cash
   and Cash Equivalents                                    -               -           (104)
                                                 -----------     -----------    -----------
Increase(Decrease) in Cash and Cash
   Equivalents                                             -               -         (1,144)
Cash and Cash Equivalents
   Beginning of Period                                     -               -          3,929
                                                 -----------     -----------    -----------
   End of Period                                           -               -          2,785
                                                 ===========     ===========    ===========

</TABLE>

                                       29

<PAGE>

                               MMH HOLDINGS, INC.
                 (Debtors - in - Possession as of May 17, 2000)
            SUPPLEMENTAL CONDENSED COMBINING STATEMENT OF CASH FLOWS
                    FOR THE NINE MONTHS ENDED JULY 31, 1999
                                   (UNAUDITED)
                             (Dollars in Thousands)
<TABLE>

<CAPTION>
                                                                     Non-                                             Consolidated
                                                Guarantor       Guarantor     Morris Material                      Morris Material
                                               Subsidiaries    Subsidiaries    Handling, Inc.     Eliminations     Handling, Inc.
                                               ------------    ------------   ---------------     ------------     ---------------

<S>                                            <C>             <C>            <C>                 <C>              <C>
Operating Activities
   Net income (Loss)                           $    (3,756)    $      (496)   $  (21,326)         $     4,252      $   (21,326)
   Add (deduct)-items not affecting cash
     used for operating acitvities:
   Depreciation and amortization                     5,837             220             -                    -            6,057
   Amortization of debt financing costs                  -               -         1,603                    -            1,603
   Equity in loss of subsidiaries                      456               -         3,756               (4,212)               -
   Deferred income taxes - net                           -               -            41                    -               41
   Other                                                 -               -             -                  (40)             (40)
   Changes in working capital, excluding
     the effects of acquisition opening
     balance sheets:
   Accounts receivable                              17,410             802             -                    -           18,212
   Inventories                                         404            (370)            -                    -               34
   Other current assets                             (5,528)           (367)        2,133                    -           (3,762)
   Trade accounts payable and bank
     overdrafts                                    (10,075)           (437)            -                    -          (10,512)
   Accrued interest                                      -               -         4,243                    -            4,243
   Other current liabilities                       (10,358)            302         3,319                    -           (6,737)
                                               -----------     -----------    ----------          -----------      -----------
   Net cash provided by (used for)
     operating activities                           (5,610)           (346)       (6,231)                   -          (12,187)
                                               -----------     -----------    ----------          -----------      -----------
Investment and Other Transactions
   Fixed asset additions - net                      (3,921)            (91)            -                    -           (4,012)
   Capitalized software                             (2,196)              -             -                    -           (2,196)
   Acquisition of businesses - net of
     cash acquired                                  (5,070)              -                                              (5,070)
   Repayment of loans by senior management               -               -           (80)                   -              (80)
   Other - net                                        (841)            271             -                    -             (570)
                                               -----------     -----------    ----------          -----------      -----------
   Net cash (used for) provided by
     investment and other transactions             (12,028)            180           (80)                   -          (11,928)
                                               -----------     -----------    ----------          -----------      -----------
Financing Activites
   Changes in short-term debt and
     notes payable                                     (22)              -             -                    -              (22)
   (Repayments of)/Proceeds for Revolving
     Credit Facility borrowings                      7,171               -        16,887                    -           24,058
   Repayments of Term Loans                              -               -        (1,388)                               (1,388)
   Proceeds from Acquisition Facility
     Line borrowings                                     -               -         1,235                    -            1,235
   Distribution to parent                           10,334               -       (10,334)                   -                -
   Repayments of long-term debt                          -             (31)          (89)                   -             (120)
                                               -----------     -----------    ----------          -----------      -----------
   Net cash provided by (used for)
     financing activities                           17,483             (31)        6,311                    -           23,763
                                               -----------     -----------    ----------          -----------      -----------
Effect of Exchange Rate Changes on Cash
   and Cash Equivalents                                (13)            (16)            -                    -              (29)
                                               -----------     -----------    ----------          -----------      -----------
Increase(Decrease) in Cash and Cash
   Equivalents                                        (168)           (213)            -                    -             (381)
Cash and Cash Equivalents
   Beginning of Period                               2,214             320             -                    -            2,534
                                               -----------     -----------    ----------          -----------      -----------
   End of Period                               $     2,046     $       107    $        -          $         -      $     2,153
                                               ===========     ===========    ==========          ===========      ===========

<CAPTION>
                                                                                 Consolidated
                                                  MMH Holdings,                  MMH Holdings,
                                                      Inc.        Eliminations       Inc.
                                                  -------------   ------------   -------------

<S>                                               <C>             <C>            <C>
Operating Activities
   Net Income (Loss)                              $   (21,326)    $    21,326    $   (21,326)
   Add (deduct)-items not affecting cash
     used for operating activities:
   Depreciation and amortization                            -               -          6,057
   Amortization of debt financing costs                     -               -          1,603
   Equity in loss of subsidiaries                      21,326         (21,326)             -
   Deferred income taxes - net                              -               -             41
   Other                                                    -               -            (40)
   Changes in working capital, excluding
     the effects of acquisition opening
     balance sheets:
   Accounts receivable                                      -               -         18,212
   Inventories                                              -               -             34
   Other current assets                                     -               -         (3,762)
   Trade accounts payable and bank overdrafts               -               -        (10,512)
   Accrued interest                                         -               -          4,243
   Other current liabilities                                -               -         (6,737)
                                                  -----------     -----------    -----------
   Net cash provided by (used for)
     operating activities                                   -               -        (12,187)
                                                  -----------     -----------    -----------
Investment and Other Transactions
   Fixed asset additions - net                              -               -         (4,012)
   Capitalized software                                     -               -         (2,196)
   Acquisition of businesses - net of
     cash acquired                                          -               -         (5,070)
   Repayment of loans by senior management                   -               -            (80)
   Other - net                                              -               -           (570)
                                                  -----------     -----------    -----------
   Net cash used for investment and other
     transactions                                           -               -        (11,928)
                                                  -----------     -----------    -----------
Financing Activites
   Changes in short-term debt and
     notes payable                                          -               -            (22)
   (Repayments of)/Proceeds for Revolving
     Credit Facility borrowings                                                       24,058
   Repayments of Term Loans                                 -               -         (1,388)
   Proceeds from Acquisition Facility
     Line borrowings                                        -               -          1,235
   Distribution to parent                                                                  -
   Repayments of long-term debt                             -               -           (120)
                                                  -----------     -----------    -----------
   Net cash provided by (used for)
     financing activities                                   -               -         23,763
                                                  -----------     -----------    -----------
Effect of Exchange Rate Changes on Cash
   and Cash Equivalents                                     -               -            (29)
                                                  -----------     -----------    -----------
Increase(Decrease) in Cash and Cash
   Equivalents                                              -               -           (381)
Cash and Cash Equivalents
   Beginning of Period                                      -               -          2,534
                                                  -----------     -----------    -----------
   End of Period                                  $         -               -          2,153
                                                  ===========     ===========    ===========
</TABLE>

                                       30

<PAGE>

Note 15 - Condensed Combined Financial Statements
-------------------------------------------------

The  following  condensed   combined/consolidating   financial   statements  are
presented in accordance with SOP 90-7:

                               MMH HOLDINGS, INC.
                 (Debtors - in - Possession as of May 17, 2000)
            CONDENSED COMBINED/CONSOLIDATING STATEMENTS OF OPERATIONS
                     FOR THE NINE MONTHS ENDED JULY 31, 2000

<TABLE>
<CAPTION>
                                                        Combined         Combined
                                                       Entities in    Entities not in
                                                     Reorganization   Reorganization
                                                       Proceedings      Proceedings    Eliminations   Consolidated
                                                     --------------   ---------------  ------------   ------------
<S>                                                   <C>              <C>             <C>            <C>

Revenues
  Equipment and Part Sales                            $ 103,201        $  56,218       $  (5,399)     $  154,020
  Service Sales                                          27,634           16,751             (16)         44,369
                                                      ---------        ---------       ---------      ----------
  Net sales                                             130,835           72,969          (5,415)        198,389
  Other income - net                                          -                -               -               -
                                                      ---------        ---------       ---------      ----------
                                                        130,835           72,969          (5,415)        198,389

Cost of Sales                                           101,339           59,715          (5,415)        155,639

Selling, General and Administrative Expenses             32,620           21,323               -          53,943

Impairment Loss on Long-Lived Assets                          -           16,009               -          16,009

Reorganization Items                                      5,198                -               -           5,198

                                                      ---------        ---------       ---------      ----------
     Operating Income (Loss)                             (8,322)         (24,078)              -         (32,400)

Gain on sale of business                                  6,380                -               -           6,380

Loss on disposal of fixed assets                           (830)               -               -            (830)

Interest Expense - net                                  (14,347)          (4,907)              -         (19,254)

                                                      ---------        ---------       ---------      ----------
Loss before Income Taxes and Minority Interest          (17,119)         (28,985)              -         (46,104)

Benefit (Provision) for Income Taxes                        (66)          (2,195)              -          (2,261)
Minority Interest                                             -                -             242             242
Equity in Income (Loss) of Subsidiaries                 (31,180)               -          31,180               -
                                                      ---------        ---------       ---------      ----------
     Net loss                                           (48,365)         (31,180)         31,422         (48,123)
                                                      =========        =========       =========      ==========

</TABLE>

                                       31

<PAGE>

                               MMH HOLDINGS, INC.
                 (Debtors - in - Possession as of May 17, 2000)
                 CONDENSED COMBINED/CONSOLIDATING BALANCE SHEET
                               AS OF JULY 31, 2000

<TABLE>
<CAPTION>
                                                        Combined         Combined
                                                       Entities in    Entities not in
                                                     Reorganization   Reorganization
                                                       Proceedings      Proceedings    Eliminations   Consolidated
                                                     --------------   ---------------  ------------   ------------
<S>                                                   <C>               <C>            <C>            <C>

ASSETS
Current Assets
  Cash and cash equivalents                           $     636        $   2,149       $       -      $    2,785
  Accounts receivable - net                              37,292           19,904               -          57,196
  Inventories                                            23,192           12,709               -          35,901
  Other current assets                                    3,761            2,071           1,734           7,566
                                                      ---------        ---------       ---------      ----------
                                                         64,881           36,833           1,734         103,448
                                                      ---------        ---------       ---------      ----------
Intercompany accounts receivable, net                   109,934                -        (109,934)              -
                                                      ---------        ---------       ---------      ----------
Property, Plant and Equipment - net                      18,800           17,129               -          35,929
                                                      ---------        ---------       ---------      ----------

Other Assets
  Goodwill                                               16,753            5,747               -          22,500
  Debt financing costs                                   14,781                -               -          14,781
  Investment in subsidiaries                             83,535           13,877         (97,412)              -
  Other                                                   5,905            3,663               -           9,568
                                                      ---------        ---------       ---------      ----------
                                                        120,974           23,287         (97,412)         46,849
                                                      ---------        ---------       ---------      ----------
                                                      $ 314,589        $  77,249       $(205,612)     $  186,226
                                                      =========        =========       ==========     ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities Not Subject to Compromise
  Current Liabilities
  Current portion of long-term obligations            $       -        $     116       $       -      $      116
  Junior DIP Facility                                    31,252                -               -          31,252
  Bank overdrafts                                             -              998               -             998
  Trade accounts payable                                  5,124            7,986               -          13,110
  Advance payments and progress billings                  9,048            2,544               -          11,592
  Accrued warranties                                      1,212              653               -           1,865
  Accrued interest                                          753                9               -             762
  Income taxes payable                                        -            1,561               -           1,561
  Other current liabilities                               6,619            5,725               -          12,344
                                                      ---------        ---------       ---------      ----------
                                                         54,008           19,592               -          73,600
                                                      ---------        ---------       ---------      ----------

  Intercompany accounts payable, net                          -          108,200        (108,200)              -
  Other Long-Term Debt                                        -              624               -             624
  Other Long Term Liabilities                                 -              239               -             239
                                                      ---------        ---------       ---------      ----------
                                                         54,008          128,655        (108,200)         74,463
Liabilities Subject to Compromise                       295,483                -               -         295,483
Minority Interest                                             -                -              71              71
Manditorily Redeemable Preferred Stock                  118,642                -               -         118,642
Shareholders' Equity                                   (153,544)         (51,406)        (97,483)       (302,433)
                                                      ---------        ---------        ---------     ----------
                                                      $ 314,589        $  77,249       $(205,612)     $  186,226
                                                      =========        =========        =========     ==========

</TABLE>

                                       32

<PAGE>


                               MMH HOLDINGS, INC.
                 (Debtors - in - Possession as of May 17, 2000)
             CONDENSED COMBINED/CONSOLIDATING STAEMENTS OF CASH FLOW
                               AS OF JULY 31, 2000

<TABLE>
<CAPTION>
                                                        Combined         Combined
                                                       Entities in    Entities not in
                                                     Reorganization   Reorganization
                                                       Proceedings      Proceedings    Eliminations   Consolidated
                                                       -----------      -----------    ------------   ------------
<S>                                                   <C>               <C>            <C>            <C>

Operating Activities
  Net Loss                                            $ (17,185)       $ (31,180)      $    242       $  (48,123)
  Add (deduct) - items not affecting cash
    provided by operating activities:
  DIP financing fees                                        950                -              -              950
  Depreciation and amortization                           3,749            3,255              -            7,004
  Amortization of debt financing costs                    1,761                -              -                -
  Deferred income taxes - net                                 -                -              -                -
  Gain on sale of business                               (6,380)               -              -           (6,380)
  Impairment loss on long-lived assets                        -           16,009              -           16,009
  Loss on disposal of fixed assets                          830                -              -              830
  Other                                                       -                -           (242)            (242)
Changes in working capital, excluding the
  effects of acquisition opening balance sheets:
  Accounts receivable                                      (250)           5,433              -            5,183
  Inventories                                               187            1,935              -            2,122
  Trade accounts payable and bank overdrafts              2,010           (3,379)             -           (1,369)
  Advance payments and progress billings                  4,379           (1,245)             -            3,134
  Accrued interest                                       11,350                9              -           11,359
  Other, net including intercompany balances             (8,722)           9,497              -              775
                                                      ---------        ---------       ---------      ----------
Net cash used for operating activities,
  including reorganization items                         (7,321)             334              -           (6,987)
                                                      ---------        ---------       ---------      ----------
Investment and Other Transactions
  Fixed asset additions - net                              (722)            (311)             -           (1,033)
  Capitalized software                                     (890)               -              -             (890)
  Acquisition of businesses - net of cash acquired            -                -              -                -
  Net proceeds on divestiture of business                 9,115                -              -            9,115
  Net Issuance of loans to senior management                  -                -              -                -
  Other - net                                                 5               25              -               30
                                                      ---------        ---------       ---------      ----------
Net cash provided by (used for) investment and
  other transactions                                      7,508             (286)             -            7,222
                                                      ---------        ---------       ---------      ----------

Financing Activities
  Changes in short-term debt and notes payable               34              (43)             -               (9)
  Proceeds from DIP and Junior DIP borrowings            31,352                -              -           31,352
  Repayments of DIP borrowings                             (100)               -              -             (100)
  Net (repayments of)/proceeds from Revolving
    Credit Facility borrowings                           (7,279)               -              -           (7,279)
  Repayment of Term Loans                               (21,079)               -              -          (21,079)
  Proceeds from/(repayments of) Acquisition
    Facility Line borrowings                             (2,867)               -              -           (2,867)
  Repayments of long-term debt                             (117)               -              -             (117)
  Payment of DIP financing fees                            (950)               -              -             (950)
  Payment of fees for amendment of Credit Facility         (226)               -              -             (226)
                                                      ---------        ---------       ---------      ----------
Net cash provided by (used for)financing activities      (1,232)             (43)             -           (1,275)
                                                      ---------        ---------       ---------      ----------
Effect of Exchange Rate Changes on Cash and
  Cash Equivalents                                            -             (104)             -             (104)
                                                      ---------        ---------       ---------      ----------
Increase (decrease) in Cash and Cash Equivalents         (1,045)             (99)             -           (1,144)
Cash and Cash Equivalents
  Beginning of Period                                     1,681            2,248              -            3,929
                                                      ---------        ---------       ---------      ----------
  End of Period                                       $     636        $   2,149       $      -       $    2,785
                                                      =========        =========       =========      ==========

</TABLE>

                                       33

<PAGE>

                               MMH HOLDINGS, INC.
                         MORRIS MATERIAL HANDLING, INC.
                    (Debtors - in - Possession as of May 17, 2000

                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                       CONDITION AND RESULTS OF OPERATIONS


THE  FOLLOWING  DISCUSSION  SHOULD  BE READ IN  CONJUNCTION  WITH THE  FINANCIAL
STATEMENTS AND THE RELATED NOTES THERETO  INCLUDED  PREVIOUSLY IN THIS DOCUMENT.
THE COMPANY'S  FISCAL YEAR ENDS OCTOBER 31.  CONSEQUENTLY,  ANY REFERENCE TO ANY
PARTICULAR  FISCAL YEAR MEANS THE FISCAL YEAR ENDED  OCTOBER 31 OF SUCH YEAR. AS
USED HEREIN, UNLESS THE CONTEXT OTHERWISE REQUIRES, THE TERM "COMPANY" REFERS TO
HOLDINGS, MMH AND ITS SUBSIDIARIES.

GENERAL

On May 17, 2000, MMH Holdings, Inc. ("Holdings"), Morris Material Handling, Inc.
and their domestic operating  subsidiaries  (collectively,  the "Debtors") filed
voluntary  petitions for reorganization  under Chapter 11 of the U.S. Bankruptcy
Code (the  "Bankruptcy  Code") in the  United  States  Bankruptcy  Court for the
District of Delaware (the  "Bankruptcy  Court").  The Debtors'  Chapter 11 cases
have been consolidated for the purpose of joint administration under case number
00-2027(SLR).   The  Debtors  are  currently   operating  their   businesses  as
debtors-in-possession  pursuant  to the  Bankruptcy  Code.  No trustee  has been
appointed.  An  official  committee  of  unsecured  creditors  (the  "Creditors'
Committee")  was appointed by the office of the United States Trustee on May 30,
2000.  Pursuant to the Bankruptcy Code,  actions to collect certain  prepetition
indebtedness of the Debtors and other obligations against the Debtors may not be
enforced.  These  claims are  reflected  in the  balance  sheet as  "liabilities
subject to compromise".  In addition, under the Bankruptcy Code, the Debtors may
assume or reject executory contracts and unexpired leases. Additional claims may
arise from such rejection, and from the determination by the court (or agreed by
the parties in interest) to allow claims for  contingencies  and other  disputed
amounts.  However,  the Debtors have not yet completed their review of all their
prepetition executory contracts and leases for assumption or rejection. See also
Note 5, Liabilities Subject to Compromise, and Note 9, Indebtedness.

The Debtors  received  approval  from the  Bankruptcy  Court to pay or otherwise
honor certain of their prepetition  obligations,  including the authority to pay
employee wages and maintain their employee benefit programs.

The Debtors have the  exclusive  right,  pursuant to an order of the  Bankruptcy
Court, until December 15, 2000, to file a plan or plans of reorganization.  Such
period can be  extended  from time to time during the  pendancy of the  Debtors'
bankruptcy cases at the discretion of the Bankruptcy  Court.  Subject to certain
exceptions  set  forth  in  the  Bankruptcy  Code,   acceptance  of  a  plan  of
reorganization  requires  approval of the Bankruptcy  Court and the  affirmative
vote  (i.e.,  more than 50% of the  number  and at least  66-2/3%  of the dollar
amount,  both based on claims  actually  voted) of each class of creditors whose
claims are impaired by the plan. Alternatively,  absent the requisite approvals,
a debtor may seek  Bankruptcy  Court approval of its  reorganization  plan under
"cramdown" provisions of the Bankruptcy Code, assuming certain tests are met. If
a debtor fails to submit a plan of reorganization  within the exclusivity period
prescribed or any extensions thereof, any creditor or equity holder will be free
to  file  a plan  of  reorganization  with  the  Bankruptcy  Court  and  solicit
acceptances thereof.

The  Bankruptcy  Court set September 20, 2000 as the last date  creditors  could
file proof of claims against the Debtors.  There may be differences  between the
amounts  recorded in the Debtors'  schedules  and financial  statements  and the
amounts  claimed by their  respective  creditors.  Litigation may be required to
resolve such disputes.

The  Debtors  will  continue  to incur  significant  costs  associated  with the
reorganization.  The  amount of these  expenses,  which are  being  expensed  as
incurred,  is expected to significantly affect results while the Debtors operate
under Chapter 11. See Note 4, Reorganization Items.

Currently,  it is not  possible to predict  the length of time the Debtors  will
operate  under the  protection  of  Chapter  11, the  outcome of the  Chapter 11
proceedings in general,  or the effect of the proceedings on the business of the
Company or on the interests of the various creditors and security holders.

                                       34

<PAGE>

Under the Bankruptcy Code, postpetition  liabilities and prepetition liabilities
(i.e.,  liabilities  subject to  compromise)  of the Debtors  must be  satisfied
before  shareholders of the Debtors can receive any  distribution.  The ultimate
recovery to the Debtors' shareholders,  if any, will not be determined until the
end of the case when the fair value of the  Debtors'  assets is  compared to the
liabilities and claims against the Debtors.  The Debtors and their  professional
advisors are in the process of analyzing strategic alternatives and developing a
plan of  reorganization  for the  Debtors.  Based on the  Debtors'  analysis  of
scheduled  and filed claims and the  valuation of the Company,  a  determination
will be made as to the payment of claims and the  distribution of value, if any,
to the Debtors' shareholders.

The accompanying consolidated interim financial statements have been prepared on
a going concern basis, which contemplates continuity of operations,  realization
of assets and  liquidation of liabilities in the ordinary course of business and
do not reflect any  adjustments  that might  result if the Debtors are unable to
continue as a going  concern.  As a result of the  Debtors'  Chapter 11 filings,
however,  such  matters are subject to  significant  uncertainty,  although  the
Debtors  intend  to file a plan of  reorganization  with the  Bankruptcy  Court.
Continuing on a going concern basis is dependent upon,  among other things,  the
Debtors'  formulation of an acceptable  plan of  reorganization,  the success of
future  business  operations,   and  the  generation  of  sufficient  cash  from
operations  and  financing  sources  to  meet  the  Debtors'  obligations.   The
accompanying  consolidated  interim financial statements do not reflect: (i) the
realizable  value of  assets on a  liquidation  basis or their  availability  to
satisfy liabilities,  (ii) aggregate  prepetition  liability amounts that may be
allowed for claims or  contingencies,  or their  status or  priority,  (iii) the
effect of any  changes to the  Debtors'  capital  structure  or in the  Debtors'
business operations as the result of an approved plan of reorganization; or (iv)
adjustments  to the carrying  value of assets or  liability  amounts that may be
necessary as the result of actions by the Bankruptcy Court.

The  Company's   consolidated   financial  statements  have  been  presented  in
conformity with the AlCPA's Statement of Position 90-7,  "Financial Reporting By
Entities In Reorganization  Under the Bankruptcy Code", issued November 19, 1990
("SOP  90-7").  SOP 90-7  requires  a  segregation  of  liabilities  subject  to
compromise  by  the  Bankruptcy  Court  as of the  bankruptcy  filing  date  and
identification of all transactions and events that are directly  associated with
the reorganization of the Debtors.

The Company is an international provider of "through-the-air"  material handling
products and  services  used in most  manufacturing  industries.  The  Company's
original  equipment  operations  design and manufacture a comprehensive  line of
industrial  cranes,  hoists and  component  products.  Through  its  aftermarket
operations,  the Company  provides a variety of related  products and  services,
including  replacement  parts,  repair  and  maintenance  services  and  product
modernizations. In recent years, the Company has shifted its orientation from an
original  equipment-focused  United States manufacturer to an international full
service  provider with a significant  emphasis on the higher margin  aftermarket
business.  The  Company's  revenues  are  derived  principally  from the sale of
industrial  overhead  cranes,  component  products and aftermarket  products and
services.

RECAPITALIZATION.  Historically,  the Company  conducted  its business as one of
several  operating units of Harnischfeger  Industries,  Inc.  ("HII").  Prior to
March 30, 1998, the core United States  operations of the Company were conducted
directly by HarnCo, while the remainder of the Company's  operations  throughout
the world  were  conducted  through  a number of  entities  owned,  directly  or
indirectly, by HII and its affiliates.

On January 28, 1998, HII reached an agreement with MHE  Investments,  Inc. ("MHE
Investments"),  a newly formed affiliate of Chartwell  Investments Inc., for the
sale  of an  approximately  80  percent  common  ownership  interest  in the MHE
Business. Pursuant to this agreement, HarnCo and other HII affiliates effected a
number of  transactions  (the  "Transactions"  or the  "Recapitalization")  that
resulted  in  Holdings,  a  preexisting  company  engaged  in the MHE  Business,
acquiring,  through MMH, its newly formed  wholly-owned  subsidiary,  the equity
interests of all of the operating  entities  engaged in the MHE  Business.  As a
result of the  reorganization of the MHE Business' legal entities,  Holdings and
the Company became the successor companies to the MHE Business. The Transactions
are  accounted  for as a  recapitalization  for  financial  reporting  purposes.
Accordingly,  the historical  basis of the Company's  assets and liabilities was
not impacted by the Transactions.

In conjunction  with the  Recapitalization,  which closed on March 30, 1998 (the
"Recapitalization  Closing"),  Holdings  sold  $60.0  million of Series A Units,
consisting  of $57.7  million  liquidation  preference of Holdings' 12% Series A
Senior  Exchangeable  Preferred Stock (the "Holdings  Series A Senior  Preferred
Stock") and 720 shares of non-voting  common stock, to institutional  investors.
In addition,  MMH sold $200.0 million  aggregate  principal amount of its 9 1/2%
Senior  Notes due 2008 (the "Senior  Notes") and entered  into a senior  secured
credit facility (the  "Prepetition  Credit  Facility").  The

                                       35

<PAGE>

Prepetition  Credit  Facility  includes  $55.0  million of term loans (the "Term
Loans"),  a revolving credit facility (the "Revolving  Credit  Facility") and an
acquisition facility (the "Acquisition Facility"). The Revolving Credit Facility
initially provided the Company with up to $70.0 million of available  borrowings
for working  capital,  acquisitions  and other  corporate  purposes,  subject to
compliance with certain conditions. The Acquisition Facility initially permitted
the Company to borrow up to $30.0  million  until the third  anniversary  of the
Recapitalization  Closing to finance  acquisitions,  subject to compliance  with
certain  conditions.  The  Prepetition  Credit Facility was amended on August 2,
1999.  As amended,  the  Revolving  Credit  Facility  provided  $50.7 million of
available  borrowings  ($10.0  million of which was  required to be reserved for
issuance of letters of credit),  and the Acquisition Facility provided for $12.4
million  of  borrowings  ($7.4  million  of which was  previously  funded by the
lenders  under the  Prepetition  Credit  Facility  and $5.0 million of which was
funded by indirect  equity  holders in Holdings)  for  acquisitions  and general
corporate purposes.  No additional borrowings under the Acquisition Facility are
available  from lenders under the  Prepetition  Credit  Facility.  In connection
with, and as a condition to, the lenders under the  Prepetition  Credit Facility
entering into the August 2, 1999 Amendment to the Prepetition  Credit  Facility,
certain of the current  indirect equity holders in Holdings  purchased,  through
Martin Crane L.L.C.  ("Martin Crane"), a newly formed limited liability company,
a $5.0 million  participation  in the  Prepetition  Credit Facility and received
shares of non-voting common stock of Holdings,  in consideration  therefor. As a
result,  at July 31  2000,  MHE  Investments  owned  approximately  54.5% of the
Holdings Common Stock,  HarnCo owned  approximately 15.6% of the Holdings Common
Stock,  institutional  investors own  approximately  4.9% of the Holdings Common
Stock and Martin Crane owns approximately 25.0% of the Holdings Common Stock.

At the  Recapitalization  Closing, (i) MHE Investments paid HarnCo $54.0 million
for 72.6% of Holdings'  common stock (the "Holdings Common Stock") (after giving
effect  to  the  Transactions)  and  approximately   $28.9  million  liquidation
preference  of Holdings' 12 1/2% Series C Junior Voting  Exchangeable  Preferred
Stock (the "Holdings  Series C Junior Voting  Preferred  Stock"),  (ii) Holdings
redeemed  certain shares of Holdings  Common Stock and Holdings  Series C Junior
Voting  Preferred  Stock  from  HarnCo for $282.0  million in cash  (subject  to
potential  post-Recapitalization  adjustments  as to  which an  additional  $5.0
million was  provided  to HarnCo) and  approximately  $4.8  million  liquidation
preference  of Holdings' 12 1/4% Series B Junior  Exchangeable  Preferred  Stock
(the "Holdings  Series B Junior  Preferred  Stock"),  and (iii) HarnCo  retained
approximately  20.8% of the Holdings  Common Stock (after  giving  effect to the
Transactions).

At the  Recapitalization  Closing,  MMH  entered  into a  number  of  agreements
pursuant to which HII and its affiliates  continued to provide to MMH and to its
subsidiaries  located  in the  United  States,  on an  interim  basis  and under
substantially  the same  terms and  conditions  as before the  closing,  certain
products  and  services.  In  addition,  HII  and  MMH  entered  into  a  credit
indemnification  agreement (the "Credit Indemnification  Agreement") pursuant to
which HII will maintain in place the credit support  obligations in existence at
the Recapitalization  Closing but have no further duty to extend, renew or enter
into  any  new  credit  support  obligations  (except  as to  the  MHE  Business
obligations  existing  at  the  Recapitalization   Closing).  Under  the  Credit
Indemnification Agreement, MMH is required to pay HII, in advance, an annual fee
equal to 1% of the  amounts  outstanding  under  each  letter of credit and bond
provided by HII and its affiliates  (approximately  $11.2 million as of July 31,
2000).  MMH accrued a fee of $167,260 for the first three  quarters of 2000. HII
is required to refund the Company on a quarterly basis a pro-rata portion of the
annual fee for any reductions in the outstanding  amount of credit that occurred
during such  quarter.  In addition,  the Company will  reimburse HII for certain
future fees and  expenses.  The Company also  entered into a surety  arrangement
(the   "Surety    Arrangement")    to   provide    credit    support   for   its
post-Recapitalization Closing operations.

In  connection  with the  Recapitalization,  the  Company  also  entered  into a
trademark  license  agreement  (the  "Trademark  License   Agreement")  with  an
affiliate of HarnCo,  pursuant to which the Company has the right to use the P&H
trademark  with  respect to all MHE Business  products on a worldwide  exclusive
basis from the date of the  Recapitalization  Closing  until 15 years  after the
earlier to occur of a sale of Holdings to a third party or a public  offering of
the common stock of Holdings,  the Company or their parents or  successors  (and
for an additional seven years thereafter for aftermarket products and services).
The royalty fee for use of the  trademark is 0.75% of the aggregate net sales of
the MHE Business for the ten year period  commencing March 30, 1999. The Company
accrued  $2,856,000  of expenses  for royalty  fees in the period from March 30,
1999 to July 31, 2000,  including  $1,503,000 for the nine months ended July 31,
2000. The Company elected to defer the payment of the royalty fee for the period
ended  October  31, 1999  ($1,353,000),  which was  payable  January  30,  2000,
pursuant to the terms of the Trademark License Agreement.  The Trademark License
Agreement  provides  that the annual  royalty fee may be deferred  for up to two
years if the Company does not meet certain financial  criteria.  The Company can
only defer up to two  payments  during the term of the  agreement.  In addition,
interest accrues at 12% per year on the deferred fee payments.

                                       36


<PAGE>

As discussed  below, the Company could be materially  adversely  affected by the
fact that HII and certain of its United States  affiliates  filed for bankruptcy
protection.

For income tax  purposes,  Holdings and MMH were deemed to acquire the assets of
the MHE Business  pursuant to Code Section  338(h)(10)  in  connection  with the
Transactions.  Accordingly,  the  Recapitalization  increased  the tax  basis of
certain assets and created tax-deductible goodwill.

CHAPTER 11 FILING. As discussed above, on May 17, 2000, Holdings,  MMH and their
domestic  operating  subsidiaries  filed voluntary  petitions for reorganization
under Chapter 11 of the U.S.  Bankruptcy  Code. On June 15, 2000, the Bankruptcy
Court  approved  a  $35  million   Debtor-in-Possession   Facility   (which  was
subsequently  reduced  by  agreement  of  the  parties  to  $25  million)  ("DIP
Facility") and authorized the Debtors to use their collections in the operations
of their  business.  The DIP and  Junior  DIP  Facilities  contain  a number  of
covenants  that,  among other  things,  limit the Debtors'  ability to create or
assume liens, consolidate or merge with other entities, create, incur, or assume
additional   indebtedness,   dispose   of  certain   assets  and  make   capital
expenditures.  The DIP and Junior DIP  Facilities  also  require  the Debtors to
comply with certain  financial  ratios and  borrowing  condition  tests based on
monthly  measurements  of the latest twelve months  results of  operations.  The
first  measurement  date is December 31, 2000.  Cash collected by the Company is
used to repay the Term Loans, the Revolving  Credit Facility  Borrowings and the
Acquisition  Facility Line  Borrowings on a pro-rata basis and these amounts are
re-loaned  to the Company  under a Junior DIP  Facility up to $38  million.  The
Junior DIP  Facility  is junior to the DIP  Facility.  At July 31,  2000,  $31.3
million in  borrowings  are  outstanding  under the Junior DIP  Facility and are
classified as current obligations in the balance sheet.

The DIP and Junior DIP  Facilities  benefit  from  superpriority  administrative
claim status and senior and senior  liens as provided  for under the  Bankruptcy
Code.  Under the Bankruptcy  Code, a superpriority  claim is senior to unsecured
prepetition claims and all other administrative expenses incurred in the Chapter
11 case. Borrowings under the DIP Facility are priced at the Alternate Base Rate
of the Post-Petition  Agent under the DIP Facility plus 1.5% or, at the Debtors'
option,  LIBOR plus 3 1/2%.  The DIP  Facility has an initial  maturity  date of
December  1,  2000,  which  date,  absent  a  default,  shall  be  automatically
extendable  to  June 1,  2001  if a sale of the  Debtors  shall  not  have  been
consummated prior to December 1, 2000.

The principal sources of liquidity for the Company's operating requirements have
been cash flows from  operations and  borrowings  under the DIP Facility and the
Junior DIP  Facility.  While the Company  expects that such sources will provide
sufficient working capital to operate its businesses, there can be no assurances
that such sources will prove to be sufficient.

Immediately prior to the bankruptcy  filings,  the Company's UK subsidiary had a
short-term  bank credit line with an outstanding  balance of $1.9 million.  This
credit  line  was  converted  to the  Revolving  Credit  Facility  borrowing  in
conjunction with the bankruptcy.

The Company  believes that the filing  provides the Debtors with the opportunity
to   restructure   its   indebtedness.   The  Company  plans  to  continue  with
implementation  of its cost  savings  initiatives  to bring  costs in line  with
market requirements. Although no material adverse effects have occurred to date,
disruption  of  operations  relating  to the  Chapter  11  reorganization  could
adversely affect the Debtors'  relationships  with their  creditors,  customers,
suppliers or employees.

HII  BANKRUPTCY  PETITION.  On June 7, 1999,  (the "HII Petition  Date") HII and
certain of its United  States  affiliates  (including  HarnCo)  filed  voluntary
petitions  for  relief  under  Chapter 11 of the  Bankruptcy  Code in the United
States Bankruptcy Court for the District of Delaware.  Certain provisions of the
Bankruptcy Code allow a debtor to avoid, delay and/or reduce its contractual and
other  obligations to third parties.  There can be no assurance that HII and its
affiliates  will not attempt to utilize  such  provisions  to cease  performance
under their agreements and arrangements  with the Company.  The inability of the
Company  to  receive  the  benefits  of one or more of these  agreements  or the
termination  of ongoing  arrangements  between the Company and affiliates of HII
(including  those relating to the provision of services and materials by HII and
its affiliates to the Company) could  materially  adversely affect the Company's
operations and financial  performance.  In the event that any of the liabilities
retained  by HII and its  affiliates  in  connection  with the  Recapitalization
remain  unsatisfied  as of  the  HII  Petition  Date,  the  Company's  right  to
indemnification  for any  such  amounts  it has  paid on  behalf  of HII and its
affiliates may also be avoided, delayed or reduced.

Each of HII and certain of its  affiliates on the one hand,  and the Company and
certain of its affiliates,  on the other hand, have  receivables and payables to
the other that may be affected by the HII Bankruptcy.

                                       37


<PAGE>

ACQUISITIONS AND DIVESTITURES

ACQUISITIONS  - During the nine months ended July 31, 2000,  the Company did not
make any  acquisitions.  During the nine months ended July 31, 1999, the Company
completed one acquisition with an aggregate purchase price of $3.1 million,  net
of cash acquired,  including  approximately $1.0 million financed by the seller.
This  acquisition  was related to the  Company's  aftermarket  business  and was
accounted for as a purchase transaction with the purchase price allocated to the
fair value of  specific  assets  acquired  and  liabilities  assumed.  Resultant
goodwill of $1.8 million is being amortized over 40 years.  This acquisition was
partially  financed by the seller,  resulting in a deferred purchase price which
will be paid in 2004 and 2005.  During the nine months ended July 31, 1999,  the
Company made final  consideration  payments of $1.5 million  related to two 1998
acquisitions.  In addition, with respect to a 1995 acquisition,  the Company was
required to make a contingent  consideration payment of $1.4 million in the nine
months ended July 31, 1999. Additionally,  a payment of $100 was made in each of
the nine  month  periods  ended  July 31,  2000  and 1999  toward a fiscal  1998
purchase which was partially  financed by the seller.  On a pro forma basis, the
fiscal 1999  acquisition was not material to results of operations  reported for
the nine months ended July 31, 1999 and  accordingly,  such  information  is not
presented.

DIVESTITURES-On  December 16, 1999, the Company  completed the sale of the Brake
Business located in Mississauga,  Ontario,  Canada, for a net sale price of $6.8
million after deduction of certain  transaction-related  items, including taxes.
During the first  quarter of fiscal year 2000,  the Brake  Business  contributed
$0.5  million  in sales and no  operating  income to the  Company's  results.  A
pre-tax gain of $6.4 million was recognized on this transaction.

RESULTS OF OPERATIONS

The following table sets forth certain financial data for the periods indicated.

<TABLE>

<CAPTION>
                                                             Supplemental Data
                                                           (Dollars in Millions)



                                Three months ended      Three months ended         Nine months ended         Nine months ended
                              ---------------------    --------------------     ----------------------    ----------------------
                                  July 31, 2000           July 31, 1999              July 31, 2000             July 31, 1999
                              ---------------------    --------------------     ----------------------    ----------------------
                                         Percent of              Percent of                 Percent of                Percent of
                                 $       net sales       $       net sales         $        net sales        $        net sales
                              -------    ----------    ------    ----------     -------     ----------    -------     ----------

<S>                           <C>         <C>          <C>        <C>           <C>          <C>          <C>          <C>

Net Sales                     $  65.5     100.0%       $ 72.7     100.0%        $198.4       100.0%       $ 212.5      100.0%
Other income - net                  -         -            .5        .7%             -           -             .6         .3%
Cost of sales                    54.1      82.6%         52.2      71.8%         155.6        78.4%         157.3       74.0%
Selling, general and
    Administrative expenses      18.0      27.5%         18.3      25.2%          54.0        27.2%          53.6       25.2%
Impairment loss on
    Long-lived assets            16.0      24.4%            -         -           16.0         8.1%             -          -
Reorganization items              3.0       4.6%            -         -            5.2         2.6%             -          -
Operating income (loss)         (25.6)    -39.1%          2.7       3.7%         (32.4)      -16.3%           2.2        1.1%
Gain on sale of business            -         -             -         -            6.4         3.2%             -          -
Loss on Disposal of
   fixed assets                   (.8)     -1.2%            -         -            (.8)       -0.4%             -
Interest expense                 (3.9)     -5.9%         (7.5)    -10.3%         (19.2)       -9.7%         (21.9)     -10.3%
Minority interest                  .2        .3%            -         -             .2          .1%             -          -
Tax benefit (expense)             (.2)     -0.3%          (.6)     -0.8%          (2.3)       -1.2%          (1.6)       -.8%
Net loss                        (30.3)    -46.2%         (5.4)     -7.4%         (48.1)      -24.3%         (21.3)     -10.0%
</TABLE>


NINE MONTHS ENDED JULY 31, 2000 COMPARED TO NINE MONTHS ENDED JULY 31, 1999

Net sales for the nine months  ended July 31, 2000  decreased  $14.1  million or
6.6% to $198.4  million  from $212.5  million for the nine months ended July 31,
1999. The decrease in net sales was primarily caused by the following:  (i) $4.5
million decrease in U.S.  engineered crane sales due to a slowdown in new orders
during the first three  quarters of 2000;  (ii) $1.2 million lower service sales
in  Australia;  (iii) $4.9 million  decrease in hoist sales in the United States
and the  United  Kingdom  and  (iv)  $2.4  million  decrease  in  South  African
engineered crane sales where a large project was being performed during the same
period in the prior year. In general,  sales in the U.S. reflect the lower level
of  orders  in  recent  months  due to  customers'  apprehension  regarding  the
financial  stability of the Company.  These decreases were partially offset by a
$1.7 million increase in hoists for southeast Asia as that market begins to show
renewed activity.

                                       38


<PAGE>

Cost of sales  decreased  to $155.6  million for the nine months  ended July 31,
2000  compared to $157.3  million for the same  period in fiscal  1999.  Cost of
sales  increased  as a  percentage  of net sales from 74.0% for the first  three
quarters of 1999 to 78.4% for the first three  quarters of 2000 primarily due to
lower selling prices in the  engineered  crane,  hoist and service  markets as a
result of competitive pressures, as well as lower production volumes.

Selling,  general and  administrative  expenses remained  relatively stable from
1999 to 2000,  increasing  by $0.4 million or 0.1% to $54.0 million for the nine
months ended July 31, 2000 from $53.6 million for the nine months ended July 31,
1999. The selling,  general and adminstrative expenses for the nine months ended
July 31, 2000 included (i)  increased  goodwill  amortization  due to the fiscal
1999 fourth quarter change in the  amortization  period for the goodwill related
to the Company's  international  operations;  (ii) additional  expenses due to a
fiscal 1999 acquisition in the second quarter of 1999; (iii) additional contract
related costs associated with the port crane business in the United Kingdom; and
(iv) the write-off of accounts  receivable  due from a Malaysian  joint venture.
The nine month period ending July 31, 1999 also included $3.3 million of charges
related to provisions for certain delinquent  accounts receivable and changes in
management (severance and recruiting costs).

Professional fees related to the  restructuring of the Company's  operations and
capital  structure  for the nine months  ended July 31,  2000 are  included as a
separate line item in the Condensed  Statements of Operations and  Comprehensive
Loss entitled "Reorganization Items". It also includes fees paid relative to the
DIP Facility  financing and accrued  retention plan costs.  There are no similar
expenses in the nine months ended July 31, 1999.

Operating  results  for the nine  months  ended July 31,  2000 also  included an
impairment loss on long-lived assets. Consistent with prior periods, the Company
assessed  the  carrying  value of goodwill  at July 31,  2000.  Such  assessment
included, as appropriate, a comparison of (a) the estimated future nondiscounted
cash flows, excluding interest, anticipated to be generated during the remaining
amortization  period of the goodwill to (b) the net carrying  value of goodwill.
Based upon the continued  negative trends in the operating  results of non-North
American  businesses  and shortfalls in actual third quarter  operating  results
compared  with  estimates  developed  during  the  second  quarter,   management
concluded that future operating cash flows,  excluding interest, did not support
the recoverability of recorded goodwill over the remaining  amortization period.
Accordingly,  the Company assessed the fair value of the related  businesses and
wrote-off the remaining  unamortized  goodwill balances related to its non-North
American operations of approximately $16.0 million in the third quarter.

During  the third  quarter of 2000,  the  Company  also  recorded a loss of $0.8
million on the disposal of fixed assets.  This loss relates to fixed assets of a
distribution and service business that were written-off during the quarter.

Approximately  $19.2  million in interest  expense,  including  $1.8  million in
amortization  of  related  financing  costs,  was  recorded  in the first  three
quarters  of  2000  compared  to  $21.9  million,   including  $1.6  million  in
amortization of related financing costs, in the first three quarters of 1999. As
a result of the bankruptcy  filings,  principal and interest payments may not be
made  on  prepetition  debt  without   Bankruptcy  Court  approval  or  until  a
reorganization  plan or plans defining the repayment  terms have been confirmed.
Interest due under the Prepetition  Credit Facility is being paid by the Debtors
as "adequate protection" pursuant to an order of the Bankruptcy Court. The total
interest on  prepetition  debt that was not paid or charged to earnings  for the
period from May 17, 2000 to July 31, 2000 was $4.1 million. Such interest is not
being  accrued  since it is not  probable  that it will be treated as an allowed
claim.  The  Bankruptcy  Code  generally  disallows the payment of interest that
accrues  postpetition  with respect to unsecured  claims.  The Company paid $6.9
million and $16.0 million of interest and commitment fees during the nine months
ended July 31, 2000 and 1999, respectively.

Tax expense of $2.3 million recorded during the first nine months ended July 31,
2000 related  primarily to the  estimated  tax recorded on the sale of the Brake
Business in December 1999 and profitable operations in Canada.

The Company's backlog of orders at July 31, 2000 was approximately $78.5 million
compared to $94.2  million at July 31, 1999.  Bookings for the nine months ended
July 31, 2000 were $199.5  million  compared to $209.3  million  during the nine
months ended July 31, 1999.  The overall  backlog is lower  primarily due to the
completion  of  several  large  orders  that were in  backlog a year ago and the
normal  variability in booking patterns for highly engineered  cranes.  Bookings
have also been negatively  impacted by the Company's filing voluntary  petitions
for reorganization under Chapter 11 of the U.S. Bankruptcy Code.

                                       39


<PAGE>

THREE MONTHS ENDED JULY 31, 2000 COMPARED TO THREE MONTHS ENDED JULY 31, 1999

Net sales for the three  months  ended  July 31,  2000  ("Third  Quarter  2000")
decreased $7.2 million or 9.9% to $65.5 million from $72.7 million for the three
months ended July 31, 1999 ("Third Quarter 1999"). The decrease in net sales was
primarily caused by the following: (i) a decrease of $4.0 million in the sale of
standard  cranes  in the U.S.  reflecting  the  lower  level of orders in recent
months due to customers'  apprehension  regarding the financial stability of the
Company;  (ii) a decrease in service  sales of $2.2 million in North America due
to competitive  pressures and turnover in service technicians;  and (iii) a $1.4
million decrease in the sale of engineered cranes in the Company's international
market.  These  decreases  were partially  offset by a $1.6 million  increase in
service sales in the U.S.

Cost of sales increased to $54.1 million in Third Quarter 2000 compared to $52.2
million for the Third Quarter 1999.  Cost of sales  increased as a percentage of
net  sales  from  71.8% in Third  Quarter  1999 to 82.6% in Third  Quarter  2000
primarily due to lower selling prices in the engineered crane, hoist and service
markets  as  a  result  of  competitive  pressures,  lower  production  volumes,
inventory adjustments related to the Company's Mexican operation,  and increases
in  certain  cost  estimates  related  to orders  in  process  at the  Company's
operation in the United Kingdom.

Selling,  general and administrative  expenses decreased $0.3 million or 1.6% to
$18.0  million in Third  Quarter 2000 from $18.3  million in Third Quarter 1999.
The  decrease  is due mainly to savings  that are being  realized as a result of
workforce  reductions in the United States and the United Kingdom and other cost
savings  iniatives  that have been  implemented  thoughout  the  Company.  These
savings were in part offset by $1.0 million in  severance  costs  related to the
workforce  reductions and additional  provisions for certain delinquent accounts
receivable. The third quarter of 1999 included $0.4 million of special severance
charges related to Company restructuring.

Professional fees related to the  restructuring of the Company's  operations and
capital  structure  for the three  months  ended July 31, 2000 are included as a
separate line item in the Condensed  Statements of Operations and  Comprehensive
Loss entitled "Reorganization Items". It also includes fees paid relative to the
DIP Facility  financing and accrued  retention plan costs.  There are no similar
expenses in the three months ended July 31, 1999.

Operating  results for the three  months  ended July 31,  2000 also  include the
impairment loss on long-lived assets and the loss on disposal of fixed assets as
previously discussed.

Approximately  $3.9  million in  interest  expense,  including  $0.6  million in
amortization  of related  financing  costs,  was recorded in Third  Quarter 2000
compared to $7.5  million,  including  $0.6 million in  amortization  of related
financing  costs,  in the Third  Quarter  1999.  As a result  of the  bankruptcy
filings,  as previously  discussed,  principal and interest  payments may not be
made  on  prepetition  debt  without   Bankruptcy  Court  approval  or  until  a
reorganization  plan or plans defining the repayment  terms have been confirmed.
Interest due under the Prepetition  Credit Facility is being paid by the Debtors
as "adequate protection" pursuant to an order of the Bankruptcy Court. The total
interest on  prepetition  debt that was not paid or charged to earnings  for the
period from May 17, 2000 to July 31, 2000 was $4.1 million. Such interest is not
being  accrued  since it is not  probable  that it will be treated as an allowed
claim.  The  Bankruptcy  Code  generally  disallows the payment of interest that
accrues  postpetition  with respect to unsecured  claims.  The Company paid $2.5
million  and $2.2  million of  interest  and  commitment  fees  during the Third
Quarter 2000 and Third Quarter 1999, respectively.

Tax expense of $0.2 million recorded in the Third Quarter 2000 was the result of
profitable operations in Canada.

The Company's backlog of orders at July 31, 2000 was approximately $78.5 million
compared to $94.2 million at July 31, 1999.  Bookings in Third Quarter 2000 were
$65.8  million  compared to $69.7  million in Third  Quarter  1999.  The overall
backlog is lower  primarily  due to the  completion of several large orders that
were in backlog a year ago and the normal  variability  in booking  patterns for
highly  engineered  cranes.  Bookings have also been negatively  impacted by the
Company's filing voluntary petitions for reorganization  under Chapter 11 of the
U.S. Bankruptcy Code.

LIQUIDITY AND CAPITAL RESOURCES

                                       40


<PAGE>

The  majority of the  Company's  sales of products  and services are recorded as
products  are shipped or services  are  rendered.  Revenue on certain  long-term
contracts is recorded using the  percentage-of-completion  method. Net cash flow
from  operations is affected by the volume of, and timing of the payments under,
percentage-of-completion  long-term  contracts,  and more recently,  also by the
Company's financial  condition,  as vendors have shortened payment terms and, in
some cases, required advance payments.

Net cash flow used for  operating  activities  for the first  three  quarters of
fiscal year 2000 and 1999,  respectively,  was $7.0  million and $12.2  million,
respectively.

Net cash provided by investment and other transactions for the nine months ended
July 31,  2000 was $7.2  million  compared to net cash used for  investment  and
other  transactions  of $11.9  million for the same  period in 1999.  During the
first three quarters of 2000,  $9.1 million of cash,  net of transaction  costs,
was  provided by the sale of the Canadian  brake  business.  This was  partially
offset  by  $0.1  million  of  cash  used  for  deferred  payments  on  previous
acquisitions.  During the nine months ended July 31, 1999, $5.1 million was used
for an  acquisition  related to the Company's  distribution  and service  center
network  and  payments  made  with  respect  to  three   earlier   acquisitions.
Additionally,  capital  expenditures  decreased to $1.9 million  during the nine
months ended July 31, 2000 from $6.2  million  during the nine months ended July
31, 1999. The fiscal year 2000 expenditures included computers and manufacturing
equipment.  The fiscal year 1999 expenditures  included  computers and upgrades,
new  operating  system  software,   office  and  warehouse   consolidations  and
manufacturing equipment.

Net cash used for  financing  activities  was $1.3  million  in the first  three
quarters of 2000 compared to net cash provided by financing  activities of $23.8
million in the first three quarters of 1999. Net repayments,  excluding  amounts
re-loaned  under the Junior DIP Facility,  during the nine months ended July 31,
2000 included $6.7 million  under the  Revolving  Credit  Facility in the United
States and United Kingdom and $4.1 million of principal on the Term Loan A, Term
Loan B, and Acquisition Facility,  mainly from the net proceeds from the sale of
the Canadian brake business.

The Company  entered into several  Amendments and Waivers under the  Prepetition
Credit Facility,  dated as of January 31, 2000 through April 28, 2000,  whereby,
among other  matters,  the lenders  waived  compliance  by the Company with such
financial  covenants,  for the period from  January 31, 2000 until 5:00 p.m. May
26, 2000 (the "Waivers").  The Waivers permitted the Company, subject to certain
conditions,  to make additional  borrowings  under the Revolving Credit Facility
and issue additional letters of credit, above levels in existence on January 28,
2000, in an aggregate amount of up to $12.4 million,  during the period to which
the Waivers apply.

On   June   15,   2000,   the   Bankruptcy   Court   approved   a  $35   million
Debtor-in-Possession  Facility ("DIP Facility") (which was subsequently  reduced
by agreement of the parties to $25  million) and  authorized  the Debtors to use
their  collections in the operations of their  business.  The DIP and Junior DIP
Facilities  contain a number of covenants  that,  among other things,  limit the
Debtors'  ability  to create or assume  liens,  consolidate  or merge with other
entities,  create, incur, or assume additional indebtedness,  dispose of certain
assets and make capital  expenditures.  The DIP and Junior DIP  Facilities  also
require  the  Debtors to comply  with  certain  financial  ratios and  borrowing
condition  tests  based on  monthly  measurements  of the latest  twelve  months
results of operations.  The first  measurement  date is December 31, 2000.  Cash
collected by the Company is used to repay the Term Loans,  the Revolving  Credit
Facility  Borrowings and the Acquisition  Facility Line Borrowings on a pro-rata
basis and these amounts are re-loaned to the Company under a Junior DIP Facility
up to $38  million.  The Junior DIP Facility is junior to the DIP  Facility.  At
July 31, 2000, $31.3 million in borrowings are outstanding  under the Junior DIP
Facility and are classified as current  obligations in the July 31, 2000 balance
sheet.

The DIP and Junior DIP  Facilities  benefit  from  superpriority  administrative
claim status and senior and junior  liens as provided  for under the  Bankruptcy
Code.  Under the Bankruptcy  Code, a superpriority  claim is senior to unsecured
prepetition claims and all other administrative expenses incurred in the Chapter
11 case. Borrowings under the DIP Facility are priced at the Alternate Base Rate
of the Post-Petition  Agent under the DIP Facility plus 1.5% or, at the Debtors'
option,  LIBOR plus 3 1/2%.  This DIP Facility has an initial  maturity  date of
December  1,  2000,  which  date,  absent  a  default,  shall  be  automatically
extendable  to  June 1,  2001  if a sale of the  Debtors  shall  not  have  been
consummated prior to December 1, 2000.  Borrowings under the Junior DIP Facility
are priced at the Alternate Base Rate of the  Post-Petition  Agent under the DIP
Facility plus 2.0% or, at the Debtors'  option,  LIBOR plus 3 1/2%.  This Junior
DIP Facility  matures on the earlier of the initial maturity date of December 1,
2000, which date, absent a default, shall be automatically extendable to June 1,
2001 if a sale of the Debtors shall not have been consummated  prior to December
1, 2000, or upon confirmation of a plan of reorganization.

                                       41


<PAGE>

The principal sources of liquidity for the Company's operating requirements have
been cash flows from operations and borrowings under the DIP Facility and Junior
DIP  Facility.  While  the  Company  expects  that  such  sources  will  provide
sufficient working capital to operate its businesses, there can be no assurances
that such sources will prove to be sufficient.

Immediately prior to the bankruptcy  filings,  the Company's UK subsidiary had a
short-term  bank credit line with an outstanding  balance of $1.9 million.  This
credit  line  was  converted  to the  Revolving  Credit  Facility  borrowing  in
conjunction with the bankruptcy.

The matters described under this caption "Liquidity and Capital  Resources",  to
the  extent  that  they  relate  to  future  events  or  expectations,   may  be
significantly  affected by the Chapter 11 proceedings.  Those  proceedings  will
involve,  or  result  in,  various  restrictions  on  the  Debtors'  activities,
limitations  on  financing,  the need to obtain  Bankruptcy  Court  approval for
various matters and  uncertainty as to  relationships  with vendors,  suppliers,
customers  and  others  with whom the  Debtors  may  conduct  or seek to conduct
business.

Under the Bankruptcy Code, postpetition  liabilities and prepetition liabilities
(i.e.,  liabilities  subject to  compromise)  of the Debtors  must be  satisfied
before  shareholders of the Debtors can receive any  distribution.  The ultimate
recovery to the Debtor's shareholders,  if any, will not be determined until the
end of the case when the fair value of the  Debtor's  assets is  compared to the
liabilities and claims against the Debtors.  The Debtors and their  professional
advisors are in the process of analyzing strategic alternatives and developing a
plan of  reorganization  for the  Debtors.  Based on the  Debtor's  analysis  of
scheduled and filed claims and the valuation of the Debtor, a determination will
be made as to the payment of claims and the  distribution  of value,  if any, to
the Debtor's shareholders.

The Company  believes that the filing  provides the Debtors with the opportunity
to restructure its indebtedness.  The Company plans to continue to implement its
cost  savings  initiatives  to bring  costs in line  with  market  requirements.
Although  management  believes that no material adverse effects have occurred to
date,  disruption of operations relating to the Chapter 11 reorganization  could
adversely affect the Debtors'  relationships  with their  creditors,  customers,
suppliers or employees.

The Company is currently seeking, and is engaged in discussions  regarding,  its
strategic  alternatives.  The Company has engaged in  discussions  with its bank
lenders and representatives of the Creditors  Committee  concerning the possible
restructuring  of  the  Company's  capital  structure  pursuant  to  a  plan  of
reorganization,  including  a possible  sale of the  Company to a third party in
connection therewith. There can be no assurance that the Company will be able to
successfully   pursue  strategic   alternatives  or  that  the  results  of  its
discussions with its creditors will be successful.

EURO CONVERSION

On January 1, 1999,  eleven of the  fifteen  member  countries  of the  European
Monetary Union (the  "participating  countries")  began a three-year  transition
from their national currencies to a new common currency,  the "euro". As of that
date, the participating  countries no longer control their own monetary policies
by  directing  independent  interest  rates for  their  national  currency.  The
national  currencies  will  remain  legal  tender and can be used in  commercial
transactions until January 1, 2002. Beginning January 1, 2002, the participating
countries  will issue new euro currency and withdraw their  respective  national
currencies  which will no longer be used as legal  tender.  The  Company's  only
significant operations in member countries of the European Monetary Union are in
the United Kindgom,  which is not a participating  country. As such,  management
does not believe that the euro conversion will have a significant  impact on the
operations,  cash flows or financial  position of the Company,  unless and until
the United Kingdom adopts the euro.

CAUTIONARY FACTORS

This report contains or may contain  forward looking  statements by or on behalf
of Holdings and the Company. Such statements are based upon management's current
expectations  and are  subject to risks and  uncertainties  that could cause the
Company's  actual results to differ  materially  from those  contemplated in the
statements.  Readers are cautioned not to place undue  reliance on these forward
looking statements. In addition to the assumptions and other factors referred to
specifically  in connection with such  statements,  factors that could cause the
Company's actual results to differ materially from those  contemplated  include,
among others, the following:

                                       42


<PAGE>

     o Liquidity Status and Chapter 11 Filing - The Company did not meet certain
     of the financial  covenants under the  Prepetition  Credit Facility for the
     period ended January 31, 1999 and did not meet such financial covenants and
     certain additional financial covenants for the period ended April 30, 1999.
     The Company obtained a waiver of such financial covenants through August 2,
     1999. On August 2, 1999, the Company entered into the Amendment which cured
     past financial  covenant  violations and reset  financial  covenants  until
     April  2001.  The  Amendment  increased  the cash  availability  under  the
     Revolving  Credit  Facility from $35.7  million  under the previous  waiver
     agreement  to $40.7  million.  In addition,  the  Amendment  permitted  the
     Company to obtain letters of credit,  bid bonds and performance bonds in an
     amount not to exceed $10.0  million in the  aggregate of which $5.3 million
     have been issued.

     The  Company  entered  into  several   Amendments  and  Waivers  under  the
     Prepetition Credit Facility, dated as of January 31, 2000 through April 28,
     2000,  whereby,  among other matters,  the lenders waived compliance by the
     Company with such financial covenants, for the period from January 31, 2000
     until 5:00 p.m. May 26, 2000 (the  "Waivers").  The Waivers  permitted  the
     Company, subject to certain conditions, to make additional borrowings under
     the Revolving Credit Facility and issue additional letters of credit, above
     levels in existence on January 28,  2000,  in an aggregate  amount of up to
     $12.4 million, during the period as to which the Waivers apply.

     On May 17, 2000,  Holdings,  MMH and their domestic operating  subsidiaries
     filed voluntary  petitions for reorganization  under Chapter 11 of the U.S.
     Bankruptcy  Code. See Note 1,  Reorganization  under Chapter 11. On May 18,
     2000,  the  Bankruptcy  Court entered an order  approving  $10.0 million in
     interim  debtor-in-possession  financing to the Debtors and authorizing the
     Debtors to utilize their  collections  in the operation of their  business.
     This $10 million amount  represented the initial portion under a commitment
     by the lenders to provide $35 million in  financing  (including a letter of
     credit facility) in connection with the Debtors' Chapter 11 cases. The full
     $35 million  facility (which was reduced by agreement of the parties to $25
     million)  was  approved  by the  Bankruptcy  Court on June 15,  2000.  This
     facility  has an initial  maturity  date of December  1, 2000,  which date,
     absent a default,  shall be  automatically  extendable to June 1, 2001 if a
     sale of the Debtors  shall not have been  consummated  prior to December 1,
     2000.

     The  Company  believes  that  the  filing  provides  the  Debtors  with the
     opportunity to restructure its indebtedness.  The Company plans to continue
     to  implement  its cost  savings  initiatives  to bring  costs in line with
     market requirements.  Although management believes that no material adverse
     effects have occurred to date,  disruption  of  operations  relating to the
     Chapter 11 reorganization could adversely affect the Debtors' relationships
     with their creditors, customers, suppliers or employees.

     As of the end of the third quarter of 2000,  the Company had $309.7 million
     of indebtedness outstanding,  including $93.8 million under the Prepetition
     Credit  Facility,  the DIP Facility and the Junior DIP Facility  (including
     accrued  interest)  and  $211.9  million  evidenced  by  the  Senior  Notes
     (including accrued interest).

     The Company is currently seeking, and is engaged in discussions  regarding,
     its strategic alternatives. The Company has engaged in discussions with its
     bank lenders and representatives of the Creditors Committee  concerning the
     possible  restructuring of the Company's  capital  structure  pursuant to a
     plan of reorganization, including a possible sale of the Company to a third
     party in connection  therewith.  There can be no assurance that the Company
     will be able to  successfully  pursue  strategic  alternatives  or that the
     results of its discussions with its creditors will be successful.

     POTENTIAL MATERIAL ADVSERSE EFFECT OF HII BANKRUPTCY - On June 7, 1999, HII
     and  certain of its  United  States  affiliates  (including  HarnCo)  filed
     voluntary  petitions for relief under Chapter 11 of the Bankruptcy  Code in
     the United States  Bankruptcy  Court for the District of Delaware.  Certain
     provisions  of the  Bankruptcy  Code allow a debtor to avoid,  delay and/or
     reduce its contractual and other obligations to third parties. There can be
     no assurance that HII and its  affiliates  will not attempt to utilize such
     provisions to cease  performance  under their  agreements and  arrangements
     with the Company.  The  inability of the Company to receive the benefits of
     one or more of these agreements or the termination of ongoing  arrangements
     between the Company and affiliates of HII (including  those relating to the
     provision  of  services  and  materials  by HII and its  affiliates  to the
     Company) could  materially  adversely  affect the Company's  operations and
     financial performance. In the event that any of the liabilities retained by
     HII and its  affiliates  in  connection  with the  Recapitalization  remain

                                       43


<PAGE>

     unsatisfied  as  of  the  HII  Petition   Date,  the  Company's   right  to
     indemnification  for any such  amounts it has paid on behalf of HII and its
     affiliates may also be avoided, delayed or reduced. Each of HII and certain
     of its  affiliates on one hand,  and the Company and certain  affiliates on
     the other hand,  have  receivables  and  payables to the other which may be
     affected by the HII Bankruptcy.

     o RISKS ASSOCIATED WITH LARGE CRANE PROJECTS - The  Company's  principal
     business includes designing,  manufacturing,  marketing and servicing large
     cranes for the capital  goods  industries.  Long  periods of time are often
     necessary to plan,  design and build these machines.  With respect to these
     machines,   there  are  risks  of  customer   acceptance  and  start-up  or
     performance  problems.  Large amounts of capital are required to be devoted
     by some of the  Company's  customers  to  purchase  these  machines  and to
     finance the steel mills,  paper mills and other  facilities  that use these
     machines.   The  Company's   success  in  obtaining   and  managing   sales
     opportunities can affect the Company's financial performance.  In addition,
     some  projects are located in  undeveloped  or developing  economies  where
     business  conditions are less  predictable.  Finally,  the market for large
     cranes is down substantially and the outlook is not expected to improve for
     the foreseeable future.

     o  RISKS ASSOCIATED WITH INTERNATIONAL OPERATIONS  -  The  Company  has
     operations and assets located in Canada, Mexico, Chile, the United Kingdom,
     South Africa,  Thailand,  Australia and Singapore and is establishing joint
     ventures in Malaysia and Saudi Arabia.  The Company also sells its products
     through  distributors  and agents in over 50  countries,  some of which are
     merely ad hoc arrangements and may be terminated at any time. The Company's
     international  operations  (including Canada,  Mexico, Chile, South Africa,
     Singapore,  Thailand, Australia and the United Kingdom) accounted for 37.1%
     and 39.8% of the  Company's  aggregate  net sales for the six months  ended
     July 31, 2000 and 1999, respectively.  Although historically, exchange rate
     fluctuations and other international factors have not had a material impact
     on the Company's  business,  financial  condition or results of operations,
     international operations expose the Company to a number of risks, including
     currency exchange rate  fluctuations,  trade barriers,  exchange  controls,
     risk  of  governmental   expropriation,   political  and  legal  risks  and
     restrictions,  foreign  ownership  restrictions  and risks of  increases in
     taxes.  The inability of the Company,  or  limitations  on its ability,  to
     conduct its foreign  operations or distribute its products  internationally
     could adversely affect the Company's operations and financial performance.

     o  COMPETITION  - The  markets  in which the  Company  operates  are highly
     competitive.  Both  domestically  and  internationally,  the Company  faces
     competition from a number of different manufacturers in each of its product
     lines,  some of which have greater  financial and other  resources than the
     Company.  The principal  competitive  factors affecting the Company include
     performance,  functionality, price, brand recognition, customer service and
     support,  financial strength and stability,  and product availability.  The
     current depressed level of new equipment orders has increased the intensity
     of competition  and has reduced selling prices and margins on new equipment
     bookings.  There  can be no  assurance  that  the  Company  will be able to
     compete successfully with its existing competitors or with new competitors.
     Failure to compete successfully could have a material adverse effect on the
     Company's  financial  condition,  liquidity and results of  operations.  In
     addition,  the  Company's  ability to compete  successfully  will likely be
     adversely affected by the Company's liquidity crisis.

     o MARKET  RISKS - The  Company's  business  is affected by the state of the
     United States and global  economy in general,  and by the varying  economic
     cycles of the  industries  in which its products are used.  There can be no
     assurance  that any future  condition of the United  States  economy or the
     economies of the other  countries in which the Company does  business  will
     not  have an  adverse  effect  on the  Company's  business,  operations  or
     financial performance.

YEAR 2000 COMPLIANCE

The Company has not experienced  any  significant  disruption in operations as a
result of the Year 2000 issue,  although there remains a potential for Year 2000
problems to occur after January 1, 2000. Management,  however, believes that any
potential  problems  would not have a  significant  impact on  operations of the
Company.  All  material  information  technology  ("IT") and  non-IT  equipment,
processes  and software  were  compliant  and resulted in no material  Year 2000
issues through November 17, 2000.

                                       44


<PAGE>

The Company  also  assessed  and  addressed  Year 2000  issues with  significant
vendors.  The Company sought  assurances from all of its vendors with respect to
Year 2000 issues.  The Company does not,  however,  control the systems of other
companies,  and cannot assure that these systems were timely  converted  and, if
not  converted,  would  not have an  adverse  effect on the  Company's  business
operations. In the event that the Company's significant vendors or suppliers did
not  complete  their  Year 2000  compliance  efforts,  the  Company  could  have
experienced disruptions in its operations.  Disruptions in the economy generally
resulting  from Year 2000  issues also could have  affected  the  Company.  With
respect to products  sold by the Company,  management  continues to believe that
any liability for Year 2000 compliance will not be material.

FUTURE ACCOUNTING CHANGES

In June  1998,  the  Financial  Accounting  Standards  Board  (FASB)  has issued
Statement of Accounting  Standards  ("SFAS") No. 133  "Accounting for Derivative
Instruments and Hedging  Activities." It requires all derivative  instruments to
be recorded in the statements of financial position at fair value. In June 1999,
the statement's effective date was delayed by one year, and it will be effective
for the year ending October 31, 2001.  Interim  reporting for this standard will
be required. Due to the Company's current limited use of derivative instruments,
the adoption of this statement is not expected to have a material  effect on the
Company's financial condition or results of operations.

                                       45
<PAGE>


ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company is potentially  exposed to market risk  asssociated  with changes in
foreign  exchange and interest  rates.  From time to time the Company will enter
into derivative  financial  instruments to hedge these exposures.  An instrument
will be  treated  as a hedge if it is  effective  in  offsetting  the  impact of
volatility in the Company's  underlying  interest rate and foreign exchange rate
exposures. The Company does not enter into derivatives for speculative purposes.
There have been no material  changes in the Company's  market risk  exposures as
compared to those  discussed in the  Company's  1999 Annual Report on Form 10-K,
except  for the  termination  of the  Company's  interest  rate swap  during the
quarter ended April 30, 2000.

                                       46


<PAGE>


                           PART II. OTHER INFORMATION


Item 1. Legal Proceedings
        -----------------

     On October 28, 1996, a strong  windstorm caused  significant  damage to the
Belview  container-handling  terminal at the Port of Waterford  in Ireland.  One
container-handling  crane sold by the Company's  United  Kingdom  subsidiary was
destroyed  and another was  seriously  damaged.  The two cranes were sold to the
Waterford  Harbour  Commissioners  in 1992 and  commissioned for use in 1993. On
October 19, 1998, the Waterford Harbour  Commissioners  wrote to the Company and
provided a notice of arbitration,  asserting breach of contract,  negligence and
breach of duty against the  Company's  United  Kingdom  subsidiary in connection
with the  destroyed and damaged  cranes.  The  Waterford  Harbour  Commissioners
claimed direct damages of IR(pound)8.5  million ($10.1 million based on exchange
rates  at July  31,  2000)  and  unspecified  consequential  damages.  The  port
operator,  Bell Lines,  Limited,  filed a similar  claim  against the  Company's
United  Kingdom  subsidiary  in October  1999,  asserting  unspecified  damages.
Management  intends to  vigorously  defend both  matters.  One of the  Company's
insurance  carriers  has agreed to provide  defense  coverage for one of the two
cranes  involved in the accident and limited  indemnification  if the Company is
unsuccessful  in  defending  the  claims.  The  Company  and its United  Kingdom
subsidiary  have  initiated  litigation  in the Milwaukee  County  Circuit Court
against Ace American Insurance Company, AON Risk Services, Inc. of Illinois, and
National  Union Fire  Insurance  Company of  Pittsburgh,  Pennsylvania,  seeking
additional insurance coverage for defense and indemnification obligations. While
the  Company  believes  that it will obtain a  favorable  resolution  (either by
successfully defending the claim or by obtaining insurance coverage thereon), no
assurances  can be made as to the final outcome of the claims.  If the Company's
United Kingdom subsidiary is found liable for the claims and is unable to obtain
insurance  coverage  therefor,  there could be a material  adverse effect on the
Company's operations and financial performance. Based upon the current status of
this matter, no related liability has been accrued at July 31, 2000.

     The Company is also  involved  from time to time in various  other  routine
litigation  incident to its  operations.  Although the outcome of those  matters
cannot be predicted with certainty, management believes that any such pending or
threatened   litigation  will  not  have  a  material   adverse  effect  on  its
consolidated results of operations and financial condition.

Item 2. Changes in Securities
        ---------------------

     Not applicable.

Item 3.  Defaults  upon  Senior  Securities
         ----------------------------------

     In  advance of the  Chapter 11  bankruptcy  filings  described  in Item 2 -
     Management's  Discussion and Analysis of Financial Condition and Results of
     Operations  of Part I, the Debtors  were unable to pay the  interest on the
     Senior Notes.

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

     Not applicable.

Item 5. Other Information
        -----------------

     Not applicable.

Item 6. Exhibits and Reports on Form 8-K
        --------------------------------

     (a) Exhibits

          Exhibit 27 Financial Data Schedule

     (b) Reports on Form 8-K

          The Registrants  filed no reports on Form 8-K during the quarter ended
     July 31, 2000.

                                       47

<PAGE>


                                   SIGNATURES

     Pursuant to the  requirements  of the Securities  Exchange Act of 1934, the
registrants  have duly caused  this  report to be signed on their  behalf by the
undersigned thereunto duly authorized.


                                                MMH HOLDINGS, INC.


     Date:  December 15, 2000                   /s/ David D. Smith
                                                -------------------
                                                David D. Smith
                                                Vice President  - Finance
                                                (Principal Financial Officer)



                                                 MORRIS MATERIAL HANDLING, INC.


     Date:  December 15, 2000                    /s/ David D. Smith
                                                 -------------------
                                                 David D. Smith
                                                 Vice President - Finance
                                                 (Principal Financial Officer)



                                       48


<PAGE>


EXHIBIT
NUMBER

  27.1           Financial Data Schedule

  27.2           Financial Data Schedule




                                       49