**UNITEDSTATESSECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

**FORM 10-Q**
| **(Mark   One)**                                                                                                                                    | ** **                                                                                              |
|-----------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------|
| ** **                                                                                                                                          | ** **                                                                                              |
| **x**                                                                                                                                               | **QUARTERLY REPORT PURSUANT TO SECTION 13 OR  15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**  |
| ** **                                                                                                                                          | ** **                                                                                              |
| **For the  Quarterly Period Ended April 30, 2007**                                                                                                  |
| ** **                                                                                                                                          | ** **                                                                                              |
| **OR**                                                                                                                                              |
| ** **                                                                                                                                          | ** **                                                                                              |
| **o**                                                                                                                                               | **TRANSITION REPORT PURSUANT TO SECTION 13 OR  15(d) OF THE SECURITIES EXCHANGE ACT OF 1934** |
| ** **                                                                                                                                          | ** **                                                                                              |
| **For the  transition period  from         to          ** |

 

**Commission file number 1-12557**

**CASCADECORPORATION**

(Exact name of registrant as specified in its charter)

| **Oregon**                                                      |   | **93-0136592**                        |
|-----------------------------------------------------------------|--------|---------------------------------------|
| (State or other  jurisdiction of incorporation or organization) |   | (I.R.S. Employer  Identification No.) |
|                                                            |   |                                  |
| **2201  N.E. 201st Ave.**                                       |   | ** **                            |
| **Fairview,  Oregon**                                           |   | **97024-9718**                        |
| (Address of  principal executive office)                        |   | (Zip Code)                            |

 

Registrant’stelephone number, including area code: **(503)669-6300**

Indicateby check mark whether the registrant (1) has filed all reports required tobe filed by Section 13 or 15(d) of the Securities Exchange Act of1934 during the preceding 12 months (or for such shorter period that theregistrant was required to file such reports), and (2) has been subject tosuch filing requirements for the past 90 days. Yes x  No o

Indicate by check mark whether the registrant is alarge accelerated filer, an accelerated filer, or a non-accelerated filer. Seedefinition of “accelerated filer and large accelerated filer” in Rule 12b-2of the Exchange Act. (Check one):
| Large accelerated  filer o | Accelerated  filer x | Non-accelerated  filer o |
|---------------------------------|----------------------|--------------------------|

 

Indicate by check mark whether the registrant is ashell company (as defined in Rule 12b-2 of the ExchangeAct).Yes o  No x

The number of sharesoutstanding of the registrant’s common stock as of May 22, 2007 was 11,832,670.

 

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**CASCADE CORPORATION**

**FORM 10-Q**

**Quarter Ended April 30, 2007**

** **

**TABLEOF CONTENTS**
| ** **                                                                                           | **Page**   |
|------------------------------------------------------------------------------------------------------|------------|
| **Part I – Financial  Information:**                                                            | ** ** |
|                                                                                                 |       |
| Item 1.  Financial Statements (unaudited):                                                           |       |
| Consolidated Statements of  Income                                                                   | 4          |
| Consolidated  Balance Sheets                                                                         | 5          |
| Consolidated Statement of  Changes in Shareholders’ Equity                                      | 6          |
| Consolidated Statements of  Cash Flows                                                               | 7          |
| Notes to Consolidated  Financial Statements                                                          | 8          |
|                                                                                                 |       |
| Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of  Operations | 15         |
|                                                                                                 |       |
| Item 3.  Quantitative and Qualitative Disclosures about Market Risk                                  | 22         |
|                                                                                                 |       |
| Item 4. Controls and  Procedures                                                                     | 23         |
|                                                                                                 |       |
| **Part II – Other  Information**                                                                | 24         |
|                                                                                                 |       |
| **Signatures**                                                                                       | 25         |
|                                                                                                 |       |
| **Exhibit  Index**                                                                                   | 26         |

 

2

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**Forward-LookingStatements**

This Form 10-Q,including “Management’s Discussion and Analysis of Financial Condition andResults of Operations” (Item 2) contains forward-looking statements thatinvolve risks and uncertainties, as well as assumptions that, if they nevermaterialize or prove incorrect, could cause our results to differ materiallyfrom those expressed or implied by such forward-looking statements. Allstatements other than statements of historical fact are statements that couldbe deemed forward-looking statements, including any projections of revenue,gross profit, expenses, earnings or losses from operations, synergies or otherfinancial items; any statements of plans, strategies, and objectives ofmanagement for future operations; any statements regarding future economicconditions or performance; any statements of expectation or belief; and anystatements of assumptions underlying any of the foregoing. The risks,uncertainties, and assumptions referred to above include, but are not limitedto:

·                  Competitivefactors in, and the cyclical nature of, the materials handling and constructionequipment industries;

·                  Fluctuationsin lift truck and construction equipment orders or deliveries;

·                  Availabilityand cost of raw materials;

·                  Generalbusiness and economic conditions in North America, Europe, Asia Pacific andChina;

·                  Actionsby foreign governments;

·                  Assumptionsrelating to pension and other postretirement costs;

·                  Foreigncurrency fluctuations;

·                  Pendinglitigation;

·                  Environmentalmatters;

·                  Levels of public and non-residentialconstruction activity;

·                  Effectivenessof our capital expenditures and cost reduction initiatives.

We undertake noobligation to publicly revise or update forward-looking statements to reflectevents or circumstances that arise after the date of this report.

3

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**PART I—FINANCIAL INFORMATION**

**Item1. Financial Statements**

**CASCADE CORPORATION**

**CONSOLIDATED STATEMENTS OF INCOME**

**(Unaudited — in thousands, except per share amounts)**
| ** **                                   | ** ** | **Three Months Ended** | ** ** |
|----------------------------------------------|------------|----------------------------------|------------|
| ** **                                   | ** ** | **April 30**                | ** ** |
| ** **                                   | ** ** | **2007**                         | ** ** | **2006** | ** ** |
| Net sales                                    |       | $                                | 135,500    |   | $ | 117,774 |   |
| Cost of goods  sold                          |       | 92,271                           |       | 81,085 |   |
| Gross profit                                 |       | 43,229                           |       | 36,689 |   |
|                                         |       |                             |       |   |   |
| Selling and  administrative expenses         |       | 21,132                           |       | 19,852 |   |
| Gain on  disposition of assets               |       | (35                              | )          | (662 | ) |
| Amortization                                 |       | 798                              |       | 302 |   |
| Insurance  litigation recovery, net          |       | (15,977                          | )          | — |   |
|                                         |       |                             |       |   |   |
| Operating income                             |       | 37,311                           |       | 17,197 |   |
| Interest expense                             |       | 995                              |       | 532 |   |
| Interest income                              |       | (157                             | )          | (355 | ) |
| Other expense  (income), net                 |       | 78                               |       | (34 | ) |
|                                         |       |                             |       |   |   |
| Income before  provision for income taxes    |       | 36,395                           |       | 17,054 |   |
| Provision for  income taxes                  |       | 12,599                           |       | 6,020 |   |
|                                         |       |                             |       |   |   |
| Net income                                   |       | $                                | 23,796     |   | $ | 11,034 |   |
|                                         |       |                             |       |   |   |
| Basic earnings  per share                    |       | $                                | 1.99       |   | $ | 0.88 |   |
| Diluted earnings  per share                  |       | $                                | 1.90       |   | $ | 0.84 |   |
|                                         |       |                             |       |   |   |
| Basic weighted  average shares outstanding   |       | 11,966                           |       | 12,542 |   |
| Diluted weighted  average shares outstanding |       | 12,545                           |       | 13,174 |   |
|                                         |       |                             |       |   |   |

 

Theaccompanying notes are an integral part of the consolidated financialstatements.

4

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**CASCADE CORPORATION**

**CONSOLIDATED BALANCESHEETS**

**(Unaudited - in thousands, except per share amounts)**

 
| ** **                                                                                                | ** ** | **April 30** | ** ** | **January 31** | ** ** |
|-----------------------------------------------------------------------------------------------------------|------------|-------------------|------------|---------------------|------------|
| ** **                                                                                                | ** ** | **2007**          | ** ** | **2007**            | ** ** |
|                                                                                                      |       |              |       |                |       |
| **ASSETS**                                                                                                | ** ** | ** **        | ** ** | ** **          | ** ** |
| Current  assets:                                                                                          |       |              |       |                |       |
| Cash and cash  equivalents                                                                                |       | $                 | 34,642     |                | $          | 36,593 |   |
| Accounts  receivable, less allowance for doubtful accounts of $1,441 and $1,515                           |       | 90,107            |       | 74,992              |       |
| Inventories                                                                                               |       | 63,268            |       | 58,280              |       |
| Deferred income  taxes                                                                                    |       | 3,691             |       | 4,481               |       |
| Prepaid expenses  and other                                                                               |       | 7,926             |       | 8,609               |       |
| Total current  assets                                                                                     |       | 199,634           |       | 182,955             |       |
| Property, plant and  equipment, net                                                                       |       | 86,723            |       | 84,151              |       |
| Goodwill                                                                                                  |       | 103,757           |       | 99,498              |       |
| Deferred income taxes                                                                                     |       | 12,274            |       | 11,817              |       |
| Intangible assets, net                                                                                    |       | 16,305            |       | 17,026              |       |
| Other assets                                                                                              |       | 1,998             |       | 1,985               |       |
| Total assets                                                                                              |       | $                 | 420,691    |                | $          | 397,432 |   |
|                                                                                                      |       |              |       |                |       |
| **LIABILITIES  AND SHAREHOLDERS’ EQUITY**                                                            | ** ** | ** **        | ** ** | ** **          | ** ** |
| Current  liabilities:                                                                                     |       |              |       |                |       |
| Notes payable to  banks                                                                                   |       | $                 | 2,194      |                | $          | 4,546 |   |
| Current portion  of long-term debt                                                                        |       | 12,500            |       | 12,573              |       |
| Accounts payable                                                                                          |       | 28,625            |       | 26,008              |       |
| Accrued payroll  and payroll taxes                                                                        |       | 10,022            |       | 9,391               |       |
| Accrued  environmental expenses                                                                           |       | 985               |       | 1,024               |       |
| Income taxes  payable                                                                                     |       | 5,987             |       | —              |       |
| Dividends  payable                                                                                        |       | 1,886             |       | —              |       |
| Other accrued  expenses                                                                                   |       | 14,773            |       | 16,283              |       |
| Total current  liabilities                                                                                |       | 76,972            |       | 69,825              |       |
| Long-term debt, net of  current portion                                                                   |       | 40,000            |       | 34,000              |       |
| Accrued environmental  expenses                                                                           |       | 5,600             |       | 5,838               |       |
| Deferred income taxes                                                                                     |       | 3,415             |       | 2,798               |       |
| Employee benefit  obligations                                                                             |       | 9,562             |       | 9,719               |       |
| Other liabilities                                                                                         |       | 3,275             |       | 3,616               |       |
| Total  liabilities                                                                                        |       | 138,824           |       | 125,796             |       |
|                                                                                                      |       |              |       |                |       |
| Commitments and  contingencies (Note 7)                                                                   |       |              |       |                |       |
|                                                                                                      |       |              |       |                |       |
| Shareholders’ equity:                                                                                |       |              |       |                |       |
| Common stock,  $.50 par value, 20,000 authorized shares; 11,787 and 12,070 shares issued and  outstanding |       | 5,893             |       | 6,035               |       |
| Retained  earnings                                                                                        |       | 256,215           |       | 253,307             |       |
| Accumulated  other comprehensive income                                                                   |       | 19,759            |       | 12,294              |       |
| Total  shareholders’ equity                                                                          |       | 281,867           |       | 271,636             |       |
| Total liabilities and  shareholders’ equity                                                          |       | $                 | 420,691    |                | $          | 397,432 |   |

 

Theaccompanying notes are an integral part of the consolidated financialstatements.

5

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**CASCADE CORPORATION**

**CONSOLIDATED STATEMENT OFCHANGES IN SHAREHOLDERS’ EQUITY**

**(Unaudited — in thousands, except per share amounts)**
| ** **                                                    | ** ** | ** **            | ** ** | ** **  | ** ** | ** **     | ** ** | ** **        | ** ** | **Accumulated**        | ** ** | ** **        | ** ** | ** **             | ** ** |
|---------------------------------------------------------------|------------|-----------------------|------------|-------------|------------|----------------|------------|-------------------|------------|------------------------|------------|-------------------|------------|------------------------|------------|
| ** **                                                    | ** ** | ** **            | ** ** | ** **  | ** ** | **Additional** | ** ** | ** **        | ** ** | **Other**              | ** ** | **Total**         | ** ** | **Year-To-Date**       | ** ** |
| ** **                                                    | ** ** | **Common Stock** | ** ** | **Paid-In** | ** ** | **Retained**   | ** ** | **Comprehensive** | ** ** | **Shareholders’** | ** ** | **Comprehensive** | ** ** |
| ** **                                                    | ** ** | **Shares**            | ** ** | **Amount**  | ** ** | **Capital**    | ** ** | **Earnings**      | ** ** | **Income (Loss)** | ** ** | **Equity**        | ** ** | **Income (Loss)** | ** ** |
| **Balance at January 31, 2007**                               |       | 12,070                |       | $           | 6,035      |           | $          | —            |       | $                      | 253,307    |              | $          | 12,294                 |       | $ | 271,636 |   |   |   |
|                                                          |       |                  |       |        |       |           |       |              |       |                   |       |              |       |                   |       |
| Net income                                                    |       | —                |       |        |       |           |       | 23,796            |       | —                 |       | 23,796            |       | $                      | 23,796     |   |
| Dividends ($0.16 per  share)                                  |       | —                |       |        |       |           |       | (1,886            | )          | —                 |       | (1,886            | )          | —                 |       |
| Common stock issued                                           |       | 106                   |       | 53          |       | 1,351          |       |              |       | —                 |       | 1,404             |       | —                 |       |
| Tax benefit from  exercise of share-based compensation awards |       | —                |       |        |       | 686            |       |              |       | —                 |       | 686               |       | —                 |       |
| Common stock repurchased                                      |       | (389                  | )          | (195        | )          | (3,021         | )          | (19,002           | )          |                   |       | (22,218           | )          |                   |       |
| Share-based compensation                                      |       | —                |       |        |       | 984            |       |              |       | —                 |       | 984               |       | —                 |       |
| Translation adjustment                                        |       | —                |       |        |       |           |       |              |       | 7,465                  |       | 7,465             |       | 7,465                  |       |
|                                                          |       |                  |       |        |       |           |       |              |       |                   |       |              |       |                   |       |
| **Balance at April 30, 2007**                                 |       | 11,787                |       | $           | 5,893      |           | $          | —            |       | $                      | 256,215    |              | $          | 19,759                 |       | $ | 281,867 |   | $ | 31,261 |   |

 

The accompanying notes are an integralpart of the consolidated financial statements.

6

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**CASCADE CORPORATION**

**CONSOLIDATED STATEMENTSOF CASH FLOWS**

**(Unaudited - inthousands)**
| ** **                                                                         | ** ** | **Three Months Ended** | ** ** |
|------------------------------------------------------------------------------------|------------|----------------------------------|------------|
| ** **                                                                         | ** ** | **April 30**                | ** ** |
| ** **                                                                         | ** ** | **2007**                         | ** ** | **2006** | ** ** |
| **Cash flows from operating  activities:**                                         | ** ** | ** **                       | ** ** | ** ** | ** ** |
| Net income                                                                         |       | $                                | 23,796     |   | $ | 11,034 |   |
| Adjustments to  reconcile net income to net cash provided by operating activities: |       |                             |       |   |   |
| Depreciation and  amortization                                                     |       | 4,277                            |       | 3,784 |   |
| Share-based  compensation                                                          |       | 984                              |       | 931 |   |
| Deferred income  taxes                                                             |       | 355                              |       | (586 | ) |
| Gain on  disposition of assets                                                     |       | (35                              | )          | (662 | ) |
| Changes in  operating assets and liabilities:                                      |       |                             |       |   |   |
| Accounts  receivable                                                               |       | (12,713                          | )          | (10,355 | ) |
| Inventories                                                                        |       | (3,174                           | )          | 2,754 |   |
| Prepaid expenses  and other                                                        |       | 1,066                            |       | 130 |   |
| Accounts payable  and accrued expenses                                             |       | 2,582                            |       | (3,742 | ) |
| Income taxes payable  and receivable                                               |       | 6,787                            |       | 3,262 |   |
| Other assets and  liabilities                                                      |       | (858                             | )          | 85 |   |
| Net cash  provided by operating activities                                         |       | 23,067                           |       | 6,635 |   |
|                                                                               |       |                             |       |   |   |
| **Cash flows from investing  activities:**                                         | ** ** | ** **                       | ** ** | ** ** | ** ** |
| Capital  expenditures                                                              |       | (5,249                           | )          | (3,251 | ) |
| Proceeds from  disposition of assets                                               |       | 176                              |       | 1,521 |   |
| Sales of  marketable securities                                                    |       | —                           |       | 7,000 |   |
| Purchases of  marketable securities                                                |       | —                           |       | (6,100 | ) |
| Net cash used in  investing activities                                             |       | (5,073                           | )          | (830 | ) |
|                                                                               |       |                             |       |   |   |
| **Cash flows from financing  activities:**                                         | ** ** | ** **                       | ** ** | ** ** | ** ** |
| Payments on  long-term debt                                                        |       | (31,073                          | )          | — |   |
| Proceeds from  long-term debt                                                      |       | 37,000                           |       | — |   |
| Notes payable to  banks, net                                                       |       | (2,413                           | )          | (366 | ) |
| Common stock  issued under share-based compensation plans                          |       | 1,404                            |       | 114 |   |
| Common stock  repurchased                                                          |       | (24,496                          | )          | — |   |
| Excess tax  benefit from exercise of share-based compensation awards               |       | 686                              |       | 23 |   |
| Net cash used in  financing activities                                             |       | (18,892                          | )          | (229 | ) |
| ** **                                                                         | ** ** | ** **                       | ** ** | ** ** | ** ** |
| Effect of exchange rate  changes                                                   |       | (1,053                           | )          | (942 | ) |
|                                                                               |       |                             |       |   |   |
| Change in cash and cash  equivalents                                               |       | (1,951                           | )          | 4,634 |   |
| Cash and cash  equivalents at beginning of period                                  |       | 36,593                           |       | 35,493 |   |
| Cash and cash  equivalents at end of period                                        |       | $                                | 34,642     |   | $ | 40,127 |   |
|                                                                               |       |                             |       |   |   |
| **Supplemental disclosure of cash  flow information:**                             | ** ** | ** **                       | ** ** | ** ** | ** ** |
| See Note 9 to the  consolidated financial statements                               |       |                             |       |   |   |

 

The accompanying notes are an integralpart of the consolidated financial statements.

7

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**CASCADE CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**(Unaudited)**

**Note 1—Description of Business**

Cascade Corporation(“Company”) is an international company engaged in the manufacture of materialshandling products that are widely used on industrial fork lift trucks and, to alesser extent, products that are used on construction, mining and agriculturalvehicles. Accordingly, our sales are largely dependent on sales of lift trucksand on the sales of replacement parts. Our sales are made throughout the world.We are headquartered in Fairview, Oregon, employing approximately 2,200 peopleand maintaining operations in 15 countries outside the United States.

**Note 2—Interim Financial Information**

The accompanying consolidatedfinancial statements for the interim periods ended April 30, 2007 and 2006 areunaudited. In the opinion of management, the accompanying consolidatedfinancial statements reflect normal recurring adjustments necessary for a fairstatement of the financial position, results of operations and cash flows forthose interim periods. Results of operations for the interim periods are notnecessarily indicative of the results to be expected for the full year, andthese financial statements do not contain the detail or footnote disclosuresconcerning accounting policies and other matters that would be included in fullfiscal year financial statements. Therefore, these statements should be read inconjunction with our audited financial statements included in our Annual Reporton Form 10-K for the fiscal year ended January 31, 2007.

**Note 3—Segment Information**

Our operating units have largelysimilar economic characteristics and attributes, including similar products,distribution patterns and classes of customers. As a result, we aggregate ouroperating units into four geographic operating segments related to themanufacturing, distribution and servicing of material handling load engagementproducts primarily for the lift truck industry. We evaluate performance of eachof our operating segments based on operating income, which is income beforeinterest, miscellaneous income/expense and income taxes. The accountingpolicies of the operating segments are the same as those described in thesummary of significant accounting policies contained in Note 2 of ourconsolidated financial statements included in our Form 10-K for the fiscal yearended January 31, 2007.

Revenues and operatingresults are classified according to the country of origin.  Identifiable assets are attributed to thegeographic location in which they are located. Net sales, operating results andidentifiable assets by geographic region were as follows (in thousands):

8

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**Segment Information**

(In thousands)

 
| ** **                            | ** ** | **Three Months Ended April 30** | ** ** |
|---------------------------------------|------------|-----------------------------------------------------|------------|
| **2007**                              | ** ** | **North America**                              | ** ** | **Europe** | ** ** | **Asia Pacific** | ** ** | **China** | ** ** | **Eliminations** | ** ** | **Consolidation** | ** ** |
| Net sales                             |       | $                                                   | 71,382     |   | $ | 41,604 |   | $ | 13,795 |   | $ | 8,719 |   | $ | — |   | $ | 135,500 |   |
| Transfers between areas               |       | 8,309                                               |       | 324 |   | 70 |   | 2,669 |   | (11,372 | ) | — |   |
| Net sales and transfers               |       | $                                                   | 79,691     |   | $ | 41,928 |   | $ | 13,865 |   | $ | 11,388 |   | $ | (11,372 | ) | $ | 135,500 |   |
| Gross profit                          |       | $                                                   | 28,156     |   | $ | 7,605 |   | $ | 3,597 |   | $ | 3,871 |   |   |   | $ | 43,229 |   |
| Selling and  administrative           |       | 12,139                                              |       | 6,226 |   | 1,957 |   | 810 |   |   |   | 21,132 |   |
| Loss (gain) on  disposition of assets |       | (74                                                 | )          | 8 |   | — |   | 31 |   |   |   | (35 | ) |
| Amortization                          |       | 588                                                 |       | 205 |   | — |   | 5 |   |   |   | 798 |   |
| Insurance litigation  recovery, net   |       | (15,977                                             | )          | — |   | — |   | — |   |   |   | (15,977 | ) |
| Operating income                      |       | $                                                   | 31,480     |   | $ | 1,166 |   | $ | 1,640 |   | $ | 3,025 |   |   |   | $ | 37,311 |   |
| Total assets                          |       | $                                                   | 222,123    |   | $ | 122,363 |   | $ | 35,158 |   | $ | 41,047 |   |   |   | $ | 420,691 |   |
| Property, plant and  equipment, net   |       | $                                                   | 33,187     |   | $ | 36,373 |   | $ | 1,794 |   | $ | 15,369 |   |   |   | $ | 86,723 |   |
| Capital expenditures                  |       | $                                                   | 1,554      |   | $ | 818 |   | $ | 187 |   | $ | 2,690 |   |   |   | $ | 5,249 |   |
| Depreciation expense                  |       | $                                                   | 1,910      |   | $ | 1,225 |   | $ | 99 |   | $ | 245 |   |   |   | $ | 3,479 |   |
|                                  |       |                                                |       |   |   |   |   |   |   |   |   |   |   |

 
| ** **                            | ** ** | **Three Months Ended April 30** | ** ** |
|---------------------------------------|------------|-----------------------------------------------------|------------|
| **2006**                              | ** ** | **North America**                              | ** ** | **Europe** | ** ** | **Asia Pacific** | ** ** | **China** | ** ** | **Eliminations** | ** ** | **Consolidation** | ** ** |
| Net sales                             |       | $                                                   | 66,615     |   | $ | 33,221 |   | $ | 11,137 |   | $ | 6,801 |   | $ | — |   | $ | 117,774 |   |
| Transfers between areas               |       | 5,994                                               |       | 405 |   | 92 |   | 1,667 |   | (8,158 | ) | — |   |
| Net sales and transfers               |       | $                                                   | 72,609     |   | $ | 33,626 |   | $ | 11,229 |   | $ | 8,468 |   | $ | (8,158 | ) | $ | 117,774 |   |
| Gross profit                          |       | $                                                   | 25,958     |   | $ | 5,344 |   | $ | 2,749 |   | $ | 2,638 |   |   |   | $ | 36,689 |   |
| Selling and  administrative           |       | 11,468                                              |       | 5,852 |   | 1,948 |   | 584 |   |   |   | 19,852 |   |
| Loss (gain) on  disposition of assets |       | 4                                                   |       | (662 | ) | (4 | ) | — |   |   |   | (662 | ) |
| Amortization                          |       | 89                                                  |       | 207 |   | — |   | 6 |   |   |   | 302 |   |
| Operating income (loss)               |       | $                                                   | 14,397     |   | $ | (53 | ) | $ | 805 |   | $ | 2,048 |   |   |   | $ | 17,197 |   |
| Total assets                          |       | $                                                   | 207,837    |   | $ | 112,474 |   | $ | 31,266 |   | $ | 26,302 |   |   |   | $ | 377,879 |   |
| Property, plant and  equipment, net   |       | $                                                   | 34,351     |   | $ | 35,655 |   | $ | 1,548 |   | $ | 4,931 |   |   |   | $ | 76,485 |   |
| Capital expenditures                  |       | $                                                   | 2,003      |   | $ | 347 |   | $ | 71 |   | $ | 830 |   |   |   | $ | 3,251 |   |
| Depreciation expense                  |       | $                                                   | 2,041      |   | $ | 1,272 |   | $ | 104 |   | $ | 65 |   |   |   | $ | 3,482 |   |

9

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**Note 4—Goodwill**

The change in the amountof goodwill between April 30, 2007 and January 31, 2007 related entirelyto fluctuations in foreign currency. We have no goodwill recorded in China. Thefollowing table provides a breakdown of goodwill by geographic region (inthousands):
|               | ** ** | **April 30** | ** ** | **January 31** | ** ** |
|---------------|------------|-------------------|------------|---------------------|------------|
| ** **    | ** ** | **2007**          | ** ** | **2007**            | ** ** |
| North America |       | $                 | 89,721     |                | $          | 85,903 |   |
| Europe        |       | 11,052            |       | 10,598              |       |
| Asia Pacific  |       | 2,984             |       | 2,997               |       |
|          |       | $                 | 103,757    |                | $          | 99,498 |   |

 

**Note 5—Inventories**

Inventories stated at thelower of average cost or market are presented below by major class (inthousands).
|                                | ** ** | **April 30** | ** ** | **January 31** | ** ** |
|--------------------------------|------------|-------------------|------------|---------------------|------------|
| ** **                     | ** ** | **2007**          | ** ** | **2007**            | ** ** |
| Finished goods  and components |       | $                 | 38,351     |                | $          | 36,716 |   |
| Work in process                |       | 565               |       | 399                 |       |
| Raw materials                  |       | 24,352            |       | 21,165              |       |
|                           |       | $                 | 63,268     |                | $          | 58,280 |   |

 

**Note 6—Share-Based Compensation Plans**

We have granted two typesof awards, stock options and stock appreciation rights (SARS), under ourshare-based compensation plans to officers, key managers and directors. Stockoptions provide the holder the right to receive our common shares at anestablished price. SARS provide the holder the right to receive an amount,payable in our common shares, equal to the excess of the market value of ourcommon shares on the date of exercise (“intrinsic value”) over the base priceat the time the right was granted. The base price may not be less than themarket price of our common shares on the date of grant. The prices for all awardsare established by our Board of Directors’ Compensation Committee at the timethe awards are granted. All awards vest ratably over a four year period andhave a term of ten years.

We have reserved1,400,000 shares of common stock under our stock option plan. As of April 30,2007 a total of 908,000 shares have been issued upon the exercise of stockoptions.  No additional stock options canbe granted under the terms of the plan. The SARS plan provides for the issuanceof 750,000 shares of common stock upon the exercise of SARS of which 74,000shares have been issued at April 30, 2007. We issue new common shares upon theexercise of all awards.

A summary of the plans’status at April 30, 2007 together with changes during the three months thenended are presented in the following table (in thousands, except per shareamounts):
| ** **                   | ** ** | **Stock Options** | ** ** | **Stock Appreciation Rights** | ** ** |
|------------------------------|------------|------------------------|------------|-----------------------------------------|------------|
| ** **                   | ** ** | ** **             | ** ** | **Weighted Average**               | ** ** | ** ** | ** ** | **Weighted Average** | ** ** |
| ** **                   | ** ** | **Outstanding**        | ** ** | **Exercise Price**                 | ** ** | **Outstanding** | ** ** | **Exercise Price** | ** ** |
| ** **                   | ** ** | **Awards**             | ** ** | **Per Share**                      | ** ** | **Awards** | ** ** | **Per Share** | ** ** |
|                         |       |                   |       |                                    |       |   |   |   |   |
| Balance at  January 31, 2007 |       | 570                    |       | $                                       | 13.79      |   | 1,031 |   | $ | 31.56 |   |
| Granted                      |       | —                 |       | —                                  |       | — |   | — |   |
| Exercised                    |       | (101                   | )          | 14.07                                   |       | (11 | ) | 35.60 |   |
| Forfeited                    |       | (4                     | )          | 19.38                                   |       | (17 | ) | 36.18 |   |
|                         |       |                   |       |                                    |       |   |   |   |   |
| Balance at April 30,  2007   |       | 465                    |       | $                                       | 13.67      |   | 1,003 |   | $ | 31.44 |   |

 

We calculate share-basedcompensation cost using the Black-Scholes option pricing model.  Additional information regarding theassumptions used to calculate the fair value of our share-based compensationplans is presented in Note 2 to our consolidated financial statements includedin our Form 10-K for the year ended January 31, 2007.

As of April 30, 2007,there was $8.3 million of total unrecognized compensation cost related tononvested share-based compensation awards granted under the Plans, which isexpected to be recognized over a weighted average period of 2.4 years. Thefollowing table represents as of April 30, 2007 the share-based compensationcosts to be recognized in future periods (in thousands) for awards granted todate:
| Fiscal Year | ** ** | **Amount** | ** ** |
|------------------|------------|------------|------------|
| 2008             |       | $          | 2,975      |   |
| 2009             |       | 3,286      |       |
| 2010             |       | 1,714      |       |
| 2011             |       | 305        |       |
|             |       | $          | 8,280      |   |

 

10

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**Note 7—Commitments and Contingencies**

**Environmental Matters**

We are subject toenvironmental laws and regulations, which include obligations to remove ormitigate environmental effects of past disposal and release of certain wastesand substances at various sites. We record liabilities for affected sites whenenvironmental assessments indicate probable cleanup and the costs can bereasonably estimated. Other than for costs of assessments themselves, thetiming and amount of these liabilities is determined based on the estimatedcosts of remediation activities and our commitment to a formal plan of action,such as an approved remediation plan. The reliability and precision of the loss estimates are affected bynumerous factors, such as different stages of site evaluation and reevaluationof the degree of remediation required. We adjust our liabilities as newremediation requirements are defined, as information becomes availablepermitting reasonable estimates to be made and to reflect new and changingfacts.

It is reasonably possiblethat changes in estimates will occur in the near term and the relatedadjustments to environmental liabilities may have a material impact on our netincome. Unasserted claims are not currently reflected in our environmentalremediation liabilities. It is also reasonably possible that these claims mayalso have a material impact on our net income if asserted. We cannot estimateat this time the amount of any additional loss or range of loss that isreasonably possible.

Our specific environmentalmatters consist of the following:

*Fairview,Oregon*

In 1996, the OregonDepartment of Environmental Quality issued two Records of Decision affectingour Fairview, Oregon manufacturing facility. The Records of Decision requiredus to initiate remedial activities related to the cleanup of groundwatercontamination at and near the facility. Remediation activities have beenconducted since 1996 and current estimates provide for some level of activityto continue through 2019. Costs of certain remediation activities at thefacility are shared with The Boeing Company, with Cascade paying 70% of thesecosts. The recorded liability for ongoing remediation activities at ourFairview facility was $5.6 million and $5.9 million at April 30, 2007and January 31, 2007, respectively.

*Springfield,Ohio*

In 1994, we entered intoa consent order with the Ohio Environmental Protection Agency, which requiredthe installation of remediation systems for the cleanup of groundwatercontamination at our Springfield, Ohio facility. The current estimate is thatthe remediation activities will continue through 2013. The recorded liabilityfor ongoing remediation activities in Springfield was $1.0 million at bothApril 30, 2007 and January 31, 2007.

*InsuranceLitigation*

On April 9, 2007, weentered into a settlement agreement with Employers Reinsurance Corporation withrespect to litigation to recover various expenses incurred in connection withenvironmental and related proceedings. The recovery from the settlement, recorded during the three months endedApril 30, 2007 was $16.0 million, net of expenses.  In connection with the settlement, wereleased all rights we might have under insurance policies issued by EmployersReinsurance Corporation and certain related entities.  This concludes all litigation against ourinsurance companies with regard to environmental matters.

**LegalProceedings**

We are subject to legalproceedings, claims and litigation, in addition to the environmental matterspreviously discussed, arising in the ordinary course of business. While theoutcome of these matters is currently not determinable, management does notexpect the ultimate costs to be material to our consolidated financialposition, result of operations, or cash flows.

11

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**Note 8—Earnings Per Share**

The following table presents the calculation of basicand diluted earnings per share (in thousands, except per share amounts):
| ** **                                                      | ** ** | **Three Months Ended April 30** | ** ** |
|-----------------------------------------------------------------|------------|-----------------------------------------------------|------------|
| ** **                                                      | ** ** | **2007**                                            | ** ** | **2006** | ** ** |
| Basic earnings per  share:                                      |       |                                                |       |   |   |
| Net income                                                      |       | $                                                   | 23,796     |   | $ | 11,034 |   |
| Weighted average  shares of common stock outstanding            |       | 11,966                                              |       | 12,542 |   |
|                                                            |       | $                                                   | 1.99       |   | $ | 0.88 |   |
|                                                            |       |                                                |       |   |   |
| Diluted earnings per  share:                                    |       |                                                |       |   |   |
| Net income                                                      |       | $                                                   | 23,796     |   | $ | 11,034 |   |
| Weighted average  shares of common stock outstanding            |       | 11,966                                              |       | 12,542 |   |
| Dilutive effect  of stock options and stock appreciation rights |       | 579                                                 |       | 632 |   |
| Diluted weighted  average shares of common stock outstanding    |       | 12,545                                              |       | 13,174 |   |
|                                                            |       | $                                                   | 1.90       |   | $ | 0.84 |   |

 

Basic earnings per shareis based on the weighted average number of common shares outstanding for theperiod. Diluted weighted average common shares includes the incremental sharesthat would be issued upon the assumed exercise of stock options and stockappreciation rights.  All stock optionsand stock appreciation rights were included in our calculation of dilutedearnings per share because they were dilutive.

**Note 9—Supplemental Cash Flow Information**

The following tablepresents information that supplements the consolidated statements of cash flow(in thousands):
|                                                  | ** ** | **For the Three Months Ended April 30** | ** ** |
|--------------------------------------------------|------------|-----------------------------------------------------------------------|------------|
| ** **                                       | ** ** | **2007**                                                              | ** ** | **2006** | ** ** |
| Cash paid during  the period for:                |       |                                                                  |       |   |   |
| Interest                                         |       | $                                                                     | 775        |   | $ | 58 |   |
| Income taxes                                     |       | $                                                                     | 4,716      |   | $ | 3,477 |   |
|                                             |       |                                                                  |       |   |   |
| Supplemental  disclosure of noncash information: |       |                                                                  |       |   |   |
| Dividends  declared                              |       | $                                                                     | 1,886      |   | $ | 1,882 |   |

 

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**Note 10—Benefit Plans**

The following tablerepresents the net periodic cost related to our defined benefit plans inEngland and France and our postretirement benefit plan in the United States (inthousands):
| ** **                      | ** ** | **Defined Benefit**                            | ** ** | **Postretirement Benefit**                     | ** ** |
|---------------------------------|------------|-----------------------------------------------------|------------|-----------------------------------------------------|------------|
| ** **                      | ** ** | **Three Months Ended April 30** | ** ** | **Three Months Ended April 30** | ** ** |
| ** **                      | ** ** | **2007**                                            | ** ** | **2006**                                            | ** ** | **2007** | ** ** | **2006** | ** ** |
| Net periodic benefit  cost:     |       |                                                |       |                                                |       |   |   |   |   |
| Service cost                    |       | $                                                   | 14         |                                                | $          | 21 |   | $ | 30 |   | $ | 34 |   |
| Interest cost                   |       | 129                                                 |       | 125                                                 |       | 105 |   | 114 |   |
| Expected return  on plan assets |       | (125                                                | )          | (123                                                | )          | — |   | — |   |
| Recognized prior  service cost  |       | —                                              |       | —                                              |       | (19 | ) | (19 | ) |
| Recognized net  actuarial loss  |       | 22                                                  |       | 35                                                  |       | 48 |   | 111 |   |
|                            |       | $                                                   | 40         |                                                | $          | 58 |   | $ | 164 |   | $ | 240 |   |

 

**Note 11—Recent Accounting Pronouncements**

**FIN 48**- In June 2006, the FASB issued FASB Interpretation No. 48, “Accounting forUncertainty in Income Taxes” (FIN 48). This interpretation clarifies the accounting for uncertainty in incometaxes recognized in an enterprise’s financial statements in accordance withFASB Statement No. 109, “Accounting for Income Taxes.”

On February 1,2007, we adopted the provisions of FIN 48 which prescribes amore-likely-than-not threshold for financial statement recognition andmeasurement of a tax position taken or expected to be taken in a taxreturn.  This interpretation alsoprovides guidance on derecognition of income tax assets and liabilities,classification of current and deferred income tax assets and liabilities,accounting for interest and penalties associated with tax positions, accountingfor income taxes in interim periods and income tax disclosures.

As of February 1,2007, our liability for uncertain tax positions was $325,000.  As a result of the implementation of FIN 48,we recognized no material adjustment in the liability for uncertain taxpositions.  Our policy is to classifytax-related interest and penalties as income tax expense.

We file income taxreturns in the U.S. federal jurisdiction and various state and foreignjurisdictions. The Internal Revenue Service (IRS) is currently examining ourU.S. income tax return for fiscal year 2006. As of February 1, 2007, we remained subject to examination in thefollowing major tax jurisdictions for the tax years as indicated below:
| Jurisdiction                 | ** ** | **Open Fiscal Tax Years** |
|------------------------------|------------|---------------------------|
| United States -  federal     |       | 2003-2006                 |
| United States –  states |       | 2002-2006                 |
| Canada                       |       | 1999-2006                 |
| China                        |       | 1996-2006                 |
| Germany                      |       | 2002-2006                 |
| Italy                        |       | 2001-2006                 |
| The Netherlands              |       | 2001-2006                 |
| United Kingdom               |       | 1999-2006                 |

 

**SFAS 157**- In September 2006, the FASB issued SFAS No. 157 (SFAS 157), “Fair ValueMeasurements.” SFAS 157 provides a common definition of fair value, establishesa framework for measuring fair value and expands the related disclosurerequirements. Application of SFAS 157 is required for our financial statementsfor the fiscal year beginning February 1, 2008. We are currently evaluating the impact of SFAS 157 on our financialstatements.

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****SFAS 158**** - In September2006, the FASB issued SFAS No. 158 (SFAS 158), “Employers’ Accounting forDefined Benefit Pension and Other Postretirement Plans – an amendment of FASBStatements No. 87, 88, 106, and 132(R).” This statement requires balance sheet recognition of the overfunded orunderfunded status of pension and postretirement benefit plans. Under SFAS 158,actuarial gains and losses, prior service costs or credits, and any remainingtransition assets or obligations that have not been recognized under previousaccounting standards must be recognized in other comprehensive income, net oftax effects, until they are amortized as a component of net periodic benefitcost.  In addition, the measurement date,the date at which plan assets and the benefit obligation are measured, isrequired to be the company’s fiscal year end. Presently, we use aDecember 31 measurement date for the postretirement benefit plan, whichwill change to coincide with our January 31 fiscal year-end date.  As required by SFAS 158, we adopted thebalance sheet recognition provision as of January 31, 2007.  The measurement date provision is effectivefor the fiscal year beginning February 1, 2008. We are currently evaluating the impact of the measurement date provisionof SFAS 158 on our consolidated financial statements.

**SFAS 159**- In February 2007, the FASB issued SFAS No. 159 (SFAS 159), “The Fair ValueOption for Financial Assets and Financial Liabilities – Including an Amendmentof FASB Statement No. 115.”  SFAS 159allows companies the choice to measure many financial instruments and certainother items at fair value.  Applicationof SFAS 159 is required for our financial statements beginning February 1,2008.  We are currently reviewing the impactof this pronouncement on our consolidated financial statements.

**Note 12—Warranty Obligations**

We record a liability onour consolidated balance sheet for costs related to warranties with the salesof our products. This liability is estimated through historical customerclaims, product failure rates, material usage and service delivery costsincurred in correcting a product failure. Our warranty obligations, which arerecorded in other accrued expenses on the consolidated balance sheets, were asfollows (in thousands):
|                                                   | ** ** | **2007** | ** ** | **2006** | ** ** |
|---------------------------------------------------|------------|----------|------------|----------|------------|
| Balance at  January 31                            |       | $        | 1,754      |     | $          | 1,665 |   |
| Accruals for  warranties issued during the period |       | 645      |       | 715      |       |
| Accruals for  pre-existing warranties             |       | —   |       | (40      | )          |
| Settlements  during the period                    |       | (588     | )          | (598     | )          |
| Balance at April 30                               |       | $        | 1,811      |     | $          | 1,742 |   |

 

**Note 13—Accumulated Other Comprehensive Income(Loss)**

The following tablepresents the changes in and the components of accumulated other comprehensiveincome (in thousands):
|                              | ** ** | **Accumulated Other Comprehensive Income (Loss)** | ** ** |
|------------------------------|------------|-----------------------------------------------------------------------|------------|
| ** **                   | ** ** | **Translation Adjustment**                                       | ** ** | **Minimum Pension Liability  Adjustment** | ** ** | **Total** | ** ** |
| Balance at  January 31, 2007 |       | $                                                                     | 14,675     |   | $ | (2,381 | ) | $ | 12,294 |   |
| Translation  adjustment      |       | 7,465                                                                 |       | — |   | 7,465 |   |
| Balance at April 30,  2007   |       | $                                                                     | 22,140     |   | $ | (2,381 | ) | $ | 19,759 |   |

 

**Note 14—Gainon Sale of Assets**

During the first quarterof fiscal 2007, we recognized a $715,000 gain on the sale of our manufacturingfacility in Hoorn, The Netherlands. We had closed this facility in fiscal 2006.

**Note 15—SubsequentEvent**

**On May1, 2007, we purchased for $12 million the stock of American CompactionEquipment, a manufacturer of compaction wheel attachments located in San JuanCapistrano, California.**

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**Item 2. Management’sDiscussion and Analysis of Financial Condition and Results of Operations**

Our businesses globally manufacture and distributematerial handling load engagement products primarily for the lift truckindustry and to a lesser extent the construction industry.  We operate in four geographic segments:  North America, Europe, Asia Pacific andChina.  All references to fiscal periodsare defined as the quarter ended April 30, 2006 (fiscal 2007) and the quarterended April 30, 2007 (fiscal 2008).

**COMPARISONOF FIRST QUARTER OF FISCAL 2008 AND FISCAL 2007**

**Executive Summary**
|                             | ** ** | **Three Months Ended April 30**                   | ** ** | ** ** | ** ** | ** ** | ** ** |
|-----------------------------|------------|-----------------------------------------------------------------------|------------|------------|------------|------------|------------|
| ** **                  | ** ** | **2007**                                                              | ** ** | **2006**   | ** ** | **Change** | ** ** | **Change %** | ** ** |
| ** **                  | ** ** | **(In thousands, except per share amounts)** | ** ** | ** ** | ** ** |
|                        |       |                                                                  |       |       |       |       |       |   |   |
| Net sales                   |       | $                                                                     | 135,500    |       | $          | 117,774    |       | $ | 17,726 |   | 15 | % |
| Operating income            |       | $                                                                     | 37,311     |       | $          | 17,197     |       | $ | 20,114 |   | 117 | % |
| Net income                  |       | $                                                                     | 23,796     |       | $          | 11,034     |       | $ | 12,762 |   | 116 | % |
| Diluted earnings per  share |       | $                                                                     | 1.90       |       | $          | 0.84       |       | $ | 1.06 |   | 126 | % |

 

During the firstquarter of fiscal 2008 we recorded higher levels of net sales, operating incomeand net income in all geographic segments compared to the first quarter offiscal 2007.  This reflects the generalstrength of lift truck markets globally, where shipments were up 9% and theimpact of a prior year acquisition.

In addition, wesettled an insurance litigation matter during the first quarter of fiscal 2008which accounted for a $16 million increase to operating income compared to theprior year.  The calculated dilutedearnings per share, excluding the insurance litigation recovery is $1.07 forthe three months ended April 30, 2007 compared to $0.84 in the prior year.  We believe the exclusion of the insurancelitigation recovery provides a more appropriate comparison with prior yearresults.  The calculation of dilutedearnings per share excluding the insurance recovery is as follows (in thousands,except per share amount):
|                                                                      | ** ** | **Three months ended** | ** ** |
|----------------------------------------------------------------------|------------|----------------------------------|------------|
| ** **                                                           | ** ** | **April 30, 2007**     | ** ** |
|                                                                 |       |                             |       |
| Net income as  reported                                              |       | $                                | 23,796     |   |
| Less: insurance  litigation recovery, net of income taxes of $5,592  |       | (10,385                          | )          |
| Adjusted net  income, excluding insurance litigation recovery        |       | $                                | 13,411     |   |
|                                                                 |       |                             |       |
| Diluted weighted  average shares outstanding                         |       | 12,545                           |       |
|                                                                 |       |                             |       |
| Diluted earnings per  share, excluding insurance litigation recovery |       | $                                | 1.07       |   |

 

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**North America**
| ** **                            | ** ** | **Three Months Ended April 30** | ** ** | ** ** | ** ** | ** ** | ** ** |
|---------------------------------------|------------|-----------------------------------------------------|------------|------------|------------|------------|------------|
| ** **                            | ** ** | **2007**                                            | ** ** | **%**      | ** ** | **2006**   | ** ** | **%** | ** ** | **Change** | ** ** | **Change %** | ** ** |
| ** **                            | ** ** | **(In thousands)**                             | ** ** | ** ** | ** ** | ** ** | ** ** |
| Net sales                             |       | $                                                   | 71,382     |       | 100        | %          | $          | 66,615 |   | 100 | % | $ | 4,767 |   | 7 | % |
| Cost of goods sold                    |       | 43,226                                              |       | 61         | %          | 40,657     |       | 61 | % | 2,569 |   | 6 | % |
| Gross profit                          |       | 28,156                                              |       | 39         | %          | 25,958     |       | 39 | % | 2,198 |   | 8 | % |
|                                  |       |                                                |       |       |       |       |       |   |   |   |   |   |   |
| Selling and  administrative           |       | 12,139                                              |       | 17         | %          | 11,468     |       | 17 | % | 671 |   | 6 | % |
| Loss (gain) on  disposition of assets |       | (74                                                 | )          | —     |       | 4          |       | — |   | (78 | ) | — |   |
| Amortization                          |       | 588                                                 |       | —     |       | 89         |       | — |   | 499 |   | — |   |
| Insurance litigation  recovery, net   |       | (15,977                                             | )          | (22        | )%         | —     |       | — |   | (15,977 | ) | — |   |
|                                  |       |                                                |       |       |       |       |       |   |   |   |   |   |   |
| Operating income                      |       | $                                                   | 31,480     |       | 44         | %          | $          | 14,397 |   | 22 | % | $ | 17,083 |   | 119 | % |

 

The following arefinancial highlights for North America for the first quarter of fiscal 2008 ascompared to the first quarter of fiscal 2007:

·                  Highersales in fiscal 2008 are the result of the acquisition of Pacific Services& Manufacturing, Inc. (PSM) made in the fourth quarter of fiscal 2007.

·                  NorthAmerica lift truck industry shipments decreased 8% for the first quarter offiscal 2008 compared to the first quarter of fiscal 2007.  We have found that lift truck industrystatistics provide an indication of the direction of our businessactivity.  However, changes in our netsales do not correspond directly to the percentage changes in lift truck industryshipments.

·                  Ourgross profit percentage remained consistent during fiscal 2008 compared tofiscal 2007.  We have been able to offsetthe effect of general and material cost increases through either cost reductionactivities or sales price increases.

·                  Sellingand administrative costs increased due to the PSM acquisition and general costincreases.

·                  Higheramortization costs in fiscal 2008 relate to amortization of intangible assetsrelated to our PSM acquisition.

·                  Duringthe first quarter of fiscal 2008, we entered into a settlement agreement withEmployers Reinsurance Corporation with respect to litigation to recover variouscosts incurred in connection with environmental and related proceedings.  The recovery from this settlement was $16.0million, net of expenses.

**Europe**
| ** **                            | ** ** | **Three Months Ended April 30** | ** ** | ** ** | ** ** | ** ** | ** ** |
|---------------------------------------|------------|-----------------------------------------------------|------------|------------|------------|------------|------------|
| ** **                            | ** ** | **2007**                                            | ** ** | **%**      | ** ** | **2006**   | ** ** | **%** | ** ** | **Change** | ** ** | **Change %** | ** ** |
| ** **                            | ** ** | **(In thousands)**                             | ** ** | ** ** | ** ** | ** ** | ** ** |
| Net sales                             |       | $                                                   | 41,604     |       | 100        | %          | $          | 33,221 |   | 100 | % | $ | 8,383 |   | 25 | % |
| Cost of goods sold                    |       | 33,999                                              |       | 82         | %          | 27,877     |       | 84 | % | 6,122 |   | 22 | % |
| Gross profit                          |       | 7,605                                               |       | 18         | %          | 5,344      |       | 16 | % | 2,261 |   | 42 | % |
|                                  |       |                                                |       |       |       |       |       |   |   |   |   |   |   |
| Selling and  administrative           |       | 6,226                                               |       | 15         | %          | 5,852      |       | 18 | % | 374 |   | 6 | % |
| Loss (gain) on  disposition of assets |       | 8                                                   |       | —     |       | (662       | )          | (2 | )% | 670 |   | — |   |
| Amortization                          |       | 205                                                 |       | —     |       | 207        |       | — |   | (2 | ) | — |   |
|                                  |       |                                                |       |       |       |       |       |   |   |   |   |   |   |
| Operating income (loss)               |       | $                                                   | 1,166      |       | 3          | %          | $          | (53 | ) | — |   | $ | 1,219 |   | — |   |

 

The following arefinancial highlights for Europe for the first quarter of fiscal 2008 ascompared to the first quarter of fiscal 2007:

·                  Duringfiscal 2008, sales increased 16%, excluding currency changes.

16

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·                  Europeanlift truck industry shipments increased 23% in the first quarter of fiscal 2008compared to the prior year.  We believewe have maintained our overall existing market share in Europe during the firstquarter of fiscal 2008.

·                  Ourgross profit percentage in fiscal 2008 increased to 18% from 16% in the prioryear.  In the current year, we receivedthe benefit of better overhead cost absorption with increased sales andimproved manufacturing efficiencies.

·                  Excludingthe impact of currency changes, selling and administrative expenses decreased3% in Europe, primarily due to lower warranty costs in the current year.

·                  Gainon disposition of assets in fiscal 2007 primarily relates to the sale of ourmanufacturing facility in Hoorn, The Netherlands.

**Asia Pacific**
|                                | ** ** | **Three Months Ended April 30** | ** ** | ** ** | ** ** | ** ** | ** ** |
|--------------------------------|------------|-----------------------------------------------------|------------|------------|------------|------------|------------|
| ** **                     | ** ** | **2007**                                            | ** ** | **%**      | ** ** | **2006**   | ** ** | **%** | ** ** | **Change** | ** ** | **Change %** | ** ** |
| ** **                     | ** ** | **(In thousands)**                             | ** ** | ** ** | ** ** | ** ** | ** ** |
| Net sales                      |       | $                                                   | 13,795     |       | 100        | %          | $          | 11,137 |   | 100 | % | $ | 2,658 |   | 24 | % |
| Cost of goods  sold            |       | 10,198                                              |       | 74         | %          | 8,388      |       | 75 | % | 1,810 |   | 22 | % |
| Gross profit                   |       | 3,597                                               |       | 26         | %          | 2,749      |       | 25 | % | 848 |   | 31 | % |
|                           |       |                                                |       |       |       |       |       |   |   |   |   |   |   |
| Selling and  administrative    |       | 1,957                                               |       | 14         | %          | 1,948      |       | 18 | % | 9 |   | — |   |
| Gain on  disposition of assets |       | —                                              |       | —     |       | (4         | )          | — |   | 4 |   | — |   |
|                           |       |                                                |       |       |       |       |       |   |   |   |   |   |   |
| Operating income               |       | $                                                   | 1,640      |       | 12         | %          | $          | 805 |   | 7 | % | $ | 835 |   | 104 | % |

 

The following arefinancial highlights for Asia Pacific for the first quarter of fiscal 2008 ascompared to the first quarter of fiscal 2007:

·                  Excludingcurrency changes, net sales increased 22% during fiscal 2008 compared to theprior year.  This increase occurred throughoutthe region, but sales were particularly strong in Korea and Japan.

·                  Lifttruck industry shipments in Asia Pacific increased 2% in the first quarter offiscal 2008.

·                  Thegross profit percentage in Asia Pacific for fiscal 2008 was 26%, an increase of1% over the prior year.  The sourcing oflower cost product from China is the primary reason for the gross profitpercentage increase.

·                  Sellingand administration costs decreased 2%, excluding the impact of currencychanges, due to a general reduction in overall costs in the current year.

**China**
|                                | ** ** | **Three Months Ended April 30** | ** ** | ** ** | ** ** | ** ** | ** ** |
|--------------------------------|------------|-----------------------------------------------------|------------|------------|------------|------------|------------|
| ** **                     | ** ** | **2007**                                            | ** ** | **%**      | ** ** | **2006**   | ** ** | **%** | ** ** | **Change** | ** ** | **Change %** | ** ** |
| ** **                     | ** ** | **(In thousands)**                             | ** ** | ** ** | ** ** | ** ** | ** ** |
| Net sales                      |       | $                                                   | 8,719      |       | 100        | %          | $          | 6,801 |   | 100 | % | $ | 1,918 |   | 28 | % |
| Cost of goods  sold            |       | 4,848                                               |       | 56         | %          | 4,163      |       | 61 | % | 685 |   | 16 | % |
| Gross profit                   |       | 3,871                                               |       | 44         | %          | 2,638      |       | 39 | % | 1,233 |   | 47 | % |
|                           |       |                                                |       |       |       |       |       |   |   |   |   |   |   |
| Selling and  administrative    |       | 810                                                 |       | 9          | %          | 584        |       | 9 | % | 226 |   | 39 | % |
| Loss on  disposition of assets |       | 31                                                  |       | —     |       | —     |       | — |   | 31 |   | — |   |
| Amortization                   |       | 5                                                   |       | —     |       | 6          |       | — |   | (1 | ) | — |   |
|                           |       |                                                |       |       |       |       |       |   |   |   |   |   |   |
| Operating income               |       | $                                                   | 3,025      |       | 35         | %          | $          | 2,048 |   | 30 | % | $ | 977 |   | 48 | % |

 

The following arefinancial highlights for China for the first quarter of fiscal 2008 as comparedto the first quarter of fiscal 2007:

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·                  Duringfiscal 2008, sales increased 24%, excluding the impact of currency changes.

·                  Lifttruck shipments in China increased 23% in the current year.

·                  Currentyear gross profit percentage increased to 44% from 39% in the prior year.  This increase primarily reflects the benefitof sourcing certain raw materials and components from within China.

·                  Excludingthe impact of currency changes, selling and administration costs increased 35%due to additional costs to support our expanding operations in China.  As a percentage of net sales, selling andadministration costs are consistent at 9% for both fiscal 2008 and 2007.

**Non-Operating Items**

The effective tax rate remained consistent at 35% inthe first quarter of fiscal 2008 compared to the prior year.

**Lift Truck Market Outlook**

Based on our review of preliminary industry data we believethe general lift truck market outlook for the remainder of fiscal 2008 is asfollows:

·                  Industryestimates are for the market in North America to be down 7% for fiscal 2008compared to the prior year.

·                  Europe willcontinue to grow but at a more modest rate than experienced for the firstquarter.

·                  The market inAsia Pacific will remain at the current levels through the remainder of theyear.

·                  The market inChina will continue to experience robust growth through the remainder of theyear.

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**CASH FLOWS**

The statements of cash flows reflect the changes incash and cash equivalents for the three months ended April 30, 2007 andApril 30, 2006 by classifying transactions into three major categories ofactivities: operating, investing and financing.

**Operating**

Our primary source of liquidity is cash generated fromoperating activities. This consists of net income adjusted for noncashoperating items such as depreciation and amortization, losses and gains ondisposition of assets, share-based compensation, deferred income taxes andchanges in operating assets and liabilities.

Net cash provided by operating activities fromcontinuing operations was $23.1 million in the first three months offiscal 2008 compared to $6.6 million for the same period in fiscal 2007.The increase in cash provided by operating activities in fiscal 2008 was due toan increase in net income, proceeds from the insurance litigation recovery, andchanges in accounts payable, accrued expenses and income taxes payable.  This increase was partially offset by changesin accounts receivable and inventory.

**Investing**

Our capital expenditures are primarily for equipmentand tooling related to product improvements, more efficient production methods,expansion of production capacity and replacement for normal wear and tear.Capital expenditures by geographic segments were as follows (in thousands):
|               | ** ** | **Three Months Ended** | ** ** |
|---------------|------------|----------------------------------|------------|
| ** **    | ** ** | **April 30**                | ** ** |
| ** **    | ** ** | **2007**                         | ** ** | **2006** | ** ** |
|          |       |                             |       |   |   |
| North America |       | $                                | 1,554      |   | $ | 2,003 |   |
| Europe        |       | 818                              |       | 347 |   |
| Asia Pacific  |       | 187                              |       | 71 |   |
| China         |       | 2,690                            |       | 830 |   |
|          |       | $                                | 5,249      |   | $ | 3,251 |   |

 

We expect capital expenditures for the rest of fiscal2008 to approximate depreciation expense, excluding expenditures related to ourexpansion plans in China.  The increasein capital expenditures in China is the result of the continued expansion ofour Chinese operations.  We currentlyanticipate additional investments of $3 million in China in fiscal 2008 underour current plan.  Depreciation expensefor the first three months in fiscal 2008 and fiscal 2007 was $3.5 millionfor both periods.

**Financing**

We declared dividends totaling $0.16 and $0.15 pershare during the first three months of fiscal 2008 and 2007, respectively.  The dividend of $0.16 per share declared byour Board of Directors on April 5, 2007 was paid on May 18, 2007.  A dividend payable of $1.9 million isrecorded on our consolidated balance sheet as of April 30, 2007 and presentedas a noncash item in Note 9 to the consolidated financial statements, in thisForm 10-Q.

The issuance of common stock related to the exerciseof stock options and stock appreciation rights generated $1.4 million and$110,000 of cash for the first three months ended April 30, 2007 and 2006,respectively.

We paid $24.5 million to repurchase common stockduring the first three months of fiscal 2008.

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**FINANCIALCONDITION AND LIQUIDITY**

Our working capital, defined as current assets lesscurrent liabilities, at April 30, 2007 was $122.7 million as compared to$113.1 million at January 31, 2007. Our current ratio at April 30, 2007was consistent at 2.6 to 1 compared to January 31, 2007.

Total outstanding debt, including notes payable tobanks at April 30, 2007 was $54.7 million as compared to $51.1 million atJanuary 31, 2007.  Our debtagreements contain covenants relating to net worth and leverage ratios. We werein compliance with these covenants at April 30, 2007.  Borrowing arrangements currently in placewith commercial banks provide lines of credit totaling $125 million, ofwhich $54.7 million was outstanding and $3.3 million was used to issue lettersof credit at April 30, 2007.  The linesof credit expire on December 7, 2011. The interest rates on the lines of credit were 6.07% at April 30, 2007and 6.06% at January 31, 2007.  Averageinterest rates on notes payable to banks were 3.1% at April 30, 2007 and 4.9%at January 31, 2007.

Our current plans are to fund our existingpostretirement obligation as costs are incurred.  Any defined benefit obligations will befunded to meet minimum statutory funding requirements or any additional fundingrequirements which we have committed to in specific plan agreements.  Currently, these additional fundingrequirements are limited to annual contributions of $400,000 through fiscalyear 2011 to a defined benefit plan in England. During the first quarter of fiscal 2008, we made our second annualcontribution to this defined benefit plan.

On September 5, 2006, our Board of Directorsauthorized a share repurchase program of up to $80 million over a two yearperiod.  During the three months endedApril 30, 2007, we repurchased and retired 389,000 shares of common stock.  Under the current program, as of April 30,2007, we have repurchased and retired a total of 1.1 million shares of commonstock for $61 million.

We believe that our cash and cash equivalents,existing credit facilities and cash flows from operations will be sufficient tosatisfy our expected working capital, capital expenditure, acquisition, sharebuyback and debt retirement requirements for the next twelve months.

**OTHERMATTERS**

The U.S. dollar weakened in the first three months offiscal 2008 in comparison to most foreign currencies used by our significantforeign operations, which are the Euro, Canadian Dollar and British Pound.  As a result, foreign currency translation adjustmentsincreased shareholders’ equity by $7.5 million in the first three months offiscal 2008.

**CRITICAL ACCOUNTING POLICIES AND ESTIMATES**

Our discussion and analysis of financial position andresults of operations is based on our consolidated financial statements whichhave been prepared in accordance with generally accepted accounting principlesin the United States of America (GAAP). The preparation of these financial statements requires us to makeestimates and judgments that affect the reported amounts of assets,liabilities, revenues and expenses and the disclosure of contingent assets andliabilities.  We evaluate our estimatesand judgments on an on-going basis, including those related to uncollectiblereceivables, inventories, goodwill and long-lived assets, warranty obligations,environmental liabilities and deferred taxes. We base our estimates on historical experience and various otherassumptions that we believe to be reasonable under the circumstances.  Actual results may differ from these estimatesunder different assumptions or conditions. A description of our critical accounting policies and related judgmentsand estimates that affect the preparation of our consolidated financialstatements is set forth in our Annual Report on Form 10-K for the year endedJanuary 31, 2007.

**OFFBALANCE SHEET ARRANGEMENTS**

At April 30, 2007, we did not have any relationshipswith unconsolidated entities or financial partnerships, such as entities oftenreferred to as structured finance or special purpose entities, which would havebeen established

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forthe purpose of facilitating off-balance sheet arrangements or for othercontractually narrow or limited purposes. As such, we are not materiallyexposed to any financing, liquidity market or credit risk that could arise ifwe had engaged in such relationships.

**RECENTACCOUNTING PRONOUNCEMENTS**

**FIN 48**- In June 2006, the FASB issued FASB Interpretation No. 48, “Accounting forUncertainty in Income Taxes” (FIN 48). This interpretation clarifies the accounting for uncertainty in incometaxes recognized in an enterprise’s financial statements in accordance withFASB Statement No. 109, “Accounting for Income Taxes.”

On February 1,2007, we adopted the provisions of  FIN48, which  prescribes amore-likely-than-not threshold for financial statement recognition andmeasurement of a tax position taken or expected to be taken in a taxreturn.  This interpretation alsoprovides guidance on derecognition of income tax assets and liabilities,classification of current and deferred income tax assets and liabilities,accounting for interest and penalties associated with tax positions, accountingfor income taxes in interim periods and income tax disclosures.

As of February 1,2007, our liability for uncertain tax positions was $325,000.  As a result of the implementation of FIN 48,we recognized no material adjustment in the liability for uncertain taxpositions.  Our policy is to classifytax-related interest and penalties as income tax expense.

We file income taxreturns in the U.S. federal jurisdiction and various state and foreignjurisdictions. The Internal Revenue Service (IRS) is currently examining ourU.S. income tax return for fiscal year 2006. As of February 1, 2007, we remained subject to examination in thefollowing major tax jurisdictions for the tax years as indicated below:
| Jurisdiction                | ** ** | **Open Fiscal Tax Years** | ** ** |
|-----------------------------|------------|------------------------------------------|------------|
| United States - federal     |       | 2003-2006                                |       |
| United States – states |       | 2002-2006                                |       |
| Canada                      |       | 1999-2006                                |       |
| China                       |       | 1996-2006                                |       |
| Germany                     |       | 2002-2006                                |       |
| Italy                       |       | 2001-2006                                |       |
| The Netherlands             |       | 2001-2006                                |       |
| United Kingdom              |       | 1999-2006                                |       |

 

****SFAS 157****- In September2006, the FASB issued SFAS No. 157 (SFAS 157), “Fair Value Measurements.” SFAS157 provides a common definition of fair value, establishes a framework formeasuring fair value and expands the related disclosure requirements.Application of SFAS 157 is required for our financial statements for the fiscalyear beginning February 1, 2008.  We arecurrently evaluating the impact of SFAS 157 on our financial statements.

****SFAS 158**** - In September2006, the FASB issued SFAS No. 158 (SFAS 158), “Employers’ Accounting forDefined Benefit Pension and Other Postretirement Plans – an amendment of FASBStatements No. 87, 88, 106, and 132(R).” This statement requires balance sheet recognition of the overfunded orunderfunded status of pension and postretirement benefit plans. Under SFAS 158,actuarial gains and losses, prior service costs or credits, and any remainingtransition assets or obligations that have not been recognized under previousaccounting standards must be recognized in other comprehensive income, net oftax effects, until they are amortized as a component of net periodic benefitcost.  In addition, the measurement date,the date at which plan assets and the benefit obligation are measured, isrequired to be the company’s fiscal year end. Presently, we use aDecember 31 measurement date for our postretirement benefit plan, whichwill change to coincide with our January 31 fiscal year-end date.  As required by SFAS 158, we adopted thebalance sheet recognition provision as of January 31, 2007.  The measurement date provision is effectivefor the fiscal year beginning February 1, 2008. We are currently evaluating the impact of the measurement date provisionof SFAS 158 on our consolidated financial statements.

**SFAS 159**– In February 2007, the FASB issued SFAS No. 159 (SFAS 159), “The Fair ValueOption for Financial Assets and Financial Liabilities – Including an Amendmentof FASB Statement No. 115.”  SFAS 159 allowscompanies the choice to measure many financial instruments and certain otheritems at fair value.  Application of SFAS159 is required for our financial statements beginning February 1, 2008.  We are currently reviewing the impact of thispronouncement on our consolidated financial statements.

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**Item 3.Quantitative and Qualitative Disclosures About Market Risk**

Market risk is thepotential loss arising from adverse changes in market rates and prices, such asforeign currency exchange rate and interest rate fluctuations. A significantportion of our revenues and expenses are denominated in foreign currencies. Asa result, our operating results could become subject to significantfluctuations based upon changes in the exchange rates of the foreign currenciesin relation to the U.S. dollar.

The table belowillustrates the hypothetical increase in net sales for the first quarter offiscal 2008 resulting from a 10% weaker U.S. dollar during the quarter,measured against foreign currencies that affect our operations (in millions):
| Euro                                                           |   | $   | 3.2    |   |
|----------------------------------------------------------------|--------|-----|--------|--------|
| Chinese yuan                                                   |   | 0.9 |   |
| British pound                                                  |   | 0.8 |   |
| Canadian dollar                                                |   | 0.6 |   |
| Other currencies  (representing 11% of consolidated net sales) |   | 1.5 |   |

 

A 10% weaker U.S. dollarduring the quarter, measured against foreign currencies that affect ouroperations, would have an immaterial impact on our operating income.

We enter into foreigncurrency forward exchange contracts to offset the impact of currencyfluctuations on certain nonfunctional currency assets and liabilities. Theprincipal currencies hedged are denominated in Japanese yen, Canadian dollars,Euros and British pounds. Our foreign currency forward exchange contracts haveterms lasting up to six months, but generally less than one month. We do notenter into derivatives or other financial instruments for trading orspeculative purposes.

A majority of ourproducts are manufactured using steel as a primary raw material and steel basedcomponents as purchased parts. As such, our cost of goods sold is sensitive tofluctuations in steel prices, either directly through the purchase of steel asraw material or indirectly through the purchase of steel based components.Presuming that the full impact of commodity steel cost increases is reflectedin all steel and steel based component purchases, we estimate our gross profitpercentage sensitivity to be approximately 0.3% for each 1.0% increase incommodity steel cost without offsetting sales price increases. For example, ifthe price of commodity steel increases 1.0%, and the full impact of thatincrease is reflected in all raw material and component purchases, the netdecrease in the gross profit percentage would be approximately 0.3%. Based onour statement of income for the quarter ended April 30, 2007, a 1% increase incommodity steel costs without offsetting sales price increases would havedecreased consolidated gross profit by approximately $369,000.

To date we have been ableto mitigate the effect of a portion of steel cost increases on our grossprofit. This has been done through price increases and production costreductions. We intend to continue our efforts to mitigate the impact of anyadditional steel cost increases. There may be some time lag between theabsorption of the steel cost increases and realizing the offsetting benefits ofthe mitigating measures. It should be noted that there is no assurance that wecan fully mitigate all future steel cost increases through price increases andother measures and actual cost increases from steel suppliers could differ fromcost increases that have been previously communicated.

Manufacturing of ourproducts includes the purchase of various raw materials and components. Certainof these items are provided worldwide by a limited number of suppliers. We arenot currently experiencing shortages in obtaining the raw materials andcomponents. However, certain steel products obtained in Europe are subject toallocations from suppliers. At this time, we believe the current allocation ofthese products from suppliers is sufficient to meet planned production volumes.Nevertheless, there can be no assurance that these suppliers will be able tomeet our future requirements. An extended delay or interruption in the supplyof any components could have a material adverse effect on our business, resultsof operations and financial condition. We are working to identify alternativesupplier sources for these products.

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**Item4. Controls and Procedures**

*Evaluationof Disclosure Controls and Procedures*

Our management hasevaluated, under the supervision and with the participation of our chiefexecutive officer and chief financial officer, the effectiveness of ourdisclosure controls and procedures as of the end of the period covered by thisreport pursuant to Rule 13a-15(b) under the Securities ExchangeAct of 1934 (the “Exchange Act”). Based on that evaluation, our chief executiveofficer and chief financial officer have concluded that, as of the end of theperiod covered by this report, our disclosure controls and procedures areeffective in ensuring that information required to be disclosed in our ExchangeAct reports is (1) recorded, processed, summarized and reported in atimely manner, and (2) accumulated and communicated to our management,including our chief executive officer and chief financial officer, asappropriate to allow timely decisions regarding required disclosure.

*Changesin Internal Control Over Financial Reporting*

There has been no changein the internal control over financial reporting that occurred during the threemonths ended April 30, 2007 that has materially affected, or is reasonablylikely to materially affect, our internal control over financial reporting.

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**PART II—OTHER INFORMATION**

**Item1. Legal Proceedings**

None

**Item1A. Risk Factors**

There are no materialchanges from risk factors previously disclosed in our Form 10-K forthe year ended January 31, 2007.

**Item2. Unregistered Sales of Equity Securities and Use of Proceeds**

The table belowsummarizes information about our purchases of our common shares during thethree months ended April 30, 2007.
| ** **                   | ** ** | ** **                    | ** ** | ** **                       | ** ** | **Total Number of**                 | ** ** | **Maximum Dollar Value**             | ** ** |
|------------------------------|------------|-------------------------------|------------|----------------------------------|------------|-----------------------------------------------|------------|------------------------------------------------|------------|
| ** **                   | ** ** | ** **                    | ** ** | ** **                       | ** ** | **Shares Purchased as**             | ** ** | **of Shares that May Yet** | ** ** |
| ** **                   | ** ** | **Total Number of** | ** ** | **Average Price Paid** | ** ** | **Part of Publicly Announced** | ** ** | **be Purchased Under the**      | ** ** |
| **Period**                   | ** ** | **Shares Purchased**     | ** ** | **Per Share**               | ** ** | **Plans or Programs**               | ** ** | **Plans or Programs**                | ** ** |
| February 1 - 28, 2007        |       | 157,719                       |       | $                                | 55.24      |                                          | 157,719    |                                           | $          | 32,470,000 |   |
| March 1 - 31, 2007           |       | 177,136                       |       | 57.45                            |       | 177,136                                       |       | 22,293,000                                     |       |
| April 1 - 30, 2007           |       | 53,661                        |       | 62.01                            |       | 53,661                                        |       | 18,965,000                                     |       |
|                         |       |                          |       |                             |       |                                          |       |                                           |       |
| Quarter ended April 30, 2007 |       | 388,516                       |       | $                                | 57.18      |                                          | 388,516    |                                           |       |   |
|                              |            |                               |            |                                  |            |                                               |            |                                                |            |  |  |

 

**Item3. Defaults Upon Senior Securities**

None

**Item4. Submission of Matters to a Vote of Security Holders**

None

**Item5. Other Information**

None

**Item6. Exhibits**

The following exhibitsare included with this report:
| Exhibit No. | ** ** | **Description**                                                                                                |
|-------------|------------|----------------------------------------------------------------------------------------------------------------|
| 31.1        |       | Certification of Chief Executive Officer of Cascade  Corporation.                                              |
| 31.2        |       | Certification of Chief Financial Officer of Cascade  Corporation.                                              |
| 32          |       | Certification of Chief Executive Officer and Chief  Financial Officer pursuant to 18 U.S.C. Section 1350. |

 

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**SIGNATURES**

Pursuant to therequirements of the Securities Exchange Act of 1934, the registrant has dulycaused this report to be signed on its behalf by the undersigned thereunto dulyauthorized.
|              |     | CASCADE CORPORATION                                                                                 |
|--------------|----------|-----------------------------------------------------------------------------------------------------|
| June 8, 2007 |     |                                                                                                |
|         |     |                                                                                                |
|         |     | /s/ RICHARD S.  ANDERSON                                                                            |
|         |     | Richard S.  Anderson                                                                                |
|         | * * | *Senior  Vice President and  Chief Financial Officer  (Principal Financial and Accounting Officer)* |

 

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**EXHIBITINDEX**
| Exhibit No. | ** ** | **Description**                                                                                               |
|------------------|------------|---------------------------------------------------------------------------------------------------------------|
| 31.1             |       | Certification of Chief Executive Officer                                                                      |
| 31.2             |       | Certification of Chief Financial Officer                                                                      |
| 32               |       | Certification of Chief Executive Officer and Chief  Financial Officer pursuant to 18 U.S.C. Section 1350 |

 

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