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UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

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FORM 10-Q

|/x/ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|--- | ---------------------------------------------------------------------------------------

For the Quarterly Period Ended October 31, 2001

|/ / | 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

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CASCADE CORPORATION(Exact name of registrant as specified in its charter)

Oregon(State or other jurisdiction of
incorporation or organization)

93-0136592(I.R.S. Employer Identification No.)2201 N.E. 201st Ave.
Fairview, Oregon(Address of principal executive office)

97024-9718(Zip Code)


Registrant's telephone number, including area code:(503) 669-6300

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

The
number of shares outstanding of the registrant's common stock as of October 31, 2001 was 11,312,890.

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PART I FINANCIAL INFORMATION

Item 1. Financial Statements

CASCADE CORPORATION        CONSOLIDATED BALANCE SHEET        (in thousands except share and per share data)

|                                                                                                                    |                                                                                | October 31
2001                                     |         | January 31
2001 |        
|------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------ | --------------------------------------------------- | ------- | --------------- | -------
|
|ASSETS                                                                                                              |                                                                                |                                                     |         |                 |        
|Current assets:                                                                                                     |                                                                                |                                                     |         |                 |        
|                                                                                                                    | Cash and cash equivalents                                                      |                                                     | $       | 19,473          |        
|                                                                                                                    | Accounts receivable, less allowance for doubtful accounts of $1,431 and $1,574 |                                                     |         | 48,281          |        
|                                                                                                                    | Inventories                                                                    |                                                     |         | 36,618          |        
|                                                                                                                    | Deferred income taxes                                                          |                                                     |         | 2,177           |        
|                                                                                                                    | Prepaid expenses and other                                                     |                                                     |         | 4,504           |        
|                                                                                                                    |                                                                                |                                                     |         |                 |        
|                                                                                                                    |                                                                                | Total current assets                                |         |                 | 111,053
|Property, plant and equipment, net                                                                                  |                                                                                |                                                     | 71,679  |                 |        
|Goodwill, net                                                                                                       |                                                                                |                                                     | 61,815  |                 |        
|Deferred income taxes                                                                                               |                                                                                |                                                     | 11,044  |                 |        
|Other assets                                                                                                        |                                                                                |                                                     | 10,223  |                 |        
|                                                                                                                    |                                                                                |                                                     |         |                 |        
|                                                                                                                    |                                                                                | Total assets                                        |         | $               | 265,814
|                                                                                                                    |                                                                                |                                                     |         |                 |        
|LIABILITIES AND SHAREHOLDERS' EQUITY                                                                                |                                                                                |                                                     |         |                 |        
|Current liabilities:                                                                                                |                                                                                |                                                     |         |                 |        
|                                                                                                                    | Notes payable to banks                                                         |                                                     | $       | 2,124           |        
|                                                                                                                    | Current portion of long-term debt                                              |                                                     |         | 828             |        
|                                                                                                                    | Accounts payable                                                               |                                                     |         | 15,182          |        
|                                                                                                                    | Accrued payroll and payroll taxes                                              |                                                     |         | 6,416           |        
|                                                                                                                    | Accrued environmental expenses                                                 |                                                     |         | 865             |        
|                                                                                                                    | Other accrued expenses                                                         |                                                     |         | 10,647          |        
|                                                                                                                    |                                                                                |                                                     |         |                 |        
|                                                                                                                    |                                                                                | Total current liabilities                           |         |                 | 36,062 
|Long-term debt                                                                                                      |                                                                                |                                                     | 77,970  |                 |        
|Accrued environmental expenses                                                                                      |                                                                                |                                                     | 10,450  |                 |        
|Deferred income taxes                                                                                               |                                                                                |                                                     | 2,613   |                 |        
|Other liabilities                                                                                                   |                                                                                |                                                     | 4,873   |                 |        
|                                                                                                                    |                                                                                |                                                     |         |                 |        
|                                                                                                                    |                                                                                | Total liabilities                                   |         |                 | 131,968
|                                                                                                                    |                                                                                |                                                     |         |                 |        
|Exchangeable convertible preferred stock and minority interest                                                      |                                                                                |                                                     | 11,374  |                 |        
|                                                                                                                    |                                                                                |                                                     |         |                 |        
|Shareholders' equity:                                                                                               |                                                                                |                                                     |         |                 |        
|Common stock, $.50 par value, authorized 20,000,000 shares; 11,312,890 and 11,439,890 shares issued and outstanding |                                                                                |                                                     | 5,656   |                 |        
|Additional paid-in capital                                                                                          |                                                                                |                                                     |        |                 |        
|Retained earnings                                                                                                   |                                                                                |                                                     | 144,166 |                 |        
|Accumulated other comprehensive loss:                                                                               |                                                                                |                                                     |         |                 |        
|                                                                                                                    |                                                                                | Cumulative foreign currency translation adjustments |         |                 | (27,350
|                                                                                                                    |                                                                                |                                                     |         |                 |        
|                                                                                                                    |                                                                                | Total shareholders' equity                          |         |                 | 122,472
|                                                                                                                    |                                                                                |                                                     |         |                 |        
|                                                                                                                    |                                                                                | Total liabilities and shareholders' equity          |         | $               | 265,814
|                                                                                                                    |                                                                                |                                                     |         |                 |        

The
accompanying notes to consolidated financial statements are an integral part of this statement.

2

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CASCADE CORPORATION        CONSOLIDATED STATEMENT OF INCOME        (Unauditedin thousands except share and per share data)

|                                            |                                     | Three Months Ended
October 31 |            | Nine Months Ended
October 31 |  
|------------------------------------------- | ----------------------------------- | ----------------------------- | ---------- | ---------------------------- | -
|
|Net sales                                   |                                     | $                             | 70,536     |                              | $
|                                            |                                     |                               |            |                              |  
|Costs and expenses:                         |                                     |                               |            |                              |  
|                                            | Cost of goods sold                  |                               |            | 49,299                       |  
|                                            | Amortization                        |                               |            | 1,080                        |  
|                                            | Selling and administrative expenses |                               |            | 13,236                       |  
|                                            |                                     |                               |            |                              |  
|                                            |                                     |                               | 63,615     |                              |  
|                                            |                                     |                               |            |                              |  
|Operating income                            |                                     |                               | 6,921      |                              |  
|Interest expense                            |                                     |                               | 1,592      |                              |  
|Interest income                             |                                     |                               | (331       | )                            |  
|Other expense (income), net                 |                                     |                               | (180       | )                            |  
|                                            |                                     |                               |            |                              |  
|                                            |                                     |                               |            |                              |  
|Income before income taxes                  |                                     |                               | 5,840      |                              |  
|Income taxes                                |                                     |                               | 2,219      |                              |  
|                                            |                                     |                               |            |                              |  
|Net income                                  |                                     | $                             | 3,621      |                              | $
|                                            |                                     |                               |            |                              |  
|                                            |                                     |                               |            |                              |  
|Basic earnings per share                    |                                     | $                             | 0.32       |                              | $
|                                            |                                     |                               |            |                              |  
|Diluted earnings per share                  |                                     | $                             | 0.30       |                              | $
|                                            |                                     |                               |            |                              |  
|Diluted weighted average shares outstanding |                                     |                               | 12,129,324 |                              |  
|                                            |                                     |                               |            |                              |  

The
accompanying notes to consolidated financial statements are an integral part of this statement.

3

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CASCADE CORPORATION        CONSOLIDATED STATEMENT OF CASH FLOWS        (Unauditedin thousands)

|                                                  |                                                                                   | Nine Months Ended
October 31              |       
|------------------------------------------------- | --------------------------------------------------------------------------------- | ----------------------------------------- | ------
|
|Cash flows from operating activities:             |                                                                                   |                                           |       
|                                                  | Net income                                                                        |                                           | $     
|                                                  | Adjustments to reconcile net income to net cash provided by operating activities: |                                           |       
|                                                  |                                                                                   | Depreciation and amortization             |       
|                                                  |                                                                                   | Deferred income taxes                     |       
|                                                  |                                                                                   | Loss on disposal of property              |       
|Changes in operating assets and liabilities:      |                                                                                   |                                           |       
|                                                  | Accounts receivable                                                               |                                           |       
|                                                  | Inventories                                                                       |                                           |       
|                                                  | Prepaid expenses and other                                                        |                                           |       
|                                                  | Accounts payable and accrued expenses                                             |                                           |       
|                                                  | Other liabilities                                                                 |                                           |       
|                                                  |                                                                                   |                                           |       
|                                                  |                                                                                   | Net cash provided by operating activities |       
|                                                  |                                                                                   |                                           |       
|Cash flows from investing activities:             |                                                                                   |                                           |       
|                                                  | Acquisition of property, plant and equipment                                      |                                           |       
|                                                  | Proceeds from disposition of property, plant and equipment                        |                                           |       
|                                                  | Other assets                                                                      |                                           |       
|                                                  |                                                                                   |                                           |       
|                                                  |                                                                                   | Net cash used in investing activities     |       
|                                                  |                                                                                   |                                           |       
|Cash flows from financing activities:             |                                                                                   |                                           |       
|                                                  | Payments on long-term debt                                                        |                                           |       
|                                                  | Notes payable to banks                                                            |                                           |       
|                                                  | Repurchase of common stock                                                        |                                           |       
|                                                  | Cash dividends                                                                    |                                           |       
|                                                  |                                                                                   |                                           |       
|                                                  |                                                                                   | Net cash used in financing activities     |       
|                                                  |                                                                                   |                                           |       
|Effect of exchange rate changes                   |                                                                                   |                                           | (1,578
|                                                  |                                                                                   |                                           |       
|Increase (decrease) in cash and cash equivalents  |                                                                                   |                                           | 7,055 
|Cash and cash equivalents at beginning of year    |                                                                                   |                                           | 12,418
|                                                  |                                                                                   |                                           |       
|Cash and cash equivalents at end of period        |                                                                                   | $                                         | 19,473
|                                                  |                                                                                   |                                           |       
|Supplemental disclosure of cash flow information: |                                                                                   |                                           |       
|                                                  | Cash paid during the period for:                                                  |                                           |       
|                                                  |                                                                                   | Interest                                  |       
|                                                  |                                                                                   | Income taxes                              |       

The
accompanying notes to consolidated financial statements are an integral part of this statement.

4

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CASCADE CORPORATION        CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY        (Unauditedin thousands)

|                            |  | Common Stock |   |   |       |   |   | Accumulated
Other
Comprehensive
Income |   |   |        
|--------------------------- |  | ------------ | - | - | ----- | - | - | -------------------------------------- | - | - | -------
|
|
|Balance at January 31, 2001 |  | 11,440       |   | $ | 5,720 |   | $ | 234                                    |   | $ | 132,337
|Net income                  |  |             |   |   |      |   |   |                                       |   |   | 12,689 
|Translation adjustment      |  |             |   |   |      |   |   |                                       |   |   |       
|Repurchase of common stock  |  | (127         | ) |   | (64   | ) |   | (234                                   | ) |   | (860   
|                            |  |              |   |   |       |   |   |                                        |   |   |        
|Balance at October 31, 2001 |  | 11,313       |   | $ | 5,656 |   | $ |                                       |   | $ | 144,166
|                            |  |              |   |   |       |   |   |                                        |   |   |        

The
accompanying notes to consolidated financial statements are an integral part of this statement.

5

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CASCADE CORPORATION        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS        (Unauditedin thousands)

Note 1Information About Operations

|Nine months ended October 31, 2001  |  | North America |         | Europe |   | Other  |   | Eliminations |        | Consolidated
|----------------------------------- |  | ------------- | ------- | ------ | - | ------ | - | ------------ | ------ | ------------
|Sales to unaffiliated customers     |  | $             | 143,271 |        | $ | 58,061 |   | $            | 25,396 |             
|Transfers between areas             |  |               | 11,201  |        |   | 3,997  |   |              | 88     |             
|                                    |  |               |         |        |   |        |   |              |        |             
|Net sales                           |  | $             | 154,472 |        | $ | 62,058 |   | $            | 25,484 |             
|                                    |  |               |         |        |   |        |   |              |        |             
|Net income                          |  | $             | 10,630  |        | $ | 1,116  |   | $            | 943    |             
|                                    |  |               |         |        |   |        |   |              |        |             
|Identifiable assets                 |  | $             | 165,315 |        | $ | 71,195 |   | $            | 29,244 |             
|                                    |  |               |         |        |   |        |   |              |        |             
|Nine months ended October 31, 2000  |  |               |         |        |   |        |   |              |        |             
|Sales to unaffiliated customers     |  | $             | 166,961 |        | $ | 64,929 |   | $            | 30,528 |             
|Transfers between areas             |  |               | 12,144  |        |   | 4,604  |   |              | 233    |             
|                                    |  |               |         |        |   |        |   |              |        |             
|Net sales                           |  | $             | 179,105 |        | $ | 69,533 |   | $            | 30,761 |             
|                                    |  |               |         |        |   |        |   |              |        |             
|Net income (loss)                   |  | $             | 11,769  |        | $ | 110    |   | $            | (1,312 | )           
|                                    |  |               |         |        |   |        |   |              |        |             
|Identifiable assets                 |  | $             | 178,695 |        | $ | 72,137 |   | $            | 31,510 |             
|                                    |  |               |         |        |   |        |   |              |        |             
|
|Sales to unaffiliated customers     |  | $             | 44,921  |        | $ | 17,264 |   | $            | 8,351  |             
|Transfers between areas             |  |               | 3,444   |        |   | 1,398  |   |              | 6      |             
|                                    |  |               |         |        |   |        |   |              |        |             
|Net sales                           |  | $             | 48,365  |        | $ | 18,662 |   | $            | 8,357  |             
|                                    |  |               |         |        |   |        |   |              |        |             
|Net income (loss)                   |  | $             | 3,299   |        | $ | (115   | ) | $            | 436    |             
|                                    |  |               |         |        |   |        |   |              |        |             
|Three months ended October 31, 2000 |  |               |         |        |   |        |   |              |        |             
|Sales to unaffiliated customers     |  | $             | 55,935  |        | $ | 19,556 |   | $            | 9,890  |             
|Transfers between areas             |  |               | 4,574   |        |   | 1,302  |   |              | 56     |             
|                                    |  |               |         |        |   |        |   |              |        |             
|Net sales                           |  | $             | 60,509  |        | $ | 20,858 |   | $            | 9,946  |             
|                                    |  |               |         |        |   |        |   |              |        |             
|Net income (loss)                   |  | $             | 3,895   |        | $ | (1,005 | ) | $            | (2,098 | )           
|                                    |  |               |         |        |   |        |   |              |        |             

Note 2Inventories

|                              |  |  |  |  |  |  |  | October 31,
2001 |        | January 31,
2001
|----------------------------- |  |  |  |  |  |  |  | ---------------- | ------ | ----------------
|Finished goods and components |  |  |  |  |  |  |  | $                | 25,446 |                 
|Work in process               |  |  |  |  |  |  |  |                  | 993    |                 
|Raw materials                 |  |  |  |  |  |  |  |                  | 10,179 |                 
|                              |  |  |  |  |  |  |  |                  |        |                 
|                              |  |  |  |  |  |  |  | $                | 36,618 |                 
|                              |  |  |  |  |  |  |  |                  |        |                 

Note 3Reclassifications

Certain reclassifications have been made to the prior year consolidated financial statements to conform to the current year presentation.

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Note 4Contingencies

The Company is subject to environmental laws and regulations, which include obligations to remove or mitigate environmental effects of past disposal and
release of certain wastes and substances at various sites. The Company records liabilities for affected sites when environmental assessments indicate probable cleanup and the costs can be reasonably
estimated. Other than for costs of assessments themselves, the timing and amount of these liabilities is generally based on the Company's commitment to a formal plan of action, such as an approved
remediation plan. The reliability and precision of the loss estimates are affected by numerous factors, such as different stages of site evaluation and reevaluation of the degree of remediation
required. The Company adjusts its liabilities as new remediation requirements are defined, as information becomes available permitting reasonable estimates to be made and to reflect new and changing
facts. Unasserted claims are not reflected in the Company's environmental remediation liabilities.

The
Company and The Boeing Company are defendants in U.S. District Court for Oregon litigation brought in December 1999 by the City of Portland, Oregon (City), alleging damages
arising from the proximity of a City wellfield to groundwater contamination in the area of their respective Portland plant sites. The Company and The Boeing Company are remedying the contamination in
question, which does not affect water pumped by the City from the wellfield. The City's complaint alleged damages of approximately $6.6 million. In November 2000, the City raised new theories
which increased its claimed damages against both defendants by up to $19 million. In October 2001, it withdrew claims based on these new theories for $2 million to $4 million
representing alleged diminution in wellfield value, and asserted an alternative theory which would reduce a $15 million lost revenue claim to $6.6 million. The Company continues to
believe these additional damage claims are without merit. Motions directed at the City's new theories have been filed with the U.S. District Court, and rulings are expected within the next few
months.

The
U.S. District Court for Oregon granted a partial summary judgment to the City on certain liability issues in its original claim. The partial summary judgment will lead to a
damage judgment in some amount; however, at the present time the Company cannot estimate the amount of potential loss. The Company believes it has substantial defenses to the damage amounts sought by
the City and intends to defend itself vigorously. A damage judgment would be subject to allocation between the Company and The Boeing Company. That allocation is not currently determinable.

Note 5New Accounting Standards

In July 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 141 (SFAS 141), "Business
Combinations." SFAS 141 addresses financial accounting and reporting for business combinations. This Statement requires that all business combinations be accounted for the purchase method. As
required by SFAS 141, we will adopt this new accounting standard for all business combinations initiated after June 30, 2001. The adoption of SFAS 141 will not have a material
impact on our financial statements.

In
July 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 142 (SFAS 142), "Goodwill and Other Intangible Assets."
SFAS 142 addresses financial accounting and reporting for intangible assets and goodwill. The Statement requires that goodwill and intangible assets having indefinite useful lives not be
amortized, rather tested at least annually for impairment. Intangible assets that have finite useful lives will continue to be amortized over their useful lives. As required by SFAS 142, we
will adopt this new accounting standard February 1, 2002. We are currently analyzing the provisions of SFAS 142 and have not yet determined the impact on our financial statements.

In
June 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 143 (SFAS 143), "Accounting for Asset Retirement
Obligations." SFAS 143 addresses financial accounting and reporting for obligations associated with the retirement of tangible, long-lived

7

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assets and the associated asset retirement costs. This Statement requires that the fair value of a liability for an asset retirement obligation be recognized in the period in which it is incurred by
capitalizing it as part of the carrying amount of the long-lived assets. As required by SFAS 143, we will adopt this new accounting standard on February 1, 2003. We believe the adoption
of SFAS 143 will not have a material impact on our financial statements.

In
August 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 144 (SFAS 144), "Accounting for the Impairment or
Disposal of Long-Lived Assets. " This Statement establishes a single accounting model for the impairment or disposal of long-lived assets. As required by SFAS 144, we will adopt this new
accounting standard on February 1, 2002. We believe the adoption of SFAS 144 will not have a material impact on our financial statements.

8

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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

The Company has classified all depreciation expense amounts as a component of cost of goods sold or selling and administrative expenses. The Company had
previously classified depreciation and amortization expense separately in its consolidated statement of income. This change will have no impact on net income for the current quarter or any prior
periods. All of the Company's future filings will reflect this change.

All
historical net sales and cost of goods sold amounts for the three and nine month periods ended October 31, 2000 have been restated to reflect the requirements of Emerging
Issues Task Force Issue 00-10 (EITF 00-10), "Accounting for Shipping and Handling Fees and Costs." Net sales and cost of goods sold amounts for the three and nine month periods
ended October 31, 2001 are presented in accordance with EITF 00-10.

The
table below summarizes the restatements of the Company's consolidated statements of income for the three and nine month periods ended October 31, 2000 for the
reclassifications of depreciation expense and freight costs (in thousands):

|                                         |  | Three Months
Ended October 31, 2000 |        | Nine Months
Ended October 31, 2000
|---------------------------------------- |  | ----------------------------------- | ------ | ----------------------------------
|
|Amounts as previously reported           |  | $                                   | 82,947 |                                   
|Reclassification of freight costs        |  |                                     | 2,434  |                                   
|Reclassification of depreciation expense |  |                                     |       |                                   
|                                         |  |                                     |        |                                   
|Amounts as currently reported            |  | $                                   | 85,381 |                                   
|                                         |  |                                     |        |                                   

All
references to fiscal periods are defined as periods ending in the year ended January 31, 2001 (fiscal 2001) and year ended January 31, 2002 (fiscal 2002).

Results of Operations

Consolidated net sales for the three months ended October 31, 2001 totaled $70.5 million, a decrease of 17.4% compared to net sales of
$85.4 million for the three months ended October 31, 2000.
Consolidated net sales for the nine months ended October 31, 2001 totaled $226.7 million, a decrease of 13.6% compared to net sales of $262.4 million for the nine months ended
October 31, 2000. The decrease in net sales in both the third quarter and the first nine months of fiscal 2002 is the result of decreased order rates for lift trucks throughout the world,
primarily in North America.

Net
income for the third quarter of fiscal 2002 was $3.6 million ($.30 per share), as compared to $0.8 million ($0.06 per share) in the third quarter of fiscal 2001. Net
income as a percentage of consolidated net sales was 5.1% in the third quarter of fiscal 2002 as compared to 0.9% in the third quarter of fiscal 2001. For the nine month periods ended
October 31, 2001 and 2000, net income was $12.7 million and $10.6 million, respectively. The increases in net income for the third quarter and the nine month period were primarily
due to certain expenses, restructuring costs, environmental expenses, and Special Board Committee costs, incurred only in fiscal 2001. Lower sales volume in fiscal 2002 has resulted in lower income
levels than would have been expected if sales had continued at the levels experienced in fiscal 2001.

9

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The Company's sales in North America for the third quarter of fiscal 2002 decreased 19.7% in comparison with the third quarter of fiscal 2001. Sales in North America represent
approximately two-thirds of the Company's consolidated sales. Order rates for applicable lift truck classes in North America have decreased 42% in the third quarter of fiscal 2002 compared
to fiscal 2001. Shipping rates in North America for the same periods have reflected a 40% decrease. The Company has historically found that changes in the level of its net sales do not correspond
directly to the percentage changes in lift truck industry order rates and shipments due to fluctuating inventory levels and market competition. However, industry statistics do provide a strong
indicator of the level of business activity in the Company's various markets. Given the severity of the current industry trend, the Company expects sales in North America for the remaining three
months of fiscal 2002 to be less than sales in the comparable period of fiscal 2001. Fourth quarter sales in North America will also fall short of sales levels in each of the first three quarters of
fiscal 2002 due to the continuation of reduced order rates and planned holiday shutdowns in all North American facilities. Due to these holiday shutdown periods the Company's fourth quarter
historically has the lowest sales level in comparison with other quarterly periods.

Net
sales in Europe decreased 11.7% in the third quarter of fiscal 2002 as compared to fiscal 2001. The decrease is primarily the result of decreased order rates, primarily related to
fork products. Lift truck industry order rates for Europe in the third quarter of fiscal 2002 were 3% below prior year levels and shipping rates were consistent with prior year levels.

The
majority of the Company's other net sales are in Asia and Australia. Net sales in these markets decreased 15.6% in the third quarter of fiscal 2002 as compared to fiscal 2001.
Excluding the impact of weakened foreign currencies in Asia, net sales have been consistent with the prior year period. Australia's net sales have decreased primarily due to the elimination of the
tire and battery business and other unprofitable product lines as part of the Company's fiscal 2001 restructuring efforts.

The
Company's gross margin as a percentage of net sales in the third quarter of fiscal 2002 and 2001 was 30.1% and 31.5%, respectively. Gross margin as a percentage of net sales in
the first nine months of fiscal 2002 was 31.0% as compared to 32.1% in fiscal 2001. The decrease in fiscal 2002 gross margins relates to lower sales volumes through the first nine months in comparison
with the prior year. The Company has implemented aggressive cost management initiatives, which include plant shutdowns and reduced work schedules, staffing reductions and other operating efficiencies,
which have enabled the gross profit margins to remain in line with expectations.

The
Company's selling and administrative expenses decreased 36.5% in the third quarter of fiscal 2002 to $13.2 million, 18.8% of net sales, from $20.9 million, 24.4% of
net sales, during the third quarter of fiscal 2001. Year-to-date selling and administrative expenses in fiscal 2002 were $42.3 million, 18.7% of net sales, a decrease of
24.8% from expenses of $56.3 million, 21.5% of net sales, in fiscal 2001. Fiscal 2001 expenses include costs related to restructuring activities in Europe and Australia, environmental expenses
and Special Board Committee activities. The selling and administrative costs related to these activities totaled $4.9 million and $6.6 million for the three month and nine month periods
ended October 31, 2000, respectively. Selling and administrative expenses in first nine months of fiscal 2001 also included $1.2 million related to bad debt expense related to the
bankruptcy of a major OEM customer. Excluding these costs from fiscal 2001, the Company's selling and administrative expenses in fiscal 2001 were $48.5 million as compared to fiscal 2002
expenses of $42.3 million. The 12.8% decrease in fiscal 2002 costs is due to various cost control initiatives implemented by the Company and staffing reductions in fiscal 2002.

Interest
expense in both the third quarter and first nine months of fiscal 2002 has decreased when compared to fiscal 2001 interest expense due to lower debt levels. See "Liquidity
and Capital Resources" for discussion of debt levels and payments.

10

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The Company's effective tax rate of 38% for the third quarter and first nine months of fiscal 2002 has approximated the effective tax rate for the comparable prior year periods.

As
previously noted, the lift truck industry in fiscal 2002 is experiencing a significant decline in order rates in all parts of the world. Through the remaining three months of
fiscal 2002, the Company expects consolidated net sales to be less than fiscal 2001 net sales for the comparable period and also below the sales levels experienced in the first three quarters of
fiscal 2002. The Company expects its cost management initiatives to partially offset the lower profitability from these declining sales volumes. Overall, the Company expects its net income in the
remaining three months of fiscal 2002 to fall below the net income for the last three months of fiscal 2001, excluding the effects of fiscal 2001 restructuring and Special Board Committee activities
and environmental charges.

Liquidity and Capital Resources

During the nine months ended October 31, 2001, the Company generated $26.4 million in cash from operating activities, compared with
$23.3 million in the first nine months of fiscal 2001. Cash and cash equivalents at October 31, 2001 totaled $19.5 million as compared to $12.4 million at
January 31, 2001.

Working
capital at October 31, 2001 was $75 million in comparison with $64.7 million at January 31, 2001. The Company's current ratio was 3.1 to 1 at
October 31, 2001 compared to 2.3 to 1 at January 31, 2001.

Total
outstanding debt at October 31, 2001 was $80.9 million in comparison with $94.7 million at January 31, 2001. The Company's debt to equity ratio
improved to .66 to 1 at October 31, 2001 from .81 to 1 at January 31, 2001. As of October 31, 2001, the Company had short-term lines of credit with commercial banks
totaling $56.2 million, of which $2.1 million was used. During the nine months ended October 31, 2001, the Company paid down debt and revolving credit facilities by
$13.8 million. The Company believes its available cash and credit facilities are more than sufficient to meet its short-term requirements.

Capital
expenditures for the nine months ended October 31, 2001 were $5 million, which was comparable to the level of capital expenditures in the first nine months of
the prior year. Planned capital expenditures for fiscal 2002 are expected to be less than $8 million. The Company plans to use operating cash flows and existing credit facilities to fund
current year capital expenditures.

The
Company discontinued payment of dividends in fiscal 2001 as a condition of the merger agreement with the Lift Group as was previously disclosed in the Company's filings. The Board
of Directors has taken no action to date regarding the Company's dividend policy since the merger agreement was terminated on April 17, 2001.

On
September 17, 2001, the Company's Board of Directors authorized management to purchase up to 600,000 common shares over the following 12 months. As of October 31, 2001, the
Company has purchased 127,000 shares for $1.4 million.

During
the first nine months of fiscal 2002, weakened foreign currencies resulted in a cumulative translation adjustment that reduced shareholders' equity by $5.6 million.

On
January 1, 1999, 11 of 15 countries that are members of the European Union introduced a new currency called the "euro", which will ultimately replace the national currencies
of these 11 countries. The conversion rates between the euro and the participating nations' currencies were fixed irrevocably
as of January 1, 1999, and participating national currencies will be removed from circulation between January 1, 2002 and June 30, 2002 and replaced by the euro.

The
Company modified its internal systems that were affected by the initial introduction of the euro without incurring material costs. Further internal system changes are currently
being made in preparation for the ending of the bilateral rates in January 2002 and the withdrawal of the currencies

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thereafter. The costs of these changes are not expected to be material. While the Company continues to evaluate the impact of the ongoing euro conversion over time, based on currently available
information, management does not believe that the euro conversion will have a material adverse impact on our financial condition or overall trends in results of operations.

New Accounting Standards

In July 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 141 (SFAS 141), "Business
Combinations." SFAS 141 addresses financial accounting and reporting for business combinations. This Statement requires that all business combinations be accounted for the purchase method. As
required by SFAS 141, we will adopt this new accounting standard for all business combinations initiated after June 30, 2001. The adoption of SFAS 141 will not have a material
impact on our financial statements.

In
July 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 142 (SFAS 142), "Goodwill and Other Intangible
Assets." SFAS 142 addresses financial accounting and reporting for intangible assets and goodwill. The Statement requires that goodwill and intangible assets having indefinite useful lives not
be amortized, rather tested at least annually for impairment. Intangible assets that have finite useful lives will continue to be amortized over their useful lives. As required by SFAS 142, we
will adopt this new accounting standard February 1, 2002. We are currently analyzing the provisions of SFAS 142 and have not yet determined the impact on our financial statements.

In
June 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 143 (SFAS 143), "Accounting for Asset Retirement
Obligations." SFAS 143 addresses financial accounting and reporting for obligations associated with the retirement of tangible, long-lived assets and the associated asset retirement
costs. This Statement requires that the fair value of a liability for an asset retirement obligation be recognized in the period in which it is incurred by capitalizing it as part of the carrying
amount of the long-lived assets. As required by SFAS 143, we will adopt this new accounting standard on February 1, 2003. We believe the adoption of SFAS 143 will not
have a material impact on our financial statements.

In
August 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 144 (SFAS 144), "Accounting for the Impairment or
Disposal of Long-Lived Assets." This Statement establishes a single accounting model for the impairment or disposal of long-lived assets. As required by SFAS 144, we
will adopt this new accounting standard on February 1, 2002. We believe the adoption of SFAS 144 will not have a material impact on our financial statements.

Forward-Looking Statements

Forward-looking statements throughout this report are based upon assumptions involving a number of risks and uncertainties. Factors which could cause actual
results to differ materially from these forward-looking statements include, but are not limited to, competitive factors in, and the cyclical nature of, the lift truck industry; fluctuations in lift
truck orders or deliveries, availability and cost of raw materials; general business and economic conditions in North America, Europe, Australia and Asia; foreign currency fluctuations; and the
effectiveness of the Company's cost reduction initiatives.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Market risk is the potential loss arising from adverse changes in market rates and prices, such as foreign currency exchange rate and interest rate
fluctuations. The Company does enter into foreign currency forward exchange contracts to offset the impact of currency fluctuations on certain nonfunctional currency assets and liabilities. The
principal currencies hedged are denominated in Japanese, Canadian, Korean, Australian, New Zealand and several European currencies, primarily the euro and British pound. The Company's foreign
currency forward exchange contracts have terms normally lasting less than one month. The Company does not enter into derivatives or other financial instruments for trading or speculative purposes. See
Note 12 to the Consolidated Financial Statements in Item 8 of the prior year Form 10-K.

The
Company's risk associated with fluctuating interest rates is limited, however, to the exposure related to those debt instruments and credit instruments and credit facilities which
are tied to market rates and the Company does not consider its interest rate risk to be material.

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CASCADE CORPORATION

PART II OTHER INFORMATION

Item 1. Legal Proceedings

Neither the Company nor any of its subsidiaries are involved in any material pending legal proceedings other than the environmental litigation discussed below.
The Company and its subsidiaries are insured against product liability, personal injury and property damage claims which may occasionally arise.

The
Company and The Boeing Company are defendants in U.S. District Court for Oregon litigation brought in December 1999 by the City of Portland, Oregon (City), alleging damages
arising from the proximity of a City wellfield to groundwater contamination in the area of their respective Portland plant sites. The Company and The Boeing Company are remedying the contamination in
question, which does not affect water pumped by the City from the wellfield. The City's complaint alleged damages of approximately $6.6 million. In November 2000, the City raised new
theories which increased its claimed damages against both defendants by up to $19 million. In October 2001, it withdrew claims based on these new theories for $2 million to $4 million
representing alleged diminution in wellfield value, and asserted an alternative theory which would reduce a $15 million lost revenue claim to $6.6 million. The Company continues to
believe these additional damage claims are without merit. Motions directed at the City's new theories have been filed with the U.S. District Court, and rulings are expected within the next few
months.

The
U.S. District Court for Oregon granted a partial summary judgment to the City on certain liability issues in its original claim. The partial summary judgment will lead to a damage
judgment in some amount; however, at the present time the Company cannot estimate the amount of potential loss. The Company believes it has substantial defenses to the damage amounts sought by the
City and intends to defend itself vigorously. A damage judgment would be subject to allocation between the Company and The Boeing Company. That allocation is not currently determinable.

Item 2. Changes in Securities

None

Item 3. Defaults Upon Senior Securities

None

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

None

Item 5. Other Information

On September 17, 2001, the Company's Board of Directors authorized management to purchase up to 600,000 common shares over the following
12 months.

Item 6. Exhibits and Reports on Form 8-K

During the quarter ended October 31, 2001, the Company filed a report on Form 8-K dated September 20, 2001, which disclosed management's
authorization to purchase common stock as discussed in Item 5 above.

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