<PAGE>

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

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

                                      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 July 31, 1998


                    ( )  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


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


                 OREGON                                 93-0136592
      (State or other jurisdiction of                (I.R.S. Employer
     incorporation or organization)                Identification No.)


 2201 N.E. 201ST AVE. FAIRVIEW, OREGON                  97024-9718
  (ADDRESS OF PRINCIPAL EXECUTIVE OFFICE)               (ZIP CODE)


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


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
July 31, 1998 was 11,807,258.

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>

CASCADE CORPORATION AND SUBSIDIARY COMPANIES

                                        PART 1
CONSOLIDATED BALANCE SHEET
     (in thousands, except share data)

<TABLE>
<CAPTION>
                                                              July 31           January 31
                                                                1998               1998
                                                             ----------         ----------
                                                            (unaudited)
<S>                                                          <C>                <C>
Assets

Current assets:
 Cash and cash equivalents                                   $  15,748           $  12,966
 Accounts receivable, less allowance
   for doubtful accounts of $725 and $743                       71,557              62,271
 Inventories, at average cost
   which is lower than market:
   Finished goods and components                                44,544              42,280
   Goods in process                                              2,440               3,965
   Raw materials                                                15,279              12,035
                                                             ---------           ---------
                                                                62,263              58,280
Deferred income taxes                                               56               1,165
Prepaid expenses                                                 7,808               6,011
                                                             ---------           ---------
     Total current assets                                      157,432             140,693

Property, plant and equipment, at cost less
   accumulated depreciation                                    101,140             101,147
Deferred income taxes                                            4,260               4,044
Goodwill                                                        89,097              94,982
Other Assets                                                     9,958               8,726
                                                             ---------           ---------
    Total assets                                             $ 361,887           $ 349,592
                                                             ---------           ---------
                                                             ---------           ---------

Liabilities and Shareholders' Equity

Current liabilities:
 Notes payable to banks                                      $  24,855           $  13,193
 Current portion of long-term debt                               2,207               2,501
 Accounts payable                                               26,875              23,604
 Accrued payroll and payroll taxes                               5,692               7,331
 Other accrued expenses                                          9,764              13,001
                                                             ---------           ---------
    Total current liabilities                                   69,393              59,630

Long-term debt                                                 144,834             144,785
Accrued environmental expenditures                              10,316              10,316
Other liabilities                                                3,310               3,720
                                                             ---------           ---------
    Total liabilities                                          227,853             218,451
                                                             ---------           ---------

Mandatorily redeemable convertible preferred stock, no par
 value, 305,000 and 330,000 shares issued and outstanding        4,575               4,950
Minority interest                                               15,640              15,640
Shareholders' equity:
Common stock, $.50 par value, authorized
  20,000,000 shares; 11,934,756 and 11,988,208 outstanding       5,967               5,994
Additional paid-in capital                                       2,835               3,711
Retained earnings                                              118,743             109,091
Cumulative foreign currency
  translation adjustments                                      (13,497)             (8,016)
Treasury stock, at cost
  (127,498 shares)                                                (229)               (229)
                                                             ---------           ---------
    Total shareholders' equity                                 113,819             110,551
                                                             ---------           ---------
    Total liabilities and
    shareholders' equity                                    $  361,887          $  349,592
                                                             ---------           ---------
                                                             ---------           ---------
</TABLE>

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

<PAGE>

CASCADE CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENT OF INCOME

(unaudited - in thousands, except Per Share and average share figures)

<TABLE>
<CAPTION>
                                                              Three months ended              Six months ended
                                                                   July 31                         July 31
                                                        -----------------------------    --------------------------
                                                           1998                 1997         1998           1997
                                                       -----------         ----------    -----------    -----------
<S>                                                    <C>                 <C>           <C>            <C>
Net sales                                              $  105,160          $   90,340    $   212,285    $   175,065
                                                       -----------         ----------    -----------    -----------
Costs and expenses:
   Cost of goods sold, excluding depreciation              73,085              62,445        146,720        120,685
   Depreciation                                             5,235               4,870         10,640         10,025
   Selling and administrative expenses                     17,535              15,300         35,135         30,710
   Environmental insurance settlement, net                      -              (9,250)             -         (9,250)
                                                         ---------         ----------    -----------    -----------
                                                           95,855              73,365        192,495        152,170
                                                         ---------         ----------    -----------    -----------

Operating income                                            9,305              16,975         19,790         22,895

   Interest expense                                         2,625               2,960          5,185          4,475
   Interest income                                           (125)               (120)          (315)          (250)
   Other expense (income), net                             (1,270)               (520)        (3,290)          (380)
                                                         ---------         ----------    -----------    -----------
Income before taxes                                         8,075              14,655         18,210         19,050
Income taxes                                                2,585               4,950          5,905          6,445
                                                         ---------         ----------    -----------    -----------

Net income                                             $    5,490          $    9,705    $    12,305    $    12,605
                                                       -----------         ----------    -----------    -----------
                                                       -----------         ----------    -----------    -----------

Basic earnings per share                               $     0.45          $     0.81    $      1.01    $      1.04
                                                       -----------         ----------    -----------    -----------
                                                       -----------         ----------    -----------    -----------

Diluted earings per share                              $     0.41          $     0.73    $      0.93    $      0.96
                                                       -----------         ----------    -----------    -----------
                                                       -----------         ----------    -----------    -----------

Diluted weighted average shares outstanding            13,280,602          13,290,400     13,286,701     13,074,852
                                                       -----------         ----------    -----------    -----------
                                                       -----------         ----------    -----------    -----------

</TABLE>

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


<PAGE>

CASCADE CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENT OF CASH FLOWS

(unaudited - in thousands)

<TABLE>
<CAPTION>
                                                                             Six months ended
                                                                                 July 31
                                                                      ------------------------------
                                                                          1998                1997
                                                                      ----------          ----------
<S>                                                                   <C>                 <C>
Cash flows from operating activities:
Net income                                                            $   12,305          $   12,605
  Adjustments to reconcile net income to net
   cash provided by operating activities:
    Depreciation and amortization                                         10,641              10,025
    Deferred income taxes                                                  1,066              (1,323)
    Gain on disposal of property                                          (2,505)                  -
Changes in operating assets and liabilities:
    Accounts receivable                                                   (9,286)                806
    Inventories                                                           (3,983)             (2,630)
    Insurance settlement receivable                                            -              (9,750)
    Prepaid expenses                                                      (1,797)                579
    Accounts payable and accrued expenses                                 (1,605)             (3,644)
    Other liabilities                                                       (410)             (2,282)
                                                                      ----------          ----------
     Net cash provided by operating activities                             4,426               4,386
                                                                      ----------          ----------
Cash flows from investing activities:
 Acquisition of property, plant and equipment                             (8,395)            (11,125)
 Business acquisitions                                                         -             (64,943)
 Other assets                                                              1,761              (1,193)
 Proceeds from sale of property                                            2,606                   -
                                                                      ----------          ----------
     Net cash used in investing activities                                (4,028)            (77,261)
                                                                      ----------          ----------
Cash flows from financing activities:
 Payments on long-term debt                                                 (458)               (839)
 Notes payable to banks                                                   11,662              78,223
 Repurchase of manditorily redeemable convertible
   preferred stock                                                          (375)                  -
 Repurchase of common stock                                               (1,009)             (1,035)
 Issuance of common stock                                                    106                   -
 Cash dividends                                                           (2,653)             (2,675)
                                                                      ----------          ----------
     Net cash provided by financing activities                             7,273              73,674
                                                                      ----------          ----------
Effect of exchange rate changes                                           (4,889)                400
                                                                      ----------          ----------
Increase in cash and cash equivalents                                      2,782               1,199

Cash and cash equivalents at
 beginning of year                                                        12,966              15,642
                                                                      ----------          ----------
Cash and cash equivalents at end of period                            $   15,748          $   16,841
                                                                      ----------          ----------
                                                                      ----------          ----------

Supplemental disclosure of cash flow information:

  Cash paid during the period for:
     Interest                                                         $    3,780          $    2,646
     Income taxes                                                     $    8,338          $    5,603

  Exchangeable preferred stock issued for
     acquisition                                                      $        -          $   15,640

</TABLE>


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

<PAGE>

CASCADE CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY

<TABLE>
<CAPTION>


                                                        Six months
                                                          ended              Fiscal
                                                          July 31          Year ended
                                                           1998            January 31
COMMON STOCK                                            (unaudited)           1998
                                                        -----------        ----------
<S>                                                      <C>               <C>
   Beginning balance                                     $  5,994            $  6,024
   Common stock issued                                          3
   Common stock repurchased                                   (30)                (30)
                                                         ---------           --------
                                                            5,967               5,994
                                                         ---------           --------

ADDITIONAL PAID-IN CAPITAL
   Beginning balance                                        3,711                   -
   Treasury shares issued for acquisition                       -               3,711
   Common stock issued                                        103
   Common stock repurchased                                  (979)                  -
                                                         ---------           --------
                                                            2,835               3,711
                                                         ---------           --------

RETAINED EARNINGS
   Beginning balance                                      109,091              94,561
   Net income                                              12,305              21,040
   Cash dividend                                           (2,653)             (5,505)
   Common stock repurchased                                     -              (1,005)
                                                         ---------           --------
                                                          118,743             109,091
                                                         ---------           --------

CUMULATIVE FOREIGN CURRENCY ADJUSTMENTS
   Beginning balance                                       (8,016)             (1,142)
   Translation adjustments                                 (5,481)             (6,874)
                                                         ---------           --------
                                                          (13,497)             (8,016)
                                                         ---------           --------

TREASURY STOCK
   Beginning balance                                         (229)               (686)
   Treasury shares issued for acquisitions                      -                 457
                                                         ---------           --------
                                                             (229)               (229)
                                                         ---------           --------

TOTAL SHAREHOLDERS' EQUITY                             $  113,819          $  110,551
                                                         ---------           --------
                                                         ---------           --------

</TABLE>

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

<PAGE>

CASCADE CORPORATION            EXHIBIT 11.

<TABLE>
<CAPTION>

Computation of Earnings Per Share
(In thousands except per share data)

------------------------------------------------------------------------------------------------------------------------------------
                                                                             QUARTER ENDED JULY 31
                                                                  1998                                       1997
                                              ----------------------------------------     -----------------------------------------
                                                                             PER SHARE                                     PER SHARE
                                                 INCOME          SHARES        AMOUNT        INCOME          SHARES          AMOUNT
                                               (Numerator)   (Denominator)                 (Numerator)   (Denominator)
                                               -----------   -------------   ---------     -----------   -------------     ---------
<S>                                            <C>            <C>             <C>           <C>          <C>               <C>
Net income                                     $  5,490                                     $  9,705

Less:  preferred stock dividend                    (140)                                        (143)
                                               --------                                     --------
BASIC EPS
Income available to
   common shareholders                            5,350         11,843        $  0.45          9,562         11,860        $  0.81
                                                                              -------                                      -------
                                                                              -------                                      -------

Effect of dilutive securities
Manditorily redeemable convertible
   preferred stock                                  110          1,100                           110          1,100

Exchangeable preferred stock                         30            305                            33            330

Incentive stock options                               -             33                             -              -
                                               --------         ------                        ------        -------
DILUTED EPS
Income available to common
   shareholder plus assumed
   conversions                                 $  5,490         13,281        $  0.41       $  9,705         13,290        $  0.73
                                               --------         ------        -------       --------         ------        -------
                                               --------         ------        -------       --------         ------        -------
</TABLE>


<TABLE>
<CAPTION>





                                                                             SIX MONTHS ENDED JULY 31
                                                                  1998                                       1997
                                              ----------------------------------------      ----------------------------------------
                                                                             PER SHARE                                     PER SHARE
                                                 INCOME          SHARES        AMOUNT        INCOME         SHARES          AMOUNT
                                               (Numerator)   (Denominator)                 (Numerator)   (Denominator)
                                               -----------   -------------   ---------     -----------   -------------     ---------
<S>                                            <C>           <C>             <C>           <C>           <C>               <C>
Net income                                    $  12,305                                    $  12,605

Less:  preferred stock dividend                    (283)                                        (286)
                                              ---------                                    ---------
BASIC EPS
Income available to
  common shareholders                            12,022         11,852        $  1.01         12,319         11,876        $  1.04
                                                                              -------                                      -------
                                                                              -------                                      -------
Effect of dilutive securities
Manditorily redeemable convertible
   preferred stock                                  220          1,100                           220            869

Exchangeable preferred stock                         63            316                            66            330

Incentive stock options                               -             18                             -              -
                                              ---------        -------                       -------        -------
DILUTED EPS
Income available to common
  shareholder plus assumed
  conversions                                 $  12,305         13,286        $  0.93      $  12,605         13,075        $  0.96
                                              ---------        -------        -------      ---------        -------        -------
                                              ---------        -------        -------      ---------        -------        -------

</TABLE>

<PAGE>

CASCADE  CORPORATION AND SUBSIDIARY COMPANIES

                              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 environmental litigation
          or litigation incidental to the regular course of business.  The 
          company and its subsidiaries are adequately insured against product 
          liability, personal injury and property damage claims which may arise 
          occasionally.

ITEM 2.   CHANGES IN SECURITIES

               None


ITEM 3.   DEFAULTS UPON SENIOR SECURITIES

               None


ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

          The election of directors was the only matter submitted to a
          shareholder vote at the Annual Meeting of the Shareholders of the
          Company, held May 14, 1998:  The vote on each nominee presented
          follows:

<TABLE>
<CAPTION>

          Nominee                       Votes For*          Votes Withheld
          -------                       ----------          --------------
          <S>                           <C>                 <C>
          J.J. Barclay                  10,576,532              47,661
          W.J. Harrison                 10,576,432              47,761
          R.C. Hire                     10,574,582              49,411
          E. Hoffman                    10,571,382              52,811
          C.C. Knudsen                  10,573,482              50,711
          N.R. Lardy                    10,576,432              47,761
          E.C. Mercier                  10,568,732              55,461
          J.S. Osterman                 10,568,632              55,561
          J.B. Schwartz                 10,576,132              48,061
          N.A. Wilgenbusch              10,572,132              52,061
          R.C. Warren, Jr.              10,576,132              48,061

</TABLE>

          *includes in each case 1,100,000 votes cast by holder of special 
           voting share.

ITEM 5.   OTHER INFORMATION

               None


ITEM 6.   EXHIBIT AND REPORTS ON FORM 8-K

          (A) EXHIBITS
               11.  Computation of Earnings Per Share

          (B) REPORTS ON FORM 8-K
               Cascade Corporation filed no reports on Form 8-K during the
               quarter ended July 31, 1998.


<PAGE>

CASCADE CORPORATION AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS   (unaudited)


NOTE 1 - COMPREHENSIVE INCOME

          In June 1997, the Financial Accounting Standards Board (FASB) issued
          SFAS No. 130, "Reporting Comprehensive Income".  The Company has 
          adopted the standard as of February 1, 1998.  Total comprehensive 
          income consists of the following:

<TABLE>
<CAPTION>


                                                 For the quarter ended         For the six months ended
                                                July 31        July 31         July 31            July 31
                                                  1998           1997            1998               1997
                                               --------       --------        --------          ---------
          <S>                                  <C>            <C>             <C>               <C>
          Net income                           $  5,490       $  9,705       $ 12,305           $  12,605
          Foreign currency
             translation, net of tax             (7,124)          (872)        (5,481)             (3,540)
                                               --------       --------        --------          ---------
          Total comprehensive income           $ (1,634)      $  8,833       $  6,824            $  9,065
                                               --------       --------        --------          ---------
                                               --------       --------        --------          ---------

</TABLE>



          Cumulative foreign currency translation adjustments represent the
          Company's only other comprehensive income item.  The translation
          adjustment consists of unrealized gains/losses in accordance with SFAS
          No. 52, "Foreign Currency Translation".  The Company has no intention
          of liquidating the assets of the foreign subsidiaries in the
          foreseeable future.


<PAGE>

CASCADE CORPORATION AND SUBSIDIARY COMPANIES

                                      SIGNATURES

     The enclosed financial statements have not been certified by independent
accountants.  However, to the best of my knowledge and belief these financial
statements have been prepared in conformity with generally accepted accounting
principles and on a basis substantially consistent with audited financial
statements included in the annual report filed with the Commission for the
preceding fiscal year.

     The Company believes that all adjustments, consisting of normal recurring
adjustments, necessary for a fair statement of the results of operations, have
been included.

     Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.


                                        CASCADE CORPORATION



  9/14/98                              /s/ Kurt G. Wollenberg
-------------                         ---------------------------------
Date                                       Kurt G. Wollenberg,
                                          Vice President - Finance


<PAGE>

ITEM 7.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
          RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

Consolidated net sales for the three months ended July 31, 1998 totaled
$105,160,000, an increase of 16.4% compared to sales of $90,340,000 recorded in
the second quarter of 1997.  Net income for the second quarter of 1998 was
$5,490,000 ($.41 per share) or 52.5% higher than operating net income of
$3,600,000 ($.27 per share) for the corresponding 1997 period.  Reported net
income for the prior year quarter was $9,705,000 ($.73 per share) which included
$6,105,000 ($.46 per share) for an insurance settlement related to environmental
expenses.  Expressed as a return on sales, net income for the second three-month
period of 1998 was 5.2% compared to 4.0% for the corresponding 1997 quarter
exclusive of the insurance settlement.

Consolidated net sales for the first six months of 1998 totaled $212,285,000, an
increase of 21.3% compared to sales of $175,065,000 recorded in the first two
quarters of 1997.  Net income for the first six months of 1998 before a
previously announced land sale gain was $10,677,000 ($.80 per share), 64.3%
above 1997 net income before the insurance settlements of $6,500,000 ($.50 per
share).  Year to date net income including non recurring items was $12,305,000
($.93 per share), compared to $12,605,000 ($.96 per share) in 1997.


The lift truck industry remains exceptionally strong in North American markets.
Factory orders for new trucks continue at very high levels, and the resulting
original equipment manufacturer (OEM) backlogs suggest that demand for
attachments, forks and tires will remain high into next year.  European OEM
shipments continue to improve and the Company continues to experience improved
performance in this important market.

Recent Asian and Eastern European economic disruptions are a concern, but the
Company's exposure in these markets is limited.  Management continues to believe
that long-term prospects in these markets are for significant growth, and the
Company intends to continue to be in position to serve them.

Cost of sales during the second quarter of 1998 and 1997 was $73,085,000 and
$62,445,000, respectively.  For the second quarter of 1998 and 1997, cost of
sales as a percentage of net sales was 69.5% and 69.1%.  For the year to date
through July 31, 1998 and 1997, cost of sales as a percentage of net sales was
69.1% and 68.9%.  During the first and second quarters of 1998 the Company has
implemented selected price increases.   The Company continues to concentrate on
manufacturing cost reduction and improving manufacturing methods and processes.
These steps have lowered cost of sales as a percentage of net sales.
Nevertheless, these gains have been offset by changes in product mix related to
stronger OEM sales.

Depreciation and amortization expense increased to $5,235,000, 5.0% of net sales
during the second quarter of 1998 from $4,870,000, and 5.4% of net sales for the
prior year


<PAGE>

period.  For the six months through July 31, 1998 depreciation and amortization
expense was $10,640,000, 5.0% of sales compared with $10,025,000, and 5.7% of
sales for the prior year period.  Amortization of the goodwill from the 
purchase of Kenhar Corporation did not commence until April 1997. As a 
result, the 1997 year to date depreciation and amortization expense is lower 
than the 1998 amount.

The Company's selling and administrative expenses for the second quarter of 1998
were $17,535,000, 16.7% of net sales versus $15,300,000, 16.9% of net sales
during the year earlier period.  Year to date selling and administrative expense
was $35,135,000, 16.6% compared with $30,710,000, 17.5% for 1997.  The 1998
results reflect the implementation of strict cost controls imposed to reduce
selling and administrative expenses as a percentage of revenues.

Second quarter 1998 interest expense of $2,625,000 was lower than the $2,960,000
recorded in the 1997 period as a result of refinancing existing debt at more
favorable interest rates.  For the six months ended July 31, 1998 interest
expense of $5,185,000 is higher than the $4,475,000 interest expense recorded
through July 31, 1997 because the acquisition debt was not outstanding during
the entire 1997 period.

Other income and expense for the second quarter of 1998 of $1,270,000 includes
currency translation gains recorded as a result of the strengthening US dollar.
The year to date other income and expense account of $3,290,000 includes a
pre-tax gain of $2,505,000 from the sale of an undeveloped parcel of land
recorded in the first quarter.

The effective tax rate for the quarter was 32% compared with 33.8% for the
second quarter of 1997.  For the six months ended July 31, 1998 and 1997 the
effective tax rates were 32.4% and 33.8%, respectively.

LIQUIDITY AND CAPITAL RESOURCES

During the six months ended July 31, 1998, the Company generated $4,426,000 in
cash from operating activities compared with $4,386,000 for 1997.  Cash and cash
equivalents at the end of the second quarter of 1998 totaled $15,748,000.

The Company's total long and short-term debt to equity ratio was 1.51 to 1.00
and working capital was $88,039,000 at July 31, 1998.  As of July 31, 1998, the
Company had revolving loan commitments with commercial banks totaling 
$131,868,000 of which $47,013,000 was unused.  The Company believes its 
available cash and credit facilities are more than sufficient to meet its 
short-term requirements.

For the six months ended July 31, 1998, capital expenditures totaled $8,395,000
compared with $11,125,000 purchased during the corresponding 1997 period.
Capital expenditures for new facilities, machinery, equipment and tooling over
the preceding five years totaled approximately $78,031,000.  Planned capital
expenditures for 1998 are estimated at $16,336,000 and include $5,815,000 for
implementation of an enterprise-wide software system to link all of the
Company's core business systems.  Implementation will be phased-in throughout
the operating units with final completion


<PAGE>

scheduled for fiscal 2000.  The Company plans to use cash generated from
operations and existing credit facilities to fund 1998 capital expenditures.

During the second quarter and for the six months ended July 31, 1998, the U.S.
dollar strengthened significantly against most major currencies included in the
Company's financial consolidations.  As a result, the cumulative translation
adjustment in the consolidated balance sheet has decreased $7,124,000 ($.54 per
share) for the quarter and $5,481,000 ($.41 per share) for the six months ended
July 31, 1998.


IMPACT OF THE YEAR 2000 ISSUE

The Year 2000 Issue is the result of computer programs being written using two
digits rather than four to define the applicable year.  Some of the Company's
computer programs that have date-sensitive software may recognize a date using
"00" as the year 1900 rather than the year 2000.  This could result in a system
failure or miscalculations causing disruptions of operations, including, among
other things, a temporary inability to process transactions, send invoices, ship
product or engage in any number of similar business activities.

Based on its own assessment, the Company determined that it would need to modify
or replace portions of its software so that its computer systems will properly
utilize dates beyond December 31, 1999.  The Company presently believes that
with modifications to existing software and conversions to new software, the
Year 2000 Issue can be mitigated.  However, if such modifications and
conversions are not made, or not completed timely, the Year 2000 issue could
have a material impact on the operations of the Company.

The Company has initiated formal communications with all of its significant
suppliers and large customers to determine the extent to which the Company is
vulnerable to those third parties' failure to remediate their own Year 2000
Issue. There can be no guarantee that the systems of other companies on which
the Company's systems rely will be timely converted, or that a failure to
convert by another company, or a conversion that is incompatible with the
Company's systems, would not have a material adverse effect on the Company.  The
Company has determined that it has no exposure to contingencies related to the
Year 2000 Issue for the products it has sold.

The Company has initiated the implementation of an enterprise-wide resource
planning (ERP) software system to link all of its core business systems
throughout the Company.  This implementation was the result of normal business
migration to improved and expanded software systems to increase the Company's
ability to improve its operational efficiency, reduce costs and enhance overall
quality.  As part of this implementation, the Company will also replace those
software systems that will encounter the Year 2000 Issue.  The Company plans to
complete the ERP project in the year 2000 and will complete those portions of
the project that will address the Year 2000 Issue in 1999. The total 
cost of the ERP project is estimated at $10,000,000 and is being funded through
leases and operating cash flows.


<PAGE>

Actual project costs incurred through the end of the second quarter of 1998 
total approximately $3,597,000.

The costs of the project and the date on which the Company plans to complete the
Year 2000 modifications are based on management's best estimates which were
derived utilizing numerous assumptions of future events including the continued
availability of certain resources, third party modifications, plans and other
factors.  However, there can be no guarantee that these estimates will be
achieved and actual results could differ materially from those plans.  Specific
factors that might cause such material differences include, but are not limited
to, the availability and cost of personnel trained in this area, the ability to
locate and correct all relevant computer codes and similar uncertainties.


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 and Asia; foreign currency fluctuations; effectiveness of the
Company's cost reduction initiatives; and the Company's success in
organizationally and operationally integrating recently acquired businesses.