** **

**UNITEDSTATESSECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

**FORM 10-Q**

| **(Mark  One)** | ** ** | ** **                                                                                               |
|-----------------|------------|----------------------------------------------------------------------------------------------------------|
| ** **      | ** ** | ** **                                                                                               |
| **x**           | ** ** | **QUARTERLY  REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE  ACT OF 1934**  |
| ** **      | ** ** | ** **                                                                                               |
| ** **      | ** ** | **For the  Quarterly Period Ended October 31, 2007**                                                     |
| ** **      | ** ** | ** **                                                                                               |
| ** **      | ** ** | **OR**                                                                                                   |
| ** **      | ** ** | ** **                                                                                               |
| **o**           | ** ** | **TRANSITION  REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE  ACT OF 1934** |
| ** **      | ** ** | ** **                                                                                               |

**For thetransition period from         to**

**Commission file number 1-12557**

**CASCADECORPORATION**

(Exact name of registrant as specified in its charter)

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

 

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

Indicate by check markwhether the registrant (1) has filed all reports required to be filed bySection 13 or 15(d) of the Securities Exchange Act of 1934 during thepreceding 12 months (or for such shorter period that the registrant wasrequired to file such reports), and (2) has been subject to such filingrequirements for the past 90 days. Yes x  No o

 

                                                Indicate by check mark whether theregistrant is a large accelerated filer, an accelerated filer, or a non-acceleratedfiler. See definition of “accelerated filer and large accelerated filer” inRule 12b-2 of the Exchange Act. (Check one):

 

| Large  accelerated filer o | Accelerated  filer x | Non-accelerated  filer o |
|---------------------------------|---------------------------|-------------------------------|

 

                     Indicate by check mark whether theregistrant is a shell company (as defined in Rule 12b-2 of theExchange Act).Yes o  No x

                     The number of shares outstanding of theregistrant’s common stock as of November 30, 2007 was 11,528,710.

 

 

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**CASCADE CORPORATION**

**FORM10-Q**

**QuarterEnded October 31, 2007**

** **

**TABLE OF CONTENTS**

** **
| ** **                                                                                              | **Page**   |
|---------------------------------------------------------------------------------------------------------|------------|
| **Part I — Financial Information:**                                                                | ** ** |
| ** **                                                                                              | ** ** |
| **Item 1. Financial Statements (unaudited):**                                                           | ** ** |
| **Consolidated  Statements of Income**                                                                  | **4**      |
| **Consolidated Balance Sheets**                                                                         | **5**      |
| **Consolidated  Statement of Changes in Shareholders’ Equity**                                     | **6**      |
| **Consolidated  Statements of Cash Flows**                                                              | **7**      |
| **Notes  to Consolidated Financial Statements**                                                         | **8**      |
| ** **                                                                                              | ** ** |
| **Item 2. Management’s Discussion and Analysis of  Financial Condition and Results of Operations** | **17**     |
| ** **                                                                                              | ** ** |
| **Item 3. Quantitative and Qualitative Disclosures about  Market Risk**                                 | **29**     |
| ** **                                                                                              | ** ** |
| **Item 4. Controls and Procedures**                                                                     | **30**     |
| ** **                                                                                              | ** ** |
| **Part  II — Other Information**                                                                   | **31**     |
| ** **                                                                                              | ** ** |
| **Signatures**                                                                                          | **33**     |
| ** **                                                                                              | ** ** |
| **Exhibit Index**                                                                                       | **34**     |
| ** **                                                                                              | ** ** |

**2**

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** **

**Forward-LookingStatements**

This Form 10-Q, including “Management’sDiscussion and Analysis of Financial Condition and Results of Operations” (Item2) contains forward-looking statements that involve risks and uncertainties, aswell as assumptions that, if they never materialize or prove incorrect, couldcause our results to differ materially from those expressed or implied by suchforward-looking statements. All statements other than statements of historicalfact are statements that could be deemed forward-looking statements, includingany projections of revenue, gross profit, expenses, earnings or losses fromoperations, synergies or other financial items; any statements of plans,strategies, and objectives of management for future operations; any statementsregarding future economic conditions or performance; any statements ofexpectation or belief; and any statements of assumptions underlying any of theforegoing. The risks, uncertainties, and assumptions referred to above include,but are not limited to:

•                  Competitive factors in, and the cyclicalnature of, the materials handling and construction equipment industries;

•                  Fluctuations in lift truck andconstruction equipment orders or deliveries;

•                  Availability and cost of raw materials;

•                  General business and economic conditionsin North America, Europe, Asia Pacific and China;

•                  Foreign currency fluctuations;

•                  Pending litigation;

•                  Environmental matters;

•                  Levels of public and non-residentialconstruction activity;

•                  Effectiveness of our capital expendituresand cost reduction initiatives;

•                  Fluctuations in interest rates;

•                  Actions by foreign governments;

•                  Assumptions relating to pension and otherpostretirement costs.

We undertake no obligation to publicly revise orupdate forward-looking statements to reflect events or circumstances that ariseafter the date of this report.

 

3

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**PART I—FINANCIALINFORMATION**

**Item 1. FinancialStatements**

**CASCADE CORPORATION**

**CONSOLIDATEDSTATEMENTS OF INCOME**

**(Unaudited—in thousands, except pershare amounts)**

 
| ** **                                   | ** ** | **Three Months Ended  October 31** | ** ** | **Nine Months Ended  October 31** | ** ** |
|----------------------------------------------|------------|------------------------------------|------------|-----------------------------------|------------|
| ** **                                   | ** ** | **2007**                           | ** ** | **2006**                          | ** ** | **2007** | ** ** | **2006** | ** ** |
| Net sales                                    |       | $                                  | 143,143    |                              | $          | 122,809 |   | $ | 421,826 |   | $ | 359,959 |   |
| Cost of goods  sold                          |       | 99,102                             |       | 83,356                            |       | 289,270 |   | 245,464 |   |
| Gross profit                                 |       | 44,041                             |       | 39,453                            |       | 132,556 |   | 114,495 |   |
|                                         |       |                               |       |                              |       |   |   |   |   |
| Selling and  administrative expenses         |       | 22,656                             |       | 19,830                            |       | 65,842 |   | 59,579 |   |
| Loss (gain) on  disposition of assets, net   |       | (6                                 | )          | 45                                |       | (1,178 | ) | (572 | ) |
| Amortization                                 |       | 764                                |       | 368                               |       | 2,406 |   | 975 |   |
| Insurance  litigation recovery, net          |       | —                             |       | —                            |       | (15,977 | ) | — |   |
|                                         |       |                               |       |                              |       |   |   |   |   |
| Operating income                             |       | 20,627                             |       | 19,210                            |       | 81,463 |   | 54,513 |   |
| Interest expense                             |       | 961                                |       | 499                               |       | 2,878 |   | 1,524 |   |
| Interest income                              |       | (169                               | )          | (580                              | )          | (551 | ) | (1,462 | ) |
| Other expense  (income), net                 |       | 746                                |       | (119                              | )          | 1,048 |   | (440 | ) |
|                                         |       |                               |       |                              |       |   |   |   |   |
| Income before  provision for income taxes    |       | 19,089                             |       | 19,410                            |       | 78,088 |   | 54,891 |   |
| Provision for  income taxes                  |       | 6,669                              |       | 7,127                             |       | 26,728 |   | 19,651 |   |
|                                         |       |                               |       |                              |       |   |   |   |   |
| Net income                                   |       | $                                  | 12,420     |                              | $          | 12,283 |   | $ | 51,360 |   | $ | 35,240 |   |
|                                         |       |                               |       |                              |       |   |   |   |   |
| Basic earnings  per share                    |       | $                                  | 1.04       |                              | $          | 0.97 |   | $ | 4.30 |   | $ | 2.80 |   |
| Diluted earnings  per share                  |       | $                                  | 1.00       |                              | $          | 0.94 |   | $ | 4.11 |   | $ | 2.69 |   |
|                                         |       |                               |       |                              |       |   |   |   |   |
| Basic weighted  average shares outstanding   |       | 11,965                             |       | 12,604                            |       | 11,954 |   | 12,572 |   |
| Diluted weighted  average shares outstanding |       | 12,391                             |       | 13,050                            |       | 12,487 |   | 13,088 |   |

** **

** **

**The accompanying notes are anintegral part of the consolidated financial statements.**

** **

**4**

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** **

**CASCADE CORPORATION**

**CONSOLIDATEDBALANCE SHEETS**

**(Unaudited—in thousands, except pershare amounts)**

 
| ** **                                                                                                | ** ** | **October 31  2007** | ** ** | **January 31  2007** | ** ** |
|-----------------------------------------------------------------------------------------------------------|------------|----------------------|------------|----------------------|------------|
|                                                                                                      |       |                 |       |                 |       |
| **ASSETS**                                                                                                | ** ** | ** **           | ** ** | ** **           | ** ** |
| Current assets:                                                                                           |       |                 |       |                 |       |
| Cash and cash  equivalents                                                                                |       | $                    | 23,019     |                 | $          | 36,593 |   |
| Accounts  receivable, less allowance for doubtful accounts of $1,569 and $1,515                           |       | 96,666               |       | 74,992               |       |
| Inventories                                                                                               |       | 81,242               |       | 58,280               |       |
| Deferred income  taxes                                                                                    |       | 3,592                |       | 4,481                |       |
| Prepaid expenses  and other                                                                               |       | 9,192                |       | 8,609                |       |
| Total current  assets                                                                                     |       | 213,711              |       | 182,955              |       |
| Property, plant  and equipment, net                                                                       |       | 92,578               |       | 84,151               |       |
| Goodwill                                                                                                  |       | 123,733              |       | 99,498               |       |
| Deferred income  taxes                                                                                    |       | 7,931                |       | 11,817               |       |
| Intangible  assets, net                                                                                   |       | 21,285               |       | 17,026               |       |
| Other assets                                                                                              |       | 1,738                |       | 1,985                |       |
| Total assets                                                                                              |       | $                    | 460,976    |                 | $          | 397,432 |   |
|                                                                                                      |       |                 |       |                 |       |
| **LIABILITIES AND SHAREHOLDERS’ EQUITY**                                                             | ** ** | ** **           | ** ** | ** **           | ** ** |
| Current  liabilities:                                                                                     |       |                 |       |                 |       |
| Notes payable to  banks                                                                                   |       | $                    | 4,958      |                 | $          | 4,546 |   |
| Current portion  of long-term debt                                                                        |       | 12,500               |       | 12,573               |       |
| Accounts payable                                                                                          |       | 37,390               |       | 26,008               |       |
| Accrued payroll  and payroll taxes                                                                        |       | 10,377               |       | 9,391                |       |
| Other accrued  expenses                                                                                   |       | 14,087               |       | 17,307               |       |
| Total current  liabilities                                                                                |       | 79,312               |       | 69,825               |       |
| Long-term debt,  net of current portion                                                                   |       | 45,000               |       | 34,000               |       |
| Accrued  environmental expenses                                                                           |       | 5,067                |       | 5,838                |       |
| Deferred income  taxes                                                                                    |       | 5,369                |       | 2,798                |       |
| Employee benefit  obligations                                                                             |       | 9,958                |       | 9,719                |       |
| Other  liabilities                                                                                        |       | 2,897                |       | 3,616                |       |
| Total  liabilities                                                                                        |       | 147,603              |       | 125,796              |       |
|                                                                                                      |       |                 |       |                 |       |
| Commitments and  contingencies (Note 7)                                                                   |       |                 |       |                 |       |
|                                                                                                      |       |                 |       |                 |       |
| Shareholders’  equity:                                                                               |       |                 |       |                 |       |
| Common stock,  $.50 par value, 20,000 authorized shares; 11,803 and 12,070 shares issued and  outstanding |       | 5,901                |       | 6,035                |       |
| Retained  earnings                                                                                        |       | 267,764              |       | 253,307              |       |
| Accumulated  other comprehensive income                                                                   |       | 39,708               |       | 12,294               |       |
| Total  shareholders’ equity                                                                          |       | 313,373              |       | 271,636              |       |
| Total  liabilities and shareholders’ equity                                                          |       | $                    | 460,976    |                 | $          | 397,432 |   |

 

 

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

 

5

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**CASCADE CORPORATION**

**CONSOLIDATEDSTATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY**

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

 
| ** **                                                           | ** ** | ** **       | ** ** | ** **     | ** ** | ** **   | ** ** | **Accumulated**   | ** ** | ** **             | ** ** | ** **        | ** ** |
|----------------------------------------------------------------------|------------|------------------|------------|----------------|------------|--------------|------------|-------------------|------------|------------------------|------------|-------------------|------------|
| ** **                                                           | ** ** | ** **       | ** ** | **Additional** | ** ** | ** **   | ** ** | **Other**         | ** ** | **Total**              | ** ** | **Year-To-Date**  | ** ** |
| ** **                                                           | ** ** | **Common Stock** | ** ** | **Paid-In**    | ** ** | **Retained** | ** ** | **Comprehensive** | ** ** | **Shareholders’** | ** ** | **Comprehensive** | ** ** |
| ** **                                                           | ** ** | **Shares**       | ** ** | **Amount**     | ** ** | **Capital**  | ** ** | **Earnings**      | ** ** | **Income**             | ** ** | **Equity**        | ** ** | **Income  (Loss)** | ** ** |
| **Balance  at January 31, 2007**                                     |       | 12,070           |       | $              | 6,035      |         | $          | —            |       | $                      | 253,307    |              | $          | 12,294 |   | $ | 271,636 |   |   |   |
|                                                                 |       |             |       |           |       |         |       |              |       |                   |       |              |       |   |   |
| Net income                                                           |       |             |       |           |       | —       |       | 51,360            |       | —                 |       | 51,360            |       | $ | 51,360 |   |
| Dividends ($ 0.52 per share)                                    |       | —           |       | —         |       | —       |       | (6,194            | )          | —                 |       | (6,194            | )          | — |   |
| Common stock  issued                                                 |       | 424              |       | 212            |       | 3,632        |       | —            |       | —                 |       | 3,844             |       |   |   |
| Excess tax  benefit from exercise of share-based compensation awards |       | —           |       | —         |       | 3,268        |       | —            |       | —                 |       | 3,268             |       | — |   |
| Common stock  repurchased                                            |       | (691             | )          | (346           | )          | (10,129      | )          | (30,709           | )          | —                 |       | (41,184           | )          | — |   |
| Share-based  compensation                                            |       | —           |       | —         |       | 3,229        |       | —            |       | —                 |       | 3,229             |       | — |   |
| Minimum  pension/post-retirement adjustment                          |       | —           |       | —         |       | —       |       | —            |       | 18                     |       | 18                |       | 18 |   |
| Translation  adjustment                                              |       | —           |       | —         |       | —       |       | —            |       | 27,396                 |       | 27,396            |       | 27,396 |   |
|                                                                 |       |             |       |           |       |         |       |              |       |                   |       |              |       |   |   |
| **Balance  at October 31, 2007**                                     |       | 11,803           |       | $              | 5,901      |         | $          | —            |       | $                      | 267,764    |              | $          | 39,708 |   | $ | 313,373 |   | $ | 78,774 |   |

 

The accompanying notesare an integral part of the consolidated financial statements.

 

6

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**CASCADE CORPORATION**

**CONSOLIDATEDSTATEMENTS OF CASH FLOWS**

**(Unaudited—in thousands)**

 
| ** **                                                                         | ** ** | **Nine Months Ended  October 31** | ** ** |
|------------------------------------------------------------------------------------|------------|-----------------------------------|------------|
| ** **                                                                         | ** ** | **2007**                          | ** ** | **2006** | ** ** |
| **Cash  flows from operating activities:**                                         | ** ** | ** **                        | ** ** | ** ** | ** ** |
| Net income                                                                         |       | $                                 | 51,360     |   | $ | 35,240 |   |
| Adjustments to  reconcile net income to net cash provided by operating activities: |       |                              |       |   |   |
| Depreciation and  amortization                                                     |       | 12,711                            |       | 11,251 |   |
| Share-based  compensation                                                          |       | 3,229                             |       | 2,958 |   |
| Deferred income  taxes                                                             |       | 1,917                             |       | (1,853 | ) |
| Gain on disposition  of assets                                                     |       | (1,178                            | )          | (572 | ) |
| Changes in  operating assets and liabilities:                                      |       |                              |       |   |   |
| Accounts  receivable                                                               |       | (13,552                           | )          | (12,130 | ) |
| Inventories                                                                        |       | (16,379                           | )          | 3,729 |   |
| Prepaid expenses  and other                                                        |       | (873                              | )          | (443 | ) |
| Accounts payable  and accrued expenses                                             |       | 6,791                             |       | (1,522 | ) |
| Income taxes  payable and receivable                                               |       | 594                               |       | (1,090 | ) |
| Other assets and  liabilities                                                      |       | (1,054                            | )          | (55 | ) |
| Net cash  provided by operating activities                                         |       | 43,566                            |       | 35,513 |   |
|                                                                               |       |                              |       |   |   |
| **Cash  flows from investing activities:**                                         | ** ** | ** **                        | ** ** | ** ** | ** ** |
| Capital  expenditures                                                              |       | (14,262                           | )          | (11,890 | ) |
| Proceeds from  disposition of assets                                               |       | 2,638                             |       | 1,669 |   |
| Business  acquisitions                                                             |       | (11,529                           | )          | — |   |
| Sales of  marketable securities                                                    |       | —                            |       | 20,800 |   |
| Purchases of  marketable securities                                                |       | —                            |       | (13,600 | ) |
| Net cash used in  investing activities                                             |       | (23,153                           | )          | (3,021 | ) |
|                                                                               |       |                              |       |   |   |
| **Cash  flows from financing activities:**                                         | ** ** | ** **                        | ** ** | ** ** | ** ** |
| Cash dividends  paid                                                               |       | (6,194                            | )          | (5,654 | ) |
| Payments on  long-term debt                                                        |       | (82,642                           | )          | (89 | ) |
| Proceeds from  long-term debt                                                      |       | 93,200                            |       | — |   |
| Notes payable to  banks, net                                                       |       | (624                              | )          | (3,747 | ) |
| Common stock  issued under share-based compensation plans                          |       | 3,844                             |       | 1,764 |   |
| Common stock  repurchased                                                          |       | (43,463                           | )          | (12,808 | ) |
| Excess tax  benefit from exercise of share-based compensation awards               |       | 3,268                             |       | 1,054 |   |
| Net cash used in  financing activities                                             |       | (32,611                           | )          | (19,480 | ) |
| ** **                                                                         | ** ** | ** **                        | ** ** | ** ** | ** ** |
| Effect of  exchange rate changes                                                   |       | (1,376                            | )          | (247 | ) |
|                                                                               |       |                              |       |   |   |
| Change in cash  and cash equivalents                                               |       | (13,574                           | )          | 12,765 |   |
| Cash and cash  equivalents at beginning of period                                  |       | 36,593                            |       | 35,493 |   |
| Cash and cash  equivalents at end of period                                        |       | $                                 | 23,019     |   | $ | 48,258 |   |
|                                                                               |       |                              |       |   |   |
| **Supplemental  disclosure of cash flow information:**                             | ** ** | ** **                        | ** ** | ** ** | ** ** |
| See Note 9 to  the consolidated financial statements                               |       |                              |       |   |   |

 

The accompanying notesare an integral part of the consolidated financial statements.

 

7

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**CASCADE CORPORATION**

**NOTES TOCONSOLIDATED FINANCIAL STATEMENTS**

**(Unaudited)**

 

**Note 1—Descriptionof Business**

Cascade Corporation is an international manufacturerof materials handling products that are widely used on industrial fork lifttrucks and, to a lesser extent, construction, mining and agricultural vehicles.Accordingly, our sales are largely dependent on sales of lift trucks and on thesales of replacement parts. Our sales are made throughout the world. We areheadquartered in Fairview, Oregon, employing approximately 2,400 people andmaintaining operations in 15 countries outside the United States.

**Note 2—InterimFinancial Information**

The accompanying consolidated financial statements forthe interim periods ended October 31, 2007 and 2006 are unaudited. In theopinion of management, the accompanying consolidated financial statementsreflect normal recurring adjustments necessary for a fair statement of thefinancial position, results of operations and cash flows for those interimperiods. Results of operations for the interim periods are not necessarilyindicative of the results to be expected for the full year, and these financialstatements do not contain the detail or footnote disclosures concerningaccounting policies and other matters that would be included in full fiscalyear financial statements. Therefore, these statements should be read inconjunction with our audited financial statements included in our Annual Reporton Form 10-K for the fiscal year ended January 31, 2007.

**Note 3—Segment Information**

Our operating units have largely similar economiccharacteristics and attributes, including similar products, distributionpatterns and classes of customers. As a result, we aggregate our operatingunits into four geographic operating segments related to the manufacturing,distribution and servicing of material handling load engagement products. Weevaluate performance of each of our operating segments based on operatingincome, which is income before interest, miscellaneous income/expense and incometaxes. The accounting policies of the operating segments are the same as thosedescribed in the summary of significant accounting policies contained in Note 2of our consolidated financial statements included in our Form 10-K for thefiscal year ended January 31, 2007.

Revenues and operating results are classifiedaccording to the country of origin. Identifiable assets are attributed to the geographic location in whichthey are located. Net sales, operating results and identifiable assets bygeographic region were as follows (in thousands):

 

8

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| ** **                                 | ** ** | **Three Months Ended October 31** | ** ** |
|--------------------------------------------|------------|-----------------------------------|------------|
| **2007**                                   | ** ** | **North America**                 | ** ** | **Europe** | ** ** | **Asia Pacific** | ** ** | **China** | ** ** | **Eliminations** | ** ** | **Consolidated** | ** ** |
| Net sales                                  |       | $                                 | 73,757     |   | $ | 43,408 |   | $ | 15,460 |   | $ | 10,518 |   | $ | — |   | $ | 143,143 |   |
| Transfers  between areas                   |       | 8,940                             |       | 434 |   | 27 |   | 5,258 |   | (14,659 | ) | — |   |
| Net sales and  transfers                   |       | $                                 | 82,697     |   | $ | 43,842 |   | $ | 15,487 |   | $ | 15,776 |   | $ | (14,659 | ) | $ | 143,143 |   |
| Gross profit                               |       | $                                 | 28,393     |   | $ | 6,891 |   | $ | 3,966 |   | $ | 4,791 |   |   |   | $ | 44,041 |   |
| Selling and  administrative                |       | 12,676                            |       | 6,738 |   | 2,186 |   | 1,056 |   |   |   | 22,656 |   |
| Loss (gain) on  disposition of assets, net |       | 10                                |       | — |   | (18 | ) | 2 |   |   |   | (6 | ) |
| Amortization                               |       | 599                               |       | 165 |   | — |   | — |   |   |   | 764 |   |
| Operating income  (loss)                   |       | $                                 | 15,108     |   | $ | (12 | ) | $ | 1,798 |   | $ | 3,733 |   |   |   | $ | 20,627 |   |
| Total assets                               |       | $                                 | 241,142    |   | $ | 133,579 |   | $ | 39,216 |   | $ | 47,039 |   |   |   | $ | 460,976 |   |
| Property, plant  and equipment, net        |       | $                                 | 35,233     |   | $ | 38,474 |   | $ | 2,249 |   | $ | 16,622 |   |   |   | $ | 92,578 |   |
| Capital  expenditures                      |       | $                                 | 2,505      |   | $ | 1,983 |   | $ | 292 |   | $ | 376 |   |   |   | $ | 5,156 |   |
| Depreciation  expense                      |       | $                                 | 1,680      |   | $ | 1,264 |   | $ | 94 |   | $ | 378 |   |   |   | $ | 3,416 |   |
|                                       |       |                              |       |   |   |   |   |   |   |   |   |   |   |
|                                       |       |                              |       |   |   |   |   |   |   |   |   |   |   |
|                                       | ** ** | **Three Months Ended October 31** |       |
| **2006**                                   | ** ** | **North America**                 | ** ** | **Europe** | ** ** | **Asia Pacific** | ** ** | **China** | ** ** | **Eliminations** | ** ** | **Consolidated** | ** ** |
| Net sales                                  |       | $                                 | 68,287     |   | $ | 34,368 |   | $ | 12,551 |   | $ | 7,603 |   | $ | — |   | $ | 122,809 |   |
| Transfers  between areas                   |       | 6,600                             |       | 213 |   | 35 |   | 2,175 |   | (9,023 | ) | — |   |
| Net sales and  transfers                   |       | $                                 | 74,887     |   | $ | 34,581 |   | $ | 12,586 |   | $ | 9,778 |   | $ | (9,023 | ) | $ | 122,809 |   |
| Gross profit                               |       | $                                 | 27,334     |   | $ | 5,622 |   | $ | 3,139 |   | $ | 3,358 |   |   |   | $ | 39,453 |   |
| Selling and  administrative                |       | 11,170                            |       | 5,754 |   | 2,147 |   | 759 |   |   |   | 19,830 |   |
| Loss (gain) on  disposition of assets, net |       | 10                                |       | 28 |   | (2 | ) | 9 |   |   |   | 45 |   |
| Amortization                               |       | 89                                |       | 235 |   | 19 |   | 25 |   |   |   | 368 |   |
| Operating income  (loss)                   |       | $                                 | 16,065     |   | $ | (395 | ) | $ | 975 |   | $ | 2,565 |   |   |   | $ | 19,210 |   |
| Total assets                               |       | $                                 | 207,392    |   | $ | 112,063 |   | $ | 31,352 |   | $ | 33,721 |   |   |   | $ | 384,528 |   |
| Property, plant  and equipment, net        |       | $                                 | 33,189     |   | $ | 35,024 |   | $ | 1,530 |   | $ | 9,190 |   |   |   | $ | 78,933 |   |
| Capital  expenditures                      |       | $                                 | 1,159      |   | $ | 475 |   | $ | 131 |   | $ | 3,877 |   |   |   | $ | 5,642 |   |
| Depreciation  expense                      |       | $                                 | 1,920      |   | $ | 1,222 |   | $ | 86 |   | $ | 161 |   |   |   | $ | 3,389 |   |
|                                       |       |                              |       |   |   |   |   |   |   |   |   |   |   |
|                                       |       |                              |       |   |   |   |   |   |   |   |   |   |   |
|                                       | ** ** | **Nine Months Ended October 31**  | ** ** |
| **2007**                                   | ** ** | **North America**                 | ** ** | **Europe** | ** ** | **Asia Pacific** | ** ** | **China** | ** ** | **Eliminations** | ** ** | **Consolidated** | ** ** |
| Net sales                                  |       | $                                 | 219,708    |   | $ | 128,430 |   | $ | 44,346 |   | $ | 29,342 |   | $ | — |   | $ | 421,826 |   |
| Transfers  between areas                   |       | 25,843                            |       | 1,131 |   | 125 |   | 11,817 |   | (38,916 | ) | — |   |
| Net sales and  transfers                   |       | $                                 | 245,551    |   | $ | 129,561 |   | $ | 44,471 |   | $ | 41,159 |   | $ | (38,916 | ) | $ | 421,826 |   |
| Gross profit                               |       | $                                 | 85,590     |   | $ | 22,420 |   | $ | 11,145 |   | $ | 13,401 |   |   |   | $ | 132,556 |   |
| Selling and  administrative                |       | 37,217                            |       | 19,487 |   | 6,287 |   | 2,851 |   |   |   | 65,842 |   |
| Loss (gain) on  disposition of assets, net |       | (1,184                            | )          | 8 |   | (35 | ) | 33 |   |   |   | (1,178 | ) |
| Amortization                               |       | 1,826                             |       | 579 |   | — |   | 1 |   |   |   | 2,406 |   |
| Insurance  litigation recovery, net        |       | (15,977                           | )          | — |   | — |   | — |   |   |   | (15,977 | ) |
| Operating income                           |       | $                                 | 63,708     |   | $ | 2,346 |   | $ | 4,893 |   | $ | 10,516 |   |   |   | $ | 81,463 |   |
| Capital  expenditures                      |       | $                                 | 6,006      |   | $ | 3,344 |   | $ | 741 |   | $ | 4,171 |   |   |   | $ | 14,262 |   |
| Depreciation  expense                      |       | $                                 | 5,330      |   | $ | 3,724 |   | $ | 291 |   | $ | 960 |   |   |   | $ | 10,305 |   |
|                                       |       |                              |       |   |   |   |   |   |   |   |   |   |   |
|                                       |       |                              |       |   |   |   |   |   |   |   |   |   |   |
|                                       | ** ** | **Nine Months Ended October 31**  | ** ** |
| **2006**                                   | ** ** | **North America**                 | ** ** | **Europe** | ** ** | **Asia Pacific** | ** ** | **China** | ** ** | **Eliminations** | ** ** | **Consolidated** | ** ** |
| Net sales                                  |       | $                                 | 200,749    |   | $ | 101,416 |   | $ | 36,007 |   | $ | 21,787 |   | $ | — |   | $ | 359,959 |   |
| Transfers  between areas                   |       | 19,104                            |       | 1,050 |   | 203 |   | 5,546 |   | (25,903 | ) | — |   |
| Net sales and  transfers                   |       | $                                 | 219,853    |   | $ | 102,466 |   | $ | 36,210 |   | $ | 27,333 |   | $ | (25,903 | ) | $ | 359,959 |   |
| Gross profit                               |       | $                                 | 79,373     |   | $ | 17,239 |   | $ | 8,867 |   | $ | 9,016 |   |   |   | $ | 114,495 |   |
| Selling and  administrative                |       | 34,141                            |       | 17,154 |   | 6,225 |   | 2,059 |   |   |   | 59,579 |   |
| Loss (gain) on  disposition of assets, net |       | 19                                |       | (589 | ) | (12 | ) | 10 |   |   |   | (572 | ) |
| Amortization                               |       | 267                               |       | 650 |   | 19 |   | 39 |   |   |   | 975 |   |
| Operating income                           |       | $                                 | 44,946     |   | $ | 24 |   | $ | 2,635 |   | $ | 6,908 |   |   |   | $ | 54,513 |   |
| Capital  expenditures                      |       | $                                 | 4,886      |   | $ | 1,467 |   | $ | 275 |   | $ | 5,262 |   |   |   | $ | 11,890 |   |
| Depreciation  expense                      |       | $                                 | 6,026      |   | $ | 3,655 |   | $ | 298 |   | $ | 297 |   |   |   | $ | 10,276 |   |

 

9

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**Note 4—Inventories**

Inventories stated at the lower of average cost ormarket are presented below by major class (in thousands).

| ** **                     | ** ** | **October 31  2007** | ** ** | **January 31  2007** | ** ** |
|--------------------------------|------------|----------------------|------------|----------------------|------------|
| Finished goods  and components |       | $                    | 49,354     |                 | $          | 36,716 |   |
| Work in process                |       | 1,010                |       | 399                  |       |
| Raw materials                  |       | 30,878               |       | 21,165               |       |
|                           |       | $                    | 81,242     |                 | $          | 58,280 |   |

 

**Note 5—Goodwill**

During the nine months ended October 31, 2007,goodwill increased $16.6 million due to fluctuations in foreigncurrencies.  The remaining increase ingoodwill between October 31, 2007 and January 31, 2007 relates toacquisitions. We have no goodwill recorded in China. The following tableprovides a breakdown of goodwill by geographic region (in thousands):

| ** **    | ** ** | **October 31  2007** | ** ** | **January 31  2007** | ** ** |
|---------------|------------|----------------------|------------|----------------------|------------|
| North America |       | $                    | 109,075    |                 | $          | 85,903 |   |
| Europe        |       | 11,698               |       | 10,598               |       |
| Asia Pacific  |       | 2,960                |       | 2,997                |       |
|          |       | $                    | 123,733    |                 | $          | 99,498 |   |

 

**Note 6—Share-BasedCompensation Plans**

Wehave granted three types of share-based awards, stock appreciation rights(SARS), restricted stock and stock options under our share-based compensationplans to officers, key managers and directors. The grant prices are established by our Board of Directors’ CompensationCommittee at the time the awards are granted. We issue new common shares upon the exercise of all awards.

 

SARSprovide the holder the right to receive an amount, payable in our commonshares, equal to the excess of the market value of our common shares on thedate of exercise (“intrinsic value”) over the base price at the time the rightwas granted. The base price may not be less than the market price of our commonshares on the date of grant.  All SARS vestratably over a four year period and have a term of ten years.

 

 During the second quarter of fiscal 2008, ourshareholders approved a proposal to amend the SARS plan to permit the issuanceof restricted shares of common stock. Upon the granting of restricted stock, common shares are issued to therecipient, but the shares may not be sold, assigned, transferred, pledged, ordisposed of by the recipient until vested. Regardless of vesting, restricted shares have full voting rights and anydividends declared will be paid to the restricted stock recipient.  Restricted shares vest ratably over a periodof three years for officers and four years for directors.  The number of restricted shares issued todirectors is based on the market value of our shares on the date of grant.

 

Theamended SARS plan provides for the issuance of a maximum of 750,000 shares ofcommon stock upon the exercise of SARS or issuance of restricted stock.  As of October 31, 2007, a total of 217,000shares of common stock have been issued under the SARS plan, which includes42,000 shares of restricted stock with a grant date fair market value of $73.73per share.

 

Stockoptions provide the holder the right to receive our common shares at anestablished price.  We have reserved1,400,000 shares of common stock under our stock option plan. As of October 31,2007, a total of 1,083,000 shares have been issued upon the exercise of stockoptions.  No additional stock options canbe granted under the terms of the plan. All outstanding stock options vest ratably over a four year period andhave a term of ten years.

 

10

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A summary of the plans’ status at October 31, 2007together with changes during the nine months then ended are presented in thefollowing tables (in thousands, except per share amounts):
| ** **                   | ** ** | **Stock Options**       | ** ** | **Stock Appreciation Rights**                   | ** ** |
|------------------------------|------------|-------------------------|------------|-------------------------------------------------|------------|
| ** **                   | ** ** | **Outstanding  Awards** | ** ** | **Weighted Average  Exercise Price  Per Share** | ** ** | **Outstanding  Awards** | ** ** | **Weighted Average  Exercise Price  Per Share** | ** ** |
|                         |       |                    |       |                                            |       |   |   |   |   |
| Balance at January  31, 2007 |       | 570                     |       | $                                               | 13.79      |   | 1,031 |   | $ | 31.56 |   |
| Granted                      |       | —                  |       | —                                          |       | 66 |   | 73.73 |   |
| Exercised                    |       | (276                    | )          | 14.02                                           |       | (170 | ) | 29.87 |   |
| Forfeited                    |       | (6                      | )          | 19.86                                           |       | (79 | ) | 33.93 |   |
|                         |       |                    |       |                                            |       |   |   |   |   |
| Balance at  October 31, 2007 |       | 288                     |       | $                                               | 13.43      |   | 848 |   | $ | 34.96 |   |

 

                                                Wecalculate share-based compensation cost for SARS and stock options using theBlack-Scholes option pricing model.  Therange of assumptions used to compute share-based compensation are as follows:

 

| ** **                                    | ** ** | **Granted in  Fiscal 2008** | ** ** | **Granted Prior to  Fiscal 2008** | ** ** |
|-----------------------------------------------|------------|-----------------------------|------------|-----------------------------------|------------|
|                                          |       |                        |       |                              |       |
| Risk-free  interest rate                      |       | 5.1                         | %          | 2.3 - 5.0                         | %          |
| Expected  volatility                          |       | 41                          | %          | 40 - 42                           | %          |
| Expected  dividend yield                      |       | 1.0                         | %          | 1.1 - 2.8                         | %          |
| Expected life  (in years)                     |       | 7                           |       | 5 - 6                             |       |
| Weighted average  fair value at date of grant |       | $                           | 33.31      |                              | $          | 4.16 - 17.86 |   |
|                                               |            |                             |            |                                   |            |  |  |

 

We calculate share-based compensation cost forrestricted stock by multiplying the fair market value of our common shares onthe grant date by the number of restricted shares expected to vest.  The restricted stock share-based compensationis expensed ratably over the applicable vesting period.

As of October 31, 2007, there was $10.3 million oftotal unrecognized compensation cost related to nonvested share-basedcompensation awards granted under the plans, which is expected to be recognizedover a weighted average period of 2.4 years. The following table represents asof October 31, 2007 the share-based compensation costs to be recognized infuture periods (in thousands) for awards granted to date:

| **Fiscal Year** | ** ** | **Amount** | ** ** |
|-----------------|------------|------------|------------|
| 2008*           |       | $          | 1,301      |   |
| 2009            |       | 4,563      |       |
| 2010            |       | 3,057      |       |
| 2011            |       | 1,157      |       |
| 2012            |       | 198        |       |
|            |       | $          | 10,276     |   |

----

***   Representslast three months of fiscal 2008.**

 

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**Note 7—Commitments and Contingencies**

**Environmental Matters**

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

It is reasonably possible that changes in estimateswill occur in the near term and the related adjustments to environmentalliabilities may have a material impact on our net income. Unasserted claims arenot currently reflected in our environmental remediation liabilities. It isalso reasonably possible that these claims may also have a material impact onour net income if asserted. We cannot estimate at this time the amount of anyadditional loss or range of loss that is reasonably possible.

Our specific environmental matters consist of thefollowing:

*Fairview, Oregon*

In 1996, the Oregon Department of EnvironmentalQuality issued two Records of Decision affecting our Fairview, Oregonmanufacturing facility. The Records of Decision required us to initiateremedial activities related to the cleanup of groundwater contamination at andnear the facility. Remediation activities have been conducted since 1996 andcurrent estimates provide for some level of activity to continue through 2019.Costs of certain remediation activities at the facility are shared with TheBoeing Company, with Cascade paying 70% of these costs. The recorded liabilityfor ongoing remediation activities at our Fairview facility was$5.2 million and $5.9 million at October 31, 2007 andJanuary 31, 2007, respectively.

*Springfield, Ohio*

In 1994, we entered into a consent order with the OhioEnvironmental Protection Agency, which required the installation of remediationsystems for the cleanup of groundwater contamination at our Springfield, Ohiofacility. The current estimate is that the remediation activities will continuethrough 2013. The recorded liability for ongoing remediation activities inSpringfield was $879,000 at October 31, 2007 and $1.0 million atJanuary 31, 2007.

*Insurance Litigation*

On April 9, 2007, we entered into a settlementagreement with Employers Reinsurance Corporation with respect to litigation torecover various expenses incurred in connection with environmental and relatedproceedings.  The recovery from thesettlement, recorded during the three months ended April 30, 2007, was $16.0million, net of expenses.  In connectionwith the settlement, we released all rights we might have under insurancepolicies issued by Employers Reinsurance Corporation and certain relatedentities.  This concluded all litigationagainst our insurance companies with regard to environmental matters.

**LegalProceedings**

Weare subject to legal proceedings, claims and litigation, in addition to theenvironmental matters previously discussed, arising in the ordinary course ofbusiness. While the outcome of these matters is currently not determinable,management does not expect the ultimate costs to be material to ourconsolidated financial position, result of operations, or cash flows.

 

12

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**Note 8—Earnings PerShare**

The following table presents the calculation of basic anddiluted earnings per share (in thousands, except per share amounts):
| ** **                                                      | ** ** | **Three Months Ended October 31** | ** ** | **Nine Months Ended October 31** | ** ** |
|-----------------------------------------------------------------|------------|-----------------------------------|------------|----------------------------------|------------|
| ** **                                                      | ** ** | **2007**                          | ** ** | **2006**                         | ** ** | **2007** | ** ** | **2006** | ** ** |
| Basic earnings  per share:                                      |       |                              |       |                             |       |   |   |   |   |
| Net income                                                      |       | $                                 | 12,420     |                             | $          | 12,283 |   | $ | 51,360 |   | $ | 35,240 |   |
| Weighted average  shares of common stock outstanding            |       | 11,965                            |       | 12,604                           |       | 11,954 |   | 12,572 |   |
|                                                            |       | $                                 | 1.04       |                             | $          | 0.97 |   | $ | 4.30 |   | $ | 2.80 |   |
|                                                            |       |                              |       |                             |       |   |   |   |   |
| Diluted earnings  per share:                                    |       |                              |       |                             |       |   |   |   |   |
| Net income                                                      |       | $                                 | 12,420     |                             | $          | 12,283 |   | $ | 51,360 |   | $ | 35,240 |   |
| Weighted average  shares of common stock outstanding            |       | 11,965                            |       | 12,604                           |       | 11,954 |   | 12,572 |   |
| Dilutive effect  of stock options and stock appreciation rights |       | 426                               |       | 446                              |       | 533 |   | 516 |   |
| Diluted weighted  average shares of common stock outstanding    |       | 12,391                            |       | 13,050                           |       | 12,487 |   | 13,088 |   |
|                                                            |       | $                                 | 1.00       |                             | $          | 0.94 |   | $ | 4.11 |   | $ | 2.69 |   |

 

                                                Basic earnings per share is based on theweighted average number of common shares outstanding for the period. Dilutedweighted average common shares includes the incremental shares that would beissued upon the assumed exercise of stock options and stock appreciation rightsand the amount of unvested restricted stock. Unexercised SARs totaling 66,000 awards were excluded from the fiscal2008 three months and nine months calculations of diluted earnings per sharebecause they were antidilutive.  Theremaining SARs and all stock options and restricted stock were included in ourcalculation of incremental shares because they are dilutive.

 

13

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**Note 9—Supplemental Cash Flow Information**

 

The following table presents information thatsupplements the consolidated statements of cash flow (in thousands):
| ** **                                             | ** ** | **For the Nine Months Ended October 31** | ** ** |
|--------------------------------------------------------|------------|------------------------------------------|------------|
| ** **                                             | ** ** | **2007**                                 | ** ** | **2006** | ** ** |
| Cash paid during  the period for:                      |       |                                     |       |   |   |
| Interest                                               |       | $                                        | 2,650      |   | $ | 1,082 |   |
| Income taxes                                           |       | $                                        | 20,825     |   | $ | 21,549 |   |
|                                                   |       |                                     |       |   |   |
| Supplemental  disclosure of investing activities:      |       |                                     |       |   |   |
| Current year  business acquisitions:                   |       |                                     |       |   |   |
| Accounts  receivable and other assets                  |       | $                                        | 935        |   | $ | — |   |
| Inventories                                            |       | 818                                      |       | — |   |
| Property, plant  and equipment                         |       | 296                                      |       | — |   |
| Intangible  asset—customer relationships          |       | 5,400                                    |       | — |   |
| Intangible  asset—intellectual property and other |       | 1,900                                    |       |   |   |
| Goodwill                                               |       | 6,478                                    |       | — |   |
| Accounts payable  and other liabilities assumed        |       | (708                                     | )          | — |   |
| Notes payable assumed                                  |       | (931                                     | )          | — |   |
| Deferred income  tax liability                         |       | (2,659                                   | )          |   |   |
| Net cash paid  for current year acquisitions           |       | $                                        | 11,529     |   | $ | — |   |

 

14

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**Note 10—Benefit Plans**

The following tablerepresents the net periodic cost related to our defined benefit plans inEngland and France and our postretirement health benefit plan in the UnitedStates (in thousands):
| ** **                      | ** ** | **Defined Benefit  Three Months Ended October 31** | ** ** | **Postretirement Benefit  Three Months Ended October 31** | ** ** |
|---------------------------------|------------|----------------------------------------------------|------------|-----------------------------------------------------------|------------|
| ** **                      | ** ** | **2007**                                           | ** ** | **2006**                                                  | ** ** | **2007** | ** ** | **2006** | ** ** |
| Net periodic  benefit cost:     |       |                                               |       |                                                      |       |   |   |   |   |
| Service cost                    |       | $                                                  | 15         |                                                      | $          | 17 |   | $ | 30 |   | $ | 34 |   |
| Interest cost                   |       | 133                                                |       | 120                                                       |       | 106 |   | 114 |   |
| Expected return  on plan assets |       | (130                                               | )          | (114                                                      | )          | — |   | — |   |
| Recognized prior  service cost  |       | —                                             |       | —                                                    |       | (19 | ) | (19 | ) |
| Recognized net  actuarial loss  |       | 22                                                 |       | 36                                                        |       | 48 |   | 110 |   |
| Settlements                     |       | —                                             |       | 99                                                        |       | — |   | — |   |
|                            |       | $                                                  | 40         |                                                      | $          | 158 |   | $ | 165 |   | $ | 239 |   |
|                            |       |                                               |       |                                                      |       |   |   |   |   |
| ** **                      | ** ** | **Defined Benefit  Nine Months Ended October 31**  | ** ** | **Postretirement Benefit  Nine Months Ended October 31**  | ** ** |
| ** **                      | ** ** | **2007**                                           | ** ** | **2006**                                                  | ** ** | **2007** | ** ** | **2006** | ** ** |
| Net periodic  benefit cost:     |       |                                               |       |                                                      |       |   |   |   |   |
| Service cost                    |       | $                                                  | 44         |                                                      | $          | 60 |   | $ | 90 |   | $ | 102 |   |
| Interest cost                   |       | 393                                                |       | 373                                                       |       | 317 |   | 342 |   |
| Expected return  on plan assets |       | (382                                               | )          | (362                                                      | )          | — |   | — |   |
| Recognized prior  service cost  |       | —                                             |       | —                                                    |       | (57 | ) | (57 | ) |
| Recognized net  actuarial loss  |       | 66                                                 |       | 107                                                       |       | 144 |   | 332 |   |
| Settlements                     |       | —                                             |       | 99                                                        |       | — |   | — |   |
|                            |       | $                                                  | 121        |                                                      | $          | 277 |   | $ | 494 |   | $ | 719 |   |

** **

**Note 11—Recent Accounting Pronouncements**

****SFAS 157—****In September 2006, the FinancialAccounting Standards Board (“FASB”) issued Statement of Financial AccountingStandards (“SFAS”) No. 157 (SFAS 157), “Fair Value Measurements.” SFAS 157provides a common definition of fair value, establishes a framework formeasuring fair value and expands the related disclosure requirements.Application of SFAS 157 is required for our financial statements for the fiscalyear beginning February 1, 2008. We are currently evaluating the impact of SFAS157 on our financial statements.

 

****SFAS 158****—In September 2006, the FASB issued SFASNo. 158 (SFAS 158), “Employers’ Accounting for Defined Benefit Pension andOther Postretirement Plans—an amendment of FASB Statements No. 87, 88, 106, and132(R).” This statement requires balance sheet recognition of the overfunded orunderfunded status of pension and postretirement benefit plans. Under SFAS 158,actuarial gains and losses, prior service costs or credits, and any remainingtransition assets or obligations that have not been recognized under previousaccounting standards must be recognized in other comprehensive income, net oftax effects, until they are amortized as a component of net periodic benefitcost. In addition, the measurement date, the date at which plan assets and thebenefit obligation are measured, is required to be the company’s fiscal yearend. Presently, we use a December 31 measurement date for thepostretirement benefit plan, which will change to coincide with our January 31fiscal year-end date. As required by SFAS 158, we adopted the balance sheetrecognition provision as of January 31, 2007. The measurement date provision iseffective for the fiscal year beginning February 1, 2008. We are currentlyevaluating the impact of the measurement date provision of SFAS 158 on ourconsolidated financial statements.

 

**SFAS 159**—In February 2007, the FASB issued SFASNo. 159 (SFAS 159), “The Fair Value Option for Financial Assets and FinancialLiabilities—Including an Amendment of FASB Statement No. 115.” SFAS 159 allowscompanies the choice to measure many financial instruments and certain otheritems at fair value. Application of SFAS 159 is required for our financialstatements beginning February 1, 2008. We are currently reviewing the impact ofthis pronouncement on our consolidated financial statements.

 

15

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**Note 12—Warranty Obligations**

 

We record a liability on our consolidated balancesheet for costs related to warranties with the sales of our products. Thisliability is estimated through historical customer claims, product failurerates, material usage and service delivery costs incurred in correcting aproduct failure. Our warranty obligations, which are recorded in other accruedexpenses on the consolidated balance sheets, were as follows (in thousands):

 

| ** **                                        | ** ** | **2007** | ** ** | **2006** | ** ** |
|---------------------------------------------------|------------|----------|------------|----------|------------|
| Balance at  January 31                            |       | $        | 1,754      |     | $          | 1,665 |   |
| Accruals for  warranties issued during the period |       | 1,929    |       | 1,922    |       |
| Accruals for  pre-existing warranties             |       | —   |       | (13      | )          |
| Settlements  during the period                    |       | (1,786   | )          | (1,868   | )          |
| Balance at  October 31                            |       | $        | 1,897      |     | $          | 1,706 |   |

** **

**Note 13—AccumulatedOther Comprehensive Income**

The following table presents the changes in and thecomponents of accumulated other comprehensive income (in thousands):
| ** **                                 | ** ** | **Accumulated Other Comprehensive Income (Loss)** | ** ** |
|--------------------------------------------|------------|---------------------------------------------------|------------|
| ** **                                 | ** ** | **Translation Adjustment**                        | ** ** | **Minimum Pension  Liability Adjustment** | ** ** | **Total** | ** ** |
| Balance at  January 31, 2007               |       | $                                                 | 14,675     |   | $ | (2,381 | ) | $ | 12,294 |   |
| Translation  adjustment                    |       | 27,396                                            |       | — |   | 27,396 |   |
| Minimum  pension/postretirement adjustment |       | —                                            |       | 18 |   | 18 |   |
| Balance at  October 31, 2007               |       | $                                                 | 42,071     |   | $ | (2,363 | ) | $ | 39,708 |   |

 

**Note 14—Gainon Sale of Assets**

During the second quarter of fiscal 2008, werecognized a $1.1 million gain on the sale of land in Fairview, Oregon.

During the first quarter of fiscal 2007, we recognizeda $715,000 gain on the sale of our manufacturing facility in Hoorn, TheNetherlands. We had closed this facility in fiscal 2006.

**Note 15—Acquisitions**

During the second quarter of fiscal 2008, we purchased100% of the stock of American Compaction Equipment, Inc., a manufacturer ofconstruction attachments located in San Juan Capistrano, California. The totalpurchase price was approximately $11.5 million, net of assumed liabilities. Resultsof operations for American Compaction Equipment, Inc. have been included in ourconsolidated statement of income since the acquisition date of May 1, 2007. Wehave not included pro forma financials as though the acquisition had occurredon February 1, 2007, due to materiality.

**Note 16—IncomeTaxes**

Effective February 1, 2007, we adopted the provisionsof FASB Interpretation No. 48 (“FIN 48”) which prescribes a more-likely-than-notthreshold for financial statement recognition and measurement of a tax positiontaken or expected to be taken in a tax return. This interpretation alsoprovides guidance on derecognition of income tax assets and liabilities,classification of current and deferred income tax assets and liabilities,accounting for interest and penalties associated with tax positions, accountingfor income taxes in interim periods and income tax disclosures.

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

We are subject to taxation primarily in the U.S.,Canada and China, as well as various state and other foreign jurisdictions. TheInternal Revenue Service is currently reviewing our U.S. income tax return forfiscal years 2004 - 2007. As of February 1, 2007, we remained subject to examinationin various state and foreign jurisdictions for the 1996-2006 tax years.

 

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**Item 2. Management’s Discussion and Analysis ofFinancial Condition and Results of Operations**

Ourbusinesses globally manufacture and distribute material handling loadengagement products primarily for the lift truck industry and to a lesserextent the construction industry. We operate in four geographic segments: NorthAmerica, Europe, Asia Pacific and China. All references to fiscal periods aredefined as the periods ended October 31, 2006 (fiscal 2007) and the periodsended October 31, 2007 (fiscal 2008).

 

**COMPARISON OF THIRD QUARTER OF FISCAL 2008 ANDFISCAL 2007**

 

**Executive Summary**

 
| ** **                  | ** ** | **Three Months Ended October 31**           | ** ** | ** ** | ** ** | ** ** | ** ** |
|-----------------------------|------------|---------------------------------------------|------------|------------|------------|------------|------------|
| ** **                  | ** ** | **2007**                                    | ** ** | **2006**   | ** ** | **Change** | ** ** | **Change %** | ** ** |
| ** **                  | ** ** | **(In thousands except per share amounts)** | ** ** | ** ** | ** ** |
| Net sales                   |       | $                                           | 143,143    |       | $          | 122,809    |       | $ | 20,334 |   | 17 | % |
| Operating income            |       | $                                           | 20,627     |       | $          | 19,210     |       | $ | 1,417 |   | 7 | % |
| Net income                  |       | $                                           | 12,420     |       | $          | 12,283     |       | $ | 137 |   | 1 | % |
| Diluted earnings  per share |       | $                                           | 1.00       |       | $          | 0.94       |       | $ | 0.06 |   | 6 | % |

 

Higher levels of netsales, operating income and net income in the third quarter of fiscal 2008compared to the third quarter of fiscal 2007 are primarily the result of thestrength of lift truck markets in Europe, China and Asia Pacific, acquisitionsin North America and our capital expansion plan in China. Lift truck shipmentsglobally increased 9% compared to the prior year. Excluding the impact offoreign currency, net sales increased 13% during the third quarter of fiscal2008. 

 

17

----

 

**NorthAmerica**

 
| ** **                          | ** ** | **Three Months Ended October 31** | ** ** | ** ** | ** ** | ** ** | ** ** |
|-------------------------------------|------------|-----------------------------------|------------|------------|------------|------------|------------|
| ** **                          | ** ** | **2007**                          | ** ** | **%**      | ** ** | **2006**   | ** ** | **%** | ** ** | **Change** | ** ** | **Change %** | ** ** |
| ** **                          | ** ** | **(In thousands)**                | ** ** | ** ** | ** ** | ** ** | ** ** |
| Net sales                           |       | $                                 | 73,757     |       | 89         | %          | $          | 68,287 |   | 91 | % | $ | 5,470 |   | 8 | % |
| Transfers  between areas            |       | 8,940                             |       | 11         | %          | 6,600      |       | 9 | % | 2,340 |   | 35 | % |
| Net sales and  transfers            |       | 82,697                            |       | 100        | %          | 74,887     |       | 100 | % | 7,810 |   | 10 | % |
|                                |       |                              |       |       |       |       |       |   |   |   |   |   |   |
| Cost of goods  sold                 |       | 54,304                            |       | 66         | %          | 47,553     |       | 64 | % | 6,751 |   | 14 | % |
| Gross profit                        |       | 28,393                            |       | 34         | %          | 27,334     |       | 36 | % | 1,059 |   | 4 | % |
|                                |       |                              |       |       |       |       |       |   |   |   |   |   |   |
| Selling and  administrative         |       | 12,676                            |       | 15         | %          | 11,170     |       | 15 | % | 1,506 |   | 13 | % |
| Loss on  disposition of assets, net |       | 10                                |       | —     |       | 10         |       | — |   | — |   | — |   |
| Amortization                        |       | 599                               |       | 1          | %          | 89         |       | — |   | 510 |   | — |   |
| Operating income                    |       | $                                 | 15,108     |       | 18         | %          | $          | 16,065 |   | 21 | % | $ | (957 | ) | (6 | )% |

 

The following are financial highlights for North America for the thirdquarter of fiscal 2008:

 

•                  Higher sales are primarily the result of the acquisitions of PacificServices & Manufacturing, Inc. and American Compaction Equipment, Inc. madein the fourth quarter of fiscal 2007 and the second quarter of fiscal 2008,respectively. Excluding sales related to our acquisitions and changes incurrencies, net sales were flat for the quarter.

•                  North America lift truck industry shipments from fiscal 2007 to fiscal2008 decreased 13%. We have found that lift truck industry statistics providean indication of the direction of our business activity. However, changes inour net sales do not correspond directly to the percentage changes in lifttruck industry shipments.

•                  Transfers to other Cascade geographic areas increased 35% during fiscal2008 compared to fiscal 2007, due to increased customer demand globally.

•                  Our gross profit percentage decreased slightly from 36% in fiscal 2007to 34% in fiscal 2008, due to higher material costs and changes in product mix.

•                  Excluding currency changes, selling and administrative costs increased12%. Expenses related to our acquisitions, higher personnel costs andconsulting charges account for this increase. As a percentage of net sales andtransfers, selling and administrative costs remained consistent at 15%.

•                  Higher amortization costs in fiscal 2008 relate to the amortization ofintangible assets from our acquisitions.

 

**Europe**

 
| ** **                          | ** ** | **Three Months Ended October 31** | ** ** | ** ** | ** ** | ** ** | ** ** |
|-------------------------------------|------------|-----------------------------------|------------|------------|------------|------------|------------|
| ** **                          | ** ** | **2007**                          | ** ** | **%**      | ** ** | **2006**   | ** ** | **%** | ** ** | **Change** | ** ** | **Change %** | ** ** |
| ** **                          | ** ** | **(In thousands)**                | ** ** | ** ** | ** ** | ** ** | ** ** |
| Net sales                           |       | $                                 | 43,408     |       | 99         | %          | $          | 34,368 |   | 99 | % | $ | 9,040 |   | 26 | % |
| Transfers  between areas            |       | 434                               |       | 1          | %          | 213        |       | 1 | % | 221 |   | 103 | % |
| Net sales and  transfers            |       | 43,842                            |       | 100        | %          | 34,581     |       | 100 | % | 9,261 |   | 27 | % |
|                                |       |                              |       |       |       |       |       |   |   |   |   |   |   |
| Cost of goods  sold                 |       | 36,951                            |       | 84         | %          | 28,959     |       | 84 | % | 7,992 |   | 28 | % |
| Gross profit                        |       | 6,891                             |       | 16         | %          | 5,622      |       | 16 | % | 1,269 |   | 23 | % |
|                                |       |                              |       |       |       |       |       |   |   |   |   |   |   |
| Selling and  administrative         |       | 6,738                             |       | 16         | %          | 5,754      |       | 16 | % | 984 |   | 17 | % |
| Loss on  disposition of assets, net |       | —                            |       | —     |       | 28         |       | — |   | (28 | ) | — |   |
| Amortization                        |       | 165                               |       | —     |       | 235        |       | 1 | % | (70 | ) | (30 | )% |
| Operating loss                      |       | $                                 | (12        | )          | 0          | %          | $          | (395 | ) | (1 | )% | $ | 383 |   | 97 | % |

 

The following are financial highlights for Europe for the third quarterof fiscal 2008:

 

•                  Net sales increased 17%, excluding currency changes, reflecting astrong European lift truck market.

•                  European lift truck industry shipments increased 20% compared to theprior year.

•                  Our gross profit percentage remained consistent at 16% during fiscal2008 and fiscal 2007. The benefits of fixed cost absorption due to higher salesand production levels were offset by increases in material costs and higherfreight and personnel expenses.

 

18

----

** **

**•**                  Selling and administrative expenses increased 7%, excluding currencychanges, due to higher sales, marketing, personnel and other generaladministrative costs. As a percentage of net sales and transfers, selling andadministration costs remained consistent at 16%.

 

**Asia Pacific**

 
| ** **                          | ** ** | **Three Months Ended October 31** | ** ** | ** ** | ** ** | ** ** | ** ** |
|-------------------------------------|------------|-----------------------------------|------------|------------|------------|------------|------------|
| ** **                          | ** ** | **2007**                          | ** ** | **%**      | ** ** | **2006**   | ** ** | **%** | ** ** | **Change** | ** ** | **Change %** | ** ** |
| ** **                          | ** ** | **(In thousands)**                | ** ** | ** ** | ** ** | ** ** | ** ** |
| Net sales                           |       | $                                 | 15,460     |       | 100        | %          | $          | 12,551 |   | 100 | % | $ | 2,909 |   | 23 | % |
| Transfers  between areas            |       | 27                                |       | —     |       | 35         |       | — |   | (8 | ) | (22 | )% |
| Net sales and  transfers            |       | 15,487                            |       | 100        | %          | 12,586     |       | 100 | % | 2,901 |   | 23 | % |
|                                |       |                              |       |       |       |       |       |   |   |   |   |   |   |
| Cost of goods  sold                 |       | 11,521                            |       | 74         | %          | 9,447      |       | 75 | % | 2,074 |   | 22 | % |
| Gross profit                        |       | 3,966                             |       | 26         | %          | 3,139      |       | 25 | % | 827 |   | 26 | % |
|                                |       |                              |       |       |       |       |       |   |   |   |   |   |   |
| Selling and  administrative         |       | 2,186                             |       | 14         | %          | 2,147      |       | 17 | % | 39 |   | 2 | % |
| Gain on  disposition of assets, net |       | (18                               | )          | —     |       | (2         | )          | — |   | (16 | ) | — |   |
| Amortization                        |       | —                            |       | —     |       | 19         |       | — |   | (19 | ) | — |   |
| Operating income                    |       | $                                 | 1,798      |       | 12         | %          | $          | 975 |   | 8 | % | $ | 823 |   | 84 | % |
|                                     |            |                                   |            |            |            |            |            |  |  |  |  |  |  |  |  |  |  |

 

The following are financial highlights for Asia Pacific for the thirdquarter of fiscal 2008:

 

•                  Excluding currency changes, net sales increased 17% during fiscal 2008,reflecting increases in sales at all locations throughout the region due to thestrength of current lift truck markets.

•                  Lift truck industry shipments in Asia Pacific increased 13% in fiscal2008.

•                  The gross profit percentage in Asia Pacific for fiscal 2008 increased1%, due to the sourcing of lower cost products from China.

**•**                  Selling and administrative costs decreased 5% infiscal 2008, excluding the impact of currency changes, due to personnel andgeneral cost decreases.

 

**China**

 
| ** **                          | ** ** | **Three Months Ended October 31** | ** ** | ** ** | ** ** | ** ** | ** ** |
|-------------------------------------|------------|-----------------------------------|------------|------------|------------|------------|------------|
| ** **                          | ** ** | **2007**                          | ** ** | **%**      | ** ** | **2006**   | ** ** | **%** | ** ** | **Change** | ** ** | **Change%** | ** ** |
| ** **                          | ** ** | **(In thousands)**                | ** ** | ** ** | ** ** | ** ** | ** ** |
| Net sales                           |       | $                                 | 10,518     |       | 67         | %          | $          | 7,603 |   | 78 | % | $ | 2,915 |   | 38 | % |
| Transfers  between areas            |       | 5,258                             |       | 33         | %          | 2,175      |       | 22 | % | 3,083 |   | 142 | % |
| Net sales and  transfers            |       | 15,776                            |       | 100        | %          | 9,778      |       | 100 | % | 5,998 |   | 61 | % |
|                                |       |                              |       |       |       |       |       |   |   |   |   |   |   |
| Cost of goods  sold                 |       | 10,985                            |       | 70         | %          | 6,420      |       | 66 | % | 4,565 |   | 71 | % |
| Gross profit                        |       | 4,791                             |       | 30         | %          | 3,358      |       | 34 | % | 1,433 |   | 43 | % |
|                                |       |                              |       |       |       |       |       |   |   |   |   |   |   |
| Selling and  administrative         |       | 1,056                             |       | 6          | %          | 759        |       | 8 | % | 297 |   | 39 | % |
| Loss on  disposition of assets, net |       | 2                                 |       | —     |       | 9          |       | — |   | (7 | ) | — |   |
| Amortization                        |       | —                            |       | —     |       | 25         |       | — |   | (25 | ) | — |   |
| Operating income                    |       | $                                 | 3,733      |       | 24         | %          | $          | 2,565 |   | 26 | % | $ | 1,168 |   | 46 | % |

 

The following are financial highlights for China for the third quarterof fiscal 2008:

 

•                  During fiscal 2008, net sales increased 33%, excluding the impact ofcurrency changes. Our recent capital expansion plan in China has enabled us tomanufacture a larger volume of products. We are currently seeing the benefitsof this effort with our increased sales activity.

•                  Lift truck shipments in China increased 20% in fiscal 2008.

•                  Transfers to other Cascade geographic areas, primarily Asia Pacific andEurope, increased 142% during fiscal 2008 due to the recent expansion of operationsin China.

•                  Current year gross profit percentage decreased to 30% from 34% in theprior year. This decrease is primarily the result of increased intercompanysales, changes in product mix and higher material costs.

 

19

----

 

•                  Excluding the impact of currency changes, selling and administrativecosts increased 33% due to additional costs to support our expanded operationsin China. As a percentage of net sales and transfers, selling andadministration costs decreased from 8% in fiscal 2007 to 6% for fiscal 2008.

 

**Non-Operating Items**

 

Duringthe third quarter of fiscal 2008, interest expense increased $462,000 comparedto the prior year as a result of increased borrowings to fund variousinitiatives, including our share repurchase program and our acquisition ofAmerica Compaction Equipment, Inc. These initiatives also resulted in adecrease in our cash and marketable securities balance and a corresponding$411,000 decrease in interest income during the current year.

 

Theincrease in other expense in the third quarter of fiscal 2008 is due to foreigncurrency losses, which are the result of stronger foreign currencies comparedto the U.S. dollar during the current year.

 

The effective tax rate decreased 2% in the thirdquarter of fiscal 2008 from 37% in the prior year. The decrease was primarilyrelated to lower state taxes and changes in income between jurisdictions withdiffering tax rates. These decreases were partially offset by additionalvaluation allowances from pre-tax losses in Europe.

 

**LiftTruck Market Outlook**

 

Basedon our review of preliminary industry data we believe the general lift truckmarket outlook for the remainder of fiscal 2008 is as follows:

 

•                  The market in North America will continue to be downcompared to the prior year.

•                  Europe will continue at current levels through theremainder of the year.

•                  The market in Asia Pacific will remain at currentlevels through the remainder of the year.

•                  The market in China will continue to experience its currentrate of growth through the remainder of the year.

 

20

----

 

**COMPARISON OF THE FIRST NINE MONTHS OF FISCAL 2008AND FISCAL 2007**

 

**Executive Summary**

** **
| ** **                  | ** ** | **Nine Months Ended October 31**            | ** ** | ** ** | ** ** | ** ** | ** ** |
|-----------------------------|------------|---------------------------------------------|------------|------------|------------|------------|------------|
| ** **                  | ** ** | **2007**                                    | ** ** | **2006**   | ** ** | **Change** | ** ** | **Change %** | ** ** |
| ** **                  | ** ** | **(In thousands except per share amounts)** | ** ** | ** ** | ** ** | ** ** | ** ** |
| Net sales                   |       | $                                           | 421,826    |       | $          | 359,959    |       | $ | 61,867 |   | 17 | % |
| Operating income            |       | $                                           | 81,463     |       | $          | 54,513     |       | $ | 26,950 |   | 49 | % |
| Net income                  |       | $                                           | 51,360     |       | $          | 35,240     |       | $ | 16,120 |   | 46 | % |
| Diluted earnings  per share |       | $                                           | 4.11       |       | $          | 2.69       |       | $ | 1.42 |   | 53 | % |
|                             |            |                                             |            |            |            |            |            |  |  |  |  |  |  |

 

Higher levels of netsales, operating income and net income in the first nine months of fiscal 2008compared to the first nine months of fiscal 2007, excluding the litigationinsurance settlement, are primarily the result of the strength of lift truckmarkets in Europe, China and Asia Pacific, acquisitions in North America andour capital expansion plan in China. Lift truck shipments globally increased 9%compared to the prior year. Excluding the impact of foreign currency, net salesincreased 14% during the first nine months of fiscal 2008.

 

In addition, we settledan insurance litigation matter during the first quarter of fiscal 2008 whichaccounted for a $16 million increase to operating income compared to the prioryear. The calculated diluted earnings per share, excluding the insurancelitigation recovery is $3.31 for the first nine months ended October 31, 2007compared to $2.69 in the prior year. We believe the exclusion of the insurancelitigation recovery provides a more appropriate comparison with the prior yearresults. The calculation of diluted earnings per share, excluding the insurancelitigation recovery, is as follows (in thousands, except per share amount):

 

| ** **                                                           | ** ** | **Nine months ended  October 31, 2007** | ** ** |
|----------------------------------------------------------------------|------------|-----------------------------------------|------------|
| Net income as  reported                                              |       | $                                       | 51,360     |   |
| Less: insurance  litigation recovery, net of income taxes of $5,951  |       | (10,026                                 | )          |
|                                                                 |       |                                    |       |
| Adjusted net  income, excluding insurance litigation recovery        |       | $                                       | 41,334     |   |
| Diluted weighted  average shares outstanding                         |       | 12,487                                  |       |
|                                                                 |       |                                    |       |
| Diluted earnings  per share, excluding insurance litigation recovery |       | $                                       | 3.31       |   |

 

21

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**North America**

 

 
| ** **                                 | ** ** | **Nine Months Ended October 31** | ** ** | ** ** | ** ** | ** ** | ** ** |
|--------------------------------------------|------------|----------------------------------|------------|------------|------------|------------|------------|
| ** **                                 | ** ** | **2007**                         | ** ** | **%**      | ** ** | **2006**   | ** ** | **%** | ** ** | **Change** | ** ** | **Change %** | ** ** |
| ** **                                 | ** ** | **(In thousands)**               | ** ** | ** ** | ** ** | ** ** | ** ** |
| Net sales                                  |       | $                                | 219,708    |       | 89         | %          | $          | 200,749 |   | 91 | % | $ | 18,959 |   | 9 | % |
| Transfers between  areas                   |       | 25,843                           |       | 11         | %          | 19,104     |       | 9 | % | 6,739 |   | 35 | % |
| Net sales and  transfers                   |       | 245,551                          |       | 100        | %          | 219,853    |       | 100 | % | 25,698 |   | 12 | % |
|                                       |       |                             |       |       |       |       |       |   |   |   |   |   |   |
| Cost of goods  sold                        |       | 159,961                          |       | 65         | %          | 140,480    |       | 64 | % | 19,481 |   | 14 | % |
| Gross profit                               |       | 85,590                           |       | 35         | %          | 79,373     |       | 36 | % | 6,217 |   | 8 | % |
|                                       |       |                             |       |       |       |       |       |   |   |   |   |   |   |
| Selling and  administrative                |       | 37,217                           |       | 15         | %          | 34,141     |       | 16 | % | 3,076 |   | 9 | % |
| Loss (gain) on  disposition of assets, net |       | (1,184                           | )          | —     |       | 19         |       | — |   | (1,203 | ) | — |   |
| Amortization                               |       | 1,826                            |       | 1          | %          | 267        |       | — |   | 1,559 |   | — |   |
| Insurance  litigation recovery, net        |       | (15,977                          | )          | (7         | )%         | —     |       | — |   | (15,977 | ) | — |   |
| Operating income                           |       | $                                | 63,708     |       | 26         | %          | $          | 44,946 |   | 20 | % | $ | 18,762 |   | 42 | % |

 

The following are financial highlights for North America for the firstnine months of fiscal 2008:

 

•                  Higher sales in fiscal 2008 are primarily the result of theacquisitions made in the fourth quarter of fiscal 2007 and the second quarterof fiscal 2008. Excluding net sales for acquisitions and the impact of currencychanges, net sales increased 1%.

•                  North America lift truck industry shipments from 2007 to 2008 decreased9%. We have found that lift truck industry statistics provide an indication ofthe direction of our business activity. However, changes in our net sales donot correspond directly to the percentage changes in lift truck industryshipments.

•                  Transfers to other Cascade geographic areas increased 35% during fiscal2008 compared to fiscal 2007 due to increased customer demand globally.

•                  Our gross profit percentage decreased 1% during fiscal 2008 compared tofiscal 2007, due to higher material costs and changes in product mix.

•                  Selling and administrative costs increased 9%, excluding currencychanges, mainly due to acquisitions and personnel costs. As a percentage of netsales and transfers, selling and administrative costs decreased from 16% infiscal 2007 to 15% for fiscal 2008.

•                  During the second quarter of fiscal 2008 we realized a gain of $1.1million on the sale of land in Fairview, Oregon.

•                  Higher amortization costs in fiscal 2008 relate to the amortization ofintangible assets from our acquisitions.

•                  During the first quarter of fiscal 2008, we entered into a settlementagreement with Employers Reinsurance Corporation with respect to litigation torecover various expenses incurred in connection with environmental and relatedproceedings. The recovery from this settlement was $16.0 million, net ofexpenses.

 

22

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**Europe**

 
| ** **                                 | ** ** | **Nine Months Ended October 31** | ** ** | ** ** | ** ** | ** ** | ** ** |
|--------------------------------------------|------------|----------------------------------|------------|------------|------------|------------|------------|
| ** **                                 | ** ** | **2007**                         | ** ** | **%**      | ** ** | **2006**   | ** ** | **%** | ** ** | **Change** | ** ** | **Change %** | ** ** |
| ** **                                 | ** ** | **(In thousands)**               | ** ** | ** ** | ** ** | ** ** | ** ** |
| Net sales                                  |       | $                                | 128,430    |       | 99         | %          | $          | 101,416 |   | 99 | % | $ | 27,014 |   | 27 | % |
| Transfers  between areas                   |       | 1,131                            |       | 1          | %          | 1,050      |       | 1 | % | 81 |   | 8 | % |
| Net sales and  transfers                   |       | 129,561                          |       | 100        | %          | 102,466    |       | 100 | % | 27,095 |   | 26 | % |
|                                       |       |                             |       |       |       |       |       |   |   |   |   |   |   |
| Cost of goods  sold                        |       | 107,141                          |       | 83         | %          | 85,227     |       | 83 | % | 21,914 |   | 26 | % |
| Gross profit                               |       | 22,420                           |       | 17         | %          | 17,239     |       | 17 | % | 5,181 |   | 30 | % |
|                                       |       |                             |       |       |       |       |       |   |   |   |   |   |   |
| Selling and  administrative                |       | 19,487                           |       | 15         | %          | 17,154     |       | 17 | % | 2,333 |   | 14 | % |
| Loss (gain) on  disposition of assets, net |       | 8                                |       | —     |       | (589       | )          | (1 | )% | 597 |   | — |   |
| Amortization                               |       | 579                              |       | —     |       | 650        |       | 1 | % | (71 | ) | (11 | )% |
| Operating income                           |       | $                                | 2,346      |       | 2          | %          | $          | 24 |   | 0 | % | $ | 2,322 |   | — |   |

 

The following are financial highlights for Europe for the first ninemonths of fiscal 2008:

 

•                  During fiscal 2008, net sales increased 18%, excluding currencychanges, reflecting a strong European lift truck market.

•                  European lift truck industry shipments increased 21% compared to theprior year.

•                  Our gross profit percentage remained consistent at 17% during fiscal2008 and fiscal 2007. The benefits of fixed cost absorption due to higher salesand production levels were offset by increases in material costs and higherfreight and personnel expenses.

•                  Excluding the impact of currency changes, selling and administrativeexpenses increased 5% in Europe, because of higher sales and marketing costs. Asa percentage of net sales and transfers, selling and administrative costsdecreased from 17% in fiscal 2007 to 15% for fiscal 2008.

 

**Asia Pacific**

 
| ** **                          | ** ** | **Nine Months Ended October 31** | ** ** | ** ** | ** ** | ** ** | ** ** |
|-------------------------------------|------------|----------------------------------|------------|------------|------------|------------|------------|
| ** **                          | ** ** | **2007**                         | ** ** | **%**      | ** ** | **2006**   | ** ** | **%** | ** ** | **Change** | ** ** | **Change %** | ** ** |
| ** **                          | ** ** | **(In thousands)**               | ** ** | ** ** | ** ** | ** ** | ** ** |
| Net sales                           |       | $                                | 44,346     |       | 100        | %          | $          | 36,007 |   | 99 | % | $ | 8,339 |   | 23 | % |
| Transfers  between areas            |       | 125                              |       | —     |       | 203        |       | 1 | % | (78 | ) | (38 | )% |
| Net sales and  transfers            |       | 44,471                           |       | 100        | %          | 36,210     |       | 100 | % | 8,261 |   | 23 | % |
|                                |       |                             |       |       |       |       |       |   |   |   |   |   |   |
| Cost of goods  sold                 |       | 33,326                           |       | 75         | %          | 27,343     |       | 76 | % | 5,983 |   | 22 | % |
| Gross profit                        |       | 11,145                           |       | 25         | %          | 8,867      |       | 24 | % | 2,278 |   | 26 | % |
|                                |       |                             |       |       |       |       |       |   |   |   |   |   |   |
| Selling and  administrative         |       | 6,287                            |       | 14         | %          | 6,225      |       | 17 | % | 62 |   | 1 | % |
| Gain on  disposition of assets, net |       | (35                              | )          | —     |       | (12        | )          | — |   | (23 | ) | — |   |
| Amortization                        |       | —                           |       | —     |       | 19         |       | — |   | (19 | ) | — |   |
| Operating income                    |       | $                                | 4,893      |       | 11         | %          | $          | 2,635 |   | 7 | % | $ | 2,258 |   | 86 | % |

 

The following are financial highlights for Asia Pacific for the firstnine months of fiscal 2008:

 

•                  Excluding currency changes, net sales increased 20% during fiscal 2008.This increase occurred in all locations throughout the region.

•                  Lift truck industry shipments in Asia Pacific increased 7% in fiscal2008 compared to fiscal 2007.

•                  The gross profit percentage in Asia Pacific increased 1% for fiscal2008 compared to fiscal 2007, due to the sourcing of lower cost product fromChina.

•                  Excluding the impact of currency changes, selling and administrativecosts decreased 3% in the current year, due to personnel and general costdecreases.

 

23

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**China**

 
| ** **                          | ** ** | **Nine Months Ended October 31** | ** ** | ** ** | ** ** | ** ** | ** ** |
|-------------------------------------|------------|----------------------------------|------------|------------|------------|------------|------------|
| ** **                          | ** ** | **2007**                         | ** ** | **%**      | ** ** | **2006**   | ** ** | **%** | ** ** | **Change** | ** ** | **Change %** | ** ** |
| ** **                          | ** ** | **(In thousands)**               | ** ** | ** ** | ** ** | ** ** | ** ** |
| Net sales                           |       | $                                | 29,342     |       | 71         | %          | $          | 21,787 |   | 80 | % | $ | 7,555 |   | 35 | % |
| Transfers  between areas            |       | 11,817                           |       | 29         | %          | 5,546      |       | 20 | % | 6,271 |   | 113 |   |
| Net sales and  transfers            |       | 41,159                           |       | 100        | %          | 27,333     |       | 100 | % | 13,826 |   | 51 | % |
|                                |       |                             |       |       |       |       |       |   |   |   |   |   |   |
| Cost of goods  sold                 |       | 27,758                           |       | 67         | %          | 18,317     |       | 67 | % | 9,441 |   | 52 | % |
| Gross profit                        |       | 13,401                           |       | 33         | %          | 9,016      |       | 33 | % | 4,385 |   | 49 | % |
|                                |       |                             |       |       |       |       |       |   |   |   |   |   |   |
| Selling and  administrative         |       | 2,851                            |       | 7          | %          | 2,059      |       | 8 | % | 792 |   | 38 | % |
| Loss on  disposition of assets, net |       | 33                               |       | —     |       | 10         |       | — |   | 23 |   | — |   |
| Amortization                        |       | 1                                |       | —     |       | 39         |       | — |   | (38 | ) | — |   |
| Operating income                    |       | $                                | 10,516     |       | 26         | %          | $          | 6,908 |   | 25 | % | $ | 3,608 |   | 52 | % |

 

The following are financial highlights for China for the first ninemonths of fiscal 2008:

 

•                  During fiscal 2008, net sales increased 30%, excluding the impact ofcurrency changes. Our recent capital expansion plan in China has enabled us tomanufacture a larger volume of products. We are currently seeing the benefitsof this effort with our increased sales activity.

•                  Lift truck shipments in China increased 20% in fiscal 2008.

•                  Transfers to other Cascade geographic areas, primarily Asia Pacific andEurope, increased 113% during fiscal 2008, due to the recent expansion ofoperations in China.

•                  The current year gross profit percentage remained consistent at 33%compared to the prior year. The benefit of sourcing certain raw materials andcomponents from within China was offset by lower margins due to changes inproduct mix and increased intercompany sales.

•                  Selling and administrative costs increased 33%, excluding currencychanges during fiscal 2008, due to additional costs to support our expandedoperations in China. As a percentage of net sales and transfers, selling andadministrative costs decreased from 8% in fiscal 2007 to 7% in fiscal 2008.

 

**Non-OperatingItems**

 

During the first nine months of fiscal 2008, interestexpense increased $1.4 million compared to the prior year as a result ofincreased borrowings to fund various initiatives including our share repurchaseprogram and our acquisition of American Compaction Equipment, Inc. Theseinitiatives also resulted in a decrease in our cash and marketable securitiesbalance and a $911,000 decrease in interest income during the current year.

 

The increase in other expense during the first ninemonths of fiscal 2008 was primarily the result of foreign currency losses dueto stronger foreign currencies compared to the U.S. dollar during the currentyear.

 

Our year-to-date effective tax rate of 34% is lowerthan the 36% rate for the first nine months of the prior year. The decrease isprimarily related to lower state taxes, proportionally high income levels infiscal 2008 in China, which has a lower tax rate compared to other Cascadelocations and year-to-date valuation allowances from pre-tax losses in Europe,which have decreased in relation to total pre-tax income.

 

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**CASHFLOWS**

 

Thestatements of cash flows reflect the changes in cash and cash equivalents forthe nine months ended October 31, 2007 and October 31, 2006 by classifyingtransactions into three major categories of activities: operating, investingand financing.

 

**Operating**

 

Ourprimary source of liquidity is cash generated from operating activities. Thisconsists of net income adjusted for noncash operating items such asdepreciation and amortization, losses and gains on disposition of assets,share-based compensation, deferred income taxes and changes in operating assetsand liabilities.

 

Netcash provided by operating activities from continuing operations was$43.6 million in the first nine months of fiscal 2008 compared to$35.5 million for the same period in fiscal 2007. The increase in cashprovided by operating activities in fiscal 2008 was due to an increase in netincome, which includes proceeds from the insurance litigation recovery, andchanges in accounts payable, accrued expenses and deferred income taxes. Thesechanges were partially offset by increases in accounts receivable and inventorydue to higher sales and sourcing of product globally.

 

**Investing**

 

Ourcapital expenditures are primarily for equipment and tooling related to productimprovements, more efficient production methods, expansion of productioncapacity and replacement for normal wear and tear. Capital expenditures bygeographic segments were as follows (in thousands):

 

| ** **    | ** ** | **Three Months Ended** | ** ** | **Nine Months Ended** | ** ** |
|---------------|------------|------------------------|------------|-----------------------|------------|
| ** **    | ** ** | **October 31**         | ** ** | **October 31**        | ** ** |
| ** **    | ** ** | **2007**               | ** ** | **2006**              | ** ** | **2007** | ** ** | **2006** | ** ** |
| North America |       | $                      | 2,505      |                  | $          | 1,159 |   | $ | 6,006 |   | $ | 4,886 |   |
| Europe        |       | 1,983                  |       | 475                   |       | 3,344 |   | 1,467 |   |
| Asia Pacific  |       | 292                    |       | 131                   |       | 741 |   | 275 |   |
| China         |       | 376                    |       | 3,877                 |       | 4,171 |   | 5,262 |   |
|          |       | $                      | 5,156      |                  | $          | 5,642 |   | $ | 14,262 |   | $ | 11,890 |   |

 

We expectcapital expenditures for the rest of fiscal 2008 to approximate our thirdquarter fiscal 2008 depreciation expense. We currently anticipate additionalinvestments of up to $5 million in China and $6 million in Asia Pacific overthe next twelve months. Depreciation expense for the first nine months infiscal 2008 and fiscal 2007 was $10.3 million for both periods.

 

Duringthe second quarter of fiscal 2008, we purchased 100% of the stock of AmericanCompaction Equipment, Inc., a manufacturer of construction attachments locatedin San Juan Capistrano, California. The total purchase price was approximately$11.5 million, net of assumed liabilities.

 

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**Financing**

 

Wedeclared dividends totaling $0.52 and $0.45 per share during the first ninemonths of fiscal 2008 and 2007, respectively.

 

Theissuance of common stock related to the exercise of stock options and stockappreciation rights generated $3.8 million and $1.8 million of cash for thefirst nine months of fiscal 2008 and 2007, respectively.

 

We paid $43.5 million and $12.8 million to repurchasecommon stock during the first nine months of fiscal 2008 and fiscal 2007,respectively.

 

Net proceeds from long-term debt during the first ninemonths of fiscal 2008 was $10.6 million and funded various initiativesincluding the share repurchase program and acquisition of American CompactionEquipment, Inc.

 

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**FINANCIAL CONDITION AND LIQUIDITY**

 

Ourworking capital, defined as current assets less current liabilities, at October31, 2007 was $134.4 million as compared to $113.1 million atJanuary 31, 2007. Our current ratio at October 31, 2007 increased to 2.7to 1 compared to 2.6 to 1 at January 31, 2007.

 

Totaloutstanding debt, including notes payable to banks at October 31, 2007 was$62.5 million and at January 31, 2007 was $51.1 million. Our debtagreements contain covenants relating to net worth and leverage ratios. We werein compliance with these covenants at October 31, 2007. Borrowing arrangementscurrently in place with commercial banks provide lines of credit totaling$125 million, of which $45.0 million was outstanding and $3.5 million wasused to issue letters of credit at October 31, 2007. The lines of credit expireon December 7, 2011. The interest rate on the lines of credit, which is basedon LIBOR plus a margin of 0.75%, was 5.6% at October 31, 2007 and January 31,2007. Average interest rates on notes payable to banks were 5.6% at October 31,2007 and 4.9% at January 31, 2007.

 

Ourcurrent plans are to fund our existing postretirement obligation as costs areincurred. Any defined benefit obligations will be funded to meet minimumstatutory funding requirements or any additional funding requirements which wehave committed to in specific plan agreements. Currently, these additionalfunding requirements are limited to annual contributions of $400,000 throughfiscal year 2011 to a defined benefit plan in England. During the first quarterof fiscal 2008, we made our second annual contribution to this defined benefitplan.

 

OnSeptember 5, 2006, our Board of Directors authorized a share repurchase programof up to $80 million over a two year period. During the first six months offiscal 2008, we repurchased and retired 389,000 shares of common stock. Duringthe third quarter of fiscal 2008, we repurchased and retired 303,000 shares ofcommon stock, which completed this program. In total, we repurchased 1,448,000shares of common stock for $80 million, for an average price per share of$55.24.

 

OnSeptember 24, 2007 we announced that our Board of Directors had authorized anew share repurchase program of up to $50 million over a two-year period. Repurchaseswill be made based on market conditions, relevant securities laws and otherfactors. During the third quarter of fiscal 2008 we did not repurchase anyshares of common stock under this new program. As of December 4, 2007, we hadrepurchased 303,000 shares for $18.0 million.

 

Webelieve that our cash and cash equivalents, existing credit facilities and cashflows from operations will be sufficient to satisfy our expected workingcapital, capital expenditure, acquisition, share buyback and debt retirementrequirements for the next twelve months.

 

**OTHER MATTERS**

 

The U.S.dollar weakened in the first nine months of fiscal 2008 in comparison to mostforeign currencies used by our significant foreign operations, which are theEuro, Canadian Dollar, Chinese Yuan and British Pound. As a result, foreigncurrency translation adjustments increased shareholders’ equity by $15.3million and $27.4 million in the third quarter and first nine months of fiscal2008, respectively.

 

**CRITICAL ACCOUNTING POLICIES ANDESTIMATES**

 

Our discussion and analysis of financial position andresults of operations is based on our consolidated financial statements whichhave been prepared in accordance with generally accepted accounting principlesin the United States of America (GAAP). The preparation of these financialstatements requires us to make estimates and judgments that affect the reportedamounts of assets, liabilities, revenues and expenses and the disclosure ofcontingent assets and liabilities. We evaluate our estimates and judgments onan on-going basis, including those related to uncollectible receivables,inventories, goodwill and long-lived assets, warranty obligations,environmental liabilities and deferred taxes. We base our estimates onhistorical experience and various other assumptions that we believe to bereasonable under the circumstances. Actual results may differ from theseestimates under different assumptions or conditions. A description of ourcritical accounting policies and related judgments and estimates that

 

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affect thepreparation of our consolidated financial statements is set forth in our AnnualReport on Form 10-K for the year ended January 31, 2007.

 

**OFF BALANCE SHEET ARRANGEMENTS**

 

AtOctober 31, 2007, we did not have any relationships with unconsolidatedentities or financial partnerships, such as entities often referred to asstructured finance or special purpose entities, which would have beenestablished for the purpose of facilitating off-balance sheet arrangements orfor other contractually narrow or limited purposes. As such, we are notmaterially exposed to any financing, liquidity market or credit risk that couldarise if we had engaged in such relationships.

 

**RECENT ACCOUNTING PRONOUNCEMENTS**

****SFAS 157********—I****n September 2006, the FASB issued SFASNo. 157 (SFAS 157), “Fair Value Measurements.” SFAS 157 provides a commondefinition of fair value, establishes a framework for measuring fair value andexpands the related disclosure requirements. Application of SFAS 157 isrequired for our financial statements for the fiscal year beginning February 1,2008. We are currently evaluating the impact of SFAS 157 on our financialstatements.

 

****SFAS 158****—In September 2006, the FASB issued SFASNo. 158 (SFAS 158), “Employers’ Accounting for Defined Benefit Pension andOther Postretirement Plans—n amendment of FASB Statements No. 87, 88, 106, and132(R).” This statement requires balance sheet recognition of the overfunded orunderfunded status of pension and postretirement benefit plans. Under SFAS 158,actuarial gains and losses, prior service costs or credits, and any remainingtransition assets or obligations that have not been recognized under previousaccounting standards must be recognized in other comprehensive income, net oftax effects, until they are amortized as a component of net periodic benefitcost. In addition, the measurement date, the date at which plan assets and thebenefit obligation are measured, is required to be the company’s fiscal yearend. Presently, we use a December 31 measurement date for our postretirementbenefit plan, which will change to coincide with our January 31 fiscal year-enddate. As required by SFAS 158, we adopted the balance sheet recognitionprovision as of January 31, 2007. The measurement date provision is effectivefor the fiscal year beginning February 1, 2008. We are currently evaluating theimpact of the measurement date provision of SFAS 158 on our consolidatedfinancial statements.

 

**SFAS 159**—In February 2007, the FASB issued SFASNo. 159 (SFAS 159), “The Fair Value Option for Financial Assets and FinancialLiabilities—ncluding an Amendment of FASB Statement No. 115.” SFAS 159 allowscompanies the choice to measure many financial instruments and certain otheritems at fair value. Application of SFAS 159 is required for our financial statementsbeginning February 1, 2008. We are currently reviewing the impact of thispronouncement on our consolidated financial statements.

 

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

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

The table below illustrates the hypothetical increasein net sales for the third quarter of fiscal 2008 resulting from a 10% weakerU.S. dollar during the quarter, measured against foreign currencies that affectour operations (in millions):

 

| Euro                                                          |   | $   | 3.3    |   |
|---------------------------------------------------------------|--------|-----|--------|--------|
| Chinese yuan                                                  |   | 1.1 |   |
| British pound                                                 |   | 0.9 |   |
| Canadian dollar                                               |   | 0.7 |   |
| Japanese yen                                                  |   | 0.6 |   |
| Other currencies  (representing 7% of consolidated net sales) |   | 1.0 |   |

 

A10% weaker U.S. dollar during the quarter, measured against foreign currenciesthat affect our operations, would have an immaterial impact on our operatingincome.

 

We enter into foreign currency forward exchangecontracts to offset the impact of currency fluctuations on certainnonfunctional currency assets and liabilities. The principal currencies hedgedare denominated in Japanese yen, Canadian dollars, Euros and British pounds.Our foreign currency forward exchange contracts have terms lasting up to sixmonths, but generally less than one month. We do not enter into derivatives orother financial instruments for trading or speculative purposes.

A majority of our products are manufactured usingsteel as the primary raw material and steel based components as purchasedparts. As such, our cost of goods sold is sensitive to fluctuations in steelprices, either directly through the purchase of steel as raw material or indirectlythrough the purchase of steel based components. Presuming that the full impactof commodity steel cost increases is reflected in all steel and steel basedcomponent purchases, we estimate our gross profit percentage sensitivity to beapproximately 0.3% for each 1.0% increase in commodity steel cost withoutoffsetting sales price increases. For example, if the price of commodity steelincreases 1.0%, and the full impact of that increase is reflected in all rawmaterial and component purchases, the net decrease in the gross profitpercentage would be approximately 0.3%. Based on our statement of income forthe quarter ended October 31, 2007, a 1% increase in commodity steel costswithout offsetting sales price increases would have decreased consolidated grossprofit by approximately $396,000.

To date we have been able to mitigate the effect of aportion of steel cost increases on our gross profit. This has been done throughprice increases, process improvements and production cost reductions. We intendto continue our efforts to mitigate the impact of any additional steel costincreases. There may be some time lag between the absorption of the steel costincreases and realizing the offsetting benefits of the mitigating measures. Itshould be noted that there is no assurance that we can fully mitigate allfuture steel cost increases through price increases and other measures andactual cost increases from steel suppliers could differ from cost increasesthat have been previously communicated.

Manufacturing of our products includes the purchase ofvarious raw materials and components. Certain of these items are providedworldwide by a limited number of suppliers. We are not currently experiencingshortages in obtaining the raw materials and components. However, certain steelproducts obtained in Europe are subject to allocations from suppliers. At thistime, we believe the current allocation of these products from suppliers issufficient to meet planned production volumes. Nevertheless, there can be noassurance that these suppliers will be able to meet our future requirements. Anextended delay or interruption in the supply of any components could have amaterial adverse effect on our business, results of operations and financialcondition. We are working to identify alternative supplier sources for theseproducts.

 

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**Item 4. Controls andProcedures**

*Evaluation of Disclosure Controlsand Procedures*

Our management has evaluated, under the supervisionand with the participation of our chief executive officer and chief financialofficer, the effectiveness of our disclosure controls and procedures as of theend of the period covered by this report pursuant to Rule 13a-15(b) underthe Securities Exchange Act of 1934 (the “Exchange Act”). Based on thatevaluation, our chief executive officer and chief financial officer haveconcluded that, as of the end of the period covered by this report, ourdisclosure controls and procedures are effective in ensuring that information requiredto be disclosed in our Exchange Act reports is (1) recorded, processed,summarized and reported in a timely manner, and (2) accumulated andcommunicated to our management, including our chief executive officer and chieffinancial officer, as appropriate to allow timely decisions regarding requireddisclosure.

*Changes in Internal Control OverFinancial Reporting*

There has been no change in the internal control overfinancial reporting that occurred during the nine months ended October 31, 2007that has materially affected, or is reasonably likely to materially affect, ourinternal control over financial reporting.

 

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**PART II—OTHERINFORMATION**

**Item 1. Legal Proceedings**

None

**Item 1A. Risk Factors**

There are no material changes from risk factorspreviously disclosed in our Form 10-K for the year endedJanuary 31, 2007.

**Item 2. UnregisteredSales of Equity Securities and Use of Proceeds**
| ** **                      | ** ** | ** **           | ** ** | ** **             | ** ** | ** **                              | ** ** | ** **                 | ** ** |
|---------------------------------|------------|----------------------|------------|------------------------|------------|-----------------------------------------|------------|----------------------------|------------|
| ** **                      | ** ** | ** **           | ** ** | ** **             | ** ** | **Total Numberof  Shares Purchased as** | ** ** | **Maximum Dollar value**   | ** ** |
| ** **                      | ** ** | **Total Number of**  | ** ** | **Average Price Paid** | ** ** | **Part of Publicly Announced**          | ** ** | **of Shares that May Yet** | ** ** |
| **Period**                      | ** ** | **Shares Purchased** | ** ** | **Per Share**          | ** ** | **Plans or Programs**                   | ** ** | **Plans or Programs (1)**  | ** ** |
| August 1 - 31,  2007            | ** ** | —               |       | $                      | —     |                                    | —     |                       | $          | 18,965,000 |   |
| September 1 -  30, 2007         |       | 264,200              |       | 62.38                  |       | 264,200                                 |       | 2,483,000                  |       |
| October 1 - 31,  2007           |       | 38,400               |       | 64.66                  |       | 38,400                                  |       | 50,000,000                 |       |
|                            |       |                 |       |                   |       |                                    |       |                       |       |
| Quarter ended  October 31, 2007 |       | 302,600              |       | $                      | 62.67      |                                    | 302,600    |                       |       |   |
|                                 |            |                      |            |                        |            |                                         |            |                            |            |  |  |

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(1)               On September 7, 2006, we announced that our Board ofDirectors had authorized a share repurchase program of up to $80 million over atwo-year period.We completed this share repurchase program in October 2007.During the share repurchase program, we purchased a total of 1,448,235 sharesof stock at an average price per share of $55.24. On September 24, 2007, we announcedthat our Board of Directors had authorized a new share repurchase program of upto $50 million over a two-year period.

 

 

** Item 3. DefaultsUpon Senior Securities**

None

**Item 4. Submission ofMatters to a Vote of Security Holders**

None

**Item 5. Other Information**

 

None

 

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**Item 6. Exhibits**

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

 

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**SIGNATURES**

Pursuant to the requirements of the SecuritiesExchange Act of 1934, the registrant has duly caused this report to be signedon its behalf by the undersigned thereunto duly authorized.
|             | CASCADE CORPORATION                                                                                   |
|------------------|-------------------------------------------------------------------------------------------------------|
| December 7, 2007 |                                                                                                  |
|             |                                                                                                  |
|             | /s/ RICHARD S. ANDERSON                                                                               |
|             | Richard S. Anderson                                                                                   |
|             | *Senior  Vice President and   Chief Financial Officer   (Principal Financial and Accounting Officer)* |

 

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**EXHIBIT INDEX**

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

 

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