<PAGE>

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

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


                                    FORM 10-Q


                   (X) QUARTERLY REPORT PURSUANT TO SECTION 13
                 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

                  For the Quarterly Period Ended July 31, 1999


                  ( ) TRANSITION REPORT PURSUANT TO SECTION 13
                 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


               For the Transition Period From _______ to _________

                         Commission file number 1-12557
                         ------------------------------

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


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

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

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


         Indicate by check mark whether the registrant (1) has filed all reports
         required to be filed by Section 13 or 15(d) of the Securities Exchange
         Act of 1934 during the preceding 12 months (or for such shorter period
         that the registrant was required to file such reports), and (2) has
         been subject to such filing requirements for the past 90 days.
         YES X NO____

         The number of shares outstanding of the registrant's common stock as of
         August 31, 1999 was 11,439,890.

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

CASCADE CORPORATION AND SUBSIDIARY COMPANIES
             PART 1
CONSOLIDATED BALANCE SHEET
(in thousands, except per share data)
<TABLE>
<CAPTION>

                                                                              July 31            January 31
                                                                               1999                 1999
                                                                          ----------------     ---------------
                                                                            (unaudited)
<S>                                                                     <C>                 <C>
Assets

Current assets:
 Cash and cash equivalents                                              $          20,224   $          11,460
 Accounts receivable, less allowance
        for doubtful accounts of $1,056 and $1,009                                 62,562              72,354
 Inventories, at average cost
        which is lower than market:
        Finished goods and components                                              33,346              44,496
        Goods in process                                                            2,286               2,309
        Raw materials                                                              13,076              15,210
                                                                          ----------------     ---------------
                                                                                   48,708              62,015

 Deferred income taxes                                                                323                 254
 Prepaid expenses                                                                   2,599               7,640
                                                                          ----------------     ---------------
          Total current assets                                                    134,416             153,723

Property, plant and equipment, at cost less
        accumulated depreciation                                                   89,888             100,075
Deferred income taxes                                                               5,927               3,370
Goodwill                                                                           73,885              86,462
Other assets                                                                       10,384               4,227
                                                                          ----------------     ---------------
          Total assets                                                  $         314,500   $         347,857
                                                                          ----------------     ---------------
                                                                          ----------------     ---------------

Liabilities and Shareholders' Equity

Current liabilities:
 Notes payable to banks                                                 $           9,591   $           9,817
 Current portion of long-term debt                                                  1,842               6,510
 Accounts payable                                                                  18,952              26,789
 Accrued payroll and payroll taxes                                                  5,413               6,954
 Other accrued expenses                                                             8,983               9,105
                                                                          ----------------     ---------------
          Total current liabilities                                                44,781              59,175

Long-term debt                                                                    121,034             142,783
Accrued environmental expenditures                                                  7,228               7,228
Other liabilities                                                                   4,104               3,228
                                                                          ----------------     ---------------
          Total liabilities                                                       177,147             212,414
                                                                          ----------------     ---------------

Mandatorily redeemable convertible preferred stock and minority
interest                                                                           15,536              15,949

Shareholders' equity:
Common stock, $.50 par value, authorized
   20,000,000 shares; 11,567,388 and 11,715,488 outstanding                         5,784               5,858
Additional paid-in capital                                                            399                   -
Retained earnings                                                                 129,383             125,065
Accumulated other comprehensive income:
        Cumulative foreign currency translation adjustments                       (13,520)            (11,200)
Treasury stock, at cost, 127,498 shares                                              (229)               (229)
                                                                          ----------------     ---------------
          Total shareholders' equity                                              121,817             119,494

          Total liabilities and                                           ----------------     ---------------
          shareholder's equity                                           $         314,500   $         347,857
                                                                          ----------------     ---------------
                                                                          ----------------     ---------------

</TABLE>

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

<PAGE>

CASCADE CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENT OF INCOME

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

<TABLE>
<CAPTION>

                                                          Three months ended                           Six months ended
                                                               July 31                                      July 31
                                                     -----------------------------               ----------------------------
                                                         1999             1998                        1999           1998
                                                     ------------     ------------               ------------    ------------
<S>                                                  <C>              <C>                        <C>             <C>

Net sales                                            $     77,709     $    105,160               $    167,209    $    212,285
                                                     ------------     ------------               ------------    ------------

Costs and expenses:
      Cost of goods sold, excluding depreciation           50,038           73,085                    108,868         146,720
      Depreciation and amortization                         4,808            5,235                     10,028          10,640
      Selling and administrative expenses                  14,643           17,535                     30,858          35,135
                                                     ------------     ------------               ------------    ------------
                                                           69,489           95,855                    149,754         192,495
                                                     ------------     ------------               ------------    ------------

Operating income                                            8,220            9,305                     17,455          19,790

      Interest expense                                      2,276            2,625                      4,661           5,185
      Interest income                                        (414)            (125)                      (529)           (315)
      Other expense (income), net                            (494)          (1,270)                       201          (3,290)
                                                     ------------     ------------               ------------    ------------
                                                     ------------     ------------               ------------    ------------

Income before taxes                                         6,852            8,075                     13,122          18,210
Income taxes                                                2,410            2,585                      4,570           5,905
                                                     ------------     ------------               ------------    ------------

Net income                                           $      4,442     $      5,490               $      8,552    $     12,305
                                                     ------------     ------------               ------------    ------------
                                                     ------------     ------------               ------------    ------------

Basic earnings per share                             $       0.38     $       0.45               $       0.73    $       1.01
                                                     ------------     ------------               ------------    ------------
                                                     ------------     ------------               ------------    ------------

Diluted earings per share                            $       0.35     $       0.41               $       0.68    $       0.93
                                                     ------------     ------------               ------------    ------------
                                                     ------------     ------------               ------------    ------------

Diluted weighted average shares outstanding            12,517,390       13,280,602                 12,577,255      13,286,701
                                                     ------------     ------------               ------------    ------------
                                                     ------------     ------------               ------------    ------------

</TABLE>

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


<PAGE>


CASCADE CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENT OF CASH FLOWS
        (unaudited - in thousands)
<TABLE>
<CAPTION>

                                                                                              Six months ended
                                                                                                   July 31
                                                                                    -----------------------------------
                                                                                         1999                1998
                                                                                    ---------------     ---------------
<S>                                                                              <C>                 <C>
Cash flows from operating activities:
 Net income                                                                      $           8,552   $          12,305
  Adjustments to reconcile net income to net
   cash provided by operating activities:
    Depreciation and amortization                                                           10,028              10,640
    Deferred income taxes                                                                   (2,606)              1,066
    Loss (gain) on disposal of property                                                        762              (2,505)
Changes in operating assets and liabilities:
    Accounts receivable                                                                      9,792              (9,286)
    Inventories                                                                             13,307              (3,983)
    Prepaid expenses                                                                         5,041              (1,797)
    Accounts payable and accrued expenses                                                  (10,149)             (1,605)
    Accrued environmental expenditures                                                         152                   -
    Other liabilities                                                                        1,373                (410)
                                                                                    ---------------     ---------------
        Net cash provided by operating activities                                           36,252               4,425
                                                                                    ---------------     ---------------

Cash flows from investing activities:
Acquisition of property, plant and equipment                                               (11,033)             (8,395)
Proceeds from dispositions of property, plant and equipment                                 23,863               2,606
 Other assets                                                                               (6,921)              1,761
                                                                                    ---------------     ---------------
        Net cash provided by (used in) investing activities                                  5,909              (4,028)
                                                                                    ---------------     ---------------

Cash flows from financing activities:
 Payments on long-term debt                                                                (26,062)               (458)
 Notes payable to banks                                                                       (226)             11,662
 Repurchase of manditorily redeemable convertible
   preferred stock                                                                               -                (375)
 Repurchase of common stock                                                                 (1,846)             (1,009)
 Issuance of common stock                                                                        -                 106
 Cash dividends                                                                             (2,476)             (2,653)
                                                                                    ---------------     ---------------
        Net cash (used in) provided by financing activities                                (30,610)              7,273
                                                                                    ---------------     ---------------

Effect of exchange rate changes                                                             (2,787)             (4,888)
                                                                                    ---------------     ---------------

Increase in cash and cash equivalents                                                        8,764               2,782

Cash and cash equivalents at
 beginning of year                                                                          11,460              12,966
                                                                                    ---------------     ---------------

Cash and cash equivalents at end of period                                       $          20,224   $          15,748
                                                                                    ---------------     ---------------
                                                                                    ---------------     ---------------

Supplemental disclosure of cash flow information:
        Cash paid during the period for:
                   Interest                                                      $           3,316   $           3,780
                   Income taxes                                                  $           3,724   $           8,338
        Non-cash
                   Conversion of preferred stock into common stock               $             413   $               -


</TABLE>

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


<PAGE>




CASCADE CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
(in thousands)

<TABLE>
<CAPTION>


                                                                                                     Accumulated
                                     Common Stock       Additional                                      Other          Annual
                                  ------------------      Paid-In        Treasury      Retained     Comprehensive   Comprehensive
                                  Shares       Amount     Capital          Stock       Earnings         Income         Income
-----------------------------------------------------------------------------------------------------------------------------------
<S>                                 <C>       <C>        <C>             <C>           <C>              <C>               <C>
Balance at January 31,1999          11,588    $ 5,858    $      -        $ (229)       $ 125,065        $ (11,200)        $     -

Net Income                               -          -           -             -            8,552                -           8,552
Dividends                                -          -           -             -           (2,476)               -               -
Common stock repurchased              (176)       (88)          -             -           (1,758)               -               -
Conversion of preferred stock           28         14         399             -                -                -               -
Translation Adjustment                   -          -           -             -                -           (2,320)         (2,320)
                                    -----------------------------------------------------------------------------------------------
Balance at July 31, 1999            11,440    $ 5,784       $ 399        $ (229)       $ 129,383        $ (13,520)        $ 6,232
                                    -----------------------------------------------------------------------------------------------
                                    -----------------------------------------------------------------------------------------------
</TABLE>


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

<PAGE>

CASCADE CORPORATION


NOTE 1 - INFORMATION ABOUT OPERATIONS
(In thousands)
<TABLE>
<CAPTION>


Six months ended
July 31, 1999                            North America         Europe              Other          Eliminations       Consolidation
-----------------------------------------------------------------------------------------------------------------------------------
<S>                                     <C>                  <C>                <C>                <C>                  <C>
Sales to unaffiliated customers         $ 104,092            $ 46,382           $ 16,735           $      -             $ 167,209
Transfer between areas                     12,431              16,831                233            (29,495)                    -
-----------------------------------------------------------------------------------------------------------------------------------
Total revenue                             116,523              63,213             16,968            (29,495)              167,209
-----------------------------------------------------------------------------------------------------------------------------------
Net income                                  6,315               1,851                386                  -                 8,552
-----------------------------------------------------------------------------------------------------------------------------------
Identifiable assets                     $ 183,598            $ 94,533           $ 36,369           $      -             $ 314,500
-----------------------------------------------------------------------------------------------------------------------------------

July 31, 1998

Sales to unaffiliated customers          $ 136,183            $ 59,015           $ 17,087          $       -             $ 212,285
Transfer between areas                      13,413               4,738                268            (18,419)                    -
-----------------------------------------------------------------------------------------------------------------------------------
Total revenue                              149,596              63,753             17,355            (18,419)              212,285
-----------------------------------------------------------------------------------------------------------------------------------
Net income                                  10,005               1,764                536                                   12,305
-----------------------------------------------------------------------------------------------------------------------------------
Identifiable assets                      $ 229,039           $ 101,202           $ 31,646          $       -             $ 361,887
-----------------------------------------------------------------------------------------------------------------------------------


</TABLE>

<PAGE>


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


NOTE 2 - DIVESTITURES

The consolidated financial statements for the six months ended July 31, 1999,
reflect the sale of assets and the purchasers assumption of certain liabilities
of the Company's Industrial Tire Division and the wheel and baseband
manufacturing operations of its Kenhar Division in Guelph, Ontario to Maine
Rubber Company on April 29, 1999. The sale price for the assets was
$38,892,651 (US). Of this Maine Rubber Company paid (1) $26,808,737 (US) in
cash, and (2) $7,307,552 (US) in the form of a junior subordinated note to be
paid over four years, and assumed $4,776,362 (US) in liabilities. The note
bears interest rate of 8% per annum and is unsecured. During the year ended
January 31, 1999 the Industrial Tire and wheel and baseband divisions
contributed approximately $45,158,000 in net sales. For the six months ended
July 31, 1999 and 1998 net sales were approximately $9,128,000 and $23,982,000
respectively.

<PAGE>

CASCADE  CORPORATION AND SUBSIDIARY COMPANIES

                            PART II OTHER INFORMATION



ITEM 1.            Legal Proceedings
                   -----------------

                   Neither the Company nor any of its subsidiaries are involved
                   in any material pending legal proceedings other than
                   environmental litigation or litigation incidental to the
                   regular course of business. The company and its subsidiaries
                   are adequately insured against product liability, personal
                   injury and property damage claims which may arise
                   occasionally.


ITEM 2.            Changes in Securities
                   ---------------------

                                        None


ITEM 3.            Defaults Upon Senior Securities
                   -------------------------------

                                        None


ITEM 4.            Submission of Matters to a Vote of Security Holders
                   ---------------------------------------------------
                   At the Annual Meeting of Shareholders of the Company, held
                   May 13, 1999, two matters were submitted to a vote of common
                   shareholders: (a) the election of directors; and (b)
                   amendment and restatement of the 1995 senior managers'
                   incentive stock option plan. The proposed amendment permits
                   the Stock Option Committee to grant nonqualified stock
                   options, thus providing greater latitude in setting the terms
                   of option grants, as well as stock appreciation rights, and
                   other awards involving common stock. The amendment also
                   provides for a 5,000-share option grant to each non-employee
                   director, including directors first elected at future Annual
                   Meetings.

                   Election of Directors

<TABLE>
<CAPTION>

                   Nominee                   Votes For           Votes Withheld
                   ---------------------     ----------------    --------------
                   <S>                          <C>                   <C>
                   E. Hoffman                   10,018,338            63,413
                   C. C. Knudsen                10,024,538            57,213
                   G. H. Kubicek                10,014,832            66,919
                   N. R. Lardy                  10,024,152            57,599
                   E. C. Mercier                10,027,564            54,187
                   J. S. Osterman               10,021,952            59,799
                   J. B. Schwartz               10,035,132            46,619
                   H. W. Wessinger II           10,014,532            67,219
                   N. A. Wilgenbusch            10,011,851            69,900
                   R. C. Warren, Jr.            10,028,731            53,020
</TABLE>
<PAGE>

Amendment and Restatement of the 1995 Senior Managers' Incentive Stock Option
Plan

<TABLE>
<CAPTION>

                   For                        Against              Abstain
                   ----------------           ------------         ------------
                   <S>                        <C>                   <C>
                     9,256,224                771,808               53,719

                   Not Voted
                   ----------------
                     2,112,143

</TABLE>

ITEM 5.            Other Information
                   -----------------

                                        None


ITEM 6.            Exhibit and Reports on Form 8-K
                   -------------------------------
                   (A) EXHIBITS
                          11.    Computation of Earnings Per Share
                          27.    Financial Data Schedule

                   (B) REPORTS ON FORM 8-K
                       Cascade Corporation filed no reports on Form 8-K during
                       the quarter ended July 31, 1999.

<PAGE>


CASCADE CORPORATION AND SUBSIDIARY COMPANIES

                                       SIGNATURES


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

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

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


                                                   CASCADE CORPORATION




                 9/15/99           /s/ Kurt G. Wollenberg
            -------------------    --------------------------------------------
                   Date                     Kurt G. Wollenberg,
                                            Senior Vice President/
                                            Chief Financial Officer

<PAGE>

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

RESULTS OF OPERATIONS

Consolidated net sales for the three months ended July 31, 1999 totaled
$77,709,000, a decrease of 26.1% compared to sales of $105,160,000 recorded in
the second quarter of 1998. The lower consolidated net sales primarily reflected
the divestiture of the mast business unit in January 1999 and the Industrial
Tire and baseband operating divisions in April 1999. Net income for the second
quarter of 1999 was $4,442,000 ($.35 per share) or 19.1% lower than net income
of $5,490,000 ($.41 per share) for the corresponding 1998 period. Expressed as a
return on sales, net income for the second three-month period of 1999 was 5.7%
compared to 5.2% for the corresponding 1998 quarter.

Consolidated net sales for the first six months of 1999 totaled $167,209,000; a
decrease of 21.2% compared to sales of $212,285,000 recorded in the first two
quarters of 1998. Net income for the first six months of 1999 was $8,552,000
($.68 per share). Earnings for the six months include a $1,085,000 loss ($.09
per share after tax) from the sale of the Industrial Tire and baseband operating
divisions. Net income for the first six months of 1998 was $12,305,000 ($.93 per
share) which included a land sale gain of $1,628,000 ($.12 per share after tax).
Net income excluding the non-recurring items for the first two quarters was
lower by 9.6% in 1999, $9,637,000 compared with $10,677,000 for 1998.

Excluding sales of divested operations, sales for the first six months of 1999
to the same period of 1998 decreased 3.7%, $158,058,000 for 1999 versus
$164,066,000 for 1998. At the same time gross profit percentage from
continuing operations increased 1.6%, to 35.4% in 1999 from 33.8% in 1998.

Second quarter results did not reach first quarter sales and earnings from
continuing operations of $80,348,000 and $5,053,000. Several factors contributed
to this change. In Europe, slowing economic growth, adverse foreign exchange
conditions, and competitive pressure led to lower gross profit at certain
operations and, in North America, attachment sales have moderated, while
unusually strong first quarter fork demand had abated somewhat in this period.

European lift industry bookings have declined from 1998 levels. Asian markets
continue their slow recovery, which is encouraging for the long term performance
of Cascade.

On April 29, 1999, the Company completed the sale of all operating assets and
certain liabilities of the Industrial Tire division as well as the Fork Products
division's baseband manufacturing operations to Maine Rubber Company. Since
purchasing the Industrial Tire division, revenues increased over 35% with
improving profitability. However, we did not see the prospect of achieving all
the synergies originally anticipated and concluded our management efforts and
investment resources

<PAGE>

would be more effective if allocated to enhancing shareholder value through
continued focus on the Company's core attachment and fork businesses. While
this divestiture will reduce revenues in the coming year, profit margins of
this product line were low, and management does not expect a significant
impact on future operating results.

The Company continues to strive to lower product costs by improving
manufacturing methods and processes as it focuses on core business activities.
The divestiture of the lower margin mast and tire operations has further
contributed to the reduction in cost of goods sold as a percent of sales.
Cost of sales during the second quarter of 1999 and 1998 was $50,038,000 and
$73,085,000, respectively. For the second quarter of 1999 and 1998, cost of
sales as a percentage of net sales was 64.4% and 69.5%. The second quarter
percentage of 64.4% is 1.3% lower than the 65.7% recorded in for the first
quarter of 1999. The six months ended July 31, 1999 and 1998 shows a gross
profit of 65.1% and 69.1% respectively.

Depreciation and amortization expense decreased to $4,808,000, 6.2% of net
sales, during the second quarter of 1999, from $5,235,000, 5.0% of net sales
for the prior year period. For the six months ended July 31, 1999 depreciation
and amortization expense was $10,028,000, 6.0% of sales compared with
$10,640,000 and 5.0% of sales for the prior year period. While depreciation
and amortization expense decreased due to the divestiture of the mast and the
Industrial Tire Divisions, the full effect was mitigated by the impact of
heavy spending for the most significant phase of our enterprise resource
planning (ERP) implementation. This, combined with the lower sales volume,
resulted in the increased percentage as it relates to total sales.

The Company's selling and administrative expenses decreased for the second
quarter of 1999 to $14,643,000, 18.8% of net sales, versus $17,535,000, 16.7% of
net sales during the year earlier period, and $16,215,000 during the first
quarter of 1999. Year to date selling and administrative expense was
$30,858,000, 18.5% compared with $35,135,000, 16.6% for 1998. The 1999 results
continue to reflect the implementation of cost controls imposed to reduce
selling and administrative expenses relative to historic sales levels. The
divestiture of the mast and Industrial Tire Divisions further reduced selling
and administrative expenses. The increase as a percentage of revenues is
primarily the result of the lower sales volume in the first and second quarters
compared to the previous year.

Second quarter 1999 interest expense of $2,276,000 was lower than the $2,625,000
recorded in the 1998 period and $2,385,000 recorded in the first quarter of
1999. Year to date interest expense was $4,661,000 compared with $5,185,000 for
the prior year. The lower interest expense is attributed to reduction in
long-term debt from the cash proceeds of the divestiture of the mast business
unit and the Industrial Tire Division.

The other expense for the six months results primarily from the loss from
the sale of the Industrial Tire and baseband-manufacturing divisions, offset by
the currency transaction gains recorded. Other income for the prior year
resulted primarily from the


<PAGE>

gain from the sale of an undeveloped parcel of land and currency transaction
gains recorded as result of the strengthening US dollar.

The effective tax rate for the six months ended July 31, 1999 was 34.8% compared
with 32.4% for the same period of 1998 and 31.6% for the year ended January 31,
1999. The increase in the rate is due to numerous minor changes in tax matters
including the tax effect of the sale of the Industrial Tire and wheel and
baseband divisions.

LIQUIDITY AND CAPITAL RESOURCES

During the six months ended July 31, 1999, the Company generated $36,252,000 in
cash from operating activities compared with $4,426,000 for 1998. Cash and cash
equivalents at the end of the second quarter of 1999 totaled $20,224,000.

The Company's total long- and short-term debt-to-equity ratio was 1.09 to 1.00,
and working capital was $89,635,000 at July 31, 1999. As of July 31, 1999, the
Company had revolving loan commitments with commercial banks totaling
$23,726,000 of which $9,591,000 was used. The Company believes its available
cash and credit facilities are more than sufficient to meet its short-term
requirements.

For the six months ended July 31, 1999, capital expenditures totaled $11,033,000
compared with $8,395,000 purchased during the corresponding 1998 period. Capital
expenditures for new facilities, machinery, equipment and tooling over the
preceding five years totaled approximately $88,567,000. Planned capital
expenditures for 1999 are estimated at $19,210,000 and include $4,459,000 for
implementation of an enterprise-wide software system to link all of the
Company's core business systems. Implementation will be phased-in throughout the
major operating units with completion scheduled for fiscal 2000. The Company
plans to use operating cash flows, leases and existing credit facilities to fund
1999 capital expenditures.

At its August 1998 meeting, the Board authorized the repurchase up to 500,000
Cascade common shares from time to time in the open market. During the first two
quarters the Company repurchased 175,600 shares at an average price of $10.53.
Repurchases to date totaled 400,000 shares at an average price of $12.09.

During the first two quarters, the U.S. dollar strengthened against the major
currencies included in the Company's financial consolidations. As a result, the
cumulative translation adjustment in the consolidated balance sheet decreased
shareholder's equity by $2,320,000 for the first six months.

IMPACT OF THE YEAR 2000 ISSUE

The Year 2000 Issue is the result of computer programs being written using two
digits rather than four to define the applicable year. Some of the Company's
computer programs that have date-sensitive software may recognize a date using
"00" as the year 1900 rather than the year 2000. This could result in a system
failure or miscalculations


<PAGE>

causing disruptions of operations, including, among other things, a temporary
inability to process transactions, send invoices, ship product or engage in
any number of similar business activities.

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

The Company has initiated formal communications with all of its significant
suppliers and large customers to determine the extent to which the Company is
vulnerable to those third parties' failure to remediate their own Year 2000
Issue. This program is ongoing and the Company will continue to monitor
responses received to determine if Year 2000 issues exist with these third
parties. Contingency plans include finding alternative suppliers where
practical. For those suppliers that are not easily replaced, the Company will
maintain adequate supplies to help counteract short-term supply interruptions.
There can be no guarantee that the systems of other companies on which the
Company's systems rely will be converted on schedule; or that a failure to
convert by another company, or a conversion that is incompatible with the
Company's systems, would not have a material adverse effect on the Company.


The Company has initiated the implementation of an enterprise-wide resource
planning (ERP) software system to link all of its core business systems. This
implementation was the result of normal business migration to improved and
expanded software systems to increase the Company's ability to improve its
operational efficiency, reduce costs and enhance overall quality. As part of
this implementation, the Company will also replace those software systems that
will encounter the Year 2000 Issue. The portion of the project that address the
Year 2000 issue was scheduled in phase I of the implementation. The Company has
completed a substantial portion of phase I of the ERP project in the second
quarter. The remaining portion of phase I is scheduled to be completed in the
third quarter of 1999. The implementation of the other major operating units is
scheduled for completion in fiscal year 2000. The total cost of the ERP project
is estimated to exceed $14,000,000 including the $4,383,000 spent in the first
six months of 1999. The ERP project is being funded through leases and operating
cash flows.

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


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The Company has evaluated data with regard to non-financial software and
embedded chip technology to assess the impact of the Year 2000 on its
non-financial systems such as manufacturing equipment, security equipment, etc.
During the second quarter substantially all upgrades have been completed. The
remaining upgrades are expected to be completed in the third quarter. The cost
of achieving Year 2000 compliance for its non-financial systems, have not been
and are not expected to be material.

FORWARD-LOOKING STATEMENTS

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