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                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                -----------------

                                    FORM 10-K
                ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
                       THE SECURITIES EXCHANGE ACT OF 1934
                                -----------------

                   For the fiscal year ended October 31, 2000

Commission       Registrant; State of Incorporation;      IRS EMPLOYER
File Number      Address; and Telephone Number            Identification No.

333-52529         MMH HOLDINGS, INC.                         39-1716155
                 (a Delaware Corporation)
                 315 W. Forest Hill Avenue
                 Oak Creek, Wisconsin  53154
                 (414) 764-6200

333-52527         MORRIS MATERIAL HANDLING, INC.             39-1924039
                 (a Delaware Corporation)
                 315 W. Forest Hill Avenue
                 Oak Creek, Wisconsin  53154
                 (414) 764-6200

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

           SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT

                                      None

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

           SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT

                                      None

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

Indicate by check mark whether the registrants (1) have 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
registrants were required to file such reports), and (2) have been subject to
such filing requirements for the past 90 days.

                                 Yes [X] No [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrants' knowledge in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
form 10-K. [x]

As of January 31, 2001, 10,169 shares of MMH Holdings, Inc. Voting Common Stock
were outstanding, none of which were held by non-affiliates. In addition, 4,350
shares of MMH Holdings, Inc. Nonvoting Common Stock were outstanding, 720 of
which were held by non-affiliates. There is no established trading market for
MMH Holdings, Inc.'s Nonvoting Common Stock.

As of January 31, 2001, 100 shares of Morris Material Handling, Inc. Common
Stock were outstanding, all of which were held by MMH Holdings, Inc.

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                       DOCUMENTS INCORPORATED BY REFERENCE

Portions of Item 14 of Part IV are incorporated by reference to: MMH Holdings,
Inc.'s Registration Statement No. 333-52529, filed on May 13, 1998; Morris
Material Handling, Inc.'s Registration Statement No. 333-52527, filed on May 13,
1998; Amendment No. 2 to MMH Holdings, Inc.'s Registration Statement No.
333-52529, filed on July 22, 1998; Amendment No. 2 to Morris Material Handling,
Inc.'s Registration Statement No. 333-52527, filed on July 22, 1998; MMH
Holdings, Inc.'s and Morris Material Handling, Inc.'s Annual Report on Form 10-K
for the fiscal years ended October 31, 1999 and 1998; MMH Holdings, Inc.'s and
Morris Material Handling, Inc.'s Quarterly Reports on Form 10-Q for the quarters
ended January 31, 1999, April 30, 1999 and July 31, 1999; and MMH Holdings,
Inc.'s and Morris Material Handling, Inc.'s Quarterly Reports on Form 10-Q for
the quarters ended January 31, 2000, April 30, 2000 and July 31, 2000.

This combined Form 10-K is separately filed by MMH Holdings, Inc. ("Holdings")
and by Morris Material Handling, Inc. ("MMH"). The financial statements
presented in this combined report (collectively, the "Financial Statements")
include the financial statements of Holdings as well as separate financial
statements for MMH. Information contained herein relating only to Holdings or
MMH is filed by Holdings or MMH as the case may be, on its own behalf.

Certain sections of this Form 10-K, including "Business" and "Management's
Discussion and Analysis of Financial Condition and Results of Operations,"
contain various forward looking statements within the meaning of Section 21E of
the Securities Exchange Act of 1934, which represent management's expectations
or beliefs concerning future events. Holdings and MMH caution that those
statements are further qualified by important factors that could cause actual
results to differ from those in the forward looking statements. Factors that
might cause such a difference include, without limitation, general economic
conditions and competition in the markets in which the Registrants' operations
are located and are detailed herein under "Management's Discussion and Analysis
of Financial Condition and Results of Operations--Cautionary Factors."
Consequently, all forward-looking statements made herein are qualified by these
cautionary statements. There can be no assurance that the actual results, events
or developments referenced herein will occur or be realized.

<PAGE>



                               MMH HOLDINGS, INC.
                         MORRIS MATERIAL HANDLING, INC.

                                    INDEX TO
                           ANNUAL REPORT ON FORM 10-K
                       FOR THE YEAR ENDED OCTOBER 31, 2000

                                                                            Page

PART I                                                                        1
   Item 1.       Business                                                     1
   Item 2.       Properties                                                  14
   Item 3.       Legal Proceedings                                           15
   Item 4.       Submission of Matters to a Vote of Security Holders         16

PART II                                                                      17
   Item 5.       Market for Registrants' Common Stock and Related
                   Stockholder Matters                                       17
   Item 6.       Selected Financial Data                                     18
                 MMH Holdings, Inc.
                 Morris Material Handling, Inc.
   Item 7.       Management's Discussion and Analysis of Financial
                   Condition and Results of Operation                        20
   Item 7A.      Quantitative and Qualitative Disclosures about
                   Market Risk                                               31
   Item 8.       Financial Statements and Supplementary Data                 33
   Item 9.       Changes in and Disagreements with Accountants on
                   Accounting and Financial Disclosure                       90

PART III                                                                     91
   Item 10.      Directors and Executive Officers of the Registrants         91
   Item 11.      Executive Compensation                                      93
   Item 12.      Security Ownership of Certain Beneficial Owners and
                   Management                                                97
   Item 13.      Certain Relationships and Related Transactions              99

PART IV                                                                     103
   Item 14.      Exhibits, Financial Statement Schedules and Reports
                   on Form 8-K                                              103

SIGNATURES                                                                  110

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                                     PART I

                                ITEM 1. BUSINESS

MMH Holdings, Inc. is a holding company whose sole direct subsidiary is Morris
Material Handling, Inc., a manufacturer, distributor and service provider of
"through-the-air" material handling equipment with operations in the United
States, United Kingdom, South Africa, Singapore, Canada, Australia, Thailand,
Chile and Mexico. Unless the context requires otherwise, references to the
"Company" in this combined 10-K are to Holdings, MMH, its subsidiaries and their
predecessors. The Company's original equipment operations design and manufacture
a comprehensive line of industrial cranes, hoists and other component products,
sold principally under the P&H and Morris brand names. Through its aftermarket
operations, the Company provides a variety of related products and services,
including replacement parts, repair and maintenance services and product
modernizations. See also Note 24, Subsequent Events, of the Financial Statements
in Item 8.

Background:  Recapitalization

On January 28, 1998, Harnischfeger Industries, Inc. ("HII") reached an agreement
with MHE Investments, Inc. ("MHE Investments"), a newly formed affiliate of
Chartwell Investments Inc., for the sale of an approximately 80 percent common
ownership interest in the MHE Business. Pursuant to this agreement, HarnCo and
other HII affiliates effected a number of transactions (the "Transactions" or
the "Recapitalization") that resulted in Holdings, a preexisting company engaged
in the MHE Business, acquiring, through MMH, its newly formed wholly owned
subsidiary, the equity interests of all of the various operating entities
engaged in the MHE Business. As a result of the reorganization of the MHE
Business' legal entities, Holdings and the Company became the successor
companies to the MHE Business. The Transactions are accounted for as a
recapitalization for financial reporting purposes. Accordingly, the historical
basis of the Company's assets and liabilities was not impacted by the
Transactions.

In conjunction with the Recapitalization, which closed on March 30, 1998 (the
"Recapitalization Closing"), Holdings sold $60.0 million of Series A Units,
consisting of $57.7 million liquidation preference of Holdings' 12% Series A
Senior Exchangeable Preferred Stock (the "Holdings Series A Senior Preferred
Stock") and 720 shares of non-voting common stock, to institutional investors.
In addition, MMH sold $200.0 million aggregate principal amount of its 9 1/2%
Senior Notes due 2008 (the "Senior Notes") and entered into a senior secured
credit facility (the "Prepetition Credit Facility"). The Prepetition Credit
Facility included $55.0 million of term loans (the "Term Loans"), a revolving
credit facility (the "Revolving Credit Facility") and an acquisition facility
(the "Acquisition Facility"). The Revolving Credit Facility initially provided
the Company with up to $70.0 million of available borrowings for working
capital, acquisitions and other corporate purposes, subject to compliance with
certain conditions. The Acquisition Facility initially permitted the Company to
borrow up to $30.0 million until the third anniversary of the Recapitalization
Closing to finance acquisitions, subject to compliance with certain conditions.
The Prepetition Credit Facility was amended on August 2, 1999. As amended, the
Revolving Credit Facility provided $50.7 million of available borrowings ($10.0
million of which was required to be reserved for issuance of letters of credit),
and the Acquisition Facility provided for $12.4 million of borrowings ($7.4
million of which was previously funded by the lenders under the Prepetition
Credit Facility and $5.0 million of which was funded by indirect equity holders
in Holdings) for acquisitions and general corporate purposes. No additional
borrowings under the Acquisition Facility are available from lenders under the
Prepetition Credit Facility. In connection with, and as a condition to, the
lenders under the Prepetition Credit Facility entering into the August 2, 1999
Amendment to the Prepetition Credit Facility, certain of the current indirect
equity holders in Holdings purchased, through Martin Crane L.L.C. ("Martin
Crane"), a newly formed limited liability company, a $5.0 million participation
in the Prepetition Credit Facility and received shares of non-voting common
stock of Holdings, in consideration therefor. As a result, at October 31 2000,
MHE Investments owned approximately 54.5% of the Holdings Common Stock, HarnCo
owned approximately 15.6% of the Holdings Common Stock, institutional investors
own approximately 4.9% of the Holdings Common Stock and Martin Crane owns
approximately 25.0% of the Holdings Common Stock.

At the Recapitalization Closing, (i) MHE Investments paid HarnCo $54.0 million
for 72.6% of Holdings' common stock (the "Holdings Common Stock") (after giving
effect to the Transactions) and approximately $28.9 million liquidation
preference of Holdings' 12 1/2% Series C Junior Voting Exchangeable Preferred
Stock (the "Holdings Series C Junior Voting Preferred Stock"), (ii) Holdings
redeemed certain shares of Holdings Common Stock and Holdings Series C Junior
Voting Preferred Stock from HarnCo for $282.0 million in cash (subject to
potential post-

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Recapitalization adjustments as to which an additional $5.0 million was provided
to HarnCo) and approximately $4.8 million liquidation preference of Holdings' 12
1/4% Series B Junior Exchangeable Preferred Stock (the "Holdings Series B Junior
Preferred Stock"), and (iii) HarnCo retained approximately 20.8% of the Holdings
Common Stock (after giving effect to the Transactions).

At the Recapitalization Closing, MMH entered into a number of agreements
pursuant to which HII and its affiliates continued to provide to MMH and to its
subsidiaries located in the United States, on an interim basis and under
substantially the same terms and conditions as before the closing, certain
products and services. In addition, HII and MMH entered into a credit
indemnification agreement (the "Credit Indemnification Agreement") pursuant to
which HII will maintain in place the credit support obligations in existence at
the Recapitalization Closing but have no further duty to extend, renew or enter
into any new credit support obligations (except as to the MHE Business
obligations existing at the Recapitalization Closing). Under the Credit
Indemnification Agreement, MMH is required to pay HII, in advance, an annual fee
equal to 1% of the amounts outstanding under each letter of credit and bond
provided by HII and its affiliates (approximately $9.3 million as of October 31,
2000). MMH accrued a fee of $143,743 for the year ended October 31, 2000. HII is
required to refund the Company on a quarterly basis a pro-rata portion of the
annual fee for any reductions in the outstanding amount of credit that occurred
during such quarter. In addition, the Company will reimburse HII for certain
future fees and expenses. The Company also entered into a surety arrangement
(the "Surety Arrangement") to provide credit support for its
post-Recapitalization Closing operations.

In connection with the Recapitalization, the Company also entered into a
trademark license agreement (the "Trademark License Agreement") with an
affiliate of HarnCo, pursuant to which the Company has the right to use the P&H
trademark with respect to all MHE Business products on a worldwide exclusive
basis from the date of the Recapitalization Closing until 15 years after the
earlier to occur of a sale of Holdings to a third party or a public offering of
the common stock of Holdings, the Company or their parents or successors (and
for an additional seven years thereafter for aftermarket products and services).
The royalty fee for use of the trademark is 0.75% of the aggregate net sales of
the MHE Business for the ten year period commencing March 30, 1999. The Company
accrued $3,380,000 of expenses for royalty fees in the period from March 30,
1999 to October 31, 2000, including $2,027,000 for the year ended October 31,
2000. The Company elected to defer the payments of the royalty fee for the
periods ended October 31, 1999 ($1,353,000) and October 31, 2000 ($2,027,000),
which were payable January 30, 2000 and 2001, respectively, pursuant to the
terms of the Trademark License Agreement. The Trademark License Agreement
provides that the annual royalty fee may be deferred for up to two years if the
Company does not meet certain financial criteria. The Company can only defer up
to two payments during the term of the agreement. In addition, interest accrues
at 12% per year on the deferred fee payments. The Debtors and Harnischfeger
continue to negotiate towards a consensual resolution of the issues arising from
and related to the Recapitalization and have reached a settlement in principle,
subject to definitive documentation and Bankruptcy Court approval.

As discussed below, the Company could be materially adversely affected by the
fact that HII and certain of its United States affiliates filed for bankruptcy
protection.

For income tax purposes, Holdings and MMH were deemed to acquire the assets of
the MHE Business pursuant to Code Section 338(h)(10) in connection with the
Transactions. Accordingly, the Recapitalization increased the tax basis of
certain assets and created tax-deductible goodwill.

Recent Developments

Reorganization under Chapter 11

The Company entered into several Amendments and Waivers under the Prepetition
Credit Facility, dated as of January 31, 2000 through April 28, 2000, whereby,
among other matters, the lenders waived compliance by the Company with required
financial covenants, for the period from January 31, 2000 until 5:00 p.m. May
26, 2000 (the "Waivers"). The Waivers permitted the Company, subject to certain
conditions, to make additional borrowings under the Revolving Credit Facility
and issue additional letters of credit, above levels in existence on January 28,
2000, in an aggregate amount of up to $12.4 million, during the period as to
which the Waivers applied.

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<PAGE>

On May 17, 2000, MMH Holdings, Inc. ("Holdings"), Morris Material Handling, Inc.
and their domestic operating subsidiaries (collectively, the "Debtors") filed
voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy
Code (the "Bankruptcy Code") in the United States Bankruptcy Court for the
District of Delaware (the "Bankruptcy Court"). The Debtors' Chapter 11 cases
have been consolidated for the purpose of joint administration under case number
00-2027(SLR). The Debtors are currently operating their businesses as
debtors-in-possession pursuant to the Bankruptcy Code. No trustee has been
appointed. An official committee of unsecured creditors (the "Creditors'
Committee") was appointed by the office of the United States Trustee on May 30,
2000. Pursuant to the Bankruptcy Code, actions to collect certain prepetition
indebtedness of the Debtors and other obligations against the Debtors may not be
enforced. These claims are reflected in the balance sheet as "liabilities
subject to compromise". In addition, under the Bankruptcy Code, the Debtors may
assume or reject executory contracts and unexpired leases. Additional claims may
arise from such rejection, and from the determination by the court (or agreed by
the parties in interest) to allow claims for contingencies and other disputed
amounts. However, the Debtors have not yet completed their review of all their
prepetition executory contracts and leases for assumption or rejection. See also
Note 6, Liabilities Subject to Compromise, and Note 12, Indebtedness, of the
Financial Statements in Item 8.

The Debtors received approval from the Bankruptcy Court to pay or otherwise
honor certain of their prepetition obligations, including the authority to pay
employee wages and maintain their employee benefit programs.

The Debtors filed a plan of reorganization (the "Plan") and related disclosure
statement (the "Disclosure Statement") with the U.S. Bankruptcy Court on January
16, 2001. The Debtors are continuing to negotiate with their creditor
constituencies regarding the Plan and anticipate making material amendments to
the Plan. The Debtors are still attempting to obtain a commitment by a lender to
provide the Debtors with financing to satisfy the Debtors' cash obligations
under the Plan and to provide the Debtors with working capital and letters of
credit and anticipate modifications to the Plan to reflect such financing. A
hearing to consider approval of the Disclosure Statement is scheduled for March
23, 2001. Subject to certain exceptions set forth in the Bankruptcy Code,
acceptance of a plan of reorganization requires approval of the Bankruptcy Court
and the affirmative vote (i.e., more than 50% of the number and at least 66-2/3%
of the dollar amount, both based on claims actually voted) of each class of
creditors whose claims are impaired by the plan. Alternatively, absent the
requisite approvals, a debtor may seek Bankruptcy Court approval of its
reorganization plan under "cramdown" provisions of the Bankruptcy Code, assuming
certain tests are met.

The Bankruptcy Court set September 20, 2000 as the last date creditors could
file proof of claims against the Debtors. There may be differences between the
amounts recorded in the Debtors' schedules and financial statements and the
amounts claimed by their respective creditors. Litigation may be required to
resolve such disputes.

The Debtors will continue to incur significant costs associated with the
reorganization. The amount of these expenses, which are being expensed as
incurred, is expected to significantly affect results while the Debtors operate
under Chapter 11. See Note 5, Reorganization Items, of the Financial Statements
in Item 8.

Currently, it is not possible to predict the length of time the Debtors will
operate under the protection of Chapter 11, the outcome of the Chapter 11
proceedings in general, or the effect of the proceedings on the business of the
Company or on the interests of the various creditors and security holders. The
Company believes that the bankruptcy filing provides the Debtors with the
opportunity to restructure its indebtedness. The Company plans to continue with
implementation of its cost savings initiatives to bring costs in line with
market requirements. Disruption of operations relating to the Chapter 11
reorganization has not had a material adverse effect on the Debtors'
relationships with their creditors, suppliers or employees, however, sales and
bookings for modernizations, engineered and standard cranes, hoists and
components have been negatively impacted.

The accompanying consolidated financial statements of the Company have been
prepared on a going concern basis, which contemplates continuity of operations,
realization of assets and liquidation of liabilities in the ordinary course of
business and do not reflect any adjustments that might result if the Debtors are
unable to continue as a going concern. As a result of the Debtors' Chapter 11
filings, however, such matters are subject to significant uncertainty. The
Debtors filed a plan of reorganization with the U.S. Bankruptcy Court on January
16, 2001 and anticipate filing material amendments to the Plan prior to the
hearing to consider approval of the Disclosure Statement. Continuing on a going
concern basis is dependent upon, among other things, the Bankruptcy Court's
acceptance of such plan of reorganization, the success of future business
operations, and the generation of sufficient cash from operations and financing
sources to meet the Debtors' obligations. The accompanying consolidated
financial statements do not

                                       3
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reflect: (i) the realizable value of assets on a liquidation basis or their
availability to satisfy liabilities, (ii) aggregate prepetition liability
amounts that may be allowed for claims or contingencies, or their status or
priority, (iii) the effect of any changes to the Debtors' capital structure or
in the Debtors' business operations as the result of an approved plan of
reorganization; or (iv) adjustments to the carrying value of assets or liability
amounts that may be necessary as the result of actions by the Bankruptcy Court.

The Company's consolidated financial statements have been presented in
conformity with the AlCPA's Statement of Position 90-7, "Financial Reporting By
Entities In Reorganization Under the Bankruptcy Code" ("SOP 90-7"). SOP 90-7
requires a segregation of liabilities subject to compromise by the Bankruptcy
Court as of the bankruptcy filing date and identification of all transactions
and events that are directly associated with the reorganization of the Debtors.

Debtor-in-Possession Facility

On June 15, 2000, the Bankruptcy Court approved a $35 million
Debtor-in-Possession Facility (which was subsequently reduced by agreement of
the parties to $25 million) ("DIP Facility") and authorized the Debtors to use
their collections in the operations of their business. Pursuant to such
facility, cash collected by the Company is used to repay the Term Loans, the
Revolving Credit Facility Borrowings and the Acquisition Facility Line
Borrowings on a pro-rata basis and these amounts are re-loaned to the Company
under a Junior DIP Facility up to $38 million. The DIP and Junior DIP Facilities
contain a number of covenants that, among other things, limit the Debtors'
ability to create or assume liens, consolidate or merge with other entities,
create, incur, or assume additional indebtedness, dispose of certain assets and
make capital expenditures. The DIP and Junior DIP Facilities also require the
Debtors to comply with certain financial ratios and borrowing condition tests
based on monthly measurements of the latest twelve months results of operations.
The first measurement date was December 31, 2000. The Company did not meet
certain of the financial covenants under the DIP Facility at December 31, 2000.
The Company obtained a waiver of such financial covenants through March 30,
2001. The waiver permits the Company to continue to borrow under the DIP
Facility to meet its working capital requirements. The Junior DIP Facility is
junior to the DIP Facility. At October 31, 2000, $38.0 million in borrowings are
outstanding under the Junior DIP Facility and are classified as current
obligations in the balance sheet.

The DIP and Junior DIP Facilities benefit from superpriority administrative
claim status and senior and senior liens as provided for under the Bankruptcy
Code. Under the Bankruptcy Code, a superpriority claim is senior to unsecured
prepetition claims and all other administrative expenses incurred in the Chapter
11 case. Borrowings under the DIP Facility are priced at the Alternate Base Rate
of the Post-Petition Agent under the DIP Facility plus 1.5% or, at the Debtors'
option, LIBOR plus 3 1/2%. The DIP Facility had an initial maturity date of
December 1, 2000, which date was automatically extended to June 1, 2001.

The principal sources of liquidity for the Company's operating requirements have
been cash flows from operations and borrowings under the DIP Facility and the
Junior DIP Facility. While the Company expects that such sources will provide
sufficient working capital to operate its businesses, there can be no assurances
that such sources will prove to be sufficient.

Immediately prior to the bankruptcy filings, the Company's UK subsidiary had a
short-term bank credit line with an outstanding balance of $1.9 million. This
credit line was converted to the Revolving Credit Facility borrowing in
conjunction with the bankruptcy.

HII Bankruptcy Petition

On June 7, 1999, (the "HII Petition Date") HII and certain of its United States
affiliates (including HarnCo) filed voluntary petitions for relief under Chapter
11 of the Bankruptcy Code in the United States Bankruptcy Court for the District
of Delaware. Certain provisions of the Bankruptcy Code allow a debtor to avoid,
delay and/or reduce its contractual and other obligations to third parties.
There can be no assurance that HII and its affiliates will not attempt to
utilize such provisions to cease performance under their agreements and
arrangements with the Company. The inability of the Company to receive the
benefits of one or more of these agreements or the termination of ongoing
arrangements between the Company and affiliates of HII (including those relating
to the provision of services and materials by HII and its affiliates to the
Company) could materially adversely affect the Company's operations and
financial performance. In the event that any of the liabilities retained by HII
and its affiliates in

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connection with the Recapitalization remain unsatisfied as of the HII Petition
Date, the Company's right to indemnification for any such amounts it has paid on
behalf of HII and its affiliates may also be avoided, delayed or reduced. Each
of HII and certain of its affiliates on the one hand, and the Company and
certain of its affiliates, on the other hand, have receivables and payables to
the other that may be affected by the HII Bankruptcy. The Debtors and
Harnischfeger continue to negotiate towards a consensual resolution of the
issues arising from and related to the Recapitalization and have reached a
settlement in principle, subject to definitive documentation and Bankruptcy
Court approval.

COMPANY AND INDUSTRY OVERVIEW

Industrial cranes and hoists are critical to the operations of most businesses
that require the movement of large or heavy objects. The steel, aluminum, paper
and forest products, aerospace, foundry, and automotive industries, among
others, rely on "through-the-air" material handling equipment as a flexible and
efficient method of transporting materials within a plant while maximizing the
use of available space. Through-the-air material handling equipment provides
more efficient space and capacity utilization than fixed conveyors and
traditional forklifts. The industrial crane and hoist industry remains highly
fragmented, with four global participants and a large number of regional and
local players.

The industry is comprised of original equipment cranes and hoists, and
aftermarket parts, service and modernizations. The United States market for
industrial overhead cranes and hoist products is estimated to be approximately
$400 million per year and the potential aftermarket for such products is
estimated to be approximately $1.2 billion per year. Management estimates that
the global market is several times larger. In mature industrialized economies,
original equipment sales are driven by the need for upgrades and replacements as
well as capacity expansion. Technological innovations such as more compact,
space efficient cranes, built in diagnostic systems and sophisticated motors and
transmissions, improve operating efficiency and fuel the replacement/upgrade
market. In emerging economies, however, the market for overhead cranes is tied
principally to industrial development. Demand for aftermarket products and
services is driven by general wear and tear of equipment and increases as a
result of growth in the installed base of cranes and hoists. Industrial cranes,
which typically last 20 to 50 years, require significant aftermarket support in
the form of replacement parts, machine modernizations and upgrades, repairs and
inspection and maintenance services. Management believes the market for service
and parts will continue at approximately current levels, however, management
expects the current down-turn in the crane equipment market to continue.

PRODUCTS AND SERVICES

The following presents the Company's business and operations. The Company's
business and operations, however, may be significantly adversely affected by its
liquidity situation and Chapter 11 filing. See "Reorganization under Chapter 11"
and "Liquidity and Capital Resources." The Company's core business was founded
in 1884 and material handling machinery and related equipment have been sold
under the well-recognized P&H and Morris brand names since the 1890s. Management
believes that the Company is one of the leading suppliers of industrial overhead
cranes in North America, the United Kingdom, Australia and South Africa.
Management also believes that the Company is one of the largest global providers
of aftermarket products and services to the industrial crane industry. Sales
outside of North America accounted for 22.5% of fiscal 2000 net sales, with
Western Europe representing 14.5% and the Pacific Rim representing 4.4% of net
sales. For additional geographical information, see the Financial Statements and
notes thereto appearing elsewhere herein.

The Company operates through two distinct but interrelated business groups: (i)
original equipment and (ii) aftermarket products and services. See Note 24,
Subsequent Events, of the Financial Statements in Item 8.

Original Equipment

The Company's original equipment operations design, manufacture and distribute a
broad range of standard and engineered overhead and gantry cranes, hoists and
related products. The Company's original equipment products have a reputation
for quality, durability and technological innovation.

    Engineered Cranes - The Company's engineered cranes are used by customers
    with unique performance requirements that cannot be achieved with a standard
    overhead crane. The Company's engineered cranes

                                       5
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    are individually designed for specific applications in a wide variety of
    demanding environments and typically have a high load capacity. Each unit
    is highly engineered, incurring between 300 and 4,500 hours of engineering,
    and is generally priced between $60,000 and $6.0 million. The Company
    markets engineered cranes under the P&H and Morris brand names.

    Within the engineered crane market, performance is often the most critical
    purchase criterion for a customer. Given the premium placed on technological
    sophistication and specific product performance, customers purchasing highly
    engineered cranes tend to be less sensitive to the length of time between
    order and delivery than most standard overhead crane customers. Overall lead
    times for engineered cranes typically range between 20 and 40 weeks and
    include on-site inspection of customer needs, in-house engineering and
    development, manufacturing, product testing and installation. Many
    engineered crane projects are completed pursuant to contracts on which the
    Company receives progress payments and for which the Company occasionally
    must post performance bonds.

    Engineered cranes provide particularly valuable aftermarket opportunities
    since they often operate in harsh environments and require frequent
    replacement parts and a high degree of ongoing inspection and maintenance
    services.

    Due to the advanced design of an engineered crane, these products are
    generally manufactured at one of the Company's facilities located in Oak
    Creek, Wisconsin, Loughborough, England or Johannesburg, South Africa. Each
    of these facilities maintains flexible manufacturing capabilities,
    sophisticated engineering skills, project management and inspection
    capabilities.

    Standard Cranes - The Company's standard cranes, which utilize
    pre-engineered components, are adaptable to a wide variety of uses. While
    the cranes are configured to meet each customer's particular needs, the
    degree of specific engineering is typically limited to less than 100 hours
    and most often falls within the 20 to 60 hour range. These cranes typically
    range in price from $10,000 to $200,000. The Company markets various
    standard cranes under the P&H, Morris, and various other brand names
    throughout the world.

    While engineered cranes have typically been produced by larger
    manufacturers, local crane builders have historically supplied significant
    numbers of standard cranes. Delivery time and price are key purchase
    criteria. The Company has grown its standard crane market share by expanding
    local assembly operations to shorten delivery times and reduce costs.

    Hoists - The Company manufactures electric wire rope and chain hoists,
    manual chain hoists and ratchet lever hoists. The Company's hoists range in
    capacity from 1/8 of a ton to 60 tons and feature a variety of electrical
    control technologies. Customers select a specific type of hoist based on the
    number of lifts to be performed per day and the average load capacity. Hoist
    product prices range from $100 to $150,000, with most sold in the $1,000 to
    $8,000 range. The Company markets its industrial hoists under the P&H brand
    name in North and South America and under the Morris brand name in the
    United Kingdom, South Africa, South America and Southeast Asia. Through the
    acquisition of Morris Mechanical Handling Ltd. in 1994, the Company
    significantly strengthened its position in the hoist marketplace. In 1994, a
    portion of the Company's Loughborough, England facility used to manufacture
    electric hoists was destroyed by a fire. The Company rebuilt the hoist
    manufacturing bay into a more efficient hoist manufacturing and assembly
    facility.

Aftermarket Products and Services

The Company's aftermarket business consists of replacement parts, repairs,
inspection and maintenance services, and modernizations for products
manufactured by both the Company and its competitors. The Company's network of
Company-owned distribution and service centers ("DSCs") and independent
distributors located around the world is the platform for the Company's
aftermarket sales activities, serving as distribution centers for its original
equipment and replacement parts as well as the focal point for service
activities.

                                       6
<PAGE>

    Parts and Components - The Company manufactures a wide range of replacement
    parts and components necessary to maintain cranes and hoists manufactured by
    both the Company and its competitors. These parts are sold through both DSCs
    and independent distributors and agents.

    Given the long useful life of an overhead crane, which ranges from 20 to 50
    years, the Company's installed base of equipment provides a foundation for
    the Company's aftermarket business. Parts sales are generated by customer
    requests and through service personnel during scheduled inspections,
    appraisals and service calls.

    The Company markets both proprietary and commercially available parts for
    its equipment. Proprietary parts command premium prices because they either
    have unique design attributes that make them difficult to reverse engineer
    or are critical parts where an inadequate substitute could have serious
    safety and operational consequences.

    Service - The Company provides installation, repair, inspection and
    maintenance services, primarily through its DSC network. The Company
    provides these services under recognized trade names including Crane Aid
    (South Africa) and UK Crane Service (United Kingdom).

    The Company has expanded its service offerings as a strategic response to
    customers' interest in outsourcing the repair, inspection and maintenance of
    overhead cranes and hoists. Currently, management estimates that more than
    30% of the Company's total repair and maintenance net sales are from
    services performed upon cranes and hoists manufactured by its competitors.
    Management believes that there is an opportunity to leverage its growing
    service operations to provide similar services on more of the cranes and
    hoists manufactured by its competitors.

    In addition to responding to service calls from clients, the Company has
    expanded its portfolio of services to include inspections for regulatory
    compliance purposes (such as OSHA) as well as an innovative Crane
    Appraisal/Repair Evaluation (CARE) program. The CARE program thoroughly
    assesses the condition and performance of a crane and provides a concise
    reference document for restoring the equipment to optimal operating
    performance. Each of these inspection programs sends a highly-trained
    service technician into customers' factories to evaluate the overall
    condition of the crane or hoist, and allows the technician to recommend
    preventive maintenance and replacement components. See "Sales, Marketing and
    Distribution."

    Modernizations - Crane modernizations provide an opportunity for the Company
    to generate additional revenue from its installed base of equipment. By
    upgrading the electrical and mechanical systems on existing cranes, the
    Company can help its customers to optimize crane performance and improve the
    capacity and efficiency of their operations. The cost of modernizing an
    older crane typically ranges between 10% and 60% of the cost of a new
    product.

Management of the Company has further defined the organization around the
following operating segments consistent with the way that management assesses
operating performance. The Company's primary operating segments are as follows:

    o    Equipment and Aftermarket - Americas
    o    Equipment and Aftermarket - Other
    o    Distribution and Service - North America
    o    Engineered Products and Automation - Europe
    o    Equipment and Aftermarket - Europe
    o    Equipment and Aftermarket - Asia Pacific
    o    Equipment and Aftermarket - South Africa

Each segment has a manager who is accountable to and maintains regular contact
with the Chief Executive Officer and Chief Financial Officer. The Company
evaluates performance of its segments based on operating income, determined on a
basis consistent with amounts reported in the consolidated financial statements.

                                       7
<PAGE>

The Equipment and Aftermarket - Americas segment designs and manufactures a
comprehensive line of engineered and standard overhead cranes, hoists and other
component products and repair parts at the Company's facilities located in Oak
Creek and Windsor, Wisconsin. This segment also modernizes products manufactured
by both the Company and its competitors. This segment is the main manufacturer
of the replacement parts sold by the Company's Distribution and Service-North
America segment as well as the manufacturer of component products used in that
segment's standard cranes. Repair parts and component products are purchased by
the Distribution and Service - North America segment at list price less standard
intercompany discounts.

The Equipment and Aftermarket - Other segment is the Company's brake
manufacturing operation in Canada. Approximately 21% of this segment's sales in
FY 2000 were to other Company segments. The Company sold this operation in
December 1999.

The Distribution and Service - North America segment is the network of
Company-owned locations in key industrial markets in North America. The network
is the platform for the Company's sales activities, serving as distribution
centers for its original equipment and replacement parts as well as the focal
point for service activities. Some of the distribution centers also fabricate
and assemble standard cranes using components manufactured by the Equipment and
Aftermarket - Americas and the Equipment and Aftermarket - Europe segments.

The Engineered Products and Automation - Europe segment focuses on the
manufacture of highly engineered material handling systems for use in automated
warehouse units at the Company's facility located in Loughborough, England, and
provides software support for the automated warehouse units installed at
customer locations.

The Equipment and Aftermarket-Europe segment consists of standard crane and
hoist manufacturing in the Loughborough, England facility as well as the network
of Company-owned distribution centers in key industrial markets in the United
Kingdom. The Equipment and Aftermarket -Europe segment provides services for the
Engineered Products and Automation segment at prices consistent with those
charged to external customers. In addition, this segment distributes hoists
through Distribution and Service - North America and Equipment and Aftermarket -
Asia Pacific and South Africa at prices consistent with those charged to
external customers.

The Equipment and Aftermarket - Asia Pacific and South Africa segments operate
in a manner similar to the Distribution and Service - North America segment. The
Asia Pacific segment includes operations in Australia, Singapore, Thailand and
Saudi Arabia.

SALES, MARKETING AND DISTRIBUTION

Due to the diverse nature of its product lines and customer requests, the
Company uses multiple sales approaches to serve its customer base. However, the
majority of sales are generated by Company employees. In addition, the Company
utilizes a number of independent agents and distributors in certain overseas
markets. In many markets, the members of the Company's sales staff specialize in
either original equipment or aftermarket products and services. These employees
have the ability to effectively identify and service the original equipment and
aftermarket needs of the customer, thereby positioning the Company as a single
source provider.

With the exception of sophisticated original equipment projects, the Company's
selling efforts occur primarily at the regional level. For sophisticated
original equipment, the Company uses worldwide product or engineering
specialists to "team sell" the products. In this process, the team provides
written specifications, design concept consulting, project scope development and
project financial planning.

In order to develop stronger and more knowledgeable customer relationships, the
Company has developed a DSC network, bringing the Company's parts and service
operations closer to the customer. The Company's DSC network provides three
distinct yet integrated functions: (i) a distribution network for parts; (ii) a
sales organization for original equipment; and (iii) an installation, repair,
inspection and maintenance service operation. The Company has continued to
expand its DSC network in recent years through both acquisitions of previously
independent distributors as well as the start-up of new DSCs.

In 1999, the Company reorganized its Distribution and Service - North America
segment along geographic lines to form eight North American regions. They
include five in the United States, two in Canada and one in Mexico. The
reorganization allowed the Company to strengthen its customer focus by providing
capable crane engineering, sales,

                                       8
<PAGE>

service, manufacturing and parts support on a local basis. By centralizing
engineering, manufacturing and parts at each regional headquarters, the Company
has been able to reduce selling, general and administrative expenses.

A similar approach has been adopted in the Company's international operations.
The United Kingdom Material Handling Centre has the capability of full crane
design and manufacture as well as service and parts. Crane design and component
manufacture in the other international operations in Thailand, Singapore,
Australia and South Africa are under the control of the U.K. operation to
minimize selling, general and administrative expenses and control product cost.

                                        Number of                     Number of
                                          Branch                       Service
Region                 Headquarters     Locations    Manufacturer    Technicians
--------------------------------------------------------------------------------
Northeast          Philadelphia, PA         4            Yes              24
Southeast          Birmingham, AL           4            Yes              46
Western            Dallas, TX               8             No              47
Great Lakes        Franklin, OH             7            Yes              53
Midwest            Waukesha, WI             4             No              26
Eastern Canada     Hamilton, Ontario        5            Yes              31
Western Canada     Edmonton, Alberta        6            Yes              24
Chile              Santiago, Chile          2             No              10
Mexico             Mexico City              2            Yes               7
United Kingdom     Loughborough            12            Yes              60
South Africa       Johannesburg             9            Yes              35
Australia          Sydney                   3            Yes              18
Singapore          Tuas                     1            Yes               4
Thailand           Bangkok                  2            Yes               6
                                           --                            ---
                                           69                            391

In 1999 the Company acquired a distributor and regional crane builder located in
Philadelphia, Pennsylvania and a service business in North Carolina. These
acquisitions together with ongoing growth added four branch locations, and
approximately 50 service technicians. During the year ended October 31, 2000,
the Company did not acquire any new companies and is not planning any
acquisitions in 2001.

MANUFACTURING

The Company employs manufacturing at its core facilities. The Company utilizes
specialized manufacturing facilities in combination with regional assembly to
balance the different operational requirements faced by a full service
participant in the overhead crane and hoist industry.

The specialized manufacturing facilities build highly engineered cranes. These
facilities support the regional DSC crane assembly operations by providing
high-quality, standardized components which are manufactured using processes
which are not economical for smaller, regional facilities. For example, due to
the specialized nature of the machining and assembly processes associated with
hoists, a focused manufacturing facility located in Loughborough is used to
produce the majority of these components for distribution to the Company's
facilities throughout the world. This centralization allows the Company to take
advantage of economies of scale and focused engineering resources while
supporting the Company's objective of standardizing component design and
manufacturing.

By providing light manufacturing and assembly of standardized overhead crane
products on a regional basis, the Company addresses customers' demand for cost
effective products and shorter lead-times. This regional manufacturing strategy
also benefits the Company's new product development efforts since the regional
DSC manufacturers have a better understanding of end-users' performance needs.

RAW MATERIALS

The Company maintains close relationships with a large number of suppliers both
domestically and abroad. Typically, the Company will source raw materials from a
local supplier in the region of the manufacturing facility, often entering into
a blanket purchase order or an equivalent arrangement to reduce costs. Under
certain

                                       9
<PAGE>

circumstances, however, the Company will establish a long-term supply
arrangement, either in an attempt to secure product consistency or to take
advantage of volume discounts. Some of the materials most frequently purchased
by the Company include steel, electric motors, castings and forgings, electrical
controls and components, and power transmission and related components.
Substantially all of the materials purchased by the Company are available from a
variety of sources within the country of manufacture.

BACKLOG

The Company's backlog of orders at October 31, 2000 was approximately $59.9
million compared to approximately $77.4 million at October 31, 1999. Bookings
for the year ended October 31, 2000 were $250.6 million as compared to $274.3
million for the year ended October 31, 1999. The change in backlog is due to
lower bookings and completion of several large projects that were in backlog the
previous year. Bookings for modernizations, engineered and standard cranes,
hoists and components were negatively impacted by the Company's filing voluntary
petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code. The
Company's orders for standard hoist products are usually shipped within 3 to 12
weeks. Overall lead times for products that are manufactured to customer's
specifications typically range between 12 and 40 weeks. The entire backlog of
orders is anticipated to be shipped in fiscal 2001.

WARRANTIES

The Company generally provides a warranty on its products for periods of one to
two years. At October 31, 2000, the Company had accrued warranties of
approximately $2.3 million.

TRADEMARKS AND BRAND NAMES

The Company offers its equipment and services primarily under the P&H and Morris
brand names. The P&H and Morris trademarks, which have been consistently used
for over 100 years, are recognized in important markets around the world. P&H is
currently used on above-ground mining equipment manufactured by HarnCo, mobile
construction cranes manufactured by Terex (the successor to the former mobile
construction crane division of HarnCo), as well as on the crane and hoist
products manufactured by the Company and related services offered by the
Company. HarnCo has licensed to the Company the sole and exclusive right to use
the P&H trademark on a worldwide basis in connection with "through-the-air"
material handling original equipment from the date of the Recapitalization
Closing until 15 years after the earlier to occur of a sale of Holdings to a
third party or a public offering of the common stock of Holdings, the Company or
their parents or successors, and for an additional seven years in connection
with aftermarket products and services. The royalty fee for use of the trademark
is 0.75% of the aggregate net sales of the MHE Business for the ten year period
which commenced March 30, 1999. The Company accrued $3,380,000 of expenses for
royalty fees in the period from March 30, 1999 to October 31, 2000. The Company
has elected to defer the payments of the royalty for the periods ended October
31, 1999 and 2000, which would otherwise be payable on January 30, 2000 and
2001, respectively, pursuant to the terms of Trademark License Agreement. The
Trademark License Agreement provides that the annual royalty fee may be deferred
for up to two years if the Company does not meet certain financial criteria. The
Company can only defer up to two payments during the term of the agreement. In
addition, interest accrues at 12% per year on the deferred fee payments. The
Debtors and Harnischfeger continue to negotiate towards a consensual resolution
of the issues arising from and related to the Recapitalization and have reached
a settlement in principle, subject to definitive documentation and Bankruptcy
Court approval. See "Certain Relationships and Related Transactions."

The Company also sells products under the Kaverit trademark in Canada and the
Powerlec and JDN Monocrane trademarks in Australia. It provides aftermarket
service under the UK Crane Service trademark in the United Kingdom and the Crane
Aid trademark in South Africa. The Company also uses a variety of other marks in
different countries. There are no known conflicts or third party rights which
would materially impact the Company's limited use of the P&H trademark in
connection with the Company's business activities for the life of the license
agreement or use of its other trademarks.

PATENTS

The Company owns 49 United States patents and pending patent applications and 41
foreign patents and pending patent applications, primarily in Canada, Japan,
Mexico, Chile, the European Union and the United Kingdom. The

                                       10
<PAGE>

Company has acquired patents pertaining to improvements in stacker cranes,
portal cranes, anti-sway cable reeving systems for cranes, automation and
controls, and crane wheel and rail configurations to prevent skewing of
rail-mounted cranes. Most of the products manufactured by the Company are
proprietary in design and the Company is not aware of any subsisting patents
held by others which would be infringed by the manufacture and sale of the
Company's current lines of crane and hoist products. Patents are important to
the Company because, among other things, they prevent competitors from using the
Company's proprietary inventions and designs. The Company believes this provides
a competitive advantage in the marketplace. However, the Company's overall
competitive position is not dependent upon a particular patent, nor would the
loss of any particular patent have a material impact upon the Company's
competitive or financial position. Nonetheless, the Company expects to continue
to protect its proprietary technology through patents and other forms of
intellectual property. The Company has aggressively pursued infringement of its
proprietary rights and intends to continue to do so should the need arise. The
Company's patents have a duration ranging from approximately one to eighteen
years, depending on the filing dates of the patent applications.

COMPETITION

The industrial crane and hoist industry is highly fragmented, with four global
participants and many regional and local players. Therefore, the markets in
which the Company operates are highly competitive, and the Company faces
competition from a number of different manufacturers in each of its product
areas and geographic markets, both domestic and foreign. The current depressed
level of new equipment orders has increased the intensity of competition and has
reduced selling prices and margins on new equipment bookings. Globally, the
Company believes it is one of the four largest manufacturers of industrial
overhead cranes and one of the largest providers of related aftermarket products
and services. Other global competitors include Mannesmann Dematic AG, a
subsidiary of Mannesmann AG; Columbus McKinnon Corp.; and KCI Konecranes
International Corp. Within specific geographic and product markets, the market
share of the top participants often varies.

GOVERNMENTAL REGULATION

    Environmental Regulation

    The Company's operations and properties worldwide are subject to extensive
    and changing legal requirements and regulations pertaining to environmental
    matters. In 2000, expenditures in connection with the Company's compliance
    with federal, state, local and foreign environmental laws and regulations
    did not have a material adverse effect on the Company's earnings or
    competitive position.

    The principal environmental compliance issues that arise in connection with
    the Company's manufacturing facilities are hazardous/solid waste disposal
    and air emissions (primarily painting operations). The Company's DSCs do not
    create environmental conditions that materially affect the Company's
    operations.

    The Resource Conservation and Recovery Act ("RCRA") requires the Company to
    manage and recycle or dispose properly of the wastes it generates from its
    manufacturing operations. Similar foreign hazardous waste laws and
    regulations apply to the Company's facilities outside the United States.
    RCRA and these other hazardous waste laws and regulations include storage,
    management and manifest provisions, among others. The Company has agreements
    worldwide with hazardous waste management firms to recycle or dispose
    properly of generated hazardous wastes. Many of the Company's regional
    distribution centers have a "parts washer sink" on-site, and the spent
    solvents generated from these minor cleaning activities are managed,
    collected and recycled under contracts with waste management firms. The
    Company is not aware of any material non-compliance with applicable
    hazardous waste laws and regulations at its facilities or operations.

    Under the Clean Air Act, the States have adopted an array of control
    measures and programs to minimize certain hazardous air pollutants and
    particulate matter. In 1995, the Company submitted a timely air permit
    application for its Oak Creek operations and is waiting for final review and
    issuance of a permit from the Wisconsin Department of Natural Resources. The
    Company is protected under the permit shield provision of the Clean Air Act.
    The Company has obtained necessary permits for other affected facilities.
    Foreign clean air laws and regulations address many of the same pollutants
    and issues. Under England's Clean Air Regulations adopted April 1998, the
    Company has submitted an air permit application for its

                                       11
<PAGE>

    Loughborough facility. A permit was approved and issued by the Charnwood
    Borough Council November 2000. Considerable regulatory activity is expected
    in the next ten years with the implementation of 1997 changes to the
    national ambient air quality standards for ozone and particulate matter,
    although that rulemaking is currently subject to litigation and thus may be
    delayed. The Company has made a number of select investments in equipment at
    its primary manufacturing sites in anticipation of these changes. The
    adoption of some of these additional clean air regulations might require the
    Company to make further capital expenditures not currently anticipated and
    that may be material.

    In connection with the ownership of its properties and operation of its
    business, the Company may also be subject to liability under various
    federal, state, local and foreign laws, regulations and ordinances relating
    to clean-up and removal of hazardous substances on, under or in such
    properties. Certain laws, such as the Comprehensive Environmental Response,
    Compensation and Liability Act, typically impose liability whether or not
    the owner or operator knew of, or was responsible for, the presence of such
    hazardous substances. Persons who arrange, or are deemed to have arranged,
    for the disposal or treatment of hazardous substances also may be liable
    for the costs of removal and remediation of such substances at the
    treatment or disposal site, regardless of whether such site is owned or
    operated by such person. Under the terms of the Recapitalization Agreement,
    HarnCo retained all liability for the only two, open environmental clean-up
    claims brought against HarnCo in the Milwaukee area. During fiscal year
    2000, an environmental assessment was conducted at the Company's
    Loughborough, England facility which included soil and groundwater testing
    throughout the property. Results of this study warranted notification to
    the Environmental Agency in West Bridgeford, Nottingham. At this time it
    appears that certain "hot spots" of hydrocarbon contamination on the
    property will require soil removal and remediation for which costs may be
    material. Also, based on the test results, there are other portions of the
    property which, if developed, may require soil removal and remediation
    relative to heavy metals which costs may also be material. It is uncertain
    whether further testing will be required or what future actions may be
    warranted and whether it will have an adverse impact on the Company's
    financial performance. The Company and its management are not aware of any
    other material environmental clean-up claim which is pending or is
    threatened against the Company, but there can be no assurance that any such
    claim will not be asserted against the Company in the future. See also Item
    3 - Legal Proceedings.

    In regards to ongoing environmental compliance reporting, the Company has
    developed an "Annual Compliance Calendar" matrix for all required facility
    reports and has staff designated to lead compliance activities at each
    facility. A key component of the Company's environmental strategic
    management plan is continuous awareness and training for managers and
    employees.

    It is likely that situations will arise from time to time requiring the
    Company to incur expenditures in order to ensure continuing regulatory
    compliance. The Company is not aware of any environmental condition or any
    operation at any of its properties or facilities, either individually or in
    the aggregate, which would cause expenditures that would result in a
    material adverse effect on the Company's results of operations, financial
    condition, or competitive position. There could be future, unknown
    environmental regulatory changes that could have a material effect.

    In connection with the Transactions, a comprehensive environmental
    assessment of certain of the Company's properties and operations at which
    the Company may have potential environmental liabilities was conducted. This
    environmental assessment indicated that no environmental matters or
    compliance issues exist that would have a material adverse effect on the
    Company's earnings or competitive position. The Company has followed up on
    all priority recommendations made in the environmental assessment with
    respect to both United States and foreign operations. There can be no
    assurance that unknown conditions at the Company's facilities will not
    result in potential liabilities that may be material.

    The Loughborough, England facility is subject to an air emissions permit,
    the limits of which became enforceable in April 1998. The Company has
    retained a consultant who has conducted tests to determine if the facility
    complies with such limits. The test results indicated that the Company
    exceeded emission limits in one area. Significant operational changes have
    been implemented. The Company has submitted a proposal to the Charnwood
    Borough Counsel and has received verbal approval, however a formal response
    has not yet been received. At this time it is not anticipated that material
    expenditures will be required.

                                       12
<PAGE>

    Other Regulation

    The Company's operations also are subject to many other laws and
    regulations, including those relating to workplace safety and worker health
    (principally OSHA and regulations thereunder in the United States and
    similar laws in most other countries). In fiscal 2000, expenditures in
    connection with the Company's compliance with federal, state, local and
    foreign environmental laws and regulations did not have a material adverse
    effect on the Company's earnings or financial position. Additionally, the
    Company believes it is in material compliance with these laws and
    regulations and does not believe that future compliance with such laws and
    regulations will have a material adverse effect on its cash flow, results of
    operations or financial condition.

Employees

At December 31, 2000, the Company employed 1,840 persons, of whom 647 were
hourly and 1,193 were salaried personnel. Approximately 56.5% of the Company's
hourly employees are represented by unions. The Company's unionized employees in
Oak Creek, Wisconsin are covered by a collective bargaining agreement with the
United Steelworkers of America, Local 1114, which expires August 31, 2002. The
unionized employees in Philadelphia, Pennsylvania are covered by a collective
bargaining agreement with the International Association of Bridge, Structural,
Ornamental and Reinforcing Iron Workers, Local 502, which expires July 31, 2003.
In addition, the Company is a party to several agreements with unions
representing certain of its employees in Mexico, South Africa and the United
Kingdom. These agreements all have one year terms. The Company believes that its
relations with its employees are good.

                                       13
<PAGE>

ITEM 2. PROPERTIES

    The Company maintains its corporate headquarters in Oak Creek, Wisconsin and
conducts its principal operations at the following facilities:

<TABLE>
<CAPTION>
                                                                                  SQUARE                         OPERATING
LOCATION                      UTILIZATION                                         FOOTAGE    OWNED/LEASED       SEGMENT (H)
-------------------------------------------------------------------------------------------- -------------------------------
<S>                           <C>                                                 <C>        <C>                    <C>
Loughborough, U.K.            Crane/hoist manufacturing                           420,000    Owned                  (4), (5)
Oak Creek, WI                 Crane/hoist/winch manufacturing                     277,000    Owned                  (1)
Johannesburg, S.A.            Crane/hoist manufacturing                           124,000    Owned                  (7)
Franklin, OH                  Regional fabrication/remanufacturing                 75,000    Owned                  (3)
Mexico City, Mexico           Crane/hoist manufacturing/distribution/service       65,000    Owned                  (3)
Edmonton, Canada              Crane/hoist regional manufacturing/service           58,300    Owned                  (3)
Burlington, Ontario, Canada   Crane manufacturing/distribution/service             20,000    Owned                  (3)
Windsor, WI                   Crane/hoist remanufacturing                          55,000    Leased (a)             (1)
Mauldin/Greenville, SC        Regional crane assembly/service                       4,000    Leased (b)             (3)
Philadelphia, PA              Regional crane assembly/service                      39,000    Leased (c)             (3)
Birmingham, AL                Regional crane assembly/service                      46,500    Owned/Leased (d)       (3)
Melbourne, Australia          Crane/hoist manufacturing/service                    30,000    Leased (e)             (6)
Singapore, Singapore          Parts warehouse/crane assembly/hoist distribution    21,200    Licensed (f)           (6)
Sydney, Australia             Material handling equipment distribution/service     14,000    Leased (g)             (6)
</TABLE>

(a)      Lease expires May 31, 2002.
(b)      Lease expires June 30, 2003.
(c)      Lease expired July 31, 2000 but was extended to March 31, 2001.
(d)      The Company owns a 36,500 square foot property with the exception of a
         portion thereof leased (with an option to purchase) from the Industrial
         Revenue Board of Birmingham. The remaining 10,000 square feet is under
         a lease that expires December 31, 2004.
(e)      Lease expires August 4, 2003.
(f)      The property is held under a license granted pursuant to a building
         agreement with the Jurong Town Corporation of Singapore. Subject to
         compliance with certain stipulated conditions in such agreement, the
         Company is to be granted a 30-year lease of the property from April 1,
         1994.
(g)      Lease expires June 30, 2003.
(h)      The operating segments are as follows:
         (1)    Equipment and Aftermarket - Americas
         (2)    Equipment and Aftermarket - Other
         (3)    Distribution and Service - North America
         (4)    Engineered Products and Automation - Europe
         (5)    Equipment and Aftermarket - Europe
         (6)    Equipment and Aftermarket - Asia Pacific
         (7)    Equipment and Aftermarket - South Africa

The Company also leases a number of other properties as DSCs in the United
States, Canada, the United Kingdom, South Africa, Australia, Chile, Thailand and
Mexico.

The Company believes that its properties have been adequately maintained, are in
generally good condition, and are suitable for the Company's business as
presently conducted. The Company believes its existing facilities provide
sufficient production capacity for its present needs and for its anticipated
needs in the foreseeable future. The Company also believes that upon the
expiration of its current leases, it either will be able to secure renewal terms
or enter into leases for alternative locations at market terms.

                                       14
<PAGE>

ITEM 3. LEGAL PROCEEDINGS

Chapter 11 Bankruptcy Filing

As a result of the bankruptcy filings, litigation relating to prepetition claims
against the Debtors is stayed. See also Item 1, Recent Developments -
Reorganization under Chapter 11, for information regarding our bankruptcy
proceedings.

General

On October 28, 1996, a strong windstorm caused significant damage to the Belview
container-handling terminal at the Port of Waterford in Ireland. One
container-handling crane sold by the Company's United Kingdom subsidiary was
destroyed and another was seriously damaged. The two cranes were sold to the
Waterford Harbour Commissioners in 1992 and commissioned for use in 1993. On
October 19, 1998, the Waterford Harbour Commissioners wrote to the Company and
provided a notice of arbitration, asserting breach of contract, negligence and
breach of duty against the Company's United Kingdom subsidiary in connection
with the destroyed and damaged cranes. The Waterford Harbour Commissioners
claimed direct damages of IR(pound)8.5 million ($9.1 million based on exchange
rates at October 31, 2000) and consequential damages of IR(pound)4.9 million
($5.3 million based on exchange rates at October 31, 2000. The port operator,
Bell Lines, Limited, filed a similar claim against the Company's United Kingdom
subsidiary in October 1999, asserting unspecified damages. Management intends to
vigorously defend both matters. The Company's insurance carriers have agreed to
provide defense coverage for the accident and limited indemnification if the
Company is unsuccessful in defending the claims. The Company and its United
Kingdom subsidiary have initiated litigation in the Milwaukee County Circuit
Court against Ace American Insurance Company, AON Risk Services, Inc. of
Illinois, and National Union Fire Insurance Company of Pittsburgh, Pennsylvania,
seeking additional insurance coverage for indemnification obligations. While the
Company believes that it will obtain a favorable resolution (either by
successfully defending the claim or by obtaining insurance coverage thereon), no
assurances can be made as to the final outcome of the claims. If the Company's
United Kingdom subsidiary is found liable for the claims and is unable to obtain
insurance coverage therefore, there could be a material adverse effect on the
Company's operations and financial performance. Based upon the current status of
this matter, no related liability has been accrued at October 31, 2000.

In connection with the sale of substantially all assets of the Company's United
Kingdom Group in March 2001, (see also Note 24, Subsequent Events) the Company's
U.K. operating subsidiaries were placed in administrative receivership as a
result of their inability to satisfy claims made by creditors pursuant to
guarantees made by such subsidiaries under the Prepetition Credit Facility. It
is not yet certain as to the impact this will have on the litigation discussed
above; however, these subsidiaries will not have sufficient assets to settle all
third party liabilities.

The Company is a party to various other litigation matters, including product
liability and other claims, which are normal in the course of its operations.
Also, as a normal part of its operations, the Company undertakes certain
contractual obligations and warranties in connection with the sale of products
or services. Although the outcome of these matters cannot be predicted with
certainty, management believes that the resolution of such matters will not have
a material adverse effect on the consolidated results of operations, financial
position or cash flows of the Company.

                                       15
<PAGE>

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

None.

                                       16
<PAGE>

                                     PART II

ITEM 5. MARKET FOR REGISTRANTS' COMMON STOCK AND RELATED STOCKHOLDER MATTERS

There is no established public trading market for Holdings' Voting Common Stock,
par value $.01 per share (the "Holdings Voting Common Stock"), or Holdings'
Nonvoting Common Stock, par value $.01 per share (the "Holdings Nonvoting Common
Stock"). As of January 31, 2001, there were two holders of Holdings Voting
Common Stock and nine holders of Holdings Nonvoting Common Stock.

Holdings has not paid or declared any cash dividends during the last two fiscal
years and does not anticipate paying cash dividends on the Holdings Voting
Common Stock or Holdings Nonvoting Common Stock in the foreseeable future. The
ability of Holdings to obtain cash resources to pay cash dividends on its
capital stock is restricted by the terms of the Prepetition Credit Facility and
the indenture that governs the Senior Notes (the "Note Indenture") . See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources."

There is no established public trading market for MMH's Common Stock, par value
$.01 per share (the "MMH Common Stock"). Holdings owns all of the issued and
outstanding MMH Common Stock.

MMH did not pay any dividends to Holdings during fiscal 2000.

On August 27, 1999, Holdings issued 1,210 shares of its non-voting common stock
to Martin Crane in consideration for Martin Crane's funding of a $5.0 million
participation interest in the New Credit Facility in connection with the August
2, 1999 amendment of the New Credit Facility. On December 3, 1999, Holdings
issued 2,420 more shares of its non-voting common stock to Martin Crane as
additional consideration pursuant to the terms of the Subordination and
Participation Agreement. No underwriter was involved in the transaction, which
was exempt from registration under Section 4(2) of the Securities Act.

Appropriate legends were affixed to the stock certificates issued in the above
transactions.

                                       17
<PAGE>

ITEM 6. SELECTED FINANCIAL DATA

For the purposes of periods prior to the Recapitalization presented in this Form
10-K, it is assumed that Holdings has historically owned the capital stock of
MMH, that all the assets of the MHE Business were owned by subsidiaries of MMH
and that, immediately prior to the consummation of the Recapitalization, the
historical combined financial statements of Holdings were identical to those of
the Company.

                               MMH Holdings, Inc.
                             Selected Financial Data
                             (dollars in thousands)

<TABLE>
<CAPTION>
                                                                Fiscal Year Ended October 31,
                                               ------------------------------------------------------------
                                                  2000         1999         1998         1997        1996
                                               ---------    ---------    ---------    ---------   ---------
<S>                                            <C>          <C>          <C>          <C>         <C>
INCOME STATEMENT DATA:
Net sales                                      $ 268,074    $ 294,195    $ 317,857    $ 353,350   $ 323,735
Gross profit                                      57,292       75,492       90,866       92,556      76,176
Other income - net                                    --          392        1,331        2,649       1,149
Selling, general and Administrative expenses      70,372       72,439       63,152       56,806      44,968
Impairment loss on long-lived assets              16,009           --           --           --          --
Reorganization items                               7,850           --           --           --          --
HII Management fee                                    --           --        1,155        2,862       2,341
Nonrecurring employee benefit costs (a)               --           --        1,216           --          --
                                               ---------    ---------    ---------    ---------   ---------
Operating income (loss)                          (36,939)       3,445       26,674       35,537      30,016

Net income (loss)                                (56,746)     (98,205)       4,291    $  20,853   $  18,446
                                                                                      =========   =========
Dividends on preferred stock                     (13,283)     (12,322)      (6,545)

Amortization of preferred stock discount            (581)        (581)        (338)
                                               ---------    ---------    ---------
Net loss attributable to Common Stock          $ (70,610)   $(111,108)   $  (2,592)
                                               =========    =========    =========
</TABLE>

<TABLE>
<CAPTION>
                                                          As of October 31,
                                         ----------------------------------------------------
                                           2000       1999       1998       1997       1996
                                         --------   --------   --------   --------   --------
<S>                                      <C>        <C>        <C>        <C>        <C>
BALANCE SHEET DATA:
Total assets                             $176,171   $226,836   $310,997   $199,600   $189,058
Total debt (b)                             38,748    297,114    265,338      6,088      2,044
Mandatorily redeemable preferred stock    122,109    108,245     95,351         --         --
</TABLE>

--------------
(a) Represents incentives to certain members of management. While the cost of
    the incentive payments appear on the Company's income statement, HII, the
    Company's former parent, not the Company, was responsible for paying these
    incentives.

(b) At October 31, 2000, total debt excludes prepetition debt which is included
    in Liabilities Subject to Compromise.

                                       18
<PAGE>

                         Morris Material Handling, Inc.
                             Selected Financial Data
                             (dollars in thousands)

<TABLE>
<CAPTION>
                                                           Fiscal Year Ended October, 31
                                          -----------------------------------------------------------
                                             2000         1999         1998        1997        1996
                                          ---------    ---------    ---------   ---------   ---------
<S>                                       <C>          <C>          <C>         <C>         <C>
INCOME STATEMENT DATA:
Net sales                                 $ 268,074    $ 294,195    $ 317,857   $ 353,350   $ 323,735
Gross profit                                 57,292       75,492       90,866      92,556      76,176
Other income - net                               --          392        1,331       2,649       1,149
Selling, general and Administrative
   expenses                                  70,372       72,439       63,152      56,806      44,968
Impairment loss on long-lived assets         16,009           --           --          --          --
Reorganization items                          7,850           --           --          --          --
HII Management fee                               --           --        1,155       2,862       2,341
Nonrecurring employee benefit costs (a)          --           --        1,216          --          --
                                          ---------    ---------    ---------   ---------   ---------
Operating income (loss)                     (36,939)       3,445       26,674      35,537      30,016

Net income                                $ (56,746)   $ (98,205)   $   4,291   $  20,853   $  18,446
                                          =========    =========    =========   =========   =========
</TABLE>

<TABLE>
<CAPTION>
                                        As of October 31,
                      ----------------------------------------------------
                        2000       1999       1998       1997       1996
                      --------   --------   --------   --------   --------
<S>                   <C>        <C>        <C>        <C>        <C>
BALANCE SHEET DATA:
Total assets          $176,171   $226,836   $310,997   $199,600   $189,058
Total debt (b)          38,748    297,114    265,338      6,088      2,044
</TABLE>

--------------
(a) Represents incentives to certain members of management. While the cost of
    the incentive payments appear on the Company's income statement, HII, the
    Company's former parent, not the Company, was responsible for paying these
    incentives.

(b) At October 31, 2000, total debt excludes prepetition debt which is included
    in Liabilities Subject to Compromise.

                                       19
<PAGE>

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

The following discussion should be read in conjunction with the Financial
Statements and the related notes thereto included elsewhere in this document.
The Company's fiscal year ends October 31. Consequently, any reference to any
particular fiscal year means the fiscal year ended October 31 of such year.

GENERAL

The Company is an international provider of "through-the-air" material handling
products and services used in most manufacturing industries. The Company's
original equipment operations design and manufacture a comprehensive line of
industrial cranes, hoists and component products. Through its aftermarket
operations, the Company provides a variety of related products and services,
including replacement parts, repair and maintenance services and product
modernizations. In recent years, the Company has shifted its orientation from an
original equipment-focused United States manufacturer to an international full
service provider with a significant emphasis on the high margin aftermarket
business. The Company's revenues are derived principally from the sale of
industrial overhead cranes, component products and aftermarket products and
services.

On May 17, 2000, MMH Holdings, Inc. ("Holdings"), Morris Material Handling, Inc.
and their domestic operating subsidiaries (collectively, the "Debtors") filed
voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy
Code (the "Bankruptcy Code") in the United States Bankruptcy Court for the
District of Delaware (the "Bankruptcy Court"). The Debtors' Chapter 11 cases
have been consolidated for the purpose of joint administration under case number
00-2027(SLR). The Debtors are currently operating their businesses as
debtors-in-possession pursuant to the Bankruptcy Code. No trustee has been
appointed. An official committee of unsecured creditors (the "Creditors'
Committee") was appointed by the office of the United States Trustee on May 30,
2000. Pursuant to the Bankruptcy Code, actions to collect certain prepetition
indebtedness of the Debtors and other obligations against the Debtors may not be
enforced. These claims are reflected in the balance sheet as "liabilities
subject to compromise". In addition, under the Bankruptcy Code, the Debtors may
assume or reject executory contracts and unexpired leases. Additional claims may
arise from such rejection, and from the determination by the court (or agreed by
the parties in interest) to allow claims for contingencies and other disputed
amounts. However, the Debtors have not yet completed their review of all their
prepetition executory contracts and leases for assumption or rejection. See also
Note 6, Liabilities Subject to Compromise, and Note 12, Indebtedness of the
Financial Statements in Item 8.

The Debtors received approval from the Bankruptcy Court to pay or otherwise
honor certain of their prepetition obligations, including the authority to pay
employee wages and maintain their employee benefit programs.

The Debtors filed a plan of reorganization (the "Plan") and related disclosure
statement (the "Disclosure Statement") with the U.S. Bankruptcy Court on January
16, 2001. The Debtors are continuing to negotiate with their creditor
constituencies regarding the Plan and anticipate making material amendments to
the Plan. The Debtors are still attempting to obtain a commitment by a lender to
provide the Debtors with financing to satisfy the Debtors' cash obligations
under the Plan and to provide the Debtors with working capital and letters of
credit and anticipate modifications to the Plan to reflect such financing. A
hearing to consider approval of the Disclosure Statement is scheduled for March
23, 2001. Subject to certain exceptions set forth in the Bankruptcy Code,
acceptance of a plan of reorganization requires approval of the Bankruptcy Court
and the affirmative vote (i.e., more than 50% of the number and at least 66-2/3%
of the dollar amount, both based on claims actually voted) of each class of
creditors whose claims are impaired by the plan. Alternatively, absent the
requisite approvals, a debtor may seek Bankruptcy Court approval of its
reorganization plan under "cramdown" provisions of the Bankruptcy Code, assuming
certain tests are met.

The Bankruptcy Court set September 20, 2000 as the last date creditors could
file proof of claims against the Debtors. There may be differences between the
amounts recorded in the Debtors' schedules and financial statements and the
amounts claimed by their respective creditors. Litigation may be required to
resolve such disputes.

The Debtors will continue to incur significant costs associated with the
reorganization. The amount of these expenses, which are being expensed as
incurred, is expected to significantly affect results while the Debtors operate
under Chapter 11. See Note 5, Reorganization Items, of the Financial Statements
in Item 8.

                                       20
<PAGE>

Currently, it is not possible to predict the length of time the Debtors will
operate under the protection of Chapter 11, the outcome of the Chapter 11
proceedings in general, or the effect of the proceedings on the business of the
Company or on the interests of the various creditors and security holders. The
Company believes that the filing provides the Debtors with the opportunity to
restructure its indebtedness. The Company plans to continue with implementation
of its cost savings initiatives to bring costs in line with market requirements.
Disruption of operations relating to the Chapter 11 reorganization has not had a
material adverse effect on the Debtors' relationships with their creditors,
suppliers or employees, however, sales and bookings for modernizations,
engineered and standard cranes, hoists and components have been negatively
impacted.

The accompanying consolidated financial statements of the Company have been
prepared on a going concern basis, which contemplates continuity of operations,
realization of assets and liquidation of liabilities in the ordinary course of
business and do not reflect any adjustments that might result if the Debtors are
unable to continue as a going concern. As a result of the Debtors' Chapter 11
filings, however, such matters are subject to significant uncertainty. The
Debtors filed a plan of reorganization with the U.S. Bankruptcy Court on January
16, 2001. Continuing on a going concern basis is dependent upon, among other
things, the Bankruptcy Court's acceptance of such plan of reorganization, the
success of future business operations, and the generation of sufficient cash
from operations and financing sources to meet the Debtors' obligations. The
accompanying consolidated financial statements do not reflect: (i) the
realizable value of assets on a liquidation basis or their availability to
satisfy liabilities, (ii) aggregate prepetition liability amounts that may be
allowed for claims or contingencies, or their status or priority, (iii) the
effect of any changes to the Debtors' capital structure or in the Debtors'
business operations as the result of an approved plan of reorganization; or (iv)
adjustments to the carrying value of assets or liability amounts that may be
necessary as the result of actions by the Bankruptcy Court.

The Company's consolidated financial statements have been presented in
conformity with the AlCPA's Statement of Position 90-7, "Financial Reporting By
Entities In Reorganization Under the Bankruptcy Code" ("SOP 90-7"). SOP 90-7
requires a segregation of liabilities subject to compromise by the Bankruptcy
Court as of the bankruptcy filing date and identification of all transactions
and events that are directly associated with the reorganization of the Debtors.

Recapitalization - Historically, the Company conducted its business as one of
several operating units of HII. Prior to March 30, 1998, the core United States
operations of the Company were conducted directly by HarnCo, while the remainder
of the Company's operations throughout the world were conducted through a number
of entities owned, directly or indirectly, by HII and its affiliates.

On January 28, 1998, HII reached an agreement with MHE Investments, a newly
formed affiliate of Chartwell Investments Inc., for the sale of an approximately
80 percent common ownership interest in the MHE Business. Pursuant to this
agreement, HarnCo and other HII affiliates effected a number of transactions
that resulted in Holdings, a preexisting company engaged in the MHE Business,
acquiring, through MMH, its newly formed wholly-owned subsidiary, the equity
interests of all of the operating entities engaged in the MHE Business. As a
result of the reorganization of the MHE Business' legal entities, Holdings and
the Company became the successor companies to the MHE Business. The Transactions
are accounted for as a recapitalization for financial reporting purposes.
Accordingly, the historical basis of the Company's assets and liabilities was
not impacted by the Transactions.

In conjunction with the Recapitalization, which closed on March 30, 1998 (the
"Recapitalization Closing"), Holdings sold $60.0 million of Series A Units,
consisting of $57.7 million liquidation preference of Holdings' 12% Series A
Senior Exchangeable Preferred Stock (the "Holdings Series A Senior Preferred
Stock") and 720 shares of non-voting common stock, to institutional investors.
In addition, MMH sold $200.0 million aggregate principal amount of its 9 1/2%
Senior Notes due 2008 (the "Senior Notes") and entered into a senior secured
credit facility (the "Prepetition Credit Facility"). The Prepetition Credit
Facility includes $55.0 million of term loans (the "Term Loans"), a revolving
credit facility (the "Revolving Credit Facility") and an acquisition facility
(the "Acquisition Facility"). The Revolving Credit Facility initially provided
the Company with up to $70.0 million of available borrowings for working
capital, acquisitions and other corporate purposes, subject to compliance with
certain conditions. The Acquisition Facility initially permitted the Company to
borrow up to $30.0 million until the third anniversary of the Recapitalization
Closing to finance acquisitions, subject to compliance with certain conditions.
The Prepetition Credit Facility was amended on August 2, 1999. As amended, the
Revolving Credit Facility provided $50.7 million of available borrowings ($10.0
million of which was required to be reserved for issuance of

                                       21
<PAGE>

letters of credit), and the Acquisition Facility provided for $12.4 million of
borrowings ($7.4 million of which was previously funded by the lenders under the
Prepetition Credit Facility and $5.0 million of which was funded by indirect
equity holders in Holdings) for acquisitions and general corporate purposes. No
additional borrowings under the Acquisition Facility are available from lenders
under the Prepetition Credit Facility. In connection with, and as a condition
to, the lenders under the Prepetition Credit Facility entering into the August
2, 1999 Amendment to the Prepetition Credit Facility, certain of the current
indirect equity holders in Holdings purchased, through Martin Crane L.L.C.
("Martin Crane"), a newly formed limited liability company, a $5.0 million
participation in the Prepetition Credit Facility and received shares of
non-voting common stock of Holdings, in consideration therefor. As a result, at
October 31 2000, MHE Investments owned approximately 54.5% of the Holdings
Common Stock, HarnCo owned approximately 15.6% of the Holdings Common Stock,
institutional investors own approximately 4.9% of the Holdings Common Stock and
Martin Crane owns approximately 25.0% of the Holdings Common Stock.

At the Recapitalization Closing, (i) MHE Investments paid HarnCo $54.0 million
for 72.6% of Holdings' common stock (the "Holdings Common Stock") (after giving
effect to the Transactions) and approximately $28.9 million liquidation
preference of Holdings' 12 1/2% Series C Junior Voting Exchangeable Preferred
Stock (the "Holdings Series C Junior Voting Preferred Stock"), (ii) Holdings
redeemed certain shares of Holdings Common Stock and Holdings Series C Junior
Voting Preferred Stock from HarnCo for $282.0 million in cash (subject to
potential post-Recapitalization adjustments as to which an additional $5.0
million was provided to HarnCo) and approximately $4.8 million liquidation
preference of Holdings' 12 1/4% Series B Junior Exchangeable Preferred Stock
(the "Holdings Series B Junior Preferred Stock"), and (iii) HarnCo retained
approximately 20.8% of the Holdings Common Stock (after giving effect to the
Transactions).

At the Recapitalization Closing, MMH entered into a number of agreements
pursuant to which HII and its affiliates continued to provide to MMH and to its
subsidiaries located in the United States, on an interim basis and under
substantially the same terms and conditions as before the closing, certain
products and services. In addition, HII and MMH entered into a credit
indemnification agreement (the "Credit Indemnification Agreement") pursuant to
which HII will maintain in place the credit support obligations in existence at
the Recapitalization Closing but have no further duty to extend, renew or enter
into any new credit support obligations (except as to the MHE Business
obligations existing at the Recapitalization Closing). Under the Credit
Indemnification Agreement, MMH is required to pay HII, in advance, an annual fee
equal to 1% of the amounts outstanding under each letter of credit and bond
provided by HII and its affiliates (approximately $9.3 million as of October 31,
2000). MMH accrued a fee of $143,743 for the year ended October 31, 2000. HII is
required to refund the Company on a quarterly basis a pro-rata portion of the
annual fee for any reductions in the outstanding amount of credit that occurred
during such quarter. In addition, the Company will reimburse HII for certain
future fees and expenses. The Company also entered into a surety arrangement
(the "Surety Arrangement") to provide credit support for its
post-Recapitalization Closing operations.

In connection with the Recapitalization, the Company also entered into a
trademark license agreement (the "Trademark License Agreement") with an
affiliate of HarnCo, pursuant to which the Company has the right to use the P&H
trademark with respect to all MHE Business products on a worldwide exclusive
basis from the date of the Recapitalization Closing until 15 years after the
earlier to occur of a sale of Holdings to a third party or a public offering of
the common stock of Holdings, the Company or their parents or successors (and
for an additional seven years thereafter for aftermarket products and services).
The royalty fee for use of the trademark is 0.75% of the aggregate net sales of
the MHE Business for the ten year period commencing March 30, 1999. The Company
accrued $3,380,000 of expenses for royalty fees in the period from March 30,
1999 to October 31, 2000, including $2,027,000 for the year ended October 31,
2000. The Company elected to defer the payments of the royalty fee for the
periods ended October 31, 1999 ($1,353,000) and 2000 ($2,027,000), which were
payable January 30, 2000 and 2001, respectively, pursuant to the terms of the
Trademark License Agreement. The Trademark License Agreement provides that the
annual royalty fee may be deferred for up to two years if the Company does not
meet certain financial criteria. The Company can only defer up to two payments
during the term of the agreement. In addition, interest accrues at 12% per year
on the deferred fee payments. The Debtors and Harnischfeger continue to
negotiate towards a consensual resolution of the issues arising from and related
to the Recapitalization and have reached a settlement in principle, subject to
definitive documentation and Bankruptcy Court approval.

As discussed below, the Company could be materially adversely affected by the
fact that HII and certain of its United States affiliates filed for bankruptcy
protection.

                                       22
<PAGE>

For income tax purposes, Holdings and MMH were deemed to acquire the assets of
the MHE Business pursuant to Code Section 338(h)(10) in connection with the
Transactions. Accordingly, the Recapitalization increased the tax basis of
certain assets and created tax-deductible goodwill.

Debtor-in-Possession Facility. As discussed above, on May 17, 2000, Holdings,
MMH and their domestic operating subsidiaries filed voluntary petitions for
reorganization under Chapter 11 of the U.S. Bankruptcy Code. On June 15, 2000,
the Bankruptcy Court approved a $35 million Debtor-in-Possession Facility (which
was subsequently reduced by agreement of the parties to $25 million) ("DIP
Facility") and authorized the Debtors to use their collections in the operations
of their business. Pursuant to such facility, cash collected by the Company is
used to repay the Term Loans, the Revolving Credit Facility Borrowings and the
Acquisition Facility Line Borrowings on a pro-rata basis and these amounts are
re-loaned to the Company under a Junior DIP Facility up to $38 million. The DIP
and Junior DIP Facilities contain a number of covenants that, among other
things, limit the Debtors' ability to create or assume liens, consolidate or
merge with other entities, create, incur, or assume additional indebtedness,
dispose of certain assets and make capital expenditures. The DIP and Junior DIP
Facilities also require the Debtors to comply with certain financial ratios and
borrowing condition tests based on monthly measurements of the latest twelve
months results of operations. The first measurement date is December 31, 2000.
The Junior DIP Facility is junior to the DIP Facility. At October 31, 2000,
$38.0 million in borrowings are outstanding under the Junior DIP Facility and
are classified as current obligations in the balance sheet.

The DIP and Junior DIP Facilities benefit from superpriority administrative
claim status and senior and junior liens as provided for under the Bankruptcy
Code. Under the Bankruptcy Code, a superpriority claim is senior to unsecured
prepetition claims and all other administrative expenses incurred in the Chapter
11 case. Borrowings under the DIP Facility are priced at the Alternate Base Rate
of the Post-Petition Agent under the DIP Facility plus 1.5% or, at the Debtors'
option, LIBOR plus 3 1/2%. The DIP Facility has an initial maturity date of
December 1, 2000, which date was automatically extended to June 1, 2001.
Borrowings under the Junior DIP Facility are priced at the Alternate Base Rate
of the Post-Petition Agent under the DIP Facility plus 2.0% or, at the Debtors'
option, LIBOR plus 3 1/2%. This Junior DIP Facility matures on the earlier of
the initial maturity date of December 1, 2000, which date was automatically
extended to June 1, 2001.

The principal sources of liquidity for the Company's operating requirements have
been cash flows from operations and borrowings under the DIP Facility and the
Junior DIP Facility. While the Company expects that such sources will provide
sufficient working capital to operate its businesses, there can be no assurances
that such sources will prove to be sufficient.

Immediately prior to the bankruptcy filings, the Company's UK subsidiary had a
short-term bank credit line with an outstanding balance of $1.9 million. This
credit line was converted to the Revolving Credit Facility borrowing in
conjunction with the bankruptcy.

HII Bankruptcy Petition. On June 7, 1999, (the "HII Petition Date") HII and
certain of its United States affiliates (including HarnCo) filed voluntary
petitions for relief under Chapter 11 of the Bankruptcy Code in the United
States Bankruptcy Court for the District of Delaware. Certain provisions of the
Bankruptcy Code allow a debtor to avoid, delay and/or reduce its contractual and
other obligations to third parties. There can be no assurance that HII and its
affiliates will not attempt to utilize such provisions to cease performance
under their agreements and arrangements with the Company. The inability of the
Company to receive the benefits of one or more of these agreements or the
termination of ongoing arrangements between the Company and affiliates of HII
(including those relating to the provision of services and materials by HII and
its affiliates to the Company) could materially adversely affect the Company's
operations and financial performance. In the event that any of the liabilities
retained by HII and its affiliates in connection with the Recapitalization
remain unsatisfied as of the HII Petition Date, the Company's right to
indemnification for any such amounts it has paid on behalf of HII and its
affiliates may also be avoided, delayed or reduced. Each of HII and certain of
its affiliates on the one hand, and the Company and certain of its affiliates,
on the other hand, have receivables and payables to the other that may be
affected by the HII Bankruptcy. The Debtors and Harnischfeger continue to
negotiate towards a consensual resolution of the issues arising from and related
to the Recapitalization and have reached a settlement in principle, subject to
definitive documentation and Bankruptcy Court approval.

                                       23
<PAGE>

ACQUISITIONS AND DIVESTITURES

Acquisitions- During the year ended October 31, 2000, the Company did not make
any acquisitions. During the year ended October 31, 1999, the Company completed
two acquisitions with an aggregate purchase price of $4.1 million, net of cash
acquired. During 1998, the Company completed several acquisitions for an
aggregate purchase price of $8.9 million, net of cash acquired. These
acquisitions were related to the Company's aftermarket business and were
accounted for as purchase transactions with the purchase prices allocated to the
fair value of specific assets acquired and liabilities assumed. Resultant
goodwill of the transactions, $2.5 million for the 1999 transactions and $8.3
million for the 1998 transactions, is being amortized over 10 to 40 years. The
resulting deferred purchase price will be paid in 2004 and 2005 for the 1999
acquisitions, and in annual installments through 2006 for the 1998 acquisition.
The two fiscal 1999 acquisitions added approximately $13.7 million in sales and
$1.5 million in operating income to the Company's results.

During the year ended October 31, 1999, the Company made final consideration
payments of $1.5 million related to two 1998 acquisitions. With respect to a
1995 acquisition, the Company made a final contingent consideration payment of
$1.4 million in the year ended October 31, 1999. Additionally, a payment of
$100,000 was made during both 2000 and 1999 toward a fiscal 1998 purchase which
was partially financed by the seller and a payment of $110,000 was made during
the year ended October 31, 2000 toward the fiscal 1999 purchase which was
partially financed by the seller. On a pro forma basis, the 1999 and 1998
acquisitions were not material to results of operations reported for the year
ended October 31, 1999 and accordingly, such information is not presented.

Divestitures-On December 16, 1999, the Company completed the sale of the
Company's brake manufacturing operation (the "Brake Business") located in
Mississauga, Ontario, Canada, for a net sale price of $6.8 million after
deduction of certain transaction-related items, including taxes. During fiscal
year 2000, the Brake Business contributed $0.5 million in sales and no operating
income to the Company's results.

In accordance with the Prepetition Credit Facility, as amended by the Amendment,
the Company was permitted to apply half of the net proceeds of the sale of the
Brake Business (which amounted to $3.4 million) to general corporate purposes,
which the Company would otherwise have been required to use to prepay
indebtedness under the Prepetition Credit Facility. After consummation of the
sale, the Company repaid $3.1 million of the outstanding term loans ($2.4
million of which was applied to the final scheduled principal payment obligation
with respect to the term loans) and repaid $0.3 million on the Acquisition
Facility. A pre-tax gain of $6.4 million was recognized on this transaction.

RESULTS OF OPERATIONS

FISCAL 2000 AS COMPARED TO FISCAL 1999

Net sales in 2000 decreased $26.1 million or 8.9% to $268.1 million from $294.2
million in 1999. Generally, sales in 2000 were negatively impacted by the
Company's filing voluntary petitions for reorganization under Chapter 11 of the
U.S. Bankruptcy Code as well as a slowdown in the market. More specifically, the
decrease in net sales was primarily caused by the following: (i) a decrease of
$4.6 million in engineered cranes sales in the United States due to a slowdown
in new orders during the year; (ii) a $2.8 million decrease in South African
engineered cranes where a large project was performed during the prior fiscal
year; (iii) a $10.6 million decrease in standard crane sales; (iv) a $5.3
million decrease in hoist sales in the United States and the United Kingdom
which was partially offset by a $2.7 million increase in hoists for southeast
Asia as that market begins to show renewed activity; (v) a $4.0 million decrease
in sales of modernizations in the United States as a result of no large projects
performed during fiscal year 2000 similar to those in fiscal year 1999; and (vi)
a $2.3 million decrease in service sales in Australia due to a reclassification
of machine sales previously reported as service sales. These decreases were
partially offset by a $3.3 million increase in service sales in the United
States.

Cost of sales decreased $7.9 million or 3.6% to $210.8 million in 2000 from
$218.7 million in 1999 primarily due to the lower sales volume described above.
However, cost of sales as a percentage of net sales has increased from 74.3% in
1999 to 78.6% in 2000 due mainly to lower selling prices in the engineered
cranes, hoist and service markets as a result of competitive pressures as well
as lower production volumes.



                                       24
<PAGE>

Selling, general and administrative expenses decreased $2.0 million or 2.8% in
2000, from $72.4 million in 1999 to $70.4 million in 2000. This decrease came in
the fourth quarter and was due mainly to a decrease in professional fees
incurred related to normal business issues, continued headcount reductions
worldwide and no international goodwill amortization in the fourth quarter since
it was written off in its entirety during the third quarter. These decreases
were partially offset by (i) additional expenses due to a fiscal 1999
acquisition in the second quarter of 1999; (ii) additional contract related
costs associated with the port crane business in the United Kingdom; and (iii)
the write-off of accounts receivable due from a Malaysian joint venture.

Professional fees related to the restructuring of the Company's operations and
capital structure for the year ended October 31, 2000 are included as a separate
line item in the Condensed Statements of Operations and Comprehensive Loss
entitled "Reorganization Items". It also includes fees paid relative to the DIP
Facility financing and accrued retention plan costs. There are no similar
expenses in the year ended October 31, 1999.

Operating results for the year ended October 31, 2000 also included an
impairment loss on long-lived assets. Consistent with prior periods, the Company
assessed the carrying value of goodwill at each quarter-end during fiscal 2000.
Such assessment included, as appropriate, a comparison of (a) the estimated
future nondiscounted cash flows, excluding interest, anticipated to be generated
during the remaining amortization period of the goodwill to (b) the net carrying
value of goodwill. Based upon the continued negative trends in the operating
results of non-North American businesses and shortfalls in actual third quarter
operating results compared with estimates developed during the second quarter,
management concluded that future operating cash flows, excluding interest, did
not support the recoverability of recorded goodwill over the remaining
amortization period. Accordingly, the Company assessed the fair value of the
related businesses and wrote-off the remaining unamortized goodwill balances
related to its non-North American operations of approximately $16.0 million in
the third quarter of fiscal 2000.

During fiscal 2000, the Company also recorded a loss of $0.8 million on the
disposal of fixed assets. This loss relates to fixed assets of a distribution
and service business that were written-off during the quarter.

Approximately $22.4 million in interest expense, including $2.4 million in
amortization of related financing costs, was recorded during fiscal 2000
compared to $30.0 million, including $2.5 million in amortization of related
financing costs, in fiscal 1999. As a result of the bankruptcy filings,
principal and interest payments may not be made on prepetition debt without
Bankruptcy Court approval or until a reorganization plan or plans defining the
repayment terms have been confirmed. Interest due under the Prepetition Credit
Facility is being paid by the Debtors as "adequate protection" pursuant to an
order of the Bankruptcy Court. The total interest on prepetition debt that was
not paid or charged to earnings for the period from May 17, 2000 to October 31,
2000 was $9.2 million. Such interest is not being accrued since it is not
probable that it will be treated as an allowed claim. The Bankruptcy Code
generally disallows the payment of interest that accrues postpetition with
respect to unsecured claims. The Company paid $9.3 million and $27.7 million of
interest and commitment fees during the year ended October 31, 2000 and 1999,
respectively.

Tax expense of $3.2 million was recorded during the year ended October 31, 2000
related primarily to the estimated tax recorded on the sale of the Brake
Business in December 1999 and profitable operations in Canada. During 1999, the
Company increased its deferred tax asset valuation allowance by $80.4 million
which was recognized as income tax expense. Management believed that it was more
likely than not that the net deferred tax assets previously recorded would not
be realized since realization is dependent on generating sufficient taxable
income prior to expiration of net operating loss carryforwards.

The Company's backlog of orders at October 31, 2000 was approximately $59.9
million compared to approximately $77.4 million at October 31, 1999. Bookings
for the year ended October 31, 2000 were $250.6 million as compared to $274.3
million for the year ended October 31, 1999. The change in backlog is due to
lower bookings and completion of several large projects that were in backlog the
previous year. Bookings for modernizations, standard cranes, hoists and
components have been negatively impacted by the Company's filing voluntary
petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code. The
Company's orders for standard hoist products are usually shipped within 3 to 12
weeks. Overall lead times for products that are manufactured to customer's
specifications typically range between 12 and 40 weeks. The entire backlog of
orders is anticipated to be shipped in fiscal 2001.

                                       25
<PAGE>

FISCAL 1999 AS COMPARED TO FISCAL 1998

Net sales in 1999 decreased $23.7 million or 7.4% to $294.2 million from $317.9
million in 1998. The decrease in net sales was primarily caused by the
following: (i) a decrease of $15.9 million in hoists and component sales
primarily resulting from continued softness in certain European and Asian
markets; (ii) a decrease of $7.1 million in engineered crane sales worldwide
largely due to the fact that 1998 included $8.9 million in container crane sales
in the United Kingdom without any corresponding sales in 1999; (iii) a decrease
in overall parts sales of $3.6 million caused primarily by the decrease in spare
parts orders attributable to the lower engineered crane sales resulting from a
weakened market; and (iv) a decrease in modernization sales of $1.4 million.
These decreases were partially offset by an increase in service sales of $2.4
million and an increase in standard crane sales of $1.9 million.

Cost of sales decreased $8.3 million or 3.7% to $218.7 million in 1999 from
$227.0 million in 1998 primarily due to the lower sales volumes described above.
However, cost of sales as a percentage of net sales increased from 71.4% in 1998
to 74.3% in 1999 due to the lower level of volume in manufacturing operations
tied to the decrease in engineered crane and hoist and component sales.
Additionally, the Company experienced $2.0 million in special charges during
1999 related to revised estimates of inventory obsolescence, warranty reserves
and contract completion costs.

Selling, general and administrative expenses increased $9.2 million or 14.7% to
$72.4 million in 1999 from $63.2 million in 1998. The primary cause was $4.2
million of special charges related to provisions for certain delinquent accounts
receivable and changes in management (severance and recruiting costs).
Additional causes were: (i) the increased administrative resources necessary to
replace functions formerly performed by HII and their affiliates, including
information systems and certain accounting and human resource functions; (ii)
increased consulting costs; and (iii) increases due to the 1999 and 1998
acquisitions. Selling, general and administrative expenses in 1999 also included
approximately $1.0 million of management fees compared to $0.6 million in 1998.
Additionally, selling, general and administrative expenses in 1999 included
approximately $1.4 million of accrued royalties owed to HII for use of the P&H
trademark after March 30, 1999, the initial date such royalty payments began
accruing, while 1998 expenses included severance costs of $1.8 million
associated with restructuring the Company's United States and United Kingdom
manufacturing operations. These increases were offset by savings associated with
the 1998 restructuring of the United Kingdom and United States manufacturing
operations and other cost-reduction measures.

Parent management fees allocated by HII (prior to the Recapitalization), which
represented an allocation of HII's corporate expenses, were $1.2 million in
1998. Additionally, in 1998, the Company recognized incentive payments of $1.2
million to certain members of management. While the cost of these incentive
payments appears on the Company's income statements, HII, the Company's former
parent, paid these incentives.

Approximately $30.0 million in interest expense was recorded in 1999. The
components include $23.6 million related to the debt issued in connection with
the Recapitalization and related commitment fees, $2.6 million related to
borrowings for working capital and acquisition funding, a $0.4 million fee paid
in conjunction with the waiver of Prepetition Credit Facility debt covenant
violations, $0.7 million related to other borrowings, $2.5 million in
amortization of financing costs recognized in connection with the
Recapitalization and $0.2 in amortization of a credit support fee payable to
HII. Interest expense in 1998 included $1.5 million related to borrowings from
HII and affiliates (prior to the Recapitalization), $14.2 million related to the
debt issued in connection with the Recapitalization, $0.8 million on borrowings
for working capital, $1.2 million in amortization of financing costs and $0.3
million in amortization of a credit support fee payable to HII. The Company paid
$27.7 million in cash interest, waiver fees and commitment fees during 1999.

Realization of deferred tax assets is dependent on generating sufficient taxable
income prior to expiration of net operating loss carryforwards. During 1999, the
Company re-estimated its future operating results and determined its deferred
tax asset valuation allowance required an increase of $80.4 million which was
recognized as income tax expense. Management believes it is more likely than not
that the net deferred tax assets recorded will not be realized.

The current income tax expense recorded of $2.1 million resulted primarily from
profitable operations in Canada and from state income tax liabilities.

The Company's backlog of orders at October 31, 1999 was approximately $77.4
million compared to approximately $97.3 million at October 31, 1998. Bookings in
1999 were $274.3 million compared to $317.5 million in 1998. The

                                       26
<PAGE>

change in backlog is due to lower bookings and completion of several large
projects in fiscal 1999. The decrease in bookings was primarily due to lower
orders for modernizations, standard cranes, hoists and components bookings,
especially in international markets. Fourth quarter 1998 bookings included a $21
million order with no comparably sized order in 1999.

LIQUIDITY AND CAPITAL RESOURCES

The majority of the Company's sales of products and services are recorded as
products are shipped or services are rendered. Revenue on certain long-term
contracts is recorded using the percentage-of-completion method. Net cash flow
from operations is affected by the volume of, and the timing of payments under,
percentage-of-completion long-term contracts, and more recently, by the
Company's financial condition, as vendors have shortened payment terms and, in
some cases, required advance payments.

Net cash used for operating activities for the year ended October 31, 2000 and
1999, respectively, was $5.2 million and $15.2 million, respectively. The
decrease in cash used for operating activities from 1999 to 2000 was primarily
due to a $26.0 million increase in cash flow resulting from net changes in
working capital. This decrease was offset, in part, by a $18.5 million increase
in net loss after adjusting for the effect of the increase in the deferred tax
provision in 1999 and the gain on sale of the Brake Business and the write-off
of international goodwill in 2000. The decrease in operating cash flow from 1998
to 1999 was primarily due to a $33.2 million decrease in net income after
adjusting for the effect of the increase in the deferred tax provision and a
$2.8 million increase in depreciation and amortization, offset, in part, by a
$6.1 million increase in cash flow resulting from net changes in working
capital.

Net cash provided by investment and other transactions for the year ended
October 31, 2000 was $5.4 million compared to net cash used for investment and
other transactions of $13.7 million for the same period in 1999. During fiscal
year 2000, $9.1 million of cash, net of transaction costs, was provided by the
sale of the Canadian brake business. This was partially offset by $0.2 million
of cash used for deferred payments on previous acquisitions. During the year
ended October 31, 1999, $5.6 million was used for an acquisition related to the
Company's distribution and service center network and payments made with respect
to three earlier acquisitions. Additionally, capital expenditures decreased to
$2.7 million during the year ended October 31, 2000 from $7.6 million during the
year ended October 31, 1999. The fiscal year 2000 expenditures included
computers and manufacturing equipment. The fiscal year 1999 expenditures
included computers and upgrades, new operating system software, office and
warehouse consolidations and manufacturing equipment.

Net cash used for financing activities was $1.4 million in fiscal year 2000
compared to net cash provided by financing activities of $30.3 million in fiscal
year 1999. Repayments, excluding amounts re-loaned under the Junior DIP
Facility, during the year ended October 31, 2000 included $7.2 million under the
Revolving Credit Facility in the United States and United Kingdom and $4.1
million of principal on the Term Loan A, Term Loan B, and Acquisition Facility,
mainly from the net proceeds from the sale of the Canadian brake business.
Proceeds from the Revolving Credit Facility in the United States and the United
Kingdom were $11.4 million during fiscal year 2000.

The Company entered into several Amendments and Waivers under the Prepetition
Credit Facility, dated as of January 31, 2000 through April 28, 2000, whereby,
among other matters, the lenders waived compliance by the Company with such
financial covenants, for the period from January 31, 2000 until 5:00 p.m. May
26, 2000 (the "Waivers"). The Waivers permitted the Company, subject to certain
conditions, to make additional borrowings under the Revolving Credit Facility
and issue additional letters of credit, above levels in existence on January 28,
2000, in an aggregate amount of up to $12.4 million, during the period to which
the Waivers apply.

On June 15, 2000, the Bankruptcy Court approved a $35 million
Debtor-in-Possession Facility ("DIP Facility") (which was subsequently reduced
by agreement of the parties to $25 million) and authorized the Debtors to use
their collections in the operations of their business. Pursuant to such
facility, cash collected by the Company is used to repay the Term Loans, the
Revolving Credit Facility Borrowings and the Acquisition Facility Line
Borrowings on a pro-rata basis and these amounts are re-loaned to the Company
under a Junior DIP Facility up to $38 million. The DIP and Junior DIP Facilities
contain a number of covenants that, among other things, limit the Debtors'
ability to create or assume liens, consolidate or merge with other entities,
create, incur, or assume additional indebtedness, dispose of certain assets and
make capital expenditures. The DIP and Junior DIP Facilities also require the
Debtors to comply with certain financial ratios and borrowing condition tests
based on monthly measurements of the latest

                                       27
<PAGE>

twelve months results of operations. The first measurement date is December 31,
2000. The Junior DIP Facility is junior to the DIP Facility. At October 31,
2000, $38.0 million in borrowings are outstanding under the Junior DIP Facility
and are classified as current obligations in the October 31, 2000 balance sheet.

The DIP and Junior DIP Facilities benefit from superpriority administrative
claim status and senior and junior liens as provided for under the Bankruptcy
Code. Under the Bankruptcy Code, a superpriority claim is senior to unsecured
prepetition claims and all other administrative expenses incurred in the Chapter
11 case. Borrowings under the DIP Facility are priced at the Alternate Base Rate
of the Post-Petition Agent under the DIP Facility plus 1.5% or, at the Debtors'
option, LIBOR plus 3 1/2%. This DIP Facility had an initial maturity date of
December 1, 2000, which date, absent a default, was automatically extended to
June 1, 2001 if a sale of the Debtors had not been consummated prior to December
1, 2000. Borrowings under the Junior DIP Facility are priced at the Alternate
Base Rate of the Post-Petition Agent under the DIP Facility plus 2.0% or, at the
Debtors' option, LIBOR plus 3 1/2%. This Junior DIP Facility matures on the
earlier of the initial maturity date of December 1, 2000, which date, absent a
default, was automatically extended to June 1, 2001 if a sale of the Debtors had
not been consummated prior to December 1, 2000, or upon confirmation of a plan
of reorganization.

The principal sources of liquidity for the Company's operating requirements have
been cash flows from operations and borrowings under the DIP Facility and Junior
DIP Facility. While the Company expects that such sources will provide
sufficient working capital to operate its businesses, there can be no assurances
that such sources will prove to be sufficient.

Immediately prior to the bankruptcy filings, the Company's UK subsidiary had a
short-term bank credit line with an outstanding balance of $1.9 million. This
credit line was converted to the Revolving Credit Facility borrowing in
conjunction with the bankruptcy.

The matters described under this caption "Liquidity and Capital Resources", to
the extent that they relate to future events or expectations, may be
significantly affected by the Chapter 11 proceedings. Those proceedings will
involve, or result in, various restrictions on the Debtors' activities,
limitations on financing, the need to obtain Bankruptcy Court approval for
various matters and uncertainty as to relationships with vendors, suppliers,
customers and others with whom the Debtors may conduct or seek to conduct
business.

Under the Bankruptcy Code, postpetition liabilities and prepetition liabilities
(i.e., liabilities subject to compromise) of the Debtors must be satisfied
before shareholders of the Debtors can receive any distribution. The ultimate
recovery to the Debtors' shareholders, if any, will not be determined until the
end of the case when the fair value of the Debtors' assets is compared to the
liabilities and claims against the Debtors. The Debtors and their professional
advisors are in the process of analyzing strategic alternatives and developing a
plan of reorganization for the Debtors. Based on the Debtors' analysis of
scheduled and filed claims and the valuation of the Debtors, a determination
will be made as to the payment of claims and the distribution of value, if any,
to the Debtors' shareholders.

The Company believes that the filing provides the Debtors with the opportunity
to restructure its indebtedness. The Company plans to continue to implement its
cost savings initiatives to bring costs in line with market requirements.
Although management believes that disruption of operations relating to the
Chapter 11 reorganization has not had a material adverse effect on the Debtors'
relationships with their creditors, suppliers or employees, sales and bookings
for modernizations, engineered and standard cranes, hoists and components have
been negatively impacted.

The Company is currently seeking, and is engaged in discussions regarding, its
strategic alternatives. The Company has engaged in discussions with its bank
lenders and representatives of the Creditors Committee concerning the possible
restructuring of the Company's capital structure pursuant to a plan of
reorganization, including a possible sale of the Company to a third party in
connection therewith. The Debtors filed the Plan and related Disclosure
Statement with the U.S. Bankruptcy Court on January 16, 2001. The Debtors are
continuing to negotiate with their creditor constituencies regarding the Plan
and anticipate making material amendments to the Plan. A hearing to consider
approval of the Disclosure Statement is scheduled for March 23, 2001. There can
be no assurance that the Company will be able to successfully pursue strategic
alternatives or that the results of its discussions with its creditors will be
successful.

                                       28
<PAGE>

CAUTIONARY FACTORS

This report contains or may contain forward looking statements by or on behalf
of Holdings and the Company. Such statements are based upon management's current
expectations and are subject to risks and uncertainties that could cause the
Company's actual results to differ materially from those contemplated in the
statements. Readers are cautioned not to place undue reliance on these forward
looking statements. In addition to the assumptions and other factors referred to
specifically in connection with such statements, factors that could cause the
Company's actual results to differ materially from those contemplated include,
among others, the following:

    o    Liquidity Status and Chapter 11 Filing - The Company did not meet
         certain of the financial covenants under the Prepetition Credit
         Facility for the period ended January 31, 1999 and did not meet such
         financial covenants and certain additional financial covenants for the
         period ended April 30, 1999. The Company obtained a waiver of such
         financial covenants through August 2, 1999. On August 2, 1999, the
         Company entered into the Amendment which cured past financial covenant
         violations and reset financial covenants until April 2001. The
         Amendment increased the cash availability under the Revolving Credit
         Facility from $35.7 million under the previous waiver agreement to
         $40.7 million. In addition, the Amendment permitted the Company to
         obtain letters of credit, bid bonds and performance bonds in an amount
         not to exceed $10.0 million in the aggregate of which $5.3 million have
         been issued.

         The Company entered into several Amendments and Waivers under the
         Prepetition Credit Facility, dated as of January 31, 2000 through April
         28, 2000, whereby, among other matters, the lenders waived compliance
         by the Company with such financial covenants, for the period from
         January 31, 2000 until 5:00 p.m. May 26, 2000 (the "Waivers"). The
         Waivers permitted the Company, subject to certain conditions, to make
         additional borrowings under the Revolving Credit Facility and issue
         additional letters of credit, above levels in existence on January 28,
         2000, in an aggregate amount of up to $12.4 million, during the period
         as to which the Waivers apply.

         On May 17, 2000, Holdings, MMH and their domestic operating
         subsidiaries filed voluntary petitions for reorganization under Chapter
         11 of the U.S. Bankruptcy Code. See Note 1, Reorganization under
         Chapter 11. On May 18, 2000, the Bankruptcy Court entered an order
         approving $10.0 million in interim debtor-in-possession financing to
         the Debtors and authorizing the Debtors to utilize their collections in
         the operation of their business. This $10 million amount represented
         the initial portion under a commitment by the lenders to provide $35
         million in financing (including a letter of credit facility) in
         connection with the Debtors' Chapter 11 cases. The full $35 million
         facility (which was reduced by agreement of the parties to $25 million)
         was approved by the Bankruptcy Court on June 15, 2000. This facility
         had an initial maturity date of December 1, 2000, which date was
         automatically extended to June 1, 2001.

         The Company believes that the filing provides the Debtors with the
         opportunity to restructure its indebtedness. The Company plans to
         continue to implement its cost savings initiatives to bring costs in
         line with market requirements. Although management believes that
         disruption of operations relating to the Chapter 11 reorganization has
         not had a material adverse effect on the Debtors' relationships with
         their creditors, suppliers or employees, sales and bookings for
         modernizations, engineered and standard cranes, hoists and components
         have been negatively impacted.

         As of October 31, 2000, the Company had $310.0 million of indebtedness
         outstanding, including $93.8 million under the Prepetition Credit
         Facility, the DIP Facility and the Junior DIP Facility (including
         accrued interest) and $212.1 million evidenced by the Senior Notes
         (including accrued interest).

         The Company is currently seeking, and is engaged in discussions
         regarding, its strategic alternatives. The Company has engaged in
         discussions with its bank lenders and representatives of the Creditors
         Committee concerning the possible restructuring of the Company's
         capital structure pursuant to a plan of reorganization, including a
         possible sale of the Company to a third party in connection therewith.
         The Debtors filed the Plan and related Disclosure Statement with the
         U.S. Bankruptcy Court on January 16, 2001. The Debtors are continuing
         to negotiate with their creditor constituencies regarding the Plan and
         anticipate making material amendments to the Plan. The Debtors are
         still attempting to

                                       29
<PAGE>

         obtain a commitment by a lender to provide the Debtors with financing
         to satisfy the Debtors' cash obligations under the Plan and to provide
         the Debtors with working capital and letters of credit and anticipate
         modifications to the Plan to reflect such financing. A hearing to
         consider approval of the Disclosure Statement is scheduled for March
         23, 2001. There can be no assurance that the Company will be able to
         successfully pursue strategic alternatives or that the results of its
         discussions with its creditors will be successful.

    o    Potential Material Adverse Effect of HII Bankruptcy - On June 7, 1999,
         HII and certain of its United States affiliates (including HarnCo)
         filed voluntary petitions for relief under Chapter 11 of the Bankruptcy
         Code in the United States Bankruptcy Court for the District of
         Delaware. Certain provisions of the Bankruptcy Code allow a debtor to
         avoid, delay and/or reduce its contractual and other obligations to
         third parties. There can be no assurance that HII and its affiliates
         will not attempt to utilize such provisions to cease performance under
         their agreements and arrangements with the Company. The inability of
         the Company to receive the benefits of one or more of these agreements
         or the termination of ongoing arrangements between the Company and
         affiliates of HII (including those relating to the provision of
         services and materials by HII and its affiliates to the Company) could
         materially adversely affect the Company's operations and financial
         performance. In the event that any of the liabilities retained by HII
         and its affiliates in connection with the Recapitalization remain
         unsatisfied as of the HII Petition Date, the Company's right to
         indemnification for any such amounts it has paid on behalf of HII and
         its affiliates may also be avoided, delayed or reduced. Each of HII and
         certain of its affiliates on one hand, and the Company and certain
         affiliates on the other hand, have receivables and payables to the
         other which may be affected by the HII Bankruptcy. The Debtors and
         Harnischfeger continue to negotiate towards a consensual resolution of
         the issues arising from and related to the Recapitalization and have
         reached a settlement in principle, subject to definitive documentation
         and Bankruptcy Court approval.

    o    Risks Associated with Large Crane Projects - The Company's principal
         business includes designing, manufacturing, marketing and servicing
         large cranes for the capital goods industries. Long periods of time are
         often necessary to plan, design and build these machines. With respect
         to these machines, there are risks of customer acceptance and start-up
         or performance problems. Large amounts of capital are required to be
         devoted by some of the Company's customers to purchase these machines
         and to finance the steel mills, paper mills and other facilities that
         use these machines. The Company's success in obtaining and managing
         sales opportunities can affect the Company's financial performance. In
         addition, some projects are located in undeveloped or developing
         economies where business conditions are less predictable. Finally, the
         market for large cranes is down substantially and the outlook is not
         expected to improve for the foreseeable future.

    o    Risks Associated with International Operations - The Company has
         operations and assets located in Canada, Mexico, Chile, the United
         Kingdom, South Africa, Thailand, Australia and Singapore and is
         establishing joint ventures in Malaysia and Saudi Arabia. The Company
         also sells its products through distributors and agents in over 50
         countries, some of which are merely ad hoc arrangements and may be
         terminated at any time. The Company's international operations
         (including Canada, Mexico, Chile, South Africa, Singapore, Thailand,
         Australia and the United Kingdom) accounted for 35.6% and 37.9% of the
         Company's aggregate net sales for the year ended October 31, 2000 and
         1999, respectively. Although historically, exchange rate fluctuations
         and other international factors have not had a material impact on the
         Company's business, financial condition or results of operations,
         international operations expose the Company to a number of risks,
         including currency exchange rate fluctuations, trade barriers, exchange
         controls, risk of governmental expropriation, political and legal risks
         and restrictions, foreign ownership restrictions and risks of increases
         in taxes. The inability of the Company, or limitations on its ability,
         to conduct its foreign operations or distribute its products
         internationally could adversely affect the Company's operations and
         financial performance. See Note 24, Subsequent Events, of the Financial
         Statements in Item 8.

    o    Competition - The markets in which the Company operates are highly
         competitive. Both domestically and internationally, the Company faces
         competition from a number of different manufacturers in each of its
         product lines, some of which have greater financial and other resources
         than the Company. The principal competitive factors affecting the
         Company include performance, functionality, price, brand

                                       30
<PAGE>

         recognition, customer service and support, financial strength and
         stability, and product availability. The current depressed level of new
         equipment orders has increased the intensity of competition and has
         reduced selling prices and margins on new equipment bookings. There can
         be no assurance that the Company will be able to compete successfully
         with its existing competitors or with new competitors. Failure to
         compete successfully could have a material adverse effect on the
         Company's financial condition, liquidity and results of operations. In
         addition, the Company's ability to compete successfully will likely be
         adversely affected by the Company's liquidity crisis.

    o    Market Risks - The Company's business is affected by the state of the
         United States and global economy in general, and by the varying
         economic cycles of the industries in which its products are used. There
         can be no assurance that any future condition of the United States
         economy or the economies of the other countries in which the Company
         does business will not have an adverse effect on the Company's
         business, operations or financial performance.

FUTURE ACCOUNTING CHANGES

In June 1998, the Financial Accounting Standards Board (FASB) has issued
Statement of Accounting Standards ("SFAS") No. 133 "Accounting for Derivative
Instruments and Hedging Activities." It requires all derivative instruments to
be recorded in the statements of financial position at fair value. In June 1999,
the statement's effective date was delayed by one year, and it will be effective
for the year ending October 31, 2001. Interim reporting for this standard will
be required. Due to the Company's current limited use of derivative instruments,
the adoption of this statement is not expected to have a material effect on the
Company's financial condition or results of operations.

In October 2000, the Emerging Issues Task Force ("EITF") reached a consensus in
Issue No. 00-10, "Accounting for Shipping and Handling Fees and Costs." EITF
Issue No. 00-10 requires companies to classify all amounts billed to a customer
in a sale transaction related to shipping and handling as revenue. Initial
application of EITF Issue No. 00-10 is required for financial statements for the
fiscal years beginning after December 15, 1999. Reclassification of comparative
financial statements for prior periods is required. The Company plans to apply
EITF Issue No. 00-10 in fiscal year 2001. It is not expected to have a
significant effect on the Company's financial statements.

In December 1999, The Securities and Exchange Commission ("SEC") released Staff
Accounting Bulletin No. 101 ("SAB 101"), "Revenue Recognition in Financial
Statements." SAB 101 summarizes certain of the SEC staff's views in applying
generally accepted accounting principles to revenue recognition in financial
statements. The SEC staff expressed its view that revenue generally is realized
or realizable and earned when all of the following criteria are met: persuasive
evidence of an arrangement exists; delivery has occurred or services have been
rendered; the seller's price to the buyer is fixed or determinable; and
collectibility is reasonably assured. Implementation of SAB 101 is required for
fiscal years beginning after December 15, 1999. The Company plans to implement
SAB 101 in fiscal year 2001. It is not expected to have a significant effect on
the Company's financial statements.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company is potentially exposed to market risk associated with changes in
foreign exchange and interest rates. From time to time the Company will enter
into derivative financial instruments to hedge these exposures. An instrument
will be treated as a hedge if it is effective in offsetting the impact of
volatility in the Company's underlying interest rate and foreign exchange rate
exposures. The Company does not enter into derivatives for speculative purposes.

The Company's products are sold in over 50 countries around the world. Although
revenues of the Company are generated in foreign currencies, the vast majority
of both sales and associated costs are in United States dollars, Pounds Sterling
and Canadian Dollars. The Company may, from time to time, hedge specifically
identified committed cash flows in foreign currencies using forward contracts.
Such foreign currency contract activity historically has not been material. At
October 31, 2000, there were no foreign currency forward contracts outstanding.
There also were no material non-functional currency denominated financial
instruments, which would expose the Company to foreign exchange risk,
outstanding at October 31, 2000.

                                       31
<PAGE>

To limit the effect of increases in the interest rates under the Prepetition
Credit Facility, the Company entered into an interest rate swap arrangement. The
effect of this agreement was to limit the interest rate exposure on specified
amounts up to $55.0 million borrowed under the Prepetition Credit Facility to a
fixed LIBOR rate of 5.875% (the "Fixed Rate") plus 3.5%, as applicable. The
Company terminated this arrangement during the second quarter of fiscal 2000 at
a gain of $0.3 million.

                                       32
<PAGE>

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

INDEX TO 2000 FINANCIAL STATEMENTS

   FINANCIAL STATEMENTS:

      MMH HOLDINGS, INC.

         Report of Independent Accountants.................................. 34
         Balance Sheets at October 31, 2000 and 1999........................ 36
         Statements of Income and Comprehensive Income for the three
           years ended October 31, 2000..................................... 37
         Statements of Cash Flows for the three years ended
           October 31, 2000................................................. 38
         Statements of Preferred Stock and Shareholders' Equity/Parent
           Investment for the three years ended October 31, 2000............ 40
         Notes to Financial Statements...................................... 47
         Financial Statement Schedules:

         For the three years ended October 31, 2000

         II -  Valuation And Qualifying Accounts

      MORRIS MATERIAL HANDLING, INC.

         Report of Independent Accountants.................................. 35
         Balance Sheets at October 31, 2000 and 1999........................ 42
         Statements of Income and Comprehensive Income for the three
           years ended October 31, 2000 .................................... 43
         Statements of Cash Flows for the three years ended
           October 31, 2000................................................. 44
         Statements of  Shareholder's Equity/Parent Investment for
           the three years ended October 31, 2000........................... 46
         Notes to Financial Statements...................................... 47
         Financial Statement Schedules:

           For the three years ended October 31, 2000

           II -  Valuation And Qualifying Accounts

All other schedules are omitted because they are not applicable or the required
information is shown in financial statements or notes thereto.

                                       33
<PAGE>

                        REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Shareholders of
   MMH Holdings, Inc.

In our opinion, the financial statements listed in the accompanying index
present fairly, in all material respects, the financial position of MMH
Holdings, Inc. and its subsidiaries at October 31, 2000 and 1999, and the
results of their operations and their cash flows for each of the three years in
the period ended October 31, 2000, in conformity with accounting principles
generally accepted in the United States. In addition, in our opinion, the
financial statement schedules listed in the accompanying index present fairly,
in all material respects, the information set forth therein when read in
conjunction with the related consolidated financial statements. These financial
statements and financial statement schedules are the responsibility of the
Company's management; our responsibility is to express an opinion on these
financial statements and financial statement schedules based on our audits. We
conducted our audits of these statements in accordance with auditing standards
generally accepted in the United States, which require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for the opinion expressed
above.

The accompanying consolidated financial statements have been prepared assuming
the Company will continue as a going concern. As discussed in Note 1 to the
financial statements, on May 17, 2000, the Company and substantially all of its
domestic operating subsidiaries filed voluntary petitions for reorganization
under Chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy
Court for the District of Delaware. The Company filed a Joint Plan of
Reorganization with the U.S. Bankruptcy Court on January 16, 2001 and is
continuing to negotiate with its creditor constituencies regarding the Plan with
the expectation of making material amendments to the Plan. Although the Company
is continuing its on-going business operations as a Debtor-in-Possession under
the jurisdiction of the Bankruptcy Court, its ability to continue to operate as
a going concern is contingent upon, among other matters, the approval by the
Company's creditors of an amended Joint Plan of Reorganization. The approval and
implementation of an amended Joint Plan of Reorganization could materially
change the recorded amounts and classification of assets and liabilities.
Substantial losses from operations, liquidity issues, and the uncertainty of
approval by the Company's creditors of an amended Joint Plan of Reorganization,
raise substantial doubt about the Company's ability to continue as a going
concern. The accompanying consolidated financial statements do not include any
adjustments to the carrying value of assets or amounts of liabilities that might
be necessary as a consequence of the implementation of an amended Joint Plan of
Reorganization or any adjustments relating to the recoverability of assets or
liquidation of liabilities in the ordinary course of business that might result
if the Company is unable to continue as a going concern.

PRICEWATERHOUSECOOPERS LLP
Milwaukee, Wisconsin
February 22, 2001, except as to Notes 12, 15 and 24
   which are as of March 8, 2001

                                       34
<PAGE>

                        REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Shareholder of
   Morris Material Handling, Inc.

In our opinion, the financial statements listed in the accompanying index
present fairly, in all material respects, the financial position of Morris
Material Handling, Inc. and its subsidiaries at October 31, 2000 and 1999, and
the results of their operations and their cash flows for each of the three years
in the period ended October 31, 2000, in conformity with accounting principles
generally accepted in the United States. In addition, in our opinion, the
financial statement schedules listed in the accompanying index present fairly,
in all material respects, the information set forth therein when read in
conjunction with the related consolidated financial statements. These financial
statements and financial statement schedules are the responsibility of the
Company's management; our responsibility is to express an opinion on these
financial statements and financial statement schedules based on our audits. We
conducted our audits of these statements in accordance with auditing standards
generally accepted in the United States, which require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for the opinion expressed
above.

The accompanying consolidated financial statements have been prepared assuming
the Company will continue as a going concern. As discussed in Note 1 to the
financial statements, on May 17, 2000, the Company and substantially all of its
domestic operating subsidiaries filed voluntary petitions for reorganization
under Chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy
Court for the District of Delaware. The Company filed a Joint Plan of
Reorganization with the U.S. Bankruptcy Court on January 16, 2001 and is
continuing to negotiate with its creditor constituencies regarding the Plan with
the expectation of making material amendments to the Plan. Although the Company
is continuing its on-going business operations as a Debtor-in-Possession under
the jurisdiction of the Bankruptcy Court, its ability to continue to operate as
a going concern is contingent upon, among other matters, the approval by the
Company's creditors of an amended Joint Plan of Reorganization. The approval and
implementation of an amended Joint Plan of Reorganization could materially
change the recorded amounts and classification of assets and liabilities.
Substantial losses from operations, liquidity issues, and the uncertainty of
approval by the Company's creditors of an amended Joint Plan of Reorganization,
raise substantial doubt about the Company's ability to continue as a going
concern. The accompanying consolidated financial statements do not include any
adjustments to the carrying value of assets or amounts of liabilities that might
be necessary as a consequence of the implementation of an amended Joint Plan of
Reorganization or any adjustments relating to the recoverability of assets or
liquidation of liabilities in the ordinary course of business that might result
if the Company is unable to continue as a going concern.

PRICEWATERHOUSECOOPERS LLP
Milwaukee, Wisconsin
February 22, 2001, except as to Notes 12, 15 and 24
   which are as of March 8, 2001

                                       35
<PAGE>

                               MMH HOLDINGS, INC.
                  (Debtors - in Possession as of May 17, 2000)
                                 BALANCE SHEETS
                             (Dollars in Thousands)

<TABLE>
<CAPTION>
                           ASSETS                                         LIABILITIES AND SHAREHOLDERS' EQUITY
                           ------                                         ------------------------------------

                                  October 31, October 31,                                                   October 31,  October 31,
                                     2000        1999                                                          2000         1999
                                     ----        ----                                                          ----         ----
<S>                               <C>         <C>         <C>                                               <C>          <C>
Current Assets                                            Liabilities Not Subject to Compromise
    Cash and cash equivalents     $   2,607   $   3,929    Current Liabilities
    Accounts receivable-net          57,795      64,481      Short-term notes payable and current
    Inventories                      31,813      39,994      portion of long-term obligations (Note 12)     $      134   $      383
    Other current assets              4,204       7,842      Junior DIP Facility (Note 12)                      38,000            -
                                  ---------   ---------      Revolving Credit Facility Borrowings (Note 12)          -       27,925
                                     96,419     116,246      Term Loans (Note 12)                                    -       52,225
                                  ---------   ---------      Acquisition Facility Line Borrowings (Note 12)          -       12,430
                                                             Senior Notes (Note 12)                                  -      200,000
                                                             Bank overdrafts                                     1,233        1,367
                                                             Trade accounts payable                             16,453       26,757
Property, Plant and Equipment                                Employee compensation and benefits                  6,628        8,020
    Land and improvements             3,328       3,349      Advance payments and progress billings              7,542        8,336
    Buildings                        22,205      23,235      Accrued warranties                                  2,261        1,821
    Machinery and equipment          42,832      45,219      Accrued interest                                      682        1,804
                                  ---------   ---------      Income taxes payable                                1,921        2,205
                                     68,365      71,803      Other current liabilities                           8,599        9,791
    Less accumulated depreciation   (33,969)    (30,829)                                                     ---------    ---------
                                  ---------   ---------                                                         83,453      353,064
                                     34,396      40,974
                                  ---------   ---------     Other Long-Term Obligations                            614        2,784
                                                            Other Long-Term Liabilities                            229        1,307
                                                          Liabilities Subject to Compromise (Note 6)           286,481            -
Other Assets                                              Minority Interest                                         73          504
    Goodwill                         22,164      42,844   Commitments and Contingencies (Note 15)
    Debt financing costs             14,242      16,398   Mandatorily Redeemable Preferred Stock               122,109      108,245
    Other                             8,950      10,374   Shareholders' Equity                                (316,788)    (239,068)
                                  ---------   ---------                                                     ----------   ----------
                                     45,356      69,616                                                     $  176,171   $  226,836
                                  ---------   ---------                                                     ==========   ==========



                                  $ 176,171   $ 226,836
                                  =========   =========

                                 The accompanying notes are an integral part of the financial statements
</TABLE>

<PAGE>

                               MMH HOLDINGS, INC.
                 (Debtors - in - Possession as of May 17, 2000)
                 STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
                             (Dollars in Thousands)

<TABLE>
<CAPTION>
                                                                             Year Ended
                                                                             October 31,
                                                            ------------------------------------------
                                                               2000           1999             1998
                                                            ----------     ----------       ----------
<S>                                                         <C>            <C>              <C>
Revenues
      Equipment and Part Sales                              $  213,005     $  235,526       $  261,544
      Service Sales                                             55,069         58,669           56,313
                                                            ----------     ----------       ----------
      Net Sales                                                268,074        294,195          317,857
      Other Income - Net                                             -            392            1,331
                                                            ----------     ----------       ----------
                                                               268,074        294,587          319,188

Cost of Sales                                                  210,782        218,703          226,991

Selling, General and Administrative Expenses                    70,372         72,439           65,523

Impairment Loss on Long - Lived Assets                          16,009              -                -

Reorganization Items                                             7,850              -                -
                                                            ----------     ----------       ----------
Operating Income (Loss)                                        (36,939)         3,445           26,674

Gain on Sale of a Business                                       6,380              -                -

Loss on Disposal of Fixed Assets                                  (830)             -                -

Interest Expense - Net                                         (22,355)       (30,027)         (17,975)
                                                            ----------     ----------       ----------
Income (Loss) Before Income Taxes and Minority Interest        (53,744)       (26,582)           8,699

Provision for Income Taxes                                      (3,225)       (71,680)          (4,435)

Minority Interest                                                  223             57               27
                                                            ----------     ----------       ----------
Net Income (Loss)                                              (56,746)       (98,205)           4,291

Foreign Currency Translation Adjustments                        (6,210)          (687)          (2,441)
                                                            ----------     ----------       ----------
Comprehensive Income (Loss)                                   $(62,956)    $  (98,892)     $     1,850
                                                              ========     ==========      ===========
</TABLE>

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

<PAGE>

                               MMH HOLDINGS, INC.
                 (Debtors - in - Possession as of May 17, 2000)
                            STATEMENTS OF CASH FLOWS
                             (Dollars in Thousands)

<TABLE>
<CAPTION>
                                                                                                       Year Ended
                                                                                                       October 31,
                                                                                         --------------------------------------
                                                                                            2000           1999         1998
                                                                                         ---------      ---------     ---------
<S>                                                                                      <C>            <C>           <C>
Operating Activities
   Net Income (Loss)                                                                     $ (56,746)     $ (98,205)    $   4,291
   Add (deduct) - items not affecting cash provided by
   operating activities:
      DIP financing fees                                                                       950              -             -
      Depreciation and amortization                                                          9,256          8,239         6,823
      Amortization of debt financing costs                                                   2,399          2,531         1,169
      Deferred income taxes - net                                                                -         69,614           327
      Gain on sale of business                                                              (6,380)             -             -
      Impairment loss on long-lived assets                                                  16,009              -             -
      Loss on disposal of fixed assets                                                         830              -             -
      Divestiture bonus                                                                          -              -         1,216
      Other                                                                                   (223)           (57)         (908)
   Changes in working capital, excluding the effects of acquisition opening
   balance sheets:
      Accounts receivable                                                                    3,277         17,950         2,223
      Inventories                                                                            5,481          4,000        (7,692)
      Other current assets                                                                   3,002         (3,385)       (3,317)
      Trade accounts payable and bank overdrafts                                               970         (6,810)       (4,292)
      Employee compensation and benefits                                                    (1,052)          (975)           75
      Advance payments and progress billings                                                  (523)        (1,335)        2,258
      Accrued warranties                                                                       554           (489)       (1,689)
      Accrued interest                                                                      11,451           (397)        2,201
      Other current liabilities                                                              5,533         (5,856)        3,647
      Activity with parent and other affiliates - net                                            -              -         3,224
                                                                                         ---------      ---------     ---------
Net cash provided by (used for) operating activities, including reorganization items        (5,212)       (15,175)        9,556
                                                                                         ---------      ---------     ---------
Investment and Other Transactions
      Fixed asset additions - net                                                           (1,897)        (4,889)       (5,208)
      Capitalized software                                                                    (772)        (2,705)            -
      Acquisition of businesses - net of cash acquired                                           -         (5,630)       (8,891)
      Net proceeds on divestiture of business                                                9,115              -             -
      Net Issuance of loans to senior management                                                 -            (80)         (120)
      Other - net                                                                           (1,033)          (444)       (1,738)
                                                                                         ---------      ---------     ---------
Net cash provided by (used for) investment and other transactions                            5,413        (13,748)      (15,957)
                                                                                         ---------      ---------     ---------
Financing Activities
      Changes in short-term debt and notes payable                                              (9)           463          (694)
      Proceeds from DIP and Junior DIP borrowings                                           38,100              -             -
      Repayment of DIP borrowings                                                             (100)             -             -
      Net (repayments of)/proceeds from Revolving Credit Facility borrowings                (9,752)        26,300         1,200
      Repayment of Term Loans                                                              (24,807)        (2,100)            -
      Proceeds from/(repayments of) Acquisition Facility Line borrowings                    (3,414)         6,235         6,194
      Repayments of long-term debt                                                            (181)             -          (675)
      Proceeds from Senior Note Offering                                                         -              -       200,000
      Proceeds from New Credit Facility                                                          -              -        55,000
      Net proceeds from issuance of Series A preferred stock                                     -              -             -
</TABLE>




                                       38
<PAGE>

<TABLE>
<CAPTION>
                                                                                                       Year Ended
                                                                                                       October 31,
                                                                                         --------------------------------------
                                                                                            2000           1999         1998
                                                                                         ---------      ---------     ---------
<S>                                                                                      <C>            <C>           <C>
         and related common shares                                                               -              -        57,094
      Redemption of common stock and preferred stock                                             -              -      (287,000)
      Stock redemption transaction costs                                                         -              -        (3,553)
      Debt financing cost                                                                        -              -       (20,074)
      Payment of DIP financing fees                                                           (950)             -             -
      Payment of fees for amendment of Credit Facility                                        (245)          (612)            -
                                                                                         ---------      ---------     ---------
Net cash provided by (used for) financing activities                                        (1,358)        30,286         7,492
                                                                                         ---------      ---------     ---------
Effect of Exchange Rate Changes on
   Cash and Cash Equivalents                                                                  (165)            32           (89)
                                                                                         ---------      ---------     ---------
Increase (decrease) in Cash and Cash Equivalents                                            (1,322)         1,395         1,002
Cash and Cash Equivalents
      Beginning of Period                                                                    3,929          2,534         1,532
                                                                                         ---------      ---------     ---------
      End of Period                                                                      $   2,607      $   3,929     $   2,534
                                                                                         =========      =========     =========
</TABLE>

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

                                       39
<PAGE>

                               MMH HOLDINGS, INC.
                 (Debtors - in - Possession as of May 17, 2000)
             STATEMENTS OF PREFERRED STOCK AND SHAREHOLDERS' EQUITY
                       FOR THE YEAR ENDED OCTOBER 31, 2000
                             (Dollars in Thousands)

<TABLE>
<CAPTION>
                                                                            Preferred Stock
                                           -----------------------------------------------------------------------------------------
                                                   Series A                   Series B                  Series C
                                           -------------------------  ------------------------   ------------------------
                                             Shares        Carrying      Shares       Carrying     Shares       Carrying
                                           Outstanding      Value     Outstanding      Value     Outstanding      Value     Total
                                           -----------      -----     -----------      -----     -----------      -----     -----
<S>                                          <C>            <C>           <C>           <C>         <C>         <C>        <C>
BALANCE AT OCTOBER 31, 1997                       -         $     -           -         $    -           -      $     -    $      -
Net income
Change in foreign currency translation
Exchange of 450 common shares
 outstanding for 100,000 shares of
 common stock and 30,000 shares of
 Series C preferred stock                                                                           30,000       30,000      30,000
Issue Series A preferred and common
 shares for $60 million (net of $2,906
 million fees)                               57,710          54,804                                                          54,804
Redemption of shares from Harnco and
 related cost                                                                                       (1,145)      (1,145)     (1,145)
Exchange of 1,512 common shares for
 Series B preferred shares                                                4,809          4,809                                4,809
Preferred stock dividends                     3,478           4,075         296            347       1,823        2,123       6,545
Amortization of preferred stock discount                        338                                                             338
Capital contribution from HII
Issuance of loans to senior management
Repayment of loans by senior management
Deferred taxes arising from change in
 U.S. federal income tax basis
Activity with HII and other affiliates,
 October 31, 1997 - March 30, 1998 - net
                                            -------         -------     -------        -------    --------     --------    --------
BALANCE AT OCTOBER 31, 1998                  61,188          59,217       5,105          5,156      30,678       30,978      95,351
Net loss
Change in foreign currency translation
Net issuance of loans to senior
 management
Issuance of non-voting common shares
Cash dividends paid                                              (9)                                                             (9)
Preferred stock dividends                     7,553           7,654         645            652       3,955        4,016      12,322
Amortization of preferred stock discount                        581                                                             581
                                            -------         -------     -------        -------    --------     --------    --------
BALANCE AT OCTOBER 31, 1999                  68,741         $67,443       5,750         $5,808      34,633      $34,994    $108,245
Net loss
Change in foreign currency translation
Preferred stock dividends                     8,249           8,249         705            705       4,329        4,329      13,283
Issuance of non-voting common shares
Amortization of preferred stock discount                        581                                                             581
Other
                                            -------         -------     -------        -------    --------     --------    --------
BALANCE AT OCTOBER 31, 2000                  76,990         $76,273       6,455         $6,513      38,962      $39,323    $122,109
                                            =======         =======     =======        =======    ========     ========    ========
</TABLE>

<TABLE>
<CAPTION>

                                                                         Parent
                                                  Common Stock         Investment/     Accumulated
                                             -----------------------   Additional         Other                        Total
                                                Shares                  Paid-in-      Comprehensive    Retained     Shareholders'
                                             Outstanding   Par Value     Capital          Loss         Earnings        Equity
                                             -----------   ---------     -------          ----         --------        ------
<S>                                            <C>        <C>          <C>              <C>           <C>            <C>
BALANCE AT OCTOBER 31, 1997                       450     $    -       $ 124,618        $  (300)      $       -      $ 124,318
Net income                                                                                                4,291          4,291
Change in foreign currency translation                                                   (2,441)                        (2,441)
Exchange of 450 common shares
 outstanding for 100,000 shares of
 common stock and 30,000 shares of
 Series C preferred stock                      99,500          1         (30,001)                                      (30,000)
Issue Series A preferred and common
 shares for $60 million (net of $2,906
 million fees)                                    720                      2,290                                         2,290
Redemption of shares from Harnco and
 related cost                                 (88,319)        (1)       (289,407)                                     (289,408)
Exchange of 1,512 common shares for
 Series B preferred shares                     (1,512)                    (4,809)                                       (4,809)
Preferred stock dividends                                                                                (6,545)        (6,545)
Amortization of preferred stock discount                                                                   (338)          (338)
Capital contribution from HII                                              1,216                                         1,216
Issuance of loans to senior management                                      (900)                                         (900)
Repayment of loans by senior management                                      780                                           780
Deferred taxes arising from change in
 U.S. federal income tax basis                                            71,129                                        71,129
Activity with HII and other affiliates,
 October 31, 1997 - March 30, 1998 - net                                   3,224                                         3,224
                                              -------     -------        -------        -------        --------       --------


BALANCE AT OCTOBER 31, 1998                    10,889                   (121,860)        (2,741)         (2,592)      (127,193)
Net loss                                                                                                (98,205)       (98,205)
Change in foreign currency translation                                                    (687)                           (687)
Net issuance of loans to senior
 management                                                                                                 (80)           (80)
Issuance of non-voting common shares            1,210
Cash dividends paid
Preferred stock dividends                                                                               (12,322)       (12,322)
Amortization of preferred stock discount                                                                   (581)          (581)
                                              -------     -------        -------        -------        --------       --------



                                       40
<PAGE>
<CAPTION>
<S>                                            <C>        <C>          <C>              <C>           <C>            <C>

BALANCE AT OCTOBER 31, 1999                    12,099     $    -       $(121,860)       $(3,428)      $(113,780)     $(239,068)
Net loss                                                                                                (56,746)       (56,746)
Change in foreign currency translation                                                   (6,210)                        (6,210)
Preferred stock dividends                                                                               (13,283)       (13,283)
Issuance of non-voting common shares            2,420
Amortization of preferred stock discount                                                                   (581)          (581)
Other                                                                       (900)                                         (900)
                                              -------     ------       ---------        -------       ---------      ---------
BALANCE AT OCTOBER 31, 2000                    14,519     $    -       $(122,760)       $(9,638)      $(184,390)     $(316,788)
                                              =======     ======       =========        =======       =========      =========
</TABLE>

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


                                       41

<PAGE>

                         MORRIS MATERIAL HANDLING, INC.
                 (Debtors - in - Possession as of May 17, 2000)
                                 BALANCE SHEETS
                             (Dollars in Thousands)

<TABLE>
<CAPTION>
                    ASSETS                                                     LIABILITIES AND SHAREHOLDERS' EQUITY
                    ------                                                     ------------------------------------
                                  October 31, October 31,                                                  October 31,  October 31,
                                      2000       1999                                                         2000          1999
                                      ----       ----                                                         ----          ----
<S>                                <C>        <C>          <C>                                              <C>         <C>
Current Assets                                            Liabilities Not Subject to Compromise
    Cash and cash equivalents      $   2,607  $   3,929    Current Liabilities
    Accounts receivable-net           57,795     64,481      Short-term notes payable and current           $      134  $      383
    Inventories                       31,813     39,994      portion of long-term obligations (Note 12)
    Other current assets               4,204      7,842      Junior DIP Facility (Note 12)                      38,000           -
                                   ---------  ---------      Revolving Credit Facility Borrowings (Note 12)          -      27,925
                                      96,419    116,246      Term Loans (Note 12)                                    -      52,225
                                   ---------  ---------      Acquisition Facility Line Borrowings (Note 12)          -      12,430
                                                             Senior Notes (Note 12)                                  -     200,000
                                                             Bank overdrafts                                     1,233       1,367
Property, Plant and Equipment                                Trade accounts payable                             16,453      26,757
    Land and improvements              3,328      3,349      Employee compensation and benefits                  6,628       8,020
    Buildings                         22,205     23,235      Advance payments and progress billings              7,542       8,336
    Machinery and equipment           42,832     45,219      Accrued warranties                                  2,261       1,821
                                   ---------  ---------      Accrued interest                                      682       1,804
                                      68,365     71,803      Income taxes payable                                1,921       2,205
                                                             Other current liabilities                           8,599       9,791
    Less accumulated depreciation    (33,969)   (30,829                                                      ---------   ---------
                                   ---------  ---------)                                                        83,453     353,064
                                      34,396     40,974                                                      ---------   ---------
                                   ---------  ---------    Other Long-Term Obligations                             614       2,784
                                                           Other Long-Term Liabilities                             229       1,307
Other Assets                                              Liabilities Subject to Compromise (Note 6)           286,481           -
    Goodwill                          22,164     42,844   Minority Interest                                         73         504
    Debt financing costs              14,242     16,398   Commitments and Contingencies (Note 15)
    Other                              8,950     10,374   Shareholders' Equity                                (194,679)   (130,823)
                                   ---------  ---------                                                      ---------   ---------
                                      45,356     69,616                                                      $ 176,171   $ 226,836
                                   ---------  ---------                                                      =========   =========

                                   $ 176,171  $ 226,836
                                   =========  =========

</TABLE>

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

                                       42
<PAGE>

                         MORRIS MATERIAL HANDLING, INC.
                 (Debtors - in - Possession as of May 17, 2000)
                 STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
                             (Dollars in Thousands)

<TABLE>
<CAPTION>
                                                               Year Ended October 31,
                                                          --------------------------------
                                                            2000        1999        1998
                                                          --------    --------    --------
<S>                                                       <C>         <C>         <C>
Revenues
    Equipment and Part Sales                              $213,005    $235,526    $261,544
    Service Sales                                           55,069      58,669      56,313
                                                          --------    --------    --------
    Net Sales                                              268,074     294,195     317,857
    Other Income - Net                                           -         392       1,331
                                                          --------    --------    --------
                                                           268,074     294,587     319,188

Cost of Sales                                              210,782     218,703     226,991

Selling, General and Administrative Expenses                70,372      72,439      65,523

Impairment Loss on Long - Lived Assets                      16,009           -           -

Reorganization Items                                         7,850           -           -
                                                          --------    --------    --------
Operating Income (Loss)                                    (36,939)      3,445      26,674

Gain on Sale of a Business                                   6,380           -           -

Loss on Disposal of Fixed Assets                              (830)          -           -

Interest Expense - Net                                     (22,355)    (30,027)    (17,975)
                                                          --------    --------    --------
Income (Loss) Before Income Taxes and Minority Interest    (53,744)    (26,582)      8,699

Provision for Income Taxes                                  (3,225)    (71,680)     (4,435)

Minority Interest                                              223          57          27
                                                          --------    --------    --------
Net Income (Loss)                                          (56,746)    (98,205)      4,291

Foreign Currency Translation Adjustments                    (6,210)       (687)     (2,441)
                                                          --------    --------    --------
Comprehensive Income (Loss)                               $(62,956)   $(98,892)   $  1,850
                                                          ========    ========    ========

</TABLE>

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

                                       43
<PAGE>

                         MORRIS MATERIAL HANDLING, INC.
                 (Debtors - in - Possession as of May 17, 2000)
                            STATEMENTS OF CASH FLOWS
                             (Dollars in Thousands)

<TABLE>
<CAPTION>
                                                                                                    Year Ended
                                                                                                    October 31,
                                                                                       -----------------------------------
                                                                                          2000         1999         1998
                                                                                       ---------    ---------    ---------
<S>                                                                                    <C>          <C>          <C>
Operating Activities
    Net Income (Loss)                                                                  $ (56,746)   $ (98,205)   $   4,291
    Add (deduct) - items not affecting cash provided by operating activities:
        DIP Financing fees                                                                   950           --           --
        Depreciation and amortization                                                      9,256        8,239        6,823
        Amortization of debt financing costs                                               2,399        2,531        1,169
        Deferred income taxes - net                                                           --       69,614          327
        Gain on sale of business                                                          (6,380)          --           --
        Impairment loss on long-lived assets                                              16,009           --           --
        Loss on disposal of fixed assets                                                     830           --           --
        Divestiture bonus                                                                     --           --        1,216
        Other                                                                               (223)         (57)        (908)
    Changes in working capital, excluding the effects of acquisition opening
    balance sheets:
        Accounts receivable                                                                3,277       17,950        2,223
        Inventories                                                                        5,481        4,000       (7,692)
        Other current assets                                                               3,002       (3,385)      (3,317)
        Trade accounts payable and bank overdrafts                                           970       (6,810)      (4,292)
        Employee compensation and benefits                                                (1,052)        (975)          75
        Advance payments and progress billings                                              (523)      (1,335)       2,258
        Accrued warranties                                                                   554         (489)      (1,689)
        Accrued interest                                                                  11,451         (397)       2,201
        Other current liabilities                                                          5,533       (5,856)       3,647
        Activity with parent and other affiliates - net                                       --           --        3,224
                                                                                       ---------    ---------    ---------
Net cash provided by (used for) operating activities, including reorganization items      (5,212)     (15,175)       9,556
                                                                                       ---------    ---------    ---------
Investment and Other Transactions
    Fixed asset additions - net                                                           (1,897)      (4,889)      (5,208)
    Capitalized software                                                                    (772)      (2,705)          --
    Acquisition of businesses - net of cash acquired                                          --       (5,630)      (8,891)
    Net proceeds on divestiture of business                                                9,115           --           --
    Net issuance of loans to senior management                                                --          (80)        (120)
    Other - net                                                                           (1,033)        (444)      (1,738)
                                                                                       ---------    ---------    ---------
Net cash provided by (used for) investment and other transactions                          5,413      (13,748)     (15,957)
                                                                                       ---------    ---------    ---------
Financing Activities
    Changes in short-term debt and notes payable                                              (9)         463         (694)
    Proceeds from DIP and Junior DIP borrowings                                           38,100           --           --
    Repayment of DIP borrowings                                                             (100)          --           --
    Net (repayments of)/proceeds from Revolving Credit Facility borrowings                (9,752)      26,300        1,200
    Repayment of Term Loans                                                              (24,807)      (2,100)          --
    Proceeds from/(repayments of) Acquisition Facility Line borrowings                    (3,414)       6,235        6,194
    Repayments of long-term debt                                                            (181)          --         (675)
    Proceeds from Senior Note Offering                                                        --           --      200,000


                                       44

<PAGE>

    Proceeds from New Credit Facility                                                         --           --       55,000
    Net proceeds from issuance of Series A preferred stock                                    --           --           --
        and related common shares                                                             --           --       57,094
    Redemption of common stock and preferred stock                                            --           --     (287,000)
    Stock redemption transaction costs                                                        --           --       (3,553)
    Debt financing cost                                                                       --           --      (20,074)
    Payment of DIP financing fees                                                           (950)          --           --
    Payment of fees for amendment of Credit Facility                                        (245)        (612)          --
                                                                                       ---------    ---------    ---------
Net cash provided by (used for) financing activities                                      (1,358)      30,286        7,492
                                                                                       ---------    ---------    ---------
Effect of Exchange Rate Changes on Cash and
    Cash Equivalents                                                                        (165)          32          (89)
                                                                                       ---------    ---------    ---------
Increase (decrease) in Cash and Cash Equivalents                                          (1,322)       1,395        1,002
Cash and Cash Equivalents
    Beginning of period                                                                    3,929        2,534        1,532
                                                                                       ---------    ---------    ---------
    End of period                                                                      $   2,607    $   3,929    $   2,534
                                                                                       =========    =========    =========
</TABLE>

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

                                       45
<PAGE>

                         MORRIS MATERIAL HANDLING, INC.
                 (Debtors - in - Possession as of May 17, 2000)
                       STATEMENTS OF SHAREHOLDER'S EQUITY
                       FOR THE YEAR ENDED OCTOBER 31, 2000
                             (Dollars in Thousands)

<TABLE>
<CAPTION>
                                                   Common Stock             Parent        Accumulated
                                             ------------------------     Investment/        Other                       Total
                                                Shares           Par       Additional    Comprehensive    Retained   Shareholders'
                                             Outstanding        Value   Paid-in-Capital       Loss        Earnings      Equity
                                             -----------        -----   ---------------  -------------    --------      ------
<S>                                             <C>              <C>       <C>                <C>          <C>          <C>
BALANCE AT OCTOBER 31, 1997                        -            $  -       $124,618           $ (300)                   $124,318
Net income                                                                                                 $4,291          4,291
Change in foreign currency translation                                                        (2,441)                     (2,441)
Stock issued to Holdings in exchange for
   certain operating assets and ownership
   interest of the MHE business                  200
Dividends to and redemption of
   Shares from Holdings                         (100)                      (233,459)                                    (233,459)
Capital contribution from HII                                                 1,216                                        1,216
Issuance of loans to senior management                                         (900)                                        (900)
Repayment of loans by senior management                                         780                                          780
Deferred taxes arising from change
   in U.S. federal income tax basis                                          71,129                                       71,129
Activity with HII and other affiliates,
   October 31, 1977 - March 30, 1998 - net                                    3,224                                        3,224
                                                 ---            ----       --------          -------    ---------      ---------
BALANCE AT OCTOBER 31, 1998                      100               -        (33,392)          (2,741)       4,291        (31,842)
Net loss                                                                                                  (98,205)       (98,205)
Change in foreign currency translation                                                          (687)                       (687)
Distribution to Holdings                                                                                       (9)            (9)
Net issuance of loans to senior management                                                                    (80)           (80)
                                                 ---            ----       --------          -------    ---------      ---------
BALANCE AT OCTOBER 31, 1999                      100               -        (33,392)          (3,428)     (94,003)      (130,823)
Net loss                                                                                                  (56,746)       (56,746)
Change in foreign currency translation                                                        (6,210)                     (6,210)
Other                                                                          (900)                                        (900)
                                                 ---            ----       --------          -------    ---------      ---------
BALANCE AT OCTOBER 31, 2000                      100            $  -       $(34,292)         $(9,638)   $(150,749)     $(194,679)
                                                 ===            ====       ========          =======    =========      =========
</TABLE>

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

                                       46
<PAGE>

                                MM HOLDINGS, INC.
                         MORRIS MATERIAL HANDLING, INC.
                 (Debtors - in - Possession as of May 17, 2000)
                          NOTES TO FINANCIAL STATEMENTS

(Dollar amounts in thousands unless indicated)

Note 1 - Reorganization under Chapter 11

On May 17, 2000, MMH Holdings, Inc. ("Holdings"), Morris Material Handling, Inc.
("MMH") and their domestic operating subsidiaries (collectively, the "Debtors")
filed voluntary petitions for reorganization under Chapter 11 of the U.S.
Bankruptcy Code (the "Bankruptcy Code") in the United States Bankruptcy Court
for the District of Delaware (the "Bankruptcy Court"). The Debtors' Chapter 11
cases have been consolidated for the purpose of joint administration under case
number 00-2027(SLR). The Debtors are currently operating their businesses as
debtors-in-possession pursuant to the Bankruptcy Code. No trustee has been
appointed. An official committee of unsecured creditors (the "Creditors'
Committee") was appointed by the office of the United States Trustee on May 30,
2000. Pursuant to the Bankruptcy Code, actions to collect certain prepetition
indebtedness of the Debtors and other obligations against the Debtors may not be
enforced. These claims are reflected in the balance sheet as "liabilities
subject to compromise". In addition, under the Bankruptcy Code, the Debtors may
assume or reject executory contracts and unexpired leases. Additional claims may
arise from such rejection, and from the determination by the court (or agreed by
the parties in interest) to allow claims for contingencies and other disputed
amounts. However, the Debtors have not yet completed their review of all their
prepetition executory contracts and leases for assumption or rejection. See also
Note 6, Liabilities Subject to Compromise, and Note 12, Indebtedness.

The Debtors received approval from the Bankruptcy Court to pay or otherwise
honor certain of their prepetition obligations, including the authority to pay
employee wages and maintain their employee benefit programs.

The Debtors filed a Plan of Reorganization (the "Plan") and related Disclosure
Statement with the U.S. Bankruptcy Court on January 16, 2001. The Debtors are
continuing to negotiate with their creditor constituencies regarding the Plan
and anticipate making material amendments to the Plan. The Debtors are still
attempting to obtain a commitment by a lender to provide the Debtors with
financing to satisfy the Debtors' cash obligations under the Plan and to provide
the Debtors with working capital and letters of credit and anticipate
modifications to the Plan to reflect such financing. A hearing to consider
approval of the Disclosure Statement is scheduled for March 23, 2001. Subject to
certain exceptions set forth in the Bankruptcy Code, acceptance of a plan of
reorganization requires approval of the Bankruptcy Court and the affirmative
vote (i.e., more than 50% of the number and at least 66-2/3% of the dollar
amount, both based on claims actually voted) of each class of creditors whose
claims are impaired by the plan. Alternatively, absent the requisite approvals,
a debtor may seek Bankruptcy Court approval of its reorganization plan under
"cramdown" provisions of the Bankruptcy Code, assuming certain tests are met.

The Bankruptcy Court set September 20, 2000 as the last date creditors could
file proof of claims against the Debtors. There may be differences between the
amounts recorded in the Debtors' schedules and financial statements and the
amounts claimed by their respective creditors. Litigation may be required to
resolve such disputes.

The Debtors will continue to incur significant costs associated with the
reorganization. The amount of these expenses, which are being expensed as
incurred, is expected to significantly affect results while the Debtors operate
under Chapter 11. See Note 5, Reorganization Items.

Currently, it is not possible to predict the length of time the Debtors will
operate under the protection of Chapter 11, the outcome of the Chapter 11
proceedings in general, or the effect of the proceedings on the business of the
Company or on the interests of the various creditors and security holders.

Under the Bankruptcy Code, postpetition liabilities and prepetition liabilities
(i.e., liabilities subject to compromise) of the Debtors must be satisfied
before shareholders of the Debtors can receive any distribution. The ultimate
recovery to the Debtors' shareholders, if any, will not be determined until the
end of the case when the fair value of

                                       47
<PAGE>

the Debtors' assets is compared to the liabilities and claims against the
Debtors. The Plan as filed proposes that shareholders will not receive or retain
any property under the Plan.

Note 2 - Basis of Presentation

Recapitalization. On January 28, 1998, Harnischfeger Industries, Inc. ("HII")
reached an agreement with MHE Investments, Inc. ("MHE Investments"), an
affiliate of Chartwell Investments Inc. ("Chartwell"), for the sale of an
approximately 80 percent common ownership interest in HII's Material Handling
Equipment Business (the "MHE Business"). As more fully described in Note 4, the
resulting transactions (the "Recapitalization"), which closed on March 30, 1998
(the "Recapitalization Closing"), led to a significant change in the capital
structure and a reorganization of the underlying legal entities of the MHE
Business. As a result of the Recapitalization, Holdings, a pre-existing company
engaged in the MHE Business, became an indirect holding company for the
operating entities engaged in the MHE Business. Specifically, MMH, (and
collectively with its subsidiaries and their predecessors, the "Company"), a
newly formed wholly-owned direct subsidiary of Holdings, directly or indirectly
acquired the various operating entities engaged in the MHE Business. Holdings
was recapitalized in order to effect the redemption of certain shares of common
stock of Holdings held by Harnischfeger Corporation ("HarnCo"). As a result of
the reorganization of the legal entities of the MHE Business, Holdings and MMH
became the successor companies to the MHE Business. The transactions have been
accounted for as a recapitalization and accordingly, the financial statements
presented herewith reflect the underlying historical accounting basis of the MHE
Business.

For periods prior to the Recapitalization Closing, the financial statements
presented represent the combined financial statements of the entities comprising
the MHE Business. For purposes hereof, it is assumed that Holdings has
historically owned the capital stock of MMH, that all of the assets of the MHE
Business were owned by subsidiaries of MMH and that, immediately prior to the
consummation of the Recapitalization, the historical combined financial
statements of Holdings were identical to those of the Company.

All significant intercompany balances and transactions have been eliminated.
Payables and receivables with HII and affiliates prior to the Recapitalization
are recorded as a component of parent investment.

Chapter 11 Filing. The accompanying consolidated financial statements have been
prepared on a going concern basis, which contemplates continuity of operations,
realization of assets and liquidation of liabilities in the ordinary course of
business and do not reflect any adjustments that might result if the Debtors are
unable to continue as a going concern. As a result of the Debtors' Chapter 11
filings, however, such matters are subject to significant uncertainty.
Continuing on a going concern basis is dependent upon, among other things, the
approval by the Debtors' creditors of an amended Joint Plan of Reorganization,
the success of future business operations, and the generation of sufficient cash
from operations and financing sources to meet the Debtors' obligations. The
accompanying consolidated financial statements do not reflect: (i) the
realizable value of assets on a liquidation basis or their availability to
satisfy liabilities, (ii) aggregate prepetition liability amounts that may be
allowed for claims or contingencies, or their status or priority, (iii) the
effect of any changes to the Debtors' capital structure or in the Debtors'
business operations as the result of an approved plan of reorganization; or (iv)
adjustments to the carrying value or classification of assets or liability
amounts that may be necessary as the result of actions by the Bankruptcy Court.

The Company's consolidated financial statements have been presented in
conformity with the AlCPA's Statement of Position 90-7, "Financial Reporting By
Entities In Reorganization Under the Bankruptcy Code" ("SOP 90-7"). SOP 90-7
requires a segregation of liabilities subject to compromise by the Bankruptcy
Court as of the bankruptcy filing date and identification of all transactions
and events that are directly associated with the reorganization of the Debtors.
Schedules have been filed by the Company with the Bankruptcy Court setting forth
the assets and liabilities of the Company as of May 17, 2000, the bankruptcy
filing date, as reflected in the Company's accounting records. Differences
between amounts reflected in such schedules and claims filed by creditors are
currently being investigated and either resolved by mutual consent or
adjudicated. The final amounts of such claims are not presently determinable.

Note 3 - Description of Business and Significant Accounting Policies

Description of Business - MMH Holdings, Inc. is a holding company, with no
material operations, that conducts its business operations through its directly
wholly-owned subsidiary Morris Material Handling, Inc.

                                       48
<PAGE>

The Company is a leading international provider of "through-the-air" material
handling products and services used in most manufacturing industries. The
Company's original equipment operations design and manufacture a comprehensive
line of industrial cranes, hoists and other component products. Through its
aftermarket operations, the Company provides a variety of related products and
services, including replacement parts, repair and maintenance services and
product modernizations. The Company's revenues are derived principally from the
sale of industrial overhead cranes, component products and aftermarket products
and services.

Use of Estimates - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements, and the reported amounts of revenues and
expenses during the reporting period. Ultimate realization of assets and
settlement of liabilities in the future could differ from those estimates.

Inventories - Inventories are stated at the lower of cost or market value. Cost
is determined by the last-in, first-out (LIFO) method for certain domestic
inventories and by the first-in, first-out (FIFO) method for certain domestic
inventories and inventories of foreign subsidiaries.

Revenue Recognition - The majority of the Company's sales of products or
services are recorded as products are shipped or services are rendered. Revenue
on certain long-term contracts is recorded using the percentage-of-completion
method. Losses, if any, are recognized in full as soon as identified. The
Company's products are generally under warranty against defects in material and
workmanship for a period of 1 to 2 years. The Company generally provides for
future warranty costs based upon the relationship of sales in prior periods to
actual warranty costs.

Property, Plant and Equipment - Property, plant and equipment is stated at
historical cost. Expenditures for major renewals and improvements are
capitalized, while maintenance and repairs which do not significantly improve
the related asset or extend its useful life are charged to expense as incurred.
For financial reporting purposes, plant and equipment is depreciated primarily
by the straight-line method over the estimated useful lives of the assets.
Depreciation claimed for income tax purposes is computed by accelerated methods.

Cash Equivalents - The Company considers all highly liquid debt instruments with
an initial maturity of three months or less at the date of purchase to be cash
equivalents.

Interest Rate Swaps - To limit the effect of increases in interest rates, the
Company entered into an interest rate swap arrangement. The differential between
the contract floating and fixed rates was accrued each period and recorded as an
adjustment of interest expense. This arrangement was terminated during the
second quarter of fiscal 2000 at a gain of $0.3 million.

Foreign Currency Translation - The assets and liabilities of the Company's
international operations are translated at year-end exchange rates; income and
expenses are translated at average exchange rates prevailing during the year.
For operations whose functional currency is the local currency, translation
adjustments are accumulated within shareholders' equity. Transaction gains and
losses are reflected in income. Pre-tax foreign exchange gains (losses) included
in operating income were $(340), $557, and $(118) in 2000, 1999 and 1998,
respectively.

Goodwill and Intangible Assets - Goodwill represents the excess of the purchase
price over the fair value of identifiable net assets of acquired companies and
is amortized on a straight-line basis over periods ranging from 10 to 40 years.
The Company assesses the carrying value of goodwill at each balance sheet date.
Consistent with Statement of Financial Accounting Standards ("SFAS") No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed Of," such assessments include, as appropriate, a comparison of (a)
the estimated future nondiscounted cash flows, excluding interest, anticipated
to be generated during the remaining amortization period of the goodwill to (b)
the net carrying value of goodwill.

Debt financing costs - In conjunction with the Recapitalization (see Note 4),
the Company recorded $20.1 million of debt financing costs. These costs are
being amortized over periods ranging from 5 to 10 years. Accumulated
amortization was $5,838 and $3,682 at October 31, 2000 and 1999, respectively.

Income Taxes - For periods prior to the Recapitalization, the Company's domestic
income tax provision reflects an intercompany tax allocation arrangement with
its parent such that the domestic income taxes payable was recorded

                                       49
<PAGE>

as if the Company filed separate income tax returns. The Company recorded its
domestic income taxes payable as an intercompany payable within shareholder's
investment. Subsequent to the Recapitalization, Holdings, its subsidiaries and
MHE Investments have entered into a tax sharing agreement (the "Tax Sharing
Agreement") which provides for, among other things, the allocation of federal,
state and local tax liabilities between Holdings, its subsidiaries and MHE
Investments. In general, under the Tax Sharing Agreement, Holdings and its
subsidiaries will be responsible for paying their allocable share, based upon
amounts calculated as if separate income tax returns were filed, of all income
taxes shown to be due on the consolidated federal (and any comparable state or
local) income tax return filed by MHE Investments. The Company's foreign income
tax provision and related income taxes payable are recorded based upon the
income tax returns as filed by its foreign affiliates in their respective
jurisdictions.

Domestic and foreign deferred income taxes are recognized for the tax
consequences of temporary differences by applying enacted statutory tax rates
applicable to future years to differences between the financial statement
carrying amounts and the tax bases of existing assets and liabilities, and for
tax basis carryforwards. A valuation allowance is provided for deferred tax
assets where it is considered more likely than not that the benefit of such
assets will not be realized.

Fair Value of Financial Instruments - Cash and cash equivalents, accounts
receivable and accounts payable recorded in the balance sheets approximate fair
value based on the short maturity of these instruments. The fair values of
long-term debt obligations are estimated based on market conditions and interest
rates available to the Company for similar financial instruments and in the case
of the Company's senior notes, based on quoted market prices. The fair value of
the Company's Senior Notes was approximately $2 million based upon the quoted
market price of the instrument on October 31, 2000.

Research and Development Expenses - Research and development costs are expensed
as incurred. Such costs incurred in the development of new products or
significant improvements to existing products amounted to $1,125, $930, and
$1,308 in 2000, 1999 and 1998, respectively.

Computer Software - Costs of computer software developed or obtained for
internal use are capitalized and amortized on a straight-line basis over the
estimated useful life of the software (generally three to five years).

Segment Information - The Company adopted SFAS No. 131, "Disclosures about
Segments of an Enterprise and Related Information" for the fiscal year ended
October 31, 1999. SFAS No. 131 supersedes SFAS No. 14, "Financial Reporting for
Segments of a Business Enterprise" and requires the Company to report certain
financial information about operating segments. The method specified in SFAS No.
131 for determining what information to report is referred to as the "management
approach". The management approach is based upon the way that management
organizes the segments within the enterprise for making operating decisions and
assessing performance. SFAS No. 131 also requires disclosures about products and
services, geographic areas, and major customers. The adoption of SFAS No. 131
did not affect results of operations or financial position but did affect the
disclosure of segment information (see Note 18 - Segment Information).

Future Accounting Changes - In June 1998, the Financial Accounting Standards
Board (FASB) issued Statement of Accounting Standards ("SFAS") No. 133
"Accounting for Derivative Instruments and Hedging Activities." It requires all
derivative instruments to be recorded in the statements of financial position at
fair value. In June 1999, the statement's effective date was delayed by one
year, and it will be effective for the year ending October 31, 2001. Interim
reporting for this standard will be required. Due to the Company's current
limited use of derivative instruments, the adoption of this statement is not
expected to have a material effect on the Company's financial condition or
results of operations.

In October 2000, the Emerging Issues Task Force ("EITF") reached a consensus in
Issue No. 00-10, "Accounting for Shipping and Handling Fees and Costs." EITF
Issue No. 00-10 requires companies to classify all amounts billed to a customer
in a sale transaction related to shipping and handling as revenue. Initial
application of EITF Issue No. 00-10 is required for financial statements for the
fiscal years beginning after December 15, 1999. Reclassification of comparative
financial statements for prior periods is required. The Company plans to apply
EITF Issue No. 00-10 in fiscal year 2001. It is not expected to have a
significant effect on the Company's financial statements.

In December 1999, The Securities and Exchange Commission ("SEC") released Staff
Accounting Bulletin No. 101 ("SAB 101"), "Revenue Recognition in Financial
Statements." SAB 101 summarizes certain of the SEC staff's views in applying
generally accepted accounting principles to revenue recognition in financial
statements. The SEC

                                       50
<PAGE>

staff expressed its view that revenue generally is realized or realizable and
earned when all of the following criteria are met: persuasive evidence of an
arrangement exists; delivery has occurred or services have been rendered; the
seller's price to the buyer is fixed or determinable; and collectibility is
reasonably assured. Implementation of SAB 101 is required for fiscal years
beginning after December 15, 1999. The Company plans to implement SAB 101 in
fiscal year 2001. It is not expected to have a significant effect on the
Company's financial statements.

Note 4 - Recapitalization Transaction

The Recapitalization was effectuated pursuant to the January 28, 1998
Recapitalization Agreement among MHE Investments, HarnCo and certain of HII's
affiliates. Pursuant to this agreement, HarnCo and other HII affiliates effected
a number of transactions which resulted in Holdings owning, directly or
indirectly, the equity interests of all of the operating entities engaged in the
MHE Business. Holdings, in turn, formed MMH as a wholly owned subsidiary to
directly or indirectly hold the various operating entities engaged in the MHE
Business.

The principal transactions effected as part of the Recapitalization were the
following: (i) MHE Investments acquired (x) 7,907 shares of Holdings' common
stock for $25.1 million and (y) $28.9 million liquidation preference of
Holdings' 12 1/2% Series C Junior Voting Exchangeable Preferred Stock (the
"Series C Junior Voting Preferred Stock") from HarnCo; (ii) Holdings redeemed
certain shares of its common stock and Series C Junior Voting Preferred Stock
held by HarnCo for $287 million in cash (including a $5 million prepayment of a
potential post-closing redemption price adjustment) and approximately $4.8
million liquidation preference of Holdings' 12 1/4% Series B Junior Exchangeable
Preferred Stock (the "Series B Junior Preferred Stock"); and (iii) HarnCo
retained 2,261 shares of Holdings' common stock.

To finance the Recapitalization, Holdings sold $60 million of Series A Units,
consisting of $57.7 million liquidation preference of Holdings' 12% Series A
Senior Exchangeable Preferred Stock (the "Series A Senior Preferred Stock") and
$2.3 million of Holdings' non-voting common stock, to institutional investors.
In addition, MMH issued (the "Note Offering") $200 million of aggregate
principal amount of its 9 1/2% senior notes due 2008 (the "Senior Notes") and
entered into a senior secured credit facility (the "Prepetition Credit
Facility") (see Note 12). The Prepetition Credit Facility consisted of a $70
million Revolving Credit Facility (the "Revolving Credit Facility"), a $30
million acquisition facility (the "Acquisition Facility") and $55 million in
term loans. MMH used a portion of the $200 million aggregate proceeds from the
Note Offering and $55 million aggregate borrowings under the New Credit Facility
to redeem certain of its common shares from Holdings and pay Holdings a dividend
which redemption and dividend totaled $233.8 million. Holdings, in turn, used
the proceeds from this redemption, together with the proceeds of the sale of the
Series A Units, to finance the cash portion of the redemption price for HarnCo's
shares. The remainder of the proceeds was used by Holdings and MMH (i) to make
loans to senior management to acquire indirect equity interests in Holdings,
(ii) to fund certain transaction fees and expenses and (iii) for general
corporate purposes.

At October 31, 2000, MHE Investments owned approximately 54.5% of the common
stock of Holdings and $39.0 million liquidation preference of the Series C
Junior Voting Preferred Stock and HarnCo owned approximately 15.6% of the common
stock of Holdings and $6.5 million liquidation preference of the Series B Junior
Preferred Stock. Certain indirect equity holders in MHE Investments own, through
Martin Crane L.L.C., approximately 25.0% of the common stock of Holdings. The
remaining equity interests are held by institutional investors and consist of
non-voting stock representing approximately 4.9% of the outstanding common stock
of Holdings and $77.0 million liquidation preference of the Series A Senior
Preferred Stock.

Note 5 - Reorganization Items

Reorganization expenses are comprised of items of income, expense, gain or loss
that were realized or incurred by the Debtors as a result of their decision to
reorganize under Chapter 11 of the Bankruptcy Code. During fiscal year ended
October 31, 2000, reorganization expenses, including certain costs incurred by
the Company prior to May 17, 2000 related to its restructuring efforts, were as
follows:

     Professional fees                      $6,100
     DIP financing costs                       950
     Accrued retention plan costs              800
                                            ------
                                            $7,850
                                            ======

                                       51
<PAGE>

Note 6 - Liabilities Subject to Compromise

The principal categories of claims classified as liabilities subject to
compromise under reorganization proceedings are identified below. All amounts
below may be subject to future adjustment depending on Bankruptcy Court action,
further developments with respect to disputed claims, or other events.
Additional prepetition claims may arise from rejection of additional executory
contracts or unexpired leases by the Debtors. Under a confirmed plan of
reorganization, prepetition claims may be paid and discharged at amounts
substantially less than their allowed amounts. Unless the Debtors are
substantively consolidated under a confirmed plan or plans of reorganization,
payment of prepetition claims of each Debtor may substantially differ from
payment of prepetition claims of other Debtors.

On a consolidated basis, recorded liabilities subject to compromise under
Chapter 11 proceedings consisted of the following at October 31, 2000:

<TABLE>
<CAPTION>
<S>                                                                       <C>
Trade accounts payable                                                    $9,706
Accrued interest expense, as of May 16, 2000                              12,591
Senior notes, at 9.5% due April 1, 2008                                  200,000
Bank term loan (Term Loan A) at LIBOR plus 3.5% (10.15% at
  October 31, 2000) due in quarterly installments through March 2003       8,938
Bank term loan (Term Loan B) at LIBOR plus 3.5% (10.15% at
  October 31, 2000) due in quarterly installments through March 2005      18,461
Bank acquisition loan (in combined draws), at LIBOR plus 3.5%
  (10.15% at October 31, 2000) due in eight quarterly
  installments beginning June 2003 through March 2005                      4,016
Acquisition term loan (Sponsor Loan), at Eurodollar plus 6.0%
   (12.65% at October 31, 2000) due in eight quarterly
   installments beginning June 2003 through March 2005                     5,000
Bank revolving credit loan, at LIBOR plus 3.5% (10.15% at
   October 31, 2000) due March 2003                                       18,174
Deferred payments for purchases of companies, due in annual
   installments through 2006                                               1,805
Long-term capital leases with various expiration dates                        20
Industrial revenue bonds, at 6.2% due in annual installments
   through June 2007                                                         320
Income taxes payable                                                       2,035
Royalty fee and credit support fee payable to HII                          2,810
Other                                                                      2,605
                                                                        --------
                                                                        $286,481
                                                                        ========
</TABLE>

Pursuant to SOP 90-7, certain of the amounts included above represent secured
claims about which there is uncertainty as to whether the liability is
undersecured, or will be impaired under a reorganization plan or plans.

As a result of the bankruptcy filings, principal and interest payments may not
be made on prepetition debt without Bankruptcy Court approval or until a
reorganization plan or plans defining the repayment terms have been confirmed.
Interest due under the Prepetition Credit Facility is being paid by the Debtors
as "adequate protection" pursuant to an order of the Bankruptcy Court. The total
interest on unsecured prepetition debt that was not paid or charged to earnings
for the period from May 17, 2000 to October 31, 2000 was $9.2 million. Such
interest is not being accrued since it is not probable that it will be treated
as an allowed claim. The Bankruptcy Code generally disallows the payment of
interest that accrues postpetition with respect to unsecured claims.

Note 7 - Liquidity and Capital Resources

On May 17, 2000, Holdings, MMH and their domestic operating subsidiaries filed
voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy
Code. See Note 1, Reorganization under Chapter 11. On May 18, 2000, the
Bankruptcy Court entered an order approving $10.0 million in interim
debtor-in-possession financing to the Debtors and authorizing the Debtors to
utilize their collections in the operation of their business. This $10 million
amount represented the initial portion under a commitment by the lenders to
provide $35 million in

                                       52
<PAGE>

financing (including a letter of credit facility) in connection with the
Debtors' Chapter 11 cases. The complete $35 million facility (which was
subsequently reduced by agreement of the parties to $25 million) was approved by
the Bankruptcy Court on June 15, 2000 (see Note 12). This facility had an
initial maturity date of December 1, 2000, which date, absent a default, was
automatically extended to June 1, 2001 if a sale of the Debtors had not been
consummated prior to December 1, 2000.

The Company believes that the filing provides the Debtors with the opportunity
to restructure its indebtedness. The Company plans to continue to implement its
cost savings initiatives to bring costs in line with market requirements.
Although management believes that disruption of operations relating to the
Chapter 11 reorganization has not had a material adverse effect on the Debtors'
relationships with their creditors, suppliers or employees, however, sales and
bookings for modernizations, engineered and standard cranes, hoists and
components have been negatively impacted.

Note 8 - Acquisitions and Divestitures

Acquisitions - During the year ended October 31, 2000, the Company did not make
any acquisitions. During the year ended October 31, 1999, the Company completed
two acquisitions with an aggregate purchase price of $4.1 million, net of cash
acquired. During 1998, the Company completed several acquisitions for an
aggregate purchase price of $8.9 million, net of cash acquired. These
acquisitions were related to the Company's aftermarket business and were
accounted for as purchase transactions with the purchase prices allocated to the
fair value of specific assets acquired and liabilities assumed. Resultant
goodwill of the transactions, $2.5 million for the 1999 transactions and $8.3
million for the 1998 transactions, is being amortized over 10 to 40 years. The
resulting deferred purchase price will be paid in 2004 and 2005 for the 1999
acquisitions, and in annual installments through 2006 for the 1998 acquisition.
The two fiscal 1999 acquisitions added approximately $13.7 million in sales and
$1.5 million in operating income to the Company's results.

During the year ended October 31, 1999, the Company made final consideration
payments of $1.5 million related to two 1998 acquisitions. With respect to a
1995 acquisition, the Company made a final contingent consideration payment of
$1.4 million in the year ended October 31, 1999. Additionally, a payment of
$100,000 was made during both 2000 and 1999 toward a fiscal 1998 purchase which
was partially financed by the seller and a payment of $110,000 was made during
the year ended October 31, 2000 toward the fiscal 1999 purchase which was
partially financed by the seller. On a pro forma basis, the 1999 and 1998
acquisitions were not material to results of operations reported for the year
ended October 31, 1999 and accordingly, such information is not presented.

Divestitures - On December 16, 1999, the Company completed the sale of the
Company's brake manufacturing operation (the "Brake Business") located in
Mississauga, Ontario, Canada, for a net sale price of $6.8 million after
deduction of certain transaction-related items, including taxes. During fiscal
year 2000, the Brake Business contributed $0.5 million in sales and no operating
income to the Company's results.

In accordance with the Prepetition Credit Facility, as amended by the Amendment,
the Company was permitted to apply half of the net proceeds of the sale of the
Brake Business (which amounted to $3.4 million) to general corporate purposes,
which the Company would otherwise have been required to use to prepay
indebtedness under the Prepetition Credit Facility. After consummation of the
sale, the Company repaid $3.1 million of the outstanding term loans ($2.4
million of which was applied to the final scheduled principal payment obligation
with respect to the term loans) and repaid $0.3 million on the Acquisition
Facility. A pre-tax gain of $6.4 million was recognized on this transaction.

Note 9 - Accounts Receivable

Accounts receivable at October 31 consisted of the following:

                                                            2000         1999
                                                           -------      -------
Trade receivables                                          $54,230      $59,737
Unbilled receivables                                         6,624        6,469
Allowance for doubtful accounts                             (3,059)      (1,725)
                                                           -------      -------
                                                           $57,795      $64,481
                                                           =======      =======

The amount of accounts receivable due beyond one year is not significant.

                                       53
<PAGE>

Note 10 - Inventories

Inventories at October 31 consisted of the following:

<TABLE>
<CAPTION>
                                                        2000            1999
                                                      -------         -------
<S>                                                   <C>             <C>
Raw material                                          $ 3,268         $ 8,771
Work-in-process                                        11,592          20,166
Finished parts                                         23,312          18,116
                                                      -------         -------
                                                       38,172          47,053
Less excess of current cost over
stated LIFO value                                      (6,359)         (7,059)
                                                      -------         -------
                                                      $31,813         $39,994
                                                      =======         =======
</TABLE>

Inventories valued using the LIFO method represented approximately 34% and 33%
of inventories at October 31, 2000 and 1999, respectively. During 2000 and 1999,
inventory quantities were reduced, resulting in a liquidation of LIFO inventory
quantities carried at lower costs prevailing in prior years as compared with the
cost of 2000 and 1999 purchases. The effect of these liquidations decreased cost
of sales by $1,150, $171 and $2,079 in 2000, 1999 and 1998, respectively.

Note 11 - Goodwill

Net goodwill at October 31 consisted of the following:

<TABLE>
<CAPTION>
                                                    2000         1999
                                                  --------     --------
<S>                                               <C>          <C>
Goodwill                                          $ 24,598     $ 47,686
Accumulated amortization                           (2,434)       (4,842)
                                                  --------     --------
                                                  $ 22,164     $ 42,844
                                                  ========     ========
</TABLE>

The Company assesses the carrying value of goodwill at each balance sheet date.
In 1999 the Company reduced the remaining estimated useful life of goodwill
related to its non-North American operations to ten years. This change in
estimate resulted in additional amortization expense of $340. Based upon the
continued negative trends in the operating results of non-North American
businesses and shortfalls in actual operating results compared with estimates
developed during the second quarter, management concluded that future operating
cash flows, excluding interest, did not support the recoverability of recorded
goodwill over the remaining amortization period. Accordingly, the Company
assessed the fair value of the related businesses and wrote-off the remaining
unamortized goodwill balances related to its non-North American operations of
approximately $16.0 million in the third fiscal quarter of 2000.

Management believes there is no impairment of recorded goodwill related to the
North American businesses at October 31, 2000 and 1999.

                                       54
<PAGE>


Note 12 - Indebtedness

Long-term obligations at October 31 consisted of the following:

<TABLE>
<CAPTION>
                                                                                                           2000          1999
                                                                                                         --------       -------
<S>                                                                                                      <C>            <C>
Junior Debtor-in-Possession Facility (Junior DIP), at LIBOR plus 3.5% (10.15% at October 31,
      2000) due on the earlier of June 1, 2001 or upon confirmation of a plan of reorganization          $ 38,000       $     -
Senior notes, at 9.5% due April 1, 2008                                                                       -         200,000
Bank term loan (Term Loan A), at LIBOR plus 3.5% due in quarterly installments through March 2003             -          17,750
Bank term loan (Term Loan B), at LIBOR plus 3.5% due in quarterly installments through March 2005             -          34,475
Bank acquisition loan (combined draws), at LIBOR plus 3.5% due in eight quarterly installments
      beginning June 2003 through March 2005                                                                  -           7,430
Acquisition term loan (Sponsor Loan), at Eurodollar plus 6.0% due in eight quarterly installments
      beginning June 2003 through March 2005                                                                  -           5,000
Bank revolving credit loan, at LIBOR plus 3.5% due March 2003                                                 -          27,500
U.S. Swingline borrowings at Prime less 0.5%                                                                  -             425
Deferred payments for purchases of companies, due in annual installments through 2006                         -           1,993
Long-term capital leases with various expiration dates                                                        183           218
Bank debt, at 6.5% due in annual installments through March 2010                                              565           636
Industrial revenue bonds, at 6.0% due in annual installments through June 2007                                -             320
                                                                                                         --------       -------
                                                                                                           38,748       295,747
Less current portion                                                                                       38,134       292,963
                                                                                                         --------       -------
                                                                                                         $    614       $ 2,784
                                                                                                         ========       =======
</TABLE>


On March 30, 1998, MMH issued $200 million aggregate principal amount of 9.5%
Senior Notes due April 1, 2008 (the "Senior Notes") in connection with the
Recapitalization as discussed in Note 4. Interest on the Senior Notes was
payable semi-annually on each April 1 and October 1, commencing October 1, 1998.
The Senior Notes are senior unsecured obligations and are unconditionally
guaranteed, jointly and severally, on a senior unsecured basis by substantially
all of MMH's subsidiaries. See further discussion in Note 23.

At the Recapitalization Closing, MMH entered into the Prepetition Credit
Facility which consisted of a $70 million revolving credit facility (the
"Revolving Credit Facility"), a $30 million acquisition facility (the
"Acquisition Facility"), a $20 million term loan ("Term Loan A") and a $35
million term loan ("Term Loan B").

The Revolving Credit Facility initially permitted, subject to compliance with
certain conditions, MMH to borrow, repay and reborrow up to $70 million at any
time until the fifth anniversary of the Recapitalization Closing, the proceeds
of which may be used for working capital and other corporate purposes. At
October 31, 2000 and 1999, the Company had $18.2 million and $27.5 million of
borrowings outstanding under the Revolving Credit Facility. The Acquisition
Facility, the proceeds of which may be used for acquisitions, initially
permitted, subject to compliance with certain conditions, MMH to borrow up to
$30 million at any time until the third anniversary of the Recapitalization
Closing, and to repay the same in installments on or prior to the seventh
anniversary of the Recapitalization Closing. Term Loan A and Term Loan B are
repayable in 20 and 28 quarterly installments, respectively, which commenced in
June 1998.

The Prepetition Credit Facility provided that the Company was to pay certain
fees and commissions to the agents and lenders, including an annual
administrative fee, a Revolving Credit Facility and Acquisition Facility unused
commitment fee of 0.75% and a letter of credit fee of 3.625% of the average
outstanding amounts under letters of credit.

                                       55
<PAGE>

Borrowings under the Prepetition Credit Facility are secured by certain of MMH's
and its subsidiaries' assets, including substantially all of their assets
located in the United States and the United Kingdom, and are guaranteed by
Holdings and substantially all of MMH's subsidiaries.

Borrowings under the Prepetition Credit Facility bear interest at various
interest rates based on certain floating reference rates (the "Floating Rate").
To limit the effect of increases in the interest rates under the Prepetition
Credit Facility, the Company entered into an interest rate swap arrangement. The
effect of this agreement was to limit the interest rate exposure on specified
amounts up to $55.0 million borrowed under the Prepetition Credit Facility to a
fixed LIBOR rate of 5.875% (the "Fixed Rate") plus 3.5%, as applicable. The
Company terminated this arrangement during the second quarter of fiscal 2000 at
a gain of $0.3 million.

The Prepetition Credit Facility and the indenture governing the Senior Notes
(the "Note Indenture") contain a number of covenants that, among other things,
limit Holdings' and its subsidiaries' ability to prepay subordinated
indebtedness, dispose of certain assets, create liens, make capital
expenditures, make certain investments or acquisitions and otherwise restrict
corporate activities. In addition, the Prepetition Credit Facility limits
Holdings' and its subsidiaries' ability to incur indebtedness and the Note
Indenture limits the Company's and its subsidiaries' ability to incur
indebtedness. The Prepetition Credit Facility also requires Holdings and its
subsidiaries to comply with certain financial ratios and borrowing condition
tests based on quarterly measurements of the latest twelve months results of
operations, under which Holdings and its subsidiaries are required to achieve
and maintain certain financial and operating results.

The Company did not meet certain of the financial covenants under the
Prepetition Credit Facility for the period ended January 31, 1999 and did not
meet such financial covenants and certain additional financial covenants for the
period ended April 30, 1999. On August 2, 1999, the Company obtained an
amendment to the Prepetition Credit Facility (the "Amendment") which cured past
financial covenant violations and reset the financial covenants until April
2001. The Amendment increased the cash availability under the Revolving Credit
Facility from $35.7 million under the previous waiver agreement to $40.7
million. In connection with, and as a condition to, the Amendment, certain of
the current indirect equity holders in Holdings purchased a $5.0 million
participation in the Prepetition Credit Facility and received certain non-voting
equity interests in Holdings, consisting of 25% of the then outstanding common
stock of Holdings.

The Company entered into several Amendments and Waivers under the Prepetition
Credit Facility, dated as of January 31, 2000 through April 28, 2000, whereby,
among other matters, the lenders waived compliance by the Company with such
financial covenants, for the period from January 31, 2000 until 5:00 p.m. May
26, 2000 (the "Waivers"). The Waivers permitted the Company, subject to certain
conditions, to make additional borrowings under the Revolving Credit Facility
and issue additional letters of credit, above levels in existence on January 28,
2000, in an aggregate amount of up to $12.4 million, during the period to which
the Waivers applied. Amounts outstanding under the Prepetition Credit Facility
at May 17, 2000 are reflected as liabilities subject to compromise in the
October 31, 2000 balance sheet (see Note 6).

Following the Company's Chapter 11 filing, on June 15, 2000 the Bankruptcy Court
approved a $35 million Debtor-in-Possession Facility ("DIP Facility") (which was
subsequently reduced by agreement of the parties to $25 million) and authorized
the Debtors to use their collections in the operations of their business.
Pursuant to such facility, cash collected by the Company is used to repay the
Term Loans, the Revolving Credit Facility Borrowings and the Acquisition
Facility Line Borrowings on a pro-rata basis and these amounts are re-loaned to
the Company under a Junior DIP Facility up to $38 million. The DIP and Junior
DIP Facilities contain a number of covenants that, among other things, limit the
Debtors' ability to create or assume liens, consolidate or merge with other
entities, create, incur, or assume additional indebtedness, dispose of certain
assets and make capital expenditures. The DIP and Junior DIP Facilities also
require the Debtors to comply with certain financial ratios and borrowing
condition tests based on monthly measurements of the latest twelve months
results of operations. The first measurement date was December 31, 2000. The
Company did not meet certain of the financial covenants under the DIP Facility
at December 31, 2000. The Company obtained a waiver of such financial covenants
through March 30, 2001. The waiver permits the Company to continue to borrow
under the DIP Facility to meet its working capital requirements. The Junior DIP
Facility is junior to the DIP Facility. At October 31, 2000, $38.0 million in
borrowings are outstanding under the Junior DIP Facility and are classified as
current obligations in the October 31, 2000 balance sheet. There were no
borrowings outstanding under the DIP Facility at October 31, 2000.

                                       56
<PAGE>

The DIP and Junior DIP Facilities benefit from superpriority administrative
claim status and senior and junior liens as provided for under the Bankruptcy
Code. Under the Bankruptcy Code, a superpriority claim is senior to unsecured
prepetition claims and all other administrative expenses incurred in the Chapter
11 case. Borrowings under the DIP Facility are priced at the Alternate Base Rate
of the Post-Petition Agent under the DIP Facility plus 1.5% or, at the Debtors'
option, LIBOR plus 3 1/2%. This DIP Facility has an initial maturity date of
December 1, 2000, which date, absent a default, was automatically extended to
June 1, 2001. Borrowings under the Junior DIP Facility are priced at the
Alternate Base Rate of the Post-Petition Agent under the DIP Facility plus 2.0%
or, at the Debtors' option, LIBOR plus 3 1/2%. This Junior DIP Facility matures
on the earlier of the initial maturity date or December 1, 2000, which date was
automatically extended to June 1, 2001, or upon confirmation of a plan of
reorganization.

The principal sources of liquidity for the Company's operating requirements have
been cash flows from operations and borrowings under the DIP Facility and Junior
DIP Facility. While the Company expects that such sources will provide
sufficient working capital to operate its businesses, there can be no assurances
that such sources will prove to be sufficient.

Immediately prior to the bankruptcy filings, the Company's UK subsidiary had a
short-term bank credit line with an outstanding balance of $1.9 million. This
credit line was converted to the Revolving Credit Facility borrowing in
conjunction with the bankruptcy.

                                       57
<PAGE>

At October 31, 2000, installments payable related to the Company's long-term
obligations are as follows:

                2001                     $   134
                2002                          78
                2003                          90
                2004                          67
                2005                          56
                Thereafter                   323
                                         -------
                                         $   748
                                         =======

Note 13 - Mandatorily Redeemable Preferred Stock and Shareholders' Equity

As previously discussed in Note 1, the Company's Plan of Reorganization as filed
proposes that shareholders will not receive any property under the Plan. The
following is a summary of the outstanding preferred and common stock of the
Company at October 31, 2000 and the principal terms of such shares.

Mandatorily redeemable preferred stock at October 31, 2000 consisted of the
following:

                                                                  Carrying Value
                                                                  --------------
12% Series A senior exchangeable preferred stock, stated
value $1,000 per share, par value $.01 per share,120,000
shares authorized, 76,990 shares issued and outstanding              $   76,273

12 1/4% Series B junior exchangeable preferred stock, stated
value $1,000 per share, par value $.01 per share, 10,000 shares
authorized, 6,455 shares issued and outstanding                           6,513

12 1/2% Series C junior voting exchangeable preferred stock,
stated value $1,000 per share, par value $.01 per share, 60,000
shares authorized, 38,962 shares issued and outstanding                  39,323
                                                                     ----------
                                                                     $  122,109
                                                                     ==========

Series A Senior Preferred Stock

The Series A Senior Preferred Stock is nonvoting and ranks senior to all classes
of common stock and to each other series of preferred stock. The Series A Senior
Preferred Stock shareholders are entitled to receive cumulative dividends at an
annual rate of 12% of the liquidation preference value, payable semi-annually in
arrears. Dividends may be paid, at Holdings' option, on any dividend date prior
to April 1, 2003, either in cash or additional shares of Series A Senior
Preferred Stock. Cash will be paid in lieu of fractional shares. After April 1,
2003, dividends will be payable in cash.

On or after April 1, 2003, the Series A Senior Preferred Stock may be redeemed,
in whole or in part, at the option of Holdings at the following redemption
prices, plus an amount in cash equal to all accumulated and unpaid dividends:

Year Beginning April 1,                                           Percentage
-----------------------                                           ----------

2003                                                               106.000%
2004                                                               104.000%
2005                                                               102.000%
2006 and thereafter                                                100.000%

                                       58
<PAGE>

Notwithstanding the foregoing, Holdings may redeem in the aggregate all, but not
less than all, of the Series A Senior Preferred Stock then outstanding, at any
time prior to April 1, 2001, at a redemption price equal to 112.000% of the then
effective liquidation preference thereof, plus an amount in cash equal to all
accumulated and unpaid dividends out of the net proceeds of a public offering of
shares of common stock, provided that redemption occurs within 90 days following
the closing of any such public offering. On April 1, 2009, the Series A Senior
Preferred Stock will be subject to mandatory redemption at a price equal to 100%
of the liquidation preference thereof, plus all accumulated and unpaid dividends
to the date of redemption, payable in cash. Dividends in kind declared and
accumulated were both $8,249 at October 31, 2000.

Subject to certain conditions, the Series A Senior Preferred Stock will be
exchangeable, in whole but not in part, at the option of Holdings, on any
dividend payment date, for Holdings' 12% Exchange Debentures due 2009 (the
"Exchange Debentures"). Interest on the Exchange Debentures will be payable at a
rate of 12% per annum and will accrue from the date of issuance thereof.
Interest on the Exchange Debentures will be payable semi-annually in cash or, at
the option of Holdings, on or prior to April 1, 2003, in additional Exchange
Debentures, in arrears on each April 1 and October 1, commencing on the first
such date after the exchange of the Series A Senior Preferred Stock for Exchange
Debentures. The Exchange Debentures mature on April 1, 2009. The Exchange
Debentures will be redeemable, at the option of Holdings, in whole or in part,
on or after April 1, 2003, at applicable redemption prices, plus accrued and
unpaid interest to the date of redemption.

Series B Junior Preferred Stock

The Series B Junior Preferred Stock was issued to HarnCo in connection with the
Recapitalization. The Series B Junior Preferred Stock is generally nonvoting and
ranks junior to the Series A Senior Preferred Stock and senior to the Series C
Junior Voting Preferred Stock discussed below as well as any class of common
stock. Dividends on the Series B Junior Preferred Stock are cumulative from
March 30, 1998, at an annual rate of 12 1/4%, to be paid semi-annually in
arrears on each April 1 and October 1, commencing October 1, 1998. Prior to
April 1, 2003, dividends are payable, at Holdings' option, either in cash or in
additional shares of Series B Junior Preferred Stock. After that date, dividends
will be payable in cash.

On or after April 1, 2003, the Series B Junior Preferred Stock may be redeemed,
in whole or in part, at the option of Holdings at the applicable redemption
price together with an amount in cash equal to all accumulated and unpaid
dividends. In addition, Holdings, at its option, may redeem all, but not less
than all, of the Series B Junior Preferred Stock then outstanding, at any time
prior to April 1, 2001, at a redemption price equal to 112.250% of the then
effective liquidation preference thereof, plus an amount in cash equal to all
accumulated and unpaid dividends out of the net proceeds of a public offering of
shares of common stock, provided that redemption occurs within 90 days following
the closing of any such public offering. On April 1, 2010, Holdings will be
required to redeem in cash all of the Series B Junior Preferred Stock
outstanding at a redemption price equal to 100% of the liquidation preference
thereof, plus all accumulated and unpaid dividends to the date of redemption.
Dividends in kind declared and accumulated were both $705 at October 31, 2000.

Subject to certain conditions, the outstanding shares of Series B Junior
Preferred Stock are exchangeable, in whole but not in part, at the option of
Holdings, at any time on any dividend payment date for Holdings' 12 1/4%
Exchange Debentures due 2010.

Series C Junior Voting Preferred Stock

The Series C Junior Voting Preferred Stock was acquired by MHE Investments in
connection with the Recapitalization. Each share of Series C Junior Voting
Preferred Stock has voting rights of 0.314 votes per share. The Series C Junior
Voting Preferred Stock ranks junior to the Series A Senior Preferred Stock and
Series B Junior Preferred Stock and senior to any class of common stock.
Dividends on the Series C Junior Voting Preferred Stock are cumulative from
March 30, 1998, at an annual rate of 12 1/2%, to be paid semi-annually in
arrears on each April 1 and October 1, commencing October 1, 1998. Prior to
April 1, 2003, dividends are payable, at Holdings' option, either in cash or in
additional shares of Series C Junior Voting Preferred Stock. Thereafter,
dividends will be payable in cash.

On or after April 1, 2003, the Series C Junior Voting Preferred Stock may be
redeemed, in whole or in part, at the option of Holdings at the applicable
redemption price together with an amount in cash equal to all accumulated and
unpaid dividends. In addition, Holdings, at its option, may redeem all, but not
less than all, of the Series C Junior

                                       59
<PAGE>

Voting Preferred Stock then outstanding, at any time prior to April 1, 2001, at
a redemption price equal to 112.500% of the then effective liquidation
preference thereof, plus an amount in cash equal to all accumulated and unpaid
dividends out of the net proceeds of a public offering of shares of common
stock, provided that redemption occurs within 90 days following the closing of
any such public offering. On April 1, 2010, Holdings will be required to redeem
in cash all of the Series C Junior Voting Preferred Stock outstanding at a
redemption price equal to 100% of the liquidation preference thereof, plus all
accumulated and unpaid dividends to the date of redemption. Dividends in kind
declared and accumulated were both $4,329 at October 31, 2000.

Subject to certain conditions, the outstanding shares of Series C Junior Voting
Preferred Stock are exchangeable, in whole but not in part, at the option of
Holdings at any time on any dividend payment date for Holdings' 12 1/2% Exchange
Debentures due 2010.

                                       60
<PAGE>

Common Stock

Common stock consisted of the following at October 31, 2000:

                                                                  Par Value
MMH Holdings, Inc.:

    Nonvoting common stock, $.01 par  value,
    100,000 shares authorized, 4,350 shares issued
    and outstanding                                                  $  -

    Voting common stock, $.01 par value, 900,000
    shares authorized, 10,169 shares issued and
    outstanding                                                         -

Morris Material Handling, Inc.

    Common stock, $.01 par value, 1,000 shares
    authorized, 100 shares issued and outstanding                       -

MMH Holdings, Inc. holds all of the outstanding common stock of Morris Material
Handling, Inc.

                                       61

<PAGE>

Note 14 - Income Taxes

The components of income/(loss) of the Company's domestic and foreign operations
for the years ended October 31 were as follows:

                                             2000          1999          1998
                                          --------      --------      --------
Domestic                                  $(20,423)     $(17,419)     $  8,774
Foreign                                    (33,321)       (9,163)          (75)
                                          --------      --------      --------
                                          $(53,744)     $(26,582)     $  8,699
                                          ========      ========      ========

The provision for income taxes included in the Statements of Income and
Comprehensive Income for the years ended October 31 consisted of the following:

                                             2000          1999          1998
                                          --------      --------      --------
Current provision
      Federal and state                   $     69      $    373      $  1,883
      Foreign                                3,156         1,769         2,225
                                          --------      --------      --------
Total current                                3,225         2,142         4,108
                                          --------      --------      --------
Deferred provision
      Federal and state                          -        71,455         1,804
      Foreign                                    -        (1,917)       (1,477)
                                          --------      --------      --------
Total deferred                                   -        69,538           327
                                          --------      --------      --------
Provision for income taxes                $  3,225      $ 71,680      $  4,435
                                          ========      ========      ========

The difference between the U.S. federal statutory tax rate and the effective tax
rate for the years ended October 31 are as follows:

                                             2000          1999          1998
                                          --------      --------      --------
Federal statutory rate                        35.0%         34.0%         34.0%
Divestiture bonuses                              -             -           4.7
Foreign taxes, net of
      federal benefit                         (3.8)         (0.3)          3.2
State taxes, net of
      federal benefit                         (0.1)         (0.1)          1.9
Valuation allowance adjustment               (35.6)       (302.5)          7.6
Other - net                                   (1.3)         (0.7)         (0.5)
                                          --------      --------      --------
                                              (5.8)%      (269.6)%        50.9%
                                          ========      ========      ========

Foreign income taxes paid were $368, $2,972 and $1,209 in 2000, 1999 and 1998,
respectively.

Temporary differences and carryforwards which gave rise to deferred tax assets
and liabilities at October 31 were as follows:

                                                        2000             1999
                                                     ---------        ---------
Accrued expenses and reserves                        $   4,343        $   3,578
Inventories                                              1,829            4,306
Fixed assets                                             5,032            5,786
Intangibles                                             61,831           70,529
U.S. federal and state tax loss carryforwards           46,232           15,137
Prepaid pension asset                                   (1,215)          (1,170)
Other, net                                                   -            1,170
                                                     ---------        ---------
                                                       118,052           99,336
Valuation allowance                                   (118,052)         (99,336)
                                                     ---------        ---------
                                                     $       -        $       -
                                                     =========        =========

                                       62
<PAGE>

The deferred income tax accounts reflect the impact of temporary differences
between the basis of assets and liabilities for financial reporting purposes and
their related basis as measured by income tax regulations. For income tax
purposes, Holdings and MMH were deemed to have acquired the assets of the MHE
Business pursuant to Internal Revenue Code Section 338(h)(10). Accordingly, this
transaction increased the tax basis of certain assets and created tax-deductible
goodwill, and resulted in significant book/tax basis differences. Substantially
all of the additional deferred taxes recorded resulted from this goodwill
created for tax purposes. A valuation allowance was recorded to reflect the
estimated amount of deferred tax assets which may not be realized due primarily
to the possible limitation on the future use of foreign tax credits. The
resulting net adjustment to deferred income taxes of approximately $71 million
has been recorded as an adjustment to shareholders' equity for the year ended
October 31, 1998.

As a result of the Section 338(h)(10) election made in connection with the
Recapitalization, all historical earnings and profits were taxed. Accordingly,
any dividends remitted from pre-closing retained earnings of the Company's
foreign subsidiaries would be treated as previously-taxed and subject only to
local withholding taxes, for which the Company may claim a foreign tax credit.

During fiscal 1999, the Company increased its deferred tax valuation allowance
to reduce its net deferred tax assets to zero. This change in estimate reflected
primarily the significant shortfall in actual fiscal 1999 operating results
compared with estimates developed during the year and an increase in the
estimated pretax loss for fiscal 2000. In addition, the Company has reported
cumulative pretax losses since the March 30, 1998 recapitalization. Accordingly,
based upon this negative evidence, management concluded that the realization of
recorded U.S. deferred tax assets could not be supported as more likely than not
of occurrence in accordance with SFAS 109. At October 31, 2000, the Company has
approximately $121 million and $100 million of federal and state net operating
loss carryforwards, respectively, which expire at various future dates. These
carryforwards may be reduced upon emergence from bankruptcy due to the rules and
regulations in the Internal Revenue Code. Because the Company's proposed plan of
reorganization provides for certain substantial changes in the Company's
ownership, there will be annual limitations on the amount of the federal
carryforwards which the Company may be able to utilize on its income tax
returns. This annual limitation is an amount equal to the value of the stock of
the Company immediately before the ownership change adjusted to reflect the
increase in value of the Company, resulting from the cancellation of creditors'
claims, multiplied by a federally mandated long-term tax exempt rate.

The Company believes that realization of net operating loss and tax credit
benefits in the near term is unlikely. If the Company's proposed plan of
reorganization is confirmed, it will result in a significantly modified capital
structure and SOP 90-7 will require the Company to apply "fresh start"
accounting. Under fresh start accounting, realization of net operating loss and
tax credit benefits will first reduce any reorganization goodwill until
exhausted and thereafter be reported as additional paid in capital.

Note 15 - Commitments and Contingencies

Contingent liabilities as of the Chapter 11 filing date are subject to
compromise. At October 31, 2000, the Company was contingently liable to banks,
financial institutions and others for approximately $14.7 million for
outstanding letters of credit, bank guarantees and surety bonds securing
performance of sales contracts and other guarantees in the ordinary course of
business. Of the $14.7 million, approximately $8.5 million was issued at the
request of Debtor entities prior to the bankruptcy filing. Included in the $14.7
million outstanding as of October 31, 2000 were $3.4 million issued under the
DIP Facility.

The Debtors have not completed their review of prepetition executory contracts
to determine whether to assume or reject such contracts. Rejection of executory
contracts could result in additional prepetition claims against Debtors.
Accordingly, it is not possible to estimate the amount of additional prepetition
claims that could arise out of the rejection of executory contracts.

To secure the performance of sales contracts related to MMH operations, MMH was
contingently liable to financial institutions and others for the following at
October 31, 2000: (i) $8.7 million of outstanding letters of credit and surety
bonds under the Prepetition Credit Facility, (ii) $3.1 million under a surety
arrangement for outstanding surety bonds and (iii) $2.9 million of surety bonds
with other institutions. Prior to the Recapitalization Closing, HII and its
affiliates ("HII Group") provided credit support for the MHE Business. As part
of the Recapitalization, HII agreed to maintain in place credit support
(including letters of credit and surety bonds) in existence at the

                                       63
<PAGE>

Recapitalization Closing and the Company agreed to reimburse HII for any
payments made by the HII Group with respect to such credit support. At October
31, 2000, approximately $9.3 million of HII Group letters of credit and surety
bonds remained outstanding.

As of the Recapitalization Closing, HarnCo retained certain income and other tax
liabilities relating to the MHE Business, all environmental liabilities relating
to previously shared facilities, any liabilities for which HarnCo or its
affiliates have been named as potentially responsible parties with respect to
Superfund sites, and any liabilities arising in connection with claims alleging
exposure to asbestos (to the extent there is insurance coverage therefor) in
connection with the MHE Business prior to the Recapitalization Closing.
Additionally, HarnCo retained all liability for medical and disability benefit
claims for current United States employees made prior to the Recapitalization
Closing and all claims with respect to any of the HII benefit plans for former
United States employees.

HarnCo has been and is currently a defendant to a number of asbestos related
lawsuits and will likely be named in future such actions. Most suits involve
multiple defendants including asbestos manufacturers. MMH has agreed to
indemnify HarnCo and its affiliates with respect to any liabilities in excess of
insurance arising in connection with past and future asbestos litigation
relating to the MHE Business. HII's insurance program included coverage for
asbestos related claim activity through 1986, when coverage for asbestos related
claims ceased to be available. HII's insurer has provided first dollar coverage
for policy periods through 1976. During the 1977 to 1985 policy periods, HII had
a variety of policies, with retention levels ranging from $100,000 to $15.0
million and total coverage limits ranging from $12.5 million to $50.0 million.
To date, HII's insurer has paid all liabilities relating to asbestos claims
(which amounts have not been material to the MHE Business) but there can be no
assurance such insurers will continue to do so in the future or that there will
be insurance coverage for such claims. In addition, policy primary aggregate
levels were exhausted in certain years, which would require the participation of
excess insurers for future claim activity. Given its experience to date with
such claims, the Company believes that its exposure to asbestos related claims
is not material, but there can be no assurance that such liability will not in
fact be material.

All of the Company's agreements and arrangements with HII and its affiliates
(including those referred to above and those relating to the provision of
services and materials by HII and its affiliates to the Company) could be
materially adversely affected by the fact that on June 7, 1999 (the "Petition
Date"), HII and certain of its United States affiliates (including HarnCo) filed
voluntary petitions for relief under Chapter 11 of the United States Bankruptcy
Code (the "Bankruptcy Code") in the United States Bankruptcy Court for the
District of Delaware (the "HII Bankruptcy"). Certain provisions of the
Bankruptcy Code allow a debtor to avoid, delay and/or reduce its contractual and
other obligations to third parties. There can be no assurance that HII and its
affiliates will not attempt to utilize such provisions to cease performance
under their agreements with the Company. The inability of the Company to receive
the benefits of one or more of these agreements or the termination of ongoing
arrangements between the Company and affiliates of HII could materially
adversely affect the Company's operations and financial performance. In the
event that any of the liabilities retained by HII and its affiliates remain
unsatisfied as of the Petition Date, the Company's right to indemnification for
any such amounts it has paid on behalf of HII and its affiliates may also be
avoided, delayed or reduced.

Each of HII and certain of its affiliates on the one hand, and the Company and
certain of its affiliates, on the other hand, have receivables and payables to
the other which may be affected by the HII Bankruptcy.

On October 28, 1996, a strong windstorm caused significant damage to the Belview
container-handling terminal at the Port of Waterford in Ireland. One
container-handling crane sold by the Company's United Kingdom subsidiary was
destroyed and another was seriously damaged. The two cranes were sold to the
Waterford Harbour Commissioners in 1992 and commissioned for use in 1993. On
October 19, 1998, the Waterford Harbour Commissioners wrote to the Company and
provided a notice of arbitration, asserting breach of contract, negligence and
breach of duty against the Company's United Kingdom subsidiary in connection
with the destroyed and damaged cranes. The Waterford Harbour Commissioners
claimed direct damages of IR(pound)8.5 million ($9.1 million based on exchange
rates at October 31, 2000) and consequential damages of IR(pound)4.9 million
($5.3 million based on exchange rates at October 31, 2000). The port operator,
Bell Lines, Limited, filed a similar claim against the Company's United Kingdom
subsidiary in October 1999, asserting unspecified damages. Management intends to
vigorously defend both matters. The Company's insurance carriers have agreed to
provide defense coverage for the accident and limited indemnification if the
Company is unsuccessful in defending the claims. The Company and its United
Kingdom subsidiary have initiated litigation in the Milwaukee County Circuit
Court against Ace American Insurance Company, AON Risk Services, Inc. of
Illinois, and National Union Fire Insurance Company of Pittsburgh, Pennsylvania,
seeking additional insurance coverage for indemnification obligations. While the

                                       64
<PAGE>

Company believes that it will obtain a favorable resolution (either by
successfully defending the claim or by obtaining insurance coverage thereon), no
assurances can be made as to the final outcome of the claims. If the Company's
United Kingdom subsidiary is found liable for the claims and is unable to obtain
insurance coverage therefore, there could be a material adverse effect on the
Company's operations and financial performance. Based upon the current status of
this matter, no related liability has been accrued at October 31, 2000.

During fiscal year 2000, an environmental assessment was conducted at the
Company's Loughborough, England facility which included soil and groundwater
testing throughout the property. Results of this study warranted notification to
the Environmental Agency in West Bridgeford, Nottingham. At this time it appears
that certain "hot spots" of hydrocarbon contamination on the property will
require soil removal and remediation for which costs may be material. Also,
based on the test results, there are other portions of the property which, if
developed, may require soil removal and remediation relative to heavy metals
which costs may also be material. It is uncertain whether further testing will
be required or what future actions may be warranted and whether it will have an
adverse impact on the Company's financial performance.

In connection with the sale of substantially all assets of the Company's United
Kingdom Group in March 2001, (see also Note 24, Subsequent Events) the Company's
U.K. operating subsidiaries were placed in administrative receivership as a
result of their inability to satisfy claims made by creditors pursuant to
guarantees made by such subsidiaries under the Prepetition Credit Facility. It
is not yet certain as to the impact this will have on the litigation discussed
above; however, these subsidiaries will not have sufficient assets to settle all
third party liabilities.

The Company is a party to various other litigation matters, including product
liability and other claims, which are normal in the course of its operations.
Also, as a normal part of its operations, the Company undertakes certain
contractual obligations and warranties in connection with the sale of products
or services. Although the outcome of these matters cannot be predicted with
certainty, management believes that the resolution of such matters will not have
a material adverse effect on the consolidated results of operations, financial
position or cash flows of the Company. As a result of the Company's bankruptcy
filing described in Note 1, Reorganization under Chapter 11, litigation against
the Company and its subsidiaries that filed bankruptcy is stayed.

Under the terms of the Recapitalization Agreement, HarnCo retained all liability
for the only two open environmental clean-up claims brought against HarnCo in
the Milwaukee, Wisconsin area. The Company and its management are not aware of
any other material environmental clean-up claim which is pending or is
threatened against the Company, but there can be no assurance that any such
claim will not be asserted against the Company in the future. In addition, as
noted above, the Company's right to indemnification against HarnCo for such
liabilities may be avoided, delayed or reduced as a result of HarnCo's filing
for bankruptcy protection.

Note 16 - Employee Benefit Plans

The Company adopted SFAS No. 132, "Employer's Disclosures about Pensions and
Other Postretirement Benefits," in 1999. SFAS No. 132 revises disclosure
requirements for pension and other postretirement benefit plans for all years
presented but does not change the measurement or recognition of those plans.

HII Plans

Prior to the Recapitalization, the Company was a participant in HII and
affiliates' domestic defined benefit pension plans. Benefits from these plans
were based on factors which included various combinations of service, employee
compensation during the last years of employment and the recipient's social
security benefit. Pension expense was allocated annually based upon headcount.
The Company's pension expense for these domestic defined benefit plans was $0,
$0, and $584 in 2000, 1999 and 1998, respectively.

MMH Plans

Effective April 1, 1998, the Company established a retirement savings plan under
Section 401(k) of the Internal Revenue Code (the "Savings Plan"). The Savings
Plan covers all non-bargaining unit employees in the United States from their
first day of service. Employees can contribute from 1% to 10% of their eligible
pre-tax pay. The Company matches 100% of contributions up to 3% of an employee's
eligible pay and 50% of the next 2% of an employee's eligible pay. Also, once an
employee turns 35, the Company contributes an additional percentage of the
employee's pay based on his/her age. In addition, the Company makes a special
contribution for long-service and older employees who were participants in the
former HII pension plan in order to make up for future years of
non-participation in that plan. If an employee's age plus years of service add
up to 65 or more, the Company contributes an additional percentage of the
employee's pay to the Savings Plan. All Company contributions are 100% vested
upon contribution. An employee must be active on December 31 of the Savings Plan
year in order to qualify for annual Company contributions. The Company
recognized expense of $3,755, $2,331 and $890 during 2000, 1999 and 1998,
respectively, related to the Savings Plan.

The Company also continued the HII profit sharing plan as a component of its new
retirement savings plan. The profit sharing plan covers substantially all
domestic employees, except employees covered by collective bargaining

                                       65
<PAGE>

agreements and employees of affiliates with separate defined contribution plans.
Contributions to this plan in 1998 were based on the Company's "economic value
added" performance. Effective November 1, 1998, contributions were based on
earnings of the Company before interest and taxes. The Company's profit sharing
expense for this plan was $0, $0 and $137 in 2000, 1999 and 1998, respectively.

In connection with the Recapitalization, the Company had committed to establish
a new equity incentive plan to attract and retain key personnel, including
senior management, and to enhance their interest in the Company's continued
success. Holdings reserved 1,186.0849 shares of Holdings nonvoting common stock
and 4,328.25 shares of Holdings Series C Junior Voting Preferred Stock with a
value of $8.1 million on March 30, 1998 for this plan (such shares to be
denominated in 8,100 units consisting of 0.1464 shares of Holdings nonvoting
common stock and 0.5344 shares of Holdings Series C Junior Voting Preferred
Stock (the "Equity Units")). The Company had committed to make an initial option
grant to each member of the Company's senior management on March 30, 1998 under
such executive's employment agreement. It is expected that a new equity
incentive plan will be established in connection with the Plan of
Reorganization.

Pension expense, as determined by the Company's actuaries, for its employee
benefit plan in the United Kingdom for the three years ended October 31 included
the components shown below. Pension expense for the Company's other foreign
employee benefit plans is not significant.

<TABLE>
<CAPTION>
                                                   2000       1999       1998
                                                  ------     ------     ------
<S>                                               <C>        <C>        <C>
Service cost - benefits earned during the year    $  857     $  914     $  894
Interest cost on projected benefit obligation      1,652      1,634      1,665
Actual gain on plan assets                        (3,451)    (4,062)    (1,408)
Net amortization and deferral                      1,584      2,552       (619)
Curtailment gain                                     (99)         -          -
                                                  ------     ------     ------
                                                  $  543     $1,038     $  532
                                                  ======     ======     ======
</TABLE>

The discount rate used for this foreign plan was 6.0% in 2000, 1999 and 1998.
The assumed rate of increase in future compensation of employees was 4.0% in
2000, 1999 and 1998. The expected long-term rate of return on assets was 8.0%,
8.5% and 8.5% in 2000, 1999 and 1998.

The following table sets forth the funded status of the United Kingdom plan at
October 31:

<TABLE>
<CAPTION>
                                                          2000          1999
                                                         -------       -------
<S>                                                      <C>           <C>
Change in Plan Assets:
      Fair value of plan assets at beginning of year     $27,949       $23,851
      Actual return on plan assets                         3,451         4,062
      Employer contributions                                 854           691
      Plan participants' contributions                       182           195
      Currency translation                                (3,932)         (355)
      Benefits paid                                         (513)         (495)
                                                         -------       -------
Fair value of plan assets at end of year                 $27,991       $27,949
                                                         =======       =======
</TABLE>

<TABLE>
<CAPTION>
Change in Benefit Obligation:
<S>                                                      <C>           <C>
      Benefit obligation at beginning of year            $29,560       $27,739
      Service cost                                           857           914
      Interest cost                                        1,652         1,634
      Plan participants' contributions                       182           195
      Actuarial (gain)/loss                               (3,238)          (24)
      Curtailments                                           (99)            -
      Currency translation                                (3,799)         (403)
      Benefits paid                                         (513)         (495)
                                                         -------       -------
Benefit obligation at end of year                        $24,602       $29,560
                                                         =======       =======
</TABLE>

                                       66
<PAGE>

Actuarial present value of:
      Vested benefits                                    $21,171       $25,713
                                                         -------       -------
      Accumulated benefits                                21,171        25,713
                                                         -------       -------
      Projected benefits                                  24,602        29,560
Net assets available for benefits                         27,991        27,949
                                                         -------       -------
Plan assets greater than (less than) projected benefits    3,389        (1,611)
Unrecognized net loss                                        307         5,729
                                                         -------       -------
Prepaid pension asset                                    $ 3,696       $ 4,118
                                                         =======       =======

Postretirement Benefits Other Than Pensions

HII generally provided certain health care and life insurance benefits under
various plans for U.S. employees who retired after attaining early retirement
eligibility, subject to plan amendments. In 1993, the HII Board of Directors
approved a general approach that would culminate in the elimination of
contributions towards postretirement health care benefits. Increases in costs
were capped for certain plans beginning in 1994 extending through 1998 and
contributions were eliminated on September 1, 1998 for most employee groups. As
such, negative plan amendments made subsequent to November 1, 1993 were
amortized from the date of the amendment to September 1, 1998. Postretirement
benefit income was allocated each year based upon headcount. The Company's
postretirement benefit income was $684 for the five months ended March 30, 1998.
Following the Recapitalization, the Company has no liability to previously
retired employees for such benefits.

As of October 31, 1998, the Company no longer offered any postretirement health
care or life insurance benefits.

Note 17 - Operating Leases

The Company leases certain plant, office and warehouse space as well as
machinery, vehicles, data processing and other equipment. Certain of these
leases have renewal options at reduced rates and provisions requiring the
Company to pay maintenance, property taxes and insurance. Generally, all rental
payments are fixed.

Total rental expense under operating leases, excluding maintenance, taxes and
insurance, was $3,497, $4,375 and $4,465 in 2000, 1999, and 1998, respectively.

At October 31, 2000, the future payments for all operating leases with remaining
lease terms in excess of one year, and excluding maintenance, taxes and
insurance, were as follows:

           2001                                        $ 2,607
           2002                                          1,664
           2003                                          1,092
           2004                                            474
           2005 and thereafter                             644

Note 18 - Segment Information

The Company adopted SFAS No. 131, "Disclosures about Segments of an Enterprise
and Related Information" during the fiscal year ended October 31, 1999. The
prior year's third quarter segment information has been restated to conform to
the current year presentation. Pursuant to SFAS No. 131, the Company has
identified its reportable segments based on the Company's method of internal
reporting which is utilized by its chief operating decision-maker, the Chief
Executive Officer. The reportable operating segments are as follows:

     o   Equipment and Aftermarket - Americas
     o   Equipment and Aftermarket - Other
     o   Distribution and Service - North America
     o   Engineered Products and Automation - Europe
     o   Equipment and Aftermarket - Europe
     o   Equipment and Aftermarket - Asia Pacific
     o   Equipment and Aftermarket - South Africa

                                       67
<PAGE>

Each segment has a manager who is accountable to and maintains regular contact
with the Chief Executive Officer and Chief Financial Officer. The Company
evaluates performance of its segments based on operating income, determined on a
basis consistent with amounts reported in the consolidated financial statements.

The Equipment and Aftermarket - Americas segment designs and manufactures a
comprehensive line of engineered and standard overhead cranes, hoists and other
component products and repair parts at the Company's facilities located in Oak
Creek and Windsor, Wisconsin. This segment also modernizes products manufactured
by both the Company and its competitors. This segment is the main manufacturer
of the replacement parts sold by the Company's Distribution and Service - North
America segment as well as the manufacturer of component products used in that
segment's standard cranes. Repair parts and component products are purchased by
the Distribution and Service - North America segment at list price less standard
intercompany discounts.

The Equipment and Aftermarket - Other segment is the Company's brake
manufacturing operation in Canada. Approximately 21% of this segment's sales are
to other Company segments. The Company sold this operation in December 1999.

The Distribution and Service - North America segment is the network of
Company-owned locations in key industrial markets in North America. The network
is the platform for the Company's sales activities, serving as distribution
centers for its original equipment and replacement parts as well as the focal
point for service activities. Some of the distribution centers also fabricate
and assemble standard cranes using components manufactured by the Equipment and
Aftermarket - Americas and the Equipment and Aftermarket - Europe segments.

The Engineered Products and Automation - Europe segment focuses on the
manufacture of highly engineered ship-to-shore and gantry cranes for use in
container handling and automated warehouse units at the Company's facility
located in Loughborough, England, and provides software support for the
automated warehouse units installed at customer locations.

The Equipment and Aftermarket - Europe segment consists of standard crane and
hoist manufacturing in the Loughborough, England facility as well as the network
of Company-owned distribution centers in key industrial markets in the United
Kingdom. The Equipment and Aftermarket - Europe segment provides services for
the Engineered Products and Automation segment at prices consistent with those
charged to external customers. In addition, this segment distributes hoists
through Distribution and Service - North America and Equipment and Aftermarket -
Asia Pacific and South Africa at prices consistent with those charged to
external customers.

The Equipment and Aftermarket - Asia Pacific and South Africa segments operate
in a manner similar to the Distribution and Service - North America segment. The
Asia Pacific segment includes operations in Australia, Singapore, Thailand and
Saudi Arabia.

Within North America, certain centrally incurred costs such as insurance costs
and computer charges are allocated to operating segments based upon various
methods of allocation. In the United Kingdom, utilities, property taxes and
insurance costs are allocated to the segments based upon varying allocation
methods. Domestically, costs related to centralized accounting, marketing, human
resources, and IT functions are not allocated. Internationally, these costs, as
well as amortization of goodwill, are allocated amongst individual segments in
the year ended October 31, 2000, however, in the same period in fiscal year
1999, no allocation was done.

As discussed above, the Company assessed the fair value of its non-North
American businesses and, as a result, wrote-off the remaining unamortized
goodwill balances related to these operations in the third quarter. The total
write-off of approximately $16.0 million was allocated to the applicable
segments as follows: $10.0 million to Eliminations and Other - Europe, $0.8
million to Equipment & Aftermarket - South Africa and $5.2 million to Equipment
& Aftermarket - Asia Pacific.

                                       68
<PAGE>

                               MMH HOLDINGS, INC.
                         MORRIS MATERIAL HANDLING, INC.
                 (Debtors - in - Possession as of May 17, 2000)
                               Operating Segments
                       For the Year Ended October 31, 2000


<TABLE>
<CAPTION>
                                          ---------------------------------
                                                       SALES
                                          ---------------------------------   ------------------------------------------------------
                                                                              Operating
                                                                               Income       Depreciation &  Long-Lived     Capital
                                          External  Intercompany   Total       (Loss)        Amortization     Assets    Expenditures
                                                                              --------       ------------     ------    ------------
<S>                                       <C>         <C>          <C>        <C>               <C>          <C>            <C>
       Equipment & Aftermarket - Americas $ 26,253    $  53,881    $ 80,134   $   (517)         $3,583
          Equipment & Aftermarket - Other      423          111         534         (4)              -
                                          --------    ---------    --------   --------          ------
            Total Equipment & Aftermarket   26,676       53,992      80,668       (521)          3,583       $ 14,045       $1,271
   Distribution & Service - North America  181,809        1,007     182,816      9,091           2,026         34,652          809
                     Eliminations & Other        -      (54,999)    (54,999)       179               -
                                          --------    ---------    --------   --------          ------
                           Total Americas  208,485            -     208,485      8,749           5,609

Engineered Products & Automation - Europe    7,531           39       7,570     (1,520)              -
         Equipment & Aftermarket - Europe   31,418        4,949      36,367     (1,785)              -
                     Eliminations & Other        -         (767)       (767)   (15,678)         13,195
                                          --------    ---------    --------   --------          ------
                             Total Europe   38,949        4,221      43,170    (18,983)         13,195
   Equipment & Aftermarket - South Africa    8,931            -       8,931     (1,603)            978
   Equipment & Aftermarket - Asia Pacific   11,709            -      11,709     (6,803)          5,483
                     Eliminations & Other        -       (1,195)     (1,195)         -               -
                                          --------    ---------    --------   --------          ------
                      Total International   59,589        3,026      62,615    (27,389)         19,656         12,377          589
                                          --------    ---------    --------   --------          ------
               Corporate and Eliminations        -       (3,026)     (3,026)   (18,299)             -
                                          --------    ---------    --------   --------          ------       --------       ------
                             Consolidated $268,074    $       -    $268,074   $(36,939)        $25,265       $ 61,074       $2,669
                                          ========    =========    ========   ========         =======       ========       ======
</TABLE>

                                       69
<PAGE>

                               MMH HOLDINGS, INC.
                         MORRIS MATERIAL HANDLING, INC.
                 (Debtors - in - Possession As Of May 17, 2000)
                               Operating Segments
                       For the Year Ended October 31, 1999

<TABLE>
<CAPTION>
                                          ----------------------------------------------
                                                              SALES
                                          ----------------------------------------------  ----------------------------------------
                                                                               Operating
                                                                                Income    Depreciation &  Long-Lived    Capital
                                             External  Intercompany   Total     (Loss)     Amortization     Assets    Expenditures
                                             --------  ------------   -----     ------     ------------     ------    ------------
<S>                                          <C>         <C>        <C>        <C>            <C>          <C>           <C>
       Equipment & Aftermarket - Americas    $ 50,602    $ 52,370   $102,972   $  7,226       $3,163
          Equipment & Aftermarket - Other       3,809       1,934      5,743      1,417           67
                                             --------    --------   --------   --------       ------
            Total Equipment & Aftermarket      54,411      54,304    108,715      8,643        3,230       $17,312       $5,064
   Distribution & Service - North America     166,929       4,130    171,059     10,291        1,940        36,783          990
                     Eliminations & Other           -     (58,434)   (58,434)        76            -
                                             --------    --------   --------   --------       ------
                           Total Americas     221,340           -    221,340     19,010        5,170
                                             --------    --------   --------   --------       ------

Engineered Products & Automation - Europe      11,568         507     12,075     (1,056)         124
         Equipment & Aftermarket - Europe      35,521       6,446     41,967      1,803        1,137
                     Eliminations & Other           -      (1,869)    (1,869)    (4,418)         497
                                             --------    --------   --------   --------       ------
                             Total Europe      47,089       5,084     52,173     (3,671)       1,758

   Equipment & Aftermarket - South Africa      12,794         599     13,393       (913)         152
   Equipment & Aftermarket - Asia Pacific      12,972           -     12,972       (624)         349
                     Eliminations & Other           -      (1,431)    (1,431)      (722)         810
                                             --------    --------   --------   --------       ------
                      Total International      72,855       4,252     77,107     (5,930)       3,069
                                             --------    --------   --------   --------       ------
               Corporate and Eliminations           -      (4,252)    (4,252)    (9,635)           -        34,971        1,540
                                             --------    --------   --------   --------       ------       -------       ------

                             Consolidated    $294,195    $      -   $294,195   $  3,445       $8,239       $89,066       $7,954
                                             ========    ========   ========   ========       ======       =======       ======
</TABLE>

                                       70
<PAGE>

                               MMH HOLDINGS, INC.
                         MORRIS MATERIAL HANDLING, INC.
                 (Debtors - in - Possession as of May 17, 2000)
                               Operating Segments
                       For the Year Ended October 31, 1998

<TABLE>
<CAPTION>
                                           ---------------------------------------------
                                                               SALES
                                           ---------------------------------------------   ----------------------------------------
                                                                               Operating
                                                                                 Income    Depreciation &  Long-Lived     Capital
                                           External  Intercompany    Total       (Loss)     Amortization     Assets    Expenditures
                                           --------  ------------    -----       ------     ------------     ------    ------------
<S>                                        <C>        <C>         <C>           <C>           <C>           <C>          <C>
       Equipment & Aftermarket - Americas  $ 72,051   $ 52,114    $124,165      $ 18,886      $  2,598
          Equipment & Aftermarket - Other     4,410      1,796       6,206         1,688            57
                                           --------   --------    --------      --------      --------
            Total Equipment & Aftermarket    76,461     53,910     130,371        20,574         2,655      $ 15,071     $  3,820
   Distribution & Service - North America   159,187      2,297     161,484        14,160         1,716        32,132          423
                     Eliminations & Other         -    (56,207)    (56,207)         (268)            -
                                           --------   --------    --------      --------      --------
                           Total Americas   235,648          -     235,648        34,466         4,371
                                           --------   --------    --------      --------      --------

Engineered Products & Automation - Europe    14,608      3,412      18,020        (2,372)          330
         Equipment & Aftermarket - Europe    44,195     10,779      54,972         3,216           889
                     Eliminations & Other         -     (3,491)     (3,491)         (905)          469
                                           --------   --------    --------      --------      --------
                             Total Europe    58,803     10,698      69,501           (61)        1,688
   Equipment & Aftermarket - South Africa    16,342        930      17,272           687           182
   Equipment & Aftermarket - Asia Pacific     7,064          -       7,064          (483)          174
                     Eliminations & Other         -     (5,687)     (5,687)         (486)          408
                                           --------   --------    --------      --------      --------
                      Total International    82,209      5,941      88,150          (343)        2,452        35,635          965
                                           --------   --------    --------      --------      --------
               Corporate and Eliminations         -     (5,941)     (5,941)       (6,294)            -
                                           --------   --------    --------      --------      --------

                             Consolidated  $317,857   $      -    $317,857      $ 27,829      $  6,823      $ 82,838     $  5,208
                                           ========   ========    ========      ========      ========      ========     ========
</TABLE>


                                       71
<PAGE>

The following table provides information related to external customer sales and
long-lived assets by geographic area. Geographic sales are based on the country
in which the sales originate.

                                             2000
                              --------------------------------------
                              External Sales       Long-Lived Assets
                              --------------       -----------------

          United States          $174,736              $ 39,484
                 Canada            27,097                 7,806
         United Kingdom            38,949                 9,274
           South Africa             8,931                   359
              Australia             8,365                   872
                  Other             9,996                 3,279
                                 --------              --------
                                 $268,074              $ 61,074
                                 ========              ========

                                             1999
                              --------------------------------------
                              External Sales       Long-Lived Assets
                              --------------       -----------------

          United States          $187,067              $ 43,785
                 Canada            28,077                 9,231
         United Kingdom            47,089                24,791
           South Africa            12,794                 1,426
              Australia            10,292                 4,665
                  Other             8,876                 5,168
                                 --------              --------
                                 $294,195              $ 89,066
                                 ========              ========

                                             1998
                              --------------------------------------
                              External Sales       Long-Lived Assets
                              --------------       -----------------

          United States          $202,639              $ 37,360
                 Canada            26,034                 8,828
         United Kingdom            58,803                26,516
           South Africa            16,342                 1,577
              Australia             2,073                 4,267
                  Other            11,966                 4,290
                                 --------              --------
                                 $317,857              $ 82,838
                                 ========              ========

Information related to sales of products and services to external customers is
presented below:

                               --------     --------     --------
                                 2000         1999         1998
                               --------     --------     --------

               Machines         131,881      157,395      179,825
                  Parts          76,267       78,131       81,719
                Service          59,926       58,669       56,313
                               --------     --------     --------
                  Total        $268,074     $294,195     $317,857
                               ========     ========     ========

Note 19 - Related Party Transactions

HII and Affiliates

Previously (and until the Recapitalization Closing), HII and/or HarnCo performed
centrally a number of functions necessary for the operations of the Company.
Under a management services arrangement with HII, the Company was provided with
certain services, including, but not limited to, matters of organization and
administration, cash management, labor relations, employee benefits, public
relations, financial policies and practices, taxation and legal affairs
(intellectual property,

                                       72
<PAGE>

environmental, labor, securities and ERISA compliance, as well as assistance
with product liability cases). The annual fee charged the Company for these
services was based upon a pro rata share of corporate administration costs using
an allocation methodology based on consolidated worldwide sales. Such fees
totaled $1,155 in 1998.

Interest income/(expense) on receivables/(payables) with HII affiliates was
charged by/(to) the Company using interest rates tied to LIBOR, the 13-week
treasury bill rate or prime rate.

After the Recapitalization Closing, the Company continued to sell certain
products and services to HII affiliates at negotiated rates and performed
certain administrative functions for HarnCo in Mexico. Sales to HII affiliates
amounted to $1.0 million and $3.2 million in fiscal 1999 and 1998, respectively.
Sales to HII affiliates in fiscal year 2000 were nil.

In a number of instances, HII and/or HarnCo provided contracting credit support
in connection with the Company's business. Certain customers for large crane
supply contracts require the supplier to provide contracting credit support
and/or parent guarantees of performance. See Note 15. At October 31, 2000,
HarnCo continues to be shown as the guarantor on the Birmingham, Alabama
facility lease with the Industrial Revenue Board of Birmingham.

On June 7, 1999, (the "Petition Date") HII and certain of its United States
affiliates (including HarnCo) filed voluntary petitions for relief under Chapter
11 of the Bankruptcy Code in the United States Bankruptcy Court for the District
of Delaware. Certain provisions of the Bankruptcy Code allow a debtor to avoid,
delay and/or reduce its contractual and other obligations to third parties.
There can be no assurance that HII and its affiliates will not attempt to
utilize such provisions to cease performance under their agreements and
arrangements with the Company. The inability of the Company to receive the
benefits of one or more of these agreements or the termination of ongoing
arrangements between the Company and affiliates of HII (including those relating
to the provision of services and materials by HII and its affiliates to the
Company) could materially adversely affect the Company's operations and
financial performance. In the event that any of the liabilities retained by HII
and its affiliates in connection with the Recapitalization remain unsatisfied as
of the Petition Date, the Company's right to indemnification for any such
amounts it has paid on behalf of HII and its affiliates may also be avoided,
delayed or reduced. Each of HII and certain of its affiliates on the one hand,
and the Company and certain of its affiliates, on the other hand, have
receivables and payables to the other that may be affected by the HII
Bankruptcy. The Debtors and Harnischfeger continue to negotiate towards a
consensual resolution of the issues arising from and related to the
Recapitalization and have reached a settlement in principle, subject to
definitive documentation and Bankruptcy Court approval.

Transition Services Agreement - On March 30, 1998, the Company entered into a
Transition Services Agreement with HarnCo pursuant to which HarnCo and/or its
affiliates provide the Company and the Company's subsidiaries located in the
United States certain specified transition services for a set monthly price per
service, plus cost sharing in certain instances, for periods ranging up to three
years. These services had been provided historically, and for all of fiscal
1998, but were not covered by a written agreement until the date of the
Recapitalization. These services included financial support (including payroll,
accounts payable and some accounting), MIS support (including mainframe
applications, PC support, engineering applications, maintenance, shared products
and telephone system support), human resources support (including assistance in
union negotiations, processing support for workers' compensation claims,
screening and hiring of hourly employees and benefits administration), shared
space, warehouse services for repair parts at one of HarnCo's facilities until
July 1998, order processing, office space and lobby services at HarnCo's
offices, employee communications, use of corporate aircraft owned by HarnCo or
its affiliates, and all traffic functions and transportation of materials
between Milwaukee area operations. The Company was charged $2.1 million and $5.0
million for such services in fiscal 1999 and 1998, respectively. During fiscal
year 2000, the only service provided by HarnCo was MIS support for which the
Company was charged $0.3 million. These arrangements for shared facilities and
services, which are consistent with those which existed prior to the
Recapitalization, include the following:

1.   The Company and an HII affiliate shared a parts warehouse through June 1998
     for which the Company was charged approximately $976 in 1998.

2.   An HII affiliate provided support to the Company for accounting, credit,
     traffic and human resource services and charged approximately $194 and $335
     to the Company in 1999 and 1998, respectively. In addition, the Company
     leased office space from this affiliate through February 1999 at a cost of
     approximately $41 and $120 for 1999 and 1998, respectively.

3.   HarnCo provided certain products and services to the Company which
     management estimates amounted to approximately $0.8 million, $14.1 million
     and $12.4 million in fiscal 2000, 1999 and 1998, respectively. HarnCo
     manufactured electric motors, fabricated larger steel girders and did
     machining on certain cranes for the Company at cost or at cost plus a
     percentage. In addition, HII affiliates have acted as motor rewind
     subcontractors for the Company. It is contemplated that

                                       73
<PAGE>

     these transactions, none of which individually or in the aggregate are
     significant to the Company, will continue in the future.

4.   Until August 1999 when the Company replaced its shared business system, an
     HII affiliate provided information systems services to the Company and
     charged approximately $1,886 and $3,610 to the Company in 1999 and 1998,
     respectively.

Prior to the Recapitalization, the above-noted charges were negotiated by the
Company on an annual basis with HII or other affiliates. The Company considers
such costs, in the aggregate, to reflect arms-length terms and believes that in
the aggregate these products and services can be obtained on comparable terms
from third parties.

Component and Manufactured Products Supply Agreement - At the Recapitalization
Closing, the Company entered into a two year agreement with HarnCo pursuant to
which HarnCo was to sell, or have its affiliates sell, to the Company and to its
subsidiaries located in the United States, at cost, certain products, repair
parts and rebuilds as have been previously manufactured by HarnCo for the
Company. The price for these products was the fully absorbed standard cost for
normal production products and repair parts, and the fully absorbed job cost for
rebuilds and repairs.

Trademark License Agreement - In connection with the Recapitalization, MMH
entered into a trademark license agreement (the "Trademark License Agreement")
with an affiliate of HarnCo pursuant to which the Company was granted the right
to use the "P&H" trade name, trademark and service mark with respect to all MHE
Business products on a worldwide exclusive basis from March 30, 1998 until 15
years after the earlier to occur of a sale of Holdings to a third party or a
public offering of the common stock of Holdings, MMH or their parents or
successors (and for an additional seven years thereafter for aftermarket
products and services). The royalty fee for use of the trademark is equal to
0.75% of the aggregate net sales of the MHE Business for the ten year period
which commenced March 30, 1999. There will be no royalty fee for the remainder
of the term following such ten year period. The Company accrued $3.4 million of
expenses for royalty fees in the period from March 30, 1999 to October 31, 2000.
The Company has elected to defer the payments of the royalty fees for the
periods ended October 31, 1999 and 2000, which would otherwise be payable on
January 30, 2000 and 2001, respectively, pursuant to the terms of Trademark
License Agreement. The Trademark License Agreement provides that the annual
royalty fee may be deferred for up to two years if the Company does not meet
certain financial criteria. The Company can only defer up to two payments during
the term of the agreement. In addition, interest accrues at 12% per year on the
deferred fee payments. The Debtors and Harnischfeger continue to negotiate
towards a consensual resolution of the issues arising from and related to the
Recapitalization and have reached a settlement in principle, subject to
definitive documentation and Bankruptcy Court approval.

Health and Welfare Arrangements - Under the terms of the Recapitalization
Agreement, the current United States employees of the Company continued to
participate, from the Recapitalization Closing until December 31, 1998, in the
medical, dental, life and long-term disability insurance benefit plans that were
sponsored by HarnCo for the benefit of these employees as of the
Recapitalization Closing. The Company paid to HarnCo the cost of all benefits
provided under these plans. The Company recognized approximately $0.7 million
and $1.1 million of expense related to these arrangements in fiscal 1999 and
1998, respectively. Beginning on January 1, 1999, the Company sponsored its own
medical, dental, life and long-term disability insurance benefit plans.

Stockholders Agreement - At the Recapitalization Closing, Holdings entered into
a stockholders' agreement and registration rights agreement with HarnCo and MHE
Investments (the "Stockholders' Agreement") pursuant to which HarnCo has the
right to appoint a representative to the board of directors of Holdings, so long
as HarnCo owns at least 5% of the outstanding voting common stock of Holdings.
Certain actions by Holdings require HarnCo's approval, including non-pro rata
redemptions, certain post-closing affiliate and insider transactions, granting
of conflicting rights or entering into conflicting agreements, and dividends or
distributions on, or redemptions or purchases of, any junior equity stock at any
time when dividends are in arrears on the Series B Junior Preferred Stock owned
by HarnCo. The Stockholders' Agreement also provides that HarnCo has the right
to purchase its pro rata share of future issuances of common stock of Holdings
except for issuances of management stock and options and common stock sold in an
underwritten public offering. HarnCo's shares are subject to a right of first
refusal in favor of Holdings and its designees and certain other rights.

Credit Indemnification Agreement - At the Recapitalization Closing, MMH entered
into a number of agreements pursuant to which HII and its affiliates will
continue to provide to MMH and to its subsidiaries located in the United States,
on an interim basis and under substantially the same terms and conditions as
before the closing, certain products and services. In addition, HII and MMH
entered into a credit indemnification agreement (the "Credit Indemnification
Agreement") pursuant to which HII will maintain in place the credit support
obligations in existence at the Recapitalization Closing but have no further
duty to extend, renew or enter into any new credit support obligations (except
as to the MHE Business obligations existing at the

                                       74
<PAGE>

Recapitalization Closing). The Company also entered into a surety arrangement
(the "Surety Arrangement") to provide credit support for its
post-Recapitalization Closing operations.

Loans to Management - At the Recapitalization Closing, the Company made
short-term loans in an aggregate principal amount of $900,000 to members of the
Company's senior management to purchase equity interests in Niles L.L.C., an
indirect minority shareholder of Holdings, in accordance with the terms of
certain promissory notes. Interest on each of the notes, at a rate per annum
equal at all times to the federal short-term rate (as defined) in effect from
time to time, from the date of issuance until such note is repaid in full will
be payable in arrears as a lump sum on the date the remaining unpaid principal
amount of such note is due in full. In fiscal 1999, in conjunction with Jack
Stinnett's, President and Chief Executive Officer, purchase of 80% of the former
President's equity interest in Niles L.L.C., the Company made a loan to Mr.
Stinnett in the amount of $150,000.

Chartwell

Chartwell Financial Advisory Agreement - The Company entered into an agreement
with Chartwell providing for the payment of fees and reimbursement of expenses
to Chartwell for acting as financial advisor with respect to the
Recapitalization, including soliciting, structuring and arranging the financing
of the Recapitalization. The fees, totaling $5.0 million, equal to 1% of the
consolidated capitalization of Holdings and the reimbursement of expenses, were
paid at the Recapitalization Closing.

Chartwell Management Consulting Agreement - The Company has entered into a
management consulting agreement with Chartwell pursuant to which Chartwell
provides the Company with certain management, advisory and consulting services
for a fee of $1.0 million for each fiscal year of the Company during the term of
the agreement, plus reimbursement of expenses. The term of the management
consulting agreement is 10 years commencing at the Recapitalization Closing and
is renewable for additional one year periods unless the Board of Directors of
the Company gives prior written notice of non-renewal to Chartwell. The Company
incurred expenses totaling $1,000, $1,000 and $583, excluding amounts paid for
the reimbursement of expenses, during fiscal 2000, 1999 and 1998, respectively,
under this agreement.

Note 20 - Non-Recurring Employee Benefit Costs

As a result of the Recapitalization and subsequent restructuring, the Company
recognized certain non-recurring employee benefit costs. These costs included:

1.   Employee Termination Costs - During fiscal 1998, 1999 and 2000, the Company
     has incurred employee termination costs to reduce employee staffing levels
     associated with restructuring the Company's United Kingdom and United
     States manufacturing operations. During the 1998 fiscal year, 72 employees
     were terminated, resulting in severance costs of $0.7 million. Also, in
     October 1998, the Company announced additional terminations of 64 employees
     resulting in additional severance costs of approximately $1.1 million in
     fiscal 1998. The staffing reductions announced in October 1998 were
     completed in early fiscal 1999. In 1999 and 2000, the Company initiated and
     completed further staff reductions at its United Kingdom and United States
     operations. The program was primarily aimed at streamlining its production
     base, improving efficiency and enhancing its competitiveness. In 1999,
     approximately 129 employees were terminated at a cost of approximately $1.8
     million. In 2000, approximately 84 hourly and salary positions were
     eliminated at a cost of $1.8 million. Termination benefits paid and charged
     against the liability as of October 31, 2000, were $1.4 million. The
     remaining severance benefits are anticipated to be paid primarily during
     the fourth quarter of 2000 and the first quarter of 2001. Severance costs
     included severance pay, outplacement services and insurance coverage.

2.   Divestiture Bonuses - Incentives were given to certain members of
     management in connection with the sale of the MHE Business by HII in fiscal
     1998. HII, not the Company, was responsible for making these incentive
     payments and accordingly, this amount has been reported as a capital
     contribution in the accompanying financial statements. The incentives paid
     to management were approximately $1.2 million.

Note 21 - Other Income - Net

Other income - net consists of the following for the years ended October 31:

                                    2000         1999         1998
                                   ------       ------       ------
          Licensee income          $    -       $  470       $  594
          Other-net                     -          (78)         737
                                   ------       ------       ------
                                   $    -       $  392       $1,331
                                   ======       ======       ======

                                       75
<PAGE>

Note 22 - Supplemental Condensed Financial Information

In connection with the Recapitalization, MMH, a direct wholly-owned subsidiary
of Holdings, issued Senior Notes that are guaranteed by certain of MMH's
subsidiaries (the "Guarantor Subsidiaries"). Each of the Guarantor Subsidiaries
is a wholly-owned subsidiary, directly or indirectly, of MMH and the guarantees
are full, unconditional and joint and several. Both Holdings and MMH are holding
companies with no material operating assets. All of the Company's business
operations are conducted through subsidiaries of MMH and accordingly, both
Holdings and MMH are dependent on the operating subsidiaries of MMH to fund
their cash needs, including debt service and tax obligations. The Guarantor
Subsidiaries include the domestic operating subsidiaries which filed voluntary
petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code in the
United States Bankruptcy Court for the District of Delaware (See Note 1).

Separate financial statements of the Guarantor Subsidiaries are not presented
because management has determined that they would not be material to investors.
The following supplemental financial information sets forth the balance sheet,
statement of operations and cash flow information for the Guarantor Subsidiaries
and for MMH's other subsidiaries (the "Non-Guarantor Subsidiaries"). The
supplemental financial information reflects the investments of the Guarantor
Subsidiaries in the Non-Guarantor Subsidiaries using the equity method of
accounting. For purposes of this presentation, it is assumed that, historically,
all of the assets of the MHE Business were wholly-owned by subsidiaries of MMH,
which is an entity that was formed by Holdings in connection with the
Recapitalization and accordingly, the historical financial statements of MMH and
Holdings are identical following completion of the Recapitalization.

                                       76
<PAGE>

                               MMH HOLDINGS, INC.
                 (DEBTORS - IN - POSSESSION AS OF MAY 17, 2000)
               SUPPLEMENTAL CONDENSED CONSOLIDATING BALANCE SHEET
                                OCTOBER 31, 2000
                             (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>

                                                                       Non-                                        Consolidated
                                                    Guarantor       Guarantor     Morris Material                 Morris Material
                                                   Subsidiaries    Subsidiaries    Handling, Inc.  Eliminations    Handling, Inc.
                                                   ------------    ------------    --------------  ------------    --------------
<S>                                                  <C>             <C>             <C>             <C>             <C>
ASSETS
Current Assets
     Cash and cash equivalents                       $   1,141             241       $   1,225       $      --       $   2,607
     Accounts receivable - net                          55,626           2,169              --              --          57,795
     Intercompany accounts receivable                   27,190             222          26,273         (53,685)             --
     Inventories                                        30,301           1,512              --              --          31,813
     Other current assets                                4,010             144              50              --           4,204
                                                     ---------       ---------       ---------       ---------       ---------
                                                       118,268           4,288          27,548         (53,685)         96,419
                                                     ---------       ---------       ---------       ---------       ---------
Property, Plant and Equipment - net                     32,165           2,231              --              --          34,396
                                                     ---------       ---------       ---------       ---------       ---------
Other Assets
     Goodwill                                           22,164              --              --              --          22,164
     Debt financing costs                                   --              --          14,242              --          14,242
     Noncurrent intercompany receivable                  4,496              --          73,484         (77,980)             --
     Investment in affiliates                           (5,177)             --          24,634         (19,457)             --
     Other                                               8,351              --             599              --           8,950
                                                     ---------       ---------       ---------       ---------       ---------
                                                        29,834              --         112,959         (97,437)         45,356
                                                     ---------       ---------       ---------       ---------       ---------
                                                     $ 180,267       $   6,519       $ 140,507       $(151,122)      $ 176,171
                                                     =========       =========       =========       =========       =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities Not Subject to Compromise
     Current Liabilities
          Current portion of long-term obligations          92              42       $      --       $      --       $     134
          Junior DIP Facility                               --              --          38,000              --          38,000
          New Credit Facility borrowings                    --              --              --              --              --
          Term loans                                        --              --              --              --              --
          Acquisition Facility borrowings                   --              --              --              --              --
          Senior Notes                                      --              --              --              --              --
          Bank overdrafts                                  489             744              --              --           1,233
          Trade accounts payable                        15,436           1,017              --              --          16,453
          Intercompany accounts payable                 26,495           3,675          23,515         (53,685)             --
          Advance payments and progress billings         7,542              --              --              --           7,542
          Accrued interest                                 (17)             --             699              --             682
          Other current liabilities                     15,915           1,126           2,368              --          19,409
                                                     ---------       ---------       ---------       ---------       ---------
                                                        65,952           6,604          64,582         (53,685)         83,453
                                                     ---------       ---------       ---------       ---------       ---------
     Other Long-Term Debt                                   91             523              --              --             614
     Noncurrent Intercompany Payable                    73,484           4,496              --         (77,980)             --
     Other Long Term Liabilities                            35              --             194              --             229
                                                     ---------       ---------       ---------       ---------       ---------
                                                       139,562          11,623          64,776        (131,665)         84,296
Liabilities Subject to Compromise                       16,071              --         270,410              --         286,481
Minority Interest                                           --              --              --              73              73
Mandatorily Redeemable Preferred Stock                      --              --              --              --              --
Shareholders' Equity                                    24,634          (5,104)       (194,679)        (19,530)       (194,679)
                                                     ---------       ---------       ---------       ---------       ---------
                                                     $ 180,267       $   6,519       $ 140,507       $(151,122)      $ 176,171
                                                     =========       =========       =========       =========       =========
</TABLE>





<TABLE>
<CAPTION>
                                                                                 Consolidated
                                                       MMH                            MMH
                                                    Holdings,                      Holdings,
                                                       Inc.       Eliminations        Inc.
                                                    ---------     ------------   ------------
<S>                                                 <C>             <C>            <C>
ASSETS
Current Assets
     Cash and cash equivalents                      $      --       $      --      $   2,607
     Accounts receivable - net                             --              --         57,795
     Intercompany accounts receivable                      --              --             --
     Inventories                                           --              --         31,813
     Other current assets                                  --              --          4,204
                                                    ---------       ---------      ---------
                                                           --              --         96,419
                                                    ---------       ---------      ---------
Property, Plant and Equipment - net                        --              --         34,396
                                                    ---------       ---------      ---------
Other Assets
     Goodwill                                              --              --         22,164
     Debt financing costs                                  --              --         14,242
     Noncurrent intercompany receivable                    --              --             --
     Investment in affiliates                        (194,679)        194,679             --
     Other                                                 --              --          8,950
                                                    ---------       ---------      ---------
                                                     (194,679)        194,679         45,356
                                                    ---------       ---------      ---------
                                                    $(194,679)      $ 194,679      $ 176,171
                                                    =========       =========      =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities Not Subject to Compromise
     Current Liabilities
          Current portion of long-term obligations  $      --       $      --      $     134
          Junior DIP Facility                              --              --         38,000
          New Credit Facility borrowings                   --              --             --
          Term loans                                       --              --             --
          Acquisition Facility borrowings                  --              --             --
          Senior Notes                                     --              --             --
          Bank overdrafts                                  --              --          1,233
          Trade accounts payable                           --              --         16,453
          Intercompany accounts payable                    --              --             --
          Advance payments and progress billings           --              --          7,542
          Accrued interest                                 --              --            682
          Other current liabilities                        --              --         19,409
                                                    ---------       ---------      ---------
                                                           --              --         83,453
                                                    ---------       ---------      ---------
                                                           --              --             --
     Other Long-Term Debt                                                                614
     Noncurrent Intercompany Payable                                                      --
     Other Long Term Liabilities                           --              --            229
                                                    ---------       ---------      ---------
                                                           --              --         84,296
Liabilities Subject to Compromise                          --              --        286,481
Minority Interest                                          --              --             73
Mandatorily Redeemable Preferred Stock                122,109              --        122,109
Shareholders' Equity                                 (316,788)        194,679       (316,788)
                                                    ---------       ---------      ---------
                                                    $(194,679)      $ 194,679      $ 176,171
                                                    =========       =========      =========
</TABLE>




                                       77

<PAGE>

                               MMH HOLDINGS, INC.
                 (DEBTORS - IN - POSSESSION AS OF MAY 17, 2000)
               SUPPLEMENTAL CONDENSED CONSOLIDATING BALANCE SHEET
                                OCTOBER 31, 1999
                             (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                   Non-                                        Consolidated
                                                Guarantor       Guarantor     Morris Material                 Morris Material
                                               Subsidiaries    Subsidiaries    Handling, Inc.  Eliminations    Handling, Inc.
                                               ------------    ------------    --------------  ------------    --------------
<S>                                             <C>             <C>             <C>             <C>             <C>
ASSETS
Current Assets
     Cash an cash equivalents                   $   2,325       $     104       $   1,500       $      --       $   3,929
     Accounts receivable - net                     60,163           4,318              --              --          64,481
     Intercompany accounts receivable              20,057              --          13,204         (33,261)             --
     Inventories                                   37,892           2,102              --              --          39,994
     Other current assets                           6,509             533             800              --           7,842
                                                ---------       ---------       ---------       ---------       ---------
                                                  126,946           7,057          15,504         (33,261)        116,246
                                                ---------       ---------       ---------       ---------       ---------
Property, Plant and Equipment                      38,294           2,680              --              --          40,974
                                                ---------       ---------       ---------       ---------       ---------
Other Assets
     Goodwill                                      40,010           2,834              --              --          42,844
     Debt financing costs                              --              --          16,398              --          16,398
     Noncurrent intercompany receivable             5,161              --          83,891         (89,052)             --
     Investment in affiliates                      (1,527)             --          64,899         (63,372)             --
     Other                                          9,758              --             616              --          10,374
                                                ---------       ---------       ---------       ---------       ---------
                                                   53,402           2,834         165,804        (152,424)         69,616
                                                ---------       ---------       ---------       ---------       ---------
                                                $ 218,642       $  12,571       $ 181,308       $(185,685)      $ 226,836
                                                =========       =========       =========       =========       =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
     Current portion of long-term obligations   $     342       $      41       $      --       $      --       $     383
     New Credit Facility borrowings                   425              --          27,500              --          27,925
     Term loans                                        --              --          52,225              --          52,225
     Acquisition Facility borrowings                   --              --          12,430              --          12,430
     Senior Notes                                      --              --         200,000              --         200,000
     Bank overdrafts                                  139           1,228              --              --           1,367
     Trade accounts payable                        25,562           1,195              --              --          26,757
     Intercompany accounts payable                 13,204           4,153          15,904         (33,261)             --
     Advance payments and progress billings         8,336              --              --              --           8,336
     Accrued interest                                  18              --           1,786              --           1,804
     Other current liabilities                     18,602           1,221           2,014              --          21,837
                                                ---------       ---------       ---------       ---------       ---------
                                                   66,628           7,838         311,859         (33,261)        353,064
                                                ---------       ---------       ---------       ---------       ---------
Other Long-Term Debt                                2,189             595              --              --           2,784
Noncurrent Intercompany Payable                    83,891           5,161              --         (89,052)             --
Other Long Term Liabilities                         1,035              --             272              --           1,307
                                                ---------       ---------       ---------       ---------       ---------
Minority Interest                                      --              --              --             504             504
Mandatorily Redeemable Preferred Stock                 --              --              --              --              --
Shareholders' Equity                               64,899          (1,023)       (130,823)        (63,876)       (130,823)
                                                ---------       ---------       ---------       ---------       ---------
                                                $ 218,642       $  12,571       $ 181,308       $(185,685)      $ 226,836
                                                =========       =========       =========       =========       =========
</TABLE>

<TABLE>
<CAPTION>
                                                                                Consolidated
                                                     MMH                             MMH
                                                Holdings, Inc.   Eliminations   Holdings, Inc.
                                                --------------   ------------   --------------
<S>                                              <C>               <C>            <C>
ASSETS
Current Assets
     Cash an cash equivalents                    $      --         $      --      $   3,929
     Accounts receivable - net                          --                --         64,481
     Intercompany accounts receivable                   --                --             --
     Inventories                                        --                --         39,994
     Other current assets                               --                --          7,842
                                                 ---------         ---------      ---------
                                                        --                --        116,246
                                                 ---------         ---------      ---------
Property, Plant and Equipment                           --                --         40,974
                                                 ---------         ---------      ---------
Other Assets
     Goodwill                                           --                --         42,844
     Debt financing costs                               --                --         16,398
     Noncurrent intercompany receivable                 --                --             --
     Investment in affiliates                     (130,823)          130,823             --
     Other                                              --                --         10,374
                                                 ---------         ---------      ---------
                                                  (130,823)          130,823         69,616
                                                 ---------         ---------      ---------
                                                 $(130,823)        $ 130,823      $ 226,836
                                                 =========         =========      =========


LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
     Current portion of long-term obligations    $      --         $      --      $     383
     New Credit Facility borrowings                     --                --         27,925
     Term loans                                         --                --         52,225
     Acquisition Facility borrowings                    --                --         12,430
     Senior Notes                                       --                --        200,000
     Bank overdrafts                                    --                --          1,367
     Trade accounts payable                             --                --         26,757
     Intercompany accounts payable                      --                --             --
     Advance payments and progress billings             --                --          8,336
     Accrued interest                                   --                --          1,804
     Other current liabilities                          --                --         21,837
                                                 ---------         ---------      ---------
                                                        --                --        353,064
                                                 ---------         ---------      ---------
Other Long-Term Debt                                    --                --          2,784
Noncurrent Intercompany Payable                         --                --             --
Other Long Term Liabilities                             --                --          1,307
                                                 ---------         ---------      ---------
Minority Interest                                       --                --            504
Mandatorily Redeemable Preferred Stock             108,245                --        108,245
Shareholders' Equity                              (239,068)          130,823       (239,068)
                                                 ---------         ---------      ---------
                                                 $(130,823)        $ 130,823      $ 226,836
                                                 =========         =========      =========
</TABLE>

                                       78
<PAGE>


                               MMH HOLDINGS, INC.
                 (DEBTORS - IN - POSSESSION AS OF MAY 17, 2000)
                 SUPPLEMENTAL CONDENSED STATEMENT OF OPERATIONS
                           (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                           For the Year Ended October 31, 2000
                                                       -----------------------------------------------------------------------------
                                                                           Non-                                       Consolidated
                                                        Guarantor       Guarantor     Morris Material               Morris Material
                                                       Subsidiaries    Subsidiaries    Handling, Inc.  Eliminations  Handling, Inc.
                                                       ------------    ------------    --------------  ------------  --------------
<S>                                                     <C>             <C>             <C>             <C>             <C>
Revenues
     Equipment and Parts                                $ 205,926       $   7,985       $      --       $    (906)      $ 213,005
     Service                                               50,762           4,307              --              --          55,069
                                                        ---------       ---------       ---------       ---------       ---------
     Net Sales                                            256,688          12,292              --            (906)        268,074
     Other Income - net                                        --              --              --              --              --
                                                        ---------       ---------       ---------       ---------       ---------
                                                          256,688          12,292              --            (906)        268,074
Cost of Sales                                             202,117           9,571              --            (906)        210,782
Selling, General
   and Administrative expenses                             63,561           3,757           3,054              --          70,372
Impairment Loss on Long-Lived Assets                       13,392           2,617              --              --          16,009
Reorganization Items                                        6,900              --             950              --           7,850
                                                        ---------       ---------       ---------       ---------       ---------
Operating Income (Loss)                                   (29,282)         (3,653)         (4,004)             --         (36,939)
Gain on sale of business                                       --              --           6,380              --           6,380
Loss on disposal of fixed assets                             (830)             --              --              --            (830)
Interest Expense - Net
     Affiliates                                            (6,038)           (237)          6,275              --              --
     Third party                                             (455)           (215)        (21,685)             --         (22,355)
                                                        ---------       ---------       ---------       ---------       ---------
Income (Loss) Before Income Taxes, Equity in Earnings
(Loss) of Subsidiaries and Minority Interest              (36,605)         (4,105)        (13,034)             --         (53,744)
Benefit (Provision) for Income Taxes                       (1,735)            (83)         (1,407)             --          (3,225)
Equity in Earnings (Loss) of Subsidiaries                  (3,965)             --         (42,305)         46,270              --
Minority Interst                                               --              --              --             223             223
                                                        ---------       ---------       ---------       ---------       ---------
Net Income (Loss)                                       $ (42,305)      $  (4,188)      $ (56,746)      $  46,493       $ (56,746)
                                                        =========       =========       =========       =========       =========
</TABLE>


<TABLE>
<CAPTION>
                                                                                          Consolidated
                                                               MMH                            MMH
                                                          Holdings, Inc.  Eliminations   Holdings, Inc.
                                                          --------------  ------------   --------------
<S>                                                         <C>             <C>            <C>
Revenues
     Equipment and Parts                                    $      --       $     --       $ 213,005
     Service                                                                                  55,069
                                                            ---------       ---------      ---------
     Net Sales                                                     --              --        268,074
     Other Income - net                                            --              --             --
                                                            ---------       ---------      ---------
                                                                   --              --        268,074
Cost of Sales                                                      --              --        210,782
Selling, General
   and Administrative expenses                                     --              --         70,372
Impairment Loss on Long-Lived Assets                                                          16,009
Reorganization Items                                                                           7,850
                                                            ---------       ---------      ---------
Operating Income (Loss)                                            --              --        (36,939)
Gain on sale of business                                           --              --          6,380
Loss on disposal of fixed assets                                                                (830)
Interest Expense - Net
     Affiliates                                                    --              --             --
     Third party                                                   --              --        (22,355)
                                                            ---------       ---------      ---------
Income (Loss) Before Income Taxes, Equity in Earnings
(Loss) of Subsidiaries and Minority Interest                       --              --        (53,744)
Benefit (Provision) for Income Taxes                               --              --         (3,225)
Equity in Earnings (Loss) of Subsidiaries                     (56,746)         56,746             --
Minority Interst                                                   --              --            223
                                                            ---------       ---------      ---------
Net Income (Loss)                                           $ (56,746)      $  56,746      $ (56,746)
                                                            =========       =========      =========
</TABLE>


                                       79

<PAGE>

                               MMH HOLDINGS, INC.
                 (Debtors - in - Possession as af May 17, 2000)
          SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
                             (Dollars in Thousands)

<TABLE>
<CAPTION>
                                                                   FOR THE YEAR ENDED OCTOBER 31, 1999
                                              ----------------------------------------------------------------------------
                                                                  Non-                                       Consolidated
                                               Guarantor       Guarantor    Morris Material                Morris Material
                                              Subsidiaries    Subsidiaries   Handling, Inc.  Eliminations   Handling, Inc.
                                              ------------    ------------   --------------  ------------   --------------
<S>                                            <C>             <C>             <C>             <C>             <C>
Revenues
     Equipment and Parts Sales                 $ 224,510       $  11,848       $      --       $    (832)      $ 235,526
     Service Sales                                54,563           4,106              --              --          58,669
                                               ---------       ---------       ---------       ---------       ---------
     Net Sales                                   279,073          15,954              --            (832)        294,195
     Other Income - net                              397              (5)             --              --             392
                                               ---------       ---------       ---------       ---------       ---------
                                                 279,470          15,949              --            (832)        294,587
Cost of Sales                                    206,349          13,186              --            (832)        218,703
Selling, General and
   Administrative expenses                        66,257           3,833           2,349              --          72,439
                                               ---------       ---------       ---------       ---------       ---------
Operating Income (Loss)                            6,864          (1,070)         (2,349)             --           3,445
Interest (Expense) Income - net
     Affiliates                                   (6,070)           (375)          6,445              --              --
     Third Party                                    (675)           (424)        (28,928)             --         (30,027)
                                               ---------       ---------       ---------       ---------       ---------
Loss Before Income Taxes, Equity in Earnings
(Loss) of Subsidiaries and Minority Interest         119          (1,869)        (24,832)             --         (26,582)
Provision for Income Taxes                           (32)             --         (71,648)             --         (71,680)
Equity in Earnings (Loss) of Subsidiaries         (1,812)             --          (1,725)          3,537              --
Minority Interest                                     --              --              --              57              57
                                               ---------       ---------       ---------       ---------       ---------
Net Income (Loss)                              $  (1,725)      $  (1,869)      $ (98,205)      $   3,594       $ (98,205)
                                               =========       =========       =========       =========       =========
</TABLE>

<TABLE>
<CAPTION>
                                                   FOR THE YEAR ENDED OCTOBER 31, 2000
                                              ----------------------------------------------
                                                                              Consolidated
                                                   MMH                             MMH
                                              Holdings, Inc.   Eliminations   Holdings, Inc.
                                              --------------   ------------   --------------
<S>                                              <C>             <C>            <C>
Revenues
     Equipment and Parts Sales                   $      --       $      --      $ 235,526
     Service Sales                                      --              --         58,669
                                                 ---------       ---------      ---------
     Net Sales                                          --              --        294,195
     Other Income - net                                 --              --            392
                                                 ---------       ---------      ---------
                                                        --              --        294,587
Cost of Sales                                           --              --        218,703
Selling, General and
   Administrative expenses                              --              --         72,439
                                                 ---------       ---------      ---------
Operating Income (Loss)                                 --              --          3,445
Interest (Expense) Income - net
     Affiliates                                         --              --             --
     Third Party                                        --              --        (30,027)
                                                 ---------       ---------      ---------
Loss Before Income Taxes, Equity in Earnings
(Loss) of Subsidiaries and Minority Interest            --              --        (26,582)
Provision for Income Taxes                              --              --        (71,680)
Equity in Earnings (Loss) of Subsidiaries          (98,205)         98,205             --
Minority Interest                                       --              --             57
                                                 ---------       ---------      ---------
Net Income (Loss)                                $ (98,205)      $  98,205      $ (98,205)
                                                 =========       =========      =========
</TABLE>

                                       80
<PAGE>

                               MMH HOLDINGS, INC.
                 (Debtors - in - Possession as of May 17, 2000)
                 SUPPLEMENTAL CONDENSED STATEMENT OF OPERATIONS
                             (Dollars in Thousands)

<TABLE>
<CAPTION>
                                                                    FOR THE YEAR ENDED OCTOBER 31, 1998
                                              ----------------------------------------------------------------------------
                                                                  Non-                                       Consolidated
                                               Guarantor       Guarantor    Morris Material                Morris Material
                                              Subsidiaries    Subsidiaries   Handling, Inc.  Eliminations   Handling, Inc.
                                              ------------    ------------   --------------  ------------   --------------
<S>                                            <C>             <C>             <C>             <C>             <C>
Revenues
     Net Sales                                 $ 298,897       $  22,262       $      --       $  (3,302)      $ 317,857
     Other Income - net                            1,331              --              --              --           1,331
                                               ---------       ---------       ---------       ---------       ---------
                                                 300,228          22,262              --          (3,302)      $ 319,188
Cost of Sales                                    212,736          17,557              --          (3,302)        226,991
Selling, General and
   Administrative expenses                        56,588           4,184             583              --          61,355
HII Management Fee                                 1,155              --              --              --           1,155
Non Recuring Employee Benefit Costs                1,797              --           1,216              --           3,013
                                               ---------       ---------       ---------       ---------       ---------
Operating Income (Loss)                           27,952             521          (1,799)             --          26,674
Interest (Expense) Income - net
     Affiliates                                   (5,407)           (167)          4,126              --          (1,448)
     Third Party                                     (76)           (505)        (15,946)             --         (16,527)
                                               ---------       ---------       ---------       ---------       ---------
Loss Before Income Taxes, Equity in Earnings
(Loss) of Subsidiaries and Minority Interest      22,469            (151)        (13,619)             --           8,699
Provision for Income Taxes                        (2,895)            264          (1,804)             --          (4,435)
Equity in Earnings (Loss) of Subsidiaries            140              --          19,714         (19,854)             --
Minority Interest                                     --              --              --              27              27
                                               ---------       ---------       ---------       ---------       ---------
Net Income (Loss)                              $  19,714       $     113       $   4,291       $ (19,827)      $   4,291
                                               =========       =========       =========       =========       =========
</TABLE>

<TABLE>
<CAPTION>
                                                    FOR THE YEAR ENDED OCTOBER 31, 1998
                                               ----------------------------------------------
                                                                               Consolidated
                                                    MMH                             MMH
                                               Holdings, Inc.   Eliminations   Holdings, Inc.
                                               --------------   ------------   --------------
<S>                                               <C>            <C>             <C>
Revenues
     Net Sales                                    $      --      $      --       $ 317,857
     Other Income - net                                  --             --           1,331
                                                  ---------      ---------       ---------
                                                         --             --         319,188
Cost of Sales                                            --             --         226,991
Selling, General and
   Administrative expenses                               --             --          61,355
HII Management Fee                                       --             --           1,155
Non Recuring Employee Benefit Costs                      --             --           3,013
                                                  ---------      ---------       ---------
Operating Income (Loss)                                  --             --          26,674
Interest (Expense) Income - net
     Affiliates                                          --             --          (1,448)
     Third Party                                         --             --         (16,527)
                                                  ---------      ---------       ---------
Loss Before Income Taxes, Equity in Earnings
(Loss) of Subsidiaries and Minority Interest             --             --           8,699
Provision for Income Taxes                               --             --          (4,435)
Equity in Earnings (Loss) of Subsidiaries             4,291         (4,291)             --
Minority Interest                                        --                             27
                                                  ---------      ---------       ---------
Net Income (Loss)                                 $   4,291      $  (4,291)      $   4,291
                                                  =========      =========       =========
</TABLE>

                                       81

<PAGE>

                               MMH HOLDINGS, INC.
                 (Debtors - in - Possession as of May 17, 2000)
            SUPPLEMENTAL CONDENSED COMBINING STATEMENT OF CASH FLOWS
                       FOR THE YEAR ENDED OCTOBER 31, 2000
                             (Dollars in Thousands)

<TABLE>
<CAPTION>
                                                                                Non-
                                                             Guarantor       Guarantor    Morris Material
                                                            Subsidiaries    Subsidiaries   Handling, Inc.  Eliminations
                                                            ------------    ------------   --------------  ------------
<S>                                                            <C>            <C>            <C>            <C>
Operating Activities
    Net income (Loss)                                          $(42,305)      $ (4,188)      $(56,746)      $ 46,493
    Add (deduct) - items not affecting
       cash provided by operating activities:
    DIP financing fees                                               --             --            950             --
    Depreciation and amortization                                 8,930            305             21             --
    Amortization of debt financing costs                             --             --          2,399             --
    Equity in loss of subsidiaries                                3,965             --         42,305        (46,270)
    Gain on sale of business                                         --             --         (6,380)            --
    Impairment loss on long-lived assets                         13,392          2,617             --             --
    Loss on disposal of fixed assets                                830             --             --             --
    Other                                                            --             --             --           (223)
    Changes in working capital, excluding the
       effects of acquisition opening balance sheets:
    Accounts receivable                                           1,537          1,740             --             --
    Inventories                                                   5,117            364             --             --
    Other current assets                                          1,850            402            750             --
    Trade accounts payable and bank overdrafts                    1,179           (209)            --             --
    Accrued interest                                                (19)            --         11,470             --
    Other current liabilities                                     1,675            137          2,700             --
                                                               --------       --------       --------       --------
    Net cash provided by (used for) operating activities         (3,849)         1,168         (2,531)            --
                                                               --------       --------       --------       --------
Investment and Other Transactions
    Fixed asset additions - net                                  (1,864)           (33)            --             --
    Capitalized software                                           (772)            --             --             --
    Net proceeds on divestiture of business                       9,115             --             --             --
    Other - net                                                    (834)          (119)           (80)            --
                                                               --------       --------       --------       --------
    Net cash used for investment and other transactions           5,645           (152)           (80)            --
                                                               --------       --------       --------       --------
Financing Activities
    Changes in short-term debt and notes payable                     (9)            --             --             --
    Proceeds from DIP and Junior DIP borrowings                      --             --         38,100             --
    Repayment of DIP borrowings                                      --             --           (100)            --
    Proceeds from/(Repayments of) Revolving
       Credit Facility borrowings                                  (425)            --         (9,327)            --
    Repayments of Term Loans                                         --             --        (24,807)            --
    Repayments of Acquisition Facility Line borrowings               --             --         (3,414)            --
    Distribution to parent                                       (2,285)          (794)         3,079             --
    Repayments of long-term debt                                   (125)           (56)            --             --
    Payment of DIP financing fees                                    --                          (950)            --
    Payment of fees for amendment of Credit Facility                 --             --           (245)            --
                                                               --------       --------       --------       --------
    Net cash provided by (used for) financing activities         (2,844)          (850)         2,336             --
                                                               --------       --------       --------       --------
Effect of Exchange Rate Changes on Cash and Cash Equivalents       (136)           (29)            --             --
                                                               --------       --------       --------       --------
Increase (Decrease) in Cash and Cash Equivalents                 (1,184)           137           (275)            --
Cash and Cash Equivalents
    Beginning of Period                                           2,325            104          1,500             --
                                                               --------       --------       --------       --------
    End of Period                                              $  1,141       $    241       $  1,225       $     --
                                                               ========       ========       ========       ========
</TABLE>

<TABLE>
<CAPTION>
                                                               Consolidated                                   Consolidated
                                                             Morris Material       MMH                             MMH
                                                              Handling, Inc.  Holdings, Inc.   Eliminations   Holdings, Inc.
                                                              --------------  --------------   ------------   --------------
<S>                                                              <C>            <C>              <C>            <C>
Operating Activities
    Net income (Loss)                                            $(56,746)      $(56,746)        $ 56,746       $(56,746)
    Add (deduct) - items not affecting
       cash provided by operating activities:
    DIP financing fees                                                950                                            950
    Depreciation and amortization                                   9,256             --               --          9,256
    Amortization of debt financing costs                            2,399             --               --          2,399
    Equity in loss of subsidiaries                                     --         56,746          (56,746)            --
    Gain on sale of business                                       (6,380)            --               --         (6,380)
    Impairment loss on long-lived assets                           16,009             --               --         16,009
    Loss on disposal of fixed assets                                  830             --               --            830
    Other                                                            (223)            --               --           (223)
    Changes in working capital, excluding the
       effects of acquisition opening balance sheets:
    Accounts receivable                                             3,277             --               --          3,277
    Inventories                                                     5,481             --               --          5,481
    Other current assets                                            3,002             --               --          3,002
    Trade accounts payable and bank overdrafts                        970             --               --            970
    Accrued interest                                               11,451             --               --         11,451
    Other current liabilities                                       4,512             --               --          4,512
                                                                 --------       --------         --------       --------
    Net cash provided by (used for) operating activities           (5,212)            --               --         (5,212)
                                                                 --------       --------         --------       --------
Investment and Other Transactions
    Fixed asset additions - net                                    (1,897)            --               --         (1,897)
    Capitalized software                                             (772)            --               --           (772)
    Net proceeds on divestiture of business                         9,115             --               --          9,115
    Other - net                                                    (1,033)            --               --         (1,033)
                                                                 --------       --------         --------       --------
    Net cash used for investment and other transactions             5,413             --               --          5,413
                                                                 --------       --------         --------       --------
Financing Activities
    Changes in short-term debt and notes payable                       (9)            --               --             (9)
    Proceeds from DIP and Junior DIP borrowings                    38,100             --               --         38,100
    Repayment of DIP borrowings                                      (100)            --               --           (100)
    Proceeds from/(Repayments of) Revolving
       Credit Facility borrowings                                  (9,752)            --               --         (9,752)
    Repayments of Term Loans                                      (24,807)            --               --        (24,807)
    Repayments of Acquisition Facility Line borrowings             (3,414)            --               --         (3,414)
    Distribution to parent                                             --             --               --             --
    Repayments of long-term debt                                     (181)            --               --           (181)
    Payment of DIP financing fees                                    (950)                                          (950)
    Payment of fees for amendment of Credit Facility                 (245)            --               --           (245)
                                                                 --------       --------         --------       --------
    Net cash provided by (used for) financing activities           (1,358)            --               --         (1,358)
                                                                 --------       --------         --------       --------
Effect of Exchange Rate Changes on Cash and Cash Equivalents         (165)            --               --           (165)
                                                                 --------       --------         --------       --------
Increase (Decrease) in Cash and Cash Equivalents                   (1,322)            --               --         (1,322)
Cash and Cash Equivalents
    Beginning of Period                                             3,929             --               --          3,929
                                                                 --------       --------         --------       --------
    End of Period                                                $  2,607       $     --         $     --       $  2,607
                                                                 ========       ========         ========       ========
</TABLE>

                                       82
<PAGE>


                               MMH HOLDINGS, INC.
                 (Debtors - in - Possession as of May 17, 2000)
            SUPPLEMENTAL CONDENSED COMBINING STATEMENT OF CASH FLOWS
                       FOR THE YEAR ENDED OCTOBER 31, 1999
                             (Dollars in Thousands)

<TABLE>
<CAPTION>
                                                                              Non-
                                                           Guarantor       Guarantor    Morris Material
                                                          Subsidiaries    Subsidiaries   Handling, Inc.  Eliminations
                                                          ------------    ------------   --------------  ------------
<S>                                                          <C>            <C>            <C>            <C>
Operating Activities
    Net income (Loss)                                        $ (1,725)      $ (1,869)      $(98,205)      $  3,594
    Add (deduct) - items not affecting cash used
       for operating activities:
    Depreciation and amortization                               7,939            279             21             --
    Amortization of debt financing costs                           --             --          2,531             --
    Equity in loss of subsidiaries                              1,812             --          1,725         (3,537)
    Deferred income taxes - net                                (1,833)            --         71,447             --
    Other                                                          --             --             --            (57)
    Changes in working capital, excluding the
       effects of acquisition opening balance sheets:              --             --
    Accounts receivable                                        16,641          1,309             --             --
    Inventories                                                 3,376            624             --             --
    Other current assets                                       (2,054)          (928)          (403)            --
    Trade accounts payable and bank overdrafts                 (5,841)          (969)            --             --
    Accrued interest                                               18             --           (415)            --
    Other current liabilities                                 (11,714)           (43)         3,102             --
                                                             --------       --------       --------       --------
    Net cash provided by (used for) operating
       activities                                               6,619         (1,597)       (20,197)            --
                                                             --------       --------       --------       --------
Investment and Other Transactions
    Fixed asset additions - net                                (7,511)           (83)            --             --
    Capitalized software                                           --             --             --             --
    Acquisition of businesses - net of cash acquired           (5,630)            --             --
    Net issuance of loans by senior management                     --             --            (80)            --
    Other - net                                                   162            (19)          (587)            --
                                                             --------       --------       --------       --------
    Net cash (used for) provided by investment
        and other transactions                                (12,979)          (102)          (667)            --
                                                             --------       --------       --------       --------
Financing Activities
    Changes in short-term debt and notes payable                  505            (42)            --             --
    (Repayments of)/Proceeds for Revolving Credit
        Facility borrowings                                        --             --         26,300
    Repayments of Term Loans                                       --             --         (2,100)
    Proceeds from Acquisition Facility Line borrowings             --             --          6,235             --
    Payment of fees for amendment of Prepetition
        Credit Facility                                            --             --           (612)            --
    Distribution to parent                                      5,922          1,537         (7,459)            --
    Repayments of long-term debt                                   --             --             --             --
                                                             --------       --------       --------       --------
    Net cash provided by(used for) financing activities         6,427          1,495         22,364             --
                                                             --------       --------       --------       --------
Effect of Exchange Rate Changes on Cash and
    Cash Equivalents                                               44            (12)            --             --
                                                             --------       --------       --------       --------
Increase (Decrease) in Cash and Cash Equivalents                  111           (216)         1,500             --
    Cash and Cash Equivalents
    Beginning of Period                                         2,214            320             --             --
                                                             --------       --------       --------       --------
    End of Period                                            $  2,325       $    104       $  1,500       $     --
                                                             ========       ========       ========       ========
</TABLE>

<TABLE>
<CAPTION>
                                                             Consolidated                                   Consolidated
                                                           Morris Material       MMH                             MMH
                                                            Handling, Inc.  Holdings, Inc.   Eliminations   Holdings, Inc.
                                                            --------------  --------------   ------------   --------------
<S>                                                            <C>            <C>              <C>            <C>
Operating Activities
    Net income (Loss)                                          $(98,205)      $(98,205)        $ 98,205       $(98,205)
    Add (deduct) - items not affecting cash used
       for operating activities:
    Depreciation and amortization                                 8,239             --               --          8,239
    Amortization of debt financing costs                          2,531             --               --          2,531
    Equity in loss of subsidiaries                                   --         98,205          (98,205)            --
    Deferred income taxes - net                                  69,614             --               --         69,614
    Other                                                           (57)            --               --            (57)
    Changes in working capital, excluding the
       effects of acquisition opening balance sheets:
    Accounts receivable                                          17,950             --               --         17,950
    Inventories                                                   4,000             --               --          4,000
    Other current assets                                         (3,385)            --               --         (3,385)
    Trade accounts payable and bank overdrafts                   (6,810)            --               --         (6,810)
    Accrued interest                                               (397)            --               --           (397)
    Other current liabilities                                    (8,655)            --               --         (8,655)
                                                               --------       --------         --------       --------
    Net cash provided by (used for) operating
       activities                                               (15,175)            --               --        (15,175)
                                                               --------       --------         --------       --------

Investment and Other Transactions
    Fixed asset additions - net                                  (7,594)            --               --         (7,594)
    Capitalized software                                             --             --               --             --
    Acquisition of businesses - net of cash acquired             (5,630)                                        (5,630)
    Net issuance of loans by senior management                      (80)            --               --            (80)
    Other - net                                                    (444)            --               --           (444)
                                                               --------       --------         --------       --------
    Net cash (used for) provided by investment
        and other transactions                                  (13,748)            --               --        (13,748)
                                                               --------       --------         --------       --------
Financing Activities
    Changes in short-term debt and notes payable                    463             --               --            463
    (Repayments of)/Proceeds for Revolving Credit
        Facility borrowings                                      26,300                                         26,300
    Repayments of Term Loans                                     (2,100)                                        (2,100)
    Proceeds from Acquisition Facility Line borrowings            6,235             --               --          6,235
    Payment of fees for amendment of Prepetition
        Credit Facility                                            (612)            --               --           (612)
    Distribution to parent                                                                                          --
    Repayments of long-term debt                                     --             --               --             --
                                                               --------       --------         --------       --------
    Net cash provided by(used for) financing activities          30,286             --               --         30,286
                                                               --------       --------         --------       --------
Effect of Exchange Rate Changes on Cash and
    Cash Equivalents                                                 32             --               --             32
                                                               --------       --------         --------       --------
Increase (Decrease) in Cash and Cash Equivalents                  1,395             --               --          1,395
    Cash and Cash Equivalents
    Beginning of Period                                           2,534             --               --          2,534
                                                               --------       --------         --------       --------
    End of Period                                              $  3,929       $     --         $     --       $  3,929
                                                               ========       ========         ========       ========
</TABLE>

                                       83
<PAGE>

                               MMH HOLDINGS, INC.
                 (Debtors - in - Possession as af May 17, 2000)
            SUPPLEMENTAL CONDENSED COMBINING STATEMENT OF CASH FLOWS
                       FOR THE YEAR ENDED OCTOBER 31, 1998
                             (Dollars in Thousands)

<TABLE>
<CAPTION>
                                                                               Non-
                                                            Guarantor       Guarantor    Morris Material
                                                           Subsidiaries    Subsidiaries   Handling, Inc.  Eliminations
                                                           ------------    ------------   --------------  ------------
<S>                                                          <C>             <C>             <C>             <C>
Operating Activities
    Net income (Loss)                                        $  19,714       $     113       $   4,291       $ (19,827)
    Add (deduct) - items not affecting cash used
       for operating activities:
    Depreciation and amortization                                6,371             452              --              --
    Amortization of debt financing costs                            --              --           1,169              --
    Equity in loss of subsidiaries                                (140)             --         (19,714)         19,854
    Deferred income taxes - net                                 (1,477)             --           1,804              --
    Divestiture bonus                                               --              --           1,216              --
    Other                                                         (881)             --              --             (27)
    Changes in working capital, excluding the
       effects of acquisition opening balance sheets:               --              --              --
    Accounts receivable                                           (247)          2,470              --              --
    Inventories                                                 (9,231)          1,539              --              --
    Other current assets                                        (2,177)           (751)           (389)             --
    Trade accounts payable and bank overdrafts                  (1,405)         (2,887)             --              --
    Accrued interest                                                --              --           2,201              --
    Other current liabilities                                    3,644             647              --              --
    Activity with parent and other affiliates - net             11,038          (1,011)         (6,803)             --
                                                             ---------       ---------       ---------       ---------
    Net cash provided by (used for) operating activities        25,209             572         (16,225)             --
                                                             ---------       ---------       ---------       ---------
Investment and Other Transactions
    Fixed asset additions - net                                 (5,078)           (130)             --              --
    Capitalized software                                            --              --              --              --
    Acquisition of businesses - net of cash acquired            (8,891)             --              --
    Net issuance of loans by senior management                      --              --            (120)             --
    Other - net                                                 (1,532)           (206)             --              --
                                                             ---------       ---------       ---------       ---------
    Net cash (used for) provided by investment and
       other transactions                                      (15,501)           (336)           (120)             --
                                                             ---------       ---------       ---------       ---------
Financing Activities
    Changes in short-term debt and notes payable                  (639)            (55)             --              --
    Proceeds from Senior Note Offering                              --              --         200,000
    Proceeds from Pre-petition Credit Facility                      --              --          55,000
    Proceeds from Acquisition Facility Line borrowings              --              --           6,194              --
    Net proceeds from Revolving Credit Facility borrowings          --              --           1,200              --
    Net proceeds from issuance of Series A preferred stock
       and related common shares                                    --              --              --              --
    Redemption of shares held by Holdings                           --              --        (233,459)             --
    Redemption of common stock and preferred stock                  --              --              --              --
    Stock redemption transaction costs                              --              --              --              --
    Debt financing costs                                            --              --         (20,074)             --
    Distribution to parent                                      (8,159)             --           8,159              --
    Repayments of long-term debt                                    --              --            (675)             --
                                                             ---------       ---------       ---------       ---------
Net cash provided by (used for) financing activities            (8,798)            (55)         16,345              --
                                                             ---------       ---------       ---------       ---------
Effect of Exchange Rate Changes on Cash and Cash Equivalents       (89)             --              --              --
                                                             ---------       ---------       ---------       ---------
    Increase (Decrease) in Cash and Cash Equivalents               821             181              --              --
    Cash and Cash Equivalents
    Beginning of Period                                          1,393             139              --              --
                                                             ---------       ---------       ---------       ---------
    End of Period                                            $   2,214       $     320       $      --       $      --
                                                             =========       =========       =========       =========
</TABLE>

<TABLE>
<CAPTION>
                                                               Consolidated                                   Consolidated
                                                             Morris Material       MMH                             MMH
                                                              Handling, Inc.  Holdings, Inc.   Eliminations   Holdings, Inc.
                                                              --------------  --------------   ------------   --------------
<S>                                                              <C>             <C>             <C>             <C>
Operating Activities
    Net income (Loss)                                            $   4,291       $  (4,291)      $   4,291       $   4,291
    Add (deduct) - items not affecting cash used
       for operating activities:
    Depreciation and amortization                                    6,823              --              --           6,823
    Amortization of debt financing costs                             1,169              --              --           1,169
    Equity in loss of subsidiaries                                      --           4,291          (4,291)             --
    Deferred income taxes - net                                        327              --              --             327
    Divestiture bonus                                                1,216              --              --           1,216
    Other                                                             (908)             --              --            (908)
    Changes in working capital, excluding the
       effects of acquisition opening balance sheets:
    Accounts receivable                                              2,223              --              --           2,223
    Inventories                                                     (7,692)             --              --          (7,692)
    Other current assets                                            (3,317)             --              --          (3,317)
    Trade accounts payable and bank overdrafts                      (4,292)             --              --          (4,292)
    Accrued interest                                                 2,201              --              --           2,201
    Other current liabilities                                        4,291                                           4,291
    Activity with parent and other affiliates - net                  3,224              --              --           3,224
                                                                 ---------       ---------       ---------       ---------
    Net cash provided by (used for) operating activities             9,556              --              --           9,556
                                                                 ---------       ---------       ---------       ---------
Investment and Other Transactions
    Fixed asset additions - net                                     (5,208)             --              --          (5,208)
    Capitalized software                                                --              --              --              --
    Acquisition of businesses - net of cash acquired                (8,891)                                         (8,891)
    Net issuance of loans by senior management                        (120)             --              --            (120)
    Other - net                                                     (1,738)             --              --          (1,738)
                                                                 ---------       ---------       ---------       ---------
    Net cash (used for) provided by investment and
       other transactions                                          (15,957)             --              --         (15,957)
                                                                 ---------       ---------       ---------       ---------
Financing Activities
    Changes in short-term debt and notes payable                      (694)             --              --            (694)
    Proceeds from Senior Note Offering                             200,000                                         200,000
    Proceeds from Pre-petition Credit Facility                      55,000                                          55,000
    Proceeds from Acquisition Facility Line borrowings               6,194              --              --           6,194
    Net proceeds from Revolving Credit Facility borrowings           1,200              --              --           1,200
    Net proceeds from issuance of Series A preferred stock
       and related common shares                                        --              --              --              --
    Redemption of shares held by Holdings                         (233,459)             --              --        (233,459)
    Redemption of common stock and preferred stock                      --              --              --              --
    Stock redemption transaction costs                                  --              --              --              --
    Debt financing costs                                           (20,074)             --              --         (20,074)
    Distribution to parent                                              --
    Repayments of long-term debt                                      (675)             --              --            (675)
                                                                 ---------       ---------       ---------       ---------
Net cash provided by (used for) financing activities                 7,492              --              --           7,492
                                                                 ---------       ---------       ---------       ---------
Effect of Exchange Rate Changes on Cash and Cash Equivalents           (89)             --              --             (89)
                                                                 ---------       ---------       ---------       ---------
    Increase (Decrease) in Cash and Cash Equivalents                 1,002              --              --           1,002
    Cash and Cash Equivalents
    Beginning of Period                                              1,532              --              --           1,532
                                                                 ---------       ---------       ---------       ---------
    End of Period                                                $   2,534       $      --       $      --       $   2,534
                                                                 =========       =========       =========       =========
</TABLE>

                                       84
<PAGE>

Note 23 - Condensed Combined/Consolidating Financial Statements

The following condensed combined/consolidating financial statements are
presented in accordance with SOP 90-7:

                               MMH HOLDINGS, INC.
                   (DEBTORS-IN-POSSESSION AS OF MAY 17, 2000)
            CONDENSED COMBINED/CONSOLIDATING STATEMENTS OF OPERATIONS
                       FOR THE YEAR ENDED OCTOBER 31, 2000

<TABLE>
<CAPTION>
                                                 Combined         Combined
                                                Entities in    Entities not in
                                               Reorganization  Reorganization
                                                Proceedings      Proceedings     Eliminations   Consolidated
                                                -----------      -----------     ------------   ------------
<S>                                              <C>              <C>             <C>             <C>
Revenues
     Equipment and Part Sales                    $ 144,224        $  75,619       $  (6,838)      $ 213,005
     Service Sales                                  33,095           21,990             (16)         55,069
                                                 ---------        ---------       ---------       ---------
     Net sales                                     177,319           97,609          (6,854)        268,074
     Other income - net                                 --               --              --              --
                                                 ---------        ---------       ---------       ---------
                                                   177,319           97,609          (6,854)        268,074

Cost of Sales                                      137,791           79,845          (6,854)        210,782

Selling, General and Administrative Expenses        41,808           28,564              --          70,372

Impairment Loss on Long-Lived Assets                    --           16,009              --          16,009

Reorganization Items                                 7,850               --              --           7,850
                                                 ---------        ---------       ---------       ---------
     Operating Income (Loss)                       (10,130)         (26,809)             --         (36,939)

Gain on sale of business                             6,380               --              --           6,380

Loss on disposal of fixed assets                      (830)              --              --            (830)

Interest Expense - net                             (15,537)          (6,818)             --         (22,355)
                                                 ---------        ---------       ---------       ---------
Loss before Income Taxes and Minority Interest     (20,117)         (33,627)             --         (53,744)

Benefit (Provision) for Income Taxes                (1,479)          (1,746)             --          (3,225)
Minority Interest                                       --               --             223             223
Equity in Income (Loss) of Subsidiaries            (35,373)              --          35,373              --
                                                 ---------        ---------       ---------       ---------
     Net loss                                      (56,969)         (35,373)         35,596         (56,746)
                                                 =========        =========       =========       =========
</TABLE>

                                       85
<PAGE>

                               MMH HOLDINGS, INC.
                   (DEBTORS-IN-POSSESSION AS OF MAY 17, 2000)
                 CONDENSED COMBINED/CONSOLIDATING BALANCE SHEET
                             AS OF OCTOBER 31, 2000

<TABLE>
<CAPTION>
                                                 Combined         Combined
                                                Entities in    Entities not in
                                               Reorganization  Reorganization
                                                Proceedings      Proceedings     Eliminations   Consolidated
                                                -----------      -----------     ------------   ------------
<S>                                              <C>              <C>             <C>             <C>
ASSETS
Current Assets
    Cash and cash equivalents                    $   1,342        $   1,265       $      --       $   2,607

    Accounts receivable - net                       37,463           20,332              --          57,795
    Inventories                                     20,278           11,535              --          31,813
    Other current assets                             2,840              910             454           4,204
                                                 ---------        ---------       ---------       ---------
                                                    61,923           34,042             454          96,419
                                                 ---------        ---------       ---------       ---------
Intercompany accounts receivable, net              104,607               --        (104,607)             --
                                                 ---------        ---------       ---------       ---------
Property, Plant and Equipment - net                 18,320           16,076              --          34,396
                                                 ---------        ---------       ---------       ---------
Other Assets
    Goodwill                                        16,649            5,515              --          22,164
    Debt financing costs                            14,242               --              --          14,242
    Investment in subsidiaries                      81,962               --         (81,962)             --
    Other                                            5,218            3,732              --           8,950
                                                 ---------        ---------       ---------       ---------
                                                   118,071            9,247         (81,962)         45,356
                                                 ---------        ---------       ---------       ---------
                                                 $ 302,921           59,365       $(186,115)      $ 176,171
                                                 =========        =========       =========       =========

LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities Not Subject to Compromise
    Current Liabilities
    Current portion of long-term obligations     $      --        $     134       $      --       $     134
    Junior DIP Facility                             38,000               --              --          38,000
    Bank overdrafts                                     --            1,233              --           1,233
    Trade accounts payable                           8,210            8,243              --          16,453
    Advance payments and progress billings           4,667            2,875              --           7,542
    Accrued warranties                               1,306              955              --           2,261
    Accrued interest                                   682               --              --             682
    Income taxes payable                             1,370              551              --           1,921
    Other current liabilities                        8,075            7,152              --          15,227
                                                 ---------        ---------       ---------       ---------
                                                    62,310           21,143              --          83,453
                                                 ---------        ---------       ---------       ---------
    Intercompany accounts payable, net                  --          104,153        (104,153)             --
    Other Long-Term Debt                                --              614              --             614
    Other Long Term Liabilities                         --              229              --             229
                                                 ---------        ---------       ---------       ---------
                                                    62,310          126,139        (104,153)         84,296
Liabilities Subject to Compromise                  286,481               --              --         286,481
Minority Interest                                       --               --              73              73
Mandatorily Redeemable Preferred Stock             122,109               --              --         122,109
Shareholders' Equity                              (167,979)         (66,774)        (82,035)       (316,788)
                                                 ---------        ---------       ---------       ---------
                                                 $ 302,921        $  59,365       $(186,115)      $ 176,171
                                                 =========        =========       =========       =========
</TABLE>

                                       86
<PAGE>

                               MMH HOLDINGS, INC.
                   (DEBTORS-IN-POSSESSION AS OF MAY 17, 2000)
            CONDENSED COMBINED/CONSOLIDATING STATEMENTS OF CASH FLOW
                             AS OF OCTOBER 31, 2000

<TABLE>
<CAPTION>
                                                          Combined         Combined
                                                         Entities in    Entities not in
                                                        Reorganization  Reorganization
                                                         Proceedings      Proceedings     Eliminations   Consolidated
                                                         -----------      -----------     ------------   ------------
<S>                                                        <C>              <C>             <C>            <C>
Operating Activities
    Net Loss                                               $(21,596)        $(35,373)       $    223       $(56,746)
    Add (deduct) - items not affecting cash
      provided by operating activities:
      DIP financing fees                                        950               --              --            950
      Depreciation and amortization                           5,033            4,223              --          9,256
      Amortization of debt financing costs                    2,399               --              --          2,399
      Deferred income taxes - net                                --               --              --             --
      Gain on sale of business                               (6,380)              --              --         (6,380)
      Impairment loss on long-lived assets                       --           16,009              --         16,009
      Loss on disposal of fixed assets                          830               --              --            830
      Other                                                      --               --            (223)          (223)
    Changes in working capital, excluding the
      effects of acquisition opening balance sheets:
      Accounts receivable                                      (421)           3,698              --          3,277
      Inventories                                             3,101            2,380              --          5,481
      Trade accounts payable and bank overdrafts              3,230           (2,260)             --            970
      Advance payments and progress billings                     (2)            (521)             --           (523)
      Accrued interest                                       11,451               --              --         11,451
      Other, net including intercompany balances             (4,461)          12,498              --          8,037
                                                           --------         --------        --------       --------
Net cash used for operating activities,
    including reorganization items                           (5,866)             654              --         (5,212)
                                                           --------         --------        --------       --------
Investment and Other Transactions
    Fixed asset additions - net                                (887)          (1,010)             --         (1,897)
    Capitalized software                                       (772)              --              --           (772)
    Acquisition of businesses - net of cash acquired             --               --              --             --
    Net proceeds on divestiture of business                   9,115               --              --          9,115
    Net Issuance of loans to senior management                   --               --              --             --
    Other - net                                                (627)            (406)             --         (1,033)
                                                           --------         --------        --------       --------
Net cash provided by (used for) investment
    and other transactions                                    6,829           (1,416)             --          5,413
                                                           --------         --------        --------       --------
Financing Activities
    Changes in short-term debt and notes payable                 (9)              --              --             (9)
    Proceeds from DIP and Junior DIP borrowings              38,100               --              --         38,100
    Repayments of DIP borrowings                               (100)              --              --           (100)
    Net (repayments of)/proceeds from Revolving
        Credit Facility borrowings                           (9,752)              --              --         (9,752)
    Repayment of Term Loans                                 (24,807)              --              --        (24,807)
    Proceeds from/(repayments of) Acquisition
        Facility Line borrowings                             (3,414)              --              --         (3,414)
    Repayments of long-term debt                               (125)             (56)             --           (181)
    Payment of DIP financing fees                              (950)              --              --           (950)
    Payment of fees for amendment of Credit Facility           (245)              --              --           (245)
                                                           --------         --------        --------       --------
Net cash provided by (used for) financing activities         (1,302)             (56)             --         (1,358)
                                                           --------         --------        --------       --------

                                       87
<PAGE>

Effect of Exchange Rate Changes on Cash and Cash
    Equivalents                                                  --             (165)             --           (165)
                                                           --------         --------        --------       --------
Increase (decrease) in Cash and Cash Equivalents               (339)            (983)             --         (1,322)
Cash and Cash Equivalents
    Beginning of Period                                       1,681            2,248              --          3,929
                                                           --------         --------        --------       --------
    End of Period                                          $  1,342         $  1,265        $     --       $  2,607
                                                           ========         ========        ======         ========
</TABLE>

<PAGE>

Note 24 - Subsequent Events

On February 28, 2001, the Bankruptcy Court approved procedures for the
divestiture of substantially all assets of the Company's non-North American
operations. As of March 6, 2001, substantially all assets of the Company's
United Kingdom Group have been sold, including the Company's operations in
Singapore and Thailand, with the exception of certain U.K. real estate holdings
which are the subject of an existing sale agreement, and investments in the
Company's operations in Australia and South Africa. In connection with these
transactions, the Company's U.K. operating subsidiaries were placed in
administrative receivership as a result of their inability to satisfy claims
made by creditors pursuant to guarantees made by such subsidiaries under the
Prepetition Credit Facility. Accordingly, these U.K. subsidiaries will not have
sufficient assets to settle all recorded third party liabilities.

A net loss of approximately $12.0 million is expected to be recognized by the
Company in connection with the completed transactions and the derecognition of
recorded liabilities of the U.K. subsidiaries that will not be settled pursuant
to the receivership proceedings as discussed above. This net loss is
substantially attributed to the recognition of cumulative translation
adjustments and a settlement loss recognized under SFAS 88 related to the
Company's United Kingdom employee benefit plan.

                                       89
<PAGE>

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE

        None.


                                       90
<PAGE>

                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANTS

The following sets forth certain information with respect to the persons who are
members of Holdings' Board of Directors, MMH's Board of Directors or the senior
management team of MMH and/or Holdings as of February 13, 2001 (1).

      NAME             AGE      POSITION
      ----             ---      --------
Jack F. Stinnett       55       President, Chief Executive Officer and Chairman
                                of the Board of MMH and Holdings
David D. Smith         46       Vice President--Finance of MMH and Vice
                                President and Director of Holdings
Peter A. Kerrick       44       Vice President--Service & Modernizations of MMH
Edward J. Doolan       49       Vice President--P&H Regional Sales & Service of
                                MMH
Michael J. Maddock     57       Vice President--P&H/Morris Europe, Pacific Rim
                                & Middle East of MMH
Ross C. Smith          44       Vice President--Equipment & Operations of MMH
Randall G. Burlison    57       Vice President--P&H Aftermarket of MMH
Todd R. Berman         42       Director of MMH and Holdings
Michael S. Shein (2)   37       Director of MMH and Vice President and Director
                                of Holdings
Larry Zine (2)         45       Director of Holdings
Eric A. Green          39       Director of Holdings

(1)  J. Bradley Wiedmann resigned as Vice President--Human Resources of MMH
     effective December 31, 1999. Malcolm Lassman resigned as a director of
     Holdings on December 5, 1999. Jay R. Bloom, Michael R. Young and Robert W.
     Hale resigned as directors of Holdings on March 15, September 1, and
     December 1, 2000, respectively. Effective February 5, 2001, Martin L.
     Ditkof no longer serves as General Counsel and Secretary of MMH and
     Holdings. Instead, the Company has contracted with Mr. Ditkof to serve as
     the key outside legal counsel.

(2)  Member of the Audit Committee.

Jack F. Stinnett--Jack Stinnett joined the Company as President, Chief Executive
Officer and as a director of both Holdings and MMH in March 1999. He serves as
Chairman of the Board of each of Holdings and MMH since February 2, 2000.
Previously, he served as Vice President and General Manager of Engine Components
World Wide for TRW, a global automotive parts business. Before that, Mr.
Stinnett was employed by Babcock & Wilcox in various management and materials
positions. Mr. Stinnett graduated from the United States Naval Academy with a
Bachelor of Science degree in Marine Engineering and obtained his MBA from
Lynchburg College/Tulane University.

David D. Smith--David Smith has been serving as Vice President--Finance of the
Company since March 30, 1998 and as a director and Vice President of Holdings
since 1997. Previously, he served as Vice President and Controller of the
Company since 1993. Mr. Smith joined the Company in 1988 as a Senior Operations
Auditor. Mr. Smith received his Bachelor of Science in Business Administration
from Bucknell University and his M.B.A. from the University of Pittsburgh. Mr.
Smith is a Certified Public Accountant.

Peter A. Kerrick--Peter Kerrick assumed his current position as Vice
President-Service & Modernizations of the Company in 2000. Prior to that time,
Peter served as Vice President--Engineered Equipment of the Company since 1995.
Since joining the Company in 1978 as a Design & Project Engineer, Mr. Kerrick
has held numerous positions with the Company, primarily in the sales capacity.
Mr. Kerrick obtained a Bachelor of Science degree in Mechanical Engineering from
Purdue University.

Edward J. Doolan--Edward Doolan serves as Vice President--P&H Regional Sales &
Service of the Company. Prior to being promoted to his current position in 1994,
Mr. Doolan served in a variety of positions in the aftermarket products and
service groups. He joined the Harnischfeger team in 1979 and became Director of
Product Support for the Company in 1985. Mr. Doolan has a Bachelor of Science in
Industrial Engineering from Georgia Tech and an M.B.A. from Marquette
University.

Michael J. Maddock--Michael Maddock has been Vice President--P&H/Morris Europe,
Pacific Rim & Middle East of the Company since March 1999. Previously, Mr.
Maddock held a number of positions at Morris Ltd., including Director and
General Manager, Hoist Division, and Managing Director, Standard Products
Division. He joined Morris Ltd. in 1989. Mr. Maddock received his M.I. in
Mechanical Engineering from the Institute of Mechanical Engineers, a Bachelor of
Science in Metallurgy from the University of Surrey, a Higher National Diploma
in Mechanical Engineering and a Higher National Certificate in Production
Engineering. He received his Membership from the Institute of Mechanical
Engineers.

Ross C. Smith--Ross Smith assumed his current position as Vice
President-Equipment & Operations in 2000. Prior to this position, Ross served as
Vice President--Standard Cranes and Components since March 1999. Mr. Smith
joined the Company

                                       91
<PAGE>

in July 1998 as the Vice President of Business Development and Strategic
Planning. Previously, Mr. Smith held a position in strategic planning and market
development at Siebe plc., a global supplier of intelligent automation, controls
and industrial equipment since 1989. Mr. Smith received his B.A. from
Northwestern University and an M.B.A. from the Owen School at Vanderbilt
University.

Randall G. Burlison--Randy Burlison assumed his current position as Vice
President--P&H Aftermarket in 1999. Since joining the Company in 1978, Mr.
Burlison has held a variety of positions including General Manager, Crane
Division, and Operations Manager, Oak Creek. Mr. Burlison received his Bachelor
of Science degree in Industrial Engineering from the University of Illinois.

Todd R. Berman--Todd Berman has been a director of Holdings and a director of
the Company since March 30, 1998. Mr. Berman is the founder and President of
Chartwell Investments Inc. He served as Chairman of the Board of Griffith
Consumers Company, one of the nation's largest independent distributors of
heating oil and other petroleum products, from December 1994 until February
1999; as Chairman of Carl King, Inc., the leading operator of gas stations and
convenience stores in the Delmarva peninsula (Delaware, Maryland, Virginia),
from December 1994 until February 1999; and as a director of Petro Stopping
Centers, L.P., a leading operator of large, full-service truck stops, from
January 1997 until July 1999. Mr. Berman has been with Chartwell Investments
Inc. or its predecessor since 1992. He received his A.B. from Brown University
and an M.B.A. from Columbia University Graduate School of Business.

Michael S. Shein--Michael Shein has been a director and Vice-President of
Holdings and a director of the Company since March 30, 1998. Mr. Shein is a
Managing Director and co-founder of Chartwell Investments Inc. and has been with
Chartwell Investments Inc. or its predecessor since 1992. Mr. Shein served as a
director of Griffith Consumers Company, one of the nation's largest independent
distributors of heating oil and other petroleum products, from December 1994
until February 1999; a director of Carl King, Inc., the leading operator of gas
stations and convenience stores in the Delmarva peninsula (Delaware, Maryland,
Virginia), from December 1994 until February 1999; and a director of Petro
Stopping Centers, L.P., a leading operator of large, full-service truck stops,
from January 1997 until July 1999. Mr. Shein received a B.S. summa cum laude
from The Wharton School at the University of Pennsylvania.

Larry Zine--Larry Zine has served as a director of Holdings since March 30,
1998. Mr. Zine is Chief Financial Officer and Executive Vice President of
Blockbuster and was the Executive Vice President and Chief Financial Officer of
Petro Stopping Centers, L.P., a leading operator of large full-service truck
stops, from September 1996 until 1999. Prior to that, Mr. Zine served as the
Executive Vice President and Chief Financial Officer for The Circle K
Corporation, the second largest chain of convenience stores in the United
States, from 1988 to 1996. Mr. Zine was educated at the University of North
Dakota and holds an M.S. degree in accounting and a B.S.B.A. in marketing.

Eric A. Green--Eric Green has served as a director of Holdings since August 21,
1999. Mr. Green is a partner in Chase Capital Partners and is a director of
Interdent. Before joining Chase Capital, Mr. Green was a Managing Director in
the Merchant Banking Group at Banque Paribas. Mr. Green also was employed by GE
Capital and the General Electric Company. Mr. Green received a Bachelor of
Administration from Wabash College and an M.B.A. from New York University.

Director Compensation

Holdings pays directors fees to certain of its directors. Larry Zine receives
$3,000 per meeting. In addition, the Company has committed to grant 50 options
to purchase shares of Holdings Series A Senior Preferred Stock at an exercise
price of $1,000. Holdings and MMH reimburse all of their directors for
reasonable out-of-pocket expenses incurred in connection with attending Board
meetings.

                                       92
<PAGE>

ITEM 11. EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE

The following table presents information concerning compensation paid for
services to the individuals who served as Chief Executive Officer of the Company
during fiscal year 2000, the four other most highly paid executive officers
employed by the Company at the end of fiscal year 2000, and two individuals who
would have been among the four most highly paid executive officers if they had
been employed by the Company at the end of the fiscal year 1999, for each of the
fiscal years ended October 31, 1999 and 1998, respectively (collectively, the
"Named Executive Officers").

<TABLE>
<CAPTION>
                                                              Annual Compensation
                                                       ---------------------------------
                                                                               Other          All
                                                                               Annual         Other
                 Name and                              Salary      Bonus    Compensation  Compensation
            Principal Position                           ($)        ($)          ($)           ($)
            ------------------                         -------    -------     --------      ---------
<S>                                          <C>       <C>        <C>         <C>           <C>

Jack F. Stinnett.......................      2000      400,008    213,590     7,200(a)      10,478(b)
  President and Chief Executive
  Officer                                    1999      265,389    100,000     4,800(a)       5,787(b)

David D. Smith.........................      2000      172,800      4,697         -         10,938(b)
  Vice President and Chief Financial
  Officer                                    1999      144,000     14,493         -          6,959(b)

Michael J. Maddock.....................      2000      132,077          -    19,412(c)           -
  Vice President - Europe, Pacific Rim &
  Middle East                                1999      133,485          -    20,438(c)      99,842(d)

Edward J. Doolan.......................      2000      144,540     26,523         -         15,235(b)
  Vice President - Regional Sales &
  Service                                    1999      140,040      7,352         -         12,341(b)

Ross C. Smith..........................      2000      135,000      3,211         -          5,670(b)
  Vice President - Equipment &
  Operations                                 1999      116,500      2,738     2,000(e)       5,358(b)

Peter A. Kerrick.......................      2000      120,084      3,092         -          6,586(b)
  Vice President - Service &
  Modernizations                             1999      111,216      5,838         -          6,191(b)
</TABLE>

(a)  Amount consists of the car allowance for Mr. Stinnett.

(b)  No amounts were earned in fiscal years 1999 and 2000 under the profit
     sharing component of the Company's Retirement Plan (as defined herein)
     which was adopted on April 1, 1998, and which permits the employee to elect
     to receive half of the payment in cash, rather than as a contribution to
     the Retirement Plan. This number includes employer matching, transition and
     age-based contributions of $9,491, $10,579, 14,894, $5,571 and $6,385 for
     Messrs. Stinnett, D. Smith, Doolan, R. Smith, and Kerrick, respectively for
     fiscal year 2000 and the following amounts paid by the Company during
     fiscal 2000 for group term life insurance premiums for the benefit of the
     executives: Mr. Stinnett, $987; Mr. D. Smith, $ 359; Mr. Doolan, $341; Mr.
     R. Smith, $99; and Mr. Kerrick, $201. Fiscal year 1999 amounts include
     employer matching, transition and age-based contributions of $4,800,
     $6,600, $12,000, $5,261, and $5,990 for Messrs. Stinnett, D. Smith, Doolan,
     R. Smith, and Kerrick, respectively, and the following amounts paid by the
     Company for group term life insurance premiums for the benefit of the
     executives: Mr. Stinnett, $987; Mr. D. Smith, $359; Mr. Doolan, $341; Mr.
     R. Smith, $97; and Mr. Kerrick, $201.

(c)  Fiscal year 2000 includes $14,469 in car allowance for Mr. Maddock. Fiscal
     year 1999 includes $20,483 in car allowance for Mr. Maddock. Also includes
     taxable benefits such as private health insurance, fuel allowance and
     telephone allowance.

(d)  Represents an annual earn-out paid to Messr. Maddock pursuant to the terms
     of his employment agreement.

(e)  Represents the remaining portion of a signing bonus paid to Messr. R. Smith
     in 1998 and 1999.

                                       93
<PAGE>

ARRANGEMENTS PRIOR TO CONSUMMATION OF THE TRANSACTIONS

The following describes certain compensation and benefit arrangements applicable
to members of the senior management team of the Company for periods prior to
March 30, 1998. Such employees' participation in such plans and programs, except
as otherwise noted, terminated on March 30, 1998, except with respect to vested
benefits.

Until March 30, 1998, executive officers of the Company located in the United
States participated in HII's defined benefit pension plan. The following table
sets forth the estimated annual benefits payable upon retirement at normal
retirement age for the years of service indicated under the plan (and excess
benefit arrangements defined below) at the indicated remuneration levels.

                                      Years of Service
               ---------------------------------------------------------------
Remuneration       5         10         15         20         25          30
------------   -------    -------    -------    -------    -------     -------

  $140,000     $10,500    $21,000    $31,500    $42,000    $52,500     $63,000
   180,000      13,500     27,000     40,500     54,000     67,500      81,000
   220,000      16,500     33,000     49,500     66,000     82,500      99,000
   260,000      19,500     39,000     58,500     78,000     97,500     117,000
   300,000      22,500     45,000     67,500     90,000    112,500     135,000
   340,000      25,500     51,000     76,500    102,000    127,500     153,000
   380,000      28,500     57,000     85,500    114,000    142,500     171,000

Remuneration covered by the plan includes the following amounts reported in the
1998 Summary Compensation Table: salary and bonus (including the cash value of
bonuses foregone for stock under the HII Executive Incentive Plan). "Banked"
bonuses are not included.

The years of service credited for each of the Named Executive Officers eligible
to participate in HII's defined benefit pension plan are: David Smith 10 years,
Edward Doolan 19 years, and Peter Kerrick 20 years.

Benefits are based upon years of service and the highest consecutive five year
average annual salary and incentive compensation during the last ten calendar
years of service. Estimated benefits under the retirement plan are subject to
the provisions of the Internal Revenue Code of 1986, as amended, which limit the
annual benefits which may be paid from a tax qualified retirement plan. Amounts
in excess of such limitations will either be paid from the general funds of HII
or funded with HII common stock under the terms of the HII Supplemental
Retirement and Stock Funding Plan. The estimated benefits in the table above do
not reflect offsets under the plan of 1.25% per year of service (up to a maximum
of 50%) of the Social Security benefit.

Executive officers of the Company located in the United Kingdom were eligible to
participate in an executive section of the Harnischfeger Industries Pension
Scheme specific to the Company (the "UK Scheme"), which provides defined
benefits. Pension income in the UK Scheme at normal retirement age is based on
the employee's years of service and his last twelve months' taxable earnings
(excluding certain benefits in kind and fluctuating payments), or on an average
of those taxable earnings over the last 24 months, if greater. There is no
offset for United Kingdom social security benefits. In April 1999, the defined
benefit pension scheme was separated from the Harnischfeger Industries Pension
Scheme into the Morris Material Handling Pension Plan.

In addition to United Kingdom social security benefits to which such a person
may be entitled, the following table illustrates the amount of annual pension
benefits (in pounds sterling) payable from the UK Scheme to an individual with
the indicated earnings and years of service at the individual's normal
retirement age of 65.

                                      Years of Service
                -------------------------------------------------------------
 Remuneration     10         15         20         25         30         35
                ------     ------     ------     ------     ------     ------
(pound)50,000   16,667     25,000     33,333     33,333     33,333     33,333
       75,000   25,000     37,500     50,000     50,000     50,000     50,000
      100,000   33,333     50,000     66,667     66,667     66,667     66,667
      125,000   41,667     62,500     83,333     83,333     83,333     83,333
      150,000   50,000     75,000    100,000    100,000    100,000    100,000

Mr. Maddock continues to be a member of the UK Scheme. At October 31, 2000, Mr.
Maddock had 11.75 years of service for purposes of this plan.

                                       94
<PAGE>

Divestiture Bonus Agreements

In October 1998, David D. Smith, Edward J. Doolan, Michael J. Maddock, and Peter
A. Kerrick were each paid a divestiture bonus of $125,000. These amounts were
paid under agreements with HarnCo that provided for bonuses to be paid to
certain employees in the event of a purchase by a third party not affiliated
with HarnCo of substantially all of the assets and liabilities of the MHE
Business. Under these agreements, each employee had agreed to release HarnCo and
its affiliates from certain claims and agreed not to voluntarily terminate his
employment with the MHE Business within the first six months following any such
divestiture unless there was a substantial change in the employee's duties,
functions and responsibilities or the employee was required to perform the
principal portion of his duties outside his current locale.

ARRANGEMENTS AFTER CONSUMMATION OF THE TRANSACTIONS

Employee Retirement Savings Plan

Effective April 1, 1998, the Company established a retirement savings plan under
Section 401(k) of the Internal Revenue Code (the "Retirement Plan"). The
Retirement Plan covers all non-bargaining unit employees in the United States
from their first day of service. Employees can contribute from 1% to 10% of
their eligible pre-tax pay. The company matches 100% of the first 3% and 50% of
the next 2% of each employee's contribution to the Retirement Plan ("matching
contributions"). Once an employee turns 35, the Company contributes an
additional percentage of the employee's pay based on his/her age ("age-based
contributions"). In addition, the Company makes a special contribution for
long-service and older employees who were participants in the former HII pension
plan in order to make up for future years of nonparticipation in that plan. If
an employee's age plus years of service add up to 65 or more, the Company
contributes an additional percentage of the employee's pay to the Retirement
Plan ("transition contributions"). All contributions are 100% vested upon
contribution. An employee must be active on December 31 of the plan year in
order to qualify for annual Company contributions. During fiscal year 2000, the
Company contributed $9,491, $10,579, 14,894, $5,571 and $6,385 in matching,
transition and age-based contributions to the Retirement Plan for Messrs.
Stinnett, D. Smith, Doolan, R. Smith, and Kerrick. Fiscal year 1999 amounts
include employer matching, transition and age-based contributions of $4,800,
$6,600, $12,000, $5,261, and $5,990 for Messrs. Stinnett, D. Smith, Doolan, R.
Smith, and Kerrick, respectively.

Profit Sharing Plan

The Company has continued the HII profit sharing plan as a component of its
Retirement Plan. The profit sharing plan covers substantially all domestic
employees, except those covered by collective bargaining agreements and
employees of affiliates with separate defined contribution plans. During fiscal
1998, contributions to this plan were based on the Company's "economic value
added" performance. Effective November 1, 1998, contributions are based on
earnings of the Company before interest and taxes. Employees have the option to
receive half of the payment in cash rather than in the form of a contribution to
the Retirement Plan. No amounts were earned in fiscal years 2000 and 1999 under
the profit sharing component of the Company's Retirement Plan.

Employment Agreements and Severance Arrangements

On March 30, 1998, the Company entered into employment agreements with certain
senior managers of the Company. The agreements with Messrs. D. Smith, Doolan,
and Kerrick provided for their employment in their current capacities at that
time for three years, and for additional one year periods thereafter unless
canceled by either party on 60 days notice prior to such renewal date. They
provided Messrs. D. Smith, Doolan, and Kerrick a base salary (subject to annual
review by the Board of Directors) of $111,300, $111,540, and $104,496,
respectively, and an annual performance-based bonus plan (based on Economic
Value Added for 1998 and on EBITDA for years thereafter), the terms of which are
to be agreed upon by the Compensation Committee of the Board of Directors and
the Company's Chief Executive Officer. The agreements also provide for the
indemnification of the executives, and include non-competition and
confidentiality provisions. If the executive resigns for Good Reason (as defined
therein, which definition includes a material reduction of the executive's
duties or substantial change in work conditions, a material decrease in
compensation or benefits, and changes in control of the Company), the executive
is entitled to continuance of his then current base salary for 12 months,
continuation of health and life insurance benefits for 24 months, a pro-rated
bonus, the continuation of other perquisites for six months and payment, if
requested, for all equity in Holdings or the Company held by the executive or
his family. If the executive is terminated by the Company without Cause (as
defined therein, which definition includes the willful failure of the executive
to substantially perform his duties, and the commission of a fraud on the
Company, if not cured within 30 days' written notice thereof), he is entitled to
a lump sum payment equal to his then current annual base salary plus a lump sum
payment equal to the base salary which would otherwise have been payable for the
balance of the fiscal year in which termination occurs, and the same benefits as
if he resigned for Good Reason.

                                       95
<PAGE>

The Company also entered into a new employment agreement with Messr. Maddock on
March 30, 1998. This agreement generally continues in effect until the death of
the executive, the executive's reaching normal retirement age, termination by
the Company for Cause (as defined therein, which definition includes the
executive being absent from work through sickness or disability for more than
six months in any 12 month period, and the executive neglecting to perform his
duties in a material way), termination by the executive for Good Reason (as
defined therein, which definition includes the failure by the Company to pay the
compensation and benefits required by the agreement and a material diminishment
in the duties of the executive), or until terminated by either party upon 12
months notice. Messr. Maddock is entitled to (pound)79,000 base salary, subject
to review annually, a bonus calculated and paid in accordance with the
provisions of the management bonus scheme, an additional payment of
(pound)56,250 for each of 1998 and 1999, pension benefits at least equal in
value to the benefits the executive would have been entitled to under the
previous benefit plan in which such executive participated, and various other
benefits. The executive may terminate the agreement at any time for Good Reason,
in which case the executive is entitled to receive his annual base salary
immediately prior to termination for an additional 12 months and a lump sum of
(pound)56,250 multiplied by two minus the number of times the executive received
this additional payment. The executive is also entitled to continue
participating in the medical, dental and life insurance plans for one year or
until he receives equivalent benefits from a new employer.

The Company entered into an employment agreement with Mr. Stinnett on January
27, 1999. The agreement with Mr. Stinnett provides for his employment in his
current capacity for three years, and for additional one-year periods thereafter
unless canceled by either party on 60 days notice prior to such renewal date. It
provides Mr. Stinnett a base salary (subject to annual review by the Board of
Directors) of $400,000 and an annual performance-based bonus plan (based on
EBITDA), the terms of which are to be agreed upon by the Board of Directors and
Mr. Stinnett. The agreement also provide for the indemnification of Mr.
Stinnett, and includes non-competition and confidentiality provisions. If Mr.
Stinnett resigns for Good Reason (as defined therein, which definition includes
a material reduction of his duties or substantial change in work conditions, a
material decrease in compensation or benefits, and changes in control of the
Company), he is entitled to continuance of his then current base salary for 12
months, continuation of health and life insurance benefits for 24 months, a
pro-rated bonus, the continuation of other perquisites for six months and
payment, if requested, for all equity in Holdings or the Company held by Mr.
Stinnett or his family. If Mr. Stinnett is terminated by the Company without
Cause (as defined therein, which definition includes the willful failure of the
executive to substantially perform his duties, and the commission of a fraud on
the Company, if not cured within 30 days' written notice thereof), he is
entitled to a lump sum payment equal to 1.5 times his then current annual base
salary and the same benefits as if he resigned for Good Reason.

Equity Incentive Plan

In connection with the Recapitalization, the Company committed to establish a
new equity incentive plan to attract and retain key personnel, including senior
management, and to enhance their interest in the Company's continued success.
Holdings reserved 1,186.0849 shares of Holdings Nonvoting Common Stock and
4,328.25 shares of Holdings Series C Junior Voting Preferred Stock with a value
of $8.1 million on March 30, 1998 for this plan (such shares to be denominated
in 8,100 units consisting of 0.1464 shares of Holdings Nonvoting Common Stock
and 0.5344 shares of Holdings Series C Junior Voting Preferred Stock (the
"Equity Units")). The Company had committed to make an initial option grant to
each member of the Company's senior management on March 30, 1998 under such
executive's employment agreement. Messr. D. Smith was to be granted 816 Equity
Units (representing 119.5 shares of Holdings Nonvoting Common Stock and 436.1
shares of Holdings Series C Junior Voting Preferred Stock). Messrs. Doolan,
Maddock and Kerrick were to each be granted 676 Equity Units (representing 99.0
shares of Holdings Nonvoting Common Stock and 361.3 shares of Holdings Series C
Junior Voting Preferred Stock). The initial exercise price of each Equity Unit
covered by the initial option grants to the members of the Company's senior
management was to be $1,000. The Company does not anticipate making additional
option grants to these executives under the plan. Options not previously
exercised or terminated will expire ten years from the date of grant. The
Company did not formally establish the final terms of such Equity Units prior to
its Chapter 11 filing on May 17, 2000.

                                       96
<PAGE>

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth, as of February 13, 2001, the number and
percentage of outstanding shares of voting stock and nonvoting common stock of
Holdings beneficially owned by: (i) each executive officer of Holdings and MMH
and each director of Holdings and MMH; (ii) all directors of Holdings and MMH
and all executive officers of Holdings and MMH as a group; and (iii) each person
known by Holdings to own beneficially more than five percent of Holdings voting
stock, respectively. Holdings believes that each individual or entity named has
sole investment and voting power with respect to shares of voting stock of
Holdings indicated as beneficially owned by them, except as otherwise noted.

<TABLE>
<CAPTION>
                                             NONVOTING      PERCENT      VOTING     PERCENT       SERIES C       PERCENT
NAME AND ADRESS OF BENEFICIAL OWNER         COMMON STOCK   OF CLASS   COMMON STOCK  OF CLASS  PREFERRED STOCK   OF CLASS
5% OWNERS:
<S>                                             <C>         <C>           <C>         <C>          <C>            <C>
Chartwell L.P. (a)......                        3,630       83.4%         7,907       77.8%        34,633         100.0%
   c/o KPMG
   Genesis Building
   448 GT
   Grand Cayman
   Cayman Islands
Harnischfeger Corporation                                                 2,261       22.2%            --             --
   3600 South Lake Drive
   St. Francis, Wisconsin  53235

Named Executive Officers and Directors:
Todd R. Berman (b)                              3,630       83.4%         7,907       77.8%        34,633         100.0%
Michael S. Shein (b)                            3,630       83.4%         7,907       77.8%        34,633         100.0%
Jack F. Stinnett (c) (d)                           --          --            --          --            --             --
David D. Smith (c) (d)                             --          --            --          --            --             --
Peter A. Kerrick (c)                               --          --            --          --            --             --
Edward J. Doolan (c)                               --          --            --          --            --             --
Michael J. Maddock (c) (d)                         --          --            --          --            --             --
Larry Zine                                         --          --            --          --            --             --
Erie Green (a)                                     --          --            --          --            --             --
All directors and officers as a group (14       3,630       83.4%         7,907       77.8%        34,633         100.0%
persons)
</TABLE>

--------------
(a)  Chartwell L.P., a Cayman Islands limited partnership, is the managing
     member of Frasier L.L.C., a Delaware limited liability company, and of
     Niles L.L.C., a Delaware limited liability company, which own 62.4% and
     37.6%, respectively, of the shares of common stock of MHE Investments, a
     Delaware corporation. MHE Investments, in turn, owns 77.8% of the shares of
     Holdings Voting Common Stock and 100.0% of the Holdings Series C Junior
     Voting Preferred Stock. Chartwell L.P. is also the managing member of
     Martin Crane L.L.C., a Delaware limited liability company, which owns 83.4%
     of the shares of Holdings Nonvoting Common Stock. The general partner of
     Chartwell L.P. is Chartwell G.P. Corp., a Cayman Islands company. Chartwell
     G.P. Corp. may be deemed to beneficially own all of the shares of Holdings
     beneficially owned by Chartwell L.P. Mr. Donald Gales owns all of the
     issued and outstanding capital stock of Chartwell G.P. Corp. and,
     consequently, may be deemed to beneficially own all of the shares of
     Holdings beneficially owned by Chartwell G.P. Corp. However, Holdings has
     been advised by each of Chartwell L.P., Chartwell G.P. Corp. and Mr. Gales
     that each disclaims beneficial ownership of such Holdings shares. Todd R.
     Berman, who is a director of Holdings and MMH, is a limited partner of
     Chartwell L.P. Michael S. Shein, who serves as a director and Vice
     President of Holdings and as a director of MMH, is also a limited partner
     of Chartwell L.P. Mr. Berman and Mr. Shein are the managers of Frasier
     L.L.C., Niles L.L.C. and Martin Crane L.L.C. Concurrent with the
     Recapitalization Closing, an affiliate of CIBC World Markets Corp., the
     initial purchaser in the offering of Series A Units, acquired an
     approximately 25.0% interest in each of Frasier L.L.C. and Niles L.L.C. An
     affiliate of CIBC World Markets Corp. also acquired an approximately 25.0%
     interest in Martin Crane L.L.C. Accordingly, CIBC World Markets Corp. holds
     an indirect equity interest in 19.4% of the shares of Holdings Voting
     Common Stock and in 20.9% of the shares of Holdings Nonvoting Common Stock,
     but does not have any beneficial ownership in such shares. Concurrent with
     the Recapitalization Closing, an affiliate of Chase Capital Partners
     acquired an approximately 21.7% interest in Niles L.L.C. An affiliate of
     Chase Capital Partners also acquired an approximately 8.1% interest in
     Martin Crane. Accordingly, Chase Capital Partners holds an indirect equity
     interest in 6.3% of the shares of

                                       97
<PAGE>

     Holdings Voting Common Stock and in 6.8% of the shares of Holdings
     Nonvoting Common Stock, but does not have any beneficial ownership in such
     shares. Eric Green, who is a director of Holdings, is a Partner of Chase
     Capital Partners.

(b)  Chartwell L.P., a Cayman Islands limited partnership, is the managing
     member of Frasier L.L.C., a Delaware limited liability company, and of
     Niles L.L.C., a Delaware limited liability company, which together own
     100.0% of the shares of common stock of MHE Investments, a Delaware
     corporation. MHE Investments, in turn, owns 77.8% of the shares of Holdings
     Voting Common Stock and 100.0% of the Holdings Series C Junior Voting
     Preferred Stock. Chartwell L.P. is also the managing member of Martin Crane
     L.L.C., a Delaware limited liability company, which owns 83.4% of the
     shares of Holdings Nonvoting Common Stock. Todd R. Berman, who is a
     director of Holdings and MMH, is a limited partner of Chartwell L.P.
     Michael S. Shein, who serves as a director and Vice President of Holdings
     and as a director of MMH, is also a limited partner of Chartwell L.P. Mr.
     Berman and Mr. Shein are the managers of Frasier L.L.C., Niles L.L.C. and
     Martin Crane L.L.C. The address of each of Mr. Berman and Mr. Shein is c/o
     Chartwell Investments Inc., 717 Fifth Avenue, 23rd Floor, New York, New
     York 10022.

(c)  Members of the Company's senior management own $850,000 of equity interests
     of Niles L.L.C., constituting 4.2% of the total equity interest in Niles
     L.L.C. Accordingly, members of the Company's senior management collectively
     hold an indirect equity interest in 1.2% of the shares of Holdings Voting
     Common Stock, but do not have any beneficial ownership interests in such
     shares.

(d)  Certain members of the Company's senior management own $46,759 of equity
     interests of Martin Crane L.L.C., constituting 0.93% of the total equity
     interest in Martin Crane L.L.C. Accordingly, certain members of the
     Company's senior management collectively hold an indirect equity interest
     in 0.78% of the shares of Holdings Nonvoting Common Stock, but do not have
     any beneficial ownership interests in such shares.

                                       98
<PAGE>

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Relationship with Harnischfeger

Until the Recapitalization Closing, HII and/or HarnCo performed centrally a
number of functions necessary for the operations of the Company. Under a
management services arrangement with HII, the Company was provided with certain
services, including, but not limited to, matters of organization and
administration, cash management, labor relations, employee benefits, public
relations, financial policies and practices, taxation and legal affairs
(intellectual property, environmental, labor, securities and ERISA compliance,
as well as assistance with product liability cases). The annual fee charged the
Company for these services was based upon a pro rata share of corporate
administration costs using an allocation methodology based on consolidated
worldwide sales. Such fees totaled approximately $1.2 million in fiscal 1998.

Prior to the consummation of the Transactions, the Company also obtained volume
discounts by entering into joint purchase agreements in the United States with
HII, HII's mining equipment operations unit ("Mining") and paper equipment
operations unit ("Paper") for items such as bearings, motors, steel,
maintenance, repair and operational supplies, domestic telephone service and
rates, and fleet and equipment leases (including master capital leases for
vehicles and other equipment). In the United Kingdom, the Company, Mining and
Paper entered into joint purchase agreements for energy, steel and automobile
leases. The Company also had a joint banking program with the other HII
affiliates and participated in a consolidated pension plan in the United
Kingdom. Until August 31, 1998, the Company's hourly shop employees at its Oak
Creek, Wisconsin facility were covered by a collective bargaining agreement
between HarnCo and the United Steelworkers of America, Local 1114 that also
covered certain employees of Mining. Effective September 1, 1998, these
employees were covered by a renegotiated collective bargaining agreement between
the Company and the United Steelworkers of America, Local 1114.

In addition, computer hardware, software licenses and other technology necessary
to operate the Company were owned and/or held by HII and/or HarnCo and were used
by HarnCo. Virtually all information systems necessary to the United States
operations of the Company were shared with HarnCo. Furthermore, the Company
(including all of its foreign operations) was insured pursuant to HII's
insurance program until March 30, 1998. Effective April 1, 1998, the Company
obtained its own insurance coverage, with the exception of medical, dental, life
and long-term disability insurance, which the Company obtained effective January
1, 1999. The Company had a number of other arrangements with HII, HarnCo and/or
their affiliates, including tax allocation agreements and inter-company notes,
all of which terminated upon consummation of the Transactions.

After the Recapitalization Closing, the Company continued to sell certain
products and services to HII affiliates at negotiated rates and performed
certain administrative functions for HarnCo in Mexico. Sales to HII affiliates
amounted to $1.0 million and $3.2 million in fiscal 1999 and 1998, respectively.
The Company had no sales to HII affiliates in fiscal year 2000. In addition,
Mining and Paper provided certain products and services to the Company which
management estimates amounted to approximately $0.8 million, $14.1 million and
$12.4 million in fiscal 2000, 1999 and 1998, respectively. HarnCo manufactured
electric motors, fabricated larger steel girders and did machining on certain
cranes for the Company at cost or at cost plus a percentage. Mining and Paper
also acted as motor rewind subcontractors for the Company. It is contemplated
that these transactions, none of which individually or in the aggregate are
significant to the Company, will continue in the future.

Prior to March 30, 1998, in a number of instances, HII, HarnCo and/or the
Non-MHE HarnCo Affiliates provided contracting credit support in connection with
the Company's business. Certain customers for large crane supply contracts
require the supplier to provide contracting credit support and/or parent
guarantees of performance. This credit support included HarnCo and the Non-MHE
HarnCo Affiliates: (i) providing working capital; (ii) guaranteeing financial
and performance obligations with respect to customer and supply contracts and
relationships; (iii) providing collateral and credit support with respect to
letters of credit, surety bonds or other arrangements of the MHE Business; and
(iv) otherwise being directly and contingently liable for the MHE Business's
obligations (collectively, the "Credit Support Obligations"). In addition, HII
and/or HarnCo guaranteed Company debt and the Company's performance under
certain real estate, vehicle and equipment leases. At October 31, 2000, there
was approximately $9.3 million outstanding under the letters of credit and bonds
provided by HarnCo and Non-MHE HarnCo Affiliates. At October 31, 2000, HarnCo
continues to be shown as the guarantor on the Birmingham, Alabama facility lease
with the Industrial Revenue Board of Birmingham.

Management believes that in the aggregate these products and services can be
obtained on comparable terms from third parties.

Harnischfeger Separation Agreement

The organizational structure of Holdings and its subsidiaries was substantially
reorganized in connection with the anticipated sale of the MHE Business. In
connection therewith, in October 1997 HarnCo transferred the assets of its
Material Handling Equipment Division to MHLLC, a newly-created wholly-owned
subsidiary of the Company. All non-cash assets held by

                                       99
<PAGE>

HarnCo and used exclusively by the MHE Division were transferred or, in the case
of leased personal property, subleased to MHLLC or to one of its affiliates. In
return, MHLLC assumed substantially all of the liabilities of HarnCo and the
Non-MHE HarnCo Affiliates relating to the MHE Business (other than as described
below).

HarnCo has retained certain income and other tax liabilities relating to the MHE
Business, all environmental liabilities relating to the ownership or operation
of any shared facilities and of HarnCo's Orchard Street facility, any
liabilities for which HarnCo or its affiliates have been named as potentially
responsible parties with respect to two Superfund sites, and any liabilities
arising in connection with claims alleging exposure to asbestos (to the extent
there is insurance coverage therefor) in connection with the MHE Business prior
to the Recapitalization Closing. In addition, among other matters, HarnCo and
certain of HarnCo's affiliates have retained all liability for medical and
disability benefit claims for current United States employees made prior to the
Recapitalization Closing, all claims by United States employees who were on
short-term or long-term disability as of the Recapitalization Closing and all
claims with respect to any of the HII benefit plans for former United States
employees of the Company.

Trademark License Agreement

In connection with the Recapitalization, MMH entered into the Trademark
Licensing Agreement with Harnischfeger Technologies, Inc. ("HTI"), an affiliate
of HarnCo, pursuant to which the Company was granted a sole and exclusive
worldwide license to use the "P&H" trade name, trademark and service mark with
respect to all MHE Business products on a worldwide exclusive basis from March
30, 1998 until 15 years after the earlier to occur of a sale of Holdings to a
third party or a public offering of the common stock of Holdings, MMH or their
parents or successors (and for an additional seven years thereafter for
aftermarket products and services). The royalty fee for use of the trademark is
equal to 0.75% of the aggregate net sales of the MHE Business for the ten year
period which commenced March 30, 1999. There will be no royalty fee for the
remainder of the term following such ten year period. The Company accrued $3.4
million of expenses for royalty fees in the period from March 30, 1999 to
October 31, 2000. The Company has elected to defer the payments of the royalty
fees for the periods ended October 31, 1999 and 2000, which would otherwise be
payable on January 30, 2000 and 2001, respectively, pursuant to the terms of
Trademark License Agreement. The Trademark License Agreement provides that the
annual royalty fee may be deferred for up to two years if the Company does not
meet certain financial criteria. The Company can only defer up to two payments
during the term of the agreement. In addition, interest accrues at 12% per year
on the deferred fee payments. The Debtors and Harnischfeger continue to
negotiate towards a consensual resolution of the issues arising from and related
to the Recapitalization and have reached a settlement in principle, subject to
definitive documentation and Bankruptcy Court approval.

Component and Manufactured Products Supply Agreement

At the Recapitalization Closing, the Company entered into a two year agreement
with HarnCo pursuant to which HarnCo was to sell, or have its affiliates sell,
to the Company and to its subsidiaries located in the United States, at cost,
certain products, repair parts and rebuilds as have been previously manufactured
by HarnCo for the Company. The price for these products was the fully absorbed
standard cost for normal production products and repair parts, and the fully
absorbed job cost for rebuilds and repairs.

Transition Services Agreement

On March 30, 1998, the Company entered into a Transition Services Agreement with
HarnCo pursuant to which HarnCo and/or its affiliates provide the Company and
the Company's subsidiaries located in the United States certain specified
transition services for a set monthly price per service, plus cost sharing in
certain instances, for periods ranging up to three years. These services had
been provided historically, and for all of fiscal 1998, but were not covered by
a written agreement until the date of the Transactions. These services include
financial support (including payroll, accounts payable and some accounting), MIS
support (including mainframe applications, PC support, engineering applications,
maintenance, shared products and telephone system support), human resources
support (including assistance in union negotiations, processing support for
workers' compensation claims, screening and hiring of hourly employees and
benefits administration), shared space, warehouse services for repair parts at
one of HarnCo's facilities until July 1998, order processing, office space and
lobby services at HarnCo's offices, employee communications, use of corporate
aircraft owned by HarnCo or its affiliates, and all traffic functions and
transportation of materials between Milwaukee area operations until May 1998.
The Company was charged $2.1 million and $5.0 million for such services during
fiscal 1999 and 1998, respectively, and was charged $0.3 million in fiscal 2000
for MIS support, the only service still being provided to the Company by HarnCo.
This charge will continue to decrease as certain of the MIS support services
provided by HarnCo become no longer necessary.

Health and Welfare Arrangements

<PAGE>

Under the terms of the Recapitalization Agreement, the current United States
employees of the Company continued to participate, from the Recapitalization
Closing until December 31, 1998, in the medical, dental, life and long-term
disability insurance benefit plans that were sponsored by HarnCo for the benefit
of these employees as of the Recapitalization Closing. The Company paid HarnCo
the cost of all benefits provided under these plans. Beginning on January 1,
1999, the Company sponsored its own medical, dental, life and long-term
disability insurance benefit plans.

Stockholders Agreement

At the Recapitalization Closing, Holdings entered into a stockholders' agreement
and registration rights agreement with HarnCo and MHE Investments (the
"Stockholders' Agreement") pursuant to which HarnCo has the right to appoint a
representative to the board of directors of Holdings, so long as HarnCo owns at
least 5% of the outstanding Holdings Voting Common Stock. Certain actions by
Holdings require HarnCo's approval, including non-pro rata redemptions, certain
post-closing affiliate and insider transactions, granting of conflicting rights
or entering into conflicting agreements, and dividends or distributions on, or
redemptions or purchases of, any junior equity stock at any time when dividends
are in arrears on the Holdings Series B Junior Preferred Stock owned by HarnCo.
The Stockholders' Agreement also provides that HarnCo has the right to purchase
its pro rata share of future issuances of Holdings Common Stock except for
issuances of management stock and options and common stock sold in an
underwritten public offering. HarnCo's shares are subject to a right of first
refusal in favor of Holdings and its designees and certain other rights.

Credit Indemnification Agreement

On March 30, 1998, HII and the Company entered into a Credit Indemnification
Agreement pursuant to which HII will maintain in place the credit support
obligations in existence on March 30, 1998 but have no further duty to extend,
renew or enter into any new credit support obligations, other than with respect
to the MHE Business obligations existing at the Recapitalization Closing. Under
the Credit Indemnification Agreement, MMH is required to pay HII, in advance, an
annual fee equal to 1% of the amounts outstanding under each letter of credit
and bond provided by HII and its affiliates (approximately $9.3 million as of
October 31, 2000). MMH accrued a fee of $143,743 for the year ended October 31,
2000. HII is required to refund the Company on a quarterly basis a pro-rata
portion of the annual fee for any reductions in the outstanding amount of credit
that occurred during such quarter. In addition, the Company will reimburse HII
for certain future fees and expenses. The Credit Indemnification Agreement
provides that the Company is to reimburse HII on demand for any payment made by
HII or its affiliates under any of the credit support obligations.

Confidentiality and Non-Competition Agreement

At the Recapitalization Closing, Holdings and HII entered into a Confidentiality
and Non-Competition Agreement, pursuant to which HII agreed, on behalf of itself
and of its subsidiaries, not to, directly or indirectly, participate or engage
in, or assist any person that is engaged in, any business or enterprise that is
competitive with the MHE Business as conducted at the Recapitalization Closing.
In addition, the agreement provides for HII and its affiliates to maintain in
confidence and not use any confidential information of the MHE Business. The
non-compete covenants, which apply worldwide, will be in effect until the later
of (i) the fourth anniversary of the Recapitalization Closing or (ii) the third
anniversary of the date on which a director designated by HII or its affiliates
ceases to serve on the board of directors of Holdings. HII and its affiliates
also agreed not to induce or encourage any current employee of the Company or
any of its affiliates to leave the Company or its affiliates, and not to employ
certain specified officers and employees of the MHE Business for 18 months after
the Recapitalization Closing.

Tax Sharing Agreement

Holdings, its subsidiaries and MHE Investments have entered into a tax sharing
agreement (the "Tax Sharing Agreement") which provides for, among other things,
the allocation of federal, state and local tax liabilities between Holdings, its
subsidiaries and MHE Investments. In general, under the Tax Sharing Agreement,
Holdings and its subsidiaries are responsible for paying their allocable share
of all income taxes shown to be due on the consolidated federal (and any
comparable state or local) income tax return filed by MHE Investments.

Loans to Management

At the Recapitalization Closing, the Company made short-term loans in an
aggregate principal amount of $900,000 to members of the Company's senior
management to purchase equity interests in Niles L.L.C., an indirect minority
shareholder of Holdings, in accordance with the terms of certain promissory
notes, with proceeds from the Senior Notes and/or the New Credit Facility. The
original principal amounts of the loans to Messrs. D. Smith, Maddock, Doolan and
Kerrick were $110,000, $125,000, $100,000 and $70,000, respectively, and have
been repaid in full. On June 30, 1999, the Company made a loan in

                                      101
<PAGE>

the amount of $150,000 to Mr. Stinnett, who purchased 80% of Mr. Erwin's equity
interest in Niles L.L.C. At October 31, 2000, the principal amount of the note
outstanding for Mr. Stinnett was $150,000. Interest was charged on each of the
notes at a rate per annum equal at all times to the Federal Short-Term Rate in
effect from time to time, from the date of issuance until such note was repaid
in full. The principal amount of the loan to Mr. Stinnett and the interest
thereon will be payable in full in the event he ceases to be employed by the
Company as a result of termination for Cause (as defined therein), or by reason
of his death or resignation for other than Good Reason (as defined therein), or
upon an Event of Default (as defined therein). As collateral for the note to Mr.
Stinnett granted to the Company a security interest in the equity interests in
Niles L.L.C. he acquired with the proceeds of the loans.

Chartwell Financial Advisory Agreement

The Company entered into an agreement with Chartwell Investments Inc., providing
for the payment of fees and reimbursement of expenses to Chartwell Investments
Inc. for acting as financial advisor with respect to the Transactions, including
soliciting, structuring and arranging the financing of the Transactions. The
fees, totaling $5.0 million, equal to 1% of the consolidated capitalization of
Holdings and the reimbursement of expenses, were paid at the Recapitalization
Closing. Mr. Berman and Mr. Shein are, respectively, Chairman of the Board and a
director of each of Holdings and MMH and both are officers and directors of
Chartwell Investments Inc.

Chartwell Management Consulting Agreement

The Company has entered into a management consulting agreement with Chartwell
Investments Inc. pursuant to which Chartwell Investments Inc. provides the
Company with certain management, advisory and consulting services for a fee of
$1.0 million for each fiscal year of the Company during the term of the
agreement, plus reimbursement of expenses. The term of the management consulting
agreement is 10 years commencing at the Recapitalization Closing and is
renewable for additional one year periods unless the Board of Directors of the
Company gives prior written notice of non-renewal to Chartwell Investments Inc.
Mr. Berman and Mr. Shein are, respectively, Chairman of the Board and a director
of each of Holdings and MMH and both are officers and directors of Chartwell
Investments Inc. The Company paid Chartwell $1.0 million, $1.0 million and $0.6
million plus expenses during fiscal 2000, 1999 and 1998, respectively.

Prepetition Credit Facility Participation

On August 2, 1999, the Company obtained an amendment to the New Credit Facility
that cured past financial covenant violations and reset the financial covenants
until April 2001. In connection with, and as a condition to, the New Credit
Facility Amendment, Martin Crane L.L.C., a Delaware limited liability company,
purchased a $5.0 million participation in the New Credit Facility and received
certain non-voting equity interests in Holdings, consisting of 25% of the
outstanding Holdings Common Stock.

Chartwell L.P., a Cayman Islands limited partnership, is the managing member of
Martin Crane. Chartwell L.P. is the managing member of Frasier L.L.C. and Niles
L.L.C., which collectively indirectly own 77.8% of the Holdings Voting Common
Stock and all of the Holdings Series C Junior Voting Preferred Stock. Todd R.
Berman, who is Chairman of the Board of Holdings and MMH, is a limited partner
of Chartwell L.P. Michael S. Shein, who serves as a director and Vice President
of Holdings and as a director of MMH, is also a limited partner of Chartwell
L.P. Mr. Berman and Mr. Shein are, respectively, Chairman of the Board and a
director of each of Holdings and MMH and both are officers and directors of
Chartwell Investments Inc. Mr. Berman and Mr. Shein are the managers of Martin
Crane.

An affiliate of CIBC World Markets Corp. owns an approximately 25.0% interest in
Martin Crane. Jay R. Bloom, who serves as a director of Holdings, is a Managing
Director of CIBC World Markets Corp. An affiliate of Chase Capital Partners owns
an approximately 8.1% interest in Martin Crane. Eric Green, a director of
Holdings, is a Partner in Chase Capital Partners.

                                      102
<PAGE>

                                     PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

    (A)  1.   FINANCIAL STATEMENTS

              Reference should be made to the index included in Item 8 of this
              Form 10-K for a complete list of the financial statements filed as
              part of this report.

         2.   FINANCIAL STATEMENT SCHEDULES INCLUDED IN PART IV OF THIS REPORT

              Reference should be made to the index included in Item 8 of this
              Form 10-K for a complete list of the financial statements filed as
              part of this report.


         3.   EXHIBITS AND EXHIBIT INDEX

   EXHIBIT
   NUMBER                                     EXHIBIT
   ------                                     -------

    2.1(aa)   Recapitalization Agreement, dated January 28, 1998, among
              Harnischfeger Corporation, the sellers named therein and MHE
              Investments, Inc., as amended.

    3.1(aa)   Second Amended and Restated Certificate of Incorporation of MMH
              Holdings, Inc.

    3.2(cc)   Certificate of Incorporation of Morris Material Handling, Inc.

    3.3(aa)   Bylaws of MMH Holdings, Inc.

    3.4(cc)   Bylaws of Morris Material Handling, Inc.

    3.5(aa)   Certificate of Designations of the Powers, Preferences and
              Relative, Participating, Optional and Other Special Rights of 12%
              Series A Senior Exchangeable Preferred Stock, and Qualifications,
              Limitations and Restrictions Thereof.

    3.6(aa)   Certificate of Designations of the Powers, Preferences and
              Relative, Participating, Optional and Other Special Rights of 12
              1/4% Series B Junior Exchangeable Preferred Stock, and
              Qualifications, Limitations and Restrictions Thereof.

    3.7(aa)   Certificate of Designations of the Powers, Preferences and
              Relative, Participating, Optional and Other Special Rights of 12
              1/2% Series C Junior Preferred Stock, and Qualifications,
              Limitations and Restrictions Thereof.

    4.1(aa)   Preferred Stock Registration Rights Agreement, dated as of March
              30, 1998, by and among MMH Holdings, Inc. and CIBC Oppenheimer
              Corp.

    4.2(cc)   Registration Rights Agreement, dated as of March 30, 1998, by and
              among Morris Material Handling, Inc, the Guarantors named therein
              and CIBC Oppenheimer Corp., Goldman, Sachs & Co. and Indosuez
              Capital.

    4.3(aa)   Common Stock Registration Rights and Stockholders Agreement, dated
              as of March 30, 1998, among MMH Holdings, Inc., Chartwell, L.P.
              and CIBC Oppenheimer Corp.

    4.4(cc)   Indenture, dated as of March 30, 1998, between Morris Material
              Handling, Inc. and United States Trust Company of New York, as
              Trustee, relating to Morris Material Handling, Inc.'s 9 1/2%
              Senior Notes due 2008.

    4.5(cc)   Form of 9 1/2% Senior Note due 2008.


                                      103
<PAGE>

   EXHIBIT
   NUMBER                                     EXHIBIT
   ------                                     -------

    4.6(bb)   Credit Agreement, dated March 30, 1998, among MMH Holdings, Inc.,
              Morris Material Handling, Inc., Material Handling, LLC, Morris
              Material Handling, Ltd., Mondel ULC, Kaverit Steel and Crane ULC
              and Canadian Imperial Bank of Commerce, as Administrative Agent,
              Credit Agricole Indosuez, as Syndication Agent, BankBoston, N.A.,
              as Documentation Agent, and the Lending Institutions listed
              therein.

    4.7(cc)   U.S. Security Agreement, dated as of March 30, 1998, made by
              Morris Material Handling, Inc., the Guarantors listed therein, in
              favor of Canadian Imperial Bank of Commerce.

    4.8(aa)   Guarantee, dated as of March 30, 1998, by MMH Holdings, Inc., in
              favor and for the benefit of Canadian Imperial Bank of Commerce.

    4.9(aa)   Guarantee, dated as of March 30, 1998, by each of the subsidiary
              Guarantors named therein, in favor and for the benefit of Canadian
              Imperial Bank of Commerce.

    4.10(aa)  Stockholders and Registration Rights Agreement, dated as of March
              30, 1998, by and among MMH Holdings, Inc., MHE Investments, Inc.
              and Harnischfeger Corporation.

    4.11(aa)  Form of Indenture dated as of March 30, 1998, among MMH Holdings,
              Inc., as the Issuer, and United States Trust Company of New York,
              as the Trustee for 12% Exchange Debentures Due 2009.

    4.12(aa)  Form of 12% Exchange Debenture Due 2009.

    4.13(dd)  Amendment No.1 dated as of August 28, 1998 to the Credit
              Agreement, dated March 30, 1998, among MMH Holdings, Inc., Morris
              Material Handling, Inc., Material Handling, LLC, Morris Material
              Handling, Ltd., Mondel ULC, Kaverit Steel and Crane ULC and
              Canadian Imperial Bank of Commerce, as Administrative Agent,
              Credit Agricole Indosuez, as Syndication Agent, Bank Boston, N.A.,
              as Documentation Agent, and the Lending Institutions listed
              therein.

    4.14(dd)  Waiver dated as of March 2, 1999 by and among MMH Holdings, Inc.,
              Morris Material Handling, Inc., Morris Material Handling, LLC,
              Morris Material Handling, Ltd., Mondel ULC, Kaverit Steel and
              Crane ULC, the lending institutions listed on the signature pages
              thereto, Credit Agricole Indosuez, BankBoston, N.A. and Canadian
              Imperial Bank of Commerce.

    4.15(dd)  Waiver No. 2 dated as of June 14, 1999 by and among MMH Holdings,
              Inc., its subsidiaries named on the signature pages thereto, and
              the Agents and lending institutions named on the signature pages.

    4.16*     Waiver No. 3 dated as of June 30, 1999 among MMH Holdings, Inc.,
              its subsidiaries named on the signature pages thereto, and the
              Agents and lending institutions named on the signature pages
              thereto.

    4.17(ee)  Amendment No. 2 dated as of August 2, 1999 to the Credit Agreement
              dated as of March 30, 1998 among (i) MMH Holdings, Inc., (ii)
              Morris Material Handling, Inc., (iii) Morris Material Handling,
              LLC, (iv) Morris Material Handling Equipment Limited, (v) Mondel
              ULC, (vi) Kaverit Steel and Crane ULC, (vii) the Banks referred to
              therein, (viii) the New York branch of Credit Agricole Indosuez,
              as syndication agent, (ix) BankBoston, N.A., as documentation
              agent and (x) Canadian Imperial Bank of Commerce, as
              administrative agent and collateral agent.

    4.18(ee)  Subordination and Participation Agreement dated as of August 2,
              1999 among (i) Canadian Imperial Bank of Commerce; (ii) the
              Selling Banks listed therein; (iii) Martin Crane L.L.C.; (iv) MMH
              Holdings, Inc.; (v) Morris Material Handling, Inc. and Morris
              Material Handling, LLC; and (vi) the Subsidiaries listed therein.

    4.19*     Amendment No. 3 and Waiver dated as of January 31, 2000 to the
              Credit Agreement dated as of March 30, 1998 among (i) MMH
              Holdings, Inc., (ii) Morris Material Handling, Inc., (iii) Morris
              Material Handling, LLC, (iv) Morris Material Handling Equipment
              Limited, (v) Kaverit Steel and Crane ULC, (vi) the Banks referred
              to therein, (vii) the New York branch of Credit Agricole Indosuez,
              as syndication agent, (viii) BankBoston, N.A., as documentation
              agent and (ix) Canadian Imperial Bank of Commerce, as
              administrative agent and collateral agent.

                                      104
<PAGE>

   EXHIBIT
   NUMBER                                     EXHIBIT
   ------                                     -------

    10.1(aa)  Surety Arrangement, dated March 30, 1998, among Reliance Insurance
              Companies, MMH Holdings, Morris Material Handling, Inc. and
              certain of their subsidiaries.

    10.2(aa)  Credit Indemnification Agreement between Harnischfeger Industries,
              Inc. and Morris Material Handling, Inc., dated as of March 30,
              1998.

    10.3(aa)  Tax Sharing Agreement between MHE Investments, Inc., MMH Holdings,
              Inc. and certain of MMH Holdings, Inc.'s subsidiaries, dated March
              30, 1998.

    10.4(aa)  Component and Manufactured Products Supply Agreement between
              HarnCo and Morris Material Handling, Inc., dated as of March 30,
              1998.

    10.5(aa)  Transition Services Agreement between HarnCo and Morris Material
              Handling, Inc., dated as of March 30, 1998.

    10.6(aa)  Trademark License Agreement between Harnischfeger Technologies,
              Inc. and Morris Material Handling, Inc., dated as of March 30,
              1998.

    10.7(aa)  Management Consulting Agreement between Morris Material Handling,
              Inc. and Chartwell Investments Inc., dated March 30, 1998.

    10.8(aa)  Financial Advisory Agreement between Morris Material Handling,
              Inc. and Chartwell Investments Inc., dated March 30, 1998.

    10.9(aa)  Separation Agreement, dated October 26, 1997, between
              Harnischfeger Corporation and Material Handling, LLC.

    10.10(aa) Share and Asset Purchase Agreement between PHMH Holding Company,
              James Gann, Sr., James Gann, Jr. and Gail Gann, dated February 14,
              1997.

    10.12(bb) Employment Agreement, dated March 30, 1998, between Morris
              Material Handling, Inc. and David D. Smith.

    10.15(bb) Employment Agreement, dated March 30, 1998, between Morris
              Material Handling, Inc. and Peter A. Kerrick.

    10.16(bb) Employment Agreement, dated March 30, 1998, between Morris
              Material Handling, Inc. and Edward J. Doolan.

    10.17(bb) Service Agreement, dated March 30, 1998, between Morris Mechanical
              Handling Limited and M J Maddock.

    10.19(bb) Form of Promissory Note, dated March 30, 1998, between Michael S.
              Erwin and Morris Material Handling, Inc.

    10.20(bb) Form of Promissory Note, dated March 30, 1998, between David D.
              Smith and Morris Material Handling, Inc.


                                      105
<PAGE>

   EXHIBIT
   NUMBER                                     EXHIBIT
   ------                                     -------

    10.21(bb) Form of Promissory Note, dated March 30, 1998, between Martin L.
              Ditkof and Morris Material Handling, Inc.

    10.22(bb) Form of Promissory Note, dated March 30, 1998, between Richard J.
              Niespodziani and Morris Material Handling, Inc.

    10.23(bb) Form of Promissory Note, dated March 30, 1998, between Peter A.
              Kerrick and Morris Material Handling, Inc.

    10.24(bb) Form of Promissory Note, dated March 30, 1998, between Edward J.
              Doolan and Morris Material Handling, Inc.

    10.25(bb) Form of Promissory Note, dated March 30, 1998, between M J Maddock
              and Morris Material Handling, Inc.

    10.26(bb) Form of Promissory Note, dated March 30, 1998, between K B
              Norridge and Morris Material Handling, Inc.

    10.27(ff) Morris Material Handling Employee Retirement Savings Plan.

    10.28*    Employment Agreement, dated as of January 27, 1999, between Jack
              Stinnett and Morris Material Handling, Inc.

    10.29*    Promissory Note, dated June 30, 1999, between Jack Stinnett and
              Morris Material Handling, Inc.

    10.30*    Share Purchase Agreement, dated as of December 16, 1999, by and
              among 3016117 Nova Scotia ULC, Morris Material Handling, Inc. and
              Magnetek Mondel Holding ULC.

    10.31*    Intellectual Property Transfer Agreement, dated as of December 16,
              1999, between MHE Technologies, Inc. and Mondel ULC.

    11.1(gg)  Revolving Credit and Guaranty Agreement, dated as of May 18, 2000,
              among Morris Material Handling, Inc., MMH Holdings, and certain
              subsidiaries listed therein, Canadian Imperial Bank of Commerce,
              as Administrative Agent, and the Lending Institutions listed
              therein.

    11.2(gg)  Amendment to Revolving Credit and Guaranty Agreement, dated as of
              September 29, 2000, among Morris Material Handling, Inc., MMH
              Holdings, and certain subsidiaries listed therein, Canadian
              Imperial Bank of Commerce, as Administrative Agent, and the
              Lending Institutions listed therein.

    11.3(gg)  Waiver to the Revolving credit and Guaranty Agreement, dated as of
              March 8, 2001, among Morris Material Handling, Inc., MMH Holdings,
              Inc. its subsidiaries named on the signature pages thereto, and
              the Agents and lending institutions named on the signature pages
              thereto.

    22.*      Subsidiaries of MMH Holdings, Inc. and Morris Material Handling,
              Inc.

    27.       Financial Data Schedule.

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

(aa)     Incorporated by reference to Holdings' Registration Statement on Form
         S-4 (Registration No. 333-52529) filed with the Commission on May 13,
         1998.

(bb)     Incorporated by reference to Amendment No. 2 to the Issuer's
         Registration Statement on Form S-4 (Registration No. 333-52529) filed
         with the Commission on July 22, 1998.

(cc)     Incorporated by reference MMH's Registration Statement on Form S-4
         (Registration No. 333-52527) filed with the Commission on May 13, 1998.

(dd)     Incorporated by reference to MMH Holdings, Inc.'s and Morris Material
         Handling, Inc.'s Quarterly Report on Form 10-Q for the quarterly period
         ended April 30, 1999.

(ee)     Incorporated by reference to MMH Holdings, Inc.'s and Morris Material
         Handling, Inc.'s Quarterly Report on Form 10-Q for the quarterly period
         ended July 31, 1999.

                                      106

<PAGE>

(ff)     Incorporated by reference to MMH Holdings, Inc.'s and Morris Material
         Handling, Inc.'s Annual Report on Form 10-K for the fiscal year ended
         October 31, 1998.

  *      Filed herewith.

         (B)  REPORTS ON FORM 8-K.

              None.








                                      107

<PAGE>

                               MMH HOLDINGS, INC.
                                   SCHEDULE II
                        VALUATION AND QUALIFYING ACCOUNTS
                             (THOUSANDS OF DOLLARS)

<TABLE>
<CAPTION>

                                              Balance at   Additions                    Currency                  Balance at
                                              Beginning    Charged to                  Translation                  End of
Classification                                 of Year      Expense     Deductions (1)   Effects       Other (2)      Year
--------------                                 -------      -------     --------------   -------       ---------      ----
<S>                                            <C>          <C>           <C>            <C>           <C>           <C>
Allowance Deducted in Balance Sheet from
   Accounts Receivable:

For the year ended October 31, 2000
   Doubtful accounts                           $ 1,725      $ 3,200       $(1,637)       $  (231)      $     2       $ 3,059
                                               ==============================================================================

For the year ended October 31, 1999
   Doubtful accounts                           $ 1,606      $ 2,407       $(2,396)       $   (28)      $   136       $ 1,725
                                               ==============================================================================

For the year ended October 31, 1998
   Doubtful accounts                           $ 1,330      $ 1,219       $  (861)       $   (16)      $   (66)      $ 1,606
                                               ==============================================================================

</TABLE>

(1)   Represents write-off of bad debts, net of recoveries.
(2)   Represents reclasses to other reserve accounts and reserves acquired in
      acquisitions.






                                      108
<PAGE>

                         MORRIS MATERIAL HANDLING, INC.
                                   SCHEDULE II
                        VALUATION AND QUALIFYING ACCOUNTS
                             (THOUSANDS OF DOLLARS)

<TABLE>
<CAPTION>


                                       Balance at   Additions                       Currency                   Balance at
                                        Beginning   Charged to                     Translation                   End of
Classification                           of Year     Expense     Deductions (1)      Effects      Other (2)       Year
--------------                           -------     -------     --------------      -------      ---------       ----
<S>                                      <C>          <C>          <C>               <C>           <C>           <C>
Allowance Deducted in Balance
Sheet from Accounts Receivable:

For the year ended October 31, 2000
   Doubtful accounts                     $ 1,725      $ 3,200      $(1,637)          $  (231)      $     2       $ 3,059
                                         ===============================================================================

For the year ended October 31, 1999
   Doubtful accounts                     $ 1,606      $ 2,407      $(2,396)          $   (28)      $   136       $ 1,725
                                         ===============================================================================

For the year ended October 31, 1998
   Doubtful accounts                     $ 1,330      $ 1,219      $  (861)          $   (16)      $   (66)      $ 1,606
                                         ===============================================================================
</TABLE>


(1)  Represents write-off of bad debts, net of recoveries.
(2)  Represents reclasses to other reserve accounts and reserves acquired in
     acquisitions.


                                      109

<PAGE>

                                   SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
behalf by the undersigned, thereunto duly authorized, on the 27th day of March,
2001.

                                                      MMH HOLDINGS, INC.



                                                      By: /s/ Jack F. Stinnett
                                                          ----------------------
                                                          Jack F. Stinnett
                                                          chairman of the Board



            Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the date indicated.

Signature                             Title                            Date
---------                             -----                            ----

/s/ Jack F. Stinnett            President, Chief Executive        March 27, 2001
---------------------------     Officer and Chairman of
(Jack F. Stinnett)              the Board of Directors
                                (Principal Executive Officer)

 /s/ David D. Smith             Vice President                    March 27, 2001
---------------------------     Officer and Chairman of
(David D. Smith)                (Principal Financial and
                                Accounting Officer)


/s/ Michael S. Shein            Vice President and Director       March 27, 2001
---------------------------
(Michael S. Shein)


/s/ Todd R. Berman              Director                          March 27, 2001
---------------------------
(Todd R. Berman)


/s/ Larry Zine                  Director                          March 27, 2001
---------------------------
(Larry Zine)


/s/ Eric Green                  Director                          March 21, 2001
---------------------------
(Eric Green)



                                      110

<PAGE>


                                   SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
behalf by the undersigned, thereunto duly authorized, on the 27th day of March,
2001.


                                          MORRIS MATERIAL HANDLING, INC.



                                          By: /s/ Jack F. Stinnett
                                              -------------------------------
                                              Jack F. Stinnett
                                              chairman of the Board



     Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the date indicated.


Signature                             Title                          Date
---------                             -----                          ----
/s/ Jack F. Stinnett           President, Chief Executive        March 27, 2001
-------------------------      Officer and Chairman of
(Jack F. Stinnett)             the Board of Directors
                               (Principal Executive
                               Officer)

/s/ David D. Smith             Vice President                    March 27, 2001
-------------------------      (Principal Financial and
(David D. Smith)               Accounting Officer)


/s/ Todd R. Berman             Director                          March 27, 2001
-------------------------
(Todd R. Berman)


/s/ Michael S. Shein           Director                          March 27, 2001
-------------------------
(Michael S. Shein)




                                       111
<PAGE>


                    SUPPLEMENTAL INFORMATION TO BE FURNISHED
                  WITH REPORTS FILED PURSUANT TO SECTION 15(D)
                    OF THE ACT BY REGISTRANTS WHICH HAVE NOT
             REGISTERED SECURITIES PURSUANT TO SECTION 12 OF THE ACT


No annual report or proxy material has been sent to security holders of either
Holdings or MMH.