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UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

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FORM 10-K

|/x/                                        |  | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934    
|------------------------------------------ |  | ----------------------------------------------------------------------------------------
|For the fiscal year ended January 31, 2001
|/ /                                        |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|For the Transition Period From  to        
|Commission file number 1-12557            

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

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

2201 N.E. 201st Ave. Fairview, Oregon 97024-9718(Address of principal executive office) (Zip Code)

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

Securities
registered pursuant to Section 12(b) of the Act: Common Stock, par value $.50 per share

Name
of exchange on which registered:New York Stock Exchange

Securities
registered pursuant to Section 12(g) of the Act:None

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

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 the
registrant's 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/

The
aggregate market value of common stock held by non-affiliates of the registrant as of March 31, 2001 was $146,087,395.

The
number of shares outstanding of the registrant's common stock as of March 31, 2001 was 11,439,890.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the definitive Proxy Statement to be filed on or before May 23, 2001, to be delivered to shareholders in connection with the Annual Meeting
of Shareholders to be held June 14, 2001 are incorporated by reference into Part III.

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TABLE OF CONTENTS

|           |          |    |                                                                                       |  | Page
|---------- | -------- | -- | ------------------------------------------------------------------------------------- |  | ----
|PART I     |          |    |                                                                                       | 
|           | Item 1.  |    | Business:                                                                             |  |     
|           |          |    | General                                                                               |  | 1   
|           |          |    | Attachment Products                                                                   |  | 1   
|           |          |    | Fork Products                                                                         |  | 2   
|           |          |    | Customers                                                                             |  | 2   
|           |          |    | Research and Development                                                              |  | 2   
|           |          |    | Environmental Matters                                                                 |  | 2   
|           |          |    | Formation of Special Board Committee                                                  |  | 3   
|           |          |    | Employees                                                                             |  | 3   
|           |          |    | Foreign Operations                                                                    |  | 3   
|           |          |    | Forward-looking Statements                                                            |  | 4   
|           | Item 2.  |    | Properties                                                                            |  | 4   
|           | Item 3.  |    | Legal Proceedings                                                                     |  | 4   
|           | Item 4.  |    | Submission of Matters to a Vote of Security Holders                                   |  | 5   
|PART II    |          |    |                                                                                       | 
|           | Item 5.  |    | Market for Registrant's Common Equity and Related Stockholder Matters                 |  | 5   
|           | Item 6.  |    | Selected Financial Data                                                               |  | 6   
|           | Item 7.  |    | Management's Discussion and Analysis of Financial Condition and Results of Operations |  | 7   
|           | Item 7A. |    | Quantitative and Qualitative Disclosures About Market Risk                            |  | 12  
|           | Item 8.  |    | Financial Statements and Supplementary Data                                           |  | 13  
|           | Item 9.  |    | Changes in and Disagreements With Accountants on Accounting and Financial Disclosure  |  | 35  
|PART III   |          |    |                                                                                       | 
|           | Item 10. |    | Directors and Executive Officers of the Registrant                                    |  | 35  
|           | Item 11. |    | Executive Compensation                                                                |  | 36  
|           | Item 12. |    | Security Ownership of Certain Beneficial Owners and Management                        |  | 36  
|           | Item 13. |    | Certain Relationships and Related Transactions                                        |  | 36  
|PART IV    |          |    |                                                                                       | 
|           | Item 14. |    | Exhibits, Financial Statement Schedules, and Reports on Form 8-K                      |  | 36  
|SIGNATURES |          | 37

NOTE:  All
references to fiscal years are defined as year ended January 31, 2001 (fiscal 2001), year ended January 31, 2000 (fiscal 2000) and year ended January 31,
1999 (fiscal 1999).

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PART I

Item 1.  Business

General

Cascade Corporation is a corporation organized in 1943 under the laws of the State of Oregon. The term "the Company" includes Cascade Corporation and its
subsidiaries. The Company's headquarters are located in Fairview, Oregon, a suburb of Portland, Oregon. The Company is one of the world's leading manufacturers of attachments, hose reels,
sideshifters, hydraulic cylinders and related replacement parts, primarily for the lift truck industry. Acquisitions in 1996 and 1997 expanded the attachment and hydraulic cylinder product
capabilities and broadened the Company's focus to include fork products, also primarily for the lift truck industry. The Company sold its mast business unit in January, 1999, and its industrial tires
division in April, 1999. The Company's business is now focused on its primary attachment and fork products.

Attachment Products

The Company's attachment products include an extensive line of hydraulically actuated attachments designed for mounting on industrial lift trucks. Attachment
products are manufactured with the Cascade name and symbol, for which the Company has secured trademark protection. The primary function of these products is to increase the scope and efficiency of
materials handling applications normally performed by lift trucks. The product line offers a wide variety of functionally different attachments, each of which has several models, capacities and
optional combinations. Attachments have been designed to clamp, lift, rotate, push, pull, tilt and sideshift a variety of loads such as appliances, paper rolls, baled materials, textiles, beverage
containers, drums, canned goods, bricks, masonry blocks, lumber, plywood and boxed, packaged, palletized and containerized products of virtually all types.

In
addition, attachment products include hydraulic cylinders, which are used to transmit power in lift trucks and other types of machinery and industrial equipment. A substantial
number of cylinders are utilized in the Company's proprietary lift truck attachment products. Hydraulic cylinders are also sold to manufacturers of various types of materials handling and other mobile
equipment, usually through the customer's purchasing and engineering departments.

The
Company is one of the leading domestic and foreign independent suppliers of hydraulically actuated materials handling equipment designed for mounting on industrial lift trucks.
Several lift truck manufacturers, who are customers of the Company, are also competitors in varying degrees to the extent that they manufacture a portion of their attachment requirements. Since the
Company offers a broad line of attachment products capable of supplying a significant part of the total requirements for the entire lift truck industry, its experience has shown that lower costs
resulting from its relatively high unit volume would be difficult for any individual lift truck manufacturer to achieve.

The
manufacturing of attachment products includes the purchase of raw materials and components, principally rolled products from steel mills, unfinished castings and forgings,
hydraulic motors and hardware items such as fasteners, rollers, hydraulic seals and hose assemblies. The Company is not currently experiencing any shortages in obtaining raw materials or purchased
parts. A portion of rolled steel is purchased from a German steel mill. With respect to other materials, the Company has several domestic and foreign suppliers. Difficulties in obtaining any of those
items could affect operating results.

Domestic
manufacturing activities for attachment products are conducted in plants in Portland, Oregon, Springfield, Ohio, Beulaville, North Carolina and Warner Robins, Georgia.
Foreign manufacturing sites are located in the United Kingdom, The Netherlands, Australia, Canada and China. In addition, the Company has sales, engineering and warehousing facilities in Japan, South
Korea, Germany, France, Spain, Finland, New Zealand and South Africa.

1

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Fork Products

In March 1997, the Company added fork products to its product line with the purchase of Kenhar Corporation. Fork products are subject to strict design,
construction and safety requirements established by industry associations and the International Standards Association. The Company continues to market under the Kenhar brand name. Kenhar forks are
carefully designed and engineered products requiring specially formulated steel, a manufacturing process which strengthens the
"heel", certified welding of the brackets which hold them to the carriage and heat treatment of the finished product.

The
Company presently offers a wide variety of both standardized and specialized forks. Fork characteristics are dictated by the expected capacity to be lifted, the characteristics of
the load, the ambient environment in which employed, the terrain over which the load will be moved and the operational life cycle of the vehicle using the fork. Accordingly, while there are some
standard fork products, the market demands a wide range of forks in custom sizes and shapes.

The
Company is one of the leading independent manufacturers of forks for lift trucks in the world. Market share varies by geographic region. The Company believes it is the leading
manufacturer in North America and the preferred supplier of many OEMs (original equipment manufacturers) as well as after-market dealers and distributors. The Company also has significant market share
in Europe and is continuing its sales and manufacturing expansion into the Asia/Pacific region. Since the Company offers a broad range of both standard and specialized forks, it is capable of
supplying a significant part of the total requirements for the lift truck industry. In addition to sales to the lift truck market, the Company has an increasing market share of forks sold to OEMs of
construction, mining, agricultural and industrial (other than lift trucks) mobile equipment.

The
Company purchases various materials and components necessary to produce its fork products, for which the principal material purchased is bar steel. The Company is not currently
experiencing any shortage in obtaining bar steel which it obtains from steel mills under annual pricing agreements. While the Company has alternative suppliers of bar steel identified, difficulties in
obtaining alternative sources of bar steel could affect the operating results should bar steel from one of its primary suppliers become unavailable.

Domestic
fork product manufacturing activities are conducted in Findlay, Ohio. Foreign manufacturing sites are located in the United Kingdom, France, Italy, China, Canada and South
Korea.

Customers

Attachment products are sold to both OEMs and equipment dealers. Products are marketed throughout the United States, Canada, Latin America, Europe, the Middle
East, Australia, Africa and Asia. Since attachment products are sold to OEMs manufacturers and their dealers, a substantial portion of sales are to a few major customers. As with attachment products,
the Company's fork product sales are primarily related to the lift truck industry and are sold primarily to OEM's. None of the Company's customers account for more than 10% of total net sales.

Research and Development

Most of the Company's research and development activities are performed in a 28,000-square-foot product development center in Portland, Oregon. The Company's
engineering staff develops and designs substantially all of the products sold by the Company. This staff is continually involved in developing new products and applications in the materials handling
field. The Company does not consider patents to be important to the attachment and fork products business.

Environmental Matters

From time to time the Company is the subject of investigations, conferences, discussions, and negotiations with various federal, state, local and foreign
agencies with respect to cleanup of hazardous

2

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waste and compliance with environmental laws and regulations. Note 15 to the Consolidated Financial Statements (Item 8), "Legal Proceedings" (Item 3) and "Management's Discussion
and Analysis of Financial Conditions and Results of Operations" (Item 7) contain additional information concerning the Company's environmental matters.

Formation of Special Board Committee

On March 29, 2000, Robert C. Warren, Jr., President and Chief Executive Officer, advised the Company's Board of Directors that he and a management group
were exploring the possibility for the Company to be taken private in a management led leveraged buyout. Then Chairman, C. Calvert Knudsen, appointed a Special Committee of independent directors,
consisting of James S. Osterman, Committee Chairman, Nicholas R. Lardy, Ernest C. Mercier and Nancy Wilgenbusch, to consider options to increase shareholder value. Henry Wessinger II later joined the
Special Committee. On May 11, 2000, the Special Committee announced it had retained Gleacher & Co. to advise it on strategic alternatives to maximize shareholder value, including a sale
or merger of the Company. After an extensive due diligence process, which involved the evaluation of the Company by several parties, including the Company's management group, the Special Committee
received a number of proposals.

On
October 18, 2000, the Company entered into a merger agreement with acquisition companies formed by Lift Technologies, Inc., a manufacturer of lift truck masts, TD Capital
Group Limited, a member of the Toronto Dominion Bank Group and the Ontario Municipal Employees Retirement Fund (Lift Group). Under the terms of the merger agreement each share of Cascade's common
stock would be converted into the right to receive $17.25 in cash and the Company would become a wholly-owned subsidiary of a corporation formed by the Lift Group and continue doing business under its
current name. On March 2, 2001, the Company announced that the anticipated March 31, 2001 closing date for the merger could not be met because the Lift Group planned to revise its
proposal due to complications attributable to environmental litigation against Cascade.

The
Company's Board of Director's announced on April 17, 2001 that it had notified the Lift Group that it had terminated the merger agreement. The Board of Directors made the
decision after reviewing a revised proposal submitted by the Lift Group for $15.75 per share, which included certain contingencies primarily related to the Lift Group's financing. The Board of
Directors cited several factors as contributing to its decision. These factors included uncertainty over whether the transaction would close due to current conditions in the financing markets, pending
environmental litigation with the City of Portland, the reduction in the per share price in the Lift Group's revised proposal and the need to end the distracting effect of a possible transaction on
the Company's employees and customers.

The
Board of Directors announced that it did not intend to seek alternative buyers for Cascade at the present time, but would instead focus on reducing capital spending and debt and
would increase attention to Cascade's core markets.

Employees

At January 31, 2001, the Company had approximately 1,900 full-time employees throughout the world. The majority of these employees are not subject to
collective bargaining agreements. The Company believes relations with its employees are excellent.

Foreign Operations

The Company has substantial operations outside the United States. There are additional business risks attendant to the Company's foreign operation such as the
risk that the relative value of the underlying local currencies may weaken when compared to the U.S. dollar. For further information about foreign operations, see "Management's Discussion and
Analysis of Financial Condition and Results of Operations" (Item 7) and Notes to the Consolidated Financial Statements (Item 8).

3

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Forward-looking Statements

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

Item 2.  Properties

The Company owns and leases various types of properties located throughout North America, Europe, Australia and Asia. The Company's executive offices are
located in Fairview, Oregon. The Company operates sales offices, manufacturing or warehouse facilities in 15 countries. Its major manufacturing facilities in the United States are located in
Springfield and Findlay, Ohio; Warner Robins, Georgia; Beulaville, North Carolina and Portland, Oregon. Major manufacturing facilities located outside the United States include Almere and Hoorn, The
Netherlands; La Machine, France; Manchester and Newcastle, United Kingdom; Toronto, Mississauga and Guelph, Ontario, Canada; Brisbane, Australia; Inchon, Korea; Xiamen and Hebei, China; and Brescia,
Italy. Sales offices and warehouse facilities are located in Japan, South Africa, New Zealand, Australia, Sweden, Italy, United Kingdom, France, Germany, Spain, The Netherlands, China, Canada and the
United States. See "Business" (Item 1) for more information regarding the location of the principal facilities for each industry segment. The Company owns 14 facilities that include
major manufacturing facilities and certain sales and warehouse buildings, 4 of which are located in the United States and 10 of which are located in other countries. The Company leases
22 facilities, 5 located in the United States and 17 located in other countries.

The
Company generally considers the productive capacity of its manufacturing facilities to be adequate and suitable to meet its requirements.

The
Company is party to various leases of office and computer equipment, storage space and automobiles which are not material.

Item 3.  Legal Proceedings

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

The
Company and The Boeing Company are defendants in litigation brought in December 1999 by the City of Portland, Oregon (City), alleging damages arising from the proximity of
a City water wellfield to groundwater contamination in the area of their respective Portland plant sites. The Company and The Boeing Company are remedying the contamination in question, which has not
affected water pumped by the City from the wellfield. The City's complaint alleges damages of approximately $6.6 million. In November 2000 the City raised new theories which it asserts
would increase its claimed damages against both defendants by up to $19 million. The United States District Court for the District of Oregon recently granted a partial summary judgment to the
City on certain liability issues, however, the Company believes it has substantial defenses to damage amounts originally sought by the City and intends to defend itself vigorously. The Company
believes the November 2000 additional damage claim is without merit. There has been no allocation of possible damages between the Company and The Boeing Company. The outcome of this matter is
currently not determinable and no adjustments have been recorded in the Company's consolidated financial statements relative to possible outcome of this matter.

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

None

PART II

Item 5.  Market for Registrant's Common Equity and Related Stockholder Matters

As of January 31, 2001, there were 328 holders of the Company's common stock including blocks of shares held by various depositories. It is the
Company's belief that when the shares held by the depositories are attributed to the beneficial owners, the total exceeds 2,500.

During
the year ended January 31, 1998, a Canadian subsidiary of the Company issued 1,100,000 preferred shares in connection with the acquisition of Kenhar Corporation. Each
preferred share is exchangeable for one common share of the Company. The preferred shares were issued in an exempt private offering transaction and a Form S-3 Registration covering these shares
became effective in October, 1998. A subsidiary of the Company repurchased 300,000 of these shares in connection with the sale of the mast business unit in January, 1999. A total of 800,000
exchangeable preferred shares remain outstanding at January 31, 2001. Absent registration, Rule 144 would apply to sales of such common shares.

Market Information

The high and low sales prices of the common stock of Cascade Corporation were as follows:

Year Ended January 312001

2000High

Low

High

LowMarket price range:First quarter

$
11.44

$
7.50

$
17.25

$
9.94Second quarter


12.75


9.94


14.88


12.94Third quarter


16.00


12.75


13.38


8.94Fourth quarter


16.75


15.08


11.13


8.00


Common Stock Dividends

The common stock dividends declared by the Company in the years ended January 31, 2001 and 2000 were as follows:

Year ended January 312001

2000First quarter

$
.10

$
.10Second quarter


.10


.10Third quarter





.10Fourth quarter





.10Total

$
.20

$
.40


Stock Exchange Listing and Transfer Agent

The Company's stock is traded on the New York Stock Exchange under the symbol CAE.

The
Company's registrar and transfer agent is Chase Mellon, Shareholder Services, L.L.C., Shareholder Relations, P.O. Box 3315, South Hackensack, N.J., 07606,
(800) 522-6645.

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Item 6.  Selected Financial Data

|                                                               |                             | Year ended January 31 |        
|-------------------------------------------------------------- | --------------------------- | --------------------- | -------
|
|
|Income statement data:                                         |                             |                       |        
|Net sales                                                      |                             | $                     | 339,033
|Operating income                                               |                             | $                     | 27,862 
|Net income                                                     |                             | $                     | 11,863 
|EBITDA(1)                                                      |                             | $                     | 45,392 
|Cash flow data:                                                |                             |                       |        
|Cash flows from operating activities                           |                             | $                     | 28,049 
|Cash flows from investing activities                           |                             | $                     | (6,228 
|Cash flows from financing activities                           |                             | $                     | (31,317
|Stock information:                                             |                             |                       |        
|                                                               | Earnings per share:         |                       |        
|                                                               |                             | Basic                 |        
|                                                               |                             | Diluted               |        
|                                                               | Book value per common share |                       | $      
|                                                               | Dividends declared          |                       | $      
|Balance sheet information:                                     |                             |                       |        
|Working capital                                                |                             | $                     | 64,747 
|Total assets                                                   |                             | $                     | 282,620
|Long-term debt                                                 |                             | $                     | 87,513 
|Shareholders' equity                                           |                             | $                     | 116,503
|Other:                                                         |                             |                       |        
|Expenditures for property, plant and equipment                 |                             | $                     | 7,156  
|Depreciation and amortization                                  |                             | $                     | 18,285 
|Diluted weighted average shares of common stock outstanding(2) |                             |                       | 12,272 
|Number of employees                                            |                             |                       | 1,899  

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Item 7.  Management's Discussion and Analysis of Financial Condition and Results of Operations

All historical net sales and cost of goods sold amounts have been restated to reflect the requirements of Emerging Issues Task Force Issue 00-10, "Accounting
for Shipping and Handling Fees and Costs." See Note 2 to the Consolidated Financial Statements (Item 8).

COMPARISON OF FISCAL 2001 AND FISCAL 2000

Consolidated net sales for the year ended January 31, 2001 (fiscal 2001) totaled $339.0 million, a 1.6% increase from sales of
$333.6 million for the year ended January 31, 2000 (fiscal 2000). After adjusting fiscal 2000 net sales for the April 1999 disposition of its industrial tire division, the
Company's fiscal 2001 net sales increased 5.1%. The increase in fiscal 2001 net sales is due to higher demand in both North America and Asia. Net sales for fiscal 2001 in North America increased 10.6%
as compared to net sales in fiscal 2000, excluding fiscal 2000 net sales from the industrial tire division. Europe's net sales decrease of 8.6% in fiscal 2001 compared to fiscal 2000 is due to the
effect of weakened foreign currencies in the United Kingdom and in European Union countries whose currencies are fixed against the "euro." Excluding the effect of the weakened foreign currencies,
Europe's net sales increased 3.2% in fiscal 2001 over net sales in fiscal 2000.

Due
to reduced levels of profitability in recent years, the Company approved and initiated restructuring plans in the second quarter of fiscal 2001 in both Australia and
Europe. The restructuring of Europe included the closure of a manufacturing facility in Vaageryd, Sweden, the dissolution of redundant distribution facilities in both Germany and France and employee
terminations at the Company's European headquarters in The Netherlands. The Company incurred $2.1 million in costs during fiscal 2001 related to its European restructuring efforts, which
included $1.9 million primarily related to employee termination costs and $248,000 for inventory write downs. A total of 58 employees in Europe were terminated as a result of the restructuring
activities.

The
Company's restructuring activities in Australia included the consolidation of manufacturing plants into one remaining facility in Brisbane, reduction of distribution facilities,
realignment of sales operations and the disposal of the tire and battery businesses. Total restructuring costs in Australia during fiscal 2001 were $2 million. These costs consisted of
$1.3 million in inventory write downs, primarily for tires and batteries, $108,000 for employee termination costs and $534,000 in various asset
write-offs and miscellaneous costs. The Company terminated 32 employees in Australia related to the restructuring activities.

Restructuring
costs related to inventory write downs of $1.6 million are presented in the Company's consolidated statement of income in cost of goods sold. All other
restructuring costs are included as a part of selling and administrative expenses. At January 31, 2001, the Company's consolidated balance sheet contained $1.0 million in accrued
expenses related to the restructuring, primarily for final payments to employees terminated prior to January 31, 2001. The Company has completed the planned restructuring activities in both
Europe and Australia as of January 31, 2001, but will evaluate the need to undertake further restructuring activities based on the success of the activities completed to date to achieve desired
levels of profitability.

The
Company's gross margin increased to 34.7% in fiscal 2001 from 33.1% in fiscal 2000. This increase was due to strong demand in North America and Asia for higher margin products,
primarily attachment products, and manufacturing efficiencies achieved through better utilization of available production capacity. Cost of goods sold in fiscal 2001 included $1.6 million
related to inventory write downs for the restructuring activities in Europe and Australia. Excluding inventory write downs from restructuring activities, the Company's fiscal 2001 gross margin
percentage was 35.1%.

Total
depreciation and amortization expense for fiscal 2001 and 2000 was $18.3 million and $18.4 million, respectively. The Company's level of capital expenditures in fiscal
2001, $7.2 million, was

7

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reduced significantly from prior year levels due to the proposed merger, see "Formation of Special Board Committee" (Item 1), and the Company's decision to use excess cash to reduce outstanding debt.
This reduction minimized any additional depreciation and amortization expense recorded in fiscal 2001.

Selling
and administrative expenses were $66.5 million and $61.2 million in fiscal 2001 and 2000, respectively. As a percentage of net sales, selling and administrative
expenses were 19.6% in fiscal 2001 and 18.4% in fiscal 2000. Fiscal 2001 expenses include $1.8 million of Special Board Committee costs related to the proposed merger and $2.4 million
related to restructuring activities in Europe and Australia. Excluding the impact of these items in fiscal 2001, selling and administrative expenses were $62.2 million, 18.3% as a percentage of
net sales.

The
Company's environmental expenses relate to periodic revisions to cost estimates for environmental remediation liabilities recorded on the consolidated balance sheet. In fiscal
2001, the Company
recorded expenses of $4.9 million, which included a $3.1 million charge related to legal fees from the resolution of outstanding issues related to certain environmental and insurance
proceedings and $1.8 million to adjust cost estimates for ongoing remediation efforts at the Company's Portland, Oregon and Springfield, Ohio manufacturing facilities. The $12 million in
environmental expenses for fiscal 2000 included $7 million related to an adverse judgment against the Company in litigation brought by The Boeing Company. The remaining $5 million in
environmental expenses related to revisions to cost estimates related to the previously mentioned remediation efforts in Portland and Springfield.

Interest
expense was $8.1 million in fiscal 2001 and $8.7 million in fiscal 2000. The reduction in interest expense reflects the Company's strategy to reduce overall
debt levels through the application of cash from operations and any cash received from the sale of business units and divisions. The Company anticipates continuing this strategy into fiscal 2002.

Other
expense decreased to $755,000 in fiscal 2001 in comparison to $4 million in fiscal 2000. Fiscal 2001 other expense relates primarily to net losses on foreign currency
translation. Other expense in fiscal 2000 includes special charges that stem from the integration of operations acquired, steps taken to assure consistency of global financial reporting and the loss
on the sale of the Company's industrial tire division.

The
Company's effective tax rate increased to 41.8% in fiscal 2001 from 30.6% in fiscal 2000. This increase is due to higher levels of pre-tax income in fiscal 2001 over 2000, which
diluted the benefit of certain tax attributes. The Company also incurred losses in Australia and Germany as a result of ongoing operations and restructuring activities for which no deferred tax
benefit has been recognized.

Net
income in fiscal 2001 of $11.9 million ($.97 per share) increased $6.9 million or 140% over fiscal 2000 net income of $4.9 million ($.40 per share). The increase in
net income in fiscal 2001 is due primarily to improved gross margins from sales of higher margin products and a reduction in both interest and environmental costs compared to fiscal 2000. The increase
in the effective tax rate in fiscal 2001 to 41.8% partially offset the impact of the above items on fiscal 2001 net income. Excluding the effect of charges for environmental costs in both fiscal 2001
and 2000 and using the applicable effective tax rate for each year, net income would have been $14.7 million ($1.20 per share) in fiscal 2001 and $12.5 million ($1.01 per share) in
fiscal 2000.

North
American operations were the Company's most profitable geographic segment, accounting for substantially all of the Company's consolidated net income for fiscal 2001 and 2000.
The profitability of the Company's European operations increased in fiscal 2001 over fiscal 2000. The Company's remaining operations continued to incur a net loss in fiscal 2001, related entirely to
operations in Australia.

8

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The Company considers the results from continuing operations to be in line with its expectations for gross margin improvements within the framework of its comprehensive restructuring
programs. As noted in previous filings, the Company monitors published lift truck industry data on order and shipping volumes to assist in evaluating changes in market conditions and the impact on its
customers, OEMs and equipment dealers. During fiscal 2001 these statistics showed strong growth in comparison with comparable amounts reported in the same period of fiscal 2000. Year-to-date industry
data through March 2001 shows significant decreases in North American order volumes in comparison with the comparable prior year period through March 2000. The Company is currently
evaluating the impact of these industry trends and anticipates fiscal 2002 operating results to reflect lower levels of net sales and net income as compared to fiscal 2001.

COMPARISON OF FISCAL 2000 AND FISCAL 1999

Consolidated net sales for fiscal 2000 totaled $333.6 million, a decrease of 19.8% from net sales for the year ended January 31, 1999 (fiscal
1999) of $415.8 million. Fiscal 1999 net sales include the Company's mast business unit, which was divested in January 1999, and the industrial tire division. Adjusting for the
divestitures of the mast business unit and industrial tire division, fiscal 2000 net sales of $322.8 million, increased 2.6% over fiscal 1999 net sales of $314.7 million.

The
increase in the fiscal 2000 gross margin to 33.1% from 30.5% in fiscal 1999 was the combined result of selected price increases, cost reduction efforts, manufacturing efficiencies
and the previously mentioned divestitures of the mast business unit and industrial tire division. Both of these product lines had significantly higher cost of goods sold as a percentage of net sales.

Depreciation
and amortization expense decreased from $21.6 million in fiscal 1999 to $18.4 million in fiscal 2000. The reduction in fiscal 2000 was due to the
elimination of depreciation and amortization expense for the Company's mast business unit and industrial tire division, which were sold in December 1998 and April 1999, respectively.

Selling
and administrative expenses decreased to $61.2 million in fiscal 2000 from $68.5 million in fiscal 1999. This reduction was the result of cost reduction efforts
in fiscal 2000 and the sale of the mast business unit and the industrial tire division.

Interest
expense decreased from $10.9 million in fiscal 1999 to $8.7 million in fiscal 2000 as a result of debt reductions from funds received from the sale of business
units and divisions.

Other
expense in fiscal 2000 includes special charges from the integration of operations acquired, steps taken to assure consistency of global financial reporting and the loss on the
sale of the Company's industrial tire division. Other income of $4.8 million in fiscal 1999 relates primarily to a gain on the sale of two parcels of land.

The
Company's effective tax rate decreased to 30.6% in fiscal 2000 from 31.6% in fiscal 1999 due primarily to the increase in U.S. foreign tax credits attributed to foreign earnings
not yet repatriated.

Net
income in fiscal 2000 of $4.9 million ($.40 per share) was 76.9% lower than fiscal 1999 net income of $21.4 million ($1.63 per share). The decrease in fiscal 2000
net income is the result of increased environmental expenses, special charges from the integration of operations acquired, steps taken to assure consistency of global financial reporting and a loss on
the sale of the industrial tire division.

Adjusting
for environmental costs, special charges from the integration of operations and global financial reporting and the sale of the industrial tire division and mast business
unit, comparable net income was $17.7 million ($1.42 per share) in fiscal 2000 versus $17.3 million ($1.32 per share) in fiscal 1999 or 2.3% higher than the prior year. The 7.6% increase
in earnings per share after the above noted

9

---

adjustments also reflects shares of the Company's common stock repurchased during fiscal 2000 and 1999.

LIQUIDITY AND CAPITAL RESOURCES

The Company maintains a $60 million revolving line of credit facility, which continues through December 2002 at a variable interest rate of LIBOR
plus .50% (6.44% at January 31, 2001). The balance outstanding under the facility at January 31, 2001 was $8.5 million. Short-term lines of credit available from commercial banks
at January 31, 2001 totalled $26.2 million, of which $21.1 million was unused.

Total
outstanding debt, long-term and short-term notes payable, at January 31, 2001 was $94.7 million in comparison with $123.6 million at January 31,
2000. The Company's debt to equity ratio improved to .81 to 1 at January 31, 2001 from 1.09 to 1 at January 31, 2000.

Working
capital at January 31, 2001 of $64.7 million was less than the $66.2 million of working capital at January 31, 2000. The Company's current ratio at
January 31, 2001 was 2.32 to 1 in comparison to 2.02 to 1 at January 31, 2000.

The
Company declared dividends of $.20 per share in fiscal 2001 in comparison to dividends of $.40 per share in both fiscal 2000 and 1999. No dividends have been declared since the
second quarter of fiscal 2001, since the Company was prohibited from declaring dividends under the merger agreement signed with the Lift Group on October 18, 2000. As discussed in Item 1,
"Formation of Special Board Committee", the Board of Directors notified the Lift Group on April 17, 2001 that it had terminated the merger agreement. The Board of Directors has not yet
determined the future dividends policy.

The
Company's balance of cash and cash equivalents decreased from $23.2 million at January 31, 2000 to $12.4 million at January 31, 2001. Net cash provided
by operating activities was $28 million in fiscal 2001, compared to $50.1 million and $20.7 million in fiscal 2000 and 1999, respectively. During fiscal 2001 the Company continued
to reduce accounts receivable and inventory levels, however the reductions were less than similar reductions during fiscal 2000. In addition the Company reduced accounts payable and accrued expenses,
including accrued environmental expenses, in fiscal 2001. The increase in fiscal 2000 net cash flows from operating activities was primarily due to reductions in accounts receivable and inventory and
increases in accounts payable, accrued expenses and accrued environmental expenses.

The
Company did not sell any significant assets, business units, or divisions in fiscal 2001, which accounts for the reduction in net cash from investing activities for fiscal 2001 in
comparison with both fiscal 2000 and 1999.

Net
cash used in financing activities decreased in fiscal 2001 to $31.3 million as compared to $45.7 million in fiscal 2000. The Company continued with its planned
reduction of debt balances in fiscal 2001 with long-term debt payments of $27.5 million and $3.3 million of payments on short-term notes payable. Additional borrowings were minimal in
fiscal 2001. As previously discussed, dividend payments were also reduced in fiscal 2001. Net cash used in financing activities in fiscal 2000 included $6 million for the redemption of common
and preferred stock. Net payments to reduce long-term debt and short-term notes payable balances in fiscal 2000 were $34.3 million.

During
fiscal 2001, 2000 and 1999, the Company's capital expenditures were $7.2 million, $16.8 million and $15.5 million, respectively. The decrease in capital
expenditures in fiscal 2001 was primarily the result of management's decision to minimize expenditures in light of the proposed merger and to reduce outstanding debt. While the level of capital
expenditures in fiscal 2001 was sufficient to maintain required operational requirements, the Company believes future capital expenditure levels will need to increase above fiscal 2001 levels to
continue to achieve required manufacturing efficiencies. The Company's planned capital expenditures in fiscal 2002 are $12 million.

10

---

Capital expenditures in fiscal 2000 and 1999 included $6.1 million and $8.3 million, respectively, related to the implementation of the Company's enterprise-wide
resource planning (ERP) software system in the United States and Europe. The Company completed substantially all implementation activities in the United States and Europe in fiscal 2000. Additional
capital expenditures in fiscal 2001 related to the implementation were not material. While the Company plans to complete the ERP implementation at its Canadian operations at a future date, no specific
expenditures are planned for fiscal 2002. The Company continues to evaluate the costs and benefits of further ERP implementation activities in Asia and Australia, but currently has no plans to
complete the implementation in these areas.

The
Company believes its cash and cash equivalents, existing credit facilities and cash flows from operations will be sufficient to satisfy its expected working capital and capital
expenditure requirements for fiscal 2002.

The
US dollar strengthened in fiscal 2001 in comparison to most foreign currencies used by the Company's significant foreign operations. As a result, foreign currency translation
adjustments decreased shareholders' equity by $5.8 million in fiscal 2001. Foreign currency translation adjustments in fiscal 2000 and 1999 decreased shareholders' equity by $4.7 million and
$3.2 million, respectively.

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

The
Company's internal systems that were affected by the initial introduction of the euro were made without material system modification costs. Further internal system changes are
currently being made in preparation for the ending of the bilateral rates in January 2002 and the withdrawal of the currencies thereafter. The costs of these changes are not expected to be material.
While the Company continues
to evaluate the impact of the ongoing euro conversion over time, based on currently available information, management does not believe that the euro conversion will have a material adverse impact on
our financial condition or overall trends in results of operations.

RECENT ACCOUNTING PRONOUNCEMENTS

In November 2000, the Financial Accounting Standards Board issued Emerging Issues Task Force Issue 00-10, "Accounting for Shipping and
Handling Fees and Costs" (EITF 00-10). EITF 00-10 requires all amounts billed to a customer in a sale transaction related to shipping and handling, if any, to be classified as
revenue. It also disallows the reporting of shipping and handling costs as a reduction in revenue. Prior to the year ended January 31, 2001, the Company presented both amounts billed to
customers for shipping and related costs as a component of net sales. The Company implemented EITF 00-10 in the fourth quarter of the year ended January 31, 2001. Net sales and cost
of goods sold amounts in this Form 10-K for the year ended January 31, 2001 are presented in accordance with EITF 00-10. Amounts presented for the years ended
January 31, 2000 and 1999 have been reclassified to be consistent with the current year presentation. The reclassifications increased net sales and cost of goods sold by $9.7 million,
$8.8 million and $7.9 million for the years ended January 31, 2001, 2000 and 1999, respectively.

The
Securities and Exchange Commission (SEC) issued Staff Accounting Bulletin (SAB) 101,Revenue Recognition in Financial
Statements, in December 1999. The SAB summarizes certain of the SEC staff's views in applying generally accepted accounting principles to revenue recognition in financial
statements. During the fourth quarter of the current year, the Company performed a comprehensive review of its revenue recognition policies and determined that they are in compliance with
SAB 101.

11

---

The Company adopted Statement of Financial Accounting Standards (SFAS) No. 133, "Accounting for Derivative Instruments and Hedging Activities" in the year ended
January 31, 1999. SFAS No. 133 as amended, establishes accounting and reporting standards for derivative instruments and hedging activities. The adoption did not have a material effect
on the Company's financial statements.

Item 7A  Quantitative and Qualitative Disclosure About Market Risk

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

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

12

---



Item 8.  Financial Statements and Supplementary Data

Cascade Corporation    Consolidated Statements of Income

|                                                 |                                     | Year ended January 31 |        
|------------------------------------------------ | ----------------------------------- | --------------------- | -------
|
|
|Net sales                                        |                                     | $                     | 339,033
|                                                 |                                     |                       |        
|Operating expenses:                              |                                     |                       |        
|                                                 | Cost of goods sold                  |                       |        
|                                                 | Depreciation and amortization       |                       |        
|                                                 | Selling and administrative expenses |                       |        
|                                                 | Environmental expenses              |                       |        
|                                                 |                                     |                       |        
|Total operating expenses                         |                                     |                       | 311,171
|                                                 |                                     |                       |        
|Operating income                                 |                                     |                       | 27,862 
|Interest expense                                 |                                     |                       | 8,146  
|Interest income                                  |                                     |                       | (1,437 
|Other (income) expense, net                      |                                     |                       | 755    
|                                                 |                                     |                       |        
|Income before provision for income taxes         |                                     |                       | 20,398 
|Provision for income taxes                       |                                     |                       | 8,535  
|                                                 |                                     |                       |        
|Net income                                       |                                     |                       | 11,863 
|Dividends paid on preferred shares of subsidiary |                                     |                       | 160    
|                                                 |                                     |                       |        
|Net income applicable to common shareholders     |                                     | $                     | 11,703 
|                                                 |                                     |                       |        
|Basic earnings per share                         |                                     | $                     | 1.02   
|                                                 |                                     |                       |        
|Diluted earnings per share                       |                                     | $                     | .97    
|                                                 |                                     |                       |        

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

13

---



Cascade Corporation    Consolidated Balance Sheets

|                                                               |                                                                                                     | As of January 31                                    |       
|-------------------------------------------------------------- | --------------------------------------------------------------------------------------------------- | --------------------------------------------------- | ------
|
|
|Assets                                                         |                                                                                                     |                                                     |       
|Current assets:                                                |                                                                                                     |                                                     |       
|                                                               | Cash and cash equivalents                                                                           |                                                     | $     
|                                                               | Accounts receivable, less allowance for doubtful accounts of
$1,574 and $1,511                      |                                                     |       
|                                                               | Inventories                                                                                         |                                                     |       
|                                                               | Deferred income taxes                                                                               |                                                     |       
|                                                               | Prepaid expenses and other                                                                          |                                                     |       
|                                                               |                                                                                                     |                                                     |       
|                                                               |                                                                                                     | Total current assets                                |       
|Property, plant and equipment, net                             |                                                                                                     |                                                     | 77,235
|Goodwill, net                                                  |                                                                                                     |                                                     | 68,175
|Deferred income taxes                                          |                                                                                                     |                                                     | 11,244
|Other assets                                                   |                                                                                                     |                                                     | 12,027
|                                                               |                                                                                                     |                                                     |       
|                                                               |                                                                                                     | Total assets                                        |       
|                                                               |                                                                                                     |                                                     |       
|Liabilities and Shareholders' Equity                           |                                                                                                     |                                                     |       
|Current liabilities:                                           |                                                                                                     |                                                     |       
|                                                               | Notes payable to banks                                                                              |                                                     | $     
|                                                               | Current portion of long-term debt                                                                   |                                                     |       
|                                                               | Accounts payable                                                                                    |                                                     |       
|                                                               | Accrued payroll and payroll taxes                                                                   |                                                     |       
|                                                               | Accrued environmental expenses                                                                      |                                                     |       
|                                                               | Other accrued expenses                                                                              |                                                     |       
|                                                               |                                                                                                     |                                                     |       
|                                                               |                                                                                                     | Total current liabilities                           |       
|Long-term debt                                                 |                                                                                                     |                                                     | 87,513
|Accrued environmental expenses                                 |                                                                                                     |                                                     | 10,954
|Deferred income taxes                                          |                                                                                                     |                                                     | 2,613 
|Other liabilities                                              |                                                                                                     |                                                     | 4,471 
|                                                               |                                                                                                     |                                                     |       
|                                                               |                                                                                                     | Total liabilities                                   |       
|                                                               |                                                                                                     |                                                     |       
|Commitments and contingencies (Note 15)                        |                                                                                                     |                                                     |       
|Exchangeable convertible preferred stock and minority interest |                                                                                                     |                                                     | 11,374
|                                                               |                                                                                                     |                                                     |       
|Shareholders' equity:                                          |                                                                                                     |                                                     |       
|                                                               | Preferred stock, no par value, 200,000 shares authorized, none issued and outstanding               |                                                     |       
|                                                               | Common stock, $.50 par value, 20,000,000 authorized shares; 11,439,890 and 11,567,388 shares issued |                                                     |       
|                                                               | Additional paid-in capital                                                                          |                                                     |       
|                                                               | Retained earnings                                                                                   |                                                     |       
|                                                               | Accumulated other comprehensive income (loss):                                                      |                                                     |       
|                                                               |                                                                                                     | Cumulative foreign currency translation adjustments |       
|                                                               | Treasury stock, at cost, 127,498 shares                                                             |                                                     |       
|                                                               |                                                                                                     |                                                     |       
|                                                               |                                                                                                     | Total shareholders' equity                          |       
|                                                               |                                                                                                     |                                                     |       
|                                                               |                                                                                                     | Total liabilities and shareholders' equity          |       
|                                                               |                                                                                                     |                                                     |       

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

14

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Cascade Corporation    Consolidated Statements of Changes in Shareholders' Equity

|                                                                 |  | Common Stock |   |   |       |   |   |        |   | Accumulated
Other
Comprehensive
Income
(Loss) |      |   |  
|---------------------------------------------------------------- |  | ------------ | - | - | ----- | - | - | ------ | - | --------------------------------------------- | ---- | - | -
|
|
|
|Balance at January 31, 1998                                      |  | 11,988       |   | $ | 5,994 |   | $ | 3,711  |   | $                                             | (229 | ) | $
|Net income                                                       |  |             |   |   |      |   |   |       |   |                                               |     |   |  
|Dividends ($.40 per share)                                       |  |             |   |   |      |   |   |       |   |                                               |     |   |  
|Common stock repurchased                                         |  | (286         | ) |   | (143  | ) |   | (3,921 | ) |                                               |     |   |  
|Stock options exercised                                          |  | 12           |   |   | 6     |   |   | 241    |   |                                               |     |   |  
|Redemption of mandatorily redeemable convertible preferred stock |  |             |   |   |      |   |   | (54    | ) |                                               |     |   |  
|Translation adjustment                                           |  |             |   |   |      |   |   |       |   |                                               |     |   |  
|Other                                                            |  | 1            |   |   | 1     |   |   | 23     |   |                                               |     |   |  
|                                                                 |  |              |   |   |       |   |   |        |   |                                               |      |   |  
|Balance at January 31, 1999                                      |  | 11,715       |   |   | 5,858 |   |   |       |   |                                               | (229 | ) |  
|                                                                 |  |              |   |   |       |   |   |        |   |                                               |      |   |  
|Net income                                                       |  |             |   |   |      |   |   |       |   |                                               |     |   |  
|Dividends ($.40 per share)                                       |  |             |   |   |      |   |   |       |   |                                               |     |   |  
|Common stock repurchased                                         |  | (176         | ) |   | (88   | ) |   |       |   |                                               |     |   |  
|Conversion of preferred stock                                    |  | 28           |   |   | 14    |   |   | 399    |   |                                               |     |   |  
|Translation adjustment                                           |  |             |   |   |      |   |   |       |   |                                               |     |   |  
|                                                                 |  |              |   |   |       |   |   |        |   |                                               |      |   |  
|Balance at January 31, 2000                                      |  | 11,567       |   |   | 5,784 |   |   | 399    |   |                                               | (229 | ) |  
|                                                                 |  |              |   |   |       |   |   |        |   |                                               |      |   |  
|Net income                                                       |  |             |   |   |      |   |   |       |   |                                               |     |   |  
|Dividends ($.20 per share)                                       |  |             |   |   |      |   |   |       |   |                                               |     |   |  
|Stock options exercised                                          |  | 4            |   |   | 2     |   |   |       |   |                                               |     |   |  
|Common stock repurchased                                         |  | (4           | ) |   | (2    | ) |   |       |   |                                               |     |   |  
|Translation adjustment                                           |  |             |   |   |      |   |   |       |   |                                               |     |   |  
|Retirement of treasury stock                                     |  | (127         | ) |   | (64   | ) |   | (165   | ) |                                               | 229  |   |  
|                                                                 |  |              |   |   |       |   |   |        |   |                                               |      |   |  
|Balance at January 31, 2001                                      |  | 11,440       |   | $ | 5,720 |   | $ | 234    |   | $                                             |     |   | $
|                                                                 |  |              |   |   |       |   |   |        |   |                                               |      |   |  

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

15

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Cascade Corporation    Consolidated Statements of Cash Flows

|                                                  |                                                                                               | Year Ended January 31                 |                                                    
|------------------------------------------------- | --------------------------------------------------------------------------------------------- | ------------------------------------- | ---------------------------------------------------
|
|
|Cash flows from operating activities:             |                                                                                               |                                       |                                                    
|                                                  | Net income                                                                                    |                                       | $                                                  
|                                                  | Adjustments to reconcile net income to net cash provided by operating activities:             |                                       |                                                    
|                                                  |                                                                                               | Depreciation and amortization         |                                                    
|                                                  |                                                                                               | Deferred income taxes                 |                                                    
|                                                  |                                                                                               | Loss (gain) on disposition of assets  |                                                    
|                                                  | Changes in operating assets and liabilities, net of effects of acquisitions and dispositions: |                                       |                                                    
|                                                  |                                                                                               | Accounts receivable                   |                                                    
|                                                  |                                                                                               | Inventories                           |                                                    
|                                                  |                                                                                               | Prepaid expenses and other            |                                                    
|                                                  |                                                                                               | Accounts payable and accrued expenses |                                                    
|                                                  |                                                                                               | Accrued environmental expenses        |                                                    
|                                                  |                                                                                               | Other liabilities                     |                                                    
|                                                  |                                                                                               |                                       |                                                    
|                                                  |                                                                                               |                                       | Net cash provided by operating activities          
|                                                  |                                                                                               |                                       |                                                    
|Cash flows from investing activities:             |                                                                                               |                                       |                                                    
|                                                  | Additions to property, plant and equipment                                                    |                                       |                                                    
|                                                  | Proceeds from sale of assets                                                                  |                                       |                                                    
|                                                  | Other assets                                                                                  |                                       |                                                    
|                                                  |                                                                                               |                                       |                                                    
|                                                  |                                                                                               |                                       | Net cash provided by (used in) investing activities
|                                                  |                                                                                               |                                       |                                                    
|Cash flows from financing activities:             |                                                                                               |                                       |                                                    
|                                                  | Payments on long-term debt                                                                    |                                       |                                                    
|                                                  | Proceeds from long-term debt                                                                  |                                       |                                                    
|                                                  | Notes payable to banks, net                                                                   |                                       |                                                    
|                                                  | Redemption of convertible preferred stock and minority interest                               |                                       |                                                    
|                                                  | Repurchase of common stock                                                                    |                                       |                                                    
|                                                  | Issuance of common stock                                                                      |                                       |                                                    
|                                                  | Cash dividends paid                                                                           |                                       |                                                    
|                                                  |                                                                                               |                                       |                                                    
|                                                  |                                                                                               |                                       | Net cash used in financing activities              
|                                                  |                                                                                               |                                       |                                                    
|Effect of exchange rate changes                   |                                                                                               |                                       | (1,274                                             
|                                                  |                                                                                               |                                       |                                                    
|Increase (decrease) in cash and cash equivalents  |                                                                                               |                                       | (10,770                                            
|Cash and cash equivalents at beginning of year    |                                                                                               |                                       | 23,188                                             
|                                                  |                                                                                               |                                       |                                                    
|Cash and cash equivalents at end of year          |                                                                                               | $                                     | 12,418                                             
|                                                  |                                                                                               |                                       |                                                    
|Supplemental disclosure of cash flow information: |                                                                                               |                                       |                                                    
|                                                  | Cash paid during the year for:                                                                |                                       |                                                    
|                                                  |                                                                                               | Interest                              |                                                    
|                                                  |                                                                                               | Income taxes                          |                                                    
|Supplemental disclosure of noncash information:   |                                                                                               |                                       |                                                    
|                                                  | Receivable from capital lease                                                                 |                                       | $                                                  
|                                                  | Note receivable received upon sale of assets                                                  |                                       |                                                    
|                                                  | Conversion of convertible preferred stock to common stock                                     |                                       |                                                    

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

16

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Cascade Corporation        Notes to Consolidated Financial Statements

Note 1Description of Business

Cascade Corporation (the Company or Cascade) is an international company engaged in the business of designing, manufacturing and selling
equipment used primarily in material handling applications. The Company manufactures an extensive line of hydraulically actuated attachments designed for mounting on lift trucks. Other major products
include forks for lift trucks and hydraulic cylinders used primarily in material handling operations. Accordingly, the Company's sales are largely dependent on the sales of lift trucks and on the
sales of replacement parts. A significant portion of the Company's sales are made in North America and Europe. The Company is headquartered in Portland, Oregon, employing approximately 1,900 people
and maintaining operations in 15 countries outside the United States.

Note 2Summary of Significant Accounting Policies

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its subsidiaries. All significant intercompany accounts and transactions have
been eliminated.

Cash and Cash Equivalents

Cash and cash equivalents consist of cash on deposit and highly liquid investments with maturities of three months or less at the date of purchase.

Inventories

Inventories are stated at the lower of average cost or market.

Property, Plant and Equipment

Property, plant and equipment are stated at cost less accumulated depreciation. Depreciation is generally provided using the straight-line method
over the estimated useful lives of the assets. Useful lives range from 15 to 35 years for buildings and 2 to 12 years for machinery and equipment, including certain equipment under
long-term capital leases.

Maintenance
and repairs are expensed as incurred and costs of improvements and renewals are capitalized. Upon disposal, cost and accumulated depreciation are removed from the accounts
and the resulting gains or losses are reflected in operations.

Goodwill

Goodwill represents the excess of the cost of acquired businesses over the fair value of net identifiable assets acquired and is amortized on a
straight-line basis, generally over 20 years. Accumulated amortization of goodwill was $14.9 million and $12.5 million at January 31, 2001 and 2000,
respectively.

Impairment of Long-Lived Assets

Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not
be recoverable. Determination of recoverability is based on an estimate of undiscounted future cash flows resulting from the use of the assets and eventual disposition in comparison with the carrying
value. Measurement of an impairment

17

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loss for long-lived assets that management expects to hold and use is based on the fair value of the asset.

Stock-Based Compensation

The Company accounts for its stock-based compensation under Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees." The
exercise price of stock options granted equals the market price on the date of grant. There is no recorded expense related to grants of stock options.

Foreign Currency Translation

The Company translates the balance sheets of its foreign subsidiaries using fiscal year-end exchange rates. The statements of income are translated
using the average exchange rates for the period. The cumulative effect of such translations is included in shareholders' equity.

Environmental Remediation

The Company accrues environmental costs if it is probable a liability has been incurred at the financial statement date and the amount can be reasonably
estimated. Recorded liabilities have not been discounted. Environmental compliance costs are expensed as incurred.

Foreign Currency Forward Exchange Contracts

Gains and losses on foreign currency forward exchange contracts, which generally mature in one month or less, are recognized in operations and measured over
the period of the contract by reference to the forward rate for a contract to be consummated on the same future date as the original contract.

Fair Value of Financial Assets and Liabilities

The fair value of the Company's monetary assets and liabilities are evaluated based upon the existing interest rates related to such assets and liabilities
compared to current market rates of interest. The carrying value of the Company's monetary assets and liabilities approximates fair value.

Revenue Recognition

The Company recognizes revenue when products are shipped to customers. Provisions for return allowances and warranties are recorded at the time revenue is
recognized, based on the Company's historical experience.

Concentrations of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents, accounts
receivable and foreign currency forward exchange contracts. The Company places its cash in major financial institutions. Deposits held with the financial institutions may exceed the Federal Deposit
Insurance Corporation limit. Accounts receivable are with a large number of customers, primarily equipment manufacturers and dealers, dispersed across a wide geographic base. The Company performs
on-going credit evaluations and does not require collateral. Allowances are maintained for potential credit losses when deemed necessary. See Note 12 for discussion of foreign currency forward
exchange contracts.

18

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Reclassifications

Certain reclassifications have been made to the prior year consolidated financial statements to conform to the current year presentation. Corrections have also
been made to prior year information in certain footnotes.

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 and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates. Significant estimates and judgements made by management of the
Company include matters such as the collectibility of accounts receivable, realizability of deferred income tax assets, realizability of intangible assets and future costs of environmental matters.

Income Taxes

Deferred income tax assets and liabilities are recognized for the expected tax consequences of temporary differences between the tax bases of assets and
liabilities and the amounts reported in the consolidated financial statements. The provision for income taxes is the tax payable for the period and the change during the period in net deferred income
tax assets and liabilities. Valuation allowances are established when necessary to reduce deferred income tax assets to the amount expected to be realized.

Research and Development Costs

Research and development costs are expensed as incurred and are related to developing new products and to improving existing products or processes. The Company
incurred research and development costs of $4.2 million, $4.4 million, and $4.4 million for the years ended January 31, 2001, 2000 and 1999, respectively.

Earnings Per Share

Basic earnings per share is computed by dividing income available to common shareholders by the weighted average number of common shares outstanding for the
period. Diluted earnings per share reflects potential dilution that could occur if convertible securities or stock options were exercised or converted into common stock.

Recent Accounting Pronouncements

In November 2000, the Financial Accounting Standards Board issued Emerging Issues Task Force Issue 00-10, "Accounting for Shipping and
Handling Fees and Costs" (EITF 00-10). EITF 00-10 requires all amounts billed to a customer in a sale transaction related to shipping and handling, if any, to be classified as
revenue. It also disallows the reporting of shipping and handling costs as a reduction in revenue. Prior to the year ended January 31, 2001, the Company presented both amounts billed to
customers for shipping, handling and related costs as a component of net sales. The Company implemented EITF 00-10 in the fourth quarter of the year ended January 31, 2001. Net
sales and cost of goods sold amounts in the consolidated statements of income, quarterly financial information and segment information for the year ended January 31, 2001 are presented in
accordance with EITF 00-10. Amounts presented for the years ended January 31, 2000 and 1999 have been reclassified to be consistent with the current year presentation. The
reclassifications increased net sales and cost of goods

19

---

sold by $9.7 million, $8.8 million and $7.9 million for the years ended January 31, 2001, 2000 and 1999, respectively.

The
Securities and Exchange Commission (SEC) issued Staff Accounting Bulletin (SAB) 101,Revenue Recognition in Financial
Statements, in December 1999. The SAB summarizes certain of the SEC staff's views in applying generally accepted accounting principles to revenue recognition in financial
statements. During the fourth quarter of the current year, the Company performed a comprehensive review of its revenue recognition policies and determined that they are in compliance with
SAB 101.

The
Company adopted Statement of Financial Accounting Standards (SFAS) 133, "Accounting for Derivative Instruments and Hedging Activities" in the year ended January 31, 1999.
SFAS No. 133 as amended, establishes accounting and reporting standards for derivative instruments and hedging activities. The adoption did not have a material effect on the Company's financial
statements.

Note 3Merger Agreement

In March 2000 the Board of Directors created a Special Committee of Independent Directors to consider options to increase shareholder value. On
October 18, 2000 the Company entered into a merger agreement with acquisition companies formed by Lift Technologies, Inc., a manufacturer of lift truck masts (see Note 14), TD Capital Group Limited, a
member of the Toronto Dominion Bank Group, and the Ontario Municipal Employees Retirement Fund (Lift Group). Under the terms of the merger agreement each share of Cascade's common stock would be
converted into the right to receive $17.25 in cash and the Company would become a wholly-owned subsidiary of a corporation formed by the Lift Group and continue doing business under its current name.

On
March 2, 2001, the Company announced that the anticipated March 31, 2001 closing date for the merger could not be met because the Lift Group planned to revise its proposal due to
complications attributable to environmental litigation against Cascade. After receiving a revised proposal from the Lift Group, the Board of Directors announced on April 17, 2001 that it had notified
the Lift Group that it had terminated the merger agreement. The Board of Directors indicated it did not intend to seek alternative buyers for the Company at the present time. The Company incurred
$1.8 million in costs during the year ended January 31, 2001 related to the activities of the Special Board Committee, which are included in selling and administrative expenses.

Note 4Inventories

January 312001

2000(In thousands)Finished goods and components

$
28,899

$
34,712Work in process


1,448


1,654Raw materials


9,931


11,121$
40,278

$
47,487


20

---

Note 5Property, Plant and Equipment

January 312001

2000(In thousands)Land

$
4,420

$
4,850Buildings


38,377


39,394Machinery and equipment


138,999


143,532181,796


187,776Accumulated depreciation


(104,561
)

(101,060
)$
77,235

$
86,716


Depreciation
expense for the years ended January 31, 2001, 2000 and 1999, was $12.6 million, $13.7 million and $16.7 million, respectively.

Note 6Debt

|                                                                                                                                                                    |  | January 31
|------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------
|
|
|Series A and B senior notes, interest at 6.92% payable currently, principal due annually November 2002 through 2007                                                 |  | $         
|Revolving line of credit ($60 million facility), interest payable currently at LIBOR plus .50% rate (6.44% at January 31, 2001), principal payable in December 2002 |  |           
|Commercial paper, interest at variable rate (6.35% at January 31, 2000)                                                                                             |  |           
|Mortgage note, interest at 6.7% due quarterly through 2008, collateralized by plant facility                                                                        |  |           
|Capital lease obligations for equipment, weighted average interest (10.17% at January 31, 2001 and 7.3% at January 31, 2000), monthly payments through 2005         |  |           
|Other                                                                                                                                                               |  |           
|                                                                                                                                                                    |  |           
|                                                                                                                                                                    |  |           
|Less current portion                                                                                                                                                |  |           
|                                                                                                                                                                    |  |           
|Total long-term debt                                                                                                                                                |  | $         
|                                                                                                                                                                    |  |           

The
Company's debt agreements contain dividend restrictions and covenants relating to net worth, fixed charges and leverage ratios. Borrowing arrangements with commercial banks
provide short-term lines of
credit at January 31, 2001 totaling $26.2 million, of which $21.1 million was unused. Average interest rates on short-term borrowings were 5.1% and 4.5% at
January 31, 2001 and 2000, respectively.

21

---

Future maturities of long-term debt are as follows (in thousands):

Year ended January 312002

$
2,1072003


21,8022004


13,3302005


13,3352006


13,069Thereafter


25,977$
89,620


Note 7Income Taxes

|                                                                                      |                                                | Year Ended January 31 |       
|------------------------------------------------------------------------------------- | ---------------------------------------------- | --------------------- | ------
|
|
|Provision for income taxes consisted of (in thousands):                               |                                                |                       |       
|Current                                                                               |                                                |                       |       
|                                                                                      | Federal                                        |                       | $     
|                                                                                      | State                                          |                       |       
|                                                                                      | Foreign                                        |                       |       
|                                                                                      |                                                |                       |       
|                                                                                      |                                                |                       | 8,068 
|                                                                                      |                                                |                       |       
|Deferred                                                                              |                                                |                       |       
|                                                                                      | Federal                                        |                       |       
|                                                                                      | State                                          |                       |       
|                                                                                      | Foreign                                        |                       |       
|                                                                                      |                                                |                       |       
|                                                                                      |                                                |                       | 467   
|                                                                                      |                                                |                       |       
|Total provision for income taxes                                                      |                                                | $                     | 8,535 
|                                                                                      |                                                |                       |       
|Income before provision for income taxes was as follows:                              |                                                |                       |       
|                                                                                      | United States                                  |                       | $     
|                                                                                      | Foreign                                        |                       |       
|                                                                                      |                                                |                       |       
|                                                                                      |                                                | $                     | 20,398
|                                                                                      |                                                |                       |       
|Reconciliation of the federal statutory rate to the effective tax rate is as follows: |                                                |                       |       
|                                                                                      | Federal statutory rate                         |                       |       
|                                                                                      | State income taxes, net of federal tax benefit |                       |       
|                                                                                      | Tax on foreign earnings                        |                       |       
|                                                                                      | Foreign sales corporation                      |                       |       
|                                                                                      | International financing                        |                       |       
|                                                                                      | Net change in valuation allowance              |                       |       
|                                                                                      | Other                                          |                       |       
|                                                                                      |                                                |                       |       
|                                                                                      |                                                |                       |       
|                                                                                      |                                                |                       |       

22

---

The
components of deferred income tax assets and liabilities recorded on the consolidated balance sheet are as follows (in thousands):

|                          |                                              | January 31 |       
|------------------------- | -------------------------------------------- | ---------- | ------
|
|Deferred tax assets:      |                                              |            |       
|                          | Accruals                                     |            | $     
|                          | Environmental                                |            |       
|                          | Employee benefits                            |            |       
|                          | Foreign tax credits                          |            |       
|                          | Net operating losses of foreign subsidiaries |            |       
|                          | Other                                        |            |       
|                          |                                              |            |       
|                          |                                              |            | 24,516
|                          | Valuation allowance                          |            |       
|                          |                                              |            |       
|                          |                                              |            |       
|                          |                                              |            |       
|Deferred tax liabilities: |                                              |            |       
|                          | Depreciation                                 |            |       
|                          | Other                                        |            |       
|                          |                                              |            |       
|                          |                                              |            |       
|                          |                                              |            |       
|Net deferred income taxes |                                              | $          | 12,433
|                          |                                              |            |       

The
Company has recorded a valuation allowance as of January 31, 2001 and January 31, 2000 related to the deferred tax benefits related to foreign subsidiary net
operating loss carryforwards. Foreign loss carryforwards have no expiration date and total $7.8 million at January 31, 2001.

The
Company has recognized the benefit of U.S. foreign tax credit carryforwards of $1.0 million which expire through January 31, 2006. A deferred tax asset of
$10.7 million has been recorded for U.S. foreign tax credits attributed to unrepatriated foreign earnings. Realization of this deferred tax asset is dependent on generating sufficient
foreign-sourced U.S. taxable income. The five-year expiration period on U.S. foreign tax credits does not begin until the foreign earnings are repatriated.

Note 8Capital Stock

The Company has outstanding exchangeable preferred stock of Cascade Canada Ltd., an otherwise wholly-owned subsidiary of the Company.
Holders of the exchangeable shares are entitled to voting rights of an equivalent number of the Company's common shares and are entitled to dividends equivalent to those declared and paid for like
numbers of Cascade common stock. At January 31, 2001 and 2000 the Company had 800,000 exchangeable preferred shares issued and outstanding, which is presented as exchangeable convertible
preferred stock and minority interest on the Company's consolidated balance sheet.

23

---

Note 9Benefit Plans

The Company sponsors a number of defined contribution plans. The Company matches employee contributions in varying degrees and also makes
contributions to certain plans based on a percentage of employee wages. Company expense under these plans was $2.8 million, $2.7 million, and $2.3 million for the years ended
January 31, 2001, 2000 and 1999, respectively.

The
Company has defined benefit plans covering certain non-U.S. employees. The Company's funding policy for defined benefit plans is to make annual contributions based on actuarially
determined funding requirements. The pension benefits are based on years of service and average earnings over a specified five-year period of time.

The
Company provides health care benefits for retired employees. The Company is accruing the estimated future costs of providing postretirement benefits to eligible active employees
during the employee's active service period. The Company's postretirement plan is not funded.

The
assumed health care cost trend used in measuring the accumulated postretirement benefit obligation was 11% in the first year decreasing to 5% over the next six years, and then
remaining at 4.5% thereafter. A one percentage point increase in the cost trend rates would increase the accumulated postretirement benefit obligation as of January 31, 2001 by $528,904 and net
periodic postretirement benefit cost by $50,842.

24

---

Cascade Corporation

Notes to Consolidated Financial Statements (Continued)

Pension and Other Postretirement Benefits

The status of defined benefit and postretirement benefit plans is summarized below:

|                                                    |                                                  | Year Ended January 31        |  
|--------------------------------------------------- | ------------------------------------------------ | ---------------------------- | -
|
|
|
|Change in benefit obligation                        |                                                  |                              |  
|                                                    | Benefit obligation at beginning of year          |                              | $
|                                                    |                                                  | Service cost                 |  
|                                                    |                                                  | Interest cost                |  
|                                                    |                                                  | Participant contributions    |  
|                                                    |                                                  | Acquisition and divestitures |  
|                                                    |                                                  | Benefits paid                |  
|                                                    |                                                  | Actuarial (gain) or loss     |  
|                                                    |                                                  |                              |  
|                                                    | Benefit obligation at end of year                |                              |  
|                                                    |                                                  |                              |  
|Change in plan assets                               |                                                  |                              |  
|                                                    | Fair value of plan assets at beginning of year   |                              |  
|                                                    |                                                  | Actual return on plan assets |  
|                                                    |                                                  | Acquisition and divestitures |  
|                                                    |                                                  | Employer contributions       |  
|                                                    |                                                  | Participant contributions    |  
|                                                    |                                                  | Benefits paid                |  
|                                                    |                                                  | Exchange rate changes        |  
|                                                    |                                                  |                              |  
|                                                    | Fair value of plan assets at end of year         |                              |  
|                                                    |                                                  |                              |  
|Reconciliation of funded status                     |                                                  |                              |  
|                                                    | Funded status                                    |                              |  
|                                                    | Unrecognized actuarial loss                      |                              |  
|                                                    | Prepaid costs                                    |                              |  
|                                                    |                                                  |                              |  
|                                                    | Net amount recognized at year-end                |                              | $
|                                                    |                                                  |                              |  
|Amounts recognized in the balance sheet consist of: |                                                  |                              |  
|                                                    | Prepaid benefit cost                             |                              | $
|                                                    | Accrued benefit liability                        |                              |  
|                                                    |                                                  |                              |  
|                                                    | Net amount recognized at year-end                |                              | $
|                                                    |                                                  |                              |  
|Components of net periodic benefit cost             |                                                  |                              |  
|                                                    | Service cost                                     |                              | $
|                                                    | Interest cost                                    |                              |  
|                                                    | Expected return on plan assets                   |                              |  
|                                                    | Amortization of transitional obligation          |                              |  
|                                                    | Recognized net actuarial loss                    |                              |  
|                                                    |                                                  |                              |  
|                                                    | Net periodic benefit cost                        |                              | $
|                                                    |                                                  |                              |  
|Weighted-average assumptions                        |                                                  |                              |  
|                                                    | Discount rate                                    |                              |  
|                                                    | Expected long-term rate of return on plan assets |                              |  

25

---

Cascade Corporation

Notes to Consolidated Financial Statements (Continued)

Note 10Stock Option Plan

The Company has reserved 800,000 shares of common stock for the Cascade Corporation 1995 Senior Managers' Incentive Stock Option Plan (the
Plan). The Plan permits the award of incentive stock options (ISO) to officers and key employees. Under the terms of the Plan, the purchase price of shares subject to each ISO granted must not be less
than the fair market value on the date of grant. Accordingly, no compensation cost has been recognized under the Plan. Outstanding options vest after three or four years and are exercisable for ten
years from the date of grant.

The
Company is required under SFAS No. 123, "Accounting for Stock-Based Compensation," to disclose pro forma information regarding option grants made to its employees based on
specified valuation techniques that produce compensation charges. These amounts have not been reflected in the Company's Consolidated Statement of Income because no compensation charge arises when the
price of the employees' stock options equals the market value of the underlying stock at the grant date, as in the case of options granted to the Company employees. Pro forma information under SFAS
No. 123 is as follows:

|                                       |  | Year Ended January 31
|-------------------------------------- |  | ---------------------
|
|
|Net incomeas reported                 |  | $                    
|Net incomepro forma                   |  | $                    
|Diluted earnings per shareas reported |  | $                    
|Diluted earnings per sharepro forma   |  | $                    

The
pro forma effect on net income for the years ended January 31, 2001, 2000, and 1999 is not representative of the pro forma effect in future years because compensation
expense related to grants made in prior years is not considered. The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model with the following
weighted-average assumptions:

|                         |  | Year Ended January 31 |  
|------------------------ |  | --------------------- | -
|
|Risk-free interest rate  |  | 6.7                   | %
|Expected volatility      |  | 36                    | %
|Expected dividend yield  |  | 4.0                   | %
|Expected life (in years) |  | 5                     |  

26

---

A
summary of the Plan's status at January 31, 2001, 2000 and 1999 together with changes during the periods then ended are presented in the following table:

|                            |  | Shares   |   | Weighted Average
Price Per Share
|--------------------------- |  | -------- | - | --------------------------------
|Balance at January 31, 1998 |  | 281,377  |   | $                               
|Granted                     |  | 277,337  |   |                                 
|Exercised                   |  | (11,647  | ) |                                 
|Forfeited                   |  | (127,991 | ) |                                 
|                            |  |          |   |                                 
|Balance at January 31, 1999 |  | 419,076  |   | $                               
|Granted                     |  | 49,375   |   |                                 
|Exercised                   |  |         |   |                                 
|Forfeited                   |  | (61,672  | ) |                                 
|                            |  |          |   |                                 
|Balance at January 31, 2000 |  | 406,779  |   | $                               
|Granted                     |  | 212,000  |   |                                 
|Exercised                   |  | (3,753   | ) |                                 
|Forfeited                   |  | (3,286   | ) |                                 
|                            |  |          |   |                                 
|Balance at January 31, 2001 |  | 611,740  |   | $                               
|                            |  |          |   |                                 

The
following table summarizes information about fixed options outstanding at January 31, 2001.

|  |               | Options Outstanding |         | Options Exerciseable
|- | ------------- | ------------------- | ------- | --------------------
|
|$ | 9.94 - 10.93  |                     | 210,000 |                     
|  | 13.00 - 14.30 |                     | 48,820  |                     
|  | 15.25 - 16.00 |                     | 134,434 |                     
|  | 16.38 - 18.02 |                     | 218,486 |                     
|  |               |                     |         |                     
|  |               |                     | 611,740 |                     
|  |               |                     |         |                     

27

---

Note 11Earnings Per Share

The following table presents the calculation of basic and diluted earnings per share (In thousands, except per share amounts):

|                                                            |                                                    | Year Ended January 31 |       
|----------------------------------------------------------- | -------------------------------------------------- | --------------------- | ------
|
|Basic earnings per share:                                   |                                                    |                       |       
|Net income                                                  |                                                    | $                     | 11,863
|Preferred stock dividends                                   |                                                    |                       | (160  
|                                                            |                                                    |                       |       
|Income available to common shareholders                     |                                                    | $                     | 11,703
|                                                            |                                                    |                       |       
|Basic weighted-average shares of common stock outstanding   |                                                    |                       | 11,440
|                                                            |                                                    |                       |       
|Basic earnings per share                                    |                                                    | $                     | 1.02  
|                                                            |                                                    |                       |       
|Diluted earnings per share:                                 |                                                    |                       |       
|Income available to common shareholders                     |                                                    | $                     | 11,703
|Effect of dilutive securities:                              |                                                    |                       |       
|                                                            | Exchangeable preferred stock                       |                       |       
|                                                            | Mandatorily redeemable convertible preferred stock |                       |       
|                                                            |                                                    |                       |       
|Net income                                                  |                                                    | $                     | 11,863
|                                                            |                                                    |                       |       
|Weighted-average shares of common stock outstanding         |                                                    |                       | 11,440
|Mandatorily redeemable convertible preferred stock          |                                                    |                       |      
|Assumed conversion of exchangeable preferred stock          |                                                    |                       | 800   
|Dilutive effect of stock options                            |                                                    |                       | 32    
|                                                            |                                                    |                       |       
|Diluted weighted-average shares of common stock outstanding |                                                    |                       | 12,272
|                                                            |                                                    |                       |       
|Diluted earnings per share                                  |                                                    | $                     | .97   
|                                                            |                                                    |                       |       

Note 12Derivative Instruments and Hedging Activities

The Company has operations and sells products to dealers and original equipment manufacturers throughout the world. The Company's activities
expose it to a variety of market risks, including the effects of changes in foreign currency exchange rates. These financial exposures are monitored and managed by the Company within the Company's
foreign exchange management policy as approved by the Board of Directors. The Company's risk-management program focuses on the unpredictability of
financial markets and seeks to reduce the effects that the volatility of these markets may have on its operating results.

The
Company maintains a foreign currency risk-management strategy that uses derivative instruments to protect its interests from unanticipated fluctuations in earnings
caused by volatility in foreign currency exchange rates. Various amounts of the Company's payables, receivables and subsidiary royalties are denominated in foreign currencies, thereby creating
exposures to changes in exchange rates.

28

---



Cascade Corporation

Notes to Consolidated Financial Statements (Continued)

The Company purchases foreign currency forward exchange contracts, with contract terms normally lasting less than one month, to protect against the adverse effects that exchange rate
fluctuations may have on foreign currency denominated trade receivables and trade payables. These derivatives do not qualify for hedge accounting, in accordance with SFAS No. 133 "Accounting
for Derivative Instruments and Hedging Activities," because they relate to existing assets or liabilities denominated in a foreign currency. The gains and losses on both the derivatives and the
foreign currency denominated trade receivables and payables are recorded as transaction adjustments in current earnings thereby minimizing the effect on current earnings of exchange-rate
fluctuations.

By
using derivative financial instruments to hedge exposures to changes in exchange rates, the Company exposes itself to credit risk and market risk. Credit risk is the failure of the
counterparty to perform under the terms of the derivatives contract. When the fair value of a derivative contract is positive, the counterparty owes the Company, which creates repayment risk for the
Company. When the fair value of a derivative contract is negative, the Company owes the counterparty and, therefore, it does not possess repayment risk. The Company minimizes the credit or repayment
risk in derivative instruments by entering into transactions with counterparties whose credit ratings are AA or higher, monitoring the amount of exposure to each counterparty and monitoring the
financial condition of its counterparties.

Market
risk is the adverse effect on the value of a foreign exchange contract that results from a change in the underlying exchange rates. The market risk associated with
foreign-exchange contracts is managed by the establishment and monitoring of parameters that limit the types and degree of market risk that may be undertaken.

At
January 31, 2001, the Company had approximately $14.6 million of contracts in place to buy or sell foreign currency.

Note 13Restructuring of Foreign Operations

The Company approved and initiated restructuring plans in the second quarter of 2001 in both Australia and Europe. The restructuring of Europe
included the closure of a manufacturing facility in Vaageryd, Sweden, the elimination of redundant distribution facilities in both Germany and France and the termination of employees at the Company's
European headquarters in The Netherlands. The Company incurred $2.1 million in costs during fiscal 2001 related to its European restructuring efforts, which included $1.9 million
primarily related to employee termination costs and $248,000 for inventory write downs. A total of 58 employees in sales, production and administrative positions in Europe were terminated as a result
of the restructuring activities. As of January 31, 2001 the Company believes it has completed its restructuring plan in Europe.

The
Company's restructuring activities in Australia included the consolidation of manufacturing plants into one remaining facility in Brisbane, reduction of distribution facilities,
realignment of sales operations and the disposal of the tire and battery businesses. Total restructuring costs in Australia during fiscal 2001 were $2 million. These costs consisted of
$1.3 million in inventory write downs, primarily for tires and batteries, $108,000 for employee termination costs and $534,000 in various asset write-offs and miscellaneous costs. The Company
terminated 32 employees in sales, production and administrative positions in Australia related to the restructuring activities. The Company has completed the planned restructuring activities in
Australia as of January 31, 2001.

Restructuring
costs related to inventory write downs of $1.6 million are presented in the Company's consolidated statement of income in cost of goods sold. All other
restructuring costs are included as a part of selling and administrative expenses. At January 31, 2001 the Company's

29

---

consolidated balance sheet contained $1.0 million in accrued expenses related to the restructuring, primarily for final payments to employees terminated prior to January 31, 2001.

Note 14Divestitures

On April 29, 1999 the Company completed the sale of its industrial tire division to Maine Rubber Company for $38.1 million,
including the assumption of liabilities. The Company recorded an after tax loss on the sale of $1.1 million. During the years ended January 31, 2000 and 1999, the industrial tire
division contributed $10.9 million and $47.1 million in net sales, respectively.

On
January 22, 1999, the Company completed the sale of its mast business unit to a former Cascade officer and director for $11.2 million. The Company recorded a gain on
the sale of $582,000. In the year ended January 31, 1999, the mast product line contributed $54 million in net sales.

Note 15Commitments and Contingencies

Environmental Matters

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

The
Company is currently engaged in ongoing environmental remediation efforts at both its Portland, Oregon and Springfield, Ohio manufacturing facilities. Current estimates provide
for some level of remediation activities in Portland through 2027 and Springfield through 2010. Costs of certain remediation activities at the Portland facility are shared with The Boeing Company,
with Cascade paying 70% of actual remediation costs.

At
January 31, 2001 and 2000, the Company recorded environmental remediation liabilities of $16.4 million and $18.3 million, respectively. Environmental costs for
the year ended January 31, 2000 include approximately $7 million related to an adverse judgment in environmental litigation brought by The Boeing Company. The remaining environmental
costs recognized in the years ended January 31, 2001 and 2000 represent changes in estimates of future costs due to various factors.

The
Company and The Boeing Company are defendants in litigation brought in December 1999 by the City of Portland, Oregon (City), alleging damages arising from the proximity of
a City water wellfield to groundwater contamination in the area of their respective Portland plant sites. The Company and The Boeing Company are remedying the contamination in question, which has not
affected water pumped by the City from the wellfield. The City's complaint alleges damages of approximately $6.6 million. In November 2000 the City raised new theories which it asserts
would increase its claimed damages against both defendants by up to $19 million. The United States District Court for the District of Oregon, recently granted a partial summary judgment to the
City on certain liability issues, however, the Company believes it has substantial defenses to damage amounts originally sought by the City and intends to defend itself vigorously. The Company
believes the November 2000

30

---

additional damage claim is without merit. There has been no allocation of possible damages between the Company and The Boeing Company. The outcome of this matter is currently not determinable and no
adjustments have been recorded in the Company's consolidated financial statements relative to possible outcome of this matter.

Lease Commitments

The Company leases certain of its facilities and equipment under noncancelable operating leases. Rent expense for the years ended January 31, 2001, 2000
and 1999 totaled $4.7 million, $4.5 million and $4.8 million, respectively. Future minimum rental commitments under these leases as of January 31, 2001 are as follows (in thousands):

2002

$
3,7172003


2,1822004


1,4512005


6802006


633


Legal Proceedings

The Company is subject to legal proceedings, claims and litigation, in addition to the environmental matters previously discussed, arising in the ordinary
course of business. While the outcome of these matters is currently not determinable, management does not expect the ultimate costs to resolve these matters will have a material adverse effect on the
Company's consolidated financial position, result of operations, or cash flows.

Note 16Segment Information

|                                |  | Year Ended January 31
|------------------------------- |  | ---------------------
|
|
|2001                            |  |                      
|Sales to unaffiliated customers |  | $                    
|Transfers between areas         |  |                      
|                                |  |                      
|Net sales                       |  | $                    
|Net income (loss)               |  | $                    
|Identifiable assets             |  | $                    
|2000                            |  |                      
|Sales to unaffiliated customers |  | $                    
|Transfers between areas         |  |                      
|                                |  |                      
|Net sales                       |  | $                    
|Net income (loss)               |  | $                    
|Identifiable assets             |  | $                    
|1999                            |  |                      
|Sales to unaffiliated customers |  | $                    
|Transfers between areas         |  |                      
|                                |  |                      
|Net sales                       |  | $                    
|Net income (loss)               |  | $                    
|Identifiable assets             |  | $                    

31

---

Note 17Supplementary Quarterly Financial Information (unaudited)

|                            |                                  | 1st Quarter |   | 2nd Quarter |     | 3rd Quarter |        | 4th Quarter |  
|--------------------------- | -------------------------------- | ----------- | - | ----------- | --- | ----------- | ------ | ----------- | -
|
|Year ended January 31, 2001 |                                  |             |   |             |     |             |        |             |  
|                            | Net sales                        |             | $ | 89,265      |     | $           | 87,772 |             | $
|                            | Gross profit before depreciation |             | $ | 31,561      |     | $           | 30,921 |             | $
|                            | Net income                       |             | $ | 5,171       |     | $           | 4,604  |             | $
|                            | Net income per share:            |             |   |             |     |             |        |             |  
|                            |                                  | Basic       |   | $           | .45 |             | $      | .40         |  
|                            |                                  | Diluted     |   | $           | .42 |             | $      | .38         |  
|Year ended January 31, 2000 |                                  |             |   |             |     |             |        |             |  
|                            | Net sales                        |             | $ | 91,923      |     | $           | 79,813 |             | $
|                            | Gross profit before depreciation |             | $ | 30,670      |     | $           | 27,671 |             | $
|                            | Net income (loss)                |             | $ | 4,110       |     | $           | 4,442  |             | $
|                            | Net income (loss) per share:     |             |   |             |     |             |        |             |  
|                            |                                  | Basic       |   | $           | .35 |             | $      | .38         |  
|                            |                                  | Diluted     |   | $           | .33 |             | $      | .35         |  

32

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Report of Independent Accountants

To the Board of Directors and Shareholders of Cascade Corporation

In our opinion, the consolidated financial statements listed in the index appearing under Item 14(a)1 on page 36 present fairly, in all material
respects, the financial position of Cascade Corporation and its subsidiaries (the Company) at January 31, 2001 and 2000, and the results of their operations and their cash flows for each of the
three years in the period ended January 31, 2001 in conformity with accounting principles generally accepted in the United States. In addition, in our opinion, the financial statement schedule
listed in the index, appearing under Item 14(a)2 on page 36, presents fairly, in all material respects, the information set forth therein when read in conjunction with the related
consolidated financial statements. These financial statements and the financial statement schedule are the responsibility of the Company's management; our responsibility is to express an opinion on
these financial statements and the financial statement schedule 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.

|PricewaterhouseCoopers LLP |  | 
|-------------------------- |  | 

Portland, Oregon
March 22, 2001, except for Note 3, entitled "Merger Agreement", as to which the date is April 17, 2001.

33

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Cascade Corporation    Valuation and Qualifying Accounts    (In thousands)

|                                         |  |   |       |  |   |       |  | Column E
|---------------------------------------- |  | - | ----- |  | - | ----- |  | --------
|
|
|
|Years Ended January 31                   |  |   |       |  |   |       |  |         
|2001                                     |  |   |       |  |   |       |  |         
|Allowance for doubtful accounts          |  | $ | 1,511 |  | $ | 1,189 |  | $       
|Valuation allowancesdeferred tax assets |  | $ | 791   |  | $ | 2,249 |  | $       
|2000                                     |  |   |       |  |   |       |  |         
|Allowance for doubtful accounts          |  | $ | 1,009 |  | $ | 651   |  | $       
|Valuation allowancesdeferred tax assets |  | $ |      |  | $ | 791   |  | $       
|1999                                     |  |   |       |  |   |       |  |         
|Allowance for doubtful accounts          |  | $ | 743   |  | $ | 339   |  | $       

34

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Item 9.  Changes In and Disagreements With Accountants on Accounting and Financial Disclosure

None.

PART III

Item 10.  Directors and Executive Officers of the Registrant

The definitive Proxy Statement to be filed on or before May 23, 2001, is incorporated by reference.

Information
concerning the Company's Board of Directors is as follows:

|Director                   |  | Age |  | Director
Since |  | Title and Company                                                                   
|-------------------------- |  | --- |  | -------------- |  | ------------------------------------------------------------------------------------
|C. Calvert Knudsen         |  | 76  |  | 1974           |  | Retired, formerly Chairman and Chief Executive Officer of MacMillian Bloedel, Ltd.  
|Greg H. Kubicek (Chairman) |  | 44  |  | 1998           |  | President, The Holt Company                                                         
|Nicholas R. Lardy          |  | 55  |  | 1993           |  | Senior Fellow, The Brookings Institution                                            
|Ernest C. Mercier          |  | 68  |  | 1997           |  | Retired, Chairman of Oxford Properties, Ltd.                                        
|James S. Osterman          |  | 62  |  | 1994           |  | President of Outdoor Products Group, Oregon Cutting Systems Division of Blount, Inc.
|Jack B. Schwartz           |  | 64  |  | 1995           |  | Partner, Newcomb, Sabin, Schwartz & Landsverk                                       
|Robert C. Warren, Jr.      |  | 52  |  | 1982           |  | President and Chief Executive Officer, Cascade Corporation                          
|Henry W. Wessinger II      |  | 48  |  | 1998           |  | Senior Vice President, Ragen MacKenzie, Inc.                                        
|Nancy A. Wilgenbusch       |  | 53  |  | 1997           |  | President, Marylhurst University                                                    

The
term of office of all officers is one year. Names, ages and positions of all officers of Cascade Corporation follow:

|Name                  |  | Age |  | Year First
Elected
Officer |  | Present Position                                                                
|--------------------- |  | --- |  | -------------------------- |  | --------------------------------------------------------------------------------
|Robert C. Warren, Jr. |  | 52  |  | 1984                       |  | President, Chief Executive Officer and Director                                 
|Gregory S. Anderson   |  | 52  |  | 1991                       |  | Vice President, Human Resources                                                 
|Richard S. Anderson   |  | 53  |  | 1996                       |  | Senior Vice President, International                                            
|Terry H. Cathey       |  | 53  |  | 1993                       |  | Senior Vice President, North America                                            
|Charlie S. Mitchelson |  | 46  |  | 1999                       |  | Vice President and Managing Director, Europe                                    
|Robert L. Mott        |  | 59  |  | 1996                       |  | Vice President, OEM Product Group(1)                                            
|Art Otsuka            |  | 61  |  | 2000                       |  | Vice President, Asian Operations                                                
|Joseph G. Pointer     |  | 40  |  | 2000                       |  | Vice President, Accounting                                                      
|Anthony F. Spinelli   |  | 58  |  | 1999                       |  | Managing Director, Canadian Operations                                          
|Kurt G. Wollenberg    |  | 51  |  | 1997                       |  | Senior Vice President, Finance, Chief Financial Officer, Secretary and Treasurer

---

35

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Item 11.  Executive Compensation

The definitive Proxy Statement to be filed on or before May 23, 2001, is incorporated by reference.

Item 12.  Security Ownership of Certain Beneficial Owners and Management

The definitive Proxy Statement to be filed on or before May 23, 2001, is incorporated by reference.

Item 13.  Certain Relationships and Related Transactions

The definitive Proxy Statement to be filed on or before May 23, 2001, is incorporated by reference.

PART IV

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

Index to Financial Statements

(a) 1.Consolidated Financial Statements

|                                   |                                                                                                                | Page
|---------------------------------- | -------------------------------------------------------------------------------------------------------------- | ----
|                                   |                                                                                                                |     
|Report of Independent Accountants  |                                                                                                                | 33  
|Consolidated Financial Statements: |                                                                                                                |     
|                                   | Statements of Income for each of the three years in the period ended January 31, 2001                          |     
|                                   | Balance Sheets at January 31, 2001 and 2000                                                                    |     
|                                   | Statements of Changes in Shareholders' Equity for each of the three years in the period ended January 31, 2001 |     
|                                   | Statements of Cash Flows for each of the three years in the period ended January 31, 2001                      |     
|                                   | Notes to Consolidated Financial Statements                                                                     |     



|Valuation and Qualifying Accounts |  | 34
|--------------------------------- |  | --



(b)Reports on Form 8-K



36

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SIGNATURES

Pursuant to the requirements of Section 13 and 15(d) of the Securities Exchange Act of 1934, the registrant, CASCADE CORPORATION has duly caused
this annual report to be signed on its behalf by the undersigned thereunto duly authorized.

| |  | CASCADE CORPORATION
| |  | -------------------
| |  | By:                

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 on the
dates indicated.

| |  |  |                                                 |               
| |  |  | ----------------------------------------------- | --------------
| |  |  | /s/ Robert C. Warren, Jr.                       | April 30, 2001
| |  |  |                                                
| |  |  | Robert C. Warren, Jr.                           | Date          
| |  |  | President and Chief Executive Officer, Director |               
| |  |  | /s/ Greg H. Kubicek                             | April 30, 2001
| |  |  |                                                
| |  |  | Greg H. Kubicek,Director                        | Date          
| |  |  | /s/ Ernest C. Mercier                           | April 30, 2001
| |  |  |                                                
| |  |  | Ernest C. Mercier,Director                      | Date          
| |  |  | /s/ Jack B. Schwartz                            | April 30, 2001
| |  |  |                                                
| |  |  | Jack B. Schwartz,                               | Date          
| |  |  | Assistant Secretary, Director                   |               
| |  |  | /s/ Nancy Wilgenbusch                           | April 30, 2001
| |  | 
| |  |  | Nancy Wilgenbusch,Director                      | Date          

37

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