<PAGE>


                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D. C. 20549
                                                                     
                                    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 December 31, 1996

[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange
    Act of 1934

Commission file # 0-2129

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

            New York                                 15-0372290
---------------------------------        ------------------------------------
(State or other jurisdiction of          (I.R.S. Employer Identification No.)
 incorporation or organization)


20 South Canal Street, Greene, New York                   13778
---------------------------------------------       ----------------
(Address of principal executive offices)               (Zip Code)

Registrant's telephone number, including area code   (607) 656-2311
                                                    ----------------------

Securities registered pursuant to Section 12(b) of the Act:

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

                     Common Stock, $1.50 par value per share
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                                (Title of class)

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 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.______

As of March 14, 1997, the aggregate market value of the voting stock held by
non-affiliates of the registrant was $255,620,275.

As of March 14, 1997, there were 10,705,623 shares of the registrant's Common
Stock, $1.50 par value, outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Proxy Statement for the Annual Shareholders Meeting to be held
June 2, 1997 are incorporated by reference into Part III.

Exhibit Index is located on pages 30 - 32.

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                             THE RAYMOND CORPORATION

                                TABLE OF CONTENTS

                                                                         Page

                                     Part I

Item 1.         Description of Business.................................3 - 10
Item 2.         Properties..............................................11
Item 3.         Legal Proceedings.......................................11
Item 4.         Submission of Matters to a Vote of Security Holders.....12
                Additional Information:  Executive Officers.............13 - 14


                                     Part II

Item 5.         Market for Company's Common Stock and
                Related  Security Holder Matters........................15
Item 6.         Selected Financial Data.................................16 - 17
Item 7.         Management's Discussion and Analysis of Financial
                Condition and Results of Operations.....................18 - 27
Item 8.         Financial Statements and Supplementary Data.............28
Item 9.         Changes in and Disagreements with Accountants
                on Accounting and Financial Disclosure..................28


                                    Part III

Item 10.        Directors and Executive Officers of the Registrant......28
Item 11.        Executive Compensation..................................28
Item 12.        Security Ownership of Certain Beneficial Owners
                and Management..........................................28
Item 13.        Certain Relationships and Related Transactions..........28


                                     Part IV

Item 14.        Exhibits, Financial Statement Schedules and
                Reports on Form 8-K.....................................29

                Signatures..............................................33

                                       2
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                    THE RAYMOND CORPORATION, GREENE, NEW YORK
                                    Form 10-K

                                     PART I

Item 1.  Business

(a)             The Company (as used herein the term "Raymond" refers to The
                Raymond Corporation alone, and the term "Company" refers to The
                Raymond Corporation and its subsidiaries, both consolidated and
                unconsolidated, and direct and indirect) operates predominately
                in one business segment, that being the design, manufacture,
                distribution and service of materials handling equipment. 
                Revenues are realized primarily from distribution of
                the RAYMOND(R) and DOCKSTOCKER(R) product lines through the
                Company's Dealer Network which is principally located in North
                America. In addition, the Company has expanded in both the
                domestic and international markets through distribution and
                Original Equipment Manufacturer ("O.E.M.") supply agreements.

                Raymond was organized in 1840 as Lyon Iron Works, in Greene, New
                York, and in 1922 George G. Raymond, Sr. purchased it. Raymond
                produced its first materials handling product in 1930 under the
                Lyon Iron Works name. In 1941, Raymond was renamed Lyon-Raymond
                Corporation, and in 1951, was renamed The Raymond Corporation.
                Shares were first offered to the public in 1956.

                The major components of the Company's international operations
                are Raymond Industrial Equipment, Limited, a wholly-owned
                Canadian manufacturing subsidiary, and G.N. Johnston Equipment
                Co. Ltd., the exclusive Canadian distributor that is 74% owned
                by R.H.E. Ltd., a wholly-owned Canadian subsidiary of Raymond.
                Foreign exchange exposure on international operations is limited
                primarily to the Canadian dollar and is minimized through the
                purchase of foreign currency exchange contracts and options.

                In 1991, Raymond and Mitsubishi Caterpillar Forklift America
                Inc. ("MCFA") signed an agreement to create a joint venture
                company. The joint venture company, known as Material Handling
                Associates, Inc. ("M.H.A."), is a separate enterprise which
                designs, develops, and sells products to be manufactured
                exclusively by the Company and distributed exclusively through
                M.H.A. dealers using Caterpillar trademarks. This venture is
                intended to expand distribution of products manufactured by the
                Company and to provide additional opportunities for the sale of
                replacement parts and accessories. Certain officers of the
                Company are also officers of M.H.A.

                In 1994, MCFA signed an agreement with Raymond to purchase for
                resale battery powered, electric low lift pallet trucks known as
                walkies, similar to those currently manufactured by the Company
                for M.H.A. MCFA markets the walkies, using Mitsubishi trademarks
                throughout the United States, Canada, Mexico, Central and South
                America. Also in 1994, Raymond and MCFA signed an agreement
                whereby the Company manufactures a sit-down counterbalanced
                electric forklift truck exclusively for sale to MCFA.

                                       3
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                In 1994, Raymond entered into an agreement with Jungheinrich
                A.G. ("Jungheinrich") of Hamburg, Germany, a large manufacturer
                of lift trucks in Europe. Under the agreement, the Company
                manufactures a European version of the EASi Orderpicker truck
                for distribution by Jungheinrich. In addition, the agreement
                grants Jungheinrich the non-exclusive right to distribute this
                product in other markets in which the Company currently does not
                participate.

                During 1994, Raymond formed Dockstocker Corporation, a New York
                corporation, owned by Raymond Sales Corporation, a 100% owned
                subsidiary of Raymond. Dockstocker Corporation markets and sells
                stand-up end control counterbalanced forklift trucks featuring
                flexible dockstance operator configuration designed to maximize
                loading productivity in the dock environment, as well as its own
                line of walkie products.

                In 1995, Raymond and MCFA entered into another agreement whereby
                the Company manufactures and MCFA purchases for resale to end
                users certain battery powered, electric orderpickers, straddle
                and reach trucks under the Mitsubishi trademark for distribution
                in the United States, Canada, Mexico, Central and South America.

                Also in 1995, Raymond and Toyota Industrial Equipment
                ("T.I.E."), a division of Toyota Motor Sales, U.S.A., Inc.,
                entered into an agreement whereby the Company manufactures
                electric low lift walkie pallet trucks and service parts for
                distribution through T.I.E.'s dealer network in the continental
                United States. In 1996, the agreement was amended to provide
                T.I.E. with the right to distribute such products and services
                through its authorized dealers in Mexico, New Zealand and
                Australia. Raymond and T.I.E. entered into another agreement in
                1996 whereby the Company manufactures electric orderpickers,
                straddle and reach trucks for distribution under the Toyota
                trademark.

                Raymond initiated a plant modernization plan in 1995 which
                included a major upgrading of production equipment and processes
                in its Greene, New York facility. The modernization plan, which
                cost approximately $12 million of capital expenditures, is in
                its final stages of completion. The factory modernization
                project has significantly upgraded the technology of the plant
                and has also increased its efficiency.

                The Company has equity investments in certain members of its
                Dealer Network. In 1996, it increased equity investments in
                Dealerships with principal offices in Illinois, Pennsylvania and
                Canada. In addition to North America, the Company has Dealers in
                Central and South America, Australia, New Zealand and Singapore.

                In October 1996, Ross K. Colquhoun, Chairman of the Board and
                Chief Executive Officer of Raymond sold his shares of common
                stock of G. N. Johnston Equipment Co. Ltd. ("Johnston") and
                Associated Material Handling Industries, Inc. ("Associated"),
                both distributors of the Company's products. The shares were
                valued in accordance with the terms and conditions set forth in
                shareholder buy/sell agreements dated July 1, 1968 and August
                15, 1980, respectively. The Johnston shares, which represent
                approximately 28% of the total outstanding shares, were acquired
                by R.H.E. Ltd. ("R.H.E."), a wholly-owned Canadian subsidiary of
                Raymond. The Associated shares, which represent approximately
                26% of the total outstanding shares, were acquired by Raymond.

                                       4
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                According to the provisions of an Indenture dated December 15,
                1993, the Company issued 6 1/2% Convertible Subordinated
                Debentures due December 15, 2003. In December 1996, the Company
                announced the redemption of all of its outstanding 6 1/2%
                Convertible Subordinated Debentures.

(b)             Financial Information about Industry Segments

                See "Note N - Business Segment Information" of the consolidated
                financial statements included in Item 8 of this Form 10-K Annual
                Report.

(c)             Narrative Description of Business

         (i)    Principal Products and Services

                The Company's products are marketed principally under the
                RAYMOND(R) and DOCKSTOCKER(R) trademarks, and fall into the
                category of unit load and case pick load handling.

                The Company's unit load and case pick load products are
                operator-controlled machines used to move a load from point A to
                point B. The unit load and case pick load product line includes
                orderpickers, walkies, sideloaders, straddle, SWING-REACH(R)
                trucks, and REACH-FORK(R) trucks for narrow aisle and very
                narrow aisle operation, and counter- balanced PACER(TM) and
                DOCKSTOCKER trucks.

                In 1990, a new line of orderpickers with advanced microprocessor
                control was introduced by the Company. The orderpickers
                significantly reduce the high costs and time involved to pick
                orders. Total programmability, through the intellidrive(R)
                control system, allows truck performance to be tailored to each
                user's needs to optimize productivity. The intellidrive system
                utilizes microchip technology developed by the Company and is
                designed to replace control systems based predominately on
                hydraulic and mechanical technologies. The intellidrive system
                enhances the trucks' performance characteristics and
                productivity and has allowed the Company to reduce manufacturing
                costs through reduced material and labor expense.

                In 1991, the Company introduced a series of products known as
                EASi products - Ergonomically Advanced Systems with
                intellidrive. This new line of trucks is designed for greater
                operator comfort and enhanced productivity. The trucks included
                in this series are the operator-up SWING-REACH truck, the
                orderpicker and the narrow aisle REACH-FORK truck. The new EASi
                REACH-FORK truck has unequaled capacity at elevated heights and
                provides greater space utilization and increased productivity.

                In 1992, the Company introduced a new base model version of the
                orderpicker and REACH-FORK truck.

                In 1993, a new generation of the EASi REACH-FORK truck and EASi
                Orderpicker were introduced, designed for greater operator
                comfort and productivity.

                                       5
<PAGE>
                Also in 1993, the Company introduced an option on the EASi
                REACH-FORK truck and EASi Orderpicker with the SMARTi(TM)
                information system. The SMARTi information system enables the
                customer to easily obtain reports on the truck's activities by
                shift, day or week to help evaluate productivity.

                In addition, two new walkies were introduced in 1993. The 8,000
                pound capacity walkie and the transistor-controlled 4,000 pound
                capacity walkie are designed to increase productivity.

                In 1994, the Company introduced a new walkie handle design to
                provide greater operator comfort, convenience and productivity.
                The design difference can make repeated movements more
                comfortable.

                Also in 1994, two new products were introduced to the EASi
                REACH-FORK(R) line featuring upgradeability from 24 volt
                operation, and an optional dockstance operator compartment. In
                addition, the EASi REACH-FORK family was expanded to include a
                four directional truck for use in handling both standard pallets
                and long loads, and additional mast selections for very tall
                single and double deep reach applications.

                In 1995, the dual-drive PACER(TM) stand-up, electric
                counterbalanced lift truck was redesigned for improved operator
                ergonomics. The steering wheel and travel control were
                repositioned to make them easier to reach during forks first and
                tractor first facing stances.

                Also in 1995, the Company introduced the first reach truck
                design which incorporates a Radio Frequency ("RF") terminal,
                providing an ergonomic integration of this important
                productivity tool with the lift truck. RF communication systems
                are used in high throughput distribution operations.

                In addition, in 1995 the DOCKSTOCKER(R) stand-up, end-control
                electric counter-balanced trucks and DOCKSTOCKER walkie product
                line were introduced. These products feature enhanced technology
                and ergonomics.

                In 1996, Dockstocker Corporation introduced a Walkie-Reach truck
                which enables a pedestrian controlled vehicle to lift palletized
                loads up to 237 inches, as well as an enhanced counterbalanced
                truck designed to handle attachments.

                Also in 1996, the Company marketed an enhanced EASi REACH-FORK
                truck with increased lift speed, productivity enhancers and
                other customized features. The EASi Orderpicker product line was
                expanded in 1996 to include products for applications up to 366
                inches.

                All of these vehicles, controls and systems are sold through a
                network of Dealerships, which have multiple full service
                facilities across their trading area and are supported by a
                repair and replacement parts service. The Company's replacement
                parts and accessories business supports the base of the
                Company's lift trucks in service and provides new parts and
                service to customers who have service needs for non-Company
                equipment. In addition, the Company rebuilds and sells electric
                motors and other components for replacement use, offering its
                customers a cost-effective alternative to purchasing a new
                component for both Company and non-Company equipment.

                                       6

<PAGE>
                
                Raymond Leasing Corporation, a wholly-owned subsidiary of
                Raymond, offers lease financing, short-term rentals and sales of
                used equipment and serves as a marketing vehicle for the
                Company's products by providing the Company's Dealer Network
                with flexible leasing programs.

                The Company presently manufactures lift truck masts for two
                additional O.E.M. customers.

                The product and service categories of the Company's business
                segment are shown with percentage of revenues contributed in
                "Note N - Business Segment Information" of the consolidated
                financial statements in Item 8 of this Form 10-K Annual Report.

     (ii)       Status of New Products That Have Been Publicly Announced And
                Require a Material Investment

                There are no new products or industry segments that have been
                publicly announced by the Company that will require a material
                investment of assets or that are otherwise material. However, as
                in prior years, the Company expects to introduce new and
                enhanced models through its normal research and development
                activities.

     (iii)      Sources and Availability of Raw Materials

                The Company procures components from the best available sources
                of supply, which include a broad range of internal manufacturing
                capabilities. Certain components of its products are fabricated
                from bar, strip, rod, sheet and plate steel. Individual
                decisions to make or buy are based upon numerous factors, the
                more significant being quality, cost, lead time and
                technological sensitivity.

                The Company has no significant long-term commitments with any
                supplier and believes its supply arrangements are adequate for
                current and presently foreseeable needs. Certain electric
                motors, forks, castings, hydraulic and electronic components are
                made to Company specifications and are purchased from single
                sources. Many single sources are backed up by agreements to
                allow manufacture by alternate sources or by the availability of
                similar standard components from alternate sources. Continued
                effort is made by the Company's Engineering and Purchasing
                Departments to establish and improve the strong working
                relationships between the Company and its suppliers.

                The Company's products vary in capacity, function and load
                capability and consequently, specifications for a particular
                order require that many of the components are only made to
                orders booked. Commonly used parts are manufactured or purchased
                and stocked to minimize production time. Finished products are
                normally assembled only to orders booked. Every effort is made
                to keep inventories low, while meeting competitive delivery
                commitments.

                                       7
<PAGE>

     (iv)       Importance to the Industry and the Duration of Patents, 
                Trademarks, Licenses and Concessions

                The Company has numerous registered patents in the United
                States, Canada and several European countries with respect to
                various inventions, including the intellidrive(R) control
                system. Although the Company considers that, taken as a whole,
                the rights under these patents, which expire from time to time,
                are a valuable asset, it does not regard its business as being
                materially dependent upon any single patent or any group of
                patents.

                The Company also has a number of registered and common law
                trademarks and service marks for its products. The trade and
                service marks, taken as a whole, are considered by the Company
                to be important to its business.

     (v)        Seasonality of Business

                The Company does not recognize its business segment or any of
                its products or services as seasonal.

     (vi)       Working Capital Practices

                The Company pursues and the industry demands no special business
                practices with respect to working capital items.

     (vii)      Customers

                The Company distributes its products principally through its
                Dealer Network. These Dealers sell the Company's products to the
                end users, which represent a broad cross-section of industry.
                They include public and private businesses engaged in the
                manufacture, storage and/or distribution, both wholesale and
                retail, of a wide variety of products. These industries include
                the grocery, automotive, health care and consumer product
                industries.

                In 1992, the Company established its National Accounts Program,
                which offers to certain large customers a single purchasing and
                financing source for their materials handling equipment and
                service needs. Delivery, installation and after-sale service are
                provided by the Company's Dealer Network. The Program focuses on
                fleet users of lift trucks with facilities in several areas of
                the country. In 1996, the National Accounts Program consisted of
                seven customers nationwide.

                In 1996, the Company established the Regional Accounts Program
                in conjunction with the National Accounts Program. The Program
                targets existing dealership customers and promotes factory
                directed assistance for approximately forty high volume regional
                accounts.

                No single customer (end user) of the Company accounts for 10% or
                more of the Company's total consolidated revenues. However, at
                December 31, 1996, lease receivables from one customer
                represented approximately 16% of the total investment in leases.

                                       8

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     (viii)     Backlog

                As of December 31, 1996, the backlog of orders aggregated
                approximately $76,386,000 compared with a backlog of
                approximately $65,640,000 on December 31, 1995. No assurance can
                be given that the backlog will continue at any particular level.
                The Company reasonably expects to fill the backlog of orders
                within the current fiscal year, unless a longer delivery lead
                time has been requested by the customer. The Company believes
                that its current backlog can generally be considered firm; no
                significant cancellations are expected.

     (ix)       Contracts Subject to Termination or Renegotiation

                There is no material portion of the business that is subject to
                renegotiation of profits or termination of contracts or
                subcontracts at the election of the Government.

     (x)        Competition

                While competitive conditions vary from product to product, all
                of the Company's products are marketed in the highly competitive
                manufacturing and warehousing materials handling systems
                markets. Historically, Raymond's strength has been in providing
                technology, superior application - specific product performance,
                service and reliability.

                The Company is a major competitor in all market segments in
                which it participates, generally competing with other major
                national and international manufacturers. In addition to these
                direct competitors, a number of other products compete
                indirectly for the industrial consumer's materials handling
                dollars. The Company believes it is the only North American
                narrow aisle manufacturer which designs and manufactures a
                highly integrated vehicle control system. This allows the
                Company to be a leader in developing and applying new control
                technologies, responding more quickly to user demands and
                trends, and differentiating its products with respect to key
                competitive factors such as productivity and ergonomics.

                The Company believes it is the only company offering its
                comprehensive array of materials handling systems, products and
                services to the markets it serves.

                Because of the Company's broad product mix, it has no one single
                competitor but rather various competitors across the unit load
                and case pick load handling category. In recent years, the
                Company has introduced a new enhanced line of orderpickers,
                reach trucks, SWING-REACH(R) trucks, stand-up, end-control
                electric counterbalanced trucks and walkies which have
                solidified the Company's position in the unit load and case pick
                load handling category. Over time, several manufacturers have
                emerged as key competitors in this category, including
                U.S.-based Crown Equipment Corporation, Clark Material Handling
                Company and the Yale Industrial and Hyster subsidiaries of North
                American Coal Company.


                The Company no longer considers itself a competitor in the
                automated storage and retrieval market since its business
                activity is now limited to the manufacture of horizontal
                carousels for a single O.E.M. customer.

                                       9

<PAGE>
     (xi)       Research and Development

                The cost of the Company's research and development program
                amounted to $3,269,000 in 1996 compared to $3,601,000 in 1995
                and $3,958,000 in 1994. The Company works closely with customers
                in the development of product application to fulfill a
                particular materials handling requirement.

      (xii)     Compliance with Environmental Laws and Regulations

                The Company's production facilities and operations are subject
                to a variety of federal, state and local environmental and job
                safety laws and regulations, including various federal, state
                and local laws, ordinances and regulations pursuant to which an
                owner of real property may become liable for the costs of
                removal or remediation of certain hazardous or toxic substances
                located on or in such property. Environmental laws often impose
                liability without regard to whether the owner knew of, or was
                responsible for, the presence of such hazardous or toxic
                substances. The presence of such substances, or the failure to
                remediate the presence of such substances properly, may
                adversely affect the owner's ability to sell such real estate or
                to borrow using such real estate as collateral. In particular,
                the federal Comprehensive Environmental Response, Compensation
                and Liability Act ("CERCLA") imposes joint and several liability
                for clean-up and enforcement costs, without regard to fault or
                to the legality of the original conduct, on current or
                predecessor owners or operators of a site. Under CERCLA, an
                owner or operator of the site may be liable for all or part of
                the costs to clean up sites at which waste has been released by
                the owners, the owner's lessees, or by predecessor or successor
                owners. In addition, liability extends to persons/companies
                which generated the hazardous substances located on the
                property, or arranged for disposal of such substances. The
                Company believes that it is in compliance in all material
                respects with all relevant federal, state and local rules and
                regulations and regulations regarding hazardous or toxic
                substances. No assurances, however, can be given that the
                Company is aware of all potential environmental liabilities, or
                that there are not material environmental liabilities of which
                the Company is not aware.

     (xiii)     Employees

                The Company had 1,700 employees on December 31, 1996.

(d)             Financial Information about Foreign and Domestic Operations and
                Export Sales

                See "Note N - Business Segment Information" of the consolidated
                financial statements included in Item 8 of this Form 10-K Annual
                Report.

                (2) The Company has no extraordinary risks attendant to its
                foreign operations.

                                       10
<PAGE>
Item 2.  Properties

                The Company's corporate headquarters and main manufacturing
                facility, made of steel and masonry construction, are located in
                an approximately 70,000 square foot office building and
                approximately 325,000 square foot adjacent plant in Greene, New
                York, both of which are owned by the Company. In 1996, the
                Greene manufacturing facility underwent a $12 million
                modernization plan which addressed both the manufacturing
                processes and the information system processes.

                Expansion was completed in 1994 on a modern 138,000 square foot
                steel and masonry manufacturing and office building the Company
                owns in Brantford, Ontario, Canada.

                The Company owns a modern one-story facility located in East
                Syracuse, New York which houses the Company's Parts Distribution
                Center. The facility, made of steel and masonry construction,
                contains approximately 61,000 square feet of warehouse and
                office space.

                The Company currently leases approximately 14,000 square feet of
                space in Greene, New York for use as a manufacturing and
                assembly facility.

                The Company also leases approximately 10,301 square feet of
                space in Greene, New York for use as a training center. The
                lease, for a five year period, expires December 2000.

                Raymond Leasing Corporation, a 100% owned subsidiary of Raymond,
                leases approximately 35,600 square feet of space in Dewitt, New
                York for use as office space, warehousing of rental fleet and
                repair and maintenance shop.

                All of the Company's properties and machinery are believed to be
                well maintained and in good condition. With the completion of
                the modernization plan at the Greene facility, the Company
                estimates that its production capacity will be adequate for the
                business anticipated during the next three or four years.

Item 3.  Legal Proceedings

                The Company is currently defending approximately 65 products
                liability and similar lawsuits involving industrial accidents.
                Management believes that none of these will individually have a
                material adverse effect on the Company. Taken as a whole, the
                damages claimed would have a material adverse effect on the
                Company but actual costs of judgments, settlements and costs of
                defense have not had such an effect to date. The Company views
                these actions, and related expenses of administration,
                litigation and insurance, as part of the ordinary course of its
                business. The Company uses a combination of self-insured
                retention and insurance, paid for in part by its Dealers, to
                manage these risks and believes that the insurance coverage and
                reserves established for self-insured risks are adequate. The
                Company's Dealers contribute to the funding of the Company's
                products liability program and, in turn, the Company indemnifies
                the Dealers against products liability expense and manages
                products liability claims. The Company has a policy of
                aggressively defending these lawsuits which generally take
                several years to ultimately resolve.

                                       11
<PAGE>
                The Company is also one of seventeen remaining defendants in a
                private environmental lawsuit. The five plaintiffs in the case
                are Cooper Industries, Inc., Keystone Consolidated Industries,
                Inc., The Monarch Machine Tool Co., Niagara Mohawk Power
                Corporation and Overhead Door Corporation. Plaintiffs have been
                ordered by the United States Environmental Protection Agency
                ("EPA") to perform a Remedial Investigation/Feasibility Study
                ("RI/FS") with respect to a 20 acre site located in Cortland,
                New York and remediate the site. Plaintiffs are seeking
                contribution from each of the defendants. The RI/FS has been
                completed by the plaintiffs and submitted to the EPA for
                approval. The plaintiffs expect the EPA to issue a Record of
                Decision by the second quarter of 1997. The EPA decision will
                define the scope of the remediation required and is expected to
                narrow the issues in the private party litigation. Pretrial
                factual discovery on the plaintiffs' claims against each
                defendant has been completed. Expert discovery is expected to
                continue through 1997. The site involved in the litigation was a
                manufacturing site for many years prior to 1971. From 1971 to
                1985, a scrap metal processing operation was conducted at the
                site. From 1975 to 1982, the owners of the scrap metal
                processing operation purchased scrap metal from the Company. The
                plaintiffs have alleged that the scrap metal purchased from the
                Company was hazardous and/or was coated with certain solvents
                and/or cutting oils. Plaintiffs have successfully moved for
                partial summary judgment, on liability only, against two
                co-defendants who contributed scrap metal to the site.
                Similar motions as to the Company and two other co-defendants
                are pending. Plaintiffs have the burden of proving the nature
                and extent of the Company's contribution to the site as well as
                the burden of proving what portion of the material delivered to
                the site was "hazardous" as that term is defined in the
                environmental statutes. The Company is aggressively defending
                the claim and does not believe it is likely to have a material
                adverse effect on the Company.

                In addition to the matters discussed above, the Company is
                subject to various other legal proceedings, claims and
                liabilities which have arisen in the ordinary course of its
                business. In the opinion of management, the amount of ultimate
                liability, if any, with respect to these actions will not
                materially affect the financial results of operations or
                financial position of the Company.

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

                During the fourth quarter of 1996, no matter was submitted to a
                vote of security holders.

                                       12
<PAGE>
ADDITIONAL INFORMATION REQUIRED IN PART I:

Executive Officers of the Registrant

                The names, ages and positions of all the Executive Officers of
                Raymond, as of March 14, 1997, are listed below together with
                their business experience during the past five years. Officers
                are elected annually by the Board of Directors. There are no
                family relationships among these officers or any Director or
                Executive Officer of Raymond, nor any arrangement or
                understanding between any officer and any other person pursuant
                to which the officer was elected. Certain Executive Officers of
                Raymond are also officers of Raymond's principal subsidiaries.
<TABLE>
<CAPTION>

                Name and Position                    Age       Business Experience
                -----------------                    ---       -------------------
<S>                                                  <C>       <C>                                
                Ross K. Colquhoun                    66        Appointed Chairman of the
                Chairman of the Board, Chief                   Board and Chief Executive 
                Executive Officer and Director                 Officer in 1995 and elected in
                                                               1996; Appointed and
                                                               elected Chief Executive Officer
                                                               prior to 1992; Formerly President
                                                               from 1987-1995.

                James J. Malvaso                     46        Appointed President and Chief
                President, Chief Operating                     Operating Officer in 1995 and 
                Officer and Director                           elected in 1996;  Appointed and
                                                               elected Vice President-
                                                               Operations in 1993; Vice
                                                               President of Operations of
                                                               Pfaudler-U.S. Inc.(1990-1993), a 
                                                               leading manufacturer of glass-
                                                               lined reactors, pressure vessels
                                                               and accessories with revenues
                                                               in excess of $130 million.

                William B. Lynn                      51        Appointed and elected
                Executive Vice President                       Executive Vice President
                Principal Financial Officer                    in 1994; Formerly Vice
                                                               President-Finance from 1984-
                                                               1994.

                James B. Bennett, III                56        Appointed Vice President-
                Vice President-Sales and                       Sales and Dealer Develop-
                Dealer Development                             ment in 1995 and elected in
                                                               1996; 1994-1996, Vice
                                                               President and General Manager
                                                               of Dockstocker Corporation, a
                                                               wholly-owned subsidiary of
                                                               Raymond Sales Corporation; 
                                                               President from 1992-1993, and
</TABLE>
                                       13
<PAGE>
<TABLE>
<CAPTION>
<S>                                                           <C>    
(Con't)         James B. Bennett, III                          Vice President from 1983-1992,
                Vice President-Sales and                       of Clark Material Handling,
                Dealer Development                             Company, a manufacturer of
                                                               materials handling equipment.

                James W. Davis                       51        Appointed and elected Vice
                Vice President-Engineering                     President-Engineering
                                                               prior to 1992.

                Jerome R. Dinn                       54        Appointed Vice President-
                Vice President-National Accounts               National Accounts in 1995
                                                               and elected in 1996; Appointed
                                                               and elected Vice President-Sales
                                                               & Quality prior to 1992.

                John F. Everts                       38        Appointed and elected Treasurer
                Treasurer and                                  and Chief Accounting Officer in
                Chief Accounting Officer                       1996; Appointed and elected
                                                               Corporate Controller prior to 
                                                               1992.

                Margaret L. Gallagher                49        Appointed and elected Vice
                Vice President-Marketing                       President-Marketing prior to
                                                               1992.

                Patrick J. McManus                   42        Appointed and elected
                President, Raymond Leasing                     President, Raymond Leasing
                Corporation                                    Corporation prior to 1992;
                                                               Raymond Leasing Corporation 
                                                               is a wholly-owned leasing
                                                               subsidiary of the Company;
                                                               Treasurer from 1990-1995.

                Paul J. Sternberg                    63        Appointed and elected Vice
                Vice President,                                President in 1992; Appointed
                General Counsel &                              and elected General Counsel
                Secretary                                      and Secretary prior to 1992.
                                                          
</TABLE>

                                       14
<PAGE>

                                     PART II

Item 5.         Market for the Company's Common Stock and Related Security 
                Holder Matters


                See "Note P - Quarterly Information (Unaudited)" of the
                consolidated financial statements included in Item 8 and the
                discussion on Liquidity and Sources of Capital included in Item
                7 of this Form 10-K Annual Report.

                The number of shareholders of record on March 14, 1997 was
                2,259.

                In March 1997, the Company announced that it had retained an
                investment banking firm to assist in evaluating strategic
                alternatives available to increase shareholder value. In
                conjunction with this, the Company's Board of Directors adopted
                a Shareholders Right Plan. The Rights provide protection against
                coercive or unfair takeover tactics. The Rights Plan is similar
                to plans adopted by many public companies and should provide a
                sound and reasonable means of safeguarding the interests of all
                shareholders should an effort be made to acquire the Company at
                a price not reflective of its fair value.








                                       15
<PAGE>

Item 6.         Selected Financial Data

Financial Summary: Current and Ten Year
The Raymond Corporation and Subsidiaries

(Dollars in thousands, except per share data)

<TABLE>
                Years ended December 31,           1996       1995       1994      1993       1992        1991   
-----------------------------------------------------------------------------------------------------------------
<S>                                               <C>       <C>       <C>        <C>         <C>        <C>      
Summary of Operations                                                                                            
 Net sales, leasing and rental revenues           $305,490  $282,570   $226,727  $ 169,489    $146,662  $ 138,824 
 Other income                                        3,317     2,813      2,820      2,460       2,071      1,871 
                                                 ----------------------------------------------------------------
 Total revenues                                    308,807   285,383    229,547    171,949     148,733    140,695 
                                                 ----------------------------------------------------------------
 Cost of sales and rentals                         228,964   213,175    170,831    127,911     109,716    109,180 
 Expenses                                           49,677    44,722     36,621     31,282      27,586     28,725 
 Interest expense:                                                                                               
  Lease financing                                    4,703     2,950      2,192      3,044       3,391      3,590 
  Other                                              3,054     3,721      3,950      1,765       1,567      2,032 
                                                 ----------------------------------------------------------------
 Total costs and expenses                          286,398   264,568    213,594    164,002     142,260    143,527 
                                                 ----------------------------------------------------------------
                                                    22,409    20,815     15,953      7,947       6,473     (2,832)
 Income tax expense (benefit)                        8,282     8,088      6,428      3,202       2,664       (930)
                                                 ----------------------------------------------------------------
 Income (loss) before minority interest and                                                                       
  equity in earnings of unconsolidated                                                                          
  investees                                         14,127    12,727      9,525      4,745       3,809     (1,902) 
 Minority interest in earnings of subsidiaries         176        --         --         --          --         -- 
 Net equity earnings--unconsolidated investees       1,068       347        202        262         152        377 
                                                 ----------------------------------------------------------------
 Income (loss) from continuing operations           15,019    13,074      9,727      5,007       3,961     (1,525)
 Income (loss) from discontinued operations             --        --         --         --          --         -- 
                                                 ----------------------------------------------------------------
 Net income (loss)                                $ 15,019  $ 13,074   $  9,727   $  5,007   $   3,961  $  (1,525)
                                                 ================================================================
                                                                                                                  
-----------------------------------------------------------------------------------------------------------------
Statistical Information*                                                                                         
 Per common share:                                                                                               
  Income from continuing operations                                                                              
  (Primary)                                        $  2.00  $   1.82  $    1.39  $     .72    $    .57   $   (.22)
  Net income (Primary)                                2.00      1.82       1.39        .72         .57       (.22)
  Cash dividends                                      .075        --         --         --          --         -- 
  Book value                                         15.58     13.63      11.58      10.47        9.98       9.79 
Weighted average number of shares                                                                                
outstanding                                      7,524,097 7,176,862  6,984,319  6,972,923   6,958,098  6,956,381 
Cash dividends                                     $   573   $    --  $      --  $      --    $     --   $     -- 
Order backlog                                       76,386    65,640     78,119     52,297      31,919     31,430 
Income from continuing operations                                                                            
as % of total revenues                                 4.9       4.6        4.2        2.9         2.7       (1.1)     
Net income as % of average                                                                                       
  shareholders' equity                                13.1      14.3       12.6        7.0         5.8       (2.2)
-----------------------------------------------------------------------------------------------------------------
Financial Position                                                                                               
  Working capital                                 $ 85,264  $  73,801  $ 58,498  $  82,917   $  49,000   $ 31,259 
  Total assets                                     322,938    249,927   204,376    190,749     153,844    152,443 
  Long-term obligations                             94,136     84,548    70,546     81,510      47,876     39,128 
  Shareholders' equity                             128,672    101,334    81,000     73,053      69,447     68,099 
                                                                                                                  
</TABLE>
Note: As indicated in Note H to the financial statments, beginning in the fourth
quarter of 1996 the operating results of G.N. Johnston Equipment Co. Ltd.
(Johnston) and Associated Material Handling Industries, Inc. (Associated) have
been consolidated with those of the Company. Prior to the fourth quarter of
1996, the Company accounted for its investments in Johnston and Associated using
the equity method.

*Restated for the 1996 5% stock dividend.

                                       16
<PAGE>



<TABLE>                                              
                                                     
                                                     
                Years ended December 31,          1990      1989       1988      1987     1986         
-------------------------------------------------------------------------------------------------      
<S>                                             <C>        <C>       <C>       <C>      <C>   
Summary of Operations                                                                                  
Net sales, leasing and rental revenues           $145,525  $163,541  $151,920  $126,011  $124,929      
Other income                                        1,823     1,770     1,191       838     1,605      
                                                --------------------------------------------------     
Total revenues                                    147,348   165,311   153,111   126,849   126,534      
                                                --------------------------------------------------     
Cost of sales and rentals                         109,953   130,752   121,224    97,180    92,594      
Expenses                                           28,930    29,890    26,575    25,018    22,510      
Interest expense:                                                                                      
 Lease financing                                    3,792     3,502     3,607     3,431     2,489      
 Other                                              2,151     2,651     1,400       411       703      
                                                --------------------------------------------------     
Total costs and expenses                          144,826   166,795   152,806   126,040   118,296      
                                                --------------------------------------------------     
                                                    2,522    (1,484)      305       809     8,238      
Income tax expense (benefit)                        1,092      (506)     (181)     (624)    3,201      
                                                --------------------------------------------------     
Income (loss) before minority interest and                                                                 
 equity in earnings of unconsolidated                                                                    
 investees                                          1,430      (978)      486     1,433     5,037      
Minority interest in earnings of subsidiaries          --        --        --        --        --      
Net equity earnings-- unconsolidated investees        503     1,374       943       930       973      
                                                --------------------------------------------------     
Income (loss) from continuing operations            1,933       396     1,429     2,363     6,010      
Income (loss) from discontinued operations             --    (1,616)      282       261       217      
                                                --------------------------------------------------     
Net income (loss)                                $  1,933  $ (1,220) $  1,711  $  2,624  $  6,227      
                                                ==================================================     
                                                                                                       
--------------------------------------------------------------------------------------------------     
Statistical Information*                                                                               
 Per common share:                                                                                     
  Income from continuing operations                                                                    
  (Primary)                                      $    .28   $   .06  $    .21  $    .34  $    .87      
  Net income (Primary)                                .28      (.18)      .25       .38       .90      
  Cash dividends                                       --       .30       .41       .41       .41      
  Book value                                        10.00      9.71     10.07     10.05      9.96      
Weighted average number of shares                                                                      
  outstanding                                   6,956,196 6,952,765 6,939,045 6,931,489 6,907,711      
Cash dividends                                   $     --   $ 2,117  $  2,821  $  2,815  $  2,796      
Order backlog                                      29,673    38,442    46,427    42,655    33,157      
Income from continuing operations                                                                  
  as % of total revenues                              1.3        .2        .9       1.9       4.7      
Net income as of average                                                                             
  shareholders' equity                                2.8      (1.8)      2.5       3.8       9.3      
---------------------------------------------------------------------------------------------------    
Financial Position                                                                                     
  Working capital                                $ 30,535   $27,412  $ 41,268  $ 53,807  $ 46,107      
  Total assets                                    153,008   156,672   169,476   156,684   128,129      
  Long-term obligations                            35,571    31,913    36,428    39,943    24,462      
  Shareholders' equity                             69,530    67,544    69,803    69,616    68,828      
                                                                                                       

</TABLE>


                                       17


<PAGE>

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

The Raymond Corporation and Subsidiaries

Overview

The Raymond Corporation ("Raymond" or the "Company") is based in Greene, New
York and operates predominantly in one business segment, that being the design,
manufacture, distribution and service of materials handling equipment. Revenues
are realized primarily from distribution of the Raymond(R) and Dockstocker(R)
product lines through the Company's Dealer Network which is principally located
in North America. The Dockstocker product line of electric, stand-up
counterbalanced lift trucks was launched in 1995 and is designed for work in
loading and shipping dock areas. The Dealer Network is complemented by the
Company's National Accounts Program, which offers certain large customers single
source coordination of their materials handling needs, and a similar program
managed at the regional level. Raymond also has Dealers in Central and South
America, Australia, New Zealand and Singapore.

In addition, the Company has expanded in both the domestic and international
markets with minimal capital investment through joint venture and Original
Equipment Manufacturer (O.E.M.) supply agreements. O.E.M. agreements are in
place with Mitsubishi Caterpillar Forklift America Inc. and Toyota Industrial
Equipment for distribution in North America and Jungheinrich A.G. for
distribution in Europe. Material Handling Associates, Inc. (M.H.A.), which
distributes equipment manufactured by Raymond through the Caterpillar
distribution network, is the Company's 50% owned joint venture company with
Mitsubishi Caterpillar Forklift America Inc.

The assets and liabilities of Raymond Leasing Corporation, a wholly-owned
subsidiary which finances Company products and related accessories only in the
United States, are classified under the caption "Financial Services" in the
consolidated balance sheets. Raymond Leasing Corporation also provides the
Dealer Network with short-term rental units and used equipment.

As discussed in Note H - Acquisitions to the consolidated financial statements,
the Company acquired controlling interest in G.N. Johnston Equipment Co. Ltd.
(Johnston) and Associated Material Handling Industries, Inc. (Associated), both
distributors of the Company's products that were previously accounted for as
equity investees. Johnston is the exclusive Canadian distributor for the Company
with sales and service outlets in the principal business regions of the Dominion
of Canada. Associated is a U.S. distributor based in Elmhurst, Illinois that
serves portions of the Midwest and Pacific Northwest. The combined purchase
price for the acquired shares of Johnston and Associated was approximately $4.5
million. The operating results of Johnston and Associated, net of minority
interests, were consolidated with those of the Company starting in the fourth
quarter of 1996.


                                       18
<PAGE>

The major components of the Company's international operations are Raymond
Industrial Equipment, Ltd., a wholly-owned Canadian manufacturing subsidiary,
and Johnston. Foreign exchange exposure on international operations is limited
primarily to the Canadian dollar and is minimized through the purchase of
foreign currency exchange contracts and foreign exchange options. The impact on
the financial statements of the settlement of foreign currency exchange
contracts has not been material for the three years ending December 31, 1996.
Based on current rates and the relative historical stability of the Canadian
dollar, it is also expected that there will be no material adverse impact on
operating results from the settlement of those contracts that are outstanding at
December 31, 1996. Detailed information pertaining to foreign currency exchange
contracts and foreign exchange options is contained in Notes A and F to the
consolidated financial statements.

Products produced at the U.S. and Canadian manufacturing facilities are
determined by manufacturing process; the U.S. facility produces a wide variety
of products, including some custom-made materials handling equipment, while the
Canadian facility specializes in high volume models that require minimal
customization. The Company distributes its repair and replacement parts from its
Distribution Center in Syracuse, New York.

The major revenue categories are shown below:

Percentage of Total Revenues          1996         1995        1994
----------------------------          ----         ----        ----
Narrow and very narrow
   aisle applications                   56%         60%         57%
                                                              
All other applications                  20%         18%         20%
                                                              
Repair and replacement parts            16%         16%         17%
                                                              
Leasing and rentals                      5%          5%          5%
                                                              
Service                                  2%          -           -
                                                              
Other                                    1%          1%          1%
                                                         

Net Sales

In 1996, record net sales were reported for the fourth consecutive year. Net
sales of $289.6 million represented an increase of approximately $18.2 million
or 6.7% from the previous record set in 1995. Net sales in 1995 were $271.4
million, up approximately $53.6 million or 24.6% from the 1994 level of $217.8
million.

In 1996, the growth in net sales was attributable to the approximate $17.8
million of incremental sales and service revenue recognized as a result of the
consolidation of Johnston and Associated in the fourth quarter. The Company was
also successful in increasing its market share as well as O.E.M., Dockstocker
and National Accounts Program sales in a North American market that remained
strong in 1996 but that was down from the record levels attained in 1994 and
1995.

                                       19


<PAGE>

The substantial growth in net sales in 1995 reflected a continuation of trends
noted throughout 1994, including the Company's success in expanding its
distribution to serve new and different markets. The Company's shipments to its
Dealer Network increased as a result of the record backlog (unfilled new
equipment orders) at the start of 1995 and the continued success of its new
products with the intellidrive(R) controls technology and increased sales
efforts at the Dealership level. The successful launch of the new Dockstocker
product line, which addressed a market segment not specifically targeted by the
Company previously, contributed to the sales growth. Other significant increases
were attained through sales to M.H.A. and the increased volume of repair and
replacement parts sales.

Rental Revenues

Rental revenues were $3.7, $1.8 and $1.9 million in 1996, 1995 and 1994,
respectively. The current year increase is attributable to the rental revenues
recognized by Johnston and Associated.


Lease Finance Revenues

Lease finance revenues recognized by Raymond Leasing Corporation and Johnston in
1996 increased approximately $2.8 million or 30.3% to $12.2 million. In 1995,
lease finance revenues increased by $2.4 million or 32.9% to $9.4 million as
compared to the $7.0 million recognized in 1994. The increased revenues in the
current year primarily reflect the record level of leases booked in 1996 which
corresponds to the record sales level attained by The Raymond Corporation. In
1996, approximately 31% of the units delivered under the Raymond brand name in
the United States were financed through Raymond Leasing Corporation. Johnston's
fourth quarter lease finance revenues contributed approximately $0.4 million of
the 1996 increase. The growth in 1995 revenues also corresponded to record sales
levels attained by the Company.

The net lease portfolio of Raymond Leasing Corporation increased approximately
$24.8 million in 1996 to a record level of $131.2 million. At December 31, 1996
lease receivables from one customer represented approximately 16% of the total
investment in leases.


Other Income

Other income was $3.3 million in 1996 and $2.8 million in both 1995 and 1994.
The primary components of other income during these years were interest income,
foreign currency exchange gains, cash discounts taken and license and royalty
fees. The increase in 1996 relates to the gain recognized on the sale of an idle
facility and increased interest income.


                                       20
<PAGE>

Cost of Sales

Cost of sales as a percentage of net sales was 78.1%, 77.9% and 77.6% in 1996,
1995 and 1994, respectively.

The Company was able to maintain a relatively stable cost of sales percentage in
both 1996 and 1995 despite additional costs and short-term inefficiencies
incurred in connection with the disposal and relocation of existing
manufacturing equipment and the installation of new manufacturing equipment at
the Greene, New York facility. This factory modernization project was
essentially completed in the fourth quarter of 1996. The Company intends to
continue its efforts to reduce manufacturing costs through improved
manufacturing processes and research and development activities.

The cost of sales percentage is also impacted by the volume produced for O.E.M.
customers. Offsetting the percentage impact on cost of goods sold is the benefit
received from attaining these additional sales without incurring additional
marketing and distribution expenses.


Cost of Rentals

Cost of rentals, which consist primarily of depreciation and maintenance, was
$2.7, $1.7 and $1.8 million in 1996, 1995 and 1994, respectively. The increase
in the cost of rentals is directly related to the increased rental revenues. The
improved margins in 1996 pertain to the rental operations with end users
conducted by Johnston and Associated.


Selling, General and Administrative Expenses

Selling, general and administrative expenses of $41.3, $34.7 and $28.5 million
were 13.4%, 12.2% and 12.4% of total revenues in 1996, 1995 and 1994,
respectively. The current year increase is primarily attributable to the
inclusion of costs associated with the distribution expenses of the Dealers
acquired late in 1996. The Company's percentage of selling, general and
administrative expenses, excluding Johnston and Associated , is consistent with
the 1995 percentage even though additional costs were incurred in connection
with the Greene factory modernization project including those associated with
the implementation of a new business system.

The dollar level increase in 1995 reflects expenses incurred to support the
growth in sales volume including costs to launch the Dockstocker(R) product line
and costs for the Company's biannual International Sales Meeting. There were
increases in engineering expenditures and compensation and benefit expenses
including costs associated with stock appreciation rights. Also, increased costs
were incurred in connection with an upgrade of the Company's computer systems.
The Company's efforts to contain costs and appropriately focus its resources
enabled it to reduce selling, general and administrative costs as a percentage
of total revenues in 1995.

                                       21

<PAGE>

Interest Expense

Interest expense related to lease financing is reported net of charges on
intercompany borrowings. Lease finance interest expense of $4.7, $3.0 and $2.2
million represented 38.6%, 31.5% and 31.1% of lease finance revenues in 1996,
1995 and 1994, respectively. The increases in interest expense in both 1996 and
1995 reflect the additional external borrowings incurred to finance the growth
of the lease portfolio. The percentage increase in 1996 reflects the greater
percentage of external borrowings incurred by Raymond Leasing Corporation. It is
expected that lease financing interest expense will continue to fluctuate with
the volume of outstanding leases.

Other interest expense incurred by the manufacturing and distribution divisions
was $3.1, $3.7 and $4.0 million in 1996, 1995 and 1994, respectively. The
current year decrease reflects the impact for a full year of the subordinated
debentures converted in the third quarter of 1995, the 1996 conversion of $13.2
million of debentures, which occurred primarily in the fourth quarter, and the
$0.5 million interest subsidy grant received from New York State in connection
with the Greene factory modernization project. The decrease in 1995 was the
result of the conversion of $6.2 million of debentures in the third quarter.

Other Expenses

Other expenses were $4.8, $6.2 and $5.2 million, or 1.6%, 2.2% and 2.3% of total
revenues in 1996, 1995 and 1994, respectively. The principal components of other
expenses are cash discounts paid to Dealers for the timely payment of invoices
and the provision for losses on accounts receivable and investment in leases.
Decreases in the provision for losses on accounts and leases receivable and
certain costs incurred in connection with foreign currency transactions were the
main components of both the dollar and percentage decreases in 1996.

The formulas for computing the profit sharing provisions are consistent for all
periods presented.

Income Tax Expense

The provision for federal, state and foreign income taxes represented a combined
effective tax rate of 37.0%, 38.9% and 40.3% in 1996, 1995 and 1994,
respectively. The tax rates on foreign subsidiaries and state income taxes
accounted for the majority of the difference in the effective tax rate from the
expected U.S. federal statutory rate. Note M to the consolidated financial
statements contains further information concerning the provision for income
taxes as well as the detail components of the effective tax rate.


                                       22

<PAGE>

Valuation allowances have not been required for reported deferred tax assets and
the Company is not aware of any circumstances that would require cash payments
to significantly exceed income tax expense during the next three years.

Unconsolidated Investees

Prior to its inclusion in the consolidated financial statements in the fourth
quarter of 1996, Johnston was the Company's primary unconsolidated investee.
Other unconsolidated investees include several Dealerships located throughout
the United States, as well as M.H.A.

The Company's net equity in earnings of unconsolidated investees was $1.1
million in 1996 as compared to $0.3 and $0.2 million in 1995 and 1994,
respectively. The increase in 1996 was primarily attributable to the improved
financial performance of several U.S. Dealerships, some of whom had experienced
losses in prior years. As the presentation of the operating results of Johnston
and Associated will change with their inclusion in the consolidated results of
the Company for all of 1997 as opposed to just the fourth quarter in 1996, it is
expected that the earnings reported for unconsolidated investees will decrease
in 1997.

The Company considers its Dealer Network to be critical to the successful
distribution of its products and has therefore continued to provide investments
in, and financing to, certain Dealerships to accommodate ownership transitions
and enable them to invest in the salespeople, training and other resources
necessary to increase their market share and profitability. Net additional
advances to and investments in unconsolidated investees have averaged
approximately $3.3 million for the three years ended December 31, 1996. In 1996,
the Company continued its strategy of increasing minority equity investments in
Dealerships serving key geographic areas.

Liquidity and Sources of Capital

The Company used $12.2 million for operating activities in 1996 as compared to
$10.3 million in 1995. The cash generated from earnings was used primarily to
fund the continued growth in the lease portfolio, capital expenditures and the
increase in other working capital requirements. Cash used in investing
activities decreased approximately $1.6 million in 1996 versus 1995 as a result
of proceeds received from the sale of an idle facility in the third quarter of
1996. Cash flows from financing activities primarily reflect the external
borrowings and related debt repayments made by Raymond Leasing Corporation to
fund a portion of the continued growth of the lease portfolio.

In 1995, the Company used $10.3 million to fund operating activities, an
increase of approximately $3.0 million from 1994. As in the current year, cash
was primarily used to fund the growth of the lease portfolio and the increase in
other working capital components necessary to support the higher sales volume.
Net cash used for investing activities increased approximately $3.3 million in
1995 compared to 1994 as additional capital expenditures were incurred in
connection with the accelerated capital expenditure program at the Greene, New
York facility. The 1995 cash flows from financing activities reflect the
proceeds of long-term debt obtained by Raymond Leasing Corporation to fund a
portion of the continued growth of the lease portfolio and repay intercompany
borrowings.



                                       23

<PAGE>

The Company's manufacturing and distribution working capital was $74.2 million
at December 31, 1996 and its ratio of manufacturing current assets to
manufacturing current liabilities was 2.4 to 1.0. Financial Services total
external debt was 59.5% of the related net investment in leases at December 31,
1996.

At December 31, 1996, the Company and its subsidiaries had unused lines of
credit of $26.3 million of which approximately $10.9 million may be converted
into long-term debt at the option of the Company and/or Raymond Leasing
Corporation. In addition, payments made under the Company's revolving credit and
term loan facilities increase the funds available for borrowing. These credit
facilities, along with internally generated resources, will enable the Company
to continue to fund its growth strategy and enable Raymond Leasing Corporation
to obtain the external funds necessary to fund the growth of the lease portfolio
and to repay intercompany borrowings with The Raymond Corporation as the
manufacturing divisions require additional funds. The factory modernization
project at the Greene facility is essentially complete and there are no material
commitments for new capital expenditures although the Company intends to
continue its policy of upgrading its manufacturing equipment and facilities as
appropriate.

In March 1996, the Board of Directors declared a 5% stock dividend on the
Company's common stock payable to shareholders of record as of March 29, 1996.
All appropriate per share data and the weighted average shares outstanding have
been restated to reflect this dividend. On April 8, 1996, the Board of Directors
reinstated a regular quarterly cash dividend of 2 1/2 cents on the Company's
outstanding shares of common stock, effective for the second quarter of 1996.
The Company announced in March 1997 that the regular quarterly cash dividend was
increased to 6 1/4 cents per share, effective for the first quarter of 1997. The
Company expects to continue the quarterly cash dividends at this level but its
ability to do so will depend on a variety of factors including the Company's
earnings, cash flows and financial resources.

Maintaining a sound and flexible financial structure through conservative
financial strategies continues to be a high priority for The Raymond
Corporation. The Company's overall strong financial condition continued to
improve throughout 1996. On December 20, 1996, the Company issued a Call for
Redemption of its outstanding 6 1/2% convertible subordinated debentures due
December 15, 2003. Prior to issuing the Call for Redemption, an additional $9.5
million of the debentures were converted into shares of common stock, primarily
in the fourth quarter. The redemption was completed on January 21, 1997 and
substantially all of the outstanding debentures were converted into common stock
at the originally stated conversion rates adjusted for stock dividends.
Approximately 3.2 million shares of common stock was issued in 1996 and January
1997 in connection with the conversion of the debentures. The Company's reported
primary earnings per share of $2.00 for 1996 would have been $1.62 had these
conversions taken place as of January 1, 1996. As a result of the successful
conversion of the debentures completed in January 1997, the Company's
outstanding shares of common stock increased to approximately 10.6 million and
the net worth increased to $165.9 million. The convertible debentures were the
main component of the difference in the computation of primary and fully diluted
earnings per share as the dilution that could result from the assumed exercise
of stock options is not material.


                                       24
<PAGE>



As discussed in Note G to the consolidated financial statements, Raymond Leasing
Corporation is subject to certain debt agreements that limit cash dividends and
loans to the Company. These restrictions are not expected to impact the parent
company. Management foresees no changes in circumstances which would result in
any material decrease or deficiency in the Company's liquidity or sources of
capital. The improved capital structure resulting from continued profitability
and the conversion of the debentures will aid the Company's growth strategy
which includes pursuing additional opportunities in North America and Europe.

Changing Price Levels

Although inflation has slowed in recent years, it is still a factor in our
economy and the Company continues to seek ways to minimize its impact. To the
extent permitted by competition in general, the Company attempts to recover
increased costs by increasing selling prices over time. However, the Company has
not realized any substantial growth in revenues from increased unit selling
prices during the past three years except for the approximate 3 1/2% aggregate
unit price increase that was announced in December 1994. In addition, selling
price increases are implemented to recover cost increases with respect to repair
and replacement parts when appropriate and lease finance rates are adjusted to
reflect changes in market conditions and the Company's cost of funds. Cost
containment, technological improvements and improved manufacturing methods
continue to be emphasized as a means to improve product margins.

The Company uses the FIFO (first-in, first-out) method of accounting for its
inventories. Although management believes that the FIFO method is the method
that most appropriately matches revenues and expenses, the costs of products
sold reported in the financial statements under this method are historical costs
which are subject to inflationary distortion during times of rapidly increasing
prices.

The charges to operations for depreciation represent the allocation of
historical costs incurred over past years and are less than if they were based
on the current costs of productive capacity being consumed. Over 40% of the
Company's property, plant and equipment has been acquired over the past five
years. Assets acquired in prior years will, of course, be replaced at higher
costs. This will take place over many years. These new assets will result in
higher depreciation charges, but in many cases, due to technological
improvements, there will be operating cost savings as well. The Company
considers these matters in determining its pricing policies.



                                       25
<PAGE>

Contingencies

The Company is currently defending approximately 65 products liability and
similar lawsuits involving industrial accidents. The number of outstanding
lawsuits has remained relatively constant over the past several years.

The Company views these actions as part of the ordinary course of its business.
Management believes that none of these lawsuits will individually have a
material adverse effect on the Company. Taken as a whole, the damages claimed
would, if awarded and upheld, have a material adverse effect on the Company but
actual costs of judgments, settlements and costs of defense have not had such an
effect to date. The actual costs of these actions, as well as the related
expenses of administration, litigation and insurance, have averaged less than 2%
of total revenues over the last three years. The effect of these lawsuits on
future results of operations cannot be predicted because any such effect depends
on the operating results of future periods and the amount and timing of the
resolution of these proceedings. The Company has a policy of aggressively
defending products liability lawsuits, which generally take several years to
ultimately resolve. A combination of self-insured retention and insurance is
used to manage these risks and management believes that the insurance coverage
and reserves established for self-insured risks are adequate. The Company's
Dealers contribute to the funding of the Company's products liability program
and, in turn, the Company indemnifies the Dealers against products liability
expense and manages products liability claims.

The Company is also one of seventeen remaining defendants in a private
environmental lawsuit pertaining to a site remediation. The plaintiffs have
alleged that scrap metal purchased from the Company was hazardous and/or was
coated with certain solvents and/or cutting oils. Plaintiffs have the burden of
proving the nature and extent of the Company's contribution to the site, as well
as the burden of proving what portion of the material delivered to the site was
"hazardous" as that term is defined in the environmental statutes. Plaintiffs
have successfully moved for partial summary judgment, on liability only, against
two co-defendants who contributed scrap metal to the site. Similar motions as to
the Company and two other co-defendants are pending. The Company is aggressively
defending the claim and does not believe it is likely to have a material adverse
effect on the Company.

In addition to the matters discussed above, the Company is subject to various
other legal proceedings, claims and liabilities which have arisen in the
ordinary course of business. In the opinion of management, the amount of
ultimate liability, if any, with respect to these actions will not materially
affect the financial results of operations or financial position of the Company.


Outlook

Orders received in 1996 were a record $300.4 million, an increase of
approximately $41.5 million or 16.0% from the orders received in 1995. In 1995,
the previous record for orders received was established at $258.9 million, an
increase of approximately $15.2 million or 6.3% from the orders received in the
previous year.

                                       26
<PAGE>



At December 31, 1996, the Company's order backlog of unfilled new equipment
orders was $76.4 million and approximately $8.9 million relates to the
incremental backlog of Johnston and Associated. The current year backlog is up
$10.8 million or 16.4% and provides a solid foundation for the upcoming year. In
1995, the backlog was $65.6 million, down approximately $12.5 million or 16.0%
from the record backlog level of $78.1 million established at December 31, 1994.

The Company believes that the overall market will improve in 1997, although it
is not expected to return to the record levels of 1994. The Company attempts to
outperform the lift truck market through various growth strategies. These
strategies include continued product development such as the additions to the
Dockstocker(R) product line, enhanced distribution through the Dealer Network,
increased participation in domestic and international markets through strategic
alliances or acquisitions and continued improvements in the manufacturing
processes.

It is expected that the Company's revenues will increase in 1997 as a result of
the consolidation of Johnston and Associated. See Note H - Acquisitions to the
consolidated financial statements for the unaudited pro forma information
presented as if the acquisitions had occurred as of January 1, 1995. Net income
for these Dealers has historically been a smaller percentage of total revenues
than that attained by the Company in the last few years.

In March 1997, the Company announced that it had retained an investment banking
firm to assist in evaluating strategic alternatives available to the Company to
increase shareholder value. In conjunction with this, the Company's Board of
Directors adopted a Shareholders Rights Plan. The Rights provide protection
against coercive or unfair takeover tactics. The Rights Plan is similar to plans
adopted by many public companies and should provide a sound and reasonable means
of safeguarding the interests of all shareholders should an effort be made to
acquire the Company at a price not reflective of its fair value.

Statements included in this Management's Discussion and Analysis of Financial
Condition and Results of Operations which are not historical in nature, are
intended to be, and are hereby identified as, forward looking statements for
purposes of the safe harbor provided by Section 21E of the Securities and
Exchange Act of 1934, as amended by Public Law 104-67. The Company cautions
readers that forward looking statements, including without limitation, those
relating to the Company's future business prospects, revenues, risks of foreign
operations, working capital and liquidity and new equipment orders, are subject
to certain risks and uncertainties that could cause actual results to differ
materially from those indicated in the forward looking statements. These risks
and uncertainties include general economic and market conditions, including
demand for the Company's products and services, competition and price levels;
the possibility of catastrophic events that could impact the Company's
manufacturing, distribution and computer facilities; and changes in interest
rates and foreign currency fluctuations, among others. Additional risks and
factors are identified from time to time in the Company's reports filed with the
SEC.

                                       27

<PAGE>

Item 8.         Financial Statements and Supplementary Data

                The response to this Item is submitted in a separate section of
                this Report.


Item 9.         Changes in and Disagreements with Accountants on Accounting
                and Financial Disclosure

                Not applicable.
                                    PART III

Item 10.        Directors and Executive Officers of the Registrant

                Information regarding Directors required by Items 401 and 405 of
                Regulation S-K is disclosed under the captions "Nominees for
                Election as Directors" and "Directors Continuing in Office" in
                the Proxy Statement for the Annual Meeting of Shareholders to be
                held June 2, 1997 and is incorporated herein by reference.
                Information regarding Executive Officers is included in Part I
                of this Form 10-K and incorporated herein by reference thereto.

Item 11.        Executive Compensation

                Information regarding compensation of Directors and Executive
                Officers is disclosed under the captions "Directors
                Remuneration"; "Attendance" and "Executive Compensation" of the
                Proxy Statement for the Annual Meeting of Shareholders to be
                held June 2, 1997, and is incorporated herein by reference
                thereto.


Item 12.        Security Ownership of Certain Beneficial Owners and Management

                This information is disclosed under the captions "Security
                Ownership of Certain Beneficial Owners" and "Security Ownership
                of Management" in the Proxy Statement for the Annual Meeting of
                Shareholders to be held on June 2, 1997, and is incorporated
                herein by reference thereto.


Item 13.        Certain Relationships and Related Transactions

                This information is disclosed in the 1997 Proxy Statement for
                the Annual Meeting of Shareholders in the section captioned
                "Certain Relationships and Related Transactions" and is
                incorporated herein by reference thereto.


                                       28

<PAGE>


                                     PART IV

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

(a)             Documents filed as part of this report:

                             1.     The following consolidated financial 
                statements of The Raymond Corporation, and Subsidiaries,
                are included in Item 8:

                                                                       10-K
                                                                    Report Page
                                                                    -----------

                Report of Independent Auditors                           35

                Consolidated Balance Sheets -
                December 31, 1996, 1995 and 1994                       36 - 37

                Consolidated Statements of Income - Years ended
                December 31, 1996, 1995 and 1994                         38

                Consolidated Statements of Shareholders' Equity -
                Years ended December 31, 1996, 1995 and 1994             39

                Consolidated Statements of Cash Flows - Years
                ended December 31, 1996, 1995 and 1994                 40 - 41

                Notes to Consolidated Financial Statements -           42 - 61
                December 31, 1996

                2.  The following  Consolidated  Financial  Statement Schedules
of The Raymond Corporation and Subsidiaries are required by Item 14(d):

                                                                        10-K
                                                                     Report Page
                                                                     -----------
                Schedule I    -   Condensed Financial Information
                                  of Registrant - The Raymond
                                  Corporation Years ended December
                                  31, 1996, 1995 and 1994              62 - 67

                Schedule II    -  Valuation and Qualifying Accounts
                                  Years ended December 31, 1996,
                                  1995 and 1994                        68 - 70

                All other schedules for which provision is made in Regulation
                S-X of the Securities and Exchange Commission have been omitted
                because they are not applicable or not required under the
                related instructions or because the information has been
                furnished elsewhere in the financial statements.

                3.           See Exhibit Index at pages 30-32 of this Form 10-K.

(b)             No report on Form 8-K was filed by the registrant  during the 
                fourth quarter of its fiscal year ending  December 31, 1996.


                                       29
<PAGE>

(c)             Exhibits:

Exhibit
  #      Description
-------  -----------
3.1      Restated and Amended Certificate of Incorporation of The Raymond
         Corporation. Filed as Exhibit 3.1 to the 1995 Form 10-K Annual Report
         of the Company on page 32 and incorporated herein by reference.

3.2      Bylaws of the Company, as amended, dated March 24, 1997. Filed as
         Exhibit 3.2 to this Form 10-K Annual Report of the Company on page 73.

4.1      Form 8-A12G/A dated March 13, 1997 and filed March 14, 1997 with the
         Securities and Exchange Commission, File Number 001-12801 and
         incorporated herein by reference.

4.2      Shareholder Rights Plan filed as Exhibit 1 to the Form 8-12G/A dated
         March 13, 1997 and filed March 14, 1997 with the Securities and
         Exchange Commission, File Number 001-12801 and incorporated herein by
         reference.

10.1     Joint Venture Agreement dated August 1, 1991 between Caterpillar
         Industrial Inc., and The Raymond Corporation. Filed as Exhibit 10.1 to
         this Form 10-K Annual Report of the Company on page 89.

10.2     First Amendment to Joint Venture Agreement dated August 1, 1991 between
         Caterpillar Industrial Inc. and The Raymond Corporation dated October
         22, 1992. Filed as Exhibit 10.18 to the 1992 Form 10-K Annual Report of
         the Company on page 63 and incorporated herein by reference.

10.3     Second Amendment to Joint Venture Agreement dated August 1, 1991
         between Caterpillar Industrial Inc. and The Raymond Corporation. Filed
         as Exhibit 10.3 to the 1994 Form 10-K Annual Report of the Company on
         page 32 and incorporated herein by reference.

10.4     Third Amendment to Joint Venture Agreement dated August 1, 1991 between
         Caterpillar Industrial Inc. and The Raymond Corporation. Filed as
         Exhibit 10.4 to the 1994 Form 10-K Annual Report of the Company on page
         37 and incorporated herein by reference.

11.      Statement Re: Computation of Per Share Earnings. Filed as Exhibit 11 to
         this Form 10-K Annual Report of the Company at page 187.

20.1     Form 8-K Report dated January 7, 1997 and filed January 7, 1997 with
         the Securities and Exchange Commission, File Number 000-02129 and
         incorporated herein by reference.

20.2     Form 8-K Report dated February 5,1997 and filed February 5, 1997 with
         the Securities and Exchange Commission, File Number 000-02129 and
         incorporated herein by reference.


                                       30
<PAGE>

Exhibit
  #      Description
-------  -----------
20.3     Form 8-K/A Report dated March 17, 1997 and filed March 17, 1997 with
         the Securities and Exchange Commission, File Number 001-12801 and
         incorporated herein by reference.

21.      Subsidiaries (Direct and Indirect) of The Raymond Corporation for the
         year ending December 31, 1996 filed as Exhibit 21 to this Form 10-K
         Annual Report of the Company on page 189.

23.      Consent of Independent Auditors dated April 10, 1997 filed as Exhibit
         23 to this Form 10-K Annual Report of the Company on page 191.

24.      Power of Attorney of Directors dated March 1, 1997 filed as Exhibit 24
         of this Form 10-K Annual Report of the Company on page 193.

27.      Financial Data Schedule filed as Exhibit 27 to this Form 10-K Annual
         Report of the Company on page 195.



                  EXECUTIVE COMPENSATION PLANS AND ARRANGEMENTS


10.6     Employment Agreement dated as of November 3, 1987 amended as of June
         14, 1994 and as of November 1, 1995 and amended and restated as of
         March 24, 1997 between Ross K. Colquhoun and The Raymond Corporation.
         Filed as Exhibit 10.6 to this Form 10-K Report of the Company at
         page 113.

10.7     Sample form of Executive Agreement (Tier II) between The Raymond
         Corporation and Company Executives. Filed as Exhibit 10.7 to this
         Form 10-K Report of the Company at page 127.

10.8     Sample form of Executive Agreement (Tier III) between The Raymond
         Corporation and Company Executives. Filed as Exhibit 10.8 to this Form
         10-K Report of The Company at page 140.

10.9     The Raymond Corporation Retirement Benefits Equalization Plan. Filed as
         Exhibit 10.17 to the 1995 Form 10-K Annual Report of the Company at
         page 250 and incorporated herein by reference.

10.10    The Raymond Corporation 1996 Deferred Stock Unit Plan for Non-Employee
         Directors. Filed as Exhibit 10.10 to this Form 10-K Report of the
         Company at page 151.

10.11    The Raymond Corporation Stock Option Plan (1991) amended as of March
         24, 1997. Filed as Exhibit 10.11 to this Form 10-K Report of the
         Company at page 156.


                                       31
<PAGE>

Exhibit
   #     Description
-------  -----------
10.12    The Raymond Corporation Stock Option Plan (1995) as amended as of March
         24, 1997. Filed as Exhibit 10.12 to this Form 10-K Report of the
         Company at page 168.

10.13    The Raymond Corporation Deferred Compensation Plan for Exempt Employees
         restated as of September 1, 1994, amended as of March 24, 1997. Filed
         as Exhibit 10.13 to this Form 10-K Annual Report of the Company at
         page 180.

10.14    The Raymond Corporation Officer Performance Bonus Plan Formula. Filed
         as Exhibit 10.15 to the 1992 Form 10-K Annual Report of the Company at
         page 357 and incorporated herein by reference.


                                       32
<PAGE>


SIGNATURES

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

Date:           April 14, 1997             THE RAYMOND CORPORATION
                                           ----------------------- 
                                                 (Registrant)

                                           By: /s/ Ross K. Colquhoun
                                               ----------------------
                                           Ross K. Colquhoun
                                           Chairman of the Board and
                                           Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed by the following persons on behalf of the Registrant and in the
capacities and on the date indicated.
<TABLE>
<CAPTION>
<S>                                <C>                                <C>    
By: /s/ Ross K. Colquhoun           By: /s/ James J. Malvaso           By:  /s/ William B. Lynn
   ----------------------              ---------------------              ---------------------
Ross K. Colquhoun                   James J. Malvaso                   William B. Lynn
Chairman of the Board, Chief        President, Chief Operating         Executive Vice President
Executive Officer and Director      Officer and Director               Principal Financial Officer

Date: 04/14/97                      Date: 04/14/97                     Date: 04/14/97

                                     By:  /s/ John F. Everts
                                        --------------------
                                     John F. Everts
                                     Treasurer and Chief
                                     Accounting Officer
                                     Date:  04/14/97

By: /s/ James F. Matthews                   By: /s/ Arthur M. Richardson
   ------------------------                    ----------------------------  
James F. Matthews, Director                 Arthur M. Richardson, Director
Date: 04/14/97                              Date: 04/14/97

By: /s/ John E. Mott                        By: /s/ M. Richard Rose
   ------------------------                    ----------------------------  
John E. Mott, Director                      M. Richard Rose, Director
Date: 04/14/97                              Date: 04/14/97

By: /s/ Michael R. Porter                   By: /s/ John V. Sponyoe
   ------------------------                    ----------------------------  
Michael R. Porter, Director                 John V. Sponyoe, Director
Date: 04/14/97                              Date: 04/14/97

By:                                         By: /s/ Michael O. Womack
   ------------------------                    ----------------------------  
George G. Raymond, Jr.                      Michael O. Womack, Director
Date:                                       Date: 04/14/97

</TABLE>


                                       33
<PAGE>



                           ANNUAL REPORT ON FORM 10-K

                   ITEM 8, ITEM 14(a)(1) and (2), (c), and (d)

                   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

                                CERTAIN EXHIBITS

                          FINANCIAL STATEMENT SCHEDULES

                          YEAR ENDED DECEMBER 31, 1996

                             THE RAYMOND CORPORATION
                                GREENE, NEW YORK




                                       34
<PAGE>
                         Report of Independent Auditors

We have audited the accompanying consolidated balance sheets of The Raymond
Corporation and subsidiaries as of December 31, 1996, 1995 and 1994, and the
related consolidated statements of income, shareholders' equity, and cash flows
for each of the three years in the period ended December 31, 1996. Our audits
also included the financial statement schedules listed in the Index at Item
14(a). These financial statements and schedules are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements and schedules based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards 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. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of The
Raymond Corporation and subsidiaries at December 31, 1996, 1995 and 1994, and
the consolidated results of their operations and their cash flows for each of
the three years in the period ended December 31, 1996, in conformity with
generally accepted accounting principles. Also, in our opinion, the related
financial statement schedules, when considered in relation to the basic
financial statements taken as a whole, present fairly in all material respects
the information set forth therein.

                                                       /s/ Ernst & Young LLP


Syracuse, New York
February 7, 1997




                                       35
<PAGE>

Consolidated Balance Sheets
The Raymond Corporation and Subsidiaries
<TABLE>
<CAPTION>
                                                        December 31,               1996              1995               1994
----------------------------------------------------------------------------------------------------------------------------------
<S>                                                    <C>                     <C>                <C>              <C>    
Assets

Manufacturing and Distribution
 Cash and cash equivalents                                                     $ 12,389,071       $ 12,341,383      $  5,351,161
 Accounts receivable:
  Trade, net of allowances ($1,636,809 in 1996; $1,718,651
  in 1995 and $986,093 in 1994)                                                  38,512,979         17,621,830        20,777,505
  Unconsolidated investees                                                       12,263,324         18,727,995        12,132,856
 Investment in leases; net of unearned lease income;
  net of allowances for doubtful contracts ($122,394 in 1996)                     4,285,087                 --                --
 Inventories                                                                     47,203,818         34,645,114        30,911,341
 Recoverable income taxes                                                           774,051          1,159,325                --
 Deferred income taxes*                                                           5,012,215          5,434,967         3,764,243
 Prepaid expenses and other current assets                                        8,651,725          4,326,925         4,656,816
                                                                               ---------------------------------------------------
 Total Manufacturing and Distribution Current Assets                            129,092,270         94,257,539        77,593,922


 Investment in and advances to unconsolidated investees, at equity                9,462,438         19,165,362        16,666,728

 Investment in leases; net of unearned lease income;
  net of allowances for doubtful contracts ($228,003 in 1996)                     7,979,598                 --                --

 Property, plant and equipment, at cost                                          69,321,643         54,179,355        46,896,174
  Less accumulated depreciation                                                  40,974,213         31,043,877        29,947,379
                                                                               ---------------------------------------------------
 Net property, plant and equipment                                               28,347,430         23,135,478        16,948,795

 Rental equipment, at cost                                                       19,226,214                 --                --
  Less accumulated depreciation                                                  12,786,112                 --                --
                                                                               ---------------------------------------------------
 Net rental equipment                                                             6,440,102                 --                --

 Other assets                                                                     7,343,355          4,226,451         5,775,276
                                                                               ---------------------------------------------------
 Total Manufacturing and Distribution Assets                                    188,665,193        140,784,830       116,984,721
                                                                               ---------------------------------------------------

Financial Services
 Cash and cash equivalents                                                           31,012             17,664            72,302
 Investment in leases; net of unearned lease income;
  net of allowances for doubtful contracts ($1,757,202 in 1996;
  $1,782,906 in 1995 and $1,228,788 in 1994)                                    131,184,628        106,409,973        84,724,886

 Property, plant and equipment, at cost                                             413,256            385,486           234,712
  Less accumulated depreciation                                                     233,106            193,086           162,654
                                                                               ---------------------------------------------------
 Net property, plant and equipment                                                  180,150            192,400            72,058

 Rental equipment, at cost                                                        4,690,627          4,379,990         4,327,691
  Less accumulated depreciation                                                   2,004,428          2,145,390         2,004,464
                                                                               ---------------------------------------------------
 Net rental equipment                                                             2,686,199          2,234,600         2,323,227

 Other assets                                                                       190,995            287,702           198,550
                                                                               ---------------------------------------------------
 Total Financial Services Assets                                                134,272,984        109,142,339        87,391,023
                                                                               ---------------------------------------------------

Total Assets                                                                   $322,938,177       $249,927,169      $204,375,744
                                                                               ===================================================
</TABLE>
*Includes Manufacturing and Distribution and Financial Services

The accompanying notes are a part of the financial statements.



                                       36
<PAGE>

<TABLE>
                                              December 31,                            1996                1995                 1994
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                           <C>                 <C>                  <C>  
Liabilities and Shareholders' Equity

Manufacturing and Distribution
 Accounts payable                                                             $ 20,804,292        $ 13,656,877         $ 14,194,244
 Accrued liabilities                                                            26,479,042          20,461,499           16,782,258
 Current portion of long-term debt                                               7,573,164                  --                   --
                                                                              ------------------------------------------------------
 Total Manufacturing and Distribution Current Liabilities                       54,856,498          34,118,376           30,976,502

 Long-term debt                                                                 41,961,472          51,260,000           57,500,000
 Deferred income taxes*                                                          5,196,603           3,982,867            4,184,235
 Deferred compensation                                                           3,173,472           2,920,974            2,140,912
 Other liabilities                                                               3,326,874             777,865              386,408
                                                                              ------------------------------------------------------
 Total Manufacturing and Distribution Liabilities                              108,514,919          93,060,082           95,188,057
                                                                              ------------------------------------------------------

Financial Services
 Accounts payable                                                                   80,943              79,275              767,205
 Income taxes*                                                                   2,083,272           1,103,878            2,230,445
 Accrued liabilities                                                             1,285,322           1,954,196            1,037,822
 Notes payable -- banks                                                         74,062,500          41,537,500            6,437,500
 Notes payable -- insurance companies                                            4,000,000          10,858,000           17,715,000
                                                                              ------------------------------------------------------
 Total Financial Services Liabilities                                           81,512,037          55,532,849           28,187,972
                                                                              ------------------------------------------------------

                                                                              ------------------------------------------------------
Minority Interests                                                               4,238,918                  --                   --
                                                                              ------------------------------------------------------
Shareholders' Equity
 Common stock, $1.50 par value: authorized 15,000,000 shares
  (Issued 1996 - 8,281,694; 1995 - 7,100,444 and 1994 - 6,364,221)              12,422,541          10,650,666            9,546,332
 Capital surplus                                                                41,787,444          23,643,394           12,712,723
 Retained earnings                                                              77,590,950          69,945,200           62,566,473
 Cumulative translation adjustments                                             (2,821,639)         (2,596,653)          (3,515,662)
                                                                              ------------------------------------------------------
                                                                               128,979,296         101,642,607           81,309,866

 Less:
  Treasury stock, at cost (Shares 1996 - 22,969; 1995 - 21,974
    and 1994 - 21,049)                                                             306,993             308,369              310,151
                                                                              ------------------------------------------------------
 Total Shareholders' Equity                                                    128,672,303         101,334,238           80,999,715
                                                                              ------------------------------------------------------
 Commitments and contingencies (Notes C and O)


Total Liabilities and Shareholders' Equity                                    $322,938,177        $249,927,169         $204,375,744
                                                                             =======================================================


</TABLE>

*Includes Manufacturing and Distribution and Financial Services



The accompanying notes are a part of the financial statements.


                                       37

<PAGE>

Consolidated Statements of Income
The Raymond Corporation and Subsidiaries

<TABLE>


                                               Years ended December 31,              1996                 1995                 1994
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                           <C>                 <C>                 <C>    
Revenues
 Net sales                                                                    $289,643,479        $271,388,087         $217,831,647
 Rental revenues                                                                 3,658,304           1,830,847            1,857,128
 Lease finance revenues                                                         12,188,464           9,351,252            7,038,222
 Other income                                                                    3,316,650           2,812,828            2,819,718
                                                                              ------------------------------------------------------
 Total Revenues                                                                308,806,897         285,383,014          229,546,715
                                                                              ------------------------------------------------------
Costs and Expenses
 Cost of sales                                                                 226,233,006         211,523,419          169,071,126
 Cost of rentals                                                                 2,730,506           1,651,046            1,759,701
 Selling, general and administrative expenses                                   41,330,922          34,680,275           28,479,497
 Employees' profit sharing                                                       3,543,292           3,810,045            2,907,251
 Interest expense:
  Lease financing                                                                4,703,311           2,950,221            2,191,684
  Other                                                                          3,054,144           3,721,370            3,950,452
 Other expenses                                                                  4,802,554           6,231,805            5,233,695
                                                                              ------------------------------------------------------
 Total Costs and Expenses                                                      286,397,735         264,568,181          213,593,406
                                                                              ------------------------------------------------------
 Income before taxes, minority interest and equity in earnings of
   unconsolidated investees                                                     22,409,162          20,814,833           15,953,309

 Income tax expense                                                              8,281,964           8,087,785            6,427,672
                                                                              ------------------------------------------------------
 Income before minority interest and equity in earnings of
  unconsolidated investees                                                      14,127,198          12,727,048            9,525,637
 Minority interest in earnings of subsidiaries                                     176,403                  --                   --
 Net equity in earnings of unconsolidated investees                              1,068,626             346,887              201,634
                                                                              ------------------------------------------------------
 Net Income                                                                   $ 15,019,421        $ 13,073,935         $  9,727,271
                                                                              ======================================================
 Net Income Per Share:
    Primary                                                                   $       2.00        $      1.82          $       1.39
                                                                              ======================================================
    Fully Diluted                                                             $       1.61        $      1.44          $       1.15
                                                                              ======================================================

</TABLE>


The accompanying notes are a part of the financial statements.


                                       38
<PAGE>

Consolidated Statements of Shareholders' Equity
The Raymond Corporation and Subsidiaries
Years ended December 31, 1996, 1995 and 1994


<TABLE>
                                                                                                                             Total
                                                       Common      Capital     Retained       Currency    Treasury    Shareholders' 
                                                        Stock      Surplus     Earnings    Translation       Stock          Equity
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                   <C>          <C>          <C>            <C>          <C>           <C>

Balance December 31, 1993                           $9,072,866    $7,699,014  $58,213,804   $(1,620,658)  $(312,313)    $73,052,713
Net income                                                                      9,727,271                                 9,727,271
Issuance of 302,429 shares for stock dividend          453,643     4,914,472   (5,374,602)                                   (6,487)
Issuance of 13,215 shares under stock option plan       19,823        98,672                                                118,495
Treasury shares (146) issued                                             565                                  2,162           2,727
Currency translation adjustments                                                             (1,895,004)                 (1,895,004)

------------------------------------------------------------------------------------------------------------------------------------
Balance December 31, 1994                            9,546,332    12,712,723   62,566,473    (3,515,662)   (310,151)     80,999,715
Net income                                                                     13,073,935                                13,073,935
Issuance of 318,227 shares for stock dividend          477,340     5,210,968   (5,695,208)                                   (6,900)
Issuance of 369,868 shares for redemption of
 convertible debentures                                554,802     5,685,198                                              6,240,000
Issuance of 48,128 shares under stock option plan       72,192        33,723                                                105,915
Treasury shares (127) issued                                             782                                  1,782           2,564
Currency translation adjustments                                                                919,009                     919,009

------------------------------------------------------------------------------------------------------------------------------------
Balance December 31, 1995                           10,650,666    23,643,394   69,945,200    (2,596,653)   (308,369)    101,334,238
Net income                                                                     15,019,421                                15,019,421 
Cash dividends; $0.075 per share                                                 (572,650)                                 (572,650)
Issuance of 821,537 shares for redemption of 
 convertible debentures                              1,232,305    11,882,890                                             13,115,195
Issuance of 355,245 shares for stock dividend          532,868     6,261,193   (6,801,021)                                   (6,960)
Issuance of 4,468 shares under stock option plan         6,702          (498)                                                 6,204
Treasury shares (103) issued                                             465                                  1,376           1,841
Currency translation adjustments                                                               (224,986)                   (224,986)

------------------------------------------------------------------------------------------------------------------------------------
Balance December 31, 1996                          $12,422,541   $41,787,444  $77,590,950   $(2,821,639)  $(306,993)   $128,672,303
====================================================================================================================================


</TABLE>


The accompanying notes are a part of the financial statements.



                                       39
<PAGE>


Consolidated Statements of Cash Flows
The Raymond Corporation and Subsidiaries

<TABLE>

                                               Years ended December 31,        1996                   1995                  1994
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                        <C>                    <C>                     <C>
Cash Flows from Operating Activities

 Net income                                                             $15,019,421           $ 13,073,935           $ 9,727,271
 Adjustments to reconcile net income to net cash used in
   operating activities:
  Depreciation and amortization                                           6,697,869              4,561,770             4,007,881
  Provision for losses on accounts receivable and investment 
   in leases                                                                357,016              1,399,000             1,079,908
  Earnings of unconsolidated investees, net of dividends received          (817,122)               (11,494)              (93,665)
  Foreign currency transaction (gains) losses                               (20,257)                87,312              (607,762)
  Acquisition of rental equipment                                        (4,706,092)            (1,421,194)           (1,956,104)
  Gains on dispositions of rental equipment                                (726,286)              (732,967)             (672,190)
  Proceeds from rental equipment sales                                    2,752,085              1,497,320             1,625,456
  (Gains) losses on sales of property, plant and equipment                 (357,321)                58,379                 1,398
  Deferred income taxes                                                     323,233             (1,951,794)              238,732
  Other items, net                                                         (559,440)             2,000,037             1,317,953
  Changes in operating assets and liabilities:
     Increase in accounts receivable                                       (649,591)            (4,231,514)           (7,476,834)
     Increase in investment in leases                                   (25,475,436)           (22,264,087)          (21,366,477)
     Increase in inventories and prepaid expenses                        (4,643,333)            (4,679,521)           (6,258,217)
     Increase in accounts payable and accrued expenses                      642,095              2,271,235            13,114,995
                                                                       ------------------------------------------------------------
 Net cash used in operating activities                                  (12,163,159)           (10,343,583)           (7,317,655)
                                                                       ------------------------------------------------------------
Cash Flows from Investing Activities

 Purchase of subsidiaries, net of cash acquired                            (886,975)                    --                   -- 
 Additions to property, plant and equipment                              (7,141,433)            (8,011,503)           (4,596,668)
 Proceeds received from sales of property, plant and equipment            1,896,300                 41,915                11,666
 Investments in and advances to unconsolidated investees                 (3,448,763)            (3,168,965)           (3,293,143)
                                                                       ------------------------------------------------------------
 Net cash used in investing activities                                   (9,580,871)           (11,138,553)           (7,878,145)
                                                                       ------------------------------------------------------------ 


</TABLE>



The accompanying notes are a part of the financial statements.



                                       40
<PAGE>

<TABLE>


                                                     Years ended December 31,  1996                 1995                  1994
-----------------------------------------------------------------------------------------------------------------------------------
<S>                                                                       <C>                   <C>                     <C>
Cash Flows from Financing Activities

 Net additional borrowings (repayments) under lines of credit             2,349,306             (2,000,000)            3,000,000
 Proceeds from long-term debt                                            38,750,000             41,000,000                    --
 Repayment of long-term debt                                            (18,669,320)           (10,757,000)          (10,964,000)
 Cash dividends paid                                                       (572,650)                    --                    --
 Capital stock transactions, net                                              1,085                101,579                121,222
                                                                       ------------------------------------------------------------

 Net cash provided by (used in) financing activities                     21,858,421             28,344,579             (7,842,778)
                                                                       ------------------------------------------------------------
 Effect of foreign currency rate fluctuations on cash
  and cash equivalents                                                      (53,355)                73,141               (192,447)
                                                                       ------------------------------------------------------------
 Increase (Decrease) in cash and cash equivalents                            61,036              6,935,584            (23,231,025)

 Cash and cash equivalents at January 1,                                 12,359,047              5,423,463             28,654,488
                                                                       ------------------------------------------------------------

 Cash and cash equivalents at December 31,                             $ 12,420,083           $ 12,359,047           $  5,423,463
                                                                       ============================================================
 Cash and cash equivalents is comprised of:
  Manufacturing and Distribution                                       $ 12,389,071           $ 12,341,383           $  5,351,161
  Financial Services                                                         31,012                 17,664                 72,302
                                                                       ------------------------------------------------------------
                                                                       $ 12,420,083           $ 12,359,047           $  5,423,463
                                                                       ============================================================

</TABLE>


<TABLE>

                                                                               1996                1995                   1994
-----------------------------------------------------------------------------------------------------------------------------------
<S>                                                                     <C>                     <C>                     <C>
Supplemental disclosure of cash flow information:

 Cash paid during the year for:
  Income taxes, net of refunds                                         $  7,412,994          $ 11,000,603            $  5,332,402
  Interest                                                                8,856,404             6,693,912               6,570,979

 Purchase of subsidiaries:
  Fair value of assets acquired, net of cash acquired                  $ 35,027,509                    --                      -- 
  Fair value of liabilities assumed                                     (34,140,534)                   --                      --
                                                                       ------------------------------------------------------------
  Net cash payment                                                     $    886,975                    --                      --
                                                                       ============================================================
 Noncash activities: 
    Issuance of common stock for conversion of debentures              $ 13,115,195         $   6,240,000                      -- 
    Property acquired in exchange for retirement of 
      mortgage receivable                                                        --             1,500,000                      --


</TABLE>


The accompanying notes are a part of the financial statements.



                                       41
<PAGE>

Notes to Financial Statements
The Raymond Corporation and Subsidiaries
Years ended December 31, 1996, 1995 and 1994

A. Significant Accounting Policies

(1) Organization: The Raymond Corporation and subsidiaries (the Company)
designs, manufactures, distributes and services materials handling equipment.
Manufacturing, distribution, and service facilities are located in the U.S. and
Canada and revenues are realized primarily from distribution of the Raymond(R)
and Dockstocker(R) product lines through the Company's Dealer Network which is
predominantly located in North America. In addition, the Company produces
materials handling equipment under Original Equipment Manufacturer (O. E. M.)
agreements for distribution by other companies in both North America and Europe.

(2) Principles of Consolidation: The consolidated financial statements include
the accounts of the Company and its domestic and foreign subsidiaries after
elimination of all significant intercompany accounts and transactions.
Unconsolidated investees are stated at cost plus equity in unremitted earnings
since acquisition. The Company's share of earnings of unconsolidated investees
is included in consolidated net income using the equity method.

The accounts of foreign operations have been translated to U.S. dollars in
conformity with Statement of Financial Accounting Standards No. 52, "Foreign
Currency Translation." Exchange gains and losses arising from transactions are
included in current income. Net exchange gains (losses) were not significant in
1996, ($0.1) million in 1995 and $0.6 million in 1994.

Earnings of consolidated foreign companies, net of minority interests, were
$8.8, $9.0 and $7.1 million in 1996, 1995 and 1994, respectively.

(3) Use of Estimates: The preparation of the financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from those
estimates.

(4) Cash Equivalents: The Company considers all highly liquid investments with a
maturity of three months or less when purchased to be cash equivalents. These
amounts were $5.1, $4.5 and $3.8 million at December 31, 1996, 1995 and 1994,
respectively.

(5) Foreign Currency Exchange Contracts: In the normal course of business, the
Company's Canadian subsidiaries, enter into foreign currency exchange contracts
to provide economic hedges against foreign currency fluctuations on future
inventory purchases. Gains and losses resulting from foreign currency exchange
contracts are deferred and recognized when the offsetting gains and losses are
recognized in the related hedged item. At December 31, 1996, outstanding forward
contracts were $24.4 million which mature in increments ranging from
approximately $1.0 to $2.5 million on a monthly basis through December 1997.

(6) Foreign Exchange Options: R.H.E. Ltd., a wholly-owned Canadian subsidiary,
also purchases foreign exchange options which permit but do not require R.H.E.
Ltd. to exchange foreign currencies at a future date with another party at a
contracted exchange rate. These option contracts typically expire within one
year. At December 31, 1996, R.H.E. Ltd. had purchased foreign exchange options
of $15.9 million related to Canadian dollars.

                                       42
<PAGE>

(7) Inventories: Inventories are stated principally at the lower of cost (FIFO -
first-in, first-out method) or market.

(8) Property and Depreciation: Rental equipment and property, plant and
equipment are stated at cost. Depreciation is computed primarily on the straight
line and declining balance methods for financial reporting and accelerated
methods for income tax purposes. The estimated useful lives range primarily from
ten to twenty years for buildings and improvements and from three to ten years
for all other assets.

(9) Income Taxes: The Company uses the liability method of accounting for income
taxes in accordance with Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes." The Company considers the undistributed earnings
of its foreign subsidiaries at December 31, 1996 to be indefinitely reinvested.

(10) Revenue Recognition and Related Costs: Revenues from product sales are
recognized based upon shipment to customers. Lease finance revenues are
recognized on fixed rate, long-term leases on a declining basis over the life of
the lease (interest method). Revenues on variable rate leases are recognized
based upon the principal amounts outstanding. Financial Services interest
expense is reported net of charges on intercompany borrowings. Short-term
rentals are recognized as revenues over the term of the contract. Related costs
consist primarily of depreciation and maintenance. Cash receipts from
comprehensive fixed price maintenance contracts, which range in length from one
to seven years, are initially recorded as deferred revenue and recognized as
revenue when repair services are performed. 

Net sales include sales to unconsolidated investees of $111.3, $131.1 and $89.8
million in 1996, 1995 and 1994, respectively.

(11) Concentration of Credit Risk: The Company's sales are primarily made to its
Dealers in North America who subsequently sell the equipment to customers in
diversified industries in many geographic areas. It is the Company's policy to
have a formal agreement in effect for each Dealer which requires a purchase
money security agreement. The Company performs ongoing credit evaluations of its
Dealers' financial condition.

The investment in leases primarily represents receivables from customers (end
users) of the Company's products. These leases are collateralized by the
equipment. Credit evaluations are performed prior to the approval of a lease
contract. Subsequently, the financial condition of the customer and the value of
the collateral are monitored on an ongoing basis. At December 31, 1996, lease
receivables from one customer represented approximately 16% of the total
investment in leases. 

Reserves for potential credit losses on accounts and lease receivables are
maintained and such losses have been within management's expectations.

(12) Product Warranties: Estimated product warranty costs are accrued at the
time of revenue recognition.

(13) Insurance Accruals: The Company uses a combination of self-insured
retention and insurance coverage for products liability, workers' compensation
and certain health insurance plans in the U.S.

(14) Stock Based Compensation: The Company accounts for stock option grants in
accordance with Accounting Principles Board Opinion No. 25, "Accounting for
Stock Issued to Employees." Accordingly, no compensation expense is recognized
for stock option grants other than the amounts accrued in connection with the
stock appreciation rights associated with these grants.

(15) Research and Development Costs: Research and development costs are charged
to expense as incurred and amounted to $3.3 million in 1996; $3.6 million in
1995 and $4.0 million in 1994.

                                       43
<PAGE>

(16) Stock Dividend: On March 2, 1996, the Board of Directors declared a 5%
stock dividend on the Company's outstanding common stock payable to shareholders
of record as of March 29, 1996. All appropriate per share data and weighted
average shares outstanding have been restated to reflect this dividend.

(17) Per Share Amounts: Primary net income per share is computed by dividing net
income by the weighted average number of shares outstanding (1996 - 7,524,097;
1995 - 7,176,862 and 1994 - 6,984,319). Dilution that could result from the
assumed exercise of stock options is not material. Fully diluted net income per
share is computed by dividing net income plus after tax interest incurred on the
convertible debentures by the weighted average number of common shares
outstanding after giving effect to dilutive stock options and shares assumed to
be issued on conversion of the convertible debentures (1996 - 10,675,633; 1995 -
10,675,929 and 1994 - 10,640,237).

------------------------------------------------------------------------------
B. Inventories

The composition of inventories at December 31 was:

(in Thousands)                 1996          1995            1994
-------------------------------------------------------------------
Materials                    $ 26,239      $ 18,095        $ 15,804
Work-in-process                12,548        14,804          13,407
Finished goods                  8,417         1,746           1,700
                             --------------------------------------
                             $ 47,204      $ 34,645        $ 30,911
                             ======================================
C. Unconsolidated Investees                                 

Unconsolidated investees consist of certain North American Dealers of the
Company's products. Investments in and advances to unconsolidated investees at
equity are summarized as follows at December 31:

(in Thousands)                    1996          1995         1994
---------------------------------------------------------------------
Unconsolidated investees at
various percentages of 
ownership:

Investments*                   $ 7,587        $ 10,951       $  8,572
Advances                         1,875           8,214          8,095
                               --------------------------------------
                               $ 9,462        $ 19,165       $ 16,667
                               ======================================

*Investments are stated at cost, plus equity in subsequent earnings, net of
dividends.

                                       44
<PAGE>

At December 31,1996, consolidated retained earnings included $1.9 million of
undistributed earnings of the Company's unconsolidated investees.

As discussed in Note H - Acquisitions, in October 1996, the Company acquired an
additional 28% and 26% of the total outstanding shares of G.N. Johnston
Equipment Co. Ltd. (Johnston) and Associated Material Handling Industries, Inc.
(Associated), respectively. As a result of the acquisitions, the Company's
ownership increased to 74% and 70% of the total outstanding shares of Johnston
and Associated, respectively. Therefore, in the fourth quarter of 1996, the
operating results of Johnston and Associated have been consolidated with those
of the Company with appropriate adjustments made to reflect minority interests.
Investments in and advances to Johnston and Associated totaled $9.0 and $8.5
million at December 31, 1995 and 1994, respectively.

Twenty-six percent and 30% of the common shares of Johnston and Associated,
respectively, and various percentages of the unconsolidated investees are
controlled by their management. Upon death or termination of employment, the
Company has agreed to cause the purchase of management's shares based upon a
predetermined valuation method. These agreements further provide, under
specified conditions, that any of the shares held by the Company may be
purchased by management at a price which will return to the Company its
investment.

The unconsolidated investees also include Material Handling Associates, Inc.
(M.H.A.), a 50% owned joint venture company that was formed in 1991 with
Caterpillar Industrial Inc., predecessor of Mitsubishi Caterpillar Forklift
America Inc. The Company's minimal financial investment in this joint venture
has no carrying value as a result of the initial costs incurred by M.H.A. to
develop and market its products. Certain officers of the Company are also
officers of M.H.A.

The following is summarized financial information for the unconsolidated
investees:


(in Thousands)                1996          1995           1994
-----------------------------------------------------------------
Revenues                   $ 279,197     $ 302,852      $ 225,175
Gross margin                  68,998        75,667         41,901
Net income                     3,243         2,834          1,634
Current assets                43,057        80,188         55,215
Noncurrent assets             11,621        30,308         24,304
Current liabilities           31,153        60,983         39,373
Noncurrent liabilities        11,708        25,849         22,897



                                       45
<PAGE>

The following presents summarized information of Raymond Leasing Corporation
that is contained in the Company's consolidated financial statements to conform
with the provisions of Statement of Financial Accounting Standards No. 94,
"Consolidation of All Majority-Owned Subsidiaries":

(in Thousands)                  1996         1995           1994
-----------------------------------------------------------------
Revenues                     $ 15,559     $ 12,718       $ 10,583
Gross margin                    6,255        5,562          4,602
Net income                      2,919        2,397          1,956
Total assets                  135,772      109,243         87,510
Total liabilities             102,327       78,717         59,380

The assets and liabilities of Raymond Leasing Corporation, which finances 
Company products and related accessories only in the United States, are
classified under the caption Financial Services in the consolidated balance
sheets.

D. Property, Plant and Equipment

The composition of property, plant and equipment for Manufacturing and
Distribution and Financial Services at December 31 was:

(in Thousands)                 1996          1995           1994
-------------------------------------------------------------------
Land                         $   502       $   609         $   323
Buildings and
 improvements                 18,878        17,839          15,982
Machinery, equipment
 and tools                    36,819        28,580          23,332
Furniture and fixtures        13,536         7,537           7,494
                             --------------------------------------
                             $69,735       $54,565         $47,131
                             =======================================
E. Net Investment in Leases

The Raymond Leasing Corporation leases Raymond(R) and Dockstocker(R) equipment
to customers and its Dealers, including equity investees, under arrangements
covering three to seven years. Additionally, Johnston leases Raymond(R) and
Dockstocker(R) equipment to its customers, under arrangements covering two to
five years. The net investment in direct financing leases represents the present
value of future minimum lease payments and the residual value of the equipment
of $37.2, $25.5 and $19.4 million at December 31, 1996, 1995 and 1994,
respectively. Unearned lease income on fixed rate leases totaled $23.9, $18.2
and $14.2 million at December 31, 1996, 1995 and 1994, respectively.

At December 31, 1996 future minimum lease payments to be received for
Manufacturing and Distribution and Financial Services are as follows:

(in Thousands)
-----------------------------------------------------------------
1997                                                   $  50,482
1998                                                      35,767
1999                                                      24,418
2000                                                      14,180
2001                                                       4,866
Thereafter                                                   412
                                                       ----------           
Total future minimum lease payments                      130,125
Residual values                                           37,247
                                                       ----------           
                                                         167,372
Less unearned income                                      23,923
                                                       ----------           
                                                       $ 143,449
                                                       ==========


                                       46
<PAGE>

F. Fair Value of Financial Instruments

The carrying amount and fair value of significant financial instruments at
December 31 were as follows:

(in Thousands) 
------------------------------------------------------------------
1996                            Carrying Amount         Fair Value
----                            ---------------         ----------
Investment in leases              $  143,449            $  141,308
Manufacturing and       
 Distribution debt                   (49,535)              (52,621)
Financial Services debt              (78,063)              (78,213)
Foreign currency exchange 
 contracts                              --                    (857)

1995
----
Investment in leases               $ 106,410            $  104,706
Manufacturing and        
 Distribution debt                   (51,260)              (70,995)
Financial Services debt              (52,396)              (53,967)

1994
----
Investment in leases                $  84,725            $  82,737
Manufacturing and                   
 Distribution debt                    (57,500)             (64,400)
Financial Services debt               (24,153)             (24,276)

The carrying value of cash and cash equivalents approximates fair value because
of the short-term maturities of these instruments.

The carrying value of advances to unconsolidated investees approximates fair
value.

The fair value of the investment in leases is estimated by discounting future
cash flows, using current interest rates at which similar leases would be
entered into with borrowers with similar credit ratings and maturities.

The fair value of the Company's Subordinated Convertible Debentures is estimated
based on the quoted market price.

The fair value of Financial Services and Manufacturing and Distribution debt is
estimated using discounted cash flow analyses, based on current rates offered to
the Company for similar types of borrowing arrangements.

The fair value of foreign currency exchange contracts is estimated based upon
quoted market prices for similar instruments with similar maturities. At
December 31, 1995 and 1994, the fair value of foreign currency exchange
contracts was not significant due to the contracts' short-term nature and the
fact that they were purchased near year-end.





                                       47
<PAGE>

<TABLE>
<CAPTION>

-----------------------------------------------------------------------------------------------------------------------
G. Debt and Lease Obligations and Subsequent Event
(in Thousands)                                                             1996               1995               1994
-----------------------------------------------------------------------------------------------------------------------
<S>                                                                         <C>                <C>                  <C>
                                                                                 
Manufacturing and Distribution Debt
Short-term borrowings under lines of credit at variable interest 
 rates (composite rate of 7.28%). Borrowings are secured
 by subsidiary assets                                                       $ 3,645            $  --                 $ --
Various notes with maturities ranging from April 30, 1997 through 
 April 30, 1999. Aggregate monthly principal payments of approximately
 $0.1 million are required through April 30, 1997 when the
 first note matures. Interest is payable monthly at  
 rates ranging from 7.75% to 9.75%. Notes are 
 secured by subsidiary investment in leases                                   2,252               --                   --
Term loans with maturities of July 31, 1999 and November 30, 1999.
 Aggregate monthly principal payments of approximately $0.1 million
 are required through July 31, 1999 when the first loan matures.
 Interest is payable monthly at rates ranging from 7.43% to 8.75%.
 Loans are secured by subsidiary assets                                       2,539               --                   --
Notes payable to related parties with maturities of
 March 31, 1997 and October 10, 1998. Aggregate annual installments
 of $1.7 million and $1.3 million are due in 1997 and 1998,
 respectively. Interest is payable annually at 6.0%                           3,039               --                   --
6.50% convertible subordinated debentures due December 15, 2003.
 Interest is payable semi-annually                                           38,060            51,260              57,500
                                                                            ---------------------------------------------
Total Manufacturing and Distribution Debt                                    49,535            51,260              57.500

Less current portion                                                          7,573                --                  --
                                                                            ---------------------------------------------
Total Long-term Manufacturing and Distribution Debt                        $ 41,962          $ 51,260            $ 57,500
                                                                            =============================================

Financial Services Debt 
Short-term borrowings under lines of credit
 at variable interest rates (8.00% in 1996, 6.75% in 
 1995 and 7.00% in 1994)                                                    $ 4,000           $ 1,000             $ 3,000
6.35% note, principal is payable in quarterly installments of approximately 
 $0.3 million through July 1, 1997. Interest is payable quarterly               938             2,188               3,438
8.86% note, remaining principal is due November 27,1997. Iterest is  
 payable semi-annually                                                        4,000             8,000              12,000
Various notes executed under revolving credit and term loan agreements
 with maturities ranging from December 31, 1999 through December 31, 2001.  
 Aggregate quarterly principal payments of approximately $4.2 million are  
 required through December 31, 1999 when the first note matures. Interest 
 is  payable quarterly at rates ranging from 6.40% to 8.40%                  69,125            38,350                  --   
8.75% note, repaid in 1996                                                       --             2,858               5,715
                                                                            ---------------------------------------------
Total Financial Services Debt                                              $ 78,063          $ 52,396         s  $ 24,153
                                                                            =============================================
                                                                           
</TABLE>


                                       48
<PAGE>

Annual repayments of debt obligations are as follows:

                                           Manufacturing and       Financial
(in Thousands)                              Distribution Debt   Services Debt
-------------------------------------------------------------------------
            1997                              $ 7,573            $ 25,889
            1998                                3,100              16,949
            1999                                  802              16,950
            2000                                  --               12,500
            2001                                  --                5,775
            Thereafter                         38,060                 --
                                             ----------------------------
            Total                             $49,535            $ 78,063
                                             ============================

On December 20, 1996, the Company issued a Call for Redemption of its 6.50%
convertible subordinated debentures due December 15, 2003. Prior to the January
21, 1997 redemption date, debenture holders could convert their outstanding
debentures into common stock of the Company at a conversion price of
approximately $16.07 per share or receive 103.50% of their principal amount,
plus accrued interest, upon redemption. Subsequent to the call date and prior to
December 31, 1996, debenture holders converted $3.7 million of debentures into
229,034 shares of common stock. Prior to issuing the Call for Redemption, an
additional $9.5 million of the debentures were converted into 592,503 shares of
common stock primarily in the fourth quarter of 1996.

Through January 21, 1997, substantially all of the debentures outstanding at
December 31, 1996 were converted and an additional 2,368,395 shares of common
stock were issued. The 1996 and 1997 conversions were at the originally stated
conversion rates adjusted for stock dividends. 

Had the 1996 and 1997 conversions of the Company's debentures occurred on
January 1, 1996, the reported primary net income per share of $2.00 would have
been $1.62.

Terms of subsidiary notes provide for certain debt covenants. Among other
things, Raymond Leasing Corporation must maintain a minimum working capital and
a specified working capital ratio, and is subject to certain debt agreements
that limit cash dividends and loans to the Company. At December 31, 1996, the
restricted retained earnings of Raymond Leasing Corporation were approximately
$26.7 million.

The Company had unused lines of credit totaling approximately $26.3 million at
December 31, 1996 of which approximately $10.9 million may be converted into
long-term debt. No significant commitment fees are paid for these lines.

Rent expense under operating leases amounted to approximately $2.3, $2.1 and
$1.6 million in 1996, 1995 and 1994, respectively. At December 31, 1996, the
Company was obligated for future minimum lease payments under noncancelable
operating leases for certain equipment as follows:

(in Thousands)
-------------------------------------------------------
       1997                                    $  2,349
       1998                                       2,297
       1999                                       1,509 
       2000                                       1,151  
       2001                                         837         
       Thereafter                                   569
                                               --------
                                               $  8,712
                                               ========

                                       49
<PAGE>

H. Acquisitions

On October 10, 1996, an executive officer of the Company, sold his shares of
common stock of G.N. Johnston Equipment Co. Ltd. (Johnston) and Associated
Material Handling Industries, Inc. (Associated), both distributors of the
Company's products. The shares were valued in accordance with the terms and
conditions set forth in shareholder buy/sell agreements dated July 1, 1968 and
August 15, 1980, respectively.

The Johnston shares, which represent approximately 28% of the total outstanding
shares, were acquired by R.H.E. Ltd., a wholly-owned Canadian subsidiary of the
Company. R.H.E. Ltd. had previously owned approximately 47% of the outstanding
shares of Johnston. Johnston is the exclusive Canadian distributor for the
Company with sales and service outlets in the principal business regions of 
Canada.

The Associated shares, which represent approximately 26% of the total
outstanding shares, were acquired by the Company. The Company had previously
owned approximately 44% of the outstanding shares of Associated. Associated is a
U.S. distributor based in Elmhurst, Illinois that serves portions of the Midwest
and Pacific Northwest.

The combined purchase price for the shares of Johnston and Associated was
approximately $4.5 million. The acquisitions have been accounted for as a
purchase and the operating results of Johnston and Associated have been
consolidated with those of the Company starting in the fourth quarter of 1996.

The following unaudited pro forma information presents a summary of consolidated
results of operations of the Company, Johnston and Associated as if the
acquisitions had occurred on January 1, 1995. The information reflects
consolidation of all revenues, net of intercompany transactions, and the
incremental net income above amounts previously recognized using the equity
method. The pro forma financial information is not necessarily indicative of the
results of operations that would have occurred had the purchase been made at the
beginning of the periods presented or of the future results of the combined
operations.


(in Thousands, except per share data)                1996          1995
-------------------------------------------------------------------------
Total revenues                                   $ 370,349      $ 365,973
Net income                                       $  15,843      $  13,678
Primary net income per share                     $    2.11      $    1.91





                                       50
<PAGE>

I. Stock Options

The Company has elected to follow Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees" (APB 25) and related Interpretations
in accounting for its stock options because, as discussed below, the alternative
fair value accounting provided for under FASB Statement No. 123, "Accounting for
Stock-Based Compensation," requires use of option valuation models that were not
developed for use in valuing employee stock options. Under APB 25, because the
exercise price of the Company's stock options equals the market price of the
underlying stock on the date of grant, no compensation expense is recognized.

The shareholders of the Company have approved stock option plans for officers,
directors and key employees. At December 31, 1996, there are 236,710 unoptioned
shares available under these plans. The exercise price of options granted is
equal to the fair market value of the common stock on the date of grant, except
for greater than 5% shareholder officers whose exercise price is 110% of the
fair market value on the date of grant, and options expire ten years from the
date of the grant.

Pro forma information regarding net income and earnings per share is required by
Statement 123, which also requires that the information be determined as if the
company had accounted for its stock options granted subsequent to December
31, 1994 under the fair value method of that Statement. The fair value for these
options was estimated at the date of grant using a Black-Scholes option pricing
model with the following weighted-average assumptions for 1996 and 1995,
respectively: risk-free interest rate of 6.0% and 7.0%; dividend yield of 0.55%
and 0.60%; volatility factor of the expected market price of the Company's
common stock of .30 and .31; and a weighted-average expected life of the options
of 6 years.

The Black-Scholes option valuation model was developed for use in estimating the
fair value of traded options which have no vesting restrictions and are fully
transferable. In addition, option valuation models require the input of highly
subjective assumptions including the expected stock price volatility. Because
the Company's stock options have characteristics significantly different from
those of traded options, and because changes in the subjective input assumptions
can materially affect the fair value estimate, in management's opinion, the
existing models do not necessarily provide a reliable single measure of the fair
value of its stock options.

                                       51
<PAGE>

For purposes of pro forma disclosures, the estimated fair value of the options
is amortized to expense over the options' vesting period (one year for officers
and key employees and immediate vesting for directors). The weighted-average
fair value of options granted in 1996 and 1995 were $7.09 and $7.00 per share,
respectively. The Company's pro forma information for 1996 and 1995 follows:

(in Thousands, except per share data)                1996          1995
-------------------------------------------------------------------------
Pro forma net income                               $ 14,724      $ 12,862
Pro forma earnings per share: 
 Primary                                             $ 1.96      $   1.79 
 Fully Diluted                                       $ 1.58      $   1.42

The pro forma disclosures above for 1995 amounts reflect only the vesting of
options granted in 1995.

A summary of the Company's stock option activity and related information for
1996 follows:

                                                              Weighted-Average 
                                                 Options       Exercise Price
------------------------------------------------------------------------------
Outstanding-beginning of year                     338,474         $ 13.33
Granted                                            94,834           18.22
Exercised                                         (13,763)          15.73
Forfeited                                            --               --
                                                  -------         -------
Outstanding-end of year                           419,545         $ 14.83
                                                  =======         =======
Exercisable at end of year                        322,726             --

Exercise prices for options issued in 1996 ranged from $18.21 to $18.38 per
share. The weighted-average remaining contractual life of those options is 9.2
years. 

The following data for 1995 and 1994 has been restated to reflect the effects 
of the 1996 5% stock dividend:

                   Outstanding                            Options
                    Options        Price Range          Exercisable
---------------------------------------------------------------------
1995               338,474        $7.29 -   $18.35        258,340
1994               436,011         7.29 -    18.35        352,834

                   Options
                   Exercised            Price Range
---------------------------------------------------------------------
1995               177,441          $7.29 -   $17.60
1994                20,595           7.29 -    14.90

Stock options issued to officers and key employees are subject to stock
appreciation rights covering up to one-half the number of optioned shares.
Options outstanding subject to stock appreciation rights at December 31 were:
1996 - 372,154, 1995 - 291,290 and 1994 - 377,873. The exercise of stock
appreciation rights by an optionee is in lieu of exercising the option to
purchase and will result in a reduction of an equivalent number of optioned
shares.

Stock appreciation rights provide for cash payment equal to the appreciation in
value of the shares under option from the date the option was granted. In 1996,
approximately $0.6 million in pre-tax income was recognized in connection with 
stock appreciation rights as a result of the stock price volatility.




                                       52
<PAGE>

J. Retirement and Benefit Plans

The Company has noncontributory group trusteed retirement plans covering
substantially all of its employees. The benefits are based on years of service
and/or compensation. The Company's funding policy is to contribute annually the
maximum amount that can be deducted for federal income tax purposes.
Contributions are intended to provide not only for benefits attributed to
service to date, but also for those expected to be earned in the future. The
following table sets forth the plans' funded status and amounts recognized in
the Company's consolidated balance sheets at December 31:
<TABLE>
<CAPTION>


(in Thousands)                                                  1996          1995         1994
--------------------------------------------------------------------------------------------------
<S>                                                             <C>           <C>          <C>       
Actuarial present value of accumulated benefit obligation,
 including vested benefits of $25,142 in 1996, $20,234
 in 1995 and $15,298 in 1994                                  $ (27,350)    $ (21,806)   $ (16,532)

Plan assets at fair value, primarily listed                   =========     =========    =========
 stocks and bonds held in trust                                  40,963        30,737       24,990
Projected benefit obligation for 
 service rendered to date                                       (36,896)      (29,650)     (21,662)
Plan assets in excess of projected                            ---------     ---------    ---------
 benefit obligation                                               4,067         1,087        3,328
Unrecognized net transition asset                                (1,334)       (1,692)      (2,038)
Unrecognized net (gain) loss from past
 experience different from that assumed
 and effect of change in assumptions                             (3,441)        1,743          145
Unrecognized prior service cost                                     729           332          363
                                                              ---------     ---------    ---------
Net prepaid pension cost                                         $   21       $ 1,470      $ 1,798
                                                              =========     =========    =========
</TABLE>
                                                              
Net periodic pension cost for the plans included the following components:
<TABLE>
<CAPTION>

(in Thousands)                                                      1996        1995           1994
----------------------------------------------------------------------------------------------------
<S>                                                               <C>          <C>           <C>    
Service cost -- benefits earned during the period                 $ 2,441      $ 1,253       $ 1,378
Interest cost on projected benefit obligation                       2,663        1,859         1,604
Actual return on plan assets                                       (5,723)      (5,990)          341
Net amortization and deferral                                       2,247        3,704        (2,773)
                                                                  -------       ------        ------
Net periodic pension cost                                         $ 1,628      $   826        $  550
                                                                  =======       ======        ======
</TABLE>



                                       53
<PAGE>

The assumptions used to develop the projected benefit obligation as of December
31 were as follows:

                                              1996        1995         1994
----------------------------------------------------------------------------- 
Weighted average discount rate                7.50%       7.00%        8.50%
Rate of increase in compensation              5.50%       5.50%        5.50%
Expected return on plan assets                8.50%       8.50%        8.50%

The actuarial present value of the projected benefit obligation for the U.S.
plan decreased by approximately $1.9 million at December 31, 1996 and increased
by approximately $4.9 million at December 31, 1995 as a result of the changes in
the weighted average discount rate.

The Company has profit sharing plans covering substantially all of its
employees. The aggregate expense of these plans, as determined by the Board of
Directors, was $3.5 million in 1996, $3.8 million in 1995, and $2.9 million in
1994. In addition, salary-reduction 401(k) Plans are offered to the Company's
U.S. employees.

The Company has an unfunded supplemental benefits equalization plan designed to
maintain benefit levels for all employees at the plans' formula levels in
instances where individual benefits are limited by the Employee Retirement
Income Security Act of 1974 and the Internal Revenue Code.

A deferred compensation plan is provided for employees and directors whereby the
individual has the right to defer a portion of his or her current salary. The
liability for amounts so deferred has been accrued.

The Company has formal bonus plans for key executives. The plans provide, among
other things, that annual bonuses be computed on pre-tax income after
consideration for a return on consolidated shareholders' equity. Charges to
operations under these plans were $2.4 million in 1996, $1.9 million in 1995 and
$1.4 million in 1994.



                                       54
<PAGE>

K. Postretirement Benefits

     In addition to the Company's defined benefit pension plans, the Company
sponsors a defined benefit health care plan that provides postretirement medical
benefits. The plan is available to certain existing U.S. retirees at March 31,
1993. In addition, U.S. full-time employees who had attained age 55 with at
least 15 years continuous service as of March 31, 1993 are eligible to receive
medical benefits under the plan subject to a premium limitation of $200 per
month. No other current or future employees will be covered by this plan. The
plan contains other cost sharing features such as deductibles and coinsurance.
The Company's policy is to fund the cost of these medical benefits as premiums
are paid and claims are submitted.

     The following table presents the plan's funded status reconciled with
amounts recognized in the Company's consolidated balance sheets at December 31:

(in Thousands)                             1996        1995         1994
--------------------------------------------------------------------------
Accumulated postretirement 
 benefit obligation: 
  Retirees                              $ (3,466)    $ (2,779)    $ (2,777)
  Fully eligible active   
   plan participants                        (657)        (892)        (835)
  Other active plan    
   participants                              (54)         (57)         (38)
                                           -----        -----        -----
                                          (4,177)      (3,728)      (3,650)
Plan assets at fair value                     --           --           --
                                           -----       ------        -----
Accumulated postretirement 
  benefit obligation in 
  exess of plan assets                    (4,177)      (3,728)      (3,650)
Unrecognized net loss (gain)                 153         (329)        (467)
Unrecognized transition obligation         3,316        3,524        3,731
                                          ------       ------       ------
Accrued postretirement benefit cost       $ (708)      $ (533)      $ (386)
                                          ======       ======       ======

                                       55
<PAGE>

The assumptions used to develop the net periodic postretirement benefit costs
and the accumulated postretirement benefit obligations were as follows:

                                             1996        1995         1994
---------------------------------------------------------------------------
Weighted average   
 discount rate                               7.50%       7.00%        8.50%
Health care cost trend rate:  
 Retirees under age 65                       9.50%      10.00%       10.50%
 Retirees age 65 and older                   7.50%       7.75%        8.00%

Net periodic postretirement benefit cost includes the following components:

(in Thousands)                               1996        1995         1994
---------------------------------------------------------------------------
Service cost                                $   5       $   4       $    5
Interest cost                                 293         259          314
Amortization of transition 
 obligation over 20 years                     207         207          207
Net amortization and deferral                 --           15            7
Net periodic postretirement                 ------------------------------
 benefit cost                               $ 505       $ 485        $ 533
                                            ==============================
The health care cost trend rate for retirees under age 65 is assumed to decline
by 1/2% per year until an ultimate rate of 5.50% is reached in 2005 and later
years. For retirees age 65 and older, the health care cost trend rate is assumed
to decline by 1/4% per year until an ultimate rate of 5.50% is reached in 2005
and later years.

The accumulated postretirement benefit obligation decreased by approximately
$0.2 million in 1996 and increased by approximately $0.4 million in 1995 as a
result of the changes in the weighted average discount rate. 

The effect of increasing the assumed health care cost trend rates by one
percentage point in each year would increase the accumulated postretirement
benefit obligation by approximately $0.3 million at December 31, 1996 and would
not be significant to reported net periodic postretirement benefit cost.


L. Accrued Liabilities

Accrued liabilities for Manufacturing and Distribution and Financial Services
are summarized as follows:

(in Thousands)                    1996        1995            1994
-------------------------------------------------------------------
Insurance                      $   7,871    $ 7,724         $ 6,113
Compensation                       6,203      3,467           3,703
Service agreements                 2,955      3,878           2,619
Deferred revenue                   2,515        --              --
Profit sharing                     1,444      1,538           1,410
Dealer commissions                 1,073        795             981
Stock appreciation rights            490      1,120             888
Interest                             293        876             510
Other                              4,920      3,018           1,596
                              --------------------------------------
                              $   27,764   $ 22,416        $ 17,820
                              ======================================


                                       56
<PAGE>

M. Income Taxes

The components of income before income taxes consisted of the following:

(in Thousands)             1996            1995               1994
-------------------------------------------------------------------
Domestic               $  9,427         $  8,269          $   5,645
Foreign                  12,982           12,546             10,308
                       --------------------------------------------
                       $ 22,409         $ 20,815          $  15,953
                       ============================================

Federal, foreign and state income tax expense (benefit) 
consisted of the following:

(in Thousands)                   1996        1995         1994
---------------------------------------------------------------
Currently payable:
 Federal                      $  2,580     $ 4,692     $  1,637
 Foreign                         5,051       4,675        4,199
 State                             328         673          353
                              ---------------------------------
                                 7,959      10,040        6,189
                              ---------------------------------
Deferred:                                             
 Federal                           439      (1,757)         401
 Foreign                          (184)         24         (250)
 State                              68        (219)          88
                              ---------------------------------
                                   323      (1,952)         239
                              ---------------------------------
Total income tax expense      $  8,282     $ 8,088     $  6,428
                              =================================
                                                   
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and amounts used for income tax purposes. Significant components of the
Company's deferred tax liabilities and assets as of December 31 are as follows:

(in Thousands)                   1996        1995         1994
---------------------------------------------------------------
Deferred tax liabilities:
 Lease finance revenues       $  7,203     $ 4,696     $  4,207
 Excess tax over book      
  depreciation                   1,705       1,281        1,262
 Pension assets                      -         497          707
 LIFO inventory
  accounting change                236         471          621
 Other                             717         668          670
                              ---------------------------------
   Total deferred tax   
     liabilities                 9,861       7,613        7,467
                              ---------------------------------
Deferred tax assets:
 Insurance reserves              2,676       2,626        2,058
 Compensation                    2,242       2,268        1,846 
 Accounts receivable             1,169       1,579        1,088 
 Service agreements              1,159         821          641
 Inventory                         743         762          640 
 Tax credit carryforward           700           -            -   
 Other                             988       1,009          774
                              ---------------------------------
   Total deferred        
     tax assets                  9,677       9,065        7,047
---------------------------------------------------------------
   Net deferred tax 
    liability (asset)         $    184     $(1,452)     $   420
===============================================================

                                       57
<PAGE>

The differences between the income tax provisions and the amounts 
computed by applying the U.S. Federal statutory rate (35%) are explained as
follows:

(in Thousands)                   1996        1995         1994
---------------------------------------------------------------
Statutory provision           $  7,843     $ 7,285      $ 5,584
State income taxes, 
  net of federal tax
  benefit                          257         295          287
Foreign subsidiaries               323         308          341
Other - net                       (141)        200          216
                              ---------------------------------
Provision                     $  8,282     $ 8,088      $ 6,428
                              =================================

For federal income tax purposes, the Company has approximately $0.7 million of
alternative minimum tax payments available to offset future domestic regular
income taxes payable to the extent such regular taxes exceed alternative minimum
taxes payable.

The Raymond Corporation files a consolidated federal tax return which includes
Raymond Leasing Corporation and all required domestic subsidiaries.

Deferred income taxes and income taxes payable reported in the consolidated
balance sheets include the aggregate amounts for Manufacturing and Distribution
and Financial Services.

Undistributed earnings of the Company's foreign subsidiaries amounted to
approximately $52.6 million at December 31, 1996. Those earnings are considered
to be indefinitely reinvested and, accordingly, no provision for U.S. federal
and state income taxes has been provided thereon. Upon distribution of those
earnings in the form of dividends or otherwise, the Company would be subject to
both U.S. income taxes (subject to an adjustment for foreign tax credits) and
foreign withholding taxes. Determination of the amount of unrecognized deferred
U.S. income tax liability is not practicable because of the complexities
associated with its hypothetical calculation; however, unrecognized foreign tax
credit carryforwards would be available to reduce some portion of the U.S.
liability. Withholding taxes of approximately $2.6 million would be payable upon
remittance of all previously unremitted earnings at December 31, 1996.

N. Business Segment Information

The Company operates predominantly in one business segment, that being the
design, manufacture, distribution and service of materials handling equipment.
Revenues from unaffiliated customers are realized primarily through its Dealer
Network which is predominantly located in North America. 

For purposes of segment information, operating income is total revenue less
applicable operating expenses. In computing results from foreign operations,
exchange transaction gains and losses have been added or deducted. Domestic
transfers are at cost while foreign transfers are at prices to allow for
reasonable profit margins. Identifiable assets include investments in and
advances to unconsolidated investees which are discussed in Note C.


                                       58
<PAGE>

A summary of information about the Company's operation within the one business
segment follows:

(in Thousands)
-----------------------------------------------------------------
Product Mix                      1996        1995         1994
-----------------------------------------------------------------
Total Revenues                 $308,807    $285,383    $229,547
Narrow and very
 narrow aisle applications           56%         60%         57%
All other applications               20%         18%         20%
Repair and replacement parts         16%         16%         17%
Leasing and rentals                   5%          5%          5% 
Service                               2%          -           -
Other                                 1%          1%          1%

-----------------------------------------------------------------
Geographic Areas                 1996        1995         1994
-----------------------------------------------------------------
United States:
 Unaffiliated customers       $194,761     $163,737     $129,460
 Interarea sales
   and transfers*               19,622       23,015       20,136
                              -----------------------------------
                               214,383      186,752      149,596
Canada:
 Unaffiliated customers         28,083       12,553       10,880
 Interarea sales
   and transfers               101,202      101,134       81,891
                              -----------------------------------
                               129,285      113,687       92,771
 Eliminations                  (34,861)     (15,056)     (12,820)
                              -----------------------------------
Total Revenues                $308,807     $285,383     $229,547
                              ===================================

                                 1996        1995         1994
-----------------------------------------------------------------------------
Operating Income:
United States                 $ 12,476    $ 12,028     $  9,573
Canada                          12,987      12,508       10,331
                              -----------------------------------
                              $ 25,463     $24,536     $ 19,904
                              ===================================

Identifiable Assets:
United States                 $247,004    $210,510     $180,196
Canada                          75,934      39,417       24,180
                              -----------------------------------
                              $322,938    $249,927     $204,376
                              ===================================

*Includes sales of $7,283, $12,477, and $11,082 in 1996, 1995 and 1994,
 respectively, to Canadian company at arms-length pricing which previously was
 unconsolidated but which was consolidated effective in the fourth quarter of
 1996.

                                       59
<PAGE>

O. Commitments and Contingencies

The Company is currently defending a number of products liability and similar
lawsuits involving industrial accidents. The Company views these actions, and
related expenses of administration, litigation and insurance, as part of the
ordinary course of its business. The Company has a policy of aggressively
defending products liability lawsuits, which generally take several years to
ultimately resolve. A combination of self-insured retention and insurance is
used to manage these risks and management believes that the insurance coverage
and reserves established for self-insured risks are adequate. The effect of
these lawsuits on future results of operations cannot be predicted because any
such effect depends on the operating results of future periods and the amount
and timing of the resolution of these proceedings. The Company's Dealers
contribute to the funding of the Company's products liability program and, in
turn, the Company indemnifies the Dealers against products liability expense and
manages products liability claims.

The Company is also one of seventeen remaining defendants in a private
environmental lawsuit pertaining to a site remediation. The plaintiffs have
alleged that scrap metal purchased from the Company was hazardous and/or was
coated with certain solvents and/or cutting oils. Plaintiffs have the burden of
proving the nature and extent of the Company's contribution to the site, as well
as the burden of proving what portion of the material delivered to the site was
"hazardous" as that term is defined in the environmental statutes. Plaintiffs
have successfully moved for partial summary judgment, on liability only, against
two co-defendants who contributed scrap metal to the site. Similar motions as to
the Company and two other co-defendants are pending. The Company is aggressively
defending the claim and does not believe it is likely to have a material adverse
effect on the Company.

In addition to the matters discussed above, the Company is subject to various
other legal proceedings, claims and liabilities which have arisen in the
ordinary course of its business. In the opinion of management, the amount of
ultimate liability, if any, with respect to these actions will not materially
affect the financial results of operations or financial position of the Company.

The Company has agreements with certain officers which provide, in the event of
a change in control of the Company, for continuing the employment of the officer
for a period of three years at salary and benefit levels not less than that
which existed immediately prior to the change in control. In the event of
termination of employment without cause during this three year period, the
officer's non cash benefits continue for the remainder of the three year period
together with a single advance payment of any cash compensation due for the
remainder of the three year period.



                                       60
<PAGE>

<TABLE>
<CAPTION>

----------------------------------------------------------------------------------------------------------------------------------
P. Quarterly Information (Unaudited)
(in Thousands, except per share data)

1996 Quarters                                                   First               Second               Third            Fourth
----------------------------------------------------------------------------------------------------------------------------------
<S>                                                            <C>                 <C>                  <C>               <C>    
 Revenues                                                      $69,628             $67,798              $75,755           $95,626
 Gross profit*                                                  15,200              15,118               16,932            24,573
 Net income                                                      3,382               3,310                3,828             4,500
 Per share amounts:
  Net income (Primary)                                             .45(1)              .45(1)               .51(1)            .58(1)
  Net income (Fully Diluted)                                       .37                 .36                  .41               .47
  Cash dividends                                                     -                .025                 .025              .025 
  Market price range:
           High                                                  22.62               19.75                20.63             19.25
           Low                                                   17.25               16.00                16.75             16.00

<CAPTION>

1995 Quarters                                                   First               Second               Third              Fourth
----------------------------------------------------------------------------------------------------------------------------------
<S>                                                   <C>                 <C>                  <C>                <C>             
 Revenues                                                      $73,007             $72,843              $68,959           $70,574
 Gross profit*                                                  17,256              17,651               15,236            16,303
 Net income                                                      3,075               3,485                3,002             3,512
 Per share amounts:
  Net income (Primary)                                             .44(2)              .50(2)               .41               .47
  Net income (Fully Diluted)                                       .35                 .38                  .33               .38
  Market price range:
           High                                                  17.46               21.19                20.24             22.38
           Low                                                   14.29               17.62                17.38             18.39

</TABLE>

*Includes net sales, lease finance revenues and rental revenues less applicable
 expenses.

(1) Primary earnings per share would have been $0.37, $0.36, $0.41, and $0.47 in
the first, second, third, and fourth quarters of 1996, respectively, if the
$51.3 million conversion of debentures, which occurred primarily in the fourth
quarter of 1996 through January 21, 1997, occurred as of January 1, 1996.

(2) Primary earnings per share would have been $0.43 and $0.48 in the first and
second quarters of 1995, respectively, if the $6.2 million conversion of
debentures, which occurred in the third quarter of 1995, had occurred as of
January 1, 1995.

The Raymond Corporation is traded on the NASDAQ National Market System (ticker
symbol RAYM). The common stock market prices indicated in the tables above
represent inter-dealer prices as reported by NASDAQ without retail markups,
markdowns or commissions and do not necessarily represent actual transactions.


                                       61
<PAGE>

THE RAYMOND CORPORATION AND SUBSIDIARIES

SCHEDULE I - Condensed Financial Information of Registrant
                       - The Raymond Corporation

Years ended December 31, 1996, 1995 and 1994

Condensed Balance Sheets
<TABLE>
<CAPTION>
                                                                                 December 31,
                                                             ----------------------------------------------------
                                                                  1996               1995              1994      
                                                             ----------------------------------------------------
<S>                                                         <C>                 <C>               <C>            
Assets

Current Assets

Cash                                                         $     559,647      $     759,712     $   4,081,322  

Accounts Receivable (including $12,263,324,
$18,727,995 and $12,132,856 due from
unconsolidated investees in 1996, 1995 and 1994,
respectively) less allowances ($1,828,051 in 1996,
$1,718,651 in 1995 and $986,093 in 1994).                       33,493,460         30,685,950        34,554,193  

Inventories                                                     28,243,595         29,453,674        25,513,226  

Other Current Assets                                             3,348,927          2,801,298         2,453,898  
                                                             -------------      -------------     -------------  
Total Current Assets                                            65,645,629         63,700,634        66,602,639  

Property, Plant & Equipment                                     46,144,700         41,466,806        36,944,902  
Allowance for Depreciation                                     (26,691,257)       (24,845,922)      (24,622,493) 
                                                             -------------      -------------     -------------  
   Net Property, Plant & Equipment                              19,453,443         16,620,884        12,322,409  

Investment in and Advances to Wholly-owned
Subsidiaries and Unconsolidated Investees, at Equity.          124,979,445        107,801,894       101,180,813   

Other Assets                                                     6,718,897          3,943,511         4,360,714  
                                                             -------------      -------------     -------------  
Total Assets                                                 $ 216,797,414      $ 192,066,923     $ 184,466,575  
                                                             =============      =============     =============  

</TABLE>

The accompanying notes are a part of the financial statements.


                                       62
<PAGE>

THE RAYMOND CORPORATION AND SUBSIDIARIES

SCHEDULE I - Condensed Financial Information of Registrant
                       - The Raymond Corporation

Years ended December 31, 1996, 1995 and 1994

Condensed Balance Sheets
<TABLE>
<CAPTION>
                                                                                 December 31,
                                                             ----------------------------------------------------
                                                                  1996               1995              1994      
                                                             ----------------------------------------------------
<S>                                                         <C>                 <C>               <C>            


Liabilities and Shareholders' Equity

Current Liabilities                                         $  43,055,405       $  34,097,486     $  41,574,752  


Long-term Debt (Note B)                                        38,060,000          51,260,000        57,500,000  

Other Liabilities                                               7,009,706           5,375,199         4,392,108  

Shareholders' Equity
Common Stock                                                   12,422,541          10,650,666         9,546,332  

Other Shareholders' Equity                                    116,249,762          90,683,572        71,453,383  
                                                            -------------       -------------     -------------  
Total Shareholders' Equity                                    128,672,303         101,334,238        80,999,715  
                                                            -------------       -------------     -------------  

Total Liabilities and Shareholders' Equity                  $ 216,797,414       $ 192,066,923     $ 184,466,575  
                                                            =============       =============     =============  

</TABLE>

The accompanying notes are a part of the financial statements.



                                       63
<PAGE>

THE RAYMOND CORPORATION AND SUBSIDIARIES

SCHEDULE I - Condensed Financial Information of Registrant
                       - The Raymond Corporation

Years ended December 31, 1996, 1995 and 1994

Condensed Statements of Income
<TABLE>
<CAPTION>
                                                                                 Years Ended
                                                                                 December 31,
                                                             ---------------------------------------------------
                                                                  1996               1995              1994     
                                                             ---------------------------------------------------
<S>                                                         <C>                 <C>               <C>           
Net Sales                                                    $ 170,375,239      $ 169,507,696      $ 142,333,992
Other Income, Net                                                7,750,173          9,122,514          7,872,226
                                                             -------------      -------------      -------------
Total Revenues                                                 178,125,412        178,630,210        150,206,218

Cost of Sales                                                  140,169,904        135,066,815        113,340,243

Selling, General and Administrative Expenses
(Includes Research & Development Costs of
$3,269,000 in 1996, $3,601,000 in 1995 and
$3,958,000 in 1994)                                             32,031,284         34,972,693         28,479,361

Interest Expense                                                 2,969,918          3,694,630          3,926,796
                                                             -------------      -------------      -------------
Total Cost of Sales and Expenses                               175,171,106        173,734,138        145,746,400

Income Before Taxes and Equity in Earnings of
Wholly-owned Subsidiaries and Unconsolidated
Investees                                                        2,954,306          4,896,072          4,459,818

Income Tax Expense                                               1,091,851          1,902,413          1,796,883

Equity in Net Income of Wholly-owned Subsidiaries
and Unconsolidated Investees                                    13,156,966         10,080,276          7,064,336
                                                             -------------      -------------      -------------
Net Income                                                   $  15,019,421      $  13,073,935      $   9,727,271
                                                             =============      =============      =============

</TABLE>

The accompanying notes are a part of the financial statements.


                                       64
<PAGE>

THE RAYMOND CORPORATION AND SUBSIDIARIES

SCHEDULE I - Condensed Financial Information of Registrant
                       - The Raymond Corporation

Years ended December 31, 1996, 1995 and 1994

Condensed Statements of Cash Flow
<TABLE>
<CAPTION>
                                                                                 Years Ended
                                                                                 December 31,
                                                             ---------------------------------------------------
                                                                  1996               1995              1994     
                                                             ---------------------------------------------------
<S>                                                         <C>                 <C>               <C>           
Net Cash Provided by
Operating Activities                                         $ 10,653,652       $     236,890      $  6,019,696 

Cash Flows from Investing Activities

Additions to Property, Plant and Equipment                     (6,100,980)         (6,806,129)       (2,972,384)

Proceeds from Sales of Property, Plant & Equipment                 90,917              22,248             7,750 

Investments in and Advances to Wholly-owned 
Subsidiaries and Unconsolidated Investees                      (4,272,089)          3,123,802       (22,383,741)
                                                              -----------       -------------      ------------ 

Net Cash Used for Investing Activities                        (10,282,152)         (3,660,079)      (25,348,375)

Cash Flows from Financing Activities

Cash Dividends Paid                                              (572,650)                  0                 0 

Capital Stock Transactions, Net                                     1,085             101,579           121,222 
                                                              -----------       -------------      ------------ 
Net Cash (Used for) Provided by Financing Activities             (571,565)            101,579           121,222 

Decrease in Cash                                                 (200,065)         (3,321,610)      (19,207,457)

Cash Balance at January 1,                                        759,712           4,081,322        23,288,779 
                                                              -----------       -------------      ------------ 
Cash Balance at December 31,                                 $    559,647       $     759,712      $  4,081,322 
                                                              ===========       =============      ============ 
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
   Noncash Activities:
      Common Stock Issued for Conversion
         of Debentures                                       $ 13,115,195       $   6,240,000      $         -

</TABLE>

The accompanying notes are part of the financial statements.



                                       65
<PAGE>

THE RAYMOND CORPORATION AND SUBSIDIARIES

SCHEDULE I - Condensed Financial Information of Registrant
                       - The Raymond Corporation

Years ended December 31, 1996, 1995 and 1994

Notes to Condensed Financial Statements

NOTE A - Basis of Presentation

In the parent company-only financial statements, the Company's investment in
subsidiaries and unconsolidated investees is stated at cost plus equity in
undistributed earnings of the subsidiaries and unconsolidated investees since
the date of acquisition. Parent company-only financial statements should be read
in conjunction with the Company's consolidated financial statements.


NOTE B - Long-Term Debt
<TABLE>
<CAPTION>
                                                              1996                   1995              1994          
                                                           -----------            -----------       -----------      
<S>                                                        <C>                    <C>               <C>              
6.5% convertible subordinated debentures
     due December 15, 2003. Interest is                          
     payable semi-annually.                                $38,060,000            $51,260,000       $57,500,000
                                                           ===========            ===========       =========== 

</TABLE>

On December 20, 1996, the Company issued a Call for Redemption of its 6.5%
convertible subordinated debentures due December 15, 2003. Prior to the January
21, 1997 redemption date, debenture holders could convert their outstanding
debentures into common stock of the Company at a conversion price of
approximately $16.07 per share or receive 103.5% of their principal amount, plus
accrued interest, upon redemption. Subsequent to the call date and prior to
December 31, 1996, debenture holders converted $3.7 million of debentures into
229,034 shares of common stock. Prior to issuing the Call for Redemption, an
additional $9.5 million of the debentures were converted into 592,503 shares of
common stock primarily in the fourth quarter of 1996.

Through January 21, 1997, substantially all of the debentures outstanding at
December 31, 1996 were converted and an additional 2,368,395 shares of common
stock were issued. The 1996 and 1997 conversions were at the originally stated
conversion rates adjusted for stock dividends.


                                       66
<PAGE>

THE RAYMOND CORPORATION AND SUBSIDIARIES

SCHEDULE I - Condensed Financial Information of Registrant
                       - The Raymond Corporation

Years ended December 31, 1996, 1995 and 1994

Notes to Condensed Financial Statements  (cont'd)

NOTE C - Guarantee

Raymond Leasing Corporation, a wholly-owned subsidiary of the Company, has a
$4,000,000 long-term debt obligation outstanding at December 31, 1996. Under
terms of the debt agreement, the Company has guaranteed the payment of all
principal and interest.


NOTE D - Dividends from Subsidiaries and Investees

Cash dividends paid to The Raymond Corporation from unconsolidated investees
accounted for under the equity method were $251,504 in 1996, $335,393 in 1995,
and $107,969 in 1994. No cash dividends were paid to The Raymond Corporation by
subsidiaries in 1996, 1995, or 1994.


                                       67
<PAGE>

THE RAYMOND CORPORATION AND SUBSIDIARIES

SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS

Year Ending December 31, 1996
<TABLE>
<CAPTION>
          COL. A                 COL. B                    COL. C                         COL. D               COL. E
-------------------------   ----------------  ----------------------------------     ----------------     -----------------
                                                         Additions
                                              ----------------------------------
                                                    (1)               (2)
                            Balance at        Charged to        Charged              Deductions           Balance at
                            Beginning         Costs and         to Other             from                 Close of
      Description           Of Period         Expenses          Accounts             Reserve              Period
-------------------------   ----------------  ----------------  ----------------     ----------------     ----------------- 
<S>                         <C>               <C>               <C>                  <C>                  <C>   
Reserve and allowances deducted from asset accounts:

     Allowance for doubtful
     accounts & losses on
     investment in leases        $3,501,557           357,016            127,139-D            241,304-B         $3,744,408
                            ================  ================  ================     ================     =================

Reserves reported in accrued liabilities:

     Service agreements          $3,625,755         5,213,402                               6,251,465-A         $2,587,692
     Insurance reserves           7,723,735         5,587,868                               5,440,137-C          7,871,466
                            ----------------  ----------------  ----------------     ----------------     -----------------
                                $11,349,490       $10,801,270                             $11,691,602          $10,459,158
                            ================  ================  ================     ================     =================

</TABLE>

A - Warranty & maintenance costs charged against reserve.

B - Bad debt write-offs charged against reserve.

C - Insurance costs charged against reserve.

D - Relates to companies acquired in 1996.



                                       68
<PAGE>

THE RAYMOND CORPORATION AND SUBSIDIARIES

SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS

Year Ending December 31, 1995
<TABLE>
<CAPTION>
          COL. A                 COL. B                    COL. C                         COL. D               COL. E
-------------------------   ----------------  ----------------------------------     ----------------     -----------------
                                                         Additions
                                              ----------------------------------
                                                    (1)               (2)
                            Balance at        Charged to        Charged              Deductions           Balance at
                            Beginning         Costs and         to Other             from                 Close of
      Description           Of Period         Expenses          Accounts             Reserve              Period
-------------------------   ----------------  ----------------  ----------------     ----------------     ----------------- 
<S>                         <C>               <C>               <C>                  <C>                  <C>   
Reserve and allowances deducted from asset accounts:

     Allowance for doubtful
     accounts & losses on
     investment in leases        $2,214,881        $1,399,000                                $112,324-B         $3,501,557
                            ================  ================  ================     ================     =================

Reserves reported in accrued liabilities:

     Service agreements          $2,443,168        $6,902,683                              $5,720,096-A         $3,625,755
     Insurance reserves           6,053,159         7,567,802                               5,897,226-C          7,723,735
                            ----------------  ----------------  ----------------     ----------------     -----------------
                                 $8,496,327       $14,470,485                             $11,617,322          $11,349,490
                            ================  ================  ================     ================     =================
</TABLE>

A - Warranty & maintenance costs charged against reserve.

B - Bad debt write-offs charged against reserve.

C - Insurance costs charged against reserve.


                                       69
<PAGE>

THE RAYMOND CORPORATION AND SUBSIDIARIES

SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS

Year Ending December 31, 1994
<TABLE>
<CAPTION>
          COL. A                 COL. B                    COL. C                         COL. D               COL. E
-------------------------   ----------------  ----------------------------------     ----------------     -----------------
                                                         Additions
                                              ----------------------------------
                                                    (1)               (2)
                            Balance at        Charged to        Charged              Deductions           Balance at
                            Beginning         Costs and         to Other             from                 Close of
      Description           Of Period         Expenses          Accounts             Reserve              Period
-------------------------   ----------------  ----------------  ----------------     ----------------     ----------------- 
<S>                         <C>               <C>               <C>                  <C>                  <C>   
Reserve and allowances deducted from asset accounts:

     Allowance for doubtful
     accounts & losses on
     investment in leases        $1,727,740        $1,079,908                                $592,767-B         $2,214,881
                            ================  ================  ================     ================     =================

Reserves reported in accrued liabilities:

     Service agreements          $1,737,219        $4,612,619                              $3,906,670-A         $2,443,168
     Insurance reserves           4,764,346         6,527,819                               5,239,006-C          6,053,159
                            ----------------  ----------------  ----------------     ----------------     -----------------
                                 $6,501,565       $11,140,438                              $9,145,676           $8,496,327
                            ================  ================  ================     ================     =================
</TABLE>

A - Warranty & maintenance costs charged against reserve.

B - Bad debt write-offs charged against reserve.

C - Insurance costs charged against reserve.



                                       70